1943-03-02

POST-WAR ECONOMIC PROBLEMS PRESS REPORT AS TO PRELIMINARY CONFERENCE OF UNITED NATIONS AT WASHINGTON

[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Leader of the Opposition):: An Associated Press dispatch
from Washington, under date-line of March 1, states that Acting Secretary of States Sumner Welles said that all the united nations will be asked soon to send representatives to a preliminary conference on post-war economic problems. Will the Prime Minister be good enough to indicate to the house under what auspices the preliminary conference will be called, and whether or not any approach has been made to the Canadian government in connection therewith?

Wheat


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I have been aware that the matter was one which has been under consideration at Washington, but thus far no formal communication has been made to the Canadian government concerning the matter. All I know of it thus far is what has appeared in the statement to which my hon. friend has referred and a somewhat similar statement made before the convocation at the University of Toronto on Friday last by Mr. Sumner Welles.


Gordon Graydon: Apparently it is to be called, if called at all, by the United States government?


William Lyon Mackenzie King: I would assume so, but I cannot say definitely. I would not like to have it inferred that this has been settled. I assume that there will be exchanges of views between certain of the powers in the first instance to decide the particular auspices under which the conference will be called.


Gordon Graydon: Evidently the initiative was taken by the United States government.


William Lyon Mackenzie King: It looks that way at the moment.



CONNAUGHT RANGES


[Stage Direction]
On the orders of the day:
Mr. G. Iv. FRASER (Peterborough West): In the Ottawa Journal of February 24 there was an article headed, "Arrange Dates for Connaught Ranges." It goes on to say:
Plans are already under way for extensive alterations to the big camp....
Will these alterations include the elimination of the unsanitary conditions which existed in the Connaught camp last year and which caused most men attending the camp to have dysentery?
Hon. J. L. RALSTON (Minister of National Defence):: My hon. friend knows that the matter of the unsanitary conditions was dealt with last year.


Mr. FRASER (Peterborough West):: Only partly.


James Layton Ralston: Well, I am so advised. I had a report on it at the time, and action was immediately taken. If there is any necessity for further improvement in that respect, it will be made.



REPORTED CHANGE OF 1943 MARKETING POLICY BY UNITED STATES GOVERNMENT

[Stage Direction]
On the orders of the day:
Mr. E. E. PERLEY (Qu'Appelle):: I desire to direct a question to the Minister of Trade and Commerce (Mr. MacKinnon). I directed one yesterday to the Minister of Agriculture (Mr. Gardiner), who was somewhat evasive-


Some hon. MEMBERS:: Order.


Ernest Edward Perley: -but the Minister of Trade and Commerce is very magnanimous and is always anxious to give information with respect to any important matters.


Some hon. MEMBERS:: Order.


Ernest Edward Perley: The question is based on a report in the Regina Leader-Post, which carries the head-line, "Wheat Selling Quotas Ended."
The report is from Washington, of February 24, and reads as follows:
Agriculture (Secretary Claude Wickard suspended marketing quotas on wheat in the United States Tuesday ini a move he said is designed to ensure adequate wartime supplies of the cereal for human food and livestock feed.
The report continues:
Wheat from 1942 crops sold, used for feed from excess acreages was subject to a penalty tax of 54 cents a bushel....
The action on marketing quotas releases for sale or use without penalty excess wheat from the 1942 crop which farmers may now be holding in storage.
Was this matter discussed at the recent Washington conference of Canadian and United States agriculture officials, and did the minister know that this change in policy on the part of the Secretary of Agriculture of the United States was coming? Also did he know of this change when he decided on the 1943 marketing policy? If he is not prepared to make a statement now, will he make one to-morrow? We should like to know the facts before the discussion takes place.


Mr. SPEAKER:: Evidently this is a question that cannot be answered on the orders of the day.


Ernest Edward Perley: I should like the minister to answer it to-morrow if he would. The question could not very well be put on the order paper.
Steel and Mine Workers



STEEL AND MINE WORKERS


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: Mr. Speaker, there are two questions I wish to bring to the attention of the Minister of Finance. The first arises out of a telegram I have received from the secretary of local 1064, steel workers, Sydney, Nova Scotia, setting out that men employed by the steel company and owing 1941 income tax who have volunteered for service in the armed forces were informed on applying for their wages, totalling $67, that income tax laws compelled the company to keep all their wages, since they owed more than this amount on the 1941 tax. Is the minister in a position to inform the house whether this is in accordance with government instructions to the employers?
The second question arises out of a telegram received from the president of district No. 26, United Mine Workers of America, setting out that a serious shortage of essential foodstuffs in the coal mining areas of Nova Scotia is now interfering and will in the future seriously interfere with production. Can the minister inform the house whether the wartime prices and trade board are considering this matter, and if so, what steps are being taken to improve the situation?


Thomas Vien: The first question has some degree of urgency and might be asked on the orders of the day, but the second question was certainly not in that category. If the minister wishes to reply he may do so, but I submit that it is not a question that should be asked on the orders of the day.


Hon. C. W. G. GIBSON (Minister of National Revenue):: The hon. member was good enough to send me notice of his first question. While I have not had time to secure details of the cases to which he referred, I would say that under the provisions of the Income War Tax Act, when a taxpayer is indebted to the crown, a notice may be served on any person who is indebted to that taxpayer requiring him to withhold the whole or part of the debt owing to the taxpayer and pay it over to the Receiver General of Canada. If the taxpayer wishes to have the order withdrawn he can apply to the local inspector of income tax and make arrangements to pay either by instalments or some other basis satisfactory to both the taxpayer and the department. The income tax department is 
always willing and anxious to cooperate with taxpayers and to have outstanding taxes settled on some mutually satisfactory basis of payment.


Hon. J. L. ILSLEY (Minister of Finance):: With regard to the inquiry of the hon. member about a food shortage in the mining districts of Cape Breton, apparently a few days ago there was a temporary shortage but the matter was taken in hand last Thursday by the wartime prices and trade board. The prices and supply representative of the board in Nova Scotia has been in touch with the president of the mine workers in that district and there has been a substantial movement into that district of the foods of which there was a shortage. That movement is still taking place.
PRIVILEGE-Mr. POULIOT



REFERENCE TO EDITORIAL IN OTTAWA &quot;JOURNAL&quot; RESPECTING PARLIAMENTARY ASSISTANTS

[Stage Direction]
Mr. JEAN-FRANQOIS POULIOT (Temis-couata): I rise to a question of privilege. On the editorial page of the Ottawa Journal of February 27, there was an editorial entitled "Ten vacant jobs for M.P.'s", concerning the possible appointment of parliamentary assistants, and which contained the two following paragraphs:
What hopes this must stir in ambitious breasts; and what vistas it must open up of prestige and authority, and patronage influence, and nice offices with private secretaries and stenographers, and soft rugs under foot, and letters written on embossed stationery! Almost we can see Monsieur Jean-Fransois Pouliot in one of these roles: liking it so much that he would consent even to be "parliamentary assistant" to Colonel Ralston.
It is a happy prospect; even though, alas, there can be only ten, with ten times that number for whom there will be only the bitterness of disappointment. If only there were more ministers!
I deeply resent the Journal's insinuation that I would run after such a job. At the start of the war the lamented Mr. Norman Rogers offered me a more glamorous position which I could not accept-not that I would shirk a duty but simply because I have not the means to be a dollar-a-year man. I shall not keep the house any longer by giving proof of what I am saying, but I am ready to show it to anyone who comes to my office to see it. AfteT all, why should the pleasures of soft rugs under foot and embossed stationery be only for the Journal tycoons?

Supply-Agriculture

[Stage Direction]
The house in committee of supply, Mr. Bradette in the chair.
Administration service-
1. Departmental administration, $130,406.
["Yes, with lake St. Louis. This great natural resource should not be wasted. This work would mean that many thousands of men could be employed during the period of rehabilitation, and it would mean a power development even greater than that at Boulder dam or the recent development on the Saguenay river.\nWith all seriousness and earnestness I ask this committee to give the fullest consideration to the development of what is the continent's greatest natural resource, the St. Lawrence deep waterway.\nOn motion of Mrs. Nielsen the debate was adjourned.\nAt six o'clock the house took recess.\nAfter Recess\nThe house resumed at eight o'clock."]
Mr. DIEFENBAKER:: I am not sure that this is the occasion on which to bring up the item that I wish to bring to the attention of the committee. I would have asked the question before the orders of the day were called, while Mr. Speaker was in the chair, but I felt that some objection might be raised on the ground that the question was not of sufficient urgency. I think it comes under the head of agriculture, for this reason, that since the Debt Adjustment Act in Alberta has been declared beyond the powers of the legislature, the position of farmer debtors in the western provinces is worse than it has been at any other time during the last eight or ten years. For the last few days in Saskatoon a conference on debt adjustment has been in session with a view to arriving at some plan by which bona fide farmers in the western provinces who are unable to pay their debts may receive a measure of protection.
Under the present quota system the western farmers are unable to sell sufficient wheat or to market sufficient of their products to enable them to meet their expenses and at the same time pay their creditors. The result is that on every hand there has been an acceleration of foreclosures and cancellation proceedings. The matter should receive immediate attention, and I bring it up now to ascertain whether or not the government will at once introduce some measure of temporary protection for bona fide farmers who are desirous of paying their debts but are unable to do so by reason of the present legislation which prevents them from marketing their wheat. Something should be done by the Department of Justice to assure them of protection until such time as the quotas are increased or as legislation may be passed by this parliament.
It is not a question of the farmers wishing to evade their responsibilities. It is, however, a matter of great concern to them that at a time when they are being asked by the Department of Agriculture to expand production, foreclosures are being proceeded with. The matter particularly concerns the Minister of Agriculture, because of his desire to secure increased production in the western provinces. At the present rate of foreclosures and cancellations unless something is
done to protect bona fide farmers against actions which are the consequence of the fact that protection is no longer available, many farmers will be driven off the land before spring. I am asking the government, and particularly the Minister of Justice, whether the government will not do something at this time to put an end to what I think is a most unfair course, to stop foreclosures and cancellations against farmer debtors who are unable to pay because under the present agricultural policy they are able to market only up to a certain quota.


Hon. J. G. GARDINER (Minister of Agriculture):: While I acknowledge the importance of the question which has been raised by the hon. member for Lake Centre, it is not in any way associated with the votes of the Department of Agriculture. It is a matter which is dealt with in the Department of Finance, and, so far as it means legislation, will be dealt with by the Department of Justice. I therefore suggest that while the question is an important one, it is one that should be discussed at that time rather than on the estimates of the Department of Agriculture.


Mr. HANSON (York-Sunbury):: That is a dilatory plea on the part of the minister. If the situation is such as the hon. member for Lake Centre has indicated, then it is deplorable that the ministry is not facing up to it.


James Garfield Gardiner: I rise to a point of
order. Are we going to allow discussion under an item in the agriculture estimates on a matter which really comes properly under either the Department of Justice or the Department of Finance? I am not suggesting that the government is not prepared to face the issue


Mr. MacKINNON (Edmonton West):: It has already done so.


James Garfield Gardiner: -or has not already, at least in part, done so. I am simply suggesting that this is not the proper time to discuss it.
Mr. HANSON (York-Sunbury>: The rules of this house should be construed' liberally. If a matter of urgent public importance cannot be brought up otherwise, then the only time that an hon. member can discuss a grievance is on motion to go into supply. I suggest that we can discuss any grievance on a motion to go into supply. The point of order is not well taken.


Mr. MACKENZIE (Vancouver Centre):: But my hon. friend did not do it when the Speaker was in the chair.
Supply-Agriculture


Richard Burpee Hanson: Well, I
suggest that the speaker put the motion rather too quickly before we got into supply. If the ministry is going to take advantage of a technicality, it will have to be held to the rules hereafter. No one wants to stage a full-dress debate at this time, but the matter is of sufficient urgency, in substance and in point of time, that we could! well spend a few minutes this afternoon in asking the government for some statement of policy, and I am prepared to discuss it.


Mr. COLD WELL:: On the point of order, the hon. member for Weyburn (Mr. Douglas) was anxious to raise this very matter on going into supply today, but I thought it was understood by the gentlemen who met the Prime Minister last night that items would be called to-day without discussion and that the government would facilitate discussion of these matters within the next week by granting opportunity to aiir any grievance. If we had known that this discussion was to be precipitated we certainly would have raised the whole question under the propeT procedure on going into supply. I am anxious to see the matter discussed. It is of supreme importance to many on the prairies. If we are to have discussion we are prepared to participate in it.


William Lyon Mackenzie King: I should like to confirm what my friend the leader of the Cooperative Commonwealth Federation (Mr. Coldwell) has just said. I did meet yesterday afternoon with the different leaders to talk over matters with a view to facilitating the business of this week and the weeks following. It was understood that to-day the government would ask to have two items called simply for the sake of getting two departments before the committee of the whole so that any matters related to them might be taken up later in the latter part of any week if so desired. That was the sole purpose of calling an item to-day. This intention I think was mentioned at the conclusion of yesterday's sitting. It is also correct that when I came into the house this afternoon, I was told that the hon. member for Weyburn had intended to bring up a question on the orders of the day, which I understand is the question that has since come up; but having been informed by his leader that the purpose with respect to the house being moved into supply to-day was simply one of procedure and that it was desired to get on with the reconstruction committee debate so that if possible it wmuld be concluded to-day, the hon. member postponed raising the question, on the understanding that opportunity would be afforded by a motion to resolve the house
[Mr. Ian A. Mackenzie.!
into committee of supply which would be made within the coming week. That is the position as I think my hon. friend who has just spoken also understands it.


Gordon Graydon: It seems to me that we are dealing with technicalities in regard to this matter perhaps more than we should. Obviously the motion to go into supply was the point at which the hon. member for Lake Centre might properly have raised his objection to the farm adjustment act; but now that the point has been raised, since the Speaker left the Chair so very quickly, and since the hon. member was on his feet for some considerable time before even I noticed him, it 'seems to me that we might readily abandon any small technicalities that may exist and permit a discussion at this point. It was not my understanding that any objection would be taken to a point of this kind being raised at any time on going into supply, though perhaps I may have been confused in that respect. I did not anticipate that there would be a discussion on the first item of the estimates to be called; I naturally expected that the government would ask to have the item stand, but certainly it was not clear to me that there would be any objection to the hon. member for Lake Centre raising this question at any time on the motion to go into supply. Perhaps in that regard the hon. member for Rosetown-Biggar, the Prime Minister and myself did not reach a common understanding. I should like it to be distinctly understood, however, that since the point has now been raised, and there could have been no objection on the part of the government to its being raised on going into supply, I do not think the rules should be used to prevent further discussion of the matter.


William Lyon Mackenzie King: There are two objections to proceeding further at the moment. The first is that this is an item under agriculture, and to discuss to-day some subject which does not relate to the item before the committee would establish a precedent which would be cited continuously during the session with respect to other items.


Gordon Graydon: My understanding always has been that on the item covering departmental administration one could run the whole gamut of agriculture. That has been done year after year, to my knowledge; it has been the generally understood arrangement in the house. So that when the hon. member for Lake Centre raises this question, which is perhaps of greater concern to agriculture than almost any other single matter that he

Supply-Agriculture
could have brought up, I do not think the objection of the Prime Minister should be sustained.


William Lyon Mackenzie King: I do not wish to debate the point indefinitely, but let me answer in this way. I do not think that even my hon. friend the leader of the opposition understood there would be any discussion on any item under which all the affairs of the department could be discussed. I think my hon. friend understood that the item was simply being called-


Gordon Graydon: I thought I made that clear, but I did not want a technicality to interfere with the discussion of the matter when the hon. member for Lake Centre could have brought it up quite properly on the motion to go into supply.


John George Diefenbaker: I brought up the matter because it is of importance to every farmer in western Canada. The hon. member for Rosetown-Biggar said it was also the intention of the hon. member for Weyburn to bring up the matter but I had no knowledge of that. Anyone representing a western constituency knows that with conditions as they are there should be a declaration of policy by the government now in order to give some hope to the western farmer. I was in no way bound by any arrangement that had been made, because I had no knowledge of it. In view of the rulings of the Speaker on questions asked before the orders of today are called I decided that there was no other way I could bring up this matter, which is of importance to many thousands of farmers in western Canada. I would ask now that a statement be made by the government as to what will be done to meet the debt situation, or, alternatively, that the matter be not now further discussed but that when another department goes into supply, as I anticipate there will be another department going in to-day, I have the opportunity to raise the question before Mr. Speaker leaves the Chair.


William Lyon Mackenzie King: The house is in committee of supply now, and the next item will be called without the chairman making any report to the Speaker in the interval This is a purely formal procedure to enab:>
the business of the house to be proper;</ carried on.


Mr. DOUGLAS (Weyburn):: if the government wants to facilitate the business of the house but does not want a full discussion of this question now, would it not ease the situation if the government would now undertake to have the responsible minister make a statement within the next few days on the
whole question of farm debt, or indicate to the whips of the different parties when next a motion to go into supply will be made so that a general arrangement may be made between the parties in order that a full debate may be permitted, and especially in order that a statement may be made by the government with reference to this question of farm debt, particularly as it affects western Canada. I agree with the hon. member for Lake Centre that this is a pressing matter. It is not a question that calls for a great deal of debate; it is something that requires a statement by the government, and the people of the west want such a statement quickly. If the government would give that undertaking there would be no need of any lengthy debate.


William Lyon Mackenzie King: Perhaps I
might give an undertaking that on Monday next there will be an opportunity to discuss this matter, either before or after the leader of the opposition makes his address in the budget debate. The government will undertake, if so desired, to move to go into committee of supply. I may add with regard to this matter, which the government has recognized as being important, that the Minister of Justice has not wished to take up the time of the Minister of Finance which would be necessary in discussing the matter -until after the Minister of Finance had made the statement which he intends to make tonight. That is one reason why neither the Minister of Justice nor the Minister of Finance desired to make a statement to-day.


Gordon Graydon: May I ask the Prime Minister if he would reconsider the date when that opportunity will be afforded. The hon. member for Danforth, who will be offering our criticism with respect to the budget, will be speaking on Monday, and we hope that the budget debate will proceed from then on without interruption. I would rather hope that the Prime Minister might arrange to have this statement made on Friday next, before we get into the budget debate, because this discussion may go on for some time.


James Lorimer Ilsley: I have not said anything during this discussion because I had hoped that we would not have this matter brought up on the first item. I believe a discussion of this matter, once we start it, will go on for some time, because it is one of the most difficult questions with which the government is called upon to deal. A conference was held at Saskatoon on February 26, and as a result a delegation has been appointed to come to Ottawa and make certain representations.
Supply-Agriculture

Further, the Department of Justice received only on February 25 or 26 the text of the opinion of the judicial committee of the privy council, and since then there has not been an opportunity to decide upon any legislation, nor will there be an opportunity to do so at least until after we have heard the representations of the delegation that is coming here from western Canada. Whether or not we should precipitate a debate on this matter next Monday is a matter to be considered, having in mind that I believe the debate will be lengthy. I do not know whether or not it should be done.
Mr. ST. LAURENT: For the information of hon. members I may add that the copy of that opinion which was mailed to us from London has not arrived here as yet. The copy we have was obtained from the office of the attorney general of Alberta. I received it, I think, on February 25 or 26, and immediately brought it. to the attention of the Minister of Finance. There has been no opportunity since that time, in view of the statement the Minister of Finance is to make to-night, to go into the matter. I do not know what explains the fact that the copy of the reasons, mailed to us presumably just as quickly as the other copy was mailed to the attorney general of Alberta, has not arrived. The attorney general in that province got his, and was kind enough to send me at once by air mail a transcript of the copy he had received.


Mr. BLACKMORE:: It seems to me we are now discussing two questions. The first is whether or not we shall have an open discussion, and the second seems to have something to do with what the government's action will be. The understanding I had from our meeting last night was in accordance with that expressed by the hon. member for Rosetown-Biggar. I understood that the items were to be brought in merely to facilitate the business of the house, so that we might be in a position to discuss the items on Friday, or on other days we might choose. It was my understanding that at this time there was to be a minimum of discussion, and I had the impression that all three contracting parties agreed. If one party opens a discussion when the others are not prepared, it does not seem quite fair.


Gordon Graydon: I know my hon. friend would not attribute to me any unfairness with respect to the arrangement made yesterday. After all, this whole matter has arisen

perhaps through a misunderstanding, and because Mr. Speaker left the Chair so quickly. I wish to point out Only this, in closing the matter, that I am not a bit impressed by the explanations either of the Minister of Justice or of the Minister of Finance with respect to the reasons for judgment. We know what the privy council did in this matter. But surely under the War Measures Act, the government if it so desired could take action to prevent wholesale foreclosures and cancellations in western Canada, pending some decision being made.
Mr. ST. LAURENT: The information we have is that no wholesale foreclosures are taking place in the western provinces at the present time. That is the information I have received from reliable sources in those provinces.


John George Diefenbaker: Mr. Chairman, the explanation given by the minister, that the ministry has not had an opportunity of examining the text of the judgment of the privy council, is not satisfactory. In July of 1942 the Supreme Court of Canada declared the debt adjustment legislation in Alberta beyond the powers of the legislature. At that time I raised the question in the house and asked the Minister of Justice whether consideration had been given to bringing in some temporary relief under the War Measures Act, the minister said consideration was being given the matter. Ever since that time foreclosures have been continuing at a rate not equalled in the past ten years. They are continuing, and the condition is causing unrest. The answer by the minister, that the government intends to wait until next week or the week after, or that it did not receive the text of the privy council's decision, will not satisfy those who find themselves to-day in grave danger of litigation, and unable to pay their debts because of quotas fixed by government policy.
Item stands.



[Stage Direction]
37. Representation abroad, including salaries of high commissioners, ministers plenipotentiary, consuls, secretaries and staff, notwithstanding anything to the contrary in the Civil Service Act or any of its amendments, $988,990.
Item stands.
Progress reported.

Post-War Reconstruction
[Stage Direction]
The house resumed from Monday, March 1, consideration of the motion of Mr. Mackenzie (Vancouver Centre) for the appointment of a select committee to study and report upon the general problems of reconstruction and reestablishment which may arise at the termination of the present war.
John Horne Blackmore: Mr. Speaker, last night a few minutes before the house adjourned I began to discuss to some extent the speeches which had been delivered by hon. members in various parties. For a short time, if I may, I should like to continue along that line.
All hon. members of the Liberal and Progressive Conservative groups who spoke agreed that we should have free enterprise in the post-war period. My group would also agree, although I am not sure that we would accept without qualification the word "free". But we surely do believe in individual enterprise. The hon. member for St. Lawrenee-St. George (Mr. Claxton) pointed out that we had two million people to put to work in the post-war period, and four billion dollars to find and to distribute throughout Canada in order to maintain the standard of national income of eight billion dollars which we enjoy at the present time.
The questions naturally arise, how are we to find work for two million people, and how are we to find the four billion dollars to spend. No word was uttered by anyone, either Liberal or Progressive Conservative, as to how. those two questions might be answered. I am sorry the Cooperative Commonwealth Federation speakers also ignored the point.


Mr. COLDWELL:: We will deal with it at the proper time.
, Mr. BLACKMORE: I should have been glad to have them tell me how they would find the money.


Major James William Coldwell: We will do it at the proper time and in the proper place.


John Horne Blackmore: And we will be listening at the proper time. My question is, how? It seems to me if the house could agree upon defining the issues and finding where the clash arises among the schools of opinion in the house, and if we could agree to discuss that clash of opinions, we should really get a great deal farther.
I believe all of us agree-all members throughout the house-that we ought to use Canada's natural resources to the limit. Where
is the Liberal, the Progressive Conservative, the Cooperative Commonwealth Federation member, the social crediter, the united reformer, or any other member in the house who does not say we ought to use the resources of Canada? Why not grant that? Why discuss it at all? Surely we want the facts. Where is the Progressive Conservative who does not believe we should have reforestation in Canada? There is not one in the house. Why discuss it, then? Where is the individual who would not agree that we should have irrigation in Canada from coast [DOT]to coast, wherever irrigation schemes are feasible? Anyone would agree to that. Then why spend time discussing it? Where is the person who would not agree that we should have electrification on our farms from coast to coast? No one would dissent from that view. Where is the individual who would oppose the carrying out Of health schemes throughout Canada? No one would question the idea of free hospitalization and state medicine and every other kind Of assistance to the people that would raise th^ir standard of health. Not a soul would question that. There would be some who would ask, as soon as the question was raised, "Where is the money coming from?" But granted that the money is available, no one would doubt that we should have all desirable health measures. Then w-hy argue about them?
I think everyone agrees that housing schemes are desirable. There is not a member in this house, granted that the money is available from a suitable source, who would not advocate that everyone in Canada should live in a comfortable home. No one would question that every one of our aged people . should have a more munificent allowance than S20 per month. No member in the Liberal ranks, and I am sure no one in the Progressive-Conservative or in any other rank, does not feel aggrieved. that our aged people are condemned to the meagre allowance they now have. No one would not gladly give the old age pension at sixty-five years of age provided he knew where the money was coming from. Why spend our time discussing such matters?
I believe that there should be federal aid for education. Yesterday afternoon the hon. member for York South (Mr. Noseworthy) set forth the inequities in our educational system in Canada, and I believe we all heartily agree with what he said. The question that immediately comes to the mind of many is, "Where is the money to come from?" Then why not spend our time discussing the question which represents a clash of opinion- where is the money coming from?
Post-War Reconstruction

Suppose I spend a little time on that question. In addition to the question where the money is coming from is the question where markets are to be found. At the present time we are short 2,000,000 of our best effectives in Canada, and yet we are able to produce all the goods with which to supply the remainder of the Canadian people with a reasonably good standard of living in war time. We are also able to maintain these 2,000,000 at a good standard of living. At the same time we are devoting a great deal of our energies to the manufacture of munitions to be wasted. AVe are to be faced with the real difficulty of setting these 2,000,000 to work when they come to produce consumer goods, and of disposing of the goods which they will enable us to produce. I should think that that problem will be a real problem for anyone, no matter what his economic ideas may be.
So far as the Liberals are concerned, with the ideas that they express, it will be a hopeless problem. With the ideas that the Progressive Conservatives have expressed, I say again it will be a hopeless problem. What success the Cooperative Commonwealth Federation could achieve is an open question. It seems to me that they have always been rather shifty about what they think. There is a distinct difference between their statements and ours. We set forth in clear and unmistakable terms, which our friends may or may not understand, exactly what we propose.
Suppose Canada were going to use socialization as a means of solving the two problems, first, that of markets and, second, that of putting people to work. Let us suppose that socialization means government ownership. Take for example a shoe factory. A shoe factory is limited in its output by the number of shoes it can sell. At the present time there is probably a scarcity of labour, but, generally speaking, the only limit to the output would be the number of shoes that could be sold. The Canadian National Railways, which is government owned, has just as much difficulty selling tickets as the Canadian Pacific railway, which is privately owned. The mere fact that a government owns a factory, or that the people own a factory, or that a municipality owns a factory, will not enable that factory to sell its goods.


Mr. DOUGLAS (Weybum):: If the people were getting enough in prices they could buy the shoes.


John Horne Blackmore: We will grant that the whole question is, how are they to get

enough wages and prices? Will the mere fact that the government owns an institution grant the people that additional wage?


Thomas Miller Bell: I think so.


John Horne Blackmore: Does the fact that the Canadian government own the Canadian National Railways give the Canadian National workmen more in wages than the Canadian Pacific workmen receive?


James Lester Douglas: That is only one item of government ownership in the whole field.


John Horne Blackmore: This question must be asked and this question must be answered before we can judge the efficiency of the Cooperative Commonwealth proposals to solve the problem before us.


Thomas Miller Bell: You were going to tell us how you were going to solve them.


John Horne Blackmore: One must first clear away the rubbish from his building site before he starts to build his new house. As I have said, the two problems are, first, the selling of goods and, next, the providing of work. The next question is that of getting enough money to spend in the country in order to keep the people's standard of living high, according to the hon. member for St. Lawrence-St. George (Mr. Claxton). I hinted last night that the Liberal speakers have suggested proposals which are rather different from what they are doing at the present time and also different from what the Cooperative Commonwealth proposes to do. They are certainly as far away from the social credit proposals as the north pole is from the south.
I gathered from the words of the hon. member for St. Lawrence-St. George and the hon. member for Essex East (Mr. Martin) that they favour internationalism. I spent a little time last night on the question of internationalism. Hon. members *will remember that I referred to the fact that the United States had 23,500,000 people on relief in 1935; that Canada had about a million and a half on relief; Great Britain as well as every other one of the united nations had a corresponding number. Will anyone tell me how the problem could have been solved by tying the whole lot of them together; how internationalism can solve the problem of unemployment? I think the hon. member for St. Lawrence-St. George and the hon. member for Essex East would have made a greater contribution to the debate had they devoted at

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least a small part of their time to an elucidation of the answer to that question. The hon. member for Essex East spoke of a supranational government as a possibility.


Mr. MARTIN:: When was that said?


John Horne Blackmore: I shall read the
quotation shortly. Before I deal with the efficacy of internationalism as a solution, I should like to raise this question. The building up of an international government, especially a supranational government, will destroy the British empire and destroy the British commonwealth. How in the world could Canada listen to the advice and follow the direction of a supranational government, consisting probably of a group of financiers with headquarters at Basle, and at the same time devote the necessary attention to cooperating with the other members of the British commonwealth in order to achieve the aims and objectives which the British people may deem it desirable to achieve? Once a supranational government is established the British commonwealth of nations will be destroyed. Let us face that issue squarely.
I shall now deal with some of the remarks of the two gentlemen to whom I have referred. First I shall give some attention to the hon. member for Essex East and quote from his remarks as reported on page 741 of Hansard. He said:
What I meant last night when I said that we had to look at this problem from the broad perspective was that these effects will be of no avail unless the whole thing is done on a collective basis with the participation of all nations.
May I just interrupt to say that that is sheer nonsense.


Some hon. MEMBERS:: Oh, oh.


John Horne Blackmore: Well, it is nonsense. Our forefathers went into the wilds of this country and made things go and had a finer standard of living for the whole people, considering food, clothing, shelter and comfort, before ever we got into this age of plenty. They did not have the dangers of unemployment and insecurity which we have to-day. Where was the internationalism then to help them out? I proceed:
Our country which looks to the markets of the world for the source -of its income is in a special position in that respect. Consequently the kind of planning that I would envisage would be one where the key commodities available to all nations would be distributed through properly controlled non-privileged international pools, where production and distribution would be controlled by international cartels, again not based upon legal or special privilege. The trend
of the future must certainly be toward more extensive international control over raw materials, foreign exchange, markets and credit by some, let us call it a supranational agency-


Paul Joseph James Martin: Oh yes, but not a government.


John Horne Blackmore: Well, it is control. What can you call it but a government? What is a government but that which controls?


Mr. SLAGHT:: Whose remark is that?


John Horne Blackmore: The language is that of the hon. member for Essex East. The hon. member for Parry Sound will find it at page 741; and I conceive that, being constituted as he is, it will give a sort of shock to him. I continue:
-along the lines designated this morning by Mr. Sumner Welles and yesterday in the United Kingdom by Mr. Morrison.
This in turn will call for the creation of some mechanism by which this can be brought about, and I would hope to think that the committee will formulate a plan and subscribe to the idea of the creation of an international bank-
Heaven help us!
[DOT]-the control of production and distribution of the major foodstuffs and materials, a rationalized system of immigration and migration, the control of employment and the promotion of health and social welfare measures.
Notice this particularly luscious bit:
All these things can be done only by collective effort.
In other words, in Canada, granted that we have the doctors and the medicine and the hospitals and the means of operating, we are unable to cure a case of appendicitis without getting the consent of Iceland. One of the most absurd propositions a man ever conceived of. I proceed:
That is where I want to leave the emphasis.
Nothing can be done except by international control with respect to the matters mentioned, and apparently the international control is to be the means whereby these good objects are to be achieved. I continue:
That is the impression I wish to leave, if I leave no other.


Mr. KUHL:: That is the impression the hon. member did leave.


John Horne Blackmore: Mr. Speaker, this is simply drivel. If this were talked by anyone but a Liberal and anyone but a member of parliament, a person hearing him would be justified in having him arrested for high treason.


Paul Joseph James Martin: Why not do that?
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John Horne Blackmore: Well, I will leave someone else to fight with that particular dragon. But the men who are talking this kind of thing glibly in this country and in the United States and elsewhere are talking nothing short of high treason to the British empire, the British commonwealth of nations and the Dominion of Canada. They are talking about the destruction of the sovereign power of this government-which is undoubtedly treason or sedition.
May I turn now to the speech of the hon. member for St. Lawrence-St. George (Mr. Claxton) ? I may return after a while to the hon. member for Essex East. At page 813 of Hansard I find these statements by the hon. member for St. Lawrence-St. George:
It is easy enough to look ahead apd see what labour wants. Labour does not want handouts; labour wants an opportunity to work. Agriculture wants an opportunity of selling its products at fair prices. Industry wants a chance to make a fair profit. It is that kind of thing wre should have in our minds to-day.
With every one of these sentiments every hon. member will agree. It is the method of achieving the objectives concerning which we shall disagree; and apparently the hon. member for St. Lawrence-St. George thinks we shall be able to solve all these problems if he ties enough other nations tight up to us so we cannot move. I turn to another page. He read from the Bank of Canada report a statement with which I think no one would disagree. I read from his quotation:
"If we are to maintain full employment in peace time, we must substitute other objectives for the current will to ivin the war. Broadly speaking our goals should be to provide a rising standard of living and to contribute to the establishment of a 'world economy which will remove the threat of war."
I think we all agree. Once more, it is the method of attaining that objective which we are interested in. May I read now a third excerpt? He was referring, apparently with a great deal of sympathy, to what Australia did. He says:
. . . they have already faced one part of the problem by calling together a constitutional convention in which the federal government sought for a term substantial powers from the states in order to carry out the purposes of the national government after the war. It was interesting to note that in putting this forward the attorney general of the commonwealth of Australia said that Australia was committed to a course of action under the Atlantic charter which she could not fulfil under the existing constitution. I think that should lead us to consider in Canada if it is possible for us to fulfil our obligations under the Atlantic charter and to the Canadian people under our existing constitution.
May I break in to raise this question: What can that statement possibly mean other
fMr. Martin,]
than that the hon. member for St. Lawrence-St. George is envisaging a change of the British North America Act which will take away the powers which were conferred upon the provinces by that act? I read on:
The Atlantic charter to-day constitutes a treaty for Canada. It was signed on August 14, 1941, by Mr. Roosevelt and Mr. Churchill, and paragraphs 4 and 5 read-
I will omit the reading of these two paragraphs. Apparently this gentleman is in favour of using the Atlantic charter as a lever to force the Canadian people to swallow the idea of destroying the British North America Act.
May I say right here that there are two constitutions in the world which are proof against the contrivings of a group of gangsters who are trying to bring this thing about-this "united nations," this destruction of the British empire, this general enslavement of mankind. There are two constitutions which are proof against their machinations. One of them is the British North America Act, and the other is the constitution of Australia. And the gangsters have been at work industriously for several years, trying by one means and another, by fair means and foul, by all sorts of specious reasoning and persuasion and high powrer propaganda, to get the peoples of Canada and Australia to give up their constitutions. Apparently the hon. member has become imbued, let us say unconsciously, with the sentiments of the gentlemen who are seeking to destroy the constitutions of this dominion and of Australia-two of the greatest democratic constitutions on earth.


Mr. EDWARDS:: May I ask the hon. member a question?


John Horne Blackmore: Certainly.


Manley Justin Edwards: Is it not true that there is no government in Canada that has passed more legislation destructive of the British North America Act than the government of Alberta which my hon. friend supports?


John Horne Blackmore: I wonder whether the hon. member would answer a question for me. Does he consider that the British North America Act gives the provinces control over property and civil rights?


Manley Justin Edwards: Yes.


John Horne Blackmore: Then will he tell me how any government can control property and civil rights unless it can also control the credit of the country?


Manley Justin Edwards: In other words, the hon. member and the party which he supports want to be the interpreter of the British North America Act instead of leaving it to

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the constituted authority which was set up to interpret the act. The party which the hon. member supports, I submit, has been outstanding in its violation of the British North America Act.


John Horne Blackmore: All that the social credit government of Alberta has done has been to assert the autonomy of the province of Alberta in order to put itself in a position where it can live under the British North America Act.


Manley Justin Edwards: True, but has it not attempted to destroy the very act we are trying to uphold?


John Horne Blackmore: How is it possible for a province to control property and civil rights when a bank can lend money one year and refuse to lend it the next, thereby destroying entirely the economic stability of the province? The thing is impossible. I shall be glad to debate this matter at any length with the hon. member when we get into committee. I am not afraid of him, with all his intelligence and legal skill.


Manley Justin Edwards: I thank the hon. member for the compliment.


John Horne Blackmore: I think I have dealt fully enough with the hon. member's questions, and I have submitted to his speech.


Mr. HOMUTH:: You have not convinced him.


John Horne Blackmore: It is impossible to convince a man against his will. May I read further from the speech of the hon. member for St. Lawrence-St. George. He said at page 815 of Hansard:
. . . and in the second place, have we contributed as much as we can to setting up the internal machinery to bring that about between nations? My suggestion is that though Canada has done much we can still do a great deal more.
I take that as another veiled reference to the destruction of provincial power within this country. No government that has ever sat in Ottawa has done so much to weaken and destroy provincial power as the government now sitting in Ottawa. The Sirois report was designed purely for that purpose -purely. What I want to know is this: If the British North America Act were destroyed, how could that possibly help us to find four billion dollars to spend in this country? How could it possibly help us to put two million people to work in this country? It could not possibly help us. So that all the efforts of those who are trying to attain these two objectives, the destruction of the British North America Act to centralize power in
Ottawa, and the destruction of the British empire by putting controlling power into the hands of some international government, will in no way help to solve the problems we have before us. They are utterly beside the point.
I should have liked to discuss the tourist trade. I commend the hon. member for St. Lawrence-St. George for advocating an increased tourist trade. There are difficulties in the way, but I have not time to deal with them now because I have had to spend so much time in answering the questions of the hon. member for Calgary West (Mr. Edwards). If it were possible to solve our problems by those two devices which the Liberals are advocating, it would be quite a different matter; but it is impossible to solve them by those means, and to attempt to do so would only mean that we should lose our birthright without even getting a mess of pottage in return. The Liberals will wake up ten years from now to see what a monstrous thing they have done when somebody else is suffering the consequences.
An. hon. MEMBER: What about the Cooperative Commonwealth Federation?


John Horne Blackmore: The Cooperative Commonwealth Federation would be as bad as the Liberals or worse. They supported the Sirois report. That was clear evidence that they did not know what it was all about.
I turn now to the question whether the problem can be solved without resorting to these two most undesirable means of centralization. The London chamber of commerce, to which the hon. member for Acadia (Mr. Quelch) referred the other night, has issued a statement called "Report of the London Chamber of Commerce on General Principles of a PostWar Economy." It refers in this report to a booklet called "A Twentieth Century Economic System." I have not time to go into that booklet or into the report itself, but I commend these two publications to all hon. members. In these two booklets, the London chamber of commerce, which is one of the greatest organizations in the world, one of the most hardheaded and fact-facing bodies, states that it is not necessary to destroy national sovereignty in any sense of the term in order to solve the problems which confront us. May I just quote a statement from the London chamber of commerce Journal, printed in the Ottawa Citizen of January 11, 1943, page 18. It is not contained in either of the two booklets I mentioned, but it bears upon the question whether or not in order to cure unemployment and poverty a nation must lose its sovereignty. The article says:
There is, moreover, an effective solution in exactly the opposite direction.
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Paul Joseph James Martin: I cannot give the hon. member understanding.


John Horne Blackmore: The hon. member has not proved very conclusively to the house that he has understanding himself.


Paul Joseph James Martin: That is agreed.


Mr. KNOWLES:: You were going to tell us how you would do it.


John Horne Blackmore: By the issue of currency and credit-through increased purchasing power.


Stanley Howard Knowles: What do you mean by that?


John Horne Blackmore: If my hon. friend takes a course of study in it he will understand it.
In closing I wish to point out that leaders are making grave errors in all of Anglo-Saxondom. Men in the United States, in Britain, Canada and elsewhere are subscribing day by day to the defeatist gospel which the hon. member for Essex East and the hon. member for St. Lawrence-St. George were conveying to this house. It is not necessary to destroy the democracy which exists in Canada by depriving the provinces of their autonomy. It is not necessary to deprive any of the nations of the British commonwealth, or the United States, of their sovereignty. The all-important question is to manage the economy of Canada, for example, in such a way that the Canadian people will be given the purchasing power which will enable them to consume the goods which they can produce. That purchasing power can be provided by a wise and intelligent management of Canada's credit.
(Mr. Blackmore.]


Gordon Knapman Fraser: First I wish to congratulate the Minister of National Defence for Air (Mr. Power) on the speech he made on Friday last. In that speech he showed that he thoroughly understood the position of men in the air force who return to Canada or are discharged. He also included the other two branches of the armed services, but he emphasized for the most part the rehabilitation of men of the air force. The other two branches of the armed forces of course have to be included; they are all in this.
This motion is to set up a reconstruction and reestablishment committee. The committee should do everything in its power to find out just how the men who are being discharged from our armed forces, or who have been discharged in the past, can be rehabilitated. Some of these men have been discharged because they were wounded, some because, through no fault of their own, they have become physically unfit to continue. When they are discharged they may not be able to get a job in industry because their discharge paper says they are physically unfit for further active service. In many cases they cannot do a full day's work; they can do only a few hours' work a day. Employers in Canada do not want-at least some employers -to take on men who can work only a few hours a day. I do not know whether it is entirely the fault of the employers, or whether the blame should be put on the selective service. In Britain thousands of men are working only an hour a day, or two or three hours; and women also. Selective service in Canada should see to it that these men and women are employed for a few hours a day, if that is all they are able to do.
Of course there is a chance that some of these men may not fit into some jobs. If that is so, schools to teach and train them should be set up so that they will have a job not only at the present time but in the years to come after the war. I know that many of these men have received pensions. Speaking in the debate on the address in reply to the speech from the throne I mentioned the case of a man who had a pension of forty dollars a month, but who was unsatisfied with life because he could not get anything to do. These men simply have to have something to-do to occupy their minds and help them reestablish themselves in civil life. Therefore I wish to point out to the members of the committee and to the Minister of Pensions and National Health (Mr. Mackenzie) that the first duty of the committee is the reestablishment and rehabilitation of these men by fitting them to do something to occupy themselves-

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These men have given all they can for us; surely we can do something for them. We should be willing to give all we have to them; and God help Canada if we cannot look after those men now, because if we cannot, what will happen when the war is over and thousands upon thousands of them return to Canada? I have here a letter, dated February 19, which I should like to read:
Dear Gordon,
No doubt you get many sob stories through your daily mail, and here is another one. I feel that it is probably useless in writing on the matter, but I have been approached to do so, and you will pardon any intrusion.
A young lady in town whom you probably know was married in England nearly three years ago to a chap in the Canadian army. This boy served overseas for three years as quartermaster sergeant and his unit took part in the Dieppe incident. Prior to this the boys were given a rigid physical examination and he was found to be in a diabetic condition and sent home to Montreal.
He is getting a pension of $60 a month, but is most despondent, which, of course, is part of the disease, as he is unable to secure employment owing to the fact that he is unable to work full time. He has had good care in Montreal, but a full time job is definitely out.
I will say for the Minister of Pensions and National Health that he has been very generous in giving pensions to these boys. But that is not enough. Of course they have to have money, but money wull not bring happiness to them; they simply have to have something to do if they are to be reestablished in active life. Many of these boys, and women also, are only in the 'teen ages. They all have to be looked after, because they have many years ahead. They should be trained in different professions and callings. We are short of doctors, nurses, scientists. I do not see why they cannot be trained in those callings.
No doubt hon. members have noticed in the press in the last few months that county councils throughout the country and other municipal councils have been discussing reconstruction and reestablishment after the war. I have here a letter from the warden of Peterborough county which I should like to read:
At the January session of Peterborough county council a rehabilitation committee was set up with these thoughts in mind:
Better roads and bridges.
Development of roads to water for tourists.
More rural hydro.
Reforestation.
Rural housing on farms for hired help.
Better rural schools.
This is intended to create work for our returned men. What has dominion government in mind?
Will money be available for this work?
From whom can I get information?
Yours sincerely,
Peter J. Mather, Warden, Peterborough county.
He mentions roads and bridges, also roads leading to lakes; I take it he means roads that will be used by tourists coming to Canada after the war. Every hon. member will agree that after this war is over we shall simply have to start at scratch to rebuild out tourist trade, because nearly all the advertising that was done before the war is completely lost. To get these tourists to Canada we must have good roads, good accommodations, good fishing, and attractions to offer. The tourist business is very important to Canada and to the people in every section of Canada, because in many cases it means their livelihood. And this of course will help the men who return after the war. It will mean work for our people, a greater national income, and foreign exchange which we certainly need.
Last night the hon. member for St. Lawrence-St. George (Mr. Claxton) said that when this war is over the tourist business will boom. I do not agree with the hon. member. The tourist business will not boom unless we go after it. I do not think more than a very little of the tourist business we had before the war will come back to us. We shall have to go out after new prospects. Our advertising will have to cover the whole of the United States, central America and South America, and I know that when I say this, Mr. Leo Dolan, who is director of the Dominion of Canada travel service, will agree. Central and South American countries are bidding for the tourist trade of the United States, and now that the connecting links are being finished on what is called the allAmerican highway running from Alaska to South America, over fifteen thousand miles in all, the tourists of the United States will travel on that highway, which has been so well advertised. We in Canada must do our own advertising, and we -must make the Alcan highway attractive to United States tourists. In Colombia and I believe also in Mexico the governments have built inns and hotels at various points along the highway, half a day or a day's auto-run apart, and put them in charge of managers who are appointed on the understanding that if they do a good job, at the end of ten years the hotels will be turned over to them. The Alcan highway is some 1,650 miles long, I believe, and if we are to get any share of the tourist trade from the United States we must build inns and hotels on the Alcan highway and trans-Canada highway, on the same basis as they have been built in Colombia and Mexico.
The countries of central and South America, including Mexico, Guatemala, Costa Rica, Colombia, Peru, the Argentine, Chile
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and all the rest of them, are doing everything possible, spending many dollars, to advertise their tourist attractions. There is also a pan-American congress which meets every year to discuss the tourist business. They have much to offer, much with which to attract tourists. In Guatemala, for instance, the road is 12,500 feet in the clouds; in Chile, down below Santiago, the capital, there is an all-year highway through the lake district. They have wonderful routes and splendid scenery; in Mexico they have pyramids, ancient cities and all the rest of it, and we in this country must do something to offset those attractions. They get out booklets describing the twenty-one nations belonging to that union, with stamps showing different views in the various countries. I have been in all those countries, and I have an idea what they are going to do in an endeavour to take away our tourist trade. Therefore I urge as strongly as I can that this committee set up a tourist subcommittee to bid for the American tourist trade. We simply must have it; our country cannot live without it. I make that statement because I represent what I claim to be the best and most beautiful tourist district on the whole continent, the Kawartha lakes region, and I know what the tourist business means to our people. I know also what advertising means if you wish to get tourists, because I have been on tourist committees since 1920, and was a member of the first executive to be set up by the Ontario Tourist Association.
In my opinion the Alaska highway should be beautified, and so should our transcontinental highway. Both these routes also should be controlled, because we cannot allow them to become billboard highways, as many of our other highways have become. When you start allowing billboards to be erected along your highway, you find that they block out the very best views; therefore I sincerely hope something will be done to control billboard advertising along these roads.
In his letter the warden also mentioned the need for more rural hydro, meaning of course electric appliances in every farm home, with consequent better health. In electrifying our farms we would be helping the workers in the cities, because every electrified farm means an electric iron, an electric refrigerator, an electric washing machine, an electric milking machine and so on, all of which would mean employment to the factory worker. We must look at every angle of this question so that when our boys come home they will not have to ride the rods again as they did after the last war. We cannot allow that now. If it is possible for us to spend five and a half billion dollars-or for all I know it may be 
six billions when the minister speaks tonight-for the prosecution of the war, God help us if we cannot spend at least two and a half or three billion dollars in peace time. I know it will hurt our pockets, but if we have a happier country that will not matter.
In his letter the warden also mentioned the lack of farm housing for hired help, and I feel that he should have added better homes for the working men in our cities. I hope the committee will also consider the advisability of tearing down or moving many of the war-time houses when the war is over, because most of these houses are nothing but eyesores of the worst kind. The warden also mentions the need for better rural schools. Only yesterday I received a letter from a farmer in my riding who asked what he could do to get his two children to school, because the school, which was four and a half miles away from his farm, had been closed because there were not enough children in the district to keep it open. He felt that he might have to buy a farm near one of the other schools in order that his children might continue their education. In many rural districts you can find bright boys and girls whose education has been held back because of the fact that their fathers and mothers have not had the money to send them to high school and college. Therefore some provision should be made which would enable these boys and girls to go to collegiates and universities. This is something which has been advocated by other hon. members, and I think we should keep hammering at it until the government does something about it.
In his letter I believe the warden covered the most essential angles of reconstruction so far as the counties are concerned. The government should let the municipal bodies know what it will do in regard to funds, and give that information as soon as possible so that county councils and municipal bodies generally may make their arrangements now to set aside certain wmrks, or, as we sometimes say, "put them in the bank" until after the war.
I know these municipal bodies will see to it that for every dollar spent Canada will receive back a dollar in value.
This war is being fought for the common people. We hope the peace will be for the common people; in other words, one for all and all for one. When this war is won we must not allow the men and women of our forces to return to an unhappy Canada, a Canada in which there is no work for them. We must see that all are clothed, housed and cared for. We must have jobs for all who are able to work. It is the very least we can do; it is our duty and, may I say, our privilege.

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Mrs. CORA T. CASSELMAN (Edmonton East): Mr. Speaker, other hon. members who have, spoken have discussed the greater matters which will be considered by the committee on reconstruction and reestablishment. I should like to present a few of the smaller matters which, it seems to me, are of importance.
I believe that the brave new world which we hope to reach some day will be brought about by smaller things, that we shall arrive at our goal step by step. Therefore I offer just a few matters which the committee might consider when it deliberates in the coming weeks. We realize there is a new factor which will confront Canada and all other nations in the post-war period, in that hundreds of thousands of women will be demobilized from industry and from the armed forces at the close of the war. They are women who, to a great extent, had no previous employment beyond their own home circles. Many of them had not finished their education. Much of what the Minister of National Defence for Air (Mr. Power) said last Friday with respect to the boys in the Royal Canadian Air Force applies with equal force to the girls in all branches of the armed services. They will come back, possibly not to jobs but rather to fit in some way into a civilian life.
We must have a great deal of sympathy with both the men and the girls who will come back to things much different from what they are now experiencing. They will have difficult adjustments to make. We can give them sympathy, and we may do something for them through legislation. The girls may welcome getting back to the four walls of their homes, because those home walls do not limit them now in the way in which they did a few generations ago. A woman with the ability and the desire may go far beyond those four walls, into many other spheres of activity. While they have had a greater degree of regimentation in the armed forces, yet perhaps they have also had greater independence. They have had control of their own money, little though it may be. They have had the exhilaration of being part of a great crusade. They have drunk of the heady wine of adventure, just as the boys have. So that if they have difficulty in making adjustments when they come back, we shall have to assist them in that regard. We who are older realize that their reestablishment is of great importance, both for the individual and for the nation, because no one makes a greater contribution to the life of the nation than does the woman whose career is in the home. She must have some of the noblest qualities if she is to do her work with 100 per cent efficiency. She has to bring up her
children so that they may be tolerant, broadminded, mentally alert, so that they may have a respect for the rights of others and may be good citizens in a democratic country. She must preserve the balance between freedom and discipline. Not only must she. build character in our young people, but it must be built so that that character will be maintained in the adults. Moreover, I do not think the father's place in the home is of any less importance than the mother's. Our nation's grandest qualities are built in our homes.
I believe we must consider at the present time some system of children's allowances. That would be one of the definite recommendations I would make to the committee. That is one of the provisions which should be made for the returned men and women. There is now a provision whereby for a short time after his or her discharge a member of the armed forces receives military pay. I would suggest that in post-war years that might be a longer or a more flexible period. At present the period allowed by the Minister of Pensions and National Health (Mr. Mackenzie) may be sufficient, but during the years of adjustment after the war it might be more flexible if it were long enough to provide time for adjustment and short enough to prevent malingering-because there will be some who will take advantage of it, if they can. I believe that group, however, will be small in number when compared with the thousands who will play fair.
This would help the morale of the nation, something which will be of great importance if we are to make progress' along democratic lines. We realize that morale is a decisive factor now on the home front, and at every point where our armed services are sharing in the struggle against despotism.
Another point which might be considered by the committee is that of discharge papers for both the men and the women who will leave the army. I am wondering if we could not work out something of which they might be proud in days to come, something which would indicate what they have accomplished through their willingness to make the supreme sacrifice, .if necessary. When they volunteered to enter the armed services they showed they were willing to do what their country called upon them to do. Perhaps discharge papers should express some measure of their country's thanks, so that they may have something in which they may take pride, and which their children may cherish.
The committee will consider the larger problems, and properly so. They will no doubt discuss housing, conservation, and the use of

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our natural resources. I have no doubt they will discuss national parks and playgrounds, and when that subject is under consideration I wonder if they would keep in mind smaller playgrounds which would be within the daily reach of children in crowded areas in our . cities. So	many	children have	only	thestreets and	lanes	in which to	play.	Itwould be worth while to tear down some of the old decrepit buildings, or fill up the vacant lots by providing playground accommodation to	which	children could	have	easyaccess every	day of	their lives. I	know	that
matter comes under municipal jurisdiction, but it seems to me that the recommendations which will be made by the reconstruction committee will have some weight with the municipalities and they may agree to provide playgrounds for our children which will help to build character.
I consider that play is simply a younger sister of education, to which a number of hon. members have referred. If we have playgrounds it means that we must have supervision because, just as in the international field, there will be bullies and aggressors who will try to push others aside. Most youth organizations and those dealing with such matters find that training is necessary for supervisors. The Y.M.C.A., the Canadian girls in training, the boy scouts and many church organizations have tried to train people to take charge of children's groups. I suggest that we consider such training as part of the vocational training now being provided under the auspices of the dominion and the provinces in order that there may be a greater number of trained and efficient supervisors who could help these young people along. Such work might be made available for some of those discharged from the armed forces.
The children learn in the playgrounds to have respect for the rights of others while standing on their own rights. That is what we want in the international field. Perhaps this comes into federal jurisdiction because those who receive character training are less likely to become delinquents. At the present time there is a great increase in juvenile delinquency with so many fathers away, and if something could be done now to help to prevent delinquency I think we would find a great improvement. Perhaps that is in the provincial field, but many of these delinquents come back as second and third offenders when they must be dealt with under the federal system. We would be helping the nation as well as helping these young people if we could do something along these lines.
I know these are small matters in comparison with the large questions that will be before
[Mrs Casselman.]
the committee, but I think they should be kept in mind. In the olden days children were taught in the home; they came under the influence of the home, the school and the church. Nowadays there is a whole battery of influences, such as the movies, the radio, the comics and so on. If we plan deliberately through our reconstruction and rehabilitation schemes to build better character in our young people,
I know it will be to the advantage of the nation as a whole, both now and later.


Mr. ANTHONY HLYNKA (Yegreville):: Mr. Speaker, there seem to be two prevalent views with regard to the problem of post-war reconstruction. There are those who believe that everything will work out all right, and that all that we shall have to do will be to trust in the government of the day and we shall receive the bountiful fruits which our plans of to-day will bring forth. There are others who are not so optimistic, who look at these post-war problems in a more realistic, and at times I might say even a pessimistic way. I am inclined to agree with some hon. members that the government should at least attempt to solve some of the problems which are facing us to-day. We should then have reason to believe that we might be able to cope with other problems when they come upon us.
I have in my hand a copy of the estimates for the fiscal year ending March 31, 1944, I notice that there is a decrease of $126,000 in the item for old age pensions. Looking over other items I see that there is an increase of $54,296,231.19 provided for the payment of interest on our national debt. The total interest that must be paid in the coming year on the national debt is $198,628,033.33. In view of this, anyone who wants to convince me of the government's sincerity with regard to postwar plans will have to do more explaining than has been done, especially since they have failed to solve the problem of our aged people.
Some time ago the president of the university of New Brunswick spoke to two' hundred Y.M.C.A. delegates from the maritimes and British Columbia. The report of his speech appeared in the Winnipeg Tribune of April 12, 1941, and it reads:
Speaking of the post-war world, Professor MacKenzie said there would be "disorganization and debts and poverty and suffering, but that is the price we pay for the luxury of war. Industry and finance and commerce and government will operate much as they have in the period just past.	_
Taxation will continue at high levels, but that in itself need not alarm us, for taxation is merely a method of transferring wealth and of making accumulations of it available for large-scale use."

Post-War Reconstruction
Of course that gentleman is looking at the whole problem of post-war reconstruction in an, extremely pessimistic way, and I am not inclined to agree with him any more than I agree with those who have expounded the view that we shall have a paradise if only we continue carrying on under the old system.
Again, here is a pamphlet which I am sure other hon. members have received also. This pamphlet contains an address delivered by Mr. Walter P. Zeller, and is entitled, "Post-War Freedom." I believe this is an address delivered before some club in Canada, although it is not stated in the pamphlet just what club it was. I should like to draw the attention of the house to what I believe to be the most important point raised in his speech. It must be remembered that Mr. Zeller is one of the leading business men in Canada; he is regarded by many industrialists as one of the leading lights in the business world. A speech made by him on post-war reconstruction should be widely read; it should also be scrutinized to see whether he has anything worth while to put before us. Discussing the post-war freedom, which we all want, Mr. Zeller, I believe, makes out a good case. None of us want any more regimentation than is absolutely necessary. But when Mr. Zeller comes to the question of finding money to finance the post-war reconstruction, this is what he says:
It is natural that people should ask why it is that government can find all the resources needed to wage war but cannot do the same in the interests of peace.
That is a good question. Let us listen to the answer.
The answer, of course, is that the problems of peace-time economics are as different from the problems of war-time economics as peace is different from war.
What an answer! The whole problem of post-war reconstruction is involved in this question, and that is the best Mr. Zeller has to say in this regard. He goes on:
In the first place, the government does not find all the money it needs to pay for the war. We are by no means on a pay-as-we-go basis. Notwithstanding the present high taxation, income is only about 50 per cent of the cost. The balance must be borrowed. The record of war-time finance is outstanding and most highly commendable, but it is based on an assumption that peace will not be too long delayed.
That statement coming from Mr. Zeller, one of our leading business men, should cause us to ponder. We have now arrived at the point where is must be the responsibility of business men as well to face some of these matters realistically, and to answer so fundamental a question in this manner is by no means reassuring evidence that our business men are 72537-534
thinking seriously of how to retain private enterprise. I am a believer in private enterprise, but I do not believe in abuses, and if Canadian business men want to save the system of private enterprise they had better analyse more seriously the problems which are now facing us, and which will confont us after the war.
I am inclined to agree with the remark of the hon. member for Kamloops (Mr. O'Neill) that if the government is seriously desirous of tackling the problems of post-war reconstruction it would be well advised to begin doing so now. For example, it should take in hand at once the solution of the old age pension problem, the problem of private debt, and other problems which have faced this country for years. All the government has done hitherto has been to postpone action from day to day and from year to year, while farmers have lost their equity in their lands and today find themselves deprived of everything.
I wish to take this opportunity to ask members of the government to answer a few questions which have puzzled me for some time. How will our national debt be paid off? It has increased steadily for years and is still on the upgrade. Here are the figures per capita for the last seven years:
1936		 $371
1937		 369
1938		 372
1939		 382
1940		 387
1941		 413
1942		 445
And it is still going up. If we are to give-, our people security with freedom the government must first explain how it intends to pay off the debt of the country and where it will get the money. Then it will have to inform us where it intends to find the money to pay old age pensions, institute housing schemes, and finance other projects which will be needed after the war.
Our problem is neither one of production or one of consumption. Our people are willing to consume more than they have had an opportunity of consuming. The problem is one of distribution, and I am unable to see how any hon. member can confuse this internal question with something which is international. As a matter of fact a number of hon. members have endeavoured to place the blame on someone outside Canada for our own failure to-distribute the goods and services which we have within our country.
I believe that both the Minister of Pensions and National Health (Mr. Mackenzie) and the hon. member for Cariboo (Mr. Turgeon) have shown their desire to tackle this problem sincerely, but wishful thinking cannot solve:
Post-War Reconstruction

our problems. Both these hon. gentlemen will have to do what the hon. gentleman who holds the purse-strings will tell them to do. We shall have to get the assurance from the Minister of Finance (Mr. Ilsley) or the Prime Minister (Mr. Mackenzie King) that no financial restrictions shall be allowed to interfere with the solution of our post-war problems. Without such an assurance all talk of postwar reconstruction is useless; it is futile and nonsensical because it can never be realized. What is the use of talking about parks and playgrounds, about our tourist trade from the United States and what they have to say about us, if we cannot tackle the fundamental problems of our life, those of providing our people with bread, clothing, shelter and health services? Why soar into the air to discuss secondary things when we cannot tackle problems which are immediate and fundamental and must be attended to now?
It seems to me that the sponsors of postwar reconstruction plans would do hetter if they took a little advice from the people, instead of trying to force on them the plans which they themselves have hatched. Why not go to the farmers of this country and say: ""You constitute one-third of our total population; we want a brief from you. What do you want after this war? Place your problems Before us and we will see what we can do." "Why not go to our working people in every factory across this country and say to them: "Get together; call a conference to discuss your problems, and then formulate your demands into a brief and present it to us." Why not go to the business men and say: "We want you to get together. Prepare a brief setting out your views and present them to us." Go to the professional men and say the same thing to them, go to our young people-and I want to stress particularly the role which our young people should play after the war- and say: "What opportunities do you want? Present us with a brief." Then, after having gathered all these briefs and studied them you would have a point of view representative of every class and every group of people in Canada. I believe that that would' really be a democratic approach to some of these problems. As it is, agriculture has absolutely nothing to say about post-war reconstruction, and I say that with all due respect to the Minister of Agriculture (Mr. Gardiner), who is an able debater. But our farmers expect more than words.
I wish to quote a few words to show what conditions have existed in this country. Here is a clipping from an editorial which appeared in the Calgary Albertan of August S, 1938. It .says:
{Mr. Hlynka.]
A friend of the Albertan's who for obvious reasons, we believe, does not wish to be named, showed us yesterday a list of debtors and their debts that he had extracted from the records of the organization of which he is accountant. Suffice it to say that each of the farmers mentioned in that list now owes after eight to twenty years, from as much as the value of the original loan to two or three times the sum and that the accumulated interest ranges from twenty-two to two hundred and thirty-eight times the face value of the loan. The figures are almost unbelievable, but there they are.
The editorial goes on:
Unless this business of farmers' debts is tackled courageously, it is quite evident that market values, commodity prices and all the factors that are usually supposed to make for prosperity will not mean a thing worth speaking of.
That was in 1938. Yet when this question was brought up to-day by the hon. member for Lake Centre (Mr. Diefenbaker), the minister said that they had not had the time to consider the problem. I say, Mr. Speaker, that one-third of our population in Canada deserve a better break than that. As a matter of fact, if things continue as they have for a number of years now, we shall have repeated in Canada what has taken place in the United States. I have here a clipping from a United States paper dated December 9, 1936, which says: "Janitor winner in ballot race; mayor is angry." The janitor beat the mayor in the race for office. It will not be long before some of our janitors in Canada get wise to the trick and beat some of our professional politicians out of their positions.
I believe that some of these problems must be tackled now. We cannot wait. The debt problem, the problem of old age pensions and many others must be faced now, and if the government is seriously concerned it will put the necessary legislation into effect. Let me quote from an election leaflet issued in my constituency by the candidate of the Liberal party before the last election. These are some of his planks: "Agriculture-parity prices for farm products-wheat, hogs, dairy products. Pool the freight on wheat." Have we that? I quote further from the same leaflet: "Reconsider the whole freight rate structure. Lower the cost of agricultural machinery. Keep down living costs. No man to lose his equity in his land. Settle old debts fairly but finally," and so on and so forth.
I have now been a member of this house for three years, and I think it is high time that some of these things were done. It would make a good beginning to post-war reconstruction. We cannot continue as we have in the past. We must begin to solve some of these problems and get them out of the way, and the sooner the better. Of course the gov-


[Stage Direction]
Post-War Reconstruction
eminent in office will get the credit that is coming to it. It is not enough to wait until public opinion forces the government to move, but that is usually the speed of most governments.
I have another clipping here from the Edmonton Journal of April 23, 1939. It is a dispatch from Clarkson, Ontario, and it reads:
"Something has to be done", Councillor Mitchell said, in calling attention to conditions in his municipality. "All we are doing is creating an army of bums. We have had about 80,000 graduated from our high schools in Ontario during the past four or five years. We send them to school to acquire that education and then they have it, what good is it?
"Year after year students graduate. Perhaps a member of parliament hands them some taffy at commencement and gives them a diploma. The day after, they have nothing. I would rather have the babies knocked on the head at birth than see them turned out to wander after teaching them to feel and suffer," he stated.
That sort of thing was happening in cities all over Canada for many years. Let me read another clipping from the Edmonton Journal of February 15, 1934, at the time our Conservative friends were holding office in this country. This was the Ottawa scale: A family of two received 7-4 cents per meal; a family of four, 5-3 cents per meal; a family of six, 4-8 cents a meal; a family of eight, 4-3 cents a meal. That is something that our Conservative friends can put in their album, because those are things that have not yet been solved, or properly tackled.
Here is something about the old age pension. This is taken from the Winnipeg Tribune of April 25, 1942:
Old Samuel couldn't stretch his $20 old age pension quite far enough this month. When he went to make some purchases at a grocery store Friday he put three items in his pocket for which he hadn't the cash.
At the paying counter the clerks noticed that his pockets bulged suspiciously. They investigated, found he had hidden a pound of butter, a tin of condensed milk, a tin of cooked meat, total value 63 cents.
At 72 Samuel is almost stone deaf, and when he was haled into court this morning couldn't hear either the theft charge read out by . . . the clerk of the court or the questions asked by the magistrate.
At length, by means of exchange of written messages, Samuel was let off on suspended sentence.
If he commits the same offence within the next two years he'll be sentenced for the old as well as the new theft. Apparently Samuel doesn't intend to do any such thing, for he left the courtroom smiling.
That is the fate of our aged people. We must tackle these problems realistically and try to get rid of some of them now, because if we do not they will pile up upon us and it may be impossible to solve all of them at the same time.
We also talk about the Beveridge report. It surprises me that hon. members spend so much time on a report prepared for Britain. Why can we not get down to business and prepare a plan of our own? Why should we always be imitators? Why not consider the problem and figure out our own solution? If we know our objective it should not be very hard for us to reach it. We have all the material resources that we need and more. All we have to do is to apply a little intelligence and get these things over to our people for their use.
We have seen in this country a creeping tendency toward dictatorial bureaucracy. Instead of the government asking the different provinces to cooperate and coordinate all our affairs and with a view to arriving at a solution, we see a strong tendency on the part of the federal government to move into provincial fields and thus reduce the provincial powers to something very local. That is a dangerous trend. I was pleased to hear the hon. member for Lethbridge (Mr. Blackmore) bring out this point so clearly. The Canadian people, if they intend to wait for this govern^ ment and for various other groups to make up a plan for a democratic future for them, then they had better not wait because these individuals will not plan the future for the people of Canada. They will plan the future for themselves, to serve their own interests.
Our young people are sacrificing more than anybody else in this war. When a young man reaches eighteen years of age he may be called for military service, and when he is nineteen or twenty the same regulations apply. If these young men are intelligent enough to fight the war for us, surely they are intelligent enough to cast a vote in an election. The age qualification in our election act should be changed, so that the young boys and girls between eighteen and twenty-one years of age may be included in the voters' lists, because the future of Canada will belong to the young people. In the past some have been afraid that youth might not stand for a lot of this nonsense that we have been handing out to them. It was felt that perhaps the young people would be too impulsive and would be hard to keep under control. But, if we place our problems squarely before them and tell them "these are your problems; you are a part of this nation; let us tackle them together," they will, I am sure, cooperate in a sincere attempt to find a solution.
Our young people will have to take a lead in post-war reconstruction. I have all the respect for ripe minds and ripe age, but I am doubtful about some of these ripe things, because, no matter what it is, if it is too ripe there is danger that it may not be the very best.
Post-War Reconstruction
[Stage Direction]
I should like to bring out one or two other observations at this time, and perhaps touch upon some matters that have not been dealt with as yet. The people of Canada at this time are interested more in the fruits which they will get than in the plans that are advanced by various groups. We must judge every government by the results which it gives to the people, and not by the machinery set up. The machinery of government, if it does not bring the required results, is useless, no matter how well it may look on the surface. What we want in Canada, as the hon. member for Lethbridge has so ably pointed out, better than anyone else in this house, is security with freedom. One without the other is not enough. Why should we not have both? If we continue to get results we do not want, our freedom will be endangered. If we continue to give the people of Canada the results against which they are fighting then they will take it that democracy is failing. We do not want .our people even to think that, let alone be convinced of it. We want our people to believe that democracy is the only system for Canada, that democracy must be the system ini Canada. But this democracy must give our people better results. There is no other way out. We cannot afford to let our people say, " If these are the results we have achieved under democracy, then we want none of it." We shall then find ourselves in a really dangerous situation. We must give our people the results they want.
Mr. G. T. FULFORD (Leeds):: Mr. Speaker, I have been in this house for three years, and during that time I have followed the proceedings with great interest. In the course of the debates I have listened to and understood the philosophies and policies outlined by the Cooperative Commonwealth Federation party, though I have not agreed with them. The same applies to the policies of the new Progressive Conservative party, and also to the hon. member for North Battleford (Mrs. Nielsen), but for three solid years I have tried to understand what the New Democracy party is trying to drive at, and I have not found out yet. I listened with the most rapt attention to the two hon. members who this afternoon expounded the theories of that party. I refer to the hon. member for Lethbridge (Mr. Black-more), and the hon. member for Vegreville (Mr. Hlynka), who has just taken his seat. We hear all that is wrong with Canada, but we are given only a few nebulous suggestions which, when tested, just do not hold water. We hear that we have piled up a tremendous debt during this war. It is true that we have piled up a tremendous debt, but we have done a tremendous job, and I do not know how

that job could have been accomplished by any country in the world without piling up a great debt. It is all very well to expound these fancy panaceas, but it is quite a different matter when one tries to put them into practice, as Premier Aberhart of Alberta discovered much to his dismay. However, it is not my intention to criticize those who have spoken this afternoon except to ask how Canada can expect to progress after this war unless it takes its proper place among the nations of the world. How much respect will our allies of the united nations have for us if such isolationism as we have heard from those two hon. members this afternoon is preached generally in this country?


Mr. JOHNSTON (Bow River):: The word "isolation" was never mentioned.


George Taylor Fulford: The hon. members spoke of trading among ourselves and living to ourselves. I wonder if they have not heard of the aeroplane and how it has altered all our old ideas in regard to time and distance. I say that the future of the world is dependent upon the cooperation of all nations, and Canada can be no exception. If -we do not cooperate we are doomed to failure.
This afternoon the hon. member for Peterborough West (Mr. Fraser) offered some very good suggestions with regard to the tourist trade. I am sure the hon. member was not serious when he said his was the finest tourist district in Canada, for everyone knows that this honour belongs to the county of Leeds. I was particularly interested last evening when the subject of the tourist trade was introduced by the hon. member for St. Lawrence-St. George (Mr. Claxton). I had not realized that one of our departmentsdiad the wisdom and foresight to write Americans and anticipate their needs before they came to Canada. I refer, of course, to what was done by the wartime prices and trade board in regard to our sugar, tea and coffee ration books. I was very much impressed by the letters read by the hon. member, which had been received by the wartime prices and trade board, in appreciation of its offer to furnish these ration books to our United States friends before they came here for their visits. There is one point, however, in which I think we are rather remiss. I refer to the amount of gasoline that is allowed Americans who come to Canada for fairly long periods of time, especially those who are property owners and consequently taxpayers in this dominion. I know of several older people in my own riding who are almost obliged to take recreation in the summer time, but who will be unable to come to Canada this summer unless these restrictions are lifted to some extent. I know of one family in particular who very much resent the fact that

Post-War Reconstruction
they can get gasoline for their outboard motor, to run around the lake, but cannot get gasoline for their car. I would respectfully draw this point to the attention of both the Minister of Munitions and Supply (Mr. Howe) and the oil controller. When a Canadian goes to the United States he is given an A ration coupon book which entitles him to twelve American gallons a month. I certainly think Americans who for a great many years have been in the habit of coming to Canada and who are property owners here should be given an equal amount in Canadian gallons. That will go a long way toward counteracting the bad effect the severe rationing of last summer has had upon these tourists, and I believe it would bring to Canada a great many people who now fear that if they came here they might find themselves stranded.
Now for a moment I shall be most unoriginal. I agree with millions of other Canadians and go on record as stating that I believe entirely in free enterprise. I believe that free enterprise will help to rehabilitate Canada after the war, just as free enterprise has built Canada to her present state of civilization. But in order to succeed, this free enterprise must be unshackled; the fetters of bureaucracy must be removed. By this I do not mean that I would advocate reverting to the policy of laissez-faire of the last century. Industry must be policed, just as the individual must be policed.


Mr. MacINNIS:: Policed, but not handcuffed.


George Taylor Fulford: But so far as definite government planning is concerned, for every move industry is to make, I am sure it would fall down. On the other hand, if allowed to advance, as it has throughout this country, to its present state, it will not let us down.. One thing we cannot do is to let our men and women down when they return from active service after the war. I cannot visualize those men and women returning to a country swayed by the panaceas, if you like, conceived by certain theorists, or influenced by the untried policies of political opportunists.
Above all, after the war Canada will have to keep its head. We will stand to come out on the very top, if things are managed and governed correctly after the peace. On the other hand, we stand to lose everything if we attempt to experiment during the vital period of reconstruction.
I believe in free enterprise, because it is through free enterprise the British commonwealth of nations, as we know it, has developed. I believe in free enterprise, because
it is upon such free enterprise that Canada was built. I believe in free enterprise because it has given the United States the highest standard of living, the highest real wages any country has ever known. Surely we shall not throw overboard something which has meant as much to humanity as this system developed through the centuries.
During the debate we have heard a great deal that has been constructive, and especially suggestions for a definite and proper program of public works after the war. We have heard about water conservation; we have heard about irrigation; we have heard about a certain measure of reforestation. I wish to bring to the attention of the house a subject which was much in the public eye before Pearl Harbor, but about which we have not heard since that time. I refer to the development of one of the greatest national resources God ever gave a continent, namely, the development of the deep waterways on the St. Lawrence river. Had it not been for Pearl Harbor I believe that waterway might have been under construction now. However as a result of the emergencies of the war it has had to be put aside for the time being-but I trust only for the time being.
Living as I do on the banks of the St. Lawrence, and watching 240,000 cubic feet per second pass my door, I cannot help thinking of the waste of power, and the waste of navigable resources. Between the United States and Canada a deep waterway has been built from the head of lake Superior to Prescott. Then there is a bottleneck for about 130 miles. At great expense the government of Canada has made the port of Montreal one of the greatest seaports in the world. Yet we have this bottleneck of. only 130 miles separating our great fresh water inland seas from the commerce of the world. At the present time the largest boats which sail the great lakes go to Prescott and unload their grain. That grain must be transhipped from the elevator at Prescott, and through the 14-foot .canal. It is either transhipped in Montreal, or again put in storage from the small canal boats. Or, in some instances, the small canal boats will take it down from the head of the lakes. This is a most uneconomical and unreasonable situation.
If such a water system existed in Europe as exists on this North American continent it would have been developed many years ago. Even to-day countries in Europe are considering further development of their waterways. Germany recently completed the Danube-Rhine system, thereby connecting the North sea with the Black sea. Some years
Post-War Reconstruction

ago Russia built the canal which passes up the Volga river from the Caspian sea, thence over to the Don river and thence into the sea of Azov and the Black sea. But none of these canals can be compared in importance with the St. Lawrence system which, with the exception of the 14-foot canal, remains undeveloped. One of the most costly sections, I should add, has been built by the Beau-harnois Power Company, but the power has been only partly developed.
The canal has been built, and all that is necessary now to connect lake St. Francis with lake St. Louis is to erect locks adjacent to the power house. Really what remains for us to do here in Canada is to reconstruct the Lachine canal which connects the harbour of Montreal with lake St. Francis and the stretch from Cornwall to Prescott.


Mr. MacNICOL:: Not with lake St. Francis, but with lake St. Louis.


George Taylor Fulford: Yes, with lake St. Louis. This great natural resource should not be wasted. This work would mean that many thousands of men could be employed during the period of rehabilitation, and it would mean a power development even greater than that at Boulder dam or the recent development on the Saguenay river.
With all seriousness and earnestness I ask this committee to give the fullest consideration to the development of what is the continent's greatest natural resource, the St. Lawrence deep waterway.
On motion of Mrs. Nielsen the debate was adjourned.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



THE BUDGET


James Lorimer Ilsley: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, the financial and economic requirements of war become greater, and more exacting as the scope and thoroughness of our plans grow. This fifth war-time budget will exceed all previous standards and make provision for expenditures on a scale which it is sometimes difficult for any of us to appreciate.
IMr. Fulford.]
The task of preparing this budget has been cheered by the growing evidence that we have seized the offensive, and the power of the united nations is already striking deep into the enemy's defences. There is, too, the expectation that our own land forces will soon match the blows which our air force and navy have struck against the aggressor. But if the valour of our men and of our allies is now translating our economic and financial programme into telling blows against the axis powers, there is every reason for pressing that programme forward and none for relaxing it.
As I have said frequently, financial measures are but one of the means through which we link the whole war programme together. They are instruments and not ends in themselves. They are instruments which must be used wisely lest we frustrate our efforts now and sow the seeds of intolerable conditions later. Financial measures are one of the means through which each person has his share in this war. Taxes and loans are not exactions from the people by a government. They are weapons which the people through their elected representatives and the free methods of democracy have fashioned for their own use and their common purpose. We cannot all man guns and planes and ships; we cannot all build guns and planes and ships, but the Canadian people have shown by the reception which has been given to each succeeding wartime budget that they are ready to wield these weapons, each according to his strength and all ^gainst the people's enemies. They are ready to accept their share in each increase in the effective organization for war of which the budget is but the financial counterpart.
It is by the single purpose of the people of this country and her allies that this war will be brought to the desired end. It is by the sober, tenacious purpose of the men and women of this and other countries that a just and durable peace will be written. The proposals which I shall lay before the house tonight are the recommendations which the government makes to the elected representatives of the people of this country for improving the financial means by which each of us may throw his whole weight into this struggle-and help to make possible a world more worthy of our better selves.



ECONOMIC AND FINANCIAL REVIEW

[Stage Direction]
The current fiscal year has been marked by the coming to fruition of all our major production programmes, and yet, as we approach our full capacity, the increase in over-all production is less marked than last year.

The Budget-Mr. Ilsley
Industrial production in Canada rose from an index figure of 208 in December, 1941, to 251 in December, 1942. Such over-all figures however, conceal what has been taking place. While detailed production figures are not disclosed, the increases of 20 to 75 per cent in the numbers employed in the production of such things as chemicals, electrical equipment, iron and steel, and motor vehicles, and of more than 100 per cent in the case of those engaged in shipbuilding, tell their own story of war production. A number of other industries, partly war and partly civilian, have just maintained the level of employment. But there is a lengthening list of industries, producing, in the main, less essential goods, which show over the past year definitely reduced employment. It is the shifts in production rather than the over-all increase which tell the significant story. We have, in recent months, been definitely in the period when substantial increase in war production can be achieved only at some loss of less essential production and in which we must be prepared to shift men and resources from one kind of production to another, as changing needs dictate.
We have been confronted with our inability to satisfy fully both war requirements am. the high levels to which unrestricted war-time consumption has gone. It has been necessary, therefore, to restrict consumption and use in a growing number of instances in order that supplies for the armed forces should be fully assured, and the goods and services available distributed in an orderly and equitable manner. The problems raised by this situation are difficult and often extremely vexatious, but their emergence is a clear indication that we are reaching the stage in our war programme which it was the desire of every Canadian that we should reach, namely, the stage when we would be producing not merely what we could produce comfortably but all that we could possibly produce from the resources and manpower at our disposal. If we had no shortages, no vexatious restrictions, no farm labour problem none of the problems and difficulties wlii.u have been debated in this house in recent weeks, we could be certain that we were falling far short of a full-out war effort.
In a war of such extent and movement, in which technical improvements have already played so large a part, it was not to be expected that shortages would emerge in a well ordered and easily forseen pattern. The mounting of the allied offensives and the unlimited submarine warfare have made the limitations of ocean shipping particularly severe. Facilities for land transport have been heavily taxed, and the severity of the weather has
introduced unusual difficulties in making the fullest use of the facilities available. The offensive phase which the war has entered has necessarily imposed changes in the direction and emphasis of our war programme. As the experience of battle redefines the needs of the armed forces, we can expect to be faced with increasingly difficult problems of controlling the production, distribution and use of goods and services.
There are sufficiently frequent occasions for discussing before the house the government's policy of controlling prices, wages and salaries, that it is neither necessary nor desirable to say more here than that it continues to be an integral part of the war-time fiscal and economic policy, and that without it that policy could not be carried out effectively. Though there are plenty of critics of particular applications of this programme of control, there is none who advocates its abandonment. By the payment of consumer subsidies to offset a substantial part of the increase in the cost of living, which it was not possible to avoid, the government, after a year's experience, has reaffirmed its determination to adhere to this programme and to continue to reserve to parliament the right to distribute the financial and economic sacrifices of the war by its taxation measures rather than to have them distributed by the haphazard forces of changing prices and incomes.
As explained in the budget speech of last year, our exchange problems have now become pretty well merged with general fiscal problems. The shortage of United States dollars has ceased to be a major problem and the decisive position which it held in our early budgets has been overshadowed by the limitations imposed upon us by shortages of shipping and resources and man-power. It has already been announced that a measure will be introduced to provide, out of such war production as can be made available, for the needs of those united nations whose supplies of Canadian dollars are inadequate to permit them to purchase such equipment and materials as they need.
The estimates of revenue and expenditure and other relevant information are set out in full in the white paper which I shall table before I resume my seat. I wish, however, to report briefly on the probable results of the year and on the financing which has been carried out. The house will bear in mind that the fiscal year does not close until March 31 and that the figures which I quote ar«, therefore, estimates only.
It is estimated that all revenues, including the refundable portion of income and excess
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profits taxes estimated at $100 million, will total $2,309 million, over 55 per cent above the revenues for 1941-42.
Total tax revenues are forecast at $2,136 million including the $100 million of refundable taxes. This compares with $1,361 million for the previous year and is very close to the forecast given at the time of the last budget. Direct taxes on incomes and profits are now overwhelmingly the largest sources of tax revenues, yielding nearly two-thirds of the total. The graduated tax on personal incomes, the special tax on income from dividends and interest and the national defence tax which was in operation for only five months of the fiscal year, are expected to yield $568 million, an increase of $244 million. The corporation income tax and the excess profits tax will, it is anticipated, yield $805 million in contrast with $321 million for the previous year. It will be recalled that some part of this increase was the result of introducing payment by monthly instalments and will be nonrecurring.
Excise taxes, at $477 million, will show an over-all increase of $24 million despite conspicuous reductions in the yield of some individual taxes. The largest item in this group, the sales tax, at $230 million net, will show a decrease of $6 million from the previous year's yield.
Thanks to the substantial increases in rates imposed by the budget legislation of 1942, excise duties are expected to reach $142 million as compared with $110 million in the previous year. Customs duties, having reached their recent peak in 1941-42, are likely to decline to $118 million from $142 million for the previous year.
Non-tax revenues, of which the largest source is the Post Office, are expected to reach $114 million. Special receipts and credits will be about $59 million, the largest contribution being the $25 million operating surplus of the Canadian National Railways.
On the other side of the account, we estimate that total ordinary expenditure for 1942-43 will be approximately $566 million, or $121 million above that of the previous year. Toward this increase, interest on the public debt contributed $30 million; compensation to the provinces in respect of income, corporation and gasoline taxes, $74 million; the Unemployment Insurance Act, $7 million; and the Post Office, $4 million. Miscellaneous increases account for the remaining $6 million. Capital expenditures, at $3,862,000, will be slightly higher than those of the previous year. So-called special expenditures are likely to be about $31 million, less than half the expenditures under this category in 1941-42.

The western grain crop was such that it was not necessary to make payments under the Prairie Farm Assistance Act; wheat acreage reduction payments were somewhat less than in the previous year; and the reserve set up to meet deficits arising out of the operations of the Canadian Wheat Board in respect of the 1939 and 1940 crops has proved to be more than ample, resulting in a credit adjustment of $6,600,000.
Government-owned enterprises, specifically, the Prince Edward Island Car Ferry and the National Harbours Board, will require about the same expenditures as in the previous year, $1,263,000.
In the budget speech of June 23, 1942, I intimated to the house that, although the War Appropriation Act and the United Kingdom Financing Act made provision for expenditures of $3,000 million, the actual war expenditures were likely to be considerably in excess of that figure. It now appears that they will reach $3,803 million, including an item of $200 million for the purchase of the British interest in Canadian war plants.
Miscellaneous other charges of $66 million involve mostly items of a bookkeeping nature, including the addition of another $25 million to our reserve to meet possible losses on realization of active assets, and the charging of $36 million to a non-active account (the Canadian National Railways Securities Trust Stock) as the contra-item to the taking into revenues of the operating surplus and certain capital gains of the Canadian National Railways.
Including all these categories of expenditure, the aggregate expenditures for 1942-43 as now estimated will be $4,470 million, as compared with an estimate of $3,900 million given at the time of the last budget. Deducting total revenues for the year of $2,209 million after excluding refundable taxes, we arrive at a probable over-all deficit or increase in direct net debt of approximately $2,261 million. The proportion of expenditures paid out of revenue, namely 49-4 per cent will thus fall slightly short of the estimate of 52 per cent which I gave last year.
Total borrowings during the year (exclusive of some $33 million of school lands debentures reissued to the western provinces) are estimated at $2,423 million. Of this, $1,070 million, including $77 million from the sale of war savings certificates and stamps and $1,825,000 from non-interest bearing certificates, will have been borrowed from the public. An amount of $90 million was borrowed in New York for refunding purposes. Borrowings from the Bank of Canada amounted to $443 million,

The Budget-Mr. llsley
including the renewal of a loan of $250 million. By the end of the year, it is estimated, $790 million net will have been borrowed from the chartered banks. During the current year, in order to obtain funds needed in the intervals between public loans, we introduced the practice of borrowing directly from the chartered banks on deposit certificates, a six month security bearing interest at j of 1 per cent per annum. The amount outstanding at the end of the fiscal year will be substantially reduced when the next victory loan is issued.
Direct obligations of approximately $429 million (excluding school lands debentures) were redeemed during 1942-43, leaving net borrowings for the year of $1,994 million to which must be added an estimated $100 million of refundable taxes. This amount of $2,094 million, together with a decline of approximately $642 million in cash and other current assets and the amount of various advances repaid was used to meet the overall deficit of $2,261 million and to make loans and investments of $517 million net, after allowing for amounts repaid on various outstanding advances. The largest of the new investments were the loan of $700 million to the United Kingdom under the War Appropriation (United Kingdom Financing) Act and an advance of $131 million to the Canadian National Railways, chiefly for the redemption of railway securities.
It is estimated that on March 31, 1943, the outstanding unmatured funded debt (including treasury bills) will amount to $7,861 million on which the annual charges will be $205 million or 2.6 per cent as compared with 2.9 per cent a year previously. In addition, there will be outstanding obligations guaranteed by the government of Canada to the amount of $716 million, a decrease of about $102 million during the year.
Perhaps this is a convenient point at which to remind the house that the financial work of the government has not been completed when the budget has been discussed and legislation passed. In carrying out the approved policy, we depend on two extensive, competent, and hard-worked organizations. It is the task of the Department of National Revenue to collect the taxes enacted by parliament. The department is represented by its own Minister in the house and it is not for me to say more than that the financial programme of the war has, to a degree not generally appreciated, laid heavy and exacting duties on the very loyal and able officials of that department.
The other side of the financial programme, borrowing from the public, is carried on through the National War Finance Committee which was established by the government in
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January, 1942, under the able chairmanship of Mr. George W. Spinney. Formation of this committee marked the creation of the. first single nation-wide organization, responsible to the government, charged with the dual task of planning, organizing and administering arrangements for the maximum public sales of government securities, and of promoting maximum voluntary savings by all classes of Canadian individuals and corporations.
In effect, the committee represented a merger between the war savings committee,- which had been operating continuously since May 1940,-and the Victory Loan Committee -which had been set up as a temporary organization to arrange and conduct the first victory loan campaign in June, 1941.
Since its creation, the National War Finance Committee has welded together the previously existing war savings and victory loan organizations. At the present time, the permanent paid staff of the committee, located in Ottawa and throughout Canada, numbers only about 275 persons. This staff operates in conjunction with three main bodies of workers.
First, there are the voluntary workers attached to the local units in each province. These patriotic men and women are drawn from every group in the community. While, individually, most of these people are on a part time basis, collectively they form the largest group of workers associated with committee activities, both during and between large scale drive operations. This form of service on the home front is of vital importance, and I hope it will be possible to enlist the aid of more and more persons in this phase of our war programme. I should be most remiss if I did not take this opportunity of acknowledging the valuable work being done by these voluntary workers, and to express to them the thanks of the government and their fellow-Canadians.
The next body of workers are the salesmen on commission, and other temporary paid workers employed by the committee at the time of victory loan campaigns. These salesmen do much of the hard work of selling victory loan bonds, in small amounts, to individual investors, by house to house canvass in urban and rural areas. The salesmen who receive commission generally give up their regular jobs during the period of the loan. The money they receive as commission replaces the money they otherwise would make at their regular work, although, in many cases, the amount they receive as commission is less than their regular income. I should; perhaps add that commissions are paid only on relatively small individual subscriptions, where the canvassing work is comparatively
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difficult. Commissions are not paid on orders from larger investors, such as business firms and corporations, nor on bonds sold to employees in medium and large size business organizations.
The third group of workers associated with the National War Finance Committee are the investment dealers and brokers, and persons from the regular staff employed by dealers and brokers. This body of professional workers is closely associated with committee operations at all times. Maximum participation is reached in the period of organization preceding victory loan drives, and during the period of public offering of the loans. In general, investment dealers and brokers do the organizational work, and, during loan *campaigns, carry out the canvass of large corporate and individual investors. Investment dealers and brokers are paid for their participation in committee activities, a reasonable remuneration based on the number and nature of the staff made available and the previous record of the firm in the distribution of dominion government securities.
I have made these explanations in regard to payments to salesmen on commission, and to investment dealers and brokers, because of some public misunderstandings on these subjects. It is to me and to those familiar with money-raising campaigns a rather remarkable fact that the over-all cost of these intensive and extensive victory loan campaigns, including the cost of engraving the bonds and of all publicity activities, can be kept as low as 1 per cent of the amount of money raised.
At the time of the third victory loan, in October-November 1942, temporary paid staff, including salesmen on commission, numbered about 15,500, and voluntary workers, many additional thousands. For organizational purposes, Canada is divided into local unit areas, each of which is under a local voluntary war finance committee. These local unit committees in each province are under the control and direction of the National War Finance Committee for that province. The operations of the provincial organizations are coordinated by the central committee for the dominion which has its headquarters in Ottawa.
Our financial programme for the year has been carried out with a high degree of success. To finance expenditures of nearly $4,500 million is in itself an achievement of which we have no reason to be ashamed. It is the financial counterpart of still more notable achievements of organization and production. But I would like to add some frank words of warning on four points:

My first point is this: On occasion, comparisons have been made of our taxes with the taxes of other countries to show that Canadians are contributing a higher proportion of their incomes in taxes than the citizens of other countries. The financial burden of the war on this country is not measured by the amount of taxes levied. It is measured by the amount of expenditures which are financed. Borrowing does not lessen the cost of the war to this generation. The taxation and borrowing policy merely decides how the burden shall be distributed among the people of the country. The only ways in which we can postpone some of the costs of the war are by borrowing abroad, (if by so doing we can obtain additional supplies of goods abroad) and by using up the physical equipment and inventories of the country and leaving the post-war population to repair the wastage. To some degree, we are relieving the present by the second of these ways. The first is not only undesirable but also would provide only slight relief because of the virtual impossibility of getting additional supplies from abroad. Since the main cost has to be carried during the war, it is the policy of this government to distribute that burden as far as practicable according to the incomes which people enj oy during the war, that is to say, by taxes levied according to ability to pay. The equity of that policy cannot, I think, be challenged successfully.
Secondly, it has been suggested that Canadians are being asked to contribute too much in proportion to our national income. I shall not attempt to elucidate to the house the intricacies of national income estimates. My knowledge extends just far enough to warn me that the most accomplished statisticians find it extremely difficult to make valid comparisons between countries and that, when they have made them, the layman is almost certain to misconstrue them. But there is a much simpler comparison which is more convincing. After we have met our war requirements, what is left for consumption by the civilian population? Is it higher than the pre-war standard of consumption or is it lower? Do we work longer hours or apply ourselves more intensively than other nations? The evidence of both statistics and common observation is pretty clear that all we have experienced so far on the average is some moderate decline from the peak of war-time consumption, and some increase in the inconveniences of shopping and travelling. Let no one so misinterpret statistics as to assert that these approach the economic sacrifices of countries nearer to the theatres of war than Canada.

The Budget-Mr. llsley
In the third place, we have now p'assed the point where we can in a short time increase our total output by any large amount. What one group may gain by pressing its advantages of the moment, other groups lose. The conflicts thus started will paralyse our striking power just at the time when it must be at its height. What, broadly speaking, have been the changes in incomes during the war? Corporations and other businesses have experienced large increases in profits which have been reduced by taxation and compulsory saving to a level not higher than 70 per cent of the pre-war standard profits. This is the most severe and rigid ceiling in force in this country. Personal incomes of the middle and higher income groups have borne the brunt of war-time taxation to the point where very definite reductions in customary standard}] of living have been forced. Receipts from the sale of farm products are reported to have reached a higher level in 1942 than in any year in the past two decades. Receipts from the sale of farm products are not equivalent to farm income. Farm costs have also risen but there is every evidence that farm incomes are at more remunerative levels than in any but the record years. Average weekly earnings of employed persons are at higher levels than they have been since the inflation boom following the war of 1914-18. Thus there has been a far-reaching and important change in the distribution of income in the country. On the whole, the directions of the change have been desirable and the government has welcomed and facilitated it. The increases, by and large, have gone to those who needed them most. But we have reached the point when the demands of some labour representatives and of some farm representatives cannot both be satisfied. Ability to resolve group differences is the decisive test of democracy. Nothing will frustrate our striking force so much as internecine strife over economic and financial advantage. Nothing would so belittle us in the eyes of those other Canadians who offer as a contribution to victory neither economic nor financial sacrifice but life itself.
Finally, on the year's financial results themselves. The plain fact is that this year we have had to depend too much on bank borrowing. I was able to say last year that "aside from the increase in treasury bills, there was no new direct borrowing from the Bank of Canada or the chartered banks during the year." During the current fiscal year, we shall have borrowed direct from the Bank of Canada and the chartered banks a net amount of $983 million. That is not all dangerous borrowing for the public has desired to hold considerable savings in cash. But most of it
is borrowing which I would rather not have done. If the government borrows from individuals, the government spends the money and the individual does not. If the government borrows from the banks the government spends the money, but the spending of others is not reduced. We borrowed from the banks because we were unable to borrow as much as we needed from personal savings.
I tabled recently in the house a statement showing the sources of subscriptions to the three victory loans. They were divided between individuals and non-individuals. Nonindividuals included broadly corporation investors. Individuals included individual persons, small non-profit enterprises and some small businesses. While the total subscribed by individuals increased with each loan, the proportion to the total fell off somewhat in the third victory loan.
I estimate that sales of war savings certificates and stamps will approximate $77 million, although I should add that redemptions have been heavier than they should have been. This compares with $85 million sold in 1941-42. Non-interest bearing certificates, which were made available to meet a special demand, showed a net decline during the year, redemptions exceeding new sales.
These are sobering facts because to the degree that the government has had to borrow from the banks rather than directly from personal savings, to the degree that the spending power of the government has been increased and the spending power of the public has not been reduced by an ecp-all amount, we have contributed to the pressure-on prices and on supplies of necessary products. The evidence is clear that we-, as ai people, must bend our efforts with renewed/ and persistent strength to the task of increasing savings and placing them in the service of the nation.

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I have reviewed the financial events and operations of the year which is drawing to an end. I turn now to the year ahead and the measures which we propose.
The estimates for the coming year are already before the house. For non-war expenditures $610 million is required. The war estimates stand at $3,890 million as compared with estimated expenditures of $2,803 million under the war appropriation in the current year. The amount to be included in the Mutual Aid bill is $1,000-million, the same as was provided in the-
The Budget-Mr. Ilsley
[Stage Direction]
current year under the War Appropriation (United Kingdom Financing) Act. The estimated expenditures thus reach the great total of $5,500 million, an amount which is the dollar measure of our financial task for the year and of the national achievement in organizing for war.
To meet these requirements, it is estimated that, under the present tax laws total ordinary revenues for the fiscal year 1943-44 will be $2,561 million or after allowing $210 million for refundable taxes $2,351 million in net ordinary revenue. I shall place on Hansard a statement showing the details of the estimate and comparing it with the expected yields for 1942-43.
Customs duties 	1943-44 (millions) $ 100	1942-43 (millions) $ 118Excise duties	130	142Sales tax 	225	230War exchange tax	85	94Other excise taxes 	165	153Income taxes- Personal 	825	460National defence tax ..	-	81Corporate 	300	350Interest and dividends	26	27"Excess profits tax 	550	455'Succession duties 	18	14-Miscellaneous 	7	12INon-tax revenue 	2,431 130	2,136 114'Te-tal ordinary revenue ..	2,561	2,250'Special receipts 	40	59Total revenue ....	2,601	2,309Less refundable taxes ..	210	100Net total revenue	2,391	2,209
The table shows that, assuming no tax changes, we anticipate declines in revenue from customs duties, excise duties, sales tax and the war exchange tax. On all these items, shortage of goods and difficulties of transportation will affect revenues adversely. Excise taxes other than the sales tax are expected to yield slightly larger revenues when the higher rates and new taxes enacted at the last session apply to a full year.
It is anticipated that the yield of the personal income tax will be $284 million higher because the higher rates of tax collection will be in effect for the full year and because of increasing incomes. The yield of the corporation income tax will probably decline somewhat as in the current fiscal year we moved forward the time of payment and consequently received somewhat more than one year's taxes. The yield of the excess profits tax is expected to be substantially higher, both because the higher rates enacted

last year will be in effect for a full year and because profits before tax are apparently continuing to rise.
Expenditures of $5,500 million and gross revenues of $2,601 million will leave a deficit of $2,899 million to be met by new taxes and by borrowing other than by refundable taxes. The comparable estimated deficit for the current year is $2,162 million.
The objects to be achieved by our financial programme for the coming year are clear enough. I have set out the decisive facts with which that programme must grapple. What are the salient economic facts? First of all, we have reached a state of full employment, aside from local situations. Supplies that will be available to meet consumer demands in the coming year not only cannot be expanded but must be decreased. Imports will be harder to get and more expensive when we get them. Costs are pressing upward against the price ceiling, causing many producers to find it difficult to work beneath those ceilings. Demands continue to be made for increased wages, and labour costs have a tendency to rise despite all efforts to stabilize them. The purchasing power in the hands of the public is already excessive in relation to what there is available to buy and appears likely to grow more excessive. In short, we find that the forces making for inflation are present on a large scale. The pressure is held in check only by the rigour of our existing taxation, by the willingness of Canadians to save on an unprecedented scale, and by our price control and wage control.
These are the economic facts. The cardinal financial fact is that the proposed expenditures are a billion dollars in excess of those of the current year. Our expenditures will, apparently, amount to more than one-half our gross national production. Revenues, on the other hand, without new taxes, will amount, it is true, to substantially more than ever before in our history, but they will still fall far short of our expenditures, leaving a deficit in the absence of tax changes of $2,899 million.
How much of this deficit should we seek to cover by new taxation or higher rates? How much from increased personal savings lent to the nation?
There are important considerations to be taken into account. Already our tax rates are heavy. They are heavy in absolute terms. They are heavy even by comparison with other countries at war to-day. They are very heavy by comparison with all our pre-war standards except in the case of the sales tax and customs duties, where we have deliberately avoided increases. Moreover, there is an automatic increase in the income tax

The Budget-Mr. Ilsley
deductions at the source which must occur under present legislation as soon as we change from deductions in respect of 1942 incomes to those in respect of 1943 incomes. This arises from the credit given in the 1942 rates of deduction for national defence tax payments in the first eight months of that year. Consequently, our day to day rates of tax deductions will increase without adding anything to our tax legislation. Already, taxation has forced some groups to readjust radically their whole scale of living. The new scale of deductions will require changes in the position of others.
There are upper limits to what can be equitably obtained by an income tax, as I have endeavoured to explain a number of times in the past. A man's income and the number of his dependents are not alone a perfect measure of ability to pay. Many other circumstances enter into a complete assessment of his position. The higher we force our taxation, the more necessary it is that we take these other circumstances into account. It was for this reason that last year, when tax rates were raised steeply, we provided allowances for medical expenses and certain savings commitments. The extent to which we can make special provision for additional varying circumstances of this sort, however, is strictly limited. We cannot make our tax so complicated that the ordinary man cannot understand it. It must be simple if it to be clear to the vast majority who are subject to it. Furthermore, every additional complication, every additional allowance that we make, increases the difficulty of administration and the risk of arbitrariness in administration. Already, we have thrust huge burdens on officials of the income tax division. Faced as they are with the difficulty of obtaining experienced and trained personnel, it is remarkable that they have been able to carry through all the radical changes we have already thrust upon them. To ask them to assume administratively hopeless tasks would be to risk a breakdown in our whole income tax system. Consequently, there are now very serious barriers both in equity and in administration to substantial increase in the income tax at this time.
There are serious arguments to-day in favour of a very substantial purchase tax on all but the most essential goods and services. Such a tax would mop up a considerable amount of excess purchasing power, and would assist in securing the orderly distribution of scarce supplies. It would make those who will spend on non-essentials pay dearly for the privilege. Such expenditure in itself is evidence of ability to pay. However, there
are several serious objections to such a plan. In the first place, there are not going to be enough really non-essential goods and services to provide much revenue unless either we apply such a tax also to what are fairly essential goods, or put a tax on at exceedingly high rates. Probably, we would have to do both if we were to get enough revenue to meet any large proportion of our prospective deficit. I do not feel prepared to do this.
I don't believe there are many goods to-day which should in effect be reserved for those with the longest purses. That would be the result of putting very heavy taxes on such articles.
The financial programme for the coming year will be the government's programme only in the sense that the government has the responsibility of recommending it. In fact, it must be achieved by the willing and combined efforts of all the people of this country. In view of this fact and balancing the considerations I have outlined, I have reached the decision that the proper measures for achieving the financial results which must be achieved are: some improvements and alterations in the personal income tax to make more effective changes which were made last year, a plan for bringing our income tax collections up to date and, at the same time, increasing the current revenue, a number of increases in commodity taxes, and a renewed and extended programme for increasing personal savings. I shall also have a number of less important changes and modifications to propose.
The first and most important measure I wish to propose is that foreshadowed in the speech from the throne-the placing of our personal income tax on a pay-as-we-earn basis. In this way we will complete the transformation in our income tax begun with the enactment of the national defence tax in 1941 and carried last year to an advanced stage both in collecting a graduated tax at the source and in collecting as early as possible after the income is received on which the tax is assessed. I am proposing that beginning this year, 1943, the income tax currently collected at the source or paid in quarterly instalments, shall apply in respect of the tax to be assessed on the income of this current year, 1943. If parliament sees fit to put this proposal into effect, we shall then be on a fully current income tax basis. No one, speaking generally, will then be liable for large amounts of income tax on income he has earned- in the past- except to the extent that adjustments in tentative tax deductions or payments must be made after the year's income is finally determined with accuracy.
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[Stage Direction]
The advantages of a system of current payment of tax such as I propose are now well known, so I need only remind the house of them. Under this plan, when a man's income falls off, his tax falls off with it; when his income rises, his tax rises with it. It enables us to avoid the lag in the payment of tax under our present system-a lag which now amounts to about eight months, substantially less than it was several years ago, but still a problem to those suffering or expecting to suffer a reduction in income. The difficulties in the present system are most serious in the case of those whose incomes cease or decline severely because they enter the armed forces, lose their jobs, retire or die. Advocates of such a plan have made most people very much aware of the personal problems created in such situations by income tax debt. With taxes at present levels, such problems are now very difficult ones for any who have not made provision in advance for their taxes.
For example, a young married man who has earned $40 a week during 1942 who wished to join the air force at the beginning of this year had to face the necessity of paying income tax of $282 on his civilian income of last year out of his much lower service pay this year. Again, if a professional man earning, say, $5,000 a year, should die and leave behind a wife and two children, they would be liable for perhaps $831 of income taxes, whether or not there was any estate. The wage earner who loses his job would in many cases have anything up to several hundred dollars of income taxes to pay during the succeeding six months or year - taxes on income he had probably spent while he was earning it. Anyone who looks forward to early retirement on a pension considerably lower than his current earnings faces an almost insuperable barrier. We do not wish such persons either to exhaust what savings they have set aside or to be forced to break the law.
There are other substantial advantages of a pay-as-we-eam plan. It enables us to make more effective use of collection at the source from earnings and to avoid many refunds and adjustments that would otherwise be necessary. Secondly, it will make it possible in future to adjust our income tax rates and collections more promptly when changes in economic or other circumstances make such adjustments desirable. In this way it will make the income tax a better instrument of fiscal policy in helping to maintain full employment.
It is to overcome the various types of difficulty which I have described, and to obtain the other advantages of having our taxes on a sound current basis that the govern-
ment is proposing now to complete the transformation of our income tax system to a full pay-as-we-eam plan.
Under this new plan, all the deductions of tax made at the source during 1943 will apply in respect of the tax on 1943 incomes. Those who pay in quarterly instalments will pay such instalments in March, June, September and December of this year in respect of this year's income. These instalment payments will be based upon an estimated income and tax for this year, with safeguards to be provided against underestimates. In both cases, the correct amount of income will be determined at the end of the year and a final return will be filed on or before March 31, 1944, together with any amount required to make up the difference between the total deductions or instalment payments and the actual tax. If the taxpayer finds he has had too much deducted or has paid too much, he will claim a refund on his tax return. In making tax deductions at the source from salaries and wages, we shall aim at collecting up to 95 per cent of the total tax liability, rather than 90 per cent as we did in the deduction tables for last year. This will cut down the amount to be paid at the end of the year in filing the return.
I wish to make it quite clear that the new plan will require us to bring into effect as soon as possible the higher rates of tax deductions which would have gone into effect next September. The reason for this is relatively simple and I want it to be understood. During 1942, we collected national defence tax for eight months. This counted towards the total tax on the income of 1942. The tax deductions that we put into effect last September, and which are in effect now, were, therefore, made high enough to collect only the remainder of 90 per cent of the tax for 1942, that is, 90 per cent of the total tax less the amount already paid as national defence tax. Now it is proposed to collect the 1943 tax on which we have paid nothing by means of national defence tax in the past. Consequently, our deductions must be somewhat higher even though the tax rates themselves have not been altered. Det me assure all taxpayers, however, that they will receive full credit against 1942 taxes for what they paid as national defence tax in 1942. It will be no longer reflected in lower deductions from pay, but it will be credited toward the 1942 tax and in some cases there will be some left over to be refunded or carried as a credit against future taxes. The new rates of deduction will go into effect for the first payroll period commencing after March 31.

The Budget-Mr. Ilsley
These new deductions will also be slightly higher because we shall aim, as I have said, at collecting 95 rather than 90 per cent of the total tax by this method.
It will be difficult to put farmers on a pay-as-we-earn basis because it is so very hard for them to estimate their income in advance. We are proposing to give them as much latitude as possible by simply requiring them to pay two-thirds of their tax any time up to December 31-on the basis of a rough guess or calculation-and the balance when they file their final return in March of the following year. Higher agricultural incomes have now brought many farmers into the taxable income ranges, and I am glad to know that the Department of National Revenue is making special efforts to assist the farmer in reckoning his income and calculating his tax. After some careful consideration of the special problems faced by farmers in regard to income tax, I am proposing another special measure to assist them in overcoming the extreme variation in income to which they are frequently subject because of weather and other changes. Last year, the house approved a change in the income tax law enabling any business to carry forward a loss suffered in 1942 or any later year as a charge against profits in the following year. We propose now to enable a loss to be carried forward two years in the case of farmers-so that if a farmer suffered loss during 1942 he can charge that against the income from his farm during either 1943 or 1944.
In order to make the change to a complete pay-as-we-earn system of taxation on the income of 1943 and subsequent years, it is necessary to make some adjustments of the tax on 1942 income. If this is not done, we should have to pay a large part of the 1942 tax as well as the 1943 tax during this year 1943. If tax rates were substantially lower than they are, this overlapping would not be serious. With rates at their present high levels, we must avoid piling the unpaid portion of the 1942 tax liability on top of the current collections for 1943. This is the difficult problem of the transition to the pay-as-we-earn system. Nearly everyone has recognized the virtues of being on the pay-as-we-earn system. There has been far less agrees ment about the means of making the transition to this plan.
Fortunately we are in a better position to make this transition in respect of 1942 incomes in Canada than we would be in respect of any other year. We had already collected during 1942 eight months of national defence tax deductions from salaries and wages and four
months of deductions on the new scale introduced last September. As a consequence, those whose 1942 income consisted of salaries and wages had already paid a substantial part of their total tax by the end of the year. This proportion varies from about 33 per cent in case of fairly high incomes up to more than 100 per cent in the case of some lower incomes. The proportion paid in any	particular case	depends	on the
income, the number of dependents, and whether or not the taxpayer had savings commitments to set against the refundable part of his tax. In general, the higher the income the smaller the proportion of tax collected by the end of 1942, and the less of the refundable part of the tax that is covered by outside savings commitments, the smaller the proportion of the total tax already collected.
It should be remembered in considering this matter that our deduction plan was only intended to collect up to 90 per cent of the full tax, leaving 10 per cent to be settled by the taxpayer himself at the end of the year, against which any allowances for charitable contributions, special medical expenses, etcetera, could be made. This was also intended to leave a margin of safety to prevent over-deduction for those whose earnings varied or changed during the year.
Let me give the house a few examples to show where various types of persons stood at the end of 1942 in regard to the payment of their tax. A single person earning $30 a week through the year will have had $2.10 a week of national defence tax deducted for each of 35 weeks-and then $5.37 a week for the remaining 17 weeks, assuming that he was not able to offset the refundable portion of his tax against other specified savings commitments during 1942. Consequently, he had paid during 1942 a total of $164.79 against his total tax liability of $391.20. That is to say, he was 42 per cent paid up. A married man with two children earning $200 a month will have had 8 months national defence tax deduction of $6.66 deducted. In the last four months he will have had four monthly deductions of $24.87, if he is liable for the refundable portion of the tax. Consequently, he will have paid a total of $152.76 out of his total 1942 tax of $390.80, that is, 39 per cent. If this man had paid, say, life insurance premiums of more than $195.40 during 1942, his monthly tax deductions from September to December would have been $10.21, and consequently he would have paid a total for the year of $94.12. This would be 48 per cent of the tax for which he is liable on his 1942
The Budget-Mr. Ilsley
[Stage Direction]
income-bearing in mind that he is not required to pay the refundable portion. In the same way, it could be shown that a married man with two children and having a salary of $500 a month would have paid 38 per cent of his tax by the end of the year, assuming he had the savings portion of his tax covered by other savings commitments.
The case is somewhat different for those whose incomes are not made up very largely of wages and salaries. They are required to pay their tax in four quarterly instalments, based upon an estimate of their income for 1942. The first of these instalments was payable on or before October 15 and the second on or before January 15 of this year. Consequently, such persons had paid roughly half their taxes by the middle of January except to the extent that they underestimated their income and tax.
In summary then, it appears that most people had paid about half their tax or more by the beginning of this year; the remainder had paid between a third and a half of their tax, depending on circumstances.
In order to put the pay-as-we-earn plan into effect, we wish to have all tax deductions made during 1943 and all quarterly tax payments subsequent to that of January 15, 1943, apply in payment of 1943 taxes alone. We wish to avoid, so far as it is practicable, overlapping the payment of 1942 taxes with the current payment of 1943 taxes. Some overlapping for many people was to be expected in any case because we aimed at collecting only 90 per cent of the tax by deductions at the source, and the balance was to be paid at September 30-at the time deductions for 1943 taxes were to be taking place.
To put tax payments on a full pay-as-we-earn basis and avoid unreasonable overlapping of two years' taxes, the government has decided to propose that only one-half the full tax liability in respect of 1942 income shall now be payable. The tax liability will be reduced by one half in the case of earned incomes. For investment incomes half the 1942 liability will be deferred until the death of the taxpayer. Investment income of not more than $3,000 will be treated in the same way as earned income.
There is good reason to distinguish between earned income and investment income in making this adjustment to the pay-as-we-earn plan. The reasons for making the change arise almost entirely from the side of earned income. We wish to overcome the tax difficulties of those whose earnings cease or are reduced because they retire or die, or because they enter the armed forces or lose their jobs. In these

circumstances there are much lower earnings or no earnings out of which to pay the tax due on past earnings. In the case of invests ment income there is almost always capital out of which such remaining taxes can be paid following the death of the taxpayer-or in other circumstances. Moreover most investment incomes are not so likely to decline rapidly or to cease, as are earned incomes. There is not such great need, therefore, to tax investment income on a current basis. Indeed the question of a change would never have arisen, I feel sure, if only investment income were concerned. It is not practical, however, to, put one type of income on a current basis and not the other. Therefore we must make the shift in the collection of tax on investment income even though it is not required on its own merits. In doing so, however, we do not need to relieve the taxpayer, or his estate, of a tax which he or the estate is quite able to meet out of capital if not out of income. The course of action proposed is well in accord with the principle of taxing on the basis of ability to pay.
What we are proposing to do in respect of investment income is in effect to take the whole series of future tax payments to which it will be subject and bring them forward for earlier payment, including the unknown income tax that would be due on the death of the taxpayer, and to take the first such payment-50 per cent of the 1942 tax-and put it at the other end. Thus we substitute a definite and known liability at the time of death for an unknown and uncertain one. It is something which a man may, if he wishes, prepare for and even insure against. We are not adding to the burden on investment income-we are simply rearranging it. We are also withholding from investment income, which does not need it, the relief which we propose to give in the case of earned income and which takes effect at the time such income ceases or declines.
It is proposed to treat investment incomes up to $3,000 in the same way as earned income-forgiving 50 per cent of the tax instead of deferring it. This will enable us to avoid having to keep track over a long period of a large number of small accounts. It will afford a measure of relief in the future to those whose investment income really represents the fruits of earlier earnings or the protection against want which a man has provided for his dependents. It will also enable us to avoid what would otherwise be discrimination between those who have provided for their own old age by savings in the form of modest annuities and those whose employers have provided for them by pensions or superannuation payments which are included in earned incomes. Larger
annuities are comparable with other forms of investment income, rather than with pensions, and will be left in the same position as at present except insofar as they benefit from the adjustment in respect of the first $3,000.
To illustrate the effects of the proposed means of dealing with the tax on 1942 incomes, I would like, with the permission of the house, to place on Hansard at this point two tables of figures, one showing the situation in respect of earned incomes of various amounts and the other showing that in respect of investment incomes. These the house and the public can examine at length.

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1942 Income!	Tax Liability on 1942 Income (Before adjustment)		Amount Deducted from Wages or Salary in 1942						Amount Remaining to be Paid i.e., 50% of unadjusted tax liability less total deducted from wages or salary in 1942	
			Person with no savings credits			Person with full savings credits				
	Person with no savings credits	Person with full sayings credits	Nat. Defence tax Jan.-Aug.	Income tax Sept.-Dee.	Total (N.D.T. Income Tax)	Nat. Defence tax Jan.-Aug.	Income tax Sept.-Dee.	Total (N.D.T. Income Tax)	Person with no savings credits	Person with full sayings credits
1. Single without dependents
$	$	$	*	S700	40	20	24	2850	116	58	29	231,000	172	92	34	381,250	267	167	59	611,500	387	247	71	831,750	471	331	82	1112,000	601	441	94	1432,250	713	533	105	1752,500	826	626	117	2093,000	1,064	824	140	2734,000	1,594	1,274	187	4165,000	2,128	1,728	233	5617,500	3,570	2,970	350	95410,000	5,112	4,312	467	1,37820,000	11,829	11,029	933	3,23830,000	19,196	18,396	1,400	5,29250,000	34,963	34,163	2,333	9,711*	s	S	t	$26	24	24	*652	29	7	36	672	34	15	49	14120	59	31	90	14154	71	48	119	30193	82	70	152	43237	94	97	191	63280	105	122	227	76326	117	149	266	87413	140	201	341	119603	187	320	507	194794	233	441	674	2701,304	350	774	1,124	4811,845	467	1,138	1,005	7114,171	933	2,998	3,931	1,7446,692	1,400	5,052	6,452	2,90612,044	2,333	9,471	11,804	5,437
*14
*	7
*	3
*	6
13
40
71
190
551
1,584
2,746
5,277
to
* Minus amounts will be allowed as credits or refunds.
t It is assumed that incomes of less than *2,000 per year are paid weekly, and higher incomes monthly for the purpose of calculating deductions.
The Budget-Mr. Ilsley

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1942 iNCOMEf	Tax Liability on 1942 Income (Before adjustment)		Amount Deducted prom Wages or Salary in 1942						Amount Remaining to be Paid i.e., 50% of unadjusted tax liability less total deducted from wages or salary in 1942	
			Person with no savings credits			Person with full savings credits				
	Person with no savings credits	Person with full savings credits	Nat. Defence tax Jan .-Aug.	Income tax Sept.-Dec.	Total (N.D.T. Income Tax)	Nat. Defence tax Jan.-Aug.	Income tax Sept.-Dee.	Total (N.D.T. Income Tax)	Person with no savings credits	Person with full savings credits
2. Married persons without other dependents
$	$	$	$	$	$	$	$	$	$	$1,250	50	25	42	4	46	42	42	*21	*301,300	100	50	44	15	59	44	44	* 9	*191,500	217	109	50	46	96	50	15	65	13	*111,750	321	161	59	74	133	59	27	86	27	* 62,000	431	231	67	102	169	67	44	111	46	42,250	541	316	75	134	209	75	67	142	62	162,500	651	401	83	108	251	83	93	176	75	253,000	884	584	100	232	332	100	142	242	110	504,000	1,364	964	133	365	498	133	245	378	184	1045,000	1,878	1,378	167	508	675	167	358	525	264	1647,500	3,270	2,520	250	898	1,148	250	673	923	487	33710,000	4,762	3,762	333	1,318	1,651	333	1,018	1,351	730	53020,000	11,279	10,279	667	3,161	3,828	667	2,861	3,528	1,811	1,61130,000	18,446	17,446	1,000	5,200	6,200	1,000	4,900	5,900	3,023	2,82350,000	33,813	32,813	1,667	9,588	11,255	1,667	9,288	10,955	5,651	5,451
* Minus amounts will be allowed as credits or refunds.
It is assumed that incomes of less than $2,000 per year are paid weekly, and higher incomes monthly for the purpose of calculating deductions.
The Budget-Mr. Ilsley

[Stage Direction]
1942 Income!	Tax Liability on 1942 Income (Before adjustment)		Amount Deducted from Wages or Salary in 1942						Amount Remaining to be Paid i.e., 50% of unadjusted tax liability less total deducted from wages or salary in 1942	
			Person with no savings credits			Person with full savings credits				
	Person with no savings credits	Person with full savings credits	Nat. Defence tax Jan .-Aug.	Income tax Sept.-Dee.	Total (N.D.T. Income Tax)	Nat. Defence tax Jan.-Aug.	Income tax Sept.-Dee.	Total (N.D.T. Income Tax)	Person with no savings credits	Person with full savings credits
3. Married persons with two dependents
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1.250 1,300 1,400
1.500 1,750 2,000
2.250
2.500
3.000
4.000
5.000
7.500 10,000 20,000
30.000
50.000
$	$	$	$	$	$	$	$	$32	16	15	5	20	15	15	* 435	18	17	5	22	17	17	* 442	21	20	6	26	20	20	* 549	25	24	7	31	24	24	105	53	32	20	52	32	5	37	1215	107	41	47	88	41	17	58	20325	163	48	78	126	48	31	79	36435	217	57	111	168	57	46	103	49668	334	73	176	249	73	76	149	851,148	668	107	308	415	107	164	271	1591,662	1,062	140	452	592	140	272	412	2393 054	2,154	223	842	1,065	223	572	795	4624 546	3'346	307	1,261	1,568	307	901	1,208	70511 063	9,863	640	3,106	3,746	640	2,746	3,386	1,78618'230	17,030	973	5,145	6,118	973	4,785	5,758	2,997331597	32i397	1,640	9,532	11,172	1,640	9,172	10,812	5,626
*	7
*	8 *10 *11 *10 * 4
5
63
282
1,546
2,757
5,386
* Minus amounts will be allowed as credits or refunds.	.
t It is assumed that incomes of less than $2,000 per year are paid weekly, and higher incomes monthly for the purpose of calculating deductions.
=!-
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s
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The Budget-Mr. Ilsley

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1942 Income	Tax Liability on 1942 Income (Before adjustment)	Adjusted Liability on 1942 Income; Payable During 1942 and 1943*	Deferred Liability Due at Death of Taxpayer	Persons with	Persons with	Persons with	Persons with	Persons with	Persons withno savings	full savings	no savings	full savings	no savings	full savingscredits .	credits	credits	credits	credits	credits
Single Persons Without Dependents
$	$	$	S	$	$	S700	40	20	20	10	850	116	58	58	29	1,000	172	92	86	46	1,250	267	167	134	84	1,500	367	247	184	123	1,750	481	341	240	170	2,000	621	461	310	230	2,250	743	563	372	282	2,500	866	666	433	333	3,000	1,124	884	562	442	4,000	1,694	1,374	847	687	212	1725,000	2,268	1,868	1,134	934	454	3747,500	3,810	3,210	1,905	1,605	1,143	96310,000	5,452	4,652	2,726	2,326	1,908	1,62820,000	12,569	11,769	6,284	5,884	5,342	5,00230,000	20,336	19,536	10,168	9,768	9,151	8,79150,000	36,903	36,103	18,451	18,051	17,344	16,968100,000	82,337	81,537	41,168	40,768	39,933	39,545500,000	474,304	473,504	237,152	236,752	235,729	235,331
Married Persons With no Other Dependents
$	$	$	S	$	$	$1,250	50	25	25	12	1,300	100	50	50	25	1,500	217	109	109	54	1,750	331	165	165	83	2,000	451	251	225	125	2,250	571	346	285	173	2,500	691	441	345	220	3,000	944	644	472	322	4,000	1,404	1,064	732	532	183	1335,000	2,018	1,518	1,009	759	404	3047,500	3,510	2,760	1,755	1,380	1,053	82810,000	5,102	4,102	2,551	2,051	1,786	1,43620,000	12,019	11,019	6,009	5,509	5,108	4,68330,000	19,586	18,586	9,793	9,293	8,814	8,36450,000	35,753	34,753	17,876	17,376	16,804	16,334100,000	80,187	79,187	40,093	39,593	38,891	38,406500,000	464,154	463,154	232,077	231,577	230,685	230,188
Married Persons With Two Dependents
$	$	$	$	$	$1,250	32	16	16	8	1,300	35	18	18	9	1,400	42	21	21	10	1,500	49	24	24	12	1,750	115	57	57	29	2,000	235	117	117	59	2,250	355	177	177	89	2,500	475	237	237	119	3,000	728	364	364	182	4,000	1,248	768	624	384	156	965,000	1,802	1,202	901	601	360	2407,500	3,294	2,394	1,647	1,197	988	71810,000	4,886	3,686	2,443	1,843	1,710	1,29020,000	11,803	10,603	5,901	5,301	5,016	4,50630,000	19,370	18,170	9,685	9,085	8,716	8,17650,000	35,537	34,337	17,768	17,168	16,702	16,138100,000	79,971	78,771	39,985	39,385	38,786	38,204500,000	463,938	462,738	231,969	231,369	230,577	229,981
. This amount is one-half the unadjusted total liability. The quarterly instalments paid in respect of this income in Oct. 1942 and Jan. 1943, together with deductions at the source, will presumably already have covered most of this liability. The residual, if any, must be paid during 1943.
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The Budget-Mr. llsley
I will also give the house a few examples now to illustrate how the proposals work out. As a first example, let us recall the case I mentioned a few moments ago of the single man or woman earning $30 a week during 1942 and without credits to offset his refundable tax. Out of a total liability of $391.20, he had paid $164.79 by the end of the year. Cutting his liability in half leaves him with $30.81 still to pay. Of his reduced total liability of $195.60, $62.40 is to be refunded after the war and the balance, $133.20, is the net tax. If this man in question had been paying life insurance premiums or other types of contractual savings relieving him of the liability for refundable tax, he would only have about $5 left to pay when he files his return. Our second example was a married man with two children, earning $200 a month. He had paid, you will recall, $152.76 out of a total tax of $390.80, if he was liable for the refundable portion of the tax. Now that his liability is cut in two, he will only have $42.64 left to pay. If he had insurance premiums which looked after the refundable portion of his tax, he would only have $3.58 left to pay. Going higher up the scale, and assuming for these higher incomes that the refundable portion of the tax is covered by other savings commitments, we find that a married man with two children earning a salary of $5,000 had a total liability in respect of 1942 taxes of $1,062, of which $412 had been deducted at the source. When his liability is cut in half, this will leave him $119 of tax remaining to be paid. Similarly a $10,000 a year man will have paid $1,208 out of a total liability of $3,346, and when the liability is adjusted, he will have $465 to pay.
In the case of investment income we may reasonably assume, I think, that the two quarterly instalments together with deductions at the source have accounted for most of the 50 per cent liability that must be paid immediately. This is the end of the matter so far as investment incomes of less than $3,000 are concerned. For those of more than $3,000 we must take half of that proportion of the tax which corresponds to the proportion of income constituted by investment income in excess of $3,000. This amount is deferred and will be due at the death of the taxpayer. In the case of a $10,000 investment income the additional deferred payments will amount to $1,908; in the case of a $20,000 investment income they will be $5,342; for a $100,000 investment income they will be $39,933; and for those very few who enjoy investment incomes of more than this amount, they will be correspondingly greater. The figures I have quoted as examples are those for a single
person having no savings credits-in all other cases the amounts will be lower.
It will be observed that the amounts remaining to be paid this year in respect of
1942	tax liabilities are relatively small. For the majority of taxpayers they will be substantially less than the 10 per cent of the tax which it had been anticipated would be payable next September. In a great many cases, those with relatively small incomes will be entitled to a refund of some of the tax which has already been deducted at the source. The amount of these refunds will be very small in most cases, rarely exceeding $15, and I would hope that most of the taxpayers will see fit to leave these amounts as credits toward any amount owing on their
1943	tax at the end of the year. Those with incomes in the middle brackets, let us say from $2,000 to $5,000 per year, will find the amounts remaining to be paid relatively small if they have savings commitments that look after the refundfable portion of their tax. If they must pay the refundable portion of their tax, the amount remaining will be somewhat more than the 10 per cent they were expecting to pay in September and consequently they will need to make an increased effort to provide this additional amount of forced saving, at the same time that they are paying their 1943 tax. In order to enable them to make these payments, it is proposed to require only one-third of the remaining outstanding amount to be paid at the time the return is filed, which will be June 30th, and the balance may be paid any time during the remaining six months of the year. For those with salaries in excess of $5,000 or $10,000 a year, the amounts remaining to be paid of the 1942 tax will in all cases, I believe, exceed the 10 per cent which it was expected would be due in September. I believe, however, that it is not unreasonable to leave this relatively slight extra burden on such persons at this time, bearing in mind that we are not making any increase in the rates of tax.
The adoption of the pay-as-we-earn plan, together with the other changes associated with it, will increase our revenues in the next fiscal year and in subsequent years. It may seem strange at first sight that a rearrangement which involves cancelling some tax liabilities and making no increase in tax rates could somehow increase our tax revenues. The reason is that we replace the cancelled liabilities by bringing forward the taxes to be paid in all future years.
The effects of these changes upon revenue in the new fiscal year, 1943-44, will be an increase of about $115 million in our receipts from personal income taxes, of which roughly $15 million will be refundable after the war.
The Budget-Mr. Ilsley
[Stage Direction]
Some of this increase will arise from the fact that the higher scale of deductions from earnings will go into effect in April instead of September. Another part will result from the fact that 1943 incomes will be higher than those in 1942. There will be some increase due to the payment of the remaining liability in respect of 1942 incomes in the same year that 1943 taxes are paid. I should add that several minor adjustments in income tax which I will mention shortly will mean, the loss of some revenue, perhaps $10 million in all, and, consequently, the net increase in our income tax revenue in this new fiscal year is estimated at about $105 million in all, of which $15 million will be refundable.
The next proposal which I wish to mention is designed to clear up an anomaly which is certain to be vexatious to those affected and might lead to further undesirable results. It may be recalled that there is a provision in the law that the tax shall not reduce the income of a single person below $660 per year, nor that of a married person below $1,200 per year. The effect is that the tax, for example, on $1,200 of income for a married person is nothing, while that on $1,300 is $100, of which $50 will be refunded after the war. Thus there are ranges both above the $660 exemption and the $1,200 exemption over which in effect the tax, including the refundable portion absorbs every extra dollar added to income. This range extends from $660 per year to $733 per year in the case of single persons and from $1,200 per year to $1,362 per year in the case of married persons with no dependents. This high rate of tax on additional earnings over these ranges has not been effective this year in the deductions made from wages and salaries because at these levels of income the adjustments arising from the national defence tax have been substantial. Hence, it has not, up to date, so far as I know, been the cause of much difficulty or complaint nor has it been noted by many persons. However, the new table of deductions which must be put into effect in April would reflect fully this anomaly and the removal of incentive in these income ranges might have substantial and undesirable results. In order to maintain incentives at a time when it is desired to ensure so far as possible that everyone will stay at work and put his whole effort into work, I am proposing that we change this border-line provision. The new formula I am suggesting is that the tax in the ranges affected shall not be greater than two-thirds of the amount by which the income exceeds $660 in the case of single persons and $1,200 in the case of married persons. Under this arrangement, any addi-

tional dollar of income in this border-line range will go one-third in cash to the recipient, one-third in tax and one-third in refundable tax. This makes the incentive much greater than it is under the present formula, particularly for those who mistakenly attach little importance to the refund feature. This mistaken attitude may be based on the fact that they have not as yet received any form of security representing the taxes refundable to them. However, I have repeatedly stated and now wish to reiterate that within a reasonable time after the tax liability for 1942 is established and discharged, the taxpayer will receive a receipt or certificate covering the refundable portion of the tax which will be just as binding an obligation of the dominion as a victory bond or a war savings certificate. I would like to take this opportunity to emphasize that the refunding of this tax to those entitled to it is one of the most certain acts of any post-war government that I can imagine. Not only does the whole credit of the dominion stand behind this undertaking to repay but it would be political suicide for any government, however radical or however reactionary, to default on an obligation due to the mass of the wage-earners of the country.
I have two minor additions to propose to the list of those savings commitments which are recognized as alternative to the payment of the refundable portion of the tax. The first addition is principal payments on a mortgage on the home of the taxpayer when the property is held in the name of the wife or husband of the taxpayer. Last year, we discussed this situation and I was not prepared to include such payments as I believed that such arrangements of family property were artificial and were very frequently intended to relieve the head of the household of financial responsibilities which he should be prepared to carry in his own name. Since then, I have had my attention drawn to a great many types of cases where there were other good reasons for having the property in the name of the wife of the taxpayer and I do not now believe that there is any serious objection to recognizing such arrangements. It has also been found that quite a number of people have transferred property or transferred the mortgage from the wife's name to the taxpayer's name in order to bring them within the law. These transfers are relatively expensive in many cases and in the province of Quebec they are not possible. Since no important purpose is served by encouraging such transfers during the years in which our refundable tax is in effect and since it is inequitable to have a tax which can be escaped in one part of the country but not in another

The Budget-Mr. Ilsley
I am suggesting that we now recognize these principal payments on a mortgage when title to the property is held in the name of the consort of the taxpayer as well as when title is in the name of the taxpayer himself.
The second addition to the list of recognized savings commitments concerns Dominion annuities. Last year, there was considerable discussion as to whether or not Dominion annuities should be included. I did not believe they should be included because they did not fall within the general definition of those types of contractual savings which we wished to recognize. The principle on which we were working was that we should include only savings contracts which could not be altered without substantial loss or forfeiture to the taxpayer. In the case of Dominion annuities, the payments can be postponed at relatively small cost, since all that is involved is the difference in interest rates on the annuity and on the refundable portion of the tax. During the past eight months in which the law has been in effect, I have found that a great many of those having annuity payments to make have found it exceedingly difficult to understand this important principle on which we have been operating. However there is a degree of loss, or forfeiture which becomes important for those whose annuities are about to mature. In view of this, and the difficulty of making the principle clear to the large number of small annuity holders I am recommending that contractual annual payments for the purchase of Dominion government annuities shall not be excluded from the list of recognized offsets against the refundable portion of the tax.
I have a number of relatively minor amendments to the income tax which I shall mention only briefly. One such amendment is intended to clarify the position of Canadian employees of Canadian companies who are temporarily engaged abroad on war work. There is some doubt as to the residential status of these employees, particularly single men, under the act as at present drawn up and it is intended to make it clear that they are taxable. There will be other changes in the wording of several sections of the act which will be made clear in the bill and which are intended to strengthen the law against possible evasion. Another provision will extend the time allowed to corporations in filing their income tax return from four months to six months after the close of their fiscal year. They are now allowed six months to pay their tax and in view of the shortage of accountants at present, it is considered desirable to permit an additional two months for the complicated work of making up the tax returns of corporations.
I shall have several other minor changes to propose in regard to the making of returns and the penalties involved for those failing to make complete returns.
There is an important amendment to be made in regard to the provisions for special depreciation allowances granted for war purposes. It will be recalled that these special depreciation allowances have been permitted in the case of capital invested for essential war purposes either in cases approved by the war contracts depreciation board or in those approved by the governor in council under the terms of the War Exchange Conservation Act. Where these special depreciation allowances have been granted it has been generally understood by all the parties concerned that the plant and equipment to be depreciated in this way will have very little market value at the close of the war. It is desirable to safeguard the crown in the occasional case which may arise where such property proves to have an unexpected market value after the war. It is therefore proposed that when immovable assets have been depreciated in this way and later sold for more than their depreciated value any excess of such sales value over the depreciated value shall be applied to reduce the special depreciation already taken in respect of such assets. As a further safeguard against fictitious sales or sales between related corporations, it is proposed that when assets which have been written down by means of either special or ordinary depreciation are sold by a company, for example, to another company in which the first has an interest, then the second or purchasing company will be restricted in depreciating such assets further. This is a complicated matter to try to put briefly in a budget speech, and I refer any person desiring further information to the resolution dealing with this measure which I shall table before resuming my seat.
The members of the house will recall the difficult problems which have arisen in regard to the exemptions from taxation that have been granted to various classes of members of the armed services. Considerable study has been given to this question since the last session of parliament in the hope that a way could be found to remove the various anomalies which were still present even after the improvements which we effected last year. The problem created by the exemption from taxation of officers as well as men who are overseas while officers in Canada (except under certain circumstances) are taxable has proved to be such a fundamental difficulty that no simple solution is possible. We cannot overcome this
The Budget-Mr. Ilsley
[Stage Direction]
distinction between officers at home and abroad unless we are prepared either to place a substantial tax on those abroad or relieve those at home from income taxes which they should bear just as well as civilians. I believe that the house will see objections to either of these courses. Consequently, I am not proposing that we change the tax status of officers overseas nor that of officers at home, except to the extent that I shall mention in a moment. I am proposing, however, that we shall recognize a middle group, constituted of those serving in the western hemisphere outside of Canada. Officers serving in this area will be liable to one-half the rate of tax in respect of their remuneration, excluding subsistence allowances. Heretofore they have been, exempt, as they have been considered as serving abroad, but because of the way in which the war has developed I think it is reasonable to make a distinction between those who are in the United1 Kingdom or elsewhere across the ocean and those who are in Newfoundland, the West Indies, Labrador or Alaska.
Last year, it was provided that the tax payable by commissioned officers in the armed services, apart from the refundable portion of the tax, should not be greater than the excess of their pay over $1,600 in the case of single men, nor the excess of pay and allowances over $1,600 plus the similar allowances appropriate in the case of a warrant officer for married men. This provision was intended to overcome the anomalies created by the fact that commissioned officers were taxable, while senior noncommissioned officers were not, and the tax frequently had the result of reducing the net income of a senior man below that paid to his junior. This provision overcame most of the problem but it has been by no means perfect. It still leaves the compulsory savings portion of the tax effective in reducing an officer's retained cash income below that of a warrant officer in certain cases. Moreover it reduces substantially the difference between the net income of the junior commissioned officers and those immediately above them in rank, leaving no benefit to be gained or very little from promotions in this range. We have worked out now an improved method of making adjustments of this character which is free from the objections in the present measure. The new proposal involves a change in the form of the provision from a limitation on the tax to that of a credit against the tax. It is proposed as well that the line between taxable and nontaxable members of the forces will be drawn on a basis of income rather than on the basis of commissioned rank.

Under the new arrangement, those members of the forces receiving pay in excess of $1,600 a year will be liable for tax, whether commissioned officers or warrant officers, unless they are exempt because serving abroad, or because their duties are normally performed in aircraft or afloat. They will receive, however, a credit toward their tax equal to the tax payable on an income of $1,600 for single persons, or on $1,600 plus the appropriate dependents' allowance for those with dependents. This tax credit will be reduced, however, by the proportion which the excess of the service income of the officer above $1,600 (or above $1,600 plus allowances in the case of officers with dependents) bears to $1,600 (or $1,600 plus allowances). This will result in the tax credit being limited to those within the pay range of $1,600 to $3,200. Let me give an example to show how this works-taking the case of a single man for the sake of simplicity. A single lieutenant receives pay of $1,825. The tax paid by a single man on an income of $1,600 is approximately $407. For the lieutenant's case we must reduce this by the fraction formed by $1,825 less $1,600-that is, $225- over $1,600. That reduces the credit by 14 per cent, leaving an effective credit of $350. His tax before the application of this credit would be $522 but the credit will reduce it to $172, of which $86 will be savings. Under the present arrangement this lieutenant would pay a tax of $371, of which $146 is savings. It can be seen that this provision will chiefly benefit junior officers and officers with several dependents. It will bring into the taxable category a few warrant officers whose pay, including trades pay, exceeds $1,600. The proposal has the great advantage of providing a gradual application of the tax in such a way as not to disturb unreasonably the pay differential between various ranks.
The new arrangement for taxing at half rates those in the western hemisphere outside of Canada will help to remove some of the anomalous comparisons between persons serving in certain areas of Canada and paying tax and those serving across the boundary line or the Strait of Belle Isle and being exempt from tax. There is another anomaly which can be removed without exempting all administrative and training officers at home, or taxing officers abroad. This is the sudden reduction in income faced by an officer brought home from service abroad, which occurs because he thereby becomes liable to tax. It is proposed that such an officer returning to Canada after having served on the strength of a unit overseas shall be exempt from tax for a period of six months,

The Budget-Mr. Ilsley
or a period equal to the time he served overseas if that was less than six months. This will give returning officers an opportunity to adjust themselves to the new circumstances.
Included in the income tax proposals are a number intended to encourage the search for new sources of oil in Canada during the next two years. The government recognizes the urgent necessity under present emergency conditions of expanding our oil production and, if possible, of discovering new oil-producing areas in various parts of Canada. Success in the search for oil depends upon a combination of experience, skill and good judgment, as well as capital and good luck; it is essential therefore to bring into the search all we can of those with the necessary skill and experience. We desire to remove so far as possible any barriers which taxation may impose in the way of this search for oil. Several of the proposed measures can be put into effect by regulation but I wish to inform parliament and the public at once of our intention to apply them. We propose to revise the schedule under which preproduction expenses of any oil well may be written off against the income from it. The new schedule will be 40 per cent in the first year, 30 per cent in the second, 20 per cent in the third, and the remaining 10 per cent in the fourth. It will not be necessary to take all of these amounts in the years specified, and any amounts not used may be carried forward. In the case of wells commenced-"spudded in" I believe is the correct term-between January 1 of this year and March 31 of 1945, pre-production expenses may be written off as rapidly as the operator desires. The third change to be made by regulation is an increase from 15 per cent to 25 per cent in the depreciation rate to be applied to all depreciable assets used in oil production, including oil drilling equipment. Fourthly, it is proposed that a special wartime depletion allowance of 33| per cent instead of the present 20 per cent be permitted in respect of royalty payments received by investors from wells spudded in in the period January 1, 1943, to March 31, 1945.
There are two other proposals to encourage oil production that will require legislation. It is proposed that companies formed for the purpose of exploration and drilling for oil will be allowed to accumulate exploration costs incurred during the period January 1, 1943, to March 31, 1945, and to write off such expenses against the income produced from any well which they may find. Secondly, it is proposed that all exploration costs, including geological and geophysical expenses incurred during the period from January 1, 1943, to March 31, 1945, and all offproperty drilling expenses of dry wells which had been spudded in during this period shall be allowed as an expense or deduction against the current income of companies whose principal business is the production, refining or marketing of petroleum or its products. The tax saving so obtained' will be limited to. 40 per cent of the expenditures involved.
In addition to oil, the government wishes to encourage the search for new base metal and strategic mineral deposits, which continue to be urgently required for war purposes. It is therefore proposed to renew the present provision of the law, enacted last year, regarding amounts invested by individuals in prospecting syndicates searching for base metals and strategic minerals. Instead of renewing the corresponding provision in respect of mining companies sending out their own parties, it is now proposed to allow companies engaged in the mining of metalliferous and strategic minerals to write off exploration and prospecting expenses incurred in prospecting anywhere in Canada for base metals or strategic minerals. In this case, as in the case of oil, the saving in tax will be limited to 40 per cent of the expenditure.
As I have already indicated, the proposed changes in commodity taxes are not numerous and are such as are dictated not only by the need for revenue but also by the facts in respect of particular trades and revenues.
In order to make clear the proposals I have to make relating to imposts on liquor, it will first be necessary for me to give the house some background in regard to certain representations received from provincial governments in regard to their revenues from liquor sales. The dominion's liquor restriction programme was announced on December 16 last and provided, inter alia, for reductions of 30, 20 and 10 per cent in the quantity of spirits, wines and beer, respectively, available for sale during the twelve months beginning November 1, 1942, as compared with the quantity made available during the preceding twelve months. On December 17 I issued a statement expressing the hope that the new regulations would not financially embarrass the provinces, particularly as certain measures of adjustment were open to them. However, requests were received from certain provincial governments for a conference in order to discuss the effect of the restrictions on provincial revenues. This conference was held on January 28 and resulted in requests from representatives of most of the provincial governments that the dominion should make up to them any loss in revenue from liquor sales and also from motor vehicle licences which they might suffer in future as compared with their
The Budget-Mr. Ilsley
[Stage Direction]
receipts from these sources in some base year. Varying base years were suggested by different provinces-the fiscal year 1941-12, the calendar year 1942, the year ending October 31, 1942, and the fiscal year 1942'-43. The provinces were asked to submit their representations in writing and, while these submissions have not as yet been received from all provinces, we have given very careful consideration to such as have been received as well as to other pertinent data and are prepared to recommend a programme which we believe should accord with the equities of the situation as a whole and meet the reasonable needs of the provinces.
I am not so optimistic as to assume that it will fully satisfy all provincial governments, but we who are charged with responsibility for financing war expenditures of the colossal magnitude which I have described must never forget that there is but one tax-paying public in Canada, which pays taxes both to the dominion and to the provinces, and that, particularly under present conditions, there is an overriding obligation on all governments to avoid extracting from the pockets of the people any funds that are not absolutely necessary. What we propose, therefore, is (1) to levy an additional excise duty of $2 per proof gallon on spirits, with a corresponding increase in the duty on imported spirits to which I shall refer later, and (2) to guarantee to any province the revenues it received from all alcoholic beverages during the twelve months ending June 30, 1942, provided it is willing to increase the retail price of the spirits it sells by an amount at least sufficient to absorb our extra levy of $2 per proof gallon and an additional amount equivalent to $2 per proof gallon for the benefit of the province itself.
Let me explain the reasons for the main aspects of this proposal so that its full significance may be clear to the house. Obviously we believe that spirits can stand an additional levy of $4 per gallon; only 70 per cent of the quantity sold in the basic twelve months will be available for sale in any future 12-month period and that quantity will be sold almost as readily with the $4 increase as without. Indeed, the higher price should definitely ease the difficulties experienced by the provinces in rationing the smaller available supply. If all the available supply can be sold at the higher price and if the provinces thus have it in their power to offset their possible loss of revenue by a price adjustment, it would be unthinkable that this reasonable and appropriate solution of the problem should be overlooked and, instead, the dominion should be

forced to accept an additional burden on behalf of the taxpayers of the country as a whole.
It will also be noted that the guarantee we propose to give will be based on provincial liquor revenues for the twelve months ending June 30, 1942. Had we not also been making a proposal, which I shall explain a little later on, to change the basis of levying customs duty on imported spirits, it might have been appropriate to consider applying a guarantee to revenues for the twelve months ending October 31 last. However, this other proposal, coupled with the reduction in the strength of spirits to not more than 30 underproof, will increase the revenues of the provinces in two ways, first, by reducing the amount of customs duty payable on imported spirits, and secondly, by increasing the number of bottles per proof gallon available for sale. We believe that the increased revenues obtainable in these two ways will be sufficient to compensate the provinces for having their liquor revenues guaranteed on the basis of the period ending on June 30, 1942, rather than the period ending on October 31, 1942.
As a result of this suggested programme, the provinces will be assured of a minimum revenue equal to, or nearly equal to, the highest annual revenue they have ever obtained from liquor sales, and, in addition, will have the possibility of enjoying an increase in that revenue as a result of higher retail prices and the savings in customs duties on imported spirits. I am hopeful that the guarantee should not cost the dominion anything and, if this proves to be the case, it will be as it should be, as I am sure the house and the country would wish it to be.
We gave very careful consideration to whether we should guarantee provincial revenues from motor vehicle licences. The provinces had requested this on the ground that such revenue was likely to fall off substantially because of dominion restrictions on gasoline and rubber tires and also because the new liquor control regulations were likely to cause a substantial falling off in their most expansible source of revenue- However, it is the war, and not the dominion government, which is responsible for the restrictions on gasoline and rubber, and the provinces cannot expect to be protected against every contingency to which the war may give rise. Furthermore, the programme I have suggested in regard to liquor should prevent a further falling off in liquor receipts and ensure the provinces very high continuing revenue from this source. Examination of the published accounts of the various provinces will show

The Budget-Mr. Ilsley
a very substantial increase in their ordinary revenues since the outbreak of war, which is of course due, directly or indirectly, to our own huge expenditures for war purposes. For the first time in many years, all provinces have been showing surpluses on ordinary account, some of them very substantial indeed, and others calculated after setting aside sizeable reserves of one kind or another. We are glad to see that the war has made it possible for the provinces to achieve a material strengthening in their financial positions. The war, however, has made the financial task of the Dominion infinitely more difficult. Because of that, because of the picture which I have had to present in this budget, I believe the house and the country will regard as fully justified the decision which we have reached to reject the provincial request for a guarantee of revenues from motor vehicle licences and to subject our proposed guarantee of provincial liquor revenues to the conditions which I have described.
Increasingly large sums are being spent by the public on cigarettes and tobacco and I propose to increase the revenue derived from this source. It will be recommended that the tax on cigarettes under the Special War Revenue Act be increased by one cent for each -five cigarettes or fraction of five, making the total tax under this act two cents for each five cigarettes in addition to the excise duty of $6 per thousand. This change should produce an increase of $22,000,000 in revenue. In conformity with this change, it is proposed to raise the excise taxes on cigarette papers and tubes from six to eight cents and from twelve to fourteen cents per hundred respectively. We hope to derive $2,000,000 extra revenue from this source.
Similarly, it is proposed to increase the tax under the Special War Revenue Act on manufactured tobacco from one to two cents per ounce. The excise duty of 35 cents a pound will remain unchanged. An excise tax on raw leaf tobacco of one-half cent per ounce is recommended to bring the total excise tax and duty to 28 cents a pound. The increases on raw and manufactured tobacco are expected to contribute $6,700,000 in additional revenue.
It is recommended that the tax on cigars under the Special War Revenue Act should be raised by $5 per thousand in the first price category and by appropriate increases in the higher price categories.
The amount of expenditures by the public in night clubs and similar places of entertainment seems to me to warrant an increase in the tax on such expenditures and I shall recommend that the rate be raised from 20
per cent to 25 per cent. It will be recalled that the tax applies to the amount of every charge made to a patron of such place of entertainment and is paid in the first instance by the patron to the operator. An increase in revenue to the extent of $500,000 is anticipated to result from this change.
Thus far in the war no change has been made in the postal rates. The need for revenue is now so great that a change can no longer be delayed. It is proposed to levy an additional tax, under the Special War Revenue Act, effective April 1, of one cent per ounce or fraction thereof on certain categories of mail, viz., on first-class office to office mail, (not including postcards, nor letters addressed to members of the armed forces overseas), and on so-called "drop" letters, i.e., letters collected by and distributed from the same office. The total rates will be four cents for out of town letters, and three cents for "drop" letters. The increased revenue expected from these changes is $8 million.
The customs tariff has fallen from the high position it has previously held as an instrument of fiscal and economic policy. Under the circumstances of war, the tariff has little effect except as a producer of revenue. The scope and direction of trade are now governed by the consideration of supply, transportation and enemy action and not by the tariff. Under these circumstances, changes in the customs tariff are of no effect in expanding or curtailing trade. I do not propose, therefore, to recommend changes in the tariff other than a few modifications chiefly for the purpose of amending tariff items which have become outdated.
There will again, however, be a time when the tariff will be an important instrument of trade policy and when this country will have to decide whether it will play its part with other countries which are prepared to help in freeing the world's trade, in enlarging markets, and in promoting the full and effective use of the world's resources.
The government has already, by an exchange of notes with the United States on November 30 last, undertaken to enter into conversations with that country, and with other countries, for the purpose of formulating programmes of agreed action directed to the expansion, after the war, of production, employment, and the exchange and consumption of goods, to the elimination of all forms of discriminatory treatment in international commerce and to the reduction of tariffs and other trade barriers.
The Budget-Mr. llsley
[Stage Direction]
Committed to these objects and having in mind particularly the vital concern of this country in access to the selling and buying markets of the world, the government is prepared to discuss with the government of the United States, the government of the United Kingdom, or the governments of other countries with which we trade, reciprocal trade arrangements wider in scope and longer in duration than have hitherto been made, provided always that the advantages of such arrangements shall be open to other countries willing to adhere to the same terms.
We believe that questions of post-war commercial policy must be tackled broadly and boldly; we believe that world trade must have a more liberal and dependable charter than it has had in the past two decades; and that countries, such as Canada, for which world trade is the very blood stream, should be prepared, not merely to accept desirable arrangements but to take the initiative in working out a plan mutually of benefit to ourselves and to other countries. We believe that countries which have had long experience of friendly relations should associate themselves with that initiative and furnish to others examples of concrete accomplishment in the distribution of the world's products for the mutual welfare of all people.
The most important of the tariff changes proposed relates to the customs duty on
imported spirits. The additional duty on spirits is being increased from $5 per proof gallon to $7 per proof gallon in order to equalize the increase being made in the Excise Act making the total duty on imported spirits $12. For many years, it has been the practice to make no allowance below fifteen per cent in computing the quantity for duty purposes of imported spirits of a lesser strength than fifteen per cent under proof. Since it is not lawful now to sell spirits of greater strength than thirty per cent under proof, it is proposed that customs duty shall be collected on the actual strength of proof. The other changes proposed in the customs tariff provide for a number of tariff reductions and amend the wording of several items to facilitate administration. The duty free item covering nickel alloys is widened in scope. The other changes relate to certain articles for the manufacture, maintenance and repair of buoys and beacons, cigarette paper in sheets, bolting cloth, glue and fresh, frozen or dried peel.
This completes the tax changes which I am recommending and I shall, with the permission of the house, put on Hansard two tables, one showing the increases in revenue expected from the tax changes recommended, and the other the full revenue estimates for the coming fiscal year after giving effect to the changes in tax rates and time of payment.
Yields from Proposed Revenue Changes Fiscal Year 1943-44
Increased yields from changes in existing taxation-
Personal income tax	 $ 105,000,000
Excise duties-
Spirits	 5,000,000
Excise taxes-
Cigarettes	 22,000,000
Cigars	 2,000,000
Manufactured tobacco	 6,500,000
Raw leaf tobacco	 200,000
Cigarette papers and tubes	 2,000,000
Night clubs and cabarets	 500,000
[Stage Direction]
Post	Office	
$	8,000,000Total	
$	151,200,000Less refundable taxes	
15,000,000Net total	
$	136,200,000
[Stage Direction]
The Budget-Mr. llsley
Forecast	of Total Revenue for Fiscal Year 1943-44		
		Increase in	
Revenue from	revenue from	Totalexisting taxes	budget proposals	revenue$	$	$
100,000,000	100.000,000Excise duties 	
130,000,000	5,000,000	135,000,000
225,000,000	225,000,000
85,000,000	85,000,000Other excise taxes 	
165,000,000	33,200,000	198,200,000Income taxes:	Personal 	
825,000,000	105,000,000	930,000,000
300,000,000	300,000.000
26,000,000	26,000,000
550,000,000	550,000,000
18,000,000	18,000,000Miscellaneous 	
7,000,000	7,000,000
2,431,000,000	143,200,000	2,574,200,000Non-tax revenue 	
130,000,000	8,000,000	138,000,000
2,561,000,000	151,200,000	2,712,200,000Special receipts 	
40,000,000	40,000,000
2,601,000,000	151,200,000	2,752,200,000Less refundable taxes	
210,000,000	15,000,000	225,000,000Net total revenue 	
2,391,000,000	136,200,000	2,527,200,000

[Stage Direction]
On the basis of these estimates of the yields of the increase in tax rates, the total revenue for 1943-44 (including the refundable portions of the personal income and excess profits taxes) should be approximately $2,752 million. With expenditures of $5,500 million, we will have a budgetary deficit of $2,748 million to be covered by borrowing as compared to the similarly estimated deficit in the current year of $2,161 million.
The programme which I recommend to the house and to the people of Canada is briefly and simply this, that each man and woman in this country should limit personal and business expenditures so that provision can be made of $5,500 million for the purposes of war and the ordinary conduct of government; that we should contribute $2,752 million through the taxes now in force and the additional rates which I have recommended and that we should lend an additional $2,748 million. As far as simple formal standards will permit and careful scrutiny by the house will ensure, the tax contributions will be adjusted to the ability of each receiver of mcome to pay. But beyond this, all of us, individually and as people united in a common purpose, must determine our own ability to lend out of savings in accordance with the common objective and so manage our spending that we can achieve our share of the great task that is ahead of us in 1943-44.
The carrying out, and to some degree the organization, of the borrowing programme is in the hands of the people themselves. It will be directed by the National War Finance Committee to whom I have four requests to make.
(1)	to continue and expand the programme of increasing the public understanding of the critical need for greatly increased savings;
(2)	to multiply the sale of war savings certificates and stamps;
(3)	to organize and carry out in the next twelve months two victory loan campaigns directed particularly to the mobilization for war of the personal savings of the people on a vastly enlarged scale;
(4)	to promote by every means the retention by purchasers to the end of the war of the bonds and certificates which they buy.
Let me emphasize two points. The only way to accomplish this financial and economic programme is through increased personal savings, spending less and lending more. Some of the people's savings are mobilized and lent to the government through the insurance companies and other financial institutions. Businesses can contribute savings out of retained profits, unexpended depreciation and maintenance funds and unnecessary working capital. Large subscriptions to loans representing but a temporary shifting of assets will not do what must be done.
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[Stage Direction]
My second point is this: After the close of each victory loan campaign, many thousands of subscribers dispose of the bonds they bought during the campaign period. Further, many thousands of people are presenting their war savings certificates for redemption. I should like to make it clear that victory loan bonds and war savings certificates are the property of their individual owners who have the right to turn them into cash at any time they may desire. No restrictions on the sale of bonds or on the redemption of the certificates after six months are under consideration, and no restrictions have been under contemplation at any time in the past. When a person buys a victory bond or a war savings certificate, that person is making it possible for this country to get the men and material needed for war use, and is helping to fight the home-front battle against inflation. When people sell their bonds or present their certificates for redemption, they are withdrawing this help.
Emergency needs for cash are legitimate reasons for selling bonds or redeeming certificates, provided the person has no other forms of savings which can be used, or provided the person cannot obtain a temporary loan, to be repaid out of future income, to meet the immediate need for cash. Sales or redemptions to get dollars to buy things that are not essential have not legitimate reason. We must not only increase our voluntary savings and lend them to our country through the purchase of victory loan bonds and war savings certificates; we must also continue to hold these securities at least until after the war, unless we need money for real emergency use. I repeat what I said in the budget last year, "Let us compete with our neighbours, in saving, noL spending.''
The National War Finance Committee is performing a task of the first importance in our war programme. The responsibilities of each person in this organization are very great, and I have now made them greater.
Let no one be misled because I have considered it wise in the interest of the total objective to improve and simplify the collection of taxes rather than, to any great degree, to increase rates and add new complications. The need is so great that it must be understood clearly and each person must see clearly his own part in meeting that need.
I shall not conceal from the house nor from the people that the programme which I have set out is a huge one and will be difficult of achievement. It is not a financial programme; it is only the financial aspect of our war programme. The basic facts are that industrial workers who are making shells and tanks

and planes cannot at the same time make food, and clothing and shelter. Farmers cannot produce food for home consumption in the time spent on producing cheese and bacon for countries on shorter rations than we. Ships carrying ore to make aluminum to make planes, or oil and gasoline for air operations, cannot carry sugar and gasoline for the rest of us.
The Canadian people can shoulder this task so that they can bring this year their war programme to its highest effectiveness and in addition assure to themselves and to the men returning from the fighting fronts resources for a more prosperous and ordered world after the war. I have confidence in the strength, the discipline and the united purpose of the people of Canada.
We do not know 'when victory will be achieved. No one knows. Anyone who professes knowledge is an irresponsible deceiver. And in my judgment those who are airily predicting victory in 1943 as if they did know are contributing to a premature relaxation of our war effort and in this way doing a great deal of harm^. Most of those who believe that the war will be finished in 1943 and that we should be careful lest we put forth too great an effort are the same persons who thought it had finished and that we had lost in 1940.
We know two things and two things only. We know that we are in a position to strike hard, perhaps crushing blows in 1943 against those peoples who have made good their evil threat to bathe tne world in blood. We know that the time to relax our efforts in a wai with desperate and cunning adversaries is when they have given up their arms and surrendered unconditionally.
We do not need to tell these things to the men of the army undergoing ever more intensive battle training for the moment when they strike. We do not need to tell them to the men of the navy driving through biting wind and perilous sea to find the lurking submarine. We do not need to tell them to the airmen winging their way over Germany and Italy. We in this house and the people of this country need to tell them to ourselves.
Our soldiers, our sailors, our airmen will do their part. They are well trained; they are well equipped; they are well led; their courage and devotion are beyond praise. But what they achieve, they cannot achieve alone. It must be shared by the farmer at his work, the mechanic in the shop, the housewife in her home-in short, by every Canadian. Their achievements will be shared by each Canadian who, this year, and to the end of the war, carries out unswervingly, skilfully, relentlessly the watchwords of this budget: work and save.

The Budget-Mr. Ilsley

James Lorimer Ilsley: Mr. Speaker, I desire to give notice that when we are in committee of ways and means I shall move the following resolutions:



EXCISE ACT, 1934

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the schedule to the Excise Act, 1934, and to provide:
1.	That the duty of excise on spirits distilled in Canada be increased from nine dollary to eleven dollars per proof gallon, provided that duty paid spirits owned by any distiller at the close of business on the second day of March, one thousand nine hundred and forty-three shall be subject to the following additional duty of excise on every gallon of the strength of proof two dollars and so in proportion for any greater or less strength than the strength of proof and for any less quantity than a gallon.
2.	That the duty of excise on Canadian brandy be increased from seven dollars to nine dollars per proof gallon, provided that duty paid Canadian brandy owned by any distiller at the close of business on the second day of March, one thousand nine hundred and forty-three, shall be subject to the following additional duty of excise on every gallon of the strength of proof two dollars and so in proportion for any greater or less strength than the strength of proof and for any less quantity than a gallon.
3.	That any enactment founded upon the foregoing resolution shall come into force on the third day of March, one thousand nine hundred and forty-three.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act and to provide:
1.	That the excise tax on each letter transmitted by post be increased from one to two cents.
2.	That the excise tax on cigarettes be increased from one cent to two cents for each five cigarettes or fraction of five cigarettes contained in any package of cigarettes manufactured in or imported into Canada.
3.	That the excise tax on manufactured tobacco be increased from one to two cents per ounce actual weight or fraction thereof on manufactured tobacco of all descriptions, except cigars or cigarettes, manufactured in or imported into Canada.
4.	That there shall be imposed, levied and collected an excise tax of one-half cent per ounce actual weight or fraction thereof on Canadian raw leaf tobacco when sold for consumption in Canada.
5.	That the excise tax on cigarette paper be increased from six cents for each one hundred leaves or fraction thereof to eight cents.
6.	That the excise tax on cigarette paper tubes be increased from twelve cents for each one hundred cigarette paper tubes or fraction thereof to fourteen cents.
7.	That the excise tax on the price of admission to certain places of entertainment be increased from twenty to twenty-five per cent.
8.	That subsections (a), (b) (cj, (d) and (e) of section 1 of schedule II to this Act be repealed and the following substituted therefor:
1.	Cigars:-
(a)	valued at not more than forty dollars per thousand, per thousand, six dollars and twenty-five cents;
(b)	valued at more than forty dollars per thousand and not more than one hundred and ten dollars per thousand, per thousand, thirteen dollars and fifty cents;
(c)	valued at more than one hundred and ten dollars per thousand and not more than one hundred and fifty dollars per thousand, per thousand, twenty-five dollars;
(d)	valued at more than one hundred and fifty dollars per thousand and not more than two hundred dollars per thousand, per thousand, thirty-five dollars;
(e)	valued at more than two hundred dollars per thousand, per thousand, fifty-five dollars.
9.	That any enactment founded on paragraph one of these resolutions shall come into force on the first day of April, one thousand nine hundred and forty-three.
10.	That any enactment founded on paragraphs two to eight, inclusive, of these resolutions shall come into force on the third day of March, one thousand nine hundred and forty-three.

[Stage Direction]
1.	Resolved, that schedule A to the customs tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, is further amended by striking thereout tariff items 105a, 156, 156a, 197c, 232, 355, 440i, 563, the several enumerations of goods respectively and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
[Stage Direction]

Tariff
Item
British
Preferential
Tariff
105a
Lemon, orange, grapefruit and citron rinds, fresh, frozen, dried, sulphured or in brine	
Free
Ethyl alcohol, or the substance commonly known as alcohol, hydrated oxide of ethyl or spirits of wine, n.o.p.; gin of all kinds, n.o.p.; rum; whisky and all spirituous or alcoholic liquors, n.o.p.; amyl alcohol or fusel oil, or any substance known as potato spirits or potato oil; methyl alcohol, wood alcohol, wood naphtha, pyroxylic spirit or any substance known as wood spirit or methylated spirits, absinthe, arrack or palm spirit, brandy, including artificial brandy and imitations of brandy, n.o.p.; cordials and liqueurs of all kinds, n.o.p.; mescal, pulque, rum shrub, schiedam and other schnapps; tana, ango-stura and similar alcoholic bitters or beverages; and wines, n.o.p., containing more than forty per cent of proof spirit, per gallon of the strength of
proof	
Provided, (1) that when the goods specified in Item 156 are of greater or less strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased or decreased in proportion for any greater or less strength than the strength of proof.
Provided, (2) that bottles and flasks and packages of gin, rum, whisky and brandy of all kinds, and imitations thereof, shall be held to contain the following quantities (subject to the provisions for addition or deduction in respect of the degree of strength) viz.:-
Bottles, flasks and packages, containing not more than three-fourths of a gallon per dozen, as threefourths of a gallon per dozen	
Bottles, flasks and packages, containing more than three-fourths of a gallon but not more than one
gallon per dozen, as one gallon per dozen	
Bottles, flasks and packages, containing more than one gallon but not more than one and one-half gallon per dozen, as one and one-half gallon per
dozen	
Bottles, flasks and packages, containing more than one and one-half gallon but not more than two gallons per dozen, as two gallons per dozen	
[Stage Direction]
Intermediate
Tariff
Free
[Stage Direction]
General
Tariff
Free

[Stage Direction]
Tariff
Present Rates
Intermediate
Tariff
General
Tariff
Free 15 p.e.
Free 25 p.e.
Free 25 p.e.
[Stage Direction]
o
[Stage Direction]


o
The Budget-Mr. Ilsley
72537-55*
Tariff
Item
197c
355
440i
per dozen.
fifth gallons per dozen, gallons per dozen	
to actual measurement, under regulations pre
scribed by the Minister	
(i) Cigarette paper, ungummed, in rolls...
taining not less
inches	
Glue and gelatine, n.o.p_____
than
Nickel, and alloys containing sixty per cent b; weight or more of nickel, n.o.p.. viz.: ingots, block and shot; shapes or sections, billets, bars and rods rolled, extruded, or drawn (not including nicke processed for use as anodes); strip, sheet and plat
(polished or not); seamless tube	
The following articles and materials when imported, for use only in the manufacture, maintenance repair of automatic gas buoys and automatic gc*o beacons, or automatic electric buoys and automatic electric beacons, for the Government of Canada, for marine signal purposes or for export, under regulations prescribed by theMinister, viz.: flanged and dished steel heads made from boiler plate, over five feet in diameter; acetylene gas lanterns and parts thereof; electric flashing lights and parts
thereof	
Bolting cloth of any textile fibre, not made up, imported for use only for bolting or sifting materials	
British Preferential Tariff	Intermediate Tariff	General Tariff	Present Rates	B.P. Tariff	Intermediate Tariff	General Tariff10 p.c.	22* p.c.	25 p.c.	10 p.c.	22* p.c.	25 p.c.10 p.c. 174 p.c 2 cts.	15f p.c. 25 p.c. 5 cts.	25 p.c. 25 p.c. 5 cts.	15 p.c. 17* p.c. 2 cts.	22* p.c. 25 p.c. 5 cts.	25 p.c. 25 p.c. 5 cts.Free	Free	Free	Free 15 p.c.	Free 25 p.c.	Free 25 p.c.Free	Free	Free	Free 15 p.c.	Free 25 p.c.	Free 30 p.c.Free	Free	Free	Free 27* p.c.	Free 40 p.c. and 40 cts. per pound.	Free 45 p.c. and 40 cts. per pound.
s
>
pi
o
a
The Budget-Mr. Ilsley
[Stage Direction]
The Budget-Mr. Ilsley
[Stage Direction]
2.	Resolved, that schedule A to the customs tariff, as amended, be further amended by deleting from the Customs Tariff Amendment Act, 1939, as amended by chapter twenty-nine of the statutes of 1940, chapter thirteen of the statutes of 1941 and chapter twenty-three of the statutes of 1942, the following enumerations of goods and rates of additional duties of customs:
Whisky, brandy, rum, gin and all other goods specified in customs tariff items 156, 156a, and 156b: $5 per gallon of the strength of proof.
and by substituting therefor the following enumerations of goods and rates of additional duties of customs:
Whisky, brandy, rum, gin and all other goods specified in customs tariff items 156, and 156b: $7 per gallon of the strength of proof.
3.	Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the third day of March, one thousand nine hundred and forty-three, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:
1.	That in respect of the taxation year 1942 the income tax liability, of taxpayers other than corporations, under subsection 1 of section 9 of the Income War Tax Act, in respect of earned income and in respect of investment income up to $3,000 shall be one-half of the amount calculated according to the schedules therein specified;
2.	That in respect of the taxation year 1942 one-half the liability of taxpayers, other than corporations, under subsection 1 of section 9 of the Income War Tax Act, in respect of investment income in excess of $3,000, shall be deferred and shall not be due until the date of death of the taxpayer;
3.	That the returns of income in respect of the 1942 taxation year for taxpayers other than corporations shall be due on the 30th June, 1943, together w'ith payment of one-third of the taxpayer's unpaid income tax liability not otherwise provided for herein, the remaining two-thirds to be due and payable on the 31st December, 1943;
4.	That the date of filing annual returns of income by taxpayers other than corporations shall be the 31st day of March in the year following the receipt of the income;
5.	That the date of filing annual returns of income by corporations shall be six months after the close of the corporation's fiscal period.
6.	That in respect of the taxation year 1943 and for each year thereafter sole proprietors (other than farmers) and taxpayers whose income from sources other than salary and wages exceeds 25 per cent of their total income, shall pay by quarterly instalments as follows:
20 per cent on the 31st March,
25 per cent on the 30th June,
25 per cent on the 30th September, and 30 per cent on the 31st December.

7.	That taxpayers whose chief business is that of farming shall in respect of the year 1943 and for each year thereafter pay two-thirds of their income tax liability for the current year on or before the 31st day of December and the remaining one-third on the following 31st March;
8.	That taxpayers whose chief occupation is that of farming may be allowed to carry forward for two years any farm losses, incurred by them in 1942 or any subsequent year;
9.	That in the case of a single person or person with equivalent status whose taxable income is less than $820, the tax payable shall not exceed two-thirds of the amount by which such taxpayer's taxable income exceeds $660.
10.	That in the case of a married person or any person granted an equivalent status under the act whose income is less than $1,570, the tax payable shall not exceed two-thirds of the amount by which such taxpayer's taxable income exceeds $1,200; .
11.	That where a sale of assets takes place between persons with common interests, the total depreciation which has been and may be allowed on such assets in the hands of the transferor and the transferee together shall not exceed 100 per cent of the original cost of the assets before such sale took place;
12.	That where immovable assets (not including equipment or machinery) in respect of *which special or accelerated depreciation has been allowed, are subsequently sold at a price in excess of the residual undepreciated value, such excess shall be applied to reduce proportionately in each year the special or accelerated depreciation previously allowed to the transferor; provided, however, that such taxpayer shall not be deprived of ordinary depreciation which but for the special depreciation would have been allowed as a deduction from income;
13. That all employees, whether single or married, of Canadian companies, sent outside of Canada temporarily to perform services on behalf of such companies, shall be liable to pay income tax while so engaged outside of Canada;
14.	That the tax payable by a corporation shall be paid by twelve monthly instalments commencing in the sixth month prior to the close of its fiscal period
(a)	as to the first eleven months, one-twelfth of the estimated tax, having regard to the previous or anticipated current year's income, applying the current year's rates, and
(b)	as to the twelfth month, the balance of the tax payable, having regard to the income and applying the rates of the taxation year;
provided, however, that should any instalment paid in each month of the seventh to eleventh month, both inclusive, be less than one-twelfth of the tax actually found to have been due, such deficiency shall bear interest at the rate of 5 per cent per annum from the close of the company's fiscal period;
15.	That principal payments made by a taxpayer in respect of a mortgage or agreement for sale on or with respect to one residential property, which mortgage or agreement for sale was registered or in effect prior to the 23rd day of June, 1942, but was an obligation of such taxpayer's spouse, shall nevertheless be eligible as an offset against the refundable portion of the income tax payable;

The Budget-Mr. Ilsley
16.	That all drilling costs on wells spudded-in during the period January 1, 1943 and March 31, 1945, and abandoned within six months after completion of drilling and all exploration costs including all general geological and geophysical expenses incurred between the said dates may be allowed as a deduction against current income of companies whose principal business is the production and/or refining and/or marketing of petroleum and/or petroleum products; provided, however, that the tax saving hereunder shall be limited to 40 per cent of such expenditures;
17.	That exploration expenses incurred during the period January 1, 1943 to March 31, 1945, ~ by companies formed for the exploration and drilling for oil may be accumulated and allowed as an expense against the income from any well found hereafter by such company;
18.	That payments of oil royalties shall be subject to a deduction at the source at the rate of 7 per cent;
19.	That all companies mining metalliferous and strategic minerals shall be allowed a deduction of their exploration expenses incurred in searching for base metals and strategic minerals in respect of expenses incurred during the period January 1, 1943, to March 31, 1945: provided, however, that such tax savings shall not exceed 40 per cent of the expenses so incurred;
20.	That contractual payments made in respect of any dominion government annuity contract shall be permitted as a deduction against the refundable portion of the income tax payable;
21.	That the taxes payable and paid to a municipality pursuant to the provisions of subsections 6, 9 and 11 of section 39 of the Assessment Act (Ontario) R.S.O. 1937, chapter 272 which are deemed to be taxes on real property, may be allowed as a deduction from the income of any mining company; provided that the said Assessment Act is so amended as to provide that in assessing the said taxes payable to the municipality, taxes payable by a mining company under the Income War Tax Act and the Excess Profits Tax Act are not allowed as a deduction;
22.	That the service pay and allowances of the Canadian naval, military and air forces while in the Canadian active service forces in the western hemisphere other than in Canada shall be subject to income tax at one-half the effective rate applicable to each individual taxpayer, such rate to be determined by calculating the total tax on each taxpayer's total income, determining the effective rate which the tax bears to such total income and allowing a credit against the tax payable of one-half of the effective rate on such service pay and allowances; provided, however, that no tax shall be payable in respect of the service pay and allowances of any such member of the Canadian naval, military and air forces whose total service pay does not exceed the sum of $ 1,600_ (or in the case of female members of the said services such lower appropriate amount as shall be determined by the Governor in Council) and provided further that no tax shall be payable on service pay and allowances by members of the said forces whose duties are of such a character as are required normally to be performed afloat or in aircraft;
23.	That the service pay and allowances of any member of the Canadian naval, military and air forces who is in the Canadian active
service forces and who has been overseas on the strength of an overseas unit outside of the western hemisphere and whose service pay is in excess of $1,600 shall be exempt from taxation on the first six months' service pay and allowances received by him after his return to Canada; provided, however, that the period of such exemption shall not exceed the length of the period which has been served on the strength of an overseas unit outside of the western hemisphere; provided that in the case of female members of the said forces the figure of $1,600 shall be replaced by such appropriate lesser amount as may be determined by the Governor in Council;
24.	That members of the Canadian naval, military and air forces in the Canadian active service forces and in receipt of service pay and allowances in excess of $1,600 shall be allowed a credit from the tax otherwise payable equal to the tax payable on $1,600 (increased by dependents' allowances in the case of married persons but not including any allowance for more than six children) provided that on incomes over $1,600 (or appropriately increased by dependents' allowances) the tax credit shall be reduced in the same proportion that such income exceeds $1,600 (or appropriately increased by dependents' allowances); provided that in the case of female members of the said forces the figure of $1,600 shall be replaced by such appropriate lesser amount as may be determined by the Governor in Council;
25.	That any enactments founded on
(a)	Resolutions 4, 5, 9. 10, 11. 14. 18, 22. 23 and 24 shall be applicable to the income of the 1943 taxation period and fiscal periods ending therein and all subsequent periods;
(b)	Resolution 12 shall be applicable in respect of any sale made after March 2. 1943;
(c)	Resolutions 13, 15 and 20 shall be applicable to the income of the 1942 taxation period and fiscal periods ending therein and all subsequent periods;
(d)	Resolution 21 shall be brought into force on proclamation by the Governor in Council and be applicable to the fiscal period therein designated and to all subsequent periods.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Excess Profits Tax Act, 1940, and to provide:
1.	That the definition of ''standard profits" be amended to provide that the "standard profits" of whollv-owmed subsidiary companies incorporated in 1942 or thereafter shall not in the aggregate exceed $5,000 when the sum of the capital employed by the parent and such subsidiary companies taken together is not substantially greater than the capital employed by the parent company prior to the incorporation of such wholly-owned subsidiary companies.
2.	That where an upward adjustment of the standard profits has been made by the minister because of an increase in capital employed during the "standard period" then an adjustment dowrnwrard shall be made for subsequent decreases in capital employed wrhich have not been accompanied by an equivalent reduction in capital stock, but not to an extent greater than the said upward adjustment.
3.	That any amendment founded on the foregoing resolutions shall be deemed to have come into force at the commencement of the said act.
The Budget-Appendix

[Stage Direction]
A.	Review of Government Accounts, 1942-43.
B.	Tables on Economic Conditions, 1942-43.
A. Government Accounts, 1942-43 Comparative Summary Statement of Revenues and Expenditures
1.	Because of the early date at which the budget is being brought down and of the added difficulty in forecasting war expenditures and receipts from taxes imposed to meet outlays for war purposes, it must be recognized that the figures which are presented for the current fiscal year ending March 31st next are approximations only, and that when the books of the year are finally closed there
may be considerable variations from the figures shown herein.
2.	The following tables show, by main categories and in detail, estimated revenues, estimated expenditures and the estimated increase in net debt for the fiscal year 1942-43, together with comparable figures for the four preceding fiscal years:
l Mr. Ilsley.J

The Budget-Appendix

[Stage Direction]
(000 omitted)
-	1938-39	1939-40	1940-41	1941-42	Estimated 1942-43$	*	i	t	$Tax Revenues-	130,757	142,392	118,000Customs import duties	78,751	104,301	Excise duties-	46,776	Spirits, malt, etc	18,530	21,267	34,140	68,450Cigars, cigarettes and tobacco	33,225	40,557	55,417	65,050	77,100Licences	34	35	45	40	4051,789	61,859	89,602	111,866	145,590Less refunds	475	827	994	1,775	3,50051,314	61,032	88,608	110,091	142,090Excise taxes-	246,553	Sales	125,927	141,121	184,536	245,000M anufacturers-	11,206	16,742	2,750Automobiles, rubber tires'and tubes	1,343	1,568	Furs	:	-	-	-	-	2,500Gasoline	-	-	24,752	25,500Candy and chewing gum	-	-	-	-	7,400Cigarette papers and tubes	1,450	1,879	3,356	3,948	4,700Cigars, cigarettes and tobacco....	125	130	245	333	22,000Beverages	-	-	-	6,247	14,000Matches and lighters	1,819	2,135	2,173	2,766	2,65011,004	12,302	11,894	22,009	14,000Toilet preparations and soap	1,249	1,371	1,542	3,5o9	4,500Trunks, bags, etc	-	-	-	-	2,100Electric and gas appliances	-	-	1,886	8,470	5,200Phonographs, radios and tubes	-	-	1,289	2,361	1,200230	420	658	1,445	1,800Sundry	235	312	682	877	1,770Amusements	-	-	-	8,792	11,800Special excise (importations)	15,591	1,979	1,008	861	450Transportation and communication..	1,640	1,657	1,848	8,131	16,475Stamps, licences, interest, etc	
War exchange	4,885	4,829	4,747	5,095	12,600-	-	61,932	100,874	94,000165,498	169,703	289,002	463,795	492,395Less refunds	3,787	3,675	4,835	10,370 #	15,000161,711	166,028	284,167	453,425	477,395Income Tax-	75,863	189,502	Individuals-Graduated	46,937	45,407	460,000National Defence Tax...	-	-	27,672	106,637	80,500Corporations	85,186	77,920	131,566	185,836	350,000Dividends, interest, etc	9,903	11,122	13,042	28,269	27,000Excess profits Tax	-	-	23,995	135,168	455,000142,026	134,449	272,138	645,412	1,372,500Succession duties	-	-	6,957	14,000Banks, Insurance Companies, etc.-	949	898	786	690Chartered banks	1,014	Insurance companies	891	926	972	1,148	10,500Miscellaneous	547	540	636	702	700Total Revenue from taxes	436,254	468,225	778,176	1,360,913	2,135,875Non-tax Revenues-	Post Office	35,288	36,729	40,383	45,994	49,000Return on investments	14,407	14,617	17,902	25,826	41,500Bullion and coinage	2,052	3,756	6,266	4,767	5,750Premium, discount and exchange	477	7,939	6,107	11,855	-Other	9,539	10,351	10,921	14,469	17,500Total non-tax revenue	61,763	73,392	81,579	102,911	113,750Total ordinary revenues	498,017	541,617	859,755	1,463,824	2,249,625872	COMMONS
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(000 omitted)
Special Receipts and Other Credits- Consolidated Fund-
Refunds of previous years' Special
Expenditure	
Refunds of previous years' \
expenditure	
War donations	
Special receipts arising out of the
war	
Canadian National Railways- Operating surplus for calendar
years	
Capital gain on repatriation of Canadian National Railways
Securities	
Dominion stock "A" written off... Montreal Turnpike Trust Accountadjustment	
Canadian Wheat Board, Reserve Account-Adjustment based on operations of the Board calculated as at July 31, 1942	
Total Consolidated Fund.
Capital Accounts-
Refunds of previous years' expenditure	
Net insurance proceeds on the P.E.I.
Car Ferry	
Non-active Accounts-
Canadian Government Merchant Marine, Limited-
Balance in Contingency Reserve.. National Harbours Board-
Reduction in indebtedness....
Write-downs to Consolidated Fund-
Seed Graimand Relief Loans....
Relief Loans to Province of Saskatchewan	
Soldier and General Land Settlement Loans	
Canadian National Railways Securities Trust Stock-
Line abandonments	
Net capital loss on sale of S.S. Prince David and S.S. Prince Robert	
Total Special Receipts and Credits.
Grand Total Revenue	
Less estimated amount of Income and Excess Profits Taxes refundable after the war	
1,232
1,256
18
2,713
4,154
502,171
153
164
1
17,682
2,600
20,477
562,094
1941-42
1,221
1,410
5,504
8,538
46
2,334
1,475
12,414
872,169
13,200
3,184
4,016
21,060
984
2,539
24,712
1,488,536
Estimated
250
11,000
(>)-
25.000
11.000
6,660
54,185
15
4,500
58,775
2,308,400
100,000
2,208,400
(*) Included in Ordinary Revenues.
[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS (000 omitted)
-	1938-39	1939-40	1940-41	1941-42	Estimated 1942-43Ordinary Expenditure	t	$	$	$	$Agriculture	9,527	11,817	8,593	8,430	8,717Auditor General's Office	473	459	453	457	433Civil Service Commission	
External Affairs, including Office of	379	398	397	399	429Prime Minister	
Finance-	1,057	1,220	1,013	1,052	1,259Interest on Public Debt	
Cost of Loan Flotations and Annual Amortization of Bond Discounts and	127,996	129,315	139,179	155,018	185,000Commissions	4,914	4,992	6,304	16,350	13,530Subsidies to Provinces	13,752	13,769	13,769	14,409	14,487Special Grants to Provinces	
Wartime Prices and Trade Board- Dominion Fuel Board Administra-	7,475	5,475	5,475	tion, coal subsidies and subventions	-	-	-	(*) 4,880	4,987Miscellaneous Grants and Contributions	643	660	530	531	533Civil Pensions and Superannuation.... Government contribution to Superan-	638	567	500	435	406nuation Fund	
Old Age Pensions, including pensions to	2,220	2,271	2,316	2,347	2,350blind persons	
Compensation to Provinces under Dominion-Provincial Taxation Agreements-	29,044	29,977	29,912	29,612	29,985Income and Corporation Taxes	-	-	-	21,120	84,900Gasoline Tax	-	-	-	-	10,000Premium, Discount and Exchange	
Administrative and Sundry Expendi-	-	-	-	3,817	1,500ture	3,689	3,966	3,508	4,478Fisheries	
Governor General and Lieutenant Gov-	2,036	2,320	1,618	1,679	1,811ernors	226	227	213	226	232Insurance	194	195	176	181	183Justice	2,748	2,725	2,711	2,657	2,455Penitentiaries	2,675	2,941	2,717	2,786	3,055Labour	788	788	826	762	740Technical Education	
Unemployment Insurance Act, 1940-	27	31	18	41	30Administration	-	-	69	2,344	5,000Government contribution	
Government Annuities-	-	-	-	7,287	12,000Payments to maintain reserve	
Legislation-	-	379	Ill	617	400House of Commons	1,800	1,286	2,468	1,408	1,800Library of Parliament	72	76	70	72	77Senate	600	432	868	424	540General	75	68	58	47	62Dominion Franchise Office	
Chief Electoral Officer, including eleo-	50	-	-	-	tions	
Mines and Resources	114	458	2,469	282	1,473Administration	184	186	179	178	167Immigration and Colonization	1,335	1,338	1,273	1,289	1,422Indian Affairs	5,305	5,675	5,183	5,000	5,265Lands, Parks and Forests	2,249	2,116	1,937	1,959	1,824Surveys and Engineering	1,325	1,301	1,114	1,128	1,186Mines and Geological Survey	
Movement of Coal and Subsidies under	1,340	1,324	1,173	1,156	1,213Domestic Fuel Act	1,921	4,532	4,408	(*) -	-Munitions and Supply	
National Defence-	-	-	9	12	12Administration	409	178	30	43	38Militia Service	15,772	5,997	-	-	-Naval Service	6,590	1,869	-	-	-Air Service	11,216	4,852	-	-	-Sundry Services	
National Revenue (including Income	447	295	168	223	1,716Tax)	11,899	12,064	12,229	13,428	15,445National War Services	
72537-56	REVISED E	DITION	682	364
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STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(000 omitted)
-	1938-39	1939-40	1940-41	1941-42	Estimated 1942-43$	$	$	$	$Ordinary Expenditure-Con. Pensions and National Health- Administration	118	132	133	182	149Treatment and after-care of returned soldiers (War 1914-18)	13,453	14,771	13,402	12,667	13,124Pensions (War 1914-18) and Military ..	42,181	42,219	41,515	40,569	39,716Health Division	1,012	1,113	1,111	1,246	1,313Post Office	35,456	36,726	38,700	41,502	45,439Privy Council	49	59	54	54	62Public Archives	159	150	126	123	126Public Printing and Stationery	191	199	283	195	248Public Works	15,484	13,065	11,507	11.937	12,143Royal Canadian Mounted Police	6,145	5,626	5,554	5,985	6,451Secretary of State	730	836	772	823	839Soldier .Settlement	758	624	582	564	. 562Trade and Commerce	4,763	4,999	4,315	(*) 6.200	4,804Canada Grain Act	1,847	1,933	1,908	1,909	1,991Mail Subsidies and Steamship Subventions	1,993	1,907	942	616	629Transport- Administration	371	358	334	388	386Air Service	3,457	3,862	3,478	3,386	3,471Marine Service	4,271	4,215	3,795	4,010	4,233Canadian Travel Bureau	249	312	470	(<) -	Railways and Canals	4,371	3,763	3,527	3,694	3,644Maritime Freight Rates Act	2,583	2,660	3,951	3,935	4,917Railway Grade Crossing Fund	187	255	126	25	11Total ordinary expenditure	413,032	398,323	390,629	444,778	565,762Capital Expenditure Railways	26	23	7	4	11Public Works	5,398	7,007	3,351	3,426	3,851Total Capital Expenditure	5,424	7,030	3,358	3,430	3,862War Expenditure War Appropriation Acts	118,291	752,045	1,339,674	2,802,765The War Appropriation- ' (Uniled Kingdom Financing) Act, 1942	-	1,000,000-	118,291	752,045	1,339,674	3,802,765Special Expenditure Unemployment Relief- Administration-Relief Acts	260	287	236	106	Grants-in-aid to Provinces	17,037	Material Aid to Provinces, including municipal improvements projects. ..	19,534	15,785	Dominion share of joint Dominion-Provincial projects	6,259	7,147	1,794	2,063	834Dominion projects	12,981	24,919	9,784	6,331	4,822Transportation facilities into mining areas	1,213	1,121	48	37,750	53,008	27,647	8,500	5,658
(*) For previous years included in Departments of Trade and Commerce and Mines and Resources. (!) For current year see Department of Finance.
(*) Includes an amount of $2,615,000 for Census of population of Canada.
For current year included in National War Services.
(Mr. Ilsley.]

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(000 omitted)
-	1938-39	1939-40	1940-41	1941-42	Estimated 1942-43$	$	$	$	$Special Expenditure-Concluded Western Drought Area Relief- Direct Relief	\ 9,146	1,605	Feed, fodder, etc	
Prairie Farm Assistance Act, 1939- Administration	/	346	423	212Advances to Prairie Farm Emergency Fund	7,500	4,376	11,848	700Wheat acreage reduction plan- Administration	_	980	1,060Payments of awards to farmers	-	-	-	29,654	23,0459,146	9,105	4,722	42,905	25,017Provision for reserve against estimated losses on 1938 wheat marketing guarantees 	25,000	27,000	Provision for reserve to meet deficits resulting from the operations of the Canadian Wheat Board calculated as at July 31, 1940 and 1941, respectively, not previously provided for	10,500	12,571	Total special expenditure	71,896	89,113	42,869	63,976	30,673Government Owned Enterprises Losses charged to Consolidated Fund- Canadian National Railway System, ex-eastern lines	48,194	. 34,850	14,451	Eastern lines	6,120	5,245	2,514	-	-Prince Edward Island Car Ferry and Terminals	388	427	461	424	5MNational Harbours Board	138	94	40	33	-Trans-Canada Air Lines	818	412	-	-	-Central Mortgage Bank	-	16	-	-	-Total charged to consolidated fund	55,658	41,044	17,466	457	591Loans and advances non-active- Canadian National Steamships	6	8	National Harbours Board	3,279	1,027	716	758	672Total non-active advances	3,285	1,035	716	758	672Total government-owned enterprises	58,943	42,079	18,182	1,215	1,263Other Charges Write-down of assets chargeable to Consolidated Fund- Drought Area Relief Loans, 1934-35- Province of Saskatchewan	1,374	Reduction of soldier and general land settlement loans	1,023	1,643	1,011	271	75Yearly established losses in seed grain and relief accounts-Department of Mines and Resources	18	10	46	58	50Canadian National Railways Securities Trust Stock-Reduction due to line abandonments during calendar years, 1938,1939,1940,1941 and 1942..	2,713	2,600	2,334	2,539	4,50072537-56J	
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STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(000 omitted)
-	1938-39	1939-40	1940-41	1941-42	Estimated 1942-43Other Charges-Concluded Canadian National Railways Securities Trust Stock-Capital loss (exclusive of loss applicable to expired service life) on sale of S.S. Prince	$	%	$	$	$David and Prince Robert	
Cancellation of Canadian Farm Loan Board-	-	1,475	-	-Capital Stock	
Province of Saskatchewan Treasury	.14	11	12	10	8Bills	
To provide a reserve for possible losses on ultimate realization of Active	~	17,682	-	-	-Loans and Advances	
Non-Active Accounts- Fulfilment of guarantees- Saskatchewan Seed Crain Loans,	25,000	25,000	25,0001936 and 1937	
Canadian National Railways Securities Trust Stock- Increase in Dominion's Equity in the Canadian National Railways due to capital gain on repatriation of Canadian National Railways Se-	2,638	7,136	curities	
Increase in Dominion's Equity in the Canadian National Railways due to surplus earnings of Canadian National Railway System for cal-	5,504	99	11,000endar years	-	-	-	4,016	25,000Total other charges	3,768	25,958	42,518	31,993	65,633Grand total expenditures	553,063	680,794	1,249,601	1,885,066	4,469,958
SUMMARY OF REVENUES AND EXPENDITURES (000 omitted)
-	1938-39	1939-40	194041	194142	Estimated 194243Ordinary revenues	
Capital refunds	
Special receipts and other credits	
Total revenues	
Ordinary expenditures	
Capital expenditures	
War expenditures	
Special expenditures	
Government-owned Enterprises	
Other charges	
Total expenditures	
Total deficit or increase of direct net debt	% 498,017 40 4,114	$ 541,617 21 20,456	S 859,755 20 12,394	$ 1,463,824 1,022 23,690	$ 2,149,625 25 58,750502,171	562,094	872,169	1,488,536	2,208,400413,032 5,424 71,896 58,943 3,768	398,323 7,030 118,291 89,113 42,079 25,958	390,629 3,358 752,045 42,869 18,182 42,518	444,778 3,430 1,339,674 63,976 1,215 31,993	565,762 3,862 3,802,765 30,673 1,263 65,633553,063	680,794	1,249,601	1,885,066	4,469.95850,892	118,700	377,432	396,530	2,261,558
IMr. Ilsley.l

The Budget-Appendix
revenues, 1942-43
3.	When the books for the fiscal year 1942-43 are finally closed, total gross receipts will reach, it is estimated, a new high record of $2,308,400,000. This represents an increase over the preceding fiscal year of $819,864,000, or approximately 55 per cent. Compared with the fiscal year immediately preceding the war, namely, 1938-39, the increase in total receipts for 1942-43 is estimated at $1,806,229,000. In terms of percentage, this increase over total receipts for 1938-39 of $502,171,000 represents approximately 360 per cent. The above total of $2,308,400,000 is the total gross receipts, and includes an estimate of the refundable portion of income and excess profits taxes which are repayable after the war. It is not expected that the exact amount of these refundables will be determined before the books for the year are closed,, and accordingly provision is being made to set up a liability of an estimated amount of $100,000,000, to meet these obligations. Of this amount it is estimated $75,000,000 will be applicable to income taxes pertaining to individuals, and1 $25,000,000 to the excess profits tax.
4.	The increase in gross revenues, more fully dealt with in subsequent paragraphs, was obtained chiefly from the higher rates of tax and the new taxes imposed by the budget of June 23, 1942. A part of the increase in income taxes was due to taxes on 1941 income, paid on or after March 31, 1942, and taken into the revenues for 1942-43. An additional factor which affected income tax receipts, was the change-over from the voluntary instalment plans of payment to a compulsory instalment plan effective from July, 1942, in the case of corporations and from September, 1942, in the case of individuals. No estimate can be made as to what portion of the increase is attributable to each of these factors. In addition, there were substantial increases in revenue from succession duties, the tax on insurance companies, return on investments and also in the operating surplus of the Canadian National Railways for the calendar year 1942.
5.	The 5-year table of revenues shown on page 871 is in the same form as was used last year. This table is divided to show tax revenues under appropriate headings with subheadings for excise duties, excise taxes and income taxes. The non-tax revenue section is broken down under five main headings.
6.	Total revenue from taxes for 1942-43, including refundable taxes, is estimated to reach $2,135,875,000 compared with $1,360,913,000 collected during 1941-42. This
total represents approximately 92-5 per cent of the total revenues. An examination of the 5-year table shows that direct taxes on incomes and profits, including the refundable portion realized $1,372,500,000 compared with $645,412,000 during the previous year. In the pre-war year of 1938-39, the percentage of direct taxes on incomes and profits to total revenues was 28-3 per cent while in 1942-43 it is estimated that this ratio will be increased to 59-5. This comparison illustrates the increased reliance which has been placed upon the direct taxation of incomes including the tax on excess profits. The excess profits tax, imposed in 1940 and revised in 1941, was materially changed in its rate structure by the 1942 budget, effective from July 1, 1942. As a result, it is estimated that this item of revenue alone will account for no less an amount than $455,000,000, including an estimated amount of $25,000,000 refundable after the war. This item shows an increase over 1941-42 of $319,832,000. A portion of this increase was due to a change in timing of payments, consequent upon the introduction of the monthly instalment plan.
7.	The amount expected to be obtained in the fiscal year 1942-43 under the provisions of the Dominion Succession Duties Act, passed in 1941 is estimated at $14,000,000. In 1941-42 the amount realized from the same source was $6,957,000.
8.	Tfie total revenue from the 8 per cent sales tax, less refunds, is estimated at $230,000,000, a decrease of $6,183,000 as compared with the previous year. It will be seen from the 5-year table that gross sales tax is estimated to be less than last fiscal year by only $1,553,000, while the amount of refunds is increased by $"1,630,000. The increase in refunds is due largely to remission of taxes on materials and plant equipment imported or purchased in Canada for war purposes by the United Kingdom and allied governments or for certain other activities associated with the war.
9.	The War Exchange Tax is expected to realize a total of $94,000,000, compared1 with $100,874,000 received during the previous year. There was no change in the structure of this tax and the decline is due to a falling off of certain imports not essential for war purposes.
10.	Other excise taxes are estimated to produce $153,395,000, an increase over the previous year of $37,027,000. The 5-year table gives details of the increases and decreases in the various items. The main decreases totalling $26,959,000 are recorded in the taxes on the following articles:
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(1)	Automobiles, rubber tires and tubes, $13,992,000.
(2)	Sugar, $8,000,000.
(3)	Electric and gas appliances, $3,270,000.
(4)	Phonographs, radios and tubes, $1,161,000.
These reductions reflect the restricted use or consumption of certain articles. In the case of sugar, a reduction in the excise tax from 2 cents to li cents per pound was enacted as a result of the last budget. The increases in other excise taxes together with new taxes imposed by the last budget aggregating $63,986,000 relate to the taxes on the following articles:
(1)	Cigars, cigarettes, tobacco, $21,667,000.
(2)	Candy and chewing gum, $7,400,000.
(3)	Beverages, $7,753,000.
(4)	Trunks, bags, etc., $2,100,000.
(5)	Furs, $2,500,000.
(6)	Amusements, $3,008,000.
(7)	Transportation and communication, $8,344,000.
(8)	Stamps, etc., including payment of taxes on jewellery, chinaware, cabaret attendance, etc., $7,505,000.
(9)	Sundry, $3,709,000.
11.	Revenues from customs import duties for the current year are estimated at $118,000,000 compared with $142,392,000 received during 1941-42, a decrease of $24,392,000. This decrease is due in part to remission of customs duties and drawbacks payable on materials, equipment and supplies imported for war purposes by the United Kingdom and allied governments or for other activities associated with the war. A second factor which brought about this reduction was the decline in importations for civilian use of certain goods and commodities not entirely essential to the war effort.
12.	Receipts from excise duties mainly on liquor and tobacco are expected to reach $142,090,000, an increase of about $32,000,000 over 1941-42. Excise duties on liquors' and tobaccos were substantially increased in the June, 1942, budget.
13.	The tax on insurance companies for 1942-43 is expected to realize $10,500,000 compared with $1,148,000 received during the previous year. The increase in revenue from this source is not due alone to the increased rates imposed by the 1942 budget, but, because of arrangements made under the Dominion-Provincial Taxation Agreements, it so happens that the increased tax levied by the last budget applied to the calendar year 1941, during which year the" provincial insurance taxes were not levied, as well as to 1942.

The estimated amount of $10,500,000 therefore represents collections covering two calendar years.
14.	Total non-tax revenues are estimated at $113,750,000, an increase of $10,839,000 over 1941-42. Receipts from the Post Office are expected to total $49,000,000, an increase of slightly more than $3,000,000 as compared with the preceding fiscal year. The receipts from the Post Office will, it is estimated, exceed the cost of operations by $3,561,000. As mentioned in previous years, the post office accounts do not include the rental value and other costs of premises occupied, and equipment used, nor do they include any credit to the Post Office for services rendered to other departments for the free use of the mails. Return on Investments is expected to realize $41,500,000, an increase of $15,674,000 over last year. The larger items making up this total are: interest on advances to Canadian National Railways, $13,338,000; Bank of Canada profits, $7,985,000; interest on loans to Foreign Exchange Control Board, $4,633,000; loans to National Harbours Board, $2,600,000; loans to provinces, $2,802,000; and interest on advances made by the Department of Munitions and Supply to commodity companies, $3,500,000. The premium, discount and exchange account will, it is expected, show a debit of $1,500,000, compared with the credit for the last fiscal year of $11,855,000.
15.	The total amount estimated for 1942-43 under Special Receipts and Credits is $58,775,000. The main items making up this total are: refunds of previous years' war expenditures, $14,000,000; operating surplus of the Canadian National Railways for the calendar year 1042, $25,000,000; and the capital gain on repatriation of Canadian National Railways Securities, $11,000,000. These last two items increase the book valuation of the Canadian National Railways Securities Trust Capital Stock, and accordingly are offset by contra amounts appearing on the expenditure side under the heading "Other Charges".
Another book-keeping item which is recorded under the heading of Special Receipts and Credits is an amount of $6,660,000, representing a reduction in the Reserve Account established to meet the operating deficits of the Canadian Wheat Board. This adjustment is occasioned by an improvement in the board's balance sheet in the period ended July 31, 1942, with respect to the 1939 and 1940 crop accounts. Last year it was necessary on the basis of calculations made as at July 31, 1941, to provide on the expenditure side for an increase in the reserve account of

The Budget-Appendix
$12,570,828. This year the Reserve Account is being reduced by the amount of $6,660,000 on the basis of calculations made sis at July 31, 1942.
16.	The table below gives a summary of the forecasts made at the time of the last budget of the probable receipts from the various sources of revenue during the fiscal year 1942-43, and a comparison of these forecasts with present estimates of receipts which will be received during the fiscal year. The general observations which preface a similar table in last year's budget as to the dffieulty in forecasting revenues, particularly in time of war, are still true and are strengthened by reason of the budget being brought down at this early date. With respect to
taxation revenues, and the amounts expected to be received by reason of increased rates and new imposts, it will be quite apparent that even a small percentage of error in calculation may represent a substantial amount in dollars.
While there are some substantial variations in the individual amounts now estimated for the fiscal year 1942-43, compared with estimates made in the last budget, the total increase over the amount forecast, after taking into account $58,775,000 expected to be received from Special Receipts and Credits which was not included in the estimate, represents only 4-9 per cent. As was stated last year care was used to err on the side of conservatism rather than of undue optimism.

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Budget Forecast of Receipts			Increase (+)
Source of Revenue	From tax structure before Budget changes	From tax structure as changed by proposals made in Budget o. June 23, 1942	Receipts now estimated for 1942-43	or decrease (-) in receipts as compared with final budget forecast000 omitted	000 omitted	000 omitted	000 omitted$	*	$	8T ax revenues	Customs duties	135,000	135,000	118,000	-17,000Excise duties	123,000	134,610	142,090	+ 7,480Excise taxes:	Sales tax	218,000	218,000	230,000	+12,000War Exchange tax	95,000	95,000	94,000	- 1,000Other excise taxes	85,000	123,240	153,395	+30,155Total excise taxes	398,000	436,240	477,395	+41,155Income taxes: Graduated tax on personal incomes and	435,0001 *70,000/	national defence tax	390,000	540,500	+35,500Corporate income tax	200,000	305,000	350,000	+45,000Excess profits tax	275,000	*25,0001 440,000/	455,000	-10,000Interest and Dividends	28,000	28,000	27,000	-1,000Total income taxes	893,000	1,303,000	1,372,500	+69,500Succession duties	15,000	15,000	14,000	- 1,000Miscellaneous taxes	2,600	15,600	11,890	- 3,710Total Tax Revenues	1,566,600	2,039,450	2,135,875	+96,425Non-tax Revenues	105,000	105,000	113,750	+ 8,750Total	1,671,600	2,144,450	2,249,625	+105,175Special Receipts and Credits	-	(No estimate made)	58,775	+58,775
'Estimated amounts refundable after the war.
The Budget-Appendix

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17.	The comments which follow will deal with expenditures classified by the usual main categories: (1) Ordinary Expenditures; (2) Capital Expenditures; (3) War Expenditures; (4) Special Expenditures; (5) Operating deficits of, and Non-Active Advances to, Government-owned Enterprises; and (6) Other Charges. All disbursements under these headings with the exception of active loans and investments chargeable to War Appropriation Acts, are included as expenditures in arriving at the over-all deficit or increase in net debt.

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18.	Ordinary expenditures for the year, it is estimated, will total $565,762,000 of which a few of the larger contractual and uncontrollable items such as interest and other charges on the public debt, pensions, unemployment insurance, post office, subsidies and payments to provinces under the Dominion-Provincial taxation agreements will aggregate $442,813,000 or approximately 78-3 per cent.
The above estimated total of $565,762,000 is greater than the actual amount of ordinary expenditures during the previous fiscal year by $120,984,000. Some of the larger items making up this increase are:
Increased interest and charges on Public Debt	$
Increased compensation to Provinces under the Dominion-Provincial Taxation
Agreements	
Increase in Unemployment Insurance	
Increase in Post Office Expenditures	
Premium, Discount and Exchange Account	
Increase in administrative cost of Department of National Revenue including
Income Tax	
Increase in cost of Chief Electoral Office re plebiscite	
Increase in National Defence, sundry services	
Increase in Maritime Freight Rates Act	
27.162.000
73.780.000
7.369.000
3.937.000
1.500.000
2.017.000
1.191.000
1.493.000 982,000
[Stage Direction]
Less important increases as well as decreases effected during the year are readily ascertained by referring to the five-year table.

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19.	Total expenditures charged to capital are estimated at $3,862,000 compared with $3,430,000 in the previous year. The main items in this category are expenditures arising out of dredging the St. Lawrence Ship Channel and other construction and improvements, including lighting and radio facilities in connection with civil airways and airports.

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20.	Total outlays under the various War Appropriation Acts for the year 1942-43 are now estimated at $4,558,000,000. This estimate, it will be realized, is difficult to make with any close degree of accuracy because of the magnitude of our war programme and the
many factors that may not now be foreseen or are difficult to appraise. The total of $4,558,000,000 includes the gift of one billion dollars to the government of the United Kingdom under the War Appropriation (United Kingdom Financing) Act, 1942. It also includes the loan of $700,000,000 made to the Government of the United Kingdom under authority of the same act in order to liquidate sterling balances accumulated by the Government of Canada prior to March 31, 1942, and also $55,235,000 of loans and advances to commodity corporations and other loans made under the authority of the War Appropriation Act, 1942. Deducting these last two amounts, which are treated as active assets in the Dominion's accounts, we have a net total charged to war expenditure of $3,802,765,000. This represents an increase of $2,463,091,000 over the corresponding figure for the preceding fiscal year.
The rapid expansion of Canada's war programme is shown in the following table:
(Mr. Hsley.]

The Budget-Appendix
Fiscal Year	Charged to Active Assets	War Expenditures	Total war Outlays1939-40	$ 9,092,742 26,379,066 42,816,676 755,235,000	$ 118,291,022 752,045,326 1,339,674,152 3,802,765,000	$ 127,383,764 778,424,392 1,382,490,828 4,558,000,0001940-41 	194i-42 	
833,523,484	6,012,775,500	6,846,298,984
During the first world war Canada's total 21. The following table gives a summary expenditures, including demobilization charged of war expenditures, together with details of direct to war account, aggregated $1,695,958,570. the $755,235,000 loans and advances charged
to active assets all as now estimated:
Department of National Defence-
Army	$ 1,078,157,000
Naval Services	 207,822,000
Air	 626,960,000
Department of Munitions and Supply	 689,504,000
Miscellaneous Departments:
Agriculture	*	 20,820,000
Auditor General's Office	 280,000
Civil Service Commission	 477,000
External Affairs	 518,000
Finance	 98,668,000
Fisheries	 278,000
Justice	 95,000
Labour	 17,451,000
Mines and Resources	 7,904,000
National Harbours Board	 350,000
National Research Council	 2,022,000
National Revenue	 4,000
National War Services	 8,746,000
Pensions and National Health	 15,591,000
Post Office	 269,000
Privy Council	  1,627,000
Public Archives	 2,000
Public Works	 7,096,000
Royal Canadian Mounted Police	 4,147,000
Secretary of State	 81,000
Soldiers Settlement of Canada	 81,000
Trade and Commerce	 8,049,000
Transport	  5,766,000
Total estimated direct War Expenditure, 1942-43, under War
Appropriation Acts, 1942, 1943	$ 2,802,765,000
The War Appropriation (United Kingdom Financing) Act, 1942-
Payments for the account of the Government of the United Kingdom to enable it to purchase in Canada aircraft, tanks, mechanical transport vehicles, guns, ammunition and other munitions of war, foodstuffs, raw materials and other commodities and supplies essential to the conduct of the war and the maintenance of the people of the United Kingdom, and to defray other expenses incurred in Canada arising out of the war	 1,000,600,000
Total war chargeable to expenditure
[Stage Direction]
The Budget-Appendix
[Stage Direction]
Loans and Advances-
War Appropriation Act, 1942-
Advances to commodity corporations and other companies-Department of Munitions and Supply...® 15,371,000
Purchase of railway equipment leased to Canadian
National Railways		 16,964,000
Loan to Canadian National Railways-Vermilion Oil
Field-Alberta	 400,000
Credit to the Government of the Union of Soviet
Socialist Republics		  6,000,000
Canadian Wool Board,	Ltd	 10,800,000
Wartime Salvage, Ltd	 700.000
Commodity Prices Stabilization Corporation	 5,000,000
. .	.	.	55,235,000
The War Appropriation (United Kingdom Financing) Act,
Loan to the Government of the United Kingdom_________ 700,000,000
Total war chargeable to Active Assets	$	755,235,000
Grand Total chargeable to War Appropriations	$ 4,558,000,000
22.	The foregoing total outlay of $4,558,000,000 chargeable to war appropriations does not take into account advances made or to be made during 1942-43 under authority of section 3 of the War Appropriation Act, which advances are recoverable from the Government of the United Kingdom or from other allied governments. These recoverable advances which are estimated at $232,610,000
as at the close of the fiscal year, will be substantially offset by amounts payable by Canada with respect to accounts and commitments remaining unpaid or unadjusted when the books of the Dominion for the fiscal year 1942-43 are closed.
23.	The recoverable advances to allied governments, totalling $232,610,000, are divided as follows:
Agriculture (Food), United Kingdom	$
Munitions and Supply, War Supplies, Ltd	
National Defence
[Stage Direction]
Army	
Internment Operations	
Navy	''' ]
Air	
R.A.F., Special Schools	
B.C.A.T.P.-U.K. Equipment	
Combined Training Organization-Australia's share	;	
4.615.000 60,000,000
1.731.000
2.750.000
11.404.000
8.566.000
38.052.000
88.575.000
16.917.000
$	232,610,000
24.	The main provisions of the War Appropriation (United Kingdom Financing) Act, 1942, were: (1) the granting of a billion dollar gift to the Government of the United Kingdom to finance the purchase in Canada of foodstuffs, raw materials and munitions of war and to defray other expenditures incurred in Canada for war purposes; (2) the granting of authority to repatriate all Dominion of Canada direct and guaranteed securities and other Canadian National Railways securities held by British investors; and (3) the conversion of sterling balances accumulated to the credit of the Government of Canada to an amount equivalent to $700 million (at the exchange rate of $4.45 to the pound sterling)

into a Canadian dollar obligation which is not to bear interest until after the termination of the war.
25.	Under the second of the above' provisions, a substantial volume of Dominion and Canadian National Railways securities were repatriated before the close of the preceding fiscal year. In addition there were repatriated during the fiscal year 1942-43 securities valued on the basis of the prices at which they were vested by the Government of the United ,Kingdom, less interest included therein, at $70,022,000. The securities so purchased by the Dominion Government were classified as follows:

The Budget-Appendix
Dominion of Canada obligations	
Canadian National Railways Securities-
Dominion Guaranteed	
Unguaranteed	
Other Dominion Guaranteed Securities..
	$
24.844.000
35.503.000
[Stage Direction]
9,514,000
60,347,000
161,000
70,022,000
In accordance with the terms of the act, Canadian National Railways securities to an estimated value of $61,820,000 (including amounts purchased in 1941-42, not previously transferred) will be turned over during 1942-43 to the Railway Company, and temporary loans for this amount are made to the company to enable it to acquire them. In accordance with Section 3 of the Act,
expenditure of $76,429,000 incurred in acquiring surplus sterling accumulated during March, 1942, was charged to the billion dollar appropriation.
26.	The following table gives a detailed itemization of estimated direct war expenditures under the War Appropriation Acts, 1942-43, totalling $2,802,765,000 classified by departments and services:
Agriculture-
Agricultural Supplies Board'-
Administration expenses	S 33,000
Programmes to encourage the production of
essential war supplies	 1,089,000
Assistance in disposal of agricultural products
rendered surplus by the	War	 3,823.000
Feeds Administrator	 10,928,000
Flax Fibre Administrator	 121,000
Fertilizers and Pesticides Administrator		1,260,000
Seeds Administrator	 140,000
[Stage Direction]
$	17,394.000
Bacon Board Administration	 46.000
Dairy Products Board Administration	 11,000
Special Products Board	 662.000
Special Farm Income Payments	 2,707,000
[Stage Direction]


Auditor General's Office-
Auditing and checking war appropriation accounts
20,820,000
280,000
Civil Service Commission-
Supply of personnel for war services	 460.000
Payment of minimum railway fare re stenographers	 17,000
External Affairs-
Departmental administration and Passport	Office	 264,000
Representation abroad	 100,000
Sundries	 154,000
Finance-[DOT]
Payment of premium on purchase of Dominion of Canada
Registered Stock		 127,000
Comptroller of the Treasury's Office-War accounting offices..	6,235,000
Wartime Prices and Trade Board'-
Administration	 10,514,000
Canadian Wood Board	Administration		200,000
Wartime Salvage Limited-
Administration and Losses	 800,000
Commodity Prices Stabilization Corporation-
Administration and	Subsidies	
80,000,000_ , .,	,	, .	
91,514.000
Subsidy re consumption of coke in production of pig iron__	327,000
Freight on shipments	of	coke	
254.000Freight on shipments	of	scrap steel	
162.000Sundries	
49^000
477,000
518,000
98,668,000
The Budget-Appendix
[Stage Direction]
Fisheries-
Japanese Fishing Vessels Disposal Committee	$	19,000
Damage claims re Japanese vessels	 80,000
Subsidy re fishing vessel construction in British Columbia.... 175,000
Sundries	 4,000
[Stage Direction]


Justice-
Prize Court	  5,000
Defence of Canada	Regulations	 66,000
War Measures Act	 4,000
Royal Commission re	Hong	Kong Expedition	 20,000
Labour-
Industrial training for war work	 4,510,000
Training aircraft mechanics	 2,050,000
Specialized training for aircraft manufacturing	 26,000
War emergency training-administration	  54,000
Vocational training for discharged members of the Canadian
armed forces	 41,000
National War Labour Board	 385,000
Wartime Bureau of Technical Personnel	 163,000
Personnel management training	  48,000
National Selective Service-
Director	 $	506,000
Mobilization division	 1,981,000
Man-power records	 549,000
Expenses of work done by Unemployment
Insurance Commission	 2,100,000
.	.	  5,136,000
Coordination of shiploading and unloading operations-
Halifax	 29,000
Universities-Accelerating courses and loans to	students....	320.000
Ontario farm labour service	 100,000
General labour transference in war industries and agriculture..	275,000
Transportation of harvest workers to and from Saskatchewan
and Alberta	 250,000
Harvest assistance to provinces	 64,000
British Columbia Security Commission	 3,875,000
Organization and operation of day nurseries,	etc	 75,000
Sundries	 50,000
Mines and Resources-
Mines and Geology-
Development of tar sands	 150,000
Geological surveys	 30,000
Oil explorations	 80,000
Strategic minerals-exploration and development work	 381,000
New metallurgical laboratory	 153,000
Explosives Division-
Administration of regulations re explosives	29,000
Assistance^ to Provinces re transportation facilities to various wartime mining
projects	;	 68,000
Metallic Minerals Division-
Services to war departments	 135,000
Sundries	 6,000
T , D	_	,	

 1,032,000
Lands, Parks and Forests-
National Parks Bureau-Alternative service work
camps	 150,000
Dominion Forest Service-
Alternative service work camps	 40.000
Alternative service work camps, B.C	 600'000
Internment and prisoners of war operations..	35,000
Forest Products Laboratories	 30,000
Bureau of Northwest Territories and Yukon Affairs-Expenses of liaison officers Alcan and Canol projects ....-	 9,000
278,000
95,000
17,451,000
[Mr. Dsley.l
864,000

The Budget-Appendix
Surveys and Engineering-
Engineering and Construction Service-
Alternative service work camps	 $	100,000
Prince Rupert-Terrace-Cedarvale highway

	3,500,000
Employment of persons of the Japanese race
and Japanese Nationals	 2,000,000

[Stage Direction]
Immigration-
Canadian interests in enemy and enemy controlled
territory	 100,000
Canadian interests abroad apart from enemy or
enemy controlled territory	   25,000
Grants to National Advisory Committee for
children from overseas	 50,000
Repatriation of wives and dependents of members
of the Canadian forces	overseas	 50,000
Evacuation of Canadian citizens from the Far
East	:	 150,000
Sundries	 33,000
Munitions and Supply-
Administration	
Expansion of war industiy	
Acquisition of United Kingdom interest in war plants
National Defence-Army Services-
Departmental administration	
Dependents' Allowance Board	
Dependents' Supplementary Grants Fund	
Army	
Chemical Warfare Experimental Station	
Directorate of Public Relations	
Internment operations	
Radio Services-Northwest Territories and Yukon Inspection Board1-United Kingdom and Canada..
National Defence-Naval Services-
Navy	
Royal Canadian Sea Cadets	
Temporary Building-Cartier Square
National Defence-Air Services-
Home War Establishment	
Overseas Establishment	\ ...4.
Departmental administration. Air	
British Commonwealth Air Training Plan	
Combined Training Organization	
National Harbours Board-
Halifax-[DOT]
Operation of fire boat Rouille	
Extension of pier 9, Richmond Terminal	
Moorings for ships under repairs	
Installation of additional car dumpers at Terminal Grain
Elevator	
Saint John-West Side wooden pile dock	
National Research Council- Special war activities ... Special war annex	
National Revenue-
Censorship of newspapers and other publications
408,000
[Stage Direction]
$	7,904,000
9.500,000
480.004.000
200,000,000
[Stage Direction]
	689,504,000
1,220.000
587.000
704.000 1,060,50S,000
374.000
111.000
1.864,000
289.000
12,500,000
[Stage Direction]
 1,078,157,000
206,675.000
262.000
885,000
[Stage Direction]
	207,822,000
192.869.000
22.306.000 129.000
71.523.000
340.133.000
[Stage Direction]
	626,960,000
49.000
155.000
16.000
120.000 10,000
[Stage Direction]
 350,000
1,786,000
236,000
[Stage Direction]
 2,022,000
4,000
886	COMMONS
The Budget-Appendix
National War Services-
Departmental administration	
War Charities-
General	
Auxiliary Services	
Salvage Division	
Women's Voluntary Services	
Canadian Firefighters for United Kingdom	
Committee on Co-operation in Canadian Citizenship
Censorship Division	
Government Office Economies Control	
National Film Board
[Stage Direction]
Special War Library	
Purchase of Supplies Revolving Fund	
Sundries	
Pensions and National Health-
96.000
44.000 6,000.000
313.000
14.000
800.000
13.000 1,280,000
5,000
40.000
40.000 101,000
Treatment-
Defence Forces	  4,025,000
Royal Canadian Mounted Police	 100,000
Pensions-Defence Forces	 2,500,000
Air Raid Precautions	 6,435,000
Investigations-Dependents' Allowance Board	 85,000
Inspection of industrial plants	   25.000
Laboratory of hygiene	    17,000
Public Health Engineering	 30.000
Food and Drugs	 13,000
Quarantine Service	 75,000
Committee on Demobilization	 10,000
Rehabilitation Benefits	 300,000
Processing of blood for dried serum	 175,000
Maintenance of non-resident seamen	 25,000
Committee on Reconstruction	   35,000
Detention Allowances-Canadian seamen	 65,000
Additions, alterations and improvements to departmental
hospitals	       1,085,000
Reserve Stores-Revolving Account	 100,000
Addition-John Street Laboratories, Ottawa	 10,000
Grants to the Canadian Nurses Association	 115.000
Hospital Unit adjacent Ottawa Civic Hospital	 250.000
Acquisition of land-Westminster Hospital, London, Ontario..	66.000
Sundries	 50,000
Post Office-
Canadian Postal Corps
Privy Council-	*
Statutory Orders and Regulations Division	 26,000
Wartime Information Board	 1,601,000
Public Archives-
Compensation to staff evacuated from abroad
Public Works-
Chief Architect's Branch-
Calgary, Alta.-Purchase of the Traders'
building, and alterations	 $	178,000
Ottawa-	_ _
Construction of annex to Daly building.. 55,000 Extension to Jackson building (including
purchase of land)	 211,000
National Research Council, Sussex Street
-temporary buildings		 26.000
Addition to temporary building No. 1..	35,000
Temporary building No. 5 (Preston and
Carling)	    lfi,000
Temporary building No. 6	(Sussex	Street)	118.000Temporary building No. 7	(Sussex	Street)	141,000

8,746,000
15,591,000
269,000
1,627,000
2,000

The Budget-Appendix
Public JForks-Concluded
Chief Architect's Branch-
Ottawa-
Temporary building No. 8 (Carling Ave.) Hostels for junior employees^ in the public service - construction and
furnishings	
Installation of sprinkler systems and fire
mains at temporary buildings	
Temporary building for Royal Canadian Mounted Police, north of Justice
building	
Office building, shooting range, etc., for
National Research Council	
Armoury accommodation for Canadian
Officers' Training Corps Units	
Converting furnaces in public buildings from
oil to coal firing	*....[DOT]....
Repairs, alterations, operation and maintenance of buildings	
Rental of premises occupied for war purposes
Furniture, etc. for war employees	
Sundries	
710.000
380.000
114.000
85.000
45.000
65.000
115.000
1.300.000
1.250.000
900.000
54.000
Dartmouth, N.S.-dredging at east side of pier. St. John Harbour (Courtenay Bay), N.B.-
dredging	
Shelburne, N.S.-wharf repairs	
Ste. Anne de Bellevue, Que-Military
Hospital	
Windsor, Ont-dredging	
Esquimalt, B.C.-Dry Dock	
Harrison River-improvements	
Sidney, B.C.-wharf improvements and repairs Seymour Narrows, B.C.-removal of ripple
rocks and construction of dam	
To provide for a 24-hour telegraph service on
the Pacific Coast	
Telephone service and unforeseen	
16,000
295.000
15.000
66.000
5.000
316.000
9.000
8.000
230.000
64,000
275.000
Royal Canadian Mounted Police-
Increased activities of the force due to war
Secretary of State*
[Stage Direction]
Dominion Plebiscite Committee	
Sundries	
5,797,000
1,299,000 
[Stage Direction]

68,000
13,000
Soldier Settlement of Canada
[Stage Direction]
Purchase of right-of-way, etc. re Canada-Alaska Highway
Trade and Commerce-
Canadian Shipping Board	 74,000
Export Permit Branch	 102,000
Shipping Priorities Branch	_	 16,000
Revolving chartering fund	 210,000
Gift of wheat to Greece	  4,211,000
Steamship Stabilization Fund	 436.000
Drawback claims for millers	 3,000,000
Transport-
Departmental administration	 8,000
Transport Controller's Office	 166,000
Director of Merchant Seamen, including administration,
Manning Pools, Nautical Schools and welfare facilities....	643,000
7.096.000
4.147.000
81,000
81,000
8,049,000
The Budget-Appendix
[Stage Direction]
Transport-Concluded
Air Service^-Special radio interception and monitoring services, etc.-
Radio service	 $ 1,097,000
Meteorological service	 806,000
Northwest air route	 [DOT]	49,000
Municipal terminal airports	 233,000
Moncton-Newfoundland Airline	 218,000
North Bay Airport-Additional development.	400,000
Civil Aviation-Extra airport control	 153,000
Canals service	
Marine service-*
Aids to navigation, including lightships...	117,000
War risk bonus to crews of Dominion steamers 50,000
Reconditioning C.G.S. Lady Grey	 209.000
Marine service steamers	 180,000
Dredging in St. Charles river, Que	 37,000
Nautical services	 37,000
Degaussing equipment for Canadian vessels..	390,000
Compensation to crews of Canadian vessels
for loss of personal effects	 100.000
Expenses re C.G.S. Montcalm to Russia		85,000
Sundries	 8,000
Railway service-
Additional harbour and terminal facilities at
Halifax	 666,000
Construction of buildings at St. John for the
United Kingdom	 75,000

[Stage Direction]
Total estimated direct War Expenditure, 1942-43, under War
Appropriation Acts	$ 2,802,765,000

[Stage Direction]
27.	Expenditures classified as Special Expenditures for the fiscal year 1942-43 are estimated to total .$30,673,000 compared with
863.976.000	for last fiscal year. The largest single item in this category is an amount of
523.045.000	covering payments of awards to farmers under the wheat acreage reduction plan. The estimated amount of administration costs of the wheat acreage reduction plan is $1,060,000. Advances to the Prairie Farm Emergency Fund and the costs of administration under the Prairie Farm Assistance Act are estimated at $700,000 and $212,000 respectively. The balance of $5,656,000 represents expenditures for Dominion relief projects, $4,822,000, and the Dominion share of government Dominion-Provincial relief projects, $834,000. The reduction of special expenditures over last year was accounted for by decreases in the following items: (1) Unemployment Relief, $2,844,000, (2) Prairie Farm Assistance Act, $11,359,000, (3) Wheat Acreage Reduction Plan, $6,529,000, and (4) Provision for reserve to meet deficits resulting from the operations of the Canadian Wheat Board, $12,571,000.

[Stage Direction]
This classification of expenditures comprises the losses of and the non-active advances to Government-Owned Enterprises, which were established before the war and are operated as separate corporations.
Canadian National Railways
28.	An examination of the five-year Revenue and Expenditure tables for the first three years shown therein, namely 1938-39, 1939-40 and 1940-41, shows deficits of the Canadian National Railways System amounting to $54,314,000, $40,095,000 and $16,965,000, respectively. These deficits are shown in the expenditure table. In the revenue table will be found amounts of $4,016,000 and $25,000,000 representing operating surplus of the system for the calendar years 1941 and 1942 respectively. These have been or will be applied to repayments of temporary loans from the Government. The annual report of the Canadian National Railways for the calendar year 1942 is not yet available and it is, therefore, not possible to give details of the operating revenues and expenses for that year.

The Budget-Appendix
The operating deficit of the Prince Edward Island Car Ferry and Terminals during 1942 is estimated at S591,000 compared with §424,000 in 1941.
Canadian National Steamships
29.	The operations of the Canadian National (West Indies) Steamships Limited for the
' calendar year 1942 will, it is estimated, result in a cash surplus of §997,000 compared with $1,205,657 for 1941. This operating surplus will be paid to the Government as interest on advances (current and arrears).
National Harbours Board
30.	The annual report of the operations of the National Harbours Board for 1942 is not yet available and it is not possible to give the operating income for that year. Interest on Government advances to the Board will, it is estimated, be received this fiscal year to the amount of $2,600,000, and this has been taken into account in arriving at the total of revenue under the heading "Return on Investments".
Financial assistance provided by the Government to the National Harbours Board and charged to Dominion expenditure, it is estimated, will total $672,000. This amount is made up as follows: $380,000 for non-aetive advances in respect of the deficit of the Jacques Cartier Bridge at Montreal; $22,000 for reconstruction and capital expenditures of the Halifax Harbour Commission; $170,000 for reconstruction and capital expenditures, and $96,000 for the redemption of debentures of the Saint John Harbour Commission; and the remaining $4,000 for miscellaneous capital expenditures at various ports.
The elevators at Port Colborne and Prescott operated at a profit during 1942 and it is estimated that $250,000 from these sources will be credited to Ordinary Revenue.
OTHER CHARtfes
31.	The total of Other Charges, the final main category of expenditures, is estimated at $65,633,000.
Included in this total is $25,000,000 which has been added to the reserve to meet possible losses on ultimate realization of assets treated as "active" in the Dominion's balance sheet. This is the same amount as was provided for in the Public Accounts for the last two fiscal years and the total now provided to meet such possible losses is therefore $75,000,000. The usual annual write-off from active assets of Soldier and General Land Settlement Loans is estimated at $75,000, and cancellation of Canadian Farm Loan Board Capital Stock is estimated at $8,000. These two write-offs, and
the provision for the further reserve of $25,000,000, result in a proportionate increase in the net debt of the Dominion.
32.	The estimated total write-off from nonactive assets, includes two items:	(a)
$4,500,000 to be written off from the Canadian National Railways Securities Trust Stock representing line abandonments for the calendar year, 1942; and (b) $50,000 representing the estimated yearly established1 losses on Seed Grain and Relief Accounts administered by the Department of Mines and Resources. As both of these items are non-active assets and are therefore already included in the net debt of Canada, they are offset by similar amounts on the Revenue side under "Other Receipts and Credits".
33.	The remaining debit items, classified as Other Charges, and totalling $36,000,000, relate to the Canadian National Railways Securities Trust Stock. The amount of this stock which represents the Dominion's equity in the Canadian National Railways is expected to be increased by $25,000,000 due to the surplus earnings of the System for 1942 and also by $14,000,000 due to the estimated capital gain in respect of Canadian National Railways sterling securities redeemed during the year at a price below par in Canadian funds. The Canadian National Railways Securities Trust Stock is carried in the Dominion's books as a non-active asset, and as the two items just mentioned necessarily appear as credits under the heading Special Receipts and Credits, the net debt of Canada is not thereby changed.

[Stage Direction]
34.	The grand total of expenditure for the fiscal year, 1942-43, under the various categories enumerated, namely Ordinary Expenditures, Capital Expenditures, War Expendi-ture_s, Special Expenditures, Losses of and nonactive advances to government-owned enterprises, and Other Charges, is estimated at $4,469,958,000.
35.	The following table shows the percentage distribution of estimated revenues and expenditures for a number of important items. Receipts from various taxes and other revenue sources, after deducting the $100,000,000 of income and excess profits taxes estimated as refundable after the war, are shown as percentages both of total revenues and of total expenditures. Similarly, several of the main items of expenditure or groups of such items are shown as percentages both of total expenditures and of total revenues. The purpose of this table is to enable broad conclusions to be drawn as to the relative burdens imposed on the public treasury by the war and the main services or obligations of government.
The Budget-Appendix

[Stage Direction]
(000 omitted)
Revenues	Amount (estimated)	Percentage of total Revenues	Percentage to total ExpendituresOrdinary Revenue-	s 842,500 430.000 14.000 118.000 142,090 230,000 94.000 153,395 11,890	% 38-15	% 18-8519 47 0 63	9 620-315-34	2-646 43	3-1810-42	5-144-26	2-11Manufacturers, transportation and communication, stamp	6-95	3-430-54	0-27
2,035,875 113,750	92-19	45-55
		5-15	2-55
			
	2,149,625 58,775	97-34	48-10
		2-66	1-31
			
	2,208,400	100-00	49-41

[Stage Direction]
(000 omitted)
Expenditures	Amount (estimated)	Percentage of total Expenditures	Percentage to total Revenues*	%	%Ordinary Expenditure-	Interest on Public debt	185,000	4-14	8-38Cost of loan flotations and amortization charges	13,530	0-30	0-61Public Debt Charges	198,530	4-44	8-99Subsidies to provinces	14,487	0-32	0-66Compensation to provinces under taxation agreements	94,900	2-12	4-29Old Age Pensions	29,985	0-67	1-36Civil pensions and superannuation	406	0-01	0-02Pensions and after-care of soldiers (War 1914-18)- Pensions, war and military	39,716	0-89	1-80Treatment and after-care of returned soldiers	13,124	0-29	0-59Total	52,840	1-18	2-39Agriculture	8,717	0-20	0-40Fisheries	1,811	0 04	0-08Legislation	3,952	0-09	0-18Mines and Resources	11,077	0-25	0-50Post Office	45,439	1-02	2-06Public Works	12,143	0-27	0-55Transport	16,662	0-37	0-76All other	74,813	1-68	3-38Total Ordinary Expenditure	565,762	12-66	25-62Capital Expenditure-	Railways	11	Public Works	3,851	0-09	0-18Total Capital Expenditure	3,862	0-09	0-18
[Stage Direction]
The Budget-Appendix

[Stage Direction]
1942-43-Concluded
(000 omitted)
Expenditures	Amount (estimated)	Percentage of total Expenditures	Percentage to total Revenues$	%	%War Expenditure	3,802,765	85-07	172-19Special Expenditures- Relief expenditures	5,656	0-13	0-25Prairie Farm Assistance including wheat acreage reduction	25,017	0-56	1-14Total Special Expenditure	30,673	0-69	1-39Government Owned Enterprises- Losses charged to Consolidated Fund- Prince Edward Island Car Ferry and Terminals	591	0-01	0-03Loans and Advances non-active- National Harbours Board	672	001	0-03Total Government Owned Enterprises	1,263	002	0-06Other Charges- Write down of assets	29,633	0-66	1-34Canadian National Railways Securities Trust Stock	36,000	0-81	1-63Total Other Charges	65,633	1-47	2-97Grand Total Expenditures	4,469,958	100-00	202-41

[Stage Direction]
36.	As total net revenues for the fiscal year 1942-43 have been estimated at $2,208,400,000 and total expenditures at $4,469,958,000, the estimated over-all deficit (or increase in net debt) for the year is $2,261,558,000.

[Stage Direction]
Active Assets
37.	In addition to the estimated expenditures for the year, as already outlined, disbursements are made for the acquisition of investments which are treated as active assets in the Public Accounts. The active assets are deducted from the total direct debt in arriving at the figure of net debt. The net increase in active loans and investments for 1942-43 is estimated at $516,808,000 as compared with $640,805,000 in 1941-42. This increase is fully itemized in the table in section 54.
Loans to Provinces
38.	As was shown in the Public Accounts for the fiscal year ended March 31, 1942, loans made to the Western Provinces under authority of relief legislation and outstanding at the close of that year totalled $157,275,021.49. No loans have since been made, and during
the current year repayments to January 31, 1943, were received from the Provinces of Manitoba, Saskatchewan and Alberta in the amounts of $288,674.09; $50,986.87 and $38,500 respectively. The repayments left the	net
amount outstanding at $156,896,860.53, divided by Provinces as follows:
Manitoba	$ 24,928,540 09
Saskatchewan	
71,290,433	08Alberta	
25,933,500	00British Columbia	
34,744,387	36
[Stage Direction]
39.	During the current fiscal year, the Province of Prince Edward Island paid in full the outstanding balance of $23,500 on housing loans made at the close of the last war (1914-18). The Province of Nova Scotia reduced its indebtedness on the same account by $70,000. The only loan now outstanding with respect to these advances is one of $37,000 due by the Province of Nova Scotia and maturing in April, 1943.
40.	Subsidy overpayment to the Province of Alberta secured by a Treasury Bill of the Government of Alberta was reduced during the year by a payment by the Province of $68,750, thereby reducing this indebtedness to $400,000.
The Budget-Appendix
[Stage Direction]
Canadian National Railways
41.	It is estimated that the Government will have made during the fiscal year net advances to the Canadian National Railways in the amount of $180,938,995, classified as follows:
Advances-
Under Canadian National Railways Refunding Act, 1938-for retirement of
maturing issues	$
Under Canadian National Railways Financing and Guarantee Act, 1940- Purchase of Grand Trunk Railway Company of Canada 4 per cent
Perpetual Consolidated Debenture Stock	
Under Canadian National Railways Financing and Guarantee Act, 1941-
Purchase of securities from Canadian holders	
Under Canadian National Railways Financing and Guarantee Act, 1942- for capital expenditures and retirement of miscellaneous obligations.. Under Canadian National Railways Financing and Guarantee Act, 1942-
Purchase of securities from Canadian holders	
Under The War Appropriation (United Kingdom Financing) Act, 1942-
Purchase of securities from Government of the United Kingdom___________
Under The War Appropriation Act, 1942-for capital purposes in connection with oil drilling campaign	
Under Trans-Canada Air Lines Act-for capital purposes	
59,315,908
472,116
9,889,898
8,143,989
18,261,613
61,820,197
400.000
850.000
Total Advances	
Repayments-
Application of 1942 Surplus-
Advances
[Stage Direction]
Financing and Guarantee Act, 1939	
Financing and Guarantee Act, 1940	
Financing and Guarantee Act, 1941	
Trans-Canada Air Lines	
Total Surplus	
War Appropriation Act, 1941, advance for Working Capital
Total Repayments	
Net Advances (estimated)
[Stage Direction]
Under the authority of The War Appropriation Act, 1942, it is estimated that at March 31, 1943, the total amount of railway equipment purchased by the Dominion and leased to the Canadian National Railways, will reach $16,964,000. The Railway Company repaid instalments aggregating $1,509,141 under the terms of hire-purchase agreements relating to equipment purchased by the Government in the fiscal years 1935-36 and 1936-37; 1939-40 and 1940-41.
Canadian Pacific Railway Company
42.	The Canadian Pacific Railway Company paid in advance all outstanding instalments of principal, amounting to $3,526,154, on account of a hire-purchase agreement relating to certain equipment purchased by the Government in the fiscal years 1935-36, 1936-37 and 1937-38, and in the amount of $9,288,057 relating to certain equipment purchased by the Government in the fiscal year 1939-40 and 1940-41.
Advances to Commodity and Other Companies
43.	Advances to Commodity Corporations and other companies made by the Department of Munitions and Supply, and referred to in Section 21, are estimated at $15,371,000 for 1942^43. The following table gives net advances outstanding March 31, 1942; net advances during 1942-43, and net advances outstanding as of March 31, 1943, with respect to each Company:
[Stage Direction]
The Budget-Appendix
Name	Products or Service	Net Advances Outstanding March 31, 1942	Net Advances 1942-1943 (estimated)	Net Advances Outstanding March 31,1943 (estimated)$ cts.	$ cts.	$ cts.Government Owned and Operated Companies-	1,190,454 97	Atlas Plant Extension,	General Munitions	6,533,483 04	7,723,938 01Ltd., Welland, Ont.	Research E nterprises,	General Munitions	285,000 00	-285,000 00	-Ltd., Leaside, Ont.	Fairmont Company, Ltd., Toronto, Ont.	Commodities and Raw Materials (rubber and hides)	11,955,394 73	-2,665,069 71	9,290,325 02Melbourne Merchandising Co. Ltd., Toronto. Ont.	Commodities and Raw Materials (Wool)	5,531,319 10	12,015,609 52	17,546,928 62Plateau Co. Ltd., Toronto, Ont.	Commodities and Raw Materials (Silk)	957,729 86	2,394,951 15	3,352,681 01Other Companies-	Algoma Steel Corp. Ltd., Sault Ste. Marie, Ont.	Pig Iron and Rolled Steel Products	4,000,000 00	4,000,000 00John Bertram & Sons Co.	Machine Tools	311,723 41	-311,723 41	-Ltd., Dundas, Ont.	Dominion Steel & Coal Co. Ltd., Sydney, N.S.	Ingots and Rolled Steel Products	1,576,967 74	1,90S,393 04	3,485,360 78English Electric Co. of Canada, Ltd., St. Cath-	Transformers, Switch Gears and Motors	776,700 00	-169,800 84	606,899 16arines, Ont.	Steel Company of Canada, Ltd., Hamilton, Ont.	Pig Iron and Ingot Steel... .	2,545,000 00	-	2,545,000 00A. C. Wickman, Ltd., New Toronto	Gauges, Carbide Tips and Tools	75,000 00	-75,000 00	-Marine Industries, Ltd., Sorel, Quebec	Reconditioning barges as coal carriers	-	600,000 00	600,000 00Union Drawn Steel Co.	Cold steel	-	768,252 00	768,252 00Ltd., Hamilton, Ont.	34,548,317 88	15,371,066 72	49,919,384 6044.	In addition to advances to corporations as shown in the foregoing table, advances were made to The Commodity Prices Stabilization Corporation Limited, The Canadian Wool Board Limited, and Wartime Salvage Limited. The amounts shown as advances to these corporations which have been taken in to the accounts as Active Assets represent the estimated cash and inventory holdings of the corporations as at March 31, 1943. The balance of advances made are included as war expenditures. The assets with respect to each corporation as of March 31, 1943, are estimated to be:The Commodity Prices Stabilization Corporation	$ 5,000,000The Canadian Wool Board	
10,800,000Wartime Salvage, Limited	
700,000
Other Loans and Investments
45.	The indebtedness of the Foreign Exchange Control Board to the Dominion may, unless certain repayments occur before March 31, 1943, reach $400,000,000 and this amount- is shown as an active asset in the
preliminary balance sheet of the Dominion for the current fiscal year.
46.	Under authority of The War Appropriation (United Kingdom Financing) Act,
1942,	sterling balances in an amount equivalent to $700,000,000 (at the exchange rate of $4.45 to the pound), were converted into a Canadian dollar obligation of the Government of the United Kingdom, which, under the provisions of the act, is non-interestbearing until after the termination of the war.
47.	Pursuant to an agreement between Canada and the Union of Socialist Soviet Republics, it is. estimated that by March 31,
1943,	Canada will have advanced $6,000,000 on a credit for the purchase by Russia of Canadian wheat and flour. This advance bears interest at the rate of 3 per cent per annum.
48.	The Canadian Farm Loan Board, it is estimated, will have repurchased during the fiscal year from the Government out of surplus funds, $1,800,000 of its 34 per cent Bonds, due January 2, 1960, thereby reducing the amount of its bonds held by the Government to $27,400,000. Capital stock to be written off is estimated at $8,000.
The Budget-Appendix
[Stage Direction]
49.	Ia the period April 1, 1942, to Jaauary 31, 1943, 494 loans were approved under the National Housing Act for an amount of $1,457235, bringing the total approvals to January 31, 1943, to $78,241,380. In this period the Dominion advanced $1,175,936, and borrower's repayments amounted to $961,523, making net advances for the period of $214,413. The net amount of loans under the authority of the National Housing Act and the Dominion Housing Act, estimated to be outstanding on the books of the Dominion at March 31, 1943, is $16,500,000. Loans under the authority of the National Housing Act are made jointly by the Government and approved lending institutions, and are secured by first mortgage or hypothec, running jointly to the Government and an approved lending institution. Previous to December 8, 1942, loans were normally made not in excess of 80 per cent of the cost or appraised1 value of the completed property whichever was the lesser. In the case of owner-occupied houses, where the lending value did not exceed $2,500, a loan might be made up to 90 per cent of the said lending value. On December 8, 1942, an Order in Council was passed enabling loans to be made up to 90 per cent of the lending value for any house where the lending value does not exceed $3,200, and on a sliding scale down to 80 per cent when the lending value does not exceed. $4,000. Since January 1, 1940, new applications for loans are received only in respect of the construction of houses containing one self-contained dwelling place and where the loan does not exceed $4,000. Under Vote No. 452 of the Appropriation Act, No. 5, 1942, an amount of $1,000,000 was appropriated to provide for advances under the National Housing Act, not exceeding (with the advance made jointly by the approved lending institution) $3,200 in respect of any one house, for the construction of
houses where the Minister is satisfied that permanent houses can be constructed to relieve a serious housing shortage without threatening to create a post-war surplus.
50.	Under the Municipal Improvements Assistance Act, 1938, no further loans were approved during the current fiscal year. From the inception of the Act, total loans approved, less amounts not required to complete projects, aggregated $7,052,000. For the current fiscal year it is estimated that the amount of repayments will exceed advances by $376,000, and that the net investment as of March 31, 1943, will be $5,600,000. These loans bear interest at the rate of 2 per cent per annum, and are amortized over a period not longer than the estimated useful life of the project. The province in which the municipality is situated guarantees the payments for interest on and amortization of each loan.
51.	For the current year it is estimated that advances to the National Harbours Board for capital construction purposes at the ports of Montreal and Vancouver will total $422,000. Payments of loans made in previous years amount to $679,000, leaving a net credit for the year of $257,000.
52.	Loans for Soldier and General Land Settlement, it is estimated, will be reduced by payments of $1,333,000, and in addition it is estimated $75,000 will be written off and charged to Consolidated Fund.
53.	The indebtedness of the Canadian Broadcasting Corporation to the Dominion on account of loans as at March 31, 1942, was $503,398.77. This amount has been paid in full with interest during the current year.
54.	The following statement shows in summary form the net estimated changes in active investments for the current year, together with comparable figures for the four preceding years:
[Stage Direction]
The Budget-Appendix
LOANS AND INVESTMENTS, ACTIVE (000 omitted)
-	1938-39	193940	1940-41	1941-42	Estimated 1942-43	Foreign Exchange Control Board	325,000	400,000	Cr.	325,000Government of The United Kingdom,	The War Appropriation (United King-	dom Financing ) Act, 1942	-	-	-	-	700,000Government of The Union of Soviet	Socialist Republics	-	-	-	-	6,000Canadian Wool Board, Limited	-	-	-	-	10,800Wartime Salvage Limited	-	-	700Commodity Prices Stabilization Cor-	poration	-	-	-	-	5,000Department of Munitions and Supply-	Advances to commodity corporations	and other companies	-	-	9,891	24,657	15,371Canadian Farm Loan Board	2,834	2,288	838	Cr.	975	Cr.	1,800Dominion and National Housing Acts-	Loans	2,657	4,393	3,805	2,644	246Municipal Improvements Assistance Act,	1938-Loans	815	3,111	1,718	332	Cr.	376Provinces-Housing Loans, 1919	Cr.	105	Cr.	699	Cr.	1,634	Cr.	740	Cr.	93Provinces-under relief legislation	14,985	12,566	1,514	Cr.	217	Cr.	379Province of Saskatchewan Power Com-	mission	-	-	58	Cr.	4	Cr.	4Province of Alberta-Subsidy overpay-	ment	-	-	-	-	Cr.	69National Harbours Board	692	947	Cr.	333	Cr.	980	Cr.	257Canadian National Railways	3,841	21,479	105,573	251,723	130,940Soldier and General Land Settlement	Loans	Cr.	749	Cr.	1,116	Cr.	1,139	Cr.	1,521	Cr.	1,333Railway equipment purchased	Cr.	1,399	8,135	14,781	Cr.	1,586	2,640Sinking Funds	4,336	Cr.	2,798	Cr.	61,963	Cr.	5,233	-Canadian Broadcasting Corporation	Cr.	50	700	Cr.	364	Cr.	283	Cr.	503Canadian Pacific Railway	Cr.	211	Cr.	211	Cr.	211	Cr.	981	-Bank of Canada Capital Stock	820	-	-	-	Central Mortgage Bank Capital Stock..	-	250	-	-	-Canadian Government Merchant Marine	-	-	750	Cr.	750	-Net Advances	28,466	49,045	398,284	666,086	541,883Less write-offs-	Soldier and general land settlement	loans	-895	-1,643	-1,011	-271	-75Canadian Farm Loan Board-Capital	stock	-14	-11	-12	-10	-8Loans to Province of Saskatchewan-	Drought Area Relief, 1934-35	-	-1,374	-	-	Reserve for possible losses on ultimate	realization of active loans and advances	-	-	-25,000	-25,000	-25,000Net change in active investments	27,557	46,017	372,261	640,805	516,800

[Stage Direction]
55.	During the fiscal year ending March' 31, 1943, it is estimated that the Government will issue obligations in the amount of $2,456,449,471 (including an increase of $30,000,000 in Treasury Bills outstanding but not the amount of recurring issues of Treasury Bills made to refund outstanding Treasury Bills and only including the net amount of Deposit Certificates issued during the year). With the exception of one $90,000,000 issue
sold in New York to provide in part for the redemption prior to maturity of $100,000,000 Five Per Cent Bonds, all issues were sold in the Canadian market. During the fiscal year it is estimated that Dominion obligations in the amount of $462,168,089 will be paid out of the proceeds of the new issues. The remainder of the proceeds of the new issues namely, $1,994,281,382 less cost of flotation, will provide for direct and indirect war expenditures.
[Stage Direction]
The Budget-Appendix
[Stage Direction]
56.	The following table gives details of the issues, including the prices at which they estimated amounts and terms of the new were sold:

[Stage Direction]
Issue Date	Maturity Date	Interest Rate	Where Payable	Price	Yield at	Amount IssuedTo Public	To Govern- ment	Public Price	Price to Government	1942	%	s	$	%	%	sApril 15	..April 15, 1943	1	Canada	-	100-00	-	1-00	250,000,000April 15	..April 15. 1944	n	Canada	-	100-00	-	1-50	100,000,000Mar. 1 (* *).	..Sept. 1, 1944	u	Canada	-	100-00	-	1-50	92,831,000July 1....	..July 1, 1943	4	Canada	-	100-00	-	4-00	33,293,471(School lands)	Nov. 1	..May 1, 1946	n	Canada	100-00	(x)	1-75	w	(s) 145,800 000Nov. 1	..Nov. 1, 1956	3	Canada	100-00	GO	3-06	to	(*) 845,700,0001943	Jan. 15	..Jan. 15. 1948	21	New York	100-00	99-25	2-50	2-66	30,000,000Jan. 15	..Jan. 15, 1953	3	New York	100-50	99-125	2-94	3-10	30,000,000Jan. 15	..Jan. 15, 1958	3	New York	98-50	96-875	3-13	3-27	30,000,000Various	Non-Interest	Canada	100-00	100-00	Nil	Nil	(!) 1,825,000L	Bearing Certi-	fi cates.	Various	War Savings	Canada	-	-	(*) 3-00	(*) 3-00	(*) 77,000,000Certificates.	Various	.Various	i	Canada	-	100-00	-	0-75	(*) 790,000,000(Deposit Certi-	ficates)	2,426.449,47130,000,0002,456,449,471
' (*) Issued in Juno, 1942.
(*) Estimated amount.
(*) Yield to investor if held to maturity, seven and one-half years after issue date, (x) Final costs of Third Victory Loan not yet available.
57.	The Third Victory Loan was sold during the fiscal year under review. This loan was the largest loan ever issued for cash in Canada. It was issued in the amount of $991,500,000 and was sold to 2,041,610 subscribers.
58.	The Dominion instituted the sale of Deposit Certificates to the Canadian chartered banks in July, 1942. These Deposit Certificates bear interest at.the rate of f of 1 per cent per annum and mature twenty-six
weeks after date of issue. It is estimated that these Certificates will be sold to a total amount of $995,000,000, of which $205,000,000 have been redeemed out of the proceeds of the Third Victory Loan, leaving $790,000,000 estimated to be outstanding at the close of the fiscal year.
59.- The following table gives the details of Dominion of Canada estimated bond redemptions in the fiscal year ending March 31, 1943:
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Maturity or Call Date	Interest Rate	Where Payable	AmountMay 1, 1942	% 1 U 2 4 3 2i 5 21 3i 4 3} 3 (*) Nil	$ 250.000.	000 1,682,000 239,000 33,293,471 40,409,000 10,000,000 100.000.	000 (x) 435,566 (x) 734,432 (x) 932,672 (x) 657,948 (x) 21,849,000 (x) 1,935,000May 15, 1942	June 1, 1942	July 1, 1942	(School Lands) October 15, 1942	
January 4, 1943			New York	 New York		
March 15, 1943				
October 1, 1947 p)				
May 1, 1955 (*)				
			
September 1, 1958 (*)				
July 1, 1963 («)				
War Savings Certificates				
Non-Interest Bearing Certificates				
			
			$462,168,089
(x) Estimated.
(*) This issue was vested by the Treasury of the United Kingdom in January, 1942. The amount (at par of exchange) purchased in the fiscal year 1942-43 was cancelled.
(J) These issues were vested by the Treasury of the United Kingdom in August, 1941. The amounts (at par of exchange) purchased in the fiscal year 1942-43 were cancelled.
(') Yield to investor if held to maturity seven and one-half years after issue date.
60.	The fortnightly issue of three months Treasury Bills was continued during the fiscal year. The latest issue (February 26, 1943), was sold at a discount of 0-501 per cent. The estimated amount of these Treasury Bills outstanding at the close of the fiscal year is 8300,000,000, an increase of $30,000,000 during the year.
61.	It is estimated that the average rate of interest on the Dominion's direct funded debt (including Treasury Bills) outstanding as at March 31, 1943, will be about 2-60 per cent. This compares with 2-90 per cent on the debt outstanding at the close of the preceding fiscal year and is undoubtedly the lowest average rate in the Dominion's history.

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62.	It is estimated that the gross unmatured funded debt (including Treasury Bills) of the Dominion outstanding at the close of the current fiscal year, will amount to $7,861,196,000. Other liabilities consisting chiefly of Annuities, Superannuation and Insurance Funds, Post Office Savings Bank
deposits, and various trust and contingent funds outstanding as at the same date are estimated at $1,031,944,000. The gross liabilities of the Dominion therefore are expected to total $8,893,140,000 as at March 31, 1943. On the other side of the balance sheet will be found active assets estimated at $2,586,361,000, consisting of cash and various active loans and investments, less a reserve of $75,000,000 to provide against ultimate loss on their realization.	If, therefore, we deduct the
amount of the net active assets from the amount of the gross liabilities, we arrive at a figure of $6,306,779,000 representing the estimated net debt of the Dominion as at March 31, 1943. This net debt shows an increase over the corresponding figure for the close of the preceding fiscal year of $2,261,558,000, which of course is the estimated amount of the over-all deficit for the fiscal year 1942-43.
63.	The following is a preliminary statement or balance sheet showing the liabilities and assets of the Dominion at March 31, 1943, as estimated:
[Stage Direction]
The Budget-Appendix
[Stage Direction]
LIABILITIES-MARCH 31, 1943 (estimated)
Bank Circulation Redemption Fund	$
Post Office Money Orders, Postal Notes, etc., outstanding	
Post Office Savings Bank deposits	
Insurance and Superannuation Funds-
Government Annuities	S 185,000,000
Insurance Fund-Civil Service	 15,900,000
Insurance Fund-Returned Soldiers	 21,400,000
Retirement Fund	 15,000,000
Superannuation Funds	 68,500,000
Unemployment Insurance Fund	 108,430,000
Trust Funds-
Indian Funds	
Common School Funds	
Contractors' Securities Deposits. Other Trust Funds	
15.000.	000
2.678.000
9.100.000
16.000.	000
4,016,000
7,000,000
23,000,000
414,230,000
42,778,000
Contingent ana Special Funds	 360,000,000
Department of National Revenue-
Income and Excess Profits Taxes refundable after the war	 100,000,000
Province Debt Accounts	 11,920,000
Funded Debt and Treasury Bills unmatured	 7,861,196,000
Floating Debt-
Funded Debt matured and outstanding	 14,000,000
Interest due and outstanding	 10,000,000
Outstanding cheques	 45,000,000
[Stage Direction]
7,930,196,000
8,893,140,000

[Stage Direction]
(estimated)
Cash, working capital advances and other current assets	$
Special Deposits	
Bank of Canada Capital Stock	
Central Mortgage Bank Capital Stock	
Foreign Exchange Control Board Loan	
Government of The United Kingdom-Loan under The War Appropriation
(United Kingdom Financing) Act, 1942	
Government of The Union of Soviet Socialist Republics-Loan	
Canadian Wool Board, Limited	
Wartime Salvage, Limited	
Commodity Prices Stabilization Corporation	
Department of Munitions & Supply-
Advances to commodity corporations and other companies	
Recoverable Advances-
United Kingdom and other Allied Governments-
Agriculture (Food)	 4,615,000
Munitions and Supply-War Supplies, Ltd	 60,000,000
National Defence-Army	  1,731,000
Internment Operations	 2,750,000
Navy	 11,404,000
Air	 8,566,000
Royal Air Force Special Schools	 38,052,000
British Commonwealth Air Training Plan-
United Kingdom Equipment	 88,575,000
Combined Training Organization-
Australia's share	 16,917,000
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Canadian Farm Loan Board-Advances and Capital Stock... Canadian National (West Indies) Steamships, Limited-Loan
Dominion and National Housing Acts-Loans	
Municipal Improvements Assistance Act, 1938-Loans	
New Westminster Harbour Commission-Loan	
Loans to Provinces-
Housing Loans, O.C. of December 3/18 and amendments	$	37,000
Unemployment Relief Loans	 156,896,000
Province of Saskatchewan-Power Commission....;	 50,000
Province of Alberta-Subsidy overpayment	 400,000
Loans to National Harbours Board-
Montreal	 60,100,000
Vancouver	 25,060,000
204,616,000
3.000.	000 5,920,000
250.000
400.000.	000
700.000.	000
6.000.	000
10,800,000
700.000 5,000,000
49,919,000
232,610,000
34.729.000
450.000
16.500.000 5,600,000
275.000
157,383,000

85,160,000

The Budget-Appendix

[Stage Direction]
(estimated)
Loans to Foreign Governments-
Greece	$	6,525,000
Roumama	 24,329,000
Railway Accounts-
Canadian National Railways-
Advances-Refunding Act, 1938	 111,141,000
Advances-Financing and Guarantee Act, 1940-
Grand Trunk Railway Debenture
, Stook	 106,408,000
Advances-Financing and Guarantee Act, 1941	 6,698,000
Advances-Financing and Guarantee Act, 1941-
Purchase of securities	 9,890,000
Advances-Financing and Guarantee Act, 1942	 s', 144^000
Advances-Financing and Guarantee Act, 1942-
Purchase of securities	 18,262,000
Advances-The War Appropriation (United Kingdom Financing) Act,
1942-Purchase of securities	$ 253,423,000
Temporary Loan-The War Appropriation Act, 1941	 13' 907', 000
Temporary Loan-The War Appropriation Act, 1942-Vermilion Oil Field, Alta	 400,000
Purchase of equipment leased to-
Canadian National Railways-
1936 Agreement	 4,137,000
1940	Agreement	
12,896,0001941	Agreement	
17,366,0001942	Agreement	
625,000
Soldier and General Land Settlement Loans..
Seed Grain and Relief Advances	
Canadian Government Railways Working Capital
Bond Holding Account	
Province Debt Accounts	
Unamortized Discount and Commission on Loans.
30,854,000
528,273,000
35.024.000
32.480.000
2.400.000
16.772.000
21.550.000
2.296.000
72.800.000
Less-Reserve for possible losses on ultimate realization of active loans and advances
2,661,361,000
75,000,000
2,586,361,000
Net Debt, March 31, 1943 (estimated)	 6,306,779,000
Net Debt represented by-	'
(A) Expenditures for Capital Purposes and Non-Active Assets (estimated) March 31,
Public Works-
Canals	 240,289,000
Railways	 425,959,000
Miscellaneous	 311,752,000
Military .Property and Stores	 10 579 non
1 erntonal Accounts	 9 gg@ qqq
Canadian Pacific Railway (old)	62 791 000
Canadian National Railways Securities Trust Stock	 298)783*000
Canadian National Railway Stock	' 18* 000* 000
Loans-Non-Active-	... '	'
Canadian National Steamships	 13 872 000
National Harbours Board-
Chicoutimi	 3,838,000
Churchill	 10,000
Halifax	 12,474,000
Montreal (Jacques Cartier Bridge)	 5,195,000
Qu.ebec	 27,766,000
Saint John	 16,817,000
1 hree Rivers	 3,742,000
q * ,.	, ^	0 x ,	

 69,842,000
ooldier and General Land Settlement	 16,526,000
Seed Grain and Relief Advances	 296'000
Saskatchewan Seed Grain Loans Guarantee Act, 1936	 2,637*000
Seed Grain Loans Guarantee Act, 1937	 7) 136,000
Miscellaneous Non-Active Accounts	'"	3)537)000
(B) Consolidated Fund-	$1,493,888,000
Balance, Consolidated Fund brought forward from March 31, 1942.$2,587,277,000 Excess of expenditure over revenue, less amounts charged under A
above, fiscal year ending March 31, 1943 (estimated)	 2,225,614,000
[Stage Direction]
 4,812,891,000
[Stage Direction]
72537-57*
The Budget-Appendix
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64.	The following table shows the various standing as at March 31, 1943, and the annual obligations included in the unmatured funded interest charges thereon: debt of the Dominion estimated to be out-

[Stage Direction]
ANNUAL INTEREST THEREON___________________
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Chargesi	Canada	$ 250,000,000 00	$ 2,500,000 002)	C anada	20,000,000 00	500,000 00Julv 1 .	4	Canada	33,293,470 85	1,331,738 83H	Canada	250,000,000 00	3,750,000 00Oct 15	5	Canada	147,000,100 00	7,350,005 002}	New York	.30,000.000 00	675,000 001}	C anada	100,000,000 00	1,500,000 002	Canada	90,625,000 00	1,812,500 00n	Canada	150,000,000 00	2,250,000 0041	Canada	50,000,000 00	2,250,000 00n	Canada	200,000,000 00	3,000,000 002j	Canada	20,000,000 00	500,000 001945 Mar. 1...	2	C anada	105,000,000 00	2,100,000 002J	New York	76,000,000 00	1,900,000 00Oct 15	4	Canada	88,337,500 00	3,533,500 001946 Feb. 1 .	Canada	45,000,000 00	2,025,000 00i!	Canada	*145,800,000 00	2,551,500 00Dec. 15	2	Canada	193,286,000 00	3,865,720 001947 Oct. 1...	2§	London	1250,705 75	6,267 642*	New York	30,000,000 00	750,000 00' Feb 1	31	Canada	50,000,000 00	1,625,000 002}	Canada	269,879,000 00	6,072,277 501949 Feb 1	31	Canada	50,000,000 00	1,625,000 0031	Canada	33,500,000 00	1,088,750 00Oct 15	31	Canada	138,322,000 00	4,841,270 001950 Feb. 1	3}	Canada	50,000,000 00	1,625,000 001951' Feb 1	31	Canada	50,000,000 00	1,625,000 003	Canada	643,534,250 00	19,306,027 50Nov 15 .	3}	Canada	60,000,000 00	1,950,000 0031	Canada	50,000,000 00	1,625,000 00Oct 1	3	Canada	324,945,700 00	9,748,371 00rw 15	4	Canada	56,191,000 00	2,247,640 003	New York	30,000,000 00	900,000 003	Canada	669,658,900 00	20,089,767 0031	London	15,170,844 97	168,052 463	Canada	40,000,000 00	1,200,000 00Tune l	3	Canada	55,000,000 00	1,650,000 0041	Canada	43,125,700 00	1,940,656 503	Canada	*845,700,000 00	25,371,000 0041	Canada	37,523,200 00	1,688,544 003	New York	30,000,000 00	900,000 003	Canada	88,200,000 00	2,646,000 004	London	13,517,064 67	140,682 5941	Canada	276,687,600 00	12,450,942 001950 Nov 1	41	Canada	289,693,300 00	13,036,198 504	New York	100,000,000 00	4,000,000 0031	New York	48,000,000 00	1,560,000 0031	London	13,751,632 05	121,928 0431	Canada	54,703,000 00	1,777,847 503	Canada	55,000,000 00	1,650,000 001QfV7 .Tnn 15	3	New York	55,000,000 00	1,650,000 001QfiR Nov. 15	3	New Y ork	40,000,000 00	1,200,000 00[DOT]517	Canada	45,000,000 00	232,650 00[DOT]514	Canada	45,000,000 00	231,300 00[DOT]512	Canada	45,000,000 00	230,400 00[DOT]508	Canada	55,000,000 00	279,400 00[DOT]501	Canada	55,000,000 00	275,550 00f [DOT] 501	Canada	55,000,000 00	275,550 00Deposit Certificates	[DOT]75	Canada	1790,000,000 00	5,925,000 007,661,695,968 29	199,122,036 06War Savings Certificates	**3	Canada	1186,500,000 00	5,595,000 00Canada	14,000,000 00	-Non-Interest Bearing Certificates..	Canada	19,000,000 00	-,	7,861,195,968 29	204,717,036 06Payable in Canada	$7,409,505,720 85	94-25%Payable in New York	439,000,000 00	5-59%12,690,247 44	0-16%$7,861,195,968 29	100-00%* Preliminary figure.	t Estimated rate.	+ Estimated amount,
[DOT][DOT] 3 per cent on purchase value if held to maturity (7i years from date of issue).
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The Budget-Appendix

[Stage Direction]
65.	Bonds and debenture stocks bearing the guarantee of the Dominion and outstanding in the hands of the public are estimated to total $716,348,777 as of March 31, 1943, a decrease of $102,492,940 during the fiscal year under review. This decrease is accounted for mainly by the purchase of Canadian National Railway Company securities from the Government of the United Kingdom, as provided for under The War Appropriation (United Kingdom Financing) Act, 1942, and the redemption of guaranteed railway securities by means of loans from the Government.
66.	There will also be outstanding at the
close of the fiscal year other contingent liabilities assumed under Relief, Seed Grain and other legislation.	'
67.	Under the terms of an Order in Council dated July 10, 1942, the Commodity Prices Stabilization Corporation, a Government-owned Corporation, was authorized to guarantee certain advances and interest thereon obtained by any person from a chartered bank in order to purchase coal, coke or briquettes in the summer of 1942. The liability of the Corporation is limited to twenty per cent of the aggregate amount of advances made by each bank, but not exceeding in the aggregate $5,000,000. The amount of these advances outstanding on January 31, 1943, was $622,828, and the contingent liability of the Corporation was $124,566.
68.	Under the terms of an Order in Council dated October 9, 1942, the Commodity Prices Stabilization Corporation was authorized to guarantee certain advances, obtained by any person engaged in the production of logs or lumber, from a chartered bank. The liability of the Corporation is limited to fifteen per cent of the aggregate amount of advances made by each bank, but not exceeding in the aggregate $2,500,000. The amount of these advances outstanding on January 31, 1943, was $238,288, and the contingent liability of the Corporation was $35,743.
69.	Guaranteed bank advances to the Canadian Wheat Board outstanding as at February 13, 1943, on account of wheat amounted to $91,880,239. This amount constitutes the Board's gross liability to the banks and is related mainly to the purchase of wheat of the 1939, 1940, 1941 and 1942 crops. The guarantee of the Dominion to the Winnipeg Grain and Produce Clearing Association Limited referred to in previous budget speeches is still outstanding. However, no liability accrues from day to day in connection with this guarantee as margin deposits are made to the Clearing Association.
70.	By Order in Council passed in 1942 the Canadian Wheat Board was empowered to deal in flaxseed, soybeans, oats and barley. In order to finance these operations, guaranteed bank advances were obtained from certain chartered banks. The amount of these guaranteed advances outstanding on February 13, 1943, was flaxseed $7,444,191; soybeans $1,032 and oats and barley $227,257.
71.	Before operations under the Home Improvement Loans Guarantee Act were discontinued (October 1, 1940), 125,724 loans had been made by banks and other approved loaning institutions to home owners under the terms of this Act and the total amount of such loans was $49,959,055. The Dominion's contingent liability arising out of these loans is limited to 15 per cent of the aggregate of such loans made by approved lending institutions, but as the balance of these loans estimated to be outstanding on March 31, 1943. will have been reduced to $3,000,000, the contingent liability of the Government is limited to this amount. Up to January 31, 1943, 1,047 loss claims for an aggregate amount of $361,503 had been paid. In terms of total losses to total volume of loans, this loss ratio is only -724 of one per cent.
72.	Under the provisions of the Appropriation Act No. 5, 1942, the Home Extension Plan was created. It provided for loans not exceeding $2,000,000 by banks under regulations similar to those of the Home Improvement Loans Guarantee Act for the purpose of financing the creation of additional self-contained housing units by alterations or additions to a building used solely or partially as a dwelling at the time application is made for the loan. The general public are now beginning to take advantage of the Plan and twenty-six loans have been made. The total amount of these loans to February 15, 1943, is $55,385. The Dominion's contingent liability arising out of these loans is limited to 15 per cent of the aggregate of such loans made by the banks or $8,307. There have been no claims for loss made by the banks.
73.	Under the Dominion Housing Act, 1935, and the National Housing Act, 1938, the Government has accepted and is accepting certain obligations arising out of its contracts with approved lending institutions which, while not expressed in the form of a guarantee, may nevertheless be regarded as contingent or indirect liabilities. The manner in which losses in respect of any loan are to be borne by the Dominion and the lending institution is fixed by the contract. The general principle is that the Dominion bears two-thirds of the loss if at the time the loss is sustained the principal amount of the loan
The Budget-Appendix
[Stage Direction]
repaid, less any other amounts due, is more than the amount advanced by the Dominion. In the case of small loans (for amounts not in excess of $4,000 in the case of a single family dwelling place or not in excess of $700 per habitable room in the case of a multiple family dwelling), the share of the loss to be borne by the Dominion is not more than 80 per cent, and not less than 50 per cent of the loss. The above provisions apply to loans made under the National Housing Act and its predecessor the Dominion Housing Act. Under the National Housing Act, a new provision has been added to encourage the making of small loans in such small or remote communities and in such districts or other communities as may be designated by the Minister of Finance in any contract. In respect of such loans, the Dominion has agreed in contracts with certain lending institutions to pay losses sustained by any such lending institution up to certain amounts determined by the contract which are not less than 7 per cent of the total amount of such loans made in such areas by the lending institution.
Order in Council of December 5, 1939, provided that after January 1, 1940, applications would be received only for loans for construction of houses containing one self-contained dwelling place and where the loan does not exceed $4,000.
Under Vote No. 452 of the Appropriation Act No. 5, 1942, an amount of $1,000,000 was appropriated to provide for advances under the National Housing Act, not exceeding with the advance made jointly by the approved lending institution, $3,200 in respect of any one house, for the construction of houses where the Minister is satisfied that permanent houses can be constructed to relieve a serious housing shortage without threatening to create a post-war surplus. Loans to the number of * 19,015 have been approved at January 31, 1943, under the Dominion Housing Act, 1935, and the National Housing Act, 1938, in the amount of $78,241,380. Losses recorded and paid to January 31, 1943, amounted to $2,209, covering the Dominion's proportion of the loss on four loans. This amount represents total losses to date under both the Dominion Housing Act, 1935, and Part I of the National Housing Act, 1938. These losses are offset in part by a profit of $428 realized by the sale of ten properties. The net loss to January 31, 1943, is therefore only $1,781.
74.	The following is a statement of bonds and debenture stocks and other indebtedness guaranteed by the Dominion, estimated to be outstanding on March 31, 1943:

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Date of Maturity			Issue	Interest Rate	Estimated Amount Outstanding
				%	$
Feb.	i,	1944....	Canadian National	21	15,500,000May	i,	1944....	Canadian National	3	35,000,000Jan.	15,	1946....	Canadian National	21	15,000,000July	1,	1946....	Canadian Northern	61	23,754,000April	1,	1948....	New Westminster Harbour Commissioners	41	700,000Dec.	15,	1950....	Canadian National	3	50,500,000Sept.	1,	1951....	Canadian National	41	48,022,000Feb.	1,	1952....	Canadian National	3	20,000,000Aug.	1,	1952....	Saint John Harbour Commissioners	5	667,953Feb.	15,	1953....	Canadian National	3	25,000,000July	10,	1953....	Canadian Northern	3	1,131,580Feb.	1,	1954...	Canadian National	5	50,000,000Mar.	1,	1955....	Canadian National (West Indies) Steamships	Limited	5	9,400,000June	15,	1955....	Canadian National	41	48,518,000Feb.	1,	1956....	Canadian National	41	67,368,000July	1,	1957....	Canadian National	41	64,136,000July	20,	1958....	Canadian Northern	31	5,140,323Jan.	15,	1959....	Canadian National	3	35,000,000May	4,	1960....	Canadian Northern Alberta	31	553,257May	19,	1961....	Canadian Northern Ontario	31	4,157,623Jan.	1,	1962....	Grand Trunk Pacific	3	26,465,130Jan.	1,	1962....	Grand Trunk Pacific	4	7,999,074July	1,	1969....	Canadian National	5	56,694,000Oct.	1,	1969....	Canadian National	5	57,719,500
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The Budget-Appendix
BONDS AND DEBENTURE STOCKS GUARANTEED BY THE DOMINION GOVERNMENT AS AT MARCH 31, 1943-Concluded
Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
Nov. 1, 1969	 Feb. 1, 1970....		5	19,000,000 17,333,000 356,541
		5	
		2	
Various dates 1943-54		City of Saint John Debentures assumed by Saint		
			678,729 1,673,934 1,104,167 7,725,985 49,981
		5	
		5	
		4	
	Northern Railway of Canada Debenture Stock.,	4	
			
			S 716,348,777

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Estimated Principal Amount Outstanding Mar. 31, 1943
Bank Advances, re Province of Manitoba Savings Office	t	5,953,004
Province of Manitoba Treasury Bill	 4,805,723
Province of British Columbia Treasury Bill	 626,534
Bank Advances, re Canadian Wheat Board (Feb. 16, 1943):
Wheat	 91,880,239
Flaxseed	 7,444,191
Oats and Barley	 227,257
Soybeans	,	 1,032
Winnipeg Grain and Produce Clearing Association Ltd. Day to day margins of
the Canadian Wheat Board (closed out daily)	 -
Bank advances guaranteed under Seed Grain Loans Guarantee Act, 1938	 Not determined.
Loans made by approved lending institutions under Dominion Housing Act,
1935, and National Housing Act, 1938	 Indeterminate.
Loans made by approved lending institutions under The Home Improvement
Loans Guarantee Act, 1935	 3,000 000
Loans made by approved lending institutions under the Home Extension Plan
(Feb. 15, 1943)	  8,307
Deposits maintained by the chartered banks in the Bank of Canada (Feb. 17,
1943)	 254,832,99'
Bank Advances, re Government War Contracts-Department of Munitions and
Supply (January 31, 1943)	 1,829,607
Bank Advances, re coal, coke or briquette purchases-Commodity Prices
Stabilization Corporation,	(January 31, 1943)	 124,566
Bank Advances, re production of logs or lumber-Commodity Prices Stabilization
Corporation, (January 31,	1943)	 35,743
Guarantee under Dominion-Provincial Taxation Agreements of Provincial receipts from gasoline taxes at amounts received in fiscal years ending nearest December 31, 1940	 Indeterminate.
[Stage Direction]
The Budget-Appendix


[Stage Direction]
Calendar Years
	1926	1928	1932	1937	1939	1941		1942	
Group I-Comprehensive Indexes									
(1935-39=100)									
Physical volume of business	87	102	69	107	107	165	202Volume of manufacturing	89	100	66	109	105	192	243Mining	55	64	59	104	118	215	219Forestry	84	87	57	117	103	135	131Car loadings	131	148	88	106	102	129	137Electric power output	46	61	61	106	108	128	142Employment (a)	100	111	88	114	114	152	158National income	111	130	68	106	112	160	184Retail sales	(e)	(e)	92	105	105	136	154Group II.-Price Lerels and Financial Factors	(1926=100)	Wholesale prices	100	96	67	84	76	90	96Farm product prices	100	101	48	87	64	71	82Cost of living (b)	122	121	99	101	102	112	117Common stock prices (b)	91	145	51	116	92	68	64Bank deposits	100	115	100	120	132	152	167Active currency circulation	100	105	81	103	111	198	268Group HI.-Gross Value of Production In Major	Industries ($ millions)	Agriculture	1,715	1,806	767	1,039	1,205	1,379	(c)	2,134Forestry	556	586	349	494	466	(c)	716	(c)	770Fisheries	73	71	34	51	53	(o)	83	(c)	104Mining (including Smelting)	277	313	265	663	663	(c)	785	(c)	792Construction	386	488	133	352	373	640	(c)	547Manufacturing	3.101	3,582	1,981	3,626	3,475	(c) 6,394	(c)	8,009Group IV.-Foreign Trade and International	Transactions (J millions)	Exports (gold excluded)	1,277	1,364	498	1.012	936	1,640	(e)Net non-monetary gold exports (d)	30	40	70	145	184	204	(e)Total exports, including non-monetary gold . .	1,307	1,404	568	1,157	1,120	1,844	(e)Imports (gold excluded)	1,008	1,222	453	809	751	1,449	(e)Total trade	2,315	2,626	1,021	1,966	1,871	3,293	(«)Export balance	+299	+182	+115	+348	+369	+395	<«>Net tourist receipts	(e)	(e)	(e)	90	78	87	(e)Net interest and dividends going abroad	201	221	262	246	254	236	([DOT])(a)	1926=100.(b)	1935-39 = 100.(c)	Estimated.(d)	Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Canada on the basis of official trade returns.(e)	Not available.	.


[Stage Direction]
-	Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.Group I.-Comprehensive Indexes (a) (1935-30=100) Physical volume of business	.1940	114	109	107	119	119	122	123	130	132	133	142	1431941	144	145	144	153	156	164	167	172	178	179	184	1941942	192	193	189	198	196	200	204	206	206	207	208	221Volume of manufacturing	.1940	130	119	115	125	126	126	130	136	138	140	141	1411941	151	153	156	164	165	169	176	179	191	192	200	2071942	223	226	213	231	232	236	246	249	253	263	263	276Mining	.1940	116	110	115	138	120	133	1*0	158	152	155	164	1541941	160	156	156	150	155	180	225	258	284	300	291	2611942	258	248	234	227	211	196	213	217	226	196	192	210Forestry	.1940	121	107	109	114	122	138	140	134	131	128	127	1161941	131	130	134	132	127	128	137	138	149	141	132	1411942	138	148	148	138	133	131	128	121	116	127	117	128Carloadings	.1940	116	112	98	112	119	118	125	118	102	108	113	1231941	126	123	125	129	139	134	140	128	119	121	124	1391942	150	140	136	140	142	141	148	130	117	125	126	145Electric power output	.1940	112	114	107	112	123	124	129	119	114	109	109	in1941	117	116	116	126	129	123	131	126	136	137	138	1391942	143	138	142	144	146	147	146	143	140	138	137	140Employment (b)	.1940	121	119	118	118	119	121	122	124	126	130	133	1361941	139	140	141	150	151	153	155	156	156	158	160	1651942	172	172	172	175	174	172	172	173	172	172	175	182Retail sales (c)	.1940	90	90	106	110	120	121	103	113	114	132	136	1741941	102	102	119	136	143	134	122	134	137	152	147	2021942	128	120	145	155	159	154	137	148	154	174	165	213Group II.-Price Levels and Financial Factors- (1926=100) Wholesale prices	.1940	83	83	83	83	82	82	82	83	83	83	84	841941	85	85	86	87	89	90	91	92	93	94	94	941942	94	95	95	95	95	96	96	96	96	97	97	97Farm product prices	'.	.1940	70	70	71	72	68	64	65	63	64	65	67	671941	67	68	69	70	70	71	72	72	73	74	74	751942	77	78	79	80	80	82	81	81	84	86	86	87
c©
§
The Budget-Appendix

CANADIAN ECONOMIC CONDITIONS-Concluded

[Stage Direction]
-	Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.Cost of living (d)	1940	104	104	105	105	105	105	106	106	106	107	108	1081941	108	108	108	109	109	110	112	114	115	116	116	1161942	115	116	116	116	116	117	118	118	117	118	119	119Common stock prices (d)	1940	91	90	90	88	73	65	66	69	76	74	74	701941	71	66	67	66	64	64	68	68	71	69	69	671942	67	65	62	61	62	63	62	62	63	65	68	71Bank deposits (e)	1940	142	143	139	140	139	137	136 -	135	138	140	1*0	1391941	146	150	149	151	154	155	154	15*	153	151	153	1541942	156	160	166	166	160	156	156	163	169	178	189	181Active currency circulation (el	1940	119	120	126	125	127	143	154	159	168	173	173	1781941	169	175	182	186	187	194	198	206	211	217	222	2301942	225	234	241	245	250	254	265	278	291	305	309	317Group III.-Other Significant Factors	Exports (f) ($ millions)	1940	91	72	84	85	111	112	102	111	103	107	119	991941	89	100	103	118	163	147	171	150	143	140	164	1521942	152	168	177	170	235	(j)	(j) 	(j)	y)	(j)	(j)	(j)	Imports (f) ($ millions)	1940	71	71	77	86	101	91	90	97	86	109	102	1021941	98	90	108	106	128	115	128	138	137	141	134	1261942	142	120	115	142	(j)	y)	(j)	j)	y)	(j)	(j)	(j)	Net non-monetary gold exports (g) ($ millions)	1940	22	12	16	18	17	15	16 .	18	17	19	17	171941	19	15	20	14	16	18	17	13	21	17	15	171942	15	17	16	14	(j)	(j)	(j)	0)	(j)	(j)	(j)	(j)	Construction contracts awarded i,$ millions)	1940	9	12	12	26	28	39	29	41	52	26	55	171941	27	25	14	24	41	86	32	36	39	29	23	191942	13	11	18	22	24	47	32	32	30	21	22	10War contracts awarded (h) ($ millions)	1940	36	43	31	21	30	61	92	76	72	152	67	1031941	87	56	67	192	124	80	128	96	54	134	59	1031942	84	113	58	113	108	118	113	124	127	151	113	114War expenditure ($ millions)	1940	13	24	(i) 33	10	24	40	39	59	67	82	72	841941	88	83	(i) 104	46	90	65	108	99	91	111	120	1241942	145	133	(i) 208	142	205	138	190	173	207	176	210	219
n
o
[Stage Direction]


o
[Stage Direction]
(a)	Indexes seasonally adjusted unless otherwise indicated.
(b)	As at first of month. 1926 = 100.
(c)	Unadjusted.
(d)	1935-39 = 100.
(e)	Based on daily average figures; index unadjusted.
(f)	All gold excluded; includes exports of foreign produce.
lg) Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Canada on the basis of official trade returns.
(h) Contracts awarded by Department of Munitions and Supply on Canadian Account, including Capital Assistance; December, 1942, subject to revision, fi) Includes year-end expenditure.
(j) Because of wartime restrictions trade figures are no longer published.
The Budget-Appendix

The Budget-Mr. Harris (Danjorth)
Mr. J. H. HARRIS (Danforth):: Mr. Speaker, let me at once .congratulate the Minister of Finance (Mr. Ilsley) upon his presentation and upon the cold clarity with which he set out our present position in Canada, finishing up with fire which some of us did not think was in him. To my mind it is necessary to carry through his injunctions until such time as we in this chamber are privileged to emphasize the last few words of what the minister had to say. It will be my privilege to approach this problem one week hence. In the meantime I say: Let the words of the minister sink into the minds and hearts of our Canadian people. In my opinion he perhaps did not go far enough when he exhorted the people of Canada to face this financial burden which they must bear-they should also face the necessity of more production.
I am not in accord with the idea enunciated in the first paragraphs of his speech, namely, that we have almost reached the utmost in our production. Give us a kind1 Providence for another season in agriculture such as we had last year. Inspire men in industry of every kind, inspire all our people with a recognition of what we are facing. I am satisfied that we have not reached an all-out production in Canada.
When the force of the taxation sinks in; when the extra cent postage stamp reminds our people of their responsibility, that will help. But it is not enough. This chamber is charged with the responsibility of telling our people the position. It will not do to wait for some disaster overseas. Therefore, in approaching this problem, I say to the Canadian people that the fiery eloquence of the Minister of Finance in the last few paragraphs of his speech should be read and pondered and sink in so that we shall all be ready and anxious to play our full part.
The reasoning in parts was, of course, a little confounding; and to my mind the logic was elementary most of the way through. At the same time we must face up to the facts of the situation. I hope that while this matter is being thought over during the next six or seven days there will not be any tendency on the part of our people, ourselves, or the fourth estate to leave the impression that everything is going all right. Let us resolve to apply ourselves to the task. If we do. the words of the minister to-night will come to fruition in deeds, more production and greater war effort by the Canadian people.
On motion of Mr. Harris (Danforth) the debate was adjourned.
72537-58j



POST-WAR RECONSTRUCTION APPOINTMENT OF SPECIAL COMMITTEE ON RECONSTRUCTION AND REESTABLISHMENT

[Stage Direction]
The house resumed consideration of the motion of Mr. Mackenzie (Vancouver Centre) for the appointment of a select committee to study and report upon the general problems of reconstruction and reestablishment which may arise at the termination of the present war.
Mrs. DORISE W. NIELSEN (North Battle-ford) : I have but a few general remarks to make this evening before the minister closes the debate upon the motion to set up a committee of this house to inquire into the problems of rehabilitation and reconstruction in the post-war period.
Without any shadow of doubt, the people of this nation will feel that it is their right to decide their own future after the winning of the victory. To-day thousands of them are fighting in every field; they are engaged in a life and death struggle, first of all, for their existence as a nation, and second, for their right to be assured of democratic progress in the future.
The democratic progress of any nation depends to a very great degree upon the will of the people for progress. It depends to a great degree upon the people's understanding of the direction which has to be taken before progress can be achieved. Canadians during the last ten years have learned much. To-day they have both the will and the understanding to go on. Personally I am of opinion that when. we as a nation are rapidly approaching the great crisis when we shall be called upon to exert every effort to win the final victory, it would be well to have had committees of this house set up-even now, at this stage in the war's progress-to try to determine some of our more immediate problems. I should like to have seen a committee of this house draw up a bill of rights for labour, for there is yet much by way of contribution which labour must make before the final victory is won. I should like to have seen the committee take upon itself the function of determining further ways and means of strengthening the relations between government and management and labour. Also, a committee could have delved into the difficulties which still face agriculture, and might have drawn up a programme commensurate with the needs of our agricultural people. And these committees should recommend legislation to write on the statute books of this country what is necessary to ensure a permanent foundation which will stand us in good stead when the days of peace follow.
Our ability to go on after this war to security, to social and economic reestablish-
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ment, depends to a large degree upon what we as a nation accomplish now. The foundations of our national life must be laid now if the future is to have stability. Those of us who look back over this last period of years, know that the world is moving with great rapidity, moving over a course which I hope it will never have to re-travel. To be realistic we must acknowledge that as a nation we shall emerge from this conflict as a strong capitalist state; yet I would dare to say that as such we shall emerge from this war very much different from the nation we were in 1939.
To win this war the government has seen fit to impose upon private enterprise certain controls, and for the time being private enterprise has seen fit, on account of war emergency, to accept those controls. The question which faces any committee on post-war reconstruction is one of the degree of control which shall be considered necessary in the future. The question which comes before any committee of this kind is, whether in the general interests of the nation these mild controls necessary to our war-time endeavour shall continue so that it shall be possible to raise the levels of living and security for all our people, or whether private enterprise and corporate interests in Canada will be strong enough after the winning of this war to turn back the clock, to destroy all we have built during these years of war for national unity. If they do that there will be, according to all the laws of economics, but one course for us to follow-the road backward, a road upon which we shall travel toward an era of wide and unrestricted competition, resulting in another period of chaos such as we went through in the 'thirties.
A committee on reconstruction has to consider this question of controls before it can embark upon any ideas of spacious living for the future. In my opinion one of the greatest bulwarks of strength upon which we' can rely as a nation is the determinations set forth by the Atlantic charter and the hope that we have with the other united nations of collaboration with them in the post-war period to bring not only cultural but economic and social advancement to the peoples of all the united nations. In a post-war reconstruction era we, as a nation, must strive for the maximum of peaceful orderly development. That, Mr. Speaker, is the goal for which we must strive. During the war the government of this country has not been afraid to embark upon new ways of doing things. It has not been afraid to try new measures. We face, after this war is over, a new world with new

conditions, conditions greatly of our own making. We must not then cling to old ways just because they are familiar to us. In times of reconstruction after the war this government must face problems in as realistic a manner as it has done in the war period and not be averse to trying new ways and new things to do.
Canada, of course, was the first nation to try price control for the curbing of inflation and did so with a great measure of success. It will be a wonderful thing in the history of these coming years if the government of Canada could be one of the first to introduce new controls to ensure the gainful employment of her own people as the first requisite for post-war reconstruction. Ways can be found.
The Atlantic charter which pledges to the peoples of the united nations continued cooperation and collaboration between them was born of war emergency. In my opinion the future trade and peace relations of this nation with others depend upon the continuation of collaboration and cooperation between the united nations. Any proposals brought forward by the committee on reconstruction must be built upon the realistic and solid implementation of the Atlantic charter and all that it stands for.
I would say again, Mr. Speaker, that whatever is brought forward by way of suggestions for post-war reconstruction by the committee must be made known at the earliest possible moment to the Canadian people. I am one of those who believe that no proposals of any committee can have life and health in them unless they have the will and the cooperation of the people of this nation behind them. For this reason I would advocate that any suggestions of this committee be brought before the people of Canada so that wide public discussion may take place upon the issues which face us. Only in that way can recommendations from the various groups in this country be brought before the committee and be embodied in its proposals.
I wonder if the majority of the people today realize how much of our thinking in pre-war days was dominated by the propaganda of our enemy. One of the great aims of Hitler during the pre-war years was to foist upon the people of the world the lie that the peoples of the Union of the Soviet Socialist Republics and their leaders were the enemy of the people of the world. To the degree that it was possible Hitler endeavoured to isolate the people of the U.S.S.R. from the rest of the world, and to a great degree he was successful. But it would be too bad if, after the

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experience of these war years, we, as a nation, were to slip back into some of our pre-war thinking. It would be too bad if, after winning the military victory which we all believe will be possible for us, we should allow Hitler to win an ideological victory by continuing to destroy the faith and the confidence which have been established among the united nations during the war.
To-day the people of the U.S.S.R. and the people of Britain have a pact of collective security for the maintenance of peaceful relations for twenty years into the future. I hope very much that this nation will adhere to that pact and do everything possible to make it become a reality. To my mind it is one of the greatest guarantees for the advancement of social and economic progress in this country and all the other countries working with us.
I should like to suggest that this committee on reconstruction beware of the outcry which is likely to be raised from certain elements within this country and perhaps elsewhere against all measures of reform which will be labelled as socialist or red in their content. A situation already exists and is possibly known to members of this house where disruptive elements are tending to destroy the confidence which the united nations have between each other. Editorials are already appearing in our newspapers trying to bring to the forefront of the minds of our people fear and apprehensions as to what will be done by the U.S.S.R. after the war is over, as to what she will desire to have as her share of war spoils and what she will try to dictate in the post-war world. Such slanderous attacks as these must be guarded against and against them such a committee as we are setting up must be warned. Not only that, but within the very boundaries of this nation slanderous attacks are already being made upon labour and upon people's organizations. These are being made by the voices of appeasement which in years gone by strove to cause disunity among us and to spell defeat before we had even attempted to gather our forces and fight. They will now try to turn the clock back by labelling every reform as revolutionary. We must guard against this and see to it that every reform which is possible within the boundaries of a capitalist nation is brought forward for the people of this country who are planning and working for it. The voices of appeasement must be stilled, now and forever.
A marvellous opportunity lies before the people of Canada. We can emerge from this war stronger; we can rise as a nation to
greater heights than we have ever reached before, remembering, of course, always that the true prosperity of a nation must be judged by the living standards of its people. Their education, their culture, their health, their security and the political and economic freedom which they enjoy-those are the things and those alone which spell the greatness of a nation. It is not the profits of its industry, it is not the assets of its banks, which spell the prosperity and greatness of a nation.
The committee must see to it that those new Canadians who are born to us in the coming years are born into homes where they are greeted with happy expectancy. Members of this committee must see to it that the children of this nation are regarded by our people as its most cherished and precious possession. They must see to it that the children of all our people have an equal opportunity to develop their talent and use it for the national good. They must see to it that our young people are happy in the knowledge that society has a place for them and for their creative efforts. And they must see to it that all our people have the assurance of security to establish homes and have children as is their natural right. Our returned men and women must be made to feel the tangible and concrete gratitude of this nation; the maimed and the sick and the blind and the aged and the widowed must be cared for and live as honoured citizens.
These things can be done by a nation which has the will to do them. The poet Browning has said that a man's reach should exceed his grasp. In the matter of reconstruction I say, let us reach out for the stars. Nothing short of that must satisfy us. Let us build a Canada, not where selfish interests are allowed to work for "me and mine," but one in which all the people of Canada walk forward together as one nation, confident that they are working for "us and ours".
Hon. IAN A. MACKENZIE (Minister of Pensions and National Health): With the stirring review of the nation's finances by my colleague the Minister of Finance (Mr. Ilsley) ringing in our ears, I scarcely think it would be fair to the house, and possibly not fair to myself, that I should indulge at this time in any extended or comprehensive review of this debate. I rose for one purpose, namely to extend my own thanks to the members of the house, and especially to the hon. members who took part in this debate, for some of the most constructive contributions that I have heard during twenty-three years of parliamentary life. There was hardly a partisan note or tinge in
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the whole debate. I am sure that what was said here will be of immeasurable benefit to the committee when it is constituted.
Just a word to recall the history of these various committees. On December 2, 1939, or only about a month after the war broke out, the first cabinet committee on demobilization and rehabilitation was formed. Shortly afterwards, in February, 1941, the terms of reference of that committee were extended to appoint a committee on reconstruction, and the actual personnel of that committee was formed on September 2, 1941. As a result of the formation of the cabinet committee there was appointed a general advisory committee on demobilization and rehabilitation, and that committee with ten subcommittees has been very largely responsible for all the work that has been done in the last two or three years in preparing for the reestablishment of our fighting men, when they return. Someone said last night, unknowingly, that very little had been done in three years. I wonder if that hon. member had forgotten that the pensions committee sat in this house in 1941 and that as a result of their deliberations there was enacted by this parliament what I believe to be with all its flaws-there are some flaws-the finest piece of pension legislation in any country in the world to-day.
Last year there were passed in this house three pieces of legislation-and not by order in council: the Vocational Training Coordination Act, the Compulsory Reinstatement Act, and as a result of eighteen months' deliberation by one of these committees, the Veterans' Land Act, which I think is one of the finest acts that we have on the statute books of Canada. Although the work of many of these committees has been temporarily concluded, we are still working on the question of priorities in demobilization, still working on the question of an improved scheme of returned soldiers' allowances, and administration is being improved as fast as we can from day to day. That is touching on the angle of reestablishment.
Touching on the angle of reconstruction I wish to pay my tribute to the excellent work done by those six distinguished Canadians who not only have been studying with about one hundred assistants and consultants all the problems of our national economy in Canada, but have touched upon every single problem that has been mentioned in this debate: soil erosion; rural electrification; the Ganaraska watershed, and other waters in Manitoba and flowing into the St. Lawrence and all over Canada; agriculture, with the cooperation and excellent advice of my distinguished colleague

the Minister of Agriculture (Mr. Gardiner); mines and resources with the assistance of my colleague the Minister of Mines and Resources (Mr. Crerar); public works under the direction of the chief engineer of the Department of Public Works; employment boards under the distinguished leadership of Mr. Tom Moore, whose services unfortunately we -were not able to retain for the last few months, but we have another excellent gentleman from Vancouver whom I know well, Mr. Percy Bengough, who will carry on and do all he can to see that labour is protected. Someone on the opposite side said the other evening that labour might be forgotten. Labour will have its proper and adequate representation. So will agriculture. We are trying to represent the interests of all the people of Canada. That work is going on. We now have a subcommittee of the economic advisory committee coordinating the efforts of the various committees, and they are all reporting to my distinguished and right hon. leader the president of the privy council of Canada (Mr. Mackenzie King). Thus it will be seen that we have now a coordinated effort in regard to the problems of reconstruction.
Reconstruction is not the same as social security. Reconstruction is the positive side of the question. Reconstruction is a challenge to government to develop positive policies, to ensure that gainful employment, or if you like, optimum employment, is available for those who are able and willing to work. Social security comes in only for the very young or the very old or those who are sick or hurt or maimed or invalided. That is a challenge to government; and that is why the Beveridge report, brilliant and able as it is, is no complete solution to the problems of the nation. The Beveridge report comes only in as a safeguard of social security when positive measures of reconstruction have to a certain extent failed. Complete cooperation between both reconstruction and social security policies is requisite, and that is what the government is now seeking to obtain through the efforts of committees of this parliament-and they are supreme over any committees outside. Their recommendations will have a tremendous influence with the government. The hon. member for Cape Breton South (Mr. Gillis) asked the other evening as to the status of this committee.
I say that when this committee makes recommendations to the government they will receive the most earnest and careful attention of the government. This committee on reconstruction will do exactly what the pensions

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committee did two years ago; it will call in officials of the reconstruction committee, officials of the economic advisory committee, people from other parts of Canada and outside, from the provinces if you like, and will make careful recommendations to the government. The government will be then possessed of the facts and will determine its policies. It is ridiculous to ask any government at the present time to declare policies in regard to reconstruction. All any government can do at this stage is to have ideals and objectives, and that I think we all have in this house.
Free enterprise was condemned by the hon. member for Rosetown-Biggar (Mr. Coldwell) and commended by others. Well, Mr. Speaker, I am afraid my position is halfway between the two schools of thought. I think free enterprise has gone in the history of this world. I think controlled enterprise must be the guiding maxim for future governments of mankind. We must never let capital run rampant again, and we must never again have the exploitation of natural and human resources that we sometimes had in days gone by. Therefore this is a programme of preparedness.
Once again I thank the house for the support it has given this resolution, and I thank hon. members for the kindly comments which many of them were good enough to extend to its sponsor.
Motion agreed to.


Hon. J. E. MICHAUD (Minister of Transport) moved:: That standing order 63 of the House of Commons, relating to the appointment of standing committees of the house, be amended by adding to the standing committees of the house for the present session a standing committee on railways and shipping owned, operated and controlled by the government, to which will be referred accounts and estimates and bills relating thereto of the Canadian National Railways, the Canadian National (West Indies) Steamships, and Trans-Canada Air Lines for the present session, for consideration and report to the house; provided, however, that nothing in the resolution shall be construed to curtail in any way the full right of discussion in committee of supply; and that the said committee consist of: Messrs. Donnelly, Dubuc, Durocher, Emmerson. Ferland, Gray, Hanson (Skeena), Harris (Danforth), Hazen, Howden, Howe, Jackman, Lockhart, McCulloch, Maybank, Nicholson, Parent, Poulijt, Roebuck, Ross (Middlesex East), Sanderson, Shaw, Sissons.


Thomas Vien: Is it the pleasure of the
house to adopt the motion? Carried.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, I should like to take two or three minutes to deal with this motion.


Thomas Vien: I declared the motion
carried, but perhaps the hon. gentleman did not hear me.


Thomas Langton Church: I think before this committee is appointed the minister should say a word as to the procedure which will be followed. When this committee was first appointed, in the days of the late Mr. Graham, who took a great deal of interest in this work, it was made a rule that any private member of the house interested in the rialway question could attend the meetings of the committee and ask questions. That practice was followed for four or five years. I understand, however, that this rule has now been abrogated, with the result that members of this house have little opportunity of offering suggestions or constructive criticism in connection with our great public utility. We are at present conducting a war. From the beginning of the war to the end of 1940, according to a return tabled for me they received from the government for war work for 16 months, a period of a year and four months, the Canadian Pacific Railway $2,750,000, and the Canadian National $2,500,000, or more than they received in the four years of the last war. With all due respect I contend that this committee should consider suggestions and even resolutions presented by private members. For instance, I believe the government would be well advised to consider whether soldiers cannot be given better treatment. The transport officer issued an order cutting down certain train services during February, which order I understand is to be extended to cover this month as well. No doubt that is quite proper in view of the heavy winter we have experienced, but why should extra trains be provided at week-ends for civilians and not for soldiers? I understand that some of our boys in Camp Borden have not left that camp since Christmas. Many of those soldiers are family men. I know of one whose wife had a child the other day, and he was not able to be with her.
Then I think there should be some provision for considering special cases of soldiers. For example, many of the trains I have seen occupied by soldiers, at Brockville and many other points, are most unsatisfactory. But while soldiers are prohibited from travelling, we see in the newspapers almost every other day where some young Canadian athlete is
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transferred from Hamilton to Victoria to take part in games; then he shows up back in Hamilton again, and finally he goes to Halifax. During all this time the soldiers are not allowed to travel at all.
I do not wish to hold up this resolution at any length, but this public utility has cost the taxpayers of Canada a great deal of money and we are never given an opportunity to discuss the affairs of this system except perhaps two or three days before the session closes, when we may have an hour or so devoted to the committee's report. In view of all the money the railways are making I think the public are entitled to some reduction in fares. Soldiers are not permitted to hitchhike ; they may not go more than fifty miles on a bus, and as a result soldiers going to Camp Borden are dumped off at a point about twelve miles from Barrie and left to cover the remainder of the distance as best they can. I think the railways should be able to afford to carry soldiers and their families free over weekends. As it is now, it costs a soldier $2.25 to go home to Toronto from Camp Borden for a weekend, and if he wants to visit his family during his last leave it takes almost a week's pay. Then what is the government going to do about this Almonte disaster? Have we two bodies regulating our railways-the railway commission and the transport officer? What are the functions of these bodies?
Then there is the merchant marine, and I think we should do something about that. We have boats running from Toronto to Port Dalhousie, and one of those boats is not suitable at all. I am afraid something will happen to it, because it has been on the lake for many yeafs. It was not good enough for Northumberland strait and therefore they sent it to the run between Port Dalhousie and Toronto, while they provided a large car ferry for Northumberland strait. I do not object to that; we were glad to see them get it, but apparently any old boat is good enough for lake Ontario. It is a wonder there has not been an accident before this, and newspaper articles show that there have been close calls. I contend that not enough information about this system is given to the public, who after all are the trustees, the owners of it. What are we doing about the tourist trade? We never have any opportunity of discussing these matters, and as a supporter of public ownership in this country I urge that the taxpayer, who has paid all these capital charges and who in addition must pay high transportation costs, should be given better service.

Another question is the suburban steam service. Every large city such as New York, Philadelphia, Chicago, Baltimore and so on, has a steam suburban service, which has built up the districts surrounding those cities. Let us consider the suburban service the city of Montreal has, and I would point out that under the Railway Act every other municipality is entitled to the same opportunity, upon application to the board of transport commissioners. The fact is, however, that Montreal is about the only city that has that service.
I plead with the minister to give proper consideration to steam suburban service for the larger cities, and I believe, if that service were given, it would do much to relieve the housing situation. Around Toronto we have a system of radials and buses, now owned by the city. Those systems have built up the outlying districts, so that North York, East York and West York are to a great extent inside suburban constituencies. Rural ridings have become urban ridings. When there is money for capital and maintenance of the Canadian National Railways I ask that something be done so that we may have a more modem system to take care of that problem after the war.
I have attended one or two meetings of the committee, and I have been very much disappointed. All the members seemed to be smoking cigars, and there was much humour at times in evidence. One would think he was attending a vaudeville show, because everyone was in such good humour. They would take up this item and that item, but they were given very little information. I have read the daily reports of the committee and all I have to say is that if that is the way in which we are to-investigate public utilities, then we need some other system. The Canadian Pacific Railway would not conduct its affairs without further inquiries.
Another matter which should be considered is that of auditing. Although we have our own auditor general I do not think he has any check at all, because the railways have auditors of their own. Before the committee they present hotel accounts, maintenance accounts, capital accounts, answers and questions, and that is about the end of it. Then, near the close of the session the committee brings its report to the house. I contend that if the committee system is going to be a success-and this is one case in which it has never been successful-it must change its tactics. There is not enough detailed knowledge in what is contained in the report to parliament.

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I do not wish to prevent the passage of the motion, but I hope the new minister will consider these matters. I should like to know if private members will be permitted to attend the committee, although they may not be members of it officially.


Gordon Graydon: Mr. Speaker, before the minister replies may I reiterate, by way of emphasis, what has been said by the hon. member for Broadview (Mr. Church). There is a great deal of curiosity throughout the country with respect to the delineation of authority between the transit controller and the board of transport commissioners. I rise at this time only to ask the minister to give that matter consideration when he replies, and to indicate just where the power and authority of the transit controller begin and end, and how they affect or fit in with the power and authority of the board of transport commissioners. He might also indicate whether there has so far been any conflict between these two controls.
Mr. GORDON B. ISNOR (Halifax): Mr. Speaker, we have very little opportunity to discuss matters pertaining to our railways. This is the first one I can recall in some time. I should like to support the hon. member for Broadview (Mr. Church) in his request that greater consideration be given to the matter of suburban services. I have repeatedly placed that subject, as it affects the city of Halifax, before the vice-president of the Atlantic region, the general manager of the Atlantic region and the newly appointed Minister of Transport (Mr. Michaud). With the prevailing situation in Halifax, from the point of view of a population greatly increased by the large influx of people, a great many are obliged to live in the suburbs. And as a result of the restrictions on bus travel they are finding it exceedingly difficult to get to and from work during weekdays.
I do not wish to make a lengthy speech, but I would urge that the minister give this matter serious consideration. I am glad the hon. member for Broadview has raised it, and I hope the minister will consider the representations placed before him, with a view to seeing if he can do something to improve suburban services in so far as they affect Halifax, with its overcrowded and greatly increased population.


Joseph Enoil Michaud: Mr. Speaker, before the motion carries may I assure hon. members who have spoken, and who have claimed the privilege of appearing before the committee that, so far as I am concerned, in so far as the ndes of the house
permit they will be given every opportunity to appear and to make their suggestions. I am sure they will take advantage of the opportunity offered them. I would request the hon. member for Broadview (Mr. Church) and the senior hon. member for Halifax (Mr. Isnor) to appear before the committee and lay before the officials of the railways and the different transportation companies which come under the purview of the committee any representations they may have. Let them attend every sitting and take part in the discussions. I am sure they will be given every opportunity to voice their views. They will be given a hearing, and we shall be pleased to have their suggestions for the betterment of transportation services in Canada.
At the present time our facilities are limited, not by money or capital but by materials. Those materials are limited through priorities. Our railways-and I speak of the Canadian National Railways, but it is equally true of the Canadian Pacific Railway -are taxed to the limit. They have to transport war materials and great numbers of passengers. We feel that in certain sections and at certain times priority must be given to the transportation of war materials. This necessitates the curtailment of passenger train service, and sacrifices on the part of the travelling public. For the present, until further notice, the policy is that we request the travelling public to travel as little as possible, in order that the movement of war materials and troops may be facilitated.
Second,'our facilities are limited on account of rolling stock. Since the beginning of the war our rolling stock has been taxed to more than capacity, and has been used until it is almost exhausted. We have had to make way for more important war materials, which have priority over railway rolling stock. As a result of this we have not been able to get renewals of rolling stock, as we might have hoped.
Then, may I point out that the auditors of the Canadian National Railways are appointed by act of parliament every year, and it is the duty of parliament to decide whether or not their work is satisfactory. The best way to find out is to appear before the committee when the railway accounts are being considered, and then question railway officials who will be at the disposal of the committee.
With regard to the question asked by the leader of the opposition (Mr. Graydon) as to the different functions and duties of the board of transport commissioners, and the transit controller, may I point out that there are two
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officials, namely, the transit controller and the transport controller. The transit controller has nothing to do with transport by railroad, but the transport controller has been appointed as a war official to organize and establish priorities in connection with the transport of different war materials and as between war materials and passenger service. He acts as the controller of war-time transport services, while the board of transport commissioners is a peace-time organization created under the Railway Act. There is no conflict of authority or in the jurisdiction between the two; the one completes the functions of the other.


Gordon Graydon: Has the transport controller any authority over any other type of transportation than the railways?


Joseph Enoil Michaud: No. He attempts to correlate transport as between the railways and the water services.


Gordon Graydon: Why would it not be better to leave that under the board of transport commissioners? Why superimpose on the board of transport commissioners another controller? There are enough controllers now without adding another one. You have control now over your railways through the board of transport commissioners. Why could that board not be given the authority given to this controller? They are familiar with the whole business of transportation.


Joseph Enoil Michaud: It is a matter of opinion. There is no conflict of jurisdiction. The transport controller is simply a complement to the board of transport commissioners which is a peace-time organization and which has certain functions to exercise under the Railway Act. The transport controller must exercise extraordinary functions made necessary by war conditions and his duties are established by the War Measures Act. The transport controller has been functioning for some time and his services have been found to be most useful. He has succeeded in establishing some priorities and in bringing about order in the different branches of railroad transportation.
Ever}- opportunity will be given to hon. members to come before the committee in order to obtain information or to make suggestions in connection with the betterment of the transport facilities for goods and people. I hope that when the report of the committee is brought down, valuable suggestions will be made to meet the requirements
fMr. Michaud.]
suggested by the hon. member for Broadview and the senior hon. member for Halifax.


Mr. McCANN:: Does the transport controller act under the jurisdiction of the Minister of Transport or of the Department of Munitions and Supply?


Joseph Enoil Michaud: The transport controller comes under the jurisdiction of the Minister of Transport.


Gordon Graydon: That is an additional reason why he should not be there.
Motion (Mr. Michaud) agreed to.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, March 3, 1943