1946-07-15

PRIVILEGE


[Stage Direction]
Mr. DONALD M. FLEMING (Eglinton): Mr. Speaker, I rise to a question of privilege. In the Toronto Daily Star, the issue of Saturday, July 13, on page 11, in a report of the budget debate of July 12, there appears this paragraph, affecting myself.
Donald Fleming (Prog. Cons., Toronto-Eglin-ton) declared present income tax collection methods "educate our people to become professional scoundrels and rascals." He demanded exemptions for single persons be raised to $1,500 and for married persons to $3,000,_

I interject there, Mr. Speaker, that I never said any such thing. The remainder of the sentence is:
,, -and called the tax reductions in the budget "phantom" cuts.
Mr. Speaker, I did call the reductions in the budget "phantom cuts", but that is the only accuracy in the entire statement which I have read. The criticism that I offered of tax collection methods was on a quite different point; and I should be the last person in the world to say that Canadians were, even in spite of these methods, being educated to become professional scoundrels and rascals.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I desire to lay on the table copies of the final report of the royal commission appointed under order in council P.C. 441 on February 5 to "investigate the facts relating to and the circumstances surrounding the communication by public officials and other persons in positions of trust of secret and confidential information to the agents of a foreign power."
There have thus far been three interim reports by the commission, all of which have been tabled in the house. These are as follow: first interim report, March 2, 1946, tabled March 14, 1946; second interim report, March 14, 1946, tabled March 15, 1946; third interim report, March 29, 1946, tabled March 29, 1946.
The final report, which I am now tabling, as hon. members will observe is dated June 27. I think I should make it clear that the physical work of printing the first copy of the report for presentation was not completed until July 12. It has been received only to-day by the governor in council to whom it is addressed.
I have gone through the report rather hurriedly and have noted some of the outstanding features. I have thought that the house would wish to have something in the nature of a resume, but the report is a very lengthy one, with its quotations, appendices and the like, so what I am giving is not intended to be in any way all-embracing, but simply essential features.
The circumstances in which it was decided to appoint the royal commission of inquiry are well known. It is not necessary to review them to-day. The investigation has been completed; it confirms the seriousness of the situation which the government asked the commission to investigate.

Official Secrets Act
In this connection, however, I should like to quote a paragraph from the report, page 87, which relates to the position of the Soviet ambassador. It is as follows:
The evidence before us is that those members of the embassy who were engaged in improper and inadmissible activities operated in special sections of the embassy the operations of which were quite distinct from the official and legitimate activities of the Soviet embassy, and that the Soviet ambassador, representing in Canada the government of the Union of Soviet Socialist Republics, had no part in them.
As a result of findings contained in its interim reports, proceedings have been instituted in a number of cases and four persons have been convicted and sentenced. Other cases are awaiting trial, and I shall not refer to them.
When the inquiry was undertaken, I said that prosecutions would be instituted where the evidence warranted it. This has been done, but prosecutions and punishments are essentially secondary matters. Publicity, education and full understanding are better preventives of any recurrence of any such state of affairs as that disclosed by the report of the royal commission. In that process of education and understanding, the report itself is a very important instrument. It deserves the thoughtful study of all Canadians who feel that there is no place for espionage and underhand activities in the public life of our country.
I shall not on this occasion attempt to comment on the contents of the report. With appendices it runs to over 700 pages. It requires and will repay careful study. I desire however to place upon the record a summary of the findings of the royal commission and the statement of their recommendations as set forth in sections XII and XIII of the report.
Section XII
I.	We report that the following public officials and other persons in positions of trust or otherwise have communicated, directly or indirectly, secret and confidential information, the disclosure of which might be inimical to the safety and interests of Canada, to the agents of a foreign power:
1.	Eric Adams
2.	J. Scotland Benning
3.	Raymond Boyer
4.	H. S. Gerson
5.	Israel Halperin
6.	David Gordon Lunan
7.	Allan Nunn May
8.	Edward W. Mazerall
9.	Matt. S. Nightingale
10.	P. W. Poland
II.	David Shugar
12.	Durnford P. Smith
13.	Kathleen Mary Willsher
14.	Emma Woikin
II.	We report that we have been unable to identify the following persons named under "cover names" in the documents and there definitely stated, to have been members of Zabotin's ring:
"Galya"
"Gini"
"Golia"
"Green"
"Surensen"
III.	We also report the following facts relating to and the circumstances surrounding such communication:
1.	There exists in Canada a fifth column organized and directed by Russian agents in Canada and in Russia.
2.	Within the fifth column there are several spy rings.
3.	We have been able to identify many of the members of one of these rings, namely, that of which Colonel Zabotin was the head in Canada.
4.	Membership in Communist organizations or a sympathy towards Communist ideologies was the primary force which caused these agents to agree to do the acts referred to in their individual cases.
5.	The persons named in paragraph I were members of Colonel Zabotin's organization.
6.	Without documents such as Gouzenko placed before us we cannot identify any nonRussian members of the other rings.
7.	There was an organization whose duty it was to procure false Canadian passports and other citizenship documents for the use of agents engaged in fifth column activities, in Canada or elsewhere.
8.	Zabotin and his assistants were helping to supervise and finance the work of an organization of agents operating in certain European countries. At least one person temporarily in Canada as an employee of the international labour office was a member of this organization, namely, Germina (Hermina) Rabinovitch.
9.	Members of the. staff of the Russian embassy at Ottawa who were actively engaged in inadmissible espionage activities are named in Section II.7.
IV.	The following persons who may not come within the category of "public officials and other persons in positions of trust or otherwise" were members of Zabotin's organization and took an active part in recruiting agents, acting as contacts and securing and transmitting such secret and confidential information:
Sam Carr Fred Rose.
V.	Many of the persons named in paragraph I hereof _ were also actively engaged in the organization of "colls " from which agents were recruited, and in addition the following persons were organizers of such cells, or media of communication between espionage agents, or both:
Agatha Chapman Freda Linton S. S. Burman Henry Harris.
VI.	The following were active in procuring a false Canadian passport for a Russian agent who was operating in the United States:
Sam Carr Henry Harris John Soboloff, M.D,
W.	M. Pappin.
Official Secrets Act

VII.	Tlie following persons named in the documents did not so far as the evidence discloses take any active part in the subversive activities, but would have done so if required;
Norman Veall
Fred Chubb
Jack Isidor Gottheil.
VIII.	The names of certain other persons are mentioned in the documents merely because Moscow desired the names of all members of certain government staffs. Outside of those specifically named elsewhere in this report, there is no necessity for these names to be mentioned.
IN. The names of certain other persons were mentioned in such a context that it was considered advisable to examine them and to investigate their activities. In each case we were satisfied that their conduct has been entirely proper and that, while the Russians designed to draw some of them into the net in future, having in anticipation of doing so actually given them cover-names, such hopes were in our opinion completely without foundation and the objects of those hopes were unaware that they were being considered. Among these we refer to Colonel Jenkins by name, because he has been mentioned by name in the public press.
X.	The names of a number of persons, in government service and otherwise, who were members of secret Communist cells have been disclosed by this inquiry. These names appear in the volume of evidence. As there is no evidence that these persons were implicated in, or aware of, the espionage networks, we do not consider it necessary to mention these names in this report.
Section XIII Recommendations
We respectfully recommend:
1.	That, because of the introduction into the evidence, necessarily and unavoidably of secret technical data, the publication of which, according to the witnesses most concerned, would not be in the public interest at this time, none of the evidence or exhibits relating to any top secret, secret, restricted or confidential matters be published except with the approval of the government in consultation with the heads of the services, departments or organizations concerned.
2.	That the proper authorities in each service, department and organization take such steps as may be considered desirable and effective, in the light of this report and of the evidence and exhibits, to prevent further unauthorized transmission of information and to set up further safeguards.
3.	That all security measures should be coordinated and rendered as uniform as possible.
4.	That the evidence and exhibits accompanying this report be placed before the proper persons in the various services, departments and organizations affected, for study so that a complete evaluation of the information and material handed over can be made in each case to ascertain in detail what has, and what has not, been compromised. That consideration be given to whether the findings so made should be communicated to the proper authorities in the United Kingdom and the United States.
5.	That the Official Secrets Act, 1939, be studied in the light of the information contained in this report and in the evidence and exhibits

and, if it is thought advisable, that it be amended to provide additional safeguards.
6.	That consideration be given to any additional security measures which would be practical to prevent the infiltration into positions of trust under the government of persons likely to commit acts such as those described in tbis report.
7.	That the practice and procedure in connection with the issue of Canadian passports be revised. While not elsewhere referred to in this report, we have had evidence indicating that naturalization and birth certificates have also been improperly obtained. We therefore suggest that the conditions surrounding the issue of these documents might be the subject of consideration by the proper authority.
In conclusion I should like to say a word of appreciation of the service to the state which has been rendered by the members of the royal commission, by the counsel associated with them and by the officers of the public service who have assisted them in their investigations. Their task has been long and arduous. They have worked at it unremittingly and with a high sense of public duty.


Mr. COLD  WELL@: I should like to direct a question to the Prime Minister. I notice that the name of Doctor David Shugar is included. Doctor Shugar has since been acquitted by the court. Should not that fact have been recorded in presenting this report to the house? Once a man has been tried and acquitted, I think a note should be made of the fact in order to clear up the situation.


Mr. HOMUTH:: He was not tried. He was not even sent up for trial.


Mr. COLDWELL:: The case was dismissed.
An hen. MEMBER: He was not even committed.


William Lyon Mackenzie King: I am unable to say at the moment whether the reference here covers all that relates to Doctor Shugar. It is possible there is another connection to which this may have reference. I am sure, however, the public will be happy to take notice of what my hon. friend has said.



LABOUR CONDITIONS


Mr. A. L. SMITH (Calgary West):: Mr. Speaker, pursuant to standing order 31, I beg leave to move the adjournment of the house to discuss a matter of urgent public importance, namely, the threat to the whole Canadian economy which now exists due to the unsatisfactory relations between management and labour, accelerated as it now is by the present strike in the steel industry.

Labour Conditions-Strikes


Mr. SPEAKER:: The hon. member for Calgary West courteously notified me of his intention to make this motion. I have had the opportunity of considering it and will not need to delay the house further by examining the motion. The hon. member is asking for leave to move the adjournment of the house to discuss an urgent matter. I must draw the hon. member's attention to the fact that this question is already before the house in the debate on the budget. During that debate, as he knows, it is the privilege of every hon. member to make any suggestion or recommendation to the government that he sees fit, and to discuss any matter which comes under government responsibility; therefore I do not see any urgency to adjourn the house to discuss the matter, and I cannot allow the motion to be proceeded with.


Mr. BRACKEN:: I am aware, Mr. Speaker, that no debate is permitted on the decision you have made, but with all deference I must appeal against Your Honour's decision.


Major James William Coldwell: May I respectfully point out that a large number of members who are interested in this question have already exhausted their right to speak on the budget, and therefore Your Honour's ruling will deny some hon. members the right of expression.


James Horace King: I hope that I have
explained my position clearly to hon. members. The object in moving the adjournment of the house under standing order 31 is to give hon. members an opportunity to discuss an urgent matter. During a session we have two debates, the first one on the address and the second on the budget, during which every hon. member has an opportunity to discuss any matter which comes under the jurisdiction and the administration of the government. In a few minutes the leader of the house will call the order to resume the debate on the budget. When that is done nearly all hon. members will have the opportunity to discuss this matter.
The leader of the C.C.F. party has called my attention to the fact that many hon. members have already spoken and will not be able to take part in the debate. I would answer him by pointing out that only forty-two members out of 242 have spoken thus far on the budget. Moreover, there is an amendment and a subamendment to the motion before the house. As the house knows, hon. members have an opportunity to speak on the subamendment and the amendment, and when that is disposed of they will have another opportunity to speak on the main motion. I believe therefore that it is my duty to refuse the hon. member leave,
since, according to the rules of the house there is no urgency to adjourn the house to discuss the matter.


Mr. MacINNIS:: May I draw Your Honour's attention to the fact that either it is an urgent matter or it is not. If it is an urgent matter, then Your Honour should allow it to be dealt with nowr. I have already exhausted my right to speak on the budget, but I should certainly like to speak on this matter, because it is urgent. It cannot be put off on the basis that there is an opportunity on the budget to discuss it. This is an entirely different matter, and hon. members should have an opportunity to express themselves on it.


Mr. MACKENZIE:: May I rise to a point of order-


Karl Kenneth Homuth: There are five thousand employees in my riding who are threatened with unemployment.


Ian Alistair Mackenzie: May I refer to a decision of Mr. Speaker Black of February 19, 1932? On that occasion Mr. Speaker Black ruled that there was no appeal from the Speaker's decision under standing order 31, and he was sustained by an open vote of this house.


Mr. CASSELMAN:: He was wrong then.


Mr. KNOWLES:: Which way did the minister vote on that occasion?


Ian Alistair Mackenzie: It was done by a Tory Speaker.


James Horace King: Order. May I quote from Beauchesne's Parliamentary Rules and Forms, third edition, page 747. On February 19, 1932, Mr. Ralston appealed from the Speaker's ruling on that occasion and he was not sustained. The house sustained Mr. Speaker when he ruled that there was no appeal from the decision of the Speaker under standing order 31.


Angus MacInnis: Did the Speaker rule that the matter was not urgent?


Ian Alistair Mackenzie: The Speaker ruled that there was no appeal from his decision.


Angus MacInnis: How did he rule in the first place?


An hon. MEMBER:: Address the Chair.


Ian Alistair Mackenzie: In the first place the Speaker ruled that it was not a matter of urgent public importance. Mr. Ralston and I appealed from that ruling and we were not sustained.


Stanley Howard Knowles: For once the minister was right.
Labour Conditions-Strikes


James Horace King: Hon. members know perfectly well that a ruling of the Speaker is not ^debatable. I have given some hon. members the opportunity to speak on, this question because I wanted to have their views, but I must say that the Minister of Veterans Affairs is right. I would ask hon. members to turn to Beauehesne's Parliamentary Rules and Forms, third edition, at page 747, where they will find the following:
February 19, 1932
Honourable George Black, Speaker.
The Speaker's refusal to permit an appeal from his decision that it is not urgent to adjourn the house for the purpose of discussing an urgent matter of public importance being appealed from was confirmed by the house.
I would therefore ask the house to proceed with its business.


Mr. ROSS (St. Paul's):: The ruling of Mr. Speaker Black and the ruling of Your Honour to-day are on a different footing. Mr. Speaker Black's ruling was based on something which is not comparable with the motion now before the house; the circumstances are altogether different. This is a question of urgency.


James Horace King: Order. I would ask hon. members to proceed with the business of the house.


John Bracken: Mr. Speaker, may I have the privilege of making an observation with respect to your ruling? The Minister of Veterans Affairs has referred to a ruling of the Speaker on February 19, 1932, and you have used it as an argument in support of your present decision. I believe the house should be allowed to have that earlier decision read to them. It is as follows-page 747, Beauchesne, third edition:
Mr. Ralston, from his place in the house, asked leave under standing order 31, to move the adjournment of the house for the purpose of discussing a definite matter of urgent public importance, and stated the subject to be:
The recent dismissal of between 200 and 300 officers and men of the Royal Canadian Air Force without regard to their families, their overseas service or their period of enlistment for service, and the embarrassing situation which may arise if they were forced by the necessity for employment to accept service with another nation.
Mr. Speaker ruled that the statement was not in order and that the matter was not one of urgent public importance and moreover that there was no appeal from his decision.
Mr. Ralston appealed from the Speaker's refusal to permit an appeal from his decision.


Stanley Howard Knowles: That is the point.


John Bracken: That is the appeal I am making now-an appeal against Your Honour's right to make such a decision. The fact that the house supported the Speaker fourteen 
years ago on an entirely different matter is no reason why the house should support the Speaker to-day on this important matter.
An hon.. MEMBER: No doubt that will help the steel strike.


Mr. GLEN:: If I may be allowed a word, Mr. Speaker, subsection 3 of standing order 31, which the hon. member has quoted, reads:
He then hands a written statement of the matter proposed to be discussed to the Speaker who, if he thinks it in order and of urgent public importance, reads it out and asks whether the member has the leave of the house.
On several occasions when I occupied the chair the same question arose, and I had occasions to refuse to allow an appeal, basing my ruling upon the decisions already quoted by the Minister of Veterans Affairs that it is a matter lying solely within the discretion of the Speaker himself whether there is that urgency which should compel the house to discuss the matter. The Speaker now has given his ruling, in which he is supported by the ruling given by the hon. member for Yukon (Mr. Black) when he was Speaker, and by another ruling appearing on page 752, given by Mr. C-asgrain when he was Speaker. The rule and practice, and I think the intention of the standing order, has been that the Speaker shall be the judge of whether or not there is that urgency which would justify an appeal to the Chair. On several occasions I must say I ruled that there was no appeal from this decision, and that no appeal should be granted.


James Horace King: I should like to put on record the ruling just mentioned by the Minister of Mines and Resources (Mr. Glen), that given by the HoA. Pierre Casgrain, then Speaker, on March 10, 1939, appearing at page 752 of Beauchesne:
The Speaker's opinion that a certain matter is not urgent and cannot be discussed under a motion to adjourn the house in pursuance of standing order 31 is not subject to appeal because it is not a decision on a point of order.
I ask the house now to proceed with its business.


John Bracken: Then I must rise to appeal your decision that there can be no appeal, and I do so on the ground set out by Colonel Ralston, in which he was supported by the Minister of Veterans Affairs fourteen years ago.


Ian Alistair Mackenzie: We were turned down by the free judgment of this house.


John Bracken: We may be turned down again to-day.

Questions


James Horace King: I am sorry, but I must refuse the hon. member permission. I have cited the two authorities, the rulings by Hon. Mr. Black and Hon. Mr. Casgrain.
And more than five members having risen:


James Horace King: There is no appeal.


Major James William Coldwell: Mr. Speaker, are we to understand that this house is not in control of its own rules, that we are bound by one Speaker for the next? I think this is wrong.


William Lyon Mackenzie King: May I say one word in regard to my understanding of the Speaker's decision in this matter? As has been pointed out, the rule requires that His Honour the Speaker be given notice of the motion in advance. That is to enable His Honour to ascertain whether the matter is one which in his opinion should be discussed at this time in the manner indicated, namely by a motion to adjourn the house. In order to reach a decision on that matter Mr. Speaker asks himself whether there are other opportunities for hon. gentlemen to discuss this matter at this time; and His Honour has stated to the house that the debate on the budget -which is proceeding at the present time affords hon. members opportunity to discuss the question and that therefore there is no reason for adjourning the house at this time to permit of its being discussed as a matter of urgent public importance. Those are the facts; that is the sequence of the procedure. The rule which says there is no appeal in the matter follows logically because of the discretion given His Honour the Speaker in the first instance to say whether or not the house has an opportunity to discuss the matter apart from the motion to adjourn. The Speaker has decided that this opportunity is afforded in the debate on the budget which is now in progress.


Arthur Leroy Smith: As the humble creator of this difficulty may I say just one word; and 1 speak with the greatest respect and deference to you, Mr. Speaker. I think 3rou have gone astray. Surely the whole point of this rule is to give precedence to the matter because of its urgency. That is the basis of the right to move the adjournment of the house under standing order 31. As for the budget debate, no doubt someone adjourned it when we last met, and no doubt others are ready to proceed with it; but I think it is on the basis of that urgency that all such motions must be entertained by this house.


James Horace King: Questions.



QUESTIONS

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

Mr. WHITE (Middlesex East):: What was the amount of subsidies paid on soy beans in each of the years 1941-1945 inclusive ?


Mr. MAYHEW:: (a) Domestic subsidies
Commodity Prices Stabilization Corporation Limited has paid the following amounts by way of domestic subsidy on soy beans during the periods listed below:-
April 1,	1941	to	March	31,	1942...	nilAripl 1,	1942	to	March	31,	1943...	nilApril 1,	1943	to	March	31,	1944...	nilApril 1,	1944	to	March	31,	1945...	nilApril 1, 1945 to March 31, 1946... $116,902 36 April 1, 1946 to May 31, 1946....	9,936 73Total	
$126,839 09
(b) Import subsidies
Import subsidies paid by Commodity Prices Stabilization Corporation Limited, are broken down according to the tariff item under which the goods in question enter Canada. The main tariff items under which soy beans are classified are:
Tariff Item 47

"Beans, n.o.p.," and
Tariff Item 663c-"Soy beans, soy bean oil cake, and soy bean oil meal, when imported for use as animal or poultry feeds or as fertilizer; or when imported for use in the manufacture of animal or poultry feeds or fertilizers".
Subsidies paid against these tariff items during the periods listed below have amounted
to:
Tariff Item 47
April 1, 1942 to March 31, 1943. $ 8,296 15 April 1,	1943	to	March	31,	1944.	26,453	72April 1,	1944	to	March	31,	1945.	nilApril 1,	1945	to	March	31,	1946.	nilApril 1, 1946 to May 31, 1946..	410,329 85Total	
$445,079 72
Tariff Item 663c
April 1,	1942	to	March	31,	1943	$ 198	89April 1,	1943	to	March	31,	1944	62,589	30April 1,	1944	to	March	31,	1945	171,571	50April 1,	1945	to	March	31,	1946	42,978	36April 1, 1946 to May 31, 1946..	55,954 00

Accountable advances		506,113 62*
Total	 $839,405 67
Housing Act

* This figure represents accountable advances paid against subsidy claims, to be adjusted following determination of actual oil and meal yield from soy beans imported and depending upon the profits position of each applicant at the end of his fiscal year.


QUESTION PASSED AS ORDER FOR RETURN
Mr. BLACKMORE:: 1.	Did the Acadia Coal Mines Limited, of Calgary, Alberta, during May, 1946, apply to th? Industrial Development Bank, Ottawa, for a loan of $100,000 to improve its plant and expand coal production?
2.	If so, was the application rejected, and for what reason?
3.	What action has the federal government taken to provide financial assistance to coal producers in order to increase coal production?


MOTION FOR PAPERS
Mr. DORION:: For a copy of all correspondence, telegrams, reports and other documents in the possession of the Department of National Defence for Air, relating to the construction, development and maintenance of the airports at Baie Comeau, Forestville and Grandes Bergeronnes, Quebec?



NATIONAL HOUSING ACT


[Stage Direction]
Right Hon. C. D. HOWE (Minister of Reconstruction and Supply) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a measure to amend the National Housing Act, 1944, and more particularly:
(1)	to provide for changes in the administration of the existing housing legislation, consequent rewording of definitions and references throughout the Act;
(2)	to provide for His Majesty to join with approved lending institutions in the making of loans for the construction of homes for home owners who have a leasehold interest only in the land upon which the home is to be built and to take security in such form as may be deemed necessary to protect the interest of His Majesty and the lending institution;
(3)	to lengthen the period within which a joint loan to home owners may be repaid from twenty years to twenty-five years;
(4)	to authorize Central Mortgage and Housing Corporation on behalf of His Majesty to enter into agreements with builders who will undertake to build a specified number of houses to be financed under the National Housing Act, 1944. and to offer each such house for sale first to veterans and then to others, at a price not in excess of the selling price fixed in the agreement in consideration for the undertaking of

Central Mortgage and Housing Corporation to purchase such houses from the builders within one year from their completion if they bave not been sold;
(5)	to authorize Central Mortgage and Housing Corporation to make direct loans in outlying areas to borrowers engaged in mining or lumbering, to assist them to provide low or moderate-cost housing for rent or sale to their employees and others in the area of the operations of the borrowers with a view to making possible increased employment in connection with the said operations;
_ (6) to authorize Central Mortgage and Housing Corporation to hold, operate and manage and lease on terms satisfactory to the minister, real or personal property owned by His Majesty and made available to the corporation for such purpose, and to authorize the corporation to collect the revenues from such properties and to pay such revenues to the minister, less expenses incurred in connection with sucb properties and less such compensation to Central Mortgage and Housing Corporation as may be agreed upon by the minister:
(7) to provide greater facility for the making of joint loans for the construction on farms.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a bill to make provision for the payment of allowances to or in respect of veterans of a prescribed age and veterans permanently unemployable or incapable of self maintenance through physical or mental disability and widows and orphan children of veterans. Provisions of the bill apply to veterans of the North West Rebellion, the South African war, world war I and world war II. Provision is made for establishing a war veterans' allowance board to administer the Act and for the payment of the salaries of the members and pensions on retirement.
He said: His Excellency the Governor General. having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: On Friday last the hon. member for Peel (Mr. Graydon) asked me a question with regard to the distribution of

Labour Conditions-Strikes
reparations from Germany, as to the channels that would be used for that purpose. At the time I said I was unable to give an answer offhand but that I would give the hon. member a reply at the earliest possible moment. The answer is as follows:
The question of the distribution in Canada of reparation which may be received from Germany is at present under consideration by the interdepartmental committee on reparation. Information has been sought as to the procedures employed in other countries for the distribution of the proceeds from German reparation, but the committee is not yet in a position to make firm recommendations to council on this subject. As regards German industrial equipment, a subcommittee of the interdepartmental committee on reparation has been set up to deal specifically with this problem. The Canadian Manufacturers Association is represented on this subcommittee, and a close liaison is being maintained with Canadian industry in order that the government may be in a position to bid for German equipment most, necessary for Canadian economy.
The final disposal of the German ships Huascaran Tiefland, and Weserwehr has not yet been decided, but the authorities in the Department of Transport are arranging for preliminary inspection of these ships.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Major James William Coldwell: Mr. Speaker, I should like to ask a question of the Minister of Labour, of which I have not been able to give him notice. Has the controller in the steel dispute the duty of negotiating a reasonable settlement between the parties to the dispute-both parties-or, in the alternative, of negotiating on behalf of the companies an agreement for submission for approval of the war labour board or boards? [DOT]


Hon. HUMPHREY MITCHELL (Minister of Labour):: Mr. Speaker, in replying to the hon. member I am speaking from memory but I shall do my best to answer his question. In the first place, a controller was appointed as I announced in the house last Wednesday. Prior to that we had appointed as commissioner Mr. Justice Roach of the Ontario Supreme Court. He was to act as conciliator. In this case the controller is the employer. The department felt-and I think most hon. members agree- that this was the rational approach to a most difficult situation. This was the form of conciliation which has been peculiar to Canada in
these days. It was the form which worked successfully in the packing house dispute, in the dispute connected with the American Can company in Vancouver, in the lumber industry of British Columbia, in the Montreal street railway company dispute, and in the dispute on the inland lakes which took place recently. Unfortunately in this instance however the commissioner did not have a chance to conclude his labours, because the strike in question took place this morning at seven o'clock.
That is a bald statement of the facts. I believe an agreement could have been made. If I might say so, you cannot have things all your own way; everything is on a basis of conciliation. As I have said before, I think we shall live to regret the attitude which has been adopted by certain people. I am not calling any names. There are properly constituted boards composed of employers and employees to settle disputes.


Major James William Coldwell: I asked my question for the purpose of clarification. The order in council states in section 3 that the controller shall have the authorities and rights of the board of directors of each of the said companies. In section 11 it says that the controller is hereby authorized to apply on behalf of each of the said companies to the appropriate war labour boards for an immediate increase in the wage rates of employees. There seems to be some misunderstanding of method. Does it mean that the controller will negotiate with the employees as the directors would, or that on his own initiative he has to go to the board with a proposal for an increase in wages? That is what I am trying to get at.


Humphrey Mitchell: The judge is commissioner. You must have two things.


Major James William Coldwell: I am talking about the controller.


Humphrey Mitchell: I am talking about the duties of the judge. He conciliates. This may seem complicated, but it is simple. In the packing house dispute the controller ran the operations of the packing plant. But Mr. Justice Richards of Winnipeg was the commissioner who conciliated the dispute. After agreement they made the necessary recommendations to the regional board in that instance, and an agreement was consummated. The same thing happened in the lumber dispute in British Columbia, and in other disputes.


Angus MacInnis: I should like to ask a supplementary question. Has it been drawn to the attention of the Minister of Labour that spots have been taken on the radio to announce penalties in connection with this

Labour Conditions-Strikes
order in council? Does not the minister consider this a form of intimidation of employees?


Humphrey Mitchell: We are still living in a free country.
An hon. MEMBE.R: Are we?


Humphrey Mitchell: I hope we are-sometimes I wonder whether we are. However, the order in council is a public document. What abjection can there be to its being printed m Hansard or in the newspapers, or to having it announced over the radio? It is just a matter of information.



MASSEY-HARHIS-SETTLEMENT OF DISPUTE IN TORONTO AND BRANTFORD PLANTS

[Stage Direction]
On the orders of the day:
Humphrey Mitchell: Mr. Speaker, it might not be amiss at this time if I advised the house that another industrial dispute involving several thousand workers in Toronto and Brantford appears to have been settled as a result of the efforts of Mr. Leonard W. Brockington, K.C.,	C.M.G., Ottawa, who had been
appointed by me last week as an industrial disputes inquiry commissioner to deal with questions in dispute between the employees of the Massey-Harris Company Limited in its Toronto and Brantford plants. The employees were represented by the united automobile, aircraft and agricultural implement workers of America.
The commissioner recommended that the dispute be settled on the following basis:
1.	A general wage increase of ten cents an hour effective July 1, 1946.
2.	The parties to enter into negotiations for a general adjustment of wage rates if there be an advance of four points or any multiple thereof upon the cost of living index for September, 1946, as prepared and published by the dominion bureau of statistics; if the parties are unable to agree on such wage adjustment after thirty days' negotiation, application may be made to the regional war labour board;
3.	Two weeks' vacation with pay, effective in 1946, for employees with five years' service.
The company and. its employees had previously agreed on a reduction of the work week from 48 to 45 hours, with payment of time and one-half for hours worked in excess of 45 per week.
I understand that the recommendations of the commissioner have been accepted by both the company and the union.

I do not know why this form of approach could not have been carried out in connection with the steel dispute. Might I say again that I am the last man to run away from a dispute but, as I have said before, I do not think industrial disputes can be settled in the House of Commons. It has been my experience for a good many years that it sometimes makes things worse. So far as the record of my department is concerned, I am prepared to defend it in any general debate with anyone, and particularly as to its stand with respect to the question of the settlement of industrial disputes.
In the very nature of things we must follow the basic principles of the Industrial Disputes Investigation Act. In my judgment it has been the finest piece of legislation ever adopted by any country, because it is predicated upon conciliation, a willingness to give and take between parties in a dispute. If anyone knows of a better way of doing it, let him say so. I should like to learn from any member, or indeed from anyone outside the house, who has a better approach to industrial problems than that which is exemplified in the basic principle found1 in the Industrial Disputes Investigation Act.



VETERANS LAND ACT


[Stage Direction]
On the orders of the day:
Mr. H. W. HERRIDGE (Kootenay West):: I should like to ask a question of the Minister of Veterans Affairs. Will he kindly inform the house of developments in the signing of an agreement between the government of British Columbia and the federal authorities on the utilization of provincial lands for settlement under the Veterans Land Act administration?
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs): An agreement was signed 'to-day. I shall table it at the earliest possible moment, and send a copy to my hon. friend.



THE BUDGET


[Stage Direction]
The house resumed from Friday, July 12, 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. Macdon-nell, and the amendment to the amendment of Mr. Maclnnis.

The Budget-Mr. Sinnott
Mr. J. S. SINNOTT (Springfield):: Mr. Speaker, I wish to congratulate you on the manner in which you keep order and decorum in this chamber. Sometimes your tasks are arduous and difficult, and your patience is tried to the limit. Therefore I think a few kind remarks along this line are in order. I wish also to congratulate those who have spoken before me, as I know they have contributed much towards the wisdom of building this great Canada of ours, Canada a nation which is only a child in age compared to what other nations are and has the distinction of having achieved a most enviable record in obtaining results in the winning of the war, a record more outstanding than that of any other country with a comparable population. Canada's achievement in this respect has won not only the support of the Canadian people but the admiration of the whole world. I cannot say too much to compliment those responsible for that magnificent effort, a mighty large share of the credit for which should go to our Prime Minister (Mr. Mackenzie King).
Up to the present time I have felt that I should sit back and listen to the more experienced speakers carry on, but after listening to speeches for almost eight months I feel that I have profited sufficiently from the example of my fellow members to be able to contribute something myself. While the budget brought down by the right hon. Minister of Finance (Mr. Usley) does not show-


Mr. PROBE:: I should like to ask the hon. member what he is quoting from; or, alternatively, I should like to ask you, Mr. Speaker, if the ruling about the reading of speeches still applies.


James Horace King: The hon. member knows that according to the rules of the house a member is not supposed to read his speech. I assume he is consulting his notes.


John Sylvester Aloysius Sinnott: I am following rather
extended notes. While the budget brought down by the Minister of Finance does not show much of an over-all reduction in taxation, there is one feature of it that the government is emphasizing, and that is, keeping employment at a high level. I was more than pleased on July 5 to hear the Minister of Finance announce several important steps which were being taken in the economic and financial field to prevent undue increases in the cost of living and the cost of production, to improve the effort for price control, to encourage a greater supply of scarce commodities, and to facilitate a stabilization programme wffiich will be orderly and will give the nation protection against adverse developments outside of our borders.
I was pleased to hear the Minister of Finance announce the equalization of the Canadian and United States dollars, but most important of all was the control of rents. I believe many rents are too high, and I urge that the wartime prices and trade board make a strict revision of all rents and continue the controls.
Early post-war developments have been quite favourable, and there has not been the unemployment during demobilization that many were led to expect. Reconversion has proceeded with comparative smoothness and rapidity, and the evils of inflation and deflation have largely been avoided. Interruptions which have resulted from labour troubles have seriously delayed the production and distribution of articled which so many of our people are desirous of obtaining. It is recognized that it would be dangerous to the Canadian economy if price controls were not continued for at least another year.
I particularly wished to emphasize this afternoon the unfailing efforts of the Minister of Agriculture (Mr. Gardiner). It has been said by many in this house that most of the time of the house is taken up by agriculture, but I must say that I consider this as one of the most important subjects for discussion. If it were not for the farmer, the fisherman and our primary producers generally, the rest of the nation could not exist. For those who have never milked a cow or done the many chores of the primary producer this may be a joke, but let me say again that without those most important people our economy would falter into oblivion.
Nothing would be a finer gesture than for those who have never done this class of work to take a week after the house prorogues and go through the trials that the primary producer goes through, especially those of the dairy farmer. Some would certainly change their minds as to what he has to go through to make a livelihood for himself and his family. There are two types of farmer, the grain grower and the mixed farmer. The grain grower in these modern times, with all the modern machinery at his disposal, is living a life of leisure in comparison with the mixed farmer. Most certainly he has not the trials and tribulations of the dairy farmer who has to work 365 days a year. Certainly all the dairy farmer earns should never be begrudged and should be encouraged by continuing government subsidies.
The Budget-Mr. Sinnott

In my opinion the Minister of Agriculture has one of the most important positions to fill in the cabinet. It is hard for an outsider or for one on the street to realize just how important this portfolio is, and just how many departments are under his guidance. I am sure every hon. member of the house, on the opposition as well as on the government side, will agree with me when I say that the Minister of Agriculture has carried on his work diligently and sincerely, and has advocated a stabilized price control which will secure and guarantee the primary producer a market which he can depend on for some years to come.
Let me mention some of the divisions of the Department of Agriculture to give you some idea of the magnitude of the minister's task. They include the agricultural food board, price board, agricultural supplies board, meat board, special products board, science service, division of animal pathology, disease research division, bacteriology, botany and plant pathology, chemistry, entomology, division of plant protection, experimental farm service, prairie farm assistance, production service, live stock and poultry division, marketing service, and prairie farm assistance consumers service. I could go on almost indefinitely. All these are run efficiently to the benefit of the whole country under the guiding hand of the Minister of Agriculture. I believe it would be far better for the country as a whole if some of his critics were to go back to their constituencies with the real story of the outstanding contribution that that same Minister of Agriculture is making to the whole of Canada.
There has been a drive by the Winnipeg grain exchange to defy the government's price control policy. They have spent money like water spreading propaganda in every newspaper entitled, "Who dares speak for you, Mr. Prairie Farmer?" advocating higher prices to be more on a par with those in other countries. How long would the price remain stabilized if they had control? How long did they remain controlled after the last war? It would seem that they are making a definite challenge to defy the stabilized long term agreements which the government is advocating. I hope the western farmer will see the real facts behind this propaganda which has been distributed, and I hope that those who have marketed their grain through the Canadian wheat board realize what an effort has been made by the wheat pools and other cooperative agencies to establish a stabilized market. Furthermore I hope the western farmer has not lost sight of or forgotten the equalization payments which he has received and is still receiving from the present government.

I should like to give a few items from a table which I have here to show what the western farmer has received since 1943 in wheat acreage bonuses. These payments were as follows: 1943	1944	1945
Manitoba______ $ 5,053,000 $ 706,000 $133,000
Saskatchewan. 17,091,000	5,341,000	262,000Alberta	8,872,000	2,934,000	427,000
The payments for prairie farm assistance were as follows:
1944	1945
Manitoba	
$	17,000	$ 164,000Saskatchewan	
6,907,000	2,639,000Alberta	
2,533,000	2,815,000
That is quite a contribution that the government has made to those provinces, but some of those provinces do not appreciate it. No one would like better to see higher prices on all produce and grain than the present government, but in order for our customers to buy over a long period we must make the price attractive enough to discourage the countries from producing grain so that we may accept their commodities.
Let us look at the inflationary trend in other countries. Take even the United States or even England. Those in the lower income brackets are having a terrible time to survive.
Through you, sir, I would like to say a word about the dominion-provincial conference. Some three years ago a plan was submitted to all provincial governments and municipalities for the post-war reconversion period. This complied with plans, and preparations were made accordingly. Then came the first meeting of the dominion-provincial conference, ending in failure; then the second meeting without any further results, and then a third meeting with two of the nine provinces in agreement with the dominion's proposal.
I have in my hand a report from the Winnipeg Free Press that Manitoba has now accepted the dominion's proposal, and Mr. Garson's comment is that he is sorry that an April meeting was not agreed to by all parties. As he says:
Canadians should understand, however, that the budget speech proposal is much less advantageous than the modified proposal made by the dominion to the conference in April which was then accepted by Manitoba and some other provinces but rejected by certain provinces. The dominion's April proposal provided a plan for the coordination of dominion and provincial policies designed to maximize employment and income, and thus to reduce taxation as a percentage of national income.
It relieved provinces and municipalities of the major portion of unemployment relief costs. It provided substantially increased federal aid for pensions, social welfare and public health. It gave definite assurance of dominion aid to the construction of national highways and access roads to undeveloped resources, and to provincial and municipal public _ works timed to stabilize employment and business conditions.

The Budget-Mr. Sinnott
Had this been accepted in April, it was Mr. Garson's belief that it would have been much more beneficial. When I say that two of the provinces have shown their willingness, I should say that three have now agreed on the five year plan. Two provinces which are the most heavily populated believe they will be deprived of some taxation or taxing powers but on the other hand do not realize the tremendous amount of subsidies they will receive in return. Furthermore, the dominion government is anxious to advance the health scheme, reduce the age for old age pensions and put into effect a security programme. I therefore maintain that the time is now here to show the people of Canada that we are prepared to accept our responsibilities.
Now, Mr. Speaker, it is hard to understand some of the opposition. They maintain that the government is not doing nearly enough regarding housing, old age pensions, mothers' allowance, hospitalization, and so forth. They are all advocating higher expenditure, and yet in the face of this their financial critic, the hon. member for Muskoka-Ontario (Mr. Macdon-nell) insists that all the government is doing is tax, tax; spend, spend; but never save. That in my opinion is the surest way to unemployment. On the other hand, we have here a good heading from a good Tory paper, which says, "Government is putting in a stabilized programme to hold prices down."
I wish, Mr. Speaker, to commend through you the Liberal party for their policy of allowing their colleagues to express their views without fear of being read out of the party as has happened in some parts of Canada in other parties. I feel that the only truly democratic way is to allow a man to express himself without fear of reprisals. I also feel that I must try to further the effort of my predecessor, the late John M. Turner, and other members who have expressed their views on dealing with banks and the banking system. In this connection I quote from a * speech delivered in the session of 1944 by Mr. Turner, and reported in Hansard of that year, pages 2830 and 2831:
I believe, sir, that everybody in this house knows that I am not a financial expert, nor do I ever hope to be one; neither am I a mechanical expert and I do not ever expect to be. Perhaps all I know about finance is that a dollar lias 100 cents. Nevertheless, when I get in my car in the morning to start to drive I can immediately detect if there is something wrong, although I may not know what it is. That is the way I feel when talking on finance. There is something radically wrong with our whole financial system. The way it is set up it is like a gigantic octopus, choking the very life out of our Canadian nation through the interest system we have adopted. This certainly has to be changed.
Just as an illustration, I hold in my hand a copy of a brief prepared in February of this year by the city of Winnipeg to be presented "to Hon. Stuart S. Garson, our premier. Attached to this brief is a statement of the interest paid on debentures by the city of Winnipeg from the year 1930 to 1943, a period of fourteen years, and the staggering interest total for that period of $40,319,694.20. This figure does not include the interest on the greater Winnipeg water district, which happens to run right through my constituency. The interest on this alone amounts to $800,000 a year. Now, Mr. Speaker, if I were to stand here to-day and tell the people of Winnipeg that between now and 1957 they are going to hand out again to the money-lenders an amount close to fifty million dollars for interest, they would think I was not stating ,the facts. Nevertheless, that did happen before and it can happen again. That city is urgently in need of slum clearance, new homes, hospitals, parks and other public projects, and if we could save_ only half that amount, say $20 millions or $25 millions, for those purposes, I am sure it would be welcome news not only to Mayor Coulter, but to all the citizens of Winnipeg.
The figures I have given for Winnipeg can, in proportion to population, be duplicated in almost every province, city, town and municipality in Canada. Interest has a stranglehold on governments of all kinds and acts as a hydraulic brake against any district progressing to its fullest extent. How can they be expected to progress, carrying this terrific load?
Let us take a look at our own financial set-up in the dominion. Before the war this nation's debt as of March 31, 1939 was $3,710,610,592.87 and interest charges on same were $127,995,616.75; to-day our national debt is $9,228,252,012.03, as of March 31, 1943, the interest charges being $188,556,249.39, better than $15 millions a month, an increase of over $60 millions a year, or roughly five million dollars a month. That is a staggering figure, and who can tell to-day that the war may not last for two or three years yet and the debt will be just that much greater? We are getting in deeper all the time.
I said before that I am not a financial expert, but I know there is something positively wrong with this whole business, and I envisaged the Bank of Canada as being set up to step in and lend money to public corporations, as I have already indicated, without any interest, but with just an operating charge or a bookkeeping cost. The present system cannot go on indefinitely. We should, therefore, be prepared to try another kind, and force the big banking houses to get out of government business entirely and operate in their own field,-
Then he goes on to say:
I believe that the Bank of Canada is not operating to the fullest extent in the important matter of financing public debt and public corporations.
I have had considerable experience as head of a municipal corporation and as chairman of the school board, and I know how we finance. I can see the tremendous advantage which we could obtain by using the Bank of Canada to a far greater extent to further our education, our health schemes, mothers' allowances, hospitalization, road programme, and so on.
The Budget

Mr. Sinnott

No one can say that the need was ever greater than it is now for hospitals in almost every small community. The town in which I reside has been pleading for one for the last twenty-five years and is still without a hospital. Let me say I am not in favour of the hand-out system, that is, one by which you can receive service for nothing; but I do believe that if the provinces agree to the present dominion proposals, it will then be up to the dominion to provide the necessary money through the Bank of Canada for the services I have just mentioned. Surely we do not want to see unemployment. It is useless to say that there can be a depression in a country where there is so much to be done. Then let those provinces who wish to accept the dominion government's proposal do so and obtain the benefits which they deserve. Let the dominion government accept the responsibility of taking care of its citizens.
To sum up, Mr. Speaker, I have tried to confine my remarks to what I trust will be for the welfare of Canada as a whole. I have tried not to be personal. Furthermore, I have failed to mention many things which my constituents desire. This I believe can be done to better advantage with the responsible ministers than by occupying the time of the house.


Mr. E. G. HANSELL (Macleod):: In rising to speak in this debate on the government's budget for 1946 and perhaps 1947-because few of us are going to realize any benefits from it until that time-I wish to make just a few observations. This is not of course the first budget that I have spoken to, and it was not the first budget speech I have heard from the present Minister of Finance (Mr. Ilsley). But I sat in my seat for nearly three hours listening to Canada's finance minister as he brought down a perfectly orthodox financial budget, and I could not help thinking at the time that had there been a Social Credit government in office, a Social Credit finance minister could have made a speech in perhaps fifteen or twenty minutes. I do not know, but at least he could have made a much shorter speech and could have given the country the benefit of all that such a wealthy nation possesses. It would have been necessary only to put down the liabilities on one side and the assets on the other, indicate how much money the country needed for the coming year, and then say boldly to parliament and to the country that he was now issuing instructions to the Bank of Canada that has the power to issue currency and credit, by saying, gentlemen, you are the servants of the people. We need so much money this year. Write out a 
cheque, sign on the dotted line, and have so much money issued to this government in order that we may carry on the business of the country.
Instead I must confess that by the time the present Minister of Finance got through with his budget speech, I personally was left somewhat confused. In fact, I met a newspaper reporter in the corridors the next morning and when he asked me what I thought of the budget, I said, "Well, my friend, I am afraid I shall have to read it all over before I can answer that question, because the minister did leave my mind in a muddle as to exactly what Canada's financial position was and what will be required during the next year".
Right along that line, in the realm of money, there has been I believe a deliberate attempt to confuse the mind rather than to instruct, inform and clarify. I declare, Mr. Speaker, that there is no subject in the universe to-day that seems to be so little understood, that seems to be surrounded with so much mystery, as the subject of money and orthodox finance, and I came to the conclusion long ago that a deliberate attempt has been made to keep the people confused and in ignorance in respect to this matter.
I am a family man. I have brought up a family. My high school boys come home and they begin to instruct their father as to what they have learned in respect to the function and operation of money. They come home not merely confused but deliberately misled. They say things that are positively against the facts. Although I did not go into a deep study of finance; although I did not major in the field of economics, I am quite certain in my own mind that most of the university courses in economics tend to mystify rather than to clarify. This reminds me that a great man once said-and I quote from sacred writ:
We wrestle not against flesh and blood but against principalities, against powers, against the rulers of darkness of this world.
I am going to stop there. We wrestle not against flesh and blood but against the rulers of the darkness of this world, and if there is one subject that has been kept in the dark, if there is one subject upon which the people generally speaking manifest ignorance, it is the subject of the functioning of money. But throughout the past few years, particularly in the war years, when circumstances have forced the hands of finance ministers, that veil of mystery has gradually been torn away. The darkness has been gradually giving way as the light of newer economics has shone in upon it.

The Budget-Mr. Hansell
What happened a few years ago when this group stood in this house and declared that money was created out of nothing? We were laughed to scorn. It could not be so! When social credit first appeared upon the scene in Canada and made certain proposals, it received the reply: Oh, fountain pen money. What has happened? We have been issuing fountain pen money now to the tune of anywhere from half a billion to three-quarters of a billion dollars a year. That has gone on because of the expansion of credit ; and the mask has gradually been torn away. The people are saying, where did all this money come from? I stand up and boldly declare that it came from the end of a fountain pen.


Mr. FAIR:: The Minister of Finance agrees.


Ernest George Hansell: Of course he does; he knows his business. If he does not agree, let him rise in his place and say now that he does not. He does agree. The mask is being gradually torn away.
When some of us went out into the country and said, that 'banks did not lend their depositors' money, we were laughed at again. I suppose there are hon. members in the house today who may even now believe that banks lend their depositors' money. The mask is being torn away from that too. It has been discovered long since that banks do not lend their depositors' money. They lend freshly created money, which has come out of the end of a fountain pen and which eventually becomes depositors' money. Will any one deny that? I see no one rising in his place to deny it, and yet when years ago we said that we were laughed at.
How often have we heard our proposals talked about as being printing press money. Whenever I hear someone say that I say immediately that they do not know what they are talking about. The Minister of National Health and Welfare (Mr. Claxton) is an example,-but I shall come to him later. When we rose in our places and said that money could be issued to the tune of at least equating it with our production, we were branded as inflationists. How often have I heard the hon. member for Lethbridge (Mr. Blackmore) tell the Minister of Finance that inflation could be controlled! There is a way of handling a situation of that kind, and there is no inflation until your money reaches above your total prices. How often did/ the hon. member for Lethbridge tell the house that?-but we were referred to as inflationists! The mask has been torn off that bogy too, because we have controlled inflation in Canada to a remarkable degree. I am going to give the Minister of Finance
certain credit for that. What I am saying now is that he is doing what we said he could do anu would have to do, and circumstances forced his hand to do it.
When we said that prices could be subsidized in the process of stopping inflation, everybody again cried out against this supposedly gross error. Was it an error? That is exactly what the Minister of Finance has been doing throughout the war. Therefore I say that the mask is being gradually torn away. The glorious light of a new economic philosophy is beginning to shine in. The one step that the minister must take is the issuing of money debt-free to the nation. When he has done that, he will have torn himself loose from the old orthodox financial order which is sinking this country deeper and deeper into debt and despair. We Social Crediters were the exponents of these things, and evidently the government listened to us when circumstances forced their hands.
May I return to the charge that what we propose is printing press money? We have heard it many times. We heard it from the predecessor 'of the present leader of the opposition. I judge from the speech made by the hon. member for Muskoka-Ontario (Mr. Macdonnell) that he would regard it as printing press money. The Minister of Labour (Mr. Mitchell) has ridiculed our suggestions along this line. No doubt he believes it is printing press money. I referred to the Minister of National Health and Welfare. Judging by the remarks he has made he believes that it is printing press money. I come now to a very important point. The Minister of National Health and Welfare is responsible for the spending of more money than any other department of government; yet when we suggest to him that as an experiment he call upon the Minister of Finance to issue debt-free money through the Bank of Canada to the tune of the paltry sum of $10 million to see whether or not it would have an adverse effect on the Canadian economy, what does he say? He does not say anything. When I challenge him to do that, he sits there silent and tries to look wise. Sometimes I think this business that we are in is like a huge poker game, the rules of which are against you and you cannot win. Strangely enough this minister who spends more money than any other department of government also administers united nations relief and rehabilitation money which comes from Canada. Here is the man who cries out against any suggestion of changing the rules of the poker game.


Mr. JOHNSTON:: Because he always wins.
The Budget-Mr. Hansell


Ernest George Hansell: But the people always lose. He is the man who is chosen to accompany the Prime Minister (Mr. Mackenzie King) as one of his chief advisers at the biggest poker game the world has even seen. While I am on that subject may I say that the Prime Minister is leaving for the peace conference as usual without any instructions as to what to do. That is why I asked him the other day if an opportunity would be given to discuss external affairs before he left. The answer was that there was no time now. Of course a few items have been before the external affairs committee. It is the same old tale, the same old story; it can be San Francisco, it can be some other place, but never once does he go under instructions from the people of Canada. One of our press gallery friends labelled us on one occasion, and rightfully so, as the people's mouths. Did the people's mouths have an opportunity of expressing the views of the people, as their representatives, and sending our Prime Minister to perhaps the greatest conference the world has even seen or will ever see, with any instructions as to what to say and what to do on great and vital issues? No, sir. Furthermore, does the Prime Minister tell us what he is going to do or say? You see, this poker game is also surrounded with dark secrecy. There are vital issues to be discussed. Do we send our delegation there knowing they are going to make any pronouncements? We do not. The result is that they can make pronouncements when they are there, if they want to, without our advice, and commit the country to something about which we know nothing at all, and no one knows what is going to happen in this very complex world.
On such great issues, Mr. Speaker, as will be faced at Paris we should know what Canada's' foreign policy is. Do we know it? I do not believe we do; there is no policy, so how can we know? I do not think there ever has been one. I often see that British statesmen have made pronouncements on certain issues. I often see that American statesmen have made pronouncements saying, "Thus far and no farther," or recommending this or that. But when did any such pronouncements come from Canada? When we want to find out what our foreign policy is, can we do so? Well, I am inclined to think the present government and the present Prime Minister have a greater power of evasion than power of pronouncement.
To get back to this dark secret about money, I said I often likened it to a huge poker game the rules of which are always against you so you cannot win. Under the present orthodox system of debt-creating money the rules are against you, and you cannot win. The rules

are against the people, and you will never come out on top until you change the rules. That is one thing the Minister of Finance refuses to do-see that the rules are changed. I believe Canada's total net debt to-day is approximately $13 billion. Somebody has been losing in the poker game over the years. Sometimes I wonder at the people giving men power to deal the cards and handle the chips when every time they come back for more chips because they have lost. The Prime Minister bids for power to run the country. What does he actually say? Give me a chance, he says, to go to Ottawa again and play this poker game: if you give me one more chance I think I might be able to win. But he never wins; he comes back and wants more chips.


Ian Alistair Mackenzie: You had better raise the ante.


Ernest George Hansell: Instead of bringing us his winnings he brings us a sad story of having to sign a lot of I.O.U.'s to somebody else. Then at the next election he says: Well, give me one more chance; you see, I am getting more experience all the time, and perhaps I shall still be able to win.


Ian Alistair Mackenzie: You will never find a better man.


Ernest George Hansell: The Minister of Veterans Affairs says we shall never find a better man, but I want to know when we are going to start winning. Then, you know7, a great man appeared upon the scene. His name was R. B. Bennett. He said to the people of Canada: If only you let me play that game, I think I can win-and he came out with a slogan which I remember reading. I was not so much interested in politics at the time, but the slogan stuck. He said, "It's time for a change."


Ian Alistair Mackenzie: The trouble is you put $25 a month into the jackpot.


Ernest George Hansell: The trouble is the present government will not permit us to put $25 into the jackpot.


Charles Edward Johnston: They stole the ante and call it a family allowance.


Ernest George Hansell: So Right Hon. R. B. Bennett said, "Give me a chance. Of course you will have to give me some chips, too, but I think I can win." What did he do? He came back for more chips, but he brought the I.O.U.'s too. The I.O.U.'s were beginning to pile up; and they were I.O.U.'s somebody else held against us. So the people said, "No, Mr. Bennett. We guess we shall not be able to do it. We will try the other fellow again;

The Budget-Mr. Hansell
he still thinks he can win." So Mr. Bennett left the country; and after he did all that playing the game and losing they made him a lord. I don't know why they did that. Well, they cannot win, yet somehow or other they refuse to change the rules. All we are saying to these hon. gentlemen, these fine gentlemen, these keen business minds, is: Change the rules and perhaps we will win. But they reply, "Oh, no; we cannot very well do that."
Now another gentleman has appeared on the scene. His name also begins with B but it is not Bennett; it is Bracken this time, and he says to the people: If only you will let me play the game, of course you will have to give me some chips too but I think I shall be able to win; you see, I have had experience for twenty years at this game-of course it was not in quite such a large field, and the stakes were not quite as high, but I have had that experience. But we say to him: What we want to know is, did you ever win?


Ian Alistair Mackenzie: Has my hon. friend ever played poker?


Ernest George Hansell: I played only one game of poker in my life-and I won. The strange thing about it is that I did not know the rules. Another fact, which is not so strange, is that I had sense enough to quit after playing the one game. That is one thing which hon. gentlemen who are playing Canada's poker game have not sense enough to do. They do not change the rules, and they will not quit.
Anyway, this other man, whose name begins with a "B", came along and said, "I know what you want. It is true that I left some I.O.U.'s to be paid; but if I get into the larger field and play the game on a bigger scale I might be able to win." But somehow or another the people thought another gentleman would be able to do it better, with the result that the Prime Minister was returned to office again-still playing the same game. He is still asking for more chips, and still piling up the I.O.U.'s.
The Prime Minister is going to retire soon to write his memoirs. I should hope the title of the book would be "Memoirs of the Great Canadian Poker Game". What we are saying over and over again is, "Change the rules; change the rules." We have been piling up these I.O.U.'s, but we have never yet won a hand. Yet they will not change the rules, and to-day Canada has sunk to a position where she is in debt to the tune of over $13 billion, net debt.
How on earth are we going to get out, under the same rules which continue to put us into debt, and which have continually failed? What stands behind Canada's bonded indebtedness? What stands behind a Canadian bond?
I declare the only thing that stands behind a Dominion government bond is the ability of the people of Canada to pay taxes. I hear no complaints with that statement. Often I hear it glibly said, oh, well, Canada is wealthy; look at our natural resources. I suggest to you, Mr. Speaker, that Canada's natural resources do not stand behind a dominion government bond. That is one place where the provinces have a little more collateral than has the dominion government. The only thing that stands behind a dominion government bond is the ability of the people of Canada to pay taxes. How on earth are they ever going to be able to pay enough taxes to pay off $13 billion in I.O.U.'s which leader after leader after leader in this country has been signing?
In his budget speech the Mn.'.ster of Finance referred to the dominion-provincial conference. I shall not say much about it, except to throw a little more light on' it, or perhaps I should say, a somewhat different light. Throughout Canada, editorially and in every other way, out went the propoganda that the dominion-provincial conference had failed. I wonder if it did. It is true that it failed to meet the suggestions of the federal Minister of Finance; but did it actually fail?
There is one place it did not fail: it proved to the country that the provincial governments had certain constitutional rights, and that when it came to a consideration of those rights the dominion government could not move without the say-so from the provinces. In my view that is an important point.
There is a move to divest the provinces of provincial rights. That is how Canada lies in extreme danger. In his budget speech the minister says, in effect, "Here is the way in which I can get the provinces to submit to my suggestion. I shall bring in a budget in which I shall stipulate certain things. I will say to the provinces, 'Here, you, sign on the dotted line. If you sign on the dotted line there will be so much coming to you; if you do not, you will have to suffer the consequences.' "
That is where the dominion government has the power. It is not now concerned with constitutional powers; it has the financial power. I believe it was Baron Rothschild who once said, "Permit me to issue the money of a nation, and I care not who makes its
The Budget-Mr. Hansell

laws." That seems to be the prescription upon which the government is now acting: "Sign on the dotted line and you will get so much. ' If you do not, you will have to suffer the consequences." That is the financial power the federal government has over the provinces-and it is a tremendous thing.
While I am talking along those lines might I point out that the same Minister of Finance in the same administration, an administration which is able to supply billions of dollars in foreign credits, is not able to supply a paltry hand-out to our own provinces who, after all, are our own people. That, to me, is a strange thing. '
Not only do we pour out billions of dollars in export credits, but the government brings in a bill known as the Export Credits Insurance Act. What is it for? It is to guarantee the chartered banks or the purveyors of credit against loss. I believe our foreign credits amount to something in the neighbourhood of $3 billion-and if my figure is not correct the minister will correct me. What does this mean? It means an export of three billion Canadian dollars; that is what it means; it does not mean anything else. We bring in a bill assuring the purveyors of credit, those who wield the fountain pens, that they will be protected if those dollars do not come back. .
Here is another thing. We are doing that in a most uncertain world; we are doing that in a world of nations whose collateral is questionable. Yet when we come to deal with the provinces which administer health services, educational services and old age pensions, what is the answer? The minister says, "Go back; mind your own business; we are sorry; we cannot give you anything; we can export our dollars to foreign countries; but we cannot give our own people, and especially our aged people, the dollar security that they should have." That is a blight on our Canadian civilization, and that alone should be enough to condemn any powerful federal government.
There is another thing I should like to say right along that line. What stands behind these export credits if the dollars do not return to us? What collateral is behind that? We have our Export Credits Insurance Act to cover insurance against loss, but who is to pay the loss; what stands behind that? It is nothing but the ability of the people of Canada to pay taxes. So we export our dollars and we say to our people, if our dollars do not come back you will have to cough up by way of taxation. That is what happens. Yet when our people in the provinces want a few paltry dollars to raise old age pensions and help the indigent, we have not enough money for them. 
Surely our own collateral is good. Surely it should be good if our dollars remain within our country. You have a chance to get them back if they are in our own country; but, "oh, we cannot do that, gentlemen."
Who told the Minister of Finance that he could not do it? Is he refusing to do it on his own responsibility? Is he saying, "I cannot do it." We want to know why he cannot and we are looking for the answer.


The ACTING SPEAKER (Mr. Golding):: The hon. member has exhausted his time.


Some hon. MEMBERS:: Go ahead.


Ernest George Hansell: I was going on to another subject, but I shall do so at another time.
Mr. JOHN T. HACKETT (Stanstead): Mr. Speaker, I am sadly in need of the lessons, both in finance and in poker, that the hon. member for Macleod (Mr. Hansell) has given to the Minister of Finance (Mr. Ilsley) and other members of the house this afternoon. I do not know how much the minister is in need of the lessons in poker, but I am in need of them and I am grateful to the previous speaker for them. As to the lessons in finance, possibly the minister and I can both give them what is called in parliamentary language, due consideration.
The Minister of Finance is a notable figure in any House of Commons, possibly the most important after the Prime Minister. Most of what he does is in fact less subject to scrutiny than what is done by his colleagues. Finance is not something apart from policy, in reality it is an expression of policy. The Minister of Finance has told the house, that many hundreds of millions of dollars are required to carry out the government's policies during the fiscal year 1946-1947. He alone is not responsible for the amount. In criticizing a budget one is not criticizing the Minister of Finance alone, he is criticizing the policy which has made necessary the raising of such sums of money. Sometimes it happens that one does not criticize the amount itself but is critical of the way in which it is intended to be raised.
It is difficult in the second week of a debate of this kind, a debate which has followed so closely in the wake of public consideration of many questions which were discussed by the minister in the dominion-provincial conference, to say very much that has not already been said. The minister has pointed out that he has prepared his budget on the assumption that no general agreement with the provinces could be .had, and he said that his task has been made extremely difficult by the fact that no general agreement was reached with the provinces. He has told

The Budget-Mr. Hackett
the house that because no general agreement was reached he intends to seek special and private agreements with the various provinces. I note that in the speech from the throne the following appears:
A meeting of the coordinating committee of the dominion-provincial conference was held in January. Progress was made in the consideration ot proposals submitted by the dominion and provincial governments. The committee will meet again on April 25.
As a result of the conference, there may be further legislative proposals.
Surely the legislation then contemplated was not the enactment of the budget resolutions.
I shall deal almost exclusively with this one aspect of the budget, the intention of the government to make private and individual agreements with, the provinces. In substance the government intends to say to each province: "If you will desist from collecting taxes we will pay you a large amount of money. If you, the provinces, will not levy and collect taxes on personal incomes, will not levy and collect taxes on corporations, will not levy and collect taxes on successions or inheritances, we will pay you a large sum of money." I am not mentioning some of the details of that offer, because I wish to deal with the general proposition. That is what the government says to the provinces. And it says, "Furthermore we, the dominion government, as a return for that concession, will pay you $15 a head for your population as determined by the census of 1941 or at a later date; we will guarantee that that payment will be at least 50 per cent greater than the payments made to you under the wartimes agreements; and we will furthermore undertake to increase these payments as your population increases and as your production per capita increases."
The minister has placed on record a table which shows approximately what this means. It shows- that the amount guaranteed als a minimum if all the provinces accept the proposal is $181 million, that it is likely to be $198 million per annum, and then of course there is the possibility and even the probability of increase.
I want to say here that I am not adverse to assistance being given to provinces, assistance based on need, and my party is not adverse to that principle. What I object to is the method by which it is sought to administer that assistance, and it is to that method and its result that I intend to direct my remarks this afternoon.
I do not understand that any province is adverse to a method whereby need may be taken into consideration in a reallocation of 63260-218
the revenues of the country. I find at page 221 of the records of the plenary session of the dominion-provincial conference this utterance by the premier of Quebec:
The federal proposals are unacceptable for the very many reasons I have given and which it would be unnecessary to repeat. As stated by me the door is left open-if I may say so without offence to anyone-for Ottawa to come to a better sense of proportion. The door is left open for friendly cooperation and understanding, based upon the fundamentals of the constitution and taking into account the past, the present and the future.
At the time of confederation the chief sources of revenues were customs duties and excise taxes. They were indirect taxes, and they were allocated to the dominion. Since then, changes have taken place, and direct taxes, to which the provinces were restricted, have become a greater source of revenue, greater by far than the indirect taxe3 to which the dominion resorted at the time of confederation. I believe that these facts should be taken into consideration. I see no objection to a reallocation of the revenues available for purposes of government. But I do object, and I object with all the sincerity and with all the vehemence that I can command, to the methods by which it is proposed to bring about that reallocation. And here are some of my objections.
The province of Quebec, for instance, has an annual budget of something under $100 million : under this proposal it would receive from the dominion government just under $60 million a year. The province of Ontario has a budget of about $100 million, and under this arrangement it would receive something like $65 million a year. My suggestion is this, that we have received a constitution, and part of that constitution is parliamentary, representative and responsible government. At every moment of every day a government stands poised on the confidence of the house and of the people of the province or the dominion. It is the duty of government to raise the moneys which are required for the purposes of government. It is the duty of government to account to the house for every last penny that is raised and spent for purposes of government.
It is there that we find that the genius of those from whom we descend has expressed itself. It is in that series of balances and checks that a form of government has been evolved which gives protection to the property owner, and meets the needs of those who are in distress.
Now, what is the result here? We would find a province receiving, in the two instances that I have mentioned, something like sixty or possibly more, per cent of its revenues as-I

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was'going to say-a hand-out. These governments would be receiving it from an agency to which they would owe no responsibility whatever; they would be getting it, not from those whom they had taxed, but from someone to whom they owed no duty to account. That would mean extravagance. Money from home is always money easily spent, and money that has come to one from a friend or money that one finds is never accounted for with the same care that is exercised in accounting for that which has cost effort to get.
Then we come to the other side of the medal. Here in this house there would be at least $200 million a year for which nobody would be accountable. The Minister of Finance would rise in his place and say, "I have paid $200 million to the provinces" and we would have to say, "how' nice." If we asked how much of that money had been wasted in one province or another he could give no answer. There would be no check upon waste. This proposal is entirely subversive of our whole parliamentary system. Moreover, I submit, though I have been unable to find any case absolutely in point, that this proposal is entirely unconstitutional. Where is there in our constitution anything that permits the government of a province for instance, using the colourful language of the Minister of Finance, to lease a field of taxation, to sell a right of taxation? Where is there anything that entitles the government of a province to barter away its right of taxation, or a province or the dominion its duty to account to those from whom it collects the money?
I have scrutinized the British North America Act very carefully and I can find nothing in any of the subsections of section 91, which contains the powers of the dominion, and I can find nothing in the subsections of section 92, which contains the powers of the province, that warrants such an undertaking. Furthermore, wherever there is any intimation of one legislative body impinging upon the field of the other, it is very carefully and specifically stated. For instance, if one turns to section 94, which has to do with the common law in the provinces other than Quebec, one finds that it is competent to the dominion to enact legislation imposing the common law upon any of the provinces other than Quebec. That is a privilege of the dominion, but it is conditioned upon the province which is affected by such legislation passing concurrent legislation. One also finds that where the judges are appointed and paid by the federal authority, and where they come under the control, discipline and organizing power of the province, it is specifically laid down in the act that such divided jurisdiction obtains.
fMr. Hackett.]
Further, we find in section 12-I think that is the section where all the powers which at one time were vested in the legislatures which preceded confederation, or which were conferred upon them by imperial statute were handed on to the parliament of Canada-that in none of the subsections is there anything that suggests a right whereby the dominion should purchase or enter into an agreement under which the constitutional function of a province should cease in order that the dominion might have greater taxing power than it would otherwise have.
It is perhaps of interest at this point to refer to the constitution of Australia, because in that country, under article 51, which is the counterpart of section 91 of our constitution, there does exist a right which would warrant, justify, enable and permit a transaction of this kind. It is foupd in subsection 37 of article 51 and is in these terms:
Matters referred to the parliament of the commonwealth by the parliament or parliaments of any state or states, but so that the law shall extend only to states by whose parliaments the matter is referred or which afterwards adopt the law.
So we are embarking upon a course which is entirely new. We are embarking upon a course for which there is no direct legislative authority. We are embarking upon a course which no one would ever have thought of until the great necessities for money which are now upon us were felt. It is interesting to note how this tendency to increase the amount of money which is levied by this parliament, and which escapes the scrutiny of the house, is growing. On turning to the estimates for 1947, one finds that in a total budget of something like $1,566 million, something like $876 million is authorized by statute, of which $580 million represents interest on our obligations, while $285 million is charged to the Department of National Health and Welfare and includes cost of legislation which was enacted about a year ago.


Mr. CLAXTON:: And family allowances and old age pensions.


Mr. HACKETT:: And family allowances and old age pensions. I point out the tendency to increase these statutory amounts which, like the salaries of judges and officials, are beyond the power of this house to criticize effectively or to control at all. And here I want to make a point which I think may have escaped the attention of some. In 1937 a royal commission was set up, frequently referred to as the Rowell-Sirois commission. It is the royal commission on dominion-provincial relations. At that time the

The Budget-Mr. Hackett
necessities which brought about the most useful examination of these problems were almost exclusively the necessities of a few provinces which had not sufficient revenue from direct taxation-especially since the invasion of the field by the dominion authorities-to carry on their governmental activities with any degree of comfort. The situation is now quite changed. While there is still a need for reallocation of the taxable revenue of Canada at large, the most necessitous of all these agencies is the dominion government. The one which cannot wait, the one which is insistent is the dominion. A strange aspect of the budget is this. In the royal commission report it was suggested that a reallocation of revenues might become necessary, and one finds the following at page 72 of the second volume of the report:
One of the difficulties inherent irr any federal system is the rigidity which marks the division of jurisdiction between the central and local governments.
A little farther along we find the following:
Our instructions obviously contemplated the suitability of a reallocation of powers which would require constitutional amendments, and we are reporting as to what in our opinion will "conduce to a more efficient, independent and economical discharge of governmental responsibility in Canada."
Then farther on they say:
We desire merely to emphasize the necessity that some procedure for constitutional change should be evolved.
We think that the introduction of a measure of flexibility in the Canadian federal system should be considered. A number of provinces may on occasion be willing and may even actively desire the dominion to assume responsibility for a function which is beyond its constitutional powers. The dominion may itself be willing to assume the function but be unable to do so until public opinion has developed to the extent of permitting a constitutional amendment to be made.
I point out that it was at all times understood there could be nothing in the nature of a reallocation of revenues similar to those mentioned in the budget until there had been a constitutional amendment. To-day it is said an amendment is not necessary. It is well to remember that the royal commission on dominion-provincial relations made its report before the war. When the war came, agreements between the provinces and the dominion were entered into, and the dominion is now in possession of these so-called fields of taxation; the dominion is in possession of the territory.
In passing I may say, as an interesting feature, that the dominion was given these rights to tax for a definite period and for the purpose of winning the war, and that at a certain moment the dominion government diverted the proceeds of these rights to tax 63260-2184
from the purpose of winning the war to the purposes of winning an election, which just shows one of the difficulties which will ensue from the prosecution of this centralizing policy. But let us go on. Under these agreements the dominion has the exclusive right for a time, and I am sure that my hon. friends will not argue that because under the peace, order and good government enactments of section 91 they were given, as a result, and because of the emergency arising out of the war, the right to occupy the provincial field, that right remains in them for any additional period. I believe that has been established by the passage of the legislation in December last when the transitional emergency was born. We produce emergencies with greater facility than we used to. It was never intimated, never suggested, that these powers whereby the dominion would exclusively collect moneys by direct taxation would remain. I am aware that judgments of highest authority have held that the dominion has the right to levy taxes of all types, direct and indirect. Nevertheless these private agreements which the dominion offers to the provinces-one by one-go farther. They would result in the suspension of the most considerable, the most elementary, the most fundamental function of government, namely, that of levying taxes and being called upon to account for them. But the dominion is in possession of the field. It collects from income and corporation taxes something like SI,550 million. The minister has said somewhere that he thinks it should be reduced to $1,200 million, because of some changes that are about to become effective; nevertheless there are SI,200 million, without considering succession duties, which the dominion seeks. It is going to spend these amounts and from them it undertakes to give the provinces about $200 million a year. It is going to do all this without amending or attempting to amend in any way the British North America Act.
Speaking at the plenary session of the dominion-provincial conference, the Prime Minister (Mr. Mackenzie King) said, as reported at page 9 of the proceedings:
In all its proposals, the dominion has assumed that Canada's federal system of government should be preserved and strengthened. I should like to repeat what I said at the plenary session on August 6, last.
I skip a bit, and continue:
The only constitutional change suggested is the proposal, already mentioned, for the delegation of powers, and with this one exception under which the dominion is prepared to enlarge the powers of the provinces, none of the dominion proposals would require an amendment to the British North America Act, or involve any fundamental disturbance of the
The Budget-Mr. Hackett

traditional pattern of confederation. In this unsettled period of world transition, it would be unwise to seek constitutional change, or to make irrevocable commitments. What we are now seeking is to meet urgent needs, on a temporary basis, by the simplest and most effective means.
To say that the constitution of the dominion may be so completely perverted, so completely uprooted, and to refer to it as a mere passing event reminds one of those incidents to which the newspapers gave some notoriety a few years ago, and which I believe they called trial * marriages. The provinces cannot undergo for three or five years the experience of the type outlined by the minister and survive; the integrity of the fiscal organization of any individual province could never be revived. We know now the great difficulty the dominion is experiencing in returning to the provinces those exclusive rights it derived from them for the purpose and the period of the war. I think it fair to assume that if the federal government obtain these exclusive taxing rights for a period of five years they never will be returned to the provinces.
I want to make one further statement, and I hope my hon. friends will not think I am attempting to be unnecessarily disagreeable. My province has been torn and victimized for twenty-five years by a fear of something called conscription. The good people of that province were told-and if anyone here is anxious to hear what was said I have the newspaper clippings-that they owed no service in wars overseas; and they were told that upon the highest authority. As a result of that policy which was preached in one province but not in others, a parliamentary majority was obtained and maintained in this house for twenty-five years by hon. gentlemen opposite. War came and the nation was torn asunder. I pray that now hon. gentlemen opposite will not attempt in the economic field to convert the necessities of those provinces which at the moment have not the wealth which enables them to draw, from direct taxation, the moneys they need for their maintenance and self-support, into a party advantage. I ask that an end be put to dividing in order that one may rule. If it be competent to the minister and the government to make a special trade with a friendly province; if it be competent to go to a province and enter into an agreement which will deny it the power to tax and the power to scrutinize, I ask, what would happen to that province which happened to be in opposition to the party in power, whether it be the party now in power or another party, if that party should not like the economic doctrines or the political creed of the needy province? We all remember the day when
rMr. Hackett.]
something was said that there was not a five-cent piece for a Tory province. Much as I dislike referring to that incident, because I do not believe the statement was meant, it does show to what extremities a government might go to starve a recalcitrant province into submission if the pernicious doctrine enunciated by the minister were admitted.


Mr. ILSLEY:: If I may ask a question, assuming that the dominion government were prepared to act on such principles, would there not be much greater danger of abuse if the hon. gentleman's programme of assistance on the basis of fiscal need were adopted than assistance on the basis of a formula or rule laid down in advance?


John Thomas Hackett: There should be a formula or rule laid down in advance; I agree with the minister. But when the formula and the rule establish a definite overlordship of the dominion and make a vassal out of a province, then the formula is a bad and objectionable rule. They should be replaced by something more effective and more equitable.


James Lorimer Ilsley: I am afraid that does not answer the question.


Mr. WILLIAM BRYCE (Selkirk):: Mr. Speaker, in rising to take part in this debate I do not want to cover the ground that has been covered already by my colleagues, but I agree with them that the exemptions in the lower income tax brackets are far from satisfactory. I welcome the consideration the minister has shown the fishermen and farmers in allowing them to average their incomes over a three-year period. That is only a partial step; but it is in the right direction.
There is one phase of the income tax to which I had hoped the minister would give some considerable thought, a matter I have brought to his attention before. On the farm the whole family works as one unit; yet when the income tax return must be made up the tax is levied only on the one income, that of the farmer. Previously the minister pointed out to me that other women and other families work, as well as the farmer's wife and family, but again I should like to draw his attention to the fact that the farmer's wife and family contribute more to his income than is the case in any other business. I do not want to elaborate on this point, or go into details, but generally speaking the farmer's wife adds more to the income of the farm than in any other case that can be cited. The same can be said of the farmer's family, who increase the income of the farm by their efforts in connection with milking, haying, harvesting, feeding live stock and the many other chores around the farm. But when the income tax

The Budget-Mr. Bryce
form is filled out, the income of the whole family is reckoned as the farmer's income, and it is taxed as such. I should like the minister to give attention to this point and see if there is not some other way of granting relief where the entire family produces the income that is taxed.
I wish to go on record as endorsing what the hon. member for Swift Current (Mr. Bentley) said regarding cooperatives. I do not want to repeat his argument, but I want the minister to know that I am wholeheartedly in support of what the hon. member said.
I regret that in this budget the government, through the minister's department is forcing the cooperatives into a profitmaking class, by this three per cent return on capital investment. The minister is classing two different things together in his taxation, two things which should be separated, namely joint stock companies and cooperative societies. One is a service for profit and the other is a service at cost. You can mix them, just as you mix oil and water; but they will not stay mixed. They are entirely different, and represent two different ways of doing business.
I was born in a cooperative home. I have been a cooperator all my life, and I cannot help thinking at this time that in putting cooperatives in this position the Minister of Finance is trying to destroy the principles for which they were formed.


James Lorimer Ilsley: The hon. member has said that he was born in a cooperative home. In the cooperatives to which his family belonged were not interest or dividends paid on the capital invested in the cooperative by its members?


William Scottie Bryce: No.


James Lorimer Ilsley: None?


William Scottie Bryce: No. The minister will find on the records of this house for 1906 a description of the cooperative to which my mother belonged and which is operating in Glasgow, Scotland, to-day.


James Lorimer Ilsley: In the Rochdale type of
cooperative I thought it was usual for interest or dividends to be paid to investors, those who put their money in.


William Scottie Bryce: One share. I said I had been a cooperator all my life, and I am wondering if what I consider a cooperative, and the minister's understanding of the term, are the same. I know he must look at it differently from what I do.
I should like, through you, if I may, Mr. Speaker, to have permission to place on Hansard the contrasting features between a joint stock company and a cooperative society, as outlined by Mr. J. T. Hull of Winnipeg, when he presented a brief to the Canadian royal commission on the taxation of cooperatives at Winnipeg on February 5, 1945.


James Lorimer Ilsley: I am sorry, but I cannot agree to that. If hon. members are permitted to put briefs on the record, I suggest we would be going too far. Up to now permission has been given to place tables on the record, or material the reading of which would be most inconvenient. But I must object to the insertion of briefs.


Angus MacInnis: I am in agreement, in
principle, with what the minister has said. He is not correct, however, when he says that up to now what has been placed on the record has consisted of tables. A long brief was put on Hansard the other evening. I am not suggesting that that practice should continue, because I think it is a wrong one; all I say is that the line should be drawn impartially among all members.


James Horace King: I do not wish to deprive the hon. member of any privilege, but I ought to point out to him that the permission . to place memoranda on the record is one which is granted occasionally by the unanimous consent of the house usually to members of the government to enable them to have certain official statements incorporated in the report. The privilege is one which, however, should not be taken advantage of generally. If the house were once to adopt the practice of placing documents and memoranda on Hansard, Hansard would soon become overencumbered.


William Scottie Bryce: I agree with what the minister has said, and with Your Honour's observations. However, to support my argument I shall read the contrast. It is as follows:
The Contrasting Features of a Joint S'tock Company and a Cooperative Society
A Joint Stock Corporation
1.	Is a union of capital as an investment to earn a profit.
2.	Shareholding may be anonymous; shares are freely transferable and may be held by anyone.
3.	Is limited (as a general proposition) in the number of persons owning the business,
i.e., the shares are limited in number.
A Cooperative
1.	Is a union of persons to supply themselves with goods and services at cost.
2.	Shares are identified by persons; the shareholder must be admitted to membership or transfers must be approved by the board of directors.
3.	There is no limit to the number of persons who may participate in the business within its range of operations, i.e., the number of shares is not limited.
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The Contrasting Features of a Joint Stock A Joint Stock Corporation-Con.
4.	The shares being limited in number they will fluctuate in value according to the profits they earn.
5.	Control by the individual is determined by the number of shares he holds.
6.	Surplus earnings, i.e., profits, are the property of the corporation.
7.	Surplus is divided among the shareholders on the basis of the number of shares held.
8.	No limit to the dividend paid on share capital.
9.	The joint stock company does business in a general way with the public; the buyers and sellers (the parties to the business transactions) are distinct and different.
10.	The selling price is normally above cost price and the surplus constitutes a trading profit.
11.	Business is done for the express purpose of realizing the trading profit which becomes the property of the corporation.
That is the difference between the two methods of doing business. Here to-day we have a discussion going on as to whether pools are cooperatives, or whether they are not. We have no yardstick to go by. We have no dominion cooperatives act. The government of to-day-and those of the past, both Liberal and Conservative-have failed to say what a cooperative is, and to-day we have people in doubt.
The minister says, in his budget, that the pools are subject to taxation for 1944 and 1S945. There seems to have been a great deal of doubt about this. Had the government brought in a cooperative act there would be no doubt at this time.
I understand that a cooperative bill was introduced in this house in 1906 and referred to a special committee. It seems to have been received favourably at that time, because a special committee of the house was set up to look into it. In the Journals of the House of Commons, volume 62, for 1906-1907, I find on pages 70 and 71 the evidence given before the committee by Mr. Mackenzie King, then deputy minister of labour, who was a witness before the committee. From his remarks I quote the following:
Leading economists of to-day both in England and the United States, men who have not at heart the interests of one class of society as against^ another, but who look impartially upon economic affairs, are pretty 'well one in the favour with which they view the cooperative movement as a movement exceptionally bene-
[Mr. Bryce. 3
Company and a Cooperative Society-Con.
A Cooperative-Con.
4.	Every shareholder must be a member, thus the shares are not limited and cannot exceed par value.
5.	A member has one vote and no more regardless of the number of shares he may hold.
6.	Surplus belongs to the members, i.e., the customers.
7.	Surplus is divided among the members in proportion to the amount of business each does with the society, except where a limited interest on capital is paid.
8.	Fixed maximum rate set for dividends on share capital; in some societies no dividend paid on capital.
9.	The cooperative is organized to do business with its members; buyers and sellers constitute one body and are identical.
10- .The selling price is an arbitrary figure containing a margin of business safety above cost and the surplus constitutes an excess charge, or in the case of a marketing cooperative, an underpayment.
11. The business is organized and conducted as a mutual service for the benefit of the members and not for the benefit of the cooperative as a legal entity.
ficial from a point of view of educating the masses of the people, from the point of view of enabling the masses of the people to improve their conditions, and from the point of view of the general betterment and welfare of the people of a country.
In the election campaign of 1911 the leaders of both parties promised cooperative legislation. To-day the organized farmers and cooperatives are still demanding a dominion cooperative act. It is another promise that was made and never fulfilled. Perhaps that is the first step, to put legislation on the statutes of Canada as to what a cooperative is. You would then not have this trouble. It must be remembered that if you assess this retroactive taxation against the wheat pools and other cooperatives you will take the money, not from the pool organization or the other cooperatives, but directly away from the individual farmer who has this money to his credit. This money is credited to him and would have been paid out to him had the government acted rightly in the matter. This constitutes nothing but a capitalist raid on the collective savings of working farmers.
Who will suffer the most? The farmer's wife and the farmer's children are going to suffer again. These farmers built up these cooperatives to have service at cost, to raise their standards of living, to have better education for their families, to provide better homes in which to live with more modern conveniences. I want to assure the minister through you, Mr. Speaker, that if the farmer's

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patronage dividends, when added to the rest of his income, bring him within the taxation brackets he will willingly pay. I have a press clipping from' the Free Press of June 18. This is an article by Chester Bloom. I shall not take the time to read it all, but in part he says:
Manitoba farmers led the farmers of all Canada in numbers assessed with income tax in the fiscal year. 1944-45 according to a reply in the house Monday afternoon to a question put by G. H. Castleden (CCF-Yorkton).
The total number of Manitoba farmers assessed that year with income tax was 5,562. Next came Ontario with an even 4,000; Saskatchewan, third was 3,465; Alberta, fourth with 1.316, and British Columbia, fifth with 911. Compared with those numbers, the farmers assessed for income tax in the remainder of the provinces "were negligible, as follows: Quebec. 251: Nova Scotia, 83; Prince Edward Island, 82, and New Brunswick, 44.
According to the Canada Year Book, the latest figures given for the numbers of farms in these provinces were shown as follows: Manitoba, 57.810; Saskatchewan, 138,370; Ontario, 175,749; \lberta, 98,985; British Columbia, 25,980; Quebec, 151,850; Nova Scotia, 32,401; Prince Edward Island, 12,144; New Brunswick, 31,731.
That shows that the farmers of Manitoba will pay their income tax if they have anything to pay it with.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


William Scottie Bryce: To continue from where I left off before supper, perhaps I should touch on some material I have received from the Winnipeg grain exchange; at least it came in one of their envelopes, containing a number of advertisements, which appeared in the western papers, prepared by the grain exchange and putting their point of view before the farming population of Canada.
The first advertisement says, "Who dares speak for Mr. Prairie Farmer?" Well, I can assure hon. members that I have been speaking for the prairie farmer in Manitoba for twenty-five years. I have always spoken on his behalf, both when I was on the farm and when I was president of the Manitoba federation of agriculture, and to-day as member for Selkirk I am still speaking for the farmer. I have nothing but the good and the prosperity of the Canadian farmer at heart, and I am sure that the rest of my days will be spent in working for the advancement of the farmer.
The first advertisement outlines wheat prices in the United States and at Fort William, the two .main trading centres. It says,
"You get less than $1.55 in Canada. The United States farmer gets $2.18 a bushel for his wheat." I do not think very much of this argument. The grain exchange omitted to tell our farmers that the United States price must conform to the ceiling set by the United States authorities; it is said to be related to the American formula for parity with the things the United States farmer has to buy, and it cannot be considered a world price. Taking the general necessaries of life, the common things we need to buy, I think everybody will agree that a Canadian bushel of wheat at $1.55 will buy as much in Canada as a United States bushel of wheat at $2.18 will buy in the United States. No doubt the grain' exchange or some individual can point out that automobiles and oil are cheaper in the United States; but if we take the necessaries of life which the farmer has to buy for his own family, the one bushel of wheat will buy as much as the other.
It is claimed by the Winnipeg grain exchange that the open market would bring the price of wheat up to the United States price, which they claim is the world price. I do not agree with that. Let us look at our experience of the past when the open market prevailed. Two years after the beginning of the war, to be exact, on February 2, 1942, hon. members will find that the Winnipeg May price was eighty cents and the Chicago May price was $1.29.


Mr. JACKMAN:: How can you tell?


William Scottie Bryce: By the papers of that day.


Harry Rutherford Jackman: With the grain exchange operating?


William Scottie Bryce: A difference of approximately fifty cents. It is really only forty-nine cents, but there were fractions, and I am not quite clear what the fractions were. If the argument of this advertisement is of any value, why at that time was there a fifty cent spread? And the Winnipeg grain exchange did nothing about it when they had an open market to work on.
In the Searle grain report of Wednesday, April 13, 1946, it says, "The exchange does not make the price"; so why bring this argument in, and flood western Canada with it, when with an open market we could get no more for our grain?
I have been an advocate of a wheat board which could guarantee a steady price from year to year so that the farmer knows what he is going to get for his produce. In any other industry the person who has something to sell takes into consideration, in setting the
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selling price of his product, the cost of production plus a reasonable return for his labour. The farmer was forced to take what the grain exchange was willing to give him.


Robert Fair: What was left after the grain exchange got theirs, you mean.


William Scottie Bryce: That is right. He has had to sell his product in a market controlled by someone else and to buy the necessaries of life in a market controlled by someone else. There are many hon. members who remember the great demand by the private grain trade after the last world war that the wheat board be discontinued, and the farmer allowed to get the price to which he was entitled.


Robert Fair: And the same cry in 1932.


William Scottie Bryce: The same cry to-day by the same people. When the grain exchange came into the open market in August, 1920, wheat was $2.73 a bushel. But let us look at October of the following year; wheat was back down to $1.09. What benefit was the open market to us in those days? None whatever. Had the wheat board been continued, we at least would have had a steady price and an equal price for everybody instead of a fluctuating market.
Then, coming to December 16, 1932, with the open market still in full control, wheat dropped to the lowest record on record, 38| cents, on the Winnipeg market. It has been stated that this was the lowest price for wheat in 400 years. And the Winnipeg grain exchange, which was enjoying am open market, could do nothing about it. No doubt that is when they found out that the grain exchange does not set the .price.
Coming back to the advertisement again, it says, "Will you be satisfied with $1.25 for your wheat?" This statement was challenged and corrected by the press on June 19; but the grain exchange people and the private trade kept on using it because, no doubt, it suited their propaganda. Let me read to the house the statement of H. H. Hannam, president of the Canadian federation of agriculture, issued to the press on June 19:
On returning to Ottawa I am amazed to learn that reports which are entirely erroneous have been circulated in Canada during our absence, about the stand taken by the Canadian delegation while attending the recent international farmers' conference in London.
One statement at hand referring to the price of wheat says "the delegation stated that western farmers are prepared to accept a minimum wheat price on a long time contract at $1 a bushel with a maximum of $1.25." This statement is so completely untrue that it is ridiculous. 
No member of the Canadian delegation at any time suggested a long time contract at $1 a bushel or a maximum price of $1.25 a bushel.
In the official presentation from our delegation to the conference, reference was made to the wheat price programme purely to illustrate the pointy that Canadian farmers will support the principle of a stabilized price on a long time basis, but no mention whatever was made of any price per bushel in that statement. And the statement was read to the conference without supplementary comment.
To answer the question further, "Will you be satisfied with Si.25 a bushel?" may I say that we have been forced to take a lot less in times past when the grain exchange was in full control.
In the future surpluses will become necessary reserves for the food and agriculture organization. If we ever have surpluses, let us trust our farmers' organizations and the Canadian wheat board, and not the Winnipeg grain exchange, which has failed us in the past.
Further down, this advertisement says that even the British farmer got $1.78 for his wheat this year and that the French farmer was guaranteed $1.78. Let us look at this. The Canadian farmer sells his wheat at Fort William for $1.55 a bushel. It takes approximately twenty cents a bushel to take it to seaboard; that is Montreal or Halifax. So that makes $1.75 for the wheat at seaboard, and to equal the British or the French farmer's price it has to be taken across the ocean for three cents. It must be obvious to any unprejudiced person, or any person who has any sympathy for the people in the countries that have suffered so much, that the price we are receiving over there must be around $1.90, or about all that they can possibly be expected to pay.
We can hope that negotiations now under way will announce a price suitable to both parties; and while agreements may be bilateral for the time being, it will ultimately lead to an international agreement. We must adopt the principles of the united nations food and agricultural organization whose policy is to live and let others live too, sharing the food of a bounteous world.
The grain exchange was opened in 1903 and had a laudable object in view in those days. That was a place where men went to sell wheat and other men went to buy. But that was in 1903 and we have made vast strides since then. The method, while suitable in 1903, is far from being suitable to-day. A farmer who might go and cut wheat to-day with a reaper as in 1903 would be laughed at. He does not do that. He goes with a combine to-day. He is employing more modern ways of harvesting his crop. But the grain exchange is still the same 1903 machine.

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Operations on the grain exchange are closed now because they failed to function or were not needed during the war years. During the first war the wheat board was needed because the grain exchange system was found wanting. In the hungry thirties, when the price went to 384 cents, there were cries all over the country to reestablish the wheat board, and again in the critical years of the second war the wheat board had to be made the sole marketing agency, since the out-of-date grain exchange system was not needed and could not fill the bill.
The wheat board has proved to be a modern way of marketing grain. Why go back to the old method now? In the forty years that the Winnipeg grain exchange has existed, I would point out to hon. members that there have been eighteen commissions in all which have sat and inquired into its operations. I know many hon. members admit that, but point out that the commissions never found anything wrong. But I am sure that When an organization needs a commission appointed approximately once in every two or three years to inquire into its business, there is an impression that something is very wrong; and looking over those commissions which have sat over the last forty years one asks who sat on them and how many farmers were on them. Had there been some bona fide farmers on those commissions, I am sure that some of the conclusions arrived at would have been much different.
One of the last times I spoke in the house I spoke of parasites in the grain trade, and I have been reminded by Major Strange, a prominent grain authority at Winnipeg, that he has never seen any parasites in the grain trade. I never thought that Major Strange would take my statement to mean the employees of the grain companies. Far from it; when I speak of parasites in the grain trade I am talking about the man who has the gambling instinct, the instinct to buy and sell to make easy money, speculating on the grain exchange.
I recognize the research work that has been done by the different companies, but that has nothing to do with speculation on the grain exchange. The man who has that gambling instinct in his blood can go to the horse races or to the greyhound track. I know from experience that when you go to the races you do not hurt the jockey; you do not hurt the racehorse; you only hurt yourself. But if a man starts gambling in the food of a nation, then he is harming others. He is creating false markets and is depriving the farmer of that steady market which should exist for twelve months of the year.
Look at rye to-day. It is a disgrace to Canada that this government ever allowed speculation to continue in rye. I have statistics from the Sanford Evans-statistical service, and if you follow these figures through 1944, 1945 and 1946 you will find that when the farmer was unloading his rye it was always cheaper than when he had no rye to sell.
If the farmer sold his rye when the markets were high he would get a high price, but the market is high only when he has nothing to sell. Moreover, as my hon. friends know, taxes, mortgages, agreements of sale and other expenses generally have to be paid in the fall and the farmer is forced to sell at this time when the price has always been much lower.
It would be interesting to know how many bushels of rye have been sold in 1946-rye that never existed or was never grown. When the grain exchange was asked for this information it did not think it was in the best interests of the people to give it. We can rest assured, however, that the visible supply of rye was sold many times, over and over again.
In conclusion, I do not think I could express my views better than to quote from an editorial in the Western Producer of July 4, 1946:
Public memory is notoriously short, but the farmer we believe retains his longer than the average. He will not yet have forgotten the tragic recurrence of slump and boom which has transformed the basic business of farming into almost a gambling venture. We do not propose to go into particulars here, but in the time-honoured tradition of tile after-dinner speaker, we may be permitted to make a point by recounting an illuminating and absolutely true story. One of the giants of the world grain and milling business was recently discussing the future of wheat. He is a convinced believer in the "open market" and made no bones about it. One of his listeners ventured to suggest that if the grain exchanges were allowed to operate freely at the moment wheat would almost certainly advance sharply. He wondered whether this big operator with huge milling interests would welcome such an advance? He got his answer. "Three dollar wheat," said the operator, "is the quickest and the shortest way to fifty cent wheat."
That remark is one which every farmer should ponder long and deeply.
But why go on? The overwhelming majority of western farmers have, time and again, demonstrated their unanimity on certain vital points. Among them are these: they want the Winnipeg grain exchange erased, blotted out, done away with for all time; they want the wheat board recognized and accepted as a permanent part of the marketing system; and, to take the place of the madly fluctuating "open market", they want a negotiated, stable price fixed from time to time at a level acceptable to the producer

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and the consumer. These are the truths which the farmer holds to be self-evident and about which, there is no argument.
In one of the last grain, bulletins to come to my desk the editor refers to the so-called farm organizations being cooperatives and not representing the farmers. There are many farmers in the farm organizations who do not belong to the pools or other cooperatives-* I am one of those who do not belong to the pool-but for the grain exchange to come along and claim to represent fifty per cent of the western farmers is too funny for words.
Let the record speak for itself. Since the days of the patrons of industry right up to the present time the grain exchange and private grain trade have fought against every move the farmer has made to improve his condition. Think of the fights that have been put up regarding: (I) The expulsion of the first farmers' grain company from the Winnipeg grain exchange for their announced intention to pay patronage dividends. (2) The lobbying by the grain trade for the discontinuance of the Canadian wheat board in 1920. (3) The bitter campaign of misrepresentation by the grain trade against the wheat pools in 1929 and subsequent years. (4) The violent opposition of the grain trade to the present wheat board established in 1935.
Oh, no, no farmer who has lived on these western plains and produced the grain by the sweat of his brow over the last forty years will ever forget these things. Speculation and gambling in food with two-thirds of of the world hungry and starving cannot and will not be tolerated. The grain exchange is doomed. The writing is on the wall; it is there in large electric lights. Orderly marketing is the modern way.
Mr. Speaker, my last words are, let us remember that in many farm, homes, men and women, regardless of present prosperity, long for the day when stabilization and reasonable security will replace fear of the future.


Mr. THOMAS REID (New Westminster):: In rising to take part in this debate I am almost tempted to answer the remarks which I heard around me just before I rose to my feet. One hon. member said that this looks like Caledonia night. I say to the hon. member for Selkirk (Mr. Bryce), do not be discouraged. I remember when I came to the house back in 1930. When I made my first speech I was told that there were only two languages permitted in the House of Commons, namely, the French and the English. I can tell the hon. member that since that
[Mr. Bryce. 1
day hon. members have understood, if not by words, at least by gestures, all I really meant to convey.
My first words are to compliment the Minister of Finance (Mr. Ilsley) on the budget which he has just brought down. I wish to compliment him not only on the present budget, but on his handling of the finances of Canada during six strenuous years of war. It has been my good fortune to sit in the house under six finance ministers. I recall each and every one of them, but I have one particularly in mind, who I now understand lives among the mighty in Montreal. I refer to the Hon. Charles Dunning. I well remember him as minister of finance, on being asked to expand the amount given to the old age pensioners, rising in his place and asking, where will the money come from? He is probably remembered to this day as the man who asked that question. The Minister of Finance has answered that question fully, because by his ability and the efforts of his officials he has raised the largest amount of money to be expended throughout the years of war that has ever been raised by any finance minister since confederation. We were disappointed when we heard rumours that the Minister of Finance would, perforce, have to take a holiday. All hon. members who know something of the work of the cabinet ministers realize that there has been no harder worked cabinet minister or one who has burned the midnight oil longer than the present Minister of Finance. However, I was not surprised when the Prime Minister (Mr. Mackenzie King) announced to the house that he would take advantage of the well earned holiday of the Minister of Finance by asking him to go to Geneva to represent Canada at the Geneva conference. I am not at all surprised at the Prime Minister doing that, because a more able minister he could not have chosen.
Since the Minister of Finance has consented to go to Geneva the country and parliament should have a statement from him on his return and from the Prime Minister on his return from the Paris conference regarding the many conflicting statements which have been appearing in the press in regard to conditions in Europe. I am going to draw the attention of the Minister of Finance to a statement accusing UNRRA of a grave charge. I shall ask him to investigate this and other matters as well in connection with UNRRA when he goes to Geneva. On his return I trust that in his official capacity as representing the government he will be able to inform the house just what is going on there. The statement to which I refer appeared in

The Budget-Mr. Reid
the National Home Monthly of Winnipeg, of May, 1946, and was written by Leonard Mosley. The magazine may be found in the reading room. Mr. Mosley writes:
Any afternoon this spring, in the narrow streets behind Omonia square, in Athens, you can see large groups of pinched and ragged urchins slopping miserably about in the mud. All around them piled high on barrows and stalls are the shoes that should be on their bare feet, the coats that should be warming their rieketty bodies, and the tins of food they should be eating. But the shoes cost $160 a pair, the coats $240 each, and the meat, butter or beans $6 a can. Yet Canada and Britain and America paid for all those goods on these black market barrows. They are UNRRA goods sent to this country at our expense to keep these Greek urchins . . . and the story of how they got on to the black market is typical of what happens to UNRRA in a land like this . . .
In the six months which ended last December UXRRA imported into Greece $18,000,000 worth of foodstuffs and another $56,000,000 worth of clothing . . . that, combined with internal resources, should have given every Greek 2,000 calories daily . . . and clothed all who really needed it . . . despite some magnificent work by Canadian, American and British personnel in Greece, the supplies that should have saved the lives of hundreds of people were diverted to the black market or blocked by Greek officials for political reasons.
Then Mr. Mosley goes on to tell the entire shocking story. If these statelnents are true I think it is time we reviewed the entire situation. What is everybody's business is nobody's business. If those conditions exist, in my opinion it would have been far better, and would be better now, if Canada handled the distribution of her own goods. The people of this country have contributed largely to the funds of UNRRA; yet the goods have not reached the people for whom they were intended. Then this writer speaks about surpluses in Denmark. I trust the Prime Minister (Mr. Mackenzie King), the Minister of National Health and Welfare (Mr. Claxton) and the Minister of Finance (Mr. Ilsley) will travel through these countries and, when they come back, tell the people of this country and parliament just what they have actually seen. These statements and letters which have been appearing in fhe newspapers from people who have held high official positions in these countries, are disquieting. Just a few days ago i saw that Right Hon. Anthony Eden in Brita-in had asked where all the wheat was going, and a blue paper brought down in the British House of Commons stated that some twelve million tons of wheat had been made available to Britain and to Europe. Is it any wonder that the people of Britain are beginning to get restless, the people who bore the brunt of battle for six long years and who now have to queue up for bread? It is not due to the fact that Canada has not sent enough supplies, because 83260-21 Si
we have; but if the wheat and other goods are being used to play what are called power politics, we should be informed. I believe parliament should have a complete statement on the return of the Prime Minister and the other two ministers. We also read articles in which it is stated that American wives in Berlin, for instance, can obtain more goods there than can be obtained in the United States. I am not going to take up the time of the house by mentioning all the goods these American women found in Berlin only a month ago, but the article says plenty of butter, plenty of clothing and plenty of other goods can be obtained in Berlin. I do not want to labour the question, but if these statements are true something should be done about it, and if they are not true an official statement should be made by the Prime Minister or the Minister of National Health and Welfare or the Minister of Finance on their return to this country.
Leaving that matter for the moment and coming to the question of dollar parity, may I say that I for one was particularly pleased when the minister announced that our Canadian dollar would be equal in value to the American dollar. As a matter of fact the Canadian dollar is the best dollar in the world to-day. There are people in the United States who for some time have been coming to Canada whenever they wished to send funds to European countries. Why? Because the Canadian dollar is recognized in Europe as the best dollar in the world;'yet for a number of years it has been at a discount in the United States. I happened to be in that country the day it was announced that price ceilings would be lifted, and I took it upon myself to ask both merchants and men on the street how they felt on the matter and if they liked the idea. I also inquired as to their views in regard to the reason for lifting price ceilings. Here are some of the answers I received, not only from merchants but from quite a number of others as well. "The black markets have got out of hand," they said, and they quoted the case of butter as but one example. The ceiling price on butter had been set at around sixty-two cents. You could not get any at that price; but one person said, "Give me $1.25 for each pound, and I will get you all the butter you want." Another person I met said there was a great shortage of nylon stockings, and asked if I knew where they were. I said, no, I did not. "Well," he said, "they are down in Mexico." Apparently higher prices are being obtained in Mexico for many products manufactured in the United States; hence the shortages that have existed in that country for some considerable time.
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There is another matter I should like to mention. I do not know whether we can do anything about it, but I want to draw it to the attention of the minister. For some time past there has been excessive buying by Americans on the Canadian side, of goods which are not obtainable in their own country. Only the other day I had a letter from a dealer in tires, who told me it was impossible now to buy a tire, that for the last two months nearly all available tires have been bought and picked up by United States tourists. It is true that we like to have their money; it sort of balances trade; but, after all, if we are to be kept under strict rationing and price ceilings I believe we should keep our eye on the amount of scarce goods which are being taken across the line out of the country.
That brings me to a thought I had in regard to black markets, and for a moment or two I should like to deal with the accusations that have been made in regard to the black markets in lumber in British Columbia. Before doing so, however, in commenting upon the dollar parity I may say I suppose it all depends whose ox is being gored; but I believe it is best for the general welfare of Canada that this has been done. I am going to mention one or two articles in which we will benefit. We in British Columbia import our gasoline in the form of crude oil. Removal of the ten per cent discount will mean a lower price, unless of course there is a price increase in the United States; but in any event it should mean that we can purchase our crude oil for ten per cent less. Then the cities and municipalities whose bonds are still held in the United States, and on which a ten per cent premium had to be paid, will save considerable money. Money will be saved also on any machinery that must be bought in the United States. I know this change will affect gold .mining. Here again, however, the entire industry of gold mining depends largely upon the fictitious price of $35 an ounce set by the United States; and whatever they do with the price of gold will affect gold mining in Canada far more than bringing our dollar to parity.
What I am a little perturbed about, however, is the great drop in the exchange value of the pound. When the United States dollar was at a premium of ten per cent the British pound was also at a premium of ten per cent; but when the minister announced the removal of the premium, bringing the dollar to parity, the British pound dropped almost out of sight. At least it dropped to $4.02, buying, and $4.04, selling. I suppose this has been done because the British pound in the United States has been set at that price. But that is going to affect us far more than the parity of

our dollar with the United States dollar. Before the war, to a great extent we depended upon Great Britain as a market for our wheat, our lumber and our fish. I do not know about the lumberman, because he is not subsidized, but I do know that the Canadian farmer and the Canadian fisherman will probably not recognize that a change, has taken place, because the government will pay the guaranteed price in Canadian funds. But when it comes to a question of lumber, I am just wondering what will happen to the lumbering industry. How are they going to get along? I know there are those who say, "It will be all the better for us, if no lumber is exported; we shall have more lumber." That may be true for the present, Mr. Speaker, but I am taking a long-range view. Before the war, sixty per cent of the lumber produced in British Columbia was sold on world markets, and we depended upon those world markets to supply us with the money with which to buy millions of dollars worth of goods in the protected markets of Quebec and Ontario.
I hope trade between Great Britain and Canada is encouraged. I hope it will be an incentive for us to buy more British goods; because, unless" <we do, I cannot see, after looking at the trade figures, just how Great Britain is going to continue to trade with this country. That is the way it strikes me, after examining the trade figures from 1939 to the present time.
Coming back to the United States dollar, I have all the trade figures of that country before me, and I know this is only one small aspect of the entire picture of dollar parity. We have an adverse trade balance with the United States of $1,668 million for the calendar years 1939 to 1945. This means in dollar exchange that we paid them over $166 million more than we should have paid them. No explanation has yet been given for the drop in value of the British pound. The value of the British pound was $4.64; it is now placed at $4.02. I wonder what that will mean to our people here, especially if there were no subsidy and no guaranteed price being paid. It would be just a little unfortunate. I remember the days from 1030 to 1935 when the pound went down to S3.63, and I remember the cry which went up from the prairie farmers about the great losses which occurred during those years when we got only $3.63 for each British pound's worth of wheat purchased from Canada.
Mr. ILS-LEY: The pound sterling dropped ten per cent, like the United States dollar. The hon. member's figures are not quite correct.

The Budget-Mr. Reid


Thomas Reid: I thought the British pound was $4.64.


James Lorimer Ilsley: No, $4.45.


Thomas Reid: Then. I shall have to accept the minister's figures. I know they are correct, or he would not quote them. And, having those figures in view, the outlook is not just as dark as I thought it was.
To come to the question of lumber, the accusation has been made by legion bodies and by other responsible bodies in British Columbia that black markets in lumber are operating extensively. I do not know whether they are or not; but it should be the responsibility of the government to have the matter investigated. Such charges are serious, indeed.
There is no one but must admire the creditable task performed by the minister's department in holding down price ceilings. On July 1 newspapers were appearing in various places stating that rents would go up ten to twenty per cent in the United States, food $250 a year and clothing $100 a year for a family of four. That is only the beginning. I am one who believes implicitly that most lines under the ceiling should remain there until our shelves in Canada are stacked with ample goods for the people who require them and who now have the money to buy them. I support the minister to the utmost in the efforts made by him and his officials to hold down certain price ceilings.
May I offer one criticism, howeker, respecting some of the rental regulations. We in British Columbia feel that the officials are not too kindly disposed to us in that province. I have particularly in mind rental control. All hon. members know something of the scarcity of homes to-day. But in my opinion there are some landlords who are taking a terrific beating during these past six years. The regulations have been such as to prevent many people from opening their homes and taking in those needing housing accommodation. They realize that under present regulations, having taken persons in, it is impossible to have them removed.
It would seem that the rental regulations were made primarily for the eastern and central provinces, and perhaps for the prairies as well. Mind you, I am not advocating that a person should be thrown out indiscriminately, but under the regulations one cafinot evict a tenant between September and April. Well, those who prepared those regulations must have known little about the salubrious climate we have on the Pacific coast. These regulations are for the benefit of climates running to twenty or thirty degrees below zero.
Some of the letters I have received are almost pathetic. For instance, only the other
day I received a letter from a man who had been a veteran of both world wars. He bought a home for his daughter, who married a veteran. But, although he owns that home, do you think he can get the tenant out? No, he cannot. Under the regulations he is not permitted to do so. You cannot force them out, and some of them simply thumb their noses at the landlords. And, as has been suggested to me just now, some are doing that very thing, quite literally.
The argument is made that the regulation is to especially protect ex-service men. I have in my filing cabinet information respecting at least six ex-service men who have bought homes within the past year, but who cannot get into them. The tenants are simply saying that they will not move. I am asking the Minister of Finance to consider this matter seriously, because some of these owners are taking a terrific beating.
For instance, I have one case in mind where the tenant is making six times more money than the landlord.


Mr. MacNICOL:: I know of the same kind of case.


Thomas Reid: The landlord has to do all the repairs, pay the taxes and attend to the general upkeep of the building. Since the war began, the tenant has subdivided and sublet the entire building, and has been drawing five or six times more rental than the owner of the building. I draw this to the attention of the minister. It is all very well just to gloss it over; but these things are doing something to our people; they are doing a great deal of harm, something which will embitter them for many years to come.


Arthur Leroy Smith: What would you do about it?


Thomas Reid: There is one thing I would do; I would take these rental appeals out of the hands of lawyer judges. I would get men who had a little more humanity in them, men who were not bench-trained in the law, men who did not cross every "t" and dot every "i".


Arthur Leroy Smith: Humanity for the tenant or humanity for the landlord; which do you want?


Thomas Reid: Wherever humanity was most required, I would1 have it administered.


Arthur Leroy Smith: Throw one out and leave another in.


Thomas Reid: If you want any further explanation I shall be glad to give it to you after I am through, but I should like to finish my speech.
The Budget-Mr. Reid


Arthur Leroy Smith: You cannot give it.


Thomas Reid: My hon. friend is a great interrupter; he is one of those who can give it out but who cannot take it. I do not like rude interruptions. I have a speech that I want to deliver and some of the interruptions are almost impertinent.
I should like to come back to the question of lumber. I think the prices board did wrong in lifting the ceiling on the prices of logs:	I can tell the minister the twofold
effect this is having. First, taking the ceiling off the price of logs in British Columbia is forcing the small, independent mill man out of business and is gradually concentrating control in the hands of the large mill man who has his own woods operations. Second, taking the ceiling off has brought up the price of No. 3 logs to a point where it is almost equal to the wholesale price of lumber.
To-day No. 3 logs in the open market cost $25 per 1,000 feet, whereas the wholesale price of lumber is $27 per 1,000 feet. The prices of No. 1 and No. 2 logs are much higher. No. 1 logs, which cost $24.50 per 1,000 feet in 1940 cost $40 per 1,000 feet at the present time. No. 2 logs,, which cost $19.50 per 1,000 feet at that time, are now worth $30 per 1,000 feet. Back in 1940 No. 3 logs cost $14.50 per 1,000 feet and, as I said, they now cost $25.
I am going to suggest to the minister and the government that it is high time some real inquiry took place in regard to the entire lumber situation in British Columbia. On the one hand, wages, the price of logs and prices of material, have gone up, while, on the other hand, there is a group saying to the government, "Do not allow lumber prices to rise." I am not going farther into the question this evening other than to draw the attention of the minister to the seriousness of the situation and suggest that it is high time it was investigated.
Coming back to the budget, I was pleased, and I suppose every hon. member was pleased, to hear the announcement made that farmers and fishermen would now be allowed three years over which to spread their income. That will be of inestimable value to our farmers. In answer to the criticism that this period should be five years, I would reply that the farmer can take any three years he wishes. He can take the next year, the fourth year or the fifth year and spread his income back over any three years. I think the announcement made by the minister will be well received.
I should like to say a word now with regard to what the government has done in the budget m connection with cooperatives. There [Mr. Beid.l
has been a great deal of confused thinking and speaking since the announcement was made, in regard to the taxation of cooperatives and allowing patronage dividends to be free of tax. I listened to one speaker, a member of the C.C.F., who rightly said that cooperatives should be encouraged and that people should be encouraged who endeavour to lift themselves up by their bootstraps. Of course all these people should be helped. I doubt if there is an hon. member in this House of Commons who is not in favour of advancing and helping the cause of the cooperatives.
I am a little surprised, however, at some of the statements that have been made by members of the C.C.F., especially those who spoke so frequently against profits shortly after the inception of their party. It is a well known fact that there are cooperatives which are strictly profit-making organizations, and there is the true cooperative, the one where men band together, profitably to themselves it is true, but not with their eye on getting profits, the kind of profits so glibly connected with free enterprise or the capitalist movement. Under this budget, that organization which is a cooperative in the true sense of the word is actually helped.
I have the honour to represent a constituency in which is located one of the most successful buying cooperatives in Canada. This organization has 2,300 members and has an annual turnover of $2,000,000. They buy wheat and grain from the prairies and they charge just about the same as the other milling associations. Naturally they have a surplus or profit, but that profit is distributed among the members in the form of patronage dividends and so will not be taxable. Where in fairness, therefore, can any charge be made against the Liberal government that they are trying to keep down the cooperatives?
Some people again try to link the cooperatives with socialism. I well remember in the early days of my youth when our family was a member of the Scottish cooperative association, one of the finest in the world. Will any hon. member rise in his place and say that they are not a profit-making organization? They had a regular slogan in those days, "The more you eat, the bigger the dividend." The prices they charged were exactly the same as those charged next door, but with this difference. Instead of one man getting the profits, they were distributed among the members of the cooperative association as patronage dividends. Make no mistake; they are really profits as we know them.
There are cooperatives in this country which are just as capitalistic as any capitalist organization one could name, They are not true

The Budget-Mr. Reid
cooperatives in fact at all. To my mind, the action of the government will clarify the entire situation and at the same time help the true cooperatives.
I should like to deal for a minute or two with income taxation. I suppose the ideal state would be one in which we could carry on our business without the imposition of any taxes at all. However, I would remind hon. members that during the war, when the large budgets were being brought down, the only members who protested against borrowing money were the Social Crediters. We were all willing that the government issue victory bonds and no one rose in his place and said, "Mr. Speaker, I say to the Minister of Finance that we should not borrow; we should pay our war expenditure 100 per cent." The only ones who talked differently were the members of the Social Credit group who were against borrowing money.
To my mind, what the minister has done in this budget is outstanding. Starting with 1943, we had a deficit of over $2,500 million. We issued bonds for that; we borrowed for that deficit and no one was greatly perturbed. In 1944-45 we again had a deficit of over $2,500 million. From 1943 to 1946 the deficits' of this country totalled $7,151,217,000. Now we have this budget showing a deficit for 1946-47 estimated to be not over $300,000,000. In addition, the Minister of Finance tells us that in the following year he expects to be able actually to balance the budget. I think that is sensational, and it is something which we can be justly proud of. I have listened to the wail- of those who say that the income tax is too onerous; but if the bank deposits and the bonds held by the people of this country are any criterion, I am surprised that anyone would squeal about taxation. In 1939 the bank deposits of all individuals amounted to $1,678,363,561. Note what it is to-day? Bank deposits held in the names of individuals are up to $3,305,701,658. Further, take the bonds held by individuals; in the nine victory loans which we have issued successfully under the guidance of the Minister of Finance, they hold $12,355,000,000. As a matter of fact, if everyone agreed that what they own would be given to wipe off the debt we would have no debt left at all. That is a revolutionary idea, I know, but when people talk about a jubilee by wiping off the debt, remember, whether we agree with the idea or not, that there is as much money in the hands of the twelve million people of Canada to-day as would wipe out the dominion debt. When they get up and talk about taxation hurting
I say for numbers of our people this is going too far. The thing just does not make sense.
I have just one word to say on the dominion-provincial conference, and then I will close, because I see I am just about through as far as time is concerned. I am one of those who was greatly disappointed at the lack of results of the conference. I want, however, to make one or two comments regarding the recent offer made by the Minister of Finance to the provinces. I should like to have seen the minister attach to these proposals the suggested social security measures. I think it is a mistake to allow the two central provinces forever to run this country. I say that openly, and I do not think it can be successfully contradicted. I am thinking particularly of the old age pensioners in British Columbia, who were looking for the acceptance by all the provinces of the proposals made at the conference; and I am going to ask the Minister of Finance to think over this point seriously. When the old age pension legislation was put into effect in 1927 the wage level, taking 1939 as 100, stood at 97. To-day the price level stands at 137, forty points up. If $20 were considered enough in 1927, what must the need be to-day, when the wage level has increased forty points? Reference was made by one of the ministers about freezing the cost of living bonus which has been given to civil servants and making it permanent. Well, I am all for it. But I do not know what answer I will give to the old age pensioners of British Columbia who ask me, "Why should these people who are working get more by way of a cost of living bonus than the small amount the government now gives us?" I say to the minister, give the matter of old age pensions some thought, and if he can, revise the proposal to the various provinces, because if he can get seven to agree to his financial proposals with the social security measures which were enunciated included, it will go a long way to bring the other two mto line.
I have only time for one word more. I saw in the paper the other day a statement made by the leader of the official opposition (Mr. Bracken). It reads:
New offer by the dominion government to deal with the. provinces individually in making new tax agreements substitutes coercion for consultation and brings the danger of "Balkanization" to Canadian relations, in the opinion of John Bracken, Progressive Conservative leader.
In a speech prepared for delivery over a national radio network Wednesday night, Mr. Bracken declared that if he had been in the position of Prime Minister at the recently indefinitely adjourned conference an agreement would have been reached.

The Budget-Mr. White (Hastings)
I say to you, Mr. Speaker, that, holding the position he does as leader of the Conservative party and as leader of the official opposition, he should come into this house and tell the house and the country in what particular he would have offered terms to the provinces differing from or better than that of the Minister of Finance. He owes that answer to the country. I leave that suggestion with him.


Mr. G. S. WHITE (Hastings-Peterborough):: Mr. Speaker, with reference to the concluding remarks of the hon. member who has just taken his seat, I would not presume to speak for my leader, but I will say I am sure that if the leader of the opposition (Mr. Bracken) had been in charge of the dominion-provincial conference he would never have held a big club in the manner in which the Prime Minister (Mr. Mackenzie King) and the Minister of Finance (Mr. Ilsley) did over the provinces. I think it is well understood that the Prime Minister and the Minister of Finance really wanted the conference to fail, in order to get out of many of the social security measures which they had promised and which they knew they could not fulfil.


James Lorimer Ilsley: I deny that.


George Stanley White: The minister may deny it, but he will find there are many people in Canada who believe that he and the Prime Minister were looking for an alibi to get out of their obligations.
In regard to the remarks of the hon. member with reference to rent control and rental regulations, I wish to say only a word. The hon. member referred to the manner in which these regulations were administered and suggested that they be taken out of the hands of the county judges. But I would point out to him that the judges did not draw up these regulations; all they can do is to interpret them, and those who practise law will, I think, agree with me when I say that these rental regulations are in many instances, both ridiculous and absurd. After all, what else can one expect when they are drawn up and put into force by this autocratic and bureaucratic wartime prices and trade board.
The hon. member referred to the difficulty of returning veterans who wished to buy a home or to secure rented accommodation. Every member who has had anything to do with them knows the restrictions under which the soldier has to operate. I remember that, speaking in this house some two years ago, I suggested that these rental regulations should be reviewed and that they should not apply to every little hamlet and four corners throughout the country.

The hon. member has just mentioned that many people who in normal circumstances would be willing to rent part of their houses, a flat or a room, when they are advised that once they let a tenant in he is in "for the duration", simply say, no. After all, in many cases one cannot blame them.
I only wish to deal with one item in regard to the budget, and that is the resolution which deals with the amendment to the Succession Duty Act, and which reads:
That rates of tax upon or in respect of any succession upon the death of a person after December 31, 1946, shall be twice the rates presently in force and that the tax paid to the government of any province in respect of the same succession be allowed as a deduction from the tax payable under the Dominion Succession Duty Act up to but not exceeding one-half of the tax otherwise payable under the said act.
In this regard, I should like to refer to certain remarks of the parliamentary assistant to the Minister of Finance (Mr. Mayhew), as reported in Hansard, at page 3259:
The impression created by editorials and statements appearing in the press is that the dominion has doubled the rate of succession duties that w'ill apply on estates in 1947. How such a gross misstatement of the facts could have been seriously advanced is beyond my comprehension. The dominion's proposal was simply that the rates of duty under the dominion act would be doubled and that any duty paid to a province would be offset against the dominion duty up to one-half the amount of the increased dominion duty. Since existing provincial duties are now generally as high as or higher than one-half the increased dominion duty, in general there will be no increase in total duty under the change.
I would emphasize the last line, that in general there will be no increase in the total duty under the change. In the budget speech of the Minister of Finance, at page 2905 of Hansard there is a forecast of the estimated amount of succession duties to be $24 million as compared with $21 million for the year 1945-46. That is an increase of $3 million for a period of only three months as far as the new rates are concerned, and for a period of twelve months the increase on the same basis would be $12 million. In the same budget speech, at page 2924, the Minister of Finance estimates that the succession duty collected in one full year under the new rate will be from $48 million to $50 million, less whatever amount is allowed for duty. paid to the province.	.
If the succession duties are increased at least $12 million a year, it is hardly - fair or reasonable for the Minister of Finance or the parliamentary assistant to say that there has been no increase. I contend that in the average small estate there will be the full increase of 100 per cent in dominion succession duties

The Budget-Mr. White (Hastings)
after the first of January, 1947, and the parliamentary assistant, at page 3259, gave two examples of how the double increase would work out. Unfortunately, however, he took only two large estates. He took one of $50,000 and one of $2 million, but he made no mention of the average small estate which would be exempt from provincial duty, except for the following remarks which are found at page 3259:
There may also be individual eases where the dominion taxes a succession which the province does not tax or possibly taxes a succession in a manner different from the provincial practice where the duty under the dominion's proposal might be increased. In these cases, however, the increase would normally be relatively small in amount, and would not affect the general statement that the level of succession duties in Canada has not been raised.
That is very plain English; and, coming from the parliamentary assistant, I take it that the Minister of Finance contends that there will be no increase under the dominion succession duty rates except for the remarks about a relatively small amount which would not affect the general statement that the level of succession duties in Canada has not been raised.
I would refer, the minister to the following example. In the province of Ontario, in all estates up to $25,000 which pass to preferred beneficiaries there is no succession duty payable to the province, and in estates passing to those in the collateral class there is no duty up to $10,000. My contention is that in all these estates up to $25,000 that pass to preferred beneficiaries, the heirs are going to be called upon to pay an increase of 100 per cent in succession duty to the Dominion of Canada.
The Minister of Finance and his parliamentary assistant may consider this increase, to use their own language, a relatively small amount, but I would point out that these small estates are the ones least able to bear any increase in succession duty. There may be some justification for taxing large estates; but in my opinion the imposition of succession duties on small estates is only legalized robbery; and I say to the Minister of Finance that if it is his contention that there is to be no increase in dominion succession duties, then he should see that some provision is made whereby this full 100 per cent increase will not apply to any estate which is not taxable in the province.
If I am wrong in my contention that there is a full 100 per cent increase in succession duty rates as I have outlined, I shall be glad if the minister or his parliamentary assistant will correct me. While I have not
the figures before me, I am quite satisfied that it is the average small estate that makes up the bulk of the succession duties collected. The same thing applies to income tax. It is the average small taxpayer who makes up the great bulk of the taxes collected, because only last Friday, at page 3404 of Hansard, to show the enormous amount of income tax paid by the low income tax group, the Minister of National Defence (Mr. Abbott) said that if the exemption were raised to $1,200 for single men and $2,000 for married men there would be a loss of revenue of some $325 million.
There is the further point that if the Minister of Finance does make an arrangement with a province or all the provinces and the provinces give up their right to collect succession duties, the natural thing that will happen is that the dominion rates will rise, because I recall that during the last dominion-provincial conference the Minister of Finance made a statement to the effect, or at any rate I took the inference from what he said, that if the provinces vacated the field of succession duty the dominion would collect more succession duty taxes than are collected at the present time.
I would also point out to the Minister of Finance and the parliamentary assistant that no mention was made in the budget, as far as succession duties are concerned, about an improved method of making assessments or of speeding up the time in which final releases are granted to estates. The dominion allows only six months for payment of succession duties without payment of interest. The minister knows that in many estates it is very difficult within the six-month period to find ready cash to pay the duty without sacrificing certain assets of the estate. If only six months are allowed for payment of duty I contend that in any estate where the fault is the fault of the department in making the assessment there should be no interest penalty. I think the minister would be probably the first to say that that is only fair and reasonable. I should like to give him an example. In a small estate I filed the required papers with the inspector on October 28, 1944. With the papers I sent a cheque for the estimated duty. The assessment notice from the department was received on May 9, 1946, and it was dated the previous day, a delay of almost eighteen months. The assessment claimed a further payment of $846.14 for duty, plus a penalty of $60.29 for interest. I realize that that amount is small; but I ask the minister in all earnestness, why should this particular estate be penalized in the amount of $60.29 for interest when they

The Budget-Mr. White (Hastings)
had absolutely no control over obtaining the final release? The delay was entirely due to the department not making the assessment.
Further, in all cases where there has been an overpayment of duty no interest is allowed. In Ontario, at least interest is allowed where duty is paid in advance. The same conditions apply to income tax payments. Every hon. member has had many cases and knows of others where the assessments are held up for a long time. In some cases they are years late, and when the assessment is finally received the income taxpayer always finds there is a penalty added. But where the taxpayer has overpaid his tax and after a long delay he does receive a cheque he is not allowed any interest.
I regret that in his budget remarks the minister did not say that the income tax collection method would be overhauled and brought up to date. At page 2923 of Hansard the minister did refer to the necessity of having some change made in the method of appeals. At the present time a taxpayer may have a legitimate claim involving a small amount, but under the present complicated and expensive procedure the average taxpayer would be much farther ahead financially to pay the amount assessed.
In regard to the new appeal court announced by the minister, he said that it would have the power to review the discretionary powers now vested in the Minister of National Revenue (Mr. McCann). I suggest that the minister should have no discretionary powers in regard to income tax. There should be one law for everyone and no case should be subject to the discretion of any minister.
The proposed separate board which the minister said is to be set up to advise the minister on the exercise of certain of his discretionary powers-and I emphasize the word "certain"-is far from satisfactory; for, after all, it is only an advisory board and is restricted to advise on certain of his discretionary powers. The minister also referred to the fact that the board was being instructed to explore carefully the possibility of reducing the number of discretions now vested in the minister. Instead of having them review the matter, I would suggest to the minister that he have them all abolished.
While the savings portion of the income tax was abolished on July 1, 1944, the taxpayer who had an income over $3,000, in making his 1945 return, was still obliged to compute the savings portion and then deduct it. So far as the 1946 forms are concerned'- I am referring to form T-7 B, which is the form used for individuals who make more than one payment a year, March, June, Sep-

tember and December-I find that they are still obliged to compute the amount of the savings portion. I would think at this late date that the income tax department would have been able to issue a new schedule of rates in which the savings portion of the tax would have been eliminated.
With reference to the change in the rates of income tax for 1947, I say to the minister that it is unfortunate these rates were not set to apply from July 1, 1946, because he will recall that when changes were made in income tax rates during the war years they applied for the then current year. The reduction he has made is small in view of the statement reported in the press to have been made by his colleague the Minister of National Revenue. Speaking at Pembroke in the spring, he was reported in the press across Canada to have stated or suggested that there would be a reduction of fifty per cent in income tax. If the minister was misquoted I have never seen any denial in the papers.


Mr. McCANN:: May I make that denial now, Mr. Speaker? I never made any such statement, and the hon. member knows it.


Karl Kenneth Homuth: That is after the budget.


George Stanley White: I can only say that the Minister of National Revenue has a very fine press agent, because the statement was displayed on the front page of every newspaper across Canada, and the minister must have seen it.


James Joseph McCann: On a question of privilege, this statement has been made on several occasions by hon. members, particularly the hon. member for Lake Centre (Mr. Diefen-baker) and the leader of the opposition (Mr. Bracken). I did not speak in Pembroke; I did speak in Renfrew on March 11, and I am not responsible for the headlines; they are written by somebody else. The statement which I did make, and which is reported correctly in the Ottawa Journal of Tuesday, March 12, is as follows. I said:
I have no doubt that when parliament meets announcement will be made about bringing down the budget. We have reason to hope that the budget will be sharply reduced. I cannot say how much it will be reduced although some of us hope we can cut our expenditures by fifty per cent. I thihk we can look forward over the year to decreased taxation but this will depend entirely on public opinion. In recent years there has been a growing demand for increased social services, this is a democracy and as such must conform to the views of the people at large. It is up to the people what scale of taxation they wish. If social services are increased levels of taxation will naturally be' higher than without these services.

The Budget-Mr. Moore
There is nothing in the statement which I made, or in the speech which I made, that would justify the hon. member for Hastings-Peterborough (Mr. White) or other members who have spoken with reference to this matter crediting to me a statement such as he did, and a statement which I had not any occasion to make.


George Stanley White: All I can say, Mr. Speaker, is that it is unfortunate the minister waited until after the budget and at this late day to make the correction.
In my opinion the income tax exemptions, which are now 8750 and 551,500, are not sufficient. They should be at least S2.000 for a married person and $1,000 for a single person, with increased allowances for children. No one will dispute the statement that the cost of living has increased from 50 to 100 per cent over 1939; yet a married man with a family is permitted to deduct from his taxable income only $300 per child, while the amount allowed for the wife is also very small. During the war years the average taxpayer was quite prepared and willing to struggle along and pay these excessive taxes; but, now that the war is over, he is looking for some relief. He wants to be able to buy and enjoy some of the luxuries he was denied during the war years. The salaried taxpayers, often referred to as the white-collar class, have been under a decided hardship during the war, and the budget gives them little relief.
The minister has stated, or someone in his behalf has stated, that he needs this enormous income; but it has been very well pointed out by a number of other speakers in this debate that little if any attempt has been made to reduce controllable expenditures, despite the statement just made by the Minister of National Revenue that the government hopes some expenditures may be reduced fifty per cent. It would be interesting if the minister would indicate in the itemized expenditures which departments are being reduced to this extent. The postponement of the reduction until 1947 may have the further effect of reducing consumer goods. When one remembers the enormous production of clothing and mechanical equipment during the war years it is difficult for the average Canadian to understand just why he cannot buy anything he wishes for his home, why he cannot buy a new suit or a new shirt. It is true one can buy plenty of sport shirts at $5 or $10, but the ordinary white shirt just does not exist. Practically every householder is anxious to buy some type of electrical equipment for which he has been waiting for several years, but at
present he has little chance or hope of purchasing an electric stove, a refrigerator or anything of that type. In the province of Ontario the hydro electric power commission has under way a large programme of extending rural lines, but the prospective consumer finds wiring material practically unobtainable, and he is simply out of luck if he tries to purchase electric labour-saving devices. I suggest that the minister review the whole situation, and that the reductions in the corporation tax, the income tax and the excess profits tax be made effective as of July 1, 1946.
In conclusion, Mr. Speaker, I intend to support the amendment moved by the hon. member for Muskoka-Ontario (Mr. Mac-donnell), reading as follows:
This house regrets:
(1)	That the budget does not provide for tax reductions in the calendar year 1946;
(2)	That the budget gives no indication of any serious attempt to eliminate extravagance or effect economies in the cost of government;
(3)	That the policies of the government are discouraging much needed production.


Mr. RONALD MOORE (Churchill):: Mr. Speaker, I listened with interest as the Minister of Finance (Mr. Usley) presented his budget a few days ago. I think we were all impressed by the manner in which he gave the financial picture of the Canadian economy. All sections of the house recognized the effort he put into the preparation of his budget. While, however, we appreciate the sincerity of the minister in dealing with this subject, it was difficult for many of us to see the financial picture of this country in the same bright colours in which it was painted in his statement. It is true, of course, that one must not be too critical at a time when we are entering the reconversion period. The rehabilitation of our servicemen is in itself a problem which will require a great deal of effort and a major plan if our service people are to regain their rightful position in civilian life. The problem of reconversion is another task which will require a great deal of effort. The Minister of Reconstruction and Supply (Mr. Howe) has informed us that in a number of industries reconversion has been already completed, but there is still something to be done in this line and until it is completed we cannot consider ourselves on a truly peacetime basis.
This is the first peacetime budget we have experienced in some seven years, and I think it fair to say that the Canadian people were interested to learn what the government intended to do to meet some of the serious problems which have confronted our people for the past few years. I believe perhaps
The Budget-Mr. Moore

the most serious problem with which our people are to-day confronted is that of housing. There can be no question but that the housing problem has put our people in a difficult position. I do not think it can be said that this problem has developed over the last few years. Housing has been a problem in Canada ever since 1930. We have a tremendous lack of housing due entirely to the fact that the people of Canada have not had at any time sufficient money with which to purchase homes for themselves. In this connection I should like to quote from a series of resolutions passed at a convention of the Canadian federation of mayors and municipalities, dealing with housing and related matters, held in the city of Winnipeg in 1938:
Whereas it is demonstrable that many thousands of Canadian families in the lower income groups, in both urban and rural areas, are today housed in sub-standard, unsafe and unsanitary dwellings . . .
And whereas the vicious environment of such areas counteracts and offsets the constructive influence of education, public health, social service and religion and contributes to vice, delinquency, dependency and excessive mortality and disease, so that sub-standard housing areas are a source of heavy and uneconomic government expenditures . . .
And whereas it can be shown that the basic reason for the existence of such condition lies in the sheer inability ot many Canadian families to pay the economic rent required for adequate and modern housing accommodation, irrespective of periods of prosperity or depression . . .
And the resolution goes on:
And whereas this aspect of the housing problem being of a universal nature has been and is being handled on a national scale in other countries . . .
Now therefore be it resolved that this conference of mayors petition the government of the Dominion of Canada to introduce without delay an adequately assisted plan, aimed specifically at the provision of housing at low costs and low rents.
That was in 1938, approximately a year and a half before world war II broke out. I am not going to say anything about the conditions which developed after the outbreak of war, because we all realize that the government was too busy with other things to deal with housing on a national scale at that time. But I will say that during the war years the condition did not get any better. It got worse, and to-day we are faced with a problem which cannot be described as anything short of a national emergency. In fact, to-day the housing situation is a national calamity, and I think the government should have taken some steps during the present session of this parliament to deal adequately with that situation.
It is certain a great many of us do not fully realize the shortage of houses that exists in this country to-day. According to the Curtis

report, we are short 500,000 homes in this country, and in addition we have another 250,000 which require repair to a greater extent or lesser extent. Other authorities have told us that the veterans returning from Europe alone will need an additional 200,000 homes. This is a situation which calls for action on the part of the government. It is true, of course, that several acts of this parliament have been passed to deal with this situation. The National Housing Act was passed in the late thirties. I think it is fair to say that act has not been able to cope with the situation. It has not been able to solve this housing problem, for the very good reason that the people who do not have homes in this country are those people who do not get a sufficient amount of the national income to permit them to build homes.
A most peculiar situation exists, if one cares to compare the income tax statistics of the country with the housing situation. I have before me a copy of "Taxation Statistics1', issued by the Department of National Revenue. According to this government publication, in 1945 there were about 1,340,000 people in Canada earning $1,800 a year or less. According to statistics issued by civic bodies in various cities, throughout Canada, it requires approximately $150 a month for a family of five to live under decent conditions, and to maintain a decent standard of living. Obviously, if it requires in the neighbourhood of $1,800 a year for a family to live in decency in this country, and if the total income is only $1,800, they are not going tj have sufficient money with which to build homes. That is the crux of the situation to-day.
I have heard many people complain that they have been unable to get assistance, either under the National Housing Act or under the Central Mortgage and Housing corporation, with which to buy homes, for the very good reason that their incomes were not high enough to enable them to take advantage of that legislation. This is particularly true in Manitoba. Many people have mentioned to me that because their yearly wage was in the neighbourhood of $1,600 they were not considered a safe bet on which to lend money for the construction of homes.
As we view these statistics we find that in Canada we are short approximately a million homes, either new construction or homes which should be repaired; and this is about the same number as the number of people who come within these lower income tax brackets.
I submit that if this housing problem is to be solved it can be solved only in one manner, and that is by the government

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taking hold of the situation, the same as it did in the war years. During the war, if we required production for the army, the navy or the air force, the government simply estimated what was needed for the armed forces, acquired the raw materials and went ahead with the production. Early in the war the government found that they had to have additional plant and factory equipment in order to supply the materials of war. They did not consider how much money they had before they went ahead and built those plants. They simply acquired the materials, the man-power and the other essentials, and built the plants and factories required.
I submit the housing problem will not be solved unless we deal with it in a similar manner. This government should set up a crown company, if you like, to deal with the situation. The purpose of that company would be to produce in Canada the building materials necessary to build these homes. It might even be necessary for them to take over large sections of the forested areas of the country and erect sawmills so as to get the necessary Lumber. In those areas of the country where it would not be efficient to build frame buildings, they could go into the production of brick and other materials for the building of homes.
The only difficult problem in this connection would be the production of plumbing equipment. Because of its dependence upon steel production. I admit it would be difficult to produce plumbing equipment in as short a space of time as it would be to produce these other commodities. However, the government should make a start on such a plan as soon as possible. So much for the housing situation.
There is something else which is going to be of some concern to the people of Canada in the very near future. I refer to the growing army of unemployed. The Department of Labour has issued some interesting statistics respecting unemployment in Canada. At present, according to the figures issued by the Department of Labour, we have approximately 210.000 unemployed people in this country. Out of a population of 12,000,000, it is possible that 210,000 unemployed may not be sufficient for us to say that we have an unemployment problem on our hands. But in all fairness I think we must also admit that when we are considering the condition of unemployment there are other factors which should be taken into consideration.
At the present time we have a six-year backlog in civilian production. According to the Department of Reconstruction, a large
number of our industries have already been reconverted to peacetime conditions. Except for the odd strike, and for a shortage of materials in certain places, industry is going all-out to supply products used in civilian life. When this backlog has been overtaken, undoubtedly a number of our plants will shut down and men will be laid off.
The same is true with respect to our markets in Europe. We have sent vast sums of money to be invested in Europe, to enable those people to 'buy Canadian goods. I am not quarrelling with that; I believe it was the only plan to be followed under the circumstances. But we do not want to forget this, that the day is coming when Europe will be reconstructed, when her factories will be rebuilt and when she will be able to supply her own markets with those things she is now getting from Canada and the United States. When this situation obtains it will result in a further shutting down of Canadian factories and further unemployment of Canadian workmen. When such a situation does develop-and it might be within the life of this parliament-we are going to face an unemployment problem with which the government will have to deal.
Personally, I doubt very much if the unemployment problem of the future will be solved under our present economic system. I make that statement with a good many facts to substantiate it. Before the war began, a great deal of our unemployment was due to technological production in industry. We were applying more and more machinery to the production of goods. During the war years, an even greater advancement in technological production took place in the United States and Canada.
According to our war production board which investigated this situation in 1943, we are told that by the middle of this month in 1946, when our industries have been reconverted to peacetime conditions, 3,750 of our plants will have increased their productive capacity by some eighty-six per cent, with an employment of only thirty-three per cent more labour. Reducing those two factors to the same terms, this simply means that we enter the post-war world with plant and factory equipment capable of turning out the same goods which were turned out prior to the war, but with approximately forty per cent less labour.
So long as we can find a market for our production, we are all right; but just as soon as that market becomes restricted we are back again to where we were during the thirties. I venture to suggest that this government should act at the present time to decide what it is going to do to meet a situation of that kind.
I observed during the course of the debate that some hon. members to my right made the
The Budget-Mr. Moore

statement that members of this group were forgetting their application of, socialism to>
our present economy. In other words, they said that we were forgetting our socialist policy and were more or less dealing in Liberal terms. I do not think that statement is quite true. That may appear to them, to be the case, but I think a little consideration of the subject will make our position quite clear.
It seems to me that at the present time, we must try to get as good a deal as possible from the government for the workers and producers of this country. I am' not saying that we are the only ones who are trying to do that, but I think that is the position which private members of parliament should take. Outside of that I do not think there is any solution of these problems under our present system. The Minister of Finance during his budget address told: us that we had to have foreign markets in order to have prosperity in this country. That is true as long as we are going to operate under a system of private, enterprise. But if we continue to operate under that system we shall end up with the conditions that existed in 1929 when foreign markets just did not exist.
How can every country in the world have foreign markets? The system worked splendidly in 'England when it first began the capitalist economy with the use of the steam engine. If the steam engine had stayed in England the system might have continued to work. European countries were importing English goods; but they were not satisfied with merely doing that; they began to import English steam engines. They built up their own capitalist systems and then, they raised tariffs against English goods to preserve their markets. The system spread all over the world, until by 1929 we found that every country was trying to protect its home market for its own manufacturers by raising a tariff against all others.
Where is there a foreign market for goods at the present time except the market that is due entirely to war conditions? It simply does not exist. Prior to the outbreak of the war, the United States could produce automobiles for nearly five worlds the, size of ours, while Canada could produce automobiles more than sufficient for her own market. Where did, the foreign markets exist before the war for those things? They simply did not exist.
As I see it, the only solution of the unemployment problem, if there is one to be found, is government ownership of the means of. production, distribution and exchange in this country.


Mr. KUHL:: How does that solve it?


Ronald Stewart Moore: It will solve it by doing away with what has caused the situation. It is the profit motive in industry that has caused the situation.


Karl Kenneth Homuth: In other words, if you do not want cars they will not make them and sell them to the other workers?


Ronald Stewart Moore: You may think that, but if you have another solution I am quite willing to listen to it. If anyone can tell me how he proposes to solve the unemployment problem I shall be only too glad to listen to him. But I think it should be brought up in this house because from 1930 to 1939 it was not solved and we are doing nothing at the present time to solve our unemployment problem. The things that caused unemployment in 1929 are with us to-day. As soon as we catch up with this backlog of demand for consumer goods we shall be back where we were. Our solution is government ownership of the principal means of production, distribution and exchange, and I make this suggestion in the interests of the Canadian people.
Some believe that that will lead to a dictatorship, but here is something I ehould like to see considered. Irrespective of what government is in power, the tendency is toward government ownership. We see that with our hon. friends across the way.


Karl Kenneth Homuth: We do not think they are a good government.


Ronald Stewart Moore: I shall not pass an opinion on that. I shall go a little farther back, to 1935 when hon. gentlemen to my right were in power. They introduced legislation which was regarded as being socialistic, and I refer particularly to the Natural Products Marketing Act. I remember reading Hansard at that time and seeing that the Liberals who were in opposition were viciously attacking the government of that day for introducing socialistic measures. I venture to say that when it comes down to the final battle between capitalism and labour those who are now the government will side with the big interests. I hope I am wrong, but I think they will. When it comes to that day, then it will be the group to which I belong which will go into power.
There is something else that should be considered. All those who believe in socialism do not belong to the C.C.F. All those wbo think the C.C.F. may take power in this country do not belong to this movement. I should like to quote what was said by the premier of one of our provinces, a gentleman

The Budget-Mr. Moore
who happens to be a Liberal premier and who expressed himself in no uncertain terms in connection with this matter. Here is what Premier S. S. Garson had to say with regard to the situation in the future when speaking before the Winnipeg board of trade on January 19, 1946, as reported in the Winnipeg Free Press; here is what he had to say about what might be done to solve our problems in the future:
Canadian government and Canadian business are operating in a world environment in which in their own interests they must give a better account cf themselves than they did in the 1930's.	At that time we ineptly staggered
through year after year of depression, only to finally achieve pseudo prosperity in war.
If, in peace, we permit ourselves to descend again into depression, while the socialist states make progress toward prosperity, we shall have a hard time to convince the Canadian people that our system of free government and of free enterprise should not be replaced by some other form of government and some other arrangement for the production and distribution of goods and services.
That is the opinion of the premier of Manitoba with respect to this matter, and that is the opinion of a great many other people who are not associated with the movement to which I belong.
I should like to say a word in connection with the dominion-provincial conference. We had several sessions of that conference but they all ended m failure. I do not blame the government for this, because I think they did nearly all they could to make it a success. Nevertheless the problems it was fondly hoped would be dealt with by that conference are still with us. Allow me to deal with just one of those problems, that of labour.
We have a serious labour situation in Canada to-day, due partly to conditions arising out of the war and partly to the fact that we have a federal versus provincial problem in this country. One of the greatest problems confronting labour is due to the fact that there are nine different governments in Canada each controlling its own local labour situation. I submit that the government should seek amendments to the British North America Act so that we could have a national labour code.
The British North America Act was drawn up to meet the needs of a much less complex society than that in which we are living to-day. Great as were the fathers of confederation, in 1867 they could not foresee the needs of the Canadian people in 1946. I think the present government should do all in its power to seek amendments to the British North America Act. One of the first amendments should be the power to establish in this country a national labour code. I am not going to be
dogmatic as to what the provisions of that code are to be, but a number of labour unions have informed me that they would be quite satisfied to accept P.C. 1003 as the basis of a national labour code. It is true, all labour unions are not quite satisfied with the provisions laid down in these regulations, but if they were accepted as the basis of a federal labour code the various labour unions and the government could get together and make it more acceptable to labour in the future. That is they could make amendments to the national labour code from time to time.
One other thing I should like to deal with before closing is in connection with agriculture. Our economy in western Canada is based very largely on agriculture. The war has done a great deal to bring Canadian agriculture to the position which it ought to occupy in our economy. I think it is fair to say that for the first time in the history of Canadian agriculture it has been accorded its rightful position as a national industry. It is the first time that those engaged in farming have received a fair share of the nation's income. If we want proof of that statement we have only to compare the income tax returns of 1935 with those of 1943. In 1935, according to the returns, only 416 farmers in the whole dominion paid income tax and the amount they paid was $24,0S3. But what a different picture the income tax returns for 1943 show. There is a little difference as far as the rate of taxation goes between 1935 and 1943, but the difference in the amount of tax collected is so great that I think it illustrates my point quite clearly. In 1943, going all out to supply a war-ballasted economy, Canadian farmers paid income tax to the tune of $440,212, just under 4,000 farmers paying taxes. It is particularly significant to note the position of Saskatchewan with respect to the payment of income tax in 1943. As I have already stated, in that year the farmers of Canada paid $440,212 to the federal treasury by way of income tax, and Saskatchewan alone paid $215,835, or almost half of this amount. This is a marked improvement over the conditions which existed during the thirties, when you could count on the five fingers of one hand every farmer who paid income tax in the western provinces.
Permit me to deal for a few minutes with income tax as it applies to agriculture. The Canadian farmer has felt during the last few years that he has been unfairly taxed on his farm production, and there is some reason for his assumption in that regard. The producing unit in western Canada is the farm, but the number of people employed in one farm includes more than the head of the household; there may be twc., three or four persons work-
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mg on that farm, and yet the farmer's income is assessed as if it were the income of one individual earning and paying the tax. This has caused considerable concern in the west.
There is another thing which should be gone into. I believe that the income tax branch should attempt to devise a different tax system, one which would apply to Canadian agriculture. At the present time grains are the largest production in western Canada; but the farmer finds, after producing his grain, that his income tax is up to a certain level and, if he accedes to the request of the government to produce such extra products as butter, eggs, live stock and poultry, his income is so increased that he is placed in another income tax bracket, so that when he weighs' his additional labour against his very much increased income tax he is reluctant to produce these extra commodities. Of course it will be difficult to devise a system of income tax which could be fairly applied to agriculture, but if the government wishes to get this extra production of such farm commodities as I have mentioned it should exempt these things from taxation, at least for the time 'being.
As has been said, the economy of western Canada is based upon agriculture. There is practically nothing else to which the people of western Canada can turn. According to the dominion bureau of statistics in 1943 67-5 per cent of the people of Saskatchewan, 42-1 per cent of the people of Alberta, and 56 T per cent of the people of Manitoba were engaged in agriculture. If you average these three you will find that 55-2 per cent of the population of the prairies are so employed. In addition to this, some 13-5 per cent of the population of the prairie provinces are engaged in transportation and trade. This latter group is certain to be affected by any recession in the agricultural industry. In other words, 68-7 of our population in the prairie provinces is dependent to a large extent upon the success of the farmer. There can be little question that the reason for this situation is the rapid development in western Canada after the completion of the first railroad, some seventy years ago. In fact, it was the great farming possibilities of this area which brought about this settlement. The experiences of, the past have 'been such that we should realize the futility of basing the economy of any one section of this country upon a single industry. Western Canadians are anxious to see something done to bring about the decentralization of Canadian industry by the construction of industrial plants throughout the prairie provinces.

The same situation which confronts western Canada also faces the maritimes. The maritime provinces of Canada are largely agricultural. Figures which I have also procured from the dominion bureau of statistics show that the number of people engaged in agriculture in Prince Edward Island is 62-7 per cent; in Nova Scotia, 24 per cent, and in New Brunswick, 34-5 per cent. Averaging the three, we have 40-4 per cent of the population of the maritimes engaged in farming. I have mentioned the maritimes because it seems to me that they suffer from much the same economic circumstances as do we in western Canada.
I know that when you talk about building industries in these sections of the country which are not so well developed as the old provinces of Ontario and Quebec the problem immediately arises, where are you going to get the money; who is going to provide it? I am willing to admit that in the past that was quite a problem. It was so because we were a debtor country. Vast sums of money were invested in this country from Great Britain and the United States. The Canadian National Railways is one example, and our great mining industry is another. But since the war I do not think it can be described as so much of a problem as it was before the' war. Canada to-day is lending large sums of money to other countries. I think it would be a good plan if we decided to develop western Canada and the maritimes by investing in these provinces a certain proportion of the amount of money we are lending abroad.
By doing that we would be creating a market right at home for a small quantity of our production. I submit that if private enterprise fails in the future, as it has failed in the past, to accomplish this long overdue task, the government must go ahead and build industries in those provinces and operate them as public enterprises.
The other day an hon. member, I forget who it was, quoted figures from the James report, which stated that the government would have to provide for an expenditure of over $1,500 million a year to provide full employment in this country. I am not going to deal with that, but I think the government ought to reveal as soon as possible what they intend to do to maintain full employment in Canada This is the time to do it. We do not have a large army of unemployed at the present time, but we should have our plans formulated whereby we shall meet this problem when it does arise, which may be before the present administration concludes its term of office.


Brooke Claxton: Earlier tonight we had a speech from the hon. member

The Budget-Mr. Claxton
for Hastings-Peterborough (Mr. White) which was similar in its main lines to speeches given by a number of members of the Progressive Conservative party. It was similar in that it described a condition in Canada which was gloomy and hopeless, which verged on a description of blue ruin, which spoke of scarcity, of taxes and of everything else that was harmful and sad, and which made me wonder, as I heard those speeches, what country those hon. gentlemen were talking about. Was it Canada, or was it some other country?
I ask this house and the people who follow the proceedings in the house to ask themselves, when they hear such criticisms of our country and of the conduct of its affairs: Is this true of Canada? Are they talking about Canada? Because my impression, from knowing something about conditions here, and something about conditions in other countries throughout the world, is that at the present moment there is no country in all the world where I would rather live than in Canada.


Karl Kenneth Homuth: Comparisons are odorous at any time.


Brooke Claxton: We are quite willing to stand comparison with any country in any respect. I would like to recall to hon. members the circumstances in which' the budget was brought down. It was brought down on June 27. There was a delay of some days while other business was proceeded with, and in that interval two very significant things happened. Hon. members will agree that one way to test the strength of a country, economically and financially, is to see how its dollar or its money stands up in the markets of the world. During that interval an event of major importance happened, and that is that for the first time since 1939 the Canadian dollar was put at par with the United States dollar. This single fact showed, as does the whole state of our economy to-day, that with the single exception of possibly Switzerland, our Canadian money is the equal or the better of the money of any other country anywhere in the world.


Karl Kenneth Homuth: Is it at par to-day in New York and Buffalo?


Brooke Claxton: Is it not? The second event which happened during that interval was that the price control in the United States ceased to operate. At that time I was spending two or three days a week in New York attending sessions, first, of the economic and social council of the united nations, and, then, of the international health conference. As I
travelled backward and forward from New York to Ottawa and from Ottawa to New York, I was in the unique position of being able to appreciate the effect of different methods of price control and, later, of no price control, in dollars and cents. To-day, in consequence of the removal of controls, it is estimated that their prices have advanced by twenty-two per cent since price control was removed some ten days ago; that is assuming that estimate to be correct, by an amount which is equivalent to the total amount by which our own price level has advanced since price control was introduced back in 1941- much more, the Minister of Finance (Mr. Usley) says. That, I think, indicates to hon. members and to the people throughout the country something of the value of the administration which we have had in Canada during that time.
These economic policies did not come about suddenly. It was an action of the government of Canada supported by the Canadian people, but under the leadership of the Minister of Finance, whose record in the field of public finance is unequalled anywhere today. And it was under the leadership of the present Prime Minister (Mr. Mackenzie King) and of his administration.
At those conferences which I attended to represent the government I met the representatives of other countries, as have many other hon. members, and I think they will agree with me that as we move around and meet the representatives of other countries at such conferences or elsewhere we find them constantly amazed at the miracle of the way in which Canada's economy has been conducted during the war-amazed and full of admiration, admiration not only of the government and of the experts who advise the government but of the people of Canada who have so stoutly supported the administration-


Karl Kenneth Homuth: And shown such tolerance.


Brooke Claxton: -and shown such appreciation and good judgment.
With these preliminary remarks I should like for a moment to survey the scene in Canada, with sober good sense, against the sombre background of a world convulsed by war. We must, in considering our own position, regard it at this time in relation to the whole world situation, and we must also recognize that after six years of war it is not possible to reconvert and recover completely in nine months.
In making the statements which will follow, I do so on the best statistical information available to me, and I believe I can support
34S0
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every one of them. However, I will make those statements boldly andi baldly, and) I think they will stand in contrast with the statements made by the members of the Progressive party and other parties in the house who have taken such a gloomy view.


Mr. COLD  WELL@: You mean the Progressive Conservative party.


Brooke Claxton: Of course, the Progressive Conservative party; I am sorry. As far as possible I should like hon. members to allow me to finish these statements and afterwards I hope to substantiate them as far as there is time.
1.	The production of peacetime goods in Canada is at an all-time high.
2.	We are employing 629,000 more people than in 1939, more people than ever before in peace time.
3.	The Canadian farmers and wage-earners are getting more money than ever before in peace time.
4.	We have to-day the highest production, the highest employment and the highest national income we ever had in Canada in peace time.
5.	The savings of individual Canadians have tripled since 1939 and are at an all-time high. On the other side, debts shown by thirty lending companies alone have been reduced from $169 million to $66 million between the years 1937 and 1945, and it is estimated that during the last six years the total farm debt has been reduced by something over $400 million.


Ernest George Hansell: How about the national ddbt?


Mr. GARDINER:: The hon. member is still playing poker.


Brooke Claxton: Then 6. The ratio of net debt charges to the national income has increased since 1938 less than the United States or in the United Kingdom. I think this is one of the most objective and important evidences of the excellent way in which the economy has been managed.
7.	The rates of cuts in taxes from: their wartime high are. greater in Canada than in the United States, the United Kingdom, Australia or New Zealand.
8.	Tax exemptions in Canada are higher for both single and. married taxpayers than in the countries where they have labour governments, higher than in the United Kingdom, higher than in Australia, even after the cut announced Friday, or in New Zealand; they are also higher than in the United States, and with the further exemptions

which will be made effective from January 1, 1947, they will be very much higher than in those countries.


Mrs. STRUM:: May I ask a question?


Brooke Claxton: I ask not to be interrupted just now, if the hon. member does not mind until later.
9.	Prices have been more effectively controlled than in any country.
10.	Canadian money is as strong as that . of any country which fought in the war.
11.	The Canadian government has fewer civil servants per capita than the governments of either the United Kingdom or the United States.
12.	Repatriation and demobilization have proceeded expeditiously and smoothly, more rapidly, more smoothly and more successfully than, I believe, any one in 'Canada ever anticipated would be possible.
13.	Canada's veterans' legislation leads the world.
14.	Canada's work in international cooperation has given her a reputation second to no country in the field.
15.	Never before has Canada's reputation for sound progressive government and for successful management of her economy stood so high among other nations.
I shall now be glad if the hon. member for Qu'Appelle (Mrs. Strum) would put the question she wanted to put to me before.


Gladys Grace Mae Strum: I decided to put it in my
speech.


Brooke Claxton: This is a statement of the facts which we should bear in mind in considering the budget and in considering the position of Canada. It should not be thought for a moment that, because we are in so favourable a position, everything is going to go swimmingly for us. We have managed to achieve that position only because we have had a policy throughout the war of paying for as much as we could as we went along and of keeping up the value of our money. We shall continue to enjoy that position only if we continue to have similarly sound policies.
Broadly speaking, there are three conditions for prosperity in Canada. The first is a satisfactory arrangement with the provinces; the second, cooperation between labour and management with government so that we can keep on working and maintain and increase production; and third, the establishment of conditions abroad in which trade can be restored and expanded on a two-way paying basis. Provided that these three conditions

The Budget-Mr. Claxton
are satisfied, we can look forward to the future of Canada with confidence, based on the experience we have had in the past.
In the amendments proposed by the Progressive Conservative party and by the C.C.P. party there are some points on which I should like to make brief observations in so far as time permits. The Progressive Conservative amendment regretted first:
That the budget does not provide for tax reductions in the calendar year 1946.
There we have a revealing statement by the hon. member for Muskoka-Ontario (Mr. Macdonnell). Referring to the proposed tax reductions he said, as reported at page 3213 of Hansard'.
And, indeed the individual taxpayer will not find any change in his situation until he begins to make out his tax return early in 1948.
The hon. member for Muskoka-Ontario makes it plain that he is thinking of just one class of taxpayers, the smallest class in number, namely, the class who make out their returns and pay their taxes at the end of the fiscal year, and not the great class of taxpayers who have the cut now in force through this year, 1946, month by month, week by week, as they pay their tax in instalments and who recognize that there has been a cut of sixteen per cent.


Mr. FLEMING:: Do they not all make out their returns in the spring.


Brooke Claxton: They appreciate it now.


Mr. ABBOTT:: And they get and appreciate the reduction now.


Brooke Claxton: Hon. members may look at the figures which I would give in detail if I had the time. As I have said, the tax reductions from the wartime peak already in force in Canada are greater than those in the United Kingdom, Australia, New Zealand, or the United States.
I come to the next point in the amendment:
That the budget gives no indication of any serious attempt to eliminate extravagance or effect economies in the cost of government.


An hon. MEMBER:: We agree with that.


Brooke Claxton: The hon. member is agreeing with himself. I am reading his amendment.
In his fine speech on Friday the Minister of National Defence (Mr. Abbott) showed the house the full range of expenditures over which this or any other government would have control at the present time. It came dowm to a figure of S62 million more than the expenditures in 1939. That is the increase in the controllable expenditures on which this
great cry of economy can operate. I think I can speak for every member of the government when I say that we are continuously alive to the need for economy. Over the past year the Minister of Finance has been supported in his efforts, which I can assure the house have been strong, to secure the application of the most rigid standards of economy in every department.
In that connection, I should like to deal for a moment with the situation concerning the civil service of Canada. The hon. member for Muskoka-Ontario quoted a figure of 150,000 civil servants, and then said there had been a reduction of only some 900 from that peak figure. I am not at all sure how his figure of
150.000	is made up. The figure given by the Minister of Trade and Commerce (Mr. MacKinnon), in reply to a question in this house on May 6 of this year, was 116,362, but obviously there must be some explanation for the discrepancy, and I assume the figure of
150.000	may be correct.


Donald Methuen Fleming: It was taken from a government return.


Brooke Claxton: Apparently there were two returns covering two answers to two sets of questions, which differed because of the way the questions were put-the returns are responsive to the questions. The figure of 150,000 is, I assume, larger than the figure of 116,362, because it includes employees of government agencies and also a considerable number of casual employees. Certainly in the case of the Department of National Health and Welfare, with which I am familiar, it includes all casual employees. Assuming the figure to be 150,000, let us, for purposes of comparison, contrast it with the figures for civil servants in other comparable countries. In the United Kingdom, for example, a command paper handed down in June, 1946, gave the strength of the civil service, as of April 1, 1946, at 695,950, and contrasted it with the picture for the same group of employees as at January 1, 1946. Those figures showed an increase of some
5.000	employees during that time, with an increase in every civil department wdth the exception of three, and it was explained in the return that these increases came about because the government was beginning to get back to normal conditions; they were having to restore peacetime services and make up the differences caused by six years of war. The United States figures showed a total of 2.961,000, or an even larger per capita number of civil servants. The figure for federal government civil servants alone in the United States was 2-12 per hundred of population, whereas the English figure was 1-53 and the Canadian figure,
The Budget-Mr. Claxton

assuming a civil service of 150,000, would be 1-24. In other words, on the basis of the figures I have given, the Canadian figure was considerably lower than either the English or United States figures on a per capita basis. One would expect that a country whose density of population is much less than that of either the United Kingdom or the United States would need more, civil servants to maintain its services; yet the differences are as I have described. them to be.
In talking about economies as applied to the civil service, it would be interesting to leam from, hon. gentlemen opposite who have been so critical whether they regard the rates of pay of civil servants as too high. My impression, and certainly every criticism I get, is that they are too low, not possibly in every range but as a general picture. I can assure hon. members that for every suggestion I have ever heard that the rates are too high I have heard a thousand that they are too low; and I must say I think every minister has been subjected to the most continuous pressure to increase the rates of pay. We now come to the second element. Are there too many of them? There may be. in certain departments, and it requires some time in a large organization to make changes as we turn from a wartime to a peacetime basis. My experience is that a considerable group of civil servants are overworked, and, that there is considerable understaffing in some departments. I do not know of any case where the opposite is true and where the situation when brought to the attention of responsible officers is not dealt with as promptly as is possible. Hon. gentlemen may be surprised to learn that at the present time there is a shortage of stenographers, trained clerks, statisticians, economists and almost every other kind of trained worker that one would want in a government service. So that there is no difficulty about transfers or anything of the kind. There just are not enough qualified people available to do the jobs that have to be done at this time.
If I am right in what I say about wages and about the size of the staff, the only thing left which may be cut is whether or not we are giving, more sendees than the people of Canada want and are willing to pay for. That is the only other element in the picture. My experience, as I have handled estimates on two occasions and have heard other ministers handle them for some years, is that you never receive a suggestion that you cut down a service. It is rather the reverse. From one hon. member opposite after another you get suggestions for this additional service and that

additional service; for more social security and more things that cost money in quantities totally beyond the most extreme suggestions of any savings that could be effected. That is the sort of thing which sometimes leads one to become a little irritated, perhaps, in the face of this constant talk about extravagance, without any particularization that can be supported, while all the time we are faced with additional demands for additional services, not only from every part of the house but from every part of the country.


Mr. BLACKMORE:: It does not come from this corner.


Brooke Claxton: Oh, doesn't it? I'll say it does.
Mr. BLACKMORE; But we show you how to pay for it.


Brooke Claxton: From that corner we have had suggestions for additional old age pensions that would cost $850,000,000 a year.


John Horne Blackmore: Yes, but we show you how to pay for them.


Brooke Claxton: Not to the satisfaction of anyone in -this or any other country. That is the situation in regard to the civil service. Then we get on to the other things, such as the purchase of materials. I have not heard any hon. member opposite or any people throughout Canada say the federal government pays too much for materials or for supplies or for office space. On all sides I hear criticism that we are too tough a bargainer, so much so that sometimes we are charged with being unfair. I can assure the house that the requests for concessions being made here, or being made there, come just as often from hon. members opposite as they do from members of this party-and probably a good deal more often. That is, I think, a just appreciation of the situation.
Yet we have suggestions that there should be cuts here and cuts there, without any specification; and then at the same time increased demands for social services. We are told we should stop deficit financing-a point made at great length by the hon. member for Muskoka-Ontario. How could we stop deficit financing if at the same time we carried out his suggestions for increased reductions in taxes, and increased interest rates? Why, he would get us into a spiral there that works out exactly the opposite.
Suggestions involving additional expenditures which have been made in the house are being totalled by the Minister of National Defence (Mr. Abbott); he says he has someone working on it. Additional expenditures suggested by hon. members of the Progressive Conservative party alone, during this session,

The Budget-Mr. Claxton
would total far more than the largest possible sum that anyone could possibly raise by additional taxation at this time-and that would be just keeping the deficit where it is.


Arza Clair Casselman: Could the Minister of National Health make a statement as to the requests which have been made to various ministers by members of his own party?


Ian Alistair Mackenzie: I can, for my department: it is an additional $50 million.


Brooke Claxton: I believe the hon. member for Grenville-Dundas (Mr. Casselman) was asking for the total of suggestions from hon. members in this party, as compared with those from the Progressive Conservative party.


Ian Alistair Mackenzie: Oh, I thought it was a request for information respecting additional expenditures suggested by the opposition.


Brooke Claxton: Now, as to this question of economy-and it is an important one. Of course it is. We must be eternally vigilant, and we look to hon. members in the opposition to assist us in that vigilance. We look to the public to assist and to support the government in cutting out every possible wasteful expenditure. Of course we must do that. And having done that, as we try to do, then also give us some support when we are faced with requests for things which would cost far more than any possible saving could effect.
With regard to an item in which I am directly interested, namely the administration of family allowances, we have just completed a year of that administration. Our estimates, made before we ever began operations, and based upon the best experience here and elsewhere in respect of similar operations, have been bettered in every respect.
In the last year I believe there have been just three criticisms in the House of Commons made with respect to the administration of family allowances, and I should like to say just a word in reply to each of those. The hon. member for Three Rivers (Mr. Gariepy), speaking on Friday, said that there have been some delays in attending to correspondence, and he suggested the establishment of an office in Three Rivers. We have considered the question of opening local offices; indeed that point was considered long before the administration was set up. It was felt it would be much wiser to try to administer the whole operation from offices located at provincial capitals. By and large this has worked successfully, as hon. members from all parts of the house in other debates have been good enough to testify. So far we have seen no reason to open a large number of local offices. It may be
that, in one or two centres in Canada, we shall open inquiry offices, but we hope that those will be kept to a minimum.
The hon. member for York South (Mr. Cockeram), speaking on the same day, referred in critical terms to the fact that he had not been able to get information he wanted about family allowance administration, and added on this rather sweeping statement:
I find it difficult to get true and honest statements from the government on governmental expenditures. [DOT]
The statement given by the Department of National Health and Welfare in reply to his question was completely accurate. It showed the cost of administration of family allowances to the department for the first six months of operation. It is completely in accord with the statement I later made in the house, and there is nothing about it to explain or to correct. In so far as this department is concerned, the hon. member's statement is not accurate. Figures on expenditures in connection with the operation of family allowances have been given by me in various forms in discussion of the estimates, when we gave the actual costs for the fiscal year. Also I gave estimates showing the cost to every department of the federal government of family allowance administration. We believe we shall keep well within those costs, and hope that hon. members will assist us in doing so.
The third point was made by the hon. member for Muskoka-Ontario, as reported at page 2981 of Hansard for June 27, where he made reference to a subject which had been discussed by the leader of the opposition (Mr. Bracken) when my estimates were before the committee. Reference was made to our estimate of $300,000 for investigation, where we had spent only $6,000 in the last fiscal year. The hon. member for Muskoka-Ontario was good enough to say that this was no doubt due to the fact that this was partly-"partly"; I draw attention to that word-a new expenditure.
Well, the word "partly" there is put no doubt in an effort to be fair. But I should explain to the house that the "partly" is just about one-fiftieth right. In other words, to the extent of forty-nine fiftieths, or more, this was a new expenditure. The expenditure of $6,000 made in the fiscal year 1945-46 was for one province, representing one-twentieth of the population for three months, or for one-quarter of th$ year. Therefore the amount of the expenditure of $6,000 or thereabouts was about, let us say, one-fiftieth, one-sixtieth, or perhaps one-eightieth of what would be required for the full year. And on that our estimate was based.
The Budget-Mr. Claxton


John Thomas Hackett: Depending upon the
province?


Brooke Claxton: Depending upon what arrangements we are able to make with each province, as I have said several times.


John Thomas Hackett: Whether it would be one-fiftieth would depend upon the province involved.


Brooke Claxton: It was Nova Scotia. Those were the only three criticisms wa have had in the whole year respecting: family allowances, and I hope we shall be able to give as good an account of ourselves in the year ahead.


Donald Methuen Fleming: Would the minister permit a question?


Brooke Claxton: Go ahead.


Donald Methuen Fleming: Could the minister give the house the amount required for the first three months of the present fiscal year out of the appropriation of 8300,000 which he advocated?


James Lorimer Ilsley: Ask that on the estimates.


Brooke Claxton: I shall be glad to answer that when the estimates are being, considered. But it is very little more than at the rate I mentioned before, because of the difficulty of having arrangements established, as I have said.
There is one other matter I should like to -mention before I close, and- that is the speech made by the leader of the Progressive Conservative party over the network of the Canadian Broadcasting Corporation on July 10. In that speech he referred to the budget of this year, and then said:
And in additionwe are being asked by the government-
-to go into debt another thousand million dollars-what for? Not to buy things for ourselves-bu-t-think of it-to pay for our own exports to ship away to other countries.
Mr. Speaker, if I may say so, this is a most extraordinary statement to come from the leader of the Progressive Conservative party. Does this mean that he is opposed to the credits to the United Kingdom and to the other countries to which we are lending money or advancing cerdits in order to enable them to establish themselves and put themselves back in a condition where: they can buy our goods? If it means that, why was that statement made over the air when just five days before a bill to amend the Export Credits Insurance Act was introduced in this house and received the support of the Conservative party? The facts regarding export credits were given to the house, and that amendment, like the bill last year, was carried without division, with the full support of the Progressive Con-
servative party. Was that speech given to cast some reflection upon the use of money for this purpose? Was it intended to have some effect outside the house which could not be sought inside the house? It would be interesting indeed to have this statement fully explained in the light of the support given, by the hon. member for Muskoka-Ontario for example, and by others to this whole field of assistance by means of this legislation. Where does the Progressive Conservative party stand?
The leader of the opposition ends up with a statement about the dominion-provincial conference when he said:
There are two dangers inherent in this method. The first is that it is a Balkanization procedure.
I should like to ask: Who is being coerced by this procedure? An offer has been made to the provinces. That offer is based on the original proposals first put before the provinces on August 9, 1945, discussed during four separate sittings of the dominion-provincial conference, worked over by the economic committee, discussed at the final sessions between April 29 and May 3, modified repeatedly to the advantage of the provinces and now put before them. Why was that done? It was essential that certain provinces at least know what they could expect. They were given this opportunity without coercion, without any Balkanizing.
I venture to say that it is a wider and broader proposal that even the leader of the opposition envisaged when he so stoutly fought for the province of Manitoba and for a general arrangement between the dominion and the provinces in 1941. I am sure the leader of the opposition would not object to the federal government agreeing with the province of Manitoba or any other province on those terms. If so, It would be most interesting indeed to find out on what terms. It is a remarkable thing that during all the time these proposals have been before the provinces and before the country there has not been any adverse criticism: so far as we know by any federal party. The only alternative proposal put forward and seriously discussed at all was that put forward by the province of Ontario, the details and full weight of which we learned only two days before the conference adjourned.
As I said, I submit that there are three conditions which must be satisfied if the people of Canada are to have the prosperity I believe they could have. First, we must have a satisfactory arrangement with the provinces. Having worked hard at these dominion-provincial arrangements for three

Immigration
years, like everyone else I hoped that it would be possible on the basis of these terms to arrive at an agreement which would be in, the interests not only of the provinces and of the dominion but of the people of Canada as a whole. Here I should say a word in reply to the hon. member for Stanstead (Mr. Hackett). If there is anything unconstitutional in these arrangements, then it is strange because we have been paying subsidies to the provinces since 1867, and surely that is legal. Second, we have been working under a tax agreement similar to that proposed since 1941.


John Thomas Hackett: That was a war emergency.


James Lorimer Ilsley: The war emergency has no bearing on the point made by the hon. gentleman.


Brooke Claxton: Is there any reason why a similar arrangement should not be continued by agreement if the parties are willing to agree? We have never failed to carry out any agreement that has been made with the provinces or with any country, and we believe we should be able to rely on them to do the same.
Second, I suggested that our prosperity depends upon the cooperation of management and labour with government in working out conditions under which it is possible to carry on work. Third, the prosperity of Canada depends, as we all know, upon our establishing through collaboration with other nations, conditions abroad under which we can have prosperity at home. Those conditions are not impossible; they depend on good will here and good will abroad. I believe that all hon. members, as well as all the people of Canada, above everything else want us to work together to construct out of the world in which we find ourselves that better world we know we can build.
On motion of Mr. Menary the debate was adjoui'ned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, July 16, 1946