1944-07-05

[Stage Direction]
The house resumed from Tuesday, July 4, consideration of the motion of Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the proposed amendment thereto of Mr. Rowe.
Mr. W. ROSS MACDONALD (Brantford City):: Mr. Speaker, may I at the outset congratulate the Minister of Finance (Mr. Ilsley) upon the conciseness and clarity of his budget address. May I also pay a tribute to him for the manner in which he has directed our country's financial policy. It must indeed be a source of great satisfaction to him to know that other nations have adopted these policies which have prevented a vicious spiral of rising prices, otherwise known as inflation. In past wars this has not always been possible. I would remind the house that during the last great war prices rose sharply. Perhaps I could give a few instances. In 1919 flour sold at $7 a bag; to-day it sells for $3.10. Sugar reached 25 cents a pound in 1919; to-day it is only 8 or 9 cents a pound. Butter sold for 80 cents a pound; to-day you can buy it for 38 cents. Eggs cost $1 a dozen; to-day you can buy them in any store for 43 cents a dozen.
Canadians should indeed be proud. Not only have other countries adopted our fiscal
4522	COMMONS
The Budget-Mr. Macdonald (Brantford)
policies and1 our plans for the rehabilitation of our armed forces; they have marvelled at the great industry of our industrial workers and our farmers who have produced such prodigious quantities of war equipment and food. Over and above all this is the crowning glory which comes to us through the gallant deeds of our soldiers, sailors and airmen. The Right Hon. Peter Fraser, speaking in this house on Friday last, paid great tribute to Canada when he said:
The fact that 800,000 men and women have been enrolled in the forces, and the further fact that 2.000,000 persons are taking part in the industrial war effort of this country, are sufficiently eloquent and convincing testimony as to the whole-hearted way in which Canada has thrown itself, without reserve, into what it knew was a struggle for the existence of all that is decent in the life of mankind.
Canada and her allies among the united nations are by nature peace loving people. We were not prepared for war in 1939, and it has taken us four years to attain maximum production. To-day we are geared to a high tempo in war production. It is only natural therefore that there should be few changes m the budget.
The hon. member for Dufferin-Simcoe (Mr. Rowe), whom I should like to congratulate upon being recently elevated to the important post of financial critic of His Majesty's Loyal Opposition-had very little to say of a critical nature with respect to the budget. In one sentence he objected to the abolition of com

pulsory savings on the ground that it would result in lowered financial returns to the government and might start an inflationary trend. Then, in the very next sentence, on behalf of his party he proposed even greater reductions. If a small reduction would cause an inflationary trend, surely a greater reduction would cause a greater inflationary trend. I have never heard anything more inconsistent and more insincere-and this, I may say, from a party that prides itself on total war.


Mr. GRAYDON:: I rise to a point of order. I think I heard the hon. member say that the statement of the member for Dufferin-Simcoe was insincere. If he did say that I ask him to withdraw it. I know he would not intend such a reflection.


William Ross Macdonald: If I said "insincere" I withdraw it, but I did not intend to say it. I believe I used the word "inconsistent".
Let us consider income taxation as it affects those in the lower income brackets. We all feel that we are heavily taxed, but we should not forget that under the proposed budget an unmarried person earning less than 81,100

per year and a married person earning less than 81,600 per year are the lowest taxed persons in the whole civilized world. The proposed changes will affect thousands of girls who are working in factories and as stenographers and clerks in the smaller cities and towns. They will now have deducted just one-half of what was deducted in the past.
A married person with two children making up to $2,000 a year, and a married person without children making up to $1,800 a year, will have only half the deduction that was formerly made. Taxpayers who have not taken allowances for insurance will also find their cheques considerably increased. By the amendment the opposition would abolish certain income taxes, but if you will notice the wording of the amendment you will see that nothing is said as to whether they would abolish compulsory savings.
If the taxpayers are to continue to pay compulsory savings, the amount of reduction in the lower income brackets would be no greater than under the proposed changes in the budget. As I have pointed out, these people are now paying the lowest tax in the world. A single person in Canada earning $800 a year pays less than 87 cents a week, and a married person with two children earning $1,600 pays 51 cents a week. With Canada's income tax for the wage-earner the lowest in the world, does anyone think that a further reduction would raise our prestige with the united nations which may be having greater difficulty in financing than we are? What do you think the boys overseas would say now that the hour of conflict has come for them, now that the hour of battle has arrived when many of them must pay with their lives, if they heard that the people in Canada, who are paying the lowest income tax in the world, were to cease paying taxes altogether? I was impressed by an article in the Brantford Expositor, written by Hal Boyle, Associated Press war columnist, who stated:
The boys overseas have an idea that the people at home still think of the war as a ball game-and that they are enjoying the seventh inning stretch.
It does look like if all the energy being used in fighting the battle of the income tax could be expended on the battle of the Anzio beachhead, Rome would fall in short order.
If I know Canadians, Mr. Speaker, they would resent any further reductions in income tax at the present time. I am confident that they will cheerfully pay the present taxes, which are the lowest amongst the united nations, and are practically nothing when compared with what the boys overseas are paying.

The Budget-Mr. Macdonald (Brentford)
The financial critic of the opposition did not confine himself to finance, but had to advise on military affairs also. He complained about the use or non-use which was being made of our so-called home army. At the outset of his remarks I expected a bold forthright statement of policy on this question, but in that wavering, vacillating, typically Tory fashion he talked all around the subject and said nothing definite. But after all, how can anyone expect anything definite from him, when he gets different leads from different leaders and no lead .at all from one leader? Charles McTague said that the home defence army should all go overseas immediately, while John Bracken, according to a certain section of the press, mumbled a nervous approval, which he has never since confirmed; and during all this time the house leader of the one-time mighty Tory party sits in this house in an uncomfortable silence. I have read and reread the amendment, and the only conclusion that anyone can come to is that the Conservative party would disband the home defence army and send them back to civilian life to pick off all the good civilian jobs before the boys return from overseas, and that is one thing that I will oppose with all my strength. As long as there are good civilian jobs let us retain as many of them as we can for the boys to get when they come home. That is the very least we can do.
I may be asked what I would do with the home army. I would hold them in reserve for reinforcements. They are highly trained and they are an efficient body of men. If our soldiers who recently stormed the shores of Normandy and have now started on their long and arduous trek to Berlin must have reinforcements, these men should and will be sent. Some say that reinforcements will never be needed. I hope they are right, but do not be too sure about it. This war is not yet won. Germany is still a resourceful and a formidable foe. The end may come soon, but we must not take too much for granted.
Suppose it does cost $150,000,000 a year to maintain the home defence force. Is it not far better to spend that large sum of money and win the day than to disband this force and lose everything? Let us not forget that for four years we spent many times $150,000.000 a year to prepare our soldiers to fight in Sicily, in Italy and in France, and if the day comes when the men of the home army should be sent overseas, no one will begrude the cost of their training. If we take the advice of the official opposition in this house and disband this force, and should there not be reinforcements when they are needed, then Canadians for generations to come will hang
their heads in shame. No, Mr. Speaker, this force must not be disbanded. It must be held in reserve to fill the gaps when reinforcements are called for.
While I am referring to the armed forces there are two questions I should like to mention which I trust are not entirely irrelevant to the budget. The first one is with respect to the allowance paid to mothers of men who are serving overseas. At the present time as the house is aware, a dependent mother receives $25 per month, together with $20 assigned pay from her son. She is also allowed to earn $40 from work which she might do. But imagine, Mr. Speaker, an invalid mother trying to live on the magnificent sum of $45 a month. On the other hand, a wife receives $35 a month, together with cost of living bonus, together with a minimum assignment of pay of $23 a month, and an allowance for each child. Personally I could never see why mothers are discriminated against. I understand it is stated that there is a different legal responsibility. I took the time to look over the statutes of the various provinces, and I find that in six of the provinces, Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia, there are statutes which require a son to support his parents. Section 166 of the Quebec civil code has this wording:
Children are bound to maintain their father, mother or other ascendants who are in want.
In the other provinces I have mentioned the acts are known as the Parents' Maintenance Act, and these statutes state that a son or daughter shall be liable for his or her dependent parents.
I would also draw the attention of the house to section 242 of the criminal code, which makes a man criminally liable if through neglect a parent's health is or is likely to be permanently impaired. So that there is little if any difference legally between the obligation on the part of a son to maintain his mother and the obligation of a husband to maintain his wife. Accordingly I trust that the allowances to mothers and wives will be equalized.
The other matter to which I would refer is the clothing allowance which is given to a soldier when he is discharged. At the present time he is given $65 for that purpose. I am bound to say that I do not think he can clothe himself properly on that amount. How the amount was arrived at I do not know. Recently I visited a number of stores and obtained the prices of clothing. Here are the average prices: Hat, $5.00; cap, S1.75; two shirts, $4.00; B.V.D's, $3.00; socks, $2.25; shoes, $8.00; suit, $35.00; extra working trousers, $7.00 and overcoat, $35.00. amounting in all to $101.00. I have not included a spring
4524	COMMONS
The Budget-Mr. Macdonald (Brantford)
overcoat, overalls, handkerchiefs, et cetera. From these figures I think the house will realize that a man cannot possibly clothe himself on 165. He may possibly get by in the summer, but in the winter, when he has to have an overcoat and other clothing, he cannot buy them unless he receives from $100 to $125. Again I would ask the government to consider raising the clothing allowance, before the snow flies, in any event.
Now, Mr. Speaker, may I revert once again to the budget? There is but one tariff change, and by that change farm implements are placed on the free list. I am somewhat disappointed that not one member of this house who has taken part in this debate so far has concerned himself with the effect that this reduction may have on the workers in these implement factories. Every speaker has either approved the change or has remained silent. I therefore must take it that all parties agree on this tariff change.


Some hon. MEMBERS:: Hear, hear.


William Ross Macdonald: Therefore it remains for me alone to plead within this chamber that some consideration be given to the men who toil in these plants. One of the foremost policies of the Liberal party is consideration for the men who work in factories, and as long as I have breath in my lungs I shall fight in the interests of these working men.
The tariff has always been a lively controversial issue. The Liberal party, true to its pledge, year in and year out when it has been in power has consistently reduced the tariff.


Gordon Graydon: It said it would.


William Ross Macdonald: I repeat that it has consistently year in and 3rear out, when in power, reduced the tariff.


Gordon Graydon: I said, it said it would.


William Ross Macdonald: In fact the Liberal party in its reduction of tariffs has stood against the forces of the world, and its policy has been vindicated by events; the tariff policy of the Prime Minister of this county (Mr. Mackenzie King) is now that of the leaders of the united nations. Every statesman of the united nations has pledged himself to remove tariff barriers. I am in complete accord with that aim. It is not the reduction in the tariff of which I complain but rather the manner or the method by which it was done. The united nations have virtually agreed to reduce tariffs by a multilateral agreement. The farm implement tariff was taken off through no agreement whatsoever with any country; it is the only tariff item affected; and it is for that reason I
[Mr. \V. T?. MawlonnldJ
protest. There is discrimination. It is said that this will not affect industry. It may not affect the industry at the present time, but what about the future? Who can tell what the effect will be when there is no shortage of supplies and when all farm implement companies can get all the material that is necessary to turn out these implements?
With the consent of all hon. members there is no doubt that this tariff change will be put into effect. All I can do is to plead with hon. members to see what effect this tariff change will have on the working men in these factories. I ask their sympathetic consideration for these men.


Mr. CRUICKSHANK:: Get them to move west.


William Ross Macdonald: I am rather concerned that my hon. friend! from British Columbia has no more consideration for these workers.


George Alexander Cruickshank: What about the
farmers?


William Ross Macdonald: He above all others should have consideration for these workers, many of whom served in the last war, as he did,-


George Alexander Cruickshank: Did not the farmers serve too?


William Ross Macdonald: -and many of whom are working long hours in this war. It is not a question of setting the worker against the farmer, as some people would do; we must consider Canada as a whole. Nobody wants to injure the farmer.


Mr. SPEAKER:: The hon. gentleman who is speaking must not be interrupted.


William Ross Macdonald: I was saying, Mr. Speaker, that I would not now delay the house further on this question, but when the resolution is before the house I shall have something to say as to the effect of this reduction both on the farmers and on the workers.


Mr. CASSELMAN:: Make your motion.


Thomas Vien: Order. I must again call the attention of hon. members on all sides of the house to the fact that the hon. member who has the floor must not be interrupted.


William Ross Macdonald: I
much appreciate your remarks, Mr. Speaker, but I may mention that I do not mind a few interruptions.
As I said before, as far as the removal of the tariff on farm' implements is concerned, I have waited all these days for someone to get up and say something on behalf of the workmen in that industry.

The Budget-Mr. Macdonald (Branljord)
I should now like to address myself for a short time to something which I trust is not too far in the future; I refer to the days of reconstruction which will follow the war. The government is now making plans to see that returning warriors and people in the munitions factories are given' employment when the war is over. We must never forget that our soldiers, our sailors and our airmen offered their lives to keep Canada free. They made it possible for us to follow our Canadian way of life, and I trust that we shall make it possible for them to have employment when they return to their homes. I trust also that no member of the armed forces will be discharged against his will from' the forces until he has a job to which he can go. The men and women in the munitions factories must also be provided for; work will have to be found for them too.
The hon. member for Rosetown-Biggar (Mr. Coldwell) has suggested that five billion dollars be set aside for this purpose over the two-year period immediately following the cessation of hostilities. With the principle of that suggestion I ami not at variance; I would however suggest that no limit should be mentioned; whatever amount is necessary to find work for our people should be found. Our government is pledged to that policy. The Prime Minister, speaking last year before the American Federation of Labour, stated that that was the objective wrhich he held most important. The wmrds he used were, "useful employment for all who are willing to work." In other words the government must be responsible for seeing that jobs are provided for all willing workers. No limit, not even five billion dollars in the two year period, should be placed on the amount required for that purpose. Whatever funds are necessary, private funds as well as public funds, must be utilized for that purpose, and whatever jobs are not provided by private industry must be provided by public enterprise.
I would, however, emphasize that large quantities of money will not alone solve our problems of the future. Other nations have obtained large quantities of money by printing press methods, and in every instance it has resulted in national financial disaster, invariably causing great suffering to every man, woman and child in the country concerned. Nevertheless the supply of money can be increased within certain limits. Just what those limits should be no one at the moment can say. We do know, however, that beyond that limit lies national disaster. Our national financing in the years immediately following the war must be directed by men who are bold enough to go forward and cautious enough to
avoid the pitfalls that have invariably brought about financial disaster. The necessity of supplying war materials has taught us much about financing our domestic needs. These lessons we must carry into the peace. The governor of the Bank of Canada and the deputy minister of Finance and their associates have made bold financial strides during the last few years, and I am confident that they will go forward with equal boldness in the years to come. The Minister of Finance has stated publicly that we have learned very much and gone a long way in our development in Canada during the past four years. I join with him in stating that when the war is over we shall turn our financial capacity to the improvement of the Canadian standard of living. Here are his words:
During the war our economic controls and our financial and productive efforts have had to be directed to the destruction of the enemy. We have had to restrict our general standard of living, while protecting that of those near the minimum, in order that we could attain the highest possible standard of fighting. When the war is over, however, we must and will, I believe, turn our economic management, our newly found productive power and our financial capacity to the improvement of the Canadian standard of living. It is then that we shall reap the fruits of the peace we have secured and of the experience which we have gained.
Without doubt the years that are before us will be years of great stress and strain. We need at the helm of all branches of government men of tolerance and experience. The peace conference will not only settle the terms which we shall impose upon our adversaries but will also plan for the future of mankind. There is one statesman in Canada who has far greater knowledge of the intricacies of international law than any other man in this country, and to my mind as great a knowledge as anyone in the world. Recently our Prime Minister (Mr. Mackenzie King) visited Great Britain and attended the imperial conference, and I believe that members of all parties in this house will join with me when I say that he brought great credit to himself and also to the country of his birth. He alone has an intimate acquaintanceship with the President of the United States and with the Prime Minister of Great Britain. Canada must send her most outstanding statesman to the peace conference, and if the people of Canada will sit down quietly and consider the qualifications and experience of all Canadians, they must come to the conclusion that Canada's representative at the peace conference must be our present Prime Minister.


Mr. H. C. GREEN (Vancouver South):: Before I discuss the budget and the amendment thereto, I wish to say a few words
The Budget-Mr. Green

of encouragement to the Minister of Finance (Mr. Ilsley). For many years now he has been carrying a great burden, certainly one of the heaviest burdens carried by any man in public life in Canada. At times his work must become very discouraging, and yet I think he should know that from one coast of Canada to the other people admire him for his devotion to duty and for his great sincerity. Personally, while I cannot always agree with the stand he takes-in fact sometimes I think he is rather foolish-I must say I greatly value our personal friendship.
In introducing 'his budget the other day the minister set out that in framing it he had kept in mind four basic considerations. They will be found at page 4174 of Hansard, and are these: The first consideration was the huge cash requirements that must be raised by the Canadian people during the present fiscal year. They amount to in excess of $6 billion, which is nearly $16^ million for every day of the year. He stated that about $2,800 million of that amount would be raised by taxation of one kind or another, and that the balance of over $3,200 million would have to be borrowed from the Canadian people. That of course is a prime consideration. The second consideration he listed was the urgent need for greater production. He described that in the following words:
The second consideration is the urgent need to achieve and maintain the highest possible production of goods and services of which our available working force and management is capable. The urgency of production is very great, and it is immediate. This is not a matter of building up a great organization from which output will flow in one or two years time. The need is for maximum production now- from our present capacity and working force. It cannot be met except by maximum production per person.
The third consideration was the desirability of relieving certain hardships and anomalies in our taxation structure, and the fourth and final basic consideration was given by the minister as the need to prepare for the postwar period. This he expressed as follows:
Finally we have felt it necessary to keep in mind that we are nearer the end of the European phase of the war than we were.
He went on, quite properly I thought, to explain that the war was not yet won, that we were really just getting into the toughest part of the fighting, and then he said:
Nevertheless it is no more than prudent to give sober consideration to some of the problems which will arise when we are able to release some portion of our productive capacity for the purposes of peace.
I thought he might have added a fifth basic consideration, and in the course of his
fMr. Green.]
speech he really did place great emphasis upon it; it was that great reliance is to be placed during the present fiscal year on voluntary support. He mentioned the national war finance committee and praised their work and the support given by the Canadian people, and again I thought he was quite right in doing so. The way the Canadian people have responded to the calls for money has been inspiring. It shows what can be done by Canadians if they direct their energies to the reaching of an objective and work as one united group of people. I really think we could have here what Eric Johnston, the brilliant young president of the United States chamber of commerce has called "America Unlimited". We could have here "Canada Unlimited". We can build this nation into one of the greatest nations of the world. The way in which the Canadian people have responded to the call for funds shows what wonderful things can be accomplished.
After going carefully over the budget speech I came to the conclusion that it was much the same type of speech that might have been delivered toward the end of the first great war, perhaps in the year 1918. It is true that the budget reflects the attitude of the ministry, but I am convinced that it does not reflect the attitude of the Canadian people, that it does not meet present-day. conditions, and that it is not in line with present-day thoughts. Throughout, the speech and the budget overlook the attitude of the ordinary man and woman in Canada, of Mr. and Mrs. Jack Canuck and their family. They are the vast majority of our people; they are Canada. They are the ones who, with a son and perhaps also a daughter in the forces, are doing the war work; they are primarily responsible for the war effort of Canada. These ordinary men and women of Canada are the ones who are buying most of the bonds and obeying the laws and regulations no matter how foolish they think them to be. They are the ones who are getting the telegrams containing messages of death or the information that a loved one is missing.
Mr. and Mrs. Jack Canuck and their family are intelligent, thoughtful, idealistic, courageous, and freedom-loving. They have been doing a lot of thinking in the last few years. They have been through difficult, almost impossible times; they have been through two wars. Every one of them is uneasy at the present time because of the many restrictions on his or her freedom, and is wondering about the post-war years. They are all determined that there must be work for everyone who is willing to work; that there must be reasonable

The Budget-Mr. Green
security for all Canadian people. They are not only asking that preparations be made for the post-war period' but looking for some sign of this fine new world which has been promised to them by so many public men and which they have the right to expect. They are greatly concerned, and I think that most thoughtful members of the house will agree with me-I know that all hon. members are thoughtful-that they are filled with a sense of frustration. Whether this government is to blame for that or not, the fact remains that by and large the Canadian people are filled with a sense of frustration.
Obviously this budget was not drawn with them in mind. It shows no realization of their attitude; it shows no plan to help them to become established in the post-war world and to keep on their feet. There is very little indication that the ministry had that in mind in drawing up this budget. Therefore I make . bold to suggest to the Minister of Finance that he give careful consideration to each paragraph of the amendment moved by the hon. member for Dufferin-Simcoe (Mr. Rowe) on behalf of the Progressive Conservative party, and to any other suggestions that come out in the course of the debate on the budget or on the budget resolutions. I believe that the amendment moved on behalf of my party more nearly meets present-day conditions than the budget. It is more nearly in line with the thoughts of the ordinary men and women of Canada. I cannot deal to-day with all of the paragraphs of the amendment, but I propose to deal with some of them.
In effect, the first one advocates that adequate steps be taken to simplify the forms and modernize the methods of taxation. At the present time our income tax system is a wonder to behold. Like Topsy in that famous old' book, "Uncle Tom's Cabin," it "jest growed1," and during the war years it has grown faster and in many more directions than it did in years of peace. The position now is such that many people find it extremely difficult to make out income tax returns accurately The good citizen is worried about that. Hi wants to do what is fair by the country; he wants to do his duty, but he finds it almost impossible to make out those new tax returns. The result is that many people have to engage someone to help them, perhaps a lawyer, a notary public or an accountant. People all over Canada are worried about these income tax forms. I realize that some attempt has been made to simplify them, but I suggest to the minister that they must be simplified a great deal more. The Income War Tax Act should be gone over with a fine-tooth comb
and simplified so that the ordinary citizen can make some sense out of it. I find that many of the income tax officers themselves have great difficulty in understanding the provisions of the act; a simplification would be of benefit to them as well as to the ordinary taxpayer.
Then, as to the methods of taxation. Here there is great danger of bureaucracy running wild1; perhaps there is the greatest danger of all to the freedom of the Canadian people in just such things as the methods by which they are taxed. The great majority of our people are honest, even about income taxes; yet some officers-I do not say all the officers, but too many of them in the departments that collect our revenues, treat the people as suspect. A person is treated as a criminal until he proves himself innoeent. It is not a case of the customer being right, but of always being wrong. Some assessors are apt to forget that they are the servants of the Canadian people and not their masters. The great weakness is that at the present time there is no effective check on those government officers; there is n<-effective control over them; hence it is quite possible for bureaucracy to run wild. I have here a letter from a responsible business man in Vancouver carrying on his own business, not in a large way. He complains about the manner in which small firms have been dealt with. He says:
Hundreds-
I will not endorse that. I shall use the word "many" just to be on the safe side.
Many have left the office-
That is the income tax office.
-bullied and insulted, and burning with resentment, with a full knowledge that they were being imposed upon and "gypped". And yet, after a short time, thev paid the assessments so that they could get the worry off their minds and get on with their business, knowing well the difficulties and costs of appeal.


Mr. ILSLEY:: This is in the Vancouver office, is it?


Howard Charles Green: This is in reference to the Vancouver office. The minister may reply that there is provision already for appeals against assessments. It is true there is an appeal, first of all to the Minister of National Revenue, which in effect means to the senior officers of that department, and then the taxpayer may appeal to the exchequer court. But he has to put up $400 as security for costs; he has to incur the expense-of engaging a solicitor; he is let in for all kinds of expenditures, with the result that for Jack Canuck, the ordinary Canadian, there is no appeal. He just decides that it is cheaper not to fight, that he might as well pay, and for the rest of his life or at
The Budget-Mr. Green

least for a very long time he will harbour resentment against the government and against our whole system. This makes it so much harder for him to be a cheerful, willing citizen. I suggest, therefore, to the government that there should be some cheap and summary appeal in cases which do not involve large amounts of money. Perhaps some arrangement might be made for an appeal to the local county court judge. All these county court judges are very highly respected in their districts; they understand conditions, and I believe could very well handle appeals from income tax assessments. You see, Mr. Speaker, the war has caused hundreds of thousands of people to pay income tax for the first time. They have come in contact with the income tax officers, and probably will remain in contact with them for many years to come, during which time the income tax probably will be very heavy and will affect a very large number of the citizens of this country. I cannot stress too strongly the importance of having the Canadian people feel that in these income tax matters they are being treated fairly and that their rights are being preserved.
I propose also to say a few words about the second paragraph of the amendment, which advocates effective action to grant a measure of relief to the men and women in the lower income tax brackets by raising the exemption for single persons to not less than $800 per annum and for married persons to not less than $1,600 per annum. If the exemptions were increased it would help Mr. and Mrs. Jack Canuck, the ordinary men and women of Canada, prepare for the post-war period. The budget makes provision for helping business prepare for that period1. The minister dealt with the matter at page 4174 of Hansard, where he said:
I am concerned only with clearing away some of the uncertainties of fiscal .policy-opening the way for business firms, both large and small, to proceed on as definite as possible a basis with the drawing up of plans for the post-war conversion and expansion of industry and trade on which employment after the war will depend.
I have no quarrel with that, though I think the provisions mentioned by the minister will work mainly to the advantage of large businesses as distinguished from small businesses. It is quite clear that the government is relying upon the individual initiative of business men to provide employment in Canada after the war, rather than upon stateism which of course means the government running everything. I entirely agree with that policy; I think it is right, but I suggest the government should also rely upon and encourage the initiative of Mr. and Mrs. Jack Canuck. The initiative of the individual Canadian is of tremendous value to this country. Sometimes it is very easy

to overlook that fact, but actually Canada was built by the initiative of her people. Canadian troops made their name, both in the last war and in this war, primarily because they displayed as much initiative as any other troops, if not more, and I believe that encouraging the initiative of individual Canadians will result in most of our people being put to work when the war is over; that initiative must not be smothered, as it would be by stateism. At the same time, mind you, it is certainly the duty of any government to prevent unfairness and strictly control monopolies.
There is one way we can help the Canadian people prepare for the post-war period; that is, by increasing these income tax exemptions. Take the men who are being discharged and who will be discharged from the armed forces. Already they number almost 150,000, and more are being discharged at the rate of three or four thousand a month. These men come back and begin to reestablish themselves; at once they are faced with this very heavy income tax, which makes it just that much more difficult for them ever to get a start. Then there is the wage-earner who went through the depression days and has never had a real chance to get back on his feet. There are thousands of office workers, both men and women. There are thousands of small business men; thousands of low salaried men and women; thousands of people working on their own, such as salesmen on commission, taxi proprietors, men doing odd jobs and engaged in many other occupations. By and large these people are the backbone of Canada, and getting them started in the post-war period, encouraging their initiative, is of vital importance to the country. It is not a wise plan to bleed them now, just as we are about to enter the post-war years. Yet in this budget there is no attempt to increase exemptions. The minister has gone the other wTay; he has wiped out compulsory savings. Personally I think it would have been wiser to increase the exemptions, retain the compulsory saving, and to extend the contractual payments allowed as offsets such as premiums on life insurance policies, and principal payments on a mortgage. Those allowances might well have been extended. Perhaps they might have included the payment of other debts, so that many of our Canadian citizens for once in their lives could get out of debt. Consideration might have been given also to providing some offset in connection with the construction of new homes, and so on. If the income tax exemptions had been increased and the compulsory savings retained there would have been very little loss to the treasury during the

The Budget-Mr. Green
war period. I grant that it would have meant repaying compulsory savings after the war, but during these critical times it would have given people a better chance to accumulate something with which to reestablish themselves in the post war years.
The third paragraph of the amendment, to which I wish to refer, is as follows:
(c) This house regrets that no provision has been made to encourage greater war-time production by exempting overtime pay from income tax.
I ask hon. members to remember the second basic consideration of the minister in framing the budget. That was the urgent need for greater production. We must keep in mind the fact that the average Canadian man and woman has been working under great pressure during all the war years. Many Canadians have been doing extra jobs. Men are taking training at nights in the reserve army or are doing A.R.P. work. Many are doing parttime work in the evening after spending all day at their regular jobs. Women are working for the Red Cross and are carrying on innumerable other activities. Our people have been working very hard, and all the time they have been under the constant worry which comes with any war. Our people are weary, and I suggest that when they work overtime the pay they receive should be exempted from taxation. I believe that would help greatly in increasing production until the end of the war.


James Lorimer Ilsley: It is impractical and inequitable, as I will show.


Howard Charles Green: Nevertheless I make my submission believing that it is well worth consideration.


Gordon Graydon: There might be even a better opinion than that of the minister.


James Lorimer Ilsley: I will give my reason, but nobody else has given his.


Howard Charles Green: I do not propose to deal at the present time with paragraphs 4 and 5 of the amendment. One concerns agriculture and the other has to do with our vitally important mining industry; but there will be opportunity to discuss these matters when the budget resolutions are under consideration.
The sixth paragraph reads:
This house regrets that the government has failed to make effective the full mobilization of our financial, industrial and material resources, as well as our man-power, but is maintaining a so-called home-defence army, at a cost to the taxpayer in excess of $150,000,000 per annum, at a time when the need for men for army reinforcements, for farming and for industry is so urgent.
I would like to carry the thoughts of hon. members back to June, 1940. I am sure that
those who were here at that time, and most hon. members were, will remember those terrible dark days. I well remember blue Monday, June 10, when we were informed of the death of the late Norman Rogers, that great friend to all members in the house, who had been killed in such a tragic way. That was the day that Italy struck at France, and our whole civilized world seemed to be falling down about our ears. At that time the house properly passed what was known as the National Resources Mobilization Act, which in effect gave the government of Canada the power to utilize all the resources of the country, both human and material, in whatever way they were needed for the successful prosecution of the war. There was only one exception, that the men called up under the act could not be sent beyond Canada and the territorial waters thereof.
In 1942, almost two years later, we went through another tragic period. This was after Japan had struck and the world again looked very dark. At that time the house passed an act known as the Dominion Plebiscite Act, which provided that a plebiscite should be taken on this question:
Are you in favour of releasing the government from any obligation arising out of any past commitments restricting the methods of raising men for military service?	[DOT]
A very active campaign followed throughout the country in which members from all sides of the house took part. Advertisements appeared in all papers. I have one here, the main words of which are, "Free Canada for all-out war-vote 'yes.' " Mr. and Mrs. Jack Canuck and their family answered "yes" in no uncertain terms. A majority of over sixty-four per cent of the Canadians who voted, voted "yes." An overwhelming majority voted "yes" in eight of the nine provinces. In three provinces, Prince Edward Island, Ontario and my home province of British Columbia, and in the armed services, the "yes" vote was over eighty per cent, and Nova Scotia and Manitoba were only about one per cent behind that figure.
After that vote the government eventually brought in an amendment to the National Resources Mobilization Act which removed the restriction to which I have just referred, but during the debate on the bill the Prime Minister announced that he would not actually send men called up under the National Resources Mobilization Act overseas without first passing an order in council to that effect and then coming to the house for a vote of confidence. In effect, although the act was changed, the policy remained the same, and that policy continues to this very
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day. The whole plebiscite was nothing more or less than a sham, nothing more or less than a fraud on the Canadian people.
What followed was that in some cases the men called up under the National Resources Mobilization Act were persuaded to go active, to enlist for service overseas. That persuasion has consisted sometimes of coaxing, at other times of bluffing, and I am afraid sometimes of bullying. As hon. members know, three divisions were raised for home defence in Canada., the sixth, seventh and eighth. In due course two of those divisions were disbanded and what units remain have for a long time been made up almost entirely of home defence troops, being men who had been called up under the National Resources Mobilization Act. Last year some of those troops were sent as a task force to Kiska and took part in the landing there, Kiska being considered by the government as part of the north American continent. They worked beside United States troops, but when the show was over the Canadian troops were brought back to Canada while the United States troops went on to fight the Japanese in other parts of the Pacific.
This spring the position was that Canada had at home between 60,000 and 70,000 in a home defence army, of whom about 50,000 were in a physical category that would permit them to be sent for service overseas. Most of these were men fully trained in the use of arms, and some of them had been seasoned by taking part in the expedition to Kiska. Right along the government apparently has been afraid to pass the order in council which is necessary in order to permit them to be sent overseas.
A few months ago a campaign was put on by the Pacific command to persuade the home defence troops in that command to go active.
I have here the press clippings of that time which show just what was done. The campaign was under the direction of Major General Pearkes, V.C., one of the outstanding soldiers of Canada, and certainly must have been undertaken with the approval and consent of the Department of National Defence. Genera! Pearkes in his first appeal used these words in speaking to his men:
I regret that we were not allowed to chase the Jap right into his homeland-
Referring to the men who had been to Kiska.
-that time. But that was out of my hands.
I am very proud to tell you that the experience you gained at Kiska makes you invaluable as invasion forces.
The need is urgent. Play the man's part- the part of young Canada.

We ought to be well on the road to victory this year but it will require the assistance and the cooperation of every single one of us.
Then he made this statement to the press:
I tried principally to appeal to their pride in Canada and to the fact that the outcome of the second front might rest upon the number of home defence men who are ready to back up the troops already overseas.
Brigadier Macklin, who was in command of the camp where many of these men were stationed at the time, used these words:
The response to appeals to men to go active has not been satisfactory.
A few days later General Pearkes said this:
No man should wear that khaki uniform unless he is willing to wear it anywhere.
That is what our commander on the Pacific coast thinks of the government's man-power policy. What do the home defence troops themselves have to say? These same dispatches give their attitude. I quote from the Vancouver Sun of April 21:
The men themselves place the blame squarely on the shoulders of the government.
"Why" a number of them asked, "do we have to make the decision? We joined up on being told that we were to receive four months training. That was two years ago. We went to Kiska ready to fight. The fault is not ours. The blame lies on the government policy."
Several weeks later we find this further report:
The main stand taken by non-volunteering home defence troops for failure to go active was that they were quite willing to go under nation-wide conscription, but that they did not see why they should volunteer.
There have been reports submitted by General Pearkes and Brigadier Macklin, and I suggest that the contents of these reports would be very interesting to the house and to the nation if they were made public. I asked the other day f.or the filing of the reports on recruiting, but the Minister of National Defence (Mr. Ralston) said that they could not be produced. I think that they would be very helpful in enabling us to find out just what should be done about this question of manpower.
The campaign is still being carried on, and there is no doubt that there either is or will be great need of men overseas. General McNaughton used' these words on June 6, on D-day, just about a month ago. He said:
The call for men for the armed forces is now immediate and insistent.
Brigadier Mess, in charge of recruiting in Canada, on the following day, June 7, is reported as follows:
Speaking of the "vital and urgent need" for "more and more" fighting men to reinforce

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Canada's invasion army. Brigadier James Mess, deputy adjutant-general in charge of recruiting, to-night criticized, several classes of young men who he said were waiting "God knows what for".
I am convinced of two things: first, that our fighting units must be supported at whatever cost; second, that trained and seasoned troops, such as most of these men now in the home defence army are, should be the first sent to reinforce our troops overseas regardless of whether these trained troops are home defence men or volunteers. It just is not good enough to send over half-trained youngsters simply because they have enough public spirit to volunteer. I say that the government's policy is risking a shortage of reinforcements, that it is making all the talk of equality of sacrifice, which was heard on every side when the war broke out, just a mockery in this land. It is creating bad feeling and bitterness between Canadian and Canadian that will last for generations. This man-power policy of the government is not frank, it is not courageous, but it is political. It is an attempt on the part of the government to keep itself in power. It is a policy which effectively prevents any full mobilization of financial, industrial or material resources and of man-power for industry and for the farm. I think it can be fairly described as a disgrace to Canada.
A government that will continue such a policy at this critical time in the nation's history certainly is not fit to lead the Canadian people in the difficult years they are about to face. Mr. and Mrs. Jack Canuck deserve and will demand-and they will get- a government that will give them bold leadership.
Hon. L. S. ST. LAURENT (Minister of Justice):	Mr. Speaker, with a number of
arguments which are being used in support of this amendment to the motion of the Minister of Finance (Mr. Usley) that Your Honour do now leave the chair for the house to go into committee of ways and means I find myself in disagreement, but with respect to most of them I am content to leave the expression of my disagreement to the vote which it will be my privilege to record when the amendment is put to the house.
There is, however, one argument which appears to me to be particularly objectionable and about which I wish to make a few observations. This is what was said by the hon. member for York-Sunbury (Mr. Hanson) on Monday, as reported at page 4435 of Hansard:
I venture to assert, Mr. Speaker, that there are many hon. members sitting in this house who are in favour of the proposals enunciated in the amendment sponsored by the hon. member for Dufferin-Simcoe (Mr. Rowe) and who would, if left free, vote for them. That privilege is
denied them and they will perforce be obliged to vote against their convictions and the known views of their constituents. Take the position of hon. members representing industrial ridings. Dare they vote against this amendment? I put it to them to-d-ay. Well, they are on the horns of a dilemma. They must choose here and now. Vote against the amendment and face destruction at the polls, or vote according to the dictates of reason. I challenge hon. members from industrial ridings to vote against this amendment.
I vigorously disagree with the implications of that challenge, both on principle and in respect of the facts which it assumes. I represent an industrial riding, and I am going to vote against the amendment. When the time comes around for an election I intend to go before the' constituents of that riding, if those who supported me in February of 1942 will do me the honour of again selecting me as their candidate, and I do not expect to face destruction. I disagree with the challenge on principle because it appears to me to be destructive of the very basis of British parliamentary institutions. That basic principle was over a century and a half ago stated in eloquent language by Edmund Burke. It has more than once been put upon the records of this house, but I venture to quote it again because I think the lesson should be always present in the minds of hon. gentlemen who sit in this house. I quote:
Certainly, gentlemen, it ought to be the happiness and glory of a representative to live in the strictest union, the closest correspondence and the most unreserved communication with his constituents. Their wishes ought to have great weight with him; their opinion high respect; their business unremitted attention. It is his duty to sacrifice his repose, his pleasures, his satisfactions, to theirs; and above all, ever, and in all cases, to prefer their interest to his own. But, his unbiased opinion, his mature judgment, his enlightened conscience, he ought not to sacrifice to you; to any man, or to any set of men living. These he does not derive from your pleasure; no, nor from the law and the constitution. They are a trust from Providence, for the abuse of which he is deeply -answerable. Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.
My worthy colleague says, his will ought to be subservient to yours. If that be all, the thing is innocent. If government were a matter of will upon any side, yours, without question, ought to be superior. But government and legislation are matters of reason and judgment, and not of inclination; and what sort of reason is that, in which the determination precedes the discussion; in which one set of inert deliberate, and another decide; and where those who form the conclusion are perhaps three hundred miles distant from those who hear the arguments?
To deliver an opinion is the right of all men; that of constituents is a weighty and respectable opinion, which -a representative ought always to rejoice to hear; and which he ought always
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most seriously to consider. But authoritative instructions; mandates issued, which the member is bound blindly and implicitly to obey, to vote, and to argue for, though contrary to the clearest conviction of bis judgment and conscience-these are things utterly unknown to the laws of this land, arid which arise from a fundamental mistake of the whole order and tenour of our constitution.
Parliament is not a congress of ambassadors from different and hostile interests; which interests each must maintain, as an agent and advocate, against other agents and advocates; but parliament is a deliberative assembly of one nation, with one interest, that of the whole; where, not local purposes, not local prejudices ought to guide, but the general good, resulting from the general reason of the whole. You choose a member indeed; but when you have chosen him, he is not a member of Bristol, but he is a member of parliament. If the local constituent should have an interest, or should form an hasty opinion, evidently opposite to the real good of the rest of the community, the member for that place ought to be as far, as any other, from any endeavour to give it effect.
That doctrine is particularly wholesome and necessary when parliament is dealing with large issues which affect the very existence and liberty of the body politic. This budget relates to the financing of Canada's part in the great struggle which is being waged at this very moment for the security and freedom of our country as well as for the security and freedom of mankind. This parliament has decided that Canada should take part in that struggle in the fullest possible measure commensurate with its resources. On June 13 I reminded the house of the definition given by the Prime Minister (Mr. Mackenzie King) of what we on this side of the house understood to be total war, "the devotion to the prosecution of the war of all the available energies and resources of the nation in excess of those required to maintain the health and efficiency of the people." That policy has been and is being carried out. The total effort of the nation is nothing more than the aggregate of the total efforts of each individual; and just as, for the nation, everything which is not required to maintain the health and efficiency of the population should be devoted to the prosecution of the war, likewise with the individual, all that he does not require to maintain his health and efficiency should be devoted to the pursuance of the object in which his nation is engaged. I quoted again from Hansard, at page 3784, from the same speech of the Prime Minister:
The foundation of the total effort of any country is a correct decision as to the minimum requirements of the civilian population. Once that is determined, production and consumption, except for war, must be steadily and progressively cut down to the minimum. Waste must be eliminated; the manufacture of all luxuries and many comforts must cease. The surplus . . . must be used to make war.

It is the members of parliament who have the responsibility of determining the minimum requirements of the civilian populations and of gauging the extent to which each man can be reasonably called upon to contribute to the national effort. Not only must that effort be made but it must be financed, and each one is also required to do his part, commensurate with his ability to pay, to meet the financial requirements of total war. To suf-gest that any hon. member should be deterred from asking his constituents-all his constituents-to do their part because of fear that he might give offence to some in asking them to do so, seems to me to strike at the very root of hon. members' responsibility to their conscience and to their country.
So much for the principle. I am also in profound disagreement with the assumptions of fact implied in the challenge of the hon. member for York-Sunbury to those in this house whose privilege it is to represent industrial ridings. That challenge places too low an estimate on the intelligence and understanding of the constituents of Quebec East and too low an estimate on the intelligence and understanding of the constituents of other so-called industrial ridings. The pith and substance of that argument is that industrial workers want an exemption from income tax of at least S800 for unmarried men and at least SI,600 for married men; that from their point of view such a raising of the level of exemption is to be preferred to the elimination of the. refundable portion of the income tax as it exists at the present time, and that any failure to support the amendment of the hon. member for Dufferin-Simcoe (Mr. Rowe) will constitute a refusal to comply with their desires.
I need not take many words, Mr. Speaker, to remind the house of the true purport and effect of this amendment. The Minister of Finance has moved that you do now leave the chair so that the house may resolve itself into committee of the whole to consider ways and means to finance this year's part of Canada's war effort. The amendment of the hon. member is that the house, instead of going into committee of ways and means to determine how we shall finance this year's portion of our war effort, will content itself with expressing a few regrets-because that is the amendment. The motion is that you leave the chair. The amendment is:
That all the words after "that" be struck out and the following substituted therefor:
"This house regrets-
(a) that no adequate steps have been taken to simplify the forms and modernize the methods of taxation;

The Budget-Mr. St. Laurent
(,b) that no effective action has been taken to grant a measure of relief to the men anil women in the lower income brackets by raising the exemption in income tax for single persons to not less than $800 per annum and tor married persons to not less than $1,600 per annum;
(c) that no provision has been made to encourage greater war-time production by exempting overtime pay from income tax."
And so on.
That is the amendment. If that amendment were to be carried by a majority vote of this house, what would be the effect? First of all, it would mean that the financing of the current year's war expenditure would be in accord with the financial provisions which are on the statute books at the present time, and no change would be made. This year, taxes would be paid at the rates provided in the statutes as they exist without any amendment by parliament at this session. Not one penny would be added to the level of exemptions; not one penny would be subtracted from the obligation to pay into the exchequer the refundable portion of the tax; not one penny of relief would be granted on any one of the numerous adjustment provisions covered by the resolutions of the Minister of Finance as placed before the house to be considered when it is in committee. Everything would remain in statu quo.
Let me enumerate some of the things which the resolutions propose to do and which could not be done if the amendment carried; Adjustment of medical expenses allowances; additional expense allowance to the blind; extension of tax credits to include all children dependent on the taxpayer; allowance to persons paying alimony; amendments related to contributions to pension funds; extension of delay of appeal against income tax assessment; consideration to be given to the taxation of annuities and to the succession tax on shares in family corporations; the proposal in respect of the excess profits and corporate income taxes; elimination of customs and war exchange tax on agricultural implements, including cream separators; removal of prohibition against the importation of certain articles-all serious proposals, which the Minister of Finance, in view of his economic survey of the situation, thinks it is desirable to have at this time, but which could not be had if this amendment were to receive the approval of the majority of the members of this house.


Gordon Graydon: You would have all the good things in the budget under a new government. That would be the result.
Mr. ST. LAURENT: I am just going to deal with what is buzzing in the minds of some hon. members.


Gordon Graydon: There is a little mental exercise going on over there too.
Mr. ST. LAURENT: The second effect would be the dismissal from office of the present government and the necessity of holding an immediate general election.


Gordon Graydon: I think you are going to hold it anyway, are you not?
Mr. ST. LAURENT: My hon. friend will ask for further information about that from the leader on this side.


Gordon Graydon: We have not the right one over there just now.
Mr. ST. LAURENT: In the meantime I will proceed with the remarks I wish to submit to the house. The second effect would be the dismissal of this government from office and the necessity of having at once a general election and having the affairs of the country administered, during perhaps the most critical weeks of this world war, by a government without a majority of parliament behind it. In the meantime, until a new House of Commons had been elected, until a new session had been held, the taxing provisions of the legislation of 1943 would continue to apply, and none of these things for which the resolutions of the Minister of Finance provide could be done.
I submit quite seriously that if hon. members who support the amendment really felt that there was any serious danger of bringing about such a result at the present time they would hesitate.


Mr. MACKENZIE (Vancouver Centre):: Just politics.
Mr. ST. LAURENT:	And if they did not
hesitate it would be because they have not, in truth and in fact, that consideration for what happens at the polls that is implied in the challenge of the hon. member for York-Sunbury.
I wish to make a few comparisons between the raising of exemption from income tax suggested in the amendment and relief from payment of the refundable portion of the tax proposed in the resolutions of the Minister of Finance. Of course the exemptions cannot be raised by an affirmative vote on this amendment ; but even if a great many things were to happen and there were appropriate means taken to bring about the raising of the exemption level, let us compare what would be the result with the result of what is proposed by the Minister of Finance. The raising of this exemption would affect the whole body of taxpayers and would give some taxpayers relief of seven per cent of the normal tax on $400-some married taxpayers, and others unmarried, $340,

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plus the relief on the graduated tax. The relief would amount to 50 per cent on a $5,000 income; 55 per cent on one of $10,000; 75 per cent on one of $50,000; 85 per cent on a $100,000 income-a relief to every [DOT] taxpayer of something which would vary between $28 and $340. The man not having to pay any graduated tax would get $28, and because of the size of their incomes those paying graduated tax would get up to $340.
I do not know exactly what the raising of this exemption level would mean in loss of revenue, but I venture to suggest that it would be very considerable, and I hope the Minister of Finance in dealing with this budget will have figures to give to hon. members.


James Lorimer Ilsley: It would be $135,000,000.
Mr. ST. LAURENT: I venture to suggest that the greater portion of that would remain in the pockets of those whose incomes are such that they have to pay graduated taxes. On the other hand, the foregoing of the refundable portion of the income tax proposed by the Minister of Finance can have little or no effect on those in the higher income brackets, because they already have offsetting items which dispense them or most of them from dispersing to the federal exchequer any part of that refundable portion. The Minister of Finance has told us that the refundable portion of the personal income tax would be $110 million. There is no doubt that the class of Canadians from whom this $110 million is obtained can well afford as a class to provide that sum for the financing of Canada's war effort. There is also no doubt that there are some of them in the class for whom it was a definite hardship to have to provide their portion of it, while there are others in the class who can without hardship provide more than the portion they were providing of the refundable part of the income tax. The $110 million will have to be obtained; but under this provision, everyone, in' the face of his conscience and his duty to his country, will determine the extent to which he can contribute to it.
On the basis of raising the exemption level from $1,200 to $1,600, a married man with two dependents having no graduated tax to pay, because he has two dependents and his income is $1,600, would get a benefit of $28, which is seven per cent of $400. If my calculations are correct, under the present tax law his tax amounts to $56, and the reefundable portion which he would not be required to pay in and leave there until the end of the war would be exactly $28. At the present time the same man with an income of $2,000 would pay

$214.80, and he is relieved from having to disburse $107.40. If his income were $2,500 his tax would be $430.80 and his relief $215.40. At $3,000 his tax would be $668.40 and his relief $334.20. At $3,500 his tax would be $908.20, and his relief $420, figured on this basis, ten per cent of $3,500, which is $350, and one per cent more for each child, which makes $70, or a total of $420.
A man with an income of $4,000-and by the way that happens to be the amount of the indemnity of members of parliament-and two dependents, would pay as a tax $1,148.40. I am sure if he were a member of parliament and had no other income there would not be much left after deduction of the tax to use as savings, forced or otherwise. This budget would mean, however, that out of that salary there would be retained $480 less than at the present time. That is the relief which is being given to those who will be able to say to themselves conscientiously in face of their duty to their country, following the criterion expressed in what is meant by total war, that they cannot devote any part of their savings to the financing of the war effort.
My next submission is that the abandoning of the enforced savings is in every way to be preferred to the raising of the exemption level at the present time. It has already been pointed out and was again stated by the hon. member for Brantford City (Mr. Macdonald) this afternoon that the exemption level in this country is now higher than that existing in the United States, in the United Kingdom, in Australia, in New Zealand, and he might have mentioned some other countries. They, like ourselves, are in the war. I fully agree with the suggestion that this is no time to tell them that Canada is letting down on her war effort. But on its own merits I submit that Canada's war effort is necessary and that it is necessary that it should be financed and that that financing should be along the lines of the definition of total war as laid down by the Prime Minister (Mr. Mackenzie King) at page 3784 of Hansard, as follows:
The devotion to the prosecution of the war of all the available energies and resources of the nation in excess of those required to maintain the health and efficiency of the people.
In other words, the requirements are so great that wherever there is ability to pay there should be taxation; but where there is no ability to pay it would be quite wrong to enforce savings. The taxation is to pay for the war that is being waged at this very moment while we are debating in this house. That is what the taxation is devoted1 to, whilst the compulsory saving is added to the public

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debt just as much as the amounts lent voluntarily on victory bonds. The purpose of the savings is to enable the taxpayer to put aside purchasing power that he may have to use after the war is ended. What comparison should we establish betwem the urgency of dollars to pay for what is going on in Normandy at the present time and the putting aside of dollars so that the individual may have purchasing power for himself in the years that follow the war? If there is no ability to pay a tax-and there should be no relief from taxation on any other grounds so long as this war lasts-there certainly is no ability to make enforced savings. Of course, we all hope that that situation will not always continue. The burden of taxation is very heavy, and there is no doubt that it should be lightened just as soon as it may be possible to do so.. In my opinion there is no doubt that the lightening should commence in the lower income brackets. I am sure that no one will be better pleased than the Minister of Finance himself when he can consistently come into this house and announce some substantial reduction in real taxation; and expressing my hopes, but basing them upon the relations I have had1 with him over the last two and a half years, I trust that the first consideration will be given to those whose need is greatest, and that he will feel as I do, that the greatest need exists just above the present level of exemptions.
The Minister of Finance has stated that another reason for abandoning the enforced savings provision was its effect upon production and the reluctance of those in the lower income brackets to bridge the notch between full exemption and incipient taxation. Apparently the hon. member for York-Sunbury is in agreement with that. He said at page 4435 of Hansard:
Relief must be granted to taxpayers in the lower income brackets, not only because of the increase in the cost of living but also and more particularly to deal with the growing evil of absenteeism in industry.
The hon. member for York-Sunbury also said that the high rates of deductions rankled in the minds of the wage-earners in the lower income groups. Well, we must still face facts. This is no time for distributing compliments or otherwise. The facts are these: an unmarried man earning $660 a year or $55 a month, pays no tax. If his wages are made $56 a month he gets $12 a year more. He then pays $8 tax and has $4 left out of the $12. Maybe he earns $12 a year working overtime. He gets $4 out of $12; the tax is $8. If he gets $24 more than the $660,
10.0-2851
or rather if he earns $24 more the tax is $16 and he gets $8. If he earns $60 more the tax is $40 and he gets $20, and so on right up to $67 a month where the tax, including the refundable portion, is $96 out of the $144 he earns over $660. If he earns $75 a month his income will be $240 over the exemption portion and his tax will be $135. It has to go to $90 a month, or $420 over the exemption portion before the tax gets down to less than fifty per cent of the increased amount. That is the situation with the compulsory savings as they exist at the present time.
I am. neither justifying nor condemning anyone's conduct; I am just stating the situation created by this tax schedule, and acknowledging the fact that together with it there is absenteeism and unwillingness to increase the earnings in that range. But the bridging of the gap between no tax and some tax will not be helped in any way by increasing the exemptions. At $66.66 a month, which would be $800 a year, there would be no tax; but at $67 a month or $804 a year the tax would be $2.66; at $68 a month, or $16 over the proposed exemption, the tax would be $10.66. At $80 a month, or $160 over the exemption, the tax would be $106.66, and at $100 a month, or $400 more for the year than the exempted portion, the tax would be $204. The wage would have to go to $500 over the exemption before the wage-earner would retain as much as fifty per cent of his additional earnings. The proposal in the amendment, even if it were something more than an expression of vain regret, would not be a panacea to cure any of the resentment that may exist over the rate of taxation when it first commences to affect wage-earners.
Well, Mr. Speaker, when I go before my constituents in Quebec East these are some of the reasons I am going to give them to justify the vote I intend to register in response to the challenge of the hon. member for York-Sunbury, I hope at that time the necessity for waging total war at least in the European theatre may have passed, but I will make no apologies for what this country has done. On the contrary, I will congratulate the people on the energy, the resourcefulness and the fortitude with which they have responded to the needs of the country in these trying hours and days and weeks and months and years. I will remind them that no part of the magnificent effort which has been put forth would have been possible if the other parts of ' our war programme had not been maintained. To paraphrase the Prime Minister once more, I feel that the most difficult task in total war was the decision as to the correct balance
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between the different aspects of our war effort. I will ask them to remember that without a correct balance in the scheme of taxation the opportunities with which they have been provided to serve in the armed forces or to work in war industries could not have been maintained, and it would not now be possible for the Bank of Canada to report, as it did in the February-March statistical summary, that the number of employees on- payrolls where there are not less than fifteen employed was 1,908,000, and that the weekly payroll for those 1,908,000 was $60,600,000. I will congratulate them, but I will ask them to congratulate us on the decisions we had to make and carry out, the decisions we are having to make and carry out during these trying times, as to the correct balance to be maintained between these different aspects of our war activities. And because I am not going there to face destruction I will ask them also to believe that in the post-war period we can make like correct decisions as to the proper balance to be maintained between the different aspects of the social and economic problems which will have to be coordinated and dealt with in a satisfactory post-war reconstruction.


Mr. F. W. GERSHAW (Medicine Hat):: In making a short contribution to this budget debate, Mr. Speaker, I desire first to congratulate the Minister of Finance (Mr. Ilsley) upon the preparation and delivery of the budget. He has had many baffling problems with which to deal, but he has won a high place in the confidence of the Canadian people. A few moments ago someone said something about an election in the near future. When that day comes I believe this government should be returned, to promote the welfare and happiness of the people of Canada. They have headed into the storm; they have done what had to be done, and they are well equipped to represent Canada at the conference table and to deal with the problems of rehabilitation. The great issue before the Canadian people at the .present time is the war, which is never very far from our thoughts. As long as history is read, as long as memory lasts, the glorious deeds of skill and courage performed by the members of our fighting forces will remain with us, ever to their credit.
It has been said that one of the chief causes of the great depression which followed the last war was agricultural distress. I do hope that following this war the industry of agriculture will receive first consideration at the hands of the government, because if we have a prosperous agriculture we shall have prosperity throughout the whole economy of the country. I should like to bring to the attention of the

minister two problems that are of great importance to the district from which I come. Ever since the early eighties people farming in that district have found themselves at times in a condition of poverty, owing to crop failures. At such times they have had to obtain relief and seed grain and fodder from this government. The amount of such assistance was placed as a lien against the title of their land, and very little of that money has been repaid except when there was a transfer of title. Commissions have been set up in each province to deal with these old seed grain liens, but those commissions have not been very generous, and those unfortunate enough to have had to accept relief find themselves overwhelmed with the interest charges which have accumulated during the last forty years or so.
I should like to give some reasons why these old seed grain liens should be cancelled, in addition to the fact that such action would bring about a feeling of good will and of justice among these people. In the first place, as I have said, interest charges have mounted very rapidly. I have in mind the case of two people, Mr. and Mrs. Wing of Ranchville, who had to accept some relief thirty years ago. The day came when they wanted to retire. To their great surprise they found that the little equity they hoped would be theirs was completely wiped out by these liens, of which they had known nothing. They had thought these liens were long ago cancelled. I have another case of a man who received $293 in 1915 in relief fodder and seed grains. During the years he has paid $249, but he still owes $334.90, which is away beyond his ability to pay.	[DOT]
The officers of the provincial government are in close contact with actual conditions and that government has seen fit to cancel its share of what was advanced for relief. The dominion allowed the people to settle in those districts and certainly should bear some responsibility. The principle has now been established that there should be a minimum standard, and it seems pretty hard to have children and grandchildren, some of them returned soldiers, having to pay for relief that was used to save their parents or grandparents from actual starvation at that time. If those bad crops had come along in more recent years the condition would have been corrected by means of bonuses or payments under the Prairie Farm Assistance Act. Surely that is sufficient reason why leniency should be shown. Someone has said that those who have paid would feel that they had been dealt with unfairly if some

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remission were given to those who still owed on their debts, but I do not believe there will be one person who will object on that account.
A permanent policy should be adopted to deal with the recurring droughts in those districts. Those who live there are convinced that they cannot depend upon moisture from the sky. During the last thirty years there have been, because of lack of rainfall, only about five paying crops. We do hope and put forward the plea that adequate provision be made, so that a permanent policy can be worked out in order that these relief debts and bonuses will be quite unnecessary. The people of that district are convinced that a great step would be taken in that direction if every acre foot of water now flowing to the sea could be used for production. It is quite impossible to find private capital to build these irrigation schemes. Experience has shown that governments must advance a certain amount of money to cover the capital cost. But there would be increased production; there would be increased traffic for the transportation systems; there would be increased trade; there would be more taxes collectable, and it wohld not be necessary to provide relief and assistance.
If you go into those districts you find that the homes are often badly in need of repair. The people are isolated; they are long distances from their neighbours. They have no grass and trees and they cannot make real homes. If water were provided; if use were made of the water that is there, there would be flowers and gardens and dairy products. A community life could be built up and there would be food provided for the proper nutrition of the people. The people of this country are not getting a balanced diet. If they were we would be consuming eighty per cent more milk, forty-one per cent more butter, fifty-five per cent more eggs, twenty-nine per cent more meats and about 120 per cent more fruits and vegetables. These are the very products that could be produced as the result of irrigation.
Many of those districts are suffering from drought at the present time. If you went through them you would see that the grass was thin and brown, that the crops were poor and that the cattle were in need of water and pasture. Then if you drove into an irrigated district you would find an entirely different atmosphere. You would find the grass tall; you would find large stacks of feed; you would find the cottages and homes painted and more homelike; you would find a much better feeling, more hope and courage.
The provincial government has been approached regarding this programme and it
is ready to do what it can within its means. Petitions have been circulated and signed by thousands of people in those districts. Every member of the cabinet in this government has been approached and has been made familiar with the situation. It is true that something has been done under the Prairie Farm Rehabilitation Act in the way of building small dugouts and stock water reservoirs and other irrigation schemes, but these all depend upon the spring run-off. When there is no snow there is no run-off and the reservoirs are soon dry.
Surveys have been made, and I want to thank the Minister of Agriculture (Mr. Gardiner) for sending in surveyors at the beginning of this year to complete the survey of one large district, the Redcliff-Ronelane district. These problems have been before the reconstruction committee of this house on at least two occasions. In June, 1943, the reconstruction committee recommended that immediate steps be taken to bring about cooperation between the dominion and provincial governments to the end that these districts may be completed.
Mr. Meek, chief engineer of the Department of Mines and Resources, has been over the Milk river project on different occasions and he is thoroughly familiar with the whole proposition. He is convinced of its feasibility and practicability. Mr. Hayes, an engineer of great experience, pointed out to the committee that there were difficulties in irrigating, but he also pointed out that in the light of experience gained and knowledge now acquired great prosperity could be brought about if these districts were completed.
In the St. Mary's-Milk river district 345,000 additional acres could be brought under the ditch at a cost of about $44 an acre. This matter is urgent because, if this project were completed, the waters of those international streams could be used and if it is not completed they may be lost forever. There are 120,000 acres under irrigation but with deficient water supply with consequent lighter and poorer crops. Additional water is needed.
The Redcliff-Ronelane scheme was built up largely by private capital, and 180,000 acres could be brought under water for the cost of around $20 an acre. The people there are in deadly earnest. At a large meeting held in April of 1944, a resolution was passed recommending that the construction of these districts be proceeded with as soon as men and materials can be released from war work. The time has come when another step should be taken, a step that will really move some earth and get water into the ditches. If that is done an enduring work will have been
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constructed, a work that will be a monument to those who have completed it, a work that will last long after we are gone and be a great blessing to the people of future generations.
A little area near the ranching station at Manyberries, an area that would feed only one cow without irrigation, produced last year 2,400 bushels of feed grain and about 250 tons of hay. In the near future, and even at the present time, soldiers will be and are returning from the war and men must be moved from those dried districts. Land suitable for farming is becoming, scarce* Here we have a great area close to schools, hospitals, telephones, churches and railways that could be brought into production at a very reasonable cost. Dehydration is a common process nowadays and milk and eggs and a large number of vegetables can be dehydrated and preserved in that way. Quick-freezing plants would soon come into operation. By these means these protective foods can be made available all the year round for the people who need them. Then there would be seed plants, canning factories and beet sugar factories to complete the picture. The by-products of the beet sugar factories would be a great help to the live stock industry. Altogether it would revive and give permanency to the towns and cities there. It would create happy homes.
Education at the present time is valued very highly. Parents will sacrifice almost anything to get it for their children, and children often dream of it, 'but in the farming districts where the hazards are so great these dreams seldom come true. I am making an appeal to the members of this house to support irrigation projects because, by so doing, they will help to bring joy and happiness to many people. It would be a step away from that despair which comes when human hopes are crushed for lack of the economic means of fulfilment.
Mr. HARRY R. JACKMAN (Rosedale): Mr. Speaker, in speaking on the amendment to the budget I should like to direct the attention of the house to the following points: First, to the need for increased exemptions in the lower income brackets. If I understand them correctly, some of the calculations of the hon. Minister of Justice (Mr. St. Laurent) in re-' gard to the normal tax were not entirely correct. For instance, I do not believe that the increase in the brackets from $660 to $800 would relieve anyone of normal tax except those in the brack'd between $660 and $800 for single persons and, for married men, those in the brackets between $1,200 and $1,600. Only to that class would relief be afforded.

The second point to which I wish to address myself is that employers should be permitted after three years, and that time has already elapsed, to increase the pay of deserving salaried workers by a ten per cent upward adjustment.
Third, the conception of a modern budget. It is no longer what you earn that counts, but what the government lets you keep or hands you out.
Fourth, the need for a committee of ways and means, with power to call for witnesses and to consider alternative plans of taxation to the proposals which have been brought down by the Minister of Finance (Mr. Ilsley), which are seldom allowed to sufEer any major change at the hands of members of the house.
Fifth, why compulsory savings did not work.
Sixth, the need for an announcement of the government's general policy on post-war taxation. Business men cannot go ahead without a chart, and an announcement of the general post-war taxation policy would be a great step in giving the people of this country some basis on which to construct their own reconstruction policies which will afford employment to our people.
The amendment to the budget moved by the Progressive Conservative party would provide much needed relief to taxpayers, particularly those in the lower income groups, and at the same time provide a measure of relief that would not be inconsistent with the general financial policy of this country. In particular I refer to paragraph (b) of the amendment which reads as follows:
(b) that no effective action has been taken to grant a measure of relief to the men and women in the lower income brackets by raising the exemption in income tax for single persons to not less than $800 per annum and for married persons to not less than $1,600 per annum.
With the exemption on a single person's income limited to $660 per annum or $12.70 a week, and on a married man's income limited to $1,200 per annum or $23.07 a week, there is not enough left on which to live, much less enough left on which to begin to pay income tax. The cost of living makes the raising of the income tax exemptions necessary. Very small items bulk large in the worker's income. For example, two years ago the government permitted restaurants and hotels to increase the price of tea and coffee by five cents a cup. That meant, if the taxpayer were living away from home, an increase of fifteen cents a day, or not less than $54.75 for the year. Assuming that five cents was already charged for a cup of tea or coffee, which would surely be the minimum, we must

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add another S54.75, or a total of $109.50 a year, which the taxpayer would have to pay who uses three cups of tea or coffee a day. In view of the hardships which taxpayers living away from home were already up against, it would seem that the government might well have been advised to divert some of the taxation on alcoholic beverages and use it to subsidize the use of tea and coffee in public restaurants and hotels.
To give another example, take government employees in grade 1. Their salaries are inadequate; yet they are subject to the tax. If one visits local restaurants in Ottawa or makes inquiry it is found that just prior to the next pay cheque coming due many of these government employees cannot afford proper meals. They will have for lunch probably a sandwich and a coca-cola. The result is that they are undernourished. Yet this class of employees is subject to income tax, even though it is a small one, and it is our belief that they should be given a little higher exemption before they are brought into the income tax brackets. What is the use of the government taking away by taxation the income of these employees in the lower tax brackets and at the same time giving the cost of living bonus to some, and in varying amounts? As matters now stand, men and women in the lower income groups, both married and single, cannot live in decency, much less with comfort, on what is left of their wages and salaries after taxation. I urge the government to increase the income tax exemption on single men to $800 and on married men to $1,600. The cost of doing this would not be great; in fact, rather small after the cost of collection is deducted. It is true that it may be said to be inflationary, but only in a small degree, and not nearly to the same degree as is the need for some relief to those of our citizens in the lower income brackets. It comes with ill grace from this government to raise the cry of inflavor -hen it sponsors family allowances costing over $200,000,000.
Salaried workers, including those above the cost of living bonus class, should after three years of frozen salaries be permitted, where they have become entitled to it, a ten per cent salary increase. Salaried workers as in the civil service ordinarily get small increases from time to time, because in their early years they receive extremely small returns for their labour. As they continue in their employment they become of more value to their employers and because of this, and in many cases because of then- growing family responsibilities, it is customary and part of the implied contract that they should receive periodical increases. After three years with greatly increased taxation the plight of many of these workers is serious and economically much harder than that of other classes. I therefore urge upon the government that the salaried worker be allowed one upward adjustment of -ten per cent in his basic salary. I do not believe that there is a member of the house who will not agree that this permission to employers to give a ten per cent increase is not only fair but overdue.
To return to the estimates that were given to the house by the Minister of Finance, we have an estimated expenditure of $5,152,000,000 or $458 per person. Wei have an estimated revenue from taxation and incidental sources of $2,617,000,000, or $233 per person, leaving a deficit of $2,535,000,000, or $225 per head. We are paying for just over half the costs of the war through taxation; the remainder is provided by our people purchasing claims on the future through their subscriptions to victory loans and war savings certificates. But they are not sacrificing a present spending or purchasing power with anything but the firm expectation that, when the maturity of these war savings certificates or victory bonds comes around, they will be able to purchase just as much as they are giving up at the present time. They do not expect that a suit of clothes will then cost $100 or that a $1,000 motor car will then cost $2,000. They expect the same kind of dollar as they are giving up and lending to the government at the present time. If we were to pay as we go entirely we should have to double taxation in this country, and that would be arithmetically impossible in the higher brackets, and humanly impossible in the lower brackets, because something must be left on which to live. It may indeed be interesting for hon. members to speculate on what would happen to production if we paid for production as we went along, instead of borrowing against the future. What would be the effect on production if, for example, we paid out, not $5,152 millions bu only what we took in in revenues and taxation, namely $2,617 millions? What would be the effect in lessening incentive to our workers? And then we must ask ourselves, how long can we continue to spend twice as much as we collect?
In addition to the enormous expenditures which the house has already before it, we find that the Minister of Finance tells us that approximately $848 millions additional has to be raised in Canada in order to pay our workers and other producers for what the governments intend buying this year. The question of course arises as to what is going to happen to it. The minister said that there will prob-
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ably be large shipments for which we shall have to take payment only in the future. In other words, someone will be indebted to us and we shall have to take payments only in the future, or present payment in a currency other than Canadian-something we cannot spend at the present time, but which may be of value in the future. May I ask him, what is the nature of the transaction which involves such a large amount of money, $848 millions, over one and one-half times our ordinary peace-time budget? We are merely given a hint as to what it may be. Is it to be mutual aid to our allies who are going to use on the fighting front the goods represented by this money? I believe the minister must give us as full an outline as it is possible for him to give before this budget passes. Certainly, if we learn nothing about it, and parliament has adjourned, we have been warned already that the money will probably be spent; we do not know how it is going to be raised; if necessary, I presume, it will have to be manufactured by the printing press or the government will have to go to the Bank of Canada-it is almost the same thing-and the people's representatives will never have been consulted.
Once again, Mr. Speaker, I suggest that a committee of ways and means with the powers which I have already outlined is urgently required to pass upon these matters, unless the executive is to take complete power away from the legislative branch. About the only power left to us, namely the legislature, is that of scrutinizing expenditures and supplying money to the crown. Surely some right has to be left to the legislative branch of parliament.
The budget has really assumed tremendous proportions. Against our normal budget of about $500 million, our present budget is over ten times that amount and our cash requirements are about twelve times as great. Unlike the ordinary taxpayer or individual in this country, parliament does not figure out where the money is coming from before it spends or appropriates it. It is very much like putting the cart before the horse; and I believe that if we had a committee of ways and means we would be able to cut our coat more closely according to our cloth and have some realization of where the money is coming from before we decided how it is going to be spent. Certainly the present method cannot go on for ever without having very serious consequences to our whole economy. The only exception I would make to that stricture on the government is in connection with the war. Certainly we must not count the cost there before we spend it; we must spend every cent and every dollar we can which will shorten 
the war or save the life of a single man. That is not only our duty but our self-interest and our solemn obligation.
May I point out to this house, however, that finance is not an abstract affair apart from the people with whom it has to do. It does not operate in a vacuum. I believe that the temper of the people will allow the present method of financing to continue until victory is assured. But finance deals with people; its possibilities and limitations are rooted deep in human nature, and hence I use the qualifying phrase, "temper of the people".
In the post-war period we must make financially possible that which is physically possible, and may we hope that the temper of the people will allow that to be done. The question will undoubtedly arise at that time, will three million Canadians continue to buy government bonds and war savings certificates? I was reminded in this connection of a statement of Field Marshal Ironside, who, when he was congratulating our armies on the capture of Cherbourg added:
Every war ceases by the fact that men will not fight any more. Whatever the order given by a general or a government, when men cease to fight then the war is over. That I hope is just coming.
Or as General Montgomery says:
You can do anything with an army if the morale is 'high.
And I suggest you can do anything with production or with finance if the people are willing or have confidence. Despite the tenets of certain political doctrines there is a limit to what the people will stand, and they will stand different things at different times. Education and new ideas are a great help, and we all live and learn. But I maintain that a system which has built up the modern industrial world, based on individual initiative, is the system which is best calculated to provide the highest standard of living for all.
I should now like to say a few sentences about the conception of a modern budget, because I believe that not only will some hon. members be interested, but the people should understand what we are doing when we discuss budget matters in this house.
In a little booklet entitled, "Full Employment and the Budget", by Hugh Molson, M.P., is the following:
In the days of Gladstonian finance, it was considered that the state should concern itself as little as passible with the economic and social life of the country. Its activities were so narrow that in 1887 Lord Randolph Churchill resigned the office of Chancellor of the Exchequer rather than introduce a budget of 88 million pounds. It was thought best to leave money "to fructify in the pockets of the taxpayer."

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And, quoting further from the same pamphlet:
As Mr. Quintin Hogg, M.P., said in the House of Commons on 14th April, 1943: "we are gradually passing through a transitional stage betwen two different conceptions of what our budget is. It still is in form a statement of the accounts of the treasury-the ordinary expenditure and revenue of the year-but it is gradually developing into an annual review of our whole economic life and resources. I believe the process should continue, because I think it will lead in the end to a much wiser view of our economic policy."
The modern budget, unlike its predecessors, results in the redistribution of the national income, although that is a new conception in this country. Here it was not found necessary until some years ago, because in Canada individual initiative counts and here the children of the same family have the same opportunity, and these same children can occupy the highest or the lowest places in our economic society depending on their own abilities and application. But now the national income, which is the adding together of all our wages and salaries, those of every one of us, into what I may term, and it is so-called by many in fact, the national pie- this national pie is divided by bureaucrats under the aegis, if you will, of the Minister of Finance and under the authority of the government. You and I are merely a collection agency until the budget is brought down. It is no longer what you earn that counts, but what the government lets you keep or hands out to you. It is no longer what you receive from your employer, in competition with your fellow men, which determines how much you shall have, but simply how much the government decides that you may be allowed to keep at the end of the year. The old virtues of self-preservation, hard-work and self-denial will, I believe, reassert themselves because they are part of the fundamental law of nature. We may hope that glittering prizes for sharp swords will not be held out after the war, but at the same time we may hope that there will be payment to everyone according to his ability and his contribution to society. Fortunately, the principle which leads to the greatest production still obtains, namely, free enterprise and individual initiative; and, as Mr. John Bracken has said, it is that principle which leads to the distribution of plenty and not to the distribution of scarcity.
But it is this importance of the modern budget which I wish to emphasize to members of the house, because it surely gives rise to the need for a committee to examine these matters, since probably nothing is of greater importance to the people of Canada than the
manner in which the budget redistributes their earnings throughout the year. It has a direct effect on every taxpaying individual and nowadays, therefore, on practically every individual. There is an imperative need that a committee should be set up which knows the needs of the people and what the people will stand for, rather than to have the whole matter settled by a mere handful of people in Ottawa. Such a committee would avoid gross errors. For example, I do not think the situation in regard to compulsory savings would have been so unhappy and so disastrous had there been a committee composed of members of this house. This redivision of the national income, that is, everyone's wages and salaries, is of much greater importance than many other measures in this house on which we spend endless time and which do not begin to compare in importance with the budget.
The second basic consideration which the minister outlined in his budget address was that we must have the highest possible production, and that the urgency is very great and is immediate. This is surely not a new principle either in war budgets or even in peace-time budgets. It should be the allcompelling one, although I am afraid that sometimes other principles are allowed to take precedence over it. May we hope that, in the post-war period, whatever government is then in power will allow the principle of production to take priority over any principle of tax collection, because the budget is surely made for business and not business for the budget.
In the 1942 budget the minister upped the personal income tax and introduced compulsory savings. The latter was by far the major matter of the two. At that time he mentioned the three determining principles in framing his budget as equity, incentive, and the need for savings. The minister said this:
There is danger that high progressive rates of income tax may interfere with the incentive for harder and better work for efficient production. We can and must rely upon other than economic motives to a large extent these days, nevertheless, we cannot afford to dispense entirely with the incentive of improved earnings as a stimulus in the continued week-in week-out production work of the nation at a time when production is of vital importance.
I suggested at that time that he was guided if not dominated by bureaucrats, and as a result the compulsory savings measure has utterly failed, and failed perhaps to a large extent because this country has not had during the war the spiritual leadership which we might have expected and which some other countries have happily had. Now we find compulsory savings partly done away with. The error, in

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the minister's judgment, or in the judgment of his advisers, which he accepted, is obvious and admitted.


James Lorimer Ilsley: I would point out that several of the hon. member's colleagues want it continued and have so stated.


Mr. JACKMAN:: Under certain conditions. I hope I may be able to outline why the provision as to compulsory savings has failed so badly. It is due to the fact that it is run entirely by bureaucrats, and after the minister has listened to me I should not be surprised if he agreed with me, that is, if he ever allows his mind to agree to a new suggestion. How much production that error has cost Canada, how much in the way of revenue which we might have obtained under a taxation policy which would be more in keeping with the government's man-power policy and lack of leadership, we do not know. But it has undoubtedly been a detriment to the carrying on of the war effort and the minister now, with the great urgency for production, sees fit to change it at the last moment. In the present budget address he says:
Referring to absenteeism, I am not in a position to judge fully how far this is true, but I do know that now is the time when the need for greater production is urgent and immediate.
Last year we had an amendment to alleviate the rigour of taxation on the lower brackets between $660 and $820 and also on the married brackets just above the minimum. One-third was to be taxed; one-third was to be refundable, and one-third was to be clear gain in the hands of the taxpayer.
At that time, however, I put the following question to him:
I would like to ask the minister what assurance he has that this will prove an adequate incentive to keep workers working after they come into the taxable bracket. Will it be sufficient to stop absenteeism, or is it just a trial and error method which he is presenting to the committee?
I also at that time suggested that we should have a budget committee which would be empowered to call experts so that the house would know exactly what the response to the various measures would be by the people who would be concerned with them. At that time I also suggested as a method of raising increased revenue, or to take the place of any loss of revenue which might be incurred, an increase in the sales tax or the imposition of a purchase tax on non-essentials. But the

humiliating part of the cancellation of compulsory savings to the government must be that in doing away with compulsory savings they are not doing away with any tax at all. The fact is that the people of the country do not place reliance in the government's promise to repay the amount withheld from, the pay envelopes at two per cent interest. It merely gives an indication of the low ebb to which this government has fallen in the minds of the people of the country. Their word is no longer regarded as secure. Compulsory savings were undoubtedly good in theory because they were a bulwark to a small extent against inflation and at the same time provided the government with money. The minister has now reluctantly given up this aspect of fiscal policy. He has been forced to the conclusion that it is desirable to discontinue it. But I would suggest to him and to the hon. members of this house that there is no need to blame the workers for distrusting the government's promise to repay this money. The compulsory saving certificate is a most informal document. It is not even necessary for one to retain it in order eventually to put in a claim for compulsory savings. Let me just read to the house the "simple" language in which this savings certificate is couched. It is as follows:
The amounts refundable shall be paid to the taxpayer after the cessation of hostilities between Canada, Germany, Italy and Japan at such times and in such instalments as may be prescribed by regulation made by the governor in council, but in the case of taxes paid upon income for nineteen hundred and forty-two taxation period not later than the end of the second fiscal period of the government of Canada commencing after a date to be fixed for the purposes of this act by^ the governor in council as the date of the cessation of hostilities between Canada and Germany, Italy and Japan.
Could anybody understand that without reading it two or three times, much less an ordinary industrial worker. Yet this is the thing he is asked by the government to accept. If the government were in touch with not only the workers in the factories but with the people who handle certificates or evidence of indebtedness they would soon learn that such a wording utterly confuses the minds of the persons concerned and causes a complete lack of confidence. Why not say "not later than five or even seven years," and be done with it? People would know where they were and would therefore be content. I realize that a definite period like that does not cover all the legal and war possibilities, but it is prac-

The Budget-Mr. Jackman
tical and that is what the people are concerned with. They are not concerned with all this stuff that interests the people in the east block who do not know what the people of this country understand or what they will put up with. It is true these certificates bear interest at two per cent, but they are not negotiable and perhaps that is necessary in order for them to have any savings feature. Certainly it was a prize example of how not to package what you want to sell the public. The goods were all right, but no business man would ever try to sell the public something they could not understand. A new product must be advertised even if the government has to resort to "soap operas."
The government accepted the suggestion with regard to compulsory savings certificates. I think it was supported by members on our side of the house, and certainly the fundamental principles of this policy were to guard against inflation and to bring in some money for the government. Those principles were sound and I fully realize the reluctance with which the minister gives up the idea. Yet he has no one to blame but the ineffectiveness of his own department and the department of National Revenue in their inability to get the idea across to the Canadian people, and there is nothing wrong with the Canadian people.
I also suggested that facsimile certificates be introduced and placed in the factories where the workers could see them. I understand that has been done to a small extent, but more important and notwithstanding the odd legalistic language in which this certificate was couched it was suggested by a number of speakers on this side in former years that the actual certificate, the actual evidence of indebtedness, should be put into the hands of the workers, but of the 1942 class of taxpayers only sixty per cent have received their certificates. I understand that the government have some problems in connection with it, but they want to be too exact. Surely when they get the return from the employers showing that so much has been deducted for compulsory savings they can issue a certificate up to the nearest $100. The government has the money. There cannot be very' much chance of a mistake. Anyway the certificate is only evidence; it is not an actual receipt which you have to turn in when you want the money.
The government in its desire for preciseness has allowed the very heart of this plan to die.
I shall not mention anything about the refundable portion of the excess profits tax, but I may tell the minister that having had to calculate at times what these were in various companies I almost instinctively had by no means complete faith in them. On reasoning it out, I knew the word of the Dominion of Canada was behind them and that they were all right, but there was no date of payment attached to them and they would have to take a heavy discount because people are not interested in dealing with documents of that kind. I cannot understand a department being administered carrying out the laws laid down in this house in such a fashion. They have no idea what the people of the country will stand for or understand.
On a number of occasions the minister had to change things which had been advocated in this house at various times. For instance, in the early days of the war and only after insistence from members on this side of the house were the income of husbands whose wives had taken war jobs allowed to remain in the married men's bracket. It was found that if the wife took war work the husband's income was reduced to the single man's bracket and the net gain to the family, as a unit was very little. That was changed in order to encourage war production. Then we had the matter of interest on mortgages where the husband had put the property in the wife's name for very good reasons and still paid the mortgage interest himself because it was the only source of earnings in the home. The minister refused to make that change until a year had gone by. All of which indicates that the minister is not in touch with what the people will reasonably stand.
Then last year we had the payments in under dominion government annuity contracts. They were not allowed as an offset against compulsory savings. Although the minister said that he could see no reason why they should be, the change was made. It was impossible to make the people understand why those payments into annuities should not be allowed as an offset against compulsory savings. The minister finally changed the regulation. I suggest, Mr. Speaker, that these matters clearly indicate that the Department of Finance in the drafting of the budget and the Department
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The Budget-Mr. .Jackman

of National Revenue in the carrying out of the Income War Tax Act are hopelessly out of touch with the people of Canada. I hope that some day the Minister of Finance will learn that human, nature exists and that he is not likely to find out very much about it from a selected group of officials whose contacts are not very broad. Let us adopt the committee system where people's representatives may express the people's views. The resulting legislation may not be quite as nice looking as theory in textbooks; nevertheless it will be workable, whereas the present method produces much unworkable legislation.


James Lorimer Ilsley: We might refer it to the banking and commerce committee.


Harry Rutherford Jackman: I suggest that we find some better committee than that. After all, while we have trouble in some of our committees, yet we either believe in democracy or do not. We either believe in the people who sent us here or we do not. We should discuss these things more with the representatives of the people here; otherwise we may as well dish the whole thing. Certainly the Minister of Finance and his advisers in the east block do not know more than all others, and they should consult the people's representatives. I suggest that there has been far too much of not consulting the representatives of the people. I agree with what the minister says about the banking and commerce committee, but the fundamental principle is either we believe in democracy or we do not. The only way to prove that we have a democracy is to consult hon. members of this house, but that is not always done.
The minister gave further consideration to certain anomalies and hardships in the present law. I have not time to go fully into them and there will be ample opportunity in the resolution stage. For the most part the changes are very good. The provision for medical expenses and the plan of extension of tax credits to taxpayers to include all children and also relatives by marriage are good. The amazing thing about the provisions of the Income War Tax Act is that the wife's relatives were differentiated from those of the husband even though living with the family unit. That was an amazing circumstance and the minister has at last seen the justice of making the change. Now the minister states that the government desires to recognize more

fully than before the varying circumstances of family responsibility. Last year when I argued that every child in Canada should be the subject of income tax exemption I called upon the minister to adduce reasons why he was not willing to do so. The minister replied at pages 2406 and 245S of Hansard. Perhaps he was somewhat worried because of the length of time it was taking to get the budget through, and his reply was both petulant and rather self-righteous. Now that a complete change in the section has been made I wonder whether or not the minister's air of deep sincerity is always to be taken at face value. Perhaps it may be the result of having been held up by the committee, and not having his resolutions go through as quickly as possible. In any event, when I urged that every child in Canada should be the subject of income tax exemption, unless in an institution, this was the minister's reply:
Why stop at children? Why not include all worthy recipients of private benefactions, all worthy recipients of support? If the hon. gentleman received the letters that wre receive from people who say, "You should allow me an exemption because I am supporting a friend or relative who is ill in my home", he would realize what this means. We must have some rules and some limitations to this thing.
Later in the long paragraph he said:
I am just pointing out that we are opening up a field here of tremendous extent and the hon. gentleman cannot stop at children. He would have to include any child, a niece, a nephew, a stranger or anyone a taxpayer might take in and feed. He cannot stop there; he has to take in everybody whom he helps in this way, and it is not consistent with the principles on which our system is built.
Those were the words of the minister at that time; yet now I find that the change which I advocated, which was surely reasonable-it must have been reasonable because it has been adopted-is now to "Be incorporated in the laws of the country. Yet the minister refuses to listen to those of us who endeavour to keep in touch with the people of the country and to point out the pitfalls in the legislation he brings in from time to time. He prefers to lean upon the bureaucrats who are his sole source of guidance, as far as anyone can find out, instead of coming to the members of this house who, after all, are the representatives of the people of Canada.
On motion of Mr. Castleden the debate was adjourned.
On motion of Mr. Mackenzie (Vancouver Centre), the house adjourned at 5.55 p.m.

Sixth Victory Loan
Thursday, July 6, 1944