1946-07-12

OFFICIAL REPORT


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EDMOND CLOUTIER, C.M.G., B.A., L.Ph., PRINTER TO THE KING'S MOST EXCELLENT MAJESTY CONTROLLER OF STATIONERY 1947
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House of Commons debates
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Friday, July 12, 1946

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Seventeenth and eighteenth reports of special committee on veterans affairs.-Mr. Tucker.
Second and final report of joint committee of the Senate and House of Commons on a distinctive national flag.-Mr. Harris (Grey-Bruce).


[Stage Direction]
On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I have told hon. members of the invitation extended by the government of France, acting in the name of the council of foreign ministers, to the government of Canada to send a delegation to represent Canada at the conference which will open in Paris on July 29, to consider the terms of peace with Italy and with Roumania, Bulgaria, Hungary and Finland.
The preparations for this conference have been a long time under way. The decision of the council of foreign ministers to convoke a conference is, in itself, evidence that the preparations have resulted in a substantial measure of agreement among the great powers.
The conference now arranged represents a further stage in the process of working out the treaties of peace. In this stage all the countries which have made their military contribution to the defeat of the axis powers will have an opportunity to express their views on the terms of the peace settlement, in so far as it relates to eastern and southern Europe. It is important to note that the proceedings of the conference which convenes in Paris on July 29 will be concerned only with a consideration of the terms of peace with Italy and with the axis satellites of eastern and southern Europe.
The Paris conference is not to be confused with a peace conference to determine the final settlement with respect to Germany. While the Paris conference is of importance in what it may accomplish in creating a more peaceful atmosphere in Europe, it will be concerned neither with the treaties of peace with the major enemy countries, Germany and Japan, nor with international problems as a whole, such as are the concern of the united nations. The plans for a conference respecting Germany and the date at which it may be held have still to be determined. It is not possible at the moment even to suggest a probable date. Nor, as I have said, will the conference which meets in Paris on the 29th instant be concerned, directly or indirectly, with the conference which presumably will be held ere long with respect to Japan and Pacific questions. .
Although this is still one world, and its peace is indivisible, it is apparent that some countries are much more closely and directly concerned than others with the specific solutions of questions of territorial boundaries, population transfers, war damage indemnities, and so on. Such will be the class or kind of subject to be discussed at the forthcoming Paris conference. They obviously are of primary interest to the European countries. In these circumstances, Canada's principal interest and duty will, it seems to me, lie in helping the countries more directly concerned to work out agreed solutions which are fair, and will be likely to endure. Our national interest is to see that, as far as possible, the peace treaties are based upon broad and enduring principles of justice and equity. Canada is not seeking territory or reparations, but we do want a lasting peace. With this conception of our role in mind, and with the proceedings of the Paris conference restricted to the subjects I have outlined, the government does not feel that it would be either necessary or appropriate to have a large Canadian delegation.


Paris Peace Conference

In particular, we have considered whether it would be desirable or necessary that Canada's representation should be along the lines of our representation at the united nations conference on international organization at San Francisco, which was concerned with bringing into being the charter of the united nations, and at the preparatory commission for the united nations organization which met in London in November and December last, and at the first part of the first assembly of the united nations which met in London in January and February of this year. On these occasions several members of the administration and representatives of national parties in parliament were present.
There are important differences between the organization and working procedures of a body, such as the assembly of the united nations, and a diplomatic conference such as that which is meeting in Paris at the end of this month. The united nations charter stipulates that each member of the united nations is to have five delegates and five alternates representing it at the general assembly, and the assembly is organized into a number of standing committees which meet simultaneously to discuss the disposition of the several items on the assembly agenda. The assembly and its committees are public deliberative bodies, governed by rules of procedure very similar to those followed in our own parliament. The assembly does, perhaps, contain within itself the germ of a world parliament. It is our hope that it will develop in strength and responsibility along these lines.
The Paris conference, on the other hand, is essentially a diplomatic conference, at which most governments will be represented by their foreign ministers. It is not yet clear how the conference will be finally organized for the transaction of its business. Considering the nature and history of the questions which are bound to come up for consideration, it is most improbable that the conference will conduct its business through a series of public committees reporting to a plenary session.
In considering Canada's representation at Paris, we have had to take these facts into account. We have also had to keep in mind the fact that our parliament is still in session, and that its proceedings may continue for some time. Account also had to be taken of the fact that the united nations assembly which adjourned in London in February will resume its meeting in New York during September.
The government, I might say, contemplates, for the meeting of the united nations assembly
(Mr. Mackenzie King.]
in New York, a delegation similar in its representative character to that of the delegation to the London meeting.
In the light of all these circumstances, the government feels, as I have already intimated, that the delegation to the Paris conference should not be any larger than the situation appears to warrant and to justify. I may add that, having regard to the significance of the conference, my colleagues share the view expressed by the leader of the opposition on Friday of last week, when he said that in his judgment the country would expect the Prime Minister to go to the Paris conference and that parliament would also expect this.
Quite frankly, I have been deeply concerned as to whether I should be away from parliament for a second time this session. I feel, however, that other countries to be represented at the conference, as well as our own, may also hold the view expressed by the leader of the opposition and by my colleagues. In coming to the conclusion that I should make every effort to go, I may say that I have been helped by the assurance of the leader of the opposition that during my absence he and his party would be disposed to facilitate the work of the house. I am accordingly making my plans to be in Paris in time for the opening meeting of the conference.
I shall have with me as a member of the delegation the Minister of National Health and Welfare (Mr. Claxton). I shall also have associated with me as members of the delegation a small staff including the under-secretary of state for external affairs, the clerk of the privy council and the Canadian ambassadors to France and the U.S.S.R. If, after my arrival in Paris, when I have full particulars of the organization of the conference, and of the rules of procedure to be followed, it should appear that, in Canada's interests, it would be advisable to have additional representation, I shall not hesitate to have matters arranged accordingly.
I have one or two other statements to make to the house, but if my hon. friends wish to raise any questions with regard to the statement I have just made .1 would defer making the other statements until after they have spoken.


Mr. JOHN BRACKEN (Leader of the Opposition):: Mr. Speaker, I am aware and the house is aware that an announcement of this kind at this time is not debatable, and I appreciate the Prime Minister's indicating that we might wish to make a comment. I am sure Your Honour would have permitted it in any case. When the press intimated a

United Nations-Relief
few days ago that the peace conference was likely to be held in Paris on July 29 I took the opportunity to indicate that I thought the country would expect the Prime Minister to go. Certainly we in this section of the house thought that he should go. I am glad to learn now that he has decided to go and I am sure the house will approve that decision, and the country as well. The occasion, it is needless to say, is a very important one for Canada and the world; and I believe all will agree that the Canadian delegation should be headed by the Prime Minister. I am sure we all wish for him every success in this important mission.
Right Hon. W. L. MACKENZIE KING . (Prime Minister): I thank my hon. friend for the cordial manner in which he has received the announcement I have just made, and for his expressions of good will. I should like at the same time to thank hon. members generally for the gracious way in which they have received and approved the views expressed by the leader of the opposition.



UNITED NATIONS


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On the orders of the day:
William Lyon Mackenzie King: I wish to say a word about an important conference to be held very/ shortly in Geneva. Some days ago I received from our ambassador in Washington a communication quoting a letter which had been addressed by Mr. LaGuardia, who is director general of UNRRA, to the ambassador, and which has since been forwarded to me. The letter addressed to our ambassador is under date of June 27, 1946:
My dear Mr. Ambassador:
The agenda for the forthcoming meeting of the UNRRA council includes an item regarding the future of UNRRA. There will in due course be circulated by the administration council documents bearing upon the several aspects of this problem on which decisions will be required.
I believe it to be of the greatest importance that delegations to the council meeting be fully prepared to discuss this question, and I ani, therefore, sending to you for the information of your government an aide memoire drawing attention to the situation. I earnestly hope that your government will give immediate consideration to this document.
Sincerely yours,
F. LaGuardia,
.	Director General.
Mr. La Guardia also sent a personal letter to myself. It is under the heading United Nations Relief and Rehabilitation Administra-63260-214J
tion, and is dated Washington, June 29. In this communication Mr. LaGuardia says in part:
I am now giving some thought to the work of the forthcoming UNRRA council session. I am convinced that the meeting will be of great importance since it must decide what, if any, future provision should be made for relief activities. I am sending an aide memoire to you and other heads of member governments on this point since I know it will be essential to face these issues squarely and get clear-cut decisions.
The meeting of the UNRRA council had been arranged at first to take place in Paris on August 2. Owing, however, to the meeting of the peace conference opening in Paris on July 29, the UNRRA meeting is to be held at Geneva on August 5. I may say, Mr. Speaker, that the cabinet has given careful consideration to the steps that should be taken in meeting the request of the director general of the UNRRA, and I have an announcement to make as to the manner in which we believe it can best be met, which I think will be warmly received by the house.
It will be recalled that the third council session of UNRRA determined provisionally that final UNRRA shipments should be completed by March 31, 1947. The principal questions for consideration at the forthcoming meeting will be the transfer or winding up of UNRRA functions in the field of emergency supply, work with displaced persons and in relation also to welfare activities in countries devastated by war. In each of these fields much has been accomplished, but many problems remain and it will be for the forthcoming council meeting to make proposals for the consideration of the governments as to how these problems can best be solved.
In view of the importance of the financial implications of the questions to be considered at this meeting, the government has arranged that the Minister of Finance (Mr. Ilsley) should himself attend the meeting at Geneva. The Minister of Finance will be accompanied by Mr. L. B. Pearson, our ambassador at Washington, who has taken a foremost part in the relief and rehabilitation activities of the united nations since their inception.
Hon. members are aware that my colleague the Minister of Finance has intimated at different times to fellow members in the house that he felt considerably fatigued as a result of the strenuous exertions he has had for many months past, and that he was contemplating an absence after the motion to go into committee of ways and means had been decided. He had that very much in mind, without having reached a decision as to just where he should go for the vacation to which he has looked forward, if it can be called a vacation. Having in mind the communica-
Business oj the House

tions that were received from the director general of UNRRA, and realizing how very important this meeting will be, I felt, and so expressed myself to my colleagues, that the Minister of Finance might be able to get a bit of a change and rest on an ocean voyage en route to Geneva, and that perhaps he would be able to make better use of his time than otherwise would be the case if while away he had some active work to engage his attention.


Mr. GRAYDON:: A busman's holiday.


William Lyon Mackenzie King: At any rate, I have asked Mr. Ilsley if he would represent Canada on the council, and he has agreed to do so. I am sure I may say to him that the members of all parties in this house will welcome his willingness to assume this particular responsibility, and will hope he will at the same time be able to combine with it what is obviously desirable, namely, a much needed and well earned rest and change.



BUSINESS OF THE HOUSE


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On the orders of the day:
William Lyon Mackenzie King: I come now to the question of the affairs of the house, and of the ministers who will be acting in the absence of others, during the time that the Minister of Finance and I will be away from Ottawa. As the house is aware, when I have been absent on recent occasions, the Minister of Finance has been Acting Prime Minister. As Mr. Ilsley will not be here during my absence on this occasion, I have asked my colleague the Minister of Justice (Mr. St. Laurent) if he would take on the duties of Acting Prime Minister and he has agreed to do so. I assured him that if he were willing to assume the responsibility and the announcement were made to the house, he would see for himself, as he has now seen, how acceptable his decision would prove to be. In the absence of the Minister of Finance, my colleague the Minister of National Defence, Mr. Abbott, will be Acting Minister of Finance. The Minister of Justice, Mr. St. Laurent, will be Acting Secretary of State for External Affairs, as he has been on previous occasions, and my colleague, Mr. Mackenzie, the Minister of Veterans Affairs, will be acting president , of the council and will also continue to exercise, in the very efficient manner in which he has in the past, supervision over the organization of the business of the house, as house leader. In the absence of the Minister of

Health and Welfare (Mr. Claxton) the Minister of National Revenue (Mr. McCann) will be acting Minister of National Health and Welfare.
I should like to thank the house for the responsive manner in which it has received these several announcements.



AMENDMENT TO OLD AGE PENSIONS ACT

[Stage Direction]
On the orders of the day:
['May I ask the Prime Minister, before he closes the door entirely to bringing the estimates of external affairs before the house, to reconsider the matter in the light of the present circumstances?']
William Lyon Mackenzie King: On Friday last, July 5, the hon. member for Winnipeg North Centre (Mr. Knowles) referring to the statement which I had just made concerning legislation still to be brought down by the government, inquired what the intention of the government was regarding an amendment to the Old Age Pensions Act; and he made reference to some promise that my colleague, the Minister of National Health and Welfare (Mr. Claxton) had made. I said that I would look into the promise. The hon. member referred to a statement made on June 24 by the Minister of National Health and Welfare in which it was indicated that it was proposed, during the present session, to have legislation introduced. Obviously a bill will have to be introduced at some time to continue in force the changes made in old age pensions under the War Measures Act. It had been the intention of the government to introduce a bill at this session.
In view, however, of the great amount of business still to be concluded at this session of parliament, the government suggested that the National Emergency Transitional Powers Act, 1945, should be extended for an additional forty-five days after the opening of the next session in order to make it unnecessary to reenact a considerable volume of emergency legislation at this session. It is the intention of the government to avail itself of this amendment and to delay the introduction of the necessary old age pensions bill until next session.



[Stage Direction]
On the orders of the day:
Mr. E. G. HANSELL (Macleod):: May I direct a question to the Prime Minister? Will the house be given an opportunity to discuss external affairs before he leaves for the Paris peace conference?


William Lyon Mackenzie King: I say to my hon. friend that one of the regrets I have in being obliged to leave very soon is that there are some things that I should like to

Reparations
do that it will not be possible for me to do before leaving, and the discussion of external affairs matters is one of them. Before I left to go overseas some time ago I arranged that the estimates for the Department of External Affairs should be placed before the committee dealing with external affairs. I understand the committee has had very full information given to its members with respect to the several items that come under the head of estimates, and which may be made to include, if so desired, pretty much all the subjects that are likely to come up for debate on the estimates of the Department of External Affairs. I should have liked very much to have the privilege of saying some things on external affairs that I have been anxious to say for some little time, but I am leaving on Wednesday of next week and I do not think in the interval I should break into the proceedings of the house in its debate on the budget in order to take up external affairs. Moreover, I cannot imagine anyone who is in a better position to discuss external affairs than my colleague the Minister of Justice (Mr. St. Laurent), who will be acting minister in my absence.


Gordon Graydon: May I ask the Prime Minister, before he closes the door entirely to bringing the estimates of external affairs before the house, to reconsider the matter in the light of the present circumstances?



REPARATIONS


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On the orders of the day:
Gordon Graydon: I
should like to direct a question to the Prime Minister in his capacity as Secretary of State for External Affairs. In view of the fact that news reports are reaching Canada relating to inter-allied reparations agency decisions, will the Prime Minister be good enough to inform the house who are Canada's representatives on this body, and what reparations from Germany in money or other property have been or are likely to be allocated to Canada?


William Lyon Mackenzie King: In answer to my hon. friend's question, of which he sent me a copy, I would say the Canadian government is represented on the inter-allied reparations agency in Brussels by the Hon. W. F. A. Turgeon, Canadian Ambassador to Belgium. The alternate Canadian delegate is Colonel G. W. McPherson, of the custodian's office, Department of the Secretary
of State, at present serving as custodian representative on the Canadian military mission to Germany.
According to the final act of the Paris conference on reparations, to which the Canadian government is a signatory, Canada has been allocated 3-5 per cent of German assets under category A and 1-5 per cent of German assets under category B of the Paris conference on reparations. Category B assets include German industrial and other capital equipment removed from Germany and merchant ships and inland water transport. Category A assets include all forms of German reparations except those under category B. German external assets held in custody by the member governments and in neutral countries are assets of this category.
The Canadian custodian holds German assets to the extent of $6,485,204.26. Under the terms of the Paris agreement the Canadian government is authorized to hold or dispose of these assets, which are to be charged by the inter-allied reparations agency against the Canadian reparation account over a five year period.
From time to time lists of industrial equipment available for distribution as reparation to the member governments through interallied reparations agency are communicated to the Canadian government. Canada's share of assets of this kind is 1-5 per cent of the total available.
The inter-allied reparations agency has allocated most of the ex-German shipping available. Canada has been assigned 1-42 per cent of the tonnage amounting to some 10,797 tons made up of the ships Huas Caran, Tiefland, and Weserwehr.


Gordon Graydon: May I ask the Prime Minister a supplementary question? How will the reparations which come to Canada, and to which the Prime Minister has referred, be distributed? What channels will be used for that purpose?


William Lyon Mackenzie King: May I say to my hon. friend I am unable to answer him offhand but I shall seek to give him the answer in due course.



DOMESTIC ALLOCATION OF BRITISH COLUMBIA CANNED SALMON

[Stage Direction]
On the orders of the day:
Hon. H. F. G. BRIDGES (Minister of Fisheries):: For the information of the house and the public I would like to say that under plans which have now been worked out for the allocation of Canada's 1946 production of
Labour Conditions

canned fish, 500,006 cases of British Columbia canned salmon, or 24,000,000 pounds, will be made available to Canadian consumers from this year's pack. This is an increase of 200,000 cases, or sixty-six and two-thirds per cent, over the domestic allocation from the 1945 salmon pack. I may add that in making this increase in domestic allocation we have the concurrence of the international emergency food council, which has taken the place of the combined food board.
The house will recall that during the war years Canada sent nearly all its canned salmon overseas to help meet the critical food needs there. This year, however, it will be possible to take care of a much greater part of the domestic demand. Normal domestic demand runs to something more than half a million cases a year, but this quantity will at least be fairly well up to the usual requirements, and, as I have said, it is a much larger supply than has been available to Canadian consumers in any recent year.
Perhaps I should add a reminder that naturally it will be some months yet before this year's domestic allocation flows to market in volume and reaches the merchants' shelves. While salmon canning is now under way on the Pacific coast, it is in midsummer and on into the autumn that the big production takes place.



LABOUR CONDITIONS

[Stage Direction]
STEEL INDUSTRY-PROGRESS OP NEGOTIATIONS On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: May I be permitted to direct a question to the Minister of Labour of which I have given him notice? It arises out of several telegrams which I have received from Nova Scotia expressing great anxiety about the present steel dispute. Is the minister in a position to indicate to the house whether any progress has been made toward reaching a final settlement?


Hon. PAUL MARTIN (Secretary of State):: As the house knows, the Minister of Labour is rarely absent from his seat at this time, but he is engaged in an important conference, and he asked me to say to the hon. gentleman that he has no final information on the subject.



CANADIAN PACIFIC RAILWAY EMPLOYEES- PENSION RIGHTS '

[Stage Direction]
On the orders of the day:
Mr. STANLEY KNOWLES (Winnipeg North Centre):: I should like to direct a question to the Prime Minister. I sent him

notice of this question two days ago, but at his request in view of the other matters that were before him I delayed asking 'it until to-day. When is the royal commission to be appointed to inquire into the matter of the pension rights of Canadian Pacific Railway employees involved in the 1919 strike, as requested over a year ago by unions representing the men, and as recommended to the government last December by Mr. H. S. Johnstone, conciliation officer of the Department of Labour?


William Lyon Mackenzie King: My hon. friend was good enough to write me a letter about this matter. May I say to him that unfortunately I have not had the opportunity thus far of reading the recent reports on the matter, or the representation of the Canadian Pacific Railway company. I should like the question to stand for my colleague, the Minister of Labour (Mr. Mitchell), to answer very shortly.



ARMY SUPPLIES


[Stage Direction]
On the orders of the day:
Gordon Graydon: I
should like to direct a question to the Minister of Reconstruction and Supply, in connection with which I have sent to him a copy of the Montreal Star of July 10, the day before yesterday, in which appears a news story accompanied by pictures indicating that thousands of pairs of serviceable army shoes and slippers are lying on the Wellington street dump at Point St. Charles. In view of what appears to be a serious situation I would ask the minister to make an investigation and give the house a report on the matter as soon as possible, if he is not able to do so at the moment.


Right Hon. C. D. HOWE (Minister of Reconstruction and Supply):: Mr. Speaker, I have read the newspaper account sent across to me, and it seems to absolve both War Assets Corporation and the Department of National Defence. The report indicates that the material was dumped there by a private merchant. I shall make sure no government agency was involved, but beyond that I do not see what action the government can take.


Mr. COLD  WELL@: Cannot waste of that description be prevented?

The Budget-Mr. Gariepy



NATIONAL FLAG


[Stage Direction]
On the orders of the day:
Mr. FREDERIC DORION (Charlevoix-Saguenay):: I should like to ask the chairman of the flag committee when he will move in the house-


Some hon. MEMBERS:: Order.


Frédéric Dorion: I should like to ask when he will move concurrence in the report he tabled to-day.


Some hon. MEMBERS:: Order.


Frédéric Dorion: I think I am entitled to an answer. I am not asking the government; I am asking the chairman of the committee.


Mr. SPEAKER:: Order. The report was tabled to-day, and as the hon. member knows, under standing order 45 some time must elapse before concurrence may be moved.


Hon. P. J. A. CARDIN(Richelieui-Vercheres):: Arising out of the statement yioui have just made, Mr. Speaker, in reply to the question of the hon. member for Charlevoix-Saguenay' (Mr. Dorion.), may I ask the Prime Minister if it.is the intention of the government that such a motion shall be made later this day, and that Uie unanimous consent of those present in the house will be asked in order to do so?
Right Hon. AY. L. MACKENZIE KING (Prime Minister): Do I understand my hon. friend to ask if there is any intention of having the motion made later this day? There is no intention to have a motion later this day.



THE BUDGET


[Stage Direction]
The house resumed from Thursday, July 11, consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell, and the amendment to the amendment of Mr. Maclnnis.
Mr. WILFRID GARIEPY (Three Rivers):: Last evening, Mr. Speaker, in my desire to conclude my remarks before adjournment I neglected to reply to a couple of interruptions as I might have done. I shall do so now. To the hon. member for Argenteuil (Mr. Heon) may I say that upon investigation I have
found that the school legislation adopted by the Anderson government in Saskatchewan has not been repealed or altered by the present Douglas C.C.F. government of that province. To the hon. member for Charlevoix-Saguenay (Mr. Dorion) I must say that on looking into the records I have found I am somewhat mistaken, in that he has seen the error of his ways oftener than 1 thought. I have discovered, and I must admit, that he has voted with the government oftener than I thought had been the case. For this good move I am satisfied his electors will be very grateful to him when the proper time comes.
Two hon. members from- my province yesterday raised the question of clemency in connection with our youngsters who may have violated the Militia Act. In this connection let me read an article which appeared in the Ottawa Journal of October 31 last:
In the united nation countries, it is recognized that the men who served on land, at sea, and in the air to defeat Germany, Italy and Japan have rendered a priceless service to humanity. But in Dublin, Mr. DeValera takes a different standpoint.
By an emergency decree signed by Mr. De-Valera himself, deserters from the Irish army who were absent from Ireland during the past five years for a period of more than six months will be barred from any government employment in Ireland for seven years and will be denied unemployment benefits . . .
Admitting that these men committed an infraction of Irish military law in going to war for freedom, it wmuld seem sensible and practicable to grant them amnesty-treat their war service as if they had been sent on special instructional courses-and use them to frame an army in Ireland which would really mean something.
Recently some military police have been in my own county putting their hands on a young man belonging to a well-known family. I am personally aware that the chief of police residing in my district has a list of a certain number of young fellows who are being looked for. I have visited the Longueuil camp not far from Montreal, where at the time I visited it there were over a thousand young men who were prisoners and treated as such. I am not going to plead, Mr. Speaker; I am not going to give any special reasons for what I ask. The war has been over for one year. I appeal to this house, to the country and to the veterans' associations of Canada to join hands, grant amnesty to our young men and let them' make a fresh start for the welfare of Canada as a whole.
As to the budget, I accept it as it is, complimenting the Minister of Finance (Mr. Ilsley) on the magnificent work he has done. We have undertakings, we have debts, we have responsibilities that must be met. Mr. Brunet, assistant
The Budget-Mr. Gariepy

general manager of Alfred Lambert, Incorporated, made a statement yesterday which seems to me to contain what I might have to say in connection with the budget. Mr. Brunet believes the present yield on capital after payment of taxes is not commensurate with the risk involved in industry; that income tax deductions from the salaries of employees affect their efficiency, because employees mistakenly hold employers responsible for the decrease in their salaries; and that delays in assessing income tax liability hamper industry. To remedy this situation Mr. Brunet suggests the abolition of the excess profits tax; determination of the date for giving back the refundable portion of taxes already collected, and a tax rate decrease of about 50 per cent on individual incomes of S3,000 and less, with a decrease of 25 per cent on larger incomes.
In connection with cooperatives, let me say that I have eight parishes in my own constituency. The cooperatives in those parishes are organized among farmers of good standing who, through their organizations, operate successfully. If the state interferes by putting a tax on them, their progress will be hampered. I have been requested to lay their request for exemption before the Minister of Finance. I am now waiting until the budget resolutions are debated to find out to what extent the views I have in mind are being met.
One other point to which I would refer in closing has to do with the harbour at Three Rivers. Last year the business at that harbour compared favourably with that done at other harbours in Canada. Statistics show that Montreal harbour handled 118.361,000 bushels of wheat, Halifax 14,762,000, Quebec 15,603,000 and Three Rivers 26,378,000. I have the figures for other harbours in Canada, but the ones I have given are sufficient to show that the business done at Three Rivers compares favourably with that done in other Canadian ports, and indicates that at Three Rivers we have a harbour of which we have reason to be proud.
Mr. Briggs, the manager of our local elevator, has said that our harbour is the basis of the future prosperity of our district. The visiting owner of an ocean liner used these words:
Your harbour is one of the best in the world.
I have travelled all over the seas. My boat has been everywhere, and I can give you a certificate that I was astonished to find in Three Rivers, between Montreal and Quebec, a harbour so modern and so easy of access, where a large boat like mine can land without any help.
The Gibb report, made at the request of the Bennett government in 1931-32, states this at page 31:

Considerable latitude should be allowed to the port managers so long as their activities are directed to carrying out the policy laid down by the central authority. It is essential to avoid emasculating the local administration, since no centralized control can replace an efficient and active local administration, or the special knowledge and initiative of the local business community, both of which are vital to a port's prosperity.
For this latter reason I strongly advocate a local advisory council. There are very many aspects of port working which such a council can properly care for, such as the representation of the interests of private wharf owners, of local merchants and distributors, of local consignees and exporters, of the labour view, and of the attitude of boards of trade, chambers of commerce, corn exchanges and other such trade organizations, in addition to shipping.
It serves very usefully to identify the community with the port; and to secure the support and interest of local members of parliament, the city council, or provincial government in schemes, and so anticipate and meet criticisms from any such quarters, or action that might be prejudicial to the port.
It is invaluable in exploring the possibilities of local markets, in carrying out advertisement and propaganda and in cooperation with interests likely to promote industrial developments. Finally, a local council provides a useful check on the tendency of more or less permanent officials to become stereotyped or arbitrary.
The port manager would be ex officio chairman of the council, which would meet regularly and be consulted on all such matters as proposed developments, alterations in rates, important changes in operation. The members of the council should have the right of initiating discussions on matters of policy affecting the port, on any complaints raised by users of the port, and on questions of rates, charges, etc.: but not on any purely executive matters, and they Avould have no executive duties or powers.
The advisory councirs proceedings and recommendations would be submitted to the central authority, and they should have the right of direct access to the central authority, but not to any other department of government.
The council should be sufficiently large to include all important interests and to ensure that its recommendations will be characterized by a broad outlook. Its composition should include the representation of the following interests:
Provincial government; municipalities; board of trade; railways; shipping; Department of Trade and Commerce; merchants, corn or other exchanges or organizations; dock labour.
I shall point out to the Minister of Transport (Mr. Chevrier) that this requirement has not been lived up to. In the old days we had a local organization composed of Three Rivers business men. These were leading men in the community who served without salaries and who gave their time and energy to furthering the interests of the harbour. That system was discontinued. We now operate under the administration of a central national harbours board. This national board, efficient as it may be, is composed of three men who reside in Ottawa and who have only a limited knowledge of conditions down my way. They

The Budget-Mr. Gariepy
act through an official who to some extent is protected because he has been appointed by the civil service commission and therefore cannot be removed from his office. He is a little czar in his realm. I am not suggesting that he is making too many mistakes, but I am saying that through him the requirements set out in the Gibb report should be resurrected and enforced.
I want the government to understand that with the advantages offered by the harbour of Three Rivers, with the possibilities of development found there, it should' be helped in the way I have mentioned, namely by the aid of a local advisory board who would follow up developments and give advice on whatever might be done for the advancement of the interests of that port.


Mr. MacNICOL:: The hon. member is right.


Wilfrid Gariépy: May I lodge another small grievance? The family allowance provisions are effective in my part of the country, as in others. Moneys have been distributed, but in this matter of distribution I believe there is cause for some complaint. Possibly for reasons of economy, or because of the newness of the system, the department has only one general office for the whole province of Quebec, so far as the administration of family allowances in that province is concerned. This is neither practical nor effective. Three Rivers is situated centrally in the province. Families drawing these allowances are generally poor, and many are not educated. The idea is new, and frequently investigations are necessary. The people need help, and they write to Quebec, Montreal or Ottawa. Many cases have not received attention for weeks or even months, and I say this is an improper practice. It would not be more costly to have at Three Rivers a looal office from which the ten or twelve surrounding counties could be served. The same applies to the administration of the income tax. At present there is only one general office in Montreal, and one can well imagine the volume of correspondence flowing to that office.
It is true that some officials travel, but their visits are hasty and they do not long remain at one point. If, as we must, we are to continue collecting income tax, then it should become a part of the system to have local offices in different districts. I am not suggesting that there should be an office in ' every county or in every town. But for those in Three Rivers to have to seek information from Montreal or Quebec is placing the people of that city at a disadvantage, and is a condition which is not conducive to good results.
Anyone who travels through Quebec, as does the hon. member for Davenport (Mr. Mac-Nicol), will have noticed that the section between Montreal and Quebec is somewhat segregated. Running north from Three Rivers we find places like Shawinigan, Grand-Mere, and La Tuque, where one reaches the main line of the old Grand Trunk Pacific railway. Then, coming south one reaches points such as Nicolet, Victoriaville, Drummondville and Sherbrooke. From there one approaches the boundary line and the connections with areas south of the border.
At Three Rivers we are in the centre of the power area. Shawinigan Falls was the first power development project in Canada. Even to-day a million more horse-power could be developed if the factories were in existence to warrant it. This great power development is only about twenty miles north of my constituency. In the area are half a dozen paper companies. It is the world's centre for paper manufacturing, and we have the biggest mill in my own city, shipping its products day in and day out. It ships by water in the summer, and also by rail, one route going around by Montreal and the other by Quebec. The St. Lawrence river is very wide at that point and the ferries have been inadequate. There does not seem to be any practical way to get crossings that will give satisfaction. In that district there is eighty miles or so of first-class farming country, but it is not doing as well as it might if more attention were paid to it. I am not blaming anybody for that, but you know how it is. In the old days I lived where my hon. friend the member for Peace River (Mr. Low) resides, and I remember that Edmonton and Calgary were taking everything and the poor little town of Vegre-ville and the poor little town of Red Deer did not get much. Up to the present Montreal has been asking for a lot, and when it has not been Montreal it has been Quebec.
This country must go ahead and we must get busy to produce the best results. We have a large debt to pay. We want our people .to get returns for their work and for their abilities. The centre of our province can and should be opened up, and it would then provide ample revenues. We have a gold mine lying dormant there. What is required?
A request was made not long ago, but dropped, to build a bridge between Quebec and Levis. There has been agitation also for a bridge between Montreal and Longueuil on the south shore of the St. Lawrence. For two hundred miles there is no bridge across the St Lawrence between Montreal and Quebec, and in the summer you will see on both sides of the river hundreds of automobiles waiting

The Budget-Mr. Gariepy

for a chance to cross. Is that right? Is that proper? I say no. For various reasons a bridge must be built across the St. Lawrence between Three Rivers and thereabouts and the south shore.


John Ritchie MacNicol: That is right.


Wilfrid Gariépy: That bridge will give connections and open up trade. It will give access and satisfaction to a great number of people. There are miles and miles of territory on the south shore which can be used by new industries. Industries can no longer go into the large centres because of the taxation and obligations of one kind and another, but in the territory I speak of there is room for industrial expansion, and at this time when money is plentiful and our business men are looking for new openings it is the duty of this government to invite the cooperation of the provincial government and of the municipalities and of the two railways, the Canadian Pacific and the Canadian National, both of which are interested in crossing the St. Lawrence near Three Rivers, so that all these bodies can get together to promote the building of such a bridge. It would provide work; it would give encouragement to the people, and it would meet a necessity. Now, when things are at a low ebb, and we are looking for something new and bigger, this is a project that should receive the attention of the government and of the best brains of the country to the end that a bridge may be built in the near future.


Hon. DOUGLAS ABBOTT (Minister of National Defence):: Mr. Speaker, I think it is some two years since I took part in a budget debate, but I always enjoyed it. The nature of some of the opposition criticism during the present debate has made me feel that I want to get into the ring again.
The main line of criticism taken by hon. gentlemen opposite has been twofold: first, that the reduction in taxation provided for in this budget is inadequate and niggardly, to use the term used by some of the press supporting hon. gentlemen opposite; and in order to support their thesis, seeing that the budget shows a deficit of some $300,000,000, they contend that government expenditure is extravagant and reckless and must be reduced. If they did not contend that, of course, they would be advocating either more borrowing _ or inflation, and while some would like to borrow more, on the other hand they do not care to advocate that openly.
Before I deal, as I propose to do, with the main heads of expenditure, I want to point out to the house what it already knows, that the
fMr. Gariepy.]
estimates have been before the house for some two months now. The items of some of the more important departments, including agriculture and national health and welfare, and a substantial part of the estimates of the Department of Justice, have been considered in detail, and so far as I can recall the only suggestion made by hon. gentlemen opposite for a specific reduction in expenditure was in one of the items of the Department of National Health and Welfare, where they criticized a proposed expenditure of $300,000 to see that an expenditure of some $273,000,000 was properly made. On the other hand there have been numerous suggestions that expenditures should be increased. I asked someone in my office to prepare a list of the suggestions that have been made by hon. members opposite for increased expenditures. The job is a big one and it is not completed yet, but I can assure the house that it will be an impressive list when it is finished.
The total estimated expenditure this year is $2,769,350,000. Of that amount $1,515,846,000 is for demobilization and reconversion. ^ I am prepared to concede that there may be items in those estimates which can and should be reduced. In my own department, for instance, we have estimated that some $488,000,000 will be required for the three defence services this year, but because demobilization is proceeding more rapidly than we had anticipated and because of our continued efforts to effect economies I believe that this amount will be reduced. On the other hand I believe that the expenditures for veterans' benefits will be somewhat above those that have be<a* estimated.
Of this total of roughly, $1,500,000,000, close to $700,000,000 will be for veterans' benefits in one form or another. Another $400,000,000 odd will be for the three defence services. The house will appreciate that the balance represents either necessary demobilization or reconversion expenditures, which, while I hope they may be reduced, cannot, I believe, be substantially reduced.
Coming to what might be described as the ordinary expenditures of government, they total $1,253,504,000. In that $1,253,504,000 there are a considerable number of items of expenditure which can be classified as absolutely uncontrollable and a number of others which are relatively uncontrollable. I am going to break that figure down.
Public debt charges amount to $481,207,000. Pensions, superannuation, et cetera, amount to $76,985,000. There is no possibility of reduction in either of those two items.

The Budget-Mr. Abbott
Subsidies and payments to the provinces under the taxation agreements amount to $99,062,000. There is no possibility of reduction there.
Unemployment insurance amounts to $20,432,000. I do not know whether hon. gentlemen opposite would suggest that that should be reduced, but I do not believe it could be reduced to any considerable extent.
For the Post Office Department the amount is 160,455,000. Admittedly that is only relatively uncontrollable, but it is a service department, and while it might be possible to effect some economies I do not believe the expenditure can be substantially reduced.
The Department of National Revenue shows another large expenditure, $26,062,000. I would point out to the house that while that is substantially higher than the year before the war, that department is charged with the collection of revenues amounting to some $2,600 million. That is not out of line-with the work involved.
There are other expenditures totalling $6,097,000 which include amounts payable under the Prairie Farm Assistance Act. Hon. gentlemen opposite do not suggest that these expenditures, which amount to $3,000,000, should be discontinued. There is some $2,000,000 included in this total for cheese and cheese factories, and I understand that these payments have been effective for some time. Certainly no suggestion has been made that these should be reduced. There are sundry others.
We have family allowances, $250 million. I have heard no hon. gentleman opposite suggest that these payments should be discontinued or reduced. Finally there are payments under veterans affairs which amount to $58,320,000 exclusive of pensions. These include such matters as hospitalization grants, pensions under the Veterans Allowances Act, soldier settlement board expenses, Veterans Land Act, and the like. From my limited experience in the veterans affairs committee I have not been led to believe that there is any persistent or extensive demand among hon. members of the official opposition, or for that matter elsewhere in the house, that expenditures of this kind should be reduced.
Those total $1,078,620,000 in round figures. If you take that figure and deduct it from the figure of $1,250 million which I mentioned at the outset, you are left with the more or less controllable expenditures of government amounting to $174,884,000. That is an increase of some $62,700,000 from the corresponding comparable figure for the last pre-war year of 1938-39, which was $112,200,000. At first 63260-215t
sight that figure may seem somewhat large, but there is a good explanation for all these increases. I am not suggesting that no effort should be made to effect further economy, but I do not believe it will be possible to effect substantial economies and maintain efficiently the services of the country.
I come now to the main items which make up this increase of $62 million odd. The first and largest is the cost of living bonus to government employees, which totals in the neighbourhood of $20 million. Perhaps I should not prophesy, but I think it is fair to say that that will become a permanent part of the government wage structure. There is assistance to agriculture which cost $4,200,000. The increase in external affairs is over $3 million, but that is consistent with our greater starure as a nation, the additional legations we have opened, and the added representation we have abroad. Department of Finance is up $5,300,000, largely because of increases in the cost of operating the office of the comptroller of the treasury, due to the vastly greater expenditures which it is necessary he should supervise.
Mines and Resources and Public Works are both up substantially, but those are departments which cut their maintenance operations to the bone during the war. The increase of $5 million in the case of Mines and Resources, and some $20 million in the case of Public Works, represents largely deferred maintenance. Expenditures of the Department of Transport are some $5 million higher, due largely to deferred maintenance and the construction of terminal facilities for the Prince Edward Island car ferry. Finally, the expenditures of the Department, of Trade and Commerce are $3,900,000 higher, owing largely to increases in the operation of trade services.
Taking $200 million as a fair estimate of the really controllable portion of our expenditures, if we were to cut those twenty per cent it would amount to $40 million. I do not believe it would be possible to cut them twenty per cent and maintain efficiently the services of this country. But if it were, it still would not be possible to balance the budget. Moreover, I suggest to members of the house that in total expenditures of some $200 million to cover the ordinary services of the government there is little justification for the charges of reckless and profligate expenditures, which were the adjectives used by the hon. member for Lake Centre (Mr. Diefenbaker).


Mr. DIEFENBAKER:: They have not been changed after hearing the statement of my hon. friend.
The Budget-Mr. Abbott


Douglas Charles Abbott: The facts speak for themselves. The hon. member for Muskoka-Ontario (Mr. Macdonnell), who is the financial critic for the opposition, reproached the Minister of Finance (Mr. Ilsley) when he rose to speak after the minister had completed his budget address for not using the word "economy" in the course of his speech. I hold in my hand an extract from the Montreal Gazette of May 16, 1945. It is entitled, "Bracken's Charter for a Better Canada." It reads:
The following is the text of a declaration of policy for the Progressive Conservative party, by John Bracken, as given in a speech delivered in Ottawa, last evening, in the Glebe collegiate auditorium.
I have been through this statement carefully, and if I may paraphrase the remarks of the hon. member for Muskoka-Ontario, I have been unable to find any use of the word "economy" in that impressive document. But I do find a great many references to proposals which would involve substantial expenditures of public money. If I may, I should like to state a few of those to the house.


Mr. GREEN:: What date is that?


Douglas Charles Abbott: This is dated May 16, and it is apparently the text of an address delivered the night before by the leader of the opposition (Mr. Bracken) in the Glebe collegiate auditorium in Ottawa.


An hon. MEMBER:: An election speech.


Douglas Charles Abbott: Yes. I quote:
Members of the armed forces, except at their own request, will not be demobilized until they have fobs at proper rates of pay. On the basis of this policy the first-in-first-out principle will apply.
Then follows a long list of suggestions for increased payments to veterans, which I may say have been more than implemented, so far as I have been able to see, by legislation either now before the house or to be brought before the house within a few days. Under the heading "Youth of the Nation" this text states:
To broaden opportunity, we will encourage through grants the development in our secondary schools of specialized training for primary industries such as agriculture, mining, forestry anu fisheries. We will provide financial assistance to enable our young people, according to their abilities, to receive advanced technical or professional training in our universities, at home or abroad.
Some expenditure involved there.


Mr. JACKMAN:: Would you not expect more production if you had them trained?


Douglas Charles Abbott: I am talking about expenditures at the moment.


Harry Rutherford Jackman: If you have more production your taxation brings in more.


Douglas Charles Abbott: The report continues:
We believe in and will encourage a nationally uniform system of recreation and cultural centres. These will be extended to the rural areas through assistance in tile erection of community centres.
Then under the heading of "International Trade":
A general overhaul of the Department of Trade and Commerce to convert it from a junior and unnecessary arm of the diplomatic service to a live department responsible for organizing, with exporters themselves, the sale of Canadian goods in the markets of the world.


Mr. HAZEN:: Is there anything wrong with that ?


Douglas Charles Abbott: Not a thing, except that it involves expenditure. I do not quarrel with any of these; my point is that they all involve expenditure. I continue:
The establishment under the auspices of and at the expense of the department of training courses for young war veterans to become salesmen of Canadian goods in foreign countries.
The establishment of an export board with power and authority to determine and pay whatever difference may exist between a fair Canadian price and the actual world market price on approved items of export selected with a view to maintaining a balanced Canadian economy.
In other words, export subsidies. Here is one to which I should like especially to draw the attention of the house:
We recognize that in the period of adjustment after the war there must be a continuation of the principle of "mutual aid." Further, we recognize that in order that world trade (so essential to Canada's welfare) may expand, it will be necessary for Canada as a surplus producing country, and a large exporter, to give a lead in stabilization of international trade. In addition, Canada must be prepared to give longterm trade credits to Britain and also, in proper cases, to devastated and economically backward countries-thus building up customers for our goods.


Some hon. MEMBERS:: Hear, hear.


Douglas Charles Abbott: I am glad to hear hon. gentlemen say "Hear, hear". When I read that statement, and when I recalled the speech made by the hon. member for Muskoka-Ontario at the time the loan to Britain was before the house, I was astounded to read a statement which appeared in the Montreal Gazette yesterday, Thursday, July 11, 1946. My hon. friend the leader of the opposition has not yet spoken in this debate, but he made a speech over the radio the other night and this is what he said as reported by the Gazette, the reporter being Mr. Mears:

The Budget-Mr. Abbott
The opposition leader was critical of the export credit policy. This year, we are being asked to dig into our pockets for $2,700,000,000 of taxes and in addition to go into debt another billion dollars-what for? Not to buy things for ourselves, but-think of it!-to pay for our own exports to ship away to other countries. We can never have permanent prosperity in this country by continuing to pay out of our own pockets for our exports to other lands.
The member for Rosedale (Mr. Jackman) the other day likened the Minister of Finance to John Bunyan's Mr. Facing-Both-Ways. May I suggest that he might have found a better example for that description a little nearer home. If I may continue with some more of these "economy" measures, Mr. Speaker, and I quote:
To make these rights real and effective, we shall establish a national development board to include leaders of business, labour, agriculture and government. The board will have the responsibility of working out plans for full production and employment as well as the preservation of our natural resources and the construction of projects in the public interest.
When I read that I almost thought I was reading a part of the C.C.F. manifesto. Under the same heading, that of workers, I read:
We shall provide a uniform and comprehensive security plan for all Canadians, including: extended unemployment insurance coverage; accident and sickness benefits; children's allowances; maternity benefits; widows' benefits; retirement pensions; increased old age pensions at age 65.
And may I interject here that in a speech at Kenora, and elsewhere as well, the leader of the opposition indicated that what he and his party advocated was an increased pension of $30, payable at the age of 65, without a means test, to all Canadians. My information is that that would involve an additional expenditure of at least $300,000,000 a year.


An hon. MEMBER:: If we had an agreement with the provinces.


Douglas Charles Abbott: , He did not refer to that in the course of his speech, nor did he refer to it anywhere in this charter.


Stanley Howard Knowles: Are you opposed to that?


Douglas Charles Abbott: Never mind whether I am opposed to it or not; at the moment I am dealing with the proposals of the official opposition as set out by them in this document. To continue:
Where social services are administered provincially, we shall provide grants large enough to ensure adequate standards of social security to all Canadians.
I pause here to interject that while there has been no official statement by any member of the official opposition in this regard, many of my Conservative friends have stated to me that all these social security measures are so
much nonsense, that they are not in favour of them, and that the sooner we get rid of them the better. They are sincere and genuine in that belief. I do not question their right to express their opinion on that point, but I would appreciate it if their spokesman in the House of Commons would be equally frank.


Howard Charles Green: Was that down on St. James street?


Douglas Charles Abbott: Yes, some of it was on St. James street. Then, with regard to a national health programme, this statement appears:
Therefore, pending the setting up of this national health programme, we will make grants to all the provinces according to standards and in amounts to be agreed upon, so that they may work out health programmes of their own.
Then further:
In cooperation with the provinces, we will set up a dominion-wide farm rehabilitation and soil conservation plan. '"We will reestablish a natural products marketing act. We will appoint a board of live stock commissioners in which shall be vested power to regulate and direct all aspects of live stock marketing in somewhat the same manner as the board of grain commissioners regulates the handling of wheat.
Then with regard to the fishermen:
We pledge ourselves: to enact legislation to assure our fishermen adequate basic prices.
Again:
Establishing an export board to ensure a fair price to Canadian exporters of natural products and manufactured goods.
Then, a further proposal:
Encouraging great expansion in the fields of industrial and scientific research, supported at every stage by financial aid from the dominion government.
Under the heading of natural resources there appears this:
Our policy will be based upon the principle of managing, developing and conserving our natural resources so as to achieve the greatest possible annual return from them consistent with their preservation as a continuing source of wealth for future generations. To this end we will make provision for generous financial assistance from the dominion to the provinces to aid them in planned development and conservation.


Mr. FULTON:: A thing you failed to do.


Douglas Charles Abbott: Passing over the question of abolishing the fee for radio licences, because that was part of Doctor Manion's platform too, I come to the following:
This party will see that the financial resources of the dominion will be used in the clearing of slums and to provide subsidized housing for those in the lowest income group. We will initiate a large-scale housing programme to supply the new homes so urgently needed throughout Canada. For that purpose we will enlist the cooperation of the provinces, the municipalities, the building trades, the construction industry and private investors.
The Budget-Mr. Abbott

Well, that is a fairly comprehensive list and if hon. members care to look at it they will find, as I have found, that there is no mention of economy throughout the whole document. Bracken House did pretty well on that charter, but they overlooked the feature of economy.
Now I come to a more recent date. Last March, just about the time the house opened, the Progressive Conservative Association of Canada, at its annual meeting in the city Ottawa at the Chateau Laurier, passed a number of resolutions, publicity as to which was given in the newspapers. I asked my office the other day to get for me a copy of these resolutions, and I have it here. It is entitled:
Appendix B to the minutes of the annual meeting of the Progressive Conservative Association of Canada, 1946.
That was the meeting at which my hon. friend the financial critic of the opposition, the hon. member for Muskoka-Ontario, was elected dominion president of the association- and may I observe, in passing, that a very excellent choice was made by the party in that regard. There are twenty-seven resolutions. The first deals with leadership, the second with appreciation of Progressive Conservative members-well deserved, I am sure. The third deals with press and radio, the fourth with farm prices, the fifth with bureaucratic controls, the sixth with taxation, the seventh-


Gordon Graydon: Are you passing over bureaucratic controls?


Douglas Charles Abbott: I will read that, gladly.


Gordon Graydon: Yes, read it.


Douglas Charles Abbott: I will read it with pleasure: We are opposed in principle to the continuation of other wartime wage and price ceilings and to restrictive controls. With very few exceptions we demand their immediate removal.


Mr. ILSLEY:: Would you like to have it read again?


Douglas Charles Abbott: 
John Ritchie MacNicol: Does not my hon. friend think that that is a reckless statement?


John George Diefenbaker: The recklessness
continues.


Douglas Charles Abbott: I think it was Edmund Burke who said that it is not possible to tax and be loved. Perhaps that is true, but I suggest, Mr. Speaker, that it is possible to tax and be respected for imposing those taxes. I believe that is the position in which the Minister of Finance finds himself to-day. I was struck by a remark which was made to me by a friend of mine in Montreal-and he is also well known to the hon. member for Muskoka-Ontario. I met him on the Saturday morning, two days after the budget was brought down, and he said to me: "Well,
judging by some editorial comment that I have seen and some talks that I have had with some of my friends, I am one of the few men who like this budget; but as a m">n who has bought all the victory bonds he could afford during the last six years I say, thank God we have a minister of finance and a government that is not afraid to tax."


Mr. H. R. ARGUE (Wood Mountain):: We have all listened with interest to the able speech presented to the house by the Minister of National Defence (Mr. Abbott). He shines best when he criticizes the Conservative party, because in that criticism he is always right. But in my opinion he does a poor job of substantiating his own case.


Gordon Graydon: He did not have a case.


Hazen Robert Argue: The minister can rest assured that the members of this group are not going to make the burden of its criticism that there has been much wasteful government expenditure. While no doubt some economies could have been made in different places-I am sure that all members on this side of the house will agree that it might have been possible-nevertheless what the people of Canada need is plenty of expenditures in the right place at the right time.
In my remarks this afternoon I shall attempt to deal in the main with the speech which was ably delivered by the Minister of Finance (Mr. Ilsley). Throughout his whole speech the minister referred again and again to what he thought were prosperous conditions in Canada to-day. He said he considered Canada more prosperous and further along the road to reemployment and reconversion than we could reasonably have expected last August. He said that we are enjoying a level of employment and prosperity that we had never experienced before in peace time. He then went on to show the main props that are under what prosperity we have at this time. What hon. members are attempting to do is to see that the props under what prosperity we have at this time are sound, secure and likely to be durable, because if they are not durable, then it goes without saying that the prosperity will not last long.
I believe we should attempt to analyse economic conditions in Canada to see if indeed we have prosperity at this time. Certainly if the great masses of the Canadian people are not receiving sufficient incomes to enjoy a high and decent standard of living then the so-called prosperity we have is nothing in which we should take pride. We should attempt to decide in our own minds if government policies are moving in fact toward greater prosperity in the nation.
The Budget-Mr. Argue


Mr. CASTLEDEN:: Is that a pre-election promise?
The Budget-Mr. Argue


Hazen Robert Argue: Yes; May 15, 1945. I should like to read these words:
Jobs! Jobs with bright futures for the young men and women coming out of the armed services with the best part ot their lives before them!
And then, in the official publication of the Department of Veterans Affairs, under date of June 15, 1946, we find that at the end of May, 1946, there were 43,336 veterans obtaining out-of-work benefits. Does that look like jobs for veterans, jobs with bright futures? Does that look like jobs with good reliable money?


Mr. MACKENZIE:: Are you opposed to it?


Hazen Robert Argue: With that many out of work-[DOT]


Ian Alistair Mackenzie: Are you opposed to it?


Hazen Robert Argue: I am opposed to a party making a pledge before an election and then failing to live up to it. I am not opposed to benefits for those who have not jobs. The benefits are not much; they are second best. But a slice of bread is better than no bread at all.


Ian Alistair Mackenzie: You are against it.


Hazen Robert Argue: I am not against it.


Ian Alistair Mackenzie: You seem to be.


Hazen Robert Argue: I don't seem to be.


George Hugh Castleden: How about your
promise?


Ian Alistair Mackenzie: You can't have it both ways, either.


Hazen Robert Argue: If the Minister of Veterans Affairs will say that there are good jobs, then I assure him that the boys will not any longer want these niggardly out-of-work benefits.


Ian Alistair Mackenzie: I can tell my hon. friend that I have done more for the veterans than he has ever done.


An hon. MEMBER:: Give it to him; you have got him going.


Hazen Robert Argue: Another thing we should attempt to do is to find out if there is to be greater prosperity in Canada in the future, and if so, we should attempt to see what the income tax exemptions for 1947 will do for the people who will receive the benefit of them. In 1946 a single man earning SI,250 paid S140 tax. In 1947 a single man earning $1,250 will pay $118 tax. He will be given tax relief in 1947 to the extent of $22 in excess of what he received in 1946. A married man in 1946 earning $2,000 a year pays S194 tax, while in 1947 he will pay $118, or will have a reduction of $76 in taxation.
[Mr. Castleden.1
Many statements have been made that we are witnessing to-day an increase in the cost of living. We know that there is a certain amount of inflation in Canada and that the prices of many articles are increasing by leaps and bounds. The cost of living index published by the bureau of statistics in April, 1945, was 119 and in April, 1946, 121, an increase of two points. The homemakers' association, as recorded in the Toronto Star of April 9, found that in six years the cost of feeding a family had increased by fifty per cent.
I am not attempting to argue that there will be all-out inflation in Canada. What I am attempting to do is to have hon. members agree that there is a certain amount of inflation, and that there will be inflation next year. Some of us might be reasonably well satisfied if the cost of living next year did not increase by more than ten per cent. I do not know if that would be considered a reasonable figure, but some of us might think it was not too bad. Others might think that if it increased only five per cent a good job was being done. I believe most will agree that if it increased four per cent, that is the least that could be expected. If the cost of living increases four per cent in 1947 over what it is now, then four per cent of a married man's income of $2,000 will amount to $80, and that $80 in fact will buy him nothing, because of the decreasing value of money. So that if the cost of living increases on the average four per cent in 1947 tlhe small tax relief of $76 that is being given for 1947 will be in effect- entirely wiped - out.
If the cost of living increases two per cent a single man earning $1,250 will have to use $25 of his income to make up for the increase in prices. His tax relief for 1947 will be $22. So that, if -the cost of living increases in 1947 by two per cent, the very small tax relief given to a single man, earning $1,250 will in effect, by another means, be taken away from him.
If we look to see how the exemptions will benefit the taxpayer within the next twelve months we find that if there is a two per cent rise in the cost of living it will cost a single man earning $1,250 some $25 to make up for the additional increase in the cost of living. But his tax relief within the next twelve months will be only $11. So that in effective purchasing power within the next twelve months, if the cost of living goes up by two per cent, lie will be $14 worse off than he was before.
The Minister of Finance is, with one hand, granting some small amount of tax relief to income earners, but because the government is not successful in maintaining rigid price control he is in effect taking -away that small

The Budget-Mr. Argue
amount of tax relief with the other hand because the value of the money which the income earner receives will be less through the increase in the cost of living.
Let us now look at the policies which the government is inaugurating or is likely to inaugurate to increase prosperity in Canada and see if the low paid sixty per cent of the labour force do get increases in income so that their incomes will be up at least to the extent of reaching the low income tax brackets. To provide more prosperity for Canada the government made certain proposals to the dominion-provincial conference. As I understand those proposals there were mainly two fields in which the government proposed new measures. One was a taxation agreement with the provinces so that there would not be double taxation in-the income and corporation tax fields and in succession duties. Second, the government proposed a social security programme, including public investments, a health programme, adequate old age pensions and unemployment insurance.
We all know the history of the dominion-provincial conference. It failed. Then the government announced proposals for taxation agreements minus the social security programme. The Minister of Finance in his budget address stated:
Financial pressure on the less-favoured provinces will give rise to increasingly arbitrary and discriminatory taxation, will lead to interference with interprovincial trade and to the extension of government ownership and operation of business merely in order to obtain additional provincial revenues which of course would mean loss of revenues to the dominion.
I would like hon. members to note that according to that statement of the minister, without an agreement with the provinces, there is likely to be an extension of provincial government ownership. The minister went on to say:
The dominion cannot stand aside and allow such a situation to develop. It would seriously impair the capacity of private enterprise to provide high and expanding employment.
There was some danger, if an agreement had not been offered, of some provinces going into business for themselves. The premier of Manitoba made a statement to that effect at the conference. If the provinces were forced to go into business undertakings for themselves it would of course deal a severe blow to big business and corporations in Canada, and the Minister of Finance says the dominion cannot stand aside. But there was no offer made to the provinces to sign separate agreements for social security measures. The dominion government, while not ready to stand aside and see big business double-taxed, is willing
to stand aside and see the Canadian people go without an adequate social security programme. Surely that is placing the emphasis entirely in the wrong place.


James Lorimer Ilsley: Did I say anything in that speech to the effect that we did not want government ownership to take place in the provinces because it would hurt private business?


Hazen Robert Argue: No; but apparently that is wha-t the minister had in mind.


James Lorimer Ilsley: That is most unfair. What I had in mind I said, which was that it was undesirable to have the provinces taking over business purely for revenue purposes. That is what that says.


Hazen Robert Argue: That is right.


James Lorimer Ilsley: And that is undesirable.


Hazen Robert Argue: Because it would force
governments in some of the provinces to go into the public ownership of business, as the Saskatchewan government has done.


James Lorimer Ilsley: Does the hon. member think it is desirable for a province to go into public ownership of private industry, merely because it can get a tax advantage or increased revenue at the expense of the dominion?


Hazen Robert Argue: A province goes into business for many reasons. If it gets revenue for the province rather than allowing the corporations to skim off the cream of the revenue, certainly that is for the benefit of the people of the province.
The minister went on to say that the proposal that he was making to the provinces was based on fiscal need. He stated that a number of times, I believe. It is based on fiscal need to this extent, that a poor province will be enabled to get some additional moneys that are raised by taxation by the federal government and turned over to the province in the form of a subsidy. I wonder, in looking over the various amounts that will be paid to the different provinces, If indeed they are based on fiscal need. The people of British Columbia under this proposal are to get approximately $20 per capita. The people of the other provinces will get something over $15 per capita, considering the gross national product and the formula that is used. I am not suggesting for one minute that the people of British Columbia should get any less than $20 per capita, but I am suggesting that if the people of British Columbia are to be paid $20 per capita, then the people of the other provinces of this nation should be treated equally well.

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James Lorimer Ilsley: Would you place everybody on an equal per capita basis?


Hazen Robert Argue: No, I would not, but that would be better in my opinion than the method now proposed, because I do not think British Columbia is likely to have the same expenditures in providing social services that some of the other provinces will have.


Ian Alistair Mackenzie: They have the highest standard in Canada.


Hazen Robert Argue: I am talking of the cost of providing the social services, not what social services they have. For example, in British Columbia approximately 394,500 people live in towns of over 5,000, and this out of a total population, according to the 1941 census, of some 817,800. In other words, in British Columbia about forty-eight per cent of the people live in towns of over 5,000. I am sure that even the Minister of Veterans Affairs (Mr. Mackenzie) will admit that it costs more money to provide social services in the rural areas where people are widely dispersed than it does to provide the same services in towns of over 5,000.
In Saskatchewan there are 147,000 people living in towns of over 5,000 out of a total population of some 895,000, or about seventeen per cent. The number of people in Ontario who live in centres of over 5,000 is more than half the total population. Surely it cannot be said that proposals are based on fiscal needs when in certain provinces the cost of providing social services is more per capita because the population is widely disbursed.
I do not think it can be said that the proposals are based on fiscal needs because, if widespread drought occurs in the west, the provincial governments of Alberta and Saskatchewan, and to a lesser extent Manitoba, will be almost bankrupt. If we experience a period of low prices for our primary products the people on the prairies will not have sufficient income to provide a taxation base by which the provinces will be able to furnish the social services they may wish to provide. I do not think any effective argument can be made that these proposals are in any way 'based on fiscal needs. Before there can be continuous social services we must protect the primary producer against drought and low prices, and protection also must be provided to see that unemployment does not recur.
In conclusion, I contend that the Minister of Finance has based his statement that there is prosperity to-day in Canada on three weak and breaking props. There is no prosperity in Canada when the vast majority of Canadians are not receiving incomes sufficient to maintain an adequate standard of living.

More than that, the very small income taxation reductions that have been provided in the budget and the utter failure to go ahead with an agreement to provide social security measures place the people of Canada in a position where they cannot look forward to years of prosperity, but rather only to depression, poverty and misery in the very near future.
Mr. DONALD M. FLEMING (Eglinton): Mr. Speaker, this effort on my part will in no sense be a sermon but it will open with a text. I am grateful to my hon. friend, the Minister of National Defence (Mr. Abbott), for supplying that text. It will be found in part of the quotation with which he closed his remarks this afternoon: "We have a Minister of Finance (Mr. Usley) who is not afraid to tax." Apparently this is the cry of the Liberal party: We are the party of taxation; we are the party which is not afraid to tax. Their fitness for office apparently is to be based upon their ability to heap on the taxation.
During the five days of this debate a good many adjectives have been devoted to this budget. Probably it has earned a good many of them because it is certainly a recordbreaking budget. It has engendered more bitterness than any budget in the living memory of the people of this .country who were led to certain expectations in consequence of lavish government promises. They have carried a heavy load of taxation during the war; they struggled along manfully hoping to see light at the end of the road, in the form of some relief from the crushing burden of taxation. What have they been given in this budget-this budget for the first full year of peace?
In the first place, they have been told that there will be no easing of the load this year. In the second place, they have been given no hope of any worth-while or substantial easing of the load after this year. In the third place, they have been given no evidence of retrenchment on the part of the government. Is it small wonder that the taxpayers of this country feel frustrated, defeated and bitter? And bitter they do feel. They put the responsibility squarely where it belongs, on the doorstep of the government.
May I say a word concerning these so-called deferred reductions. To what shall we liken these slight reductions, these phantom, fugitive reductions? Would this be a fair picture? We have a very tired, jaded steed which has covered six long, hard laps. We have a rider plunging the spurs in further and further and calling for another long, hard lap, with greater expenditure of effort on the part of the steed

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than has been made in the previous laps. What is the steed offered? The rider dangles a carrot, and a very small one, in front of the steed just out of his reach. The tired steed must gallop another long, hard lap, in the hope of catching up with the small carrot at the end of the lap.
In truth, this is a two-in-one budget. Where did this extraordinary and novel idea originate? It certainly was not conceived by anyone devoid of political considerations. It certainly was not conceived by anyone who was prepared to come forward and say frankly that there would be no reduction in taxation this year for the people of Canada. Apparently it was conceived by those who were not prepared to make a reduction in taxation this year, but who were afraid to tell the people of Canada that they were unwilling to make a reduction. So there has been resort to this curious expedient of announcing in the budget for the fiscal year 1946-47 that certain meagre reductions in taxation will come into effect within the course, not of this year, but of next year. It is a curious and interesting device.
I suggest that the people of Canada are going to have certain convictions and certain knowledge in their minds on this subject. They know perfectly well that this budget covers only the fiscal year which began on April 1, 1946, and which will end on March 31, 1947. It does not go one day beyond that. They know also that the Minister of Finance cannot bind or undertake now for the fiscal year 1947-48. They know, too, that these elusive and fugitive reductions announced in the budget will apply for only three months of next year, January, February and March. They know that something has been done by the Minister of Finance in this budget which has never been done in the previous fiscal history of this country, the announcement of reductions which will not come into effect until the following year.
This leads me to ask: will there be a budget next year? It is hard to see what occasion there will be next year for a budget since the Minister of Finance has rolled two years' budgets into one. Apparently this is the begin-ling of biennial budgets. Apparently, also, in view of the fact that we have had six heavy budgets in six years and that this is the seventh, the Minister of Finance has adopted the timely suggestion of the leader of the Social Credit party (Mr. Low) that, this being the seventh year, he, the minister, might observe a Sabbatical year and go on .an extended absence. The leader of the Social Credit party suggests that it would be helpful to the minister to move closer to the people and understand what they are asking. It may
be that the Minister of Finance, in looking forward to a Sabbatical year, has decided to roll two years' budgets into one.
But what will he do next year when this fiscal year has rolled on to its close on March 31, 1947? I suggest that the Minister of Finance, whoever he may be at that time, will have these three alternatives before him. In the first place, he can make an announcement of these reductions, or rather a reannouncement of the slight reductions which the present minister has announced this year. The minister at that time can reannounce them and take double credit. In the second place, he might withdraw them. There is nothing in them binding beyond March 31 of next year. In the third place, he might ignore them and announce similar reductions, not to come into force until the following year. He can do that inasmuch as precedent has been established for announcing reductions that shall be postponed a year.
With the present mind prevailing, it is hard to see the end of what I call a fantastic farce in budgeting. It is mere window-dressing, trying to dress up the fact that there is no tax reduction this year, and that all the hopes which this government, by its rash and lavish promises, conjured up in the minds of the taxpayers, who were looking forward to reductions in store for them when the war was over, will be dashed to the ground. The government is not making these reductions, so that these phantom, deferred reductions are so much window-dressing.
The year 1947 will be closer to the next election than 1946 and, if the same mind prevails in 1948, then as that year will be still closer to the election, we may expect the budget reductions of that year to be also postponed. The Minister of Finance has admitted the house to a fleeting glimpse of these slight reductions and has then hustled them away into the refrigerator, keeping them in cold storage until the next calendar year. I can liken that action to that of a mother who, when the children open their toys on Christmas day, thinking that Johnny has received too many presents for his good, decides to put them away until a later stage in the year, or until next Christmas.
The Minister of Finance, I say, has offered this fleeting glimpse of phantom reductions. But surely, Mr. Speaker, in this year of grace and this year of taxation it should not be necessary in the Canadian House of Commons to put in a word for the hard-pressed taxpayer. Apparently, however, it is necessary because very little has been said, by those who sit to your right, by way of a plea for an under-
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standing of the plight of the Canadian taxpayer. The Canadian taxpayer has carried and is still carrying a crushing burden. He is round-shouldered carrying it-yes, and he is the man who has been cajoled into thinking he might now expect a lightening of that heavy load.
The Canadian taxpayer in many cases is living on a fixed income under a wage ceiling or a salary ceiling. He has had no increase in income, no opportunity to put anything by during the war years. Indeed, great numbers of our taxpayers have been living in the red because taxation and the cost of living have taken more than they, have been able to earn under ceilings. The cost of living has been going up, and I am not in the slightest degree impressed by the government's babbling about the way they have held down that cost, because the official cost-of-living index is so much nonsense. It is eyewash. There is not a housewife in this country who is prepared to accept the statement that the cost of living since the war began has increased only twenty per cent. She knows better because that cost of living index does not take into account deterioration in the quality of the goods she has to buy and the fact that she has to pay a higher price for goods of the same quality which, previously, she was able to buy at a lower price.
That same round-shouldered taxpayer has been burning himself out during the war. There are tens of thousands of men throughout the length and breadth of the country whose lives, and certainly the period of whose earning power, have been greatly curtailed by the exertions they made during the war. Everyone, or nearly everyone, has been doing his best, and many a man working under these ceilings has shortened the period of his earning life.
The Minister of Finance keeps coming back to the statement-in fact, it has become almost a' fetish with him-that there is more money in the banks than before the war. I do not know who the people are who have all the money in the banks, but I should like the minister to know that it must be in the hands of people I do not know, because the people I come in contact with are people who have been on low frozen incomes during the war, on whom the burden of taxation has been grievous. They have not any larger bank accounts, and, in fact, great numbers of them have hardly any bank account at all. But, as I say, it has become a sort of fetish with the Minister of Finance. He has persuaded himself that a duty rests upon him to relieve the people of these great surpluses which they

are supposed to have in the banks. That has been carried too far. Whoever planted that idea in the mind of the Minister of Finance has done him no great service, and it is a pity that by reason of the heavy burden he has been carrying he should be misled in that way. I should be the last person-and I say this in all frankness-to minimize in any sense the size of the load he has been carrying, but it is a pity that he has not been freer or has not taken the opportunity to go around and get into closer contact with the people who are paying the taxes that he imposes. It would have a beneficial effect on his approach to these problems.
Unfortunately, the Minister of Finance has become a prisoner of the bureaucrats. It is a pity that a little refreshing contact with the people who have to pay the taxes is not possible for him. Such a contact would have a salutary effect in restoring a perspective which I fear the right hon. gentleman has lost.
The Minister of Finance has trumpeted the fact that next year about a quarter of those who now pay income tax will not be doing so. Well, there will still be about 1,750,000 people left paying income taxes and sharing that burden with their families. Is that the whole story? It is far from the whole story. I wish some of those eloquent spokesmen for the government, including the Minister of National Defence, who made his maiden speech to-day as Acting Minister of Finance, would give the house some inkling as to how the burden of hidden taxation has been reduced by one copper in this budget. There is no hope of a reduction as long as the government continues in its present frame of mind.
What is the situation? There are taxes that are borne in this country by everyone, the whole twelve million of us. Is there any relief for them? Not a word in that regard. The budget still soaks everyone of them, and this government keeps on professing to be the government of the people. The Minister of National Defence this afternoon spoke about the government being the government of the people.


Douglas Charles Abbott: I never used that phrase.
I would think of something newer than that.


Mr. FLEMING:: They are posing as the friend of the ordinary man, but this budget has exposed them. They are exposed out of their own mouths. This, I suppose, is a sample of the Liberal idea of a budget that meets the needs of the masses. But what about the masses? What about the tax on sugar-a cent a pound on a price of eight cents a pound still going on? It is still in full force

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and effect, a load borne by every one of the twelve million people of Canada. On such harmless things as soft drinks we still have a tax of twenty-five per cent, plus a cent for the bottle, which means that the youngsters pay seven cents instead of five cents for ordinary soft drinks. It means, too, that the movie, the poor man's recreation, is still subject to a twenty per cent tax; it means that candy, even when consumed by children, is still subject to a thirty per cent tax. Everybody in the country bears it. How about a little relief for these people? How about the twelve million people who are still waiting in vain for some semblance of reduction in taxes?
I am not a smoker; therefore I can make my next observation, I trust, with complete dispassionate objectivity. Consider cigarette papers. I suppose they are used chiefly by people who cannot afford to buy packages of cigarettes. A man or a woman pays thirteen cents for a package of 100 cigarette papers of which eight cents represents tax, eight out of thirteen cents. Then there is a tax on cigarettes in packages. The tax is two cents on every five cigarettes, and that affects every smoker throughout the length and breadth of the land. I suggest that if the Minister of Finance is looking about for opportunities to grant some tax relief he had better think about the rank and file of people from coast to coast.
I turn now to a subject which affects every man, woman and child in Canada, namely, reconversion from wartime to peacetime economy. At the outset I should like to emphasize the crucial importance of the time factor. Even the Minister of Finance recognized that in what he had to say on June 27. If we are to give any assistance to this reconversion process it must be given right now, not next spring, not in next year's budget, but right now, and there is no time to lose. This is what the Minister of Finance said in his budget speech of June 27, as reported at page 2905 of Hansard:
. . . the action we take now in regard to taxes should provide whatever stimulus is possible to increased production. If we can encourage hard work and efficient production at this critical time, we shall be assisting greatly the effectiveness of our other actions to overcome the inflationary influences left behind by the war.
An ounce of effort now to assist in the reconversion process will be worth a pound a year from now. The solution depends on the action that we take right now, and it depends far more on this budget than many hon. members have given any indication that they yet realize. Let me quote what the right hon. gentleman had to say at page 2904 of Hansard:
Production then should be our primary objective both for its own sake in a world that needs goods so badly, and as a safeguard against the present danger of inflation. We should aim now at high volume production for civilian purposes. . .
A little further on he said:
No longer must civilian production be restricted in order to conserve resources for war. It can now receive first priority.	_
How are we to assist this reconversion process? I should like to recall the description of government wartime fiscal policy as outlined by the Minister of Finance in his speech on October 12, 1945, as reported at page 1002 of Hansard of last year. This is what he said:
During the war, there has been built up a system of taxation which is discouraging to investment, to enterprise and to consumer expenditures. In many of its aspects it was designed to be discouraging and restrictive to all activities not necessary to the prosecution of the war. Some taxes were intended to restrict trade. Others have had the effect of increasing costs. I recognize that in the course of six years, war-time taxation has begun to blunt incentives and if continued indefinitely will paralyse the development of industry and trade.
This is a consideration of the greatest national importance.
I should like to underline every word that the right hon. gentleman uttered on that occasion and recall to you, Mr. Speaker, that every moment the government fiscal policy as outlined by the Minister of Finance on October 12 last persists, these consequences, which he fully and frankly outlined on that occasion, will persist, too: the restriction on output, the discouragement of enterprise. To the extent that this budget carries on the same fiscal policy as was in effect then, it just accomplishes these things; the restriction of output, the dampening of incentive and the retardation of this whole process of reconversion from wartime to peace-time economy. There is no escape, and this budget unhappily carries forward just about-well, I shall be conservative with a small "c" if I say ninety-seven per cent of everything that was involved in government fiscal policy during the war as described by the Minister of Finance in the passage which I read from his speech of October 12 last.


Harry Rutherford Jackman: Managed economy.


Donald Methuen Fleming: Yes, managed economy, the fetish of bureaucrats; that is what We have been given. How on earth are we to accomplish or achieve the high production which the minister now claims to be so necessary to fend off the peril of inflation? How is he to do it; how on earth could it be done by the kind of budget proposals which have been introduced by the Minister of Finance? Look at them. First, look at the
The Budget-Mr. Fleming

income tax rates; rates which were discouraging people in the factories, workshops and elsewhere from working overtime. They are still in effect this year.


James Lorimer Ilsley: Less sixteen per cent.


Donald Methuen Fleming: That is what the government told us last October, that they were reducing taxes by sixteen per cent. Why did they not tell us quite frankly that last year the taxes were reduced by only four per cent? They did not say that. Is this some more of the two-in-one juggling of public finance, juggling of budgets? How about having one clear statement for one clear year at a time?
What is the next feature of this contribution of the budget to the increase in production that is so urgently needed? The minister proposes to increase the tax on married men by reducing the income the wife is allowed from $660 to $250, wdiich is bound to have a discouraging effect on farmers' wives and all part-time employment by married women. It is going to affect a great many of them; make no mistake about that.
Let us have a look at the corporations. The Minister of Finance has indicated that he is putting his hopes on private enterprise. He made that abundantly clear in what he had to say in this chamber on June 27. How is he encouraging private enterprise in the corporations? Well, he says to them, I will reduce your corporation tax; I will reduce the tax effective January 1, 1947, and he says he wants production now. Is it reasonable to expect that corporations are going to take many risks in expanding production this year when, by waiting or withholding the marketing of their products until January 1 next, they can expect to increase their profits? Does that make sense? I say that it is most senseless when it is put alongside the minister's statement that we need expanded production.
Look at the partnerships and other proprietorships which are now subject to excess profits tax. The minister says, Oh, if you wait until January I next you will no longer be subject to excess profits tax. Is it reasonable to expect that many of them are going to take long chances in expanding production between now and December 31 when, by withholding products from the market until January 1 and af^er, they can benefit in the form of increased gains? The whole proposal of the minister has only to be stated to manifest its complete absurdity. What is needed is some relief now, and some encouragement to private enterprise.
In passing, I would suggest to the Minister of Finance that it is high time he took aside 
some of the hon. members who sit behind him and gave them a little instruction in government policy. If he does not do that he will find more and more hon. members running wild in respect of government policy, as the hon. member for Algoma East (Mr. Farquhar) did the other evening, as reported at page 3294 of Hansard, when he advocated the continuation indefinitely of the excess profits tax. The hon. member thought it was a pretty good tax, and that corporations should continue to be taxed under it, not only now but in future. In that connection, I should like to read just a remark and I shall give the reference later. It may be found at page 1004 of Hansard for 1945:
The Excess Profits Tax Act is a wrar measure which has commanded overwhelming support as an important and necessary instrument of war finance. Unmodified, it seriously wreakens the stimulus toward the investment of capital and the efficient operation of enterprises. In this period of reconstruction it is becoming a barrier to expanding employment.
Those are not the words of anyone on this side of the house. They are the words of the Minister of Finance. So I suggest that the hon. members who sit behind the minister either refrain from the discussion of forbidden topics of that kind or at least take the trouble to be instructed on what the Minister of Finance has already declared on previous occasions in the name of this government. Yes, we have had many samples of contradiction as between what the government talks about and what it actually does, but I dare say hon. members will look a long time before they will find a more complete example of contradiction than is to be found between the government resolutions on the one hand and the speech of the Minister of Finance on the other.


James Lorimer Ilsley: Does my hon. friend take instructions on the party line before he makes a speech?


Donald Methuen Fleming: This is a party, Mr. Speaker, to which I am very proud to belong, led by a man I am very proud to follow. It is not a party ruled by an iron hand. It is a party which in the House of Commons stands on the principles of consultation one with the other and of freedom within the proper lines of policy as they have been laid down for the people of Canada, and on which the people of Canada elected those of us who sit here. We do not have to put ourselves in the unhappy position of being simply choristers singing the praises of a government sitting in front of us.
I wish to make one observation as to trade, Mr. Speaker, because in one of the earlier

The Budget-Mr. Fleming
remarks I read from the address by the Minister of Finance you will find some reference to external trade. The fact of the matter is that the government, which is always ready to take credit to itself because this country stands in a leading position in the field of external trade, in which we are the fourth nation in the world, tells us in effect now that we are simply marking time until others are prepared to take some action in the international field. If we have reached this enviable status, I suggest that is not a good enough answer from the government. We should know precisely what this government proposes. We should know something about the plans this government proposes to lay before any conference called for this purpose. We have not been given the slightest inkling; in this case we have not even been permitted a glimpse of any phantom plans on behalf of the government. May I remind you, Mr. Speaker, that this summer two important conferences are being held to which, this government will soon be sending delegates. They are conferences being held in London by the Imperial Economic Committee and the Imperial Shipping Committee. The Imperial Economic Committee has been assembling data on trade within the empire, making reports and fulfilling a useful function in connection with the extension of trade within the units of the commonwealth and empire. That conference this summer is to decide, according to what we were told in the external relations committee on July 9, whether or not the Imperial Economic Committee shall continue hereafter. I suggest that is a serious matter. If our external trade is so important-and it is important; it may be the lifeblood of this nation before we are through -we should know from this government immediately what instructions they are giving their delegates with respect to the views to be presented to the Imperial Economic Committee. Before this budget debate ends, I trust we may have an authoritative pronouncement from the government on this score.
In the limited time remaining, I wish to say a word about a subject which has been neglected in the budget proposals and in the budget speech of the Minister of Finance. That matter is income tax reform. I do not know whether hon. gentlemen opposite have forgotten quite what reform means; perhaps I shall have to speak in relatively simple terms.
In the first place, there is one reform which is long overdue. I suggest that it is about time we eliminated one particular word, one conspicuous word, from the title of this measure. It is called the Income War Tax Act. Enacted during the last war, in 1917, it has . become a permanent part of the taxation and
fiscal fabric of this country; so let us have some realism and get rid of the fiction of the word "war."
I turn now to the subject of the machinery of collection and assessment. Again I may have to refer to some remarks of the Minister of Finance on other and perhaps happier occasions. In his budget speech on June 27 of this year the minister had this to say on the subject of our personal income tax, at page 2914 of Hansard:
Our personal income tax is now unnecessarily cumbersome . . .
That is a masterpiece of understatement. He added:	.
Not only is the tax structure itself complex but as the house well knows its drafting leaves much to be desired.
Another masterpiece of understatement! I recall the remark of the right hon. gentleman in his budget speech last fall, at page 1006 of Hansard for 1945:
There are clear and obvious reasons for as early a reorganization and simplification of this tax as is practicable.
You know, Mr. Speaker, we all expected after that speech, which the minister made on October 12, 1945, that he would seriously take in hand this problem of revising the income tax, eliminating all the complications and absurdities in the procedure of assessment and collection; but they remain. The minister has apparently been too busy, and all the house has been given this year is another apology for delay. Everything remains for another year. The 1946 returns, to be made out in April, 1947, will still be the same old returns containing the things with which we have become so unhappily familiar: the normal tax, the graduated tax, the surtax, compulsory savings, and all the other headaches. That return will be made out next year, as it has been made out in recent years, not only by all those who made it out this year, but it will now have to be made out by all the farmers and fishermen who hope to qualify on the new basis of averaging their incomes over a three-year period. Yes, all the complications remain; the complicated procedure is still there.
But the minister trots out for our view something that apparently is intended to dazzle the house. He has two proposals, the first for an income tax appeal board and the second for an income tax advisory board. Let us look at these for just a moment, taking first the income tax appeal board. We are told it is to be set up for this purpose: to hear appeals from assessments made by the Minister of National Revenue in respect of the year 1946 and subsequent taxation years.
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Just what does that mean? This appeal board will go to work on assessments for the year 1946, and subsequent years. We may be sure this suggestion was not brought forward by the Minister of Finance until there had been a great deal of criticism of the existing procedure, an outcry from outraged taxpayers throughout the length and breadth of this country. The generality of taxpayers have been crying for years for some reform of the present procedure in connection with assessment and collection. But let us see how far this proposal goes. It begins with the 1946 assessment. Well, Mr. Speaker, you will make out your return on your 1946 income-and I hope it will be substantial-in April, 1947. If the slow-motion procedure now in full flower in the Department of National Revenue continues to flourish, assessments on the returns made in 1947 on 1946 income will probably begin to be issued in 1950. So that this appeal board will begin to go to work about 1950, or perhaps 1951. I am sure the taxpayers of this country will be grateful to the Minister of Finance for coming to their rescue with such a timely measure!
As. the minister well knows, there has been strong criticism about the multiplicity of discretionary powers vested in the Minister of National Revenue under the Income War Tax Act and the Excess Profits Tax Act. As a matter of fact, if hon. members have perused the report of the special committee appointed in .the other place (the senate) to review the workings of the Income War Tax Act and the Excess Profits Tax Act-and I hope they have, because they will find it a most interesting and valuable document-they will find at page 386 that the committee catalogues the discretionary powers vested in the minister under those two acts. The figures as L add them up total eighty-eight under the Income War Tax Act and twenty-four under the Excess Profits Tax Act.
These discretionary powers cover a variety of subjects, such as the allowance of reserves; limitation of expenses; determination of the true nature of transactions where lessening of tax may be involved with reference to companies and individuals; determination of the nature of income; determining the nature and effect of certain legal documents and reciprocal acts; approval of pension schemes; minor administrative discretions; regulations to carry the act into effect; waiving of penalties; determination of standard profits; adjustment of standard profits, and references to board of referees in the case of new or substantially different business.
The Minister of Finance offers, as an answer to this injustice, one which is crying for reform, a recommendation for an income tax advisory

board. It will be recalled that the committee appointed in the other place recommended that those discretionary powers should not be final and absolute in the hands of the minister, but that there should be an appeal from them.
The officials of the department came before the committee and said, "No, we are opposed to that." The committee in the other place was not overcome by that opposition, and still made its recommendation. Of course, when it got to the department and the officials set to work advising the minister, hon. members will know what happened. Hon. members know what would always happen under those circumstances, with the present government in office. The officials won out, of course.
So we have the situation wherein the income tax advisory board is to have power only to advise the minister; and the minister in turn retains full power either to accept or reject that advice. In the second place, there is no appeal from the exercise of any discretionary powers. In the third place, there is not the slightest reduction in the number of discretionary powers; they continue in full number.
Mr. Speaker, my time has expired. I had hoped to touch upon dominion-provincial relations, but time does not permit. In closing let me add this thought. This is not the kind of budget the people of Canada had been led by the government to expect, in the light of the lavish promises the government made. In the second place, it is not the kind of budget the people of this country deserve, after the sacrifices they made in the war years. In the third place, it is not the kind of budget which will help the people of this country to carry on, to expand production, to increase employment and fo convert to peacetime economy. Lastly, it is not the kind of budget the people of this country will approve. Indeed, in the light of this budget, so far as the taxpayer is concerned, the war is still on.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS

Mr. RALPH MAYBANK (Winnipeg South Centre):: Mr. Speaker, I move that bills Nos. 254 to 298 inclusive be now read a second time.


Mr. J. W. BURTON (Humboldt):: Mr. Speaker, it is not my intention to delay the second reading of these bills unduly, particularly in view of the fact that on a number of occasions both this session and in previous sessions serious objections have been raised

Private Bills
against the manner in which these bills go through the house. There is nothing much that I can add, except that I recall that on the last occasion on which this question came up the Minister of Justice (Mr. St. Laurent) gave in my opinion a good explanation of how these divorce cases might be disposed of in the future. I sincerely hope that the Minister of Justice will not delay unduly in bringing down a bill for that purpose, so that these divorce cases can be dealt with in a proper manner. Just to give an example of the position we are in-and this is another reason why I protest now against these bills going through in this manner-the printing of these bills is not all it should be. In one of them, for instance, the name "Burton" is mentioned; I believe that should be "Turton". I give that as an example of how parliament has got into the habit of passing these bills carelessly, and I wish to register my protest along with others that have been made previously against the manner in which these divorces are granted.


[Stage Direction]
Motion agreed to, on division. -
'	SECOND READINGS
Bill No. 254, for the relief of Jessie Violet Louise Stargratt Burton.-Mr. MacLean.
Bill No. 255, for the relief of Helen Louise Mitchell Meyer.-Mr. Maybank.
Bill No. 256, for the relief of Donald Dale Carr-Harris.-Mr. Maybank.
Bill No. 257, for the relief of Eugene Ernest Hubert George Colnaghi Williams Waterfield. -Mr. Maybank.
Bill No. 258, for the relief of Gratia Lauzon Rousseau.-Mr. Maybank.
Bill No. 259, for the relief of Laura Olive Byers Manley.-Mr. Boucher.
Bill No. 260, for the relief of Vera Gertrude Horder Fournier.-Mr. Maybank.
Bill No. 261, for the relief of Julia Patricia Byrne Cote.-Mr. Maybank.
Bill	No.	262,	for	the	relief	of	Dorothy
Adelaide Grace Vennor O'Toole.-Mr. May-bank.
Bill No. 263, for the relief of Lillian Doris Howard Clark.-Mr. Maybank.
Bill No. 264, for the relief of Helen Agnes Stuart Colt.-Mr. MacLean.
Bill No. 265, for the relief of Alma Gosselin Carbonneau.-Mr. Maybank.
Bill	No.	266,	for	the	relief	of	Florence
Cleveland Smith des Baillets.-Mr. MacLean.
Bill	No.	267,	for	the	relief	of	FlorenceWinnifred	Dunlop	Starkey.-Mr.	Stuart
(Charlotte).
Bill No. 268, for the relief of Francis John Stone.-Mr. Maybank.
Bill No. 269, for the relief of Mary McCallum McNamara.-Mr. Stuart (Charlotte).
Bill No. 270, for the relief of Leah Helen Shute Main.-Mr. MacLean.
Bill No. 271, for the relief of Cecile Simonne Robert Turgeon.-Mr. Boucher.
Bill No. 272, for the relief of Edward Cotapschi.-Mr. Maybank.
Bill No. 273, for the relief of Catherine Young Rivard.-Mr. Maybank.
Bill No. 274, for the relief of Mary Jane Michelle Ahern de Brabant.-Mr. Maybank.
Bill No. 275, for the relief of Jean Ethel-wyn Marshall Ross.

Mr. Maybank.
Bill No. 276, for the relief of Frank Ernest Smith.-Mr. Baker.
Bill No. 277, for the relief of Cleora Elizabeth Doyle Mastine.-Mr. Senn.
Bill No. 278, for the relief of Elizabeth Carr Johnstone.-Mr. Emmerson.
Bill No. 279, for the relief of Marie-Rose-Yvette Breton Philips.-Mr. MacLean.
Bill No. 280, for the relief of Barbara Laing Robertson MacNab.-Mr. Maybank.
Bill No. 281, for the relief of Anne Goldsmith Glick.-Mr. Maybank.
Bill No. 282, for the relief of Jean Alexandra Oughtred Scott.-Mr. Maybank.
Bill No. 283, for the relief of Charles Horatio Baldwin.-Mr. Maybank.
Bill No. 284, for the relief of Mary Slo-bodzian.-Mr. MacLean.
Bill No. 285, for the relief of Edward Charles McKerness.-Mr. MacLean.
Bill No. 286, for the relief of Ivy Anderson Lobb.-Mr. Maybank.
Bill No. 287, for the relief of Yvonne Rachel Mayer Richard.-Mr. MacLean.
Bill No. 288, for the relief of Nellie Izbitsky Abracen.-Mr. Maybank.
Bill No. 289, for the relief of Ellen Margaret Price Garvie.-Mr. Baker.
Bill No. 290, for the relief of Sophie Shoob Natovitch.-Mr. Casselman.
Bill No. 291, for the relief of Madge Aileen Hunter Parker.-Mr. Maybank.
Bill No. 292, for the relief of Claire Yaro-slawa Lytwyn Pendiuk.-Mr. Maybank.
Bill No. 293, for the relief of Henry Wallace Argali.-Mr. Baker.
Bill No. 294, for the relief of Mary Norma Wickens Baker.-Mr. Maybank.
Bill No. 295, for the relief of Mildred Emily Rogers Thoms.-Mr. Maybank.
Bill No. 296, for the relief of Pauline Gregoire Girard.-Mr. MacLean.
Bill No. 297, for the relief of Marjorie Maxwell Cleghorn Pope.-Mr. MacLean.
Bill No. 298, for the relief of Marie Charlotte Arsenault Leonard.-Mr. MacLean.
341S
The Budget-Mr. Dionne


[Stage Direction]
The house resumed consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell and the amendment to the amendment of Mr. Maclnnis.
Mr. LUDGER DIONNE (Beauce):: Mr. Speaker, in the Budget speech which was delivered in. the House of Commons by the Minister of Finance (Mr. Ilsley) on June 27, I noticed a sincere desire to meet the conditions imposed on us by the reconversion from war to peace, but I failed to see a real effort to meet the wishes of the Canadian people.
In the first part of my remarks I shall deal with the unsuccessful results of the dominion-provincial conference. Has the federal government the right to tax the population to meet its obligations without asking the consent of the provinces? It w'ould seem that the federal government has this privilege, if one may judge by the legislation which the minister is submitting for the consideration of the members of this house. If the federal government can tax the population without the consent of the provinces, why then consult the provinces? No doubt I shall be answered that the federal government is trying to avoid double taxation on the population, namely, taxation by the federal government and taxation by the provinces. This scheme is an economical and practical proposition, but as the provinces do not want to accept such an agreement, I do not understand the reasons for the federal government insisting so much.
The system of direct taxation followed by the federal government is disagreeable to the Canadian people. Why then insist on the provinces collecting their taxes directly from the people and then giving it back to them on the basis of $12 to $15 or $20 per capita? Why relieve the provinces of this unpleasant job? Why not let the provinces tax their own people in the manner they think fit and forget about this? In other words, why not mind our own business? I think we have enough to do here without doing the work of the provinces against their own will.
Personally, I am sick and tired of this bargaining with the provinces which, owing to the influence of the press in each province, is detrimental to the constructive ideas which this house has in mind. What have we gained to date with the provinces? Nothing practical. The federal government has been

accused by the press in practically every province of aiming at centralization and monopolization of the privileges of the provinces, to their detriment. Our ministers have done a tremendous amount of work on this problem, but it has proved fruitless. I submit that we have devoted too much time already to this matter. On the other hand, df we do not have the right to tax the people under the heading of income tax, succession duties, et cetera, we should take some means to legalize this form of taxation or to enter other taxation fields so that we may obtain the results wre are seeking.
I should like to refer now to the items of taxation which appear in the budget. I contend that our system of taxation is unjust and unfair to our people. In analysing our income tax legislation from a practical point of view I notice that only part of our population pay any income tax, namely, the working class and commercial institutions. Labour cannot escape this tax because it is deducted at the source, and commercial institutions who have to keep complete sets of books with accountants and auditors must pay it. But what about the thousands of other large and small businesses, those in the professions and many other classes of citizens too numerous to mention? How are taxes collected from these people? Most of them pay no tax. Those who do pay a tax are at the mercy of the income tax collector, or the inspectors must accept whatever they can get from them. It is a direct invitation to dishonesty. Most of these people are dreaming of nothing else but ways and means to hide their income. If they are successful in this they must live lives of fear of being caught and penalized. I know of no better way to educate our population to become professional scoundrels and rascals.
Is this the kind of people we want to have in Canada? Certainly not. If we want to avoid this calamity we shall have to change our methods of taxation. Remember that we have exacted enormous sacrifices from our people during the last five or six years. Are the people not entitled to fairness and equity from their leaders? This exploitation of the classes who do pay taxes, in faxrnur of other classes who do not pay any, or pay only part, must cease. The present budget submitted to the house is inviting criticism and evading our responsibility. We must be honest with our people and with ourselves. We must be bold enough to tell them that we must get revenue to face our obligations and are prepared to enact whatever legislation is necessary to achieve this objective by fair and equitable means.

The Budget-Mr. Dionne
The mass of the Canadian people would like the exemption on salaries of single men raised to $1,500 and married men raised to $3,000. Why not accept this proposition? How many people earning $1,500 and $3,000 respectively do pay income tax honestly? I repeat, the workman because his tax is deducted from his weekly pay by his employer. How many other citizens are there who are earning similar amounts or more from whom the government collects nothing. Hon. members will admit the exactness of this declaration because their own experience tells them it is so. Is such a method of taxation fair and equitable? I leave the answer to them. If it is not, as every hon. member will admit, why not change it?
In most of the communities of this country we hear the same language, namely, that the cost of living has increased and is increasing; that labour is asking for increased wages, et cetera. This situation should not exist with the strict controls of the wartime prices and trade board. The increase in the cost of living is caused directly by the black market. Why not curb it? What is the use of having price control by the wartime prices and trade board if it does not achieve its purpose?
I understand that the wartime pricae and trade board cannot control the situation alone. It needs support. Here is what I suggest to help them. Let us impose an additional sales tax of ten per cent on the retail price of goods. Such tax would be paid by the manufacturer and recharged to the retailer and the consumer. The manufacturer would buy stamps and stick, sew, or stamp them on the manufactured article itself. This stamp of ten per cent would be a sure indication of the value of the article bought- by the consumer. Let me illustrate my thought by an example.
Suppose I am a shoe manufacturer. I know by experience that a pair of shoes which I sell to the merchant at $2.25 plus eight per cent sales tax, retails at $5, so that I will insert in the shoes a 50-cent stamp. I will charge this stamp to my customer in. addition to the price of the shoes, namely $2.43 plus a 50-cent stamp. When those shoes are bought by the consumer he will have the assurance, in looking at the 50-cent stamp, that the ceiling price of the shoes is $5. No salesman, merchant, or peddler can overcharge or cheat him. Every consumer will act as a policeman. Recently I was in Washington with some friends of mine. A lady in the group wanted to buy a pair of shoes. She returned to the hotel with a pair of shoes for which she had paid $23. She was elated with her purchase because similar shoes in the shoe case were
priced at $34. I examined the shoes and realized that they were similar to those manufactured in Canada to sell at around $2.50 by the Canadian manufacturer to the Canadian merchants. If these Shoes 'had borne a 50-cent stamp the lady would have realized that they were $5 shoes and would not have allowed herself to 'be robbed of the difference, $18. What applies to shoes applies also to dhirts, hats and other commodities of life.
Do you not think, Mr. Speaker, that the consumer would be satisfied and pleased to pay ten per cent more for the necessities of life and have the assurance that he is protected? It would cost the government nothing to collect this tax, with the exception of the cost of the stamps. On the other hand, look at the thousands of employees whom the government will have to hire to enforce the law as it is drafted and you will realize the saving the government will make. Do you not think we have enough bureaucrats in Ottawa? Many people talk of economy. I approve. But I am not satisfied with words only. I would like to get some action.
In accepting the increase of exemption of income tax on salaries to $1,500 for single men and $3,000 for married men, the government would, I will admit, lose many million dollars of revenue, but look at the revenue they would get from this ten per cent sales tax. The actual sales tax of eight per cent based on manufacturers' prices gave $404 million revenue to the government last year. A tax of ten per cent on the retail price of goods would yield at least one billion dollars and probably much more. This amount would certainly compensate for the loss the government would suffer in raising the exemption of single men to $1,500 and married men to $3,000. In accepting this suggestion the government would satisfy the Canadian people with fair and equitable treatment and would protect them from the black market which is spreading rapidly across our country.
This legislation should be enforced by drastic measures. In other words, if a merchant is caught selling goods at prices higher than ten times the amount of the stamps or selling goods without stamps', let him go to gaol. It would be better to put a few men in gaol for a month or two and protect our people from these exploiters. We may rest assured that not many people wdll risk being gaoled. If some are caught, they will take great care not to repeat the offence. Some will no doubt mention that this tax of ten per cent will be detrimental to large families. I am of the opinion that the family allowance and exemption granted in the present income tax for
The Budget-Mr. Cockeram

every child will more than offset this objection. Furthermore, these people will be so happy to get rid of the income tax that they will gladly accept the change. I had an opportunity of discussing the proposition outlined above with many prominent people around Quebec and Montreal this last weekend. After having thought the matter over, there was not one person who did not wish that this measure be accepted by the government.
There is only one way to handle the matter. We must protect our people against the black market by all means, and we must give the same fair treatment to everyone of our citizens without fail. If we forget this grave responsibility, I for my part, do not deserve to sit in this house any longer.


Mr. ALAN COCKERAM (York South):: Like the member for Muskoka-Ontario (Mr. Maedonnell), I had thought there would have been some question of economy on the part of the government reflected in the budget; and I was amazed this afternoon to hear the Minister of National Defence (Mr. Abbott), who is to act as Minister of Finance in the absence of the minister, discard any thought of economy. The Minister of National Defence stated that no worth-while suggestion had been given or recommendations made from this side of the house and that only one question of economy had been brought up. I would suggest that since his department is one of the great spending branches of the government, it is a department that he might overhaul and economize, because I intend to give figures to show how ludicrous the expenses incurred by his department are at the present time.
When the hon. member for Lake Centre was speaking the other day the Minister of National Defence did a lot of interrupting, and at that time I thought it was time for someone to give figures showing the expenses of his department and ways in which they can be eliminated.
As of March 31 we find in the three defence services there were 29,824 civil servants. Compare that figure with 44,144, the total number of civil servants on the strength of the government on the same date in 1938. In other words, the Department of National Defence has approximately the same number of civil servants running its three branches to-day as conducted the whole government in 1938. I am going to give figures as to the relative strength of the forces.
As at June 30 there were 1,601 officers in the Canadian navy and 6,388 enlisted men, a great many of whom were petty officers. Therefore there is one officer to every four

men in the service. But how many civil servants do hon. members think it took to run that combined number of men?-7,989. It takes 10,187; that is to say, one and a half men in the civil service for every one enlisted man in that branch of the service.
Let us now come to the army. The total army figures as at June 30, in the interim force, show 2,309 officers and 10,510 men. That is, one officer to every five men in the interim force. Apart from the interim force, there are 6,642 officers and 48,524 men, or in the combined forces a total number of officers of 8,951 and a total strength of 59,034. The total number of civil servants it takes to look ' after those 59,000 is 13,701.
Let us now come to the air force, which is in better shape than the other branches. There are 3,633 officers for 25,873 men, or about one officer for every eight men.
Surely there can be a saving in these departments. I have here an article discussing the United States army, in which the statement is made that some 300 generals are slated for demotion between "now and the 1st of July". We are not attempting to demote people here. We are still promoting major-generals, or were within the last few weeks. Recently an officer was promoted to major-general to take over the head of the military mission in Washington.
Before the war, there was one major-general in Canada and he was chief of the general staff. We know that with the expansion of services and the additional money that is being spent on those services we must have higher ranking officers. I would point to some of the statements that were made in reply to a question of mine which I asked in the middle of April. I asked how many generals, major-generals, brigadiers and colonels there were in the Canadian army. There were five lieutenant-generals as against one major-general before the war. There were eighteen major-generals, five of whom were seconded to other departments of government doing civil service jobs to a great extent at high rates of army pay, rates higher than those of other civil servants. There were forty-six brigadiers and 121 officers with the rank of full colonel, thirteen of whom were seconded to other departments of government.
I asked a question regarding Canadian military establishments in Washington. The reply was that in the army there were 141 army personnel stationed there, forty-six of whom were officers-and remember that this was a year after the war was over. In the air force there was a personnel of seventy-three, fourteen of whom were officers. I am speaking of Washington, of course. The navy had a

The Budget-Mr. Cockeram
strength in Washington of, I believe, fourteen. In other words, of a staff of 226 in Washington, sixty-nine were officers getting special rates of pay and having special income tax allowances. Yet the minister comes to the house and says he cannot save money.
In my opinion these figures are ridiculous. There should be a saving, because it is absurd that there should be that military establishment of this size in Washington to-day. I cannot see why there should be one officer in the navy for every four enlisted men, and in the entire force of the army one officer for every five men. I am reliably informed that even if they get 25,000 men for the interim force they will still have a surplus of 1,300 officers recruited for that force. Surely there can be economy here. I know that in the old days, if a district officer commanding wished to spend more than $250, he had to go to the treasury board to get approval. Is the minister's department not checking up on this colossal overstaffing? That is one thing that could be done to save the people's money. There is, in my mind, no question about that.
Some days ago an atomic bomb was dropped in the Pacific. One would have thought the department would have sent as an observer one of their bright young officers, one who is going to be in the service in the days to come. Whom did they send? They sent Major-General Luton, who had been director of medical services and is now retired. They sent this retired officer to check up and report on the dropping of the atomic bomb. I say that that job should have been given to a young soldier, somebody who is going to be in the service for years.
If the Minister of National Defence (Mr. Abbott) wishes to do a job for this country he can clean out his department and do away with this colossal overhead for which the people of Canada have to pay. The Minister of Finance has some idea of what it costs to maintain an officer in the army, especially when there are so many higher ranking officers around. I venture to say that the members of this house have seen more major-generals and brigadiers at the Chateau and at various functions in the last few months than during the war. If the minister is serious in trying to keep down expenses-and I am sure he is- there must be some way in which he and his departmental officials can check this overstaffing of the force, because undoubtedly they are overstaffed; it is known to everybody. If you take the train to Toronto for the weekend you will find that it is still full of service personnel. I know the department will say that they are going to release from the services something like 20,000 men this month, but I
venture to say that there will not be a corresponding drop in the number of officers dropped from the roll. Unfortunately, so far as the services are concerned too many officers are making jobs and trying to maintain them not only for to-day but for the future.
I wish to say a few words about the steel strike which has been called for Monday in spite of the fact that the government has placed a controller in charge. The minister announced an increase in the exemption for married men and single men which is to come into effect some time in the distant future. I suggest that many of our labour troubles today are brought about by the fact that the men want to keep their "take-home pay" with which we all agree. Would it not be wise for the minister to bring these exemptions into effect as from the first of this month? Perhaps it would prevent a lot of labour trouble in this country, and a great deal of our difficulties might be eliminated. I suggest that the minister give consideration to this suggestion. If that were done, the workers in the country would have a greater "take-home pay." We know it would cost money; but, after all, money means nothing if you have a contented people. The amount lost would come back in many ways. Again I suggest to the minister that he give consideration to bringing these exemptions into force as from July 1 of this year. There is no reason why this should not be done.
I now come to the Department of National Health and Welfare. I find it difficult to get true and honest statements from the government on governmental expenditures. Some time ago I asked a question with regard to the expenses of administering family allowances. The figure I received was that for the first six months of operation the total cost was $783,141.43. It was obvious to me that that figure was incorrect. I also asked the question as to how many men were employed administering the act. The reply that came to me was that on December 31 there were 417 temporary employees and thirty-five permanent. In a court case in Toronto on April 17, Mr. Jackson, manager of the Toronto office of family allowances, made the statement that he had 300 permanent employees in Toronto and 100 temporary employees. It was therefore obvious to me that my question was not answered correctly. There was nothing in the statement for postage. On looking through the estimates of the Department of National Health and Welfare, one can see that the department pays postage on everything. If one takes the number of cheques that go out-and they were sending out 1,378,128-according to my reckoning the postage would be approximately
The Budget

Mr. Cockeram

The Budget*-Mr. Cockeram

fare is $40 return. The fifteen per cent tax adds $6 to that, which the worker in that area has to pay. If he travelled the same distance by railway he would pay a tax of only about thirty cents. The minister should immediately do away with this tax on air transportation to remote areas which have no other means of transport. This should be done to benefit those who are working in the mines because, when they come out for holidays, just that much more expense is involved.
The devastating effect of the minister's action at this time is bound to have repercussions in the future. If the mining industry is to survive, new mines must be found to-day. This was once recognized by the government, and I quote from the dominion proposals to the dominion-provincial conference:
The great export industries are agriculture, forestry, mining and, to a lesser degree, fishing. An accelerated resources development programme would provide alternative income to tnese great export groups if exports are low. Non-urban road development programmes will have the same effect as far as agriculture, forestry and mining are concerned, although it is not apt to help the fisheries industry directly to any great extent. Increased income of the primary export groups would, greatly help the remainder of the economy by maintaining both consumption and investment outlay.
A decline in private investment expenditure releases workers of various skills from employment and lowers the amounts of producer materials used. The resources development programme would help provide employment directly and indirectly to many of these people.
Records show that the Canadian mineral production from 1907 to 1944, inclusive, according to figures compiled by the bureau of statistics, reached the staggering figure of $10,005,699,893. This sum represents two-thirds of the Canadian government's bonded debt to-day.
Just in order to give a little encouragement to those who sit to my left, I should like,' if I may, to table a list of Ontario producing gold mines which ceased operations between 1939 and 1944, and which paid no returns to shareholders, and the total production value from commencement to date of closing. The total production of these 39 mines was $21,859,000. No dividends were paid, but production taxes of some kind were paid on all these mines.


James Lorimer Ilsley: This would have to be with the unanimous consent of the house.


James Horace King: Has the hon. member unanimous consent?


Some hon. MEMBERS:: Agreed.


Alan Cockeram: The table is as follows:
Table showing list of Ontario producing gold mines which ceased operations between 1939 and 1944 and which paid no returns to share-

holders; and giving'total production value from commencement to date of closing (in thousands of dollars):
Production Value in thousands
Mine	of dollars
Algoma Summit
Centennial	
Cordova	
De Santis	
Devon	
Elora	
Feymar	
Golden Gate ....
Goldwood	
Gold Eagle ....
Hiawatha	
Hoyle	
Jubilee	
J-M Consolidated
Jellicoe	
Jerome	
Kenwest	
Kenapo	
Kenricia	
Lebel Oro	
Mayboro	
Mace	
Morris Kirkland
Nakhados	
New Golden Rose
Orelia	
Porcupine Lake .
Ranson	
Ronda	
Roven River ....
Regnery	
Sandy Beach	
St. Anthony	
Straw Lake	
Tianoga	
Tyranite	
Uchi	
Upper Seine .... Yama	
298 18 134 1,340 ' 2 49 841 984 114 1,484
1,785
966
2,190
6 94
2
615
1,657
46
99
112
1,977
82
1,156
4,363
102
Total-39 mines	 21,859
* No dividends but paid a small return on capital investment on closing.
In the early days of the war, when gold was so necessary to enable Canada to buy goods and materials in the United States, the gold mines were asked by the then minister of finance to increase their production, with the result that gold production was increased from $166,205,990 in 1938 to $205,789,392 in 1941. This great increase in production was brought about as a general economic loss to the mines, because they mined their richest veins in order to get production.
Not only did they trespass upon their ore reserves, but they paid taxes on fictitious profits, because at that time they were unable to do the development work which normally a mine must do to keep ahead. The result was that the mines paid taxes on those profits, and did not get any relief from taxation at that time.
I say to the minister, in closing, that in spite of this body-blow which has been admin-

The Budget-Mr. Gour
istered to the industry those engaged in the industry, management, men, prospectors and everybody else connected with it are still good Canadians with a determination that the industry will survive and that it will continue to play its full part in the Canadian economy.
I would ask the minister to give consideration as soon as he can to some relief for this industry, not by way of subsidies, but by some real and considered relief which would be helpful to the industry in these difficult times.


Mr. JOSEPH OMER GOUR (Russell) (Translation):: Mr. Speaker, I am pleased to take advantage of the opportunity which is now afforded me to congratulate you on your elevation to your distinguished post and especially on the efficiency with which you are discharging your duties. I hasten to compliment also the government and all the ministers, especially the Right Hon. the Prime Minister (Mr. Mackenzie King) about the manner in which they have directed this country's affairs during six long years of war. I commend them for having so well prepared this country for the post-war period, through trade treaties, and the loans that have been made and those which will probably be granted in the near future. Such action ensures us for many years to come a market that will mean good prices for our farmers and employment for all our workers, owing to the fact that we shall have an export trade greater and more profitable than ever before.
In no country of the world, not even in the United States our great and prosperous neighbour, has inflation been better controlled, and the middle class, comprising the majority of the people, better protected than in Canada.
I think it behooves me to congratulate all the cabinet members. I must first mention the Right Hon. Mr. Mackenzie King, that great statesman, who is admirably leading our country in accordance with the high traditions set by our revered and lamented leader, Sir Wilfrid Laurier; I must also commend our Minister of Reconstruction (Mr. Howe) who arouses the envy of all other countries on account of his ability and his unmatched talents; our Minister of Transport (Mr. Chevrier), who organized his department so as to move through Canada and to Europe, more equipment, more soldiers and more civilians than even the most optimistic observer would have thought possible; our Minister of Labour (Mr. Mitchell) whose ability, consideration and absolute frankness for the worker have gained their esteem and who has obtained for them wages in keeping with a high standard of living; the Right Hon. Minister of Justice (Mr. St. Laurent) the 63260-216J
pride of Canadians, for his personality, his ableness and his great sense of fairness which no one ever questions; our Secretary of State (Mr. Martin) who has so worthily represented our country abroad on various occasions and who, lately, has piloted through the house a bill of which our country is justly proud;, our Minister of Health (Mr. Claxton) for all the social measures he has presented, especially family allowances, besides the numberless others he would so willingly support were our finances such as to warrant them; the Minister of Public Works (Mr. Fournier) who,-due to his integrity, is so successful in the administration of his department and attends to the erection of public buildings and numerous works contributing to the wealth of Canada, in spite of the inadequacy of the amounts voted for these purposes; our ministers of National Defence (Mr. Gibson and Mr. Abbott) who have so well organized our war effort, have proceeded with demobilization with so much speed, and have implemented more measures benefiting our veterans than any other country and all the other members of the cabinet who are so well qualified and of whom I shall have more to say later for the work they have done.
I feel it my duty also to commend the Minister of Finance (Mr. Ilsley) for the splendid budget he has brought down. He has shown evidence of unprecedented ability in thus balancing a budget of such staggering proportions not only without increased taxation but, on the contrary, allowing substantial reduction for people of modest means. We may therefore count on his finding means to repeat this performance in the future.
I should not want to miss this opportunity, Mr. Speaker, to express to the minister my whole-hearted admiration for the splendid way in which he has managed the affairs of his department. His financial ability has been of great service to his country and his fellow-citizens. By his courage he has established and maintained price control thus protecting the bulk of our population, our farmers, our workers, and people of low income, against the abuse of trusts, so that the public shall not be exploited as they were during the first world war. I hope that price control will be maintained until the return of normal conditions when offer shall again exceed the demand for all the commodities essential to a high standard of living for all Canadians and in order that competition shall prevent profiteers throughout the country to take unfair advantage of shortages and of every opportunity to exploit the people and satisfy their greed.
342b
The Budget-Mr. Gour

It may however become necessary to raise the prices of certain commodities, as happened recently in the case of farm machinery, a measure which I cannot criticize because we have had ample evidence that the manufacturers could not produce at a profit. We may be sure also that they would not have taken steps to increase their production. They might even have curtailed their production, thus depriving our farmers from machinery they sorely needed in view of the scarcity of labour.
Our farmers have a greater need of equipment than in the past and a shortage of farm machinery would impair increased production. I take this opportunity of congratulating our farmers on their splendid effort during the war years when they intensified production while
400,000	of their number had left the land to serve with the armed forces or in various other fields.
May I remind my hon. friends in this house, Mr. Speaker, that if we do not grant the farmers all the means of production, the whole country will suffer. I confess that I find the price of farm machinery very high. A farmer needs a great deal of capital to secure everything he needs for profitable operation. If [DOT]new increases raise production costs on the farm, the government must lend a helping ihand as was done when the government increased the prices of bacon, eggs, butter and .other agricultural products, or add to the -farmers' revenue by grants of some sort.
I submit, Mr. Speaker, that the farmers want a more generous agricultural loan, similar to that extended to veterans by the government.
I compliment the government for the fine legislation implemented in favour of our veterans which does credit to our country.
Mr. Speaker, I would now ask hon. members to consider the riding of Russell, which. I have the honour to represent, because it truly reflects the whole of Canada. In the first place, its population is made up of all creeds and all races, French-Canadians, English, Scottish, Irish and others, living in perfect harmony.
In think my constituency is one of the best agricultural districts of Canada, on account of its production of butter, milk, cheese, pork and eggs. A large part of our farm products is sold in the beautiful city of Ottawa, the capital of our country, of which we are so proud on account of its growth and of its attractions, and which is remarkable for its fine people and its distinguished visitors. *
[Mr. Gour.l
Although farming is the main occupation in my constituency, the district is noted for some very pretty small towns and attractive villages which hope for more industries. I take this opportunity of appealing to the government and to manufacturers and of informing them that they would receive a warm welcome in the county of Russell. To my mind, it would be beneficial to disperse our industries rather than concentrate them in large urban centres; since, in the event of another war, the atomic bomb could destroy a city in a few minutes, it would be advisable to scatter these industries throughout the rural districts where life is less expensive for the worker and where the farmer could sell his products closer to home.
In my constituency of Russell, one finds in Rockland, Orleans, Embrun, Russell, Cassel-man, Bourget, Clarence Creek, and elsewhere, ideal locations for any type of industry and capable workers who would certainly cooperate with any establishment set up in the district. The Rockcliffe and Uplands airports with which you are familiar are also in the vicinity, and you are well aware of the immense service thdy rendered the country in war time and of their present contribution.
I shall prove to you that we can rightly be proud of this fine constituency of Russell, because for 59 consecutive years, that is, since 1887, it has never failed to elect a Liberal member to the House of Commons in Ottawa.
We shall celebrate that diamond jubilee shortly and I wish to invite the Prime Minister and all the hon. members to join in with us in celebrating this glorious event and come back later when we celebrate the centenary. I do not think the representatives of Russell have taken too much of the time of the house and it is not my intention to abuse this privilege, as I believe that needlessly protracted discussions cost the country millions of dollars and tend to increase taxes.
The electors of my constituency feel that their interests are well taken care of by the Liberal party. A moment ago I congratulated the members of the cabinet for this unparalleled era of prosperity prevailing in my constituency and throughout Canada. This is proven by the fact that during the ninth victory loan the sum subscribed was higher than the total amount of all the loans launched during the first great war.

The Budget-Mr. Nicholson
In order to thank Providence- for the most prosperous era in the history of our country, which is unequalled in the whole world, I believe that the government could not find a better time to appoint an ambassador to the Vatican. We should be proud to do so, since ours is such a Christian country, and in view of the fact that forty other countries have already led the way, namely; France, Belgium, Great Britain, United States, Japan, China, Bolivia, Brazil, Chile, Argentina, Ireland, Colombia, Cuba, Haiti, Ecuador, Peru, Venezuela, Germany, Czechoslovakia, Rou-mania, Finland, Italy, Spain. Portugal, Luxembourg, Holland, etc.
(Text)


Mr. JOHNSTON:: When are you coming back to Canada?	[DOT]


An hon. MEMBER:: You do not understand what he is saying.


Joseph-Omer Gour: I will speak so that my hon. friends can understand.
Mr. Speaker, I must say again that our farmers are urgently in need of help from the federal government since we are not getting enough from the provincial government of Ontario, especially chemical fertilizer at better conditions, assistance in the draining of the lands, et cetera, in order to keep our farmers on the land and to encourage the veterans in settling on the land.
Good roads and electricity are also essential. The farmers cannot keep their sons on the farms, when it is a matter of seventy-five hours or more work per week, without offering them reasonable and necessary accommodations.
It is essential to the farmers, as well as to the workers, that a reasonable profit margin be established between production cost and sale price, the same as between the salary of the worker and the cost of living.
In conclusion, Mr. Speaker, I would like to state that the constituency of Russell has flourishing flax cooperatives. I would fail in my duty if I did not take a few minutes of the house's attention to congratulate the hon. Minister of Agriculture (Mr. Gardiner). Is it not a fact that it is due to his unpreceeded ability that he provided ways and means of stimulating our farmers, who replied splendidly to his call and have multiplied several times our production from coast to coast. Thanks to them, we are now the country which provides the most food to the starving people throughout the entire world.
As a result of the laws which the Minister of Agriculture has had adopted and the bonuses which he gave the farmers in order to encourage them to better their products, to-day we are offering products which are superior to
those of every other country, and you will agree with me that this is all to the honour of Canada.
It is also due to his ability that our country and its products are better known and that we are getting more advantageous markets everywhere in the world.
Yes, Mr. Speaker, we have reasons to believe that we can never have a more qualified Minister of Agriculture. I sincerely wish that we shall be granted the envious privilege of keeping him in his present position for many years to come. The country is most fortunate in having such a competent minister at the head of this department. I would remind hon. members that if agriculture is not prosperous, Canada cannot be prosperous.
I want to take this opportunity to thank the minister for the precious help he has given all the cooperatives and flax industries which were of such great importance to our war effort. I feel certain that the flax industry will continue to render great service to our country provided that the government will continue to extend its assistance to its development until such a time when we shall have mills which will be providing work for thousands and thousands of workers.
I shall conclude by saying that we must thank Divine Providence for having given us such a glorious statesman at the head of our country, the most qualified man in all the world to-day, our Prime Minister (Mr. Mackenzie King).


Mr. A. M. NICHOLSON (Mackenzie):: Mr. Speaker, I should like to join with hon. members in congratulating the Right Hon Minister of Finance (Mr. Ilsley) upon having been selected to go to Geneva on an important mission for his country. I am sure people in all parts of the country will hope that the ocean voyage will improve his health and that in the near future he will come back in the best of condition. During the war I participated on many occasions in victory loan campaigns in my constituency. I always made it clear that while the C.C.F. did not have a mandate to conduct the financial programme of Canada, being a democrat I accepted the verdict of the majority. I told my constituents that I thought we were fortunate in having as Minister of Finance one who would not use his high office to improve his own personal position. I told them that if waste or inefficiency existed in government, those conditions did not prevail with the knowledge or the approval of the minister. I am sure that those factors had a great bearing upon making it possible for Canada to achieve such an impressive war effort.
The Budget-Mr. Nicholson

During the war I felt that there were criticisms that should be made, and I made them from time to time. I think this peacetime budget deserves criticism and, before I conclude, I shall have something critical to say about it. After having listened to the Progressive Conservative members who have participated in the debate, I began to feel that there could have been a worse budget. When the financial critic for the Progressive Conservatives spoke after the minister had brought down his budget on June 27 he emphasized the word "economy", "economy", "economy". I submit that we could save quite a few million dollars in Canada but still could not improve materially the lot of the people. The hon. member for Muskoka-Ontario (Mr. Macdonnell) took us back a long time in his speech. As reported on page 3222 of Hansard, he took us back to the seventeenth century when he said:
As I understand it, democracy as we have it really takes its roots from seventeenth century England, and if there ever was a place where they believed that people should try to look after themselves and have a sense of responsibility, it was seventeenth century Puritan England.
It is quite a long time since I have read about the seventeenth century. The remarks of my hon. friend created an interest in that period of history, and so I turned to Trevelyan's "English Social History". While the hon. member for Muskoka-Ontario might like to live in Puritan England of the seventeenth century I prefer Canada of the twentieth. The period of Puritan England to which he referred was still 100 years before the industrial revolution. It was a time when the development of the coal mining industry forced the working of women and children, who were compelled to toil long hours underground. The hon. member for Cape Breton South (Mr. Gillis) has told us about conditions of the mines in the twentieth century, but conditions were much worse in the seventeenth. Hon. members may be interested to know something of what was done for the aged in the time of Puritan England. As a result of forty-five years of faithful service in the compiling of chronicles, James I awarded John Stowe of the city of London, in the year 1603, a licence to beg. John Stowe was given a royal licence to beg! Then there is an interesting statistical compilation here, Gregory King's Tables. I shall refer to it later when dealing with the budget of the Minister of Finance, to indicate that in some particulars we have not gone very far from the conditions that prevailed in the seventeenth century.

I would remind the house that there was a period, within the memory of most of us, when we did practise the word "economy" about which we have heard so often. From 1930 to 1935 we had a government here-


Ian Alistair Mackenzie: No, we had not.


Alexander Malcolm Nicholson: -that had some of the stalwarts who are still in the house, and they did practise economy in those days. Let us see what the economy was. The hon. member for Muskoka-Ontario complained much about expenditures in connection with the civil service, but he has not made many concrete suggestions as to how the expenses can be cut down. His government, from 1930 to 1935, did indicate one means by which this result could be effected, for they slashed the salaries of civil servants ten per cent all across the board. Those receiving higher salaries had a ten per cent cut, and those who received $60, $70 and $80 a month had the axe applied equally to them, for they, too, had a ten per cent reduction.


John Ritchie MacNicol: And members of parliament and senators too.


Alexander Malcolm Nicholson: We find that certain relief settlement plans were drawn up, because an act was passed in 1932 whereby agreements were made with all the provinces, except Prince Edward Island, providing for nonreconvertible expenditures of one-third of the amount, not to exceed $600 per family, for the purpose of providing a measure of selfsustaining relief to families who otherwise would be in receipt of material aid, by placing such families on the land. Those were the days when my hon. friends practised economy. They said!, "It is far cheaper to keep unfortunate people, who cannot find jobs, on the land. Give them 160 acres of bushland for $10 and make available to them the sum of $600 and they will no longer be a charge on the rest of society." That is not so long ago. That was in 1932.
Hon. members who have lived in other parts of Canada will have some difficulty in picturing what is involved when you leave a city like Regina or Moose Jaw or Saskatoon under the assistance of the federal government, the provincial government and the municipality and try to become self-supporting on $600. I happen to have returns for some of the veterans of world war I of 1914-18.


An hon. MEMBER:: Were you one?


Alexander Malcolm Nicholson: 
Mr. SKEY:: On a point of order, may I ask whether the hon. gentleman is opposing the budget of 1932 or the budget of 1946?


Alexander Malcolm Nicholson: I am making my position clear, that the people who now talk about economy had a chance of practising it at that time, and they did not improve to any extent the lot of the majority of the Canadian people.
To continue, there is an item on January 12, C.N.R. freight, amounting to $43.95. Then, on June 8, 1933, they bought a black gelding, the other team having died, and this single horse cost them $50.


Donald Methuen Fleming: Too much for a C.C.F. horse.


Alexander Malcolm Nicholson: Then we find in 1933 sealers and sugar, $10.75. On February 2, 1934, there was an item of thirty bushels of oats for $8.30. The election was coming on and allowances then went up, because the
family that had been expected to get along on $10 now received $18.20. That was for eight people. By the 20th February, 1934, they had exhausted their $600. But, of course, they were not self-supporting and assistance was continued.
I am speaking about Saskatchewan, but I would remind the house that the leader of the opposition (Mr. Bracken) was premier of Manitoba, the adjoining province, and they also participated in that sort of programme. They settled quite a large number of persons and at the same time carried out a programme to settle boys on farms at $5 a month, and if they continued on long enough there was a subsidy of $2.50 a month.
I do not wish to excuse the present government. I notice the Minister of Veterans Affairs (Mr. Mackenzie) is smiling, and I would remind him that in 1940, after we had been at war for some time, there were still several thousand young men working on farms drawing benefits of $5 a month.
I submit that the solution of the economic problems that confront the Canadian people will not be found by going back to the seventeenth century or to the thirties of the twentieth century, when we pared down allowances to veterans of the war who had committed no offence but were unfortunate enough to be carpenters, tinsmiths or plumbers who could not find jobs at any wage in the cities. It was costing a good deal to keep them on relief. It cost $70 a month to keep them on relief in Regina, and the Conservative government at Ottawa felt that if they got these people into the bush they could cut down the provincial and federal expenses and balance budgets. But the real costs will never be known-the toll of suffering in the way of undernourished children, broken-hearted mothers and fathers, and youngsters who, year after year, were denied the privilege of going to school. I would like hon. members to bear in mind that this is within the memory of all of us here. Those terrible years we had in Canada, when we could not provide a decent standard of living for the people, can be recollected by all of us.
During the war the Minister of Finance did some things that deserve commendation. He pursued a policy which proceeded on the basis that anything which was physically possible somehow or another would be made financially possible. If we needed ships, tanks, guns or materials of any kind, the question was, not how much money we had in the banks, or how much was in our gold reserves, but had we the raw materials; had we the man-power? Was it part of an over-all plan which would enable Canada to make her
The Budget-Mr. Nicholson

greatest contribution for the purpose of winning the war? During the war years Canada set high standards. We had more than a million of our young men and women in uniform. We gave large contributions to the united nations, and we kept for ourselves more of nearly every item of food than we ever had before in the history of the country. Is there not something radically wrong with an economic system which gives the people their highest standard of living during two wars, the war of 1914-18 and the war of 1939-45?
The performance of the Minister of Finance during the war should indicate that if he wishes he can organize our fiscal policy so that we can have full employment and rising standards of living in peace time. I wish to point out that the greatest waste in our time or in any country's time is the waste which takes place when able-bodied men are denied the chance to do useful work, and when machines remain idle when there are neecis which must be filled.
When these settlers were going to the north country the sawmills in the midst of the bush were closed and the settlers could not get lumber to finish their houses because, we were told, we had no money in Canada. Under the pressure of war we found that if we needed lumber, mills were operated and those who worked in the mills deserved reasonable standards of living.
I come now to a criticism of the budget. The amendment moved by the hon. member for Vancouver East (Mr. Maclnnis) sets out the fundamental criticisms of the budget. I should like to confine my criticism chiefly to the points raised last night by my deskmate, the hon. member for Winnipeg North Centre (Mr. Knowles). The budget does not provide for the tax reductions in the calendar year 1946 by raising sufficiently the exemptions of those in the lower income brackets. In discussing the budget on June 27 the minister said, and correctly, as reported at page 2915 of Hansard:
Secondly, we are all, I believe, agreed that the income tax is the fairest and best tax on which to rely for the bulk of our revenue. More than any other, it takes ability to pay properly into account. We must, I consider, rely upon it as heavily as we can, subject to the limits imposed by its effects on incentive and efficiency.
My quarrel with the minister all during the war was that he was too cautious, that he paid too much attention to the people in the higher income brackets, who are few in number but apparently quite powerful.


James Lorimer Ilsley: Is eighty-five per cent not high enough for these fellows?


Alexander Malcolm Nicholson: No, I think not, as I shall show a little later on.


Stanley Howard Knowles: It was ninety-two per cent at one time.


Alexander Malcolm Nicholson: The important consideration is, how much is left when the Minister of Finance takes away eighty-five per cent? My figures will indicate that the fifteen per cent which is left is more than adequate.
Let us go back to the seventeenth century in wthioh the hon. member for Muskoka-Ontario would like to live. We find a division of income at that time similar to what we have now. We start with the labouring people. There were apparently about 364,000 in this category. For my purpose I am taking the pound at $5. These 364,000 labouring people had an annual income of $75. The next class was common seamen; there were 50,000 of them and they received $100 a year.


John George Diefenbaker: What year was
that?


Alexander Malcolm Nicholson: That was back in 1688, in the seventeenth century. The farmers then as now were getting pretty rough treatment. There were 150,000 farmers who received an annual income of $212. Shopkeepers and tradesmen, of whom there were 50,000, received an annual income of $225. Then we come to the lesser clergymen, of whom there were 8,000-


Gordon Graydon: Here is where my hon. friend comes in.


Alexander Malcolm Nicholson: Yes, that is my
category. I was up in the north country with the veterans of the last war. There were
8,000	lesser clergymen who received an annual salary of $250. The military officers were a little better off. There were 4,000 of these and they received $300 a year. The next class were persons in liberal arts and sciences. They had rough treatment then as now. There were 75,000 and they received $300 a year. The next class is eminent clergymen. There were 12.000 of them who received $360 a year.
I would remind the house that the lesser clergymen received $250. Naval officers, of whom there were 20,000, received $400 a year. Lawyers were better off, but not as well off as they are now. There were 10,000 of them who received $770 a year. There were 8,000 lesser merchants and traders by sea who received $990 a year, and 2,000 eminent merchants and traders by sea who received $2,000 a year. The last two categories are the spiritual lords and the temporal lords. There were only twenty-six spiritual lords, but they

The Budget-Mr. Nicholson
had an annual income of $6,500. The temporal lords, of whom there were 160, had an annual income of $16,000.


Mr. BROOKS :: What does it all add up to?


Ian Alistair Mackenzie: What year was this?


Alexander Malcolm Nicholson: This was back in the period in which the hon. member for Muskoka-Ontario would like to live, the good old days when we 'had some incentive, something to work for.


Mr. ROSS (St. Paul's):: May I interject that those were the days when there was a socialist government in England.


Alexander Malcolm Nicholson: I should like to bring to the attention of the Minister of Finance some information which is contained in the national accounts income and expenditure 1938-1945. I am sorry the hon. member for Muskoka-Ontario is not in his seat at the moment.


Alfred Johnson Brooks: He is not missing anything.


Alexander Malcolm Nicholson: It gives a pattern
which has a remarkable similarity to What I have just given. On page 33 a table appears entitled "Estimated distribution of all income recipients in the armed services and nonagricultural occupations by income classes, Canada, 1942". This table gives the income classes from $0 to $250, from $250 to $500, from $500 to $750. The next page gives the estimated distribution of aggregate income in the armed services and non-agricultural occupations by income classes, Canada, 1942. I should like the house to follow me in a simplification of these two tables, where I indicate how we distribute the national income in Canada. It is rather hard to interpret this in terms of the incomes of individuals, but if we take 1,000 we shall, I think, accomplish our object. The table indicates that over four million people were taken into account in this compilation, bfit I shall use the figure 1,000. The table will then read as follows:
No. of persons 84 . 100 . 138 . 127 . 112 . 118 . 93 . 67 .. 79 . 34 . 33 .
Basis=1,000
Average
annual
I should like hon. members to picture a thousand people living in one community in Canada, having in that community eighty-four families each with an annual income of only $142, in the year 1942, and with one family having an income of $32,000. If you distributed your national income according to that pattern and had the thousand people living in one community you would certainly have trouble. It appears, however, that when you have the people in the top brackets in Montreal or Toronto or Winnipeg and the people in the lower brackets in Glace Bay, Hudson Bay Junction and Humboldt, where they are not familiar with the way the wheels go round, then this condition is tolerated. I was talking the other day to a friend who is an importer of British woollens, who is selling high-priced materials here in Ottawa. He said he went into one of the stores in this city, and was afraid the high prices that must be paid for these superior goods would frighten the storekeeper. The merchant said, however, "Oh, that doesn't mean anything these days. We are selling men's pyjamas at $75 a suit." I do not suppose they are selling very many of them, but apparently we still have an income tax structure that leaves a few people in the highest brackets with sufficient to spend on that scale.
The minister has made some revisions in the rates, and again I have simplified the results so that I personally may be able to understand a little better just what the position is. Again for this purpose, as for the other table I mentioned, I have taken a year as 300 days rather than 365, in order to simplify the calculations. There will be nothing allowed for Sundays and a couple of weeks' holidays, but on the basis of 300 days a year this table shows the annual income of various groups, the daily rate remaining after payment of tax, and the increase that will result from the tax revisions:
3	
1	
income $142	Gross Income	Single Persons Yearly Daily	Increase376	$ 700 	...$ 700	$ 2 33	[DOT]03652	1,000 	... . 945	3 15	*08874 1,125 1 .97a	2,000 	... 1,687	5 62	[DOT]193,000 	... 2,407	8 02	*331^624	5,000 	.. . 3,794	12 65	[DOT]82L866	10,000 	.. . 6,962	23 21	1-952.215	20,000 	.. . 12,100	40 33	4-542,706	30,000 	... 16,600	55 20	6-713.697	50,000 	... 23,909	79 70	10-776,909	75,000 	... 31,485	104 95	14-8016.667	100,000 	... 37,984	126 61	18-2232,000	200,000 	... 56,559	188 53	21-12
The Budget-Mr. Nicholson

Then I should like to give the same comparison for married persons without children:
Married Persons
Gross Income	Yearly Daily	Increase$ 2,000	$ 1,882 $ 6 27	-253.000	
2,617	8	72	-365.000	
4,027	13	42	-6110.000	
7,277	24	26	1-4620.000	
12,512	4 1 70	3-8230.000	
17,012	56	7 1	5-5650.000	
24,359	81	20	5-1575.000	
32,009	106	70	11-36100.000	
38,509	128	36	13-39200.000	
57,159	190 53	10-94
I agree with the minister that the amount of revenue that would be obtained from the relatively small number in these higher income brackets would not be great; but after asking our people to tighten their belts during the war, I think an income, after all taxation, of over $57,000 a year for a married man without children is unnecessary. I remember that on a previous occasion the minister indicated that he did not really know what people did with such large amounts of money, that he had not had those amounts himself and had no particular desire to have them. It may be that I have peculiar views regarding these matters, but I think the prime minister of a country should have the highest income in that country. I cannot think of anyone who, in the minds of the people, should have a more adequate income than the prime minister of a country. I believe also the Minister of Finance should stand very high on the income list, and I think it must be very difficult for him to justify the "take-home pay" he has for himself, while year after year bringing in budgets which leave so much to the few in the higher income tax brackets. I believe that if the hon. member for Muskoka-Ontario would compare the two tables I have just given he might feel that the minister has kept reasonably close to the standards which prevailed back in the seventeenth century, when it comes to rewarding people in these various groups.
Before I conclude, I should like to say just one word about the failure of the Minister of Finance to indicate a more positive programme in connection with dominion-provincial relations. Recently I received from the attorney general of Saskatchewan some comments regarding the proposals as they affect that province. He says:
In Saskatchewan's case for example under the conference proposals we were to give up the right to impose income, corporation and inheritance taxes and in return were to share in the benefits resulting from:
(1)	per capita grants of $15 costing the dominion 198 million annually;
(2)	public investment and unemployment assistance and other grants estimated at roughly 150 millions annually-

(3)	health insurance and grants worth an eventual 165 millions;
(4)	an old age pension offer worth 220 million.
All figures are taken from the Financial Post of July 6.
In other words the dominion was prepared to spend 733 millions in return for exclusive rights in the three tax fields. Of this Saskatchewan would have received her share.
Under the budget proposal Saskatchewan is required to pay the full price fixed for an expenditure by the government of 733 millions but what she gets in return is only a share of a federal expenditure of 198 millions.
Under the new proposal the government is spending 535 millions less than offered at the convention. On a population basis Saskatchewan would have participated in that expenditure to the extent of approximately 40 millions.
In other words, under Mr. King's proposal of April 29, 1946, Saskatchewan would have received her proportionate share of 733 millions or 53 millions. Under Mr. Beley's new proposal Saskatchewan will receive only 13-7 millions and we give up or lease or lend to the dominion exactly the same things, namely income, corporation and inheritance taxes and our statutory subsidies.
The government of Saskatchewan has taken the position that the offer is better than no offer at all, but it is not good enough considering the needs. The federal government is the one authority that can find funds for housing, for old age pensions, for social security, for health services; and if at this time we do not receive positive leadership from the federal authority, I very much fear that the trend will be accelerated under which the provinces will be unable to deal with these problems, and the municipal authorities will throw up their hands in despair.
After having demonstrated that we could defeat our nazi enemies across the seas, by making extensive efforts, it is strange if we cannot solve the problem of poverty in the midst of plenty in our own country. So I hope that before the resolutions have been passed we shall have some revision of the federal government's proposals to the provinces, and also that ' there will be some indication that the people in the lower income tax brackets will receive relief, while those in the higher income tax brackets, who are better able to pay, will 'have jheir taxes maintained at the high levels which prevailed during the war.


Douglas Gooderham Ross: Mr. Speaker, the hon. member who has just taken his seat made some reference to woollens. Goodness knows it is hot enough to-night, without that.
(Translation):
I suffer from the heat to-night. I am sorry that Mr. Speaker is not in the chair at the present moment, so I could tell him how much

The Budget-Mr. Ross (St. Paul's)
I sympathize with with him because he has to wear an additional garment in this period of hot weather. I have nothing to suggest for his comfort, but I have some suggestions which I shall make in English concerning the hon. mertibers.
(Text):
Mr. Speaker, this business of calling parliament late in the year is getting to be a habit, and it is perfect nonsense. Let us get down to work early next year-and every year-and not have to sit here until late in the year. But this practice of calling parliament late has become well-known government policy; it has been the same since I have been in the House of Commons. It has been a policy of, "Put everything off; put everything off; keep putting everything off". I say that is not a real policy, at all.
When one asks what the government's policy is he is told, "Oh, we will give it to you in good time." But it is always the same old story-"Put it off; put it off".
Before saying a few words about the budget, I should like to make some other observations. At this time of the year, Mr. Speaker, it gets hot. I sympathize with you, sir; I sympathize with the clerk; I sympathize with the assistant clerk; I sympathize with the sergeant at arms- all of you with your regalia. The only one I do not sympathize with is the deputy speaker, because he has not got his regalia yet.
I know we wish to observe decorum in the House of Commons. I know we want to do that, by being decently dressed. But it is very hard these days to get ice cream suits; in fact, one cannot get them, although I see one across the floor. He is a pretty lucky man.
Why should members of the House of Commons suffer in weather like this? Why should we not be allowed to sit here in clean white shirts?


Ian Alistair Mackenzie: Pyjamas?


Douglas Gooderham Ross: We would all be
better off. All this business of having to wear coats, and things like that, in the House of Commons, is all very well; we want to observe the decorum of the house. But I put this down, too, to lack of policy on the part of the government.


An hon. MEMBER:: You cannot call it
extravagance.


Douglas Gooderham Ross: Custom is a funny thing. In the old days soldiers were not soldiers unless they wore red coats, and had their buttons shined. But the last war taught us something different. As a Progressive Con-63260-217^	.
servative and, as a matter of fact, as a darned good Tory as well, I say that if we are going to have to put up with the vagaries of the party in power to-day, then certainly the least they can do for us would be to give some attention to the health and comfort of members in the house by letting us take our coats off.
I like to see hon. members properly dressed. Indeed, I recall when Charlie Dunning came to the house to give his budget he was always well dressed, wearing his morning coat and his pin-striped trousers. He looked well in them, too. I should like to follow his example, and be well dressed, too. We had great respect for him.
But times have changed. I noticed that when the present minister gave his budget speech he did not wear a morning coat or striped trousers, but just an ordinary business suit. And, after having looked at the budget and having seen what is in it, I think it would have been much more appropriate if the minister had worn his mourning suit-spelled "m ourning".
I now address myself to the budget, and what I shall describe as a presentation for Canada. The author was the Right Hon. J. L, Usley, his assistants, the bureaucrats and the unrealistic brain-trusters. The name of his presentation is "The Government's Great Extravaganza. Continuous performance, at high cost to the taxpayers of Canada; come and be disillusioned!"


Gordon Graydon: No rain checks?


Douglas Gooderham Ross: What I think of
this budget is that it is a budget of remote control, so remote from the people of Canada who are in business that it is removed entirely from all realistic business and all life.
Making these few observations in the budget debate my thoughts go back to 1945, in the spring of which year we had no budget. Individuals who were in business had to wait until the fall of that year before they knew where they stood. Certainly it was not for lack of asking for a budget. Of course we know why it was not brought down in the spring of 1945. There was an election in sight, and the government was simply scared to death to declare its position.
Again this year we began to wonder if we were going to have a budget. Again it was not for any lack of asking when it would be brought down. Finally, we waited until June 27 before it was received. Everybody knows that, so far as business is concerned, it is necessary to have the budget brought down in the early part, of the year. But it is becoming a habit-I hope it does not become

The Budget-Mr. Ross (St. Paul's)
chronic-to bring the budget down late. Delay is not good. This procedure simply goes to show the government's uncertainty of mind.
The budget, when it was finally brought down, has demonstrated a lack of determination on the part of the minister and. his bureaucrats as to where the government is going.
Before I forget, while I am talking about bureaucrats, I wish to congratulate the minister upon the announcement that was made, and as reported in the press, respecting his having a bit of a holiday. I hope he has a long voyage, and that he gets as far away from those unrealistic bureaucrats as he possibly can. If he does, I know he will be a darned sight better man when he returns.
The budget shows a failure on the part of the government to face issues before us. They try to face them, but only succeed in facing them both ways. To my mind, the budget has been prepared by impractical theorists. I would ask the minister, what businessmen were consulted in its preparation? Is there anything practical in it? I am certain that no businessmen of any standing have been consulted in the preparation of this budget.
The minister may say that he could not bring down the budget earlier this year until such time as an agreement had been reached between the dominion and the provinces at the conference. That is no excuse. I am sure that the minister knew or he should have known or had a pretty good idea that the conference could not reach an agreement in view of his lack of give-and-take. The attitude of the dominion government has been uncompromising, rigid; there has been no spirit of compromise, no spirit of good will. How could there be, when everybody knows that the whole attitude of the government in connection with this matter was nothing more or less than political? The conference has not failed. Progress has been made, and another sitting should take place at the earliest possible moment. It may be, however, that the unwillingness to compromise and the lack of patience and the fact that the minister has now drawn the big stick may mean that the day will have to be put forward when an agreement can be reached.
As I said before, the budget should have .been brought down earlier. It is unfair to business and unfair to individuals to make them wait to this late day in the year to make their plans and to have to carry on with a feeling of uncertainty.
But now that the budget has been brought down, and after all the promises and all the forecasting by the minister- it will be remem-
bered how the Minister of National Revenue (Mr. McCann) made a big speech in Renfrew and told everybody how much of a reduction we were to have in taxation-after all that, what a shock this budget has been to the House of Commons, the members Of parliament and to the people of this country; and after listening to the speeches which have been made by members opposite we know what an awful shock it has been to them too and what an awful time they are going to have defending it.
This budget is probably the craziest fiscal doctrine ever brought down in the history of this country-and I mean crazy. It is absolutely the craziest thing that has ever been brought down. That is its one outstanding feature. As one listened to it and read it, one fact could no longer be hidden, and that is the administrative ineptitude of this government. Evidence of this has been accumulating over a great length of time. The government can think of nothing but spending hundreds of millions of dollars, and they have no practical ideas about where we are going.
Another fact about the budget is that at the very time when boldness is needed it shows a remarkable lack of courage, the greatest timidity in any budget to which I have ever listened. It is full of political promises. The taxpayers are asked to accept a poor measure of relief which will be operative for only three months of next year. Never has parliament been asked to approve tax reductions such as these. They are inoperative in the fiscal year in which they are introduced. If anybody can tell me that that has ever been done before, I should like to know about it. Not only that, but parliament has no power to guarantee financial programmes beyond the period from April to March to give any further relief to the poor old taxpayer. We are not even sure that we are to have this relief next year, because the government has other commitments.
We have a deficit of $300,000,000, and proposals to pay the provinces some $414,000,000; probably further increases in the children's allowance, as well as government non-war commitments, and there is no endeavour on the part of the government to cut administrative costs. All this is reckless and nonrealistic in the face of stern realities as we see them to-day. What hope is there when all these commitments which I have mentioned are taken into account?
Another feature of the budget, which, to my mind, is blind stupidity, is its failure to make the tax reductions operative now, particularly for the low and middle income groups. The budget should have allowed them more "take-

The Budget-Mr. Ross (St. Paul's)
home pay" and should also have given some relief now to business from the excessive burden of taxation. In failing to give this relief now, the minister has closed the door to the only important stimulus to insure production at reasonable prices and also to maintain a high level of employment and national income, which are so essential for sound reconversion and stabilization. Last year the Minister of Finance stated:
During the war there has been built up a system of taxation which is discouraging to investment, to enterprise and to consumer expenditures ... I recognize that in the course of six years war-time taxation has begun to blunt incentives, and if continued indefinitely will paralyse the development of industry aud trade.
He went on to emphasize:
. . . the great and harmful effect which our present high personal income tax is having in discouraging work and initiative in all groups at a time when we need a rapid expansion of employment and a willing mobility of labour.
Believing this, why has the minister not the courage to act on his own convictions? If he believes in production, why continue to blunt the incentive and aid in paralyzing the development of industry and trade, and continue the great and harmful effects of the present high income taxes?
The minister is so imbued with the danger of inflation that we have these timid proposals put forward in the budget. On the other hand, the minister thinks he is taking a great big chance, for in the final quarter of the fiscal year he is going to reduce taxation. Is it not true that the high taxes on corporations and the present labour unrest are a great detriment to production? That vital fact has been demonstrated in industries such as building supplies. Increased production means the use of more than one shift and possibly overtime. What industry is going to run itself into the ground, wear out its machinery and depreciate its assets by a two or three-shift operation under present circumstances? What industry is going to exhaust its resources for the sake of paying excessive taxes? What incentive has a workman to work full time when he receives so little extra "take-home pay"?
The excess profits tax may have been justified in war time when it was operative because of the patriotism and war spirit which then prevailed. In those days the people were not interested in making money; they were interested only in turning out goods because they knew that if supplies were not forthcoming for the allies they would not have to worry in the future about what would happen to them. As I say, the excess profits tax may have been justifiable in war time, but it is folly to encourage waste and to encourage extravagance. The
minister knows that as well as I. If this habit of waste and extravagance is continued it will put Canada and Canadian manufacturers in an unenviable and disadvantageous position in the markets of the world when competing for foreign trade.
Furthermore, in a growing country like Canada such a policy hampers to a great extent young growing businesses. It is also* grossly unfair to certain industries which put up with it during the war for patriotic purposes and who, through no fault of their own, experienced abnormally low profits during the1 basic period 1936-39. Is it not obvious that ai sizeable reduction in the tax of the workers would mean an immediate increase in "take-home pay", which in turn would mean an immediate increase in the amount of pay that could be taxed?
Such a policy would have a tremendous effect in discouraging strikes. If there had been a sizeable decrease in the taxation on those men who are making reasonable salaries I doubt very much if the Minister of Labour (Mr. Mitchell) would have had to put the steel works under a controller.
The cost of living has been rising steadily, which rise stems from the withdrawal of subsidies. These subsidies have been paid for by the workers themselves; they provided the subsidies. To my mind, the tax proposals proposed for three months of next year would no more than balance the practical increased cost of living, not the theoretical increase. A sizeable decrease in taxation of workers would stimulate production. It would provide some incentive and give some hope to the workers of earning a decent living. It would increase the national income and the revenue therefrom.
I realize it has cost a lot of money to fight this war, to preserve our freedom, and we must pay for it. That may take more than a generation; certainly it will be more than one short year before we can expect any great decrease in our taxes. But this is no time for timidity; bold action is required. The minister and his bureaucrats are imbued with the fear of inflation, or perhaps I should say the theoretical danger of inflation because there is still the law of supply and demand. The people of Canada are beginning to see the results of this two-faced product, the budget.
The answer to inflation is greater production^ and our object in Canada should be to use every means possible to produce the goods that are wanted, to produce them in greater volume so that there will be more goods at reasonable prices rather than fewer goods at high prices. That was the advice given
<j436

The Budget-Mr. Ross (St. Paul's)
to the minister and it is sound advice. The minister contributed some advice for the businessmen. He urged them to do everything to hold prices down and get volume up. That is as far as the minister went; tthat is where he missed' the boat. He should have spoken to a wider audience, he should have spoken to labour and given them some hope of an increased "take-home pay". The businessmen cannot do everything, but incentive can and there is no incentive in this budget.
Labour is the vital factor, often the dominant factor in determining prices. The attitude of labour and its leaders will have much to do in determining whether prices are kept down to reasonable levels. The attitude of labour will be the determining factor to a great extent on the action taken by this government in the way of tax relief now, not next year. What is the other factor? It is the consuming public. Already there are signs that the consuming public is far from satisfied with either the flow or the quality of goods which are at present being produced.
We may see again a repetition of what happened after the last war when the public went on a buying strike. Of necessity that was a detriment to business, a detriment to labour and a detriment to everybody else. A depression followed, and this may be the result of a budget that is timid as far as taxation is concerned. The budget is too little, too late. The ministers and their advisers could not make up their minds whether to pep up or pep down business. This is just another example of government policy-too little, too late.
We can see the results of this high taxation, both personal and corporation, upon the production of houses for the veterans of this war. Material is in short supply because there is no incentive to produce. Labour has no incentive to work beyond a certain number of hours a week because of the small amount of extra "take-home pay". What further folly is proposed? To my mind, this is just silly.
I do not know who thought this up. When production is so necessary it is proposed that where a husband and wife are working, everything that the wife makes over $250 must be taken from the exemption of the husband. Those are the exemptions proposed, although it is true that they will apply for only three months of next year.
Most things are in short supply to-day, but there is something else that is very necessary and we have it if only we will take advantage of it. There is a tremendous potential buy-

ing power among the Canadian people, and certainly the incentive to produce should be provided.
One word about the housing situation. There is no doubt about it that as far as overcrowding in my riding in Toronto is concerned, it is the direct responsibility of this government. I have pointed out, time after time in this house, what would happen, and I suggested precisely that which did happen in regard to the obvious increase in the number of employees at Malton. and the people on the outskirts of the city. I pointed out that there were upwards of 25,000 workers alone who had to be housed, not taking into consideration their dependents. Not only do these people have to travel from twenty to twenty-five miles to and from work every day, but the situation is so serious in that city, and more especially in my riding, that efforts should have been made to meet the housing shortage. Wartime housing was put up in other towns and cities, but we never got a five-cent piece unless we yelled for it. The people occupying wartime houses in other cities and towns are still occupying them. I submit that wartime houses should have been put lip in the proximity of these plants; but, time after time, when I questioned the Minister of Munitions and Supply as to what he would do to relieve the situation, in view of the fact that these people had done the best they could, I got no satisfactory reply. We have a situation of overcrowding which is, to use a slang phrase, like nobody's business -fifty-three people living in one house, and all that sort of thing. As a matter of fact, I am sick and tired of talking about it, because nothing has been done to improve matters. There has been a lot of talk about what will be done, but that does not provide houses. When I brought the seriousness of this situation to the attention of the Minister of Munitions and Supply the answer I received was that Toronto ought to look after its own housing.
I now come to another important matter and that is economy, and the inability of the ministry to cape with necessary economy after the war. Some figures have been quoted as to the total number of employees of the government of Canada, including employees of boards and commissions appointed as of March 31, 1945, and March 31, 1946, and also as to salaries, wages and allowances paid to such employees in the month of March of each of those years. I want it distinctly understood that I am not talking about the regular civil service but about boards, commissions and so on. These figures are derived from sessional paper 98 and a sessional paper

The Budget-Mr. Ross (St. Pauls)
I received last year. Having looked into them two or three times, I find omissions, so that I do not know whether they are correct. Certainly some of them are incorrect and that is why I wish to quote them again to-night, because some of these figures will shock hon. members.
Some figures have been quoted by other hon. members as well as by myself, in which a comparison is made of different years. I pointed out, as other hon. members have done, that there has been a reduction of only some 900 in the number of these employees. I noted that there was one omission. I do not know how many others there are and therefore I got a supplementary return to-day. In the last return, March 31, 1946, there is an omission. The national harbours board had 1,890 employees, and salaries and wages paid for the month of March were $289,429-quite a sizeable amount. This shows that, instead of a reduction of 900 from March 1, 1945, to March 1, 1946, there was an increase of 900, and an increase in wages of $1,080,691. This does not tell the whole story. There were others in the employ of another government company which will further swell the rolls. That is War Assets Corporation. As of March 31, 1946, there were 5,413 employees.
I have not the monthly payroll and so I shall have to give an estimate. What does this all add up to? It shows that, instead of the meagre reduction which I stated in the house once before, of 900, there has been an increase altogether of 6,046 employees, or a total increase in payroll of $4,500,000 yearly. That, as I say, is an estimate. I understand that it is nearer $5 million, but I am putting it at the smaller amount. This brings the total number of employees to 156,657, and the total payroll for Canada to $245 million a year.	[DOT]
The Minister of National Defence (Mr. Abbott) this afternoon spoke about controllable expenditures. He suggested that we had controllable expenditures of something like $200 million. But, Mr. Speaker, there is $245 million there in the payroll of Canada. What nonsense it is for him to say that there is only $200 million of controllable expenditures.
Not only that, but there seems to be no effort on the part of the administration to reduce rather than to increase. It means, taking an average of three in a family, that 475,000 people are being supported by the rest of the taxpayers of Canada. We cannot stand it. We have not enough people in Canada to pay these salaries. Economy must be practised, and there does not seem to be any
reason why the government should not make an effort in this direction. But no effort will ever be made by this administration which is so inept at reducing salaries.
When one considers some of the departments of government and sees increases in so many, he can only come to the conclusion that no effort is being made by the administration. Let me run through a few of them. The minister says that some moderate increases have been made. Well, I do not think the increase there up to $245 million is moderate, considering all the other things that are going on at the present time. Take the Department of Agriculture. In March, 1945, we had 4,185 employees. I should think that in agriculture the country would need more people during the war to take care of the requirements, but we find we have now 4,606, or an increase of nearly 500. Take the civil service commission. In 1945 the figure was 586; to-day it is 713. Take the minister's department, the comptroller of the treasury. In 1945 it had 7,747 employees; to-day there are 9,232. I should say these figures are given as of March each year. In external affairs there were 340 employees in 1945, this year 625. In the finance department, another department of the minister, there were 765 employees in March 1945; there are now 827. In the mint there were 161 in 1945 and 286 in 1946. In fisheries there were 530 in 1945; there are now 620. In justice there were 1,023 in 1945; there are now 1,114.
I now come to the army, navy and air force. I shall take only some of them. Here we have the conditions which the hon. member for York South (Mr. Cockeram) described a little while ago. The air force had 12,524 employees in 1945. They have now only 5,936. The army had 16,683 in 1945, and there is a reduction of fewer than 3,000 There are now 13,701. The navy had 13,542 in 1945 and they still have 10,187 civilians in the Department of Naval Affairs at the present time. What in the world do they do with all these people? Of course, the Department of National Health and Welfare has gone away up.


James Horace King: I am sorry to interrupt
the hon. member, but he has spoken for forty minutes.


Douglas Gooderham Ross: I wanted to pay
a compliment to one department.


Some hon. MEMBERS:: Continue.


Douglas Gooderham Ross: The department
of printing has set a good example. With all the extra work that it has had to do it had only 759 employees last year, and in March of this year it had 774. Probably they need more.

The Budget-Mr. Ross (St. Paul's)
I want it firmly understood that I am not criticizing the people who are in the employ of the government. Possibly some of the departments are understaffed. I know something of the conditions of work in the income tax branch in Toronto. They are packed in there worse than any Norwegian sardine. There is overcrowding which does not lend itself to efficiency. You cannot bring more people there and pack them in and expect to have anything done. They need decent conditions under which to work. I do not know the conditions under which they work, but I wish to see them decently housed. I do know something about the income tax department in Toronto but not anywhere else. These people have responsible positions and they deserve to be decently accommodated. It is an inescapable fact that if we needed 150,000 people in March, 1945, when the war was on, we do not need as many people in civilian jobs to-day.
This administration have become war-minded; they have been thinking in hundreds of millions and billions of dollars and they are now incapable of grasping the need for economy in an endeavour to give the taxpayers some relief. After all, the taxpayers need some consideration. It is beyond my comprehension why, now that the war is over, a reduction of staff does not take place. A great number of these employees, good employees, could be returned to productive employment.
On motion of Mr. Sinnott the debate was adjourned.
On motion of Mr. Mackenzie the house adjourned at 10.40 p.m.
Monday, July 15, 1946