1946-07-23

Hon. HUMPHREY MITCHELL (Minister of Labour):: Mr. Speaker, I wish to table herewith copy of P.C. 3030, passed on July 18, 1946, providing that effective August 15, 1946, control over conscientious objectors for alternative service will end.



REPORTS OF COMMITTEES


[Stage Direction]
Mr. GORDON B. ISNOR (Halifax) presented the fourth report of the special committee on war expenditures, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
Twenty-second and twenty-third reports of standing committee on veterans affairs.-Mr. Tucker.


[Stage Direction]
"gazette"
Mr. H. C. GREEN (Vancouver South):: Mr. Speaker, I wish to raise a question of privilege having to do with a Canadian Press dispatch which appears in this morning's Montreal Gazette and probably has been published in other Canadian papers. The heading of the article is "Stiffer Attitude Seen in Outlays for Vets." The article goes on to say:

A stiffening attitude towards further financial outlays through allowances for Canada's veterans is reflected in rejection by the veterans committee of two new proposals.
It adds this paragraph, which is the one about which I am complaining:
The Department of Veterans Affairs recommended that student-veterans at universities be given a $5 a week commutation allowance if they had to travel a certain distance to school and a $5 a month textbook allowance. The committee rejected both but accepted a loan plan to aid such veterans.
As a matter of fact no such proposal was put before the committee on veterans affairs by the Department of Veterans Affairs, and that paragraph of the report is entirely erroneous.
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs): I entirely agree with my hon. friend.



MR. FRASER-QUESTIONS DROPPED FROM ORDER PAPER

[Stage Direction]
Mr. G. K. FRASER (Peterborough West) * Mr. Speaker, I rise on a question of privilege. This morning, just as I entered the chamber, I was handed your letter, and I wish to read it:
Dear Mr. Fraser,
I enclose copy of a memorandum submitted to me by the Clerk of the House of Commons, with regard to certain questions filed by you for the order paper.
Yours very truly,
Gaspard Fauteux.
The enclosed memorandum reads:
Memorandum for Mr. Speaker
['Where an individual contract is set up by the director, Veterans Land Act, the contractor is issued with a priority certificate by the priority officer of the. department of reconstruction. This certificate entitles the contractor to electrical wiring from the local dealer, provided that the dealer has it to supply. The Veterans Land Act uses a very small proportion of the total amount of electrical wiring\n\nFlour Shortage\nmanufactured, and any priority supplied to the Veterans Land Act would have little, if any, effect on the normal distribution.']
Mr. SPEAKER:: I would ask the hon. member to state his question of privilege very briefly.


Mr. FRASER:: Mr. Speaker, I cannot
possibly state my question of privilege unless I read the memorandum. The memorandum is from the Clerk of the House in regard to questions that I submitted to him for the order paper, and I feel that in justice to myself and other members of the house who have submitted questions and have had them taken off the order paper, I should be allowed to read this memorandum.


Mr. MACKENZIE:: Would the hon. gentleman give the house a summary of what is in the letter, without reading it? I think it is improper to read the letter.


James Horace King: Order. I do not think the attitude of the hon. member is right. I believe that if he looks at Bourinot, Beau-chesne and May he will see that it has

Questions dropped jrom Order Paper
always been the practice in this house not t-o question or to discuss the conduct of the Speaker. I do not think the hon. member would assist in maintaining dignity inside of this house and outside it by discussing the conduct of the Speaker. I call his attention to May's Parliamentary Practice, 14th edition, chapter 16, page 334; it is entitled "Questions to the Speaker":
Questions dealing with matters within the jurisdiction of the Speaker should be addressed to the Speaker by private notice. No written or public notice of questions addressed to the Speaker is permissible. . . .
And so on. I am sure the hon. member would not wish to do anything which would reflect disagreeably upon the Speaker, and may I point out that if he needs any explanation, if he requires any advice which the Speaker can give him, the Speaker will be glad to give him any advice or information within his power.


Gordon Knapman Fraser: Mr. Speaker, at all times I have tried to uphold the dignity of the house-


Some hon. MEMBERS:: Oh, oh.


Gordon Knapman Fraser: -and I do . not wish to reflect in any way on the Speaker. I have held him in high regard, and I still do. The whole point is that I submitted questions for the order paper; they refused to put them on the order paper, but instead they have sent them to the chairman of the war expenditures and economies committee to be answered, and I find from members of that committee that many of the questions which they asked weeks and weeks ago still remain unanswered.


Some hon. MEMBERS:: Order.


Gordon Knapman Fraser: That is why I rose to-day on a question of privilege.


Mr. COLD  WELL@: Mr. Speaker, I notice that the question which was asked by the hon. member for Yorkton (Mr. Castleden) and was removed from the order paper is restored to-day. I was hoping that some explanation would be given to the house of the removal and the restoration of questions to the order paper. Is it the intention of the Speaker to make an explanation?


James Horace King: The hon. gentleman will receive a letter and memorandum.


Mr. GRAYDON:: Mr. Speaker, on this question of inquiries as to questions, I regret as much as you do and as the house does that we should be having so much difficulty and trouble, and at times it may appear as though it is almost a reflection upon Your Honourwhich I am sure no one in this house wants it to be. But here is a question which has just been raised by the hon. member for Rosetown-Biggar (Mr. Coldwell)-a question on all fours with the one which was refused admittance to the order paper, the one asked by the hon. member for Peterborough West (Mr. Fraser);
I refer to the question dealing with War Assets Corporation-which was on the order paper for some days, and then on Friday everyone noticed that it was off the order paper; now we come to Tuesday, and it is on the order paper again.


An hon. MEMBER:: "Off again, on again."


Gordon Graydon: In raising the question
as a matter of privilege, Your Honour, I do not think it is enough to send letters and memoranda to, hon. members in matters of this kind. I think we should have a definite ruling so that the house could have the opportunity of saying whether these questions, without the approval or consent of the member who submits them, can be sent to a committee of the house. If these questions are to be refused a place on the order paper they ought to be returned to the hon. member, but on no occasion has anyone a right to send them to any other member of the house; yet I understand that in the case of the hon. member for Peterborough West they were sent to the senior member for Halifax (Mr. Isnor).
I know of no right on the part of any official of the house to send a question designed to be placed on the order paper to another hon. member without the consent of the hon. member whose question it is. Actually what this is doing-and I say this in all seriousness, though I do not want to have a lot of trouble, nor do I suppose any hon. member does-is drawing an asbestos curtain right over the whole question of the War Assets Corporation.	.


James Horace King: I think the hon. member for Peel will realize that if I thought it was right to send a memorandum, which was prepared by the Clerk of the House-who is acknowledged as an authority-to the hon. member for Peterborough West, I should do the same thing for the hon. member for Rose-town-Biggar, who is leader of the C.C.F. party. I should like to draw the attention of hon. members to "Bourinot's Parliamentary Procedure," chapter 9, page 313:
It is the duty of the Clerk to point out any irregularity to the Speaker, as in the case of-notices of motion and if the latter is of the same opinion he will order the Clerk to communicate with the member-

Questions dropped from, Order Paper
"To communicate with the member" what has been done.
-so that he may have the opportunity of amending his notice.
Now, what is the duty of the Speaker? Is it to discuss the merits of the question? The duty of the Speaker in relation to the question, as indicated in "May's Parliamentary Practice," fourteenth edition, chapter 16, page 333, is this:
The Speaker's responsibility in regard to questions is limited to their compliance with the rules of the house.
"Is limited to their compliance with the rules of the house". If therefore, according to the rules of the house, the question should not be put on the order paper, the Speaker's duty is not to discuss the merits of that question, though the rule may be unfortunate for some member, but to act in accordance with the rules. I may say to the leader of the C.C.F. party that the hon. member will receive a memorandum written and prepared by the Clerk of the House, and it may help if the hon. member would consult the Speaker, who will do everything possible to be agreeable.


Mr. COLD  WELL@: May I say, Mr. Speaker, that the reason I raised the question was that we might get an opinion on the record of the house. I understood that would be done. The question was ordered "stand" in the house, and then it was removed, and I submit that an explanation is due the house. I understood an explanation was to be given, and when we have that explanation, if it is based upon the rules, I shall be the last one to suggest that we do anything that would cause the Speaker to take any action contrary to the rules. An explanation as to why the question was removed and then restored should be given to the house, since it was done against the order of the Speaker that the question stand on the order paper.


James Horace King: 1 have noted with interest the remarks of the hon. member, and will take them into consideration.



[Stage Direction]
Hon. HUMPHREY MITCHELL (Minister of Labour) moved for leave to introduce bill No. 307, to provide for the reinstatement in civil employment of discharged members of His Majesty's forces and other designated classes of persons.
Gordon Graydon: What is the explanation of the bill?
IMr. Speaker.]


Humphrey Mitchell: This is a new bill, Mr. Speaker, replacing the bill which was given first reading on, I think, April 15 last. Following that, as hon. members will recall, the bill was withdrawn in order that it might be redrafted and referred to the committee on veterans affairs for consideration and report. The bill consolidates the provisions of the 1942 act and of subsequently passed orders in council and gives statutory effect to the orders in council.
The form in which it is now presented has received the approval of the committee.
Motion agreed to and bill read the first time. FAMILY ALLOWANCES ACT


AMENDMENT RESPECTING SCHOOL ATTENDANCE AND POWERS TO MAKE REGULATIONS
[Stage Direction]
Hon. BROOKE CLANTON (Minister of National Health and Welfare) moved for leave to introduce bill No. 308, to amend the Family Allowances Act, 1944.
Some hon. MEMBERS:: Explain.


Mr. CLANTON:: This bill would make, two minor changes in the Family Allowances Act. The first would carry into statutory form the provisions now in force regarding school attendance. The second would make textual alterations regarding the powers to make regulations.
Motion agreed to and bill read the first time. VETERANS AFFAIRS


HOUSING-ELECTRICAL WIRING SUPPLIES
[Stage Direction]
On the orders of the day:
Mr. J. O. PROBE (Regina City):: I wish to direct a question to the Minister of Veterans Affairs. Will he please inform the house what priorities for electrical wiring supplies for houses being build under the Veterans Land Act are now in effect and whether the amount of such materials being reserved for veterans' building is such as to curtail distribution of electrical wiring through the normal trade outlets in Canada.


Mr. W. A. TUCKER (Parliamentary Assistant to the Minister of Veterans Affairs):: Where an individual contract is set up by the director, Veterans Land Act, the contractor is issued with a priority certificate by the priority officer of the. department of reconstruction. This certificate entitles the contractor to electrical wiring from the local dealer, provided that the dealer has it to supply. The Veterans Land Act uses a very small proportion of the total amount of electrical wiring

Flour Shortage
manufactured, and any priority supplied to the Veterans Land Act would have little, if any, effect on the normal distribution.



BUSINESS OF THE HOUSE


James Horace King: Orders of the day.


Ian Alistair Mackenzie: No. 1.


The CLERK ASSISTANT:: Third reading of bill No. 303, an act to amend the criminal code.


Mr. HODGSON:: Mr. Speaker, I would like to direct a question-


James Horace King: I am sorry, but the order of business has already been called.


Gordon Graydon: On a question of privilege,
I have never seen this done before in my eleven years here. Time after time latitude has been given a member who was trying to get the floor when the Clerk Assistant got in ahead of him. Surely you are not going to do this to us.


James Horace King: The rules of the house are clear.


Some hon. MEMBERS:: Oh, oh.


James Horace King: Order. When a member rises to ask a question he says, "Mr. Speaker, before the orders of the day are called I should like to put a question to the hon. minister of so and so." On this occasion the order of the day had been read by the Clerk Assistant, and after it had been read the hon, member rose to put a question. I do not wish to be. severe, but I have stated the rule of the house. With the unanimous consent of the house I will permit the hon. member to put his question, but according to the rules-


Gordon Graydon: We surely cannot be put in a straitjacket every moment of our time. I would-


Ian Alistair Mackenzie: Order.


Gordon Graydon: I would-


Ian Alistair Mackenzie: Withdraw that.


Gordon Graydon: I appeal to the leader of the government to ask that unanimous consent be given.


Ian Alistair Mackenzie: You cannot insult the Speaker.
Mr. ST. LAURENT: I should be glad to ask the house to give unanimous consent, but the hon. member who is leading the opposition
should withdraw the statement he has made about being in a straitjacket.


Mr. BLACK (Yukon):: Mr. Speaker, it has been my experience in this house over a good many years that even when the Clerk or the Clerk Assistant has called the first item on the orders of the day, where it appears that a member wishes to ask a question the. Clerk sits down so that the member may put the question. May I point out that it is not necessary for a member before asking a question to say, "Mr. Speaker, before the orders of the day are called". That is only a custom; it is not a rule of the house, and it not necessary that a member wishing to ask a question should use those words. Before the orders of the day are called any member may rise and ask an appropriate question.


James Horace King: As I have pointed out to hon. members, it is the practice every day, even when the Clerk Assistant has risen and has begun to read the item called by the leader of the house, to permit the member to put his question. But once the item has been read I do not think it is permissible for anyone to put a question. However, if it is the pleasure of the house that he be allowed to do so, the hon. member may rise and state his question.


Clayton Wesley Hodgson: Mr. Speaker, I would like to direct a question to the Minister of Finance, or to his parliamentary assistant, who is in the house, under whose department the wartime prices and trade board is administered. My question has reference to priority in connection with the acute flour shortage in my constituency. I would like to know what has been done since Friday to relieve that flour shortage in the county.


Mr. R. W. MAYHEW (Parliamentary Assistant to the Minister of Finance):: The hon.
gentleman on Friday last asked me a similar question without sending me any notice, and he has done the same to-day. I will tell him yhat has happened. I gave him the address of the flour administrator in Montreal, even that gentleman's telephone number, and suggested that he or his principals get in touch with the administrator and inform 'him who their supplier is and what they have used of their quota. They did not see fit to do it in that way, but suggested that I do it for them. I therefore called up the flour administrator's office on Saturday morning about nine o'clock, and was informed that the bakers in whom
Flour Shortage

the hon. member is interested are buying their flour not from the Robin Hood Milling company but from Canada Packers. The Robin Hood Milling company has supplied to the Canada Packers the full quota of flour to which these bakers are entitled, and if they have not received their full quota it is to this company that they should apply and not to the flour administrator. Further, I wish to advise the hon. member that these companies have not only used up their full quota but were sent an additional fifty bags. The administrator said that he would get in touch with the Canadian bakers on Saturday afternoon in an endeavour to see if there was anything wrong or if they had fallen down in their deliveries, and they would try to get supplies. However, there is a way of handling these matters, and it is not by bobbing up in the house on every pretext-


Some hon. MEMBERS:: No, no.


Robert Wellington Mayhew: Everyone knows who the administrator is-


Mr. GARDINER:: The request for the
regulations came from the other side.


Robert Wellington Mayhew: The hon member had all this information last Friday morning. He could have come to my office and it would have been settled, but he waited until after three o'clock and then rose on the orders of the day. I leave it to the house to judge why it was done.


Clayton Wesley Hodgson: On a question of privilege, I went to the parliamentary assistant at three o'clock-


Robert Wellington Mayhew: At three o'clock?


Clayton Wesley Hodgson: -in the afternoon.


Robert Wellington Mayhew: Three o'clock in the
afternoon.


Clayton Wesley Hodgson: A few minutes after. I will not hesitate to say four o'clock, or five o'clock, if you like. The reason I went to the hon. member and asked him to do it was that this was not a new thing. This has been going on since June 12. I have letters here-


Ian Alistair Mackenzie: Order.


Clayton Wesley Hodgson: -which have come from the bakers, and-


Some hon. MEMBERS:: Order.


James Horace King: Order.


Ian Alistair Mackenzie: A Tory bear-garden.


Mr. LENNARD:: I never saw you throw
one over your shoulder.


James Horace King: Order. I would ask the
hon. member-


Clayton Wesley Hodgson: The statement made by
the parliamentary assistant-


Some hon. MEMBERS:: Order.


James Horace King: Order.


Clayton Wesley Hodgson: -is not right.


James Horace King: Order. I would remind
the hon. member that when the Speaker rises and calls "order," the hon. member who is speaking must resume his seat.


Clayton Wesley Hodgson: I am Sony; there was
so much noise over here I did not notice that Your Honour was on his feet. As to the statement about bakers having used up their quota of flour-


Ian Alistair Mackenzie: Order.


Some hon. MEMBERS:: Order.


Mr. MACDONNELL (Muskoka-Ontario):: May I ask a supplementary question of the parliamentary assistant to the Minister of Finance. The question is, what is he doing to relieve a similar situation in Muskoka?


Ian Alistair Mackenzie: Order no. 1.


Some hon. MEMBERS:: No.


Robert Wellington Mayhew: I had no notice of the
hon. member's question, but I say the same to him. If he will give the department a list of those who are in short supply of flour, it will be attended to, provided that they have not already used up their quota.


Clayton Wesley Hodgson: I gave the list on
Friday.



CRIMINAL CODE


[Stage Direction]
Right Hon. L. S. ST. LAURENT (Minister of Justice) moved the third reading of bill No. 303, to amend the criminal code.
Motion agreed to and bill read the third time and passed.


[Stage Direction]
The house resumed from Monday, July 22, consideration in committee of bill No. 250, respecting judges of dominion and provincial courts-Mr. St. Laurent-Mr. Golding in the chair.
On section 1-Short title.
The ACTING CHAIRMAN (Mr. Golding):: Shall section 1 carry?

Judges Act


Mr. KNOWLES:: No, Mr. Chairman. When second reading of this bill was called last evening, as the record will show, at about five minutes to eleven, there seemed to be a desire to get it into committee so that it might be discussed in detail.


William Henry Golding: Order. There is so* much noise in the chamber that I can hardly hear the hon. gentleman.


Stanley Howard Knowles: Because of the desire to get the bill into committee we did not raise any objection at that time. As a matter of fact no remarks were made when the order was called for second reading. But as we in this group look over this bill and find that its important provisions are for increases of salaries, many of which are already quite large, we do not take kindly to it. The lowest salaries referred to in the bill, aside from salaries for part-time service, are of the order of $5,000, which are to be increased to $6,666.66. Then they go all the way up to a present salary of $15,000, which is to become $20,000. I know that some of us hold a view which other hon. members of the house do not understand, but we still feel that when old age pensioners are asked to live on the amounts provided them, when the suggestion is made that a ten cents an hour increase is all that should be granted to workers at this time, it is not fair to propose such munificent increases in salaries in brackets that are already so high.
I have no objection to large salaries; I have no objection to judges, but we should look at this matter in- the proper perspective. I am all for the dignity of our courts and our judiciary, but too much emphasis has been laid upon the necessity of large salaries to maintain that dignity. One must also bear in mind that there are generous pension provisions in the act for judges and their widows. Taken by themselves, I have no objection to salaries of this kind being provided, but in the light of our failure in this parliament to deal properly with old age pensioners, which I mention particularly, it is hardly called for. I know that at times when we on this side of the house have made reference to what has been done for old age pensioners as compared with some of these large salaries we get replies from the other side to the effect that it is "cheap stuff", and so on. I suggest that that is not so. If the word "dignity" has any merit or validity, it applies to all citizens, and one has to ask the question how much dignity can be maintained on an old age pension of $25 a month. It does seem to me that the Minister
of Justice, as a member of a government which has failed to deal properly with our old age pensioners, has a tough proposition on his hands to make a case for the increases set out in this bill.


Mr. CHURCH:: I wish to say a few words on this section. I had intended to say them on second reading of the bill. This bill is one of the most important ones we have before parliament. For many years the Judges Act has remained a dead letter, as to the function of judges, the appointment to their offices, and so on. We should have an equitable system of appointing judges. There should be an amendment to the act in that respect. Some judges in the Montreal district are classed as superior court judges and they are doing the very same work as is done by His Honour Judge Barker, the able senior judge of the county of York. He has the largest number of civil and other cases in any industrial area in Canada.
I had two bills before the house which the minister said he would consider, but I do not see any reference to them in this legislation. One dealt with judges, providing that they should not serve on what are known as federal commissions. Unless we have too many judges their time should be fully occupied with judicial and not parliamentary matters. We are fast building up in this country a system of commission government over the head of parliament when it is in session. The other bill related to the construction to be placed upon certain statutes, providing that a decision of a court of record on authoritative cases shall be final and binding, and shall be followed by all judges appointed under this act. I find that is not the case now. In one particular matter which has been referred to many times in this house we find that the decision of the final court, the judicial committee of the privy council, which should be authoritative and binding Upon all judges appointed under the Judges Act, was not followed, though there can be no doubt about the law in that connection.
I am sorry to see that some of the recommendations of the chief constables' association are not implemented in this legislation. I do not want to speak very long, since this is our first morning session, but since confederation the federal government has not enforced its own laws. Every year hundreds of orders in council and acts are passed by this parliament, but the federal government does nothing to enforce them. Their enforcement is left to the attorneys general of the nine provinces. It is the duty of the federal government to enforce its own laws. All these acts are passed under
Judges Act

section 91 of the British North America Act, and their enforcement should be under fhe federal government instead of being handed over to the provinces, who in turn delegate it to the municipalities, who have to pay the costs. With the tens of thousands of orders in council passed during the war, this has placed an intolerable burden upon every municipal police system in the country. Last Saturday we had a meeting in the city of Toronto of chief constables from many cities on both sides of the border; we had the police games, and all that sort of thing. There is also a chief constables' association. Why was their brief not included here? I remember when I was head of the city council and police commissioner in Toronto the police chiefs of many cities met there and formed the Canadian chief constables' association. These men are out day and night, meeting all kinds of people, many of whom come across the border and commit all sorts of offences here, while the public are not protected.
There is another matter I am sorry is not dealt with in this legislation. I had a return brought down showing the large number of people killed and injured in fatal accidents on the highways. There were twenty-seven killed or injured last week end, and it is the same throughout the year. The province can spend sixty or seventy thousand dollars in prosecuting a person charged with culpable homicide, but it has not a dollar to spend to deal with this menace. More people are injured in the city of Toronto each year than would fill the seats in this House of Commons ten times over. In my city alone thousands of people were injured by the motor car, constituting one of Canada's greatest scandals.	Men, women and children are
slaughtered. Small children lawfully using the streets are struck down by hit and run drivers, and what are we doing to stop it? We are doing nothing under this bill. The penalties should be increased. That offence should be considered culpable homicide to a preeminent degree, because as I have said before nothing is so cowardly as that particular offence.
Now may I say a word about the appointment of judges. I do not wish to advocate the American system, of electing judges- more care in selection is needed-but with all respect I think the minister should tell us who makes these appointments of county court judges. The other day I made some remarks about members of the bar which I am afraid the right hon. attorney general, who was very patient, misunderstood. All appointments made to the county court of York are lawyers of at least ten years stand-

ing at the bar, but I had in mind that some of them had not practised for many years. They may have been county clerks or township clerks or division court clerks, or held some other municipal office before being appointed to the county court bench. I am not saying the men appointed have not been good men, but I believe there should be some better system of appointment. It has been a rule since confederation that members of the House of Commons shall not ask the right hon. attorney general, who is Minister of Justice, to give legal opinions to the house or the committees thereof. That is a wise rule, because he is Attorney General of Canada, and- there may be contests in the law courts between him and the attorneys general of the provinces. But I believe we should know ihow these appointments are made. I understand the provincial and federal cabinet ministers make recommendations to the minister. Sir John A. Macdonald appointed members of both parties to the bench, which had a good effect. He appointed some people who were on the opposite side of politics, because after all is said and done, our system is different from that of the mother country. Our Department of Justice includes the equivalent of four or five departments of the government in England. It performs the functions of the attorney general; it performs the functions of the solicitor general; it carries out the duties of the lord chancellor in England, who appoints the judges and is responsible for their salaries and the conduct of their offices. In addition our Minister of Justice has under his jurisdiction our penal institutions, which in England come under the home secretary. So in Canada this department has grown to be very important. The present minister is probably one of the best lawyers we have ever had in this office. A great many eminent lawyers have held this position, and I am filled with a spirit of deep humility when I recall some of them and their fine work for Canada.
The war has been over for a year, but we have not had a commission appointed to revise the criminal code. One provision of the code is violated every day, the provision concerning who may wear certain clothing and who may not. That is only a small matter, but there are other sections of the code which need to be looked into. In this connection I am sorry to say that one matter, which is now before the court of appeal in Ontario, was mentioned in this high court of parliament. That should not have been done, because the matter is still pending before the courts of the province of Ontario.

Judges Act
Then I understand the attorney general of Ontario wrote a letter to the Attorney General of Canada asking for certain changes in the law regarding culpable homicide. I have been trying to get something done about motor cars and many other matters, but I find no action has been taken on all these matters. Then I think we should have some explanation from the Attorney General about the recommendations of the various bar associations. I do not see why we should wait for them to make recommendations for the appointment of judges, practically taking that matter out of the hands of the Attorney General. I say further that at least some people in Canada believe in the election of judges. I am not prepared to go that far at the present time, though I can say that at times there is dissatisfaction on the part of bar associations and some of our local people about bringing judges into the county court of York from all over Ontario. We had three judges in that city who did all the work: the late Judge Coatsworth, then the late Judge Winchester; Judge Morson, and Judge Morgan. They were worked to death. Those judges were appointed from our own city.
What are the duties of county judges? Well, they have to do work in connection with the voters' list and in connection with many other municipal acts. These matters are referred to them for consideration. In my opinion they should have special knowledge of the localities in which they preside in civil and criminal cases. In this connection I do not agree with an argument used by a former minister. To a great extent they are judges handling municipal matters, under municipal laws and laws relating to the provinces under section 92 of the British North America Act. It is true that they take some cases which are under section 91. I believe the time has come however when some revision of policy should be made. There is criticism of the absence from this bill of penalties to check fatalities and accidents arising from motor cars, level crossings, drowning, fire hazards, fires in homes when parents are not present, and conditions of that kind. It is high time we in the House of Commons did something to remedy this condition by more modem legislation.
I believe that judges have for a long time earned larger salaries. We will remember that at one time a bill was introduced to exempt them from income tax. The first legislation of that kind was introduced by the late administration. Following the debate they were included under the income tax provisions. This is the highest court in Canada, the high court of parliament. Representations
are made from time to time by certain members of the bar. Only last Saturday an article appeared in a local paper with respect to the able hon. member for Calgary West. We must remember that we sit in the high court of parliament, and must protect the judiciary. Many members of the bar have earned salaries far greater than they have been paid as judges, and it pleases me to see some progress made in this connection.
The quicker a royal commission is appointed to revise the criminal code, the better. As chairman, I would suggest a great trial judge like Mr. Justice Keiller Mackay. There are many other competent judges, and have been many in the past. I have in mind the late chief justice W. R. Meredith, and a brother, Chief Justice R. M. Meredith, one of our most able judges. Both served on a commission to revise the statutes.
The public should receive more consideration than it does to-day. We must consider the onerous work performed by the Minister of Justice. I can tell him that unless he does less work and has more leisure, and devotes less time to his duties of office I fear for his state of health, remembering what happened to three of his predecessors. While he has given some of his work to. the new Solicitor General, a * competent man in his own right, I believe the only solution is a standing national legal committee, such as may be found in all the provinces, to consider all legal bills we have in this house. If we had a legal committee we would not be forced to operate in compliance with the rules of house procedure. Two special committees have met. We must keep in mind that this high court of parliament is the highest court in the land. Let us first attend to our own rules, and make a complete revision. In the disposition of civil and criminal cases in the courts we need a British North America Act for the living, not one for the dead. The rules of procedure for this chamber are obsolete. Let us put our own house in order first; let us recover the rights, functions and privileges we had in this chamber years ago. We do not want generosity. We are sent here by the high court of public opinion, the people of Canada, to do our duty properly and to the best of our ability.
As I read the text of the bill presented the other day I war reminded of the time when Charles I walked in the door of the House of Commons, and sat in the Speaker's chair. He was looking for five men, and approached Mr. Speaker Lenthall in the matter. Mr. Speaker Lenthall said: "May it please Your Majesty, I have neither eyes to see nor tongue to speak in this place but as the
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house is pleased to direct me, whose servant I am here." The presiding officer in this chamber is the servant of the House of Commons, as is a judge or a chief justice in a court of law who under sections 91 and 92 of the British North America Act represents parliament in civil and criminal cases.
Charity should begin at home. If we want to set an example for our law courts, and have a popular administration of justice, then let us set our own house in order. The first step would be to have a committee to revise the rules, so that we would have modern rules in this court of law, this highest court in the Dominion of Canada.


Mr. BOUCHER:: With much of what was said by the hon. member for Winnipeg North Centre I am sure all hon. members will be in agreement. He has asked why we should think of increasing the salaries of judges when old age pensioners are not getting enough to live on. Upon reflection however I believe he will realize that his main point is not well taken. In Canada, as in all British countries, one of the things in which we take greatest pride is our judiciary. Fundamental to the well-being of every nation is a respect for law and constituted authority. So far as a respect for law and authority is concerned I believe Canadians, perhaps more than those of any other nation, have reason to be proud. I fear however that within the last five or ten years there has been in our country a diminishing of that attitude. This is most regrettable.
I do not believe the Canadian citizen of today is as anxious to maintain the respect and obedience for the dignity of law as he was ten years ago.
When discussing salaries of judges I believe we should reflect upon the general attitude of the average Canadian toward Canadian laws and institutions. For the last ten or fifteen years, and perhaps for longer than that,
I think parliament has not properly appreciated the particular advantages accruing to Canadian citizenship from a strong and highly respected and dignified judiciary. To a great extent I believe parliament and legislators generally have lost perspective through the appointment of so many commissions and commissioners with powers to interpret and to decide law.
A survey of the duties of judges in our Canadian courts would disclose that they have very little leeway in rendering their judgments because they must follow legal precedent. They must follow a code of interpretation and administration of law which has been established for generations and is binding upon them. They must obey the judgments of superior courts, and in their decisions follow those superior court judgments. A good judge must

also take into consideration changing law to suit changing conditions. To guide him in this he has a mass of precedent from the court of record to which he belongs. This is not so of commissions or committees. During the war we watched the operations of a rental administrator, a man appointed to deal with problems affecting real property. Very often administrators of this type who are given power to interpret the law have never actually studied any law outside that which they are empowered to interpret. They have had no experience in administration of the law, and no precedents to follow. A judgment given to-day in a similar set of circumstances could be entirely opposite from one given to-morrow. There seems to be no way of checking this process, and the result does not add either to efficiency or to respect for law.
As to the matter of raising the salaries of judges, I have no doubt that each hon. member could think of a judge here and there who may not have a busy time of it and who, we may feel, is receiving adequate compensation for the work he is doing. But we can also think of many other judges who are doing much more work than they are being paid for. The hon. member for Broadview has referred to the judges of the county court of the county of York. The hon. member has indicated that they receive a salary of $6,000 a year. How does that compare with the salary of $15,000 received by the chairman of the Canadian Broadcasting Corporation? Compare the ridiculous salaries of some civil servants appointed by this government with the salaries of the supreme court judges in Ontario, who when they are on itinerary seldom are able to spend more than a weekend at home. Then look at the death toll among the supreme court judges of Ontario through overwork in the last fifteen or twenty years, and we shall begin to realize that the public, instead of having gained a few paltry dollars by keeping the salaries and the number of the judges down, have really lost through not having enough judges to do the work and by not giving the increased number more work to do.
If we do increase the salaries of the county court judges-and I am not objecting to that -some of them will be getting more salary than the work they have to do entitles them to, but for the most part they will fully earn their salaries. I feel that parliament must in the very near future adopt a different policy in relation to our judges. Our judges are as independent as they can be. I think every Canadian will agree that the independence of our judges is one of the strongest attributes of our national life. Compare with some other officers, a judge who by experience is fitted to administer the law. Parliament passed a law

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on income tax and appointed a commissioner of income tax. The commissioner of income tax and his officials give a ruling, we will say, that I do not like and which I think is against the law. If I appeal from his ruling I have to appeal to the very man who has given that ruling. I am not saying anything against the commissioner of income tax, but I say that he has been administering the policy laid down by the government and has grown up in the spirit of income taxation. When there is an appeal from his ruling he has no court to which he can go for legal precedents and direction, nor has he that breadth of view of public problems to deal with them in the light of various circumstances.
I think we should approach this question first from the point of view of a strong realization of the dignity and authority of our courts, and, secondly, with the realization that that authority is not any greater than it was in the past, if as great. Personally I do not believe Sts authority is as great as it was ten years ago. I believe that the people of Canada, who have been subject during the war years to a multitude of regulations and restrictions, have through their lack of knowledge of the law and perhaps from a desire to beat the law, acquired an unhealthy disrespect for the law. I believe that those who administer the law have the responsibility of returning the people to a greater respect for the law.
Look at 'the experience that a county court .judge has had. He has first of all had experience as a lawyer, whether that counts or not. Then when he sits on the county court bench he administers not only federal statutes, orders in council and regulations, but provincial law, orders in council and regulations, and municipal law and regulations, and he performs many other functions, all of which together give him a wealth of experience in interpreting the law.
In the provinces we have a municipal board administering municipal law. They are not members of the judiciary, and have not had the legal experience that our judicial officers have. The workmen's compensation board is another example, and if we want to take a federal example there is the wartime prices and trade board in almost every branch of which there are people engaged in interpreting a law for the enactment of which they themselves were responsible. A fundamental principle of British justice is that there shall be a differentiation between the judge, the prosecuting attorney, the jury, the witnesses, the plaintiff and the defendant, and we should bear that in mind. We should make sure that those who are appointed to office are able to perform the functions thereof.
Therefore in supporting to a degree the Minister of Justice in raising the salaries of the judges, I do so not because I believe that at the present time under our present policy they all require an increase, but because I feel that the time has come when we must and should see that o-ur judges are compensated for the increased work we shall be obliged to call upon them to do. But I would urge the Minister of Justice to take note also of the many officers who are performing judicial functions for which they have not judicial qualifications. If we are to increase the salaries of the county court judges, let us increase their work so that the people of Canada will also get the benefit of this increase.


Mr. McLURE:: Mr. Chairman, I seldom enter into a discussion of bills of this kind, for the reason that I am not a lawyer and the legal fraternity are well able to take care of them. But I desire to direct a question to the Minister of Justice which deals with the judiciary of my province, Prince Edward Island. The matter I shall mention I have often heard our lawyers discuss in Charlottetown and in different parts of the island.
In Prince Edward Island, the supreme court of which consists of three judges as at present constituted, we have no real court of appeal. I understand that when a judgment is given by one judge an appeal may be heard only by the remaining two judges of (the supreme court bench, with the result that if they disagree, as often happens, the trial judgment stands, even when the appeal judges disagree on points not even raised before these trial judges. I might also mention that the outcome of many cases is often unsatisfactory because the amount involved does not permit of an appeal to the Supreme Court of Canada. Does the bill now before us take care of such a situation as this, and has any consideration been given to the rearrangement of the judiciary of Prince Edward Island so as to provide for an efficient appeal court without adding to the existing number of judges?
Mr. ST. LAURENT: This bill does not take care of the situation referred to by the hon. member. Consideration has been given to it at various times ever since I assumed the office of Minister of Justice. One of the suggestions made was that the number of county court or district court judges be reduced and the number of high court judges increased so that there would always be three high court judges who had not participated in the judgment from which an appeal was taken. That has been discussed with the provincial authorities. The hon. member will realize that it is a matter within their juris-
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diction. They are the ones who determine what courts they will have and how many judges constitute the bench of each court. Of course we have something to say in the matter. We do not admit that they can provide for any number of judges, a number that would be out of all proportion to the number required to handle the judicial business. But we try to meet the desires of the provincial authorities in providing sufficient judges for the courts which they organize as being the ones required for their local needs.
The suggestion of having one more high court judge and one less county court judge is one that has not been abandoned. It has not yet been accepted. It is a matter about which I understand the local authorities would like to get acceptance by the population of the counties. It may well be that it would require having the county court judges given jurisdiction over the whole island and not over just one district, because I do not think any one county would wish to abandon its rights to a judge in favour of the other counties. It is a matter which is still under consideration, I understand, by the local authorities of the province. The suggestion would involve some additional expense, but the local authorities have been told that I would undertake to recommend to parliament the additional expense that would be involved in the difference between the salary of a county court judge and a high court judge. It is something which the people of Prince Edward Island will have to make up their minds about. I do not think the hon. member would suggest that there be one judge added; I think he would agree that there are enough judges in Prince Edward Island to take care of all the judicial work, which arises there. It is a matter for the people of the province to determine how they want that judicial talent used to the best advantage.


Winfield Chester Scott McLure: When I asked the question I put it this way: to provide an efficient appeal court without adding to the existing number of judges.
Mr. ST. LAURENT: Yes.


Winfield Chester Scott McLure: I should like to ask one more question. Could a county court judge sit with the two supreme court judges on an appeal case?
Mr. ST. LAURENT: That suggestion has been considered, and so far the information I have is that that would not be an acceptable solution, It has been given consideration, but the hon. member knows that there are personal feelings which enter into it, and so far it has not been found by the local authorities to be an acceptable solution.


Mr. HACKETT:: In Ontario do not judges of different jurisdictions sit as an appeal tribunal?
Mr. ST. LAURENT: They do not form part of the court of appeal. I understand that district or county court judges hear appeals from magistrates, but the Ontario court of appeal is composed exclusively of judges who are appointed to that court and who call in occasionally as ad hoc judges some of their brethren of the high court or of the trial side.


Mr. IRVINE:: I should like to add a few words of protest to those of the hon. member for Winnipeg North Centre in respect to the size of the salaries that are being provided for our judges. I want also to add a word of question in respect to the principle which is embodied in section 3 of the bill, that only barristers shall be eligible to be judges. I have just been reminded by the hon. member for North Battleford that Solomon had quite a reputation as a judge, and there is no evidence that he ever knew anything about Canadian law. I have also to remind the house, because I know they have a great respect for biblical characters and biblical lore, that Daniel was an extraordinarily adept judge, and I do not believe he was a lawyer.


Mr. BERTRAND (Laurier):: That was a long time ago.


William Irvine: That was a long time ago, but humanity is still humanity, and-


James MacKerras Macdonnell: Will the hon. gentleman permit a question?


William Irvine: Just a minute; I want to finish this. Laws are not made for lawyers; they are made for people, and therefore the human element, all the conditions under which people err, is of greater importance than any legal dignity. Now ask your question.


James MacKerras Macdonnell: Has the hon. member any evidence to show that Solomon and Daniel had not made deep studies in law?


William Irvine: If my hon. friend had asked the question a hundred years ago whether the moon was made of green cheese and had required me to prove that it was not, it might have been difficult, but it is not very difficult to prove it to-day; and I do not think it is difficult to prove that Daniel was not a student of law in the sense that our barristers are. However, I am not hinging too much on that reference.


Mr. POWER:: Good.

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William Irvine: Personally I do not care whether they were lawyers or not. I am making the point that I question very much whether those who are trained in law are the best judges, and I am going to ask the Minister of Justice before this bill is passed to justify the principle involved in section 3. I want to know how it happens that they know more about how to judge the weaknesses of human nature and the errors of men just because they happen to have passed an examination in law. I want to know why it is that some of our most important crimes are judged by juries who know nothing about law at all. If it be that judges alone are eligible for this high office, perhaps we ought to abolish the old practice of trial by jury. But I will leave the minister to clear up that point.
The other point I want to protest against is that of the size of the salaries. I do not object to a man getting a big salary, but this is a public office, paid for out of the public treasury, and I do not think it is good business in a democracy to have such enormous disparities between public service and the average run of people who keep the country going. According to the government's own figures as presented in the Marsh report, which is the latest official publication that I know of dealing wdth matters of this kind, there are actually hundreds of thousands of people in Canada who get less than $500 a year, and they are the people who will be judged by these judges who receive salaries of $20,000, $16,000, $13,000, $12,000, and so on. Then, when they'get too old to judge, they receive three-quarters of their salary as pension, and their wives may come in for half of that three-quarters.


An Iron. MEMBER:: Two-thirds in some cases.


William Irvine: Two-thirds in some cases. In my opinion that is building up a plutocratic aristocracy which will not lend dignity to the law but which will rob it of all its dignity, unless it is possible to raise the living standards of the people who are to be judged to something a little nearer that which it is proposed to pay judges.
I was amazed at the reasoning, or perhaps lack of reasoning, of the member for Carleton. He pointed out two things, or perhaps he thought he was pointing out two things, one of which was that these high salaries that- we are paying are an evidence of our profound respect as a people for law. If that were good reasoning, we should probably increase or double the salaries of judges and then we would all have so much respect for law that no one would ever break the law and the
judges could take a holiday and would not die of overwork, as the hon. gentleman suggested. The other point in his argument was that many of our judges work very hard and therefore ought to be highly paid. They work so hard that they die young. If that is true, my suggestion to the hon. gentleman is that judges' salaries should be cut in half and twice as many judges appointed. They would then live longer, if they are dying of hard work, because certainly increasing their salaries will not make them live any longer if they do the same work they do now for a little less. But that is the kind of reasoning by which we are bolstering up increases in judges' salaries.
I have made my protest and' I am going to insist that the Minister of Justice be kind enough, before the bill is passed, to satisfy the house as to the wisdom of the principle embodied in section 3.


Mr. McKAY:: I am sorry I cannot be as eloquent as the member for Cariboo, but I have a few observations to make on this bill and several suggestions to offer with regard to our Canadian judicial system. First, I would say that there has been some little question in this house in the past over travelling and subsistence allowance given judges serving on various commissions appointed by the government. A reference has been made to at least one case where a judge received an allowance sufficiently large to provide, for his wife while he was serving away from his judicial district. The government should have a clear-cut policy with regard to these cases, certainly so far as expense allowances are concerned. The fact that one judge receives special consideration, and the public is made aware of the situation, results in the public sometimes questioning whether judges are free from political favouritism on the part of the government. The judges are not to blame for that. I am not suggesting that they are, but I do suggest that the government is to blame for allowing it to happen. The house should insist that a flat rate be allowed for expenses and allowances for a judge's wife when away from home, and no deviation from that rate should be permitted. The judiciary should never be placed in such a position that the public may question its integrity.
Secondly, an impression prevails throughout the country that judges serving on commissions receive extra remuneration for such services, despite the fact that it has been stated in this house by the minister that only travelling and subsistence allowances have been allowed in addition to the salary normally received by the judge in the position he holds. I believe it is timely now to make
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a statement to the public that that is not so, and that the rule has not been broken with regard to the payment of any judges serving on commissions, so that the public in general may be made aware of the true state of things.
Thirdly, I question the method of appointing judges which has been in vogue in Canada ever since the passing of the British North America Act. When a Liberal government is in power Liberal judges are appointed-that is, Liberal in political faith-and should a Conservative government take office at the next election I should not be surprised to see judges of another political stripe appointed, namely, Conservatives. It is obvious that these appointments are political. Too often the appointments are a reward for political activities. Not infrequently, appointments are made to take care of some old war horse who has outlived his usefulness to the party. On the whole, I believe that the men appointed, either by this government ' or by previous governments, have been good men. I am not suggesting anything to the contrary. I am not suggesting that any of the men in the past have been incompetent. I say, however, that political appointees generally must find it a little difficult to bury the hatchet once they are made judges. They are human, and if they have been in political life for some considerable time they must retain some little political prejudice. While, mind you, there has been very little evidence that that is so, we hear rumours unfortunately from time to time that it is. I believe a better system could be devised than the one we have, and I would suggest that when the appointment of a judge is found necessary, 'recommendations for the position be invited from the law society of the province in which the judge is to be appointed.


Mr. FLEMING:: Is the hon. member
satisfied that political considerations would not be taken into account by such bodies in such circumstances?


Eric Bowness McKay: They might be, but not to
such an extent. If they simply picked men of calibre who they felt were capable and qualified for the position, men who had experience, I do not think appointments would be restricted to any one political party. That is the point I am trying to make. I am willing to face a judge who is a Conservative, a Liberal or anything else; they seem to be decent chaps. That is not the point I am making.
I would further suggest that in order to free judges from political prejudice, in whatever degree it may exist-I am not suggesting it
rMr. McKay.]
exists to any large degree-no member of parliament or of a legislative assembly be appointed as a judge. I know that is not a popular stand to take, and I shall be classed almost as a heretic.


John Thomas Hackett: No one who has been a member of these bodies?


Eric Bowness McKay: Yes. I knew it would not be popular.


John Thomas Hackett: I am not saying that.


Mr. DIEFENBAKER:: Appointments are made from these classes in England.


Eric Bowness McKay: I know, but I am making the suggestion.


Gordon Graydon: Would that suggestion apply also to magistrates in the provinces?


Eric Bowness McKay: I am speaking chiefly of judges.


Gordon Graydon: But would it apply to magistrates?


Eric Bowness McKay: They are appointed by the provincial governments. I had not thought very mudh of that, but I should have no particular objection to putting them in, and I think they would do their work very much better if they did not have any political connection.


Gordon Graydon: Is that the policy followed in Saskatchewan?


Eric Bowness McKay: In general I think so. I do not think they are picking out C.C.F. men as judges. As a matter of fact they would have a little difficulty in picking out men who are strictly C.C.F. followers.


Gordon Graydon: For magistrates?


Eric Bowness McKay: Yes. I know that in a recent appointment made in Saskatchewan the individual was definitely not a member of the C.C.F. I cannot say that is general; I cannot say that is the rule all the way through. It seems obvious to anyone that when a young lawyer enters the profession-


George Russell Boucher: May I ask a question?


Eric Bowness McKay: May I be permitted to carry on without too much interruption?


The CHAIRMAN:: Order.


Eric Bowness McKay: It is not that I do not want to answer the questions, but I should like to follow my argument.


William Ross Macdonald: No hon. member should be interrupted without his consent.

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Eric Bowness McKay: It is a little difficult for me to follow the trend of my argument if I have too many interruptions. I have tried to answer the questions.


Gordon Graydon: The hon. member is pretty decent about it.


Eric Bowness McKay: As I said, young lawyers enter the profession and frequently look for something. They look forward to the day when they may be judges, and therefore they get into political life.


John Thomas Hackett: Not all of them.


Eric Bowness McKay: I agree with the hon. member for Stanstead that they do not all do that, because some have no hope of ever becoming judges.


Some hon. MEMBERS:: Oh, oh.


Eric Bowness McKay: We find this situation developing. The young enterprising lawyer gets into political life. I have had experience in this particular field; I know what happened in one instance, where in a partnership one lawyer was a Conservative and the other a Liberal. They were not going to overlook their opportunities. I suppose if a third member was required in the partnership he would be a C.C.F. member. It could happen. If that were done then they would be always on the right side for any appointment that was being made; one or the other of the group would be selected.
If my suggestion with regard to appointments to the bench should be followed-I know it would not be popular-it would tend to safeguard the public against politics playing a part in the administration of justice.
I would further suggest that some method of promotion be evolved for judges. This suggestion may be a little more popular than the previous one. Every hon. member has observed the appointment of lawyers to high judicial places, even to the supreme court, I am told, without any experience whatever on the bench. I believe that is wrong; I think the principle is wrong. It is my opinion, and only my opinion, that judges should be appointed first to a district court, or to the county court, as it is called in Ontario, or to courts of equivalent status. The experience gained in that court would prepare a judge for work in a higher court. The next step upward would be to the court of king's bench. He would receive that appointment provided he had done acceptable work in the court to which he had been previously appointed. Then judges of the appeal court could be selected from the court of king's bench. I do
not think it is sound to select men who have had no judicial training whatever and appoint them to high court positions.
The bill before us deals mainly with increases in judges' salaries and allowances for federal judges. It will involve considerable controversy; it will involve a considerable increase in public expenditure. I find myself definitely opposed to such a large increase at this time. Judges can still be found who will gladly serve for S5,000 a year, together with the. other allowances which they receive, consisting chiefly of travelling and sustenance allowances when they are away from home. That is a fairly substantial salary, and as I have pointed out before, there always seem to be many men who want the appointments. That is proof in itself that they are adequately paid.
Some of our judges are not too busy. I have in mind a certain district court judge in Saskatchewan who had no more than twelve cases a year. In addition to his work on the bench he has the administration of the Farmers' Creditors Arrangement Act, which involves some extra work. But he is not a busy man. You can always tell how busy people are by what they do with their spare time.
I suggested a moment ago that $5,000 seemed to be a fairly substantial salary, but most of our judges in Saskatchewan-and I think this holds good throughout the dominion-receive an additional salary as judges of the surrogate court. That additional salary usually amounts to $1,000, and is added to the $5,000 which they receive as district or county judges. I believe I am right in that.


John Thomas Hackett: They receive that from the province.


Eric Bowness McKay: Yes, but it adds to their income. That makes the substantial salary of $6,000, plus the allowances for travelling and the sustenance which they receive when they go to a district some little distance from their home. It seems to me that that is adequate. It is going to be most difficult for us to convince the general public that it is not. I cannot see that the work of a judge is any more onerous than that of a provincial cabinet minister. The cabinet ministers I have come in contact with w-ork day and night and are always on the go, and yet we are paying our judges a comparable salary.
We should keep it in mind when we are increasing the salaries that the judge is appointed for life. Most other positions which carry like incomes have not that security. The pensions which are allowed a judge and his
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Mr. HANSELL:: Mr. Chairman, I have rather full notes here on this subject, but I must confess that if I did not know the hon. member for Weyburn to be very honest and capable I would almost think that somehow or other he had stolen my notes, for what I am going to say is almost identical with what he had in mind; and of course as a result I need not take up a great deal of the time of the committee.
There is a point, however, I should like to make here in respect to the argument that the salaries of these judges are so high that there is a tremendous spread between their incomes and the incomes of thousands of people in our country who get so little; and the old age pensioners have been referred to in this respect. This is true, and we have no argument against it except that fundamentally we are arguing at cross purposes. The fundamental error is not that one is getting so much and the other is getting so little; the fundamental error is that under our present system of tax finance, when we raise the salaries of judges or
fMr. McKay.]
government appointees we are spending somebody else's money, and that is where the rub comes.
When these matters are under discussion here I cannot help thinking that there are two attitudes that may be taken. One seems to be the attitude taken by all the parties except the Social Credit party; the other is the attitude taken by us. The one attitude is that there is only so much money to go round, and that money must come from the taxpayers. Just so long as you agree that is so, then so long shall we have the argument that there is unfair distribution of the scarcity of money; and on that basis the argument would be sound. But the Social Credit philosophy in that respect is a philosophy of spending. That may sound strange to some who have not heard of it before, but money is only good in so far as you are able to spend it. For that reason we believe our taxation system can be extensively revised, even to a point of almost doing away with it, apart from some injustices that might occur; and that if only we can look at this matter as being the spending of new money which is not other people's money, perhaps that problem would dissolve. Of course the argument that increasing the salaries of judges is an injustice imposed upon those getting lower salaries would have been a good argument to advance when our own indemnities were increased by reason of a 12,000 expense allowance. We did not hear those arguments then. My observation, of course, is that we knew we needed it and could not get along without it; nevertheless the same argument applies.	,
It has always struck me as rather strange that those who administer the law get more than those who make it.


Stanley Howard Knowles: But not as much as those who break it.


Ernest George Hansell: That is so, too. I do not want any unfair inference to be taken from my remarks. I am quite satisfied now with the indemnity and allowance we are getting, and I am well aware of the fact that those who administer the law must have a background of training which costs a great deal of money. They have to go to university; they have to be articled to some law firm; they have to start out in business; they take a chance on whether or not their ability will get them somewhere, and I know all these things have to be taken into consideration. But regardless of the remuneration paid those who make the law, let us take as an illustration the one person in this country who after all is responsible for the administration of all the legal aspects involved in the country's business. I refer to

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the Minister of Justice. I believe his salary is $10,000, with perhaps an allowance. But I am certain he has a tremendous responsibility. These judges get higher salaries than he receives. I could mention others. Take the Prime Minister, who gets a certain salary. I would have to turn to my estimates to refresh my memory as to the exact figure, but it occurs to me that the Prime Minister does not get as much as the chief justice of Canada, and he gets no pension when he is defeated at the next, election. Then there are other government appointees who receive more than the Prime Minister receives. We have the Minister of Finance being paid $10,000 a year, and the governor of the Bank of Canada receiving $30,000 a year. I could never quite understand how that came about.
I shall refer to one other matter, to which I believe I shall not do 'better justice than did the hon. member for Weybum, when he referred to the manner of appointing judges. To many who become judges the appointments are just juicy political plums. I refer to the matter in that way because I am certain that the appointment of judges is not necessarily based upon the ability of the appointees as lawyers. Many who receive appointments to the bench h'ave not had outstanding careers in law. There are men who have outstanding legal careers and who have divorced themselves from politics but who, in my opinion, do not stand a ghost of a chance of becoming judges in Canada. I believe therefore that some other method should be devised for the appointment of judges.
I shall take my seat after asking a question. Are the salaries of judges subject to income tax, and are their expense accounts as outlined in the bill subject to income tax?
Mr. ST. LAURENT: Salaries of judges are subject to income tax. Travelling allowances provided are not taxed.


Mr. DROPE:: I have listened with interest to the discussion which has taken place this morning, and would suggest a medium through which we could raise the salaries of judges without adding any greater expense to the country. I believe we have too many judges. Reference has been made to the large amount of work they are doing-and this may be so in some cases. However I can, visualize many counties in the rural sections of Canada where the judges could easily take on the duties of one or two more counties, and still do justice to their work. I believe that probably we would attract a better class of judges if we paid higher salaries, and I would favour such an increase in salaries. At the same time I believe there should be a reduction in the number of judges.
I hear a good deal of criticism from the fact that judges withhold too long decisions in cases they have tried. It appears that there should be some provision whereby in a reasonable length of time a judge would be compelled to give a decision in a case. The expenses in connection with the trials of many of these cases have been heavy, and yet there does not appear to be any way of compelling the judge to give his decision. I believe it would be in the public interest if action were taken along this line.
Speaking generally I believe the work of the judiciary in Canada has been satisfactory, and that we should see to it that they receive a remuneration which would make them independent and fit them to do a better job in the administration of our laws.


Mr. SINCLAIR (Ontario):: As a rule I am not in favour of increasing public expenditures, but in this instance I am heartily in favour of the move made by the Minister of Justice. For too long have the judges who administer our laws been underpaid. I welcome this opportunity to support the action, of the Minister of Justice in bringing this bill forward.
Some novel suggestions have been heard in committee this morning. The hon. member for Cariboo referred to Solomon. Well, judging from the number he had: around his house, Solomon was probably a better judge of women than of most other things. And as to Daniel, he would probably have qualified as a judge at a circus, because he landed in the lions' den.
The suggestion that non-lawyers should be appointed as judges in our courts is a novel one. I do not suppose that even a socialist would set a blacksmith to lay bricks on a house. After all, any man holding a responsible position must have some training for the position he occupies. Judges have to have a practice in law at the bar for a term of years before they become qualified to hold judicial posts.
The hon. member for Cariboo referred to the administration of law by juries. Sometimes juries are right and sometimes they are wrong. I am not going to say in which class most of their findings would fall. But as a solicitor who has been practising for a good many years I have often wondered what particular use there was for juries in a country where we have such well-trained judges on the bench. Some of the findings of juries upon facts given in evidence make one wonder how those findings were arrived at. Let me add, however, that where juries are employed they are given direction by a judge who, after all, presides in the court and has control of its proceedings. It seems to me hon. members
Judges Act

are going a long way when they advocate a system, such as was suggested this morning, under which we would not have trained lawyers on the bench to administer matters coming before them.
As usual the hon. member for Macleod had to give us the social credit theory-and I understood it this morning just as well as I have understood all the social credit theories we have listened to. I sit opposite them, and hear them all the time. Never yet, however, have I had the satisfaction of coming to a final conclusion of what it is all about, beyond the fact that it adds to the volume of Hansard and to the satisfaction of hon. members who have spoken.


Mr. LOW:: Keep your mind open; you will learn.


William Edmund Newton Sinclair: I cannot. I have had two sessions of it, and have learned nothing.


Solon Earl Low: Don't blame us for that.


William Edmund Newton Sinclair: The hon. member for Macleod also referred to juicy political plums. Let me tell him that there are many practising barristers and solicitors who do not look upon these appointments as juicy plums. Many of our best lawyers refuse to take appointments to the bench-and the Minister of Justice knows it. The result is that we must take men who have not the Outstanding qualifications possessed by many others in the profession. For these reasons I certainly do not look upon an appointment to the bench as a juicy political plum.
Reference was made this morning to the law societies of the different provinces. For fifteen years I have been a bencher of the Law Society of Upper Canada. I am now a life member of that body, and I know that very often this matter has been discussed by it. They are actively interested in having the very best appointments to the bench.
Section stands.
Progress reported.
At one o'clock the house took recess.
The house resumed at three o'clock.



THE BUDGET


[Stage Direction]
The house resumed from Thursday, July 18, consideration of the motion of Right Hon. J. L. Usley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell.
Mr. JOHN BRACKEN (Leader of the Opposition):: Mr. Speaker, when the house rose on Thursday last I was discussing the question of dominion-provincial relations. Before I proceed with my remarks to-day I propose to take a few minutes of the time of the house to summarize briefly what I had to say up to that time.
I had shown that the question of dominion-provincial relations had first been set out in [DOT]the British North America Act of seventy-nine years ago; that that act set up a federal system in Canada, and not a unitary system-in other words a two-government system, not a one-government system-with a central government on the one hand and provincial governments on the other.
I had pointed out that this federal system placed responsibilities on each of these two types of government, and on one of them, namely the provincial governments, it had placed a limitation of taxing powers, the provinces being confined to direct taxation and denied indirect taxation. I had shown that the advantages arising from confederation had not been equally distributed as between the different sections of Canada, not because of any deliberate intention, but partly because of the accident of the degree of centralization that it brought about.
I had shown that certain national policies, particularly the tariff, had borne inequitably on different sections of the nation. I had shown that certain social services and the cost of those services, responsibilities largely of the provinces, had multiplied rapidly in the seventy-nine years, and that as a result, certain areas in Canada either had a very low standard of social services or had them only by imposing such a high rate of taxation as to be almost confiscatory.
I had shown as well that in the seventy-nine years since confederation there had been several adjustments between the dominion and and the provinces with respect to subsidies and so on, most of them, as we see them today, more or less minor in character. But in the nineteen thirties the situation had become desperate, and in 1937 this government appointed a royal commission to deal with the matter. That commission after three years' work had reported in 1940. The report failed to secure the agreement of the province in 1941; and then the government, realizing that something had to be done and practically everybody accepting that decision, entered into the wartime tax suspension agreements with the provinces, whereby the provinces vacated certain tax fields and the government

The Budget-Mr. Bracken
reimbursed the provinces to the extent substantially of the revenues which they had been receiving from those taxes.
With the termination of the war and the wartime tax suspension agreements being due to terminate, some next fall and others next spring, the federal government came forward with its August 1945 dominion-provincial proposals. Those proposals dealt not only with finance and taxation but with an expanded programme of social security and with a programme of public investment. Those proposals were modified slightly again in January of this year; and then in May of this year, in a conference with the provinces, failure to secure agreement was again the result. On June 27 last, when the Minister of Finance brought in his budget, he brought forward a much watered-down proposal which has been advanced to the provinces one by one since that time.
I had shown that in these various approaches to the problem there had been a progressive increase in the tax burden proposed to be levied on the Canadian people in order to meet this problem, increasing from $40,000,000 in ,1940 under the proposals of the Rowell-Sirois commission's report to over $80,000,000 under the wartime tax suspension agreements, and to approximately $180,000,000 under the first proposals of the dominion government advanced last August, and approximately $200,000,000 in its modified proposals of last January; to which had to be added large sums for social security and public investment, bringing the tax burden sooner or later to be imposed on the Canadian people to $600,000,000 in the case of the dominion government and an addition of $200,000,000 on the provinces or a total of some $800,000,000 in all.
At the hour of adjournment on Thursday last I was dealing with the government's excuse for its meagre programme of tax reductions for this year, and for its action in omitting from its present programme the social security and public investment aspects of the proposals which it advanced last August. The efforts of the government in trying to represent that tax reductions by the government were dependent upon the approval of its proposals by the provinces I suggest, Mr. Speaker, leaves a false impression which is unworthy of the government of Canada. The government had to reduce taxation under the wartime tax suspension agreements of 1942 with the provinces. In its agreements with the nine provinces it was required by the provinces to get out of those tax fields to some extent at the end of the war. I know something about it, because I was on the other end of the agreement with
Manitoba at that time. The provinces would not have gone into the agreements if they had not felt that they would be terminated when the war was over and that they could get back into their vacated tax fields without an undue burden on their taxpayers. In that connection I might read one section from the tax suspension agreement of the dominion with the province of Manitoba. I do not know whether the clause reads exactly the same in the agreements with the other provinces, but I presume it does. This is how section 20 of the tax suspension agreement with Manitoba reads:
The dominion shall have the sole right to levy taxes on personal and corporation incomes of the calendar year ending on the thirty-first day of December nearest to the date of the termination of this agreement, and with respect to personal and corporation incomes in the following calendar year undertakes to reduce its rates of taxes by such an amount as will enable the province again to use the income tax and corporation tax fields, and in particular the dominion undertakes to reduce its rates of tax on corporation incomes by at least 10 per cent of such incomes.
That was a definite undertaking in the agreement signed four years ago. In compliance with that undertaking the government had no choice but to make these minor reductions in taxation which the minister announced in his budget.
Now with respect to the abandonment by the government of its social security programme and the public investment programme, what explanation does the government give for abandoning these two features of its 1945 proposal to the provinces? It is going ahead now province by province with the possibility of less than nine agreements being made; possibly eight, possibly seven, possibly six, possibly less; no man knows-possibly all. One cannot but regret this plan of approaching the provinces one at a time. One is compelled to wonder if the dominion is really anxious to have the larger provinces come in. I suspect it would rather see the larger provinces stay out.
The dominion is now paying $88 million to the provinces under the wartime tax suspension agreements. This amount will be saved the dominion treasury as the agreements expire, and if a province does not enter into a new agreement the dominion saves the rental it would otherwise have to pay. The government therefore has no right to say it has to abandon its social security and public investment policies because it has not been able to get the agreement of the provinces. If the government reaches agreement with all the provinces, it will pay what it has agreed
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to pay-$198 million, it is estimated, for the year 1947; and if it makes agreements with less than nine provinces the cost to the government will be less. So why talk about abandoning the social security and public investment features of this policy which it proclaimed so loudly last August? In comparison with the August 1945 proposals as amended by them in January, the saving to the dominion under the government's present plan would be colossal. All this present plan can' cost the government of Canada is $198 million a year; the last-year plan might cost and would in due course cost the Canadian people, dominion and provincial-and they are the same people-$800 million a year. As I said, in comparison with the August 1945 proposals subsequently amended, the lessened cost to the dominion under the government's present plan would be colossal. For that reason I say that the dominion government's attempt to saddle upon the non-agreeing provinces the responsibility for postponement of their social security programme is just pure bluff.
But the government will say that unless it has the exclusive use of these three fields of taxation, income, corporation and succession duties, it will not know what the provinces are going to do in them. The government hints that while it may be endeavouring to raise national production and national income, the provinces in the meantime may be trying to lower it. This is another type of superiority complex which is unworthy of the dominion. The dominion government says it wants to pursue anti-depression policies; is it to be assumed that the provinces will want to pursue pro-depression policies? This superior attitude which the dominion is developing towards the provinces is anything but conducive to good dominion-provincial relations. Is the dominion government assuming that if it reduces its corporation and personal income tax rates by small amounts to raise the level of production and employment, the province of Ontario or of Quebec or of British Columbia is going to be so stupid or so reckless of its own interests and the interests of Canada that it will penalize individuals and industries by imposing higher taxes? The logic of the government's argument is that the provinces can no longer be trusted to act responsibly in fiscal matters. It brings into the open in a way that has never been brought out before this superior attitude of the dominion government and its secret invisible government of advisers.	[DOT]
A few centuries ago kings and ministers fell into the hands of alchemists, those who claimed they could produce gold from the philosopher's stone. Gold has not the import-
ance to-day that it had a few centuries ago; but we are building up in Ottawa with the concurrence of this government, a public service which is beguiling the people into believing that there is some magic or mysterious way which is open to dominion officials, but to no others, to provide services and goods without imposing great obligations by way of taxation. If the present government's social security and public investment policies were sound last August and sound until last April, then they were also sound in June, when the government brought in its present proposals. The dominion has no justification for dropping its social security programme because of any action taken by the provinces. All the facts indicate, Mr. Speaker, that the government fears to proceed with its own policies, that it fears the consequences of the heavy burden of taxation they would impose. It looks as if the government was pleased when the conference failed, particularly if it could lay the blame on somebody else.
Let me summarize briefly my views with respect to this matter. My observations of the last nine years, during which I happen to have been very close to this problem, indicate to me two things. First, the people of Canada will not be satisfied without an agreement; second, they will not be satisfied without an agreement arrived at by conference with all the provinces as opposed to one made by the government's piecemeal procedure.
My recommendations in this matter can be stated very briefly. They are just four in number.
First the dominion government should repeal certain minor taxes, such as the gasoline tax, amounting to three cents per gallon, and the tax on electricity of eight per cent of the consumers' bills, which taxation fields it invaded as a wartime measure. To comment on that in passing, let me remind the house that in the case of this gasoline tax, three cents per gallon, farmers have been held down with respect to farm prices even as their costs are rising; and now the dominion continues to impose three cents a gallon tax not only on gasoline used by farmers but also on gasoline used by fishermen and many others. With respect to the eight per cent tax on consumers' bills for electricity, I know of two provinces, Ontario and Manitoba-there may be others-the governments of which are taxing their whole people, in order to do what? To lessen the cost by fifty per cent of the distribution of electrical energy to outlying communities. In the face of that generous policy the dominion government comes along and puts on an eight per cent consumer's tax on electricity, offsetting to at least that degree

The Budget-Mr. Bracken
the policies of getting electrical energy extended to outlying areas. That is number one.
My second recommendation is that the dominion should stay out of these minor tax fields and leave them to the provinces. I cannot take time to-day to enlarge upon these things, but let me just say that in 1867 the provinces were required to give up their revenues in the form of indirect taxes, the chief source of revenue they had; and now, seventy-nine years later, they are asked to give up their important sources of direct taxation- income, corporation and succession duties; and the dominion still wants to stay in the other and minor fields of direct taxation. I say that the dominion should stay out of the minor fields and leave them to the provinces.
Third, the dominion should call another conference in order to try to achieve a united front in the attack on post-war problems.
Fourth, there should be set up in this dominion a central dominion-provincial committee to study dominion-provincial relations so that the present situation may be improved. In any event we should have a studied and acceptable plan for the time when the government's present five-year tax agreement plans either fail or come to an end. This question of dominion-provincial relations in Canada is too important not to have the best brains study it for as long as may be necessary in order to arrive at a plan that will receive the practically unanimous support of the Canadian people.
Briefly those are my suggestions. As for leaving these minor tax fields to the provinces, I wish to bring not only my own humble judgment but the judgment of the Rowell-Sirois commission, set up in 1937, which made a better study of this question than any other body that 'has studied it since confederation. What was proposed by that commission was that the dominion should have the sole recourse to income, corporation and succession duties; but that commission left no doubt in the minds of the Canadian people where it stood in respect of the other minor taxation fields. This is what the commission had to say at page 85 of volume 2 of its report: Each province will be left with, relatively speaking, a remarkably stable revenue. A large part of the revenue of some will consist of a fixed cash payment from the dominion. The taxes with highly variable yields will have been transferred to the dominion. Those with fairly constant yields will remain. (The chief exceptions are the public domain revenues and the mining tax rebate in some provinces, and the profits from the sale of liquor.)
Listen to this-the report continues:
It is implicit in the plan, but should be clearly stated, that the dominion will respect the tax fields left to the provinces. Adjustments in the joint domininn-provineial-municipal tax structure will undoubtedly be necessary and desirable from time to time, but the dominion can no longer consider itself a free and independent agent to take unilateral action to this end when it pleases. The essence of the plan is to leave provinces and municipalities with adequate, suitable revenues, and this would clearly be defeated if the dominion should extend its taxation into fields already occupied by the provinces or on objects jointly taxed without making satisfactory compensatory adjustments. Such action would violate the whole spirit of the arrangement.
That, Mr. Speaker, is the view of the dominion's own commission after three years of study. It is the commission's view with respect to the attitude of the dominion government towards the minor fields of direct taxation in which the dominion now persists in remaining, even though it is asking the governments to give up the three large fields of taxation.
In addition to the views expressed by the Rowell-Sirois commission, I might point to the views of one of the provincial premiers, the premier of Nova Scotia. What he had to say may be read at the bottom of page 38, and on to page 39 of the proceedings of April 29 of the dominion-provincial conference. The date, as I say, is April 29, 1946, and I should like to read what he had to say about this particular aspect of the problem:
How do the provinces stand under the proposals? We have two exclusive fields of taxation, one of which fields is valueless. There is joint occupancy of other small fields such as gasoline, amusements, electricity and the like. Then there are the proposed grants, which the dominion calculated at $15 per head, increasing as the production of this country increases. In return we are asked to surrender our rights to collect income and corporation taxes, two fields which, as I said, yielded last year something in excess of one and a half billion dollars. We have then to surrender the rights to collect income and corporation tax, two fields which I stated last year yielded something over one and a half billion dollars. That is the position which the provinces are asked to take.
Let me ask you, Mr. Chairman, and the delegates here, whether they represent the dominion or the provinces, let me ask anyone who is within sound of my voice, let me ask that great body to which we as public servants are all accountable, the citizens of our provinces or of Canada, let me ask any of those people whether they think that is a fair or honourable or dignified position in which to place the. provinces in this dominion? Provincial autonomy will be gone. Provincial independence will vanish. Provincial dignity will disappear. Provincial governments will become mere annuitants of Ottawa. Provincial public life-and I do not think these words are too strong-will be debased and degraded. I cannot think that such a state of affairs is desired by the representatives of the government of Canada here to-day, my one-time colleagues. I am sure that they have no wish or desire to see such a state of affairs come
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to pass in this country nor can I believe that such a state of affairs is desired by the people of this country.
So much for the views of the Rowell-Sirois commission and of the premier of Nova Scotia.
As I said, at confederation the provinces gave up their indirect taxes, which then represented almost their total source of revenue. They gave them up for a subsidy payment which, even now, seventy-nine years later, amounts only to about $17,000,000; and now, after that seventy-nine years, the provinces are asked by the dominion to give up their chief sources of direct taxation-income and corporation and succession duties. When the provinces say, "At least leave us a few minor fields of taxation," the dominion says no. I suggest that such an attitude is not democratic. It is not cooperative. It represents not the conference mind but the dictatorial mind. It represents coercion. It smacks of centralized dictatorship. It represents the type of public discussion that this country ought, until the last extremity, to try to avoid.
I come now to the second of the two topics I indicated that I wished to deal with, namely, the question of the attitude of the government of Canada toward the cooperative movement. With respect to the cooperative movement let me at the outset make two brief comments. To me the cooperative movement is one of the counter balancing forces to the present trend in government toward centralization and bureaucratic controls. I regard the cooperative movement as a bulwark against both cartelization on the one hand and state socialism on the other. It is a movement that is here; it is a good movement, and nothing must be permitted which will hamper its development along sound lines.
My position with respect to the government's proposed taxation of cooperatives can be briefly stated in five sentences. Before I state these views let me say that any responsible government must try to find a system of taxation which is fair to all its constituents. Neither this government nor any other can let itself get into a position where unfair taxation laws drive people from one type of enterprise into another. Having said that, let me outline our position with respect to these cooperatives.
First, we are opposed to the government policy of imposing taxes on moneys which would have been paid out in patronage dividends by certain cooperatives in 1944 and 1945. We have a situation in Canada where, from 1930 until now, these organizations were not taxed on patronage dividends, or savings, or earnings, or whatever you choose to call them;

and the government now comes forward with a policy saying that after 1946 they are not to be so taxed, but with respect to what has gone before they say: We are going to put a tax on these earnings, or dividends, or what>
ever you call them, for the two years 1944 and 1945.


Mr. ABBOTT:: They are not putting taxes on; the tax was there. There is nothing in this budget thait is putting a tax on.


John Bracken: Let me ask the hon. member, who will be the Acting Minister of Finance, is it the government's policy from now on to exempt cooperatives from paying taxes on patronage dividends?


Douglas Charles Abbott: Yes, of course.


John Bracken: All right. If the government had1 been bringing in this measure two years ago, what would have been your procedure? Would you have said you would tax them for two years and after that you would not tax them?


Douglas Charles Abbott: The fact remains that the law is there. Whatever we might have done had we brought the measure in two years ago, the law is there to-day.


John Bracken: My hon. friend cannot get away from this fact-


Douglas Charles Abbott: It has been there since 1930.


John Bracken: These organizations were not asked to pay taxes until about 1941.


Douglas Charles Abbott: No, 1940.


John Bracken: It was not suggested that they pay taxes any time after 1930 until then, and none have been paid. Now the government comes along with a policy which says that from 1946 on, these particular cooperatives will not have to pay taxes on patronage dividends, but that whether they are taxable or not, it is going to make them pay taxes for 1944 and 1945, the two best years they have ever had.


Douglas Charles Abbott: We are going to change the law.


John Bracken: It does not add up to any consistency whatever.


Mr. BENTLEY:: The same law was there in 1930 and is still there; it has not been repealed.


John Bracken: The law has not been changed in this respect since I do not know when. These organizations were not taxed and have not been taxed as yet. After all these years the government has come forward with a policy which says that from now on they should not be taxed but they are going to be made to pay for 1944 and 1945, the two best

The Budget-Mr. Bracken
years that they ever had. We are opposed to the government policy of imposing taxes on moneys which would have been paid out for patronage dividends by certain cooperative organizations in 1944 and 1945.
Second, we are opposed to the provision governing payment of patronage dividends, by which they must be paid in cash. We take the position that cooperatives should be allowed to pay these dividends either in cash or its equivalent of any kind.
Third, we are opposed to the government limitation that transfers of stock ownership cannot be made free of tax except on purchases made subsequent to the year 1941. I shall make some observations on these latter matters in a moment or two.
Fourth, we are opposed to the government's policy of compelling cooperatives to pay patronage dividends to non-members. We are opposed to this because it is a matter of internal cooperative management and something which should not be made the concern of the government. .


Douglas Charles Abbott: The commission recommended that.


John Bracken: It does not matter what the commission did; you are the government.


Douglas Charles Abbott: In spite of that fact, we are entitled to pay some attention to their recommendations.


An hon. MEMBER:: You cannot take it.


John Bracken: Fifth, with regard to the government's plan that taxes must be paid on three per cent of capital employed, I want a further explanation from the government when we go into committee. As the matter now stands this plan is capable of different interpretations, and in addition it is not made clear how in practice it will be administered.
Let me now deal more specifically with the government's belated policy of dealing with pool taxation over the years prior to 1946. Ordinarily a taxing authority is supposed to know its business. What would we think as individuals if the government had been in doubt for some sixteen years as to whether we were liable for taxes or not? Members of this government had let the pools remain untaxed from 1930 to 1941 without protest.


Douglas Charles Abbott: And the preceding government.


John Bracken: All right, if that helps the hon. member any.


An hon. MEMBER:: It does.


Mr. ROSS (Souris):: Take your head out of the sand and look forward.


John Bracken: Then, under pressure from the pool's competitors the government felt obliged to say, "Well, we don't know; you may be taxable or you may not." This was before the election. They said: "We will try it out in the courts. Let us have a test case." And before the test case had reached the courts, the government said, "No; we will appoint a royal commission." That was also before an election. Now for the first time in sixteen years the government has a policy with respect to taxing cooperatives. Now they say to the pools: "If you will give us two cents of the 3i cents patronage dividends that would have been paid in 1944 and 1945 if doubts had not arisen in the mind of the government, we will call the matter off."
This government has asked the farmers of Canada-I will be a little more specific; this government has asked the wheat growers of Canada-to take $155 a bushel for a certain portion of their wheat and $1.55 a bushel for certain other portions, while the world price is at a vastly greater figure. The pool organizations supported that policy loyally, and as a recompense the government comes along and says that on the amount that you regard as patronage dividends in the last two years amounting to approximately 3i cents a bushel we will take two cents. That is the government plan, even though from now on it is going to discontinue it as a matter of considered government policy.
The government has been forcing western farmers to take $1.25 basis Fort William, plus a participation certificate, for a part of their wheat. It has been forcing them to sell on export markets at $1.55 a bushel, considerably below the price paid to their competitors. Let me put it this way. Suppose the government had made up its mind earlier, as it should have done; what would have been the result? The result would have been that the years 1944 and 1945 would have been treated precisely as the years 1946 and 1947 are to be treated from now on. The government could not possibly bring forward that kind of policy and say it is right to tax these people for two years and then it is wrong forever afterwards to tax them. The government either had a taxation policy or it had not. If it had not a taxation policy, it has no business now using its power to extract money from Canadian citizens under the threat of prolonged and costly litigation.
I want to deal for a moment or two with the restrictions with which the payment of patronage dividends are surrounded. As I read resolution No. 12 the government is going to require that patronage dividends be paid in cash. If the government persists in

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very friendly with one of the commissioners who is now dead. We know, therefore, whose was Esau's hand and whose was Jacob's voice in 1941. But in 1946 it would be quite interesting to know whose was Jacob's voice, while Esau's hand was the same.
Times change. Time marches on. I am sure that if the Rowell-Sirois report has been implemented by the government, it is precisely due to the able speech delivered by the present leader of the opposition on that fateful day, January 14, 1941. The hon. member was then, as he is to-day, a man of great experience, the dean of the premiers of the nine provinces. Here is what he said about the Rowell-Sirois report:
This commission was required by its terms of reference to make a very wide inquiry. It has done this in a most thorough manner. In the judgment of many competent authorities, it is one of the most intensive and complete public inquiries ever undertaken in the British empire on the workings of a federal state. Canadians now, and in the days to come, may differ as to the wisdom or efficacy of the specific recommendations of the commissioners; but the careful and exhaustive research on which the recommendations were based will stand to-morrow, as it stands to-day, a bench-mark to which we shall always return.
Yes-"Canadians now, and in the days to come"; who would have said then that in the days to come it would be on this 23rd day of July that the hon. gentleman would deny what he was boasting with such emphasis five years ago?
But that is not all, Mr. Speaker. I quote again the same gentleman:
We in Manitoba-
Now it is "we in Ottawa"-there is a slight difference.
We in Manitoba-
It may be "we in Toronto"-
We in Manitoba respect this report because it comes from men whose ability and integrity are generally admitted-men who have had the advantage of the fullest possible facilities for reaching sound conclusions-facilities that have never before in Canadian history been provided to those charged with similar responsibilities. To the men responsible for this outstanding contribution to our national life, I wish on behalf of the people and the government of Manitoba to convey our most sincere congratulations and thanks.
An then as he sat at the clerk's table, the hon. member summarized, the four major recommendations of the commission. What were they?
1. The transfer to the dominion government of a wholly modern responsibility-unemployment relief.

When the war came along unemployment to a large extent decreased, and that question is not argued by the hon. member at this time. Then:
2.	A change in the method of arriving at dominion financial assistance to the provinces.
This is very important. It changed the basis of taxation according to the British North America Act. Now let us see what will please the premiers of the provinces:
3.	The transfer to the dominion government of the sole right to levy income tax, inheritance tax and corporation taxes.
And No. 4:
4.	The assumption by the dominion of the debts of the provinces.
The subtitles were these: Implementation of Substance of Report Essential to National Unity. Very important, Mr. Speaker. Another one was this:	Implementation of Report
Enhances Provincial Autonomy. Then under the subtitle, Unsoundness of Tax Structure Inherent in Constitution, I read this:
As long as the provinces have resort only to direct taxation, and their revenues are supplemented by the dominion only through subsidies calculated on the obsolete basis of population- just so long the dominion cannot impose the taxation which it should on incomes and inheritances without seriously reducing the important sources of revenue of many provinces, including certainly Manitoba. We suggest that as long as the provinces retain the field of direct taxation, our national tax structure will continue to present this irrational aspect.
Another subtitle, Mr. Speaker-most in-teresting-was this: Ill-Balanced Tax Structure Bears Heavily upon Low Income Consumers and Unprotected Producers, and under that heading I find this:
Let me touch on this for just a moment. As long as the dominion has to raise the bulk of its revenues by indirect taxes upon consumption which bear most heavily upon the low income groups, its taxes will continue to inflict the grave injustice which has been inflicted during the depression upon the poor, upon the consumer, and upon the farmer and other producers who are not protected by the tariff. The poorer a man, the larger his family, the less protected his market-the more heavily this tax structure bears upon him, regardless of the province in which he lives.
Some of the other subtitles are: Heavy Indirect Taxes Increase Cost of Living-Ill-Balanced Tax Structure Leaves Relatively Heavier Burden upon Low Income Groups- Present Tax Structure Transfers Income from Relatively Poor to Relatively Rich. Under the subtitle "Decision Provinces Must Make", I find this:
The decision which the provinces must make is whether they shall retain their right to impose these direct taxes and get less and less

The Budget-Mr. Pouliot
from them, or whether they shall voluntarily relinquish them now for adequate considerations, financial and otherwise.
That is what was said by the hon. leader of the opposition a little more than five years ago. I regret to have to remind him of what he said on that occasion. It may or may not be of some embarrassment to him, but as he is the one who by his eloquence was responsible for the adoption of the Rowell-Sirois report by the government, it is my duty to put this before the house so that even those who were not in public life at the time will not be unaware of the stand taken by the hon. gentleman on that occasion.
As I read the amendment which has been moved by the financial critic of the opposition I find that his first complaint is that the budget does not provide for tax reductions in the calendar year 1946. No tax reductions!
I am for tax reductions provided that the expenditure is not too heavy, and I will have i word to say about that in a moment.
When the Prime Minister sponsored the motion to establish the Rowell commission I thought that his purpose was to clear the skies, to relieve Canada of all the difficulties which had been a cause of contradictory jurisprudence, and to give ample opportunity to the government at Ottawa and to the provinces to stand up and be self-supporting for years to come.
If we read the British North America Act attentively and read at the same time what was said by Lord Carnarvon, who sponsored our constitution in the House of Lords, we shall realize that the purpose of those statesmen who had foresight and who did not change their minds every year or every five years, ivas to create independent entities, to create provinces that were to be independent of the dominion government and of the dominion parliament just as much as they were to be independent of each other. The word 'exclusively" is repeated time and time again to show that the jurisdiction of one authority is not the jurisdiction of the other. The speech of that great Englishman can be summarized in these words:	we will teach them,
teach Ottawa and the provinces, we will teach them all to mind their own business. It is precisely because of the encroachment that has been made upon these separate fields of jurisdiction, by the dominion on provincial ground and by the provinces on federal ground, that we reached the time when the commission was created.
And what happened? What was it? The intelligensia appeared before the commission from everywhere. They even brought Bruen-ing, the ex-Chancellor of Germany, to tell
the commission what had happened over there and what should happen here. I asked Mr. Dunning if Bruening had come as an expert, and he said, no, as a witness. Nevertheless he came to illuminate the minds of the commissioners. One of them was coach to the present leader of the opposition when he was premier of the province of Manitoba. All sorts of men came before the commission. And what was the purpose of the commission in drafting its report? The purpose was precisely to annihilate the provinces, and I am surprised that a clear-sighted man like the leader of the opposition did not realize that when he bestowed such praise on the commission. I remember, and I mentioned it in the house in February, 1941, that in January of that year on the eve of the meeting of the dominion-provincial conference at Ottawa I heard a professor from Queen's in one of his broadcasts saying:	We should not
have ten countries in Canada, ten small independent nations-and he had a word of contempt for the ten small countries-we should have only one big country.
I can tell the hon. gentleman that I am very glad that the government was a little cautious about implementing that report., because if one were to take for granted what he said on January 14, 1941, nothing would be left to the provinces; they would be completely destroyed; for they would have no powers of taxation. It is dangerous to listen to bad counsellors, bad advisers; and when I say that to the hon. gentleman who leads the opposition I mean it, and I make a great distinction between himself and the board of strategy of his intelligentsia in Toronto. I am sorry for him that he listens to them, that he is guided by them, that he becomes a tool in their hands. And when I speak of his board of strategy I do not include Mr. Drew.
I come to federal politics. As, five years ago, the present leader of the opposition spoke as the premier of his province, to-day he spoke in this house as the leader of a great dominion party-using "great" in a manner of speaking, but there are still great men in it. And if the Conservative party-call it "Progressive Conservative", "Tory", or what you will-is not stronger to-day in this country, it is because the hon. gentleman has listened to the voices of those who, though they cannot be elected by the people of Canada, continue to run the group. I regret that that is so, because they are bigoted and narrow-minded, while the hon. gentleman himself is broadminded and is not bigoted. Those men are responsible for the division which exists in this country. If the hon. gentleman spoke
The Budget-Mr. Pouliot

to them with the same aggressiveness and forcefulness as he spoke to-da}1, in this house I am sure there would be no more articles in the Ontario papers against the province of Quebec. It is pretty tough to listen to the predicants of national unity. National unity does not exist in this country. It is unfortunate; no one regrets it more deeply than I do. Unity will exist when the two old parties get rid of those who, as I have proved to the house, pull the strings for their own benefit. These men have not the confidence of the people, and how can the leader of the opposition expect to regain the confidence of the people by listening to the Jonahs who have been rejected by the whale, reflected; not only once, as was the Jonah of the old testament, but every time they faced the people? Even the big whale could not swallow them.
I heard the hon. gentleman speak of cooperatives. He has views on the subject, which no doubt I shall read about in the five o'clock papers. It was impossible to take a note of what he said. There may be some good suggestions in what he said on that subject, and if so they may be taken into account by the government. But with regard to the wheat pools he knows very well that the price which the grain growers get for their wheat now on the London market is $1.55.


Mr. COLDWELL:: At Fort William.


John Thomas Hackett: London is a different story.


Mr. POULIOT:: Yes, but there are subsidies. When I look over the border I find that the price of wheat is $2.15 or $2.18. The United States price is a little higher. That is because our trade channel is up a dead-end street, or a one-way street. I leave that for meditation by the hon. gentleman, who can draw his own conclusions and communicate them to his friends of the elevators of the west.
But how can the hon. gentleman complain about taxation and extravagance? Here are the first two points emphasized in his amendment by the financial critic for the opposition:
(1)	That the budget does not provide for tax reductions in the calendar year ,1946;
(2)	That the budget gives no indication of any serious attempt to eliminate extravagance or effect economies in the cost of government.
It was easy to practise economy, but once again the Conservative party has missed the boat. When the loan policy was brought to the house it was found that it was wrong. The Conservative party approved it. They approve anything that is going to be done for other countries. I am not so bigoted as to say that we should do nothing for others, but in one respect I agree with R. B. Bennett when 
be said "Canada first"; I believe that Canada should be served first and that others should be served by Canada only after Canada has been well served. So these gentlemen have not the right to complain about extravagance. I think of their own turpitude when they mention extravagance in their amendment. When I spoke of that in the house the newspapers had big headlines, "Quebec member opposed to British loan," thereby insinuating that the member for Temiscouata was antiBritish. I am not anti-British, but I am proCanadian. I see in all papers "Quebec" members have done this, "Quebec" members have done that. Always Quebec. Well, I decided to visit English-speaking Canadians outside of the house-in the Ottawa valley, in the St. Lawrence valley, and along the Atlantic coast, to the great city of Halifax. There I repeated exactly what I have said in this house

and what I say in my own county-because I have no different language for the one or the other. When I believe something I say it, whether I am wrong or right, and I admit I am wrong when I am proved to be wrong; but that has not occurred yet. I have the happiest recollection of a meeting which I had the honour to address when I told my audience that what was lacking in the House of Commons was the Canadian spirit, which should be the inspiration of our legislation. I did not say anything unpleasant about my colleagues. I said of them, sir-and I included yourself- that they were a fine bunch of fellows, which is true. It is unfortunate however that men of good will belonging to all parties in the house very seldom succeed in having their serious and most valuable suggestions adopted. In some mysterious way success comes to those on the outside. When a member of parliament makes an academic speech it does not go any farther than the house; but if an outsider, who has the halo of an expert, becomes an adviser to the government, at once his word is gospel and he must be listened to. This is very dangerous.
I said a moment ago that the Rowell-Sirois commission was a fiesta of the intelligentsia. All the people that could be got together from all around came to give, not evidence, but presentations, and they suggested all sorts of things. Most of the time it was not in the public interest, but in their own personal interest, to present a fine bill, to be well paid, and to see the little job or the fat job on the horizon coming to them just as quickly as possible. That was the purpose.
How can the hon. gentleman who leads the opposition, and his supporters, complain about bureaucracy? The Rowell-Sirois report is the magna charta of bureaucracy in Ottawa. That

The Budget-Mr. Low
is the trouble, and if we wish to redress wrongs of the past we must undo the workings of the Rowell-Sirois commission and we must return to what we were before the adoption of that report in an oblique way.
I am not going to speak much longer, although I have much more to say; but I mention again the Canadian spirit. The Canadian spirit should be our inspiration, and I say to some of my colleagues who were born outside, but who are Canadians at heart, as well as to all those who were born in this country: imperialism is the political religion of men without a country. Imperialism does not appeal to youth and at the present time there are two ways which are open to youth, one of which lies in the way of thinking that characterized our forefathers. It is the red-blooded Canadian way, the basis of which is patriotism rooted in the land of birth or adoption, above everything else. That is patriotism. But patriotism has long since been discarded, to be replaced by imperialism and then by internationalism; and internationalism is the synonym of communism. And, I say to my hon. friends, the other way that is open to youth is communism. I am in direct contact with the people and I know what our youth are thinking. I know what the returned boys are thinking. I know what the boys who stayed at home and were busy in essential occupations also know. Those boys are better Canadians than previous generations, and by that I mean that they think more of this country than is evident here in this house.
Take for instance the question of the flag. The public sentiment has not been understood by those who have designed a monstrosity which has no meaning, because the purpose of a flag is to be the sign-the "ensign", or the sign-of a country, and of one country in particular, without any subjection or suggestion of hegemony in relation to any other country. I say public sentiment was not understood. It was not understood so well in this house, under this roof, as it is understood by the youth of the country, and I hope that when the time comes to make a choice, that choice will not be made in camera but in the open, so that the sentiments that are necessarily in the hearts of men of good will will appear, and youth will choose a real Canadian flag instead of the red flag with hammer and sickle.
Mr. SOLON E. LOW (Peace River): It is because the rules of the house forbid the Social Credit group moving an amendment that I wish to speak for a few minutes to-day in order to clarify our position both with respect to the motion and on the amendment moved by my hon. friends the Conservatives. I am
sure hon. members will not feel that I an holding up the business of the house undulj if I take a few minutes to clarify our position That would have been done had we been able to move a subamendment.
The Minister of Finance (Mr. Usley), speaking in this debate a few days ago, expressed his desire to reach as soon as possible a position where he could bring in a balanced budget. That desire is quite understandable and from the personal point of view it would be for him something of an achievement. It certainly is a goal that has been sought by nearly every Minister of Finance. Moreover, by balancing the budget the minister would remove a great deal of the criticism that is usually levelled at him by the opposition in this house and throughout the country. Pressure toward a balanced budget has always been strong, and that is particularly so after a vast spending spree such as is exhibited during a destructive war.
I should like to point out that grave danger is involved in the determination to balance the federal budget. That does not hold so true with respect to provincial budgets, but it does with respect to a federal budget, especially because there is another way out. The minister should take warning that any undue pressure or haste on his part to balance his budget might result in a period of deflation. If such a trend is induced through the demands of unthinking opposition to the government, then I say it is inevitable that Canada's gross national production will be forced down to low levels, and that means only one thing, a low standard of living, depression, bread lines and human misery in a land of potential abundance. The federal government should resolve to do everything within its power to see that Canadian production of all kinds is kept at a high level. In my judgment, Sll billion a year is a reasonable minimum objective at the present time. The objectives should be revised from time to time as our productive capacity increases.
This government will come to realize sooner or later that balanced budgets will never meet the needs of a modern mass production economy so long as we continue under the system of financing which we now have. Balanced budgets in the federal field are bound to be restrictive in their effect, restrictive in every way. I refer to the traditional budget in which expenditures are brought within the revenues which the government expects.
I come now to the question of economy as it relates to the budget, and about which we have heard so much in the debate up to this day. Particularly I want to present it as if relates to a possible balancing of budgets.
The Budget-Mr. Low

The Social Credit group in this house has always advocated economy; but by "economy" we mean efficiency of expenditure and management within our country's ability to produce goods' and services. We do not mean undue pressure to cut down expenditures, to bring into balance those expenditures with anticipated tax revenues. The weakness of the Conservative position, as I understand it from their amendment, is that they press strongly for reduced government expenditures; but, as has already been pointed out, at the same time they advocate increased services to the people. The only possible result of such a position is a period of depression, a period of deflation. As the Conservatives learn more about the weaknesses of our money system they will come to understand that this is so.
The weakness of the C.C.P. position is just what the Minister of Finance pointed out last Thursday. They advocate huge government spending, but their only suggested alternative to high taxation is government ownership of the means of production from which they say there will accrue to the government profits with which services will be extended to the people without higher taxation.


Stanley Howard Knowles: Plus greater production.


Solon Earl Low: An examination of the results of socialist rule in any country to this day will reveal the fact that while in many of these countries, notably New Zealand and Australia, increased social services have been extended to the people, they have been extended as a result of higher taxation. In no single country to this day can the C.C.F. demonstrate that the application of the socialist principle of government ownership 'has enabled the government there to extend social services without increased taxation. In her apology the hon. member for Qu'Appelle (Mrs. Strum)-and I took it as an apology on behalf of Australia and New Zealand- did enumerate the services that these countries are giving. I appreciate those services; I believe everyone appreciates to the full the increased services that those countries are giving. They have done very well in this respect, but it is only fair to point out that nowhere on the face of the earth are tax levels and per capita national debt so high as they are in those countries. What is more, even under socialist governments, economies have bogged down into periods of depression where great quantities of goods and services have wasted, while human beings have languished in want because they have not the means to buy.


Mr. McCUAIG:: Where has that happened?


Solon Earl Low: In Australia and New Zealand. I say that the C.C.F. position is very weak indeed and is certainly no comfort to debt-burdened, tax-ridden and freedom-loving people.
As a contrast to the other two opposition parties, the social crediters have been consistent in showing the government where the money is to come from. Whenever we have advocated increased services to the people we have repeatedly urged the government to exercise the sacred responsibility which was placed upon them by the British North America Act to have a financial commission, or in the alternative, the Bank of Canada, issue for them debt free all the purchasing power required by all Canadians to do their business. The Minister of Finance, the governor of the Bank of Canada, and many other authorities admit that this can be done scientifically; that it is simply a matter of which way the people choose. History records that many times this method has been used in the past to the entire satisfaction of the people. Even the hon. member for Ontario (Mr. Sinclair) who spoke just before one o'clock, can see how wrong it would be for people to go hungry when large quantities of foodstuffs are being utterly wasted in Canada simply because starving people have not the purchasing power with which to buy the goods. Even he could understand the action of his own government if they should create and issue to these people who are starving, who are in want, the amount of money which represents the value of these goods so that they could be consumed and the people kept from starving. I say, "even the hon. member for Ontario" in all friendliness.
The Social Credit party has been the realistic one, and it is now realistic. We know perfectly well that this time would be a poor one to create and issue additional new money. We have not advocated such a thing under present conditions of consumer goods shortage; we are not now advocating such a thing, but we have advocated more goods. Open wide the floodgates of production by removing every possible restriction to production so that goods and services can quickly come into balance with the money that is available to buy them. This is the only sensible way to meet the threat of inflation. It is the way we have consistently advocated. It is only when goods and services, not to come, but already in existence, cannot be bought by the people who need them, that we advocate issuing any new money, debt-free. But when we do suggest and advocate that it be issued we ask that it be issued in sufficient quanti-

The Budget-Mr. Low
ties to bring consumption and production into balance and keep them there. If that is done we will take the hills and hollows out of the economy over the years.
Social crediters have always declared that the bond-debt method of government financing is the most wasteful, inefficient and unfair method that can be adopted. To my knowledge-and I have searched earnestly for the information-its advocates have never yet been able to show that this system is anything but what I have already said: wasteful, inefficient and unfair.
I understand the objects of the bond-debt method of government financing; and I am speaking of it now entirely separate and apart from the taxation method. It has two objects. In the first place, its object is to encourage thrift, and with that I can quite agree. The second object is ostensibly to manage the money supply so that there will always be purchasing power in amounts to suit the needs of the people. The idea is that in good times, when things are going along swimmingly, the government will sell bonds, thereby withdrawing purchasing power and in some respects controlling the possibilities of inflation. In bad times the idea is to buy back the bonds and thereby put into circulation new money, thus increasing the purchasing power of the people generally.
A number of obvious weaknesses are apparent to anyone who will study this whole matter and its effects. When the government sells bonds, those securities will inevitably within a very short time find themselves in the hands of those who do not need the money to buy goods and services out of current production. I have already pointed out in this debate that if a mass production economy is to serve the people in this day, then mass production must be matched by mass consumption. I have also pointed out the poorly distributed purchasing power one -would find in Canada if a survey were carried out, as a survey was carried out in the United States. Another speaker in this debate has pointed out the poor distribution of pent-up war-time savings upon which business is depending so much for future orders. I say that mass consumption cannot be brought about if large groups of our population find themselves without adequate purchasing power to meet their needs. Under such circumstances goods will be wasted.
The second weakness of the bond-debt method of financing is that it diverts investment money from the development of resources in our country into the sure-thing investment field of government bonds. We often wonder why we are not getting the 63260-237
development of Canadian resources we ought to have. It is simply because we are opening the door wide to investment in government bonds by offering the people a sure thing at a good rate of interest. That becomes a drain away from investment in the resources of the country, to the extent that our resources cannot be developed as they ought to be under private enterprise. Of course private enterprise is blamed. To many people socialism seems to be inevitable because of our failure to recognize this weakness of the bond-debt financing system. Correct this weakness and socialism will cease to become a threat.
The third weakness is that the system actually accelerates and aids maldistribution among our citizens. Only a few people during their lifetime can afford to buy. government bonds or securities. The natural resultant of that is the fourth weakness. It creates a special social evil by making it possible for some men to live off the mortgaged toil of their fellow men. No man is entitled to that right.
The fifth weakness of the system is that it piles up burdens of unpayable debt, because of the high interest involved. I have already pointed out that, even in peace time, when one would expect we might be able to do something about the matter, this country did not even pay the interest on the debt we piled up. From 1919 to 1939, roughly the peace period between the two wars, this country increased its debt by almost the exact amount of the interest payable on the debt, which simply meant that we could not meet the interest, let alone whittle down the principal to anything like decent proportions.
The sixth weakness of the bond-debt method of financing is that it makes continued high taxation necessary. When the Canadian people face the future realizing that every year they will have to dig up through taxation $481,000,000 for interest on the debt, they can see little hope for anything like a period of freedom, a period of full enjoyment of the resources of our country. The only way we shall ever be able to deal adequately with a situation of that kind is to change our method, to get at the balancing of the purchasing power in the country with the production of the country in another way; and that way Social Credit has consistently and constantly advocated. If some hon. members, as they have said, have been sitting in this house for years without coming to understand Social Credit, that is because they have not applied their minds to it. People who have applied their minds have found that the solution is sound; and once they see, they become ardent advocates and devotees of the principles we advocate.

The Budget-Mr. Low

Bond-debt financing stands condemned as a means of managing the distribution of purchasing power within our country. The best evidence of its failure is the fact that over the years since it was first introduced the economies of all nations that have adopted it have been torn by periods of disastrous, recurring depressions, and by increasing loads of debt and taxation upon the people. Let me repeat that when social crediters advocate any additional government expenditures we shall always help the minister by showing him where he can get the money without resorting to additional taxation.
Now, Mr. Speaker, just one word about cooperatives before I conclude. The social crediters do not waste their time in trying to bring the tax burden of everyone, including the cooperatives, up to the same high level. What we should all be spending our time on is in finding a means of bringing the load of taxation on all individuals and businesses down to the level of the taxes paid by cooperatives. We should be doing something sensible if we did that. Social crediters will do everything within their power to protect the cooperatives from injury through taxation; and we shall have more to say on the specific resolutions when they come up, following the vote on the budget. With the reservations I have already mentioned, the Social Credit group propose to vote for the amendment because of what it says and not because of what some people might interpret the wording to mean.


Mr. E. G. McCULLOUGH (Assiniboia):: Mr. Speaker, the budget under discussion is perhaps the most unpopular budget ever brought down by a Canadian government. It is particularly unpopular with the average Canadian, who looked for a great deal but finds very little in the budget proposals to be happy about. While the minister refers to the severity of the attacks on the budget by members of this house, and perhaps feels that such attacks are unjustified, the lea4ers of the cooperative movement and cooperative associations across this country have used very strong language in their criticism of the budget proposals in regard to cooperatives. I have here, in the Manitoba Cooperative, an editorial entitled "Discrimination", which says:
The viciousness of the proposed legislation contained in the 1946 resolutions is aimed at the eventual destruction of the cooperative organizations.
Taking into consideration the number of letters and telegrams I have received, I am sure the leaders of cooperatives across the country are unanimous in their opposition to 
the budget proposals in this connection. I could continue quoting from various articles along the same line appearing in the press, but I shall deal with this phase of the budget later on in my remarks.
I should like to compliment the minister on the very hard work he put into the preparation of the budget. My honest conviction is that no one in Canada has given more of his time and effort in the service of Canada than has the Minister of Finance (Mr. Ilsley). The most unfortunate thing is, however, that so much was expected of this budget and so little relief has come in the way of taxation or in the laying down of a real peacetime economy. It is like the old saying that "the mountain has laboured and brought forth a mouse".
At page 3589 of Hansard the minister says:
The C.C.F. opposition has shown no concern about our expenditures.
He continued by saying:
I enjoy listening to them; but they never come down to this: How would they finance? That is the question they never answer.
Hon. members have complimented the minister upon his capitalist budget. I agree that it is well-nigh impossible for any capitalist government to give anything little better than rationed poverty to the masses of the people, and still permit the legalized robbery of the farmers and workers of this country. A capitalist government is put into power primarily to protect capital, and so far in this country the voters have been successfully misled by people like Trestrail and have voted for capitalist governments. In Great Britain the people have decided, in the traditionally British and progressive way, to chart a new course. There they have voted in a government with an economic policy similar to that of the C.C.F. [DOT]


Mr. MacNICOL:: Nothing like it at all.


Edward George McCullough: I did not hear anyone advocating, and especially before the last election, that Canada should follow in the traditions of Great Britain. However, among other things I wish to cover two main points. First, I wish constructively to criticize the government for its failure in governmental policy, and in regard to the present budget, for its failure for laying a basis of a high and enduring standard of living for our people, and to show them what can be done under democratic socialism.
Second, I wish to deal with some of the specific resolutions in regard to the cooperatives. I see that the minister is not in his seat at the moment, but I believe, if he will forget

The Budget-Mr. McCullough
the capitalist viewpoint, that I can illustrate the democratic socialist way whereby a high standard of living can be achieved for all our people.
At the very beginning of the minister's speech the other day he said, as recorded at page 3589 of Hansard:
Most of the speeches have been directed to the urging of measures which would help here and there, but few of the speeches that have come from the opposition parties in this debate have taken into account the necessity of keeping within our means.
Again, to quote from his remarks at page 3596, he said:
We can go ahead and incur huge deficits, and do everything that everybody wants for a while if we can get people to lend us the money.
These two statements coming from the minister seem like an echo of the pre-war Liberal government policy:	Where is the money
coming from? Much praise has been taken by the government for their war effort, instead of attributing such success to the efforts of the people, which have been magnificent. However, the people of the country, after giving their services for the winning of the war, and producing the goods of war, now find that they have tied to their necks a millstone of a national debt of $16 billion, and an annual tribute of around $481 million to the capitalist class of this country. I think, if a true answer could be given as to who has won this war, it would not be the returned serviceman who to-day is looking for a home and finds he has to pay twice what it was worth before he finds one, or the worker who is trying to fight for a decent wage. It would be the privileged few who have had cost-plus contracts, and who now greedily demand the same privileges of profit.
I wish to hasten to say here that I do not believe that all capitalists are terrible ogres without soul or conscience. But to-day, as down through the centuries, we are fighting a class struggle. Some of us are on the side of the common people, while some are on the side of special privileges. Since we have said this has been the war of the common man, then to interpret that into real victory it would mean that so far as Canada was concerned there would need to be, considering that we had relatively full employment during the war, at least the creation of 600,000 new jobs for the
800,000	people in the armed services. This would allow 200,000 to be absorbed through marriage, in the permanent .army and in other ways. Then we could really say we had full employment.
These 600,000 new jobs would have to be in addition to jobs for those employed in war industry during the war, who would on recon-63260-237i
version have to have jobs. Nothing short of scientific planning can accomplish this, nothing short of the responsibility of the government realizing that everyone has a right to work, and accepting the principle that full employment means more jobs than applicants. This is not possible under capitalism. Capitalism can function only on a large float of unemployed.
I wish to bring two- examples before the house, one of which is taken from the Bankers' Magazine of London for August, 1943. It
states:
Workers of the future will require fears of unemployment and poverty to ensure the necessary drive in this world of internal and international competition.
Another quotation taken from the London Times of January 23, 1943, states:
Unemployment is not a mere accidental blemish in a private enterprise economy. On the contrary, it is part of the essential mechanism of the system, and has a definite function to fulfil.
The first function of unemployment (which has always existed in open or disguised forms) is that it maintains the authority of master over man.
Under the capitalist system the minister has only two main sources of revenue, those of taxation and borrowing. The average person is burdened with taxes for this and taxes for that until he cannot stand any further taxation. Big business and monopoly are still running this country. They will be taxed pretty well just as much as they choose and no more. So that the minister is in a quandary as how to give old age pensioners superannuation at sixty years of age, how to give free national health services and still keep taxes down on big business and allow them their profit.
I have regard for the minister in his plight, but I am far more concerned about the people, tens of thousands of them, and more joining the ranks every day, who realize that if everyone was allowed to work and that if wages and prices were fair, every Canadian would be assured of a decent standard of living, that we could have adequate old age pensions at sixty years and free health care for all our people.
Let us look back over history. I said earlier that we have had a class struggle down through the ages. May I say that for scores of centuries the world's wealth producers were mostly the property of an owning class- chattels, slaves. Some one wrote that "next to the preservation of life itself, the craving for freedom is the dominating objective of all conscious life." Slaves wanted freedom and frequently rebelled. One such rebellion led to Sparticus, a slave gladiator, who defied
The Budget-Mr. McCullough

the power of Rome for about three years. When this rebellion was quelled, the fear-maddened owners used frantic cruelty. Along the Appian way, six thousand crosses were planted and six thousand slaves were nailed to them.
Changing methods of production and fear of rebellions gradually brought owning classes to adopt changes, first to serfdom, and then to the free wage serf. They reasoned something like this. Slaves and serfs must have enough of their own products to keep them in fit condition to work and they must also raise children to keep up the supply of workers. Why not give them full freedom and hire them for a wage that will allow them to buy their own living? We will give them the form of freedom. As long as we own the means of life, namely the natural resources and the machinery of production, transportation and distribution for the primary producer, we will hold ownership of the markets where they must buy and sell. By owning these, we can keep for our own use all they produce above what it costs them to live. We will let them imagine that they are free and we need no longer fear heavy rebellions. There you have the greatest hoax in all history. George Bernard Shaw, with his usual caustic wit, called this hoax "giving the workers the key to the street."
We have the form of freedom, but economically we are the slaves who produce our own living and also the luxury living of the owning class. In addition, we have built up, with the labour of our hands and brains, the great industrial, transportation and distribution systems that exist in the world today. We have done all this for slaves' pay and a wage for our labour and a price for our product that would on the average buy us a living.
The present great wealth producing systems are, legally-because the owning class have always been able to make the laws-the property of a small owning class. About all we own is the right to produce wealth when the owning class can use our labour or buy our products at a profit. If anyone should question this I would refer him to the labour disputes that we read about in the newspapers, where wage increases are demanded by workers and only conceded by employers when it can be proven that the cost of living has gone up. The fact that the workers are producing a large surplus above their cost of living wage does not seem to be considered much by either side.
I would remind hon. members that in Canada, of which we are all so proud, we have achieved in the past year our greatest national

production of $11 billion. In the light of that, the standard of living in this country is disturbing. I have here the Labour Force Bulletin, put out by the Department of Labour, which shows that in 1945, excluding those in the armed forces, we had 4,256,000 people gainfully employed in Canada. In the Canadian Unionist of May, I find another table. By doing a little bit of arithmetic I find that of the 4,256,000 who were gainfully employed in 1945, those earning over $2,000 numbered 687,700, and the number earning $2,000 or less who were gainfully employed was 3,568,300. Subtracting those earning less than $2,000 but paying income tax from the total labour force, exclusive of the armed services, gives us 1,891,000 people or approximately forty-four per cent of the total population gainfully employed who do not qualify to pay income tax under the exemptions of $660 or $1,000 for single and married men respectively, and eighty-four per cent earn under $2,000. This confirms that even in this country we have not the freedom we should have when we are capable of producing a gross national income of $11 billion.
I have contended that a capitalistic government gets the money for social services and government expenditure mainly from two sources, by borrowing and taxation. I wish to illustrate how a democratic socialist government, such as the C.C.F. advocate, would get the money and how the standard of living of our people would be governed only by the availability of labour applied to our resources. In other words, what is physically possible would be made financially possible. The minister has challenged us on that. Let me illustrate by taking first the capitalist set-up and then what could be done under the democratic socialist set-up.
Let us take as an example, a large factory in a capitalist set-up. Here the owner pays the wages and other overhead in the cost of producing the goods. As an example, in a shoe factory the wages are paid, and taxes and overhead are all the responsibility the factory owner has. Then the owner has the legal right to all the shoes produced, less his costs. Under modern technology this means he accumulates wealth when he sells the surplus shoes, wealth which, unless reinvested, remains out of circulation. The owner can wear only one suit of clothes and one pair of shoes at a time, and even if he lives in the most riotous luxury he can spend only a small portion of his profit. Consequently huge accumulations of wealth become built up, which ordinarily are not reinvested and do not come into circulation. This means that under private monopoly huge accumulations of

The Budget-Mr. McCullough
wealth become centralized. The same is true of our large financial institutions where, through usury, money is accumulated and concentrated.
In this example of the shoe factory, which is typical of all modern factories, we have the workers receiving only a small portion of the total wealth produced. It is clear to see that, if we use this reasoning for all industry, huge surpluses of goods of various kinds are produced without aggregate wages paid to buy back what is produced. This in the past has been the chief reason for exporting. Countries have had to fight for world markets, sometimes going to extremes in the struggle for markets, even to the extreme, one might say, of attempting to sell woollen underwear to the Africans or longer shirt-tails to the Chinese. Eventually capitalism breaks down, and it is true that the last two great wars were fundamentally fought for markets. This sort of process under capitalism forces periods of economic stagnation and collapse, periods which are coming closer and closer together. Here, too, is the reason for unemployment and the failure of capitalist governments to give the opportunity of full employment.
Let me illustrate by another example. In the A. O. Smith body plant at Milwaukee, Wisconsin, 20,000 employees originally employed produced a unit of 10,000 car frames a day. Then, around 1930 they built a semiautomatic plant which required only 2,000 men to produce the same unit of 10,000 car frames daily. A few years later, a fully automatic plant was built requiring only 200 men, or a displacement, in the production of this daily unit of 10,000 car frames, of 19,800 men. This has taken place over some thirty years of industrial and technological development. Under the capitalist system the owner has no responsibility for those 19,800 unemployed men. They are thrown into the lap of the government and become its responsibility. So that to-day, even though it be argued that plant working conditions are the very best, where there is air conditioning, good hours of work and good pay, it is still essential to socialize such industries, because private ownership of these factories gives too much financial and economic control over the lives of our people.
The minister has said that no one has told him where the money is to come from. I think I can tell him where it would come from if the people owned these factories. The wealth, instead of belonging to a legally privileged class, would belong to the people.


John Ritchie MacNicol: Would the hon. member suggest that, if the country were under socialism, plants should not be modernized and equipped with the very best and most up-to-date machinery that could be got to cut down the cost of production?


Edward George McCullough: I absolutely agree that that should be done.


John Ritchie MacNicol: Well then, what you have said just now does not bear out at all the answer you gave me.


Edward George McCullough: Yes, it does. What we would use would be all the technological and scientific knowledge we have. We would be able to use these factories and these technological advances and improvements to have mass production, pay good wages in these factories, and have fair hours of work too. As I pointed out in giving this example of a shoe factory, when we had paid good wages to these people and sold enough shoes for that purpose, the shoes which remained would belong to the people, and, when they are sold, the money would go into the consolidated revenue of the country, and we would be able to provide social services, old age pensions and other things. There would be opportunities, for everyone willing to work at real jobs with decent wages. All would have a real incentive to work, and our national production would be governed only by the will to work. I do not think the minister can properly criticize this proposition of publicly owned enterprises or contend that they are less efficient than those privately owned, for I believe the Minister of Reconstruction and Supply (Mr. Howe) has said that government-owned plants operated more efficiently than private companies during the war.


John Ritchie MacNicol: He never said any such thing.


Edward George McCullough: In closing this part of my argument, let me say to the minister and to the government there has, in my opinion, never been a greater betrayal of the people than that of using the taxpayers' money in building up billions of dollars' worth of plant and equipment for war and then to scrap or sell them at fire-sale prices when these could have been converted to peace-time use and met the crisis of peace production as they met the crisis of war.
Instead of that, what have we to-day? Rather than enabling the small wage-earner to be * free from income tax, so that at least we could have income exemption of $1,000 for a single person and $2,000 for a married couple, $50 a month for men over sixty years of age
The Budget-Mr. McCullough

and women over fifty and free health services for all our people, we now find the minister and his government trying unsuccessfully to balance the budget. As I said before, the interest alone on our national debt is approximately the total pre-war government expenditure. The present financial policy is ridiculous and stupid.
To-day there is nothing but unrest, nothing but fear of the future. The question arises, what could and should be done to prevent this?
First, the government should have set up a federal planning board representative of organized labour and farmers, industry and government, Scientific surveys should have been made to find out the productive need1 of the country ; the potential productive capacity; possible employment in each field; proper basis of producer prices and wage levels, arrived at by negotiation. But what has the government done in this respect? It would seem that the only authority for planning is the wartime prices and trade board, carried over from the war. I have no quarrel with the personnel of this board, except to say this. I'f this board is to have power deliberately to raise farm costs and living costs without responsibility to parliament, I protest most strongly. We should have a national planning board with representation of organized agriculture and labour and industry and government, and this board should be responsible to parliament. Such a board, working in conjunction with the Minister of Finance, would be able to dispel the growing fears of our people and it would carry democracy into our national planning as never before.
As I have already said, the increase in exemptions allowed the people in the low-income brackets leaves the people no better off than they were a few years ago because everything has gone up to such an extent.
I cannot join in the optimism of the minister over his budget, I consider that such a budget will eventually lead to the government finding it necessary to protect big business by the government's emergency powers; it will find increasing unemployment, and unrest will force the government to use strong-arm methods to keep so-called law and order. To speak quite candidly, it will force the government to use measures of fascist tendencies; for fascism is only ultra-capitalism, capitalism in its last stages when capitalist forms of government are protected at any cost, where religious hatred or race baiting is thrown in to confuse the issue, but where, as I say, preservation of specilal privilege is the supreme purpose.

I wish now to deal with cooperatives. I want to add my voice to the strenuous objections taken by the leaders of the cooperatives across Canada in their criticism of the budget proposals in regard to cooperatives. Unless we can persuade the government to change, certain of these proposals, it portends sinister things to come. Because of certain proposals, I feel, that the budget strikes at the very basis of cooperation and would cripple the cooperative movement across this country.
Some cooperatives have vigorously objected, and I am in agreement with them on the following five points:
First, the objection taken that the proposals ignore the basic difference between cooperatives and private business. The cooperative organizations stem out of the need of the people who have cooperated to give themselves, through cooperation, services of various kinds at cost which they could not have got in any other way. The great wheat pools have grown up because farmers found that only by handling their wheat could they get a fair share of the products of their labour. The pools were organized, and the farmers through the pool elevators gave competition to the private elevators. There were spreads of ten and twelve cents between street and track prices; and handling charges were excessive. Through their pool organizations the farmers have been able to reduce the spread between street and track wheat to about two cents, and to reduce their handling charges materially. We farmers who are members of the pool consider the marketing of our wheat part of our farming operations. We have production costs of summer-fallowing, sowing, threshing and handling. We consider the marketing of our grain part of our business. We feel that the net price received by us should be the only money taxable, that it should be computed as part of farm income and that there should be no duplication of taxation. I maintain that in a bona fide cooperative there is no such thing as profit. The budget proposals fail to ensure that such organizations are tax exempt and leave cooperatives in doubt as to where they stand.
I could mention the Saskatchewan oil cooperative. Here again the farmers and cooperators joined together to cut down the cost of oil to themselves by setting up a cracking plant, and refining and distributing oil to themselves, thus making savings.
Resolution No. 12 would repeal section 4 (p) which recognized the differences between cooperatives and non-cooperatives. It would

The Budget-Mr. McCullough
be serious if the government failed to define this difference. I criticize the government for not having introduced a national cooperative act long ago. Then there would be no doubt as to what constituted a bona fide cooperative.
My second criticism is the objection that the proposals force cooperatives to treat members and non-members alike. This strikes at the very heart of the cooperative movement. What justification can there be to force a cooperative to treat non-members who have not any financial or other responsibility for such a cooperative on the same basis as members?
I take strong objection to this, and the very least the government should do is to allow a cooperative the choice of treating members and non-members alike, or, as an alternative, withholding dividends from nonmembers and paying a tax on the amounts so withheld. If non-members received the same treatment, since there would be no incentive to join and old members would die off, it would not be long before a cooperative would completely disintegrate. This is a vicious proposal.
The third objection is this, that the proposals would prevent cooperatives from providing service at cost by forcing them to pay tax on not less than three per cent of the employed capital. This prevents members from putting their money without interest into cooperative enterprise. This, too, is a discriminatory measure. As an example, take the position of a farmer who wishes with his neighbours to start a cooperative oil business. These farmers have already paid income tax on such money and, unless private business is taxed on the same basis, this tax is certainly unfair and discriminatory.
My fourth objection is that such proposals would interfere with the right of the individual member to leave his savings with his cooperative, for provision of further service, by forcing payment in cash within six months. By this being done, according to my information there is not enough time allowed to provide a safeguard so that cooperatives could limit or conduct their business in case of emergency, or depression, or other hazards. We shall suggest changes in committee. However, I think most cooperatives would be satisfied if the royal commission report on this matter were effected, whereby directors would have the power in any one year to limit the amount paid to ten per cent of the total and, temporarily, to suspend payments of patronage dividends in periods of crisis.
My fifth objection is this: They propose that the minister may, in his discretion, discriminate as between cooperatives in the matter of retroactive taxation. In listening
to the minister's speech and in reading it over, I am still at a loss, as I believe the minister and all members of this house are, to know what a bona fide cooperative is, and what cooperatives would be subject to retroactive taxation. Certainly no minister should have the right to decide mandatorily what is or is not a cooperative. The government has done a very great injustice in bringing in such proposals, which strike at the very basis of cooperation. It has failed to bring in a national cooperative act, defining a cooperative. Its failure to do this is as great as its failure to bring in a comprehensive national labour code. The people will not forget, unless the government repents and changes these proposals.


William Ross Macdonald: I was paired with the hon. member for London (Mr. Manross). Had I voted I would have voted against the amendment.


Mr. BREITHAUPT:: I was paired with the hon. member for Danforth (Mr. Harris). Had I voted I would have voted against the amendment.


Mr. MARQUIS:: I was paired with the hon. member for Charlevoix-Saguenay (Mr. Do-rion). Had I voted I would have voted against the amendment.


Mr. LITTLE:: I was paired with the hon member for Frontenac-Addington (Mr. Ayles-worth). Had I voted I would have voted against the amendment.


Mr. ISNOR:: I was paired with the hon. member for Colchester-Hants (Mr. Stanfield). Had I voted I would have voted against the amendment.


Mr. NIXON:: I was paired with the hon. member for York East (Mr. McGregor). Had I voted I would have voted against the amendment.


Mr. LESAGE:: I was paired *with the hon. member for Kamloops (Mr. Fulton). Had I voted I would have voted against the amendment.


Mr. CLARK:: I was paired with the hon. member for Kent, Ontario (Mr. Desmond). Had I voted I would have voted against the amendment.


Mr. LAPALME:: I was paired with the hon. member for Argenteuil (Mr. Heon). Had I voted I would have voted against the amendment.


John Bracken: I was paired with the Prime Minister (Mr. Mackenzie King). Had I voted I would have voted for the amendment.


Mr. ADAMSON:: I was paired with the hon! member for St. James (Mr. Beaudry). Had I voted I would have voted for the amendment.


Robert Earle Drope: I was paired with the hon. member for Northumberland, N.B. (Mr. Maloney). Had I voted I would have voted for the amendment.


Mr. COYLE:: I was paired with the hon. member for Prince (Mr. MacNaught). Had I voted I would have voted for the amendment.


Gordon Graydon: I was paired with the Right Hon. Minister of Finance (Mr. Ilsley). Had I voted I would have voted for the amendment.


John George Diefenbaker: I was paired with the hon. member for Winnipeg South Centre (Mr. Maybank). Had I voted I would have voted for the amendment.


Howard Charles Green: I was paired with the hon. member for Vancouver North (Mr. Sinclair). Had I voted I would have voted for the amendment.


Mr. BLACK (Cumberland):: I was paired with the hon. member for Gloucester (Mr. Richard). Had I voted I would have voted , for the amendment.

The Budget-Division


Mr. KIDD:: I was paired with the hon. member for Queens-Lunenburg (Mr. Winters). Had I voted I would have voted for the amendment.


Mr. WHITE (Middlesex East):: I was paired with the hon. member for Middlesex West (Mr. McCubbin). Had I voted I would have voted for the amendment.


Mr. McMASTER:: I was paired with the hon. member for Champlain (Mr. Brunelle). Had I voted I would have voted for the amendment.


Mr. KUHL:: I was paired with the hon. member for Kings (Mr. Grant). Had I voted I would have voted for the amendment.


James Horace King: Is the house ready for the question?


Jean-François Pouliot: Mr. Speaker, for the same reasons I gave this afternoon for voting against the amendment, I shall vote against the main motion.


Mr. COLD  WELL@: I am going to ask that the main motion be put, Mr. Speaker.


William Ross Macdonald: I was paired with the hon. member for London (Mr. Manross). Had I voted I would have voted for the motion.
The Budget-Pairs


Louis Orville Breithaupt: I was paired with the hon. member for Danforth (Mr. Harris). Had I voted I would have voted for the motion.


Eugène Marquis: I was paired with the hon. member for Charlevoix-Saguenay (Mr. Dor-ion). Had I voted I would have voted for the motion.


Walter Little: I was paired with the hon. member for Frontenac-Addington (Mr. Ayles-worth. Had I voted I would have voted for the motion.


Gordon Benjamin Isnor: I was paired with the hon. member for Colchester-Hants (Mr. Stanfield). Had I voted I would have voted for the motion.


George Ewart Nixon: I was paired with the hon. member for York East (Mr. McGregor). Had I voted I would have voted for the motion.


Joseph Arthur Lesage: I was paired with the hon. member for Kamloops (Mr. Fulton). Had I voted I would have voted for the motion.


Stuart Murray Clark: I was paired with the hon. member for Kent, Ontario (Mr. Desmond). Had I voted I would have voted for the motion.


John Bracken: I was paired with the Prime Minister (Mr. Mackenzie King). Had I voted I would have voted against the motion.


Agar Rodney Adamson: I was paired with the hon. member for St. James (Mr. Beaudry). Had I voted I would have voted against the motion.


Robert Earle Drope: I was paired with the hon. member for Northumberland, N.B. (Mr. Maloney). Had I voted I would have voted against the motion.


Thomas Ashmore Kidd: I was paired with the hon. member for Queens-Lunenburg (Mr. Winters). Had I voted I would have voted against the motion.


Gordon Graydon: I was paired with the Minister of Finance (Mr. Ilsley). Had I voted I would have opposed the motion.


Percy Chapman Black: I was paired with the hon. member for Gloucester (Mr. Richard). Had I voted I would have voted against the motion.


William Alexander McMaster: I was paired with the hon. member for Champlain (Mr. Brunelle). Had I voted I would have voted against the motion.


Harry Oliver White: I was paired with the hon. member for Middlesex West (Mr. McCubbin). Had I voted I would have voted against the motion.


Charles Delmar Coyle: I was paired with the hon. member for Prince Albert (Mr. MacNaught). Had I voted I would have voted against the motion.


Howard Charles Green: I was paired with the hon. member for Vancouver North (Mr. Sinclair). Had I voted I would have voted against the motion.


Walter Frederick Kuhl: I was paired with the hon. member for Kings (Mr. Grant). Had I voted I would have voted against the motion.


Mr. HERRIDGE:: I was paired with the hon. member for Bonaventure (Mr. Arsenault). Had I voted I would have voted against the motion.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Macdonald (Brantford City) in the chair.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.


[Stage Direction]
Bill No. 197, to incorporate Cooperative Life Insurance Company-Mr. Tucker.


[Stage Direction]
Mr. L. PHILIPPE PICARD (Bellechasse) moved the second reading of bill No. 56, to amend certain acts in respect to the labelling and marking of foods and drugs.
Gordon Graydon: I should not like to deprive the hon. member of making a full explanation on the bill, and I am quite sure that he is prepared to do so.


Mr. PICARD:: I must really thank my hon. friend for his kind attention to me. This bill has been standing in my name since the 16th of April and we have had a long time to consider it. Since that time I have received comments for and against the bill and have discovered there was a strong feeling in favor of it. With the permission of the house I will give an idea of the motives behind the bill and state its intention and purpose.
At the moment the public throughout Canada is protected against fraud, misrepresentation and so on, under the Food and Drugs Act and it is protected against injury to health under the Opium and Narcotic Drug Act. The

Food and Drugs Act
object of the present bill is to provide for those who do not understand the English language the same protection as is provided under these two acts for those who speak English. It might be said by some that the labelling prescribed under the act is not for the purpose of warning the public as to the danger of the drugs so labelled; but if we look at section 3, paragraph (b), of the Food and Drugs Act it will be seen that it gives the governor in council power to enact legislation concerning different matters having to do with drugs and food. Paragraph (b) says that the governor in council has power to make regulations:
respecting the packaging and labelling of any article or food or drug and the design of any such package or label with a view to preventing the public or the purchaser-
I draw particular attention to these words:
-being deceived or misled as to the character, strength, quality or quantity of the article.
And so on. What I intend by this bill is to make sure that the probably 2,000,000 people in Canada who are not conversant with English and who therefore are not protected, as is the intention of the law be protected by including after "labelling" the words "in English and in French." I do not think the wording of the clause is correct and, if ever my bill reaches the committee stage, I would ask a colleague to move a motion to change the wording to make it more effective. I would ask to have moved at the end of paragraph (b) the following proviso:
Provided that if the governor in council makes any regulation respecting the labelling of any article of food or drug as above-mentioned said regulation shall provide for the labelling in the French as well as in the English language.
I would then have him move to strike from my bill the words "in English and in French" in the tenth and eleventh lines. That would make it clearer and more definite in its prospective application.
The next section of my bill, section 3 concerns the Opium and Narcotic Drug Act. Had I not been remiss in my duty I would have been here on Monday, May 20. It is often said that many members are away on Monday and Friday. Many will not admit it, but unfortunately I am forced to do so in the present case. I could then have proposed an amendment to the legislation that was passed by this house on that day to the same effect as I urge to-night, by moving to amend section 4 of bill No. 29, which now reads as follows:
(b) no retail druggist shall sell, or offer for sale except pursuant to direction of a physician, any- preparation referred to in paragraph (a) of this subsection unless there is printed in a conspicuous place on ah inseparable part of the
main panel of the label and wrapper of the bottle, box, or other container, and in letters of the same size and visibility as the directions for the use of the preparation, the full formula or true list of medicinal ingredients, and the following words: "It is unlawful to administer this preparation to a child under two years of age as it contains codeine and is dangerous to its life."
I should have moved that after the words "unless there is printed" there be added "in English and in French". However, on May 20 I was in my constituency and not in the house, and I have only myself to blame if I did not move my amendment then.
If it is judged by this house that it is wise to pass a law which forces manufacturers of drugs to warn the public that the preparation should not be administered to a child under two years of age, are we not just carrying on a humanitarian gesture by adding this same proviso, printed in the language of a large part of the population of Canada, a proportion of whom do not know the English language? I will not to-night enter into a long discussion about the rights and merits of the French against the English, or the inalienable rights of this or that section; no, it will not be such a speech; I am only asking that protection be given to those who, according to the laws of this country, are entitled to speak their language, that in respect of the warnings given under the Opium and Narcotic Drug Act and the safeguards provided by the Food and Drugs Act, they receive the same protection as is given those who know English.
I shall not enter into a long discussion of that matter. The point is just this, shall we or shall we not recognize that, in accordance with their undoubted rights, some people in this country are not bilingual? There are some who are not bilingual because they know only English; there are other who are not bilingual because they know only French. If those who know only English are protected under the law, why should not those who know only French be protected? I do not think anybody would suffer if such protection were accorded, and it would be in the interests of the health of a large number of people in this country.
Hon. members may wonder Why I, who am not a physician, would worry about this; that I, who never attempted to ring the bell of nationalism or to build my following on arguing the rights of this or that minority- though I have done my best to defend and uphold them-should come forward to-night with such a bill? Well, it may be a long story but it is a childhood story. My father was a country doctor; or I should not say* a "country" doctor because he was a physician
Food and Drugs Act

at Riviere-du-Loup, the nicest little city in the world, so well represented by the hon. member for Temiscouata (Mr. Pouliot). My father practised there for twenty-five, years. At one time a client came to his office with his daughter, who was sick. My father prescribed a certain medicament; he had it in his own office; and at the time he was about to hand it to the patient's father he was called away to another patient and had to leave his home, so he said to this man, "You can read English. I give you the bottle, on which the dose is plainly and clearly written. Give it to the child according to those directions". He explained it to him in French, and the man, who could read English, went away. The health of the daughter improved; at least I suppose so, because my father was a good doctor. But some time later in the same home a young child got sick, and the girl's mother, the wife of the man who had received the bottle, did not read English, so she said, "If it was good for my other daughter, this seems to be the same ailment and I will give it to the child." But the medicine contained codeine or some such drug; the child got worse and my father was called in. When he came home my father, who was not one of these rabid nationalists, who was bilingual and had studied in England and in France, said, "Will the day ever come when both our people will have the same chance assured to them by law? Shall we ever have a law that will require the formulas on our medicaments to be printed in both languages?"
Later on, I happened to travel a bit, and went to Mexico, where, if I remember well, Your Honour was years ago. Travelling in that country and in Cuba, I saw that all the drugs imported to Cuba and Mexico, even those labelled on one side in English, had on the other side a label in Spanish containing a perfect translation, for which there was room enough on the bottles. That story of my childhood came (back to my mindi, and I investigated the field of medical preparations. I have discovered that, throughout the whole of Canada, probably thirty per cent of the drugs sold are labelled in both languages. This is due to the trade ability or good will of the manufacturers. It has taken time to reach that. I remember my father writing for this purpose to some of these firms, and now things have reached the point where I am assured by doctors that this practice is growing. An hon. member who is a physician and an English-speaking Canadian told me of seeing in Winnipeg a well-known drug the label of which, and not only the outside container, was printed in both languages.

As the matter stands at the moment, there being no law requiring protection for those who speak only French, we have chaos in the drug business. As I have said, in the whole of Canada only about thirty per cent of the drugs have directions printed in both languages. In Quebec, I would say the proportion is probably fifty per cent, and another fifteen per cent have outside labels in both languages, while the bottle is labelled only in English. So that you have four if not five ways in which these medicaments are labelled. Some issued by firms in the last five years are fully bilingual, which shows that it can be done without cost or trouble, besides being just and equitable to those who speak only French.
I have here an article from a certain firm. I am not advertising it; I am not selling its products; I do not know the proprietors; they are all nice people, but I do not care about any of them except, of course, when I need their products. One from Charles E. Frosst is called ostrogen. What it does I do not know, but anyway it is perfectly printed. The bottle is small; yet space has been found to put on it the formula in both English and French, and the warning as to how it should and how it should not be taken. These instructions are found not only on the wrapper but on a tiny bottle like the one I have in my hand, which shows that, with good will, there is no reason why any receptacle, however small, could not have the particulars printed in both languages.
Here is another bottle, even smaller, from Montreal, "Poulenc", a French firm which has opened branches in the United States and Canada.
Here we have a smaller container of "Gardenal", which I remember was mentioned in one of the answers given by the then minister when the Food and Drugs Act was proposed in 1920. It was stated that it was a narcotic and that the formula should be well printed or fully described. Anyway, on the package, small as it is, space has been found to put it in French and English, with the warning that it was a narcotic and should not be given without a doctor's prescription.
Here is one by a company operating in Switzerland, in Canada and in the United States, the CIBA company. This medicine I have here contains fully bilingual directions on the bottles, although they are very small. I chose the smallest bottles I could find to indicate that my proposal is a perfectly feasible one.
Here is another one, "Vick's" inhaler, made in the good city of Windsor, represented by my hon. friend the Secretary of State (Mr. JULY 23, 1946
Food and Drugs Act
Martin), who is three-fourths French, while I am seven-eighths French. There is just a matter of one-eighth between us, because I had a grandmother who was half English, which makes me one-eighth English, while he had an Irish grandmother. This drug made in Windsor is fully described both in English and French, and as will be seen, the package 'is very small.


Mr. MARTIN:: I am sure the hon. gentleman will permit me the observation that there is no doubt about the very high quality of that particular product.


Louis-Philippe Picard: I am sure of that; it comes from the home of my hon. friend. I know he was interested in drugs years ago, because I found his name in a debate on the question in 1936 or 1938. So that I am sure he will approve of me to-night.
I have another preparation here, or rather only the box. The bottle was big and I feared to drop it. This one is known as Collyrium and has a bilingual container outside. Although the bottle itself is big, apparently they could find space only for English. It is written in French and English on the outside box, but on the bottle you find only English. That is what is called a concession to Quebec, to please the Quebec trade. There is a second wrapper which is intended specially for the purchaser in Quebec. Presumably, when he is ou-tside Quebec he is supposed not to get sick. He does not even have to take aspirin tablets, because the makers of aspirin have not seen fit to have directions printed bilingually on the box or on the container but only on the Quebec cardboard.
Another preparation I have here is Alophen, which is put up by Parke, Davis.


Ian Alistair Mackenzie: Is that Toronto?


Louis-Philippe Picard: Walkerville.


Paul Joseph James Martin: And also Windsor.


Louis-Philippe Picard: This also has an outside carton which is bilingual, and on the inside there appears this: "To comply with certain pharmacy acts, this bottle is labelled poison." There is a space which is left blank; evidently they were not prepared to print anything in French on it. On the bilingual outside container they forgot to put what they stated on the inside about poison.
Here is another one, to show the house the chaos we are in. I am referring to Phillip's milk of magnesia in tablets. Let me assure the house that I am not advertising anything; I am a lawyer, and although I may not be prosperous in the legal profession, I have no intention of going into the advertising business. However, here you find everything in English except the dose. They have printed the directions jor use in five lines of French, and that is something anyway, even if you dc not know what the preparation is taken for. You may not know what it is intended for, but you know how much you should take.
Here is another one: Grove's cold tablets. The same thing applies here. There are directions for use. They do not tell you what it is for, and no doubt you buy it for the sake of obtaining the nice white cardboard box. You know how many you should take, but not what they are for.
I have here other samples, the great majority of which are labelled only in English. That is the admitted general practice.
Here is something else that might be a menace to health, which is put up in the United States by that other company which I praised a moment ago for being bilingual in respect of what they sell in Canada, CIBA. So far as the American end of this company is concerned, it is established at Summit, New Jersey. Of course there is no question of speaking French either in their house of representatives or in their state legislature. If French is used in that country it is used as a mark of culture by certain classes, as it is in most countries of the world. This preparation is printed in English, and of course there is no question of imposing French upon the Americans in their country.
However, this product is imported into Canada, it is supposed to be for adults only, and the caution is given that it should not be used by individuals suffering from heart disease or thyroid disturbance except on the advice of a physician. This comes into Canada and no one is protected who does not speak English. Let us note that if there are two million people in this country who do not speak English, there are many more millions who do not speak French. Nevertheless, those who do not speak English have no protection so far as this preparation is concerned, while their English-Canadian compatriots are protected.
I suggest that if it is our desire to carry out the intent of the law it would be well for us to see what was stated in 1939 when the law was modified. At that time the hon. member for Quebec South (Mr. Power) was Minister of Pensions and National Health, and as reported at page 331 of Hansard of 1939, he made this statement:
Means are being sought-
That is, in the amendments which he was proposing at that time.
-to make more effective the restraints upon misrepresentation in the marketing of foods and drags.
Food and Drugs Act

But how can there be misrepresentation if you do not represent anything? If the cover of a container is blank to the one who reads it, no matter how cultured he may be in some other language, obviously he does not know what is represented in those printed words. The printed matter should appear in such a form that he can read it. Again, at page 822 of the same volume of Hansard, the minister said that the object of the amendments was:
To improve the statutory means for protecting the purchasing consumer against injury to health-
That would apply to the Opium and Narcotic Drug Act, which does not make it compulsory to state explicitly that the drug is not safe for any child.
-and against deception in food and drug products.
The aim of the act, according to the minister at that time, was to protect the consumer against injury to health. Injury would result if a young boy, whose parents did not read English, administered a drug to him in the absence of any caution printed in both languages. To attain the objects which the minister stated, authority was then sought: to deal in greater detail with matters such as packaging and labelling, advertising, adulteration and the use of dangerous materials.
I remember that in 1939 the hon. member for Vancouver South (Mr. Green) told the minister about someone who had bought rat poison which somebody had eaten because there was no proper label on the container, and the minister assured him that under the act as it was then being amended labels would be printed in such a way that no one could possibly mistake rat poison for food. The hon. gentleman who told about the incident was apparently satisfied because his objection was limited to pointing out that particular case. But if it is considered necessary that a label should be printed in such a way as to ensure the protection of people who read the caution in English, why should not the same safeguard be afforded the two million people who do not speak English and who have the same rights under the law?
I am not going to take up any more of the time of the house, but I would appeal to the good will of all hon. members in this matter. Should, by chance, this bill go to a committee, I will bring in amendments to improve the law so as to provide for bilingual labelling so far as drugs only are concerned. Through inadvertence. I worded my bill in such a way that it would apply to foodstuffs as well. I do not wish to go that far, for the moment at any rate, because it might force some small British Columbia salmon packers

who market their product on the west coast of the United States and Canada to have their labels printed in French as well as English, and I do not suggest that that should be done, any more than I should like to have the people in my province who are packing small fruits for sale in neighbouring villages compelled to print their labels in both languages. My suggestion is that it should apply only to drugs. I assure the house that my intention is neither narrow nor nationalistic, but it is just for protecting our people that I wish to see these labels printed in French as well as in English. My object is to ensure the protection of those who speak only French, just as those who speak English are protected. I appeal to the minister and to the house to approve the principle involved, and if we get in committee I will propose the amendments necessary to bring the bill more in line with its aim.


Brooke Claxton: The hon. member for Bellechasse (Mr. Picard) has given us a delightful speech in favour of this bill, subject to such further amendment as he may be prepared to make if the bill reaches the committee. In his speech he made a number of points which were of considerable interest to hon. members. He produced a substantial array of exhibits. Last year we had hon. members producing fruit of various kinds and we were told this was not a fruit store. In another legislative [DOT] place I remember seeing hon. members competing on the relative values of different types of club sandwiches, and since all the club sandwiches were juicy it created quite a scene.
The bill put forward by the hon. member must be considered on the text which is before us. Section 2 proposes an amendment which would enable the governor in council to make regulations respecting the packaging and labelling in English and in French of any article of food or drug. The existing regulations in force read in division 1, section 1, part A (1) as follows:
Every article of food or drug in packaged form sold or put up by the manufacturer or producer thereof shall be labelled.
That has been part of the law of Canada for a long time. It has been generally enforced to the satisfaction of the Canadian people. It is arguable that if the amendment means anything it means that, whenever any requirement is made regarding the labelling of any food or drug in Canada, the labelling should be in English and in French. It is also arguable that it may mean something else, but from what the hon. member said I would gather that it was his intention that

Food and Drugs Act
all labelling be in French and English. The hon. member has been good enough to say that that is not his intention so far as food is concerned. I think it would meet with
the wishes of the members of the house and of the buying public in Canada generally that it should not be necessary to label all articles of food in French and in English. To do so would lead greatly to the inconvenience of everyone and to the cost of doing business. Therefore, if we restrict the provisions of the bill as the hon. member suggests that he would have restricted it had it been drawn so as to give effect to his intention, then it should be restricted to require the labelling of drugs. I gather from what he says that he would propose that labelling of drugs should be carried out in French and in English.
We now come to the question of different classes of drugs. First, we have narcotics, which are dealt with under the Opium and Narcotic Drug Act. This was amended at this session of parliament to make the sale of all narcotic drugs possible only under prescription. Therefore a very large class of cases which the hon. member has in mind is covered by the existing legislation. In fact the case which he mentioned where his father gave a drug to somebody which was not properly used was, I understand, a case where codeine was the drug. Under the existing law that could only be done on the prescription of a doctor. If a doctor prescribes a drug there is no requirement in any law that his prescription should be in French and English. The prescription is aimed at the person who asks for it, and if a person speaks French the doctor makes the label on the bottle or the druggist makes the label on the bottle in French, or if the patient speaks English, then it is put on the bottle in English, or the physician and druggist are not likely to continue to enjoy the custom of that particular patient.
This year we brought into effect a law under which all narcotics of every type can be sold only on prescription, except very small doses of codeine which must be mixed with other drugs and which would be very unlikely to do any harm to anyone. These very small quantities of codeine can be sold without a doctor's prescription, but they must have a warning label in one language or the other. I would suggest that the only possible application of the hon. member's suggestion to narcotics would be to that small class of cases in which it is at least arguable that unless considerable quantities of the medicine are taken there would be little harm, even to a small child.
Then there are drugs other than narcotics in respect of which there are labelling provisions of the act and of the regulations. These labelling provisions are designed to give any purchaser an accurate description of the contents of the bottle or box which he is buying. It is submitted in that respect we can leave the choice of language very largely to the good sense of the customer and of the manufacturing chemist or other person producing that particular medicine for sale. If he wants to make a sale of the medicine to persons who speak the French language, then he has to put his label in French or he will not be so likely to make the sale. If he wants to make it to English-speaking people, then he should put it in English or he will not be so likely to make the sale. In that respect it is very much the same as in the Case of food. It is a matter where we can let the ordinary rules of customer-vendor relationship take effect so as to see that the person gets what he wants.
With regard to another class of drugs or medicines, namely poisons, the hon. member here is dealing with a matter which has been dealt with by the provinces. Every province has a pharmacy act. In Quebec the pharmacy act is chapter 267 of the revised statutes of 1935, and section 20 reads:
It shall be unlawful to keep or sell any of the poisons named in the said schedule, unless the box, bottle, vessel, wrapper or cover, in which such poison is contained, be distinctly labelled with the name of the article and the word "poison" and with the name and address of the seller of the poison.
The schedule to the act has a number of medicines listed many of which would not ordinarily be regarded as poisons, but which undoubtedly, if taken in sufficient quantity, would poison anyone. That is the requirement of the Quebec law; and. I believe that there is a corresponding requirement in the law of every province. In no province is there a requirement that this important warning be put in both languages.
I would suggest to the hon. member that a large part of his case has been met by the amendment proposed this year to the Narcotic Drug Act which has been enacted, and that such part of it as is left should properly be directed at the provinces which, under these pharmacy acts, make certain requirements with regard to medicines which may act as poisons. So I would respectfully submit to the hon. member that in view of the amendment made this year and in view of the situation in the provinces, where they have laws in force, the matter should be reconsidered, to see if there is any case which should be covered by legislation and which is not now covered.
Food and Drugs Act

.Just one word in conclusion, and it is this. I think it can be said that in the cases which have been drawn to the attention of our department where someone has been done an injury through taking some drug or medicine improperly or in excess, it is difficult to say that this has been due to any failure to read the label properly because it was not printed in both languages. In the majority of such cases the person taking the medicine could not read in any language because he or she was too young to read. I would submit that for every case where some injury has been done due to any failure to print the label in both languages, there are many cases due to the inability of the person to read in any language or to know what he is doing because of the age of that person; and there is no way in which laws can be drawn to safeguard infants of tender years against injuries done through negligence on the part of parents or doctors or druggists or others concerned with the handling of medicines and drugs. For our ultimate protection in regard to these matters we must look first, as we do, to the provincial laws regarding poisons, which I think are well drafted and adequately enforced and carried out; second, to the federal law regarding narcotics, which has been extended in consequence of legislation passed this year and is now, I think, effectively enforced; third, to the provisions regarding labelling, which I think to a greater degree in Canada than elsewhere are fairly enforced, to ensure that as far as possible a person buying a medicine knows what he is buying; buit ultimately we must look to the care of all the people who have to handle these things, and for that care no legislation can enforce or replace that care entirely.
So, Mr. Speaker, in the light of the changes brought about in the situation this year since the hon. member introduced his bill, and in the light of the representations I have made that this is so largely a matter falling within the jurisdiction of the provinces, I would ask the hon. member if he would withdraw his bill and consider if there still remains some field which could be adequately covered by legislation of this house.


Mr. CRUICKSHANK:: Did I understand the minister to state it was left to the province to decide whether articles of food as well as drugs should be labelled? I thought there was some misunderstanding, because any product of our province of British Columbia by its very pack is shown to be pure.


Louis-Philippe Picard: I have noted the expression of views by the minister. I do not know that I could entirely agree with him when he says the existing laws have been applied to the satisfaction of everyone. I am sure his department has done its best, but those who could not understand the labels were certainly not as well satisfied as those who did understand them. Of course, when you come to the question of a warning I understand, as the minister says, that many provincial laws cover the matter; yet we are legislating here in a federal parliament, and I thought for once I might convince my colleagues to take this step toward improving the situation and amend *the federal law as I suggest. The minister says the main thing is the provincial laws, and the care of people handling the drugs. It may be so partly, but we want to give them the assistance of having the labels printed in such a way that everyone can understand them. The minister later said the second point was the federal narcotics law, while the third point would be in regard to the labelling, but those are the two points I tried to cover in the bill. I should think it would .be only fair that some such provisions might be made to cover them, and I am really surprised that the minister does not agree with me on this question of the protection of a large part of the population.
With all due regard to the minister's ability, I am not convinced by his argument on these points to-night. However, as I admitted myself, the bill covers more than I at first intended, including food which I did not desire to cover and would need many amendments in committee, and since it can be brought back at another session-and I do not think this parliament will be dissolved before another session-I shall dream on it and redraft it in the hope that next year the idea may have gained way, its fairness may be recognized and it may be given more favourable consideration by the cabinet and the house. In these circumstances, Mr. Speaker,
I wish to withdraw the bill.


James Horace King: Has the hon. member
leave of the house to withdraw 'his bill?


Some hon. MEMBERS:: Agreed.
Bill withdrawn.


James Horace King: The list of private and public bills having been exhausted, the house will revert to the business under consideration at six o'clock.

Income War Tax



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Macdonald (Brantford City) in the chair.
William Ross Macdonald: When the committee rose at six o'clock it was considering the Income War Tax Act.



INCOME WAR TAX ACT

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:
1. That for the 1947 and subsequent taxation years the present rules for computation of personal income tax be replaced by the following schedule of graduated rates:
On the first $250 of income or any portion thereof, 22 per cent per annum; or
$55 upon the income of $250; and 25 per cent upon the amount by which the income exceeds $250 and does not exceed $1,000; or
$242.50 upon the income of $1,000; and 28 per cent upon the amount by which the income exceeds $1,000 and does not exceed $2,500; or $662.50 upon the income of $2,500; and 31 per cent upon the amount by which the income exceeds $2,500 and does not exceed $4,500; or $1,282.50 upon the income of $4,500; and 34 per cent upon the amount by which the income exceeds $4,500 and does not exceed $6,500; or $1,962.50 upon the income of $6,500; and 38 per cent upon the amount by which the income exceeds $6,500 and does not exceed $8,500; or $2,722.50 upon the income of $8,500; and 42 per cent upon the amount by which the income exceeds $8,500 and does not exceed $10,500; or $3,562.50 upon the income of $10,500; and 46 per cent upon the amount by which the income exceeds $10,500 and does not exceed $13,000; or $4,712.50 upon the income of $13,000; and 50 per cent upon the amount by which the income exceeds $13,000 and does not exceed $18,000; or $7,212.50 upon the income of $18,000 and 55 per cent upon the amount by which the income exceeds $18,000 and does not exceed $30,000; or $13,812.50 upon the income of $30,000 and 60 per cent upon the amount by which the income exceeds $30,000 and does not exceed $50,000; or $25,812.50 upon the income of $50,000 and 65 per cent upon the amount by which the income exceeds $50,000 and does not exceed $70,000: or $38,812.50 upon the income of $70,000 and 70 per cent upon the amount by which the income exceeds $70,000 and does not exceed $100,000; or $59,812.50 upon the income of $100,000 and 75 per cent upon the amount by which the income exceeds $100,000 and does not exceed $150,000; or
$97,312.50 upon the income of $150,000 and 80 per cent upon the amount by which the income exceeds $150,000 and does not exceed $250,000; or
$177,312.50 upon the income of $250,000 and 85 per cent upon the amount by which the income exceeds $250,000.
William Alexander McMaster: I desire to offer a few observations in connection with the first three paragraphs of the resolution, dealing with the income tax on private individuals.


Douglas Charles Abbott: I am in the hands of the committee, but I wonder whether it would suit the convenience of hon. members if I
were to make a brief explanatory statement on these various resolutions as they are called, and then other hon. members could offer their comments. If that meets with the wishes of the committee I might proceed in that way.
The first and second resolutions taken together give effect to the revision and simplification of the personal income tax structure, which is proposed for 1947. The single schedule of graduated rates set forth in resolution 1; the exemption of $750 for a single person and $1,500 for a married person, and the further exemptions for dependents set forth in resolution 2, replace the entire present personal income tax rate structure, which includes the following;
1.	The normal tax of 7 per cent, which in the case of certain taxpayers is increased to 8 per cent at $1,800 and to 9 per cent at $3,000;
2.	The tax credit of $28 allowed against normal tax for each dependent;
3.	The schedule of graduated rates in the present law;
4.	The $660 deduction from income, the $150 tax credit allowed for a wife and the $80 tax credit allowed for a child under the graduated tax;
5.	The formula by which the savings portion of the total tax is calculated. While the refundable tax has not been imposed since 1944, the tax liability under the present law is still determined by calculating the total tax and deducting therefrom the savings portion to arrive at the actual balance of tax payable.
6.	The family allowance recovery tables which were introduced as a temporary supplement to the present tax structure, to give effect to the principle approved by the house that the taxpayer should not benefit in full from both family allowance payments and relief for the same child granted under the income tax. As the committee will appreciate, there is a very real simplification of the personal income tax structure. The substantial benefits to the taxpayer arising from this over-all revision were fully explained in the budget speech, and have since been set forth in the house.
I wish again briefly to summarize those advantages:
1.	Between 550,000 and 600,000 taxpayers will be completely exempt from taxation in 1947.
2.	Including adjustments of family allowances, the total benefit to the taxpayers in the proposal will be $155 million, and relief
Income War Tax

amounting to 25 per cent of our present income tax revenues, coming on top of the 16 per cent already allowed for 1946.
3.	Of the total relief of S155 million, about 70 per cent will accrue to taxpayers with incomes under $3,000; 83 per cent will accrue to taxpayers with incomes under $5,000 and 90 per cent will accrue to taxpayers with incomes under $10,000.
4.	Our exemptions under the proposal will be higher than those of any other Englishspeaking country in the world.


William Alexander McMaster: I think I can agree with the minister when he says that the method of computation has been considerably simplified. I would go farther and say that any change made would be almost bound to simplify the difficult procedure which has grown up under the act of making computation of the tax.
However, the tax still has to be paid after the computation has been made, and it is for us to examine just what change has been made, and who has benefited by it. I find that 30 per cent of the revenue Obtained by the Dominion of Canada is obtained from personal income tax. Out of a total of $2,140 million the government expects to obtain from personal income tax the sum of $640 million. That is a substantial sum.
It is true that some 550,000 or 600,000 taxpayers will in the future not be bound to make out income tax returns. But a substantial number of low income taxpayers will still be bound to do so, and a substantial sum will be obtained from them. Taking the number of taxpayers in the report issued by the government for the year 1945, I estimate that 600,000 single men, each earning less than $1,500, will pay a total of S41 million; and
187.000	married men, wdthout children, each earning less than $2,000, will pay a total of $10 million. Then, 110,000 married men without children, each earning between $2,000 and $2,500, will pay a total of $14 million, and
100.000	married men with one child, each earning less than $2,500, will pay a total of $5 million.
In other words, single men still paying taxes and earning less than $1,500, and married men earning less than $2,500 will contribute toward the taxes of Canada approximately $70 million. I would say that is a substantial sum contributed by the men in the lower income tax brackets.
The minister has just said that the exemptions are the highest in the world. That may be true, so far as exemptions for single men are concerned, and perhaps it is true, but only by a narrow margin, for married men. But

it is not true so far as dependents are concerned, because in the United States the allowance for each dependent is $500, whereas in Canada, even taking the impact of family allowances into consideration, it has been figured out at approximately $300.
I must congratulate the officials of the income tax branch upon making out so well this list of percentages. It must have been done by a process of trial and error, because everything was arranged so that the allowance is practically equivalent to $300 for those in the lower income tax brackets. It gets slightly larger in those for higher incomes.
The people in the low income tax brackets who contribute this considerable sum of $70 million are also the people who contribute a great part of the other revenue.
It will be noticed that in introducing his budget the Minister of Finance pointed out, as indicated at page 2905 of Hansard, that we would receive $183 million from customs duties. I do not know why he estimated it so optimistically, because last year it was only $129 million. From the excise tax he expects to get $195 million, or slightly more than last year. Then, from the sales tax he expects $250 million, or an increase of about $38 million over the figure for the preceding year.
These people in the lower income tax brackets are the people with children, and they are the greatest buyers of the articles which are taxed in these other ways. The only taxes which to some extent they may escape are the corporate tax to an extent of $210 million, excess profits tax of $340 million, interest on dividends of $30 million, succession duties of $24 million and other miscellaneous taxes.
So that the people in the lower income tax brackets, those with large families, are still paying more than their fair share of the burden of taxation in Canada.
I believe I might now refer to paragraph (a) of resolution 3, where we find these words:
(a) Where the spouse has an income of more than $250 and less than $750 by the amount by which the spouse's income is more than $250.
That is, if a wife happens to go out and work her income will be deducted from her husband's exemption.


Douglas Charles Abbott: I do not wish to interrupt the hon. member, but if we might discuss that when we reach resolution 3 it would be helpful.


William Alexander McMaster: I shall leave that for the time being.
As I have said, the income tax will be responsible for 30 per cent of the revenue of Canada in the coming year. Yet this revenue will be dependent entirely upon the amount of

Income War Tax
wages the people in Canada will earn. I think the minister was optimistic when he estimated $620 million. I find that the total wage income for 1945 was about $5,200 million. That is a considerable sum, much more in fact than in the previous year, when it was only $4,790 million. I should think 1945 was a peak year. Let us go back to 1938, when the total income of wage-earners in Canada was $2,449 million. It was only $2,450 million in 1939 and in 1940. When we were having the effect of the war it was only as high as $2,860 million. Can anyone believe that wage-earners can pay $640 million out of income which may, and probably will, sink as low as that of 1940, which was a fair year? And yet, without this $640 million it will be extremely difficult to meet the ordinary expenses which are now over $1,200 million, and which are bound to increase in the future from the very fact that debt charges will increase, and the fact that, as it goes along, nearly every department of government is finding other ways of spending money.
It would be very pleasant if only the rich were to pay the taxes. I was interested to find from the government's own return that in 1945 which, to say the least, was a peak year, so far as earnings are concerned, only
17.000	people in the whole of Canada would acknowledge that they made over $10,000, and that only 7,800 of the 17,000 would admit that they made more than $15,000. One would almost think there must be something wrong. I would suppose there are hon. members in the house who might easily earn $10,000 a year. If they do, after they pay their taxes they must live in a humble and quiet way. Yet in Toronto-and I know only Toronto and these parliament buildings-there are many people who would seem to have more money than $10,000. Where do they get the money? If they are evading the income tax we should take measures to obtain it. If they are living on their capital, that is different. It may be that some of them are living on their capital because, as I recall it, attempts were made many years ago to estimate the wealth of different countries. At that time, in 1935, at the bottom of the depression the wealth of Canada was estimated at $25 billion. In 1928 it was estimated at $31 billion to $32 billion. What is it to-day? First of *all, we have a debt of $16 billion, and perhaps we ought to add that to the $32 billion, which would make us worth $48 billion, if these debts that we owe to one another are part of the capital of Canada. I realize that this is a more or less hit-or-miss way of estimating the wealth of the country; but the wealth of every country was estimated in that way, the wealth of Britain, France, and the United
States as so much, and the total wealth of Canada, as I say, was estimated at $32 billion at the highest point in our financial history. We might well stop and think that a country with a capital wealth of $32 billion and a debt of $16 billion requires drastic measures to reduce spending so that we may overtake this immense debt which we have. I know it is an internal debt that we owe to one another, and only a very small portion of it is external debt, but it all has to be met so far as the individual taxpayer is concerned.
I should like to say something about the trade of Canada. Everybody is always speaking of the necessity of Canada having foreign trade. I was surprised to see in the monthly review of statistics some figures as to the trade of Canada during the month of April last. Those are the most recent figures I have, although I believe that the minister had more recent figures. They have not come to me, nor are they in the library. I have not the very latest figures; I wish I had. I find that during the first four months of this year, according to the figures I have, the imports of Canada amounted to $555 million and our exports, $700 million. The exports are very fine, but how do our imports compare with those of the last eight months of 1945? The imports for the first four months of 1946 were $555 million and the imports for the last eight months of 1945 were $1,215 million. The exports during the first four months of 1946 were only $700 million, as compared with exports of $2,250,000 during the last eight months of 1945. In other words, a credit of one billion dollars in the last eight months of 1945 has dropped to a credit balance of less than $150,000,000 during the first four months of this year.
We must live on our exports. That is our profit, and our profit is fast receding according to the figures of our exports for the present year. We know a lot of our exports are goods that we are sending out of the country by way of gifts. I am not criticizing that, but since we are giving away a lot of our goods I say that we should have a large surplus of exports over imports. During the last eight months of 1945 we had a favourable balance of trade of $160,000,000 with the United States. During the first four months of this year we have an unfavourable balance of trade of approximately $150,000,000 with the United States so that we are very likely in the near future, if this trend goes on, to owe to the United States a large external debt which will have to be paid. We shall have to raise the money.


John Ritchie MacNicol: Does that unfavourable
trade balance make allowance for our gold shipments?
Income War Tax


William Alexander McMaster: I do not think so. I think that is trade pure and simple. Any gold which we might export to the United States would hardly be for that amount, unless several years' accumulation were sent over at once. The largest amount of gold that we sent out of Canada in the most favourable year, as I recollect, would be about $200,000,000.
As I was saying, we shall have to raise the money. My suggestion to the government is that there must be other means of raising it than by taxing such a large percentage of the people's earnings. There is no doubt in the world that many people hesitate to work when in the case of a single man everything he earns over $750 is to be taxed at the rate of 22 per cent. The minister in his budget speech did not give the rates in other countries, but the Minister of National Health and Welfare covered that in his fifteen points-one more than President Wilson had-and he spoke of the larger exemptions that were allowed in Canada. But he did not mention how much higher our rates were, once the exemptions were taken care of. I find that the rates in the United States start at 17 per cent.


Douglas Charles Abbott: At 19 per cent, I think.


William Alexander McMaster: The extra three per cent might bring it up to 19 per cent. I think the minister is correct. The rates in the United States then start at 19 per cent and ours start at 22 per cent. The rate is important to the man who pays the tax, much more important than the few dollars of exemption which he is allowed. I would say to the government that some other method of raising the large sum of money required must be found than simply taking the earnings of the people which they have acquired by hard work. There is not enough differentiation made between the man who earns his money by hard labour and the man whose income comes from investments which were acquired at a time when there was no large income tax. I cannot conceive of anybody ever becoming wealthy under our present income tax laws, especially on earnings from personal work. To-day we had before us a bill to raise judges' salaries, and I sat down with a pencil and figured that every dollar that we gave them in increased salaries amounted approximately to their income tax. So that their only hope of being able to get some personal benefit from the increase is in the reduction of the income tax. A man who makes $20,000 a year will pay $7,000 in income tax under this budget, and anybody who earns less than that has little or no prospect of ever being anything but a poor man. The difference between the wealthy 
and the poor will, as the years go by, be accentuated under the tax laws such as we now have before us.


Stanley Howard Knowles: When I spoke in the
main budget debate I devoted a good portion of my remarks to the schedule which is proposed in this first resolution, and I made it my contention that it was an unfair schedule on the ground that it gave more substantial relief to those in the upper brackets than to those in the lower income brackets. In support of my argument I gave the house four tables, which are found in Hansard at pages 3374 and 3375. I indicated in connection with each of these tables that my purpose in giving them was to substantiate my contention in different ways. My point was that whether one considered the net increase in "take-home pay" or the grading of the income tax rates into the upper brackets, or if one made comparisons with the past-and I took the particular year 1941 for reasons I gave- in all cases the point wras substantiated that relief was greater for those in the upper brackets than for those in the lower income brackets.
My reason for rising to say a few words on this matter at this time is that when the Minister of Finance spoke in this debate on July 18 he did me the honour of paying some attention to the argument which I had made and to the tables which I had presented. I was not terribly surprised that he did not agree with the social philosophy behind my contentions, but there are some remarks I feel I must make with respect to his comments on my tables, particularly one of them which I shall come to in a moment.
First of all, the minister said as reported at page 3591 of Hansard-.
Whether his first table-
Referring to mine.
-has any validity or not is a matter of political philosophy, more than anything else.
Mr. Knowles:	Social philosophy.
Mr. Ilsley:	Social philosophy, perhaps. But
I disagree so fundamentally - with the whole basis of the argument he used that I do not think I need say anything further to indicate that fact.
Obviously it is difficult for us to get together there, but it is also clear that we are in that case arguing, not the rightness or wrongness of figures, but rather a difference in social philosophy. My contention was somewhat along the lines of the views advanced by the previous speaker, namely, that, when revising the income tax structure, more consideration should be given to those who need it most, namely those in the lower brackets. Then the minister said, with refer-

Income War Tax
ence to my second and third tables which are found on page 3374 of Hansard for July 11:
The second and third tables are difficult to . understand, and they do not indicate that there have not been substantial tax reductions.
Well, I never claimed for these tables that they do not indicate that there have been substantial tax reductions; the very opposite was the case. In fact, reference back to page 3373 will show that I said this:
It will be perfectly clear to lion, members when they look at these tables that the grading up of the rates ivas steeper under the old system than it will be under the new.
That was my point in presenting these tables, to indicate that there had been reductions all right, but that these reductions are more substantial in the upper brackets than is the case in the lower groups. That, therefore, was the purpose of these tables, even though the minister found it difficult to understand them. I really think that behind that statement was the position he intimated earlier, namely a difference in social philosophy.
However, I might not have bothered to take the time of the committee to reply to the minister if it were not for the criticism he made of my fourth table which appears at page 3375 of Hansard for July 11. This is what the minister had to say, at least in part:
Then, I wish to refer to the fourth table particularly, because of the rather striking statement by the hon. member as it is found at page 3373 of Hansard where it says-
And then the minister read a fairly lengthy quotation from my speech which I do not think it necessary for me to requote at this time. Having done that, the minister went
on to say:
I said, when the tables were placed on Hansard, that I would not raise any objection to them, but that there was no admission as to the correctness of them. If they were incorrect, and if there were time to do so, an answer would be made, but the hon. member said he [DOT] ouched for their correctness. However, there is an error in table No. 4, not an arithmetical error, but a more basic error. The hon. member has applied the national defence tax only to the part of income over and above exemption, instead of applying the national defence tax to the whole income from the first dollar. Therefore his 18J per cent is much too low, and the same applies to bis other figures. That, I say, vitiates the table. My officials advise me that that is so.
Now, Mr. Chairman, I feel that I could carry on the argument as to the validity of the comparisons which I made, but that will get us nowhere because of our difference of viewpoint; and so, to meet the minister's argument, I have worked out two more tables. This time I have done what the minister said I should do, namely, include the national defence tax back in 1941 right down to the very first dollar. The tables which I have
here I feel should be put on Hansard, and I hope that the committee will consent to their going on to save time. If not, I have not much else I want to say at this point and I can take the time to read them. But what shows from these tables is this, that even when the change is made that the minister suggested, it does not vitiate my argument. My argument, as I set it out on July 11 on the pages indicated, was that in the lower brackets the rates of taxation under the new schedule now before us will be higher than they were in 1941, but that in the higher brackets the rates will be lower. I did it before in my table 4 which appears on page 3430 in terms of percentages, and when I was doing it in terms of percentages of course I could do it in brackets: $2,000-83,000, $3,000-$4,500, and so on. But to meet the minister's argument I have worked out new tables for specific amounts of taxable income, taking in in 1941 the total tax payable including the graduated tax above the exemption level and the national defence tax on the total income. When that is done it does make a slight difference in the figures and a difference in the point at which the change takes place. Under the tables worked out in percentages as I gave them before, the dividing line was at $3,000 of taxable income. The dividing line under this new way of working it out is at $4,500 of taxable income. But under this way of working it out as I now present it, giving the actual taxes in dollars, computing them from the table in this schedule one that is now before us for 1947 and taking the Statutes of Canada, 1940-41, chapter 18, for the 1941 column-taking them all together, it stands now that both as regards the single taxpayer and as regards the married taxpayer the actual amounts, getting away from rates, paid up to the level of $4,500 of taxable income are greater in 1947 than in 1941; whereas above that, up to the $30,000 level, which is as far as I have worked it out in these cases, the amounts of taxation to be paid in 1947 will be less than was the case in 1941.


Douglas Charles Abbott: Is my hon. friend suggesting that the tax payable by a man with an income, let us say, of $3,500 in 1947 is greater than the tax paid by the same man in 1941?


Stanley Howard Knowles: Yes. Does the minister refer to a man with an income of $3,500?


Douglas Charles Abbott: I am taking it under the $4,000.


Stanley Howard Knowles: The single man, or
married?
'Mr. ABBOTT: I take it the hon. gentleman is granting that the tax which the man will pay
Income War Tax

in 1947, in dollars, is less than he would have paid in 1941 on the same income. Is that correct?


Stanley Howard Knowles: No. I have before me the table for married persons, and the man making $3,500 would have $2,000 of taxable income in both years, because the exemption level is $1,500 in both cases. In 1941 the total tax payable on $2,000, including graduated tax above the exemption level and national defence tax on the whole $3,500, was $472,50.


Douglas Charles Abbott: That is a married person.


Stanley Howard Knowles: Yes.


Douglas Charles Abbott: With no children?


Stanley Howard Knowles: With no children. On $2,000 of taxable income, or a total income of $3,500, the amount was $472.50.


An hon. MEMBER:: What was the rate?


Stanley Howard Knowles: On $2,000 to $3,000 the rate was a total 28J per cent, but you have to add to that the fact that that man paid 3^ per cent on the first $1,500 as well. However, to get back to the comparative figures, before we get too far down in the column, the same man in 1947 will pay $522.50.


Douglas Charles Abbott: Has the hon. member the figures for $3,000 in his table?


Stanley Howard Knowles: No, I have not the figures for every level. I have taken from $1,000 up to $30,000 at various intervals. I took the figures that came as close as possible to the levels at which they were broken off in the 1941 and 1947 schedules. I gave just now the comparison for the man making $3,500, which was $2,000 of taxable income. For the married man with $3,000 of taxable income, or a total of $4,500, the total paid was $757.50 in 1941 and it will be $817.50 in 1947. For the man with a taxable income of $4,500-that is, 'the married man-or a total income of $6,000, the amount paid in 1941 was $1,275 and in 1947 that man will pay $1,282.50. The amount is greater but the difference is narrowing down. The next figure is $6,500 of taxaible income, which would represent $8,000 of total income; in 1941 that man paid $2,060, and in 1947 he will pay only $1,962.50. But the point is that he will pay less in 1947 than in 1941, whereas those in the lower brackets pay more.


William Alexander McMaster: Where does the hon. member get those figures? I am not trying to help the government on their income tax act, but the total individual income tax paid in 1941 was $103,000,000. Is the hon. member speaking of 1941?


Stanley Howard Knowles: These were the rates in effect for the fiscal year ended March 31, 1942, and if my hon. friend will look it up he will see that the amount was larger.


William Alexander McMaster: I have it in front of me.


Stanley Howard Knowles: I got my figures for that * from the budget speech of the Minister of Finance in 1942, and the same figures were repeated in 1943. It was about $290,000,000.


Douglas Charles Abbott: In his new table my hon. friend has jumped from percentage rates to dollar amounts?


Stanley Howard Knowles: Yes, at the minister's suggestion.


Douglas Charles Abbott: The first one was shown to be wrong and we shall have to check this one. I do not, of course, suggest that it was intentionally wrong.


Stanley Howard Knowles: I was a little surprised, when I worked it out afterwards, at the way in which the minister had done this. I did not think it was up to his usual style of debating. He said:
Therefore his 18J per cent is much too low and the same applies to his other figures. That, I say, vitiates the table.
In other words, the minister made the statement that something else had to be taken into consideration.


Douglas Charles Abbott: It did, didn't it?


Stanley Howard Knowles: When I made my point I put the facts and figures before the house to prove it. The minister did not give figures to substantiate his position, and when I worked them out I found that it does not vitiate the argument I was making. But the minister had not checked it himself. His statement was:
My officials advise me that that is so.
I should like to place these tables on Hansard. The first is a comparison of total amounts of income tax payable by single taxpayers at various levels as between 1941 and 1947, given in three columns. The first column is the amount of taxable income; that is, above the exemption level of $750. The second column is "1941-Total tax payable including graduated tax above exemption level and national defence tax on total income". The third column is "1947-Total tax payable under new budget proposals". Then I give the figures from $1,000 at the various levels, running to as high as $30,000. That appears under the first column. Under tire second column, 1941, I give the figures, which run from $211.25 up to $14,456.25. In the third column the first item is $242.50 and it runs up to $13,812.50. My second table is a comparison of total amounts of income tax payable by married taxpayers at various levels as between 1941 and 1947. The first column is the amount of taxable income, that is,

Income War Tax
above the exemption, level of $1,500. The next column is "1941-Total tax payable including graduated tax above exemption level and national defence tax on total income", and the third heading is "1947-Total tax payable under new budget proposals". Under the first column I give figures from $1,000 up to $30,000. In the second column I give the figures which run from $237.50 to $14,482.50. In the third column I give the figures, namely from $242.50 to $13,812.50. It is hardly necessary for me to ask for unanimous consent to put these on Hansard since I have read practically the whole thing.	*


John Bracken: If the hon. member will tell us the source of the basic figures he is using, I shall be glad on behalf of this party, to approve of the tables going on Hansard.


Stanley Howard Knowles: Gladly. The source of the figures for the columns under 1947 will be found in Ihe budget resolutions which are before us, or as they are contained in Hansard at page 2925. For example, I include the $10,500 level. It will be found that the tax payable on $10,500 of taxable income is $3,562.50.


John Bracken: They are all official
figures?


Stanley Howard Knowles: These are the figures in the resolution now before us, which the Minister of Finance has presented. He has given the various points and what the amount is to be. That is the source of my figures for 1947. The source of my figures for 1941 is the statutes of Canada, 1940-41, parts I and II, chapter 18, which is an act to amend the Income War Tax Act. Included in that act will be found a schedule of amounts payable, similar to the one which is now before us. It is two or three pages long. I would rather not read it. It could be placed on Hansard, but that is hardly necessary; it is an official document and can be referred to by any hon. member. I would remind any hon. member who intends to work it out that he has to add to the amount of money which is called for here under the graduated tax, the national defence tax, which in most cases in 1941 was 3i per cent. The yearly rate was boosted to 7 per cent, but for that year only half of it was payable. It means that in 1941 the single person who had an income of $1,750 paid this graduated tax on the $1,000 over the $750, but in addition, to that he paid 3-J per cent on the whole $1,750.


Douglas Charles Abbott: Was that not because it was in effect for only half of a year?


Stanley Howard Knowles: Yes.


Douglas Charles Abbott: To make a comparison of like with like the hon. member should calculate the national defence tax at 7 per cent. He should do that if he is comparing 1941 with 1947 to get a true percentage rate.


Stanley Howard Knowles: If you do that it will make it even worse, because it makes the rates higher.


Douglas Charles Abbott: Whether it makes it worse or not, you want to get a correct comparison.


Stanley Howard Knowles: Right, and I suggest that the minister's proposal would not give a proper comparison, because you have to compare the actual taxes paid in the two years. That is the criticism the Minister of Finance made to me the other day, that I had to get down to the actual amounts paid rather than percentages. Therefore I say you have to compare the amount paid in 1941 with the amount paid in 1947. If, as some hon. members suggest-


Douglas Charles Abbott: I do not want to interrupt, but-


Stanley Howard Knowles: May I remind the minister that before we got to paying the full 7 per cent- that was the case in 1942-other changes were made. The $750 and $1,500 exemption levels were abolished and, instead we had the $660 level and deduction from taxation for wives and dependents, which makes it completely impossible to make any comparison between 1947 and 1942. There was also compulsory savings. But a comparison between 1947 and 1941 is valid, because in these two years we have the same basic structure, namely, the $750 exemption level for single people and $1,500 for married people, without the other complications.
I am prepared to answer any further questions which may be asked about the matter, but I do not wish to continue it further. Obviously the reason I raised it was that I felt the Minister of Finance was unfair in making the statement that he did on July 18 that this would vitiate my tables. I have presented these tables in reply, working them out as he suggested that I should, and they still support my contention that in the lower brackets the new rates are higher than was the case in 1941, and in the upper brackets the new rates are lower. The minister said the comparison with 1941 did not matter. I forget the words he used, but it is begging the question; these things do matter. The fact is that there were higher rates charged in 1941 in the upper brackets than are now being imposed. These rates went still higher in 1942. They went considerably higher in the upper brackets in 1942 than was the case in 1941. It would have been better for my purposes to have made the comparison with
Income War Tax

1942 because of that situation, 'but I refrained from doing so because I felt that such a comparison was not proper for these other reasons I have given. The purpose of my rising at this time is to support with these tables and the others that I put on Hansard previously my contention that the schedule now before us gives more relief than it should in the upper brackets and consequently not as much as it should in the lower brackets.


Douglas Charles Abbott: If the committee has no objection we shall put the tables on Hansard and have a look at them.


William Ross Macdonald: With the unanimous
consent of the committee the hon. member may put his tables on Hansard.


Stanley Howard Knowles: The tables are as follows: Table 1
Comparison of Total Amounts of Income Tax
Payable by Married Taxpayers at Various Levels, as Between 1941 and 1947.
Amount of	1941 Total Tax Payable including graduated tax above	1947
laxable income exemption level		Total Tax
(i.e. above	and National	Payable Underexemption	Defence Tax on	new Budgetlevel of $1,500)	Total Income	Proposals$1,000	$237 50	$242 502,000	472 50	522 503,000	757 50	817 504,500	1.275 00	1,282 506.500	2,060 00	1,962 508,500	2,930 00	2,722 5010,500	3,885 00	3,562 5013,000	5.147 50	4,712 5018,000	7,762 50	7,212 5030,000	14,482 50	13,812 50Comparison of	Table 2 Total Amounts	of Income Tax
Payable by Single Taxpayers at Various Levels, as between 1941 and 1047
Total Tax
Payable including Graduated Tax above ex-
Amount of	emption level	1947Taxable income	and National	Total Tax(i.e., above	Defence Tax	Payable Underexemption	on Total	new Budgetlevel of $750)	Indome	Proposals$1,000	$211 25	$242 502,000	446 25	522 503,000	731 25	817 504.500	1,248 75	1,282 506.500	2,033 75	1,962 508,500	2,903 75	2,722 5010,500	3,858 75	3,562 5013,000	5,121 25	4,712 5018,000	7,736 25	7,212 5030,000	14,456 25 .	13,812 50


Joseph Arthur Lesage: Even if I share some of the principles of social philosophy of the hon. member for Winnipeg North Centre I cannot agree with him when he says that reductions in income tax this year are more important for upper income brackets than for lower income brackets. Before dealing with that, I think that we can agree on these principles of social philosophy. According to social justice, there are two main principles in taxation. The first one is that all government bodies must measure taxes to adminin-istrative needs. That is a duty and we must fulfil it even in spite of demagogic opposition. The general evolution in the world and in our country requires higher and higher budgets as far as ordinary expenses are concerned. My hon. friends who sit just in front of me will agree with that, and they are asking for more social security, and thus for higher budgets. The increase in population, the constant evolution in the world and social security add every year to the responsibility of the state. I do not see how we can go back; we must go forward. We cannot go back; we must follow progress. The greater the field of government action, the more numerous must be its administrative staff and the more effective must be the administration. All that requires more money. That means more taxes. Let us consider the question of taxes with a true civic spirit, having in mind-and I think it is important-that the income tax is the best way for the equitable distribution of wealth.
The second principle of social justice in taxation is that taxes must be proportionate to the citizen's resources. That is the principle I want to study and the application of which I want to look for in the resolutions of the budget we are now studying.
I said last year that taxes should be imposed on personal income only over and above the minimum necessary to each one, according to his own family responsibilities. What is strictly necessary for an individual or for an individual and his family must be exempted. What has been called the normal tax takes away from the citizen in the lower brackets of income what is strictly necessary. Such a tax is unfair and unjust, and I am sure that the people of Canada are satisfied that it will disappear.
What is the amount strictly necessary for a married couple to live in Canada at the present time, and what is the amount necessary to raise children? I say, the government's obligations being what they are, the total of such amounts, according to the needs of each individual, should be the non-compressible revenue for that individual.

Income War Tax
At the present time what is the average cost in Canada of the necessities of life for a married couple? I could not find any statistics in this connection. I inquired of the proper authorities, and the only statistics indicated to me were those giving the estimated distribution of income recipients by income classes for 1942, which can be found in the appendix to a publication of the dominion bureau	of statistics entitled,
"National accounts, income and expenditures, 1938-1945." Table 2A of the appendix gives the estimated distribution of income recipients by income classes for 1942, excluding agriculture and the armed services. I submit that in order to obtain an average we can take this table, because on the one hand the revenue of the farmers is difficult to calculate or appreciate, for obvious reasons, and on the other hand1 the income of persons in the armed services in 1942 was only temporary. The table gives the number of married men in the various income classes without distinction between those who have children and those who have not. I took an average as accurately as I could and arrived at the figure of $1,441 a year as the average income of married men in Canada in 1942. I was unpleasantly surprised to find the [DOT] figure so low, which goes to prove that the people with lower incomes must be protected and that their incomes should be increased by all means possible under present economic conditions. Since 1942 there has been an increase of about twenty per cent, which would give for married men in Canada in 1946 an estimated average income of $1,730 a year.
Let us assume that this figure is the average income of a married man in Canada in 1946. We may say that it contains, first, what is strictly necessary for his wife and himself; second, for an average of a little more than two children; third, that it includes also the income tax paid in 1942 and also the savings that were made, without counting any luxuries. If you take off all the other items, the total of what is strictly necessary for the married man and his wife will fall below $1,500. That is as accurate as I can get it with the figures at hand; and $1,500 is the exemption proposed in the budget resolution. I repeat that I am far from sure the amount is accurate, and I would urge the Minister of Finance, or the acting minister, to have a survey made every five years-and I think this is important-to learn the average cost of living in the cities of Canada in order to determine what is necessary to maintain single persons and married couples, and then children of various ages, 63260-238
so that after each period' the exemptions may be revised accordingly. I said we should ascertain the average cost of living in the cities, because if we took a complete average it would mean an average of the whole country, which in turn would mean that the population of the cities, where the cost of living is highest, would be called upon to pay taxes on part of what is strictly necessary for their maintenance.
I now come to the children. I said last fall, and I repeat, that what is strictly necessary to rear a child should not be taxable. Here again we have no statistics for Canada. However, in 1938 a survey was made in the United States, and it was found that the annual cost of feeding and clothing children from one to eighteen years of age varied from $109.40 to $241.60. As I say, these figures include only the cost of food and clothing. If you add $125 as an average to cover the other expenses, and to cover also the difference between the cost of living in the United States in 1938 and the cost of living in Canada in 1946, you will arrive at an average of around $300. which is the exemption proposed for children in the present resolution.
As a matter of fact, taking into account the family allowance, the exemption is more than $300, especially in the lower income brackets. For instance, take a man with five children, earning $3,000 a year. If the exemption for his children was $300 each he would have an exemption of $1,500 for his wife and himself and $1,500 for his children. He would receive nothing and would have no tax to pay. Under the present system, however, his exemption for himself and his wife will be $1,500 and his exemptions for his five children will be $100 each or $500, which makes a total exemption of $2,000, leaving a taxable income of $1,000 on which his tax is $242.50. On the other hand, however, he will receive at least $312 in family allowances. Consequently his net income at the end of the year will be $3,069.50, all taxes paid; and that is a man with an income of $3,000. Not only will he have no tax to pay; he will have a surplus of $69.50 over his earned income. Take a man with five children, earning $2,000 a year. He will have no tax to pay. His exemption is $2,000, and he will receive $312 in family allowances. Who said the new system is not protecting families in the lower income brackets? Who will say that even with the tremendous expenses it has to meet the government'is not giving to all, under the circumstances, a great measure of equality of opportunity? I congratulate the Minister of Finance on having set up a system of

Income War Tax

personal income tax which protects the families, especially in the lower income brackets, and which imposes a tax only on the available income of the taxpayer after the necessities of life have been provided, according to his needs.
Before I go on, I should like to say a few words about the exemptions for children going to college or university. I submit that there should be no age limit of twenty-one and, in addition, that the cost of sending a son or daughter to university is so much more than S300 a year that a man should be allowed to deduct the actual expenses incurred in the education of his son or daughter falling within that category. Let him produce receipts, if necessary, but give him a chance. Taxpayers of average means cannot afford such advanced education for their children. However, I submit that those children have the same right of education that the children of rich men have. The interest of the state itself is to have the greatest possible number of advanced and educated men, and its corollary duty is to encourage young people and their parents to do so, in giving all classes of society equality of opportunity in that field.
Now that there have been corrected the two great injustices of the normal tax and of the uniform imposition of the graduated rates over $1,200, and now that there has been applied the sound principle of net incompressible income, according to family responsibilities, let us see what should be the distribution of the personal income tax on what is left over and above that minimum.
A distribution of justice requires that the rates be graduated. Let me only recall what the Master said about the poor widow. I am sure I do not have to mention to hon. members that passage in scripture which refers to the poor widow who had put only one penny into the fund, but was declared to have been the one who had given the greatest alms. As to the scale of rates, it should depend upon the needs of the state. 'There is no doubt that the rates proposed in the resolution are high. But the needs of the state are also very high and will still be in 1947. Let us hope that reductions will be announced in the next year's budget, and that such reductions will be made, especially in the lower rates of the scale, so as to ensure better distribution of wealth, and to promote further equality of opportunity.
I should like now to emphasize the importance of the reductions of personal income tax proposed for 1947. I have here a table which, with the permission of the committee, I should like to place on Hansard. It shows the distribution by income groups of combined tax reduction and increase in family allowance payments totalling $155 million in 1947.


Some hon. MEMBERS:: Agreed.


Joseph Arthur Lesage: The table is as follows:
Distribution by Income Groups of combined Tax Reduction and increase in Family Allowance Payments totalling $155 millions in 1947
Dollar Percentage Reduction Reduction
Benefit to 550,000 to 600,000 exempt taxpayers	 $ 24 millions 100
Benefit to taxpayers still taxable having incomes under $2,000	 45 millions 42
Benefit to	taxpayers	with	incomes	$2,000 to $3,000	
40	millions	39Benefit to	taxpayers	with	incomes	$3,000 to $5,000	
20	millions	23Benefit to	taxpayers	with	incomes	$5,000 to $10,000	
11	millions	13Benefit to	taxpayers	with	incomes	$10,000 to $25,000	
9	millions	12Benefit to	taxpayers	with	incomes	over $25,000	
6	millions	10Total	
$155 millions
Of the total benefit of $155 millions-
70 per	cent	is	given	taxpayers	with	incomes	up	to	$3,00083 per	cent	is	given	taxpayers	with	incomes	up	to	5,00090 per	cent	is	given	taxpayers	with	incomes	up	to	10,00010 per	cent	is	given	taxpayers	with	incomes over	10,000
Of that $155 million it will be seen in the table that the 550,000 to 600,000 who are exempt in 1947 -will benefit to the extent of $24 million. Those still taxable and having incomes under $2,000 benefit to the extent of $45 million; those with incomes between $2,000 and $3,000 to the extent of $40 million; those with incomes between $3,000 and $5,000 to the
[Mr. Lesage.l
extent of $20 million, and for those with incomes between $5,000 and $10,000 the reduction is $11 million. For those with incomes between $10,000 and $25,000 the amount is $9 million and, on incomes of over $25,000 it is $6 million. For those having incomes under $2,000 it will be seen that the reduction is 42 per cent; for those with incomes between

Income War Tax
$2,000 and $3,000, 39 per cent; for those with incomes between $3,000 and $5,000, 23 per cent, and for those with incomes from $5,000 to $10,000 it is 13 per cent.


Stanley Howard Knowles: The hon. member will admit that there are more of the people in the lower income tax brackets.


Joseph Arthur Lesage: That is right, so far as I have given it.


Stanley Howard Knowles: What counts is the
amount the individual pays.


Joseph Arthur Lesage: That is right when I talk about the dollar reduction; but when I come to the percentage it is not true, because 42 per cent is the average reduction for everyone. I do not say that $155 million is 100 per cent, and then take in the various brackets in proportion. I do not do that. I say that for people who are still paying income tax and who earn less than $2,000 a year the average reduction for the whole of that is 42 per cent, while the average reduction for incomes between $5,000 and $10,000 is only 12 per cent.
Mr, KNOWLES: Yes. I know what the hon. member is talking about, and I agree that that is right. But what counts is-


Joseph Arthur Lesage: I will give my hon. friend the total figures. Of the total benefit of $155 million it is indicated that 70 per cent is given to taxpayers with incomes up to $3,000, and 83 per cent to taxpayers with incomes up to $5,000.
However, some taxpayers, a very few of them, who earn around $8,000 a year and who have six children or more, will not benefit by any reduction in income tax. Some of them will even suffer an increase of a few dollars in 1947 over 1946. It will be an increase of from $1 to $25. That is their net position, after taking into account family allowance.
Here is the explanation of that situation. Under the 1946 act, which is really the wartime statute introduced in 1942, with subsequent modifications, a liberal allowance was made for children in families with incomes between $4,500 and $10,000. This allowance, which quite substantially exceeds $108 per child, which most people assumed it would be, arises from the following provisions in the act:
(a)	The allowance of $28 off the normal tax for each child.
(b)	The allowance of $80 off the graduated tax for each child.
(c)	The fact that at some levels of income the refundable portion is equal to one-half the tax, while at other levels it is equal to a cer-
63260-238i
tain proportion of income, which causes the tax value of children, expressed in net tax apart from refunds, to change.
(d)	The refundable portion of the tax, where this is a percentage of. income, is increased by one per cent for each child. In recent years and in 1946 the refundable portion is no longer payable, so that this results in an increased tax value of the child, that is to say, an additional allowance for the child.
(e)	At present there is, of course, am arrangement for recovering family allowances paid to persons also getting income tax allowances for children.
On the whole, the tax value of Children for incomes of over $4,500 in families of six children and over, is lower under the new law than under the old one. In most cases this difference is more than offset by the reduction in the total tax to which the parent is liable; but in a few cases the decrease in the tax value of the child is greater than the reduction in income tax that would otherwise occur. Consequently there is no reduction of tax, on balance.
To explain it with figures, the tax value of children for 1946, owing to the reasons I have mentioned, in a family of six children is as follows: $432 on an income of $1,200; only a few dollars more on $2,000; only a few dollars more on from $3,000 to $3,500; $550-on $4,000, and a little over $600 on an income of $4,500. Then it goes up sharply, reaching $1,100 at an income of $8,000.
In 1947 that line is levelled, and the tax value of the same children varies from $560 at an income of $2,100 to about $650 at an income of $8,000. The line for 1947 crosses the 1946 line at an income of $4,500, the tax value being there, I repeat, a little over $600.
All that means that justice has been done to everyone, that a disproportionate tax value for children has disappeared for higher incomes in that category, and that a fair and levelled tax value has been given to children in large families with incomes below $4,500. For the very few cases in which the net position in 1947 is worse than in 1946, I wonder if it would not be possible to have a proviso that in no case would anyone be asked to pay more income tax in 1947, after due deduction of the amount of the family allowances received,, than he will have paid in 1946, in the same-conditions of income and family obligations. It is only a few dollars, and if I were one who, upon filling out my income tax, found that in the same conditions and with the same income I w'ould have a few dollars more to pay, I would not be pleased; that is certain.
Income }Var Tax

If I had to pay more I would get mad and I believe that a few taxpayers will certainly get mad.
Many hon. members have spoken of the failure of the government to raise the exemptions for the lower incomes sufficiently high. I have already dealt with that, but let me add that with a population of 4,500,000 gainfully employed in Canada, only 1,800,000, or a little more than one-third, will pay personal income tax. I do not say that those exemptions could not be raised, but if they are they should be raised when it is also possible to reduce the rates of the graduated tax, especially on those with lower incomes.
Let us take examples which will show that for lower incomes the reduction is important. I have already given some for incomes of $2,000 and $3,000, with five children. Let us now take a man with an income of $2,250 and two children under sixteen years of age. For 1946, his net tax after receiving family allowances will be $72. In 1947-I am not making a comparison with 1941 because that is too far away and I think it is more fair to compare 1946 with 1947-his family allowances will exceed his income tax by $14. That is more than a reduction; he will have no tax to pay and will be actually $14 better off in earned income.
A man whose income is $2,500 and has three *children -under sixteen, will in 1947 pay $167.50 in taxes, but he will receive $194 in family allowances. His net position, therefore, at the end of the year will be a net income of $2,527.50. He will be better off in earned income by $27.50.
All the examples that one can take go to prove that, even with the high rates of graduated tax, we have attained a great measure of equality of opportunity in applying sound principles. Let us hope that with further reductions in the rates when government expenses fall, we shall attain a full measure of equality of opportunity.


Gordon Knapman Fraser: 
Douglas Charles Abbott: Perhaps I might now reply briefly to the first point my hon. friend raised in connection with assistance given to the taxpayer in preparing his return. Human nature being what it is, most of these taxpayers go into the district offices just a little time before the 30th of April, in the rush period, and ask for assistance in the preparation of their returns. That assistance is given so far as possible; but as the deputy minister has pointed out to me, the office has to employ everybody it can get and some of those taken on are not too experienced. Of course, as my hon. friend knows, the responsibility is on the taxpayer himself to make out his return and calculate the amount of his tax. The department endeavours to give as much assistance as it can, but the committee will realize that there are limitations on the number of staff that can be made available in the rush period toward the end of the year who are fully qualified to give such assistance.
I do not think it would be desirable to eliminate interest on the unpaid balance owing by a taxpayer until he had received a notice of assessment, at least until we are able to secure a more adequate staff than we have been able to obtain up to the present. It would require a very much larger staff to ensure that all returns would be assessed within, let us say, two or three months after they are filed. I do not think it is asking too much that a taxpayer should pay interest

Income War Tax
on the tax which on assessment it is found that he owes. Members of the committee will see that there is a provision later on in the resolution to the effect that interest will not be charged over a certain period. That is the suggested amendment in this year's budget.


Gordon Knapman Fraser: I am glad to hear that. The minister spoke of a rush of returns being made at the last minute. But I know of cases where the returns were made to the district office a month and a half before the time of payment came due. This was in Hamilton, and the office had plenty of time to check the returns. It was not a case of a last-minute rush. It was a case of a mistake being made by the tax office.


Mr. MICHAUD:: May I add a few words following the remarks and figures submitted to the committee by the hon. member for Winnipeg North Centre? As I understand his position, he takes the view that the reductions which will go into effect on the 1st of January next are greater in the upper brackets than in the lower brackets, and he submitted tables on the budget discussion and further figures to-day. While he was quoting figures, I took the trouble to do some figuring myself, taking as a basis the figures which were submitted by the Minister of Finance on June 27 and which have not been challenged. Dealing first with the single person group, I find that the reductions for single men earning an income of $850 will be 55 per cent and on an income of $1,000, 28 per cent. Of course the figures I am now giving to the committee may contain some errors, because they were calculated rapidly.


Mr. ZAPLITNY:: Will the hon. member tell us the reduction from what year?


Benoît Michaud: 1946 to 1947. On the $1,250 income the reduction is 15 per cent; on $1,500, 13 per cent; from $2,000 and $2,500 up to $10,000 it varies between 15, 14, 16, 17 per cent; it goes up and down, but it hangs on around that figure. That is for the single person. If we turn to the married person with no children, we find this. In the first place, taxpayers with incomes of $1,250 and $1,500 will not pay any income tax next year, whereas they are paying in 1946, so that it is difficult to figure out the percentage there.


An hon. MEMBER:: One hundred per cent.


Benoît Michaud: One hundred per cent; that is right. When we come to $2,000 income we find the reduction will be 40 per cent; on $2,500 the reduction will be 28 per cent; on $3,000, 22 per cent; on $4,000, 18 per cent; on $5,000, 16 per cent. So that as we go into
the higher income brackets, the reductions are smaller; in other words, the reductions are greater in the lower income brackets.


Stanley Howard Knowles: May I remind the hon. member that if the Minister of Finance were here he would probably tell him that he should not deal in these percentages, he should deal inactual figures. If he does that he will find that the figures increase as you go up.


Benoît Michaud: I cannot surmise what the Minister of Finance would tell me.


Stanley Howard Knowles: That is what he told me.


Benoît Michaud: May I follow along by giving to the committee the result of a calculation in respect of taxpayers with two children. For those under $2,000 the net position is improved in every case, so that it is pretty difficult to figure the percentage there. The net position, taking into consideration family allowance, is improved by $14 in the case of a $1,300 income, to $73 in the case of the $2,000 income. The taxpayer earning $2,250 had to pay $72 in 1946, whereas in 1947 his net position will be $14. That is again a 100 per cent reduction. For a taxpayer with an income of $2,500 the reduction will be 63 per cent; for a $2,750 income, reduction 42 per cent; $3,000 income, reduction 30 per cent; for $4,000, 13 per cent; and for $5,000, 13 per cent. So it appears to me, as a result of these casual calculations, that the reduction is considerably higher in the lower income brackets and it decreases as we reach the upper brackets. This is the opposite conclusion to that reached by the hon. member for Winnipeg North Centre, and I submit it is the proper way to look at it, that is, the percentage reduction.


Stanley Howard Knowles: Oh, no.


Benoît Michaud: Well, that is a matter of opinion; and when the hon. member quoted figures I think he took the initial position that the reductions were greater in the higher income brackets.	'


Stanley Howard Knowles: That is true.


Benoît Michaud: And he should have argued on the reductions from 1946, but to prove his point apparently he went to the 1941 figures.	*


Stanley Howard Knowles: The hon. member wants to be fair. When I spoke on July 11, I put on the record four tables. I spent most of my time to-night in dealing with the fourth, because that was the one which the minister challenged. But the first one is, "Net increase in amount of income retained by taxpayers after payment of 1947 income taxes as compared with 1945 and 1946". It is to be found on page 3374 of Hansard. I have the same
Income, War Tax

three columns which the hon. member has given, for the single person, the married person with no children, and the married person with two children. But instead of doing it in percentages I did it in the actual amount of money, which is what counts to the taxpayer.


Benoît Michaud: I was not in the house . when the hon. member dealt with it then. At any rate, I want to put before the committee the results in terms of percentages, and the net result is a conclusion opposite to that reached by the hon. member.


Stanley Howard Knowles: I should like to answer one question which the hon. member for High Park asked me while I was speaking and I was not able to give him the chapter and verse at the time. He asked me what was the total amount of revenue received from income taxes in the year to which certain rates applied, namely the 1941 rates which I quoted. He gave a figure of something around a hundred and some millions. I said I thought it was in the order of $290 million. I would now ask the hon. member to refer to Hansard of June 27, at the end of which is an appendix to the budget containing various papers. On page 4 of that appendix, in the first column, the first item is, "Tax revenue-individual income lax, including national defence tax", and the amount is 8296,139,000. That was for the fiscal year 1941-42, which was the year covered by the rates that I was quoting.


William Alexander McMaster: I think that includes corporation tax.


Stanley Howard Knowles: No; I am sorry. If the hon. member will 'turn up the page he will find that the corporation income tax is $185,836,000; it is just three items farther down in the column. He may have the figures for the previous fiscal year, but I am quoting the year which corresponds with the year the rates of which I was giving.


William Alexander McMaster: I will ask the hon. member to look at page 11 of the taxation statistics issued by the department, which was what I had in my hand when I was criticizing. I did not keep it in my head.


Stanley Howard Knowles: I am looking at the official figures given by the Minister of Finance. I appreciate the support of the principles we have been advocating by the two hon. members on the other side who spoke, and I would say to my hon. friend who has just spoken that what counts to the worker is the "take-home pay" and not what you can do by dealing with percentages. I refer him again to my tables of July 11.
[Mr. Knowles.1


Mr. KNIGHT:: Before this section carries, I should like to draw the attention of the acting minister to something which I think works hardship and injustice on certain employees. Perhaps I can explain this best by giving a specific instance. The one which was drawn to my attention was the case of a girl teaching in a country school who, in the course of events, submitted the amount of her income on the proper form to the department. At the same time her income was returned to the income tax department as being so much; I refer to the return on the form-I believe it is T.D.-l-which the employer uses to inform the department of the amount earned by the employee. The secretary of the school district in which the girl was working supplied his estimate of the amount of her income. She disputed that amount; she wrote to the school board and asked that it be corrected, but for some reason this was not done. I believe the secretary simply adopted the attitude that he had already finished with that matter and that as far as be -was concerned he could not be bothered about it. So the girl was informed by the income tax department's local office that the only thing they had before them was the amount furnished by the employer, and since she was an interested party they could not accept her figure. However, they advised her to write to the employer and get the correct figure. Again she wrote and this time no notice was taken of the letter. The result was that the income tax people threatened to sue that girl for the amount and they had her frightened to such an extent that she paid the full amount although she knew she had not earned the income on which the amount was based. Rather than get into trouble she paid the extra amount. It was then that I received a letter about the matter, and it was finally straightened out so that she was given the refund and the matter was adjusted. I thought it was my duty to bring such a case to the attention of the income tax people in the hope that some provision might be made-I do not know how; that is their headache-to prevent that type of injustice occurring again where the employer is not willing to cooperate with the employee and with the income tax department.


Douglas Charles Abbott: That would be a very rare case. Of course, the income tax inspector, or whoever it was, had no right to insist upon taking the return of the employer rather than the statement made by the young lady in her income tax return that that was her income. In the result, as my hon. friend has pointed out, the situation was cleared up and the

Income War Tax
refund made. She is only liable to pay tax on her real income. If the employer makes a mistake and reports on T.D.-1, if that is the number of the form, that the income was in excess of the amount actually received, the mistake is his and not the taxpayer's, and the taxpayer is entitled to insist that the tax be paid only on the income actually received. This young lady no doubt did take appropriate steps later on to see that she was not charged more than she should be. It is one of the things incidental to administration. The law is perfectly clear. The taxpayer files his return and pays tax on that. If the return is incorrect the department is entitled to assess. It is not a case of the employer's word against the taxpayer's, but a question of what the amount actually received by the taxpayer was.


Robert Ross (Roy) Knight: There is no way, as far
as I can find out or can presently see, for the department to ascertain what the actual figure was. If the employer has given a wrong statement and refuses to give another, who is to decide what the amount was?


Douglas Charles Abbott: If the department under
those circumstances insists on taking the employer's word as against the taxpayer's, the taxpayer has the simple recourse of filing an appeal within thirty days under the provisions of the act, and that takes the form of a simple letter appealing against the assessment. The appeal is to the minister and it would come in the ordinary course to the department at Ottawa. It would come to the attention of the deputy minister and the matter would be investigated. I think the case mentioned by my hon. friend, while it is an accurate statement of what took place in the circumstances, is exceedingly rare, because I suppose 999 employers out of 1,000 file correct statements showing the amount actually paid to the employee, and it is hard to imagine a case where it is called to the attention of the employer that he appears to have made a mistake that he would refuse to correct it or to reply to a letter. But that is one of the hazards incident to human nature.


Mr. SHAW:: The hon. member for Peterborough West referred to interest charged on arrears where such arrears arise in consequence of an error in calculating the amount of the tax. What I have to say in that regard arises out of certain representations made to me by farmer organizations. As the minister is aware, the farmers of western Canada are at the present time just a bit disturbed, to put it mildly. Their feeling is not attributable entirely to matters relating to income tax. There is the price structure in relation to costs,
over which the minister has no control. There is the cost of living, about which of course they are disturbed, because they have no faith whatsoever in the cost of living index, which ignores taxes, and quality or lack of quality of clothing, and so forth. There is some complaint about having to file tax returns. However, they knew that the law obliges them to file returns and that a day of reckoning would arrive. Therefore I am not saying anything about that argument of theirs. Many of them, however, make this statement: "We worked under extreme difficulties during the war when there were shortages, more particularly shortages of skilled help. We put in long hours, up to sixteen a day. We are not skilled in the art of completing income tax returns and often we have no time to go to points where satisfactory help could be secured. We did our best in computing the returns and we submitted them. We heard nothing about them for two or three years, and then we were advised that we had miscalculated and therefore owed the department one, two or three hundred dollars, and were charged five per cent on balances due."
The argument of the income tax branch has been this: "We have experienced a shortage of staff." Well, the farmer's argument is just a3 legitimate. The income tax people say, "We have inexperienced help," but the farmer was in exactly the same position. The farmer says, "These people have a specific task, namely, that of assessing returns, and we feel that we should not be penalized in consequence of their taking two or three years to notify us that we owe them two or three hundred dollars." Some got their 1943 assessments last year; some got their 1942 assessments last year, and personally I feel that they have a legitimate argument in asking for consideration as far as interest on unpaid returns is concerned.
The argument might be advanced that they are assessed interest only as from the date of assessment. That was what the minister was going to say, I have no doubt.


Douglas Charles Abbott: May I point out that there is a resolution, No. 36, which proposes an amendment to the law with respect to the payment of interest on income tax. I think my hon. friend's remarks would be more appropriate there. However, he has got pretty well started and perhaps he had better carry on.


Frederick Davis Shaw: It had escaped my attention that there was such a resolution, and if it meets the situation that exists, then I say. thank goodness for it.
Income War Tax


Douglas Charles Abbott: It will be more appropriate to discuss the question under that resolution. That was the point I was making.


Frederick Davis Shaw: Someone has suggested that it applies only to returns filed in 1945 or thereafter.


Douglas Charles Abbott: That is correct.


Frederick Davis Shaw: Then, of course, that does not meet the argument because the great period of emergency was in 1940, and more particularly in 1941, 1942, 1943 and 1944. That is when we were deeply involved in war and when the farmer encountered his greatest difficulty in the matter of help. That is when he, in compliance with the request of the government, worked from long before sun-up until long after sun-down. However, I shall have more to say about that when we reach the appropriate resolutions.
I should like to say a few words in respect of the exemption for income tax purposes. We fully appreciate, as has been argued, that the government is in great need of revenue. Of course it is difficult for the single man who receives $14.50 a week to understand why he is still going to pay taxes on that amount. The government says to him, "Well, we need the revenue." Of course he advances this argument, and more particularly in some parts of Canada, "It certainly was not because of our advice that you used financial methods which piled up the colossal debt, colossal interest charges plus the other colossal fixed commitments, and all the other commitments that resulted." It is small consolation to the single man who receives $15 or $16 a week to be told whenever he encounters difficulties in getting along, "Just think of the government's great needs which are still greater than yours."
So far as the married man is concerned, if he receives $28.80 or $29 a week he is taxed.
I do not know just what argument could be advanced, especially with the present increased living costs, and the higher taxes in every field including those on his own home, to convince this man that he should be taxed. It is hard for any of us to accept the argument that because of the great needs of the country we must retain our exemptions at such an extremely low level. Personally I gave a great deal of consideration to the demand for a $1,000 exemption for the single man and $2,000 for the married man.
I stuck at it, simply because I have made certain budget calculations. I am not going to quote any figures, but it is an application of a bit of common sonso to our living costs of to-day as compared with three, four or five years ago. The worst feature of it is 
that the cost of living is sky-rocketing to-day. That is taking place in spite of the controls. Any man who pays a bill will realize that his general cost of living has increased materially. He cannot be kidded by any 122 or 124 as the cost of living index. For example, the commodities of food and clothing make up the bulk of the purchases of the family man. So far as clothing is concerned, I say that the cost of living has gone up more than forty per cent, and the cost of foodstuffs generally has gone up an equivalent amount. To ask or to expect that we shall maintain in this country a decent standard of health and a proper mental outlook, while at the same time still imposing upon the $14 a week single man and the $28 married man these high rates of taxation, is to kid ourselves.
I do not wish to take up any more time at this moment, except to say that with respect to interest I shall watch the resolution referred to and if it does not grant the concessions which we believe the farmers are entitled to then I shall be obliged to occupy more of the time of the committee.


Mr. FAIR:: Before this section is carried,
I should like to refer once again to the question that is puzzling farmers to a great extent in my part of the country, namely taxation on money received from the sale of grain grown in the early years of the war. The farmers were compelled to store this grain because of the quota system which was in effect. Then, when the grain was sold in 1943, 1944 or 1945 they are compelled to pay taxes on the basis of the year the grain was sold rather than when the grain was grown.
I should like to have a statement from the minister in that connection. I feel that if the grain was grown in 1940 and was stored because of the quota system in effect, which was not the choice of the farmer but of the government, then the grain should be assessed at the 1940 rate rather than that of 1944 or some other subsequent year when the grain was sold.


Air. ABBOT  I@: I shall look into the question raised by the hon. member.


[Stage Direction]
Resolution agreed to.
2.	That for the 1947 and subsequent taxation years the following deductions from income be allowed:
(a)	$1,500 in the case of married persons and persons allowed a deduction equivalent to that of a married person and $750 in the case of all other persons;
(b)	$300 in the case of dependents not eligible for family allowances, $100 in the case of children eligible for family allowances and amounts not exceeding $300 contributed to the support of partial dependents.

Income War Tax
William Alexander McMaster: Will the Acting Minister of Finance take into consideration the moving appeal made by the hon. member to my left with regard to raising the amount of tax exemption for each child?


Douglas Charles Abbott: I shall take it into consideration, yes.


Stanley Howard Knowles: If it were possible, of
course, this is the resolution which some of us would be seeking to amend, but we know what the rules of the house do to us when we make such an attempt. I should like to ask whether any changes are proposed with respect to the definition of a married person. As the committee, may recall, one of my complaints was that- some cases of single persons were getting more benefits than married persons, but what I am thinking of now is not a single person who has no other responsibilities, but single persons who do have additional responsibilities, but who in the past have not been included in the married status. I have in mind widowers who are maintaining homes to keep their families together. I need not go into all the different cases which have been brought to the attention of the Minister of Finance and the department down through the years. Are any changes proposed?


Douglas Charles Abbott: I remember the discussions which took place in preceding years. There is no change contemplated this year in the definition as to what will qualify a man or a woman as having married or equivalent status.


Mr. JACKMAN:: In fixing the exemption for single people at $750, has the department ever endeavoured to analyse just how difficult it is for a single person to live in a city on that amount. May I suggest here that it is to a large extent in the cities where the income tax is most easily collected. The income tax is often said to be the ideal tax, but may I say to the minister that the income taxes are satisfactory only where books are kept and where there is an accounting. There are a great many people in Canada as a whole who do not receive their salaries from a corporation or business, and it is not so easy to ascertain whether or not they do have incomes. I sometimes believe that we put an overemphasis on income tax as the ideal form of tax. Perhaps there are other forms which are worthy of more attention than they receive.
To get back to the original suggestion as to whether or not the Department of National Revenue or the Department of Finance ever investigated the difficulty of an individual single person living in a city like Toronto or Montreal on the minimum exemption of $750 63260-239
which is allowed under section 2, I have had a budget prepared by a young woman, in fact, by my secretary in Toronto, which is entitled "Cost of Living Chart for a Single Girl on a Weekly Basis." I think it is worthy of presentation to this committee because it does show-and I think the committee can pass on it as well as any person-whether or not an individual can live on this small sum of money, $750, before being subject to the first bracket of taxation of 22 per cent.
The budget is as follows: board and room for the week, $8. I do not think anyone will cavil at that amount being set aside for a single girl living in a large city. Car tickets, $1, which would provide just enough to take her to and from work, I think with one extra trip a week. Lunches, $2; that is, 40 cents a working day for lunch. Some people may think that is high for an average lunch, but occasion-; ally they want a bit of variety, so that I do not think anyone will object to that.


John Ritchie MacNicol: That is very low.


Harry Rutherford Jackman: I think so myself, but I shall leave it to the committee. This budget was drawn up on October 24 last, and no doubt prices have risen since then. Clothing, $4 a week; and I see in parenthesis, "and incidentals necessary to good grooming." Then doctor and dentist bills, including medicines, tooth paste and so on, $1. I see there is a note on this item, which says:
Most people in ordinary circumstances go far too long without consulting their doctor; in fact it could safely be said that the majority wait until they experience symptoms of illness rather than have the necessary check-up. So to build up 'a needed reserve for doctor bills, hospital expenses, to take care of periodic check-ups with the dentist and to provide the necessary aids to good health, $52 a year seems little enough.
Then there is entertainment, club fees, educational and cultural advancement, at fifty cents a week. I do not think anyone will object to a small amount like that. Next is a rather large item which is perhaps not often met with: church collection and donations, fifty cents a week. We can cut that out entirely if hon. members wish; it is only $25 a year and would not do very much to disprove the point I am endeavouring to make, but personally I think most of us feel that fifty cents is not a large amount for church collection and donations, and certainly it is very much less than the tithe some people like to contribute. Then there is an item for a holiday fund, to provide for the two weeks it is hoped to get as holidays, which requires the saving of $1 a week throughout the year; and it is difficult to get holidays nowadays even for $50. These items total $18 a week; on a yearly basis the total

Income War Tax

is $936, or $186 over the exemption of $750. I believe, after an examination of the individual items, hon. members will feel that they are on the low side rather than the high side. There is a deficiency, therefore, of $186 below the amount which I think can be considered a minimum; but if a person does earn $936 to cover this minimum budget the tax collector comes around and collects 22 per cent on the amount in excess of $750, or a total of $40.92, which I feel is too much to take from a person in that income bracket.
I shall not go into the budget for a married person endeavouring to live on $1,500 in one of our cities, but it is impossible to maintain anything like a Canadian standard on such a minimum amount of money. I wonder whether or not the tax collectors in setting such minimum amounts, have really examined the position of these people. It is quite true they come back and tell you that we are now carrying on a great many social services and that there are other expenses-


Douglas Charles Abbott: They are the most generous exemptions in the world.


Harry Rutherford Jackman: Let us assume that our
exemptions are the most generous in the world, as the minister has said. I shall not challenge his statement, but I wonder whether many of the things the government has undertaken are really wanted by the people who are just above these exemption brackets of $750 and $1,500; whether these people really want the things the government is endeavouring to provide for them, or the other things on which the government spends the taxpayers' money. It would not be so bad to provide all the things w'e do provide, to spend all this money on information services, film boards and everything else we think may be desirable, though expensive, if the taxes could be collected from those whose standard of living is not brought below' a minimum which any member of this committee would consider decent. Therefore I feel that when the house is appropriating money we should realize that a large part of our revenue comes from single people who are just above the $750 bracket and from married people just above the $1,500 bracket. The government continually remind us of the amount of revenue that would be lost if the exemptions were raised to more reasonable standards. But I hope they realize that they are taxing people below what could be considered sufficient to maintain what we believe to be a minimum standard of living; and I suggest that we cut down expenses on many of the things on which we are spending the money of these poor taxpayers, these things and services which are not as necessary to 
them as is a little higher standard of living. That is one of the reasons why many on this side of the house feel that some better treatment should be given Canadian taxpayers in the very low brackets, by way of further exemptions.


Mr. BLACKMORE:: Ever since the minister delivered his budget speech, I have been thinking that in 1941 Roosevelt and Churchill met somewhere in the Atlantic and agreed to an Atlantic charter. Two of the things against which the world was supposed to be guaranteed in that charter were want and fear. What we have succeeded in doing is guaranteeing to all of us want and fear. This is a most astonishing thing. From coast to coast in this country I believe the people are just haunted by want and fear.
The remarks of the hon. member for Rose-dale would cause almost anyone to think seriously along this line. The hon. member could have gone on to point out several other things which are being overlooked. Let us suppose that a young girl finishes high school, goes to normal and then commences to teach. Let us suppose she has accumulated a debt of $300 in order to complete her education. This girl starts to work, we will say, at $750 or $800 a year. Suppose she cuts down the expenses mentioned by the hon. member for Rosedale by twenty-five per cent. In the first place, let the most brilliant man in the income tax department go to work and figure out how long it will take that girl to pay off her $300 debt. Then, let him figure out how long it will take her to save enough to provide for two or three years of additional education. In the case of a young man, how long will it take to prepare himself to be able to marry? How long will it take either the girl or the young man to provide anything like sufficient savings for their later years? In case this girl has an accident or must have an operation for appendicitis, costing perhaps $125, with a doctor bill of, say $100, how long will it take to pay off those bills?
I do not want to complain overmuch, but I think we are seriously neglecting a large percentage of the population to whom we ought to be giving careful attention. If we are going to impoverish the youth of the land and destroy their incentive, how shall we build that fine, high morale, which should prevail to make this a great nation? How shall we build in our young people a confidence that Canada is really the great land we all supposed she was?
Some serious thought must be given to this matter. It may be argued that the government must have money. I grant that, freely.

Income War Tax
My own ideas as to where money can come from are well enough known to hon. members. I find that in a general way, when those ideas are even mentioned, the minds of hon. members close up, just like granite. It is high time members of the house began to open their minds a bit. Surely what can be achieved in the way of social services and many other things that are desirable, surely the extent of those services is not going to be limited by the amount of dollars we can wring out of our people by such oppressive taxation as is now inflicted upon them.
It ought to be clear to hon. members that to suppose that such a limit is the governing factor is only to be foolish. It is time there was different thinking in financial circles of this countiy. It is time we began to realize that the amount of money we can have depends upon the goods and services we can produce, and not upon the dollars we can wring out of the people's pockets.
If members of the Progressive Conservative party would begin to direct their attention along those lines instead of talking about economy all the time-[DOT]


John Ritchie MacNicol: I am listening.
Mr. BLACIvMORE: -they would be on their way to real progress. If their thinking and their expressions should follow along the line that what is physically possible in this country must be made financially possible-


Ernest George Hansell: That is too much to expect.


John Horne Blackmore: -and if the Liberals would begin to think along the same lines they would begin to say, "That is good, sound, common sense. What is physically possible ought to be financially possible. How can we make that come about?" Then I think we would begin to look upon as a monstrosity such taxation measures as we are at present seriously contemplating in this House of Commons.
It may be argued that we have the most generous taxation system to be found. Well, that is no credit to us. The serious thing is the way we are afflicting the people who make this country their home. I believe I have said enough for the present. I shall probably have more to say later on.


Mr. MacINNIS:: There are only four minutes to go, and I was wondering if I might use them by trying to say something sensible. I am inspired to speak, not by the hon. member for Lethbridge but by the hon. member for Rosedale. We both agree on one thing, namely that the exemptions in the lower income tax 63260-239i
brackets are too low-. If I understood the hon. member correctly, that is about the extent to which we agree, for the thesis he propounded was that people were kept poor because of the taxes they pay. If the hon. member takes the tax on an income of 8900 or $800 at 22 per cent he will find that it is a small amount. No one is made poor because that amount is taken from him. He was made poor long before that happened. And he is kept poor, not because he is taxed, but because he does not get the full or the social value of his production. That is why he is poor.
We are not going to remedy the position, either, by making things financially possible that are physically possible, or by eliminating taxes, until we get down to the fact that a man is entitled to a living simply because he is a human being. And he is entitled to a living on an equality with all other -human beings in the country, because the wealth of the country cannot be produced without him and his kind. We have on our hands some labour disputes, in which a great many people are involved. These are people with small incomes. But when they stop working, the wealth out of which comes all income is not produced.
I agree with the hon. member for Rosedale that the exemptions are too low. But when I included that in an amendment to the budget, he voted against it, just as he and his colleagues voted against the various other things which the leader of the opposition supported to-day, but which- he voted against last week.
We must stop talking on both sides of our face. We must deal with issues as they really are, and not in the superficial way that my hon. friends are dealing with them.
Resolution stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, July 24, 1946