1941-05-29

OFFICIAL REPORT

[Stage Direction]
SECOND SESSION-NINETEENTH PARLIAMENT Which opened the seventh day of November, 1940, and was prorogued the twenty-first day of January, 1942.
4-5-6 GEORGE VI, 1940-41-42

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2|ousie of Commons BefmteS
[Stage Direction]
Thursday, May 29, 1941.


Mr. ALPHONSE FOURNIER (Hull) moved:: That, for the remainder of the session, all private bills from the senate when received from that house, shall be deemed to have been read the first time and ordered for second reading, and that standing order 105 respecting the posting of bills be suspended in relation thereto.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the order for motions:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: I wish to table herewith copies in English and French of a note of May 28 from the United States minister, and our reply of the same date.
This exchange of notes, which is selfexplanatory, has arisen out of the fact that the President of the United States has been obligated, under the United States Agricultural Adjustment Act, to impose a quota restriction on the importation of Canadian wheat. The president's proclamation, issued last night, limits total imports of wheat into the United States during the next twelve months to S00,000 bushels. Of this total, the allocation to Canada is 795,000 bushels. The United States note makes it clear that this import restriction will not affect the movement of Canadian wheat into the United States for miling in bond and export, or Canadian wheat moving through the United States for export.
In its note the United States government intimates that it is proposed to invite the interested governments to resume discussions in Washington, in the near future, on the whole wheat surplus problem. In addition to looking toward the resumption of discussions of the world wheat situation between the wheat producing countries, the United States government propose, in particular, closer collaboration between the Canadian and United States governments with a view to preventing divergencies in our respective wheat programmes and policies, a development which would be in accord with the purposes of the Hyde Park declaration. The Canadian note recognizes the domestic difficulties with which the United States has had to contend, acknowledges its assurance that Canadian export and transit trade will not be affected by the restrictions, and welcomes the United States initiative in proposing joint examination of the world wheat problem and closer cooperation between Canada and the United States in working out their respective wheat programmes and policies.


Mr. E. E. PERLEY (Qu'Appelle):: I had a question which I was going to direct to the Minister of Trade and Commerce (Mr. MacKinnon), but the Prime Minister (Mr. Mackenzie King) rather beat me to it when he announced the international conference which is to be held in Washington. I am sure we were all glad to learn that Canada is to be permitted to supply almost the entire import quota of the United States. There was one sentence in the press release, however, to which the Prime Minister did not refer, in which it was stated that the disclosure of the proposed conference was made in the release of an exchange of notes between the United States and Canada in connection with quota action. Would the minister table the notes which have passed between the two governments in this connection?


William Lyon Mackenzie King: I just tabled
them.


Ernest Edward Perley: I did not understand that the Prime Minister tabled the actual notes which passed between the two governments.


William Lyon Mackenzie King: Yes; that was my purpose in rising. I tabled the notes and made a short statement in explanation.

Questions



INCOME WAR TAX ACT


Hon. R. B. HANSON (Leader of the Opposition):: Will the Prime Minister at the same time table the correspondence between himself and the Premier of Ontario to which reference was made in this morning's press, having to do with the increased tax imposed on non-residents by the proposed amendment to the Income War Tax Act?


William Lyon Mackenzie King: I think that correspondence will take a little time to copy. When it is copied I shall be pleased to see that it is tabled.



PRIVATE BILLS


[Stage Direction]
Bill No. 80, for the relief of Elizabeth (Elspeth) Brown Rattray Selkirk Morphy - Mr. Bercovitch.
Bill No. 81, for the relief of Stanley Jackson.-Mr. Whitman.
Bill No. 82, for the relief of Vera Black Slatkin.-Mr. Bercovitch.
Bill No. 83, for the relief of Stella Cohen Baboushkin.-Mr. Bercovitch.
Bill No. 84, for the relief of Kate Abramo-vitch Reinblatt.-Mr. Bercovitch.
Bill No. 85, for the relief of Dora Catherine Sullivan Evans-Mr. Bercovitch.
Bill No. 86, for the relief of Ilona Klein, otherwise known as Eleanor Klein. Mr. Boucher.

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

Mr. ESLING:: 1.	How many men were given thirty days training under the provisions, of the National Resources Mobilization Act?
2.	How many of these have volunteered and been accepted for service in the Canadian army (active force)?


Mr. RALSTON:: 1.	81,086 recruits completed training.
2.	Records at national defence headquarters regarding enlistments of N.R.M.A. recruits only show the figures previous to March 25th, 1941, and as of that date the number reported

by the districts aggregated 2,039 in the navy, army and air force. A breakdown of enlistments into each service is not available.


QUEBEC PROVINCE PUBLIC UTILITIES
Mr. PARENT:: 1.	What is the name of each of the companies distributing electricity, wholesale and retail, in the province of Quebec, and who pay taxes to the dominion government?
2.	Where is the head office of each of these companies?
3.	What amount of taxes was paid by each of such companies to the dominion government during the years, 1938, 1939 and 1940?
4.	What is the total amount paid by these companies for the years, 1938, 1939 and 1940?


Mr. GIBSON:: Mr. Speaker, it would be contrary to established practice to give information as to the amount of taxes paid by any individual taxpayer. Under the circumstances I would ask that this question be dropped.
Question dropped.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. POULIOT:: 1.	Are the members and officers of the three branches of the army obliged to take the Wassermann test?
2.	If so, since when?
3.	If not, why?


UNEMPLOYMENT RELIEF-NEW BRUNSWICK
Mr. HATFIELD:: 1.	What total amount has the dominion government contributed each fiscal year since 1935 towards unemployment relief in the province of New Brunswick?
2.	During each such fiscal year:	(a) what
total amount was contributed toward direct relief; (b) what amount was contributed to be used in the paying of the cost of public works projects; (c) what amount was contributed to be used by the province to pay the costs of various youth training projects; (d) what amount, if any, was contributed to be used in paying the costs of other educational projects; (e) what amounts were contributed towards the promotion of colonization; (f) what additional projects for the relief of unemployment were assisted by contribution from the dominion to the province of New Brunswick?
3.	What was the total contribution of the dominion towards each such project?
4.	Who, in each case, represented the dominion government as supervisor or inspector on each of these projects, to see to it that moneys contributed by the dominion were expended solely and entirely for the purpose for which each contribution was made?

Great Lakes Shipping



BACON BOARD


[Stage Direction]
On the orders of the day:
Hon. J. G. GARDINER (Minister of Agriculture) :: I should like to reply to the question asked yesterday by the hon. member for Haldi-mand (Mr. Senn).
'Home short time ago I announced to the house that the British ministry of food had requested certain additional quantities of bacon. Subsequent to this a further request was received that shipments should be accelerated so that shipments under the present contract would be completed by September 15 rather than October 31 as provided for in the agreement. To comply with this request will require the shipment of 425,000,000 pounds during a period of forty-six weeks rather than fifty-two weeks as originally provided for, and it will be necessary substantially to increase shipments during the present month and during the remainder of the period up to September 15, during a period when hog marketings are normally at their lowest level. Accordingly, it was deemed desirable to take certain steps to secure additional quantities of bacon for export.
The method adopted to accomplish this purpose is that each exporting packer is being allowed for domestic distribution the average number of hogs distributed weekly in the domestic market in 1940, and is required to deliver to the board the export product of every hog slaughtered over and above the domestic allowance. At the same time all slaughterers of hogs, excepting farmers, are being required to obtain licences for the purpose of limiting the quantity of pork being distributed by domestic slaughterers to the level of 1940, similar to the action taken with respect to exporting packers.
The domestic consumption of pork has been gradually increasing and is exceedingly high, and the amount distributed during 1940 is considered a liberal allowance, since, from all information available, the per capita consumption of pork during that year was the highest on record.



THE MINISTRY


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: With regard to the ques-14873-2061
tion asked me yesterday by the leader of the opposition (Mr. Hanson), I am not at the moment in a position to announce any change in the personnel of the ministry. Before the present session is adjourned I hope to be in a position to inform the house of a change under which the Minister of Agriculture will be able to give his undivided time to the work of that department, and whereby the work of the Department of National War Services will be expanded.


Richard Burpee Hanson: What I had in mind was the announcement being made at a calf auction.


William Lyon Mackenzie King: I suppose that would depend on what my hon. friend regards as a calf auction.



GREAT LAKES SHIPPING


[Stage Direction]
On the orders of the day:
Hon. P. J. A. CARDIN (Minister of Transport):: On November 15, 1940, I told the hon. member for Broadview (Mr. Church) that an investigation would be held in respect to the loss of the steamers Novadoc and Anna C. Minch in lake Michigan, United States, on or about November 12, 1940. I am now in a position to say that formal investigations have been completed. The investigation in both cases was conducted by the Hon. E. H. Barlow, district judge in admiralty of the Exchequer Court of Canada for the Ontario admiralty district.
In regard to the Novadoc the court found no default on the part of the master or any other person or persons. The vessel was in good seaworthy condition. The court found "that the loss of the vessel and the loss of life can be attributed only to the violence of the storm". Two members of the crew were lost. The court expressed appreciation of the action of Mr. Clyde Cross and the other two men operating the fishing boat Three Brothers who at very considerable risk proceeded to the stranded Novadoc in a heavy sea and rescued the seventeen survivors. The gallant conduct of these three men will be officially recognized by the government through the marine services of the Department of Transport.
The court recommended that a barometer be conveniently placed in the pilot house of
Great Lakes Shipping



SCRAP IRON


[Stage Direction]
On the orders of the day:
Mr. C. E. JOHNSTON (Bow River):: Mr. Speaker, I would draw the attention of the Minister of Munitions and Supply to a question I asked on May 22 with respect to the intention of the Dominion Bridge company to move its plant from Calgary to Vancouver. Could the minister give the house an explanation with regard to that unfortunate situation?


Hon. C. D. HOWE (Minister of Munitions and Supply):: Permission to move the plant of the Dominion Bridge company from Calgary to Vancouver was recommended some two or three weeks ago by the steel controller. I believe the plant in Calgary has not been operating for eleven years. It seems to be of no value to the war effort in its present location, and it was recommended to me that the plant be moved to Vancouver. Government assistance in the moving of the plant was not asked, other than the usual declaration that it is being moved for war purposes, thereby allowing the company to present its case for consideration of the war contracts depreciation board. That declaration was granted, and the government has no further part in the transaction.


Charles Edward Johnston: Will
depreciation on that plant be allowed?


Clarence Decatur Howe: That is a matter for the war contracts depreciation board to consider. The board will have to decide as to what if any depreciation is permissible. The Department of Munitions and Supply is not assisting the company financially.


Charles Edward Johnston: Could not use be made of that plant in Calgary?


Clarence Decatur Howe: I cannot say as to that, but I could point out that it has been there eleven years without being used.


Charles Edward Johnston: We have been trying to get it in operation for the last six months, and have not made any progress.



CONSCIENTIOUS OBJECTORS


[Stage Direction]
On the orders of the day:
James Garfield Gardiner: -Mr. Speaker, I should like to make a statement on a matter having to do with national war services.

Succession Duty Act
When the regulations for compulsory military training for service within Canada were enacted, provision was made therein for the possible postponement of such military training for conscientious objectors, Men-nonites and Doukhobors. Provision for postponement of training for the last two classes was granted pursuant to terms of orders in council enacted at the time these people were admitted into Canada.
The regulations provided that, notwithstanding postponement from military training of persons within these three groups, such persons might be required to render some type of alternative service.
The twenty-one year old class is now being called out for military training. Members of that age class whose military training is postponed as either conscientious objectors, Men-nonites or Doukhobors will now be required to render either three or four months' labour service in lieu of military training and be subject to such further labour service as may be decided in the future.
In the case of Mennonites and conscientious objectors, an arrangement has been made with the federal Department of Mines and Resources to open camps in national parks and a camp in Ontario where Mennonites and conscientious objectors will be sent for their period of labour service. They will be called upon to do certain work in these parks which would not otherwise be done. The men will be supplied with board and lodging and will be paid fifty cents per day, but will be called upon to supply their own clothing.
In the case of Doukhobors, who are all in western Canada, negotiations are being conducted with provincial governments concerned under which certain road projects will be carried on under provincial control, and thesq men will be required to work on these projects under the conditions I have outlined.
Those who fail to report at these camps for work on these projects, when directed will be dealt with in the ordinary way as defaulters.
It is hoped to have these camps in operation on June 15, and, as the type of work to be done must of necessity be seasonal, the camps, with one or two exceptions, will be summer camps.



UNEMPLOYMENT INSURANCE


Hon. H. A. BRUCE (Parkdale):: Mr. Speaker, with your consent and with the consent of the house I would ask that Bill No. 21. order No. 17, standing in my name under public bills and orders, be withdrawn.
Bill withdrawn.



DOMINION SUCCESSION DUTY ACT

[Stage Direction]
The house resumed from Wednesday, May 28, consideration in committee of Bill No. 79, to authorize the levying of duties in respect of successions-Mr. Ilsley-Mr. Vien in the chair.
Section 9 agreed to.
On section 10-Initial duty dependent on aggregate net value.
Richard Burpee Hanson: Would the minister give a brief explanation of this section? I understand that in the first place there shall be paid an initial duty based on the aggregate net value. I do not quite understand the necessity for the proviso. What is intended by the initial duty? What will be the. scope of the operation, if that is a fair way to put it?


Hon. J. L. ILSLEY (Minister of Finance):: That is the duty payable in respect of the estate. That is clear, is it not? There is no estate duty up to $25,000. If the hon. gentleman will look at the schedule on page 25 he will see that the initial rates start at $25,000. For estates of between $5,000 and $25,000 the additional rates apply, but not the initial rates. What this proviso says is just that there shall not be any initial rates for estates between $5,000 and $25,000.


[Stage Direction]
Section agreed to.
On section 11-Additional duty.
Mr. MACDONALD (Brantford City):: I
notice there is a definition of child in clause (b), and child is also defined in the interpretation section. In clause (b) reference is made to a child of the deceased eighteen years of age or over. No reference is made to an adopted child.


James Lorimer Ilsley: The interpretation section
defines "child" as being a child under eighteen years of age, or a child who was dependent upon the deceased for support on account of mental or physical infirmity. In clause (a) of subsection 1 of section 11 the only reference to child is to one who would come within the terms of that definition. But when we come to clause (b) we find that we are talking about a child in the ordinary sense, that is a son or daughter of the deceased or a lineal descendant over eighteen years of age and not dependent upon the deceased. The child referred to in clause (b) is not a minor child.


Mr. HAZEN:: There seems to be a defect
in the draftsmanship; it is not very good.


James Lorimer Ilsley: I suppose the point is that
if you apply the definition of child as found in the interpretation section to the word
Succession Duty Act

*"child" in line 33 you get a child under eighteen years of age, whereas the words that follow are "eighteen years of age or over," hence a contradiction. It seems to me that this would be a strained interpretation, I do not think the provision could possibly give rise to any difficulty.


Richard Burpee Hanson: Will the
minister give further consideration to including in clause (a) husbands as well as widows?


James Lorimer Ilsley: I cannot see that argument at all. If it were a dependent husband-*


Richard Burpee Hanson: It might
be.


James Lorimer Ilsley: Is the hon. gentleman suggesting that we put in the words "dependent husband"?


Richard Burpee Hanson: I do not
suggest that, but I do suggest that in eight of the nine provinces a husband is treated exactly the same as a widow.


James Lorimer Ilsley: In nearly all provinces
classes A and B are combined. If A and B were combined, the husband would be in the same class as the widow, but we have separated them; we have taken out the people who are naturally dependent.


Richard Burpee Hanson: That is
just an arbitrary division. In many families the husband and wife make a joint or mutual will, especially when there are no children. The one leaves the other what little patrimony there may be. What has been saved has probably been saved by the joint effort, but the title has been divided during their lifetime. The husband leaves his to the wife, and the wife leaves hers to the husband. I do not see that there is anything wrong or improper in asking for that.


Mr. MACDONALD (Halifax):: While the rates in the aggregate as provided by this section and in the schedule are on the whole reasonable, the rates which apply to the different classes seem to be out of line. I suggest that this is particularly so in the case of small estates of from $5,000 to $25,000. The additional rate dependent on dutiable value in the case of an estate of from $5,000 to $6,000 is 2 per cent for classes A and B, which cover the widow and children of the deceased. But the rate for class D is 3 per cent, which class covers successors who may be no blood relation to the deceased, but complete strangers. Let us take another case, an estate of from $22,000 to $25,000. There the additional rate dependent on dutiable value in the case of class A is 2-45 per cent; for class B, which includes children over the age
(Mr. Ilaley.]
of eighteen years, the rate is 2-9 per cent; for class C, which includes brothers and sisters, sons-in-law and daughters-in-law, the rate is 3-4 per cent, and for class D, which covers complete strangers, the rate is only 3-9 per cent. I suggest that the difference is too small as between children and close relatives of the deceased and those who are complete strangers and may have absolutely no reason to look forward to any benefit through the death of the testator.


James Lorimer Ilsley: The reason is that in the provinces there is a much wider divergence in the rates applying to classes A and B and class D. If we had the same divergence in the dominion we would have a great total divergence between the rates.


Mr. SLAGHT:: "Why?


James Lorimer Ilsley: We would be doubling the divergence. I think it should be an arithmetical rather than a geometrical divergence. That is the theory of the act, at any rate. These rates on the whole are lower for strangers than the rates in the provinces, but when added to the provincial rates there is a substantial difference between the stranger rates in the total and the rates for children closely related in the total.


Richard Burpee Hanson: The minister is admitting that if we adopted the same progressive rate for class D as the provinces have adopted, it would be confiscation.


James Lorimer Ilsley: It would be very high.


Richard Burpee Hanson: If he will allow me to say so, I do not understand the attitude adopted by the hon. member for Halifax (Mr. Macdonald). Last evening he enunciated a principle which I was surprised to hear. He contended that a man had no inherent right to pass along his patrimony to his children.


Mr. MARTIN:: The hon. member is not married.


Mr. HANSON (York-Sunbuiy):: I was just about to say that possibly his outlook on this question is dictated by his position in life. I hope he will rectify that position very shortly.


[Stage Direction]
Section agreed to.
On section 12-Persons liable.
William Ross Macdonald: I would draw the attention of the committee to the words "shall" and "may" in the eighteenth line. It says that the duty in respect of any gift or disposition "shall also

Succession Duty Act
be payable by and may be recovered from" the executor. Is there discretion as to whether or not it shall be recoverable from the executor?


Richard Burpee Hanson: An alternative, is it not?


William Ross Macdonald: Or is it an alternative?


James Lorimer Ilsley: It is payable by the donee, by the successor-I think that is the proper term. It also may be recovered from the executor in his capacity as executor, and up to the amount of the property he has in his hands.


William Ross Macdonald: If I may anticipate and go to section 13, it provides that if the executor is forced to pay duty in respect of property not in his hands he can recover from the successor liable therefor. My question with respect to section 12 is this: Is he liable in his capacity as executor only for the assets of the estate which come into his hands? How can that accord with section 13?


Richard Burpee Hanson: Perhaps I can help the minister. I do not see the hon. member's difficulty. In the first place the successor is liable for the duty. It comes out of him eventually. Section 12(1) gives the taxing authority the right to recover from the successor, or the duty may be recovered from the executor if the money is still in his hands. It is a permissive right of the crown to look to either place for the duty, and I think that is all right. You have to protect the treasury to that extent, and give the crown that alternative right. Section 13 is a protection to the executor who has to pay under section 12. I am going to ask the minister to consider, under 13 or 12 or at some other appropriate point, that where there is a liability imposed on the executor, a liability that may be exercised, he be given more than a possessory lien on the assets; that he be given a statutory lien. I think he ought to have that. He has only a possessory lien at the moment.


James Lorimer Ilsley: Why is that not good enough?


Richard Burpee Hanson: It may not be. I would give him full protection.


James Lorimer Ilsley: The executor is given pretty full protection under this act.


Richard Burpee Hanson: But that is one provision which I think is lacking.


James Lorimer Ilsley: I think this compares pretty favourably with other acts.


Richard Burpee Hanson: I am in agreement there.


James Lorimer Ilsley: I speak subject to correction, but under some acts I believe the executor is liable for the amount of these gifts in any event.


Richard Burpee Hanson: I do not recall any that go so far as to compel him to pay it out of his own pocket unless he has violated his duty as executor and paid the gift out before the tax was paid. But no executor would think of doing that.


James Lorimer Ilsley: I may be wrong about that.


William Ross Macdonald: I have followed the argument of the leader of the opposition but if according to section 12 the executor is liable only in his capacity as executor, how can he by section 13 be required to pay duty upon assets which do not come into his possession or control? The first line of section 13 uses the words "is required".


James Lorimer Ilsley: The executor is required to pay duty on the value of a donation even though the gift is not in his hands. He is required to pay the duty, provided that he has property, up to that amount. Section 13 gives him the right to recover against the successor the amount of duty which he had to pay. The gift is not being administered by the executor. The property upon which succession duty is payable does not come into his hands. He is not administering it. Nevertheless he is obliged to pay the duty on it if he has other property in his hands, and section 13 provides that he can recover the amount of the duty from the successor, who in this case would be the donee.


William Ross Macdonald: I see. Thank you very much.


Mr. WHITE:: If the executor of the estate is liable for the duty on gifts which have been made by the testator in his lifetime, the executor will have to pay that duty out of the assets of the estate under his administration. If he is unable to collect the amount of the duty so paid from the person who received the gift, he will have to pay the duty, and it will have to come out of some of the other heirs.


Richard Burpee Hanson: That is a possibility.


George Stanley White: It is quite a probability.


James Lorimer Ilsley: The concluding words of
section 12(1) do away with that difficulty. It says that the executor is liable "for an amount not exceeding the value of the interest of the successor in the property administered by the executor." Therefore he would not be dipping into the interests of others.
Succession Duty Act


Olof Hanson: If there
was no interest of the successor in his hands, the duty could not be recovered from him. That would be a good plea in answer to an action.


James Lorimer Ilsley: Yes.


George Stanley White: If the testator during his
lifetime had made a gift to someone of $5,000, and that person had no interest in the estate when the donor died, who would be liable for the duty?


James Lorimer Ilsley: The successor.


George Stanley White: Then the executor in administering the estate would not have to pay the duty on that $5,000?


James Lorimer Ilsley: No.


Richard Burpee Hanson: But they could go after the donee.


James Lorimer Ilsley: Correct.


George Stanley White: It looks very profitable for litigation.


[Stage Direction]
Section agreed to.
Section 13 agreed to.
On section 14-Duty deductible from succession.
Richard Burpee Hanson: I think
that this fully protects the executor.


James Lorimer Ilsley: I think it does.


Richard Burpee Hanson: Does the minister think that section 14 goes far enough?
I am thinking of my suggestion of a lien. He has a possessory lien; give him a statutory lien, and that will be a protection.


Arthur Graeme Slaght: Better than a. lien, he
could take it out for himself, out of money in his hands.


Richard Burpee Hanson: That
would be the possessory lien, would it not?


Arthur Graeme Slaght: This is a statutory right. Take it away from the estate; that is better than any lien.


James Lorimer Ilsley: In answer to a question of the hon. member for Brantford City. I spoke as though section 13 applied to gifts. Section 13 applies to such a case as insurance payable, not to the executor but to some beneficiary, which does not come into the hands of the executor for administration. That is what No. 13 is designed to cover, not the case of gifts inter vivos, as I said before. Was there any question about section 14?


Richard Burpee Hanson: I was just raising the question of security. If the minister does not think well of it I will not press it any further.
fMr. 11*1 oy.]


James Lorimer Ilsley: It seems to me the executor is adequately protected.


Richard Burpee Hanson: All right. Maybe he is.


[Stage Direction]
Section agreed to.
On section 15-Filing statement.
Richard Burpee Hanson: Subsection 1 provides for the filing of a statement, including an inventory, name of successors, and so forth, within six months after the death of the deceased. Also certain other things have to be done. By subsection 2, every executor shall within six months after the death of the deceased- deliver to the -minister in such form as he may prescribe, a statement similar to that required by subsection 1. Subsection 3 provides a measure of relief where one of the persons mentioned in the two next preceding subsections has made and delivered the statement. I am assuming that in practice one statement only will be made, unless required by the commissioner.


James Lorimer Ilsley: By the -minister, yes.


Richard Burpee Hanson: Yes-well, it will be a commissioner, I suppose, or other officer authorized. I am wondering whether six months is quite long enough. I know it is the standard period of time, but it has been difficult at times to do the work within that period.


William Ross Macdonald: There is the power of extension.


Richard Burpee Hanson: Yes, but upon what principle would the department allow an extension of time, and would it be without penalty? In connection with income tax severe penalties may be imposed. Of course I realize with gratitude that in respect of income tax a man can file a pro forma statement, and make a payment on account, and so escape penalty. I commend that because it is a reasonable concession to the oppressed taxpayer. But I should like to see a longer time given than six months. These things are going to be onerous enough.


James Lorimer Ilsley: Six months is the usual
time.


Richard Burpee Hanson: Oh, I
said that.


James Lorimer Ilsley: And that, with the power
of extension, should be enough.


Richard Burpee Hanson: On what
principle will the extension be made?


Arthur Graeme Slaght: I do not grasp what circumstances the hon. gentleman has in mind which would make it even difficult to file the

Succession Duty Act
statement within six months. It is a statement which includes gifts only for three years back. The person filing the statement knows the situation, and if he cannot make the statement in six months he cannot make it in six years.


Richard Burpee Hanson: Oh, no;
it is a full itemized inventory of all the assets and all the debts of the deceased and everything of the kind. It is the ordinary statement which has to be made. I suggest that six months is not quite long enough, although I know it is the standard period. Suppose some of the property is in another country, and the matter arises in war time. I admit at once that that is an extreme case, and a condition not likely to continue for ever, but my colleague suggested it to me as a possible contingency, and so it is. The government could well concede a longer period of time.


James Lorimer Ilsley: I should not like to extend
it. I do not think it will give rise to much difficulty.


Mr. ROSS (St. Paul's):: I made a suggestion in the discussion on the resolution, which I might illustrate in this way. When, about 1929 or 1930, the crash came, a succession duty which had to be paid on a British Columbia estate amounted to a great deal more than the then value of that estate. In other words, nothing was left. I know of other instances in which the same thing has occurred. While I am not a solicitor, it seems to me that a fairer way of dealing with this matter would be to determine tentatively the value of the estate at the time of death, so that all the preliminaries could be gone on with, and then have the succession duty paid on the value of the estate six months after the death of the testator; that is, have a revaluation made at that time and payment fixed accordingly. This would obviate the unfairness, indeed the real hardship, which has occurred in the past. If in the meantime the value of the estate increased, the government would get more money; if the value diminished, the government would not receive as much, but unfairness would be avoided.
Another thing which happens in certain cases where it is necessary to liquidate assets-


The CHAIRMAN:: Order. The remarks
of the hon. member are directed to section 8, with regard to determining the aggregate net value, which has been allowed to stand. The section under consideration has to do only with the filing of the statement.


Douglas Gooderham Ross: Well, I see
"inventory" here. May I finish my remarks?


Thomas Vien: Yes, but this is only with reference to the statement of the value of the property in an inventory to be filed with the minister within a certain period, by certain persons indicated. The fixing of the value is determined under section 8.


Douglas Gooderham Ross: Subclause (a) of subsection 1 of section 15 refers to "fair market value as of the date of death". I do not think what I suggest would entail any great hardship on the government; and where it is necessary to liquidate assets, where there is a large holding in one company, immediately the value of that stock is depressed. If people know that it does not have to be done quickly there is a chance that the estate will not be depressed to the same extent, and the government may get more money. I do not think the government would lose anything, and it would be much fairer.


[Stage Direction]
Section agreed to.
On section 16-Property not disclosed.
James Lorimer Ilsley: I wish to offer an amendment to this section. It does not vitally affect the provision. The amendment is:
That section 16, subsection 1, be amended by deleting the words at the end thereof reading- "the executor shall only be liable to such penalty if he knowingly omits to make such disclosure," and substituting therefor the following:
"in any proceedings to recover such penalty the executor shall not be liable thereto if he establishes to the satisfaction of the court that his omission to disclose the property was not intentional."


Richard Burpee Hanson: The principle is an important one. The onus is put entirely on the executor. I should think the fair thing to do would be to say that if any person required to file a statement pursuant to section 15 knowingly or with intent to , defraud omits to disclose, he shall be liable to penalty.


James Lorimer Ilsley: I think the burden should be on the executor.


Arthur Graeme Slaght: I agree with the leader of the opposition, that the present wording is all that in fairness we ought to ask. It will be noted that the provision does not deal with any loss that might accrue to the estate because of non-disclosure; that might be the subject of severer penalty or treatment. But this provision deals with the case of the obligation of an executor under the act to pay a penalty of one hundred per cent of the non-disclosed property. Now, that is an arbitrary penalty to begin with, unless it could be shown-and this section does not make it a condition-that the department

Succession Duty Act

lost some revenue because of the non-disclosure. Under this amendment, by merely showing non-disclosure of an amount you could impose the one hundred per cent penalty. If it was half a million dollars it would ruin an individual executor. The department may say to him: "We are not prepared to show to a court"-or they impose the penalty without going to a court-"we are not prepared to show that you knowingly left this out, but we are going to put upon you the burden of proof that you did not knowingly leave it out." Sometimes, as we all know, the fact as to where the burden of proof rests makes all the difference between success or failure on the part of a person who is sued. Where there has been no loss, it seems to me you ought to be able to show, before you impose a penalty upon a man, that he knowingly omitted to disclose something. I suggest that the amendment ought to be withdrawn, that the draftsman who prepared the section in its present form had a better sense of proportion than the proposed amendment discloses.


Richard Burpee Hanson: I am in entire agreement with the hon. member for Parry Sound. He has stated the position much better than I could. This rather Shocks one's sense of propriety and justice. It is on a par with the principles that underlie the liquor acts in this country; a man is guilty until he proves his innocence. I cannot see that in the ordinary course of business a man acting in a representative capacity would profit by non-disclosure. His duty is clear. He does it to the best of his ability. If he omits anything, the onus should be on the crown to prove intent. As the hon. member for Parry Sound has said, where a penalty is imposed, clearly it is the duty of the crown to assume the onus of proof.
I do not like this type of legislation; it is not British justice. Of course it is making it easier for the officers of the crown to administer the law.


James Lorimer Ilsley: I disagree with the leader of the opposition and the hon. member for Parry Sound. I can hardly conceive of a case where the crown would be in a position to prove knowing omission. There might possibly be some cases in which the crown could prove a state of mind. If the crown is in a position to prove that the existence of property was brought to the attention of the executor and nevertheless was not disclosed, it would be possible for the crown to prove that state of mind. My hon. friend talks about British justice, and shock to our feelings, and that sort of thing, but we must recognize
[,Mr. Slaght.]
the fact that in a great many statutes where the means of knowledge are with the accused, not with the crown-


Mr. JACKMAN:: All criminal law is that way.


James Lorimer Ilsley: Oh, no.


Arthur Graeme Slaght: This is not criminal law.


James Lorimer Ilsley: Where the means of knowledge are with the accused, the crown establishes the facts that point to an offence, and then the accused comes forward and says "Yes, it is true that property is left out, but I did not know anything about it". If he shows that, he is free. But the section will be almost meaningless so far as executors are concerned. I do not think there would ever be a prosecution against an executor if the burden is cast on the crown of proving that there was an intentional omission. There is complete protection to the executor. All he needs to do is to say, and to swear in such a way that he is believed, that he did not know about it, and submit himself to cross-examination. In most criminal law the situation is entirely different. There you have to prove the offence.


Richard Burpee Hanson: Mens rea.


James Lorimer Ilsley: Well, mens rea is apparent in most crime. If someone walks off with your property and has it, you Show that you missed it and found it in his possession; mens rea is shown by that. Here mens rea would not be assumed from omission to make disclosure. All the crown can do to protect itself is to say that property was left out, that the return shows $50,000 worth of property while there is actually a million dollars' worth. If there is no explanation, the individual is prosecuted, and if he gives a satisfactory explanation in court he may be acquitted. I think it is a case where the burden should be on him.


Richard Burpee Hanson: I do not agree. A man making a statement of that kind will have to swear to it, will he not, under the forms that are proposed?


James Lorimer Ilsley: I do not know.


Richard Burpee Hanson: They do in the provinces.


Arthur Graeme Slaght: Yes; the executor's oath.


Richard Burpee Hanson: It is all under oath as far as the executor is concerned, and under provincial legislation he is the only one who has to file a statement.


James Lorimer Ilsley: I do not think any oath is required under this act. There is no oath in the income tax returns.

Succession Duty Act


Richard Burpee Hanson: Unfortunately there is an oath in some of the municipal income tax legislation with which we have to deal in our part of the country, and sometimes it gives me great anxiety. But this is an absolute reversal of the common law principle, and I do not think the minister has yet adduced an argument in favour of that reversal, except that it will, be easier for the crown if it is left in this form. Changing the burden of proof is nearly always a dangerous thing. The crown has to establish a prima facie case; then the onus shifts and the executor may have to meet it, by the ordinary rules of evidence; and I think those ordinary rules ought to obtain. I am not going to fight this thing out, although it is a matter of principle. I would not hope to convince the minister, though I do not say that in any derogatory sense at all, because I find that on occasion the minister is amenable to suggestion, argument and reason. I do ask him to reconsider this provision, and I will put my request as respectfully and pleasantly as I can. I do not like the insertion of the principle proposed in the amendment.


James Lorimer Ilsley: My difficulty with it as it stands is that there is no mens rea to be inferred from the mere proof of the fact that certain property was not disclosed in the statement. In the ordinary crime mens rea is to be inferred from certain facts. Let us say A hits B. You may assume that he intended to hit him; that is pretty clear. Suppose A kills B. Then you assume that it was negligent, intentional or accidental, depending upon the circumstances, and from those circumstances you may discover what was the state of mind. But there is nothing to be inferred from the mere non-disclosure. All this amendment says is that intention not to disclose is to be inferred from non-disclosure; that is all. Then the executor can come along and say, "I did not intend non-disclosure. It was a mistake. I did not know anything about the property." Once he establishes that he is free.


Arthur Graeme Slaght: I want to direct the minister's attention to another aspect of section 16 which I had not noticed when I addressed the Chair a moment ago, and suggest that it should be amended. The penalty for nondisclosure is described in line 31 as-
. .	. as a penalty an amount equal to one
hundred per centum of the amount of the duty levied. . . .
I suggest that this should read "an amount not exceeding one hundred per centum." There is no leeway, no latitude at all; the penalty 14873-2071
is statutory and, if this provision remains, must be the full one hundred per cent payable by an executor. That payment might bankrupt him; it might take all he had in the world if he had to pay the full one hundred per cent. Under those circumstances any tribunal dealing with the matter would feel that something less than one hundred per cent was a proper punishment. Why not make it human by leaving some discretion? If the minister should agree with me it could be amended quite simply by striking out the words "equal to" and substituting therefor the words "not exceeding." The provision then would read "as a penalty an amount not exceeding one hundred per centum of the amount of the duty levied."


Richard Burpee Hanson: I think
that is a reasonable suggestion.


James Lorimer Ilsley: It may be that this suggestion can be accepted; I do not know at the moment. The difficulty is that we are dealing with an executor and a successor. I recall that under the succession duty act of Nova Scotia I always thought that if the successor left out property, just did not disclose it or kept it to himself-and there is a tremendous temptation to do that, especially in the case of gifts; it is a real evil, and is not anything that we can compromise with if we are to administer the law thoroughly-then the penalty was one hundred per cent. I think that provision runs through all these acts.


Arthur Graeme Slaght: No. If I remember rightly the Ontario act leaves a discretion.


James Lorimer Ilsley: Well, let us see. I have the act here:
Every person in Ontario mentioned in subsections 1 and 2 of section 12 who fails to disclose to the treasurer any property passing on the death of the deceased or any disposition, which such person is required to disclose in accordance with the provisions of section 12, shall pay to the treasurer as a penalty an amount equal to one hundred per centum of the amount of the duty levied on such property or with respect to the transmission of such property or with respect to such disposition.
I am not so clear as to the necessity of being so severe with the executor; but in connection with the successor I feel sure that we must maintain this heavy penalty in order to get full disclosure. The temptation is so terrific not to disclose.


Richard Burpee Hanson: This deals only with an executor, does it? There may be some distinction in regard to the successor.


James Lorimer Ilsley: No, the section deals with
both.
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Mr. STIRLING:: Has the minister explained to the committee his reasons for proposing this considerable stiffening which is contained in the amendment?


James Lorimer Ilsley: Oh, yes; I have been explaining it. My reason for proposing the amendment is that the means of knowledge is in the executor, not in the crown; that the mere fact of the executor filing a statement leaving out certain property does not give ground for the inference that he did so knowingly, and therefore if he is only punishable for doing so knowingly the crown must not only prove that he left it out but must prove a further fact which is very difficult to establish. It must prove some conversation, or some inspection.


Grote Stirling: It must prove that he
did know?


James Lorimer Ilsley: Yes, prove that somebody
told him about it or that he saw it. He might have seen it late at night; he might have been told about it secretly, and the crown never would be able to prove that knowledge.


Arthur Graeme Slaght: Why should he be held
liable if it cannot be established that it did come to his attention?


James Lorimer Ilsley: He is the person who can do the showing. There should be the inference that if the property is left out, that would be prima facie evidence that it was left out knowingly. Then there is provision under which if it is shown that it was not known, penalty is escaped. With this stiff penalty in the statute there would be a disposition in the courts to be very fair to executors. I should think an executor's statement under oath that he did not know about it would in every case be sufficient, because executors as a class are of high integrity. I should think there would be no prosecutions except in cases where the department was completely satisfied that an executor was guilty of some rascality, that a return had been filed in which there were omissions, and in connection with Which property had afterward been found. If the executor says that he did not know about the property, that might be the end of it.


Richard Burpee Hanson: The minister indicates by his statement that there is a difference between a successor and an executor. With that we all agree. The last point made by the hon. member for Parry Sound is sound, if I may say so, because they are in a different position. Why should an executor be subject to as high a penalty as a successor? I am trying to think of an estate where an executor might be, we will say, a stranger. In good faith he gets all the

information he can get, but something may not be brought to his attention-possibly a gift made some years earlier. It may have been forgotten. When the matter is stirred up and comes to the knowledge of the crown, information is demanded from him under the next succeeding section. It may then develop that he knew about it. I can see the distinction between the successor and the executor, but I do not think the executor should be subject to as stiff a penalty as a successor.


James Lorimer Ilsley: In the Ontario act apparently the executor and the successor are treated alike, and there is no provision requiring proof of knowledge. Further, there is no provision such as we are putting in our measure whereby he can escape. It may be that the courts themselves will say that if there is no mens rea there should be no penalty; I do not know. But apparently the draftsman of the Ontario act did not feel there was anything wrong about imposing a penalty for non-disclosure.


Arthur Graeme Slaght: Harsh provisions are found in many of the provinces.


Richard Burpee Hanson: That is true.


James Lorimer Ilsley: Certainly a harsh provision for non-disclosure by a successor is required, because he would know what property existed. And very often he does not intend to tell.


Richard Burpee Hanson: I shall not discuss the matter at greater length. I will say, however, that if we keep on with this kind of legislation we are going to drive people to dishonesty-people who do not want to be dishonest, but who are not going to be robbed, as they say, by taxing authorities. They are going to hide and to secrete. Some people will do that; of course all will not. But it is the tendency in connection with this kind of legislation; it will make people dishonest.


William Chisholm Macdonald: Reputable . executors would not do it.


Richard Burpee Hanson: Trust companies will protect their own reputations, of course. But I deprecate this type of legislation, especially as it applies against the representatives of a testator. If a successor is a blood successor he has more knowledge, of course. But I am not going to defend his position. In any case the minister might consider the possibility of giving the court some leeway so that it need not exact the full penalty.


James Lorimer Ilsley: The word "or" in line 31 should be "to." It is only a clerical error, and I would ask that the change be made.

Succession Duty Act


Harry Rutherford Jackman: What is the amount of diligence required by an executor tracing the assets of an estate? There may be cases where executors are appointed because they do not know a great deal about the history of the affairs of the deceased. This section would seem to leave in the air just the degree of diligence required by an executor. If an asset is found after the estate has been closed, it may be that a court would say, "You did not inquire as fully as you should into the affairs of the estate." In that case he would be liable to penalty.


James Lorimer Ilsley: No, in such circumstances
he would not necessarily be liable. He is not liable to penalty unless his omission to disclose was intentional. If it was due merely to negligence, he is not liable.


Richard Burpee Hanson: I have in mind a case in which I was an executor. In that estate I found a stock certificate for so many shares in a certain company. To my horror, within a month I discovered another certificate for shares in the same company, and this happened after I had settled the duties with the Quebec government. I assure hon. members that I was diligent in bringing the matter to the attention of the authorities and filing a supplementary return, because I was afraid of what might happen.
It would seem, therefore, that an executor has to be alert. That, I believe, is the answer to my colleague's question.


[Stage Direction]
Section agreed to.
On section 17-Demand for information.
William Ross Macdonald: It seems to me the provision of this section is quite arbitrary, as indeed are the provisions of some other sections. It provides for the mailing of notice by registered mail, and for taking proceedings on affidavit of the commissioner that the notice was mailed. If I may again anticipate, the last line of section 19 provides for the mailing of the demand by registered letter. In no case is it necessary to show receipt of the notice by the person against whom action should be taken. It seems to me that no action should be taken against anyone under this measure unless the commissioner can establish not only that the notice was sent by registered letter but also that it was received by the person against whom action was taken.


Richard Burpee Hanson: The hon. member is arguing for actual notice as opposed to constructive notice?


William Ross Macdonald: Yes.


James Lorimer Ilsley: This provision is taken from the Income War Tax Act. There has never been any difficulty in connection with it. Theoretically a commissioner or some other officer of the Department of National Revenue might make an affidavit that it was sent by registered mail, and he might not verify its receipt. But practically that would never happen. The reason it is sent by registered mail is that the person to whom it is sent may sign for it.


Richard Burpee Hanson: Not necessarily; it might be a clerk.


Mr. CASGRAIN:: I think there is a provision in the post office regulations under which when a fee of fifteen or twenty cents is paid the letter is delivered and a receipt obtained, signed by the person who receives the letter.


Mr. CASSELMAN:: But you still do not get the signature.


Pierre-François Casgrain: The post office obtains
it when this fee is paid. Once I had a case in court which my client lost because he could not prove that a letter had been received. The post office is authorized to issue such special receipts.


Douglas King Hazen: Perhaps the words "with an official receipt" could be added after the words "registered letter" in line 44.


Richard Burpee Hanson: This is
the practice followed by the income tax division. Perhaps the minister could tell us if any injustices have occurred by the use of this method of notification. The experience of that division would be the answer. There is no doubt that this is only constructive notice; before any penalty could be incurred a man would have to receive an actual notice.


James Lorimer Ilsley: This is the section that has been in use since 1917 in the income tax legislation. The commissioner tells me that when he goes into court he produces the signature of the person to whom the notice is sent. I do not know whether it is necessary or not.


Richard Burpee Hanson: I do not think it is of great importance.


[Stage Direction]
Section agreed to.
Section 18 agreed to.
On section 19-Production of documents.
Richard Burpee Hanson: Is this
the first section in which provision is made for production on oath?


James Lorimer Ilsley: Yes.
Succession Duty Act


Richard Burpee Hanson: The statements may be required to be given under oath?


James Lorimer Ilsley: That is correct.


Richard Burpee Hanson: I think that is a much better practice than obtains in the provinces. I ask hon. members to take a succession duty affidavit of value and note what executors must swear to; they must swear not only to facts, but to legal statements. I always thought that some of the forms were quite improper, that they went too far. Here if a man makes a wrong statement, he does so at his peril, but he is not committing perjury.


William Ross Macdonald: Is there an affidavit on the original statement filed?


James Lorimer Ilsley: No.


[Stage Direction]
Section agreed to.
On section 20-Inquiry as to property.
Richard Burpee Hanson: This section has given me some cause for thought. It reads:
Any officer of the Department of National Revenue or any other person authorized thereto by the minister may make such inquiry as such officer or person may deem necessary for ascertaining the property included in a succession, and for the purposes of such inquiry such officer or person shall have all the powers and authority of a commissioner appointed under Part I of the Inquiries Act.
I do not know enough about the other taxing statutes of the crown to say whether this is the universal practice. I would direct the attention of hon. gentlemen to sections 2, 3, 4 and 5 of the Inquiries Act, which is chapter 99 of the revised statutes of Canada, 1927. These sections provide for wide powers to be given to anyone in the department. To take an extreme case, it might be an office boy, but I do not think for one minute the. commissioner or the minister would do that. However, I think this section is too wide open. Someone ought to be designated; the section should be limited to senior officials of the department or to some judicial officer. The Inquiries Act provides that a commissioner acting thereunder shall have the power of summoning before him any witnesses, and of requiring them to give evidence under oath, or on solemn affirmation, and orally or in writing, and to produce such documents and things as may be deemed requisite to the full investigation of the matters into which he is appointed to examine. Then in addition to that the officer of the department would be in the position of a prosecutor and, it may be, of a judge. I should like to see this section 
more limited in scope as to those who may be appointed. I admit that the minister must have some power of investigation under oath, but I do not think it should be left as wide open as this.


James Lorimer Ilsley: The minister must take some responsibility. I have signed appointments of lawyers and others under the Income War Tax Act, and I always looked into their qualifications carefully because I wanted them to have sufficient ability and standing in the community to command respect in carrying out the investigations. Those are the considerations that guide the ministers. They sign the appointments of the persons whom they want to make the investigations, and very often they want a barrister or a solicitor.


Richard Burpee Hanson: Somebody with experience.


James Lorimer Ilsley: These investigations are
sometimes difficult to conduct. This is the income tax provision.


Richard Burpee Hanson: I agree with what the minister has said as to the practice in the past, with one exception. When you appoint a man because of his political partisanship you appoint the type of man who will get his man.


An hon. MEMBER:: Not this government.


Richard Burpee Hanson: I am not saying this government-all governments.


Paul Joseph James Martin: Not this government.


Richard Burpee Hanson: I could tell of some raw deals which have been perpetrated by this government.


Arthur Graeme Slaght: The practice in Ontario is generally to appoint an accountant, sometimes an employee of the succession duty branch, although at times outside accountants are engaged.


Frederick Clayton Casselman: Do they not usually work in pairs?


Arthur Graeme Slaght: The Ontario act contains a similar provision, to which the minister referred just a moment ago while we were discussing another section. While it does not offer a real guide, it hedges it around by providing that where the treasurer for any reason is not satisfied that he is in possession of all the facts necessary, he may appoint a commissioner to make an examination, investigation or inquiry and give directions for the purpose of obtaining information. Under that provision, frequently or at times, accountants and officials are sent into offices of bond dealers, for instance, who have nothing

Succession Duty Act
to do with the inquiry other than that they may have in past years transacted business for the deceased. I am not just sure who are the officers of this department. If they are confined to a limited number of gentlemen at the top, I do not see any danger in the provision as it stands. But if "officer of the department" is a broad term, one would think there should be the safeguard of the minister's authority in writing for appointing such an officer, who, after he is appointed, has very wide powers of going into a complete stranger's office and demanding to see every note in his books extending back over the years. There should be the safeguard of the sanctity of appointment by the minister, just as an officer executing a search warrant under the code must have his appointment over the signature of a justice of the peace or a magistrate.


Richard Burpee Hanson: I have
had sent down from my office a copy of the Income War Tax Act consolidation of September, 1940, and this section is comparable with section 45 of the Income War Tax Act as it now stands, which provides not that any officer of the Department of National Revenue or other person authorized by the minister shall make such inquiry, but "any officer authorized thereto by the minister." That is limited to a direct authorization by the minister in a given case, but section 20 of this bill is a blanket provision.


James Lorimer Ilsley: That was not intended. It
is intended that the minister's authorization shall apply in both cases.


Richard Burpee Hanson: That is
not what the section says. Section 20 says distinctly: "Any officer of the Department of National Revenue"-and it gives an alternative-"or any other person authorized thereto by the minister may make such inquiry." Leave the alternative out. The provision in the Income War Tax Act is much better. It reads: "any officer authorized thereto by the minister." In each case the minister is to designate the officer, but the way section 20 is drafted that is not the situation. I submit that with confidence to the minister.


James Lorimer Ilsley: It is intended to be the
way the hon. gentleman wants it.


Richard Burpee Hanson: Then let
us make it that way. It will be an improvement. It will then read:
Any officer of the Department of National Revenue authorized thereto by the minister or any other person authorized thereto by the minister. . . .


James Lorimer Ilsley: It is suggested that we strike out the words "officer of the Department of National Revenue."


Arthur Graeme Slaght: I think it is better to leave that in, if it is hedged around with written authority to the officer from the minister. The department has accountants, and in practice they would be the best men to do this work.


Richard Burpee Hanson: In every
case there should be authorization by the minister. Perhaps the section had better stand and be redrafted by the officials.


James Lorimer Ilsley: I think we can fix it now.
The changes required are very simple. I would ask my colleague to move:
That section 20 be amended by striking out in line 26 the words "officer of the Department of National Revenue or any other," and inserting the words "in writing" after the word "minister" in line 27, deleting the words "officer of" in line 28 and again in lines 30 and 31.


Pierre-François Casgrain: I move accordingly,
Mr. Chairman.


Thomas Vien: The section as proposed to be amended will then read:
Any person authorized thereto by the minister in writing may make such inquiry as such person may deem necessary for ascertaining the property included in a succession, and for the purposes of such inquiry such person shall have all the powers and authority of a commissioner appointed under part I of the Inquiries Act.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 21 agreed to.
On section 22 - Assessment and notice thereof.
Richard Burpee Hanson: This is the practice of the income tax office?


James Lorimer Ilsley: Yes.


[Stage Direction]
Section agreed to.
On section 23-Continuation of liability to duty.
Richard Burpee Hanson: There does not seem to be any suggestion of finality in connection with any assessment. I do not like to go into what we all know about the history of these matters in certain of the provinces-


Arthur Graeme Slaght: Pretty healthy, some of
them.


Richard Burpee Hanson: They seem to be quite active to-day and yesterday. Apparently this section proceeds on the theory
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that the principle of estoppel does not operate against the crown. There ought to be some finality about these matters. It is false doctrine that the principle of estoppel does not operate against the crown. That doctrine goes back to the days of the divine right of kings and the theory that the king can do no wrong. We know now that the king, the crown, the government, operate through individuals, and the crown should be bound by the acts of its individual servants. I should like to see some limitation put on this section. As it stands now, it is capable of great abuse, not at the hands of the present minister or the commissioner-I make that plural-but without just saying it in so many words this is a terrible power to give to officialdom, bureaucracy, if they want to use it. Surely there should be some limitation of time. That is the only suggestion I make with regard to this section, that an estate shall not be opened after a certain period of time, that the doctrine of estoppel should apply against the crown. That, in brief, is my submission on this section.


James Lorimer Ilsley: I do not think this is a question of estoppel. The reason why the crown want the power to reassess is that they may get more information, information that was kept from them.


Richard Burpee Hanson: I agree
that they should have that, but this is unlimited. It says, "may at any time."


James Lorimer Ilsley: Those are the income tax sections. That point has, I know, been raised by taxpayers; it has annoyed income tax payers very much that the crown got wind, a good many years afterwards, of some income, which they had not said anything about, and went back at them for it. I myself, however, do not have very much sympathy with them.
I think they should have said something about it.


Richard Burpee Hanson: That is a case of fraud.


Colin William George Gibson: Or accident.


Richard Burpee Hanson: I suggest that fraud vitiates everything.


Colin William George Gibson: It might be accident.


Richard Burpee Hanson: Yes; but that is not fraud. If it occurs through inadvertence, that is another matter. I agree with the minister that in cases of fraud the matter Should be reopened. Fraud should vitiate everything; it does, in law; and I would not ask protection for anybody in cases of that kind. If, however, as the Minister of National Revenue suggests, the matter is one 
of inadvertence, arising after a period of years, when all the estate has been distributed, and perhaps redistributed-such things have happened1-a grave case of hardship is created. My suggestion is that the minister put in a limitation of time, except for fraud. To my mind that is fair as between the crown and the taxpayer. Make the time ten years, if you want to, or five years; I do not know which should be adopted. But I do not like this wide open provision, because I understand it has been subject to great abuse.


Mr. ROSS (Calgary East):: Suppose that some years later property turns up about which the executor or administrator knew nothing.


Richard Burpee Hanson: He should report it, of course, and he will, in the case of a trust company.


George Henry Ross: Not if the estate is closed.


James Lorimer Ilsley: But a limitation would prevent it from being dutiable.


Richard Burpee Hanson: Well, say six years. We bar common law debts after six years. It is not a violation of any principle to bar a debt. We have had statutes of limitation for years and years. Men of honourable character do not take advantage of the statute of limitations. I recall, however, that in defending a case against the crown in the exchequer court, I raised the statute of limitations-twenty years in the case of real property-and when counsel for the plaintiff attacked me for doing so, the judge on the bench upheld me and said that the crown did it regularly. I did not know that at the time, but it was a defence open to me, and I took it. I do not see why the same provision should not apply here. I am not, however, going to labour the point.


Arthur Graeme Slaght: My suggestion is along similar lines, that 'beyond ten years there should be discharge in full of an estate except for fraud. I suggest that the minister might consider inserting at line 8, on page 13 of the bill, after the words "may at any time", the words, "within ten years, if in his opinion any fraud has previously prevailed", assess, re-assess, and so forth. That would give a ten-year limitation and would confine opening up to a case of fraud. It would not, of course, cover cases of accident which, one could conceive, might happen.


George Stanley White: Later in the bill, section 35 provides for a certificate of discharge; it states that if the certificate is given, the person named therein is not liable for any further duty. Under section 23, are we to

Succession Duty Act
understand that, after such certificate has been given, the dominion succession duty department will still have power to re-assess and levy further duty?


Arthur Graeme Slaght: That is the way it worked out in Ontario.


George Stanley White: That is exactly the point I was going to bring up next.


Arthur Graeme Slaght: The section meant nothing, and a similar provision for opening up was invoked.


James Lorimer Ilsley: I do not know what section 35 does. It states that there' is no discharge if there is fraud, but I do not think there is any discharge any.way.


Richard Burpee Hanson: Is there
no finality?


Paul Joseph James Martin: To what section is the hon. member referring?


Richard Burpee Hanson: Section 35. That refers to the certificate of discharge.


George Stanley White: The executor must be released in some way, because he would not be able to distribute the estate until he was satisfied that he had made final settlement with the succession duty office.


Richard Burpee Hanson: This provides that . there shall be no discharge if there has been fraud.


Arthur Graeme Slaght: I think sections 35 and 23 need some adjustment.


Richard Burpee Hanson: So do I.


James Lorimer Ilsley: In my opinion the meaning of section 35 is this, that the certificate of discharge acts as a discharge except in the case of fraud or failure to disclose material facts.


Richard Burpee Hanson: Then, does the minister suggest that section 35 would override section 23, as being a subsequent section? That is quite a nice point of interpretation.


Arthur Graeme Slaght: That difficulty would be
removed by the insertion, at the beginning of section 23, of the words, "subject to the provisions of section 35."


Richard Burpee Hanson: Yes. These are very nice questions, and they should be settled.


James Lorimer Ilsley: Well, "subject to the provisions of section 35" could be inserted at the beginning of section 23.


Pierre-François Casgrain: I move accordingly.


Richard Burpee Hanson: Would
that cover the point we raised about finality?


James Lorimer Ilsley: It does not relieve in cases of failure to disclose, or fraud; the estate can be reopened at any time before or after a ten-year period, and I think that is the way it ought to be. I do not agree that one can fix a definite period.


Richard Burpee Hanson: The only thing that might reopen it would be a question of valuations of disclosed assets. Assume, for instance, that the value of the stock of a company not listed, owned by an estate, was fixed and agreed upon between the department and the representatives of the estate, and that, after duty had been paid, somebody came along and said, "Oh, that stock is worth a great deal more than that". Such things have happened. Let us say that some enemy of the testator wrote making the allegation that the shares were worth, not the stated valuation but a much higher valuation; then the department starts an investigation, and, upon a preconceived theory that there has been an undervaluation, it says, "We want thus much money from you."
That is what is happening in Ontario. That has happened here in Ottawa, without any real justification. Shares in what is commonly known as a family company-not technically a family company-have in many respects no market value; there is no market for them. They have intrinsic value, but no, market value. Who wants to buy in a minority interest in a family company of which he has no control, no say in the management, no possibility of electing a director? Yet the intrinsic value of the shares might be high. There is a marked distinction between market value and intrinsic value in respect of that kind of property. I have seen it happen that a man bought a minority interest in a company in the expectation that, having put his money in, he would get employment in the company and eventually succeed to the ownership, but subsequently he was squeezed out by the majority holder and just could not sell his shares at all. I remember a case in my own practice. The intrinsic value was there, but he could not sell to anyone except the majority holder, who gave him what he pleased for it. That is what may happen here.
I do not know how the minister is going to deal with it; I hope he will view it with decent leniency, that is all.


James Lorimer Ilsley: There are fairly liberal provisions for appeal on the question of value.


Richard Burpee Hanson: Oh, yes, but appeal is always costly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Succession Duty Act
[Stage Direction]
On section 24-When duties payable.
Richard Burpee Hanson: The period of time is the same as for the filing of a statement. In other words, the duty is to be paid at the same time as the statement is filed; is that the procedure?


James Lorimer Ilsley: That is right.


Richard Burpee Hanson: I would suggest that it should be payable within thirty days after the assessment. That would be fair. Then a person has six months to get ready to file his assessment. The assessment should be made with reasonable promptness; within thirty days after that the bill would be payable, and if it is not paid within thirty days, interest accrues. That would be a decent thing for the taxpayer, especially if he has to liquidate. The minister should give consideration to that suggestion. It is a little change, a little concession to the taxpayer, and not much loss to the government.


George Henry Ross: He gets six months without interest.


Richard Burpee Hanson: It takes six months to get liquidated.


James Lorimer Ilsley: In most provinces, if the duty is not paid within six months I think it bears interest from the date of decease.


Richard Burpee Hanson: Well,
thanks for that much.


James Lorimer Ilsley: If we made it payable after assessment, there might be cases in which delay in assessment would be inevitable for a year or two.


Richard Burpee Hanson: If the assessment cannot be arrived at, the debt is not adjusted. It is not a liquidated amount. Why should it begin to bear interest? If I have an open account with someone, in common law it does not bear interest unless and until there has been a settlement and account stated. Then, in some jurisdictions it begins to bear interest. This is a departure from the ordinary common-law principle. It is a taxation measure and is all in favour of the crown. I suggest that there would be no harm to the treasury if a little more consideration were given to the taxpayer. I have not heard any hon. member opposite speaking in favour of the taxpayer, except the hon. member for Parry Sound, and now he has deserted.


James Lorimer Ilsley: My complaint about the
opposition is that I never hear anyone speaking for the taxpayer.


Richard Burpee Hanson: Then
indeed I have failed in my function.


James Lorimer Ilsley: I mean the taxpayers generally.


Richard Burpee Hanson: I do not
apprehend.


James Lorimer Ilsley: I refer to the crown. We are talking as if the crown here were some enemy of mankind. The crown is the taxpayers, the people of Canada.	.


Richard Burpee Hanson: That is
the theory.


Mr. McCUAIG:: The practice in Ontario usually is that the executor makes a deposit with the succession duty department, and I presume the same practice will be carried out with respect to this legislation. If the assessment is not completed until after six months, no interest would be chargeable because the department would have the deposit of the executor.


William Ross Macdonald: In fact, the province of Ontario go further; they allow interest on the money deposited up to the time the duty is payable.


Frederick Clayton Casselman: In many instances it will be found that an estate is not in possession of liquid funds with which to pay the money; it may have no bonds that it can dispose of. One difficulty under this section is that if the taxing authority delays the settlement for a period of six months and if the money has not been paid in but a bond given to secure it, then the taxpayer is forced to pay interest because of the action of the government. Therefore, if there could be in this section something to the effect, "within six months or within a period of one or two months after the settlement has been arrived at by the government," I do not think there would be any hardship one way or the other.


James Lorimer Ilsley: It would never do. Take income tax. I keep thinking about that because I have had experience with it. If we had a provision that interest did not run until the tax was assessed by the department, why should anyone pay any income tax by April 30? They have to make a stab at it themselves, estimate their tax and pay it; otherwise we could not get money in, could not carry on the services of the country. We count on a very large sum of money coming in around April 30.


Richard Burpee Hanson: The two cases are not quite analogous.

Succession Duty Act


James Lorimer Ilsley: Yes; it is the same principle exactly. There is no hardship on the taxpayer; he knows pretty nearly what the succession duty is, and he can pay within six months and stop interest. Then, if he is assessed for more, and that assessment comes along a year later, he pays interest, I assume, on the balance, and if it is less, he gets a return. I am sure that is the only way the matter could be administered. It would not do to make the interest run only from the date of assessment, which might in cases of difficulty be long delayed.


Mr. BOUCHER:: The minister does not
quite appreciate the difference between the two positions. In the case of income tax the department has no knowledge on which to estimate -what the tax would be. In the case of an estate, however, there is a penalty if the information is not given to the department. They have the information; they may delay a considerable length of time before they actually assess and, after they assess, there may be considerable delay on the part of those who have to pay, in getting the available funds. The department could delay for two or three or five or six months in assessing the tax chargeable and then turn round and charge interest, which is really a penalty on the taxpayer for the department's own fault. That is the case exactly.


Colin William George Gibson: If the succession duty is not paid at the end of six months, the person who should have paid the duty at that time may be presumed to be receiving interest on that amount of money, and therefore the income he receives from it offsets the interest he would be paying to the government.


Richard Burpee Hanson: That
might be so in a given case, but the two positions are not analogous. Income tax is paid annually. This is one payment, once and for all; you do not get any more out of that estate. There will be delay in the initial stages in getting any revenue from this source; there will be delay at the start until the revenue begins to accrue. If you give a little more leeway with regard to payment after the first six months, when that period is exhausted the thing begins to roll automatically. The minister's distinction does not carry any conviction with me, except for a limited period of time in the initial stages of the development and collection of this tax.


William Chisholm Macdonald: I suggest
that if the crown has to wait for payment of the succession duty until an estate is settled, in many cases that duty will never be paid. I know that in my own province an executor may close an estate within six months,
but he is not compelled to do so. The result is that many estates, and particularly small estates, are never formally closed in the probate court. We might say six months or even eight or nine months, but there must be some definite time fixed, and in the circumstances six months seems quite a reasonable time. I do not see any particular objection to this provision.


[Stage Direction]
Section agreed to.
Section 25 agreed to.
On section 26-Security.
Richard Burpee Hanson: Is this
going to be limited to security provided by a guarantee company or a bank, or will personal security be accepted? Let us have a declaration as to that.


William Ross Macdonald: The practice in some provinces is to deposit with the department such security as bonds and so forth.


James Lorimer Ilsley: It may be any security satisfactory to the minister. I cannot make it any more definite than that.


[Stage Direction]
Section agreed to.
Section 27 agreed to.
On section 28-Interests in expectancy.
Richard Burpee Hanson: Is this
the standard system of computing these interests? Is this the British practice, the Ontario practice, or what is it?


James Lorimer Ilsley: This is the standard system
followed in all the provinces.


[Stage Direction]
Section agreed to.
Sections 29, 30 and 31 agreed to.
On section 32-Composition.
Richard Burpee Hanson: This gives the minister the right of composition?


James Lorimer Ilsley: Yes.


[Stage Direction]
Section agreed to.
Sections 33 and 34 agreed to.
On section 35-Certificate of discharge.
Richard Burpee Hanson: What will be the practice with respect to waivers? When an executor takes charge of an estate he looks to the most liquid assets with which to discharge the immediate obligations, which in the first place are the funeral and testamentary expenses and thereafter provision for the maintenance of the widow, if that is pressing. But one of the most important things about which he has to think is the succession duty. In some jurisdictions the executor is entitled
Succession Duty Act

to access to the safety deposit vault of a testator, to be opened under the eye of the manager of the bank or trust company, usually; and in some jurisdictions this is done in the presence of a representative of the treasury. The executor is not allowed to take out anything, as I understand the practice, except the will and, in some instances, the life insurance policies. I think it is absolutely necessary that he should have the right to do that.
What I am coming to is this. Before he can liquidate sufficient assets to take care of these pressing charges, he must have a waiver from the department. In many instances this must be obtained even before the insurance companies will pay the life insurance. What provision is there in the statute-I do not know where else I could ask for it-to take care of that situation; and1 what process will an executor have to go through in order to expedite the business that I have attempted to indicate will be necessary to be transacted in order to get in this money? In practice, will provision be made for the delivery to executors, before duties are paid1 or security is given, of waivers in respect of particular rights intended to be liquidated? That is important in actual practice, as any solicitor will advise the minister.


James Lorimer Ilsley: Sections 49 and 60 provide for consent in writing by the minister or his representative.


Richard Burpee Hanson: Then the situation I have attempted to visualize will be taken care of in succeeding sections?


James Lorimer Ilsley: Yes.


Harry Rutherford Jackman: In reference to section 34, just how is the minister going to determine what rate of interest should be allowed in the calculation of the present value of the annuities, incomes and so forth? It makes a great difference what will be the base rate, or what will be the principles determining the amount to be taxed.


James Lorimer Ilsley: I assume the commissioner would take the advice of the superintendent of insurance, and apply the prevailing rate.


[Stage Direction]
Section agreed to.
Section 36 agreed to.
On section 37-Decision of minister to affirm or amend.
Paul Joseph James Martin: Is there any provision in the bill for overpayments or mistaken payments?


James Lorimer Ilsley: Yes; subsection 4 of
section 35.


Richard Burpee Hanson: Will the minister give us some assurance that these appeals will be considered personally, or will it be a matter of departmental routine as under the identical section of the income tax act? I understand the commissioner, under authority delegated to him by the minister, determines the appeal. I may be quite wrong in that. But does the minister have anything personally to do with it? When a power of this kind is specifically delegated to the minister, I suggest that he is under obligation to exercise it himself. What is the custom in the department in respect of the income tax act, and what would be the practice under this measure? Will the minister himself review the assessments, or will he leave it to the officials who have already made the assessments to review their own assessments? In these last few words I have indicated the weakness of the present position, if, indeed, that is the position.


James Lorimer Ilsley: That is about the position.


Richard Burpee Hanson: That is no review at all, is it?


James Lorimer Ilsley: Well, it may be.


Richard Burpee Hanson: It is like it used to be when we went to a judge under the old practice obtaining in the county courts of New Brunswick. In those days a trial would be held before a judge, and1 then one might have to move for a new trial on a point of misdirection. He would have to go to the same judge, sitting as a judge in banco on his own direction to the jury. We used to have that condition in New Brunswick. I remember only once in my experience when I persuaded a judge to agree that his charge was bad.


Frederick Clayton Casselman: He must have forgotten it.


Richard Burpee Hanson: I had such a case, and the judge directed a new trial. I agree that possibly the commissioner-and I say this with great respect, applying it not only to the present minister but to his predecessors-knows possibly more about the matter than does the minister. He will not be offended by that statement, because there is nothing personal about it. We are, however, now discussing a provision in the measure which the minister admits is null and void. It might as well be cut out first as last. Is there any merit in it, if it is not carried into effect?


George Henry Ross: In the income tax act there is an express provision that matters referred to the minister such as those to which the leader of the opposition has been

Succession Duty Act
referring, shall be dealt with by the commissioner. Is there a similar provision in this measure?


James Lorimer Ilsley: Section 58 (d) states that the minister may make regulations,-
(d) authorizing the commissioner to exercise such of the powers conferred by this act as may in the opinion of the minister be conveniently exercised by the commissioner.
I suppose that covers it.


George Henry Ross: Probably it
does.


James Lorimer Ilsley: It is physically impossible for the minister to consider personally the appeals which come to the income tax branch.


Richard Burpee Hanson: Because it is getting so big?	.


James Lorimer Ilsley: Yes. I might say that I
signed them. I insisted upon having them sent to me, and I signed them.


Richard Burpee Hanson: Did the minister look at them?


James Lorimer Ilsley: I tried to, but if I was
extremely busy I saved them up, and kept in touch with them. That is about the best I could do. I left it pretty largely to the commissioner and his officers.


Richard Burpee Hanson: Maybe it works out all right.


Colin William George Gibson: It is not a ease of a man reviewing his own findings, in view of the fact that we have various officers throughout the countiy. These assessors will make the local findings. If an appeal is lodged, it will come to the head office, and be reviewed by the commissioner.


Richard Burpee Hanson: What is the modus operandi under the income tax act? You make up three copies of your report, and send in two. One of them, as I understand it, is retained by the local office, and the other comes to Ottawa. Is the assessment made up in the local office or in Ottawa? Or is it made up in the local office, and then checked and confirmed in Ottawa?


James Lorimer Ilsley: It is made up in the local office and approved in Ottawa.


Richard Burpee Hanson: Under this provision, then, the assessment will be made up in the local office and approved at head office by the commissioner of income tax, or one of his officers?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Then this review will come before head office?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: That is illuminating at all events. The system is better than I thought it was.


[Stage Direction]
Section agreed to.
Section 38 agreed to.
On section 39-Security.
Paul Joseph James Martin: Section 39 (1) is surely open to objection. Many of us quarrel with the preferred position given to the crown in litigation. Here is a position where an appeal is launched, and instead of the court determining the amount of security for costs, that is left theoretically to one of the interested parties, namely, the crown in the name of the minister. I say that is wrong. The section reads:
The party appealing shall thereupon give security for the costs of the appeal to the satisfaction of the minister in a sum of not less than $400.
I say that it should be a sum which, in the event of a dispute, is determined by a judge in chambers. But to leave the determination to one of the contestants in the litigation- because, after all, that is what the minister is-is, to say the least, carrying this principle too far.


Richard Burpee Hanson: The hon. member has a point.


James Lorimer Ilsley: The question is as to the amount.


Paul Joseph James Martin: No; it is as to whether the minister should have anything to say about it.


Richard Burpee Hanson: This is a minimum amount fixed.


Paul Joseph James Martin: My objection is not so much as to the amount. I say that the minister should have no right whatsoever to determine in litigation against the crown the security for costs which an appellant should put up. I say, further, that the minister is an interested party, and that the matter should be left to the court, and not to the minister at all.


Richard Burpee Hanson: There is no doubt about the soundness of that.


William Chisholm Macdonald: Except that it would be easier for a litigant to go to the minister than to the court. The section could provide that $400 in cash be provided as security. But to ask anyone appealing from an assessment to make application to a judge of the exchequer court is putting him to about five times as much trouble and expense as would be involved in writing a letter to the Minister of National Revenue.
Succession Duly Act


Richard Burpee Hanson: A principle is involved here, and the hon. member for Essex East has stated it clearly. There is no answer to his point. This is wrong, and it will not be found in any other jurisdiction. We do not find another instance where the opponent fixes the amount of security. Surely that is not proper, and the point is certainly unanswerable.


Mr. GRAHAM:: I agree that in the whole of the provisions of this revenue-producing legislation there is embodied the principle of which complaint has been made. I believe, however, it has been recognized that in relation to the provisions of this particular type of measure, as they are found in other acts, we are arguing about only a single point in a great number. As a lawyer I should like to see reasonable access to the courts which can best discharge the judicial functions cast upon them, but I long since have given up any hope of that being a feature of a revenue-producing measure. I think we cannot complain of this one instance, if it carries out the principle recognized in the measure.


Paul Joseph James Martin: I am sorry the hon. member has taken that position, because with the greatest respect to him I say it is a weak position.


Richard Burpee Hanson: It is a
defeatist position.


Paul Joseph James Martin: Any lawyer who has had anything to do with the Department of National Revenue-I am not speaking now of any particular minister-knows that he constantly runs up against situations which are so repugnant to our conception of the rule of law that he realizes it is about time someone spoke out openly on this subject. I have in mind a situation which I do not think can be defended upon moral or any other grounds. The Chairman may call me to order, but I should like to mention it because it is brought to my mind by this section. This case involved hundreds of thousands of dollars, and the amount which it was alleged should be paid was paid under protest with the assurance from the then minister that if it should be regarded subsequently as not having been legally due, it would be refunded. Litigation ensued later between other parties, and the privy council held on the very same point that the tax was not due. The crown did not restore that money; the minister's undertaking was never carried out because the court held that the minister speaking for himself could not bind the crown in the absence of an order in council. I know of no principle of justice by which that contention can be supported in any way. Our hon.

friends in the corner opposite are for this legislation, and I should like to see them take part in a discussion on these important sections. They are strong for the rule of law; they are strong for the due process of law and all that sort of thing, but here is an opportunity to defend a real principle.


Mr. MacINNIS:: I think we can very well leave that to hon. friends opposite. It is about time that they defended something, but it is peculiar that they should be defending capitalistic interests, as always.


Paul Joseph James Martin: I was not defending any capitalistic interest.


[Stage Direction]
Section agreed to.
Sections 40 to 43 inclusive agreed to.
On section 44-Exclusive jurisdiction of exchequer court.
Richard Burpee Hanson: Is it quite clear that there is an appeal to the Supreme Court of Canada from the exchequer court as a matter of right? What is the legal position? Let us have it on the record that there is a right of appeal.


George Henry Ross: Does the
Supreme Court of Canada Act not cover that?


Richard Burpee Hanson: I should
like the minister to say whether there is or is not a right of appeal. My own view is that there is.


James Lorimer Ilsley: I always understood that there was. It is just a question of law.


Richard Burpee Hanson: I have been asked to find out about it.


[Stage Direction]
Section agreed to.
Sections 45 to 48 inclusive agreed to.
On section 49-Transfer of property without consent of minister prohibited.
Duncan Fletcher McCuaig: The leader of the opposition referred to the rule which governs in his province, that nothing shall be taken out of a safety deposit box except the will. I can find nothing in this bill which would permit an executor to take a will from a safety deposit box. In many instances the heirs are leaving for other parts immediately after the funeral, and they are anxious to know what provisions are contained in the will. If there is no provision to permit the safety deposit box to be opened and the will produced, there is likely to be some delay. It may even be that the executor or the executors are at the funeral, and they might have to return afterward.


James Lorimer Ilsley: I think it should be provided for.

Succession Duty Act


Richard Burpee Hanson: A will is not property; it is not money.


Duncan Fletcher McCuaig: Subsection 2 of section 50 states that the box must not be opened until notice is given to the minister.


Richard Burpee Hanson: That
would be an impossible provision.


[Stage Direction]
Section agreed to.
On section 50-Safety deposit box not to be opened or removed.
Richard Burpee Hanson: This
creates a most difficult position. How can this section be operated in conjunction with the provisions of the provincial acts? I suggest to the minister that there will be a real difficulty about this. A man may be complying with the provisions of this law and contravening the provincial law. I am not familiar with the operations in Ontario, but I can see trouble ahead. There would not be any trouble in my own province because it is smaller and everything works quite harmoniously; they are all honest people there.


Duncan Fletcher McCuaig: My question has not been answered yet.


James Lorimer Ilsley: I intimated that the hon. gentleman had made a reasonable suggestion, that it ought to be provided for if it was not. I have been looking at section 50 ever since to see if the executor could not obtain the will from the safety deposit box without giving this ten days' notice. I am afraid he cannot, and we shall have to have an amendment.


Richard Burpee Hanson: I think he should be able to get the will immediately.


James Lorimer Ilsley: I think the intention of the section was to provide for a ten days' notice in connection with procuring valuables. I have an amendment to propose to section 50 and then I will propose an amendment to cover the point raised by my hon. friend. It is proposed to amend section 50, subsections 1 and 2 by inserting before the word "safety" in line 37 the following words "safe, compartment of a safe, vault, or" and by deleting the words "such safety deposit box" where they occur in the 38th line and the words "a safety deposit box" where they occur in the 43rd and 44th lines and inserting the words "such depository" and by deleting the words "safety deposit box" where they occur in the 2nd line of subsection 2 and inserting the word "depository".


Colin William George Gibson: I move accordingly, Mr. Chairman.


Richard Burpee Hanson: What is the effect of that?
Mr.'ILSLEY: The effect is to extend the class of depositories from safety deposit box to include safe, compartment of a safe and vault.


Thomas Vien: I will read the section as proposed to be amended:
50. (1) Unless the consent thereto in writing of the minister or his representative is obtained, no person shall,-
(a)	permit the opening of any safe, compartment of a safe, vault or safety deposit box or the removal thereof where such depository contains any negotiable instrument, certificates representing indebtedness under bond or otherwise or representing any holdings of stock, muniment of title, insurance policy or any other property belonging to a deceased person, or permit the withdrawal from such depository of any thing mentioned in this clause; or
(b)	deliver up or part with the possession of any property belonging to a deceased person which is at the time of the death of that person held by him for safe keeping.
(2) Notice in writing of the intention to open up any such depository or to withdraw anything therefrom or to deliver up or part with the possession of any property held for safe keeping as aforesaid shall be served on the minister or his representative at least ten days, or other period to which the minister may agree, before such opening, withdrawal, delivery or parting with possession is to take place, and the minister or his representative may attend at the time and place aforesaid and there give a consent in writing thereto, and he may examine the contents thereof, or the minister may give such consent without so attending and examining as herein provided.


Roy Theodore Graham: May I ask the meaning of the words "in writing thereto," referring to the minister or his representative?


James Lorimer Ilsley: It is intended to mean the employees of the income tax division who will be in charge of the administration of succession duties. It is really intended to mean the inspector of income tax, but it is not quite limited to him.


Mr. GRAYDON:: Duly authorized.


Roy Theodore Graham: I do not find it in the definition clause. Could the commissioner not be anybody nominated as such?


James Lorimer Ilsley: Oh, yes, anybody authorized.


Richard Burpee Hanson: The state would have the right to be present at the opening of the box. It would be opened at their instance, and they would have the key.


James Lorimer Ilsley: Yes.


[Stage Direction]
Amendment agreed to.
James Lorimer Ilsley: There is another amendment which I will ask my colleague to move, that subsection 3 of section 50 be amended by adding thereto the following words:
but such penalty shall not .apply when the minister is satisfied that the contravention of this section ms not wilful and occurred through ignorance of such death.
Succession Duty Act


Colin William George Gibson: I move accordingly, Mr. Chairman.


Richard Burpee Hanson: What does all that mean? It must be a conjunction of the two, lack of wilfulness and lack of knowledge of the death?


James Lorimer Ilsley: Yes. This is the same wording as used at the end of section 49; this makes the wording uniform.


Thomas Vien: The subsection as proposed to be amended will read:
Every person who fails to comply with this section shall be guilty of an offence and shall, for each offence, be liable to a penalty of one thousand dollars, and an amount not exceeding the amount of duty levied on or with respect to the properties contained in the safe, compartment of a safe or vault, or safety deposit box, opened or removed in contravention of this section, but such penalty shall not apply when the minister is satisfied that the contravention of this section was not wilful and occurred through ignorance of such death.


[Stage Direction]
Amendment agreed to.
Richard Burpee Hanson: I have not had time to study this subsection, but it appears that every person who fails to comply with this section shall be liable to a straight "penalty of one thousand dollars, and an amount not exceeding the amount of duty levied on or with respect to the properties contained in the safe." Why not say "a penalty not exceeding one thousand dollars"?


Mr. POTTIER:: That is what it means.


Richard Burpee Hanson: It does
not mean that. If any penalty is imposed, it must be one thousand dollars.


Vincent-Joseph Pottier: I do not think that is the right interpretation.


Richard Burpee Hanson: Then let us make it clear that that is not the meaning. Let us say "a penalty not exceeding one thousand dollars."


James Lorimer Ilsley: That is all right with me. I think it means that anyway.


Richard Burpee Hanson: I move
accordingly, Mr. Chairman.


Thomas Vien: It is moved to strike out the words "of one" in line 15 and to substitute therefor the words "not exceeding."


[Stage Direction]
Amendment agreed to.
James Lorimer Ilsley: To meet the point raised by the hon. gentleman who spoke about a will, perhaps it would be well to add another subsection, although I am not satisfied that it is necessary because the ten days' notice may be shortened. If the hon. gentleman will

look at subsection 2, he will see that it provides for a notice of at least ten days or other period to which the minister may agree. That enables the period to be shortened, but to make it clear I propose to amend the section by adding a subsection 4 as follows:
(4) Notwithstanding the provisions of this section the will of the deceased may at any time with the consent of the minister or his representative be removed from such depository.


George Henry Ross: Probably insurance policies should be removable too.


James Lorimer Ilsley: No; they will be dealt with along with the other valuables.


George Henry Ross: That may be a couple of weeks later, and the policies may expire in the meantime.


Richard Burpee Hanson: Why should the will not be delivered automatically without the intervention of the minister at all?


James Lorimer Ilsley: The minister must exercise control over the safety deposit box.


Richard Burpee Hanson: It should be opened only under supervision. I agree with this principle of safeguarding the taking out of bearer securities and the like of that. The will, however, should automatically come into the possession of the executor, and1 he should not have to go through too much red tape before he gets it. He may not know who the executor is until the will is opened. Usually these wills are sealed up.


Grote Stirling: They have to get the will to find out who the executor is.


Roy Theodore Graham: I agree with the leader of the opposition, because we shall find, under these circumstances, the habit growing up of never putting the will in a safety deposit box, and it is a dangerous practice to keep wills at home or in places where death and the destruction of the will might occur together. The practice in my own province is that the safety deposit box may be opened in the presence of the executor, the solicitor and the bank representative, and the will taken therefrom, and it seems to me that unless that provision is made, the invariable practice will be not to put wills in safety deposit boxes.


Richard Burpee Hanson: I will give the hon. member the remedy. Let him advise all -his clients to execute their wills in duplicate and leave one with the solicitor and file the other, in the bank. It is good practice.


Grote Stirling: In the case of the death of an individual when no one is aware who the executor is, who can take action, under this proposed1 wording? This does happen. I know of a specific case where it caused a great deal of concern.

Interim Supply


Richard Burpee Hanson: You cannot even get at the box.


James Lorimer Ilsley: It should be the person who has the key to the box, not the executor.


Richard Burpee Hanson: The will should be delivered only to the executor, not to some person who might not be interested under the will and might do away with it.


James Lorimer Ilsley: This does not say anything about the executor. It says that the will may, with the consent of the minister, be removed.


Richard Burpee Hanson: And leaves the matter open.


James Lorimer Ilsley: I should like to get interim supply through before six o'clock.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Progress reported.
[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of supply.
Motion agreed to and the house went into committee of supply, Mr. Vien in the chair.

Mr. ILSLEY moved:: 1.	Resolved,	that	a	sum	not	exceeding
$18,862,603.83, being one twelfth of the amount of each of the several items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1942, laid before the House of Commons at the present session of parliament, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1942.
2.	Resolved,	that	a	sum	not	exceeding
$595,102.58, being one-twelfth of the amount of each of the several following items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1942, laid before the House of Commons at the present session of parliament, in addition to the sum mentioned in resolution No. 1, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1942, namely:-
Votes Nos. 13, 112, 129, 130, 318, 319.
3.	Resolved, that a sum not exceeding $252,010.83, being one-sixth of the amount of each of the several following items to be voted, as set forth in the estimates for the fiscal year ending 31st March, 1942, laid before the House of Commons at the present session of parliament, in addition to the sums mentioned in resolutions Nos. 1 and 2, be granted to His Majesty, on account, for the fiscal year ending 31st March, 1942, namely:-
Votes Nos. 103, 143, 177, 178.


Mr. COLDWELL:: Of course it is quite impossible for hon. members to follow the numbers which have been read so rapidly, but
I take it that the passing of these items will not preclude discussion of any topic which one wishes to raise.


James Lorimer Ilsley: That is correct. No item is fully passed.


Richard Burpee Hanson: I understand that the motion provides for one-twelfth.


James Lorimer Ilsley: And one-sixth, in some instances.


Richard Burpee Hanson: Why are there any instances where one-twelfth will not be sufficient? Is this a request of the treasury board, or just what is the position?


James Lorimer Ilsley: I cannot tell the hon.
gentleman that.


Richard Burpee Hanson: Does the minister know what the explanation is?


James Lorimer Ilsley: I looked at six items, and all of them seemed to be items where large expenditures would be necessary in the spring.


Richard Burpee Hanson: That must be the answer. This is passed without prejudice to any discussion which may take place at a later stage.


[Stage Direction]
Motion agreed to.
Resolutions reported, read the second time and concurred in.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
James Lorimer Ilsley: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1942, the sum of $19,709,717.24 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 90, for granting to his majesty certain sums of money for the public service for the financial year ending the 31st March, 1942.
Motion agreed to, bill read the first, and second times, considered in committee, reported, read the third time and passed.
At six o'clock the house took recess.
32S2
Succession Duty Act
[Stage Direction]
After Recess
The house resumed at eight o'clock.

[Stage Direction]
The house resumed consideration in committee of Bill No. 79, to authorize the levying of duties in respect of successions-Mr. Usley -Mr. Vien in the chair.
On section 51-Penalty for failure to deliver statement.
Richard Burpee Hanson: I am not very familiar with the provisions of the other statutes in this respect. Are these penalties in line with those in other acts? I notice that under subsection 1 the penalty is S10 for each day of default, with a maximum of $1,000, while in subsection 2 the penalty for failure to complete the forms is $10 where the value of the property does not exceed $50,000, and $100 where the value is greater than $50,000. Ten dollars a day seems quite stiff. Is that the usual penalty?


James Lorimer Ilsley: I believe so.


[Stage Direction]
Section agreed to.
Section 52 agreed to.
On section 53-False statements.
Mr. NEILL:: This seems to be a very severe penalty for what might be a most innocent mistake. These statements have to do with the property left, and so forth, under section 15; a full, itemized inventory of all the property is required, together with the fair market value thereof. How easily one might make a .statement not in strict accordance with the truth. How is the market value determined? One man may take the market value from the Financial Post; another may get his value somewhere else, and it would be very easy to make what might be technically a false statement. If that happens, the person is liable to a fine of $10,000 or imprisonment for six months, or to both. Within the last two years I had occasion to deal with a matter of this kind, and I know that with the very best intentions I made a statement in reference to the inventory which was not in accordance with the facts. I would suggest that the word "wilfully" be inserted.


James Lorimer Ilsley: This would not extend to matters of opinion; this would have reference to the making of a false statement.


Richard Burpee Hanson: A statement of fact.


James Lorimer Ilsley: Yes, a false statement of fact; and it should be made a serious thing to do that in these succession duty statements. The penalty is a fine not to exceed $10,000,

or six months' imprisonment, or both. It is discretionary with the court, but this permits a very heavy penalty which might be imposed in an estate in which hundreds Of thousands of dollars were in question and an attempt was made to defraud the crown out of many thousands of dollars.


Richard Burpee Hanson: Then it would be done wilfully.


James Lorimer Ilsley: I should think it would mean wilfully, anyway.


Richard Burpee Hanson: I would suggest that the word "wilfully" ought to be inserted. As this section now reads, a false statement, even made innocently, would render a man liable to conviction, and I do not think it is the intention of the crown to legislate to that extent.


James Lorimer Ilsley: I agree to the word "wilfully"; that is what is intended.


Richard Burpee Hanson: All right.
Would the minister also accept this suggestion, namely, to insert the words "of fact" after the word "statement," to meet the objection raised by the hon. member for Comox-Alberni? Line 39 on page 21 of the bill would then read, "any person wilfully making a false statement of fact," and so forth.


James Lorimer Ilsley: I think the insertion of the
word "wilfully" is as far as I can go.


Richard Burpee Hanson: That is
a substantial concession, much more than I had expected to get.


Pierre-François Casgrain: I move:
That section 53 be amended by adding in the first line thereof after the words "any person" the word "wilfully", so that the section would read, "any person wilfully making a false statement".


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 54.-Secrecy.
Richard Burpee Hanson: How is it intended to maintain secrecy; just by the penalty clause? Is any oath exacted from anybody?


James Lorimer Ilsley: In the income tax division
the oath of secrecy is administered to every employee every four months.


Richard Burpee Hanson: That is
good; but that is not provided for in this bill, is it?


James Lorimer Ilsley: It will be the income tax
staff that will administer this measure.

Succession Duty Act


Richard Burpee Hanson: Unless the oath is so general as to cover this class of information, I should not think their oath would be binding. If it is necessary to have an oath in connection with the income tax act, it would seem to me absolutely necessary to have one in connection with this measure. I am not so sure that an oath is any more binding on an official than putting him on his honour, but it may be necessary. I am glad to know that the principle of secrecy is observed.


James Lorimer Ilsley: The same practice will be
followed in connection with this measure as is followed in the income tax act.
On section 55-Information to be laid by minister.


Richard Burpee Hanson: I suggest that the section might read "authorized thereunto in writing by the minister."


James Lorimer Ilsley: All that is affected is an
information or a complaint, and in my opinion it is going pretty far to provide that it is to be authorized by the minister.


Richard Burpee Hanson: I would be satisfied if it were authorized by the commissioner.


James Lorimer Ilsley: I think it is just as well to leave the section as it is.


Richard Burpee Hanson: I cannot imagine its being done in any other way.


James Lorimer Ilsley: It might be by telegram or telephone conversation.


Richard Burpee Hanson: I shall
not press the matter further.


[Stage Direction]
Section agreed to.
Sections 56 and 57 agreed to.
On section 58-Administration by minister.
Richard Burpee Hanson: The question of legislating by regulation is always important. If the wording were changed a little bit so as to take away the wide area to be covered by regulation, I would not have great objection. Under subsection 2 the minister may make any regulations deemed necessary for carrying the measure into effect. That, of course, is intended to assist in administration. Then it goes on to say that in particular the minister may make regulations regarding paragraphs (a), (b), (c) and (d). If it were drafted so that the regulations would refer only to such matters as are indicated in paragraphs (a), (b), (c) and (d), there could not be much objection. With respect, however, to paragraph (d), I am wondering if it
will include the right by regulation to determine appeals on assessments? The minister has told us that in practice assessments will be reviewed by the commissioner, not by the minister. Under this section may the minister authorize the commissioner by regulation to exercise such of the powers conferred by the legislation as the minister may think may be conveniently exercised by the commissioner? That is a pretty wide power.


Arthur Graeme Slaght: Will the regulations be
approved by order in council?


Richard Burpee Hanson: I was going to ask that. Are they so approved in the income tax act?


James Lorimer Ilsley: No.


Richard Burpee Hanson: This section gives very wide powers to the minister to set up a class of regulations that could be known to no one. How is the public to know about them? I hope the department in establishing the new tax will issue a booklet giving full information, after the regulations are drafted. If the public get proper notice, they will govern themselves accordingly. But these regulations may never see the light of day. Nobody may ever know about them. Surely this is a wide power. I suggest that it might be reviewed.


James Lorimer Ilsley: There is no danger of the regulations being kept secret. The income tax division issued brochures and booklets of one kind and another all the time, and sends them round to inspectors of income tax for the use of people who may be interested. There is one having to do with the Excess Profits Tax Act, and people who are interested write in asking for copies. Considerable time has been spent in making public the regulations relating to these various measures.


Richard Burpee Hanson: That is all to the good.


James Lorimer Ilsley: On the question as to whether the minister will by regulation authorize the commissioner to consider notices of appeal-


Richard Burpee Hanson: Determine
appeals.


James Lorimer Ilsley: I believe "consider" is the word. Section 37 states:
37. Upon receipt of the said notice of appeal, the minister shall duly consider the same and shall affirm or amend the assessment appealed against and shall notify the appellant of his decision by registered post.
I do not think there is any regulation by which the minister delegates that power to the commissioner. When I was in the
Succession Duty Act

Department of National Revenue the practice was for the minister to make those decisions, in form. That is, he signed them. The reason why he did not spend a lot of time on them was that he did not have the time to spend. It was a decision by the minister on the advice of his officials; that is really what it was.


Richard Burpee Hanson: Here is an attempt to delegate authority.


James Lorimer Ilsley: That is the reason why I say I do not think a regulation would be made under section 58 (2)	(d), by which the
minister would delegate to the commissioner authority which is vested in the minister by section 37. I believe he would get what help and advice he could in disposing of an appeal. In practice that would mean that the officials would do practically the whole thing, and the minister would sign it.


Richard Burpee Hanson: That is what the legislation attempts to do, namely, what the minister says is not done. Here is the authority to do it.


James Lorimer Ilsley: It may be the authority; I am not sure about that, in view of the express terms of section 37. This would cover other matters which would come within the minister's general power. In section 58 (1) the minister has a general power of administration, and instead of exercising those powers himself he has authority under section 58 (2) (d) to authorize the commissioner to exercise those powers.


Richard Burpee Hanson: That is reserved to the minister by section 37. Would the minister exclude 37?


Mr. CHURCH:: May I ask the minister if under paragraph (d)-


Richard Burpee Hanson: Just a minute.


Angus MacInnis: If the leader of the opposition would rise in his place when he is speaking, the committee would know who has the floor.


Richard Burpee Hanson: I apologize to the Chair and to the committee for having carried on a conversation from my seat. I know it is not quite proper. If this were limited by excluding the provisions which might be applied on section 37, I would not have so much objection. But section 37 makes a special reservation to the minister. Under section 58, power is given to delegate authority to the commissioner. I must point out that the power of determining a question of appeal is a wide power. That is all I have to say about it.
[Mr. Ilsleyd


Thomas Langton Church: May I ask the minister
why under paragraph (d) he is setting up a separate organization for duplicate death duties and1 for the administration of the same class of property for which provision is made by the British North America Act? Under section 92, death duties relate to property and civil rights in the provinces and are exclusively provincial. The minister has been inconsistent ever since he has held office. Two years ago, when it was urged in the house that the minister should let Ontario collect its own income tax, when both federal power and provincial power had taken all this away which was formerly exclusively municipal, he said "Oh, no; we will save a whole lot of money by collecting the two income taxes ourselves for the provinces as well." Instead of the provinces collecting their own income tax, in this bill we set up two administrative offices, for death duties. If the minister would wield the big stick and bring about a little economy in all the departments, it would be far better. Instead of that, he is setting up a new administrative death duties staff to deal with property rights which, since confederation, belonged to the provinces exclusively.
Why should he have accepted the work of the province of Ontario to collect their income tax for them and then turn round and set up another duplicate branch, with a staff of inspectors and clerks, federal and provincial, two separate staffs, collecting on one and the same property? Where is this going to wind up? It is nothing but state socialism. I am only giving my own opinion on it all. The minister has made a vast excursion into this field. Paragraph (d) reads:
(d) authorizing the commissioner to exercise such of the powers conferred by this act, as may, in the opinion of the minister, be conveniently exercised by the commissioner.
That might be all right under the drastic Kingsley Wood principle of collecting death duties, but all people may not own property when it comes to these rival taxing powers on the same class of property. They are likely to lose what small property they have in real and personal estate and, in the end, die in the poorhouse, with two vast organizations taxing them and putting federal burdens on real estate. It is expected that $10,000,000 will be collected this year and in a full year, $20,000,000 from this measure. Is it any wonder the people are asking why the head of the province is objecting to federal authority invading provincial and municipal institutions and taking their revenues in this way?


Colin William George Gibson: I do not know whether or not the hon. member is familiar with the set-up proposed to collect these duties, but

Succession Duty Act
when, he talks about extravagance in any department I must tell him that it costs under 2 per cent to make the collections in the income tax branch. The succession duties will be collected by that branch, which has auditors and accountants already employed. Only a small staff will have to be added to make these collections.


Richard Burpee Hanson: There will have to be an additional staff.


Colin William George Gibson: A small staff will have to be added.


Angus MacInnis: I think it is generally accepted that matters of this kind cannot be dealt with except by a delegation of power. As to whether such delegation of power is a good thing or a bad thing apparently depends upon which side of the house one happens to sit. I was here between 1930 and 1935, and in the latter year the leader of the opposition was a member of the government. At that time there was brought before the house a marketing act which not only delegated powers of administration but also empowered commissions to enforce penalties. The Minister of Finance was in the house then and was opposed to that, while the leader of the opposition, who then sat on the other side, was in favour. These two hon. gentlemen have now changed their positions in the house; the one who was opposed to this in 1935 is in favour of it in 1941, and the one who was in favour of it in 1935, is now opposed. I imagine the method is all right, after all.


Richard Burpee Hanson: The hon. member can speak for himself.


Thomas Langton Church: The Minister of National Revenue says that it will cost 2 per cent to collect this, but will he kindly tell the committee how much will be paid to lawyers? One firm, according to a return filed, got S87,000 for various legal work, and one member of this firm was a candidate for election to this house in High Park constituency. This firm of lawyers did work for the department which any solicitor could have done. Talk about 2 per cent! I can tell the young gentleman who represents the department that in the city of Hamilton the Ontario government had some trouble in collecting this type of revenue from estates, more, probably, than elsewhere in the province of Ontario. Talk about 2 per cent! Wait until you see the bills coming in. The hon. member for Hamilton West (Mr. Gibson) tells us that it will cost only 2 per cent to collect the death duties separately when they will have a duplicate system. If these duties are going to be what they are going to be and all other bills of a kindred kind, then the quicker we
abolish provincial institutions and set up this government as a dictatorship over the provinces, the better it will be. That is where it will end some day. That is all we have to-day under the Pooh-Bah powers and big Stick of the Minister of National Revenue and the Minister of Finance.


Colin William George Gibson: The dominion government had no part in the collection of succession duties for the Ontario government, and whatever expenses were incurred in collecting them in Hamilton or anywhere else is no concern of the dominion government.


Arthur Graeme Slaght: I would suggest to the
minister that the provision covering the making of regulations should be altered to provide that they shall be made by the governor in council. I may be wrong, but I know of no act which enables the minister to make regulations on everything incidental to the enforcement of the act and which does not require them to be promulgated or published in the Canada Gazette. This provision does not require them to have the approval of an order in council. I suggest with all deference that this is a departure, and I feel sure that the department and the responsible minister would feel better satisfied if the regulations were required to be published in the Canada Gazette or approved by order in council. It seems to me that this is a new kind of authority for parliament to hand to a minister, the unfettered right to make regulations without the obligation to publish them. I have no doubt that they will be published in brochure form, but it seems to me that this is a radical departure and is setting an example which may lead us down paths which will be dangerous indeed.


Richard Burpee Hanson: Is there
any analogous provision in the Income War Tax Act?


James Lorimer Ilsley: Section 75, subsection 2,
reads:
The minister may make any regulations deemed necessary for carrying this act into effect, and may thereby authorize the commissioner of income tax to exercise such of the powers conferred by this act upon the minister, as may, in the opinion of the minister, be conveniently exercised by the commissioner of income tax.


Richard Burpee Hanson: That is
the same section.


James Lorimer Ilsley: Very much the same.


Arthur Graeme Slaght: Then it ought to be
altered.


James Lorimer Ilsley: I think the other acts
administered by the Department of National Revenue grant power to the minister to make
Succession Duty Act

regulations; I think that is so in the customs division and in the excise division. In this department it is necessary to make a huge number of rulings or directions which are called regulations.


Richard Burpee Hanson: The other method might prove to be unwieldy and slow and cumbersome.


James Lorimer Ilsley: I presume that is the reason. The Department of National Revenue is filled with detail; there is a large personnel, and an enormous number of departmental decisions of one kind and another must be made. These are done largely in the name of the minister, who has the power to make regulations by statute. It would be a nuisance to take them to council all the time, a nuisance to council and a nuisance to the minister.


Richard Burpee Hanson: Still, the principle for which the hon. member for Parry Sound contends is absolutely sound.
Mr. ILSLEY; The commissioner tells me that if any of these regulations are such that it will probably be necessary to produce them in court, they are published in the Gazette.


Richard Burpee Hanson: That is for the purposes of the Canada Evidence Act, is it not?


James Lorimer Ilsley: I do not know.


Arthur Graeme Slaght: Making for easy proof. In Ontario, where for twenty years succession duty has been collected, and recently quite promptly and efficiently, we have a similar provision as to the regulations, section 43 of the act, whereby the lieutenant-governor in council may make regulations with respect to (a), (b), (c) and so forth, and it was not found too cumbersome to have them approved in that province by order in council.


James Lorimer Ilsley: It would not make any
difference in practice because I could not imagine the cabinet spending any time on that kind of regulations. They come in and just go right through if council have confidence in the minister, which they would have or he would not be there. That is all it amounts to in practice.


Arthur Graeme Slaght: Then cannot we have them published in the Gazette?


James Lorimer Ilsley: The important ones?


Arthur Graeme Slaght: All of them.


James Lorimer Ilsley: There would be such a number of them.


Richard Burpee Hanson: There
would be a great many under customs, but I do not anticipate there would be many under this.
[Mr. Ilsley.l


James Lorimer Ilsley: The power here is to make regulations prescribing forms and providing for the use thereof; prescribing what rule, method and standard of mortality and of value, and what rate of interest shall be used in determining the value of annuities, terms of years, life estates, income, and interests in expectancy. It may be that these will be very long and detailed; I can imagine cases where it would not be desirable to publish them, and certainly it would take a great deal of paper and printer's ink to publish them in the Canada Gazejtte. I do not know that very much would be gained by doing so. I have never heard any complaint that the public could not find out from the income tax division what the regulations were.


Richard Burpee Hanson: Of course,
it is in the interest of the collection of the tax to let the public know what the regulations are. What the hon. member for Parry Sound is contending for is a matter of principle, and he is right. The minister countered by saying that it is not convenient, that it would hold up the coming into effect of such regulations, and I think there is a good deal of sound, horse sense in that. But with respect to paragraph (a) there cannot be the slightest objection, because the department must prescribe the forms and provide for the use thereof.
I wonder whether the department intends to collect fees for providing these forms. In New Brunswick they have undertaken to charge you for the forms for inventories, affidavits, and so forth. They tax you for them when they supply them. I have repudiated that suggestion on principle in my own practice; I provide the forms myself, typewritten, and they look very much better that way when they are completed. Why in the world should a government department charge the taxpayer for providing him with the forms upon which he is to submit the information? I hope that nothing like that will occur in connection with this measure.


James Lorimer Ilsley: If the hon. member for Parry Sound would like to have something in this section to the effect that said regulations shall be published in the Canada Gazette, I am willing to have that inserted. I have consulted with my colleague, the Minister of National Revenue, and he thinks the number under this measure will not be so great that they could not be published.


Arthur Graeme Slaght: I do not want to waste printer's ink, of course, but a stability would be given which the department would recognize and under which it would feel safer in proceeding.

Succession Duty Act


James Lorimer Ilsley: Then I shall have my colleague move an amendment that such regulations be published in the Canada Gazette. That would be subsection 3 of section 58. It would not be necessary with respect to paragraph (a), and then there is the question of tables of mortality under paragraph (c).


Harry Rutherford Jackman: I presume the standard table of mortality will be used.


James Lorimer Ilsley: Publication would be partly in the Canada Gazette and partly in some book. I would be inclined to drop the proposed amendment. The commissioner tells me that they publish the regulations now in all important cases.


Harry Rutherford Jackman: Does paragraph (c) of section 2 correspond with the same provision in the British act, or is the provision in the British act more specific, particularly with reference to the rate of interest which shall be used in determining the value? Does this section correspond with the British section, or is the British section much more specific in its terms?


Mr. POULIOT:: Just before the minister answers, let me say that I have often protested against Canada copying and aping what is done by any other countiy. We should make our own legislation. Why should we copy the British act? Why should we copy the act of Ontario or the act of the province of Quebec? Let us make our own legislation and digest it and have no half-baked legislation.


James Lorimer Ilsley: This provision has not been copied from the British act. I am informed that it is in use. It is a section very much like sections found in several provincial acts.


Harry Rutherford Jackman: The rate of interest is vital. It means all the difference between whether a particular annuity or one of these interests might be $1,000 or $2,000. It depends upon the rate of interest being used. It is so important that I think we should be as specific as possible. If other countries, in their legislation, have seen fit to specify a certain rate, I think we should do so. Does the minister intend to prescribe a general rate from time to time, or is there to be a particular rate as to particular forms of securities?


James Lorimer Ilsley: I do not know. I could not say what the practice will be. The matter will be worked out in cooperation with the superintendent of insurance, which is the department that is expert in actuarial matters. Some fair rule will be arrived at.


Richard Burpee Hanson: The
measure will be in the experimental stage for a while. I think the rule of reason will prevail.
I have no fears on that score at the moment, but of course I do not know what the future will bring. If the measure does not work out [DOT] right, we shall come back and ask the minister to amend it.


Arthur Graeme Slaght: Rates of interest shift, of course.


William Ross Macdonald: There have been gibes from a number of hon. members regarding the fees which lawyers will receive for preparing these forms, and so forth. Has the minister had forms prepared, and do they correspond with those now in use in the provinces? It occurred to me that it would simplify matters considerably if the forms which are now used in the various provinces were used also by the dominion department, so that, instead of making the forms in duplicate, as is now done for the use of the provinces, we could make four copies and send two to the province and two to the dominion. This would save considerable expense and facilitate the work of submitting the necessary information.


Mr. HOMUTH:: All the laws are different.


James Lorimer Ilsley: Nearly all the forms are now ready. They are not printed, but so far as preparation is concerned they are substantially complete.
The other point was, should we have a different form for each province to accord with the form in that province? I do not think so.


Richard Burpee Hanson: I do not think so either.


James Lorimer Ilsley: My opinion is that we should have but one form.


Douglas King Hazen: How many employees have been added to the Department of Finance and to the Department of National Revenue for the purpose of administering this measure, and how many more is it expected to add?


Thomas Langton Church: A small standing army.


Colin William George Gibson: We have not made any
additions to the staff to take care of this, and we estimate at the present time that under a hundred will have to be added to the income tax staff to look after this work.


[Stage Direction]
Section agreed to.
On section 59-Office of commissioner.
Richard Burpee Hanson: This section raises an old discussion on the question of appointments. Personally I am in favour, generally speaking, of the civil service system of merit in the appointment of public officers,
Succession Duly Act

but I am broad-minded enough to admit that it is not invariably the best way. In certain jurisdictions and categories probably it is the better way, and the general principle I subscribe to and intend to support.
This question of appointments to the staff of the income tax branch has been settled, it seems, by the decision of the government to adhere to the principle of appointments by order in council. Does this mean that these appointments will be political? Are employees to be nominated by the minister, or by the commissioner? Is the department to be filled with friends of the party in power, or is the commissioner to have a free hand to get competent men of his choosing, nominated to his minister before confirmation? This raises a rather large question. The minister is administering three branches of the public service in the collection of national revenue; he has the customs, the excise, and the income tax branch, with which this will be coordinated. In the first two which I have mentioned the appointments are made by the civil service commission. In the income tax branch, however, the minister is continuing the system which he found when he came into office, and which has been in existence, I believe, from the very beginning.
I am aware that there are arguments on both sides. But I should like to be reassured that, if we continue the system outlined in subsection 2, efficiency and competency will be the guiding principles, and that vacancies and new positions will not be staffed by means of what we commonly term political appointments. My recollection in connection with this matter goes back a long way. I understand that the gentleman who was appointed the first commissioner demanded, as one of the conditions of undertaking the duties of the office, that he should have something to say about the selection of his staff. I rather think there was some merit in that. I do not know that there has been much, if any, abuse in respect of appointments. But I notice that the Minister of Finance has brought into the department a number of young lawyers, some from his own province.


Mr. MacNICOL:: Not from his own riding, I hope.
Mr. HANSON (York-Sunbury)': I am not suggesting that they are from his own riding; nor am I suggesting that they have not great merit; perhaps they have; but I cannot conceive that they had any experience in income tax matters before they entered the department.
Mr. MACDONALD (Brantford City); Not many people have.


Richard Burpee Hanson: I agree with that. There are not many tax experts in this country. There is in the United States a class of professional men who are income tax experts. But I am a little uneasy, and I trust we shall get some assurance that this matter will be handled on a high plane, because we know what the practice is with respect to appointments by the governor in council. They are, as a rule, political appointments.


Angus MacInnis: Patronage can never be on a high plane.
Mr. HANSON (York-SunbupO: Perhaps that is true. But we are trying to speak without bitterness, and, if we can, to elucidate the truth. I do not like the patronage system. I have never thought that it helped me in any degree. I have found that where I had to make a nomination for an appointment- which, I am glad to say, was not often-when I satisfied one man I made nine enemies.


Grote Stirling: Hear, hear.


Richard Burpee Hanson: That is the history of patronage in days gone by, when times were difficult, when a member of parliament was little better than a labour agent. One of the most strenuous periods of my life was between 1930 and 1935. One could hardly go home without having his outside office filled with people who wanted him to get a job for them.


Jean-François Pouliot: That is because the hon. member promised too many.


Richard Burpee Hanson: I never promised anybody anything. I was perfectly honest; I told them I had not any jobs to give them, and I could not give them. I told some people that a recommendation from a member of parliament would be, perhaps, a deterrent rather than a help to get a job.


William Ross Macdonald: The hon. member did not convince anybody with that statement.


Richard Burpee Hanson: No; you cannot convince them. That is the strange part of it. They will not believe you. That is an embarrassment, because they are inclined at once to charge you with the desire not to help them, when actually you are simply telling them the truth. They apparently do not recognize the truth, do not want to recognize it. That is the truth.
Will the Minister of National Revenue make a statement of policy in regard to what it is proposed to do in building up this staff, and will he see that the declaration of principles which I am suggesting he should make will be lived up to?

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William Ross Macdonald: Before the minister answers, may I say that from my experience I have found all the appointees in connection with the collection of income tax are just as efficient as any appointees under the civil service commission. I know that the civil service commission is very thorough in looking into the qualifications of all applicants and makes some very good appointments-[DOT]


An hon. MEMBER:: Occasionally.


William Ross Macdonald: On the other hand, those responsible for the collection of the income tax also make careful inquiry as to the qualifications of applicants, and in the district from which I come I can say that the employees in the income tax division are just as efficient as those who are appointed under the civil service commission.


Richard Burpee Hanson: I have
not suggested anything else.


Jean-François Pouliot: Before the minister
answers, since it is impossible for me to take the sanctimonious tone of the leader of the opposition in speaking of patronage, and since I know that if I did, there would be an uproar of laughter in the committee, I shall dispense with it. But I remember quite distinctly that the one who was the leader of the opposition during the election of 1930 said: "You who are hungry, come to me and I will satisfy your hunger. You who are thirsty, come to me and I will quench your thirst." "You who are without work, come to me and I will give you work. I am the one who will cure unemployment." He said that. The hon. leader of the opposition was credulous enough not only to believe it but to preach that doctrine himself. This is why he was elected in 1930, and this is why he was defeated in 1935.
Of course when he was a minister he had to do his share. He followed an illustrious predecessor, the Hon. H. H. Stevens, who also had made promises. It was not only R. B. who had made promises but H. H. was a good promiser. Then the hon. leader of the opposition came after those two, following in their footsteps, trying to satisfy all the people who had been dissatisfied since R. B. came into power. It was a very hard job for him, and I can understand how he found the times hard. Now he says that if he satisfied one man he made nine enemies. I shall not say that he has one single enemy, but I shall say that when he was a minister of the Bennett government he dissatisfied everybody.
The leader of the opposition is the hon. gentleman who now says we shall not have 14873-208
patronage, that we shall have appointments by the civil service commission. Of course he remembers the dark ages when he was a minister in the Bennett government and suffered from seeing so many people coming to him to whom he could give no jobs. It was pretty hard on him, something that he remembers quite distinctly even now when he is far away from patronage. Now he is signing his name and making life very pleasant for himself. But that is not enough to convince me that he has a clear judgment on the question of appointments.
Is there any complaint about the income tax division? No. At the present time the minister has before him in this chamber two officers, civil servants, who are respected and esteemed, who know their business and to whom the appellation of "cranks" that I have applied in many instances does not apply. They have grown up in the service. One of them is a barrister of wide experience; the other is an elderly civil servant who has grown up in the service and knows his business. They are not university fools, and this is the kind of civil servants that I want in this government, as there was a majority until 1930. I refer to them as an example for the others. I am satisfied with them, and neither of them was appointed by the civil service commission. I will not insist on a certain nomination, because the appointee was meritorious if the procedure was wrong. I praise both of these gentlemen personally, and I praise the staff of the income tax branch. People know them so well that they would not think of trying to get inside information from them; the work is well done and we have no complaints.
With regard to the question of patronage, those who are against what they call patronage are those who are afraid to assume their own responsibility, or those who have a sour mouth on account of difficulties that they have themselves created. They were the artisans of their own troubles, like the leader of the opposition for instance. He can blame only himself and his colleagues in the Bennett government.
I find that the system of appointments at present in force in the income tax branch is the best we could have. The reason is very simple. It is that when an appointment is made on the recommendation of a member of parliament, the minister knows who has recommended that man, and if he is unsatisfactory the member will have to answer for any complaints made in this house by any Conservative, Social Crediter or member of the Cooperative Commonwealth Federation party against

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that employee. If an hon. member makes any recommendation that is wrong, that will be an excellent reason for the minister to refuse any further recommendations from that member. Therefore the public interest is better protected under that system than under any other. On the other hand, if an appointment is made by the civil service commission, everyone knows that there are no accountants among the examiners of that commission. The civil service commission will select someone from either the Department of National Revenue or the Department of Finance, a selection which may be made on grounds entirely different from those of merit, and the commission will not be in a position to give a sound judgment on the competence of a candidate. There will be no recourse if something goes wrong; no one will receive any complaint. It will be an anonymous appointment, made by the commission and no one responsible. The commission will say it is the merit system.
Especially in branches like this it is essential that all employees should understand that the minister is the boss of the department and should respect him. It is essential that they should feel that they are under his jurisdiction, to stand by the orders they receive and to respect the tradition of secrecy that binds them. I think this is the best system, and I believe it should be continued. Let us be good sports. When the Tories were in power, what Liberal was ever recommended for appointment? When the Liberals are in power, however, the Tories are always recommending some of their friends for appointment. Let them be good sports. The people rejected them at the last election, and the one before that. Let them take their pill and wait until they have regained the confidence of the people for their almost defunct party. That will be a case of resurrection, which seldom happens; but when that time comes, they can make all the appointments they wish. These appointments should be made by the members of the government on the recommendation of Liberal members of parliament, and those members should be ready to take the responsibility. I am sure there will be nothing wrong. There will be something wrong only if the minister accepts any recommendations that may come from the Tory gang.


Colin William George Gibson: The leader of the opposition has asked me how we shall fill the positions that will be created to administer this succession duty act. I would say that we shall adopt the same measures that have been adopted in filling positions in the income tax

branch. During the year that I have been in charge of this department I have not been in the unfortunate position suggested by my hon. friend, of having to make one friend and nine enemies. The difficulty has been to get people with the high qualifications which are necessary in connection with the work of the income tax branch, and which will be necessary in connection with the work of the succession duty branch. For the senior positions, such as assessors, we have advertised in the press and have made every effort to secure men who have the necessary qualifications. We require men with the degree of chartered accountant, or a similar degree; and the difficulty we have found has been, not in connection with selecting the men but in obtaining them.
When it was necessary to create some new positions when the national defence tax came into effect, we made promotions in our own staff and filled the positions at the bottom, but there again we had difficulty in getting qualified stenographers and clerks. Therefore I say it is not a matter of selecting the right applicant; it is really a question of going out and trying to find the necessary people to fill the positions. If my hon. friend can recommend anyone suitable, I can assure him we shall be only too glad to accept that person. There is a great shortage of qualified stenographers and clerks for these positions.


Thomas Langton Church: Does the minister not follow the practice that has been followed by his predecessors? I do not blame him for having done so, because I believe all parties have done the same thing. As a matter of fact, the person receiving the recommendation of the defeated candidate or the sitting member is usually the choice of the officials, is he not? When a new minister comes into a department he asks the senior officials, "What did my predecessor do?" Then he does the very same thing, because the minister generally does not follow the swing of the pendulum, but pursues the line of least resistance. I am not criticizing the young minister; so far as I know, he has been efficient. But I should like to ask him, and his learned colleague sitting beside him who has been working so hard for the last month or so, whether this government has not followed the practice of the previous government, and the one before that, in accepting recommendations made by sitting members and defeated candidates.


Colin William George Gibson: I do not know whether or not I am following the practice of the previous administration, but I will say that I require every applicant for a position in my department to file an application in writing. When

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these applications are received they are forwarded to the various districts in order that the applicants may be examined by the local inspectors, who rate them; and the appointments are made in accordance with the ratings made by the district inspectors.


Major James William Coldwell: I do not wish to speak at any great length on this matter; but in view of the fact that from time to time a discussion arises in this house with regard to appointments, and the hon. member for Temiscouata invariably gives us a dissertation on the advantages of the patronage system, perhaps in order to keep the balance some of us who feel very strongly against the patronage system should express our view.
I know that some of the ministers, including the Minister of Finance, have endeavoured to keep as far away as possible from the patronage system. I know that at the present time there may be difficulties in securing efficient help, even by advertising; but I believe that the further away we keep from the system of political patronage, the better it will be for the government of Canada. To me it has always seemed ridiculous that anyone should hold the view that when a Liberal government is in power the employees should be Liberal, and when a Conservative party is in power the employees should be Conservative. I hope the day may come when in our own country we shall develop the same sense of respect for our public service, the same efficiency in it, and the same freedom from political patronage, that have long existed in Great Britain. I believe the efficiency of the administration in that country is due to the elimination of political patronage; and those of us who know something of British history, particularly from the days of Walpole down to comparatively modern times, know that until political patronage was driven from the public service, that service was not efficient. I sincerely hope that the system which has been followed in Canada now for more than twenty years will be continued and expanded until the time comes when we shall have a civil service 'based wholly on examination and on merit; when every civil servant, irrespective of his position, will have the right to express himself in accordance with his rights of citizenship so that he may not be obliged, because his private views conflict with those of the government in power, to risk, by expressing them, a position for which he may be very well qualified.


Arthur Graeme Slaght: Was not Walpole the author of that dangerous doctrine, "To the victor belong the spoils"?
Mr, COLDWELL: I am hoping the time will come when the victor will be big enough not to look for any spoils of office. Feeling that way, and holding that belief, I think perhaps once in a while it is well to express that view, particularly when the contrary opinion is so forcibly expressed by the hon. member for Temiscouata.


Jean-François Pouliot: The hon. member for Rosetown-Biggar has spoken of the efficiency of the civil service in Great Britain. I wonder whether he has read "The New Despotism" by no less a person than Lord Hewart, lord chief justice of England, in which the faults of bureaucracy are described. Of course I know very well why the members of the Cooperative Commonwealth Federation group are so strong for the -merit system. It is for the reason that most of the school principals, who are asked by the civil service commission to conduct examinations, are their own men, belonging to their brain tru^t. Therefore, instead of receiving patronage from the minister, they receive patronage from the school principals who are Cooperative Commonwealth Federation men. It is in order to maintain that patronage that they are so strong for the so-called merit system which exists only in their imaginations, and not on their tongues.
That having been said, I hope that any illusion created by the word "merit" will be dissipated. I see I have almost convinced hon. members in the far corner of the house, and if I have not I am sure that excellent book by Lord Hewart will finish the job. At first it was an expensive book, costing a little over a pound. After the first edition was sold there was a reprint selling for 5 shillings. I do not -know if it is available now, but if it is I strongly recommend it to any hon. member. It will be surprising to hon. members to find that other countries, like this one, can march on, in spite of the fact that they are carrying with them such a heavy weight of bureaucracy.


[Stage Direction]
Section agreed to.
On section 60-Agreement with provinces as to values, etcetera.
Richard Burpee Hanson: What does the minster expect to accomplish from this section?


James Lorimer Ilsley: I do not know. We may get the provinces to do some work for us. We do work for five of the provinces in connection with income tax collections.


Richard Burpee Hanson: It is a pious hope.
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Thomas Langton Church: Section 60 enables the government to enter into an agreement with the provinces respecting valuation and other matters affecting administration. Ontario is one of the provinces which has contributed such a large share of income tax to the federal treasury. Has the minister had any conference or agreement with the Ontario government regarding these duplicate death duties and rival methods of collection? Has he had any conversations with them or their ministers or officials? Has the minister consulted the Department of Justice as to the power of this parliament to enter into an agreement regarding death duties, which come within the definition of property and civil rights in the provinces, real and personal estate, which, in turn, are under the control of the provinces? Has the government considered whether the crown in the name of the dominion can collect the same death duties from the same property as the crown in the right of the province? The crown is indivisible. What has been the reply of Ontario? We were told this morning that they are taking the 15 per cent tax to the law courts. Has the government conferred with the government of Ontario about an agreement in connection with the administration of this measure? With whom did they confer, and when; and what is the agreement? Will all the papers be tabled, for the information of the committee?
I contend that when we are dealing with a bill like this we should follow the practice adopted in Washington, and have it considered by a committee of ways and means. There are some able men on the government benches, and it is a pity that men of their ability, men with their learning, experience and understanding-and I know them all pretty well-do not have an opportunity to look into this matter in such a committee. It is too bad we have not a municipal system, like the one they have in Washington, where the committee of ways and means would be given the work of considering a measure of this kind, and not just passing what our officials bring down.
I do not believe it is in the interests of patriotism to remain silent while all this is going on. I am supporting the government generally in its war effort. No hon. member would want to have the responsibilities of those two hon. gentlemen on the front benches. I know they have a tiresome, wearisome and thankless job. But in the name of a few of the old guard of the Conservative party I protest against the policy which has been employed here. It is a policy which is leading toward general confiscation of the wealth of

the provinces, and of private property-two separate death duties, with overgovernment and overtaxation.
What has been the reply of the Ontario government? Whom did the federal authorities meet? Did they meet ministers or deputy ministers? Has an agreement been proposed, and what has been the reply?


Colin William George Gibson: No meeting has been held with Ontario with regard to entering into an agreement under this section, because this measure has not yet been passed^ and there is no authorization to enter into such an agreement with any province until it is passed.


[Stage Direction]
Section agreed to.
On schedule 1.
James Lorimer Ilsley: There are two clerical errors in this schedule as printed. On page 25 of the bill the figures "55,900" in the first column should be "55,000." Then, on page 27 at the bottom of the third column the figure should be "10." At present there is a blank. I would ask that those clerical changes be made.
Schedule 1 as amended agreed to.
Schedule 2 agreed to.


John Ritchie MacNicol: Mr. Chairman, I was out of the chamber when section 15 was discussed, and I should like to discuss it at this time.


Thomas Vien: Mr. MacNicol moves that we revert to section 15. Is it the pleasure of the committee that we revert to section 15?


[Stage Direction]
Motion agreed to, and the committee reverted to section 15.
On section 15-Filing statement.
John Ritchie MacNicol: I should like to ask the minister about a case which came to my attention some years ago. The family I have in mind lived up-country, in a small community. It consisted of three persons, whom we shall call A, B and C. The parents were dead. A died without a will about fifteen years ago. Ten years later, or about five years ago, B died. Two years ago a legal friend of the remaining member of the family C, asked C if the affairs of the two deceased members of the family had been settled. The reply was that they had not. "Well," he said, "I think you ought to have it settled up." He did so, being the only remaining heir. The court appointed him administrator, and everything came his way.
If such a condition arose after the passage of this measure, under section 15 would C be subject to a fine or penalty?


Richard Burpee Hanson: He is a successor, and he certainly would be.

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James Lorimer Ilsley: Did C take the property on the deaths of B and A, and do nothing about it? That is, did he file no statements?


John Ritchie MacNicol: Yes. First, A died, and no statement was filed after his death. Then, no statement was filed until a couple of years after B's death.


James Lorimer Ilsley: Yes; he would be subject to penalty. He would have to file a statement in those circumstances.


William Ross Macdonald: Surely the measure is not retroactive?


James Lorimer Ilsley: Oh, ho; the hon. member was stating a hypothetical case.


John Ritchie MacNicol: They would be subject to penalty?


James Lorimer Ilsley: Yes.


[Stage Direction]
Section agreed to.
Thomas Vien: It was the understanding that we would return to a discussion of some sections which had not been passed, the first of which was section 7..
On section 7-Exemptions.


James Lorimer Ilsley: The hon. member for
St. John-Albert (Mr. Hazen) suggested that some provision should be made for merchant seamen, and there was also some discussion in the committee about making provision for those who are in the forces.


Arthur Graeme Slaght: Paragraph (d) deals with
charitable gifts, and it is stated that the exemption shall apply:
(d) where the successor is a charitable organization in Canada operated exclusively as such and not for the benefit, gain or profit of any person, member or shareholder thereof.
If a man left a million dollars to an organization of that kind, that amount would be exempt from taxation. The minister has indicated that he construes "charitable organization" to mean religious, charitable and educational institutions. I suggest that there should be added to this paragraph a restrictive provision which would exempt a charitable, religious or educational institution only if it carried on its work wholly within Canada, or only to the extent to which it carried on its work in Canada.
For example, a man might leave a large bequest to the foreign mission society of his church. This society might make all its expenditures in India, China or Timbuctoo in an endeavour to proselytize the disciples of Confucius or the followers of other religions in order to bring them within the fold of the religion which the testator thought was the
only sure road to the place beyond. Why should a million dollars spent in China, even for a good purpose, be exempt from duty, when money left by a Canadian farmer to his relatives must pay full duty?
I think we should follow the Ontario act which makes provision for such institutions and add the words "and which carries on its work solely in Canada," or adopt the further refinement of the Ontario act and say, "only with respect to such proportion of the bequest as the proportion of money spent for carrying on work in Canada equals." I can see no reason why we should let escape from the payment of duty any large sum of money, or even a small sum, sent out of Canada for purposes with which at least the majority of the people of Canada are not in accord, and still tax the bequests of smaller estates.


Jean-François Pouliot: I appreciate this definition
of "charitable organization" as being one:
(d) where the successor is a charitable organization in Canada operated^ exclusively as such and not for the benefit, gain or profit of any person, member or shareholder thereof.
That is my understanding of a charitable organization, but I hope it includes orphanages and hospitals.


James Lorimer Ilsley: It includes hospitals which
are not operated for profit, and orphanages.


William Ross Macdonald: With all due respect to the hon. member for Parry Sound (Mr. Slaght), I am of opinion that we should not limit these exemptions in the way he has suggested. We all believe in home missions, but I think we must have consideration for those beyond the boundaries of our country who have not heard the gospel. If I remember correctly, we are exhorted to preach the gospel to all nations, and I do not think we should discourage foreign missions. The world is a great deal smaller to-day than it was two thousand years ago, and it is all the more necessary that the faith in which we believe should be preached to those parts beyond the seas. The foreign missions of our churches are administered from the home country, and I feel that the wording of this paragraph should stand as it is.


Arthur Graeme Slaght: My suggestion was not intended to discourage gentlemen who wish to indulge in the spending of money in foreign countries for missionary purposes. I only ask that they contemplate helping to pay part of the taxation of this country and not be specially favoured when they leave money to such institutions which spend it entirely outside Canada by having the bequest exempted from taxation when the ordinary citizen has to pay.
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James Lorimer Ilsley: Some consideration was given to these various points. The Ontario act has four or five subsections which define with great particularity the amounts which are exempted. Provision is made for making a division of the amount proportionate to the work of the religious, charitable or educational institution done within Ontario as distinguished from that done outside the province.
This is the provision found in the Income War Tax Act. It may be that that was not the correct guide to follow because the sums involved here are so much larger. We thought, however, that the acts should be kept uniform. Under present conditions people are giving money, not by will but by way of gifts, to sufferers from bombing, to Spitfire funds and so forth.


Harry Rutherford Jackman: Floods in China and lots of other things.


James Lorimer Ilsley: The principle followed by the income tax division is that if the gift is given to an organization in Canada recognized by the Department of National War Services, it will be regarded as a charitable gift. That relates to war charities even though some of their expenditures are beyond the confines of Canada. Take a church that is integrated in its activities, which is a church rather than a set of churches, because in some religious denominations it is churches, not a church. A gift to such a church would be a gift to a religious organization which did not by any means do all of its work in Canada but rather did it all over the world. I suppose a division of the amount of the gift could be made and exemption be allowed only on that portion which bears the same ratio to the whole gift as the expenditures of the church in Canada bear to the total expenditures of the church. But I do not think we should go into it that far. We put in the provision that the exemption would not exceed fifty per cent of the person's property, and that provision is also found in the Ontario act. If, however, the committee considers that the principle should be changed, I would not be disposed to resist it because it is a protection to the revenue to allow exemptions to these charities only, but we thought we should not draw the line too fine.


Mr. BLACKMORE:: I think the minister has taken the right stand on charities, and I congratulate him. May I also congratulate the hon. member for Brantford City (Mr. Macdonald). It is a fine thing that a man will rise in his place in this house and

advocate the performance of our duty in carrying the gospel to nations which have not been blessed as we are, and I think this is the first time since I came into this house that I have heard a man venture to do that before his fellow members. I wish to assure him once more that I appreciate it. Let me repeat that I completely support the minister in his stand regarding charities. While he may lose a little revenue, we shall gain greatly by recognizing the value of the great spiritual things in life.


Jean-François Pouliot: I wish to congratulate the minister and also the hon. member for Brantford City (Mr. Macdonald). Both have given lofty expression to the great work of the church. Whatever our faith, we all realize that church work means the civilizing and betterment of mankind, and that it is all to the good of any country.


Arthur Graeme Slaght: Just one word more. I
do not desire to be put in the category of opposing charitable or religious bequests, but the plain fact is that the way this section as it now stands would work out as against an amendment such as I suggest, which would mean merely the insertion of the words "and which carries on its work solely in Canada," would be this: On a bequest of $1,000,000 to a society for foreign missions which operated in China, you would be taxing fifty per .cent of that bequest as you would do if it were a bequest to a Canadian mission, and you would exempt the bequest from a tax of $80,000 for the public treasury. You would be contravening, by encouraging that sort of bequest, so much of the good principle we have heard of the conservation of foreign exchange, because to enable such a bequest to be carried out you have to let $1,000,000 go to China and buy Chinese exchange with it at the expense of our exchange. You are going to do all that apparently, let that money go out of the country and exempt it from a succession duty in Canada. I still suggest that that principle is wrong and that any man who is anxious to aid foreign missions in China, and is quite sincere in his desire, should also possess a loyalty to this country that would be willing to have a succession duty tax applied to such a bequest.


Jean-François Pouliot: An amount of $1,000,000
went out of Canada through excess profits on sugar. That is much worse than money given for church work.


Mr. ROEBUCK:: The riding from which I come has churches in it, and I suppose there is scarcely a member of the house who is not in the same position. When I look back at

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the history of this country I realize how much Ontario and, I am sure, the other provinces owe to the missionaries who came here in the early days. They were financed by foreign funds. Positively millions of dollars have come into Canada from charitably inclined people, particularly in Great Britain, and those missionaries brought a message. They did social services which were of great value to the intellectual and spiritual life of this country; and it seems to me that, while we might need the money, this is a poor place to get it if, in so doing, we make harder the lot of the foreign missionary societies, which are always struggling up hill.
Why choose an amount of one million dollars? Has anybody in mind a grant of one million dollars to a foreign missionary society? Most of the money for that purpose is given in very small amounts. Most of it is gathered up in small donations, some of it inter vivos and some by will. I think this chamber would exhibit a very poor spirit indeed if we attempted to enrich the treasury of Canada by taking a portion of these small funds granted for the purpose of intellectual and spiritual purposes abroad.


Richard Burpee Hanson: Possibly I should say one word on the principle of the suggestion from the hon. member for Parry Sound. I think it would be a great mistake if we were to adopt what seems to me to be a very narrow provision of the Ontario act.
I am not unmindful of the divine injunction given to all of us. Perhaps I do not practise it as much as I should, and I certainly admit at once that I have never felt the call myself. Yet I should not like to do anything that would derogate from the provisions of that injunction. I suggest that the minister's scheme as laid down in this section should be allowed to pass. Just think of the money that has been sent into Canada by the English church, a society for the propagation of the gospel. Is it known to members of this house that until the restrictions were placed on the export of sterling, much if not all of the salaries of the bishops of the English [DOT] church in Canada was sent out from England, and especially money for western missions? My friend the Bishop of Calgary is now engaged in a campaign among the brotherhood of his church to raise money to take the place of that which was provided prior to the war by the church in England for Canada and Canadian missions. This matter is international.
Under the terms of the proposal of the hon. member for Parry Sound, funds given to one of our churches for carrying the gospel to
the blacks in the West Indies, where perhaps they do not have as much missionary effort as in some other parts of the world, would be taxed. I know that one of the evangelical churches in this country maintains a mission in British Guiana. And just think of the work of the early Jesuits in Canada. There is no romance more stirring than the story of their missions. For example, there is the tale of Father Jogues. If one reads Professor Wrong's book on the "Rise and Fall of New France in Canada," and the chapters which he devotes to the efforts and the sacrifices of the Jesuits in their attempts to Christianize the Indians, one is filled with admiration.


Arthur Wentworth Roebuck: Read the story of Father Breboeuf.


Richard Burpee Hanson: Yes; and I can call to mind other works of a similar nature. All the funds which supported these men came from across the water. I do not think that in this twentieth century we can revert to a restriction such as has been suggested.


Richard Burpee Hanson: There is a question about soldier pensions.


James Lorimer Ilsley: Yes. I have an amendment about that, which I hope will be accepted by the committee. It is as follows:
That subsection 3 of section 7 of the said bill be struck out and replaced by the following:-[DOT]
(3) (a) Where the deceased dies from wounds inflicted, accident occurring, or disease contracted while Canada is or was at war, while on service with Canadian or any other of his majesty's naval, military or air forces, or with allied or associated naval, military or air forces, and where the Canadian pension commission finds that the circumstances are such that the [DOT]widow or. children of the deceased are entitled or would, if such service had been with the Canadian naval, military or air forces, have been entitled to receive a pension under the Pension Act in respect of such death, or where the Canadian pension commission finds that the deceased died from wounds inflicted, accident occurring, or disease contracted, as a result of enemy action within twelve months before death;
(i)	the exemptions allowed in paragraphs (a), (b) and (c) of subsection one of this section shall be increased by fifty per centum; and
(ii)	the amount of the duty payable in respect of a succession by any successor coming within Class A or Class B in the first schedule to this act shall be reduced to such sum as would, if accumulated at compound interest at the rate of three per centum per annum from the date of death with half-yearly rests, at the expiration of the period of the normal expectation of life of a person of the age of the
Succession Duty Act

deceased at the time of death (calculated in accordance with mortality tables approved by the minister) amount to the duty otherwise payable.
(b) The Canadian pension commisison shall on the request of the commissioner investigate the circumstances and report its findings in respect of any case arising under paragraph (a) of this subsection.


Colin William George Gibson: I so move.


James Lorimer Ilsley: I believe that that reasonably meets the wishes of the committee, although not all of them, as expressed last evening.
It may be argued that this should be broadened so that it will apply to times of peace as well as to times of war. But if it is desired later to do that, it can be done by amendment. I am, however, perfectly satisfied that if we do that now, we could not amend it the other way if ever we wanted to. This meets the situation in so far as death follows as a result of the last war or as a result of this war, for all members of the forces.


Mr. GREEN:: Whether they are serving in Canada or overseas?


James Lorimer Ilsley: Whether they are serving in Canada or overseas; and, as the committee will have noted, it includes not only the members of the Canadian forces but the members of other of his majesty's naval, military and air forces, and those with allied or associated naval, military and air forces.
The latter part of the section provides for cases other than members of the forces:
where the Canadian pension commission finds that the deceased died from wounds inflicted, accident occurring, or disease contracted, as a result of enemy action within twelve months before death.


Richard Burpee Hanson: That would apply to civilians?


James Lorimer Ilsley: That would apply to
civilians.


Richard Burpee Hanson: That is, of course, quite a wide provision.


James Lorimer Ilsley: Yes. It applies to merchant seamen, who are civilians.


Howard Charles Green: Why is there a restriction of twelve months? A man may be seriously wounded and not die for, say, eighteen months or two or three years.


James Lorimer Ilsley: I am of opinion that there should be some limitation in the case of civilians. It must be remembered that we have powers by order in council which are not displaced by this section; and in the case of persons who are not members of the
[Mr. IlsleyJ
forces, and whose records are not possessed by the government, to allow the possibility five or ten years after the war, when death occurs, of claims that these deaths were the result of enemy action at the time of the war, would, in my opinion, open the door too wide.


Howard Charles Green: Of course, the onus would be on the dependent of the deceased person; it would not be on the pensions commission. Does the minister not think it would be a severe enough restriction to provide that the pensions commission must decide that the death was caused by enemy action?


James Lorimer Ilsley: I do not think so. When
we are talking about merchant seamen, we must regard the normal case as that of the seaman who is drowned in time of war as a result of enemy attack. That is the usual case, and the twelve months' provision extends the time and would cover, I suppose, the case of the man who is wounded. But twelve months is long enough. As I have said, there is a power to deal with special cases by order in council, under the consolidated Revenue and Audit Act. But I do not think we should throw the door too widely open. For the time being the situation is met as well as it can be, and if it is desired to broaden these provisions, it can be done by amendment, or cases can be dealt with by order in council.


Harry Rutherford Jackman: I am sorry that the
minister has not acted on my suggestion of last evening, when I requested that some consideration be given to a higher rate of interest on the amount of tax. Certainly three per cent is the lowest the minister possibly could have taken, and I think the government should treat cases of this kind in the most generous manner. It is an involved actuarial problem; but if a man thirty years of age is killed overseas, the tax against his estate is assessed at, say, S3,000; then the sum which accrued at three per cent with half-yearly rests-to use the approved term-is ascertained. That might be only $2,000, and that amount, then, is the tax. If the rate were four per cent instead of three per cent, the amount needed to be set up, with half-yearly rests, at the present time might be only $1,200; and at five per cent, it might be something less than $1,000. It seems to me that when a man has given his life, and his estate falls to the crown for succession duty at a very early period, the government should be willing to give his heirs every possible consideration. A soldier who is killed will probably not have had as much time to accumulate an estate as the ordinary citizen. Most

Succession Duty Act
of these men who die will die between the ages of say twenty-five and forty, and the government should give their dependents every possible consideration. I would, therefore, urge that the rate be higher than three per cent.


James Lorimer Ilsley: I have discussed this matter with the officers of the department, and we are of opinion that three per cent is the proper rate. It is substantially the market rate at the present time.


Harry Rutherford Jackman: It is a controlled rate.


James Lorimer Ilsley: I think there are not many people who can continuously have their money earning more than three per cent compound interest over a substantial period of time. Far more earn much less than that.


Harry Rutherford Jackman: I do not know of money earning much less than that over a long period of time. The government has chosen the lowest possible rate. For instance, the new loan will bear that rate or better. If the soldier had his money in a first mortgage, he would get at least five per cent. I think the minister is working a hardship on the man who gives his life.


James Lorimer Ilsley: This says three per cent at
half yearly rests.


Harry Rutherford Jackman: This is three per cent on a coupon. I do not think the minister can point to any security running over any length of years that yields less than three per cent.


Richard Burpee Hanson: On most of the provincial bonds the rates are higher.


Harry Rutherford Jackman: The attitude of the crown seems rather niggardly considering the circumstances. The event arises entirely out of the defence of the nation, and every consideration and, in fact, generosity should be shown to the soldiers' dependents. It arouses the antagonism of hon. members when the government refuses to deal considerately with these people. It is not going to involve much money, and surely the people of Canada are willing that a higher rate should be given. Under the annuities-as a matter of fact the rate of interest has not changed-four per cent is being given; and while three per cent is the prevailing rate, everyone knows that present money rates are to an extent artificial. We have a central bank in control as other countries have, and I doubt whether the minister would say that three per cent is a natural rate to-day. There are plenty of very good securities which yield considerably more, and I do not know why we should compel soldiers' dependents to receive such an extremely low rate. It is not as if they were J4873-209
getting the security of the crown behind it. It is something being taken away from them at a very early date, arising only because of the man's sacrifice. It is not as if the crown were giving something. The crown is getting a windfall, and in order not to get too much it says, "We will take only the present value of the tax and allow the man to have his normal expectation of life before calculating it." Certainly the government is not adopting a generous attitude. I strongly urge that the rate be made higher.


James Lorimer Ilsley: I point out that the main respect in which this section is extended is in the exemption. There will probably not be one in a thousand who will be affected by this valuation. There is an exemption of $30,000 for the widow and $7,500 for each child; that will take care of all cases where there is any necessity at all. Then, when we move into estates going to brothers, grown sons and so forth, I would consider that this provision is adequate. I do not know why hon. members should be so terribly concerned about those cases, because they will be extremely rare. It will be a matter of very substantial estates; and, as I say, the main respect in which this section is extended is in respect of the exemption.


Douglas Gooderham Ross: Has every soldier's widow who is entitled to a pension the same exemption? That is, the pension is the consideration?


James Lorimer Ilsley: The question in that form cannot be answered. To begin with, what does the hon. gentleman mean by a soldier?


Douglas Gooderham Ross: Every enlisted man if you like, who is entitled to a pension under the Pension Act. Does his widow receive the exemption?


James Lorimer Ilsley: No.


Douglas Gooderham Ross: Well, she should. The point is that the pension should be the consideration. There has been a great deal of discussion in the pensions committee as to the entitlement of the widow of an enlisted' man to pension. Surely, if the widow is entitled to pension, she is entitled to exemption under this bill, regardless of limitation. If the minister will put that in the bill he will get rid of a great deal of trouble, because it will follow the intent of the Pension Act. He is going to have all kinds of difficulty trying to make exceptions; the pension should be the consideration for the exemption.


Howard Charles Green: I understood the minister to say after he had read the proposed amendment that the effect of it was that if the
3EVISED EDITION
Succession Duty Act

widow could qualify for pension as a result of any disability arising out of the last war or this war-


James Lorimer Ilsley: Right.


Howard Charles Green: -then she would also qualify for the exemption.


James Lorimer Ilsley: That is correct, but that is different from what the hon. member for St. Paul's was saying. This excludes the peace cases, cases of pension arising from peace-time disability. That is the very point.


Richard Burpee Hanson: Except by enemy action.


James Lorimer Ilsley: Yes; but there would be no
enemy in peace time.


Howard Charles Green: The minister spoke a few minutes ago as though he found it hard to understand why anyone should ask that estates over a certain amount should be entitled to exemption. I raised the point a few days ago when the resolution preceding the bill was up for discussion, and the reason why I raised it was that I believe it is not right in principle that the estates of men who give their lives for their country should be subject to succession duty tax imposed by the dominion which sent these men overseas. It was on that principle that I raised the objection.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 8-Allowances in computing aggregate net value and dutiable value.
James Lorimer Ilsley: I have a small amendment to that. It reads:
That section 8, subsection 1, be amended by inserting after the word "surrogate" in the thirteenth line the words "probate or other like".
So that the opening of the said subsection shall read:
(1) In determining the aggregate net value and dutiable value respectively, an allowance shall be made for debts and encumbrances (including reasonable funeral expenses and surrogate, probate or other like court fees, but not including the charges of solicitors).


Richard Burpee Hanson: That is good enough.


Colin William George Gibson: I so move.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Preamble agreed to.
On the title.
Richard Burpee Hanson: May I say to the minister that, on the whole, if we have to have legislation of this kind I think

this is a pretty good bill. It contains certain features that I do not like. I know it is in the experimental stage so far as this jurisdiction is concerned, but I hope the administrators of the measure will keep an open mind and note any deficiencies that may become evident as time goes on. Do not be afraid to come back to parliament to rectify evils and omissions that may become apparent. Let us try to improve this measure as we go along, I do not think the rates in themselves are oppressive, although, of course, when coupled with the provincial rates, in certain instances they are heavy. I hope this bill may accomplish the result that I think is in the back of the minister's mind, of ultimately invading and capturing the field for the central authority. That would be very unpopular in some places, but on the whole I think it would be a good thing for those who have to pay the taxes. Then we would have a uniform act and uniformity of administration, and I think we would have it in a jurisdiction in which, in some instances at least, the public will have a little more confidence.


Jean-François Pouliot: I give credit to the leader of the opposition for the study he has given this legislation; but, although we are now on the title, I wish to direct attention to subsection 4 of section 35, which reads:
The minister, upon proof to his satisfaction that an overpayment of duty has been made, may refund the amount of such overpayment, provided no such refund shall be made after the expiration of one year from the receipt by the minister of an amount purporting to be in full settlement of the duty.
I find that pretty hard, and I hope the minister may see his way clear to give it a wide interpretation.
I will not insist further on that point, but I wish to say one thing to the leader of the opposition and his supporters. Ever since the special session of 1939 they have been asking this government to do more and more. They have wanted this country to practise total war. Now we have total taxation because of that total war; and if there is anyone who should not complain about this taxation, it is precisely the leader of the opposition and his satellites. The proof of the pudding is in the eating. I am against this legislation, for reasons I have already stated; but those who have been advocating a greater war effort than was at first contemplated, cannot object to it. They were never satisfied with the policy of the government, which they said was never doing enough. They wanted more and more; and every time the leader of the opposition said, "do more", I rose and asked what he meant, but he never replied. Now we have the reply, in this taxation. I regret it for the sake of some of my fellow citizens, but I am

Succession Duty Act
very glad that the Tories will have to taste their own medicine; it will be a good lesson to them. Although I regret it because of some Tories, I do not regret it for those who have said we were never doing enough.
There is one further point I should like to mention. When a certain piece of legislation is brought before us, it is stated to be essential and indispensable, and we are told that we cannot get along without it. Well, according to what was said yesterday, the revenue under this contentious legislation will be from twenty to twenty-five million dollars. If it is twenty million dollars, that will be fifteen million dollars less than what has been given the west; if it is twenty-five million dollars, it will be ten million dollars less than what we are giving the west. Therefore, if the prairie provinces had not been given $35,000,000 this year, we would not need contentious legislation like this. I have wanted to say this for a long time.


Thomas Vien: Shall the title carry?


Jean-François Pouliot: No, sir.


Thomas Vien: I should like to point out to the hon. gentleman that we are now discussing succession duties, and that the general matters of expenditure and taxation which he is now discussing are hardly linked up with the title of this bill.


Jean-François Pouliot: If you will allow me one further word-


Thomas Vien: Let us confine ourselves to the bill.


Harry Rutherford Jackman: We passed section 8 so quickly that I did not have an opportunity to refer to one other matter. I do not know whether an opinion was expressed in this connection yesterday, but what happens in a case where a man accommodates another on a promissory note, for no consideration, and the note becomes a charge against the man's estate? Will that be considered a liability of the estate?


James Lorimer Ilsley: I think that is covered by section 8 (2) (b), which reads:
Notwithstanding anything contained in the last preceding subsection allowance shall not be made-
(b) for any debt in respect whereof there is a right to reimbursement from any other person unless such reimbursement cannot be obtained.


Harry Rutherford Jackman: Take the case of a father who has educated his sons. He says, "I have no more money for you, but if you want to start up in business I will endorse a note for $5,000." The father dies; the son cannot meet the note, and therefore there is a claim against the father's estate. Will that claim be allowed as a deduction from the assets?


James Lorimer Ilsley: That is precisely covered by the subsection I read. If reimbursement could not be obtained, it would be allowed.


Harry Rutherford Jackman: Even though full consideration had not been received for it?


James Lorimer Ilsley: There is a right to reimbursement from the son.


Harry Rutherford Jackman: He may or may not be on the note, which might be given directly to the bank.


James Lorimer Ilsley: I do not know. I can only direct the hon. gentleman's attention to that section. That sort of thing is carefully covered there, and it would just be a question of applying that principle.


Harry Rutherford Jackman: That section is meant, as I understand it, only to prevent fraudulent evasion. Anything that is a real debt of the estate, even though full consideration were not given, would be satisfactory? In other words, unless there was a real attempt at evasion-


James Lorimer Ilsley: I do not understand the illustration given by the hon. gentleman. This is a case where a parent goes on a note for his son, is it? They borrow the money from somebody else, say, from a bank? In that event the father would owe the bank at the time of his death.


Richard Burpee Hanson: He would be a guarantor.


James Lorimer Ilsley: Yes, but he would be liable to the bank. If he paid the bank he would have a right to be reimbursed by his son.


Richard Burpee Hanson: Yes, and if the son was worthless this is what would happen. The executor would list the note among the assets, but then he would value it at nil.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: He would have to demonstrate that it was not worth anything. I see no trouble, because I think those cases in practice arise quite frequently.


James Lorimer Ilsley: Yes.
Mr. HANSON (York-Sunbury); If I endorse a note for a man and he is not worth it, I have to take it up. Then, if I die, my estate would be the holder of the note. My executor would list it among the assets. But if the maker of the note was worthless, it would be valued at nothing. He would have to satisfy the department that it was worth nothing, but I believe in a reasonable case that could be done.
14873-209i
Succession Duty Act


James Lorimer Ilsley: I am thinking about a
case where it is paid after the death by the executor. In that event it would be a debt of the estate.


Richard Burpee Hanson: Yes.


James Lorimer Ilsley: If reimbursement were not
possible.


Richard Burpee Hanson: It could
be deducted as a debt?


James Lorimer Ilsley: Yes, if reimbursement were
not possible.


Harry Rutherford Jackman: What troubled me was
paragraph (a). It says that an allowance shall not be made for a debt incurred where no consideration passed. Then the consideration is outlined rather specifically. If you endorse a note for a friend, you can hardly say you get "money's worth," which is the expression used in the paragraph. Neither would that be true if you endorsed a note for a son.


James Lorimer Ilsley: Money's worth was obtained
from the bank.


Harry Rutherford Jackman: But not by the deceased.


James Lorimer Ilsley: That does not matter. That would be between the guarantor and the bank. The guarantor would owe the bank the money.


Harry Rutherford Jackman: But the paragraph specifically states "money's worth wholly for the deceased's own use and benefit."


Mr. HARRIS (Danforth):: Before the title carries, I should like to make one observation. I am rather in accord with this type of taxation, first because we need the money. We must go where the money is, and we must get it. Any move the government makes toward getting money to help prosecute the war effort will receive the support of a good many of us from all sides of the chamber. I could not sit still and take the little lecture from the hon. member for Temiscouata with regard to those of us who sit on this side of the house, without saying something.
This particular item of taxation is one which worries those of us here perhaps less than many other forms of taxation in other bills which will come before us.


[Stage Direction]
Title agreed to.
Bill reported.
Mr. ILSLEY moved the third reading of the bill.
Thomas Langton Church: I believe I represent, on the question of overgovernment and overtaxation, a large body of public opinion in this country. I am not trying to speak for the leader of the opposition (Mr. Hanson), or the opposition, but I can speak for myself. I believe that in connection with this bill it is not patriotic to remain silent, and particularly at a time like this. Everybody wants to help win the war; nothing else matters in Canada but the winning of the war.
I deeply sympathize with the two ministers in charge of this bill, and the officials associated with them. They have a tiresome, wearisome and thankless job. There is, however, a large body of public opinion in Canada, a body of honest workers and toilers who have toiled all their lives to amass only a little property. We have in Canada been overgoverned by dominion, provincial and municipal governments with many taxes on the same property. We have not noticed how the right to possess property has been taken away from people in Canada by measures of taxation such as the one before the house.
In the early days of this country, in the days of Sir John A. Macdonald, Sir Wilfrid Laurier and the rest of them, everybody owned a little property. A man would own a store, a small garden, a mill, a horse and rig or a little farm, and he tried to be thrifty. In those days a man was encouraged to be thrifty. The people who came to Canada from England, Ireland, Scotland, Wales and many other countries in the early days were thrifty. The minister urged in his budget speech, and' he is again urging in connection with the loan about to be made, that people should collect savings to help in the war. We have been slow to see how the right to possess private property, and the ownership of property have been taken away in Canada to-day. So much is that true that people have become proletarian. The direct result has been that very few people possess property to-day. It is the desire of all good citizens that the government shall prosecute the war to the end; that is all that counts. The government must collect large sums of money by taxation or borrowing. They need it. I am sorry, however, that in the budget, they have not tried to collect it on a fifty-fifty basis'-fifty per cent from income and fifty per cent from capital. The manner in which it is being collected, with duplicate taxes of all kinds, is imposing a heavy burden on the thrifty people of Canada.
As I see it, these phantom excursions into the revenues of the provinces and the

Succession Duty Act
municipalities cannot continue much longer. We have our own business and our own way of doing things. I am only one of a party, and I do not always follow parties.
I follow principles. If a party leaves its principles, then I support principles just the same in this House of Commons, and not individuals in any political party.
Under our present procedure, in a time of heavy taxation, one form of government seizes the revenue from another form of government, and that form of government seizes revenue from the next. This bill I consider the worst of them all. In my view, any man who makes money in the future will spend it, in order to avoid these heavy death duties. Here we have rival organizations in the provinces and in the dominion collecting money from the very same real estate and personal property.
The government has copied sections 6 and 7 of Bill No. 79 from provincial legislation of some years ago as to death duties on real and personal estate. What is the result? In the early days of succession duties legislation in Ontario many people who owned property left the province and went to Nassau and other places to live. It is difficult to control that part of an estate which is movable. With all the trust company laws, loan company laws, banking laws, and that kind of thing, it is very easy to remove movable personal property out of a jurisdiction.
In conclusion, may I point out that if a man makes some money he will spend it; he will certainly not invest it in houses or other things to be taken away from him. He will not build houses, because his money will be taken away from him by bills like this. This measure, as I see it, is the first step toward a condition where two bodies will be taking money from the same estate and through death duties there will be in time, a general confiscation of wealth by such measures.
In adopting these duties we shall be following some form of socialism. By this overgovernment and overtaxation on certain types of property we are seeking to destroy the present status and basis of society which we have had in this country since confederation in connection with the holding of property, real estate and personal estate. If the government is to follow the imposition of these death duties and other measures to the logical conclusion, in time it will be the sole owner of all property and wealth, and in the end the government will be the only distributors of goods.
So far as I am concerned, I wish the government every success. I believe the money will
be forthcoming, but I should like to see something done for the small investor. Before the war started, this type of man had pledged in real estate and insurance policies all the money which he might have invested in the victory loan. Those two items take up about 70 per cent of what he makes and he cannot finance extra taxes and help the war loan.
I should like to see the government pass a national moratorium in connection with insurance premiums, whereby a toiler who had paid for four or five years his premiums could pay it after the war at the same rate as the victory loan, and so allow these honest workers a share in the victory loan, and also pass a moratorium on mortgages by a national act suspending payment of principal till after the war as a war measure, like the provinces did in the depression.
I wish the government every success. I know the people of Canada would rejoice if under the voluntary system Canada had a million men to go over to that glorious land of France, when the air force is ready and we have ships to help clean those barbarous Germans out of the glorious land of France where so many of our brave Canadians sleep their last sleep. The privations suffered by the people of France are terrible, and their human misery and sacrifices will live forever as a great example of sublime patriotism. I do hope the government will try to do something to readjust this awful burden of overgovernment and overtaxation which bears on the small wage earners and real estate. The people are willing to pay for the war so long as they know it is for the war and a supreme effort, but they object to vast expenditures being made on matters not having to do with the war or its prosecution to victory.


Major James William Coldwell: Mr. Speaker, as I said last night, I was not present when second reading was given to this bill because I was attending to other duties in connection with one of the committees. We of this group are pleased that the government has at last placed a measure of this sort upon the dominion statute books. For a number of years we have advocated death duties in the house, not as a war measure but as a measure of taxation which would readjust to some extent the wealth of this country where it has accumulated rather quickly in recent years. Before the war we were of opinion that a death duty should be put into effect in order that we might build up something in the nature of a sinking fund to retire our national obligations, at least in part. The war has, however, made it necessary that every dollar that we can raise shall be used for its prosecution. Therefore we welcome this legislation.
Succession Duty Act

There has been a great deal of criticism because this measure enters a field which is occupied to some extent by the provinces. That is unfortunate, but an opportunity was given to the provincial premiers, who are now objecting, to come to some agreement regarding the occupation or the vacancy of this particular field. I do not think that' argument carries any weight.
In looking over Hansard of the last few days, I find that some members of the house, particularly the leader of the opposition (Mr. Hanson), have referred to those who are inclined to support measures of this sort as the "have-nots." I am proud to represent a good many people who might be classified as "have-nots," but I am glad to say that there are associated with me many people who belong to the "have" class, but who, from motives of humanity, believe that something should be done to improve the unequal social conditions which face our generation. I believe that, when this war is over, we shall see many measures taken to prevent the accumulation of wealth and to redistribute wealth. Surely that is necessary at the present time.
The leader of the opposition stated a little while ago that one of the great communions in this country, the Anglican communion, had in the past received considerable support from the old land in establishing its institution in this country and in fostering it throughout the years. That is true. I have often wished that, in days gone by, the leaders of that great church might have given a better lead in the implementing of social legislation, and I am pleased to be able to state that, in recent days, this old and stately church has given a lead which I think we might follow when we quote it in other respects in this chamber and elsewhere. I have read with a good deal of interest the report of the Malvern conference held last January. When I hear gibes thrown at those in this house who seek to bring about a better social order, my mind goes back to the mediaeval teachers who taught what the use of property ought to be.
I was pleased to hear the hon. member for Halifax (Mr. Macdonald) state something last night which is in line with both history and philosophy:
I submit that no one has an inalienable right to transmit property to his descendants. The natural law is that a man should part with his property at the time of his death. The fact that dependents or relatives are entitled to come into possession of his estate is wholly dependent upon the laws of the country and the facilities that are provided for the administration of estates.

That is in line with the historic teachings of all great Christian religions. The resolution adopted at the Malvern conference, to which I am going to refer, began as follows:
Christian doctrine must insist that production exists for consumption ... to a large extent production is carried on not to supply the consumer with goods but to bring profits to the producer.
An amendment was moved by a member of one of the oldest and most respected families in a county of England where I was bom, the county of Devon. Sir Richard Acland, who happens to be a Liberal member of the British house of commons, moved the following amendment:
In the present situation we believe the church should declare that the maintenance of that part of the structure of our society by which the ownership of the great resources of our community can be vested in private individuals is a stumbling block, making it harder for the generality of men to live Christian lives.
Yet in this debate we have heard it hinted that those who stand for those principles in this house represent something of subversive elements in our midst. Let me say that at that great Malvern conference of a large number of the bishops and principal clergy of the Church of England, Sir Richard Acland's amendment was adopted with few dissenting votes. We have to face up to problems such as we have heard discussed in this house to-night and in the past day or two, because, if we do not, we are going to have said to us what Sir Richard Acland said in support of his resolution:
For over 150 years-
He said:
-you have neglected your duty through sheer funk. The whole structure of society is, from the Christian point of view, rotten. It has given Hitler the opportunity to say, "To hell with the whale order." In order to save humanity from the horror of nazism, we must find a way of living superior not merely to nazism but to that which we ourselves knew before. You must be prepared to offend people who are determined to reserve the existing order.
That, I think, is true, and legislation such as this before us to-night, although many may regard it as a war measure, will undoubtedly remain on the statute books of this country now it is there. Although there are some criticisms which one might have made of this bill, those criticisms were not made because we believe that this is a step in the right direction and that as experience in the administration of the measure develops, we shall be able to change it, alter it, amend it, so that it may be a better one still.

Succession Duty Act
I have heard in the last few days and read in the debates statements that persons have the right to continue to transmit property from generation to generation. Let me quote-


Mr. DUPUIS:: Would the hon. gentleman
give the source from which he is quoting?


Major James William Coldwell: It is the Malvern
Conference, England, 1941.


Vincent Dupuis: What is the date of the publication?


Major James William Coldwell: I am taking this from June 7 issue of Liberty. I have, however, the original copy of the proceedings of the conference in my office, and I can assure the hon. gentleman that this is exactly the same. The Archbishop of York, who placed the crown on the queen's 'head, wrote this:
It is perfectly ludicrous that because someone lent money for the building of, say, the Great Western Railway, he should be possessed of a salable right to levy a private tax upon that railway for ever.
The contribution of labour, whether managerial, administrative, or manual, must equally with the contribution of capital, and with still further right, carry a title to representation on the board of directors. The investor gets his interest; the workman gets his wages. There is no reason why the former should get control and the latter should not. It is on the whole more reasonable that labour should hire capital than that capital should hire labour, because capital can exist without capitalists, but labour cannot exist without labourers.
There is a fundamental truth which in legislation of this kind we have begun to recognize.
One more thing I should like to say. The leader of the opposition yesterday made the statement that:
One of the objects of the dictator of Germany under the national-socialism system, and one of the objects of the dictator of Italy under fascism in effect is to destroy the capitalistic system. What do they offer us in its place?
Anyone who knows the story of the rise of either Mussolini in Italy or of Hitler in Germany knows that the reverse is true, that these men were both financed and promoted in order that they might destroy the social democratic movements in their respective lands.


Angus MacInnis: Financed by the capitalists.


Major James William Coldwell: By the capitalists of those countries and, incidentally, of other countries. We know that every person who stood for social and economic reform, for social democracy, beginning with Matteotti, the great social-democratic leader of Italy, down to the social democratic leaders of democratic Germany, were murdered by the dictators, or placed in concentration camps, or compelled to flee into exile. What we are
witnessing to-day is the fruit of the greed of those who thought to stifle social reform, and who set up a Frankenstein which to-day is threatening to destroy us all.
Therefore I wish to commend this legislation and to express the hope that it will be extended as the years go by. The hon. member for Broadview (Mr. Church), whom I respect very highly as a member of this house, said just now that he objected to this legislation because it brought hardship on the thrifty and on the poor. But only look at the returns-look at the advertisements of our insurance companies, for instance, which tell us that of a hundred young men now twenty-five years of age, only four will be wealthy when they reach sixty, only a few more will be able to maintain themselves, and the vast majority will be dead or mainly dependent upon relatives and friends.


An hon. MEMBER:: Or upon the
government.


Major James William Coldwell: Quite true. Because, if you will look at the applications for old age pensions in this wealthy country, you will see that they bear out the statement that if we did not care for them in the very modest way in which we are doing to-day, they would be suffering great hardships in the eventide of life. Therefore again I commend the Minister of Finance (Mr. Usley) for this legislation, and I have been disappointed at the long barrage of criticism put up against it by the Conservative leader in this house. That, of course, is the traditional Conservative attitude. That is the traditional attitude which, years ago, drove many a young man out of the ranks of the Conservative party. To-day that is not the attitude of either humane or thinking people, and as a member of an opposition group in this house I commend the government for bringing in this measure. My main criticism is that it does not go far enough.


John Ritchie MacNicol: If the hon. gentleman will permit me, the leader of the opposition (Mr. Hanson) on repeated occasions during the course of this debate has commended the government for bringing in this legislation.


Major James William Coldwell: I can pick out all kinds of places in Hansard where the legislation was not commended. In his budget speech the leader of the opposition regretted' very much that this bill had been brought into parliament at all at this time.
Therefore, commending the measure, I hope it will be expanded, and I hope, on a future occasion, instead of a succession duty bill, we shall have a death duty bill. An hon.
Succession Duty Act

member says, "a capital levy". Well, let me say that when this war is over,, there will probably be a capital levy, perhaps not in the form in which it was suggested after the last war, but a levy on accumulated wealth in order that we may retire some of the debt which we are accumulating for two purposes: to defend our institutions; and, as parts of those institutions, the people who are managing to control the property of this country at the present time. I have no doubt that just as, seven or eight years ago, succession duties and death duties were proposed in this house and were more or less scorned, so, when this war is over, we shall have to find ways and means of meeting war obligations, and one of those ways and means, I predict, will be a levy on accumulated wealth.
With those few words I wish to conclude what I have to say. I am glad to see that we have taken this step, at least, in the right direction.


Jean-François Pouliot: Mr. Speaker, I do not accept the hon. member for Rosetown-Biggar (Mr Coldwell) as my professor of modern history. He should know that, after the Prussian war, France had to pay five billions of francs-cinq milliards-and it was paid in a very short time, on account of the reserve which the French peasant had in his woollen sock. On that account the war was not so hard on France as it would have been had France been living on government proposals such as those advocated by the hon. gentlemen upon your extreme left.
Furthermore, in these times, the cause of the defeat of France is to be found in the devaluation of the franc. This measure decreased so much the values of the currency possessed by Frenchmen who had annuities from the state that they became communists; they had not the same interest in defending their country as when they were owners and proprietors.
The right of ownership is something which has existed since the beginning of time, but of recent years it has been gradually replaced by theories which are most dangerous to the welfare of any country. I am in favour of the old order of things. It seems to me that our mistake is to go always ahead and forget that the best is in the past. Instead of trying always to go forward into uncharted seas, we should return to the old principles which have assured during scores of years the prosperity of this country.
For the past twenty years the teachings of economists and social scientists in all the universities of the world have been responsible 
for the misinformed young men who, though having no experience of life, have been accepted as experts and who now find themselves in the role of Moses-and I insist on Moses-the Moses' who are supposed to bring the people of Israel into the promised land. In saying that, I do not make a pun on the Goldenbergs, the Rasminskys, the Cohens and the Heapses who infest the civil service of Ottawa. I refer only to the example of the old times. Moses never entered the promised land; he saw it only from a distance, and afterwards his people got in.
I wonder whether it is not better to reflect a little upon the emptiness of modern theories of social science and economics, and go back to the experience of ages for the drafting of policies to be applied in this country.
There was, of course, the experiment of President Roosevelt in the United States. He had a brain trust, but he dispensed with it. Now we have one, and I wonder whether it is not time to get rid of it and to revert to policies which have proved so satisfactory in times past.
I shall not pursue this topic at length, because I understand that there is to be a government statement, but I protest against all new policies until there is some justification for them, and the views of so-called experts do not constitute any justification, because they are not experts; they have not the least experience of ordinary business; they have no contact with the people, and they are the most dangerous citizens that we can find in this country.
Some people are surprised at the way things are going. The government is not to blame. I have every sympathy with the ministers. The only reproach I might make against them is their proneness to accept with closed eyes and open mouths the theories which are offered to them by these young freshmen or sophomores.


Grote Stirling: For one moment I wish to detain the house for the purpose of calling attention to the fact that, in the absence of the leader of the opposition (Mr. Hanson), the leader of the Cooperative Commonwealth Federation party (Mr. Cold-well) has given expression to opinions which it is perfectly proper for him to have and to give expression to. The only thing I regret is that he should have done so in the absence of the one whom he was criticizing. The leader of the opposition will have his own opportunities of replying to that criticism if he sees fit; but I think it is right to make

Succession Duty Act
this observation, that the leader of the opposition and his colleagues of this party have not expressed themselves as being opposed to the principle of the legislation brought forward, but have carried out those duties which we of the opposition consider lie upon us, to examine the matters which arise in such resolutions and to offer such criticisms of them as they think are warranted. To that extent, in my opinion the leader of the opposition carried out his obligations in this house.
Mr. J. H. B.LACKMORE (Lethbridge): I feel that under the circumstances I should take perhaps a minute of the time of the house. We have had well and vividly placed before us to-night a struggle between the old way of doing and a new way. Something has gone wrong with our way of life. As a result of it, we are becoming subjected to taxation which is ruinous. The leader of the opposition (Mr. Hanson) has properly voiced his objection to the onrushing tide of devastating taxation. I should like to draw the attention of hon. members of the opposition to this fact, that if they were in the position of the government to-day, and if the Minister of Finance were a good Conservative of the finest Conservative type, he would be forcing upon this country a burden of taxation quite as onerous as that which the present Minister of Finance feels himself obliged to force upon the country.
I have listened with great care to the objections of the Conservatives, and not once have I heard any Conservative member state what he would do to raise the money without this taxation.
That is very serious. The leader of the Cooperative Commonwealth Federation group (Mr. Coldwell) has told us, as is characteristic of one with his ideas, that this kind of taxation is quite all right; that it is along the right lines. I draw the attention of the house to the fact that hon. members in my movement maintain that this system of taxation is all wrong, and that there is a way of managing a country like Canada, so as to, have all the revenue you need to fight the war just as vigorously as the material resources you have will enable you to do, and still maintain in this country such a set of prices, such a condition of freedom from taxation as will enable people to possess their own homes, as the hon. member for Temiscouata (Mr. Pouliot) longs to see them do, as the leader of the opposition wishes to see them do, but as the leader of the Cooperative Commonwealth Federation party very aptly and wisely says they now do not. In other words, the very things that both the Liberals and the Conservatives and all the rest of us are longing for, namely, individual ownership and freedom to produce
and own and direct our affairs, rugged individualism and all those fine things which made our fathers great, are passing away because we will not adopt a system of public management which can preserve us from the conditions of debt which are coming upon us.
I am not going into any details except just to assert once again that it is not necessary to have all this centralization, all this socialization, all this tendency toward government ownership, all this crushing taxation, all this bewildering regimentation which is coming upon us; it is not necessary to have this fear, this anxiety, this frustration and bewilderment, this unemployment, when we have a country as rich as Canada. I just wish to draw that to the attention of hon. members. There is every reason for the people of Canada even to-day to have hope, to look up and to rejoice. But we are not going to have hope and rejoicing by the further development of the policies which are being forced upon us by the administration at the present time.


Mr. J. A. ROSS (Souris):: In reference to some of the remarks made by the leader of the Social Credit party-


Mr. CRERAR:: Would my hon. friend permit me to interrupt for a moment? It is almost eleven o'clock and at the request of the Prime Minister, when this third reading is passed I wish to revert to motions to table a statement in order that it may be printed in Votes and Proceedings for tomorrow. Unless my hon. friend has something very pertinent-


James Arthur Ross: I will take only a
minute. I just wish to say with regard to the hon. member's remarks concerning the opposition to the budget and so forth, that I, as one member of the opposition, in any criticism that I offered on the budget or any exemption for which I asked, offered a substitute in every case. That is all I desire to say.
Motion agreed to and bill read the third time and passed.	,



ST. LAWRENCE WATERWAY ADDITIONAL DIVERSIONS OF WATER AT NIAGARA FALLS-TABLING OF NOTES EXCHANGED

Thomas Alexander Crerar: With the consent of the house I should like to revert to motions, in order to lay on the table at the request of the Prime Minister the exchange of notes between Canada and the United States of America relating to additional diversions at Niagara falls, to which reference was made some days ago. They embody communications from the Secretary of State of the United States, Washington, to the Canadian Minister to the United States,
Diversion of Water

Washington, and from the Canadian Minister to the United States, Washington, to the Secretary of State of the United States, Washington. They are tabled in English and French with the request that they be printed in to-morrow's Votes and Proceedings.
Along with them I desire to make the following statement:
1.	The house is familiar with the provisions of the St. Lawrence agreement which was signed in March of this year, and with the exchange of notes which took place in October last.
2.	Without embarking upon an explanation of the agreement, it may be observed that article VIII enables either country to divert water into the St. Lawrence watershed and to utilize the water so diverted for power purposes, so long as it remains a part of international waters.


John Ritchie MacNicol: That is permanent then.


Thomas Alexander Crerar: Article IX provides for the preservation of the scenic beauty of the Niagara falls and river, for the construction of remedial works, and for the efficient utilization and equitable apportionment of the waters of the Niagara to the extent that is consistent with the paramount need to preserve their scenic beauty.
3.	Last October, to ensure continued acceleration of the supply of essential war materials, an agreement was made by exchange of notes, copies of which are to be found at pages 34 to 36 in the white paper tabled in the House of Commons on March 21. These notes provided for the bringing into force, in advance of a St. Lawrence agreement, of the provisions enabling Ontario to proceed with the Ogoki and Long Lake diversions and to utilize immediately 5,000 cubic feet per second of additional water at Niagara. This made it possible to develop immediately, using idle equipment, 70,000 horse-power.
4.	The demand for power grows from day to day and from month to month. It is not a problem of static industry, it is one of constantly expanding production. Continuous expansion of production can only take place if there is corresponding expansion of hydroelectric power.
5.	To meet this situation, a proposal has been made by the government of the United States of America, leading to the immediate further utilization of the water at Niagara. It involves the immediate diversion of 5,000 cubic feet per second on the United States side, which will produce 70,000 horse-power; and the immediate diversion of 3,000 cubic feet per second on the Canadian side, which

will produce 35,000 horse-power, mostly in the form of additional energy.
6. This proposal has been embodied in an exchange of notes which took place on May 20. It might be of service to hon. members if copies, in English and in French, were included in Votes and Proceedings of to-day. I am tabling them for that purpose.
7. This exchange is being submitted to the senate of the United States for approval to-day, and it is expected that its provisions will be put into effect to-day or to-morrow.
8.	It provides for the immediate' diversion of 5,000 cubic feet per second on the United States side and 3,000 cubic feet per second on the Canadian side. There is at present an idle plant on the United States side which can use 12,500 cubic feet per second. The maximum amount of additional water that can be effectively used in Canada, with existing equipment and under existing market conditions, is 3,000 cubic feet per second. That is the reason for the apparent discrepancy in this apportionment.
9.	In substance, the exchange accelerates the provisions of the St. Lawrence agreement, whereunder additional power would be made available at Niagara, and it takes advantage of relatively high water conditions in the lakes to give effect to these provisions before the construction of the remedial works.
10.	The agreement is subject to certain conditions. In the first place, it cannot extend beyond the duration of the present emergency; in the second place, it is subject to reconsideration by both governments on October 1, 1942; in the third place, it will be subject to the provisions of article IX of the Great Lakes-St. Lawrence basin development.
11.	It will also be observed that the agreement enables the engineers of the two countries to proceed at once with the programme for remedial works.
12.	When this proposal was first made to the Canadian government, the temporary Canadian Great Lakes-St. Lawrence basin committee was asked to report upon the question as to whether immediate increases in diversions of 5.000 cubic feet per second to the United States and 3,000 cubic feet per second to Canada would be detrimental or harmful to Canadian interests.
This committee, under the chairmanship of Mr. Guy A. Lindsay of the Department of Transport, and including in its membership the chairman and chief engineer of the Hydro-Electric Power Commission, of Ontario, the vice-chairman of the Quebec Streams Commission and the legal adviser of the Department of External Affairs, has advised

Prairie Farm Rehabilitation
the government that such diversions would not be detrimental or harmful to Canadian interests. The committee studied, amongst other things, the possible effect of proposed diversions (including a total of 15,500 cubic feet per second) upon the Niagara falls and river, and have submitted the following statement:
Although it is assumed that the construction of these remedial works will be proceeded with immediately, if the diversions are authorized there will be a period during which the flow over the falls is depleted before the effect of the remedial works is felt. The committee does not think this is a serious matter however, because with flow conditions in the Niagara river approximately those of 1940, the diversions of an additional 15,500 cubic feet per second for power purposes would still leave a more satisfactory scenic spectacle at the falls than that which existed in the recent low water years of 1934, 1935 and 1936. In reaching this conclusion no account has been taken of any betterment of conditions which may have been brought about at the Canadian flank of the Horseshoe falls due to the recent construction of the gathering weir of the Canadian Niagara Power Company.
The government, therefore, reached the conclusion that the proposals submitted by the United States government, having regard for lake levels and for the paramount need for preserving the scenic beauty of the Niagara falls and river, would not be detrimental to this country. I do not suggest that if the diversions had been likely to affect the scenic beauty the government would have refused to go on with the agreement. The urgent need for power for vital war production is a paramount consideration. It is, however, satisfactory to know that this additional power can be developed without prejudice to the beauty of the falls.


[Stage Direction]
It being nine minutes after eleven o'clock the house adjourned, without question put, pursuant to standing order.
Friday, May 30, 1941.