1946-07-10

[Stage Direction]
Hon. LIONEL CHEVRIER (Minister of
Transport) moved for leave to introduce bill No. 299, respecting the Toronto Harbour Commissioners.
Mr. GRAYDON:: Would the minister give an explanation of this?


Mr. CHEVRIER:: The object of this bill is to authorize the harbour commissioners of Toronto to purchase a tract of land having an area of 3-4 acres lying north of their present holdings on the north side of Fleet street and east of Fort York armouries in the city of Toronto. The bill also gives to the Toronto harbour commissioners authority to issue debentures in order to raise money with which to pay the purchase price. The powers contained in the bill are in addition to and supplemental of the powers already contained in the Toronto Harbour Commissioners Act, 1911.


Mr. CHURCH:: Has the city corporation approved the purchase as indicated in the text of the bill?


Lionel Chevrier: I understand it has.
Motion agreed to and bill read the first time.



PRIVILEGE


Mr. BENOIT MICHAUD (Restigoucbe-Madawaska):: Mr. Speaker, I rise to a question of privilege. On the front page of this morning's issue of the Gazette there appears an article headed, "Debate on controversial budget carried on before empty seats." As the title suggests, this article criticizes severely, without justification, hon. members of the House of Commons. If the reporter had taken the trouble to inquire into the cause of the absence of a large number of members yesterday afternoon he would have found out that a great many of them were busy in attendance before a large and important committee. The reporter stated that there have been 245 members in the house during the course of the present session but, as we all know, three vacancies have occurred. Either the reporter's Sense of observation is no keener than his
judgment, or else he is disclosing an unusual lack of good faith, and that requires no further comment.


Gordon Graydon: You cannot accuse that reporter of bad faith.



PRIVATE BILLS


[Stage Direction]
Bill No. 254, for the relief of Jessie Violet Louise Stargratt Burton.-Mr. MacLean.
Bill No. 255, for the relief of Helen Louise Mitchell Meyer.-Mr. Maybank.
Bill No. 256, for the relief of Donald Dale Carr-Harris.-Mr. Maybank.
Bill No. 257, for the relief of Eugene Ernest Hubert George Colnaghi Williams Waterfield. -Mr. Maybank.
Bill No. 258, for the relief of Gratia Lauzon Rousseau.-Mr. Maybank.
Bill No. 259, for the relief of Laura Olive Byers Manley.-Mr. Boucher.
Bill No. 260, for the relief of Vera Gertrude Horder Fournier.-Mr. Maybank.
Bill No. 261, for the relief of Julia Patricia Byrne Cote.-Mr. Maybank.
Bill No. 262, for the relief of Dorothy Adelaide Grace Vennor O'Toole.-Mr. Maybank.
Bill No. 263, for the relief of Lillian Doris Howard Clark.-Mr. Maybank.
Bill No. 264, for the relief of Helen Agnes Stuart Colt.-Mr. MacLean.
Bill No. 265, for the relief of Alma Gosselin Carbonneau.-Mr. Maybank.
Bill No. 266, for the relief of Florence Cleveland Smith des Baillets.-Mr. MacLean.
Bill No. 267, for the relief of Florence Win-nifred Dunlop Starkey.-Mr. Stuart (Charlotte) .
Bill No. 268, for the relief of Francis John Stone.-Mr. Maybank.
Bill No. 269, for the relief of Mary McCal-lum McNamara.

Mr. Stuart (Charlotte).
Bill No. 270, for the relief of Leah Helen Shute Main.-Mr. MacLean.
Bill No. 271, for the relief of Cecile Simonne Robert Turgeon.-Mr. Boucher.
Bill No. 272, for the relief of Edward Cotapschi.-Mr. Maybank.
Bill No. 273, for the relief of Catherine Young Rivard.-Mr. Maybank.
Bill No. 274, for the relief of Mary Jane Michelle Ahern de Brabant.-Mr. Maybank.
Bill No. 275, for the relief of Jean Ethelwyn Marshall Ross.-Mr. Maybank.
Bill No. 276, for the relief of Frank Ernest Smith.-Mr. Baker.
Bill No. 277, for the relief of Cleora Elizabeth Doyle Mastine.-Mr. Senn.
[Stage Direction]
Questions
Bill No. 278, for the relief of Elizabeth Carr Johnstone.-Mr. Emmerson.
Bill No. 279, for the relief of Marie-Rose-Yvette Breiton Philips.-Mr. MaoLean.
Bill No. 280, for the relief of Barbara Laing Robertson MacNab.-Mr. Maybank.
Bill No. 281, for the relief of Anne Goldsmith Glick.-Mr. Maybank.
Bill No. 282, for the relief of Jean Alexandra Oughtred Scott.-Mr. Maybank.
^ Bill No. 283, for the relief of Charles Horatio Baldwin.-Mr. Maybank.
Bill No. 284, for the relief of Mary Slobodzian.-Mr. MacLean.
Bill No. 285, for the relief of Edward Charles McKerness.-Mr. MacLean.
Bill No. 286, for the relief of Ivy Anderson Lobb.-Mr. Maybank.
Bill No. 287, for the relief of Yvonne Rachel Mayer Richard.-Mr. MacLean.
Bill No. 288, for the relief of Nellie Izbitsky Abracen.-Mr. Maybank.
Bill No. 289, for the relief of Ellen Margaret Price Garvie.-Mr. Baker.
Bill No. 290, for the relief of Sophie Shoob Natovitch.-Mr. Casselman.
Bill No. 291, for the relief of Madge Aileen Hunter Parker.-Mr. Maybank.
Bill No. 292, for the relief of Claire Yaro-slawa Lytwyn Pendiuk.-Mr. Maybank.
Bill No. 293, for the relief of Henry Wallace Argali.-Mr. Baker.
Bill No. 294, for the relief of Mary Norma Wickens Baker.-Mr. Maybank.
Bill No. 295, for the relief of Mildred Emily Rogers Thoms.-Mr. Maybank.
Bill No. 296, for the relief of Pauline Gregoire Girard.-Mr. MacLean.
Bill No. 297, for the relief of Marjorie Maxwell Cleghorn Pope.-Mr. MacLean.
Bill No. 298, for the relief of Marie Charlotte Arsenault Leonard.-Mr. MacLean.

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

Mr. HATFIELD:: 1.	What quantites of potatoes were imported from the United States for the years 1941, 42, 43, 44. 45 and 46 to date?
2.	What subsidies were paid each year on the above potatoes?


Mr. MAYHEW:: L	Car-lots
1941		 737
1942		 895
1943		 1,404
1944		 464
1945		 4,417
1946	to June 30	 6,530

2.		By Commodity
	By Wartime	Prices
	Food	Stabilization
	Corporation	Corporation
Year	Limited	Limited
1941 			None
1942 			None
1943 	.. None	$811,174 221944 	.. S 3,394 50*	384,280 54t1945 	.. 37,252 65	1 50t1946 to June 30 .	.. 857,785 43	Nil$891,643 58	$426,892 18*l'rading	profit.	
tRecoveries of subsidy were made through the Department of Munitions and Supply on potatoes consumed by the armed forces. These recoveries together with other adjustments in subsidies paid, exceeded the total sums of claims paid by the amount of the figures marked t.
Note: Difference between subsidy payment in the years 1945 and 1946 as compared with importations is explained by the fact that some of the 1946 expenditure is applicable to importations during November and December 1945. On the other hand, the 1946 figure will increase with settlement of outstanding claims applicable to the shown imports.


EXPORTS OP FARM IMPLEMENTS
Mr. WRIGHT:: 1. What were the yearly (a) exports; (b) imports of farm machinery and farm machinery parts for the ten-year period 1936-1945, inclusive, and 1946 to the latest date possible, showing (1) quantities of binders, drills, ploughs, combines, harrows, farm machinery parts and repairs, etc.; (2) value; (c) countries exported to and imported from?


Mr. MacKINNON:: I am advised that it will take three persons from a week to ten days to compile this information. The material has been published already by the bureau of statistics, and my officials tell me that they will be glad to wait on the hon. member for Melfort and point out to him the various places where the information can be obtained or assist him in any other way to get the information. If that is satisfactory to the hon. member I suggest that the question be dropped in the meantime.


Mr. WRIGHT:: Dropped.
Question dropped.
Jehovah's witnesses
Mr DIEFENtBAKER:
1.	How many members of Jehovah's Witnesses are still being held in concentration camps?
2.	Of these, how many have been held for (a) 4 years and over; (b) 3 years and over; (c) 2 years and over?

Motions jor Papers


Mr. MITCHELL:: 1.	As of June 30, 1946, there were 73 postponed conscientious objectors of the Jehovah's Witnesses sect employed in alternative service camps.
2.	(a) 2;	(b) nil; (c) 24. Forty-seven
have been held for less than two years.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. FLEMING:: 1 How many retail lumber licences have been issued under authority of the wartime prices and trade board, by months, commencing July 1, 1945, to persons or corporations not previously holding such licences?
2. What are the names and addresses of such licensees ?


Robert Wellington Mayhew: Return tabled.


MOOSE JAW AIRPORT-JAPANESE
Mr. THATCHER:: 1.	Has the government received any recent request from the Saskatchewan government, or the city council of Moose Jaw, to use the old No. 32 airport for housing accommodation?
2.	Have any Japanese or Japanese Canadian citizens been recently housed in this former airport?
3.	If so, how many?
4.	For what length of time will they remain in Moose Jaw?
5.	How are these persons being employed?


MOTIONS FOR PAPERS
Mr. COLDWELL:: For a copy of all agreements made on behalf of Canada or by Canada on behalf of any other government or agency, with the International Nickel Company for special tax credits and/or special allowances for depreciation or depletion, under the Income War Tax Act, the Excess Profits Tax Act, or any other authority.


Mr. ILSLEY:: There is no objection whatever to producing what is called for by this motion, but it has already been produced. Only one agreement was made under the War Exchange Conservation Act, and it was tabled shortly after it was made.


Major James William Coldwell: There are no others?


James Lorimer Ilsley: There are no others. I have made inquiry in our department and in the Department of National Revenue, and there is none there. If the hon. gentleman would like to let this motion stand until he verifies the fact that the information is already on the table, well and good; or perhaps he might agree to having it dropped.


Major James William Coldwell: I will take the minister's word for it. I am prepared to drop the motion.
Motion dropped.


COST OF PRINTING AND DISTRIBUTING CERTAIN PUBLICATIONS
Mr. FRASER:: For a statement showing the cost to the wartime information board and the Canadian information service during (a) 1945; (b) 1946, to prepare, print, distribute and mail each of the following publications, namely:

(a) 1945:
Daily

Airmail Bulletin.
Weekly-
Facts and Figures; Faits et ehiffres; Features for Dailies; Pour la page Feminine; Field Reports; Home Front Bulletin; Radio Service; Communique de la Radio; Weekly Press Service; Communique hebdomadaire; Weekly Press Survey.
Semi-monthly-
Canadian Foreign Language Press Survey; Nouvelles catholiques; Wartime Clips; Nou-velles de guerre.
Monthly

Canada at War; Canada en guerre; Canadian Churches and the War; Consumer Facts; Information aux consommateurs; Field Reports- monthly summary; Forum Findings; Labour Facts; Labour Facts-U.S. edition; Labour Facts-overseas edition; Communique Ouvriere; Labour Press Survey; Recent Poll Releases; Wallnews; Pour Vous.
Occasional-
Canada at War-Spanish; Canada and Civil Aviation; Communique - bi-weekly; Graphic Sheet Series; Postwar Planning; Renseigne-ments sur les pro jets d'apres-guerre; Reference papers; Pages documentaires; United Nations Charter; Chartre des nations unies; Your Neighbour, Canada.
Issued during 1945 for DND (Information to Armed Forces) at home and abroad:
Semi-monthly-
Canadian Affairs; Affaires canadiennes; Civvy Street News; Tenue de ville.
Monthly-	_
Canada Digest; Canadian Affairs Pictorial; Panneau affaires canadiennes.
Occasional

	_
Looking Ahead Series; Notre vie de demain; Welcome to War Brides.
(b) 1946:
Daily-
Airmail Bulletin; Airmail Bulletin-Spanish. Weekly-
CIS Weekly; Press Survey.
Monthly-
Recent Poll Releases.
Occasional-
Canadian Cook Book for British Brides: Canada-Handbook for Mexican Book Fair; Reference Papers; Pages Documentaires.

C.N.R.-Guarantee oj Securities
Publications issued by Canadian Information Service, January 1-May 31, 1946 for Department of National Defence (Information to Armed Forces) (Publication ceased February 28, 1946).
Semi-monthly-
Canadian Affairs; Affaires canadiennes. Monthly-
Canada Digest; Canadian Affairs Pictorial; Panneau affaires canadiennes.
Occasional-
Looking Ahead; Notre vie de demain.


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
Right Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $22,550,000 in principal amount to provide the moneys necessary to meet capital expenditures made or capital indebtedness incurred during the calendar year 1946; to authorize the governor in council to guarantee the principal and interest of securities issued by the company for the purpose aforesaid; to authorize the making of temporary loans to the said company secured by such securities and not exceeding $22,500,000 in principal amount to enable the said company to meet such expenditures and indebtedness; with authority to give financial aid and assistance to other companies of the said national system.
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.
Gordon Graydon: On a question of privilege, it would appear that Mr. Speaker's reading of the resolution was somewhat different from that which appears on the order paper, and we should like to know with which resolution the Governor General has been made acquainted.


Mr. SPEAKER:: This motion is not
debatable.


Mr. BLACK (Yukon):: The resolution on the order paper is not the one read by Your Honour.


James Horace King: In those circumstances I will permit the hon. gentleman to give an explanation.


James Lorimer Ilsley: I did not follow Your
Honour's reading of the resolution, but I am told by one of my colleagues that through inadvertence Your Honour read one line of the resolution twice.


Mr. STIRLING:: It was a great deal more than that.


James Lorimer Ilsley: The hon. gentleman will have to explain what is wrong. This is the resolution that has received approval.


Gordon Graydon: Do we take it that the resolution on the order paper is the one which the minister has moved and which has received the commendation of the Governor General?


James Lorimer Ilsley: Correct.	.


[Stage Direction]
Motion agreed to.

James Horace King: This afternoon, after I
read the motion of the Minister . of Finance under the item "Government Notices of Motion", the hon. member for Peel (Mr. Graydon) drew the attention of the minister to the fact that the motion read by Mr. Speaker and the motion on the order paper were not similar. Since that incident happened, I had an opportunity to compare the two motions and to ask for an explanation. With the permission of hon. members I shall read to them the memorandum which has been prepared for my information.
There would seem to have been a discrepancy between the resolution as read by Mr. Speaker this afternoon in the house respecting the Canadian National Railway finances and the resolution as it appears on the order paper. The practice has always been to make up these resolutions as they appear in the back of the Votes and Proceedings under "Notices of Motions". This was done in this case as part of the regular procedure in the journals office. Whenever there is any correction or alteration made by the minister or member in charge, there has always existed an arrangement by which the journals office is notified in advance so that the corrected resolution or notice of motion may be substituted before it reaches Mr. Speaker. This was not done in this particular case and as a consequence the wrong resolution was placed before Mr. Speaker. I might point out in this connection that 'the reason that such papers are made up in advance is that the house sometimes decides to proceed with its business as it is printed in the back of the Votes and Proceedings. This often occurs toward the end of the session. I may say that steps are being taken to prevent a recurrence of the incident.
[Mr. Fraser. 1

United Nations


SPECIAL OPERATORS
[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 measure to make applicable the allowances and benefits accorded a veteran, to certain persons described as "special operators" who were enrolled in Canada by United Kingdom authorities for special duty during world war II, under the Veterans Land Act, 1942, the Veterans Insurance Act, the Veterans Rehabilitation Act, Part I of the War Veterans Allowance Act, 1946, The Unemployment Insurance Act, 1940, the Department of Veterans Affairs Act, the Civil Service Act, the Pension Act, the Income War Tax Act, the Reinstatement in Civil Employment Act, and the War Service Grants Act, 1944.
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:
Mr. ANGUS MacINNIS (Vancouver East):: Before the orders of the day are called I should like to put a question to the Minister of Labour. Have representatives of the textile workers asked for an appointment with the Minister of Labour to discuss the labour dispute between the textile mills in Montreal and Valleyfield and the textile workers, and is there anything the minister can do in connection with this dispute?


Hon. HUMPHREY MITCHELL (Minister of Labour):: I think about twenty or thirty hon. members received similar telegrams, and they came to see me yesterday. I want to thank my hon. friend for giving me notice of this question. My reply is that a telegram addressed to myself by R. Kent Rowley, Canadian director of the United Textile Workers' Association, was received yesterday. On my behalf, Mr. M. M. Maclean, director of industrial relations of the Department of Labour, sent the following answer:
Retel to Hon. Humphrey Mitchell, am directed to inform you that as Dominion Textile and Montreal Cottons strikes are under jurisdiction of and are being dealt with by provincial authorities, minister feels no useful purpose can be accomplished by meeting union delegation as requested.
On June 18, the hon. member for Beauhar-nois-Laprairie (Mr. Raymond) asked me if there would be federal intervention in this strike. My reply will be found on page 2590 of Hansard.


UNITED NATIONS
[Stage Direction]
INVITATION TO PEACE CONFERENCE TO OPEN IN PARIS JULY 29 On the orders of the day:
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, this morning at half past eleven o'clock His Excellency the Ambassador of France called at the office of the Department of External Affairs and handed the under-secretary nf state the following communication addresfqd to myself. The communication is in French. I shall give to the house a translation, and shall see that a copy of the original also appears in Hansard of to-day:
Ambassade de France,
Au Canada,
Ottawa, le 10 juillet 1946.
Monsieur le premier ministre,
Mon Gouvernement m'a charge de vous trans-mettre la communication suivante:
"Le gouvernement frangais, agissant au noin du Conseil des ministres des Affaires etrange-res, a, eonformement a la decision du Conseil en date du 4 juillet 1946, l'honneur d'inviter le gouvernement canadien, designe au paragraphs 2 du texte precite comme devant participer a l'examen des traites de paix avec ITtalie, la Roumanie, la Bulgarie, la Hongrie et la Fin-lande, a envoyer une delegation pour le representer a la Conference qni s'ouvrira le 29 juillet 1946 a Paris au Palais du Luxembourg. Les projets de traites de paix avec ITtalie, la Roumanie, la Bulgarie, la Hongrie et la Finlande prepares par le Conseil des ministres des Affaires etrangeres seront communiques le plus tot possible au gouvernement canadien en vue de faciliter le travail de la Conference. Des propositions conccrnant 1'organisation et les regle-ments de la procedure recommandees a sa consideration sont remises a l'ambassade du Canada a Paris".
Veuillez agreer, monsieur le premier ministre, les assurances de ma plus haute consideration.
J. de Hautecloque.
Le tres honorable Mackenzie King,
Premier ministre du Canada,
Secretaire d'Etat aux Affaires exterieures, Ottawa.
Translation Embassy of France in Canada Ottawa, July 10, 1946.
Mr. Prime Minister:
My government has directed me to transmit to you the following communication:
"The French government, acting in the name of the Council of Foreign Ministers, has, in keeping with the decision of the council taken on July 4. 1946, the honour to invite the government of Canada, designated in paragraph 2 of the text of the council's decision, as being entitled to participate in the consideration of treaties of peace with Italy, Roumania, Bulgaria, Hungary and Finland, to send a delegation to represent Canada at the conference which will open on July 29, 1946, at the Luxembourg Palace in Paris. The draft treaties of peace with Italy, Roumania. Bulgaria, Hungary and Finland drawn up by the Council of Foreign Ministers will be communicated to the government of Canada as soon as possible, with a view to facilitating the work of the conference. Detailed particulars of the organization of the

Labour Conditions

conference and of the rules of procedure recommended for consideration will be forwarded to the Canadian Embassy in Paris.
Will you accept, Mr. Prime Minister, the assurance of my high consideration.
(signed) J. de Hautecloque.
The Right Honourable Mackenzie King,
Prime Minister of Canada,	_
Secretary of State for External Affairs, Ottawa.
I have not had the opportunity since the receipt of this invitation to bring its representations to the attention of my colleagues. Therefore I do not feel in a position at the moment to give the house further information than that the invitation has been received. I hope to-morrow to be able to make a statement as to the government's decision with respect to the delegation.



OFFICIAL SECRETS ACT


[Stage Direction]
On the orders of the day:
Mr. J. G. DIEFENBAKER (Lake Centre):: Mr. Speaker, I should like to ask the Minister of Justice when the last report of the espionage commission will be filed. I noticed that ten days ago it had been sent to the printers. When will it be laid on the table?
Right Hon. L. S. ST. LAURENT (Minister of Justice): I am afraid the hon. member is a little bit misinformed as to the date on which it was sent to the printer. Parts of the report have been in the hands of the printer since much more than ten days ago, but the last portion of it was sent to the printer, I understand, only last Friday or Saturday morning. It is now in the hands of the printer and also in the hands of the translators, and it is hoped that it will be ready for tabling at a very early day. The printers and translators have been advised that it was hoped they would lose no time in making it available for tabling.



LABOUR CONDITIONS


[Stage Direction]
In the course of the budget debate:
Humphrey Mitchell: Mr. Speaker, hon. members
should be informed immediately, I believe, that the government to-day has appointed a controller and three deputy controllers for Algoma Steel Corporation Limited; Steel Company of Canada Limited; and Dominion Steel and Coal Corporation Limited. I table herewith copy of the order in council.

The government has taken this action to assure, as far as it is humanly possible to do so, that work will continue in these important plants.
All three plants are producing coke on a large scale which is being routed by the fuel controller for heating and cooking purposes, and anj' interruption in the production of coke will impair the already short supply of fuel in sight for Canada's needs.
Furthermore, the continued production of steel is basic in the economy of the nation and any stoppage of the work in these three plants would affect the entire economic fabric of the country.
I am sure hon. members will have followed the various reports, including statements by officials of the steel workers' union, that a strike date would be set on July 12 in the steel industiy. You will recall that on the recommendation of the Minister of Labour for the province of Ontario I appointed the Hon. Mr. Justice W. D. Roach, as an industrial disputes inquiry commissioner, and he has been endeavouring to mediate the dispute and bring the parties into agreement and while his efforts have resulted in bringing them closer to an understanding they have not as yet been entirely successful and rather than wait until a stoppage of work occurred, it has been deemed advisable to take the action I am now reporting.
Not only the workers of the three companies concerned and their families would have been affected by a stoppage of work in these plants but also hundreds of thousands of workers in industrial employment directly and indirectly related to steel would have faced the prospect of unemployment within a short time and production in many lines would have been slowed down and stopped.
Mr. F. B. Kilboum of Montreal, formerly steel controller, has been appointed as controller of the three companies. Mr. B. G. Sullivan of Toronto, Mr. J. Argyle of Ottawa, and Mr. H. R. Pettigrove of Halifax, have been appointeed deputy controllers.
Mr. Justice Roach has consented to continue to mediate the dispute between the interested parties. The companies and the union will continue their negotiations with a view to the settlement of the matters at present in dispute between them.
It will be recalled that the national and regional war labour boards have recently been given an extension of powers in connection with wage rates and are now authorized to fix wages on a just and reasonable basis consistent with the all important matter of retaining price control.

The Budget-Mr. Ross (Souris)
It will be appreciated that Canada, at the present time, is going through a very critical period. If there is too great a strain placed on the wage structure, it will have a disastrous effect on the whole policy of price control.
We have recently seen the results of sudden abandonment of price control with our neighbours to the south It has been publicized from an authoritative source that prices have shot up 12-7 per cent.
The Canadian Congress of Labour unions are holding a meeting of the wage policy committee in Hamilton to-day, and I wish to report that I have sent a telegram to the chairman of the committee, Mr. Conroy, and at this point I would like to read a copy of this telegram.:
Ottawa, Ont., July 9, 1946.
Mr. Pat Conroy, c/o Royal York Hotel,
Toronto, Ont.
In view of the meeting of your wage policy committee I feel impelled with the friendliest of feelings to place before you and your colleagues the following views. According to the latest reliable information obtainable the abandonment of price control in the United States has resulted in a 12-7 per cent increase in certain living costs and an average estimated at 10 per cent. I do not need to emphasize to you the gravity of a similar inflation spiral developing in Canada which might quite easily occur with unrestricted wage increase's leading to the abandonment of price control. Those in the best position to judge state most emphatically that wage increases beyond an amount considered just and reasonable cannot be made effective if price control is to be retained. Again it is the considered opinion of those best able impartially to assess the present economic situation in Canada that increases in wages beyond ten cents per hour and in some instances less will force a break in the price ceiling. Amendments recently made to the wage control order have cleared the way for favourable consideration of application to war labour boards for just and reasonable increases in wages and it is my hope that all labour leaders should see the wisdom of using the machinery provided by the wage control order as revised rather than resort to threats of strike and strike action. On numerous occasions I have commended labour for its cooperation in making the policy of price control effective and I should regret very greatly at this time any action by organized labour which would place such a strain upon the price ceiling that it would crack and bring about an inflationary situation which would be detrimental to the interests of all workers and many others whose incomes never rise as rapidly as prices once inflation sets in. Referring to our recent conversation connection with B.C. -wage settlements you may have noticed I stated recently in the House of Commons that the B.C. interior lumber, logging and box manufacturing industries settled with the I.W.A. for a ten-eent per hour increase.
Humphrey Mitchell,
Minister of Labour.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, July 9, consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell, and the amendment to the amendment of Mr. Maclnnis.
Mr. J. A. ROSS (Souris):: Mr. Speaker, in pre-war years it was the custom in this chamber to have the budget presented by the Minister of Finance in the first quarter of the year. During the war years it eventually became the custom to bring down the budget about half way through the current year. In 1945, after the termination of the war, the annual budget was presented I believe on October 12, in the third quarter of the year. Now for 1946 we are to miss entirely an effective budget; for by the financial statement of the Minister of Finance (Mr. Ilsley) on June 27, 1946, we were informed that no taxation changes will take place until January 1, 1947. After the reported statement of the Minister of National Revenue (Mr. McCann) last March that Canadians would probably receive a fifty per cent reduction in 1946 income tax, the budget presentation by the Minister of Finance can be said to be very disappointing to the citizens of Canada. It is especially disappointing because of the fact that it discourages the production in Canada of many essentials until January 1, 1947. I think that is well borne out by the minister in his budget presentation.
In an address on March 20, the Minister of Reconstruction and Supply (Mr. Howe) stated at page 120 of Hansard:
I believe that a bushel of wheat will buy more goods in Canada than a bushel of wheat produced in any other country will buy goods in that country.
I wish to place on Hansard some figures as to the number of bushels of wheat required to purchase certain articles in this country:
To purchase a Farmall M. Tractor, International, in Canada requires 1,225 bushels of wheat. To purchase the same tractor in the United States requires 669 bushels of wheat.
To purchase a three-furrow International tractor plough in Canada requires 151 bushels of wheat. To purchase the same plough in the United States requires 83 bushels of wheat.
To purchase a 24-run International double disc drill in Canada requires 270 bushels of wheat, To purchase the same drill in the United States requires 147 bushels of wheat.
The Budget-Mr. Ross (Souris)

To purchase a 10-foot International power binder in Canada requires 333 bushels of wheat. To purchase the same binder in the United States requires 183 bushels of wheat.
May I add that these were the figures before the end of June of this year, when price ceilings prevailed in both countries. Moreover they do not take into account the increase of 12% per cent on Canadian manufactured farm implements and other recent changes which have played a part in this great disparity. The .lis-parity in the purchase price of automobiles in each country is at least twenty-five per cent greater than in the case of farm implements.
I do not think any minister will rise in his place and say that these are not essential articles on any farm in Canada. So I think that the statement of the minister and other statements of a like nature are disproved by these facts. To purchase that same tractor would require in Canada the price of twelve finished 1,000-pound steers, while in the United States for the same type of tractor the proceeds of only eight such animals would be required. In a practical way that is convincing evidence of the great disparity existing in these two countries, prior to July 1 of this year; everybody knows that things are in a turmoil down there and the present disparity is very much greater.
As was pointed out in discussions yesterday, the output of farm equipment has been reduced by the lack of steel, and authorities in the United States say that this type of production in that country will be decreased this year by twenty-five to thirty per cent. I am sure nobody will disagree when I say that full production is the true basis of real wealth. Productivity of essential goods is real wealth in this or any other nation, and we should never lose sight of that fact.
I have here the current Review of Agricultural Conditions in Canada, issued by the statistical branch of the Department of Agriculture, for June, 1946. In this magazine it is set forth that since January 1, 1946, that is during the past six months, cattle slaughterings in Canada have decreased by 12 per cent, hog slaughterings by 30 per cent, milk production by 3 per cent, and dairy cows on Canadian farms by almost 2 per cent-to be exact, 1-9 per cent. As this pamphlet is issued by the Department of Agriculture I do not suppose anybody will challenge these figures.
In the matter of personal income tax changes to become effective on January 1, 1947, the inequity of the difference which has been maintained between the wife who works in industry or an office and the farmer's wife has been repeatedly argued by myself and others in this house since 1942, when that disparity

was created, allowing the wife and the man who worked in industry or in the office an exemption of $1,860. I want to object to the provision decreasing the wife's earnings exemption to $250. A levelling up process should have taken place rather than a levelling down process. This, again, affects production of much-required foodstuffs at this time and in this country. I am sure the minister has received representations in favour of allowing the farmer's wife a certain amount of exemption in respect of dairy produce raised on the farm, poultry, eggs, garden produce, and so on, and I know that managers of creameries have asked that this concession be made in order to increase the output of foodstuffs. I am sure that if that had been done it would have made a big difference in the production of these articles which I have mentioned. Rather than decrease the exemption from $660 to $250 there should have been a levelling up process in favour of the farm wife and of all married people, because it would certainly have aided in the much needed production of foodstuffs.
With respect to taxation of cooperatives, it is my view that it should not be retroactive on the patronage dividends; and that, as I understand it, is the meaning of the statement made by the minister, although I admit that some of his arguments and observations were vague and hard to understand. Therefore I simply repeat that I do not think these patronage dividends should be taxed on a retroactive basis, as I understand they are bound to be.


James Lorimer Ilsley: No retroactive legislation is proposed.


James Arthur Ross: As I said, some of the terms used by the minister are vague. However, the proper place to discuss this matter in detail will be in committee of the whole, when we can carry on a question and answer discussion with the minister, and I intend to do so.
I should like to support what my colleague, our financial critic, said the other day about the civil service. We have many very efficient civil servants, but, as he pointed out, in prewar days there were about 70,000, and during the war the number has increased to approximately 150,000. One year after the termination of the war there has been a decrease of approximately one-half per cent-less than one per cent. Sometimes it is difficult to decide just who are within the civil service and who are in other branches of work under the government to-day.

The Budget-Mr. Boss (Souris)
I want to make some reference to the matter of controls and controllers as they operate in this country, and more especially with respect to their hindrance to the reestablishment of our veterans. I would make one specific reference, the matter of a young fellow named Tate, about whom I wrote the minister on June 28. This young chap wrote to me enclosing copy of a letter he had received from the sugar administrator at Winnipeg, Mr. J. S. McDiarmid, Jr., pointing out that he did not think his request could be considered. He had asked for a sugar ration for curing meat in a quick-freeze plant he was establishing at Killarney and hoped to have operating by July 15. The last sentence in the administrator's reply was:
We regret that present regulations do not allow any deviation from this policy.
That decision prohibits this young man from reestablishing himself with his own money. He is not asking for any financial assistance. As I say, I gave the minister this correspondence on June 28. and he acknowledged it, but his reply did not give any encouragement that something would be done in this respect. I am not going to read all Mr. Tate's letter, because it contains some pretty rough language, but he says:
I am starting a quick-freeze locker plant at Killarney, and would like very much to get a sugar quota for the cure of meats in this plant
I joined the army on August 7, 1940, and was discharged on November 6. 1945. I spent four and a half years overseas, and if this is not enough service to qualify me for a little consideration now that I am trying to reestablish myself on my own money and time I sure don't know what in h- you people think we were doing over there.
I know damn well we weren't enjoying the home life and comforts that a lot in Canada were, and we sure didn't get anything to eat like the forces that were at home.
Hoping to hear from you soon.
It is matters such as this which cause contention, and it is difficult to pacify veterans who are faced with such difficulties in trying to establish themselves with their own funds in civil life. Again, it is a matter of controls and controllers. I could cite other cases, and I do want to register my objection to this sort of thing at this time.
I should like to make reference to what I consider to be Canada's number one problem, that of housing. It is a problem confronting everybody in every walk of life throughout this nation to-day, more especially our veterans and their dependents. True, we have the National Housing Act, War-time Housing, the Veterans Land Act, the small holdings scheme, all of which are supposed to be coordinated under the Minister of Reconstruction (Mr. Howe), and in the operation of these measures everything is being centralized in or near the large cities of Canada. I think that that, in principle, is definitely wrong. We should be decentralizing these enterprises as far as possible. It is utterly impossible for people to get financial assistance in the smaller centres. The National Housing Act is not operative in any town or village west of the great lakes, so far as I can ascertain. In this respect national housing is so far a complete washout. In fact, I know some fairly large cities where they cannot get assistance because the lending companies refuse to cooperate. That is a disgraceful state of affairs at this time, so long after the termination of the war, and in a country1 like this. Wartime Housing has developed what I am sure will prove in the future to be slums in certain cities of Canada. We have such a condition in Winnipeg, and I hate to think of the future of that settlement.
Under the Veterans Land Act, small holdings, a most extravagant spending orgy is in process with the result that the veteran and his familv are not receiving value for the money expended on the houses that are being built under the present system. The houses are built on the cost plus basis, which means more waste and more profit. That is the principle that, was carried out by the Minister of Reconstruction. The people were willing to let it, go during the war years in the erection of airports and other buildings needed for the training of our men. but the matter is altogether different when you come to consider some of these projects of which I am speaking. Let me mention only one, that of Charleswood in Manitoba, where there are ninety housing units. The cost is appalling, and the houses are not yet completed. For a four or five roomed unit the cost is from $5,900 up to $7,000 and more, and there is further expense to be added. Having gone through these homes and inspected the material and the workmanship, I venture to say' that the veterans who will live in these units will not get fifty per cent of real value from them when theyr buy them. To-day, under the process of adjustment, the veterans are paydng a rent, of $25 for a four-room unit and $30 for one of five rooms, and they are informed that an attempt may be made to increase the rent from S5 to $10 a month.


Mr. McILRAITH:: What project?


James Arthur Ross: Charleswood. This is a most extravagant type of construction, and I say that for this reason. To build a single storey house is much more expensive and extravagant than to put up one of two storeys because I am convinced that, once you have


Mr. T. J. BENTLEY (Swift Current):: In rising to take part in this debate I shall confine myself particularly to the matter of the taxation of cooperatives. I believe that is important, and that the minister and his colleagues need some elementary education on the workings of cooperative associations. I am going to be elementary to-day for the simple reason that the minister may unde-stand these elementary principles-he gives no indication of it in his budget proposals. It is well for the house and the country to know that the minister has at least been told what these elementary principles are.
Of course I cannot entirely ignore the callous disregard of the government for the people in the low income brackets. They have been given a miserable S90 increase in exemption. That means that a single person now has an exempted income of slightly over S2 a day-hardly enough to pay for the meals of an hon. member in the parliamentary restaurant for one day. It seems to me utterly cruel to expect these people to live on the amounts allowed. It is such a small amount that it is on a par with the old story of the Scotsman who came home and told his wife that he had just received an increase in pay. They were jubilant about it, and she said: "How shall we celebrate, Sandy?" He said: "I dinna ken, lass, but at least we shall start by tossing the canary another seed." The government is celebrating the end of the war by tossing another crumb to the people in the low income brackets.
In his budget speech, as reported at page 2920 of Hansard, the minister made this statement:
I am now in a position to say that in general the government accepts the commission's report as the basis of its proposals with respect to the taxation of trading cooperatives, credit unions and mutual insurance organizations.
Of course, the commission referred to is the McDougall commission. Throughout the minister's remarks on this matter

and it is one of extreme importance to many people in Canada-he clearly indicated that he is so thoroughly imbued with the belief that the returns on capital are more important than the welfare of human beings, that he has disregarded the welfare of the kind of human beings who make up these cooperatives.
In discussing this matter I propose to show two glaring examples of this predilection on the minister's part. It is apparent to me that the minister has made no study of the underlying principles of the cooperative movement or the cooperative associations, in spite of the fact that these associations have been in existence a long time in many countries. Anyone who studies world affairs, even in a casual way, is aware of the existence of these organizations for a long time. They have been established in Britain, in Russia and in the Scandinavian countries for many years, and for a great many years have been developing on the North American continent. They were established for the distinct purpose of endeavouring to improve the living standards of people in the low income groups. They have been accepted by a great many responsible people in this country, as I shall prove later, as important institutions for that purpose.
These cooperative associations are the natural outcome of the needs of people in the low income groups. They have tried to find some method of protecting themselves by being thrifty in a world of grab and greed, where monopoly enterprise, semi-monopoly enterprise and large business institutions have so much power in so many places. The only protection these ordinary income earners had was to form an association governed and controlled by themselves so that in a thrifty manner through cooperative enterprise they could save for themselves as much of their earnings as possible. It is entirely distinct from any private or corporate enterprise, because in an ordinary corporate or private enterprise the primary purpose is a return on capital. Let us look that over. In an ordinary enterprise, say a private company, before they begin the promotion stage the first thing that happens in the mind of somebody or of a small group of people if that they believe
331S
The Budget-Mr. Bentley
COMMON?
that by engaging in a specific industry, productive or distributive, there would be some profit in it. The next thing is to attract enough capital in the way of purchase of shares or other things in the business, with the promise that on the investment of the capital itself the investor will receive a reward in the way of interest or dividends. When that has been done and the business is set up, we find that all the elements of democracy inherent in the cooperative association are entirely lacking in the private corporation, because in the first place each share carries a vote. A small group of people can control a large number of shares so that the whole control can be in the hands of a minority.
Another reason is that with the sale of the shares, these requests for investment all over the country, people may buy shares, invest in this company for the monetary reward, but they will have no control because they live too far away from the headquarters of the organization to attend the annual meetings. The result is that they either have no voice or they give their shares to a proxy who votes on their behalf. The cooperative organization is entirely and distinctly different in its whole set-up and purpose. In the first place it is not formed until a considerable number of people in a local area, who have a common project or common purpose to achieve for themselves, decide that it is necessary to establish the organization on their own behalf. There is no expectation of a return on capital. It is usually formed among people in such a low income group that it is difficult to find the necessaiy capital for a large number of them to get started. But they do find it for the purpose, and the capital required is provided by the people themselves from their own pockets or from whatever way they can get it. They do not expect to receive much or any return on their capital. The investment takes the form of the purchase of a share in the capital stock of the company. Some organizations permit the purchase of more than one share; some allow the purchase of only one share, but no matter how many shares each or every individual may own, one individual has only one vote; that vote demonstrates his responsibility to help govern and formulate the policy of the organization, and by that action his right to enjoy its benefits. It is strictly democratic, and it is that principle of the cooperative which the minister in his proposals, as I shall show as I go along, is going to smash. Directors are elected, then, by these people, and usually in the smaller cooperatives they are located around a central point. It is not difficult for them to get to the annual meeting, and there they have a voice; [Mr. Bentley. 1
there they elect their officers, and the elected officers appoint the necessary management to carry on the physical operations of the business.
Money originally subscribed is used to provide facilities, to stock shelves, and to acquire whatever goods and services are necessary and to make provision for their distribution among the members. When a cooperative store is set up, the money from the members is used collectively for that purpose. That is a distinct difference which a great many people seem utterly unable to understand. Thev cannot get clearly in their minds the fact that a member who walks into a cooperative store to get a pound of tea has already, in combination with his associates, bought that pound of tea with his own money, and has placed it there on the shelves. When he takes the tea away, he leaves only enough money there to replace it, so that it may always be there for him or for one of-his colleagues in the association. It is not a purchase made for the purpose of providing the owner or operator of the cooperative store with a profit, because that store is his store. The member simply leaves his money there.
Why does he leave so much money there? He leaves it because at the beginning of the season the elected directors and management, who are appointed, decide as to the membership, the clientele and business they are likely to have, and what receipts that business is likely to require to pay all costs of operation and wholesale purchase prices. I am speaking of a cooperative store, but the same principle would be applied to a service organization or to any other cooperative enterprise. The management must provide sufficient for each unit but at the same time a quantity which wall disappear off the shelves so that there will always be replacements and money to pay the costs of operation, plus the necessary reserves to protect the equity held by the members.
At the end of the year these same officers, in compliance with the laws of the province of Saskatchewan-and I assume there are similar laws in other provinces-provide an audited statement and a report to be placed before the membership at the annual meeting. The members of the cooperative will receive notice of the meeting and will be encouraged in every way to take part in it. The audited statement is placed before them, and they are in a position to see how much money they left for the various units of goods and services they took off the shelves, or from that place of business which they, themselves, own. They will decide how the surplus money will be distributed-because it is their mono}'.

The Budget-Mr. Bentley
It does not belong to a board of directors or to an association. It is the collective savings of those people who, because of their thrift, have joined themselves together to augment the purchasing power of their low incomes.
This is an important distinction, and I wish the minister to try to understand and to deal with it. This is what is referred to as patronage dividends. The minister has expressed some doubt as to the proper word to use, but most people refer to these moneys as patronage dividends. Some call them a return on excess earnings, but the name of that kind of money is not important. The important fact, to my mind, is that it is money, that it belongs to the individual who helped to save it, and that it should go back into his pocket. And not until his individual income reaches the munificent sum of S755 a year should he pay a tax. When it does-all right, if that is the law. But it is not someone eise's money to be taxed in the hands of the cooperative, or in any other hands. It is his money, and should be considered in that way.
The same process takes place in marketing associations. The individual live stock pools, wheat pools, egg and poultry pools, dairy pools and the like, follow the same processes; the same operations take place, the only difference being that they deal with different types of produce.
I believe the minister has shown himself an able man. Undoubtedly he is intelligent. I have not always been complimentary to him, but I can go as far as I have, anyway. Certainly he has intelligence enough to be able to understand what J have said, and not to make a statement such as that credited to him on page 2920 of Hansard when, on June 27, during his budget speech, he said:
There are, moreover, a variety of payments in proportion to patronage, which for want of a better term T shall call patronage dividends, the status of which is by no means clear.
" Patronage dividends," I would remind the minister, through you, Mr. Speaker, is an accepted term. It may not be the best one, but it is accepted. Its status is perfectly clear to people who understand the cooperative movement.
As I said before, patronage dividends are the individual savings of people who group themselves together for that purpose. I emphasize again that these cooperatives do not exist and were never organized for the purpose of making profit for the organizations. Their sole purpose is to make savings for their members. Any return on invested capital is purely incidental and has never assumed any important part of their operations.
Complete democracy is the keynote of the organization. But, again, the minister is going to force cooperatives to break that principle.
I cannot understand why he would make a statement of this kind, or where he got his information-well, I think I understand, and I might mention that point later on. But it is amazing to me that the minister should make this kind of statement, with the intent of forming it into law:
Patronage dividends should be paid shortly after the end of the fiscal year and on the same basis to members and customers alike.
Let me remind the house of what I said a minute ago, that a cooperative provides a place for democratic control and democratic responsibility. This is an extremely important point to remember when people are dealing with cooperatives. There is a responsibility which comes ahead of the benefits received from a cooperative institution, because first one must agree to come in and accept his share of the financial, operative and governing responsibility. Each member provides his share of capital, takes his share of responsibility, and no member should avoid responsibility. I do not say that some do not avoid it-we are all human. But in the main, members of cooperatives take a pretty close interest in the operation of their concern. I doubt if in Saskatchewan, at any rate, one could go to any cooperative organization and not find every member with at least a fairly clear working understanding of how the cooperative is getting along.
Under the minister's proposal, cooperatives will be forced to give casual customers the same benefits as a .responsible member is expected to get. That is distinctly undemo-, cratic. That is like the person who comes to Canada and, without taking out citizenship papers, or accepting any of the responsibilities of citizenship, enjoys all the privileges of our democratic country.


James Lorimer Ilsley: Can the hon. member think of any explanation of why the commission, constituted as it was, with Mr. Justice McDougall as chairman, unanimously recommended that the payment of patronage dividends on an even basis to all customers be made a condition of exemption of patronage dividends from the tax?


Thomas John Bentley: No, I cannot think of any good reason for the commission arriving at that decision. It is a wrong decision so far as cooperative principles are concerned.


James Lorimer Ilsley: They were unanimous.

The Budget-Mr. Bentley


Thomas John Bentley: I cannot help it if they were. I ana not going to attempt to justify what they did, because I disagree entirely with their judgment on that particular issue. I hope I can in some way persuade the minister also to disagree with that particular part of the report. With other parts of the report I wish him to agree.
Let me give an illustration, using the Saskatchewan wheat pool. They operate in that province over 1,100 elevators. At about 170 points where they operate there are only pool elevators; there are no other elevators. These are the only elevators which it is convenient for the producers to use. At these places are farmers who for reasons of their own do not care to be members of the wheat pool. That is their democratic right, and the wheat pool has always taken the position that these people are entitled to their opinion. They say to them, "We would like you to be a member of our association; we want you in but we are not going to do anything whatsoever to coerce you, either advertently or inadvertently, to oecome a member of our association." At the 170 points they operate on a public licence in order to make it possible for these non-members to get all the marketing and handling services available through the pool elevator that they could obtain through a line elevator, were there a line elevator at the point. They give them just as good service as they give their own members, but they say, "Seeing you have assumed no responsibility, either for the original financing or present financing, in the governing, in the election of officers of this organization, we do not believe you should receive the benefits of this association." It is against their principles to pay dividends to those people. They could apply for private licences and provide services only to their own members, but they do not. They operate on public licences and give all the same service.
There is a tendency sometimes to think that these organizations do a lot of business with non-members. In only two years out of twenty-one years of operation have the Saskatchewan pool elevators gone over the prescribed 16f per cent of non-member business. In the last four or five years their business with members has been about 92 per cent; rarely have they gone over seven or eight per cent with non-members. Why is this? A great number of younger and new farmers have been joining the association. They are willing to accept their responsibilities in order to get the benefits. There have been around 30,000 new members in the last four or five years in that province alone.

This is the thing that angers 'the private elevator companies; this is the thing that has made them back the income taxpayers' association. The fact that these new and young farmers are joining the Saskatchewan wheat pool, the fact that they are accepting its cooperative ideas and are working along with the marketing and handling of grain, is the thing that has made these privately owned companies, with their headquarters in Winnipeg, so angry. I say to the minister that in his department are men who are entirely too friendly to that idea, and I think the minister gets a lot of reactionary advice from that kind of people in his department.
The cooperatives agree that it is almost impossible for a cooperative of any size not to do some business with non-members. Most cooperatives will say quite frankly that business done with a non-member is profit business, and most of them will say that they are prepared to pay the full income tax on that part of their business. However, it would be difficult and there must be some elasticity. Because of this the Cooperative Union of Canada has made a recommendation which I should like to quote. I can give the source of this if it is necessary, but I assure the house that whatever I quote has an authentic source which I can give. The Cooperative Union of Canada recommended as follows:
The surpluses of any association or organization conducting any business or enterprise for its members shall not be liable to taxation under the Income War Tax Act or the Excess Profits Tax Act, if not more than one-third of its business in any year is done with non-members.
I would point out that the Cooperative Union of Canada represents a total cooperative membership of close to one million people. I have not the exact figure, but I do not think I am far out in my estimate.
In his budget speech the minister has abrogated another important principle. He is going to force cooperatives to become profitmaking concerns. He made this statement as reported on page 2921 of Hansard:
After careful consideration, the government has. therefore, come to the conclusion that it should accept the commission's recommendation that patronage dividends and similar payments be treated as a deduction from income

Up to there it is good.
-subject to one relatively minor limitation designed to avoid at least some of the discriminatory effects I have mentioned. The limitation is this:	That no company or association shall be
able to go so far in its distribution of tax-free patronage dividends as to reduce its taxable income below a reasonable return on capital employed in the business. This reasonable return will be defined as three per cent on the capital employed.

The Budget-Mr. Bentley
Right there the minister showed that by law he is going to force the cooperatives which are non-profit-making in their operations to declare a three per cent profit on the capital used before they can pay out to their members the proper collective savings. The minister is proposing by law to break two principles in cooperative organization. He is breaking a democratic law by forcing them to pay dividends to irresponsible casual customers the same as to responsible members, and he is forcing the cooperative to become profit-making to the extent of three per cent. That is not in accord with proper cooperative philosophy and it is not in accord with the opinion of people who believe in cooperatives.
As the minister is aware, there are in the wrorld certain governments, there are in this country certain people, some of them possibly quite close to the government, who believe in cooperatives. I should like to quote two passages from the proceedings of the Hot Springs food conference which was held from May 18 to June 3, 1943 and in which Canada participated. I quote:
Whereas:
1.	The cooperative movement has been of very great importance in many countries, both to urban and rural populations, especially in agricultural districts where farming is based on small units and in urban areas of low income families;
2.	The proper functioning of cooperative societies may facilitate adjustment of agricultural production and distribution, as members have confidence in the recommendations and guidance of their own cooperative organizations, which they know operate in the interests of their members and of society in general;
3.	The democratic control and educational programmes, which are features of the cooperative movement, can play a vital part in the training of good democratic citizens, and assist in inducing a sound conception of economic matters.
I recommend those final words to the attention of the minister and his colleagues. Further in the same report we find the following recommendation:
1. That, in order to make it profitable for people to help themselves in lowering costs of production and costs of distribution and marketing:
(a)	All countries study7 the possibilities of the further establishment of producer and consumer cooperative societies in order to render necessary production, marketing, purchasing and other services:
(b)	Bach nation examine its laws, regulations and institutions to determine if legal or institutional obstacles to cooperative development exist, in order to make desirable adjustments;
(c)	Full information as to the present development of cooperatives in different countries be made available through the permanent organization recommended in resolution 11.
In view of that there is no excuse for the action taken by this government, which should understand democracy, which should under-63260-210J
stand thrift. Our friends the Tories do not believe they understand thrift, but they should understand it. They should understand democracy. If this were a country in which there had never been a cooperative, which had never been exposed to the operations of the cooperative movement, then there might be some excuse. There might be some mistakes made and they might have to appoint a royal commission to decide what they7 were. But there is no excuse for this country not knowing about it.
I come now to the taxation of cooperatives. I do not know how many people the income taxpayers' association represents, but they say 25,000 cards were sent out. I received 320 cards from my constituency, which has 20,000 odd voters. I received many resolutions from individuals and local organizations urging me to oppose the tax on cooperatives. I have one here from the city council of Swift Current, which reads:
That this council strongly protests against the suggestion contained in literature issued by the income tax payers' association to the effect that the earnings of municipally-owned enterprises be subject to income tax.
I want that known here so that members and the people generally will not think that every city council, just because it is composed of so-called business men, stands for what the income taxpayers' association advocates.
I come now to the retroactive feature. An hon. member has already mentioned this in a casual way. I am going to speak more particularly of the Saskatchewan wheat pool because I know it best. That does not mean that because there are little differences in administrative policy between the pools there is any fundamental difference between all three pools, but being more familiar with the Saskatchewan pool I shall deal with this question from the point of view of the Saskatchewan pool, although what I say will be applicable to all the pools.
I contend that the wheat pool is in every sense of the word a true cooperative association, using the principles of the Equitable Society7 of Rochdale Pioneers as the criterion. I am aware that some will dispute that statement. But I make that statement; I am prepared to debate it anywhere in Canada, inside or outside this house, and I believe that a reasonable audience that is not prejudiced will see the point.
First, one shareholder has one share and one vote and no more, and remember that to be a member of the Saskatchewan wheat pool you must be interested in wheat and cereal production. As I said, one shareholder has one vote, and only7 one vote, no matter what Ais

The Budget-Mr. Bentley
financial position may be. Democratically elected delegates each year represent the shareholders at annual and general meetings. The directors are democratically elected each year from among the elected delegates. The president and the executive committee are democratically elected each year from among the elected directors. Thus, even the president must be elected each year as a delegate, and then as a director before he is eligible to be elected as president. The president must be elected every year as a delegate in his own municipal district before he is eligible to stand for election even as a director. Let anyone here describe a more democratic method of membership control than that.
Some may ask how long a period the president holds office. I can only say that the present incumbent of that office in the Saskatchewan wheat pool has been in office eleven years, but he has had to go through that democratic process of election every year. It only proves that after a lifetime of service given to the people of his locality they believe that he is the proper man to elect as a delegate every single year, and his lifetime of service to the organization has made his fellow delegates believe that he has the necessary' qualities for the position. All honour to him for having been supported by his fellow delegates for so many years.
The disposal of all excess charges is decided by the delegates at the annual meeting. If the manager could say: We will distribute this just as we like, there might be some excuse for the minister's contention. B.ut that is not the case. The minister seems to think he is justified in singling the wheat pools from all other cooperative enterprises for taxation in 1944 and 1945 because he says that the wheat pools had reason to believe that they were subject to taxation. Let me say emphatically that never did the wheat pools believe they were subject to taxation.


James Lorimer Ilsley: If the hon. member will
allow me-[DOT]


Thomas John Bentley: 
James Lorimer Ilsley: May I ask the hon. gentleman a question? He understands, does he not, that we are not providing by legislation for the taxation of the pools in 1944 and 1945, that we are not doing anything retroactive whatever, and that it is open to the pools, if they feel that they are not subject to taxation, to take the case to the courts, if necessary to the privy council?
Mr. BENTLEY': In reply to the minister's question, I understand that there are some very good features up to and ending in 1943 -not good enough but fairly good. I say that there should be legislation. The minister is putting it up to the pools. He says, in effect, that if they are not satisfied they can go to the courts. The government has held them up for trvo years, and now it is telling the wheat pools that they may go and fight their case in the courts. In the meanwhile the United Grain Growers and other elevator companies may have laid aside reserves to meet such a possibility as this; they are going to reap the benefit if the pools win in the courts, and they will suffer nothing if the pools lose. The pools are going to fight the battle for them.


Mr. DEPUTY SPEAKER:: I am sorry to interrupt the hon. member but his time has expired.


Thomas John Bentley: If hon. members will consent, I shall be only eight or nine minutes more.


William Ross Macdonald: With the unanimous consent of the house only, the hon. member can continue.


Some hon. MEMBERS:: Go on.


Thomas John Bentley: Through you, Mr. Speaker, I should like to thank the house for its indulgence. I claim that this is nothing more or less than a raid on the treasury of an organization composed of a lot of people who have been living for years in the low-income groups and have spent many strenuous days and nights in building up this organization, which has served them so well in the past and can serve them so well in the future.
Another point is this: the years 1944 and 1945, particularly 1944, represent the largest earnings the pools have ever had, in spite of the fact that in the former year they lowered the cost of handling grain in their country elevators below' any figure which ever existed in the history of grain handling in western Canada, to my knowledge, which extends over a long time. Not only did they do that for their members, but the very fact that they lowered the handling charges in competition with private companies brought down the charges of the private companies, and every farmer who delivers grain to a country elevator in the three prairie provinces has benefited by that reduction. Now the government proposes to force them through the process of appealing to the courts or tax them on the savings they have made.


James Lorimer Ilsley: Let me get the hon. member's position.


Thomas John Bentley: The minister is using up my time.


An hon. MEMBER:: It has nothing to do with your time.


James Lorimer Ilsley: The house has given the hon. gentleman plenty of latitude. Is his position that there should be retroactive legislation exempting these pools from taxation?


Thomas John Bentley: My position is that there should be no tax on the wheat pools from the time they started to exist until now.


James Lorimer Ilsley: Even though the law is that they are taxable; is that right?


Thomas John Bentley: I do not believe that the law is that they are taxable, and I have tried to demonstrate that the pools do not believe it either.
Mr. ILSLEY': Is the position then not this, that the courts can decide? My point is: the money is not the main thing in this case; the main thing is fairness of treatment as between taxpayers. Having the opinion of the Department of Justice before the government that these taxpayers, if they are taxpayers, are taxable, how can we ignore that without legislation retroactively exempting certain taxpayers from taxation, while we are col-
The Budget-Mr. Bentley

lecting millions upon millions of dollars from other taxpayers? How can we justify it? That is what I should like to know.


Mr. KNOWLES:: A few days ago we made a bill, amending the Export Credits Insurance Act, brought in by the Minister of Trade and Commerce (Mr. MacKinnon) retroactive to cover up a doubt as to whether or not-


James Lorimer Ilsley: Oh, well, that was not a taxation matter at all. This is a matter of equity as between taxpayers, and how can we justify making retroactive legislation or taking retroactive action remitting taxes in one case unless we do it for competitors and for other taxpayers throughout the country? That is the question.


Thomas John Bentley: I will reply to that question in this way. I am stating my opinion and what I know to be the attitude of the cooperative associations in Saskatchewan, and I believe the cooperatives are right. I have stated that the wheat pools are cooperative associations. I am going to make another statement in a minute, and I will deal subsequently with the minister's question of what he could or should have done about the matter.
I want to summarize the points I have tried to make in the course of this debate; then I will deal with that particular question, and I shall be through.
I have tried to show this house and any who may be listening -or who may read this speech that the budget speech proposes to break the fundamental principles of cooperative enterprise; first, by forcing cooperatives to treat non-responsible customers in the same way as responsible members are treated. This is wrong, for democracy requires responsibility before benefits. Second, by forcing the cooperatives to adopt the principle of profit enterprise by demanding a three per cent taxable profit before the savings are returned to the members.
I have also endeavoured to show that the government proposes to discriminate against three cooperative enterprises, the pools, simply because they are now numerically and financially strong.
Now here is the answer which through you, Mr. Speaker, I would give to the minister or anybody who feels there is any justification for his point of view. I know the minister; I know that he has worked hard, and that he has got himself in a difficult position. But he is a member of a government which has been ten years in office; and during those ten years, if it found that there were any organizations in this country operating under the name of cooperatives that were not true cooperatives, it 
had the opportunity ever since 1935 to correct matters and definitely establish the position. Time and again the government has been asked in this house, by resolutions from the country, and I am going to ask now, that it formally introduce a dominion cooperative act defining a cooperative which is not taxable. When the minister does that, when he sets up a statute containing that definition, he will be justified in saying that "anyone who thinks he comes in under that, should we differ from him, will have an opportunity of deciding the point in the courts." But section 4 (p) of the Income War Tax Act states, or at least that is the opinion of a great many, that it absolves these cooperatives. I have tried to prove that the wheat pools never did believe, had no reason to believe, and do not believe to-day that they are taxable under this law, and they should not be forced to come to court, but the government should relieve them of any income tax responsibility in their legislation.


James Lorimer Ilsley: Does the hon. gentleman apply that principle to other taxpayers who do not believe that they are liable for the tax which is being asked of them?


Thomas John Bentley: I will reply to that question although I do not think it is my responsibility. According to the laws of the country as they are interpreted-and I have never broken the laws, or at any rate never been caught breaking them

I say, yes, if under the law anybody is being taxed who legally should not be taxed, he should be exempted.


James Lorimer Ilsley: Certainly; we all say that.


Thomas John Bentley: And I say that under section 4 (p) the pools are exempt. I am not speaking for other organizations; most of them are quite capable of speaking for themselves. But the answer generally is, yes.


John George Diefenbaker: I was greatly interested in the address delivered by the hon. member for Swift Current (Mr. Bentley) in which he dealt at considerable length with the experience of cooperatives over the years. His remarks on that subject were most interesting.
I should like first of all to refer to the amendment moved by the member for Muskoka-Ontario (Mr. Macdonnell) and the subamendment moved by the C.C.F. The member for Muskoka-Ontario moved, among other things, that:
This house regrets that:
(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.

The Budget-Mr. Diejenbaker
I would have thought that in reference to these matters my hon. friends of the C.C.F. would have been able to see eye to eye with us; for I have often heard them refer in this house to extravagance and to the discouragement of production. But in their subamendment they moved to strike out the references to extravagance and to the curtailment of production. Their amendment, innocuous in the extreme, points out among other things that the exemptions of those in the lower income brackets have not been raised sufficiently. With that there is no disagreement. They point out also that there should be investment of public funds to bridge the gap between anticipated private investment and unemployment. With that there can be no serious disagreement either, because it represents the point of view of those who believe in private enterprise. Reference is then made to the failure to set up a social security measure that will assure a reasonable standard of economic security for all Canadians, with which there can be no disagreement. Finally, they say that the budget fails in its proposals to recognize the principle that cooperatives are non-profit-making organizations.
A true cooperative, Mr. Speaker, is a nonprofit organization and as such is not liable to taxation. The amendment of the C.C.F. is a far cry from the socialism of last year, or even of two years ago; for it contains no reference to socialism or a socialized economy in this dominion. All that is gone. I am wondering whether the experience of two years in office in Saskatchewan has convinced my hon. friends that socialized enterprise does not operate to the benefit of the country or the state.


Mrs. STRUM:: We did not lose our
deposits.


John George Diefenbaker: It is amazing how my hon. friends can refer to Tories and cast aspersions at those on the government side of the house; but when one faces facts, the chattering invariably begins in all parts of the comer in which my hon. friends sit. Now, as I look at that subamendment-


Gladys Grace Mae Strum: The cooperators are still voting C.C.F.


Mr KNOWLES:: Are you going to vote for it?


John George Diefenbaker: Well, there is
nothing in it by itself that cannot be supported, because my hon. friends have diluted it down. As a matter of fact, from this subamendment one can only conclude that my hon. friends are engaged in the great retreat
from socialism. Much is made of cooperatives, and my hon. friends would have the house and the country believe that cooperation is similar to socialism, or that there is something in common between them. But the only thing in common between cooperation and socialism is the fact that a few years ago "cooperative" was made part of the name of the party to my immediate left. Cooperation is free enterprise.


Some hon. MEMBERS:: Oh, oh.


John George Diefenbaker: My hon. friends say "oh, oh". I am going to quote for their information from a report of the most successful cooperative in the province of Saskatchewan, the Davidson Cooperative Association. In its annual report the point I am now making is made clear and definite so that all can understand it. But, before I quote from the report let me go back to that cooperator, the great authority on the subject, Mr. Holyoake. He pointed out that socialism and cooperation are not the same. He said:
Socialism works from the top down, cooperation from the bottom up.


Mr. COLD  WELL@: What year was that?


John George Diefenbaker: Well, sir, has
socialism changed? There is something in that question by my hon. friend because they appear to have changed in the corner. They have changed in the last year in this house, and they have certainly changed their opinions since 1935, 1936, and 1937. No wonder my hon. friend the leader of the C.C.F. asks what year was that.


Mr. COLD  WELL@: Yes, what year was it? Was it 1841?
Mr. -DIEFENBAKER: The point of view of socialism and -the socialist members in the house appears to have changed with the changing years. May I say, Mr. Speaker, that all I ask of my hon. friends is that they allow me to hear' the interruptions that are being made. If I hear them I will answer them. I was going to quote from the report to which I have referred, which was made on April 17. It is the annual report of this cooperative:
Cooperation is not socialism. There is a current tendency to confuse cooperative enterprise with socialism, or state ownership of the means of production and services. Your board is convinced that they are opposite in their conception and diverse in their results.
A little while ago my hon. friends challenged me, and my answer is the words of a great cooperative in Saskatchewan. If they want any extensive quotations they will have to look at the report themselves, because time will not allow me to read extensive quotations.
The Budget-Mr. Diejenbaker

However, the report of the directors of this cooperative, a successful one, is interesting. The report continues:
State ownership of an enterprise removes the responsibility for its success from those directly connected with it. If a factory at a remote point sustains a loss it is shared by everyone who pays taxes, be they ever so far remote. As the state invades the field of production, few government experts become the voice of the nation. The great majority of its citizens become hirelings.
There is the conclusion of a great cooperative, one that has contributed much to the welfare of the people in the area which it serves, one that has a very large and ever-expanding clientele.


Gladys Grace Mae Strum: Was it Jock Wilson that wrote that?


John George Diefenbaker: Well, sir, apparently, my hon. friends recognize in the person who wrote it, and in the directors of this concern, intelligent people.


Gladys Grace Mae Strum: I wouldn't go so far as to say that.


Major James William Coldwell: That is why he never votes Conservative.


John George Diefenbaker: That, of course, is the length to which my hon. friend, the leader of the C.C.F. party, has gone in this discussion. I can say that he may not be a Conservative, but, as the head of one of the greatest cooperatives in the province, he has indicated the support he would1 give to my hon. friends of the C.C.F. who have endeavoured to make the cooperative movement in Saskatchewan or elsewhere an annex or an adjunct of the party they represent.


Mr. BURTON:: On a question of privilege, as a member of a number of cooperative organizations in Saskatchewan, which I have been for years-


Mr. GARDINER:: And so am I.


Joseph William Burton: -and as a member of the C.C.F. I take exception-


James Arthur Ross: What is the question of privilege?


Joseph William Burton: -to the remark that the
C.C.F. was trying to make the cooperative movement an auxiliary of the party.


William Ross Macdonald: There is no question of privilege.


John George Diefenbaker: Well, sir, that pretty well covers that matter.


Joseph William Burton: The fact remains that cooperation is one form of social ownership.


John George Diefenbaker: For me I prefer to take the definition of a great cooperative
corporation. The report continues in like vein to previous quotations, namely, and it is all to the same effect, the great danger that this great cooperative movement will in any way become a matter for one political party. Let me say to my hon. friend who interrupted me and rose on a question of privilege, that there would not be a wheat pool to-day if in 1931 in Saskatchewan and Manitoba two governments of opposite political faiths, coalitions, chiefly Conservative in Saskatchewan and Liberal in Manitoba, had not gone to the aid of that institution and preserved it, and thereby indicated the attitude of both of the old-line parties toward cooperatives. It was under the aegis of these governments that cooperatives first began, were nurtured and brought into being.


Joseph William Burton: The hon. member does not give the cooperative members any credit.


William Ross Macdonald: May I remind hon. members that interruptions can be made only with the consent of the hon. member who is speaking. I would also remind hon. members that when interruptions are made they should be made in an orderly manner. The member making them should rise in his place.


John George Diefenbaker: I thank you. I
never seem to be able to get interruptions in an orderly manner.
Having touched on the matters dealt with by my hon. friend I now come to a general reference to the budget and to some things which were not referred to by my right hon. friend, namely, the general conditions in the dominion to-day, the housing situation referred to by the hon. member for Souris (Mr. Ross) which is becoming serious as time goes on; the necessity for further production indicated each day by the shortages of manufactured and other industrial goods that are apparent on every hand; the migration of thousands of physically fit Canadians, the vary best of our nation, to which the hon. member for Souris made reference, 30,000 within the last year and that number does not take into consideration many who go to the United States for educational purposes or to take postgraduate work, or those of foreign birth of whom one in ten leaves this country.
Then, there was no reference to the situation in agriculture or to the fact that farmers of this nation have over the last year continued to receive about sixty-three cents less for a bushel of wheat than is received in the United States and on the world market, with the result that during 1945 they lost $110,000,000.
I wish I had the time to quote from an inter-

The Budget-Mr. Diejenbaker
view which the Minister of Agriculture (Mr. Gardiner) gave in May, 1946, as reported in the Sunday Express. I have not the time at the moment, but I may return to it. In this interview the Minister of Agriculture stated that the only reason Britain was charged a lower than worid price was that the wheat was allowed to go to Britain and nowhere else. He condemned the British people for distributing on the continent a part of what they received. So far as I am concerned I am only too willing that the British people and our other allies should receive wheat at a reasonable price. Over and over again I have repeated the right to the assurance for the farmers of Canada of the world price, and that if any amount is to be paid for advertising it should be paid by the government itself.
We hear much about inflation. The government compares prices of 1921 with 1946 using a different cost of living index. Anyone who claims that the cost of living in this country has risen only about twenty-one per cent realizes that these are official figures, but they do not take into consideration all the commodities which the individual is required to buy. As a matter of fact nobody is able to find out how the present index is figured out.


James Lorimer Ilsley: Oh, yes.


John George Diefenbaker: I shall give my
right hon. friend an answer in that regard. The present index covers a few commodities, but it does not begin to cover the commodities which have to be purchased, nor does it begin to show the true picture of the cost of living index in this country. As a matter of fact the dominion bureau of statistics has no records on the subject. On June 4 I received a letter from the bureau in reply to a letter I had written in an endeavour to secure a chart showing the various* goods and commodities from which the price ceiling had been removed, the date of the removal and the ceiling in each case and the then prices, the present wholesale and retail price, and so on. The answer given by the dominion statistician was that it was impossible to give these figures, and he said:
For further information 1 suggest that you communicate with the wartime prices and trade hoard.
In other words, to-day there are no certain records to show the degree to which prices have increased in regard to the commodities from which the price ceiling has been removed.
When one speaks of price ceilings one thinks of rackets across the country. There are black market rackets. It is not permissible for me to refer in particular to the one I
mentioned the other day, namely, La Banque Provinciale du Canada. I shall not refer in any way to particulars which will interfere with the case before the courts or the cases that are to come before the courts, but the Minister of Justice (Mr. St. Laurent) said the other night that there were no grounds whatever for reflections upon the bank generally. I say to him that on the basis of the material which was placed before me, the records showed that of eighty-three branches of the bank which were investigated, in eighty there was a departure from the regulations and irregularities and, what is more, while every other bank in the country was willing and anxious to carry out its responsibility, La Banque Provinciale showed no indication or willingness to cariy out the instructions of the wartime prices and trade board, and in point of fact in many' cases neglected to reply to requests on the part of the board. This is one example, and it is one of many across the country covering not only ordinary irregularities. In this case there were forgeries in certain cases, forgeries of coupons to the extent of 10,000 pounds of butter in one coupon and amounting to a total of one and a half million pounds of butter and a great deal of sugar. That situation prevails in other parts of the country. In the report of the Royal Canadian Mounted Police some indication is given of the extent to which these rackets have developed across the country and, I suggest, are not being proceeded against with the celerity and certainty which the circumstances require and conditions should demand.
We find ourselves in this position in this country-rising prices, shortages of material, production necessary and Canadians migrating from Canada. The government brings down a budget, in which, to use the words of the Right lion. Mr. Fielding, spoken many years ago-
They promise, prepare, propose, postpone. And end by letting things alone.
Substantial reductions in taxation, by inference, in 1945 were promised by the right hon. minister. Yet this budget shows spendthrift recklessness. It shows that the government is still on a spending spree of controllable expenditures. It shows more; it shows that there is no power in the minister, sincere as he is in his desire to curtail extravagance, to control the bureaucracy which makes possible this overexpenditure.
Moreover, the budget indicates that the war complex, the billion dollar mentality, is still the mentality of the bureaucracy which prepared this budget. I think of one example
332S
The Budget-Mr. Diejenbaker

of a war-time expenditure concerning which a warning was given in the house. I refer to the building of Cornwallis in Nova Scotia. It was pointed out that it was unnecessary; but it was proceeded with, and at a cost of $9 million. It was completed on November 30, 1944. What happened to it? We in the opposition accepted tremendous expenditures without criticism during the war, because of our desire to assist the government rather than to hoid it back in its aim and purpose to mobilize Canada for war.
But we warned about that expenditure. What has happened to Cornwallis'! With the exception of a few buildings which have been turned over to the' Department of Veterans Affairs, it has been closed down-a total loss to the country. The budget is convincing evidence of the fact that so long as the present government is in power over-expenditure, reckless expenditure and profligate expenditure will continue uncontrolled, because there seems to be no power to control those who are in charge of expenditures.


Mr. ABBOTT:: Rubbish.


John George Diefenbaker: I am going to refer to two or three matters of expenditure that could be done away with.


Douglas Charles Abbott: Good.


John George Diefenbaker: If the Minister of National Defence (Mr. Abbott) has any questions to ask, I shall answer them; but I cannot answer muttered monosyllables.


Douglas Charles Abbott: I just said, "Good".


John George Diefenbaker: I am glad I have your approval.


Douglas Charles Abbott: I was not speaking in monosyllables at all.


John George Diefenbaker: I am glad to know that, because the minister is a member of the cabinet.


Mr. TUCKER:: Before you go along, what do those savings total?


John George Diefenbaker: After all, the parliamentary assistant should be able to wait just a minute. He is not a member of the cabinet, and I am dealing with the cabinet at the present time.


Walter Adam Tucker: You should not object to answering a question like that.


John George Diefenbaker: It is perfectly all right.


Douglas Charles Abbott: Red herring.


John George Diefenbaker: "Red herring," says the Minister of National Defence. Let me give him the philosophy of this government. It is contained in the answer of the then Minister of Munitions and Supply during the period of the war, on November 19, 1945.
The hon. member for Muskoka-Ontario (Mr. Macdonnell) had pointed out that a million dollars might be saved out of $7 million in administration. What was the answer given by the Minister of Reconstruction? A chance remark?-no, a remark that reveals the philosophy of this government when, at page 2251 of Hansard he used these words:
I dare say my hon. friend could cut a million dollars from this amount; but a million dollars from the war appropriation bill would not be a very important matter.
That is the philosophy; that is the psychology.
Only the other day my good friend the Secretary of State (Mr. Martin), when a complaint was made respecting an increase in expenditures for printing from $700,000 to $2 million, brushed it aside by saying, "Oh, it is a sort of petty cash account".


Mr. MARTIN:: I point out that the bill did not refer to any expenditure. There was no expenditure whatsoever involved in the bill.


John George Diefenbaker: Oh, just a request for a blank cheque for $2 million 1 Just a kind of petty cash!


Paul Joseph James Martin: I rise to a point of order. I am sure the hon. member wishes to be fair.


John George Diefenbaker: Absolutely.


Paul Joseph James Martin: He always wants to be fair.


John George Diefenbaker: Yes.


Douglas Charles Abbott: Do you think it was?


Paul Joseph James Martin: In that bill I was not asking for a blank cheque. All we were doing, when asking that the bill be passed, was giving to the king's printer an amount of money to be put in a revolving fund. It did not in any sense represent an expenditure, but rather an advance. I am sure the hon. member will accept that.


John George Diefenbaker: No argument about it at all. But that was the attitude he had, when it was pointed out that it was an increase from $700,000 to $2 million. The attitude was that it was a sort of petty cash account.
Well, what my hon. friend said is true. It reveals the attitude of this government.
I believe this, that a Trojan horse has found its way into the camp of the people of Canada, it consists of a desire to overexpend and a

The Budget-Mr. Diejenbaker
refusal to control, regardless of the demands in all parts of this country for curtailment. Over and over again the attitude has been, spend, spend, spend!


James Lorimer Ilsley: That is the attitude of the opposition, almost to a man.


John George Diefenbaker: Never has that
attitude been mine. I have always said that my attitude is that there be no expenditures made unless those expenditures will bring a return to the dominion, or are necessary- such as uncontrollable expenditures are.


Douglas Charles Abbott: Preach that to the rest of your party, then.


John George Diefenbaker: Of course my hon. friend has apparently not been listening to some of the speeches delivered by me on previous occasions.


Douglas Charles Abbott: I have listened to a lot of them.


John George Diefenbaker: And apparently my hon. friend, the Minister of National Defence, is unrepentant. He thinks the people of Canada should continue to pay, pay, pay!


Douglas Charles Abbott: No.


John George Diefenbaker: I say that the time has come for a reduction in expenditures, where they can be made. I do not think anyone would insist that taxes will assure prosperity or increase incomes. When you continue war-time taxation to the extent that taxation is now being continued into the days of peace, it has the effect of harassing business and hamstringing the possibility of providing jobs in Canada at the present time.
It is doing more: it is reducing the standard of living of our people to an extent never before known in this country.


James Lorimer Ilsley: It is higher than ever before.


John George Diefenbaker: I did not hear that.


James Lorimer Ilsley: The standard of living is higher than it ever was before.


John George Diefenbaker: 650.000 people with incomes under a thousand dollars! That was the figure given the other day by the hon. member for Halifax (Mr. Isnor) when he was attempting to set out the wonderful advantages offered by this budget! If 650,000 be the correct figure it indicates that a great portion of the people of this country are living on a scale and standard of living far below that on which they should be living.


James Lorimer Ilsley: It may merely indicate that there are hundreds of thousands of part-time workers.


John George Diefenbaker: All of that may be replied to later on, but the fact remains that the attitude of this government and the taxation it continues to impose is punitive of success and of successful application to the job in hand. I would think that the government's attitude would be to place these expenditures before a committee and say to them, as I suggested a year or two ago, "Will we cut this down?" or, "Will we cut that down?" Expenditures should be cut to the bone, yes, into the bone itself. But that is not the attitude. In the submission made last fall by the right hon. gentleman to the dominion-provincial conference the government recognized that before there could be any return to proper conditions in this country under which the initiative and skill of private enterprise will result in new investments, the tax policies of all governments would have to be considered as a fundamental factor in arriving at that increased production which would be required.
What about the salaried man, the white collar man? He does not get any relief. He seems to be the one man who is doomed to be perpetually taxed without any hope of relief. He had some hope of relief. That was implied by the Minister of National Revenue (Mr. McCann) when he spoke at a banquet given in his honour in Renfrew last fall. Income tax has been increased some hundred times since it was first imposed twenty-nine years ago and the salaried man always pays. He should be entitled to ask at this time that some consideration be given to him; for, if you pauperize the salaried middle class, you destroy the bulwark on which this country depends against the isms that are sweeping the world to-day.
I agree with what the hon. member for Cape Breton South (Mr. Gillis) said last night that if the exemptions were increased and the rates reduced the demands of labour would be materially reduced. Labour demands increased wages because, after all, it is the "take-home pay" that counts. To increase wages means a mark-up in the goods manufactured; the pressure for increased wages causes increased prices, and so the cycle goes.
To my right hon. friend I say that the government has the billion dollar mentality. I think it would upset the members of this house if any minister were to rise in his place and say, "I am going to cut down my expenditures this year by thirty per cent, not the expenditures connected with war but the civil expenditures which have mounted so continuously since the beginning of the war, and the administrative expenses as well." The failure to take such action destroys the hope
The Budget-Mr. Diejenbaker

in man; it increases and maintains his fears. Some relief is given to the farmers and fishermen, but they have to wait. In 1948 they will be able to level off their income over a period of three years. I suggest that even now some relief should be given to the middle-class man with the fixed salary. It is that group that purchases the largest portion of our manufactured and industrial goods.
The hon. member for Rosthern (Mr. Tucker) asked me a moment ago to point out some examples. Let me say that it is difficult to pry information out of this government On November 14 last the hon. member for Eglinton (Mr. Fleming) tried to find out something about the Canadian information service.


An hon. MEMBER:: What a hope!


John George Diefenbaker: What a hope, and what information we got 1 It was denied by the government.
Mr. .CLAXTON: No information was ever denied.


John George Diefenbaker: I do not know what the word "deny" means in my hon. friend's vocabulary; but when it is refused, when there is a vote against giving it to the hon. member for Eglinton, it means denial to me although others may call it a refusal.


Mr. CLAXTON:: Surely the hon. member wants to be fair, as the Secretary of State (Mr. Martin) suggested some time ago. The motion standing in the name of the hon. member for Eglinton was a motion for the production of the minutes of the supervisory committee of the Canadian information service. It had nothing whatever to do with expenditures in any way, shape or form. The hon. member for Lake Centre knows that the minutes of boards of that kind are not producible and never have been.


John George Diefenbaker: Certainly not by this government. It related to the affairs of a board which had been set up by order in council while parliament was sitting.


Humphrey Mitchell: Nor by any other
government.


John George Diefenbaker: 
Gordon Knapman Fraser: Over 7,000 now.


John George Diefenbaker: I got a return only three months ago.


James Horace King: I am sorry but I must inform the hon. member that he has spoken for forty minutes.


Some hon. MEMBERS:: Go ahead.


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


Some hon. MEMBERS:: Yes.


John George Diefenbaker: I want to thank the house and I shall restrict myself to giving just two examples.


Walter Adam Tucker: Let us have the total of the expenditures the hon. gentleman suggests can be reduced.


John George Diefenbaker: I gave the first.

The Budget-Mr. Fair


Douglas Charles Abbott: $325,000; what is next?


John George Diefenbaker: I was dealing with War Assets Corporation. I pointed out that there were 500 employees each earning over $3,000 a year. I give one example to indicate the attitude of the government, the sale oi Fairmiles. I think the record of War Assets Corporation so far as efficiency goes deserves the serious consideration of this house and country, and information with respect to the transactions of the corporation should be given to the house and not be held back as it is being to-day in the war expenditures committee. But I shall not deal with that report since it is not before the house.
It cost this country $140,320 for eighty Fairmiles and War Assets Corporation sold forty-nine of them at $3,000 each. They could have got $15,000 and $20,000 for one or more of them. The reason they did not was that the minister said'that if they had got a better price it would have created difficulty and resentment.
What about the government ships sold to the French government? Canada makes loans to France with a view to having the French government purchase commodities in Canada? The French government purchased ten Canadian government ships for $415,000 per vessel. Did the government sell them direct to the government of France? No. They sold them through an intermediary and paid that intermediary, the American Ship Brokerage Corporation, a commission of $43,000 for each ship. I tried to find out last November who the intermediary was, and we were promised the information but it has not been given to date.
What about the situation in regard to the ships that were built by the Industrial Shipping Company Limited, of Mahone Bay, Nova Scotia, which went on manufacturing tugs, barges and scows after the end of the war, and in particular ten 65-foot tugs at a unit cost of $61,000? The British government did not want them, and what did the Canadian government do? They went ahead with the completion of these ships. When they were completed they were turned over to War Assets at $61,500 apiece and War Assets sold them at $20,000 apiece. It is waste like that, conditions like that-and I have the record here showing the sales that War Assets have made but I shall not impose it on the house-which indicate that War Assets Corporation have not been protecting the interests of the Canadian people.
You were kind enough, Mr. Speaker, to grant me an extension of time. Other matters I shall refer to when we go into committee. I suggest now, as I have suggested heretofore, that at this time when the government is
seeking to increase production in this country and to give an incentive to labour and the white-collared class and to the producers of this country, the minister, even now, should do two things. He should pare down these expenditures, which if they are not pared down will pare down the fabric of this confederation. We cannot go on piling up debt the way we are doing without a day of reckoning coming.
Second, I suggest that the government can never reduce taxation until it gets rid of the billion dollar mentality. I urge the government to make every effort to cut down controllable expenditure, and not to rush this parliament home, not to bring down the budget in the last few days and say that we should not continue talking because members want to go home. I want to go home too, but we have a responsibility here to the people of Canada, and that responsibility is this. Twelve million people in Canada are asking us to see that waste and over-expenditure be cut down; that taxation be reduced; that the people be given relief from the period of war control, high taxation and the like, and that jobs be furnished so that the Canadian people will have a higher standard of living.


Mr. ROBERT FAIR (Battle River):: It seems customary, Mr. Speaker, for hon. members rising in this debate to offer an apology for the time they intend to take. In my case I have no apology to offer. I feel it is the duty of every member here to oppose many of the things contained in the budget which was presented on the 27th of June last.
During the last six or seven years we have put up with increases in taxation and with sufferings in many directions and, now that the shooting war is over, I think it is about time that some relief from' taxation be given to the people of Canada. If we sit here dumbly, I expect that that punishment will continue, and it is not coming to our people further to endure punishment. I do not intend to deal with many subjects to-day, but I hope to discuss at tire resolution stage some of the matters dealt with in the budget.
One thing I see here which should make the people of Canada think is the amount of our funded debt at the end of March this year. It is stated to be. in round figures, $16,807,000,000. When we look back to the size of our debt in 1939 we find that it amounted to $3,205,956,000. That is quite an addition to our debt in a period of seven years. It does not seem to mean much to some people. To others it means quite a lot.
The Budget-Mr. Fair

years similar organizations were set up in the other prairie provinces. These organizations have saved the farmers millions and millions of dollars.
In my opinion everything possible should be done to see that they are kept in active operation. By that method we have done away with many of the abuses which existed in the grain trade prior to their being set up. If these other organizations are successful in putting our pools and other cooperatives out of business, then we shall revert to those abuses which we have fought for the past forty years. This is not good enough and must not be tolerated by this country or this government.
We find that the grain exchange and an affiliated organization called the income tax payers' association, with a membership of over 6,000, have been waging a bitter fight. We find that the membership of this income tax payers' association is $1 per member and they have head offices in Winnipeg and Toronto. These gentlemen have not been good enough to tell us the source of the money which they receive to carry on their campaigns over the radio and in the newspapers. That would be interesting information because I believe that in the long :un the money is drained directly or indirectly out of the pockets of the farmers across the country.
It will be wrong to tax cooperatives, particularly the wheat, pools, because prior to August, 1942, what wheat brought was only seventy cents a bushel, f.o.b. Fort William, for No. 1, and that is a price much lower than the average we had to take-I say, ''than we had to take"-during the depression years. Therefore, again I say that it is unfair to impose any further hardships on the farmers by taxing cooperatives.
There is one thing I notice in the report to which I must take strong exception, namely, the suggestion, or threat, if you like, to make cooperatives like the wheat pools taxable back to 1942. It has been pointed out that cooperatives are not profit-making organizations; that the savings are returned to their shareholders who are also their patrons. The returns are made on the basis of deliveries of grain and other things to these pools. Therefore I think it would be entirely wrong, particularly because a number of our farmers are still in the red in spite of the statements which are made that we are rapidly getting out of debt. This government or former governments should have clarified the position of the cooperatives long ago so that the people would know exactly where they stood. If taxes are imposed on the cooperatives now we shall immediately

run into a price war, because there are many more ways of killing a cat than by choking it with butter. If the cooperatives are compelled to pay income tax they can very easily see to it that nothing is left to tax. Therefore those who are pressing for the taxation of cooperatives and wheat pools should be careful, and also the government, about getting into something into which they should inquire much further.
I desire to say a few words in connection with representations which have been made to us by farmer organizations in our respective provinces. I believe this is also in line with the brief which was presented to the government not many months ago by the federation of agriculture. The government has agreed in part to some of the requests made. One of the requests was that the farmer's income be taxed on the basis of a five-year running average. The government has agreed to a three-year average. I would suggest that the minister consider making (hat period five years instead of three. Many of us wffio have farmed for a number of years know the ups and downs of farming, and I have no hesitation in saying that this three-year term should be extended to five.
My second suggestion is that breeding herds be recognized as a capital asset, and dispersal sales averaged over a three-year period. The minister has had that under consideration, but no announcement in connection with it was made in the budget. I hope to hear more about that before the budget is disposed of. Then I suggest that the exemption for single people, wffiich during war years was $660, and now has been increased to $750, be increased to $1,200 and, for married persons, to $2,000. Allowance should also be made for work done on the farm by the farmer's wife and family. We cannot place farming in the same class as many other businesses, because in the other businesses a man usually looks after the business and pays his help; whereas on the farm the farmer, his wife and the whole family, even down to the youngster who gathers the eggs at different times during the day, perform duties which in many cases are paid for at a pretty good rate of pay. That is not so on the farm.
Another kick which the farmer has-and I do not bhiDk many of them are complying with the law-is in connection with the collection of income tax from his help. Our experience has shown that where the farmer tries to collect income tax from his help he loses his help and does not have to pay any wages. Therefore he does not have to collect the tax. Ilis neighbour across the fence hires the help in question and does not collect

Privilege
the tax. Therefore the farmer who is trying to live up to the law is penalized by having his help go to the other fellow.
A board of arbitration is another suggestion which I am glad to see the minister has provided for. The payment of arrears of principal and interest on the home farm contracted prior to 1940 should be allowed as current expenses. Representation along that line has been made on many occasions, I believe, but I do not see any mention of it included in the budget. I should like to have the minister take that (under consideration because I believe he realizes, as we who live ou the farm do, that farming conditions and farming prices have been anything but desirable up until recently.
My last suggestion is that final clearance be given within two years of filing of tax returns. At the present time returns are still not definitely cleared back as far as 1942. In connection with the suggestions I have made, I should like to see a reduction in the levy, an increase in the exemption and the effective date made July 1, 1946, instead of January 1, 1947.
On motion of Mr. Boivin the debate was adjourned.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
Thursday, July 11, 1946