1947-04-29

Mr. JEAN FRANCOIS POULIOT (Temis-couata):: Mr. Speaker, I have the honour of tabling a petition signed by Reverend E.
Eldorado Mines

Guimont, parish priest of Saint-Jean-Baptiste de l'Isle -Verte, by the mayor of the parish, Mr. Willie Talbot, by Messrs. Leon Theriault and Auguste Cote, and by 881 voters of that parish, who object to the removal of the said parish of Saint-Jean-Baptiste de l'Isle Verte from the dominion constituency of Temis-couata.
I have another petition signed by Reverend Philippe Blais, parish priest of Notre-Dame-des-Sept-Douleurs de l'Isle Verte, by Mr. Joseph Michaud, former mayor, and the present mayor, as well as by 123 voters of that parish, who object to the removal of the parish of Notre-Dame-des-Sept-Douleurs from the dominion constituency of Temiscouata.
I have a third petition signed by Reverend Camille. Lachance, parish priest of Saint-Emile-d'Auclair, by Mr. Adolphe Lavoie and by 214 other voters of that parish, who protest against the removal of the said parish from the dominion constituency of Temiscouata.
Finally, I have a petition signed by Mr. Alphonse Migneault of Saint-Paul-de-la-Croix and by 304 voters of that parish, who object to the removal of the said parish from the dominion constituency of Temiscouata.
(Text):



ELDORADO MINES


Right Hon. C. D. HOWE (Minister of Reconstruction and Supply):: On March 13, in reply to a question by the hon. member for Lake Centre (Mr. Diefenbaker) referring to the Eldorado Mining and Refining (1944) Limited, I advised the house that a civil action was proceeding in the state of New York. I would now advise the house that on the recommendation of Mr. J. H. Tully, New York counsel, a settlement has been made of the civil action. I should like to table the letter received from Mr. Tully in this connection.


Mr. DIEFENBAKER:: Would the minister object to a question arising out of the settlement in connection with the Eldorado matter and the terms set forth in the papers just tabled? Will the minister say what the terms were, and whether any proceedings were instituted against certain Canadians against whom a prosecution was taken and subsequently withdrawn?


Clarence Decatur Howe: I am sorry, but I have tabled the letter from Mr. Tully which sets out the over-all settlement. It was a payment of about $2,000,000 to Eldorado, partly in cash and money's worth and partly in the return of metals. The exact terms of the settlement

cannot be given, for the reasons I stated before; they involve the purchase by other governments of fissionable material. I think my hon. friend will get the information he wants from Mr. Tully's letter.


Mr. STEPHENSON:: Criminal charges
were made against civilians in connection with Eldorado. Will the minister state whether Marcel Pochon was completely exonerated or not?


Clarence Decatur Howe: I do not know just how a man is exonerated. If a criminal charge is withdrawn it is a clear indication that the state has no charges against him. I do not think you prove a man not guilty.


Charles Elwood Stephenson: In view of the fact that charges were laid against him and have been dropped, it puts him in an unfortunate position-


Some hon. MEMBERS:: Order.


Mr. SPEAKER:: Order. The hon. member knows that the purpose of a question is to elicit information and not to give it. The hon. member has put his question and the minister has replied.


John George Diefenbaker: I have before me the letter which the minister has tabled, and I should like to ask this question. The letter sets forth that a settlement was made with the following defendants: Boris Pregel, Carl
B.	French, Canadian Radium and Uranium Corporation, and International Rare Metals Refinery, Inc. The letter says that there were two other defendants-


James Horace King: Order. The hon. member knows that it is against the rules to read telegrams, letters or newspapers as the basis for a question. If the hon. member wishes to ask a question, I would ask him to do so.


John George Diefenbaker: Mr. Speaker, may I put it this way. What action is to be taken against Radium Luminous Industries Limited and Marcel Pochon for any balances allegedly due to Eldorado, or are these actions completed as well?


Clarence Decatur Howe: Civil settlement was made with all parties to the dispute, and the matter is closed.


John George Diefenbaker: That is the reason I asked these questions.


Some hon. MEMBERS:: Order.


John George Diefenbaker: That is what the
letter does not sav. The letter says-

Air Services


Clarence Decatur Howe: It was a letter to me, not to the hon. member.


John George Diefenbaker: The letter reads:
Radium Luminous Industries Limited and Marcel Pochon were not named as defendants in the above suit because of our inability to obtain service of process upon them in this jurisdiction.
Will any proceedings be taken in Canada against these two defendants following the settlement made against other defendants, even though they were not parties to the action?


Clarence Decatur Howe: All parties mentioned in the letter took part in the settlement of the civil action.


John George Diefenbaker: No.


Clarence Decatur Howe: I am telling the hon. member that they did.


John George Diefenbaker: The letter does not say so.


Clarence Decatur Howe: That is all I can say; all actions are terminated.



AIR SERVICES


Clarence Decatur Howe: Mr. Speaker,
I wish to announce that the government of Canada and the government of Portugal have concluded am agreement for air services between their respective territories. This agreement, in the main, follows the form of previous bilateral civil aviation agreements which Canada has already concluded. It makes provision for an air line designated by each government to operate a return, service originating in its own territory and terminating in, or passing through, the territory of the other country, and includes an exchange of the first four freedoms.
The route to be operated by the designated air line of Canada is specified as Montreal via such intermediate stopping places as may be mutually agreed to the Azores and/or Lisbon, and thence to the United Kingdom and countries beyond in both directions. The route laid down for the designated Portuguese air line is from the Azores and/or Lisbon via such intermediate' stopping places as may be mutually agreed to Montreal and countries beyond in both directions.



TRANS-CANADA AIR LINES-MISSING PLANE EN ROUTE VANCOUVER

Hon. GROTE STIRLING (Yale):: Has the Minister of Reconstruction and Supply any
information to give the public with regard to the missing TCA plane en route from Lethbridge to Vancouver?


Clarence Decatur Howe: I received the following
message this morning:
Station manager W. Wells advises flight 3 TCA No. 53 CF-TDF due Vancouver 2300 PST not heard from since cleared to Vancouver tower at 23.17 PST. Crew captain Pike and first officer Stewart and twelve passengers. Air sea rescue all marine craft and police department and company have organized search. Will keep you advised.
I have inquired for any later information and I find there is none.


Mr. SMITH (Calgary West):: May I ask
the minister a supplementary question? Was it an eastbound or a westbound flight?


Clarence Decatur Howe: It was a westbound flight
going into Vancouver.



PRIVATE BILLS


[Stage Direction]
Bill No. 155 for the relief of Marjorie Winnifred Bearman Smeall.-Mr. Maybank.
Bill No. 156 for the relief of Mary Winifred Joyce Dick Dunford.-Mr. Maybank.
Bill No. 157 for the relief of Eileen Ardis Locke Thompson.-Mr. Maybank.
Bill No. 158 for the relief of Margaret Hamilton WTilson Bergeron.-Mr. Maybank.
Bill No. 159 for the relief of Norma Mar-zitelli Rudzik.-Mr. Maybank.
Bill No. 160 for the relief of Eileen Millar De Levi.-Mr. Maybank.
Bill No. 161 for the relief of Hilda Constance Caroline Mosley Dwyer.-Mr. May-bank.
Bill No. 162 for the relief of Louis Marcel Frigon.-Mr. Maybank.
Bill No. 163 for the relief of Florence Nancy Maria Haworth Stewart.-Mr. Maybank.
Bill No. 164 for the relief of John Bernth Jones, otherwise known as John Berth Jones. -Mr. Maybank.
Bill No. 165 for the relief of Patricia Violet Puttock Bromby.-Mr. Maybank.
Bill No. 166 for the relief of Dorothy Hawkins Myers.-Mr. Maybank.
Bill No. 167 for the relief of Evelyn Deltoff Moore.-Mr. Maybank.
Bill No. 168 for the relief of Eveline Hache Groulx.-Mr. Maybank.
Bill No. 169 for the relief of Annie Lucy Hurteau.-Mr. Boucher.
Bill No. 170 for the relief of Evelyn Alice Lancaster Chenoweth.-Mr. Maybank.
Inquiries oj the Ministry
[Stage Direction]
Bill No. 171 to incorporate Canadian Nurses' Association.-Mr. Benidickson.
Bill No. 172 respecting Guaranty Trust Company of Canada.-Mr. Brown.
Bill No. 173 respecting The Woman's Auxiliary to the Missionary Society of the Church of England in Canada.-Mr. Church.
Bill No. 174 to vary the Saskatchewan Natural Resources Agreement.-Mr. Glen.
Bill No. 175 to amend the Canada Evidence Act.-Mr. Ilsley.

[Stage Direction]
On the orders of the day:
Mr. JOHN BRACKEN (Leader of the Opposition):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce with respect to the proposed international wheat agreement. It arises out of a report emanating from London that "hopes for a world wheat pact were publicly blown sky high this week", and a further reference to the Canadian High Commissioner in London, Mr. Norman Robertson, who is reported as suggesting "that the meeting might be continued". The article concludes that it was finally decided to hand the corpse over to the international council in Washington for disposal. My question is this: Is it correct that the plans for an international wheat agreement have broken down? Also will the minister communicate to the house the substance of any report he may have received on the matter?


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: Mr. Speaker, I think it would be only a fair statement to say that the quotation read by the hon, leader of the opposition (Mr. Bracken) is a gross exaggeration, and I might add that that- remark applies to much that has been appearing in editorials and in leading articles on editorial pages in recent months.
The actual facts are that conversations have been continuing for some time in London among officials and those conversations went as far as it was possible for the officials to carry them. It was decided to have the question further dealt with by the different governments concerned, and prior to that the international wheat council was asked to have further conversations. The representative of the Department of Trade and Commerce, Doctor Wilson, has just flown back from England and is meeting with the wheat committee of the cabinet some time today to make an oral report. I am not sure how soon it will be possible for me to make a definite report to the house.


John Bracken: Mr. Speaker, if I might be permitted a comment, I am glad to hear the minister say that these reports are exaggerated. I would suggest that in view of the importance of the matter the actual facts ought to be made available to the house and the public as soon as possible.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. STANLEY KNOWLES (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of Labour? On February 10 he informed the house that a survey was being made to ascertain whether consideration could be given to wage increase for women cleaners in federal public buildings. Can the minister say whether this survey has been completed, and what progress is being made in connection with this matter?


Hon. HUMPHREY MITCHELL (Minister of Labour):: Since the beginning of the year the Department of Labour, on the request of the departments concerned, has made recommendations with respect to wage rates for this class of service at the following points: Toronto, Hamilton, Windsor, London, Winnipeg, Montreal, Kingston, Brantford, Kitchener, Vancouver, Sudbury, Wallaceburg and Saint John, New Brunswick. The survey to which my hon. friend refers, and which I mentioned on February 10, is not yet completed.



EMERGENCY POWERS


[Stage Direction]
The house resumed from Monday, April 28, consideration in committee of Bill No. 104, to provide for the continuation of certain orders and regulations of the governor in council for a limited period during the national emergency arising out of the war-Mr. Ilsley- Mr. Macdonald (Brantford City) in the chair.
The CHAIRMAN:: When the committee rose last night it was considering order in council P.C. 1997 having to do with timber regulations as amended.
Mr. GORDON B. ISNOR (Halifax): I wish to join with the hon. member for Queens-Lunenburg, who was supported by the hon. member for Rpyal in his remarks on the lumber situation in the maritime provinces. Coming as I do from Nova Scotia I am perhaps more familiar with the situation there-


Mr. HOMUTH:: Is the hon. member speaking for both members for Halifax?

Emergency Powers


Mr. ISNOR:: On this occasion I am happy to associate myself with the hon. member for Nova Scotia sitting on the government side and with the hon. member for Royal sitting on the side which is also occupied by my hon. friend.
I think I can safely say that in the over-all picture so far as controls affect the maritime lumber industry we have no great fault to find with them except from the standpoint of the export buisness. I can confidently state that the lumber industry in the maritimes is in a prosperous condition at the present time. I would not want the rest of Canada to think that we were not taking full advantage of the markets which have been provided for us. Both the export and the domestic markets have been good. The entire cut of the maritime provinces could not be permitted to be shipped overseas to our natural market, the United Kingdom, because of the need of lumber for construction purposes in our own country. That is generally understood, but at the same time I support the hon. member for Queens-Lunenburg in his contention that there should be a larger quota for the export business.
A careful check of the lumber production figures for Nova Scotia and New Brunswick will show that the total sawn lumber for Nova Scotia in 1939 was 270 million feet, and for New Brunswick 150 million feet, or a total maritime production in 1939 of 420 million feet. In 1945 Nova Scotia showed a cut of 338 million feet and New Brunswick 295 million feet, or a total of 633 million feet for the two provinces. The year 1946 showed about the same figure, a total of 632 million feet. Therefore you will see, Mr. Chairman, that we have had an increase from 1939 to 1945 in our sawn lumber production of something like 50 per cent. Of the 632 million feet sawn in 1946, 270 million feet were permitted to be exported free of the quota, leaving in Canada the remainder, 362 million feet. With 362 million feet we believe that a further export permit should be granted, because our normal needs in the maritimes in pre-war days did not come up to anything like this requirement. I suggest that the minister should give very careful thought to a further quota so far as the maritimes are concerned. We in the maritimes are not like [DOT]Quebec and Ontario, blessed with a large number of industries. We depend to a great extent on farming, mining, lumbering and fishing, and it is because of our export business that we need this increased quota on lumber. Last year we were very fortunate, although
somewhat handicapped owing to lack of ships to carry lumber overseas. In fact, generally speaking, transportation difficulties tied up our operations to a very marked extent. This was unavoidable because of the weather conditions in Ontario and elsewhere throughout Canada, which kept back from the maritimes a large number of cars that would otherwise have been used for carrying lumber to the ports of Halifax and Saint John. Representations have been made by the maritime lumber export commission or association to the minister or to the controller on more than one occasion. A study of 1946 production and distribution figures reveals that 258 million feet was retained for use in the maritimes, and in seven pre-war years an average of approximately 90 million feet per year was required. That leaves a very wide gap, and without taking away from our domestic requirements there is a large quantity that could be added to our export quota, thus adding to the prosperity of the maritime provinces.
I need not point out that basically our lumber industry has been export. The United Kingdom has been a great market for many years and, as was brought out by the hon. member for Royal, we want to maintain that pre-war market. We are sending large shipments there and are supplying our lumber at a reasonable price. I would point out to the hon. member for Royal that his statement is not entirely correct as regards the price of maritime lumber. Our price to the United Kingdom is something like $15 to $20 per thousand cheaper than the lumber which is supplied to that market by Russia, Denmark and Finland, which are the only other countries selling to the United Kingdom. The controller and the minister would be well advised to take this matter into consideration when dealing with the question raised by the member for Queens-Lunenburg, when he asked for a larger quota.
We could very well increase our quota without hardship to our domestic market. I want to support the contention of one hon. member with regard to birchwood. Our birchwood today is in such a condition that unless we cut and sell it we shall not be able to supply any market, either domestic or export, in the course of a few years. I note, in the provincial report recently tabled, the forty-sixth report of the Department of Lands and Forests of Nova Scotia, that the minister directing that department states:
The unsatisfactory ceiling price of hardwood will affect hardwood production adversely. This
Emergency Powers

is particularly regrettable in view of the almost certain loss of all our merchantable birch within five years.
That is the birch to which I refer. I wish to emphasize that and to bring it to the attention of the minister because of the need of taking care of this particular growth. It will be a total loss unless opportunity is given Nova Scotia and the maritime interests generally to sell that wood on the export market.
It is interesting to note that last year we had an increased production in Nova Scotia of 8-35 per cent. Softwood long lumber was up 25 million feet board measure, while hardwood showed a slight decline. Throughout the year all wood products were in great demand, and there is every indication that a similar condition will exist throughout 1947. That is from the report of the department of lands and forests of Nova Scotia.
This matter was so thoroughly covered by hon. members who have already taken part in the debate that I do not think it is necessary to dwell on the importance of the minister giving consideration to the lumber industry from the standpoint of the maritimes. It is estimated that about 78 per cent of New Brunswick and 68 per cent of Nova Scotia is still forested. The newsprint mills in four New Brunswick towns and in Liverpool, Nova Scotia, the Mersey mill-produce eight per cent of the total Canadian capacity. Most of that hardwood lumber is used locally, because the high cost of transportation to central Canada and the tariff that keeps it out of New England have to be reckoned with. It is because of these two factors, high transportation cost to central Canada and the more or less high tariff into New England, that I urge the minister to give every opportunity to the promotion of the export trade.
The present position on distribution is that United Kingdom quota has been filled. The forty million free quota has been distributed and the lumber placed by the shippers. There is a definite weakening in the eastern United States market and local demand has not increased. It is surprising to me that the local market has not increased, in view of the large amount of construction work going on in our province. I remember hearing recently something said by a gentleman who had been motoring from New York to Halifax. He said that as he drove through Massachusetts and the state of Maine he noticed very little construction work going on. When he came into New Brunswick there were signs of increasing construction of houses, but when he struck the Nova Scotia border there was an almost continuous line of houses being constructed for

veterans and others. I thought that was a very good tribute to the manner in which those interested in Nova Scotia were carrying on construction, and notwithstanding the picture of blue ruin which has been painted by many members opposite in regard to construction work in other parts of Canada, we in Nova Scotia are carrying on in an aggressive manner. Nevertheless there is still a sufficient amount of lumber to permit increasing the quota for export business.
May I say a word about price. The hon. member for Royal raised this question, and he had reference to retail price. He was justified in bringing the matter to the attention of the committee. While the export business is sufficiently large-two to one-to take care of losses that may be sustained by those engaged in selling lumber on the domestic market, I do not think it is sound business that one should have to carry the other, and I suggest again that this question of retail prices, so far as the maritimes are concerned, be reviewed, as suggested by the member for Royal, to bring about a higher price so as to kill the black market if one exists. I do not think the black market is as large, as prosperous or as thriving as some would like to make it appear.


Mr. BROOKS:: It is extensive.


Gordon Benjamin Isnor: The hon. member for Royal says it is extensive. If that is so in New Brunswick, I doubt very much if it exists to the same extent in Nova Scotia, but I am not going to argue the point. I will agree with him in regard to the raising of retail prices in order to make it possible to carry on in such a way that retailers will not have to operate at a loss.
The hon. member for Queens-Lunenburg should be complimented for bringing this question up at this time. I trust that the minister will give to the points raised his serious attention and not only perhaps allow those in the maritimes to export a larger quantity, but also give consideration to the retail price.


Mr. CHURCH:: As I come from a district which has a very large industry in timber and lumbering, I wish to say a few words, but I shall not detain the committee for more than four or five minutes. I remember the olden days in the city of Toronto, when almost everybody owned his own home, the lumbering industry, wholesale and retail, was one of the most important ones we had at the time, when the forests in northern Ontario and many other parts were cleared. Wood was also extensively used in stoves before the production of coal became a commercial industry. I

Emergency Powers
am not here to criticize anybody about the timber regulations or about what was done in peace or war, but I believe the government would be well advised to come to the help of this great industry.
I should like to see the priorities system abolished. I think it would aid housing if everybody had a chance, according to the law of supply and demand, to get the lumber of all kinds which they need to build houses. Now you find that houses are not being built but there are certain priorities which exist for certain corporations, many of which are controlled by the crown-there are priorities of all kinds-and even they are hard up sometimes for labour and materials. Rents of crown houses are reaching the point where they are too high for the ordinary workingman.
This industry has been one of the most important means of providing employment in Ontario. I should like to see the regulations eased very materially and the priorities eliminated as soon as the government can see fit to do that. In the first place, the housing situation is one of the most serious we have in our cities. Last night reference was made to it by the hon. member for High Park. There was a return made in response to a motion of mine about a certain number of buildings and sheds for the R.C.A.F. on the Toronto waterfront east of Yonge street, on the harbour land, which were erected during the war mainly for storage and other air equipment purposes. There was a return presented on July 4 last, sessional paper 187A. It shows that the cost of erecting sheds for the use of Royal Canadian Air Force on the Toronto waterfront was $1,355,028.86. The second question was:
2. What department of government had charge of the construction?
The answer was:
Plans and specifications were provided by the R.C.A.F. Contract was awarded by the Department of Reconstruction and Supply.
Workmen were then brought in-carpenters, bricklayers and others-and they came from all over Canada. We are going to have a serious situation in Ontario if they keep making it the headquarters for everybody who is out of work, except the ambassadors who are on the seven seas. These people were brought in from all over Canada to build these sheds when there was very serious unemployment in our city. What became of the sheds? They could have been used for housing. I have been in some of these Sheds. Some of those occupied by the officers were luxurious; I have never seen anything like them. Big sheds were erected on a large part of the
grounds from Yonge street down to Sherbourne street. The lands on which the sheds were erected were drained, and had storm sewers. They are right on Toronto's waterfront, on land donated by the city, east of where the boats come in and out on Toronto bay. They could have been used for housing purposes, but that was not done. It was not the fault of the city of Toronto.
I shall read the next questions:
4.	Have any been torn down or sold? If so, how many, to whom and at what price?
5.	Was any application received for use of these buildings to relieve the housing shortage? If so, from whom?
6.	What use has been made of these buildings (a) during the war; (b) afterwards?
The reply is that some of these sheds were sold to crown assets allocations committee and transferred to War Assets Corporation for disposal. I know that when a war is on, a war of greater magnitude than any other in history, mistakes will doubtless be made. We may expect that. We have them in peace, and we may expect them in war. The reply states that twenty-one of these buildings out of the sixty-five declared surplus to the War Assets Corporation have been demolished, and it is planned to tear down another twenty-eight. Of the remaining sixteen, nine have been sold as follows, and negotiations for the sale of the other seven are being proceeded with: two buildings sold to G. M. Graton and Company for $650 each, for removal. The lumber in them is worth more than that. It could have been used to build small houses. All kinds of doors, sash and windows were in them, which were made of some of the finest dressed lumber. Two buildings were sold to Toronto Home Missions Council for $650 each, for removal. One building was sold to Centre Island Association, Toronto for S650, for removal. One building was sold to Mimico Rotaiy Club for $535, for removal. There were three buildings sold to the Toronto Star for $5,160. I had better be careful because there is a libel suit on. I do not know whether that is a "5" or a "3", but it looks like a "5". I have no qualified privilege, or any privileges at all, because, according to one morning newspaper columnist the members of parliament do not do anything at all. We might as well all go home, according to one of the columnists. I am not here to criticize them, because you can never answer newspapers. They always have the last word. I found that out years ago as the humble head of the city. We all make mistakes as well as the newspapers.
Emergency Powers

I find here that three buildings were sold to the Toronto Star for $5,160. The note here is tihat "in the first four above sales the prices took into consideration the fact that purchasers had to remove the buildings from the site and restore the land to its original condition at their own expense". My first point is that the lumber could have been used for small housing; my second point is that the buildings could have been used where they were for emergency housing. * There was water, light and overflow sewers. These buildings could have been used and could have been occupied by a very large number of people for emergency and trailer housing. I would point to the buildings down by the Toronto baseball park at the foot of Bathurst street, Little Norway. Those buildings are not as well constructed; they did not have light or many other conveniences.
That is all I have to say about it. I do not know whether mistakes were made, but I believe that the lumber could have been used. We could have used the property to relieve the emergency housing situation among those who cannot enter their own houses. I am not saying that as criticism of anybody, but just making reference to it.
I would like to see something done. Who are getting this timber and this lumber? How is it the large banks are able to build skyscrapers, two of which are going up on King street in Toronto? They can get steel, lumber and everything they need. According to the Bank Act, banks may build only according to the size of the business they carry on, and they are not allowed to go into real estate; but today some of them are building 30- or 35- storey buildings. One bank building is being torn down, at the corner of King and Bay while another is going up. Where are they getting all the materials, when these buildings are not needed at all and while houses are so urgently required?
I do not think the banks belong to any benevolent society, as some people would like us to believe. They are not going to take in the soldiers and rent them living space on the top floors of their buildings. Far from it; they are going to rent that office space commercially and charge high prices for it, as they do with most of their properties.
Theatres are being built all over the city, as the hon. member for Davenport mentioned last evening. These people must have considerable influence down here at Ottawa. The members of this house are just ciphers, we were told in one of the newspapers the other day, but the people who own these theatres must be more than ciphers. They are the people behind the scenes, as someone used to 
call them-stuff-shirted nobodies. They come around this building and seem to have a great deal of influence no matter what government is in power. I do not see why these buildings are being constructed. In addition, different conventions come along and use up a lot of lumber and other building material. Our schools are crying out for new buildings. Some of the temporary or portable buildings being used for educational purposes have seen their day, though they are still being used by nearly every school board in Canada. Something should be done in this regard. In addition to that new hotels are being built, and apartment houses erected, some of them no doubt under the priority system, and I am sure very heavy rents will be charged.
I have seen a good deal of this housing problem. I remember that after the first war we had the same trouble, as we seem to have it after every war-a huge shortage of all materials and labour. On the whole I believe a great deal of good work has been done in this world shortage of construction materials, and I am not here to blame or criticize anyone, but I should like to see this priority system discontinued particularly in regard to lumber, which has to do yvith one of our key industries. As the lumbering industry goes, so will go trade and commerce; so will go housing and many other matters. I hope the minister will use the regulations during the next three months in such a way that housing will be assisted, and the construction of hospitals, schools and similar public buildings may go on. These regulations were on the whole a good thing in wartime, not only for the industry itself but for labour as well; but now they should be dropped. To eliminate controls will help wholesale lumber dealers as well as the retail dealers, who have done very little business in the last few years. A great many of them I know do not make their office expenses. I remember in the district west of Bathurst street and north of Queen street when a great deal of house building was carried on; when Manning avenue, Euclid avenue, and all the other streets were built up as far as College, and all by private builders. They put up rows of houses all over the city, and I must commend the government on what they did to assist construction of this kind a few years ago. In 1935 we had a committee on reconstruction and housing whose report was later adopted in another form by the present government. At that time I advocated that money for house building should be lent through the banks at a very low rate of interest, about 3 per cent. Later the government spent about $90,000,000 in small housing,

Emergency Powers
a very large part of it in and near the city of Toronto. Many houses were built in East York, North York, West York, and the city district north of St. Clair avenue. In all that expenditure I believe the government lost only about $16,000. If they could embark on a scheme like that and lend money to private individuals and private contractors and give them labour and materials, I think it would be far better than setting up these costly crown corporations, which have to be administered from Ottawa, which get priorities on many materials and labour which small private builders cannot get, and then charge large sums in rental.


Mr. HANSELL:: I have been sitting in the chamber now for quite some time, listening to this debate in general and to the discussion of this particular matter of housing. I have not taken part thus far because I live in a rural constituency where housing is not the same problem that it is in the larger urban centres. But throughout the discussion it has struck me that we may have missed some of the fundamental points in this whole matter. I refer now to the reason for the shortage of materials for housing. I have heard of the shortage of nails. I have heard of the shortage of lumber. I have heard of the shortage of this, that and the other thing. If such shortages were caused by physical forces over which we had no control, then I do not believe we could blame the minister. If these shortages had resulted from the war I would not attach a great deal of blame to the government. But it does seem to me that governments must take the responsibility of doing things for this country when it is physically possible to do them, and that seems to be the crux of this whole situation. Do I not speak the truth when I say that adequate housing has been held up because the government has permitted enormous amounts of housing materials to go out of the country? I do not think I am far wrong when I say that seems to be the reason.
I know there is a problem to be met. I have in mind, for instance, a family in which there were six boys, all of whom lived at home with their father and mother. When war broke out they enlisted. Before the war was over they got married and came back home, some of them with children. They wanted six homes of their own. I know that sort of thing creates quite a problem, and I am not saying the government is not faced with a problem. I am not one who would harshly criticize if a government were doing its best; but fundamentally is it not a matter of government policy? They have been so insistent on capturing foreign markets that they have permitted Canada to be divested of materials we ourselves need. If this parliament should conclude that such a policy is the right one, then let us not blame the government. If it is a wrong policy, then the government must should'er the blame for what is happening in the country today. That seems to me to be the reason. Since we are in committee I should like the minister to answer that question. Is there any physical reason why we Should not, with the war over as long as it has been, have a real housing programme on the way? If he says it cannot be done because of shortages, that is not enough. If there are shortages, let him tell the committee how they came about and what has prevented him from restoring these materials to free supply.
I am a great believer in the adage which we in this corner of the house so often quote, that that which is physically possible must be made financially possible. I am not going to talk about the financial possibilities but there should be no reason, apart from physical impossibilities, why the people of Canada cannot have what they want. Physical impossibilities arise only by reason of something over which we have no control. We have no control over winds, earthquakes, floods, and so forth; those are known as acts of God, things for which we would not blame the government. But if a thing is physically possible, why is it that the people of Canada cannot have it? That is the thing the government has to answer. I have not had an answer to that question, and I believe the government owes it to the people of Canada to give an answer. If we have that answered we will be satisfied.


Mr. HODGSON:: Mr. Chairman-[DOT]


Ernest George Hansell: Evidently the minister is not disposed to answer.


William Ross Macdonald: Before the minister
answers may I draw the attention of the committee to the fact that we are considering P.C. 1997, which deals with timber regulations. During the last few days we had a wide discussion on housing, and most of yesterday was spent in considering the emergency shelter regulations. It seems to me that the committee should now direct its attention only to the regulations respecting timber control. Although a wide discussion has been allowed up to now I feel we should stay strictly within the rule and consider only the regulations with respect to timber.


Mr. STUART (Charlotte):: Mr. Chairman, I can assure you that I shall be very brief. First I wish to associate myself with what
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has been said by the hon. member for Queens-Lunenburg, the hon. member for Royal and the hon. member for Halifax. The subject under discussion is one with which I am not particularly familiar, but I realize it is of great importance to New Brunswick and the other maritime provinces.
I have listened most attentively to this debate and must admit that the attitude taken by some hon. members is difficult to understand, particularly those who in one breath say that veterans' houses are costing too much, and bitterly condemn the government because they feel they are responsible for this condition; and then in the next breath they suggest that the retail ceiling price of lumber for domestic purposes is far too low and should be increased. The two statements do not dovetail. You cannot have your cake and eat it too. If we are to have higher retail prices for lumber, there will certainly be an increased cost to the veteran for his house.
My own personal opinion is that it is inconceivable that any producer should be obliged to sell his product at below the cost of production. Such a condition does not create a satisfactory atmosphere and no doubt in some cases would be responsible for black market trading. I am confident that this is not so in my own county, because no violations of this kind have been brought to my attention at any time.
I have a letter from a reliable citizen of Charlotte county which I believe will explain much better than I could the conditions in the maritime provinces with respect to the wholesale and retail lumber trade. The company with which this gentleman is associated, and which bears his name, has been doing business with the general public in Charlotte county and across the border in Maine for a great many years. I might add that this gentleman is a classmate of the Minister of Justice. This letter from the Haley Lumber Company Limited of St. Stephen, New Brunswick, is dated January 28, 1947, and reads:
I want to write you about the predicament we and the other retail lumber dealers of the mari-times are in due to the timber controls. You have probably read in the press that one of the woodworking factories had to lay off ten men because they couldn't get lumber.
The price paid by lumber brokers purchasing lumber to be exported to Great Britain has always controlled the domestic wholesale price in the maritimes. The present export price averages at least $52 per M. feet. One broker is offering a producer from whom we used to buy lumber $56 per M. for 2x4 and 2x6, $57 for 2x7 and 2x8, and $64.50 for 2x9 and up f.o.b.

St. Stephen in the rough. The present wholesale ceiling price averages $45 per M. feet, so you can see the impossibility of the retailers buying lumber at the wholesale ceiling price which is all they are permitted to pay.
A complicated system of earning export quotas was set up over a year ago for the purpose of encouraging lumber brokers or manufacturers-to sell to -the retailers and, in so doing, earn export quotas. The exporters and manufacturers haven't found it to their advantage to do this to any great extent. Sufficient free quota has been available to take care of the stock to be exported.
Over 90 per cent of the retailers in the maritimes have less than 40 per cent of the amount of soft wood lumber on hand to meet the demand for house building requirements. Emery Smith of Murray and Gregory told me he had only 500 M. feet of softwood lumber on hand and most of this was refuse. He should have-between two and three million.
The spread between the present domestic ceiling and the retail ceiling does not permit the retailer to purchase lumber at the market price, namely, $52 per M. feet, and sell within the retail ceiling and make a profit. The price paid for lumber to be exported has increased -at least $5 per M. in the last year without any corresponding increase in the domestic wholesale ceiling and the retail ceiling.
There seem to be three alternatives if the retail lumber dealers are to stay in business, satisfy their customers' requirements and carry on business without breaking any laws.
(1)	Decontrol of the lumber industry and' retain export control.
(2)	Increase retail ceiling prices by at least $5 per M. and cut out the wholesale ceiling; or
(3)	Increase the wholesale ceiling and allow" sufficient margin between the wholesale ceiling and the retail ceiling to permit the retailer to-make a profit.
Now, I hope you will do what you can to help out the retail lumber dealers who are in this terrible predicament due to price control.
Yours sincerely,
Harold B. Haley.


Clayton Wesley Hodgson: Mr. Chairman, I should like to say a few words in connection with the timber regulations. First, I should1 like-to congratulate hon. members from the maritimes on both sides of the house on the way in which they are cooperating. They are proceeding in about the same way as the British Columbia members did in connection with the Japanese question. If Ontario and Quebec can get a little cooperation from hon. members on that side of the house and- on this side we may be able to get somewhere in this matter.
Answering the hon. member for Eglinton,. the minister said on Friday, April 25, as reported on page 2445 of Hansard:
The speech of the hon. member for Eglinton indicates the state of utter confusion in which the official opposition finds itself on the matter-of controls.

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I want to say to the minister that I am not confused, that I am of the same opinion now as I was when the omnibus bill was first presented. On March 10, as reported on page 1235 of Hansard, the minister gave the house to understand that controls would be kept on lumber. It is up to the government to make those controls just as feasible as possible for the benefit of the trade in general. As far as I am concerned, I will give them every cooperation possible.
The government itself seems to be more confused than any other party in the house because since the introduction of the omnibus bill there has been more decontrol than at any other time since the cessation of hostilities. The regulations respecting timber under P.C. 1997, appearing at page 150 of the consolidation, cannot be understood by the ordinary layman. I think they could be written in much simpler terms so that the ordinary man could understand them. I would ask to have P.C. 1997 appear in Hansard to save the time it would1 take me to read it.


William Ross Macdonald: Is it agreed that P.C. 1997 shall appear in Hansard as part of the hon. member's speech?


Mr. ILSLEY:: I do not think that should be done.


Clarence Decatur Howe: The order in council is printed in another government document. Why have it appear in two documents?


Mr. GRAYDON:: In what other parliamentary paper does it appear?


Clarence Decatur Howe: I may have misunderstood. I am told that it has not been printed, and if that is so I have no objection to its appearing in Hansard.


William Ross Macdonald: Is that agreed?


Some hon. MEMBERS:: Agreed.


Clayton Wesley Hodgson: The order in council
reads as follows:



P.C. 1997

[Stage Direction]
At the Government House at Ottawa Tuesday, the 21st day of March, 1944.
Present:
His Excellency The Governor General in Council:
Whereas the Minister of Munitions and Supply represents that regulations respecting wood fuel were established by order in council P.C. 4362 of May 28, 1943, and were amended by order in council P.C. 5492 of July 9, 1943, and by order in council P.C. 215 of January 13, 1944; and by the said order
in council P.C. 4362, James S. Whalley was appointed wood fuel controller, and by order in council P.C. 1792 of March 5, 1943, Gustave
C.	Piche was appointed a deputy wood fuel controller;
That regulations respecting timber were established by order in council P.C. 2716 of June 24, 1940, and were amended by orders in council P.C. 7120 of December 4, 1940; P.C. 4389 of June 17, 1941; P.C. 6037 of August 8, 1941; and P.C. 7360 of September 20, 1941; and .by order in council P.C. 9994 of November 3, 1942, Alan H. Williamson was appointed timber controller; and
That it is desirable to abolish the office of wood fuel controller and to confer on the timber controller the powers, duties and functions with respect to wood fuel now being exercised by the wood fuel controller, and for these purposes to revoke certain of the orders in council above mentioned and re-enact regulations respecting timber as hereinafter set out;
Therefore His Excellency the Governor General in Council, on the recommendation of the Minister of Munitions and Supply, is pleased to revoke and doth hereby revoke the following orders in council:-
P.C. 4362 of May 28, 1943; P.C. 1792 of March 5, 1943; P.C. 5492 of July 9, 1943; and P.C. 215 of January 13, 1944.
P.C. 2716 of June 24, 1940; P.C. 7120 of December 4. 1940; P.C. 4389 of June 17, 1941; P.C. 6037 of August 8, 1941, and P.C. 7360 of September 20. 1941.
His Excellency in Council, on the same recommendation, and pursuant to the powers conferred by the War Measures Act and the Department of Munitions and Supply Act, is pleased to make the following regulations respecting timber and they are hereby made and established:-
REGULATIONS RESPECTING TIMBER 1. Interpretation.
(1) For the purpose of these regulations, unless the context otherwise requires, (a) "Controller" or "Timber Controller" shall mean the person appointed timber controller by the governor in council; (b) "Deputy Timber Controller" shall mean any person appointed a deputy timber controller by the governor in council; (c) "dealing in" shall include the following activities or undertakings and shall also include the doing of any act in preparation for or in the course of any of them;
buying, selling, exhibiting for sale, taking or receiving orders for, leasing, hiring, lending. borrowing, exchanging, acquiring.
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[Stage Direction]
importing, storing, supplying, delivering, transporting, distributing, allocating, shipping, conveying, installing, mortgaging, encumbering, bartering, trading, giving, transferring, using, or consuming and "deal in"; "dealt in" and "dealer in" shall have corresponding and similarly extended meanings;
(d)	"equipment" shall include any property, real or personal, and any goods owned by or under the control of any person for the purpose of producing or dealing in timber; provided that the minister may generally or specifically declare in writing any property or thing to be included in or excluded from "equipment" for the purposes of these regulations or any other regulations or order in council relating to the timber controller;
(e)	"minister" shall mean the Minister of Munitions and Supply;
(f)	"order" shall include any licence, permit, regulation, prohibition, direction, condition, requirement, restriction or limitation issued or made under these regulations or under any other regulation or order in council relating to the timber controller;
(g)	"producing" shall include the following activities or undertakings and shall also include the doing of any act for or in the course or preparation of any of them: felling, cutting, sawing, processing, planing, finishing, converting and making, and "produce", "produced", "producer" and "production" shall have corresponding and similarly extended meanings;
(h)	"timber" shall include any trees, standing or cut, and any lumber in any form, and any wood, processed or unprocessed, and any wood product, and any by-product of wood, including but without limiting the generality of the foregoing, pulp wood, pulp wood chips, cordwood, millwaste, sawdust, hogged fuel and charcoal.
(2) Except as herein otherwise provided His Majesty in right of Canada, and His Majesty in right of any province thereof, shall be bound by the provisions of these regulations. 2. Powers of the timber controller The controller shall have power,
(a)	to take possession of, appropriate or otherwise acquire, any timber and/or any equipment wherever found, and to dispose of or otherwise deal in such timber;
(b)	to produce and/or deal in timber and/or equipment;
(c)	to enter on any land or into any building or place, by himself or by any person duly authorized by him thereunto, for the purpose

of taking possession of, producing and/or dealing in timber and for the purpose of inspecting and/or searching for any timber;
(d)	to enter on, take possession of and utilize, by himself or by any person duly authorized by him thereunto, any land or premises or any plant, building, place, equipment or facilities used or capable of being used for producing and/or dealing in timber;
(e)	.to prohibit or regulate any practice, or mode of, or related to, producing or followed in connection therewith, which, in the opinion of the controller, would or might increase, or tend to increase, the price of timber and/or equipment of any kind either generally or to any person, or which would or might affect, or tend to affect, the orderly production of, and/or dealing in any timber and/or equipment;
(f)	subject to the approval of the minister, to fix or limit the quantity of any timber and/or any equipment which may be produced and/or dealt in either generally "or within specified periods of time; and to prohibit producing and/or dealing in any timber and/or equipment in excess of the quantities so fixed or limited;
(g)	to prohibit any person from consuming or using timber and/or equipment of any kind, either absolutely or to such an extent, or for any such purpose as may be specified by the controller;
(h)	to issue and reissue licences to persons producing and/or dealing in timber and/or equipment, and to suspend, cancel or refuse to issue any such licence whenever the controller deems it to be in the public interest to do so, and subject to the approval of the minister, to fix the fees payable for the issue of such licences, and to prescribe the manner, procedure, terms and conditions under which such licences shall be obtained;
(i)	to prohibit any person from producing and/or dealing in timber and/or equipment of any kind or kinds, or participating in any such production and/or dealing in any timber and/or any equipment, either directly or indirectly, unless previously licensed by the controller, or unless under a permit issued by the controller;
(j)	to prescribe conditions to which any licence or permit shall be subject and to vary any such conditions and/or to specify further or other conditions;
(k)	to prohibit or regulate the construction of, or the making of any structural or other change or addition to, any plant, building or

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place used or to be used for or in connection with, the production of, or dealing in, timber and/or equipment;
(l)	to prohibit or regulate the use of any land, building, plant or place for the purpose of producing and/or dealing in timber and/or equipment of any kind;
(m)	to make or to require any person to make any structural change in or addition to, or to provide or to require any person to provide any equipment in, any plant, building or place for the purpose of or to be used in any way in connection with producing and/or dealing in, timber and/or any equipment ;
(n)	to make orders regulating, fixing, determining and/or any equipment; type, grade, quality, standard and/or quantity of any timber and/or any equipment that may be produced and/or dealt in by any person; and to prohibit any production and/or dealing in timber and/or any equipment contrary to any such order or orders;
(o)	subject to the approval of the minister, to establish a quota or quotas prescribing the kind, type, model, grade, standard, quality, classification or species of any timber and/or any equipment that may be produced and/or dealt in by any person; and subject as aforesaid, to prohibit any person from producing and/or dealing in timber and/or equipment except in accordance with any such quota or quotas, unless the controller shall have issued a permit therefor, which permit may specify the manner in which such timber and/or equipment may be produced and/or dealt in contrary to such quota or quotas and/or kind, types, models, grades, standards, qualities, classifications or species of any timber and/or any equipment, and the number of each, that may be produced and/or dealt in contrary to such quota or quotas;
(p)	to prohibit any person from owning, keeping, having, retaining, or being in possession of or having control of timber;
(q)	to order or to require any person owning or having power to dispose of, or being in possession of, or producing and/or dealing in timber and/or any equipment, to produce and/or deal in such timber and/or equipment in such manner as may be so ordered, and, if ordered so to do, in priority to any other business of such person;
(r)	to order or require any person producing and/or dealing in timber or equipment to make or procure the making of such checks and/or audits of the books, accounts and/or records of such person; or of any person who has received, directly or through another supplier, timber or equipment sold or supplied by
such person, as may from time to time be prescribed by the controller either generally or specifically;
(s)	to regulate and control, by prohibition or otherwise any or all dealings or transactions between any person producing and/or dealing in timber and/or any equipment and any other such person in respect of or in connection with, any production and/or dealing in any timber and/or any equipment, and/or the acquisition and/or use of any real and/or personal property, including any equipment, for or in connection therewith.
3.	Delegation
The controller shall have power to delegate to any person or persons any power vested in the controller under these regulations or under any order in council or statute, including any power involving the exercise of a discretion, and any order made in the exercise by any such person of a power so delegated Shall be final and binding unless and until it has been varied or vacated by the controller.
4.	Orders to conserve timber, and prevent or preclude breaches of orders
The controller shall have power by order to prohibit and restrain any person from producing and/or dealing in timber and/or equipment or from dealing in any timber and/or equipment at any place or in any area or zone specified by the controller, and to this end the controller may order such acts or things to be done or omitted as he may deem necessary to prevent or preclude the use of any particular timber or equipment or any plant, building or place in breach of such order. The controller may exercise the said power to prevent or preclude any breach or further breach or apprehended breach of any order (whether general or specific) of the controller or any person acting under his authority.
5.	Breach of contract pursuant to order
Where any person fails to fulfil any contract or obligation whether made or assumed before or after the effective date of these regulations, and such failure is due to compliance on the part of such person with any order made under the authority of these regulations after such contract or obligation was made or assumed, proof of that fact shall be a good defence to any action or proceeding against such person in respect of such failure.
6.	Controller and agents protected
The controller and any person acting for, or on behalf of, or under the authority of the controller shall not be or become liable to any person for anything done or omitted in
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[Stage Direction]
the exercise or purported exercise of any power or authority from time to time vested in the controller.
7.	Powers of a deputy controller
A deputy timber controller shall have and exercise any and all powers conferred on the timber controller, subject to any restriction thereof which the controller may from time to time impose and subject in all cases to review by the controller; provided that any order of a deputy timber controller shall be final and binding unless and until it has been varied or vacated by the controller.
8.	Wartime industries control board regulations preserved
Nothing in these regulations shall restrict or vary the provisions of the wartime industries control board regulations established by order in council P.C. 3 of January 4, 1944 and the timber controller shall have the powers and immunities and be subject to the limitations granted and imposed by the said wartime industries control board regulations, which shall be read and construed as one with these regulations.
A. D. P. Heeney,
Clerk of the Privy Council. I
I would ask the minister to clarify his release No. 102 of April 22, because as I read it, it refers only to British Columbia and the western provinces, although the press has stated that the price of lumber is up 15 to 20 per cent all across Canada. I understood the situation, but evidently the press did not, and it was unfortunate that in several papers, including small papers in my own riding, the report went out to the country that lumber had increased in price 15 to 20 per cent.
Again in the provinces of Ontario and Quebec stumpage costs have been increased.
I would also like the minister to explain why an export quota of 65 per cent has been allowed to British Columbia as against 33J per cent for central Canada and the maritimes. Is the minister still consulting, as he did six years ago, the Canadian Lumbermen's Association which takes in all the lumbermen in Canada, or is he taking the advice of only one or two of the largest lumber operators?
I was in a retail office yesterday morning which had received a circular stating that an announcement would be made on lumber prices on the return of Malcolm McNicol. Wholesale and retail merchants are holding up sales in consequence until the announcement is made. Why could not this announcement have been made at the same time as it was made for

British Columbia and western Canada? If the timber control is efficient, and they have been working on controls for six years now and talking and thinking about prices and regulations, especially during the last six weeks, I would like the minister or his parliamentary assistant to explain why an announcement could not have been made to cover the whole of Canada at the same time. Why the hesitation and this discrimination against Ontario and Quebec?
I stated in the house in 1946 that the price of hemlock was then too low and it is still too low because it cannot be produced at the present ceiling prices. There have been increases in the cost of living and in wages and in everything which pertains to the production of lumber. At the same time we have lumber being imported from the United States to Canada to take the place of hemlock for crating at $77 to $82 per thousand feet.
I have a letter here which states that the Ford Motor Company:
. . . found it impossible to obtain sufficient crating lumber in Canada for their requirements and have been forced to buy substantial quantities of southern yellow pine, initial shipments of which are now arriving. This to take the place of Canadian spruce and jack pine which they have used heretofore.
At page 1234 of Hansard of March 10, 1947, the Minister of Reconstruction and Supply stated that to increase the price of lumber would increase the cost of a house S200 or $300. Somebody had said that it takes approximately 6,000 or 7,000 feet of lumber to build a house 28 x 28 or 28 x 30. If the price of lumber were increased $10 the cost of a house this size would be increased $60 or $70, which would be approximately one per cent of the price of a house such as government agencies are building today for sale to the veterans. But would it not be worth it if they could get the lumber when they needed it?
The delivery of lumber could be speeded up and a lot of bottlenecks done away with. At the present time when you sell lumber you must send four copies of a document to the timber control, and on their approval and return you can start to ship the lumber. If something could be done to speed up that process it would help considerably. I do not know just what suggestion to make, but something should be done to speed up shipments.
I want to say a word on the export of lumber to Great Britain. The exports have been at exorbitant prices, ranging from $80 to $275 per thousand f.o.b. mill, with $3.25

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added per thousand for rail shipments. We have been lending money to Britain without interest and selling our farm products to Britain at far below the world market prices, at the expense of the Canadian farmer. The government have told us that this will hold the British market for years to come. Is the case any different with lumber going to the British market? It does not seem to me good business to sell our farm products at a low price to Britain and then charge exorbitant prices for lumber shipped to Britain if we want her trade in the future. If the export prices on lumber going to Britain were reduced it would help to balance the low farm prices received on British contracts. At the present time we have to have an export market for our lumber. You could raise the domestic price on certain grades of lumber, especially hemlock, so that we could sell our lumber to Britain more cheaply and cinch that market. Russia, Sweden, Norway and Finland are going to compete against us in that market unless there is good mutual feeling between the lumber dealers of Britain and Canada.
Mr. PROBE:: Mr. Chairman, I have been
amazed this afternoon, as I was last evening, at the large number of pleas made by members on both sides of the house that the government increase today's retail prices of lumber. Many of us are not familiar with all the ramifications of the timber industry, but we are conversant with the fact that retail lumber prices have gone up sixty to seventy-five per cent at least, and perhaps more. That the hon. member for Halifax should be pleading for increased lumber exports, as he did a few moments ago, at a time when we cannot find the materials for house building is a fantastic situation. We are not beginning to get to grips with the problem at all. The only reason the hon. member is asking for increases in the export quota for his own area is that the producers of timber in that part of the country may capitalize on this squeeze which is going on in the foreign markets. There is no justification for allowing the export prices to continue, for the reason mentioned in part by the hon. member who just resumed his seat. We are actually killing the goose that lays the golden egg by extracting every nickel that we can from the foreign market now, but when the emergency is over we shall be going cap in hand asking these people if they would be good enough to buy our product.


Clayton Wesley Hodgson: I mentioned the British market.


John Oliver Probe: Yes. That applies, of course, to all our customers, but I am glad to be corrected with respect to the British market. That is what the hon. member said.
The argument of the hon. member for Queens-Lunenburg, the hon. member for Charlotte, and as I recall it, the hon. member for Royal, was that we again increase the lumber price ceiling here in Canada. The hon. member for Royal yesterday made the statement that the retail lumber firms were losing approximately $8 a thousand on their lumber sales. If that is so it is not because of the price at which they are selling the product, but because retailers are not getting sufficient wares from the wholesalers unless they are part of the wholesale connection. As I understand it, the trend in modern lumber retailing is for the timber operator to control the distribution from the cutting to the final selling of the lumber. There is some evidence of that in my own city, where certain yards apparently have larger supplies of lumber than others. It may be due to their wholesale and saw mill connections.
Under this order in council the minister has sufficient power to analyse the costs of all of the steps of the marketing of the finished product. To hear figures like S80 to $200 odd a thousand quoted for export lumber, or $70 a thousand on own retail market when I can recall that just before the war the retail market was able to sell lumber at S40 a thousand, shows that there is something incongruous in these figures.
The other evening I asked the minister to give me specific retail prices for five different lumber items based on the prices in 1939, 1944 and 1947. I have not forgotten that request, if the minister has, and I am again asking him to put these figures on the record. Today I am asking that he do something more. We have been conveniently vague in the committee on the question of various spreads in the prices from log to wholesaler, to retailer, to the ultimate market. I should like to have the minister give the representative prices today-I do not care what kind of timber he takes-so that we can get the relative spread of a log delivered at the mill compared with that log in the form of sawn lumber at saw miff prices. Then I should like the wholesale price to the retailer and the retail price to the consumer of the same article on a basis of price per thousand feet. These are figures which any laymen can understand.
In discussing the duties of the timber controller it is not enough to outline his extensive powers, unless he does something about them.
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The other evening I put on the record-and it has been done by other hon. members-the increased net profits of one corporation, the Canadian Western Lumber Company, on the west coast, which had tripled its dollar profits between 1945 and 1946, and yet its whole record from 1939 down to the end of 1945, as contained in the manual of investments that I have before me, is one of diminishing production. The capacity of the Canadian Western Lumber Company saw mills on the west coast is 209 million feet per annum. In only one year in the last eight years did it hit that figure. That was in 1939, when it produced a little over 200 million feet. In successive years from 1939 to 1945, the last figures which are given in this book, production dropped until in 1945 it was only 60 per cent of what it was in 1939, and yet the balance sheet is exceedingly-


Mr. MERRITT:: Why did production drop?


John Oliver Probe: That is one of the enigmas the meaning of which perhaps the Minister of Reconstruction and Supply may be able to give. Certainly there is nothing wrong with the timber limits which this company possesses. Everything that it owns is exceedingly accessible. This volume says that its limits are all accessible to salt water. The description of its property may be found at page 1816 of the Moody manual of investments. It is not a matter of getting the logs to the mill. It is simply a matter of this corporation-I am singling it out because its figures are so significant-


Charles Cecil Ingersoll Merritt: Does the hon. member know where its limits are?


John Oliver Probe: Yes. It is all in this record of Moody's at page 1816. I do not wish to read it to the hon. member; he may read it himself if he likes. The point I am trying to make is that while the annual production has continued to decline from 100 per cent capacity to 60 per cent of capacity, the net profits have been increasing. In large measure this is due in my opinion to the fact that the company is scalping on the market as it now exists, and that the timber controller has not examined adequately the profit sheet of this and other corporations which are in the lumber business.
I should like the minister to put on the record now, or as soon as convenient, the figures which I asked for the other evening. This afternoon I will ask for the relative prices of five staple commodities used in house building as between 1939 and 1947. The other figure I asked for was the price of any type of log in terms of thousands of feet, and carry

the price of the article through the various distributing channels until it finally gets to the consumer. I think we shall find the answer to the problem of high cost of housing in there somewhere.


Clarence Decatur Howe: All I can say to my hon. friend is that I shall be glad to look up these prices and give them at the next sitting.


Charles Cecil Ingersoll Merritt: I think the committee
is entitled to a full explanation from the minister as to why he feels it desirable to continue this timber control, and, since so apparently he does think it desirable, what he is going to do to make the timber control a bearable thing for the timber industry from coast to coast. I know it is a very difficult problem for him. All his timber controllers in the past year have found it necessary to resign; their tenure of office is becoming shorter and shorter, and I feel I must say to him that he must do better than this in the operation of the timber control if he is to justify its retention at all. We saw in the house last night, and again this afternoon, members getting up from every part of Canada, and in every case the complaint is the one I hear so much from people in the lumber business in British Columbia. In the opinion of those people who are in the business it is not possible for any central organization . to control so varied a product as lumber and get the best production and have a smoothrunning industry.


John Oliver Probe: May I make a correction
in the hon. member's statement? That is not the opinion of the members in the C.C.F. group in this house. We feel that the timber controller can do a good job, but we are mighty certain that thus far he has not made a good start in doing a good job. There is a big difference.


Charles Cecil Ingersoll Merritt: As a matter of fact I am not at all surprised at the hon. member's intervention, because it never really crossed my mind that they would support what the timber industry feels is in its best interest.


John Oliver Probe: We will not support profits like the Canadian Western Lumber Company's; it is scalping the market.


Mr. GILLIS:: Restrict production and force prices up.


Charles Cecil Ingersoll Merritt: I can say a word about that. I am not saying now that the timber control should be taken off. I have not the information that the minister has available; I have available to me only the results of his policy. It might appear to me, as it

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appears to many people, that we would be better off if the control were removed, but that is a responsibility of the government. I am not here telling them what to do-


Mr. CRUICKSHANK:: What are you telling them?


Charles Cecil Ingersoll Merritt: -but I am here to tell the minister what is going wrong and what ought to be fixed. That is what I conceive to be my task this afternoon. What the matter is, as the minister knows, is not really the question of profit at all, certainly not so far as the mills in British Columbia are concerned. They are all making a profit, and everyone knows where it comes from. It comes from the export trade, where the price is necessarily kept very high in order to subsidize a domestic ceiling which is actually below cost of production of lumber in Canada. That is perfectly clear, and it is admitted, I think, by the minister. That is why I was surprised when the member for Regina City raised this question of the profits of a certain company, which, he suggested, was scalping on the market,-whatever that is,-and that annual production had declined although its profits had gone up. The hon. member need not worry about profits made by that company. I hope he was not trying to leave the impression with hon. members that these profits were made out of the Canadian people, that the domestic market was being scalped. The Canadian people are getting British Columbia lumber at about a $10 subsidy, the cost of production being about $10 per thousand above the domestic price. If the annual production of lumber from this company has dropped each year since 1939, we have had a war on. I imagine that in the first couple of years there was a shipping shortage and perhaps not so much was cut for the export market; and after that we had timber control. It is open to serious doubts, from some of the speeches made here, whether the control exeroised by the minister is maintaining production in the way that production could be maintained either without the control or perhaps with a different type of control or a different handling of control.
The truth of the matter is that the policy followed by the government in this timber control has demoralized the timber industry in, every province in Canada. I have in my hand press clippings of Vancouver papers, of April 23 and 24, and although we have not got further papers I presume there will be more items of this kind on the way. At the moment the minister's timber controller is out in British Columbia attempting to negotiate
some new kind of agreement with the people in the business there, apparently so as to increase the amount of lumber which is delivered to the domestic market and reduce the amount shipped for export.
The minister knows that it would not be necessary in the case of many a mill for the timber controller to go to Vancouver at all, if there were a change in the policy followed by the government. I can mention one example within my personal experience where an operator in Vancouver wanted to sell a larger percentage of his cut domestically in order that he might maintain his pre-war markets and sell to veterans and not disappoint other old friends in Vancouver. He found he was unable to do what he wanted and he was unable to do what good business practice dictated, because if he did, he would be losing money over all. He found he must sell export right up to the quota in' order to make a profit on his total annual sale.
That is one little example of the way in which this industry is being distorted. Here is a clipping from the April 24 issue of the Vancouver Province:
Various lumbermen here reported today their stand that they do not wish to deprive the Canadian market of lumber and would willingly sell more at home if a profit could be made.
Then in a report in the Vancouver Sun of April 24, the concluding words are:
Vancouver lumber spokesmen said the government and its officers should get out of the business of allocating and imposing priorities for lumber orders. They would like to see controls in the industry completely abolished, but they have little hope of this.


George Alexander Cruickshank: Are you in favour of that?


Charles Cecil Ingersoll Merritt: In favour of what?


George Alexander Cruickshank: Abolishing controls.


Charles Cecil Ingersoll Merritt: I have just gone to some trouble to explain that that would appear to me to be a very wise thing, but I am anxious to hear what the minister has to say on it. The minister is now before this house asking for the continuation of his timber control. I do not think the house should pass this item without some explanation by the minister as to the difficulties which arise under his control, and what he can do in the future to set them right and see that the industry is not demoralized, as it appears to be. Does that make my position perfectly clear to the hon. member for Eraser Valley?


George Alexander Cruickshank: I am sorry, Mr. Chairman, to have interrupted without asking for permission. May I say to the hon. member
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for Vancouver-Burrard that I agree with him that far, but I still do not know where he stand's on controls.


An hon. MEMBER:: You will find out.


Charles Cecil Ingersoll Merritt: It appears also from this report that at one stage in these negotiations there was an arbitrary attempt to order certain mills in Vancouver to change the destination of their shipments without giving them any compensation for that order. This report says:
Mr. Uren today swung a haymaker at the lumber manufacturers with an order to several mills to cease loading shipments to overseas ports, reprocess, and turn the lumber over to him for Canadian use.
Mills receiving this order indicated they may defy the federal officer's dictum. It places them in conflict with signed and sealed contractual obligations, they counter.
In the report of the following day, April 24, it appears that more progress has been made and that the plan is something like this. First, the controller proposes that the domestic allocations should be increased from 35 to 40 per cent and probably to 45 per cent; second, that by way of compensation for that increase in the domestic quota, price increases be granted; the suggested amount is a ten to fifteen per cent increase, and in another newspaper report I have seen it suggested that the price might be advanced $7 to $13; third, that a system of "approvals" be set up. This apparently is a new system of priorities-
. . . to assure definite quantities to veterans' housing, railways, mines, shipyards and municipal, provincial and federal projects. Under this scheme mills would take orders from such "prioritj'" accounts, and then get them approved by timber control here. Each mill would have to supply a certain portion of its total cut to these "approval" buyers.
It appears from that report that we are to have three things:	first, an increase in the
domestic quota, which is something I should be very glad to see; second, an increase in the price, and apparently a fairly substantial increase, according to the newspaper reports; and third, a completely new system of priorities, called approvals, which I think the minister should explain to the committee if there is any truth in the report; because it seems that of the forty to forty-five per cent now to be retained in Canada, half is to be directed, under this approval scheme, to projects which the government approves; and the sawmill is to be able to supply only twenty per cent of its cut to its normal customers in its usual business way. At first sight it would appear

to me that that is going to complicate and demoralize the industry even further than has the practice up to the present time.
Just before I sit down I wish to place on the record some of the things which have been done to this industry as a result of this control, particularly as they relate to British Columbia. In the first place, before the war and before the era of controls we had in British Columbia two major markets. One was the United Kingdom market and the other was the domestic market. Under the stimulus of low freight rates through the Panama canal during the depression, and under the further and most important stimulus of the Ottawa agreements and the imperial preference, British Columbia built up for her lumber a large market in the United Kingdom. At the same time the whole industry geared itself to those two markets. A certain number of the mills are export mills. They are on tidewater and have facilities for loading into deep-sea ships. As I understand it, they used to sell, say, ninety per cent of their cut export and ten per cent domestic. On the other hand there was the other set of mills-the small mills this time, and many more in number-which all over the province had rail outlets for their lumber. They naturally served the domestic market and shipped' export only to convenience buyers or to get rid of some surplus that they had not been able to sell domestically. Naturally, their proportion of sales was just about in reverse, ninety per cent domestic and ten per cent export, or something of that kind. Also, we had on the Pacific coast, in addition to the best timber in the world, a system of grading and checking of our lumber which is unparalleled anywhere. In the Pacific lumber inspection bureau we had a body of inspectors whose certificates were accepted right around the world as proof that the lumber shipped was up to specification.
I might also say to the committee that you cannot control and set prices on lumber in the same way that you can control and set prices on wheat, because lumber is not a single commodity. There is all the difference in the world between the various grades.


John Oliver Probe: Grain is produced by the small fellows and lumber is produced by the big shots.


Some hon. MEMBERS:: Oh, oh.


Charles Cecil Ingersoll Merritt: That is not the distinction, of course.


Karl Kenneth Homuth: That is the C.C.F. mentality.

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Charles Cecil Ingersoll Merritt: The distinction, is simply this. I believe you have grade No. 1, grade No. 2 and grade No. 3 in wheat. But to compare a big timber, twelve by twelve, with a two by four, for instance, is like comparing a motor car with a railway engine. They are two different commodities.


John Oliver Probe: I am trying to compare lumber with wheat; but go ahead.


An hon. MEMBER:: You stick to wheat.


Charles Cecil Ingersoll Merritt: As I say, that is a difficulty in which the minister finds himself in trying to control this multifarious commodity. We have also heard from other hon. members-and I will not dwell on the fact-that if you subsidize your domestic market by *high external prices, particularly in the United Kingdom market, you are very likely to kill the goose that laid the golden egg.
The second last timber controller had this to say at about the time of his resignation. In a press report from Ottawa, dated August 9, Mr. David Rosenberry is quoted as saying:
"I disagree with the contention that we should make our export prices carry our Canadian losses," said the timber controller. "We cannot go on doing this and survive." "Domestic prices," he added, "were dollars below" the cost of production ... If Canadian lumbermen were forced to protect their interests by a steady rise in export prices, he maintained, then the day could come when Russia might go after the British lumber market and undersell Canada.
The government must bear that in mind in dealing with this question.
Now I go on, I hope briefly, to show the various ways in which the clear-cut business procedure of the lumbermen in British Columbia which I have outlined has been distorted and broken down by what hap-pended under control during the war. I have explained their domestic mills and their export mills. An export mill must sell forty per cent of its output in the domestic market, which it is not designed to do, and a domestic mill must sell sixty per oent of its product in the export market, which in turn it is not designed to do. That causes damage to the good will of the various operators, and damage to their future business. You have man after man in the timber business complaining that he is unable to fill orders, sometimes from old customers, and worried lest that may damage his good will in future. Then you have a most extraordinary development, in that all over British Columbia you find new little re-saw mills springing up, and people building dry kilns in conjunction with
them, which never would have occurred in normal times. This has happened because some of the established mills have closed down their kilns because they could not operate them without increasing their losses. At the same time you have a deterioration in the quality of lumber produced and in the grading. You get random lengths instead of the lengths desired by the customer. You get all sorts of technical compliance with the regulations but what really amounts to evasion. For instance, you have lumber sold as rough lumber, which is taken by the purchaser to one of these small mills where it is re-sawn, dried and sorted by the purchaser, with the additional cost added to the ceiling price. Then you have other cases of custom cutting, where the owner of the logs will make a special contract to cut those logs at a price which, because it is a special contract, is not within the regulations. Time after time one hears of lumber delivered in Vancouver, and perfectly within the law, at $60 or $70 a thousand where the ceiling price may be $30 or $40.
In all those ways timber control, while it has not cost the people on the Pacific coast any money, while they are not complaining that they do not get an adequate profit, has broken down their proper business methods, so they are complaining that their industry has been demoralized. These are the matters which, in my view, the minister should be turning his attention to now and correcting. If he feels that he must maintain the control let him at the same time make it possible for this industry to get along under business practices which will permit the operators to keep their self-respect and retain their future markets. It should be made possible for them to do the good job that they did before the war, and that they want to do in future. I hope the minister will tell us whether, in his view, it may be possible to get away from all these malpractices which I have outlined and which come under his control.


George Alexander Cruickshank: I should like to say a few words; I shall be very brief, because I want to hear the budget tonight. I have in my riding the largest logging camp in the British empire, as well as the largest cedar mill in the British empire.


Mr. GIBSON (Comox-Alberni):: So what?


George Alexander Cruickshank: The hon. member has all the profits from the pulp mills and so on in his riding. Let him take care of Comox-Alberni and I will take care of my constituency. I disagree with the argument of the
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previous speaker, as I understood it. Apparently, according to the hon. member for Vancouver-Burrard, certain mills only are to be allowed in the export market. That was his argument, as I understood- it.


Charles Cecil Ingersoll Merritt: No; that is not what I said at all.


George Alexander Cruickshank: It certainly took the hon. member half an hour to try and convince me of something else, then-. I should like the hon. member to tell me of one mill- and I am speaking now of any well-known mill-on the lower mainland which, prior to the war, did not sell on the market that paid best, whether it was domestic or export. He cannot name a solitary mill that did not do business in that way.


Charles Cecil Ingersoll Merritt: Of course, and that was my point; they cannot do that now.


George Alexander Cruickshank: And I understood the hon. member to be advocating that only a very few mills should be in that export market.


Mr. GREEN:: Oh, no.


George Alexander Cruickshank: All right; I hope to be able to say in ten minutes more than the hon. member said in thirty-five minutes, so leave me alone.


Howard Charles Green: You are not as bright as usual.


Alfred Johnson Brooks: Not as bright as he thinks he is.


Charles Cecil Ingersoll Merritt: Don't misquote me, and I will leave you alone.


George Alexander Cruickshank: Maybe I am not as bright as I think I am, but let me tell the hon. member -that more lumber is produced in my riding than in the whole province of New Brunswick, so maybe I know more about lumbering than he does.


Alfred Johnson Brooks: You don't produce it; you just talk about it.


George Alexander Cruickshank: I have probably produced more lumber than you have.


Alfred Johnson Brooks: Did you ever go out with an axe?


George Alexander Cruickshank: Probably if I got an axe I would be able to cut more than the hon. member for Royal, though I must admit I could' not cut our timber in British Columbia with an axe. We have timber in our country, not the little match-sticks you have in New Brunswick. The argument of the hon. member for Vancouver-Burrard and the (Mr. Cruickshank.]
hon. member for Royal, if I understood it, seemed to me to be the argument advocated about a year ago by the hon. member for Vancouver North, that our domestic prices should be increased. The hon. gentlemen will correct me if I am wrong, but that is my impression. At that time we were in favour of the domestic price being increased, with the proviso that the lumber so sold should be made available to the people of Canada through the various retail outlets. So I think the hon. member for Vancouver-Burrard has missed the boat. We in British Columbia who represent lumber districts-and I hope the minister is taking this in

claim that in that province we are not getting distribution of our fair allotment of the lumber we produce. We believe -the ceiling price for lumber could be increased by a reasonable amount on domestic sales provided that, as I said a moment ago, it is distributed -through the various retail outlets.
It is customary in British Columbia-and I understand that this applies also to the prairie provinces-for lumber to be distributed through retail outlets rather than direct from the mills. What has happened is that the large mills are distributing direct, and the result is that local retailers throughout the province are unable to get any supply. Large lumbering operations are carried on in my riding, so it is not a case of just talking about it like some of the hon. members from New Brunswick. A farmer wanting to buy supplies for his farm may have to send his truck on a trip of one or two days to get 200 or 1,000 feet of lumber. If the retailers were getting their fair quotas of lumber the farmers or users of lumber could afford to pay an increase of from S8 to S10 per
1,000	feet rather than having to go long distances to get their supplies.
If I am not mistaken, this is the argument which was advanced by the hon. member for Vancouver North in his intelligent speech of a year ago. He knows something about lumbering because lumbering operations are carried on in his riding. Personally I am opposed to the export market being granted to three or four large producers of lumber. A financier from Ontario came out to my riding and paid millions of dollars for one mill. If I am not mistaken he paid $14,000,000 for another outlet, although I may be wrong in my figures. However it ran up into the millions. Why did he do this? He did it in order to get the vast majority of that export market. This is one of the parties who said that they could not pay an increase of fifteen cents an hour to the loggers. I shall have something more to say about that later on.

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I just wanted to impress upon the minister that, in so far as the people of my riding are concerned, they are prepared to pay an increased price on the domestic market, provided that the quotas are raised to permit the retailers, who are the normal outlet for supplies, obtaining the necessary supplies.


Mr. ROSS (St. Paul's):: 
Mr. PEARKES:: I feel I must accept the challenge of the hon. member for Fraser Valley when he referred to the size of the mills and the logging operations in his riding and compared them with the size of the mills and logging operations elsewhere. I feel that he has put his finger on the crux of the whole problem, namely, the neglect to channel domestic lumber through the retail merchants. I know that on Vancouver island the lumber yards have been short of lumber, with the result that the farmers and agriculturists who wanted to erect barns or some other type of domestic building have been unable to secure the small amounts of lumber which are absolutely essential to them.


Mr. HENDERSON:: Mr. Chairman, what I have to say now will probably not fit in too well with the wonderful discussion with regard to lumber to which we have been listening. I do not live in a lumbering district and I have not the same interest in lumbering as some of those who have spoken. But I do know that in my district lumber is in more or less short supply; it is very hard to get and it is very much in demand.
I wanted to say a few words on firewood. I live in southern Ontario where we have not a great lumber region any more but where firewood and wood for fuel purposes generally is very much in demand.
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Clarence Decatur Howe: If I might interrupt my hon. friend, the control of fuel wood was dropped at the urgent request of the opposition.


Robert James Henderson: Many people are deeply concerned about the cost of firewood, which is in real and urgent demand by a great many of our older residents. They love the odour of wood smoke and believe no other heat is as radiant or cheering as that from the open wood grate or kitchen range. They also dread the danger of coal gas and its deadly fumes and cling to the use of wood fuel for both its cheering comforts and safety. During the war years we had a fuel controller who divided our country into regions or zones and regulated the movement and prices of wood fuel according to its several standards. But price control has been removed from wood fuel. The title of P.C. 1997 which we are now debating is:
Order in council abolishing the office of wood fuel controller, transferring his duties to the timber controller and reenacting the regulations respecting timber.
And paragraph (h) of the interpretation clause of the regulations respecting timber
issued under that order in council reads:
"Timber" shall include any trees, standing or cut and any lumber in any form, and any wood, processed or unprocesseu, and any wood product, and any by-product, of wood, including but without limiting the generality of the foregoing, pulp wood, pulp wood chips, cordwood, millwaste, sawdust, hogged fuel and charcoal.
From this I conclude that, although controls have been removed from fuel wood, the order in council grants to the timber controller power and authority again to enforce price ceilings and other controls of fuel wood if he deems it in the public interest. Since the Minister of Justice has stated that numerous articles which have been removed from price control are decontrolled only so far as prices remain reasonable and just, and since coal strikes in the future are pending and there is uncertainty as to future fuel supplies, would the minister inform us if P.C. 1997 would give the timber controller authority again to enforce price ceilings on wood fuel if it advanced to such prices as, in his opinion, would not be reasonable and just?
At present flood control and soil reconversion are being given close and immediate study in the many recent flood areas and since forests play a large part in the scheme of flood control, there is danger, if timber prices advance too sharply, of finding an undue destruction of our fast vanishing southern forests. This is a matter of immediate concern and one that requires both federal and provincial study.


Mr. McCULLOUGH (Assiniboia):: I think the way in which we handle this great natural resource of timber is the acid test of our democracy. We have in this country a timber cut of around four billion feet. During the last few days the question of controls has been under debate and we are now discussing particularly the utilization of our timber cut. My Tory friends to the right with their usual arguments have, in my opinion, been sidestepping the main issue. Their arguments represent a mental tango.


Charles Cecil Ingersoll Merritt: What is the main issue?


Edward George McCullough: The
issue is this. We want to build houses for our people. I heard the hon. member for Vancouver-Burrard ask a question of the hon. member for Regina City in regard to the profits being made by lumber companies. He asked: Does the hon. member realize that the Canadian people are not paying for the profits of the large lumber companies in this country. Was not tbat my hon. friend's question?


Charles Cecil Ingersoll Merritt: Yes.


Edward George McCullough: The
truth is that the people of this country are paying for those profits. In a previous debate in this house I mentioned the profits of the H. R. MacMillan Company, a large lumber operator on the coast, which made a profit of
SI,300,000	in 1946 over 1945, and at that time the hon. member for Kamloops asked me if I realized what taxes this company had paid. I am not concerned with the taxes these lumber companies have paid. They are making tremendous profits. I would remind the government that before the election they promised that the veterans coming back would not be any worse off than the people who had stayed at home, and they promised the veterans homes and jobs. This is the acid test of democracy. Here is one of our great natural resources which the members of this group believe must be so handled and planned as to enable homes to be built for our people. But what have we today? A new timber policy has been announced by the press. The press reports that the cost of lumber is going up twenty-five to thirty per cent. If this is true the veterans will have to pay through the nose to get the lumber they need for their houses, and when you remember the small gratuities they receive you will realize that they will not be able to build houses if lumber increases in price. I have travelled across this country and have seen veterans living in basements in Vancouver. I know people in Ottawa who are living under conditions which,
i

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if investigated, would be reported' as not fit for habitation. My information is that on the Toronto waterfront O'Keefe's, a large brewing company, are building a plant costing $2,000,000, which will use timber and other building materials, and that another is planned for Waterloo, and others elsewhere across this country. I think, therefore, it is high time that there should be planning of this great natural resource of timber so that it can be madte available to the people of this country as the members of this group have consistently argued.


Clarence Decatur Howe: Perhaps I should answer a few questions that have been asked. The hon. member for Lambton-Kent asked if it would be possible to reinstate the control of wood fuel under the present order in council. I am advised that it would be possible. We would have to call the control by another name perhaps, but it would be possible to reinstate wood fuel control under the order. I sincerely hope that will not be necessary.
The work of the timber control has been criticized. It is not surprising that there should be criticism when we hear the diverse views that have been expressed by the committee. We have had speeches advocating a higher percentage of exports, speeches advocating more lumber for domestic use, speeches demanding lower prices for housing and a great number of speeches demanding higher domestic prices so that we would not ask the poor lumberman to sell below cost. However we have struggled on for a good many years in administering timber control. It may not have been convenient for everyone.
May I tell the committee an experience that surprised me? I went all the way to Edmonton about two weeks ago to attend a meeting of the representatives of all the lumber interests of interior British Columbia and the prairie provinces. We were wanting a larger proportion of the cut in that area and some changes in distribution which would help out areas that were not getting an adequate supply of lumber. I introduced the subject by making a speech setting out our objectives, and I said that if this could be obtained it would probably speed the end of lumber control. Someone said, "No one in this room wants lumber control removed," and no one challenged that statement. One of the men drove me home afterwards, and I said, "Is that the feeling of the gathering in the room, that they do not want lumber control removed''. He said, 'Certainly".


Charles Cecil Ingersoll Merritt: What reason did he give?


Clarence Decatur Howe: He believes it is for the good of the industry. I believe that is the real opinion of the industry so far as producers are concerned. I am quite free to admit that the retailers do not take that view; but I think the important part of the lumber industry, so far as the present situation is concerned, is the producers rather than the retailers.


Charles Cecil Ingersoll Merritt: That means control for how long; an indeterminate period?


Clarence Decatur Howe: I did not ask him that. I shall perhaps go back, call them together again and ask that question.


Mr. WYLIE:: They were all Conservatives at that meeting?


Stanley Howard Knowles: Was that the speech in which you told Alberta to send down Tories if they could not send Liberals?


Clarence Decatur Howe: There is a reason for timber control which I have mentioned before. We need only compare domestic.prices and export prices to realize that it is having an effect on the Canadian economy. For example, common fir and hemlock, surfaced four sizes, is selling at the mill in Vancouver at $26 a thousand. It is selling at the mill for export at $70 a thousand; flooring, 1 x 4, is selling in Vancouver at $55 a thousand for domestic use and for export, at $150 to $170 a thousand; drop siding, 1 x 6, at $43.25 a thousand, for domestic use and $106 for export. I could give these spreads in greater detail to indicate the type of market we would be competing against without control. I could quote from the Cross weekly letter, dated Portland, Oregon, January 31, 1947, which says:
The market on finished uppers belittles description. Prices seem never to get so high that they never go higher, and a price unreasonably out of line today looks good tomorrow. Fir flooring has been sold this week at $190, mill, and drop siding and other items of corresponding size and grade have found buyers at $150, and in a few instances even more.


John Oliver Probe: Why does not the timber controller take over the complete export market and handle both ends of it?


Clarence Decatur Howe: There is a reason for that. The export market has been in existence for a good many years. We had traditional markets and we believe that the trade should look after their traditional markets. The business has been conducted between the private buyer and the private seller.


John Lambert Gibson: It is a competitive business.

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Clarence Decatur Howe: Yes. Throughout the war years and throughout the reconstruction years we have tried to interfere as little as we could with the competitive situation. We have tried as little as possible to interfere with the proportion of export markets that were maintained before the war. For example, in British Columbia the cut has always been distributed about two-thirds export and one-third domestic. The same proportion holds pretty well in the maritime provinces. Therefore we have been permitting about sixty per cent of the timber of British Columbia to go export; we have been permitting about sixty per cent of the timber cut in the maritime provinces to be exported.


Howard Charles Green: How is the minister controlling exports now; under the export and import powers or under the timber control powers?


Clarence Decatur Howe: Under both. We have the export regulations and we also have the timber control regulations. One operates on instructions of the other. There is a timber control advice to import and export control of the earned quotas and permits are granted accordingly. The overriding control is the import and export control.


Howard Charles Green: Under trade and commerce?


Clarence Decatur Howe: Yes. It has been represented to us certainly in the house and from a great portion of the eastern trade that an increase in domestic prices would improve the distribution and the supply situation. Personally I have my doubts, but in any event, so far as western Canada is concerned, we found it necessary to retain a greater proportion of the cut to serve Canadian markets. The demand for west coast lumber has increased greatly this year, due to large domestic car orders and due to demands of provinces, municipalities and other public bodies for effecting repairs to essential structures. Therefore we have negotiated with the central British Columbia and prairie operators to reduce the proportion of their exports, and we have allowed them to increase domestic prices which will give about the same return to the mill as they were able to obtain under the former system of distribution. We have been negotiating with the west coast mills to the same end. I am advised that agreement has been reached or will be reached shortly. The domestic quota of west coast lumber will be increased and there will be a corresponding adjustment in prices, and an adjust-

ment in the whole range of prices to effect a better supply of the top grades of lumber in the Canadian market.


Alfred Johnson Brooks: Will there be an increase in the export quota of lumber from eastern Canada in proportion to what has been reduced in western Canada?


Clarence Decatur Howe: No, certainly not; we need more lumber in western Canada. The export of lumber from the maritime provinces is the highest of any part of Canada. I understood from the hon. member's speech that he did not know that, but that is the fact. So far as the maritime provinces are concerned the export is about sixty per cent of the cut.


Alfred Johnson Brooks: We export one car for every two cars that we use in the domestic market.


Clarence Decatur Howe: That is so far as the earned quota is concerned, but there is a free quota to the United Kingdom, of which every cutter in the maritime provinces has a share, so that the net result is almost the opposite. Two cars are exported in the maritime provinces for one retained in this country.


George Alexander Cruickshank: Will an increase be given to the retail dealers?


Clarence Decatur Howe: The increase in the wholesale prices of the mill will, of course, be extended and will cause a readjustment of domestic prices. That is being worked out at the present time.


George Alexander Cruickshank: What I mean is, will a definite amount be detailed to the retailer? Will there be quotas on it?


Clarence Decatur Howe: All lumber is sold through retail licences.


George Alexander Cruickshank: They cannot get any.


Clarence Decatur Howe: We hope this extra quota held in Canada will provide a better supply.


Howard Charles Green: Has there been any extension of licences issued to mills? I understand that a great many of the mills are allowed to sell retail which were not allowed so to sell before, and one result of the change has been to make it much more difficult for the retail dealer to get supplies.


Clarence Decatur Howe: I cannot say. The wartime prices and trade board has the issuing of retail permits, and I think the test is as to whether the applicant has retail facilities. If he has a yard that is capable of serving the retail cus-

Emergency Powers
tomers I presume he gets a retail licence, but that is a matter which the timber controller has not had under his supervision. I do not know whether I have answered all questions.


Alfred Johnson Brooks: Last night in the minister's absence I asked a question with regard to birchwood in Nova Scotia and New Brunswick. There are about a billion feet of it, I understand, and it is being affected by a disease called dieback. I understood that the minister of lands and mines of Nova Scotia had made representations to the department here, asking that the quota be increased to allow them to cut this lumber, which would otherwise be a total loss in a few years.


Clarence Decatur Howe: That is true. We were asked to set a free quota for infested birch. The difficulty is that the lumber from infested birch is exactly like the lumber from good birch, and the result would have been that all the hardwood cut in the maritime provinces would have been infested birch by the time it came on the market.


Alfred Johnson Brooks: You do not know the people of the maritimes or you would not say that.


Clarence Decatur Howe: What I did suggest was that, after the quotas of last year had been filled, the timber controller would permit seventy-five per cent of the surplus cut to be exported, which seemed to us a very liberal proposal in that regard. It has not been accepted and I notice the cut in the maritime provinces is about the same this year as last year, so far as hardwood is concerned. But if an extra effort were made to cut more infested birch, at least 75 per cent of it could be exported.


John Lambert Gibson: I have sat here and listened to the discussion that has been going on, and I resent some of the typically cheap C.C.F. insinuations against prominent industrialists in British Columbia. I certainly do not think they need to have me come to their defence, but what annoys me is the suggestion that we hear from across the way. Anyone not on direct relief, they seem to think, is an enemy of the state.


Stanley Howard Knowles: Who are the biggest recipients of direct relief?


John Lambert Gibson: With regard to Mr. H. R. MacMillan, may I say to my good friends the hon. members for Skeena and Assiniboia, that his record in British Columbia will stand close examination and will bear comparison with any of the records of members opposite in the C.C.F. party. He is a large employer of labour in my own riding, 83166-1624
and-I may say this for the information of my hon. friends-he told me not long ago that he was definitely opposed to the removal of the domestic price controls on lumber. He said he felt that the present controls were protecting the small man in the country who was trying to obtain a home for himself, and I thought he was acting in the manner of a good Canadian citizen. I want to put that on the record to his credit. The sawmill in my riding which Mr. MacMillan operates cuts a quarter of a million feet a day, and that mill has never turned down anyone in the riding when he required lumber for the construction of a home. They have seen that lumber was available to all the residents of the constituency. I might also say-


Edward George McCullough: Will
the hon. member permit a question?


John Lambert Gibson: I might
also say to my hon. friend, when he is examining the facts with regard to lumber production and insinuating that some of the large lumber operators are reducing production in order to create larger profits because of scarcity, that the lumber cut last year in British Columbia was the largest in history, . and that we anticipate that it will be larger in 1947.


An hon. MEMBER:: How much was
exported?


John Lambert Gibson: When
you refer to profits of that lumber company you would not be fair enough to inform the committee that there has been a vast expansion in that organization in the past year, involving millions of dollars of capitalization. There has been a large profit on the shipping business which that company carries on, something which has nothing to do with the domestic market at all. The lumber companies in British Columbia are considered the best employers of labour there. They have the highest scale of wages of any industry in the whole dominion.
I would say to the minister, however, that the British Columbia timber industry is highly competitive on the world market and our competitors have always been the United States mills on the Pacific coast. Because there is no price ceiling in the United States, and consequently they receive a high price for all their lumber, within the last three months there has been definite evidence that the Americans have been stealing some of our traditional markets from us, owing to the fact that they are able to undersell us on the world market. That is one feature of price control which must be considered in any
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adjustment of the situation, but I am sure the minister will give these matters his close attention.


John Oliver Probe: May I deal briefly with one statement made by the hon. member for Comox-Albemi, and that is the one about cheap C.C.F. insinuations with respect to the lumber barons, with whom my hon. friend is associated. There is nothing cheap about insinuations when they are supported with the figures of the tremendous profits that these people are hauling in.


John Lambert Gibson: They are taxed.


John Oliver Probe: Assuming that they are
taxed; why should they not be taxed? You get your taxes where there is money. And whose lumber was it in the first place? Did the Canadian Western Lumber Company grow that timber? Certainly not; it is part of the domain of the people of Canada. Let me give instances of net profits, after taxes, in the case of the Canadian Western Lumber Company-and the source, by the way, is the Financial Post; there is nothing cheap about that. The Financial Post of March 8, 1947, quotes the Canadian Western Lumber Company as having received net profits, after taxes, in 1945 of $459,000 odd and in 1946 net profits, after taxes, of $1,019,000, or an increase of 121 per cent of actual profits. Let me say one thing more to my hon. friend. As to the rate of profit in 1946 on its capital of $3,073,000, how much of that is watered stock I do not know, but that is the capital-


John Lambert Gibson: The
original shareholders lost all their money, may I say for the hon. member's information.


John Oliver Probe: The rate of profit was
thirty-four per cent. Well, that is not a very cheap insinuation. That is extremely high-priced stuff I am talking about. I know the effect on the producer, and you as a member of parliament and as a citizen of the country should know that our people are still suffering from lack of homes. That is the criterion by which we should be considering this matter in this house, and not only whether some lumber baron is paying proper wages to labour. I did not interject that.


Edward George McCullough: The
hon. member for Comox-Alberni saw fit to get up and attack some of the statements I made, and I saw some of my hon. friends across the way and some to the right get up and support these tremendous profits. I do not think we have indulged in cheap propaganda

or debate or anything of that kind in this house. I have never in this house at any time reduced my arguments to personalities and I did not attack H. R. MacMillan for any personal reasons at all. I say this: When we have such a crying need in this country for homes and for building materials, for any government or any hon. member to stand up and support profits which I have already indicated-because my hon. friends are always talking about taxes-is something I cannot understand. Again I state that H. R. MacMillan and Company last year, in 1944, made a net profit of 81,213,790. There is the proposition. Hon. members can get up and support that sort of thing if they so desire.


Mr. HERRIDGE:: I just wish to say a word or two, because I represent a district that produces annually some 125 million or 130 million feet of lumber. Fortunately, we have not any of these wicked people in my riding. The lumber industry in my district is largely owned by hardworking people, small people. I represent a riding which has many small mills in it. I have lived for some forty odd years with these people and I must say that they are splendid people to represent. There are some reasons for increasing costs as far as our district is concerned. I have found 'that our operators were on the whole very considerate of the local market and pleased with the profits they could make in the export market. These reasons are apparent when you consider the fact that just when the war opened-and I am giving this as an illustration-the stumpage on white pine on most government lumber was SI per thousand and at the present time it runs from $5 to $7.50 to 88 a thousand; the royalty has increased from fifty cents a thousand to $2.50 to $3 a thousand; operating costs have increased generally; wages have been considerably increased during the last three or four years.
I have some knowledge of the lumber industry and the problems of the operators; and they are all small operators. We have not a single large mill in my constituency. They are nearly all workingmen, working together in small operations or in individual operations. On the whole, I think it is quite safe to say that there has been no profit in the domestic market. They have been supplying the local market, and I think in most cases, with very few exceptions, they have been very fair about it. But they have obtained most all their profit in the export market. I am not sure what lumber prices are, but I can illustrate the point by giving one instance. Late

Emergency Powers
last fall we supplied cedar fence posts to the prairie market for which we were receiving fifteen cents apiece. The Americans were coming from the south of the line and offering us thirty-six to forty cents for that identical fence post. That shows where the profit lies. Consequently, everyone is human and tries to sell as many as possible to the export market.
I am pleased to know that the government is going to divert a greater proportion of the lumber to the domestic market where it is required. I do want to emphasize the fact that, so far as the domestic market is Concerned, I think the majority of the operators I represent have been very reasonable and fair and in some cases, have put themselves out in order to try to assist people who wanted to build. Ours is a decentralized type of lumber industry, because it is not possible to operate in a large way on mountain slopes and in mountain valleys. I think the results are a good argument for decentralization. The workingman there is involved in the operation of the lumber industry.
Before I sit down, I should like to ask the minister two questions. If a mill is selling retail from the mill direct rather than through a retail yard-we do not have such things; there are very few retail yards in the interior -is that mill allowed to sell at the price established for sale from the retail yard or not? And what is the price now established for the interior industry, for three or four grades of lumber retail?


Clarence Decatur Howe: A mill can sell retail if it holds a licence to sell retail. In other words, if the wartime prices and trade board have decided that it is entitled to it, that it can give retail service, a licence is issued to the mill and it is allowed to charge retail prices. Otherwise it can sell only at mill prices. I did not catch the second question.


Herbert Wilfred Herridge: Can the minister give the retail prices now of three or four ordinary grades of lumber?


Clarence Decatur Howe: These are the retail prices for the western prairies:
per
Size	thousand
2x2, 8' to 14'	 $69
2x2, 8' to 16'	 72
2x4, 8' to 20'	 74
2x6, 8' to 14'	 65
2x8, 8'	to	14'	
672x10, 8' to	14'	
67	506x6, 8'	to	16'	
70	508x8, 8'	to	16'	
70	50
Is that sufficient?


Herbert Wilfred Herridge: I just wish to ask the minister one more question. Would this price apply, for instance, in my own district if lumber was being sold by the mill retail to local customers?


Clarence Decatur Howe: No. This is the mill price, plus the freight, plus the mark-up for the retailer.


Mr. JOHNSTON:: To the prairie provinces.


Clarence Decatur Howe: To the prairie provinces, yes. This would apply perhaps in Calgary, or between Calgary and Medicine Hat. Prices farther east are higher; for the central portion they are about $2 a thousand higher, and in the eastern portion about $2 a thousand higher again.


Charles Cecil Ingersoll Merritt: Will the minister explain this new system of approvals whereby apparently fifty per cent of the domestic quota is now allocated by the government? What is proposed by the government to be the quota?
Mr. * HOWE: The allocations system has been in effect since controls were established. During the war practically all domestic lumber was allocated to war uses. After the war ended, we attempted to get away altogether from allocations, but we never were completely successful. There were essential uses for which allocations were maintained, such as federal government uses and certain provincial government allocations. It has been found necessary recently to enlarge the sytem of allocations. I cannot believe that it will be fifty per cent of the domestic quota in any section of the country. For instance, we have a domestic car-building programme which requires special grades of timber. They are difficult for the mills to fill, and in order to get the lumber it has been necessary to allocate certain parts of the order to various mills. That is true of certain provincial requirements. The allocations system is fair in that; if it is an awkward bill of lumber to fill, each mill is required1 to take a portion of it. In other words, certain mills cannot take all the good and other mills take all the bad.


Mr. WHITE (Middlesex East):: I just wish to say a word or two about this knotty problem of lumber. I do not know whether or not I can throw any light on the shortages that appear; but a week ago Saturday in London, in western Ontario, the Liberal association held their meeting. It was evident there also that a shortage existed of good lumber for political platforms. Some of it was shaky; some of it was knotty. So I would say that not only the
Emergency Powers

lumber dealers and the farmers require lumber; political parties seem to be having trouble finding good material for their platforms.


Clayton Wesley Hodgson: Would the minister agree that with the high export quotas on the east and west coasts the operators in central Canada are in a tough spot?


Clarence Decatur Howe: No. The operators in the central provinces are close to their markets; their prices are higher than on either coast, and in my opinion, for the size of their opera^ tion, they are just as 'well off as are operators on the west or east coasts. People assume that the well being of an operator depends entirely on the proportion of his exports. It depends, of course, on the combination of the price at which he sells in the domestic market and the price at which he sells in the export market; and I have not heard anyone suggest that the operators in the central provinces are not doing as well as any other timber operators.


George Alexander Cruickshank: Has any consideration been given to increasing the quota to retailers, in view of the new prices?
Mr, HOWE: Oh, yes. All lumber sold domestically is sold by retail, and if we increase the domestic quota we increase the supplies to the retailers.


George Alexander Cruickshank: I am sorry; I do not think the minister got exactly what I mean. In British Columbia we have a large number of retail dealers; I am not speaking of the mills with retail licences. Has consideration been given, to increasing the quotas to the retail dealers?


Clarence Decatur Howe: I assume that will follow automatically when large quantities are put on the domestic market.


John Oliver Probe: The minister promised that before this item went through he would give me a reply to questions I asked with respect to typical prices. He gave that information in part when he gave the prices for certain sizes of boards in the prairie region, but to make the record complete I asked that he give prices for 1939, 1944 and 1947 for five types of material to which I referred on Friday, and this afternoon I asked that he add the prices of logs delivered to the mill. I do not care what type of logs they may be-fir logs, if you like, so that we may follow the one transaction through. Take a fir log at the mill, after it is milled, the wholesale price and the retail price per thousand feet.


Clarence Decatur Howe: The answer to that question will require a good deal of research. No one could have the prices at hand, in a complicated schedule like the lumber schedule, and be able to give an answer to that question in a few minutes. I shall be very glad to have the answers worked out and table them later. My hon. friend would not suggest that we hold up this item until he gets that information, but I will table it as soon as I can.


John Oliver Probe: I asked for it on Friday, and I still have not obtained it.


Clarence Decatur Howe: I am told they are still working on it.


Charles Edward Johnston: I would like to say a word before this item carries, though I do not intend to hold up the committee. There has been a great deal of discussion in regard to the prices of retail lumber. I am not in a position to say whether the milling companies are making exorbitant profits; I think the minister and the control officials should have that matter well in hand. But if it is true, as has been stated, that all the profits of these mills are being made in the export trade, then I have wondered just what would be the position of the man operating a small mill, and I think perhaps some investigation should be made in that regard.


Clarence Decatur Howe: The small man gets his export quota the same as the big man.


Charles Edward Johnston: But it would not benefit
him to the same extent; his turnover would not be so great. That was not the matter I particularly wanted to mention, however. I am concerned about the price increase on domestic lumber sold through retail channels. I cannot bring myself to believe that the retail yards have been suffering so very much. I agree with the minister when he says, as I interpret his words, that probably more attention should be given the wholesale or producing end of it than the retail end; generally speaking I believe that is true. In the last little while retail prices have been steadily climbing. Not only is that true, but the retail lumber companies have been making profits in another way which is detrimental to the consumer, the man who wants to build a house.
1	am not for a moment suggesting that the retail yards have been violating price controls or anything like that, but one matter has been brought to my attention by more than one contractor in the prairie provinces. The point is that the retail lumber yards are selling grade
2	and grade 3 lumber at grade 1 prices. I had

The Budget-Mr. Abbott
a fellow come to my house while I was home at Easter, who wanted this question brought up. I said, "Why don't you give me a statement to that effect? Put it in a letter to me, so that I will have it in black and white." Their position, however, which I can quite understand, is that if they did anything like that they would not be able to get lumber at all from the retail yards.


Clarence Decatur Howe: Is this the same man who lays his flooring for three cents a square foot?


Charles Edward Johnston: I do not want to get
back on that argument, but if the minister says a man can lay flooring at 3 cents a foot or less and make a decent day's wages, I say he cannot do it.


Clarence Decatur Howe: It is now one minute to six; we have been talking about lumber all afternoon. Can we not let this go through so that we may hear the budget quietly tonight, and go on with something else later?


Charles Edward Johnston: As far as I am concerned-


Mr. MACKENZIE:: May I suggest also
that as a matter of procedure the committee must rise before six o'clock, so the Speaker will be in the chair at eight o'clock. Perhaps my hon. friend would be kind enough to allow this item to go through now, and then we shall sit later in the evening, after the budget speech has been delivered.


Charles Edward Johnston: You mean on this
item?


Ian Alistair Mackenzie: Yes, on this bill.


Charles Edward Johnston: Let it stand and report progress.


Ian Alistair Mackenzie: Then with the consent of my colleague I move that the committee report progress and ask leave to sit again this day. I understand this item has been carried.


Some hon. MEMBERS:: No.


Charles Edward Johnston: That is not what you
said a moment ago; you said we should report progress.


William Ross Macdonald: Before the motion is
put, does the item on timber regulations carry?


Some hon. MEMBERS:: Carried.


Some hon. MEMBERS:: No.
Progress reported.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



THE BUDGET


Hon. DOUGLAS ABBOTT (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, it is my good fortune today to introduce a budget, the first for which I am responsible, under circumstances much more favourable than those of the recent past. Behind us are the huge and difficult budgets of the war years-highwater marks of achievement set by a Minister of Finance (Mr. Ilsley) whose name will long be remembered and honoured by his fellow Canadians

budgets which are evidence of what the Canadian people can do under the stimulus of war.
Today we have just ended a year in which our accounts show a surplus-a surplus larger than the accumulated total of all the previous surpluses in our history. Today we see a Canada enjoying a degree of prosperity never exceeded in living memory. We look forward to a year of high production and incomes. Indeed, we would appear to have ample excuse for self-satisfaction and easy optimism, if we took account only of our own immediate situation here at home. Our own position is favourable and encouraging, but beyond the Atlantic and the Pacific half the world works slowly and painfully to rebuild its ruins, and until much more progress has been made in both economic and political aspects of international affairs, we cannot afford to be complacent.
I do not propose to take the time to review in detail our present economic situation. Its main features are clear. Our available manpower is almost fully employed, with some surpluses in special areas and trades and equally real shortages in others. Demand continues to outrun supply in many lines of business. Our exports remain at high levels, limited in most cases only by our own ability to supply. Imports are pouring into the country from the south in large volume, without appearing to divert much demand from our own production. Private business is proceeding to expand, repair and improve its capital on a scale so large that its plans will be severely limited by scarcity of materials, equipment and labour.
The Budget-Mr. Abbott

Some increases in inventories are occurring but apparently not on a large scale, presumably because the pressure of demand in most cases is so excessive that neither producers nor dealers can keep ahead of it. Consumer purchasing continues to expand and there is as yet little sign in Canada of any widespread unwillingness or inability on the part of consumers to buy what is being offered to them. The demand for housing remains so great that the most strenuous efforts to meet it still leave a gap that can be filled only over a period of several years. Provincial governments and municipal authorities are making substantial expenditures to meet deferred maintenance and new public projects that were postponed during the war. In short, we are in a period of intense post-war activity, supported and fed from many quarters.
The results of this are reflected in our national statistics. The most comprehensive of these are the figures for national income, gross national production, and national expenditures, which are prepared and published by the dominion bureau of statistics. I have arranged to have included in the printed appendix to the budget a number of tables of these interesting and useful statistics as well as several tables of other representative figures that bear upon the budget and the general state of our economy. The national income, production and expenditure totals for 1946, it will be noted, are only moderately below the record levels of the peak years of the war, which years of course reflected the temporary and abnormal intensity of effort to which the war gave rise.
In spite of all the problems of transition and reconstruction during the past year, despite the huge shifts in man-power and the widespread shortages and labour unrest, our production, income and expenditures remained at very high levels. The figure for gross national production exceeded the $11 billion mentioned in last year's budget as a target which we might fail to reach because of interruptions to production. Examination of the table of national expenditures will show that there was a sharp decline during the year in government expenditures on goods and services but this was very largely offset by increased expenditures on plant, equipment and inventories on the part of private business, and by a very substantial increase in consumer expenditures. On the income side, there was a slight reduction in income from the peak level attained in 1945, but an increase in wages and salaries and in the income of individual businesses, reflecting chiefly a sub-

stantial increase in the net income of farmers which reached last year levels higher than even those of the war years.
In this present period of prosperity, inflationary pressures continue at work, though on a scale reduced from previous years. We no longer have the huge war requirements of our own and other governments exerting a constant and almost irresistible force on prices and supplies. The upward pressure of costs is also less strong, and in many cases adjustments have already been made to higher cost levels during the past year. The first rush of returned servicemen and other consumers to buy whatever was available is now subsiding and one can expect buyers to be more selective. On the other hand, of course, we must recognize that export demands for many products remain strong despite exchange difficulties of some of our customers. The huge expenditures of business on new plant, equipment, buildings and stock in trade now constitute in themselves a very potent inflationary pressure. ' Price levels in other countries, particularly the United States and Britain., are substantially higher than our own, and through both exports and imports they exert a strong upward thrust upon our prices which has only been partially offset by the readjustment last year of our exchange rate.
On balance, while there are still some inflationary forces to contend with, they are less powerful than in the past and not such as to interfere with the orderly decontrol of prices and supplies. I will not trespass here upon a subject already debated at length in this house this session, but I can and should say that in budgeting we must take into account the process and results of progressive decontrol.
In appraising our current situation we must also recognize the special and temporary character of much of the expenditure that is the stimulus to our present high level of income and production. Our war expenditures are largely finished, but there are many substantial expenditures such as those for veterans' benefits, which will diminish as time goes on. Much of the large expenditure of business on plant and equipment represents accumulated or postponed requirements and does not give us any reliable guidance as to what we may expect on a continuing basis, even under relatively prosperous conditions. Consumers, too, are probably still making purchases to meet accumulated needs that arose directly or indirectly out of the war, or are using extra wartime savings for special purposes, and consequently they are probably spending more and saving less than they

The Budget-Mr. Abbott
normally would with incomes at present levels. So with our export sales as well; some of our largest customers are buying more from Canada, because of their abnormal needs at present and because other normal sources of supply are not available, than we can reasonably expect them to buy on a continuing basis. We must be prepared for reductions in some or all of these abnormal expenditures of various types in the not distant future, and we must be prepared for the changes and adjustments in our production necessary to fit it into a more permanent pattern.
Notwithstanding the temporary and special nature of some of these forces, it is encouraging to find that our present prosperity is largely based upon consumer and business expenditure as well as a high level of exports and can be expected to continue without any special expenditure made by the government for the purpose of sustaining it, whether by incurring deficits or otherwise. The demands for our production this year are so strong that I think we may legitimately make our budget plans in the expectation that our gross national product for this year, 1947, will exceed the estimated total of $11-1 billion for 1946 and may amount to something close to $12 billion, calculated at prices somewhat above those prevailing last year. Any such forecast in these uncertain and abnormal times is subject to a wide margin of possible error and to many qualifications. In particular, we must expect that the figure will be less than that I have mentioned, if a substantial recession should occur in the United States later this year.
One of the main supports of our current high level of production and income which is the result of special government action is, of course, our large volume of exports, financed in part by the loan to Britain and by export credits to France, Belgium, Holland and. some other countries. These loans have been made to enable those who have been our customers in the past, and will be our customers in the future, to buy Canada's export products during this critical period when the world has been reconverting from war to peacetime production. These countries could not have bought from us on anything like this scale without such loans. It is very much in our interest that they should be able to buy during this period, not only as a means of getting our production and trade reestablished immediately, but also in order to assist these good customers and friendly countries to reestablish their own economic life on a satisfactory basis.
This export credit programme and the loan to Britain are, of course, essentially transitional measures. None of us contemplates a continu-83166-163
ing, large-scale programme of government lending to finance our exports. We in Canada must count on the returns from our exports to pay for our imports and to pay our other bills abroad, including the service of our external debt. We have consequently had to limit the credits that we have granted and to request those countries borrowing from us to pay for part of their requirements in foreign exchange that we can use to buy our own imports. We have also recognized' that those to whom we are lending must have sucb help as we can give them in reestablishing and expanding their own export trade, so that they may continue to buy from us later and repay what we are now lending. Creditor countries must be prepared ultimately to accept repayment in goods and services. In the case of Canada, we are now a creditor of some countries and at the same time a debtor to the United States, and we must act and plan with both these facts in mind.
During the past year the high level of Canadian production and income has led to a very high level of imports, as supplies became available in other countries, particularly in the United States. This large volume of imports has made possible a more rapid rise in our living standards, a speedier reconversion of our industry, and a more adequate supply of essential materials for our production than would otherwise have been achieved. Since supplies from many countries were not available, most of our imports have had to come from the United States and have had to be paid for in United States dollars at a time when our receipts of United States dollars from abroad were greatly reduced by the fact that many of our customers had to obtain credit for a substantial proportion of their purchases from us. The result, of course, has been that we have found it necessary to draw substantially upon large exchange reserves built up in the last years of the war and the first year after V-E day. We fully expected that it would be necessary to draw heavily upon those reserves, and this was made quite clear last summer when our exchange control legislation was before parliament. At that time highly tentative and conservative estimates were given of the possible drain on our reserves that might be expected, but these, I am afraid, were regarded in some quarters as exaggerated- they were treated in some quarters as a rather laboured attempt to justify exchange control, the necessity for which some were inclined to deny. Since that time, as the extent of our trade deficit with the United States has become apparent through the published trade statistics, there has developed a

The Budget-Mr. Abbott

tendency to go to the other extreme, and many unfounded rumours have been put into circulation. In these circumstances I felt it was desirable to table yesterday, somewhat in advance of the time when I normally would have done so, the report of the foreign exchange control board for the year 1946, which gives a great many facts concerning our trade and international financial position for that year.
I need hardly say that hon. members will find that report worthy of careful study. It shows that our official holdings of gold and United States dollars declined during 1946 by $263 million but that we still had a total of $1,245 million at December 31 last. While we had a net favourable balance on current account of $458 million with the world as a whole and one of $954 million with all countries other than the United States, our current account balance with the latter country was adverse to the extent of $603 million. This large current deficit with the United States was due in part to certain temporary factors, including the abnormal Canadian demands for United States goods and travel which we had largely done without for years, the filling up of empty shelves and warehouses, the high level of United States prices, the shortage of goods from alternative sources of supply and certain payments by the Canadian government for the purchase of military assets and equipment . But it would be a mistake to place too much emphasis on such special influences. The fact is that in any period in wThich we are enjoying high levels of production and high consumer incomes, Canada imports a great deal from the United States. In other words, our large adverse balance last year-and the continuing high level of imports-is to a very considerable extent the product of Canadian prosperity.
This point has a real bearing on the validity of the suggestion which is made in some quarters that it would have been better not to have restored the Canadian dollar to parity last July, and that the way to stop the drain on our United States dollar reserves is to reverse that action. This argument is based largely on pre-war conditions of unused capacity and limited demand that do not exist today. It seems to assume that exchange depreciation would restrict the flow of imports or increase the flow of exports. A large proportion of our imports from the United States, including for instance, such necessary products as coal, petroleum and raw cotton, would clearly not be affected at all, and under present conditions of shortages on the supply side and urgent and unsatisfied demands on the other, the effect on

our volume of imports of, say, a 10 per cent change in the cost of most other import items would be very slight indeed. After all, the rise in prices in the United States which has occurred since last July has had no apparent effect in discouraging imports to this country. On the export side, too, the change in the exchange rate has had relatively little, if any, effect iD reducing the amount of our exports, except possibly to some extent in the case *of gold and, indeed, the change may have actually increased our receipts of foreign, exchange in some cases as a result of adjustments in the prices obtained by our exporters. Our judgment on this matter has, I think, been confirmed by the action of many other governments. The exchange rates which they have selected and maintained indicate fairly clearly their view that under prevailing conditions of widespread shortages, limited supplies and urgent needs, the possibility of a country improving its exchange position by currency depreciation is extremely limited. Our return to parity last July was designed, to relieve the pressure on our price ceilings and reduce the strong tendency to inflation in both prices and costs of production. Evidence of the contribution it has made in this direction is to be found in a comparison of the movements of prices in Canada and in the United States since last July, which can be seen in table VI in the appendix to this budget.
Another important point to which the foreign exchange control board's report calls attention is the extent to which the deficit in our accounts with the United States is offset by dollars or their equivalent received from other sources, including those countries to which we have granted credits. Last year we received $237 million of gold and United States dollars as a result of transactions with countries other than the United States-chiefly the United Kingdom, France and other countries to which we had extended credits. This year we expect to receive substantially larger payments in con- . vertible exchange from the United Kingdom and from a number of other countries. Since last January the United Kingdom has been paying us for a portion of its current Canadian requirements in sterling, which we can and do convert into United States dollars or other currencies we require.
Moreover, we have now reached the time when Canada may expect to benefit from the new international machinery which has been established during recent years to aid in international monetary and financial affairs. The recent commencement of operations of the international monetary fund may soon result in overseas countries providing us through the

The Budget-Mr. Abbott
fund with cash or a source of cash. The international bank will very shortly be making its first loans. The additional United States dollars which these loans will provide should assist certain countries now borrowing from us to pay for a portion of their purchases here in United States funds.
Finally, as the house is no doubt aware, eighteen of the leading trading nations of the world are now engaged in Geneva in vitally important trade and tariff negotiations. These discussions are intended to lead to substantial tariff reductions in the United States and elsewhere and to the establishment of an agreed code of behaviour between nations in the field of commercial policy and related matters. The ultimate objective of these negotiations is to make possible the restoration of multilateral trade on a large scale, which is the best possible basis for Canadian prosperity and stability.
I have referred to certain elements in our exchange situation and prospects which have helped, or will help, to meet the problem caused by our large, adverse balance with the United States. I have done so in order to give the house a balanced picture. No one would deny that, even after allowing for these favourable elements (of which I may say there has been no general knowledge or appreciation), Canada in common with practically all countries in the world, other than the United States, has a United States dollar problem. This is no new problem with us. In the course of the war, to go no further back than that, we had a United States dollar problem which in some ways was more difficult than what we have to-day. Indeed, we reached a point in the early stages of the war when our reserves were almost completely exhausted. But we quietly took constructive measures to deal with the situation and thus owing in part to our own efforts and in part to the cooperation of the United States we were able to master the problem. Not only did we meet all our requirements but we entered the current period with exchange reserves several times as large as at any previous period in our history.
In considering the present situation, it behooves us to maintain a reasonably balanced perspective. In terms of basic economic fundamentals Canada's international position is stronger today than at any previous time in our history. We emerged from the war with our productive apparatus not only completely unimpaired but enormously enlarged and strengthened. Our working force is larger, more highly skilled, and more fully employed than ever before. Our competitive position in world trade has been greatly improved as a 83166-1631
result of our increased efficiency and the degree of control we have been able to exercise over inflationary rises in prices. Since the beginning of the war we have reduced our net international indebtedness by about thirty-five per cent, and this in spite of supplying huge quantities of goods to our allies on a gift or mutual aid basis. In 1946 we had a favourable balance in our current transactions with the world as a whole greater than that achieved in any previous year.
In this field of international trade and exchange, there are unquestionably problems which we must face and changing situations to which we must adjust ourselves. It will continue to be our policy to seek for constructive solutions to these problems in a straightforward, common-sense manner in collaboration with other nations.
I believe the house is in general familiar with the main aspects of our negotiations with provincial governments during the past year, but perhaps I should not let this occasion pass without a few comments about this important problem of dominion-provincial relations.
The offer made by the dominion in the budget of last June was promptly accepted as a basis for negotiation by three provinces and later by several others. In the course of discussions with these provinces, which extended over several months, the original terms were subject to a number of modifications and the details of agreements embodying the necessary provisions to safeguard the interest of all parties were hammered out and agreed upon.
The modified formulae for determining the amount of the annual payments to be made to the various provinces were the product of a most intensive study of the whole problem and represent, I believe, the most successful attempt yet made to achieve equitable treatment of all provinces. They maintain intact the existing pattern of statutory subsidies which are the product of a long historical evolution and in the additional payments they represent a fair compromise between the two alternative methods of allocation, namely, fiscal need and taxability or tax potential-a fair compromise between the school of thought which believes in equal per capita payments and that which would base payments on the relative ability of the various provinces to raise revenues from the tax sources in question.
The stability of revenues assured by the guaranteed minimum payments represents one of the chief advantages of the plan to the adhering provinces. Their revenues will rise
The Budget-Mr. Abbott

as their population and the gross national product rise but the assurance that regardless of fluctuations in the national income, regardless of whether the next few years bring a recession, provincial revenues will be supported by these large irreducible minimum payments is of particular value to them. Far from weakening their autonomy or sacrificing any of their constitutional rights, they have merely found a method of utilizing one of these rights -the method of renting instead of cultivating a tax field-whereby they can assure this revenue at generous levels guaranteed against the risks of economic adversity and participating also in the profits of growth and prosperity. With this assurance of stable and rising revenues, they are for the first time in a position to plan with courage and confidence and a sense of real independence, programmes for the efficient discharge of their constitutional responsibilities.
The government of Canada looks forward to the' day when the agreement of all or substantially all the provinces will make possible the achievement of the great national purposes which impelled the dominion to make its comprehensive proposals of August 1945. These include not only the elimination all across Canada of the evils of duplication and conflict in the fields of direct progressive taxation which have such important economic effects, but also the development of an efficient and flexible tax system designed to promote the expansion of employment and incomes, as well as a comprehensive programme for the cooperation of dominion and provincial governments in the field of public investment and social security.
Nevertheless, we do not ask any province to accept a tax agreement unless it believes such agreement to be in its own interest as well as that of the country as a whole. We did our best to shape the offer of last June in such a way as to make it possible and satisfactory for any province to remain out of the agreement if it wished to do so, and we would far prefer to have a province remain out indefinitely than to endeavour to persuade it to come in against its own judgment of where its true interests lie.



REVENUE AND EXPENDITURE 1946-47

[Stage Direction]
Detailed information about our revenue, expenditure and debt is provided for the house and the public in the white paper which will be printed as an appendix to the budget, and therefore I shall only draw attention here to the main points of interest. As

the accounts will not be completed for some weeks, the present figures are estimates which are still subject to change.
The grand total of expenditures for the year amounted to approximately $2,632 million, which was just over half, 51 per cent to be exact, of the expenditures for the preceding year. Total revenue of all kinds, including refunds of previous years' expenditures and other special receipts and credits, amounted to $2,984 million, only $29 million less than the total of the previous year. There was consequently a surplus of about $352 million, constituting a reduction in our net debt. This is, of course, a surplus of quite unprecedented size and, in fact, compares with a total of $319 million for all previous surpluses in Canada's account since confederation. Such a surplus is, of course, very gratifying. We can take legitimate pride in the fact that in the first fiscal year beginning after V-J day we have been able to better than balance our public accounts by a wide margin. This large surplus is a tribute primarily to the health and strength of Canada's economy but the government of the day and particularly my predecessor, the present Minister of Justice, are, I believe, entitled to take credit for the prudent management of the country's financial affairs to which this result bears witness.
We should not, however, be led into false optimism, nor should we jump to the conclusion that our present tax structure is much more than adequate to meet all our future requirements. There are abnormal aspects of both the revenue and the expenditure sides of our accounts which need to be considered before we can obtain anything like a true picture of probable future budgets.
On the revenue side, for instance, there are special receipts of $372 million, representing the proceeds of sale of surplus war assets, refunds of previous years' expenditures and other credits of a temporary character.
Some hon. MEMBERS:: Oh, oh.


Douglas Charles Abbott: Yes, but there are also excessive expenditures on the other side.
In addition our tax revenues include a substantial amount of payments by taxpayers in respect of income received in earlier years or arising out of the non-recurrent taxation of accumulated surpluses of private companies. Moreover, our revenues are based on very high levels of production, incomes and imports which we probably cannot expect as normal levels in future years. I have said enough to demonstrate that it would be a

The Budget-Mr. Abbott
mistake for us to assume that, if we were to retain our present tax structure, we could expect to obtain total revenue of a magnitude approaching that of the year just closed.
But while I emphasize that, I also wish to stress the fact that our expenditures for the past year included substantial sums for items of a temporary, abnormal or non-recurring character. National defence, for instance, spent some $376 million during the year, which is $136 million more than is being estimated for the current year. The Department of Reconstruction and Supply spent $70 million on liquidation and termination of contracts alone. Veterans Affairs paid out almost $320 million for war service gratuities and reestablishment credits, $100 million for discharge benefits and $50 million for treatment services. The continuing cost of subsidies introduced during the war accounted for about $208 million. There were many other items included in the 1946-47 expenditures which will either be entirely eliminated or greatly reduced in future years. The grand total of expenditures incurred last year must therefore be considered in the light of these abnormal or non-recurring factors. On the other hand, there is another type of allowance which will have to be made, if and to the extent that this parliament approves the undertaking of new services or the provision of new benefits. Here, in this parliament is where the real control of expenditure must rest. We may talk all we like about the necessity of reducing expenditures but if, at the same time, or, perhaps on the following day, we press for this or that new service or benefit, this or that new project, or an increase in this or that benefit, we are thereby making it impossible to maintain that more reasonable level of public expenditures which the cessation of war and demobilization expenditures should bring.
What I am getting at is this: Our surplus is a real one and one from which we can find encouragement, but it has been obtained at high levels of revenue and expenditure which do not necessarily give an accurate indication of the shape of things to come.
Total revenues for the year exceeded by $509 million the forecast made in the budget of last year. The largest increase over the forecast was in the item for special receipts, which the then Minister of Finance stated could only be an arbitrary estimate, and in respect of which we received in fact $372 million rather than $200 million. He stated that the estimates in respect of other items were believed to be conservative, and I think
the prevailing view was that he was not being conservative enough. Caution was the only attitude which a responsible Minister of Finance could take, particularly in the light of the prevailing shortages, uncertainties and industrial unrest which prevailed when the budget was brought down.
In any case, our production, trade and income, on which our revenues were based, turned out to be surprisingly well maintained last year, despite the early difficulties and uncertainties. Consequently customs duties and personal income taxes, both highly sensitive to economic change, substantially exceeded our forecasts. We probably underestimated the effect on our income tax revenues of the return of veterans now getting taxable wages and salaries instead of tax-free service pay end allowances, as well as the effect of the large retroactive increases in wage rates. Corporation profits also turned out to be considerably higher than it had been felt safe to count upon, with the result that revenue from corporation income tax and excess profits tax amounted in all to about $688 million, which was 27 per cent above the forecast. Sales tax as well reflected the much greater supply of consumers' goods available for the market. Its yield at about $300 million was 20 per cent above the figure included in the last budget. Other excise taxes on consumers' goods showed a much smaller increase over the figures budgeted, and the yield of excise duties on liquor and tobacco turned out to be quite close to the anticipated figures. Succession duties, taxes on interest and dividends going abroad, and miscellaneous taxes produced revenues close to the estimated figures, while non-tax revenues were slightly less than anticipated.
On the expenditure side, the figures for the last year were well below the amount estimated. The total as estimated at present, is $2,632 million, which is $137 million, or 5 per cent, below the total of the main estimates for the year, which in the budget was taken as a safe limit to set on probable total expenditures.
Expenditure on national defence amounted to $376 million, which was $113 million less than that authorized by the estimates, and was, of course, only a small fraction of such expenditure in the previous year. Expenditure by reconstruction and supply, mainly on contract termination, emergency housing and coal production, amounted to about $137 million, compared with total estimates of $231 million, the main reduction by comparison with the estimates coming in connection with termination of war contracts. Expenditures of all
The Budget

Mr. Abbott

kinds by the Department of Veterans Affairs amounted to about $607 million compared with aggregate estimates of $667 million. As I have said, the total cost during the past year of subsidies of all kinds, introduced during the war, paid by various departments and agencies amounted to approximately $208 million.
Following the practice of the last six years I have provided for an addition of $25 million to the reserve for possible losses on the ultimate realization of active assets. Under the Consolidated Revenue and Audit Act it is the duty of my department to present in the public accounts, to quote from the act, such "accounts and matters as are required to show what the liabilities and assets of Canada really are," at the date of such statement. I believe this obligation is to present what is considered to be a true picture of such assets and liabilities. The government of Canada has loans, advances, investments and other assets amounting in the aggregate to over $4,746 million which it carries in its books as active assets. It is obvious that while these assets on the whole are believed to be good assets, there is bound to be a certain percentage of loss on their ultimate realization. No one can forecast the future with sufficient accuracy to know precisely how large this loss may be. We can only use reasonable judgment and each year since 1941 it has been decided that the reasonable thing to do was to set aside $25 million as a reserve to take care of such losses. At March 31 last, the total amount in this reserve was $155 million1 after certain write-offs had been made against it. I would not go so far as to say that this sum, which represents 3.2 per cent of the total book value of our active assets, is a highly conservative estimate of the amount necessary to bring the book value of our active assets to a wholly realistic basis but I do believe that it is not an unreasonable provision for the purpose. No doubt ministers of finance reviewing the situation in future years may wish to build up the reserve to a somewhat larger amount over a period of time.
I have already referred to the impossibility of predicting with accuracy the probable total amount of ultimate loss in respect of all our active assets. It is even more difficult to assign this loss to individual assets or types of assets, although losses are more likely in certain cases than in others. In any case I am convinced that it would be unwise from the point of view of public policy to break up this reserve and earmark it against particular items in our active assets. No business man woidd reveal in his published statements the amount of his bad debt reserve carried against

the account of each individual debtor; if he did, he would place himself in a very weak position in the collection of his accounts. Similarly, I believe that it would not represent prudent or efficient administration of Canada's financial affairs to show in the public accounts specific reserves to meet possible losses in connection with specific assets. The general reserve offers a better method of assuring a true presentation of Canada's assets without any disadvantage.
I should point out that while it is believed no specific parliamentary authority, other than that to which I have referred, is necessary to set up and add to this reserve, it is of course clear that no asset can be written off in whole or in part and the write-off charged to this reserve, unless there is parliamentary authority, general or specific. During the past year, write-offs amounting to $19-6 million were made and charged to this account. These involved various investments made during the war in government owned plant and equipment carried in our books as active assets, and the authority for the write-offs was the Surplus Crown Assets Act.
In addition to our budgetary expenditures the government made substantial outlays during the year in the form of loans or advances or the purchase of investments, in regard to which detailed information will be found in the white paper. The largest of such investments was that of $640 million in advances to the United Kingdom under the financial agreement approved by parliament last year. The United Kingdom drew rapidly on this credit during the past fiscal year, but we do not expect drawings this year to be so rapid, as a considerable part of British requirements in Canada are now being met by payments in convertible foreign exchange derived from other sources. Drawings under export credits to other countries amounted in all to about $267 million. All these were offset to a large degree by repayments of earlier loans and advances to various governments, so that our net investment in credits to other governments last year amounted to $648 million.
Owing to our surplus of revenue over expenditures, and repayments of various loans and advances, including some of those made to the foreign exchange control board, it was possible to meet all our requirements for cash, apart from debt redemption, without net new borrowing during the year. The only sale of new securities to the general public was the issue of Canada savings bonds, which commenced in November. The amount of this issue outstanding at the end of the fiscal year was $488 million. The proceeds of this issue,

The Budget-Mr. Abbott
together with other available funds, made possible the redemption of $779 million of matured or called securities, apart from those renewed or converted, which resulted in a net reduction during the year of $283 million in our funded debt.
The estimated gross liabilities of the dominion at the end of the fiscal year amounted to approximately $17,660 million, against which active assets of approximately $4,590 million were held, leaving an estimated net debt of $13,069 million, as of March 31. This, of course, is $352 million less than a year ago, as a result of the surplus on the year's operations. I should repeat that these figures are preliminary estimates subject to adjustments before the final accounts are struck.



BUDGET FORECAST 1947-48

[Stage Direction]
In assessing the budget requirements for the new fiscal year, we should first recall that the total expenditures provided for in the main estimates are approximately $1,996 million. To this must be added $6 million of supplementary estimates already introduced, making the total $2,002 million. There will as always be supplementary and further supplementary estimates which must be taken into account and, on the other side of the ledger, we may expect the departments to make certain savings in the funds made available to them. It is the net result of these factors which will determine the total expenditures for the year.	*
At this time it is not possible to forecast with great accuracy the amount of additional funds which parliament will be asked to provide before the end of the year. However we can already see some of the purposes for which more funds will be required. One of the most important of these is to carry out our obligations under the new taxation agreements with certain provinces. Funds for this purpose could not be included in the main estimates, as the authority to enter into such agreements had not yet been granted by parliament, but in making our budget plans we must, of course, allow for them. At the present time the governments of six provinces have obtained or are now in the process of obtaining from their legislatures authority to enter into agreements. Our latest calculations of the gross annual payments to be made to these provinces in respect of the fiscal year 1947-48, using preliminary estimates of population and of gross national product, give a total of approxmately $78,400,000. From this amount must be deducted the statutory subsidies payable to these provinces. Only three-quarters of the net remaining payments to
the provinces, or approximately $52,150,000, will be payable during the current fiscal year because of the timing of the quarterly payments involved.
From these payments one would normally deduct a credit for the special corporation income tax to be levied by the provinces in accordance with the agreements. It has been estimated that this adjustment for the six provinces under consideration would be in the neighbourhood of 15 to 20 million dollars for a full year, but no deduction in respect of this item will be made until after the end of this fiscal year.
To the net total I have already mentioned, we must add the subsidies to be paid to the maritime provinces under the Duncan and White commission awards, namely $2,475,000, and the special payments to be made to New Brunswick and Prince Edward Island in respect of the "gap" between the termination of their war-time tax agreements and the date from which the new agreements will commence, April 1, 1947. These payments, for which authority will be sought in the new legislation dealing with the tax agreements, will amount to slightly more than $3 million. The total, therefore, which we must add to the estimates to cover additional payments to provinces, is approximately $58 million. Of course, if more than six provinces enter into the agreements during the year, the total may exceed this figure.
While these further payments to provinces will be the most important addition to the expenditures contemplated by the main estimates, there will be others, some of which cannot now be foreseen but a number of which are already in prospect, as for instance, the increases in old age pensions to be provided for by legislation already announced. While we expect that, as usual, departments will not spend all of the funds provided for in every one of their votes, I do not think it is safe this year to count on savings as large as usual, in view of the pressure that has been put on all departments to cut their estimates to the bone. After making due allowance for all the considerations that appear pertinent and endeavouring to avoid either excessive caution or undue optimism, I have come to the conclusion that the best estimate that can be made at the present time of our total expenditures for the current fiscal year is $2,000 million.
Turning to the revenue side, we estimate that our present taxes under the laws now in force and applied under the conditions of the
The Budget-Mr. Abbott
[Stage Direction]
current fiscal year as we now foresee them would yield total revenues of approximately $2,450 million. This includes tax revenues estimated at $2,200 million, non-tax revenues (mainly return on investments and post office receipts) estimated at $160 million, and special receipts and credits estimated at $90 million. These tax and revenue figures include
an estimated yield of $40 million for gasoline taxes, the repeal of which as from April 1 has already been announced and which is included with the tax changes in this budget. With the consent of the house, I shall place on Hansard a table showing the details of this estimate in comparison with the actual revenues of 1946-47, as now estimated.
-	Forecast Fiscal Year 1947-48	Actual Fiscal Year 1946-47
	(millions) $	(Preliminary) (millions) S
	230	237
	200	196
	325	298
	290	281
Income Tax-	625	695
	300	239
	170	449
	30	30
	26	24
	4	10
		
	2,200	2,459 -7
		
	160	160
		
	2,360 90	2,612 372
		
		
	2,450	2,984
		
It will be noted that total estimated revenue on this basis would be $534 million less than in the year just closed. One of the principal reductions expected, namely $282 million, is in special receipts and credits, where we can no longer count upon large refunds of previous years' war expenditures or upon such large sales by War Assets Corporation as during the past year. We also anticipate a large reduction in the revenue from excess profits tax as a consequence of the changes introduced last year and which are only now taking full effect upon our revenue; this decrease will be offset in part by a corresponding increase in revenue from the corporation income tax, which has replaced a portion of the flat rate of the former excess profits tax. Personal income tax revenues are also shown at a lower figure as a consequence of the changes which went into effect on January first this year. Apart from these changes and certain minor ones that I shall not attempt to mention here, the table shows that we are anticipating a buoyant effect on revenues resulting from a national income and expenditure likely to be somewhat higher this year than last.

It will be apparent from the estimate of expenditure and revenue which I have just made, that if no tax changes were made we would anticipate a surplus of approximately $350 million during the fiscal year which has just begun. In view of the inevitable uncertainties, both in regard to several major items of expenditure and in regard to the level of corporate profits and other constituents of national income, we cannot take this forecast as a firm figure but it is the best estimate which we can make at the present time and indicates the general nature of the budget situation confronting us.
The house is of course aware that in addition to our budgetary expenditures, the government is also called upon to provide cash during each fiscal year for the making of certain loans, advances and investments which increase the active assets of the dominion and therefore do not affect the surplus or deficit or the net debt. Apart from the usual capital advances to the Canadian National Railways and the national harbours board and loans for housing or to veterans, the principal items of this nature to be expected during the coming year are the

The Budget-Mr. Abbott
continuing advances to Britain and other governments under existing agreements. As at April 1, the sums still remaining unused in these credits aggregated $870 million. There is likely to be some offset to this type of demand upon our cash resources in the shape of further repayments of various loans and advances previously made. However, any proper estimate at this time of the net result of these advances and repayments would be almost impossible to make. I shall therefore not venture to make any forecast as to our net cash requirements over and above our budgets ary expenditures. We should, however, always bear in mind that a prospective budget surplus in our accounts does not necessarily mean a surplus of cash receipts over cash requirements.
We must also bear in mind that before the end of this fiscal year we must repay refundable taxes amounting to $89 million,, $58 million being in respect of personal income taxes and $31 million for excess profits tax.

[Stage Direction]
From what I have already said it will be clear that we can afford tax reductions without thereby creating a deficit in our accounts. Reductions in taxes leading to modest reductions in our revenues will result not in an increase in our net debt but rather in a smaller prospective reduction in that debt.
From some points of view it can be strongly argued that under the prevailing favourable economic conditions we should concentrate upon the maximum reduction of the national debt which of necessity had to be built up to such huge proportions during the war. It is a sensible and far-sighted policy to reduce the national debt in good times and permit it to increase in times of economic adversity. We must expect, I believe, that at times when our employment, production and incomes are below satisfactory levels, our revenues will fall short of our expenditures.^ Indeed, at such times it will probably be necessary to incur expenditures of various kinds to assist in restoring better levels of employment and income. It is a necessary corollary of this that we should aim at a surplus in times of prosperity and very high levels of income and employment, such as we have at the present time. Only by efforts to maintain our revenues under such conditions can we hope to avoid indefinite and undesirable accumulation of debt over the long run.
Economic considerations alone would hardly justify immediate tax reductions. As I have already stated, there are still substantial inflationary pressures pushing our prices and costs up. Reductions in taxes may add to these pressures in some measure, though they should reduce some of the demand for higher wage rates.
We must, however, look beyond these immediate circumstances and take other factors into account. The rapid rate at which taxes had to be increased in Canada during the war, experienced against our North American background of a long history of low taxes and relative freedom in economic affairs, has given rise to an acute tax consciousness.
Had our taxes been raised gradually and under normal conditions to their present levels, had they been increased for the productive, peacetime purposes of national development and social security rather than for the unproductive purposes of war, then the present levels might perhaps have been acceptable and tolerable as continuing levels. Instead, however, they represent a position to which we have returned after a sudden and unpleasant excursion into painful wartime levels of income tax, and people are still smarting so much from their wartime experience that even after the substantial reductions made in the last two budgets, the present levels of personal income taxes are regarded as excessive by a large proportion of the public. Therefore, whatever may be argued from the point of view of immediate economic effects or long-term debt policy, one must reach the conclusion that those who must bear them are not ready to support income taxes on the present scale. In fact, I am sure that were our present levels of personal income tax to be continued, they would constitute a serious impediment to a full working effort and a brake upon the drive and initiative of men and women in all groups and classes.
There is another important point. We in Canada must always remember the effect upon us and our policies of our proximity to the United States. So close and insubstantial is that common boundary line to most Canadians, so many-sided are the business and social relationships between our two peoples, so important is the influence exerted by the larger economy upon the smaller one, that we cannot for long follow widely divergent tax policies without causing serious strains. It would appear that if Canadians are asked to carry tax burdens which, after making due allowance for lower cost of living or lower cost of doing business or other offsetting factors, are significantly heavier than those imposed by the United States, there is a risk of a serious drain of Canadian personnel to the south for this reason alone.
The Budget-Mr. Abbott

[Stage Direction]
I am consequently proposing to make a substantial reduction in taxation in this budget. Moreover, I am proposing to concentrate this reduction almost entirely in the field of personal income tax. This is the tax that at present levels is proving so unpopular and is causing difficulty. To overcome the situation which I have described a substantial reduction is necessaryj and I do not feel that we can afford the reduction required in this field and also substantial reductions in other forms of taxation in the face of the responsibilities which Canada finds upon her shoulders in this post-war period.
In reducing the rates of income tax I have, of course, endeavoured to graduate them as fairly as possible, giving the greatest proportionate relief to those in the lowest brackets, but granting some relief to all. I have also had in mind keeping the rates of tax on additional income that a person may earn down to sufficiently reasonable proportions that the tax on such additional income does not offer a serious barrier to extra effort or initiative, including overtime work, for example.
I am, therefore, proposing a new and substantially lower schedule of rates of income tax to come into effect on July 1. Under this new schedule, the average amount of tax will be reduced by about 29 per cent, as compared with the present rates, and our revenue will be reduced accordingly. Nine out of ten taxpayers will find their taxes reduced by 29 per cent or more from existing rates. The reduction as compared with present rates is as much as 54 per cent in the bottom bracket, but is limited to about 6 per cent or 7 per cent in the top brackets. The new schedule has an initial or starting rate of 10 per cent instead of 22 per cent, as at present. The rate then steps up gradually over relatively short brackets and becomes 20 per cent over a considerable range of income in the lower middle brackets. As nearly as we can estimate, 95 per cent of all the taxpayers will find that under this new schedule the marginal rate of tax, that is to say, the rate on each additional dollar that they earn, will not exceed 20 per cent. The new schedule reaches a rate of 50 per cent on additional income at the level where income exceeds exemptions by $17,000, in place of $13,000 under the present schedule. The tax reaches a maximum of 80 per cent at the top on incomes in excess of $250,000 a year.
It is proposed to retain the same general structure of exemptions and allowances that was established last year. This structure, as the house is aware, has been considerably

simplified as compared with the elaborate and complicated structure which prevailed during the war years, and we have achieved, I believe, the simplest practicable method of taking family allowance payments into account.
The exemption levels established last year are high enough to exempt completely from tax more than half the people earning incomes in Canada. Consequently it can be said that any person who pays income tax now has more than an average income, taking his or her marital and dependent status into account. Moreover, taxpayers with income only a little in excess of the exemptions will pay only a very small tax under the new rates, a good deal less than in the United States under either the existing or the proposed new schedule which has been approved by the house of representatives but not yet by the senate or the President. If we raised exemptions above the levels established last year, we should in fact be sparing so many from income tax that it would be unfair to the large number of the people who are below the present exemption levels, because we would inevitably be forced to rely for necessary revenues upon indirect taxes which would bear more heavily upon the low income groups.
It must be remembered, too, that raising the exemptions results in a very substantial loss of revenue because it affects all taxpayers, including those in the highest brackets, and the saving for each taxpayer is his highest rate of tax applied to the increased amount of his exemption. Already our exemptions are considerably higher than those in the United States and in the United Kingdom, the countries to which we would most naturally look for comparison. If, as some have suggested, we restored the prewar levels of exemptions, we should have to sacrifice more revenue than the whole of that sacrificed by the rate reductions I am now proposing, and we would be doing practically nothing by such action to reduce the rate of tax on additional earnings for those who remain subject to income tax. It is the high marginal rate of tax on additional earnings that discourages additional work, enterprise and initiative, and consequently we must aim in our reductions at cutting down these marginal rates of tax.
I am proposing that the new schedule of rales go into operation as of July 1, which is the earliest date by which it will be possible to prepare the new tables and get them into the hands of employers. As from that date deductions from wages and salaries will be adjusted to the levels appropriate to these new rates. The new tax rates themselves will apply fully, in the absence of modification by

The Budget-Mr. Abbott
later budgets, to the income for 1948 and subsequent years. For the current year, 1947, total tax liability will be calculated by applying the existing rates, which went into effect on January 1, to half of the taxpayer's income for the year and the new rates to the other half. In other words, the effective tax rate for the year as a whole will be the average of the two sets of rates.
A few examples will probably illustrate more clearly than any description the effect of the proposed changes. A married man without children and with an income of $150 a month now is subject to a monthly deduction in respect of tax of $5.35 and must pay a total for the year of about $68 at the rates now in effect. Under the new rates his monthly deduction will be only $2.85 and his liability for a whole year will be $36. For the year 1947 his total tax will amount to $52 collected at the present rate of deduction for the first half-year and at the new rates for the last half of the year. In the United States, his total tax for a full year would be $118 under existing rates and $82 under the new proposal to which I have referred.
In Canada, a single person without dependents and with an income of $100 a month will under our present proposals find his deductions each month being reduced from $8.30 at present to $4.80 after July 1, and his tax liability for a whole year, instead of being $105 will be $61; for the year 1947 it will be the average of these two, namely $83.
Married persons with two children and a monthly income of $250 will find their deductions reduced from the present figure of $25.85 per month to about $18.30, while their annual tax bill will be reduced from $327 to $230; the average applicable to this year will be $278.
Further up the scale the more fortunate individual, married, with no dependents and with an earned income of, say, $10,000 a year will find his annual tax bill cut from $2,723 to $1,990, while his bill this year will be $2,356.
It will be agreed, I believe, that income tax reductions, averaging over 29 per cent for all taxpayers and running up to 54 per cent for those in the lowest taxable brackets, are very drastic reductions. They are particularly significant when we remember that they-follow the substantial reductions made in each of the last two budgets. I have had a calculation made to show just how much the total reduction has been from the war-time peak of income tax rates, the rates imposed by the budget of 1942. I am advised that the best way of getting the answer to my question is
to apply to the estimated volume and distribution of personal incomes in a recent year the tax rates that were applicable under the 1942 budget and those in the new schedule which is to be found in the first resolution that will be tabled at the end of this budget. Such a calculation has been made. It shows an over-all reduction in the total personal income tax burden on the Canadian people of 51 per cent, taking into account only the fixed tax in 1942 and not the compulsory savings portion. If this portion were included in such calculation, the percentage reduction would, of course, be substantially higher.
I believe that the verdict of all responsible persons will be that we have gone as far as we can possibly afford to go under the present circumstances. The new rates reduce taxes very materially in the lower brackets and bring them quite substantially below tax rates in effect and proposed in the United States and of course very much below comparable rates in .the United Kingdom, Australia and New Zealand. Higher up the scale, in the middle brackets, our proposed rates are also generally lower than those now applicable in the United States, but are somewhat higher, in dollar amount only slightly higher, than the new rates proposed in the United States, to which I have already referred but which of course may not be the rates finally adopted there.
These middle brackets represent a category of incomes to which we gave the most careful consideration. They include the salaried classes which according to much prevailing opinion have shared less than other classes in the economic gains made since 1939. The group also includes the young professional or scientific men and the young business executives for whom the attractions in the United States of more specialized opportunities and the possibility of ultimately higher rewards exercise the strongest appeal. Since early in the war our rates have been more progressive than the United States rates. However, after a great deal of study we have been able to deal with these middle ranges of income in such a way, I believe, as to achieve the maximum of fairness and the minimum of practical difficulties.
For the convenience of hon. members, I would like to place on Hansard at this point several tables illustrating our new rates of tax for single persons, married persons with no dependents, and married persons with two dependents, as compared with existing rates, and also a table comparing our taxes with those now in effect in the United States and with those proposed in the bill passed by the house of representatives.
The Budget-Mr. Abbott
[Stage Direction]
PRESENT AND PROPOSED INCOME TAX Single Taxpayer
Income .	1947 tax at present rates	1948 tax at new rates	Percentage reduction from present rates	1947 tax 6 months at present rates and 6 months at new rates	Percentage reduction from present rates$	$	p.c.	$	p.c.$ 750	800	ii	5	54	8	27900	33	16	51	25	251,000	55	29	47	42	241,200	105	61	42	83	211,500	180	120	33	150	171,800	257	180	30	218	152,000	313	220	30	266	152,250	383	270	29	326	152,500	453	320	29	386	152,750	523	370	29	446	153,000	593	420	29	506	153,500	740	520	29	630	154,000	895	620	29	758	155,000	1,205	835	29	1,020	157,500	2,058	1,465	29	1,761	1510,000	3,038	2,253	26	2,645	1320,000	7,900	6,515	17	7,208	930,000	13,400	11,728	12	12,564	650,000	26,091	23,456	10	24,773	575,000	43,516	39,418	9	41,467	5100,000	62,016	56,631	8	59,323	4200,000	143,441	133,056	7	138,248	4
Note.-In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total.
PRESENT AND PROPOSED INCOME TAX Married Taxpayer-No children
Income	1947 tax at present rates	1948 tax at new rates	Percentage reduction from present rates	1947 tax 6 months at present rates and 6 months at new rates	Percentage reduction from present rates$	$	p.c.	$	p.c.e i,5oo	1,600	22	10	54	16	271,800	68	36	47	52	242,000	118	70	41	94	202,250	180	120	33	150	172,500	243	170	30	206	152,750	313	220	30	266	153,000	383	270	29	326	153,500	523	370	29	446	154,000	663	470	29	566	155,000	973	670	29	821	157,500	1,793	1,260	29	1,526	1510,000	2,723	1,990	27	2,356	1320,000	7,488	6,140	18	6,814	930,000	12,988	11,315	13	12,151	650,000	25,641	23,043	10	24,342	575,000	42,991	38,968	9	40,979	5100,000	61,491	56,143	8	58,817	4200,000	142,841	132,493	7	137,667	4
Noto.-In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total.
[Stage Direction]
The Budget-Mr. Abbott
PRESENT AND PROPOSED INCOME TAX Married Taxpayer with two children of Family Allowance Age
Income	1947 tax at present rates	1948 tax at new rates	Percentage reduction from present rates	1947 tax 6 months at present rates and 6 months at new rates	Percentage reduction from present rates$	$	p.c.	$	p.c.s 1,700	L800	22	10	54	16	272,000	68	36	47	52	242,250	130	SO	38	105	192,500	193	130	33	161	172,750	257	180	30 [DOT]	218	153,000	327	230	30	278	153,500	467	330	30	398	154,000	607	430	30	518	155,000	911	630	30	770	157,500	1,725	1,208	30	1,466	1510,000	2,647	1,930	27	2,288	1420,000	7,378	6,040	18	6,709	930,000	12,878	11,205	13	12,041	650,000	25,521	22,933	10	24,227	575,000	42,851	38,848	9	40,849	0100,000	61,351	56,013	8	58,682	4200,000	142,681	132,343	7	137,512	4
The above figures show the actual income tax liability of a taxpayer with family allowance children' but in order to arrive at his true net position the amount of family allowance received for his children must be offset against his tax liability. For example, assuming he receives the average family allowance payment of $72.00 a child, a taxpayer with an income of $2,500 and two children would find that under present rates his income tax exceeded his family allowance by $49.00, while under the proposed rates his family allowance payments will exceed his income tax liability by $14.00.
Note.-In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total.
It is estimated that these proposed reductions in income tax rates will reduce our revenue from this tax by an amount of approximately $175 million for a full year. It is estimated that the effect upon the revenues of the current fiscal year will be about $110 million, as a part of our collections this year will be based on the previous tax rates before change.
I am endeavouring to make this a relatively simple budget and I am not, therefore, proposing any other substantial changes at this time in the income tax, although I shall later mention some minor amendments. We have been busy during the past year upon the rewriting of our basic income tax law in an effort to improve its arrangement, to make it clearer and simpler, and to remove ambiguities and anomalies. Hon. members will, I think, be particularly pleased with the extent to w'hich it will be less dependent upon the exercise of ministerial discretions. Senior officials of the Departments of Justice, National Revenue and Finance have spent many months on a very detailed revision.
I have taken a considerable personal interest in their work in this field. I hope to be able later in the session to introduce a bill embodying this general revision of income tax law with the intention of making it effective with respect to incomes of 1948. In all probability it will not be expedient or reasonable to ask the house to enact this new bill in the current session, but I believe it would be useful to bring it in this session in order to give members full opportunity to study it and mull it over, so that the country may get the full benefit of their consideration of all its details. We do not consider that this measure, when enacted as law, will constitute the final word, but we believe it will provide a framework within which further improvements can be made over the course of future years.
In addition to this new income tax act, we also will have ready for action in this session a complete revision of the Special War Revenue Act and which we propose to rename "The Excise Tax Act". When parliament has had an opportunity to deal with these two revisions, we shall have made a great advance
The Budget-Mr. Abbott

[Stage Direction]
Married Taxpayer.-No Children
Income	Canadian tax at new rates	U.S.A. tax at present rates (a)	U.S.A. tax at rates in bill passed by House of Representatives (a)$	$	$$1,200	15	111,300	32	231,400	49	351,500	67	471,600	10	84	591,800	36	118	822,000	70	152	1062,250	120	195	1382,500	170	238	1832,750	220	280	2243,000	270	323	2583,500	370	411	3294,000	470	505	4045,000	670	694	5557,500	1,260	1,292	1,03410,000	1,990	2,024	1,61920,000	6,140	6,142	4,91330,000	11,315	11,676	9,34050,000	23,043	24,453	19,56275,000	38,968	42,707	34,166100,000	56,143	62,714	50,171200,000	132,493	147,697	118,157
(a) The U.S.A. taxes shown are Federal taxes only; most States have income taxes in addition to the Federal tax. In Canada no personal income tax is levied now by any province. Under the United States income tax law every taxpayer is allowed a deduction of 10 per cent of income up to a maximum of 8500 in lieu of deductions for medical expenses, charitable donations, etc., and this is taken into account in calculating the taxes for United States; Canadian taxpayers who can claim such deductions would pay less tax than shown by this table, since no allowance has been made for such deductions in calculating the Canadian tax.
Note.-In calculating the above Canadian taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No distinction is made between investment and earned income under the United States tax.
in the complete overhauling of our tax legisla-lation, which the government regards as one of its major, immediate post-war objectives.

[Stage Direction]
I turn now to corporation income and excess profits taxes. Effective at the beginning of 1947, these have been reduced to a straight corporation income tax of thirty per cent on profits, plus a tax of fifteen per cent on excess corporation profits. As my predecessor stated last year, the excess profits tax has distinct weaknesses and limitations in normal times and is not, therefore, to be accepted as a permanent part of our tax structure. As he said, the government decided last year that it would be retained for this year, 1947, unless provision is made for its earlier repeal at this session of parliament.

We have given careful consideration to the question of whether or not this tax should be repealed before the end of the year, and have taken into account the views and arguments advanced from many sides. If business conditions had now returned to normal and we could rely upon the forces of competition and bargaining to keep profits at normal levels, we would be justified in repealing this tax with effect before the year end. If business needed larger profits to encourage and enable it to provide additional employment by greater expenditures, we should repeal the tax forthwith. Neither of these conditions exists at present. While competition is returning and supply is catching up on demand, profits before tax still are running at abnormally high levels, due to the after-effects of the war, including continuing demobilization and export credit

The Budget-Mr. Abbott
expenditures. Business confidence and available funds are so high that a good many business men are competing more in their efforts to expand their investment quickly than in getting down their costs and keeping down the prices at which they sell their products. In all these circumstances, the government has decided that this tax should not be terminated until the end of the year.
A short time ago in this house I urged Canadian business men to reduce their prices as their volume and efficiency of business expand. I stated that it is neither proper nor even good business to charge all the traffic will bear. I want to emphasize that view again now. We in the government, and - the vast majority in this house and in this country, believe in what is now called "free enterprise". We believe in it not as a windy doctrine or a mystic ideology, but as a sensible way of getting things done. It must prove itself and justify itself by its results. With the orderly removal of controls, with increasing supplies of material, with efficient and cooperative labour, and with ample markets, Canadian business enterprise is in a most favourable situation. We all expect it to show its mettle, both in production and in marketing. We expect it to show its ability to keep down costs and prices. In its own long-run interest, as well as in the national interest, business must keep its prices down and its profits within reason.
While most of the minor amendments in our tax laws will be dealt with in the revised act, about which I have already spoken, there are a few changes applying particularly to corporations and other businesses which I wish to propose at the present time.
In the first place, I am proposing that we levy a 5 per cent withholding tax on dividends paid by wholly-owned Canadian subsidiaries to their parent companies abroad. We have no tax of this kind on such companies at present, but such a tax is permitted by our tax convention with the United States which levies such a tax, and we feel that it is not unreasonable for Canada to have one as well. This new measure is to come into effect immediately, and I estimate that in a full year it will yield three or four million dollars.
It is also proposed to extend for 1948 the allowances that have been made in recent years for expenditures on exploration for oil, gas and other minerals. We believe that these allowances have been important in facilitating and encouraging mineral exploration and development, and that we should continue them at least for another year. We propose to change the form of these allowances from
the present form of a tax credit to the more normal form of a deduction from income. In the case of the special allowance provided for expenditures on deep test wells, we will make a further special provision to preserve the equivalent value of the tax credit now granted.
In accordance with the announcement made several months ago, I am also proposing to introduce a special provision in the income tax law to ensure that the income content of funding or refunding security issues received by taxpayers after January 1, 1947, will be taxed as income in the year in which the new issue is received. As I explained in the announcement, we feel that it is necessary to take this precaution to safeguard our revenue and to preserve equity.
Other proposed amendments relating to the income tax act will remove the residence requirements for dependent wives and children, now possible after the war conditions are ended, and lengthen the period within which refunds of over-deductions may be claimed; make provision for tax credits to Canadian companies in respect of corporation income tax paid to a foreign government on income of a foreign corporation in which the Canadian company owns more than 50 per cent of the voting stock; amend the part of the act dealing with the undistributed income of private companies in several minor respects; and also amend one or two provisions of the act which must be revised to carry out the terms of the agreements with the provinces. I shall give explanations and details of these minor amendments when we are dealing with the resolutions. There are some other detailed provisions in the amending bill itself which can best be explained and discussed when we have it before us.

[Stage Direction]
In the field of taxes on commodities, the only major change which I am proposing is to give effect to my earlier announcement that the gasoline tax of 3 cents a gallon will be repealed as from April 1. It is estimated that this tax would have yielded us close to $40 million in the current fiscal year, and I must, therefore, take account of this loss in our estimate of total revenue. It is, of course, well known that our purpose in withdrawing from this field of taxation at this time is to leave the provincial governments, which have traditionally occupied the field, full scope to carry out whatever policy they think best within it. As a result, the reduction in our tax may not result in any reduction in taxes paid by the consumers of gasoline, but that, of
The Budget-Mr. Abbott
[Stage Direction]
course, is a matter for each provincial government to decide in its own case. Pending action by parliament, I requested the Department of National Revenue to suspend collection of the tax from April 1.
We are also proposing to make certain minor amendments in the tax on passenger transportation, to conform with recent changes in the corresponding tax in the United States. It is desirable in this field to preserve as much similarity as possible between the taxes in the two countries, as that simplifies greatly the position of our common carriers. We are also proposing to iron out certain minor anomalies in the structure of the sugar tax and to make certain technical changes in the Act to improve its effectiveness.

[Stage Direction]
I have already referred to the tariff negotiations now taking place in Geneva. These are of the greatest importance to Canada. We hope and expect that out of them will come sufficient reductions in tariffs to make it practicable to establish an international trade organization and to agree upon a code of international behaviour in regard to import restrictions, export subsidies and other commercial policies. Canada is, of course, prepared to make tariff reductions and reductions in preferences in exchange for tariff reductions by the United States and by other countries. We do not expect one-sided bargains. We are ready to do our full share.
I feel it is important, however, to stress two aspects of the situation from the Canadian viewpoint. In the first place, the tariff policy of the United States is the key to the success both of the tariff negotiations themselves and of the proposed charter. All of us who buy from the United States on a large scale and who owe large sums to the United States on capital account must have a greater opportunity to sell our goods in her markets than we have had up to now. Unless large scale American imports provide the world with an adequate supply of United States dollars, the rest of the world cannot hope to follow the liberal, multilateral and non-discriminatory trade policy which the United States has been urging upon it with our support and that of others. A positive lead in real tariff reductions by the United States is, therefore, needed if success is to be achieved at Geneva.
Secondly, there are in the proposed trade charter a good many qualifications and escape clauses applying particularly to the vitally important parts of the agreement that relate to quantitative restrictions on trade. Good arguments can be made, and are made, for

each of these. But we must guard against the danger that if too many of them are included in the charter, the sum and substance of them all, taken together, may undermine many of the positive benefits which the charter is intended to give to each of the agreeing countries.
These are two points that deserve our keenest attention in regard to the negotiations and charter discussions at Geneva.
In view of the negotiations now in progress, I do not propose to recommend any tariff changes in this budget, nor to make any detailed statement of tariff policy. I should, however, remind the house at this point that during the past year a number of special wartime tariff arrangements have ended with the end of the special wartime circumstances that gave rise to them.
Various orders in council which had provided for temporary reductions or suspensions of duties on individual items to make it possible to hold price, ceilings, were revoked from time to time as ceilings were removed, or as domestic supplies improved. This process was virtually completed on March 31. Moreover, as I announced last January, provision has been made for the issue of a proclamation on June 30, 1947, terminating the reductions of duty under the War Exchange Conservation Act. This will restore the regular British preferential rates of duty on imports from the United Kingdom. Our future trade relations with the United Kingdom, the United States and other countries will be determined in the light of the outcome of the United Nations Conference on Trade and Employment.

[Stage Direction]
Before taking into account tax changes, I have forecast revenues of $2,450 million, and expenditures of $2,100 million for the current year, leaving a prospective surplus of $350 million. The reduction in taxes now proposed, including the repeal of the gasoline tax, will, it is estimated, reduce our revenues by a total amount of $265 million when they are in effect for a full year under economic conditions similar to those at present. Consequently these proposed tax changes will effect a continuing reduction in the general level of our revenues equal to approximately three-quarters of the amount of the surplus now in prospect. This, I believe, is as great a reduction in our tax structure as we should make at the present time. It is too early yet to hazard any forecast as to the probable level of expenditure and revenue in the fiscal year commencing April 1, 1948, but I believe

The Budget-Mr. Abbott
it would be most unwise to carry our tax reductions at the present time beyond those which I now propose.
The effect of the proposed tax reductions upon revenues in the current year is estimated to be approximately S160 million, reducing them, therefore, to a total of $2,290 million. After allowing for our prospective expenditures of $2,100 million, this leaves us with a prospective surplus of S190 million and a corresponding prospective reduction of that amount in our net debt during this fiscal year. I should point out that on the basis of the foregoing estimates, were the tax reductions in effect for the whole of the current year, this apparent surplus would be reduced to $85 million.
In appraising this prospective surplus, however, one must keep several factors in mind. In the first place we must be prepared to make financial provision for agreements with any of the three remaining provinces which have not yet signified their desire to do so but who may wish to enter into such agreements. Should all three provinces entertain agreements effective this year, our expenditures will be increased by an addition $110 million or thereabouts. If they do not, then we can reduce our net debt correspondingly. Secondly, it must be borne in mind that our revenues now are very sensitive to any change in general business conditions. In forecasting them in this budget, we have assumed that our national income, production and trade will be at high levels. We believe that this is the most probable course of events. On the other hand, it must be conceded that some recession in the United States this year is by no means impossible. A substantial recession in that country would be bound to have some effects on our own situation, and this in turn would adversely affect our revenues. We must, therefore, leave some margin of safety in the form of a surplus, which we will apply to debt reduction, if conditions remain favourable.
I hope that it will be a cause for gratification and confidence to members of this house and to all Canadians that we are able to drop the tax on gasoline, make a very substantial reduction in our personal income taxes, and still show a prospective surplus in our accounts. This is convincing evidence of the inherent strength of our financial position. I would be less than candid, however, and derelict in my duty, if I did not point out that this favourable situation is due in a very large part to the generally favourable
economic circumstances upon which our revenues so greatly depend. If and when we face greater economic difficulties we must anticipate lower revenues. We may also, I hope, anticipate somewhat lower expenditures within a year or two, as certain of the abnormal post-war expenditures disappear, particularly those on subsidies and veterans' benefits. On the other hand, the reduction in these expenditures may be offset in some years by other expenditures deliberately undertaken for the purpose of improving employment and incomes. Consequently our favourable positiQn this year cannot in itself be taken as evidence that we shall be able to avoid deficits in future years when economic conditions are less favourable than now.
Mr. Speaker, I have tried to present a balanced view of the financial affairs of this country. I have explained the extent to which our current prosperity and our governmental accounts have been influenced by factors of a special, abnormal or temporary nature. I have dealt with several of the major problems which still confront us and which we must solve if we are to retain a healthy and prosperous economy. But in spite of all I have said to discourage undue optimism or complacency, the story I have had to tell is one, I repeat, which should justify pride and inspire confidence in every Canadian. We can take just pride in the size of the surplus I have reported, pride in the fact that it has been achieved so promptly after the end of the war, pride in the fact that after a 51 per cent cut in personal income taxes and other drastic reductions from the peak of wartime taxation, we are able to forecast better than a balanced budget for the new fiscal year. All this bears eloquent witness to the speed and smoothness with which we have made the transition from war to peace. It reflects the health and the underlying strength of Canada. It inspires faith and confidence in the future of a country which is responsible for such great achievements following the close of a war to which it devoted its resources without stint on a scale matched by few others.
Two months hence we shall have occasion to celebrate the eightieth anniversary of the founding of this confederation. It was seventy-nine years ago yesterday that the first formal budget speech was presented to this house by the then Minister of Finance, the Hon. John Rose (later Sir John Rose). On April 28, 1868, in a speech lasting nearly four hours, he presented his estimates of revenue and
The Budget-Mr. Abbott
[Stage Direction]
expenditure for the first fiscal year of the new Dominion and outlined his financial proposals for the following year.
There was no Hansard in those days, but, according to the Ottawa Times of the following day, there were loud cheers when he expressed the view that "unless something very extraordinary or unforeseen should arise", the year would show a surplus on ordinary account, excluding capital expenditures, of $374,140, estimated receipts of about $14,700,000 exceeding estimated ordinary expenditures of $14,300,000. No doubt with a praiseworthy effort to improve the lot of succeeding finance ministers, he attempted to refute the charge that the country was "groaning under a heavy load of debt and taxation" but in any case it is interesting to note that eighty years ago it was also the custom to claim that the country was going to the dogs because of high taxes and high debt. The whole spirit of the speech can be summed up in a phrase which the minister had used on a previous occasion- "the sums we have to deal with are considerable but the resources and energy of the country are ample to meet them".
These men of 1867 had faith in the future of the united Canada which they were then striving to build. But probably none of them ever dreamed that in eighty short years, total revenues of the dominion could expand nearly two hundred times. We have indeed travelled a long way from the small beginnings of those days. But the same qualities which have brought us thus far can carry us to still greater heights. We are entering a most exciting period. Never before have there been such great material opportunties open to any generation. Never before have we been so conscious of the challenge presented to our economic and political abilities. Never before has our country been called to occupy a position of such high responsibility in world affairs as she does today. If we continue to show the courage, the unity and the spirit of cooperation which inspired the fathers of confederation, and which inspired our peope during these last war years, our achievements in the peace-time years ahead will, I am confident, be equally striking.

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:
1. That, effective on and after July 1, 1947, payroll deductions for taxes be reduced to conform with the following schedule of graduated rates of tax:

On the first $100 of income or any portion thereof, 10 per cent per annum; or
$10 upon the income of $100; and 12 per cent upon the amount by which the income exceeds $100 and does not exceed $200; or
$22 upon the income of $200; and 14 per cent upon the amount by which the income exceeds $200 and does not exceed $300; or
$36 upon the income of $300; and 16 per cent upon the amount by which the income exceeds $300 and does not exceed $400; or
$52 upon the income of $400; and 18 per cent upon the amount by which the income exceeds 8400 and does not exceed $500; or
$70 upon the income of $500; and 20 per cent upon the amount by which the income exceeds $500 and does not exceed $3,500; or $670 upon the income of $3,500; and 22 per cent upon the amount by which the income exceeds $3,500 and does not exceed $5,000; or $1,000 upon the income of $5,000; and 26 per cent upon the amount by which the income exceeds $5,000 and does not exceed $6,500; or $1,390 upon the income of $6,500; and 30 per cent upon the amount by which the income exceeds $6,500 and does not exceed $8,500; or $1,990 upon the income of $8,500: and 35 per cent upon the amount by which the income exceeds $8,500 and does not exceed $11,500; or $3,040 upon the income of $11,500; and 40 per cent upon the amount by which the income exceeds $11,500 and does not exceed $14,000; or $4,040 upon the income of $14,000; and 45 per cent upon the amount by which the income exceeds $14,000 and does not exceed $17,000; or $5,390 upon the income of $17,000: and 50 per cent upon the amount by which the income exceeds $17,000 and does not exceed $25,000; or $9,390 upon the income of $25,000; and 55 per cent upon the amount by which the income exceeds $25,000 and does not exceed $50,000; or $23,140 upon the income of $50,000; and 60 per cent upon the amount by which the income exceeds $50,000 and does not exceed $75,000; or $38,140 upon the income of $75,000: and 65 per cent noon the amount by which the income exceeds $75,000 and does not exceed $100,000; or $54,390 upon the income of $100,000; and 70 per cent upon the amount by which the income exceeds $100,000 and does not exceed $150,000; or
$89,390 upon the income of $150,000; and 75 per cent upon the amount by which the income exceeds $150,000 and does not exceed $250,000; or
$164,390 upon the income of $250,000: and 80 per cent upon the amount by which the income exceeds $250,000.
2.	That for the 1948 and subsequent taxation years the graduated rates of tax applicable to income of individuals be the rates set out in paragraph one.
3.	That for the 1947 taxation year the graduated rates of tax applicable to income of individuals be the average of the present rates and of the rates set out in paragraph one.
4.	That for 'the 1947 and subsequent taxation years the deductions from income of an individual allowed in respect of persons supported by or dependent on him be allowed without regard to the country of residence of such persons.

The Budget-Mr. Abbott
5.	That the provisions allowing deductions from tax to taxpayers engaged in
(a)	exploring and drilling for natural gas or oil,
(b)	the production, refining or marketing of petroleum or petroleum products, or
(e) mining or exploring for minerals, the effect of which is equivalent to a deduction from income of the wjiole of certain expenses in respect of 1947 operations, be amended to provide that such expenses in respect of 1948 operations may be deducted from income and that, in the case of such expenses in respect of 1948 operations in respect of deep test oil wells an additional deduction from tax be allowed of an amount that, together with the deductions from income, will correspond to the deduction from tax allowed in respect of 1947 operations and that the amended provisions relating to expenditures on deep test oil wells apply in respect of the 1947 and 1948 taxation years to expenditures on groups of wells drilled to locate stratigraphic traps.
6.	That there be imposed an income tax of 5 per cent on a non-resident corporation in respect of dividends received by it on or after April 30, 1947, from a resident corporation where all the issued shares of the resident corporation having full voting rights under all circumstances, other than directors' qualifying shares, are beneficially owned by the nonresident corporation,
7.	That, where a resident corporation owns over 50 per cent of the issued shares having full voting rights under all circumstances of a nonresident corporation and receives dividends (other than dividends that are not liable to taxation) from the non-resident corporation, the resident corporation may deduct from the tax otherwise payable by it for the 1947 and subsequent taxation years an amount in respect of income tax and excess profits tax paid to a government of a country other than Canada on the income out of which the dividends are deemed to have been paid.
8.	That the period during which refunds may be made in respect of amounts deducted for tax at source from salaries or wages be extended and that where the period for refunds in respect of deductions heretofore made has expired, such refunds be permitted for a further prescribed period.
9.	That funding securities received in respect of an accrued right to interest, dividends or other payments of an income nature or in respect of the extinguishment of a shareholder's preference to the declaration of dividends for past periods be taxable as income.
10.	That the provisions respecting the taxation of private companies in respect of undistributed income be extended to include companies having not more than 75 shareholders excluding shareholders employed or formerly employed by the company, as at present.
11.	That the provisions making applicable in respect of income of the 1946 and subsequent taxation years the liability of a private company to pay tax upon undistributed income to which a personal corporation, estate or trust would have been entitled if the income were
distributed, be amended to provide that the liability is to be deemed to have been imposed on and after December 18, 1945.
12.	That there be deducted from the undistributed income of a private company on hand at the end of the 1939 fiscal period, the amount of dividends paid by the company before December 31, 1942, that were not subject to tax in the hands of the shareholders by reason of the company having been a family corporation.
13.	That a tax be imposed on an individual who holds shares of a private company that paid tax on undistributed income in accordance with section 96 of the Act, which shares were held on December 31, 1944, by a corporation or other shareholder who would not have been liable to tax in respect of dividends on the shares so that the private company was not required to pay tax on the respective portion of undistributed income, such tax to be payable in respect of dividends paid to the individual out of the said respective portion of undistributed income, at the following rates:
(a)	where the shares were acquired by the individual in the years 1945 and 1946 at a rate of 15 per cent; and
(b)	where the shares were acquired by the individual on or after January 1, 1947-at the rate that the private company would have paid tax on the respective portion of the undistributed income if an individual had held the shares on December 31, 1944

[Stage Direction]
Resolved that it is expedient to amend the Excess Profits Tax Act, 1940, and to provide:-
1.	That a tax shall not be imposed under the said act on profits earned after December 31, 1947.
2.	That no taxpayer shall be entitled to make application for determination of his standard profits on or after August 1, 1947.

[Stage Direction]
Resolved, that it is expedient to amend the Special War Revenue Act and to provide:
1.	That the tax in respect of transportation tickets or rights of transportation
(a)	be removed in respect of transportation by vessel or aircraft extending outside of the northern part of the western hemisphere, except in respect of any part of such transportation that is between any port or station in Canada or the United States and any other port or station in Canada or the United States; and
(b)	be extended to apply in respect of all transportation by vessel wholly within the northern part of the western hemisphere;
and that the second proviso to subsection (l)ot section 32, under which section the tax is imposed, be repealed.
2.	That the tax on syrups enumerated in Customs Tariff Items 139 (except glucose and grape sugar) and 140 (except molasses) be reduced from 2 cents per pound to 1 cent per pound.
3.	That the provisions relating to the imposition of the consumption or sales tax on the sale price of goods be amended to provide that where the sale price is payable in instalments, the tax will be payable pro tanto at the time of payment of the instalments whether or not there has been physical delivery of the goods.
The Budget-Mr. Abbott
[Stage Direction]
4.	That payment of sales and excise taxes be required without refund in respect of taxable goods purchased or imported for commercial or mercantile purposes by provincial governments or agents or servants thereof.
5.	That payment of excise tax be required in respect of any performance, exhibition or contest that includes professional performers, horse races or motion pictures when held, staged or
operated by the institutions, boards or other organizations mentioned in subsection (2) of section 122 of the said act.
6. That the excise tax on gasoline of three cents per imperial gallon be repealed effective on and after April 1, 1947.
7.	That the enactments founded on this resolution, other than paragraph six come into force on the 30th day of April, 1947.
APPENDIX TO THE BUDGET, 1947MS A. Review op Government Accounts, 1946-47 B. Tables of Economic Statistics

[Stage Direction]
Comparative Summary Statement of Revenues and Expenditures
1.	Although Canada's fiscal year ends on March 31, the government's books for each fiscal year remain open for some time thereafter, in order to record expenditures made to April 30 as provided by section 32 of the Consolidated Revenue and Audit Act and to provide for adjustments which affect revenue and expenditure accounts as well as asset and
liability accounts. Final figures for the fiscal year 1946-47 are not yet available, and accordingly the statements which follow, in so far as they relate to 1946-47 revenue, expenditure, investment and balance sheet items, must be regarded as preliminary.
2.	The following tables show, by main categories and in detail, revenues, expenditures and the surplus (or decrease in net debt) for the fiscal year 1946-47 together with comparable figures for the four preceding fiscal years:
[Stage Direction]
The Budget-Mr. Abbott
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (Thousands of Dollars)
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47$	$	$	$	$Tax Revenue-	Direct Taxes-	Direct Taxes on Incomes-	Individual Income Tax	534,138	813,435	767,755	691,586	695,000Tax on Interest and Dividends	26,711	25,671	27,053	26,824	28,400Taxes on Rents and Royalties	1,370	1,272	1,546	1,486	1,700Corporation Income Tax	347,970	311,379	276,404	217,834	239,000Excess Profits Tax	454,581	468,718	465,805	494,196	448,700Total Direct Taxes on Incomes.	1,364,770	1,620,475	1,538,563	1,431,926	1,412,800Succession Duties	13,273	15,020	17,251	21,447	23,600Total Direct Taxes	1,378,043	1,635,495	1,555,814	1,453,373	1,436,400Indirect Taxes-	Customs Import Duties	118,963	167,882	115,091	128,877	237,400Excise Duties-	Spirits, malt, etc	65,594	65,922	72,133	91,274	98,000Cigars, cigarettes and tobacco....	76,372	79,906	83,142	98,228	100,900Licences	38	37	37	39	40Less Refunds	-3,283	-3,741	-3,390	-2,815	-2,940Total Excise Duties	138,721	142,124	151,922	186,726	196,000Excise Taxes- Taxes on Commodities-	Sales Tax	250,478	339,256	404,109	326,253	328,083War Exchange Tax	94,553	118,913	98,164	41,198	338Automobiles, rubber tires and	tubes	3,062	6,000	6,480	6,701	16,340Beverages	14,119	19,059	19,442	16,657	18,634Candy and chewing gum	8,185	12,602	12,874	11,904	13,277Cigars, cigarettes and tobacco....	26,295	54,688	62,306	70,229	76,318Cigarette papers and tubes	5,056	6,159	6,658	4,645	6,943Electric and gas appliances	5,306	3,302	4,057	1,272	7Furs	3,170	4,199	5,217	4,976	3,102Gasoline	24,898	24,930	29,671	29,836	36,220Matches and lighters	2,855	2,874	3,117	3,675	4,088Phonographs, radios and tubes....	1,191	491	1,112	646	2,526Special excise on importations	480	508	545	787	1,185Sugar	14,950	13,048	11,744	9,974	11,339Toilet preparations and soaps	4,542	5,327	6,347	7,107	7,522Trunks, bags, luggage, etc	2,187	4,170	4,134	4,711	5,710Wines	2,007	1,710	1,772	2,066	2,394Sundry	1,938	2,579	2,977	3,811	5,109Taxes on Amusements and Services-	Amusements	10,778	12,019	12,284	13,387	14,552Tax on pari-mutuel bets	1,287	1,683	1,904	2,188	2,510Transportation and communication	16,083	22,379	24,205	26,893	27,931Stamps, including payment of taxes on jewellery, chinaware, cabaret	attendance, etc	12,586	16,734	18,296	21,697	24,437Licences, interest and miscellaneous	255	331	369	302	313Less refunds (mainly sales tax)....	-17,549	-34,342	-194,719	-114,005	-29,878Total Excise Taxes	488,712	638,619	543,065	496,910	579,000Other Taxes-	Chartered bank note circulation...	665	457	350	270	220Insurance Companies	10,893	6,481	7,182	7,951	8,800Miscellaneous	723	753	702	751	700Total Indirect Taxes	758,677	956,316	818,312	821,485	1,022,120Total Revenue from Taxes	2,136,720	2,591,811	2,374,126	2,274,858	2,458,520
The Budget-Mr. Abbott
[Stage Direction]
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47$	$	$	$	$Non-Tax Revenue-	48,869 41,242 5,883 395	61,071 48,281 8,732 2,154 13,045	66,056 60,749 4,586	68,613	75,00070,915 4,954	68,780 2,300
Premium, discount and exchange-					
	19,690		14,080	16,322	14,800
					
	116,079	133,283	145,471	160,804	160,880
					
	2,252,799	2,725,094	2,519,597	2,435,662	2,619,400
					
Special Receipts and Credits- Refunds of previous years' Special	239	221	53	20	10Special Receipts-War Appropriation	18,651 275	98,918	352,918 177	626,616 161	367,578 200216	Canadian Wheat Board-	6,660	2,971	589	2,625 22,400 7,143	1,700Canadian National Railways- Net credit due to increase in Canadian National Railways Securities	31,560'	37,838 53,448 26	22,631 174	Previous years' war expenditure on investment in Crown plants trans-	1	57,386	193,638	385,905	649,602	369,488Capital and Non-active Accounts- Capital Accounts- Refunds of previous years'	102	93	728	376	100Non-active Accounts- National Harbours Board, reduc-	15	19	10Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment dur-	1,308 1,105Canadian National (West Indies) Steamships, Limited, reduction	164	549	Canadian Pacific Railway- Repayment of loan made under Unemployment Relief Act, 1932	1,000 29	Write-downs to Consolidated Deficit Account-Seed Grain and Relief Loans	42	36	45	60Total Capital and Non-active	159	1,286	1,332	421	2,583Total Special Receipts and Credits..	57,545	194,924	387,237	650,023	372,0712,310,344 70,000	2,920,018	2,906,834	3,085,685	2,991,471Less estimated amount of refundable Income and Excess Profits Taxes..	155,000	219,500	72,500	7,2002,240,344	2,765,018	2,687,334	3,013,185	2,984,271
(!) Revised to be comparable with the presentation used in the Public Accounts of 1943-44, by netting the adjustments affecting the Canadian National Railways Securities Trust Stock.
[Stage Direction]
The Budget-Mr. Abbott

[Stage Direction]
(Thousands of Dollars)
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47$	$	$	$	$Ordinary Expenditure	Agriculture	8,492	8,841	9,424	10,319	13,547Auditor General's Office	441	348	361	379	401Civil Service Commission	427	456	461	479	596External Affairs, including Office of	Prime Minister	1,150	1,596	1,974	4,583	5,631Finance-	Interest on Public Debt	188,556	242,681	318,995	409,134	461,035Cost of Loan Flotations and Annual	Amortization of Bond Discounts and	Commissions	13,838	19,285	20,679	22,311	11,976Premium paid on redemption of called	bonds	5,842	260Subsidies to Provinces	14,490	14,449	14,445	14,447	14,383Miscellaneous Grants and Contribu-	tions	526	528	531	617	96Civil Pensions and Superannuation....	398	356	325	293	240Government contribution to Superan-	nuation Fund	2,341	2,299	2,341	2,696	3,161Old Age Pensions, including pensions to	blind persons	29,976	30,377	32,187	(') -	(') -Premium, Discount and Exchange. . ..	16,348	14,734	8,500Compensation to Provinces under	Dom inion-Prov incial Taxation Agree-	ments-	Income and Corporation Taxes	85,942	83,678	82,977	94,343	88,386Gasoline Tax	8,273	11,757	10,357	3,709	-Administrative and Sundry Expendi-	ture	4,181	4,472	4,724	7,569	9,829Fisheries	1,699	1,696	2,159	3,262	3,909Governor General and Lieutenant Gov-	ernors	225	222	223	227	239Insurance	182	183	185	199	218Justice	2,667	2,673	2,696	2,848	3,107Penitentiaries	2,772	2,799	2,936	3,258	3,872Labour	717	1,170	1,446	1,620	2,078Unemployment Insurance Act, 1940-	Administration	4,657	5,171	5,113	6,185	7,882Government contribution	11,487	12,344	12,746	12,514	15,200Government Annuities-	Payments to maintain reserve	498	32	257	294	300Legislation-	House of Commons	1,827	1,915	1,612	2,235	2,616Library of Parliament	76	77	72	74	91Senate	555	562	485	727	885General	61	86	95	98	167Chief Electoral Officer, including elec-	tions	1,447	88	179	3,091	168Mines and Resources-	Administration	160	167	168	160	176Immigration	1,268	1,262	1,309	1,524	2,209Indian Affairs	4,978	5,177	6,162	4,470	6,075Lands, Parks and Forests	1,753	1,586	1,831	2,689	5,341Surveys and Engineering	1,129	1,272	1,610	1,323	3,573Mines and Geological Survey	1,140	1,125	1,216	1,303	2,080Munitions and Supply	12	14	19	(!) -	(*) -Dominion Fuel Board Administration	Coal subsidies and subventions	4,965	2,165	2,737	(!) -	(') -National Defence-	Administration	44	36	33	38	45Sundry Services	371	32	34	89	191National Health and Welfare	1,244	1,617	1,725	6,148	8,406National Film Board	-	-	-	1,146	1,184Old age pensions, including pensions to	blind persons	(!) -	(!) -	(') -	33,715	35,992172,632	245,225
(') See Department of National Health and Welfare. (') See Department of Reconstruction and Supply.
(') See Department of Finance.
The Budget-Mr. Abbott
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47$	$	$	%	$Ordinary Expenditure-Con. National Revenue (including Income Tax)	15,190	17,721	20,114	22,630	27,895National War Services	428	547	838	5	-Post Office	44,742	48,485	54,629	57,730	65,988Privv Council	62	80	81	419	747Public Archives	123	124	124	127	151Public Printing and Stationery	245	235	232	238	293Public Works	12,014	12,281	13,169	16,283	27,178Reconstruction and Supply	-	-	909	2,103	1,922Dominion Fuel Board Administration, Coal subsidies and subventions	(*) -	(*) -	(4) -	2,339	1,902Royal Canadian Mounted Police	6,242	6,678	7,183	7,284	9,511Secretary of State	820	831	864	954	1,131Trade and Commerce	4,566	4,196	3,497	4,053	7,423Canada Grain Act	1,918	2,089	2,333	2,303	2,527Mail Subsidies and Steamship Subventions 	616	800	869	994	1,182Transport- Administration	375	397	402	403	504Air Service	3,334	3,593	3,939	4,196	5,952Marine Service	4,257	4,504	4,897	4,893	6,123Railways and Canals	3,352	4,107	4,294	4,430	4,970Maritime Freight Rates Act	4,894	5,058	4,733	4,345	4,860Veterans Affairs- Departmental Administration	162	176	196	1,142	1,625Pensions (War 1914-18 and military)...	39,684	38,998	39,372	39,996	40,714War Service gratuities and re-establishment credits	_	_	20,228	(*) -	([DOT]) -Treatment and after-care of returned soldiers and allowances to dependents	12,689	14,050	19,845	28,551	44,912Soldier Settlement and Veterans Land Act	567	837	1,391	3,160	7,172Total Ordinary Expenditure...	561,251	630,381	767,376	1,061,902	1,233.952Capital Expenditure Railways	38	692	630	2,313	3,078Public Works	3,238	1,930	2,534	2,195	10,127Total Capital Expenditure..	3,276	2,622	3,164	4,508	13,205War, Demobilization and Reconversion Expenditure National Defence-Defence Research....	5,017National Defence-Army- Army Services	1,021,944	1,312,348	1,243,733	935,006	213,405Internment Operations	1,556	1,100	1,580	1,002	95Inspection Board of the U.K. and Canada	10,946	10,522	8,362	6,124	Inspection Board of Canada	-	-	-	-	2,500Sundry	3,344	4,835	8,080	7,446	2041,037,790	1,328,805	1,261,755	949,578	221,221National Defence-Naval Services	310,182	369,556	417,099	241,759	68,950National Defence-Air Services- Overseas War Establishment	23,666	383,888	759,070	Overseas Operations	-	-	-	197,076	4,700Home War Establishment	226,550	312,761	227,942	-	-Western Hemisphere Operations	-	-	108,032	36,430Air Training	366,897	233,893	272,342	-	-Training Organization	-	-	-	74,770	11,550Repatriation and Demobilization	-	-	72,153	16,200
(*) See Department of Munitions and Supply. (6) See War and Demobilization.
[Stage Direction]
_____________The Budget-Mr. Abbott
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
National Defence-Air Services-Con.
Restricted Servicing Units	
General Servicing Units	
Surplus Equipment Units	
Headquarters and Commands Administration	
Sundry	
Reconstruction and Supply (formerly Munitions and Supply)- Administration, reconversion and operation of Crown Companies and/
or Crown Plants	
Administration	
Housing Developments	
Expansion of Industry	
Emergency Coal Production Board.
Acquisition of U.K. Assets	
Acquisition of U.S. Assets	
Liquidation of Contracts	
Termination of Contracts	
National Research Council	
Sundry	
Agriculture-
Disposal of agricultural products rendered surplus by the war	
Freight assistance on western feed
grains	
Payment to increase the income of farmers in the spring wheat area of
Western Canada	
Fertilizer subventions and freight
allowance	
Subsidy on western wheat used e:
clusively as feed for live-stock..
Subsidy on milk and milk products. .. Premiun on hog carcasses suitable for
export to U.K	
To provide for reserve stocks of feed
grains	
Sundry	
Finance-
Comptroller of the Treasury	
Payment of premiums on the purchase of Dominion of Canada Registered
Stock	
Wartime Prices and Trade Board-
Adm inistration	
Subsidies due to application of Order
placing a ceiling over all prices.
Advances for payment of drawback claims to millers and other manufacturers of wheat products	
Advances to the Canadian Wheat Board to cover deficits in certain Board
operations	
House Conversion Program	" "
Old Age Pensions, increased benefits.. Halifax V-E Day disorders and explosion-
Payment of claims	
Expenses of investigations	
Sundry	
1942-43	1943-44	1944-45	1945-46	Estimated 1946-47S	$	$	%	$-	-	-	38,6231	-	-	-	14,884	16,000-	-	-	815J	-	-	17,880	11,300122	124	102	97	90617,235	930,666	1,259,456	524,330	96,2708,5009,457	9,957	8,841	6,858	4,250469,675	672,804	205,039	112,675	31,500-	-	-	-	(I0) 10,500200,000	5,000	1,964	-	-	-	1,906	--	-	-	-	24,500-	-	-	151,846	45,0002,091	2,640	2,932	2,385	4,026-	-	-	3,137	5,124681,223	690,401	218,776	278,807	133,4002,901	1,876	1,194	354	97510,318	17,754	15,943	17,317	19,0002,678	19	2	-	1,036	903	446	438	600836	4,500	7,471	7,864	7,00029,505	42,330	41,659	37,950-	3,855	14,091	9,573	4,600-	1,292	715	1,274	1,7002,211	4,589	5,862	4,499	1,57919,980	64,293	88,054	82,978	73,4046,493	8,404	9,216	9,369	6,333126	13	14	12	159,278	13,705	12,720	14,753	13,25067,715	81,519	107,338	97,819	100,000-	20,500	19,700	14,750	26,000-	13,058	(ii)-	841	4,053	1,764	(2)3,062	8,788	(>) -	(>) --	-	-	4,610	2,2001,051	417	1,632	248 946	165 1,64484,663	128,461	176,519	144,271	149,607
(') See Department of National Health and Welfare.
( ) See Department of Reconstruction and supply.
(#) See Department of Trade and Commerce.
(10)	Included in previous years in Expansion of Industry.
(11)	Included in Special Expenditure.
[Stage Direction]
The Budget-Mr. Abbott
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEA RS-Continued
(Thousands of Dollars)
War, Demobilization and Reconversion Expenditure- Con.
Labour-
Industrial training..._	 [DOT] [DOT]
Training aircraft mechanics	
National Selective Service program.. -Removal of enemy aliens from protected areas	:	
Vocational training for discharged members of the Canadian Armed
Forces	
Vocational Schools-Payments to
Provinces	
Sundry	
Mines and Resources-
Prince Rupert-Terrace-Cedar vale
Highway	
Employment of Japanese	
Aerial Photography	
Sundry	
National War Services-
War Charities-Auxiliary services..
National Film Board	
Censorship	
Sundry	
National Health and Welfare-
Old Age Pensions, increased benefits.
National Film Board	
Sundry	
Privy Council-
Canadian Information Service (formerly Wartime Information Board). Sundry	
Public Works	
Royal Canadian Mounted Police....
Trade and Commerce-
Gift of wheat to Greece	
Canadian Wheat Board-Advances for payment of drawback claims to millers and other manu-
* facturers of wheat products...
Special administration expenses.
Sundry	
Transport	
Acquisition of Airfields and Works
from United States Government
[Stage Direction]
Veterans Affairs-
Treatment-Defence Forces	
Pensions-Defence Forces	
Additions, alterations and improvements to departmental hospitals,
including land purchases	
PosUdiseharge re-establishment rehabilitation benefits	
War service gratuities and re-establishment credits	
Sundry	
4,360
2,019
4,737
4,328
1,361
16,827
2,965
1,686
1,626
6,277
6,499
1,070
8,67,5
(7)
(s)
1,474
1,503
6,880
3,870
3,835
3,000
7,364
5,762
3,478
1,378
9,346
2,545
2,724
19,638
5,750
2,761
9,405
10,910
1,220
1,727
1,330
15,187
(3)
(7)
(')
86
6,467
4,267
8,798
(3)
9,543
9,941
66,600
1,617
11,098
2,137
3,877
19,664
2,499
51
2,753
5,814
15,933
1,341
1,856
6,852
25,982
(*) -(') -
1.340
1.340
1,700
1,758
6,600
3,709
6,749
(3)	_
7,419
16,433
18,661
11,449
11,939
5,738
2,468
(') -1,165 32,759
Estimated
701
11,268
2,203
4,365
3,712
22,859
262
2,633
3,475
13,070 (>) -859 316
14,245
9,103
1,391
11,238
1,229
1,272
6,205
4,775
(3) -963 809 1,772 15,013
26,298
22,200
7,371
32,131
239,585
328,359
11,031
3,235
12,300
3,000
3,292
32,873
1,050
2,245
3,345
(*) -
72
9,545
1,038
10,704
(12)
57 57 3,796 1,808
(3)	_
641
10,591
50,000
33,800
9,000
100,000
319,500
612,576
(l) See Department of National Health and Welfare.
(3) See Department of Finance.
C) See National War Services.
(s) Included in Pensions and National Health.
(9) Included in ordinary expenditure.
(12) Included in Department of External Affairs (Other Departments). 
	APRIL 29, 1947 The Budget-			2571 -Mr Abbott	
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS -Continued					
	(Thousands of Dollars)				
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47$	$	%	S	$War, Demobilization and Reconversion Expenditure-Con.	Pensions and National Health- Treatment-Defence Forces... .	4,175 2,760 5,027 296 2,062 14,320 1,728	6,456 5,637 1,724 472	Pensions-Defence Forces	Air Raid Precautions	Post-discharge re-establishment	
Sundry	Other Departments	17,952 2,363	2,836	2,373
Write-off of Air Training Plan Loans and Advances as per United Kingdom Financial Agreement Act, 1946..				1,25,000	
The War Appropriation (U.K. Financing) Act, 1942		1,000,000				
Mutual Aid (excluding administration).. Military Relief	912,578	792,200	766,862 34,463 142,852	1,500Canada's Contribution to UNRR.A	-	65	11,093	-Total War, Demobilization and Reconversion Expenditures	3,724,249	4,587,023	4,418,446	4,002,949	1,313,188
Special Expenditure					
Agricultural and Relief Projects ..	5,013	3,751	3,869	4,423	4,420
					
Western Drought Area Relief- Prairie Farm Assistance Act, 1939- Administration		157 249 1,342 24,527	217 2,578 848 30,102		327 12,052 159 397	343 6,500
Advances to Prairie Farm Emergency Fund						
Wheat acreage reduction plan- Administration						
Payments of awards to farmers . Deficits-Canadian Wheat Board			1,707 (*)		4 20,562
Provision of reserve to meet deficits resulting from the operations of the Canadian Wheat Board not previously provided for						
					
Total Special Expenditure...	31,288	37,496	7,506	17,358	31,829
Government Owned Enterprises					
Losses charged to Consolidated Deficit Account- Prince Edward Island Car Ferry and Terminals		591	698		688	889 8,962 115
Canadian National Railways. .					
National Harbours Board/.		30	59		
					
Total Charged to Consolidated Deficit Account		591	728	832	774	9,966
					
Loans and advances non-active- National Harbours Board	657	579	526	560	704
					
Total non-active advances	657	579	526	560	704Total government-owned enterprises	1,248	1,334	10,670I	(1!) Deficits charged to the War Appropriation in 1944-45. 83166-1644	
The Budget-Mr. Abbott
[Stage Direction]
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1942-43	1943-44	1944-15	1945-46	Estimated 1946-47Other Charges Write-down of assets chargeable to Consolidated Deficit Account- Reduction of soldier and general land	$	%	%	$	$settlement loans	
Reduction of Veterans' Land Act	51	553	325	36	284Advances	
Yearly established losses in seed grain and relief accounts-	30Department of Mines and Resources. Cancellation of Canadian Farm Loan	42	29	36	45	60Board Capital Stock	
To provide a reserve for possible losses on ultimate realization of Active	7	5	1	i	1Assets	
Provision for reserve for conditional	25,000	25,000	25,000	25,000	25,000benefits under Veterans' Land Act.. Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment during calendar	464	2,600 1,308year, 1946	
[DOT] [DOT] [DOT] Canadian National Railways Securities Trust Stock- Net changes in Dominion's equity in	37,838	22,631	Canadian National Railways	31,560	22,400	Total other charges	56,660	63,425	47,762	48,177	29,283Grand Total expenditures...	4,377,972	5,322,254	5,245,612	5,136,228	2,632,127
SUMMARY OF REVENUES AND EXPENDITURES (Thousands of Dollars)
-	1942-43	1943-44	1944-45	1945-46	Estimated 1946-47Ordinary revenues	
Capital refunds	
Special receipts and other credits	
Total revenues	
Ordinary expenditures	
Capital expenditures	
War expenditures	
Special expenditures	
Government Owned Enterprises	
Other charges	
Total expenditures	
Surplus (+) or Deficit (-)	% 2,182,799 102 57,443	$ 2,570,094 194,831	S 2,300,097 798 386,509	$ 2,363,162 376 649,647	$ 2,612,200 100 371,9712,240,344	2,765,018	2,687,334	3,013,185	2,984,271561,251 3,276 3,724,249 31,288 1,248 56,660	630,381 2,622 4,587,023 37,496 1,307 63,425	767,376 3,164 4,418,446 7,506 1,358 47,762	1,081,902 4,508 4,002,949 17,358 1,334 48,177	1,233,952 13,205 1,313,188 31,829 10,670 29,2834,377,972	5,322,254	5,245,612	5,136,228	2,632,127-2,137,628	-2,557,236	-2,558,278	-2,123,043	+ 352,144

[Stage Direction]
3.	Although the accounts are not yet closed, it is estimated that grand total revenues for the fiscal year 1946-47 will reach $2,984,271,000. While this indicates a decline of $28,914,000 from the previous year's grand total, it should 
be borne in mind that the grand total for each year contains a large amount of special receipts and credits from bookkeeping transactions arising out of the war and the sale of surplus war assets. Such items, which have been abnormally high in the last three fiscal

The Budget-Mr. Abbott
years, are largely non-recurring. Because of such items a comparison of grand total revenues is not as significant as a comparison of ordinary revenues which in 1946-47 exceeded the total for the previous year by $249,028,000 and was indeed the highest in Canada's history.
4.	Throughout 1946-47 tax revenues have been remarkably buoyant and despite tax reductions the total revenue from taxes was higher than in the previous year. Total direct taxes on personal and corporate incomes yielded $1,405,600,000 or 47-1 per cent of total revenues. Excise taxes and duties also held a very important position contributing $775,000,000 or 26-0 per cent of the total. Customs import duties provided $237,400,000 or 8-0 per cent. Non-tax revenues aggregated $160,880,000, and there were special receipts and credits amounting to $372,071,000.
5.	The amount of $7,200,000 was set aside as a reserve for the refundable portion of excess profits taxes and this has been deducted in arriving at the revenue total given above. The distribution of these reserves is set out in the section relating to excess profits tax.

[Stage Direction]
6.	The personal income tax which yielded $695,000,000 was again the largest single source of revenue. Despite the substantial reductions in tax rates which were in effect the receipts were slightly higher than in 1945-46, reflecting the very high level of employment and increased incomes during the year. A further influence was the considerable number of servicemen who began to receive taxable incomes as they returned to civilian employment.
7.	Corporation income tax and excess profits tax which are both levied on business profits yielded a combined total of $687,700,000 which was $24,330,000 less than the previous year's
combined total. The corporation income tax yield of $239,000,000 was $21,166,000 more than in the previous year while the excess profits tax yield of $448,700,000 showed a decline of $45,496,000. The lower return from the excess profits tax reflects the changes announced in the 1945 budget which became effective on January 1, 1946. An important factor causing the yield of the corporation income tax to increase was the receipt of substantial amounts in 1946-47 from private companies paying the tax on accumulated undistributed income as provided by Part XVIII of the Income War Tax Act.
8.	The liability of corporations to pay refundable excess profits tax was lifted after January 1, 1946, but those which had fiscal year ending after that date were required to pay, during 1946, this tax on a part of their profits proportionate to that portion of their fiscal year which fell in the calendar year 1945: The amount of refundable excess profits tax and personal income tax reserve classified by the taxation years to which it relates, is shown in the table below. The amount of reserve established in the fiscal year under review was $7,200,000 and this was entirely on account of the excess profits tax. These figures represent estimates which are subject to revision before the books of the year are closed.
9.	Revenues under the headings "Taxes on Dividends and Interest" and "Taxes on Rents and Royalties" are derived from special taxes, largely on income going to non-residents of Canada, under authority of Section 9 B of the Income War Tax Act. In 1946-47, revenue under these two headings amounted to a total of $20,100,000, an increase of $1,790,000 over the previous year.
10.	Succession duties, which have been levied by the Dominion Government' only since 1941 have shown a gradual increase from
Taxation Year	Refundable Personal Income Tax	Refundable Excess Profits Tax1942	$ 58.000.	000 135,000,000 72.000.	000	$ 31.200.000 67.500.000 72.700.000 70.500.000 17.300.0001943	1944	1945	1946*	Gross Total	265,000,000	259,200,000Less repayments	3,669,000	4,000Net Total	261,331,000	259,196,000
Corporation fiscal years ending in 1946.
The Budget-Mr. Abbott
[Stage Direction]
year to year. This upward trend was continued in 1946-47, total receipts of $23,600,000 being $2,153,000 higher than during the previous year.
11.	Net revenue from customs import duties reached the unprecedentedly high total of $237,400,000 and exceeded the previous year's yield by $108,523,000. Industrial reconversion, high consumer purchasing power and insistent demand for goods long in short supply have tended to increase imports and this increased volume of imports, together with the higher money value upon which customs duties were levied have brought substantially increased revenue from this source.
12.	Excise duties which are levied exclusively on alcoholic beverages and tobacco products brought in a total revenue of $196,000,000, an increase of $9,274,000 over the previous year. Most of this increase was contributed by alcoholic beverages. The smoker's contribution to the Federal Treasury continued to be large with the over-all revenue from tobacco products (including the yield of the additional taxes imposed under the Special War Revenue Act on tobacco, cigarettes, cigarette papers and tubes, pipes and smokers' accessories) amounting to $184,161,000, which is 7-5 per cent of total revenue from taxes.
13.	The heading "Excise Taxes" includes the wide variety of commodity taxes levied under the Special War Revenue Act, of which the sales tax and the taxes on tobacco products were the largest sources of revenue in 1946-47. Gross collections were $2,037,000 lower than in the previous year, but because refunds of excise taxes have declined from $114,878,000 in 1945-46 to the more normal peacetime figure of $29,878,000 for >1946-47, the net revenue from excise taxes was $82,090,000 higher in 1946-47 than in the previous year. When it is considered that the war exchange tax which yielded $41,198,000 in 1945-46 was not in effect in 1946-47, this increase in total net revenue from excise taxes is all the more notable, reflecting greater supplies of goods, a somewhat higher price level and a continuing high volume of purchasing power in the hands of the public.
With a few minor exceptions, all excise taxes showed an increase in 1946-47. The tax on furs which was changed in October, 1945, from 25 per cent at point of dressing with no sales tax, to 10 per cent and sales tax, showed a decline. The war exchange tax and the tax on electric and gas appliances which were not in effect during the year yielded only insignificant clean-up amounts. The gross revenue from sales tax increased slightly, but

as a greater part of the refunds of excise taxes are in connection with the sales tax the net yield from this source showed a considerable increase. The net yield from the sales tax continues at a very high level despite the changes in 1945 which excluded equipment and apparatus used in production as well as building materials from this tax.
Some of the sources from which a considerable increase in excise tax revenue wa3 derived and the amounts of the increase in each case are as follows:
Automobiles, tires and tubes... .$9,639,000
Beverages	   1,977,000
Cigars, cigarettes and tobacco.... 6,089,000
Cigarette papers and tubes	 2,298,000
Gasoline	  6,384,000
Phonographs, radios and tubes.. 1,880,000 Special excise on importations... 398,000
Sugar	 1,305,000
Amusements	 1,165,000
14.	Small amounts of tax revenue are derived from the tax on the note circulation of the chartered banks which decreases from year to year with the decline in circulation of such notes, as provided by statute; from the taxes on the net premium income of insurance companies; from a tax on the export of electrical energy from Canada; and from a tax on the export of furs from the Northwest Territories. Revenues from all of these taxes in 1946-47 amounted to $9,720,000.
15.	Non-tax revenues for 1946-47 are estimated at $160,880,000', an increase of $76,000 from the previous year. Receipts from the Post Office again showed an increase with the total of $75,000,000, exceeding 1945-46 by $6,387,000. These receipts exceeded the cost of operating the Post Office by about. $9,012,000, without taking into account any credit for service rendered other departments free of charge and without adding into the cost of operations such items as rentals and other costs of premises occupied by the Post Office. Return on Investments realized $68,780,000, a decline from the previous year of $2,135,000. The larger items making up the total of return on investments are: interest on advances to Canadian National Railways, $21,500,000; dividends paid and profits transferred by the Bank of Canada, $21,236,000; interest on loans to Foreign Exchange Control Board, and on bonds held in Securities Investment Account, $16,540,000; interest on loans to National Harbours Board, $3,450,000; interest on loans to Provinces. $2,859,000; interest on loans to Canadian Farm Loan Board, $666,000; and interest on Soldier Land Settlement and Veterans' Land Act Loans, $738,000.

The Budget-Mr. Abbott

[Stage Direction]
16.	The estimated total of Special Receipts and Credits for the fiscal year 1946-47 is 1372,071,000, as compared with $650,023,000 for the previous year. Of this total the sum of $367,578,000 represents receipts arising from war and demobilization expenditures and consists of Refunds of Previous Years' War Expenditures, $134,977,000; Sale of Surplus War Assets, $182,400,000; and Miscellaneous War, Demobilization and Reconversion Revenues, $50,201,000.
A breakdown of Refunds of Previous Years' War Expenditures with details of the larger items, follows:
Canadian Mutual Aid Board	$ 4,300,000
National Defence
[Stage Direction]
Army	 6,700,000
Navy	 1,061,000
Air	 4,286,000
Reconstruction and Supply-
Credit from Munitions Production Allotment Fund, representing mainly return of working capital advances from prefinanced plants, $47,000,000; refunds on contracts in connection with cost audits and negotiation, $50,000,000; sundries, $3,000,000	 100,000,000
Allied Military Lire Suspense Account as authorized by Vote 687 of Further Supplementary
Estimates, 1946-47	 7,530,000
Dominion Government War Risk .Insurance Scheme-transfer to revenue of special funds set up in prior years as War Damage
Insurance Special Account		9,600,000
Sundry Departments	 1,500,000
[Stage Direction]
The amount of $182,400,000 which it is estimated will be realized during the year through the disposal of surplus war assets, does not include residual cash balances or value of accounts receivable carried by War Assets Corporation as at March 31, 1947.
Included in the amount of $50,201,000 for Miscellaneous War, Demobilization and Reconversion Revenues is the sum of $30,000,000 derived from the operation of Park Steamships Limited.
17.	The table which follows gives a summary of the forecast made at the time of the last budget of the probable receipts from the various sources of revenue during the fiscal year 1946-47, and a comparison of these forecasts with receipts for the fiscal year.

[Stage Direction]
Source of Revenue	Budget Forecast of Revenue	Actual Revenue	Increase (+) or decrease (-) in revenue as compared with budget forecastTax Revenues	(tho 183.000 195.000	usands of dolla 237,400 196,000	rs) + 54,400 + 1,000
Excise Taxes:			
	250.000 259.000	298,205 280,795	+ 48,205 + 21,795
			
Total Excise Taxes	
Income Taxes: Tax on personal incomes	
Corporate Income Tax and Excess Profits Tax	
Interest and Dividends	
Total Income Taxes	509,000	579,000	+ 70,000615.000 540.000 30,000	695,000 687,700 30,100	+ 80,000 + 147,700 -n 1001,185,000	1,412,800	+ 227,80024,000 9,000	23,600 9,720	400 + 720Miscellaneous Taxes	Total Tax Revenues	2,105,000 170,000	2,458,520 160,880	+ 353,520 - 9,120Non Tax Revenues	Total	2,275,000 200,000	2,619,400 372,071	+ 344,400 + 172,071Special Receipts and Credits	
Total Revenue	2,475,000	2,991,471 7,200	+ 516,471 - 7,200Less Refundable Taxes	Net Total Revenue	2,475,000	2,984,271	+ 509,271
The Budget-Mr. Abbott

[Stage Direction]
18.	Expenditures are dealt with under the classifications of Ordinary Expenditures, Capital Expenditures, Demobilization and Reconversion Expenditures, Special Expenditures, Government Owned Enterprises, and Other Charges.

[Stage Direction]
19.	Ordinary expenditures are estimated for the fiscal year 1946-47 at $1,233,952,000 compared with $1,061,902,000 in the previous fiscal year, an increase of $172,050,000. The largest increase, $72,593,000 was in the payment of family allowances which totalled $245,225,000 for the full year compared with $172,632,000 for the nine-month period of the previous fiscal year during which this programme was in operation. Other estimated increases of significant amounts were as follows:
Increase in interest and public debt
charges	$35,984,000
Increase in Department of National
Revenue expenditures	 5,265,000
Increase in Post Office expenditures 8,258,000 Increase in Department of Public
Works expenditures	 10,894,000
Increase in cost of treatment and
after-care of returned soldiers.... 16,361,000 Increase in cost of administering Soldier Settlement and Veterans'
Land Acts	 4,042,000
Other increases as. well as the decreases effected during the year are shown in the five-year table.
It is of importance to note that of the total estimated ordinary expenditures of $1,233,952,000, the larger contractual and uncontrollable items accounted for $998,942,000 or 80'9 per cent. These items are interest and other charges on the public debt, subsidies and payments to provinces under the Dominion-Provincial Taxation Agreements, family allowances, premium, discount and exchange, unemployment insurance, post office, pensions and superannuation.

[Stage Direction]
20.	Estimated capital expenditures totalled $13,205,000 in the fiscal year 1946-47, compared with $4,508,000 in the previous fiscal year. The main items are costs of dredging the St. Lawrence Ship Channel, improvements in connection with civil airways and airports, the construction of the new Prince Edward Island car ferry and flight equipment for the Trans-Atlantic Air Service.

[Stage Direction]
21.	Demobilization and Reconversion expenditures are estimated at $1,313,188,000. This is 49-9 per cent of the total expenditures for the year under review.
The Department of Veterans Affairs expended $512,576,000 of which war service gratuities and re-establishment credits amounted to $319,500,000, post-discharge rehabilitation benefits $100,000,000, and treatment of defence forces and pensions, World War II. $83,800,000.
The Department of National Defence expended $376,441,000, divided between Army services, $216,204,000; Naval services, $58,950,000; Air services, $96,270,000; and Defence research, $5,017,000.
Expenditures by the Department of Finance under this category totalled $149,607,000. Of this amount expenditures by the Commodity Prices Stabilization Corporation and the Canadian Wool Board Limited, together with costs of administration of the Wartime Prices and Trade Board, accounted for $113,791,000 while advances to the Canadian Wheat Board for payment of drawback claims to millers and other manufacturers of wheat products amounted to $26,000,000. The office of the Comptroller of the Treasury expended $6,333,000 and the sum of $2,365,000 was disbursed in connection with the Halifax Area explosion and V-E Day damage claims.
The Department of Reconstruction and Supply expended $134,900,000, of which the larger items were: liquidation and termination of contracts, $69,500,000; housing developments, $31,500,000; expenses and subsidies paid by the Emergency Coal Production Board, $10,500,000; and the administration, reconversion and operation of crown companies and crown plants, $8,500,000.
Another department which expended a considerable amount under the Demobilization and Reconversion appropriation was the Department of Agriculture which disbursed $73,404,000. The larger items were: subsidies on milk for butter, for fluid milk, for cheese and for concentration purposes, $37,950,000; freight assistance on western feed grains, $19,000,000; subsidy on wheat used as feed for live stock, $7,000,000; and premiums on hog carcasses, $4,600,000.
More complete details of Demobilization and Reconversion expenditure by departments and services for the fiscal year 1946-47 are given in the table which follows:

The Budget-Mr. Abbott

[Stage Direction]
Agriculture-
Agricultural Food Board:
Subsidy on milk for butter, for fluid milk, for cheese and for concentration purposes, including undischarged commitments of previous vears, .$ 37,950,000 Sundry	 50,000
Agricultural Supplies Board:
Assistance in the disposal of surplus agricultural
products	
Freight assistance on western feeds grains. .. Subsidy on wheat used as feed for live stock.
Reserve stocks of feed grains	
Fertilizer subventions and freight allowances.'... Fertilizer and bulk purchases of fertilizer chemicals
Lime for soil amendment purposes	
Sundry	
Dairy Products Board	
Meat Board:
Premium on hog carcasses	
Sundry	'
Special Products Board	
Seed Export Office	
Grosse Isle research project	
-$ 38,000.000
. 975,000 19,000,000 7,000,000 1,700,000 300.000 i 300,000 310.000 253.000	29.838.000 520,000
	
4,600.000 159,000	4,759,000
	210,000
	11,000
	66,000
Auditor General's Office
Civil Service Commission	
External Affairs-*
Canadian Information Service	$	845,000
Sundr5r	 109,000
Finance-*
Comptroller of the Treasury	 6,333,000
Wartime Prices and Trade Board administration	 13,250,000
Commodity Prices Stabilization Corporation	 100,000,000
Canadian Wool Board Ltd	 541,000
Advances to Canadian Wheat Board for payments to millers and
other manufacturers of wheat products	 26,000,000
Halifax Area explosion and V-E Day damage administration expenses
in connection with investigations	 165,000
Payment of claims	 2 200,000
Sundry	 1,118,000
Fisheries	
Labour-*
Vocational Training:
Payments to the Provinces	 3,000,000
Vocational training for discharged members of Canada's armed
forces	 12,300,000
Disposal, maintenance and removal of Japanese Nationals and other
persons of the Japanese race	 3,235,000
National Employment Service:
Expenditures by Unemployment	Insurance	Commission	
10,788,000General labour transference to industries	and	agriculture	
600,000Sundry	
2,950,000
Mines and Resources
[Stage Direction]
Administration	 2,000
Mines and Geology Branch:
Aerial photography	 1,050.000
Construction and equipment of an extension to metallurgical
laboratories	 445 non
T Sundry	 62L000
Lands, Parks and Forests Branch	 52 000
Surveys and Engineering Branch	 610*000
Immigration Branch;
For expenditures in connection with looking after
Canadian interests abroad	$	500,000
Sundry	 65,000
[Stage Direction]
 565,000
73,404,000
200,000
839,000
954,000
149,607,000
216,000
32,873,000
REVISED EDITTON*
3,345,000
The Budget-Mr. Abbott
[Stage Direction]
ESTIMATED DEMOBILIZATION AND RECONVERSION EXPENDITURES BY DEPARTMENTS AND SERVICES, FISCAL YEAR 1946-47-Con.
National Defence-
Defence research	
Army and Related Services:
Army Services	
Departmental administration	
Experimental Station, Suffield	
Internment operations and refugee camps
Dependents Allowance Board	
Dependents supplementary grants fund..
Inspection Board of Canada	
Imperial War Graves Commission	
North. West highway system	
205,414.000
1.050.000
1,000.000
[Stage Direction]
Naval Services:
Navy	
Royal Canadian Sea Cadets [DOT]. Royal Canadian Navy Reserve
57,343,000
755.000
852.000
5,017,000
216,204,000
58,950,000
Air Services:	_ _	.
Departmental administration	
Western Hemisphere operations	
Training organization	
Servicing units	
Overseas operations	
Repatriation and demobilization....
[Stage Direction]
Headquarters and Commands administration
90,000
36.430.000
11.550.000 16,000,000
4,700,000
16.200.000 11,300,000
[Stage Direction]
 96,270.000
[Stage Direction]
National Health and Welfare-*
Old age pensions and pensions to the blind
National Film Board	
Sundry	
9.545.000
1.038.000
121.000
National War Services	
Post Office	
Privy Council Office	
Public Works-
Chief Architect's Branch:	.	...
Repairs, alterations, operation and maintenance ot buildings
Rental of premises	
Sundry	
Chief Engineers Branch	
Telegraph Branch	
Contingencies	
1,932,000
720.000
624.000
275.000
240.000 5,000
Reconstruction and Supply-	,
Departmental administration	'
To provide for the liquidation of contracts	
Reconstruction projects	
Housing development	
Emergency Coal Production Board	[DOT][DOT]	
Administration, reconversion and operation of crown companies
and/or crown plants	
Termination of contracts	
To provide recoverable advances	:[DOT][DOT][DOT][DOT][DOT][DOT]"[DOT][DOT]
To provide for the liquidation of outstanding commitments to
mutual aid	
Home conversion plan	
Emergency shelter administration	
Sundry	
National Research Council	
Royal Canadian Mounted Police	
Trade and Commerce	
Transport-
Departmental administration	
Transport Controller's office	
Director of merchant seamen	 [DOT] * [DOT] [DOT] [DOT] * [DOT] [DOT] [DOT] [DOT] [DOT] *
Purchase of properties required in Canada by United states
government	
Marine service	_	
Railway and steamship services	 [DOT]
Government employees' compensation	
4.250.000
24.500.000
250.000
31.500.000
10.500.000
8.500.000 45,000,000
2.500.000
1.500.000
125.000
2.207.000 42,000
4.026.000
62,000
52,000
3,377,000
200,000
149.000
187.000 37,00C
10,704,000
72.000
1,000
57.000
3,796,000
134,900,000
1,808,000
641,000
[Stage Direction]
The Budget-Mr. Abbott
ESTIMATED DEMOBILIZATION AND RECONVERSION EXPENDITURES BY DEPARTMENTS AND SERVICES, FISCAL YEAR 1946-47- Cone.
Transport-(Cone.)
Civil Aviation Division:
Airways and airports

operation and maintenance:
Operation and maintenance of municipal and other airports.
Airway and airport traffic control	
Radio aviation services	
Meteorological aviation services	
Care, operation and maintenance of R.C.A.E. airfields trans. ferred to the Department of Transport	
Mackenzie River Route-operation, maintenance and acquisition of equipment	
North East (Crimson) Staging Route-maintenance of airfields!!! !!!
Meteorological Division	
Radio Division	!!!	
Sundry	
National Harbours Board	
Veterans Affairs-
Treatment and pension examination-World War II
Pensions-World War II	
Post-discharge rehabilitation	benefits	''Hospital accommodation	and	facilities	""War service gratuities	'Re-establishment credits	'''Sundry	
Grand Total
476.000
700.000
1.694.000
1.153.000
564.000
328.000
71.000
1.141.000
385.000
15.000
163.000
[Stage Direction]
	10,754.000
50.000.	000 33,800,000
100,000,000
9.000,000
222.500,000
97.000.	000
276.000
[Stage Direction]
 512,576,000

[Stage Direction]
22.	Special expenditures are estimated at $31,829,000, an increase of $14,471,000 over 1945-46. The principal changes in this category were due to a reduction of $5,552,000 in advances to the Prairie Farm Emergency Fund and to the payment of $20,562,000 to the Canadian Wheat Board for which there was no counterpart in the previous fiscal year. This latter item represented the payment to the Board of a sum equal to the total amount of the established deficits in certain accounts operated by the Board. Details of these deficits are given in the Further Supplementary Estimates for 1946-47.

[Stage Direction]
23.	The classification of expenditures entitled
Government Owned Enterprises comprises the losses of and non-active advances to government owned enterprises which had been established before the war and are operated as separate corporations.	The total amount
charged to expenditure in this category amounted to $9,966,000, an increase of $9,192,000 over the previous fiscal year. This increase was mainly due to the 1946 deficit of the Canadian National Railways, the first since 1940.
Canadian National Railways
24.	The operating revenues of the Canadian National Railways for the calendar year 1946 totalled $400,586,000, a decrease of 7-7 per
83166-165J
cent from those of 1945. Operating of the Railway totalled $357.237 000 with $355,294,000 in 1945.	'	'
expenses
compared
The net operating revenue of the Railway was $43,349,000 and after deducting $11,790,000 for taxes, and for equipment and joint facility rentals, there remained a net railway operating income of $31,559,000. Other income, less deductions, totalled $4,161,000, resulting in $35,720,000 being available for interest. After payment of $23,359,000 in interest on debt held by the public and $21,323,000 in interest to the Government in respect of temporary Joans for capital and refunding purposes, there was a net cash deficit of $8,962,000. This amount was paid to the Railway by the Government and charged to expenditure.
The operating deficit of the Prince Edward Island Car Ferry and Terminals for 1946 was $889,000 compared with $686,000 in 1945.
Canadian National Steamships
25.	The Canadian National (West Indies) Steamships, Limited, had an operating surplus of $1,710,000 in the calendar year 1946 and earnings on the Company's Replacement Fund totalled $197,000. From the total income of $1,907,000, there was paid for bond interest and exchange $478,000, and for interest on Government advances $126,000. The resulting income surplus was therefore $1,302,000. Of this income surplus the sum of $197,000 was retained in the Replacement Fund and the
The Budget-Mr. Abbott
[Stage Direction]
remainder, namely, $1,105,000 was paid to the Government in reduction of advances made in prior years for deficits.
National Harbours Board
26.	The operating income of the National Harbours Board for the calendar year 1946, after payment of interest to the public but before depreciation, reserve for replacements and interest on Government advances, was $4,143,036, compared with $5,596,000 in the previous year. Interest paid to the Government in the fiscal year ended March 31, 1947, totalled $3,450,000.
Financial assistance provided by the Government to the National Harbours Board and charged to expenditure under the category of Government Owned Enterprises, totalled $819,000, divided as follows: $101,000 for the operating deficit of Churchill Harbour and $14,000 for the operating deficit of Quebec Harbour; $424,000 for non-active advances to meet the deficit of the Jacques Cartier Bridge at Montreal; $242,000 for retirement of debentures of the Saint John Harbour Commission; and $25,000, $2,000, $7,000 and $4,000 for capital expenditures at the harbours at Saint John, Three Rivers, Halifax and Churchill respectively.
The elevators at Port Colborne and Prescott operated at a profit during the year and $110,000 was paid to the Government.

[Stage Direction]
27.	Total expenditures in this final category are estimated at $29,283,000, compared with $48,177,000 in 1945-46.
28.	The amount of $25,000,000 has again been credited to the reserve to meet possible losses on the ultimate realization of active assets. Against this reserve was charged the sum of $19,600,000 reflecting write-offs in connection with various loans and advances made during the war by the Department of Munitions and Supply .to Crown Companies and in connection with Crown plants privately managed. Details of these write-offs will be found in the section dealing with changes in Loans, Advances and Investments. As a result of these credit and debit transactions *this general reserve stood at $155,400,000 at the close of the year.
29.	The other items in this category which affect the net debt are as follows: the provision for reserve for conditional benefits under the

Veterans' Land Act and the annual write-off of Soldier and General Land Settlement and Veterans' Land Act Loans and Canadian Farm Loan Board Capital Stock, aggregating $2,915,000.
30.	The loss of $60,000 on seed grain and relief accounts administered by the Department of Mines and Resources does not increase the net debt as the write-off is from an amount already set aside in the non-active accounts to provide for revaluations and losses.
31.	In 1945-46, the Dominion's equity in the Canadian National Railways as reflected in the Canadian National Railway Securities Trust Stock increased by $22,631,000, representing the surplus earnings of the system, namely $24,756,000, less capital loss on abandonments and retirements of $2,125,000. During the fiscal year just closed, as the Railway had no surplus earnings in the calendar year 1946, the only change in the Securities Trust Stock was a decrease of $1,308,000, representing the retirement of rolling stock. A deficit does not reduce the Dominion's equity as the amount of the deficit is paid to the Railway by the Government and charged as Government expenditure under the category of Government Owned Enterprises.

[Stage Direction]
32.	The estimated grand total of expenditure for the fiscal year 1946-47 under the various categories enumerated, namely Ordinary Expenditures, Capital Expenditures, Demobilization and Reconversion Expenditures, Special Expenditures, Losses of and Nonactive advances to Government Owned Enterprises, and Other Charges, was $2,632,127,000.
33.	The table which follows shows the percentage distribution of estimated revenues and expenditures for a number of important items. Receipts from various taxes and other revenue sources, after deducting the $7,200,000 of excess profits taxes estimated as refundable after the war, are shown as percentages both of total revenues and of total expenditures, expenditure or groups of such items are expenditures or groups of such items are shown as percentages both of total expenditures and of total revenues. The purpose of this table is to enable broad conclusions to be drawn as to the relative burdens imposed on the public treasury.

The Budget-Mr. Abbott
Percentage Distribution of Estimated Revenue and Expenditure, 1946-47
Ordinary Revenue-
Customs Import Duties	
Excise Duties	
Excise Taxes-sales tax and other excise taxes..
Income tax on persons, corporations, etc..
Excess Profits Tax (net)	
Succession Duties	
Other Tax Revenues	
Total Revenue from Taxes	
Non-tax Revenue	
Total Ordinary Revenue	
Special Receipts and Credits	
Grand Total Revenue	
Ordinary Expenditure-
Interest on Public Debt..
Other Public Debt Charges.
ments	
Famity Allowances	
Old Age Pensions and pensions to blind persons. Unemployment Insurance Act, administration
ment's contribution	
Agriculture	
Mines and Resources	
National Revenue	
Post Office	
Public Works	
Transport	
Veterans Affairs	
All other	
Total Ordinary Expenditure. Capital Expenditure	
Demobilization and Reconversion Expenditure-
National Defence-Army	
Navy	
Air	
Reconstruction and Supply...		
Veterans Affairs	
Other Departments	
Total Demobilization and Reconversion Expenditure.
Special Expenditure	
Government Owned Enterprises. Other Charges	
Grand Total Expenditure	 2,632,127
Amount in	Percentage	Percentagethousands	of Total	to Totalof dollars	Revenue	Expenditure*	%	%. 237,400	7-95	9-02. 196,000	6-57	7-45. 579,000	19-40	21-99. 964,100	32-31	36-63. 441,500	14-79	16-77. 23,600	[DOT]79	[DOT]90. 9,720	-33	[DOT]37. 2,451,320	82-14	93-13160,880	5-39	6-112,612,200	87-53	99-24372,071	12-47	14-142,984,271	100-00	113-38Amount in	Percentage	Percentagethousands	of Total	to Totalof dollars	Expenditure	Revenue$	%	%461,035	17-52	15-4512,278	[DOT]47	[DOT]41102,769	3-90	3-44245,225	9-32	8-2235,992	1-37	1-2123,082	*88	[DOT]7713,547	-51	[DOT]4519,454	*74	-6527,895	1-06	[DOT]9365,988	2-51	2-2127,178	1-03	-9122,409	[DOT]85	-7594,423	3-59	3-17S2.677	3-14	- 2-771,233,952	46-89	41-3413,205	*50	[DOT]44221,221	8-40	7-4158,950	2-24	1-9896,270	3-66	3-23134,900	5-13	4-52512,576	19-47	17-18289,271	10-99	9-691,313,188	49-89	44-0131,829	1-21	1-0710,670	*40	[DOT]3629,283	Ml	[DOT]982,632,127	100-00	88-20
The Budget-Mr. Abbott

[Stage Direction]
34.	As total estimated revenues for the fiscal year 1946-47 were $2,984,271,000 and estimated expenditures aggregated $2,632,127,000, the over-all surplus or decrease in net debt for the year was $352,144,000.
Loans, Advances and Investments
35.	In addition to the expenditures already detailed, the Government makes disbursements for -the acquisition of investments which are treated as "active assets" and are deducted from total gross liabilities in arriving at the figure of net debt. The net increase in loans, advances and investments for 1946-47 was $983,660,000. Details of these increases together with those for the four previous fiscal years will be found in the table on page 2584.
Railway and Steamship Companies
36.	There was a net decrease in loans and advances in this category during the fiscal year 1946-47 amounting to $20,520,000. This was the result of transactions with the Canadian National Railways exclusively. The details of these transactions reflecting repayment by the Railway on account of previous loans and the making of new advances to the Railway are as follows:
Repayments-
From Dominion Guaranteed Bond Issue:
Applied to loans under Refunding Act, 1938	$ 3,888,565
Applied to loans under War Appropriation Act, 1946, Working Capital	 13,907,000
Pre-payment of amounts due under Hire-Purchase Agreements:
1940 Agreement	 8,927,715
194*1 Agreement	 15,208,977
[Stage Direction]
Repayments of Instalments under HireTPurhase Agreements:
1936 Agreement	$	517,1731940	Agreement	
991,9681941	Agreement	
1,382,6351943	Agreement	
1,561,6671944	Agreement	
868,7281946 Agreement	
871,623
Total Equipment Repayments.8 6,193,794
Total Repayments of Loans
and Equipment Repayments.848,126,051
Advances-[DOT]
Under Canadian National Railways Refunding Act, 1944-for retirement of matured issues	$23,502,000

Under Canadian National Railways Financing and Guarantee Act,
1940-Purchase of Grand Trunk Railway Company of Canada 4 per cent Perpetual Consolidated
Debenture Stock	
Under Canadian National Railways Financing and Guarantee Acts,
1941 and 1942-Purchase of securities from Canadian
holders	
Under the War Appropriation (United Kingdom Financing)
Act, 1942-Purchase of securities from Government of the United
Kingdom	
Under the Trans-Canada Air Lines
Act-Purchase of Capital Stock. 3,943,023 Total Advances by way of loan.$27,605,410
Net Repayments of Loans and
Equipment Repayments	$20,520,641
United Kingdom and Other Governments-
37.	Net advances under this heading increased by $647,689,000. The largest single change in this category during 1946-47 was the advances under the United Kingdom Financial Agreement Act, 1946, aggregating $640,000,000, out of a total $1,250,000,000 authorized by this Act. The Canadian dollar obligation of the Government of the United Kingdom under the authority of the War Appropriation (United Kingdom Financing) Act, 1942, was reduced by $95,800,000, leaving a balance outstanding at the fiscal year end of $442,764,000.
Advances made during the fiscal year to foreign governments and their agencies pursuant to agreements made under the Export Credits Insurance Act totalled $267,371,000, made up as follows: Belgium, $26,000,000; China, $19,496,000; Czechoslovakia, $1,669,000; France, $156,400,000 (of which $86,985,000 was used to repay advances obtained under Section 3 of the War Appropriation Act); The Netherlands, $51,153,000; Netherlands Indies, $3,900,000; Norway, $8,661,000; and the Union of Soviet Socialist Republics, $91,000.
The Government of the Union of Soviet Socialist Republics repaid during the fiscal year 1946-47, $5,000,000 of a loan obtained under the authority of the War Appropriation Act in the amount of $10,000,000.
Advances to the United Kingdom and other governments under the authority of Section 3 of the War Appropriation Act decreased during the fiscal year 1946-47, by $158,880,000
53,885
5,141
101,361

The Budget-Mr. Abbott
(including repayment by 'the Government of France noted in the preceding paragraph). These advances represented mainly trading accounts operated by the Departments of Agriculture and Trade and Commerce for acquisition of food and other essential supplies for these governments.
Sundry Government Agencies-
38.	Under the authority of the Appropriation Act, 1946, an advance of 12,000,000 was made to the Canadian Broadcasting Corporation for the construction of capital facilities.
39.	The net change in advances to the National Harbours Board during the year was an increase of $114,000. An advance of $186,000 was made for capital purposes at the port of 'Montreal, while a capital refund of $72,000 was received from the Vancouver Harbour.
40.	The net increase in the fiscal year in advances for Soldier Settlement and Veterans' Land Act purposes amounted to $54,268,000. This increase was occasioned by net advances of $56,398,000 under the Veterans' Land Act, less net repayments by settlers of $1,816,000 and less the sum of $314,000 which was written off and charged to Consolidated Deficit Account.
41.	Net advances to Sundry Crown Companies decreased during the fiscal year by $11,104,000. Advances were made to the Canadian Commercial Corporation totalling $2,500,000 and the total of the outstanding balance against the Commodity Prices Stabilization Corporation increased by $946,000. Loans and advances to Eldorado Mining & Refining (1944) Limited outstanding at the beginning of the fiscal year in the amount of $2,943,000 were transferred to Investments. Advances of $6,457,000 to the Canadian Wool Board and of $326,000 to the Wartime Food Corporation were repaid. The Melbourne Merchandising Limited ceased to carry on business in February, 1947. Advances to the company outstanding at the beginning of the fiscal year in the amount of $4,823,000 were liquidated by repayments of $3,215,000, by a charge to reserve for contingent liabilities of $949,000 and by a charge of $659,000 to the general reserve for possible losses upon the ultimate realization of active assets. This latter charge was made under the authority of The Surplus Crown Assets Act, 1944.
42.	Investments in connection with Crown Plants privately managed which totalled $41,100,000 at the beginning of the fiscal year, were completely liquidated by March 31, 1947. The plants involved and the amount in each case had been as follows: Alberta Nitrogen Company Limited, $10,370,000; Canada Strip Mill Limited, $9,563,000 and Welland Chemical .Works Limited, $21,167,000. The liquidation of these investments was by repayments and credits of $12,272,000, by charges of $9,918,000 to reserve for contingent liabilities-Crown Plants, and by charges of $18,910,000 to the general reserve for possible losses upon the ultimate realization of active assets.
These plants were sold by War Assets Corporation and it was necessary to clear from the Dominion's books by a charge to the general reserve the amounts in the asset accounts remaining after having applied the proceeds of the sales and the amounts charged to the reserve for contingent liabilities- Crown Companies. These charges were made under the authority of The Surplus Crown Assets Act, 1944.
Investments
43.	The Government's investment in the Canadian Farm Loan Board decreased during the year by $600,000. The Board purchased out of surplus funds $3,750,000 of its 3J per cent bonds due January 2, 4960, and approximately $1,000 of the Board's capital stock was written off to Consolidated Deficit Account. On the other hand, the Dominion purchased from the Board $3,150,000 of 3 per cent bonds due January 2, 1970. At the end of the fiscal year the Government's investment in the Canadian Farm Loan Board totalled $21,023,000.
44.	In the fiscal year 1946-47, Canada paid $48,750,000 on its subscription to the capital of the International Bank for Reconstruction and Development. Of this amount $41,665,000 was paid in the form of non-interest bearing notes. These notes are payable on demand and are carried on the Dominion's balance sheet under the heading of Floating Debt. A further call of $16,250,000 has been made on the capital stock of the Bank payable in May, 1947. The remaining amount of Canada's subscription to the capital stock of the Bank, namely, $260,000,000, can only be
The Budget-Mr. Abbott
[Stage Direction]
called to meet obligations of the Bank on securities of or guaranteed by the Bank.
45.	Canada completed its subscription to the International Monetary Fund by payments totalling $299,970,000 during the fiscal year 1946-47. Of this total, Canada paid $74,973,000 in gold, $30,997,000 in Canadian dollars and $194,000,000 in non-interst bearing demand notes. These latter are carried on the Dominion's Balance sheet under the heading of Floating Debt.
46.	Other investments increased during the fiscal year 1946-47 by $8,940,000, reflecting mainly transfers from loans and advances to Crown Companies and Crown plants-privately managed.
47.	The following table gives the details of the changes in loans, advances and investments during the fiscal year 1946-47 as now estimated, as well as the corresponding details for the four previous fiscal years.

[Stage Direction]
LAST FIVE FISCAL YEARS (thousands of dollars)
Fiscal Years Ended March 31
1943	1944	1945	1946	Estimated 1947Loans and Advances Railway and Steamship Companies- Canadian National Railways	
Canadian National Steamships- Canadian National (West Indies)	142,539	Cr. 3,907	83,608	43,614 Cr. 450	Cr. 20,520Canadian Pacific Railway Company Net Total, Railway and Steamship Companies	
Sundry Government Agencies- Canadian Broadcasting Corporation. National Harbours Board	
Soldier Settlement and Veterans Land Act	
Sundry Crown Companies	
Sundry Crown Plants, privately man-	Cr. 12,814	
129,725	Cr. 3,907	83,608	43,164	Cr. 20,520
	Cr. 503 Cr. 267 Cr. 1,692 45,140				2,000 114 54,268 Cr. 11,104 Cr. 41,101
		Cr. 127 Cr. 2,090 63,317 57,007 Cr. 11	8 3,948 Cr. 16,774 Cr. 10,909 38	Cr. 66 18,677 Cr. 20,087 Cr. 4,997 Cr. 40	
	4				
Net Total, Sundry Government Agencies	
Provincial and Municipal Governments.. United Kingdom and Other Governments- United Kingdom, loan under The War Appropriation (U.K. Financing) Act, 1942	
Union of Soviet Socialist Republics- Loan for purchase of wheat	
United Kingdom, Australia and New Zealand-Air Training accounts... United Kingdom-British Commonwealth Air Training Plan-Settle-	42,682	118,096	Cr. 23,689	Cr. 6,513	4,177Cr. 899	Cr. 437	15,599	Cr. 4,350	Cr. 2,532700,000 917 56,360	Cr. 42,392 9,083 5,403 200,000 13,244	Cr. 55,098 81,586	Cr. 63,946 Cr. 2,500 Cr. 249,504 Cr. 200,000 Cr. 9,311 67,412	Cr. 95,800 Cr. 5,000 Cr. 2United Kingdom, food advance accounts	6,755	10,613	Cr. 21,302 267,371 640,000United Kingdom Financial Agree-	83,042 661	Cr. 11,884 16,766	Cr. 71,158 Cr. 4,215	Other (U.K. and Other Governments) 	
Net Total, U.K. and Other Governments	123,308	Cr. 137,578847,735	190,220	Cr. 38,272	Cr. 334,541	647,689

APRIL 29, 1947	25S3
The Budget-Mr. Abbott
ANNUAL CHANGES IN ACTIVE LOANS AND ADVANCES AND INVESTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	Fiscal Years Ended March 31				
1943	1944	1945	1946	Estimated 1947Loans and Advances-cone. Miscellaneous- Dominion and National Housing	239 3,640 Cr. 329	Cr. 532 Cr. 3,964 Cr. 61	Cr. 1,240 7,975 Cr. 74	Cr. 14,721 Cr. 757 Cr. 74	Sundry munitions contractors etc., (Department of Reconstruction and	Cr. 2,139 Cr. 75
3,550	Cr. 4,557	6,661	Cr. 15,552	Cr. 2,214
Net Total, All Loans and Advances. Investments Central Mortgage and Housing Corporation Capital Stock						
	1,022,793	299,415	43,907	Cr. 317,792	626,600
				25,000 Cr. 2,401 Cr. 250 36 33 2,000 770	
	Cr. 2,507	Cr. 5,005	Cr. 5,001		Cr. 600
Central Mortgage Bank Capital Stock..					
Canada's subscription to International Bank for Reconstruction and Development						48,750 299,970
'Canada's subscription to International Monetary Fund						
Export Credits Insurance Corporation Capital Stock				500 1,754		
Other Investments			5,521			8,940
Net Total, Investments						
	Cr. 2,507	516	Cr. 2,747	25,188	357,060
Net Total of changes in Loans and Ad-					
	1,020,286	299,931	41,160	Cr. 292,604	983,660
					
Loan Flotations
48.	During the fiscal year ended March 31, 1947, the Dominion issued securities in the domestic market in an estimated amount of 12,427,293,471. This amount does not include the recurring issues of Treasury Bills and Deposit Certificates issued to refund similar securities maturing during the year.
During the year $2,717,872,364 of Dominion obligations matured or were called for redemption. Of this amount $1,939,293,471 was renewed or converted into new issues, the remainder, namely, $778,578,893 was provided as follows: $488,000,000 from the proceeds of the sale of Canada Savings Bonds and $290,578,893 from cash balances.
49.	In addition to renewals of Deposit Certificates, one issue of bonds for refunding purposes was sold direct to the chartered banks. This issue, in the amount of
$162,050,000, consisted of four year l-J per cent Bonds dated November 1, 1946. It was sold to the banks at 100-75 to yield 1-56 per cent.
50.	The table which follows gives the details of the various issues sold during the year (excluding the renewal for another year of $33,293,471 one year 4 per cent School Lands Debentures, held by the Governments of the Prairie Provinces in respect of school lands). In the table the issues are classified on the basis of whether they were sold at time of issue to the Bank of Canada or to the chartered banks or to 'the general public.
51.	During the fiscal year, sale of securities to the general public was confined to Canada Savings Bonds, a new type of security which was introduced in November, 1946. Net sales of Canada Savings Bonds to March 31, 1947, are estimated at $488,000,000.

[Stage Direction]
Issue
Date
Maturity
Date
Interest
Rate
Price to Government
Yield at Price to Government
Total
Amount
Issued
Renewals or Conversions Included in Amount Issued
Amount Issued for cash
Sold to Chartered Banks
%	t
%
[Stage Direction]

Four year bonds
Nov.
1,
Nov.
1950..
[Stage Direction]
Sold to Bank oj Canada
1-56
162,050,000
162,050,000
Treasury Notes(') Treasury Notes... Four Year Bonds. Treasury Notes...
April	15,	1946	Sept.	1,	1946..Sept.	1,	1946	Mar.	1,	1947..Nov.	1,	1946	Nov.	1,	1950..Mar.	1,	1947	Sept.	1,	1947..
Sold to General Public
100-00
100-00
0-	625
1-	56 0-625
350.000.	000
606.000.	000 237,950,000 550,000,000
1,743,950,000
350.000.	000
606.000.	000 237,950,000 550,000,000
1,743,950,000
Canada Savings Bonds (Net)
Nov.
1,
Nov.
1, 1956..
99-375 (!)
2-82(2)
Grand Total
488,000,000 (2)
488,000,000(2)
2,394,000,000
1,906,000,000
488,000,000
[Stage Direction]


g
£
o
[Stage Direction]
w
{}) Issue dated March 1, 1946, sold to Bank of Canada on April 15, 1946 at par and accrued interest. (2) Estimated figures.
The Budget-Mr. Abbott

The Budget-Mr. Abbott
52.	The table below gives the details of Dominion of Canada bond redemptions during the fiscal year ended March 31, 1947.
53.	The fortnightly issue of three months Treasury Bills was continued during the year. The amount outstanding, namely, $450,000,000, was unchanged throughout the fiscal year. The last issue in the fiscal year was sold at an average yield of -404 per cent.
54.	The average rate of interest on the Dominion's direct funded debt (including Treasury Bills and Deposit Certificates) outstanding at March 21, 1947, was 2-65 per cent. This figure compares with 2-59 per cent on the debt outstanding at the close of the previous year, the increase being accounted for by the issue of Canada Savings Bonds which were specially designed to promote thrift on the part of persons of small or moderate incomes and which accordingly bear interest at 2j per cent per annum.

[Stage Direction]
55.	In analysing the requirements for and sources of cash, it is necessary to follow the policy approved by Parliament when the Foreign Exchange Control Act was passed, namely, that the amount of the advances to
the Foreign Exchange Control Board outstanding at the end of the preceding calendar year should not be disclosed until within thirty days after March 31. Therefore, in keeping with this policy it is not possible at this time to give the amount of the advances to the Board outstanding at the end of the Government's fiscal year. On the other hand, it is desirable to show as much detail as possible of the state of the loans, advances and other investments made by the Government, particularly those made to other Governments. Therefore for purposes of the balance sheet as at March 31, 1947, there has been included with the ordinary cash balances held by the Government, the total amount of advances to the Foreign Exchange Control Board which are equivalent in substance to cash balances either in Canada or abroad, and also holdings of securities in the Securities Investment Account which represent the Government's temporary investment of surplus cash in its own marketable securities which are available at any time, if required, to meet needs for,cash. Detailed information on these items will, of course, be published later in the year in the Public Accounts.

[Stage Direction]
Maturity or Call Date	Interest Rate	Where Payable	AmountApril 15, 1946	% 1 it it 31 4 t [DOT] It 41 2 2i 1	$ 250.000.	000 100.000.	000 144.253.000 33,500,000 33,293,471 606,000,000 197.455.000 43,125,700 193.286.000 30,000,000 606,000,000 287,057 460,000,000 20,672,136April 15, 1946	May 1, 1946	June 1, 19460)	July 1, 1946.'	
New York. ..	
Marchl, 1947.						
			
	t(s)		
Non-interest Bearing Certificates (Net)	1			
			
			2,717,872,364 1,939,293,471
			
			
			778,578,893
			
0) Maturity date June 1, 1949, called for redemption on June 1, 1946. (2) Maturity date Nov. 1, 1956, called for redemption on November 1, 1946.			
(*) Maturity date January 15, 1948, called for redemption on January 15, 1947.
(*) These issues were vested by Treasury of the United Kingdom in August, 1941, and January, 1942. The amounts (at par of exchange) purchased in the fiscal year 1946-47 were cancelled.
(5) Deposit Certificates maturing April 2, 9,16 and 23 bore interest at the rate of 1 %.
([DOT]) Total from previous table $1,906,000,000, and School Lands Debentures, viz. $33,293,471.
The Budget-Air. Abbott
[Stage Direction]
In the table of requirements for Canadian cash shown below, therefore, the term "cash" is used in the broad sense indicated above. On this basis, apart from cash used for the redemption of securities, the total amount of cash required was approximately, $3,291,800,000. The sources from which these cash requirements were met are shown in the lower part of the table below. It will be noted that it
was possible to meet all requirements for cash during the year other than debt redemption without new borrowing, and that, indeed, there was sufficient cash available to enable a reduction of about $252,700,000 to be made in the total of outstanding funded debt payable in Canadian currency. This result was achieved, of course, by a reduction in the total of cash balances as defined above.

[Stage Direction]
(millions of dollars)
Requirements tor Cash
Expenditures-
Interest on the public debt	$
Subsidies to provinces and payments to provinces under wartime tax agreements	
Family Allowances	
Other ordinary expenditure in cash	
Total ordinary cash expenditure	
102-8
405-5
1,214-6
Demobilization and Reconversion-
Department of National Defence-
Army	$	221-2
Navy	 58-9
Air	 96-3
[Stage Direction]
	376-4
Department of Reconstruction and Supply	 139-2
Department of Veterans Affairs	 512-6
Other Departments	 294-3
Total Demobilization and Reconversion expenditure
Capital expenditure	
Special expenditure	
Government owned enterprises	
Total cash expenditures	
1,322-5
31-8
2,592-8
Outlays that Increased Assets or Decreased Liabilities-
Decreased holdings of U.S. dollars (expressed in Canadian dollars)	 -99-5
Decreased holdings of sterling balances	 -19-4
Reduction in New York indebtedness (expressed in Canadian dollars)		38-0
Reduction in sterling indebtedness	 0-4
Cost of loan flotations, portion to be amortized	 0-3
Working Capital Advances	 0-7
Loans and Advances-
To Canadian National Railways	 -20-5
To United Kingdom, The War Appropriation (U.K. Financing)
Act, 1942	 -95-8
To United Kingdom-Financial Agreement Act, 1946	 640-0
Export Credits	 267-4
Other (U.K. and Other Governments)	 -163-9
To Sundry Government Agencies-
Canadian Broadcasting Corporation	 2-0
Crown Companies and Crown Plants	 -21-7
National Harbours Board	 0-1
Soldier Settlement and Veterans' Land Act	 54 -3
To Provincial and Municipal Governments	 -2-5
Miscellaneous	 -2-3
Total Loans and Advances	 657*1
[Mr. Abbott.)

The Budget-Mr. Abbott
REQUIREMENTS FOR AND SOURCES OF CASH, FISCAL YEAR 1946-47- Concluded
(millions of dollars)
Requirements for Cash-Concluded
Outlays that Increased Assets or Decreased Liabilities-Concluded Investments-
Canada's subscription to International Bank for Reconstruction
and Development (Cash portion)	 7-0
Canada's subscription to International Monetary Fund (Cash
portion)	 106 0
Other Investments	 8-4
Total Investments	 121-4
Total outlays that increased assets or decreased liabilities	 699-0
Grand total requirements for cash	$	3,291-8
Sources of Cash
Revenues-
Personal income tax	$	695 [DOT] 0
Corporate income tax	 239-0
Excess profits tax	 448-7
Other direct taxes	 53-7
Customs duties, excise duties and excise taxes	 1,012-4
Other indirect taxes	 9-7
Total tax revenue	 2,458 [DOT] 5
Post office revenue	 75-0
Return on investments	 68-8
Other ordinary revenue	 17-1
Gross ordinary revenue	 2,619-4
Less estimated refundable portion of excess profits tax	 -7-2
Capital and other non-active refunds. Special receipts	
Total cash revenues	
2,612-2
369-5
2,982-9
Miscellaneous Receipts and Credits-
Deposit and trust accounts	 -34-3
Insurance, pension and guaranty accounts	 54-1
Deferred credits	 -16-3
Sundry suspense accounts	 -48-0
Total miscellaneous receipts and credits	 -44-5
Total revenues and miscellaneous receipts in cash	 2,938-4
Borrowing in Canada-
New issues-general public	S 490-8
Add estimated refundable portion of excess profits tax-net...	4-8
[Stage Direction]
 495-6
Less maturities paid in cash	 -748-3
Net decrease in funded debt payable in Canada	 -252-7
Net decrease in floating debt payable in Canada	 -14-9
[Stage Direction]
 -267-6
Add decrease in total of cash balances in domestic currency, Securities
Investment Account and advances to Foreign Exchange Control Board..	621-0
Grand total sources of cash,
$	3,291-8
National Debt
56.	It is estimated that the gross unmatured funded debt (including Deposit Certificates, Treasury Bills and the estimated refundable portion of personal income tax and excess profits tax) of the Government of Canada outstanding at the close
of the fiscal year 1946-47 will amount to $16,524,164,000. Other liabilities consisting chiefly of Deposit and Trust Accounts, Insurance, Pension and Guaranty Accounts are estimated at $1,185,463,000. The gross liabilities of the Dominion on March 31, 1947, therefore, are estimated at $17,659,627,000. On
The Budget-Mr. Abbott
[Stage Direction]
the other side of the balance sheet there are active assets estimated at a total of $4,745,766,000, consisting of cash, loans, advances and investments, less a reserve of $155,400,000 for possible losses on their ultimate realization. If the amount of net active assets is deducted from the amount of gross liabilities, there results a figure of $13,069,261,000 representing the estimated net debt of the Dominion as at March 31. 1947.
57.	The decrease in the net debt for the year is estimated at $352,144,000. This of course is the amount already reported as the over-all estimated surplus for the fiscal year 1946-47.
Balance Sheet
The following is a condensed estimated balance sheet of the Dominion, together with details of non-active assets:
BALANCE SHEET-MARCH 31, 1947 (estimated)
(thousands of dollars)
Liabilities-
Floating Debt-
Matured Funded Debt Outstanding	$	12,000
Stock and other obligations payable on demand	 235,734
Interest due and outstanding	 72,250
Outstanding cheques and warrants	 69,759
Post Office Account	 5 600
„	,	

$	395,343
Deposit and Trust Accounts-
Post Office Savings Bank	 35,600
Indian Trust Funds	 17,500
Miscellaneous	 111,000
[Stage Direction]
	164,100
Insurance, Pension and Guaranty Accounts-
Government Annuities	 344,300
Insurance Fund-Civil Service	 20,100
Insurance Fund-Returned Soldiers	 23,900
Unemployment Insurance Fund-Cash	 9,000
Employees Compensation Clearing Account-Defence Projects		9,000
Other Insurance and Guaranty Accounts	 2,800
Civil Service Superannuation Account	 88,000
Civil Service Retirement Fund	 12,100
Other Pension Funds	 2,900
[Stage Direction]
	512,100
Deferred Credits	   9,000
Sundry Suspense Accounts	 18,500
Province Debt Accounts	 11,920
Reserve for contingent liabilities	 24,500
Funded Debt Unmatured-
Payable in Canada-
Bonds, Deposit Certificates and Treasury Bills	 15,844,080
Refundable portion of personal income tax and excess profits tax
(estimated)	 520,527
Payable in New York	 148,000
Payable in London	 11,557
[Stage Direction]
 16,524,164
Asseis-
Cash including investment in the Foreign Exchange Control Board and holdings in the
Securities Investment Account	$
Departmental Working Capital Advances	
Loans and Advances-
To Canadian National Railways	$	679,008
To United Kingdom and Other Governments-
United Kingdom, The War Appropriation (U.K.
Financing) Act, 1942	$	442,764
United Kingdom Financial Agreement Act, 1946	640,000
Export Credits Insurance Act	 334,783
Other (U.K. and Other Governments)	 47,453
[Stage Direction]
 1,465,000
To Sundry Government Agencies-
Canadian Broadcasting Corporation	 2,000
Crown Companies	 85,755
National Harbours Board	 85,079
Soldier Settlement and Veterans' Land Act....	107,000
_	

 279,834
To Provincial and Municipal Governments	 171,372
Miscellaneous	 17 300
17,659,627
1,618,696
10,000

2,612,514﻿APRIL 29, 1947	2591
The Budget-Mr. Abbott
BALANCE SHEET-MARCH 31, 1947-concluded (estimated)
(thousands of dollars)
A as eta-Concluded
Investments-
Bank of Canada Capital Stock	$	5,920
Central Mortgage and Housing Corporation Capital Stock	 25,000
Canadian Farm Loan Board-
Advances and Capital Stock	 21,023
Canada's subscription to International Bank for Reconstruction and
Development	 48,786
Canada's subscription to International Monetary Fund	 300,003
Miscellaneous	 19,500
[Stage Direction]
$	420,232
Province Debt Accounts	 2,296
Deferred Charges-Unamortized Discounts and Commissions on Loans	 82,000
Sundry Suspense Accounts	 28
4,745,766
Less-Reserve for possible losses on ultimate realization of Active Assets	 155,400
4,590,366
Net Debt, March 31, 1947 (estimated)	 13,069,261
17,659,627
NET DEBT-MARCH 31, 1947 (estimated) (thousands of dollars)
Net Debt represented by-
(A) Expenditures for Capital Purposes and Non-aetive Assets-
Public Works-
Canals	$	240,125
Railways	 432,405
Miscellaneous	 326,964
Military Property and Stores	 12,616
Territorial Accounts	 9,896
Canadian Pacific Railway (old)	 62,791
Canadian National Railways Securities Trust Stock	 380,404
Canadian National Railways Stock	 18,000
Loans and Advances Non-active-
Canadian National Steamships	 12,053
National Harbours Board-
Chicoutimi	$	3,838
Churchill	 14
Halifax	 12,510
Montreal (Jacques Cartier Bridge)	 6,822
Quebec	 27,756
Saint John	 17,323
Three Rivers	 3,983
[Stage Direction]
	72,246
Soldier and General Land Settlement	 16,526
Seed Grain and Relief Advances	 134
Saskatchewan Seed Grain Loans Guarantee Act, 1936	 2,637
Seed Grain Loans Guarantee Act, 1937	 7,136
Miscellaneous Non-Active Accounts	 2,457
1,596,390
(B) Consolidated Deficit Account-
Balance, Consolidated Deficit Account brought forward from March
31,1946	$	11,836,341
Excess of revenue over expenditure, excluding amounts charged under
(A) above, fiscal year ended March 31, 1947 (estimated)	 363,470
[Stage Direction]
	11,472,871
13,069,261
The Budget-Mr. Abbott
[Stage Direction]
58.	The following table gives the details of the various obligations included in the ummatured funded debt of the Dominion outstanding as at March 31, 1947, and the annual interest charges thereon:

[Stage Direction]
Date of Maturity		Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Charge
				$ c.	$ 0.
1947, May	i	H	Canada	373,259,000 00	6,532,032 50July	i	4	Canada	33,293,470 85	1,331,738 83Sept.	i	I	Canada	550,000,000 00	3,437,500 00Oct.	i	2}	London	* 88,484 94	2,212 121948, Feb.	i	3}	Canada	50,000,000 00	1,625,000 00Mar.	i	2}	Canada	269,879,000 00	6,072,277 50Mar.	i	l£	Canada	239,713,000 00	4,194,977 50Nov.	i	U	Canada	344,267,000 00	6,024,672 501949, Feb.	i	3}	Canada	50,000,000 00	1,625,000 00Nov.	i	l£	Canada	267,800,000 00	4,686,500 001950, Feb.	i	3}	Canada	50,000,000 00	1,625,000 00Nov.	i	l£	Canada	335,690,000 00	5,874,575 00Nov.	i	H	Canada	400,000,000 00	7,000,000 001951, Feb.	i	3}	Canada	(>) 50,250,000 00	1,625,000 00June	15	3	Canada	(2) 649,969,592 50	19,306,027 50Nov.	15	3}	Canada	60,000,000 00	1,950,000 001952, Feb.	1	3}	Canada	(3) 50,500,000 00	1,625,000 00Oct.	1	3	Canada	324,945,700 00	9,748,371 00Oct.	15	4	Canada	56,191,000 00	2,247,640 001954, Mar.	1	3	Canada	(*) 676,355,489 00	20,089,767 001955, May	1	3}	London	* 4,702,549 99	154,782 87June	1	3	Canada	40,000,000 00	1,200,000 00June	1	3	Canada	55,000,000 00	1,650,000 001956, Nov.	1	3	Canada	(5) 855,607,410 50	25,414,081 50Nov.	1	2 £	Canada	* 488,000,00000	13,420,000 001957, May	1	3	Canada	1,111,261,650 00	33,337,849 50Nov.	1	4}	Canada	37,523,200 00	1,688,544 001958, June	1	3	Canada	88,200,000 00	2,646,000 00Sept.	1	4	London	* 3,206,685 05	128,267 40Nov.	1	4}	Canada	276,687,600 00	12,450,942 001959, Jan.	1	3	Canada	1,197,324,750 00	35,919,742 50Nov.	1	4}	Canada	289,693,300 00	13,036,198 501960, June	1	3	Canada	1,165,300,350 00	34,959,010 50Oct.	1	4	New York	100,000,000 00	4,000,000 001961, Jan.	15	3}	New York	48,000,000 00	1,560,000 001962, Feb.	1	3	Canada	1,315,639,200 00	39,469,176 001963, July	1	3£	London	3,499,053 20	113,719 23Oct.	1	3	Canada	1,295,819,350 00	38,874,580 501966, June	1	3£	Canada	54,703,000 00	1,777,847 50Sept.	1	3	Canada	1,691,796,700 00	50,753,901 00Perpetual.	3	Canada	55,000,000 00	1,650,000 001947, April	11 Treasury Bills	[DOT]399	Canada	75,000,000 00	299,250 00April	25 Treasury Bills	[DOT]398	Canada	75,000,000 00	298,500 00May	9 Treasury Bills	[DOT]399	Canada	75,000,000 00	299,250 00May	30 Treasury Bills	[DOT]399	Canada	75,000,000 00	299,250 00June	13 Treasury Bills	*399	Canada	75,000,000 00	299,250 00June	27 Treasury Bills	[DOT]404	Canada	75,000,000 00	303,000 00April	1 Deposit Certificates	[DOT]625	Canada	40,000,000 00	250,000 00April	8 Deposit Certificates	*625	Canada	40,000,000 00	250,000 00April	15 Deposit Certificates	[DOT]625	Canada	40,000,000 00	250,000 00April	22 Deposit Certificates	*625	Canada	40,000,000 00	250,000 00April	29 Deposit Certificates	[DOT]625	Canada	40,000,000 00	250,000 00May	6 Deposit Certificates	[DOT]625	Canada	40,000,000 00	250,000 00May	13 Deposit Certificates	[DOT]625	Canada	40,000,000 00	250,000 00June	15 Non-interest Bearing Certi-	ficates	Canada	* 295,000 00	
Estimated.
(') Redeemable at 100} per cent. (*) Redeemable at 101 per cent. (') Redeemable at 101 per cant. (*) Redeemable at 101 per cent (6) Redeemable at 101 per cent. 
Amount outstanding includes $ 250,000.00 redemption bonus. Amount outstanding includes 36,435,342.50 redemption bonus. Amount outstanding includes $ 500,000.00 redemption bonus. Amount outstanding includes $6,696,589.00 redemption bonus. Amount outstanding includes $8,471,360.50 redemption bonus.

The Budget-Mr. Abbott
UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31. 1947, AND ANNUAL INTEREST THEREON-Concluded * ([DOT])
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Charge1950, June 15 Non-Interest Bearing Certi-	Canada Canada	$ e. * 316,000 00 *263,800,000 00	$ c.3 2 («)	7,914,000 00Refundable portion of personal income tax	16,003,637,536,03 520,527,000 00	432,290,434 45 5,226,620 00
16,524,164,536 03	437,517,054 45
			16,364,607,762 85 148,000,000 00 11,556,773 18	99-03% 0-90% 0-07%
				
				
				
			16,524,164,536 03	100-00%
* Estimated.
([DOT]) Interest on refundable portion of personal income tar only.

[Stage Direction]
59.	Bonds and debenture stocks bearing the guarantee of the Dominion and outstanding in the hands of the public, totalled $566,954,000 at March 31, 1947, an increase of $25,972,000 over the amount outstanding at the close of the previous fiscal year. This increase is occasioned mainly by -the issue and sale to the public of $50,000,000 Canadian National Railway Company 2£ per cent Bonds dated January 2, 1947 and maturing January 2, 1967 and the redemption of $23,752,000 Canadian Northern Railway Company 6| per cent Bonds on July 1, 1946. The new issue was sold to a syndicate of Canadian banks and bond dealers at a price of 99-68 per cent to the Company. Of the proceeds of the issue the sum of $41,932,257 was used to pay off loans from the Government and the remainder for capital purposes of the Railway.
60.	Pursuant to the terms of an Order in Council dated April 16, 1946, the Commodity Prices Stabilization Corporation was authorized to guarantee certain advances and interest thereon obtained by any person from a bank in order to purchase coal, coke or briquettes in the summer of 1946. The liability of the Corporation is limited to ten per cent of the aggregate advances made by each bank, but the maximum amount of guarantee is $500,000. The estimated contingent liability of the Corporation at March 31, 1947 was $26,000.
61.	Under the provisions of The Farm Improvement Loans Act, 1944, the Government guarantees loans made by chartered banks to farmers for authorized purposes. The
amount of the guarantee is limited to 10 per cent of the aggregate principal amount of the guaranteed farm loans made by each bank. At February 28, 1947, 18,945 loans had been made by the chartered banks in the amount of $14,496,864 and the contingent liability of the Government at that date was $1,449,686.
62.	Under the provisions of The Veterans' Business and Professional Loans Act proclaimed on January 15, 1947, the Government guarantees loans made by the chartered banks to veterans domiciled in Canada for authorized purposes. These - purposes include the purchase of a business, the purchase or repair of machinery, tools, instruments or other business equipment and the construction, repair or alteration of or the making of additions to any building or structure used in the veteran's business. The amount of such loans is limited to $25,000,000. The amount of the Government's guarantee is limited to 25 per cent of the loans made by a bank, if the total loans by that bank do not exceed $1,000,000. The guarantee is reduced to 15 per cent on the amount of loans made by each bank over $1,000,000. Records of loans made at March 31, 1947, are not yet available.
63.	Under the terms of The Home Improvement Loans Guarantee Act, 1937, 125,720 loans had been made by banks and other approved loaning institutions to home owners under the terms of this Act and the total amount of such loans was $49,959,055. The Dominion's contingent liability arising out of these loans is limited to 15 per cent of the
The Budget-Mr. Abbott
[Stage Direction]
aggregate of such loans made by approved lending institutions, but as the balance of these loans on December 31, 1946, was $59,335, the contingent liability of the Government is limited to this amount. Up to December 31, 1946, 1,277 loss claims for an aggregate amount of $463,996 had been paid. The ratio of total losses to total volume of loans, therefore, is only 0-93 of one per cent.
64.	Under the provisions of the Appropriation Act No. 5, 1942, the Home Extension Plan was started. It provided for loans, not exeeding in the aggregate $2,000,000, by banks under regulations similar to those of the Home Improvement Loans Guarantee Act, for the purpose of financing the creation of additional self-contained housing units by alterations or additions to a building used solely or partially as a dwelling at the time of application for the loan. To March 31, 1946, fifty-nine loans for a total amount of $109,238 had been made. The Dominion's contingent liability arising out of these loans amounted to 15 per cent of the aggregate of such loans made by the banks of $16,386. There have been no claims for loss made by the -banks. Since March 31, 1946, no new loans have been made under this authority but under the authority of Part IV of the National Housing At, 1944.
65.	Part IV of the National Housing Act, 1944, authorizes loans to be made by chartered banks to home owners for improvement of their homes and for conversion of existing homes into multiple housing units, which loans may be guaranteed by the Government up to a maximum of $100,000,000. The contingent liability of the Government with respect to these loans is limited to 5 per cent of the aggregate of such loans made by each lending institution.
The home improvement loan section of the Act has not yet been proclaimed and therefore no loans have been granted thereunder. By Order in Council dated April 13, 1946, the home extension section of the Act was proclaimed. At March 31, 1947, twenty-eight loans had been approved in a total amount of $86,065 to provide for fifty-eight housing units. There have been no claims for losses. The contingent liability of the Government at March 31, 1947, was $4,303.
66.	Under the provisions of Part II, Section 11 (3A) of the National Housing Act, 1944, the Central Mortgage and Housing Corporation may guarantee -the principal of debentures of an institutional holding company and interest thereon at a rate of not more than two and one-half per cent per annum. At March 31, 1947, debentures had been issued

by Housing Enterprises of Canada Limited bearing -the guarantee of the Central Mortgage and Housing Corporation in the amount of $3,735,000.
67.	Under the Dominion Housing Act, 1935, the National Housing Act, 1938, and the National Housing Act, 1944, the Dominion has accepted and is accepting certain obligations arising out of its contracts with approved lending institutions which, while not expressed in the form of a guarantee, may nevertheless be regarded as contingent or indirect liabilities. On January 1, 1946, the Central Mortgage and Housing Corporation Act, 1945, was proclaimed and since that date the Corporation has been acting as the agent of His Majesty in connection with loans under these Acts.
The manner in which losses in respect of any loan are -to be shared by the Dominion and the lending institution is fixed by the contract. The original principle under the Dominion Housing Act and the National Housing Act, -1938, was that the Dominion bears two-thirds of the loss, if at the time the loss is sustained the principal amount of the loan repaid, less any other amount due, is equal to or less than the amount advanced by the Dominion and one-third of the loss if at the time the loss is sustained the principal amount repaid, less any other amounts due, is more than the amount advanced by the Dominion. In the case of small loans (that is, loans not in excess of $4,000 in the case of single family dwellings or not in excess of $700 -per habitable room in the case of multiple family dwellings), the share of the loss to be -borne by the Dominion is not more than 80 per cent and not less than 50 per cent -of the loss. Under the National Housing Act, 1938, a new provision was added to encourage the making of small loans in small or remote communities and in districts or other communities designated by the Minister of Finance in any contract. In respect of such loans, the Dominion has -agreed in contracts with certain lending institutions to pay losses sustained by any such lending institution up to certain amounts determined by the contract which are not les3 than 7 per cent and do not exceed 25 per cent of the total amount of such loans made by each such lending institution. Under -the National Housing Act, 1944, -the Dominion bears the first one-quarter of the loss and agrees to pay losses sustained by any lending institution up to an amount set out in -the contract. This amount, by statute, cannot exceed 15 -per cent of the aggregate of the lending institution's share of the joint loans made by -the lending institution and His Majesty under the contract.

The Budget-Mr. Abbott
Loans to the number of 33,765 covering 43,460 dwelling units have been approved as at February 28, 1947, under the Dominion Housing Act, 1935, the National Housing Act, 1938, and the National Housing Act, 1944, the total amount of such loans being 8165,225,310. Losses recorded and paid to March 31, 1947, amounted to $2,645 covering the Dominion's proportion of the loss on seven loans. This amount represents total losses to that date under both the Dominion Housing Act, 1935, and Part I of the National Housing Act, 1938. These losses are offset in part by a profit of $498 realized by the sale of eleven properties. The net loss to March 31, 1947, is therefore only $2,147. There have been no losses under the National Housing Act, 1944.
68.	Under authority of P.C. 4690 dated November 12, 1946, the Minister of Finance was authorized on behalf of the Government of Canada to guarantee under the provisions of the Export Credits Insurance Act the guarantee of the Republic of China of the payment by Ming Sung Industrial Company Ltd. of the cost of Canadian-produced goods and Canadian services to a maximum amount of $12,750,000 to be advanced by Imperial Bank of Canada, The Bank of Toronto and The Dominion Bank, subject to an agreement
dated October 30, 1946, between the Company and the said Banks, and to guarantee the securities given by the Ming Sung Industrial Company Ltd. for repayment of amounts drawn against credits established by the Banks in accordance with the agreement.
This guarantee was made at the request of the Government of China, which itself has guaranteed the payments to be made by the Company and the securities to be given by the Company and has undertaken to indemnify the Government of Canada against loss in connection with the guarantee so requested.
As of March 31, 1947, the Banks, under the agreement with the Ming Sung Industrial Co. Ltd. dated October 30, 1946, had issued letters of credit in the amount of $8,917,320 and opened a special account in favour of the Ming Sung Industrial Company Ltd. in the amount of $820,000. No payments had been made on drafts against the letters of credit. Advances against the special account amounted to $796,056.30. Outstanding commitments under this guarantee as of March 31, 1947, therefore amounted to $796,056.30.
69.	The following is a statement of bonds, debenture stocks and other indebtedness guaranteed by the Dominion estimated to be outstanding as at March 31, 1947.

[Stage Direction]
Perpetual.
Date of Maturity			Issue
April	1,	1948....	New Westminster Harbour Commissioners	Sept.	1,	1951....	Canadian National	Feb.	1,	1952....	Canadian National	Aug.	1,	1952....	Saint John Harbour Commissioners	Feb.	15,	1953....	Canadian National	July	10,	1953....	Canadian Northern	Feb.	1,	1954....	Canadian National	Mar.	1,	1955....	Canadian National (West Indies) SteamshipsJune	15,	1955....	Canadian National	Feb.	1,	1956....	Canadian National	July	1,	1957....	Canadian National	July	20,	1958....	Canadian Northern	Jan.	15,	1959 ...	Canadian National	May	4,	I960....	Canadian Northern Alberta	May	19,	1961....	Canadian Northern Ontario	Jan.	1,	1962....	Grand Trunk Pacific	Jan.	1,	1962....	Grand Trunk Pacific	Jan.	2,	1967....	Canadian National	Oct.	1,	1969....	Canadian National	Nov.	1,	1969...	Harbour Commissioners of Montreal	Feb. 1, 1970.... Various dates	Canadian National	1948-54.	City of Saint John Debentures assumed by Saint John Harbour Commissioners	Grand Trunk Debenture Stock	Great Western Debenture Stock	Grand Trunk Debenture Stock	
Northern Railway of Canada Debenture Stock..
Interest Rate	Estimated Amount Outstanding
%	$
41	700,000
41	48,022,000
3	20,000,000
5	667,953
3	25,000,000
3	1,162,768
5	50,000.000
5	9,400,000
41	48,496,000
41	67,368,000
41	64,136,000
31	5,636,508
3	35,000,000
31	550,727
3)	3,603,183
3	26,465,130
4	7,999,074
21	50,000,000
5	57,728,500
5	19,000,000
5	17,338,000
Various	371,229
5	1,473,495
5	848,406
4	5,960,095
4	27,458
566,954,526
The Budget-Mr. Abbott

[Stage Direction]
Estimated principal amount outstanding March 31,1947
Bank Advances, re Province of
Manitoba Savings Office	$	4,653,078
Province of Manitoba Treasury Bill 3,500,000 Loans made by approved lending institutions under Dominion and National Housing Acts.*
Loans made by approved lending	.
institutions under The Home Improvement Loans Guarantee
Act, 1937	 59,335
Loans made by approved lending institutions under the Home
Extension Plan	 16,386
Loans made by approved lending institutions under Part IV of the National Housing Act, 1944,
for home extensions	 4,303
Debentures of Housing Enterprises of Canada Limited guaranteed by Central Mortgage and
Housing Corporation	 3,735,000
Deposits maintained by the chartered banks in the Bank of
Canada	 536,264,805
Bank Advances, re Government War Contracts-Department of
Reconstruction and Supply		2,500
Bank Advances, re coal, coke or briquette purchases-Commodity Prices Stabilization Corporation	26,000
Guarantee under Dominion-Provincial Taxation Agreements of Provincial receipts from gasoline taxes at amounts received in fiscal years ending nearest December 31, 1940*
Guarantees under Part II, Export Credits Insurance Act	 796,056
Estimated principal amount outstanding March 31,1947
Loans made by chartered banks under The Farm Improvement
Loans Act, 1944	 1,449,686
Loans made by chartered banks under The Veterans' Business and Professional Loans Act.f
* Indeterminate. f Not yet determined.
B. Tables of Economic Statistics The following Tables of economic statistics, which were originally published elsewhere, are included in this Appendix to the Budget for convenience of reference in connection with consideration of the Budget accounts and proposals. Apart from monetary statistics which were taken from Bank of Canada publications, the statistics were all supplied by the Dominion Bureau of Statistics unless otherwise noted. In certain cases index numbers have been adjusted to a uniform base period.
Tables I, II, and III on National Income and related figures are based upon the publication of the Dominion Bureau of Statistics entitled "National Accounts, Income and Expenditure, 1938-1946." The nature and sources of these statistics are described in the booklet published in April, 1946, and entitled "National Accounts, Income and Expenditure 1938-1945". The figures given below have been rounded off to the nearest hundred million, and minor adjustments in the original figures have been made to eliminate residual items representing errors and omissions.


[Stage Direction]
(billions of dollars)
Salaries and Wages	
Military Pay and Allowances	
Corporate Profits and other Investment Income (Before Corporate Taxes)	
Net Income from Farms and Other Individual Enterprises	
Net National Income at Factor Cost	
Indirect Taxes less subsidies	
Depreciation and similar charges	
Gross National Product at Market Prices	
1938	1939	1944	1945	1946 (Preliminary)2-5	2-5	51	5-0	5111	11	0-30-7	0-8	1-8	20	1-80-8	0-9	19	1-7	2040	4-2	9-9	9-8	9-20-6	0-8	11	10	1-20-5	0-5	0-8	0-7	0-75-1	5-5	11-8	11-5	11-1
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The Budget-Mr. Abbott


[Stage Direction]
(billions of dollars)
-	1938	1939	1944	1945	1946 (Preliminary)
Government Expenditure on Goods and Services-					
(a) War and Similar Appropriations	01	01	4-2	2-8	0-9(b) Other, including Provincial and Municipal	0-7	0-7	0-8	0-8	1-0Gross Private Investment in Canada-	(a) On Construction and Equipment	0-5	0-5	0-6	0-8	1-10-3	-0-4	0-3Personal Expenditures on Consumers' Goods and Ser-	vices	3-7	3-8	6-2	6-8	7-4Payments from other Countries for Canadian Goods	and Services	1-4	1-5	3-5	3-6	3-2Sub-Total	6-4	6-9	15-3	14-4	13-9Deduct: Payments to other Countries for Goods and	Services Included Above	1-3	1-4	3-5	2-9	2-8Total Gross National Expenditures at Market Prices..	5-1	5-5	11-8	11-5	111

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ESTIMATED TOTAL PERSONAL INCOMES (billions of dollars)
-	1938	1939	1944	1945	1946 (Preliminary)Net National Income at Factor Cost	4-0	4-2	9-9	9-8	9-2Add: Transfer Payments*	0-3	0-3	0-4	0-8	1-5Total	4-3	4-5	10-3	10-6	10-7Deduct. Contributions to Social Security and Pension	0-2	0-2	0-2Investment Income not paid out to Individuals....	0-3	0-3	1-3	1-5	1-3Total Deductions	0-3	0-3	1-5	1-7	1-5Estimated Total Personal Incomes	4-0	4-2	8-8	8-9	9-2
'This item includes pensions, relief payments, gratuities, family allowances and similar payments, and most interest on the public debt.
The Budget-Mr. Abbott


[Stage Direction]
Note: The figures for the years 1941-45 show the estimated wartime distribution of manpower in the categories used in the Quarterly Labour Force Surveys of the Dominion Bureau of Statistics, from which the estimates for 1946-47 were obtained. For the purpose of these surveys, employed persons are those who either worked or had jobs in a specific week while the unemployed are those who were looking for work but were not working. About 170,000 persons living in remote areas and Indian Reservations are not included at all in these surveys.
(thousands of persons)
-	June 2, 1941	June 1, 1944	June 1, 1945	June 1, 1946	November 9, 1946	March 1, 1947Total population 14 years and over	8,517	8,885	8,978	8,927	8,998	9,065Total labour force including armed forces	4,908	5,304	5,367	4,953	4,896	4,751Armed forces	296	779	736	125	48	45Total civilian labour force	4,612	4,525	4,631	4,828	4,848	4,706Employed	4,242	4,443	4,525	4,702	4,733	4,565nonagri cultural	2,977	3,257	3,272	3,428	3,662	3,635agricultural	1,265	1,186	1,253	1,274	1,071	930Unemployed	370	82	106	126	115	141Housewives, students, retired persons, persons in institutions, and nonworkers	3,609	3,581	3,611	3,974	4,102	4,314
[Mr. Abbott.)

[Stage Direction]
CANADIAN COST OF LIVING AND WHOLESALE PRICE INDEXES Monthly Figures 1935-39 = 100
					1946					1947	
-	April	May	June	July	August	Sept.	Oct.	Nov.	Dec.	Jan.	Feb.Cost of Living-	121	122	124	125	126	126	127	127	127	127	128135	138	142	144	145	143	147	147	146	146	147Fuel and Light	107	107	107	107	107	107	107	109	109	109	109123	124	124	126	128	130	130	131	131	132	132112	113	113	113	113	113	113	113	113	113	113Home Furnishings	121	122	122	125	127	128	129	129	129	130	131Miscellaneous	111	112	112	114	114	114	114	114	114	115	116Wholesale Prices-	All Commodities	140	141	142	142	142	142	144	144	145	148	153Farm Products	155	156	157	159	155	154	158	158	159	159	160Raw Materials	150	150	152	153	150	150	156	157	157	159	165142	142	144	146	144	143	146	147	146	148	148Manufactures	129	129	129	130	131	131	133	133	134	136	140
The Budget-Mr. Abbott

[Stage Direction]
COMPARISON OF COST OF LIVING AND WHOLESALE PRICE INDEXES: CANADA, U.S.A., U.K., AND AUSTRALIA (A)
1935-39 = 100
	1938	1939	1940	1941	1942	1943	1944	1945	1946	June 1946	Dee. 1946	Jan. 1947	Feb. 1947
Cost of Living-													
All Items:													
Canada	102	102	106	112	117	118	119	120	124	124	127	127	128U.S.A	101	99	100	105	117	124	126	128	139	133	153	153	153United Kingdom	103	104	122	131	132	131	133	134	134	134	135	135	134Australia	103	10G	108	114	121	130	130	130	131	131	133	Food:	Canada	104	101	106	116	127	131	131	133	141	142	140	146	147U.S.A	98	95	97	106	124	138	136	139	160	140	186	184	182United Kingdom	104	104	121	124	119	122	124	120	124	124	124	124	124Australia	103	109	110	113	116	125	122	123	123	124	124	Clothing:	Canada	101	101	109	116	120	121	122	122	126	124	131	132	132U.S.A.	102	101	102	107	124	130	139	146	160	157	177	178	180United Kingdom	104	107	142	184	200	176	173	174	173	173	174	174	170Rent:	Canada	103	104	106	109	111	112	112	112	113	113	113	113	113U.S.A	104	104	105	106	109	108	108	108	1 no	United Kingdom	101	102	103	103	103	103	103	104	105	106	106	106	106Wholesale Prices-	All Commodities:	Canada	105	100	no	120	127	133	136	138	141	142	145	148	153U.S.A	98	90	98	108	123	128	129	131	150	140	175	176	179United Kingdom	102	104	138	154	161	164	167	170	177	175	181	183	184Australia	104	104	108	116	128	141	144	145	145	145	147	140	Farm Products	Canada	103	90	94	102	119	137	150	153	156	157	159	159	160U.S.A	90	86	89	108	139	161	163	109	196	177	221	217	224United Kingdom	104	104	143	172	185	188	195	199	214	185	246	251	
§
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o
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The Budget-Mr. Abbott
[Stage Direction]
Foods:													
Canada	103	98	106	119	130	136	135	138	142	144	146	148	148U.S.A	93	89	90	105	126	135	133	134	165	149	203	198	205United Kingdom	102	102	139	154	166	168	166	166	166	166	164	165	166Manufactures:	Canada	103	99	107	117	119	122	123	124	130	129	134	136	140U.S.A	99	97	99	108	119	121	122	123	135	130	154	157	169United Kingdom	106	105	127	141	144	147	150	152	165	162	171	173	174
(A) The sources of the data used in this table are: Canadian figures: the Dominion Bureau of Statistics;
U.S.A. figures: the Bureau of Labour Statistics;
United Kingdom cost of living: the Minister of Labour; United Kingdom wholesale prices: the Board of Trade; Australian figures: the Commonwealth Statistician.
The Budget-Mr. Abbott
IMr. Abbott.]
to
o>
o
to


[Stage Direction]
(as at December 31)
(millions of dollars)
	1937	1938	1939	1940	1941	1942	1943	1944	1945	1946
1. Bank of Canada and Chartered Bank Notes Held by										
Public	207	206	247	342	451	633	794	930	991	1,0302. Total Bank Deposits Held by Public in Canada	2,282	2,394	2,594	2,672	2,938	3,172	3,645	4,2S5	4,928	5,7603. of which: Demand Deposits	699	734	853	1,031	1,269	1,499	1,697	1,862	2,063	2,2914. Notice Deposits	1,583	1,060	1,741	1,641	1,669	1,673	1,948	2,423	2,865	3,469S. Total Volume of Money Held by the Public (1+2)..	2,489	2,600	2,841	3,014	3,389	3,805	4,439	5,215	5,919	6,7906. Securities Held by Bank of Canada	189	191	232	574	614	998	1,260	1,491	1,856	1,9211,411	1,463	1,646	1,531	1,759	2,293	2,940	3,611	4,038	4,2328. Total Loans by Chartered Banks in Canada	938	1,006	1,141	1,148	1,202	1,199	1,205	1,303	1,525	1,642
The Budget-Mr. Abbott

The Budget-Mr. Abbott


[Stage Direction]
-	1926	1928	Cal< 1932	>ndar Ye 1937	ars 1939	1945	1946
Group I.-Comprehensive Indexes							
(1935-39=100)							
Physical volume of business	87	103	69	107	107	213	184Volume of manufacturing	89	100	66	109	105	249	188Mining	55	65	59	104	118	157	142Forestry	84	87	57	117	103	127	147Carload ings	131	148	88	106	102	145	147Electric power output	46	61	61	106	108	153	159Employment	92	103	81	105	105	161	159Retail sales	<3)	ft	92	105	105	187	213Group II.-Price Levels	(1935-39 = 100)	Wholesale prices	133	128	89	113	100	138	141Farm product prices	140	141	68	122	90	153	Cost of living	122	121	99	101	102	120	124Common stock prices	92	147	51	117	92	100	116Group III.-Gross Value of Production in Major	Industries '% millions)	Agriculture	1,191	1,239	487	731	900	0)1,683	O) 2,027I* orest ry	556	586	267	494	466	«) 969	0) 1,147Fisheries	73	71	34	51	53	0) 155	0>
168Mining (including Smelting)	277	313	234	663	663	(i) 853	Construction	424	571	267	390	373	544	a) 680Manufacturing	3,101	3,582	1,980	3,625	3,475	<*8,266	<* 7,939Group IV.-Foreign Trade and International	Transactions ($ millions)	Exports (gold excluded)	1,277	1,364	498	1,012	936	3,267	2 339Net non-monetary gold exports <2>	30	40	70	145	184	96	Total exports, including non-monetary gold	1,307	1,404	568	1,157	1,120	3,363	Imports (gold excluded)	1,008	1,222	453	809	751	1,586	1,927Total trade	2,315	2,626	1,021	1,966	1,871	4,949	4 362Export balance	+299	+182	+115	+348	+369	+1,777	+508Net tourist receipts	53	79	65	79	68	Net interest and dividends going abroad	208	229	265	226	249	177	238
(1>
Estimated.
B>
Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Cana la on the basis of official trade returns.
(*) Not available.
83166-166£

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*
£

[Stage Direction]
-	Jan.	Feb.	Mar.	April	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.Group 1.-Comprehensive Indexes (a) (1935-39=100) Physical volume of busineas	..1945 1946	229 195	217 181	225 191	232 193	219 184	220 179	214 180	213 178	205 173	195 179	190 181	194 187
Volume of manufacturing		..1945 1946	274 203	270 198	271 191	271 190	256 187	253 181	249 181	248 181	244 180	232 186	211 192	206 192
													
..1945	174	148	174	183 142	189 156	175	161	156	150	133	131 139	114 1421946	120	98	144	1947	158	..1945	117	127	138	119 144	124	125	125	125	124	133 157	135 157	135 1591946	138	151	147	1947	..1945	152	148	149	149 144	154	156	151	142	119	129 141	138 150	143 1561946	156	147	150	1947	164	..1945	152	150	154	166 164	165 167	164	161	155	146 155	145 155	140 154	142 1581946	152	153	156	1947	...1945	187	186	186	187 179	182 176	175	172	170	166	161 169	164 174	169 1811946	175	174	174	1947	...1945	143	147	194	175	182 217	196	171	178	187	204 227	213 245	255 282
1Q46 1947	160 181	167 183	210	212	lot)	
o

The Budget-Mr. Abbott
Group II-Price Lerel and Financial Factors- 1935-39 = 100)
Wholesale prices,
1946
134
135 14S
186
Farm product prices.
1946
145
159
154
Cost of living.
1946
119
120 127
120 128
Common stock prices.
1946
89
106
122
Bank deposits (d)
1946
216
266
246
Active currency circulation (d)
1946
462
515
497
Group III.-Other Significant Factors
Exports (e) ($ millions)
1946
230
209
153
Imports (e) ($ millions)
1946
130
173
117
Net non-monetary gold exports (f) ($ millions)
1946
9	8
9	10
9	7
Construction contracts awarded ($ millions)
1946
12
45
33
134 138	134 140	134 141	134 141	135 143	134 141	134 141	134 144	134 144	134 145147	147	147	148	151	152	149	152	152	152154	155	156	158	159	155	155	158	158	159119	119	119	120	120	121	120	120	120	120120	121	122	124	125	126	126	127	127	12793	94	97	103	101	100	102	104	107	113119	125	124	123	119	117	104	102	103	106211	214	229	236	225	222	222	229	252	251248	248	249	249	251	253	257	262	270	266479	484	479	481	488	497	506	514	507	509503	507	504	506	508	511	518	522	522	530301	312	315	323	283	295	221	228	239	235178	178	197	167	189	243	170	204	232	212132	133	144	146	139	128	122	134	142	121140	161	164	158	162	163	156	186	198	18210	7	10	5	8	9	7	8	10	610	7	10	8	7	8	7	9	6	720	34	38	59	51	41	42	29	45	2658	76	82	66	68	50	45	73	48	37
>
s

(a)	Indexes seasonally adjusted unless otherwise indicated.
(b)	As at first of month. 1926=100.
(c)	Unadjusted.
(d)	Based on daily average figures; index unadjusted.
(e)	All gold excluded; includes exports of foreign produce.	,	_	,	, _	,	.	,
(f)	Adjusted for changes in stocks of earmarked gold. These figures were computed by the Bank of Canada on the basis of official trade returns.
The Budget-Mr. Abbott
The Budget-Mr. Macdonnell
Mr. J. M. MACDONNELL (Muskoka-Ontario):: Mr. Speaker, it would be a very-ungenerous, churlish and indeed very foolish man, I think, who would seek to begin the speech that I am beginning in any other way than by congratulating the Minister of Finance (Mr. Abbott) on his first budget speech. Happily, under our system of government, we can do this with sincerity. I remember not long ago when, I think it was in the state of New York, the defeated candidate for the governorship congratulated the winner a friend of mine said, "I wonder what the Russians would think of that?" and his answer was, "I suppose they would regard it as deep-dyed hypocrisy". Mr. Speaker, I do congratulate the minister. I also understand the enthusiasm with which his budget has been received and I think, in large measure, we can all share his enthusiasm. Certainly I say, just as he has said, that it does justify pride and inspires confidence in this country. I do not for a minute hesitate to say that for, as lhe has very properly said, it is our budget. It is not his budget; it is the budget of everyone of us *throughout the country. His reference to Sir John Rose and the length of his speech prompted me to do a quick calculation, although it is not an accurate one. I have guessed that if the length of the minister's speech as compared with Rose's speech had been in proportion to the amounts involved, the minister's speech would have gone on for weeks; and, of course, if it had been in proportion to the surplus, about which I shall have something to say in a moment, perhaps the minister's speech would have gone on to infinity.
Having said these words, and with great sincerity, I wish to make some comments on the speech. Of course I intend to follow the practice on these occasions and speak for only a very few minutes. First, I wish to comment on this word "surplus." It strikes me as an unusual word. The minister spoke about it in the beginning; he spoke about it again at the end, and apparently with strong selfcongratulation; but he pointed out honestly that this $352,000,000 was not equal to the amount of the capital represented in the receipts, the special receipts of $372,000,000, which have nothing to do with income. I just want to point out to the minister that, as he is thoroughly aware, this is a strange habit we have in dealing with public accounts which, if it were practised in connection with private accounts, would result not only in the company going broke but probably in somebody having to go to jail. I would also suggest to the minister-and I know he will not

mind this-that years ago when he and I were both in private life and the company with which I was associated wished to seek- and gladly seek-advice from the firm with which he was associated, we never would have wanted approximate accuracy such as we have here. We never would have wanted anything just ninety per cent right, or eighty-five per cent right. I am sure he will agree that when we went to the very good firm with which he was associated we expected 100 per cent accuracy, and nothing less. I should like to point out that it ought to be easier for the government to gauge its expenditures than for the private corporation, because the government has control over so many of the elements entering into the matter.
I want to add just this one word. The minister should not ask us to be so grateful because he has taken several hundred million dollars of our money more than he needed to take, because, after all, that is what it amounts to. I would refer him to a speech made not so many years ago by a gentleman who will be received as a great authority by those immediately to my left, the Right Hon. Philip Snowden, who said that any chancellor of the exchequer who had even a half crown of surplus ought to be charged with getting money under false pretences.
I want to make just this final comment in that connection. We have drifted-and I see it again and again

into a state of affairs where governments really seem to have thought themselves into a state of mind whereby, when they come and announce a surplus, it is just as though they had presented to us a gift out of their own pockets. So often they seem to forget that this is our own money that has done these wonderful things. So I should just like to say that to me this does not seem like good budgeting but very bad budgeting. The government ought to be very much ashamed to come to us and tell us they are five or six hundred million dollars wrong. I really think the minister should have apologized to us for that tonight; and I believe there is an uncritical attitude abroad when people will thump their desks over that sort of thing. I am sure they will feel quite differently in the morning. Many people in this country wdll say to themselves, "Did they really get all this money they did not need? I could have done with that extra money of mine that they took away."


Mr. BERTRAND (Laurier):: A new kind of critic.


James MacKerras Macdonnell: The minister is always apt, even when I do not hear him. In the few minutes which is all

The Budget-Mr. Macdonnell
I can allow myself 1 am not going to take time to comment on the way in which these reductions have been applied, but I should like to say two things. I listened to learn whether anything had been done for the unfortunate children who are still to be asked to pay for their chocolate bar and their pop an amount which apparently is beyond their resources. The minister's heart must have been wrung, I am sure, by a cartoon I and probably he read today, and I cannot understand why a man with such an open heart could have overlooked that point.
I wish to make one other comment of a much more serious nature, though that is serious enough. As far as I could judge on first hearing, it seemed to me there was no beginning to deal with the situation in regard to the gold industry which is so vital in that all important aspect of our business relations, namely, exchange with the United States.
I might deal with other matters, but I should like to say one word in regard to the excess profits tax. It seems to me a pity that it has to be continued on the present utterly unintelligible basis as to the basic period and standard rate.
There is one further comment I wish to make, and here I speak, I hope, with a sense of responsibility and a sense of moderation. In the minister's speech, which I noticed lasted for only two hours, not four hours like some other speeches-


Douglas Charles Abbott: An hour and three-quarters.


James MacKerras Macdonnell: The minister corrects me; he is more accurate than on some other occasions. During all that speech lasting an hour and three-quarters, according to the minister, only about five minutes were devoted to dominion-provincial relations. Indeed, his phraseology suggested that he might have left it out altogether. He began by saying, "Perhaps I should not let this occasion pass without a few comments about this important problem." I think we should be grateful that he did not let it pass altogether, but the comments he made were really proportionate in their importance to the length of time he took to make them. They were brief, and just related to us things we already knew. I wish to make a comment or two on that, because it seems to me that when we are invited to congratulate ourselves-as we may well do on the many favourable features we have seen-it is well to remind ourselves that here is a matter in which not only have we met failure but which, as a friend of mine put it to me the other day, is becoming a scandal; that responsible, sensible statesmen, speaking the same
language, thinking the same thoughts, with the same background, are not able to get together and sit sensibly around a table to discuss matters which are of great importance. We are inclined to criticize the failures that have been experienced at Moscow and elsewhere, but there they have had many difficulties we do not face. What has happened in the last year? On the money side we have had a kind of topsy-turvy, upside-down auction. The federal government has been the auctioneer, but it has been a strange kind of auction. They have bid up the various provinces, and the dominion, the auctioneer, has not received money, but has paid it. The dominion has paid money to everybody at the highest rate reached by anybody. So we have this perfectly topsy-turvy arrangement, which, as I say, has been brought about by this individual method of auction in reverse. Even then we should remember that nobody understands what we have done, because there is an area of uncertainty on the fringe of the whole business. Nobody knows just what has been decided; nobody knows what is to be left to the provinces and what to the dominion. The minister himself was very frank about the matter when speaking in Toronto some weeks ago.
I should like to make this final comment. It seems to me that this is a matter which goes to the very root of our national life. All these pleasant things we have been hearing tonight-and many of them are pleasant- can turn sour and have little effect if we are not able to get together as men of good will and talk these things out. As I was considering what the minister said tonight I pictured to myself the table in the senate chamber. Actually a year ago today, I believe, they were seated there, the Prime Minister at the head, as was fitting, with the premiers of the different provinces. I was thinking that if that meeting took place now there would be three absentees. Why would there be three absentees? Who are these men who apparently are not considered proper to be dealt with? These are men in high standing in their own provinces, one of them formerly a minister here, all of them returned to power more than once in their own provinces. Why is it that we cannot have this? Why is it that we stand as we do now? Is it because of the old maxim which I presume the Prime Minister learned at the university as many of us did-divide and conquer? Can it be that? Is that the reason, or can it be that there is some other reason? Whatever the reason may be, I, who am a newcomer here, make this suggestion, with respect, to the Prime Minister:	Our ancestors had old-
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fashioned ways of talking about it and they might have said, "Will not the Prime Minister as a thank-offering for the return of his health -which we all so greatly rejoice over-now that he is back-say that this thing will be changed, that we shall now try to get together and reconfederate this country which is in such great, need of reconfederation and reintroduce the spirit which existed in this country eighty years ago?"-as the Minister of Finance so well expressed it tonight. I put that forward with deference but with earnestness, and I move that this debate be now adjourned.
Motion agreed to and debate adjourned.



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[Stage Direction]
The house resumed consideration in committee of Bill No. 104, to provide for the continuation of certain orders and regulations of the governor in council for a limited period during the national emergency arising out of the war-Mr. Ilsley-Mr. Macdonald (Brantford City) in the chair.
Charles Edward Johnston: Mr. Chairman, I wish
to continue what I was saying when the committee rose at six o'clock. The Minister of Reconstruction and Supply interrupted me as I was about to conclude my remarks. I had just referred to the laying of hardwood flooring at the rate of three cents per square foot.
I want to tell the minister that between the time the committee rose at six o'clock and the house met at eight o'clock I telephoned no fewer than nine different flooring firms in Ottawa, and on no occasion did I get a bid anywhere near three cents. Not one of them would accept floor laying at the rate of three cents per square foot. I wanted to put this on the record to show that I was not very far out when I made the statement the other day that fair wages could be made at five cents per square foot. I think a man could make fair wages at that rate, but certainly not at three cents.
The thing I was more concerned about was the increase in the prices of retail lumber. It would be a very bad thing for this country and especially for the building industry and those people with small incomes who are endeavouring to get better homes, our returned men particularly. It will be a great impediment to them if prices of retail lumber are allowed to go up. I pointed out before the dinner recess, and I think it is worth mentioning again, that the minister should take some precautions in this regard.

It was brought to my attention during the Easter recess that a great many retail lumber yards are selling grades Nos. 2 and 3 for No. 1 prices. That is something which the minister should talk over with his different controllers and have investigated. It is not reasonable and it will not lead to good construction.
More consideration should be given to increasing production, and I am glad to hear the minister say that a greater percentage of our cut is to be kept at home rather than exported. When we were speaking on this matter during last session I mentioned that there was far too much of our lumber, particularly the better grades, being exported instead of being kept at home to meet the needs of the people of Canada.


Mr. G. H. CASTLEDEN (Yorkton):: I would not have spoken except that the hon. member for Comox-Albemi made some disparaging remarks about this group. He insinuated that we believe that anybody who was not on relief was an enemy of the state. I think the significance to be attached to his remarks lies in the fact that they received intense applause also from the Tory representatives on the right. The true alliance with regard to such matters is certainly evident when so many members applaud the manner in which big business exercises complete control over the life of the people of this country.
I think the reference he was making to our group had probably to do with our reference to the greatest lumber king in the world today. I am not attacking this man personally, but I just want to give the details of the kind of thing that we object to through the abuse of great powers by such persons. This man has operated under a system which he has exploited to the full. It is to such exploitation of our natural resources that we object. I spent some time looking up "Who's Who in Canada", a book in the library which gave me an outline of the kind of thing that this man was able to do.
He started off in 1911 as assistant director of the forestry branch of the old Department of the Interior, Ottawa. He discovered where Canada's forest resources lay. In 1912 he got himself appointed, through some political pull, I suppose, chief forester of the province of British Columbia, which is noted for its vast forest wealth.


Charles Cecil Ingersoll Merritt: Perhaps through his ability.


George Hugh Castleden: Perhaps through his ability, yes. In that position he made a survey of the timber resources of that province. He came back to Ottawa in 1915 as special

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timber trade commissioner and he made a
trip around the world and visited practically every continent. This was a most important trip for him in view of me fact that later on he went into business for himself and through large shipping firms exported lumber to those very countries.
In 1916 and 1917 he was sales manager for the Victoria Lumber Manufacturing Company. From 1917 to 1919 he came back as assistant director of the imperial munitions board. Then a most significant thing happened after the war. He went back to British Columbia and he framed the timber royalty act of that province. Remember you are dealing with natural resources which belong to all the people. We believe that these resources are the birthright of the Canadian people and that they should be developed for their use and not be given away so that one individual can make tremendous profits for himself. We believe that if the Canadian people need lumber with which to build houses they should be able to get that lumber to build houses and that no individual should be given power over these resources to export them to the markets of the world and make himself a multi-millionaire. I understand that this firm paid $400 million for timber rights on Vancouver Island, the leases of which had been formerly held by John D. Rockefeller, Junior. He started to expand from then on until his ships sailed the seven seas to every continent of the world. He became head of his own export company, president of British Columbia Packers, president of Alberni Plywoods, president of the Canadian Chamber of Commerce, a director of the Canadian Bank of Commerce, a director of the Dominion Power and Chemical Company, a director of Forest Investment Company and of International Nickel, president of London and Western Trusts, president of British Columbia Plywoods, president of the Canadian Transport Company, president of the Canadian White Pine Company, president of the Alberni Pacific Transport Company and a member of the Canadian advisory board of the Sun Life Assurance Company.
With his knowledge of lumber he performed valuable service to this government as timber controller in 1940, and later as chairman of the wartime requirements board. After apparently some misunderstanding with the minister, he was later made president of wartime merchant shipping and, I believe, gave valuable service to Canada in his capacity as a manager in building ships for Canada.
We in this group do not consider, as the hon. member for Comox-Alberni insinuated, that just because a man has amassed wealth he is 83166-167
therefore an enemy of the state. But we do believe that the resources of this country should not be available to any person to develop to make himself a multi-millionaire and deny in the development of those resources the very things that are essential to the Canadian people in building houses. Housing is more than a roof over one's head. It has sociological values. Bad housing is a cause of crime. But these people have taken the natural resources which belong to the Canadian people and exploited them to their own advantage. They were not thinking of the Canadian people.


John Lambert Gibson: How is the standard of living in British Columbia? Pretty good, is it not?


George Hugh Castleden: Pretty fair. I am thinking of the power and control which this man has over the timber industry and of what is being done to restore those resources to the Canadian people. In other words-


John Lambert Gibson: You do not know a thing about it.


Mr. MacINNIS:: Then there are two who do not know a thing about it, so you are square.


William Ross Macdonald: Order. If hon. members wish to ask questions they must address the Chair.


George Hugh Castleden: I would ask the minister how priorities are arranged and what quotas timber producers in British Columbia are allowed to export. How do you arrive at the portion of their cut which they are permitted to export? Is it on a quota basis? Is it given to those people who have the facilities for export and have contacts in other countries? What is done about the little fellow who is doing a small timber cutting job on the side of a mountain where perhaps there is not a vast forest?


Clarence Decatur Howe: The answer is very simple. The little man has exactly the same chance to export as the big man. He is entitled to export sixty per cent of his total cut, provided that he places the other forty per cent on the market. I think practically all timber men big and small, take advantage of their export cut. The figures would seem to indicate that.
I should like to say a few words about the speech made tonight by the hon. member for Yorkton, because it was indicative of the attitude of the group to which my hon. friend belongs. He sees nothing in the career of H. R. MacMillan except that he has made money for himself. But that was purely

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incidental. Two of the greatest builders that this country ever saw died bankrupt, but they left a great trail in this country. I refer to Sir William Mackenzie and Sir Donald Mann. Trace the careers of these two men across the country and you will see the great contribution they made to the wealth of the country today. You will see the same in H. R. MacMillan. There was no great timber industry in British Columbia when he started his operations there. He has contributed greatly to the wealth of British Columbia and to the well-being of its people, and he has contributed to the wealth of Canada by creating markets abroad for its natural resources. When my hon. friend says that Mr. MacMillan has done nothing to replace those forests, he is totally ignorant on that point. Anyone who speaks on the subject should take the opportunity to inform himself to some extent. I sincerely hope that a man of his age will take a little broader view of this dominion of ours and of what makes it grow, and give some credit to men who have shown the energy and the resourcefulness of the man to whom he referred and speak of them with some respect.


George Hugh Castleden: The reference I made was to the fact that the Canadian people are short of lumber and that if this lumber is used it should be used for the benefit of the Canadian people more than for the benefit of one particular individual who has apparently worked his way up under the system under which we live. But apparently the Canadian people believe in that system and he has exploited it to the full. That is the only thing in which we differ.


John Bracken: It is not often that I rise in this house to answer statements made by a member in any section of it, but the hon. member who has just sat down made some references to this man without mentioning his name and suggested that by some political connivance he had got a job with the British Columbia government some thirty or thirty-five years ago. I should like to give the hon. gentleman an opportunity to withdraw that imputation before I make further comment. If any young man trained in forestry ever deserved the job that was given to him as chief forester of British Columbia it was this man to whom the hon. member for Yorkton has made such disparaging reference tonight. There was absolutely no political connivance in it at all. He was a young man who got through college largely on his own initiative, and for two years thereafter he had to fight for his life against serious illness. It was because of his capacity that he got

that position. He knew no one in and had no influence with the British Columbia government or with anyone else in British Columbia at that time. I think the hon. member should withdraw his references to this man's appointment as chief forester a third of a century ago, because I know they are without foundation.


George Hugh Castleden: I was stating the record of the man. He was, first of all, an employee here in Ottawa. I said I did not know how he got the appointment in British Columbia. I said that I was not attacking the man personally but was citing him as an example of the type of thing that can happen under the system we have.


John Lambert Gibson: Thank
heaven.


George Hugh Castleden: You must keep quiet until I get through. You are the fellow who started this with the remarks you made. I said that I was not attacking this man but that he was a man who had exploited to the full the system under which we live.


John Bracken: The hon. member suggested that, by some political connivance, he got this job in British Columbia.


George Hugh Castleden: No.


John Bracken: That was the impression left with the committee.


Howard Charles Green: It is not very often that I get up to agree with the minister of reconstruction. As a member from British Columbia who has been here for quite a few years I should like to say that I agree with his remarks with regard to the statements made this evening about Mr. H. R. MacMillan. The hon. member for Yorkton has made statements which were without foundation and which were most unfair to any Canadian, poor or rich. I suggest to hon. members of the committee that it does very little credit to parliament to have statements of that kind made on the floor of the house.


George Hugh Castleden: I should like to know the statements I made to which the hon. member refers.


Howard Charles Green: The hon. member knows what they were.


George Hugh Castleden: I took them exactly from "Who's Who", and the hon. member can read them himself. What were the statements I made that were not correct?


John Bracken: I pointed out one.


George Hugh Castleden: I withdrew that. In my speech I said I did not know whether he

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had got the appointment through political influence. He did get the position and I admitted it may have been through his ability.


John Bracken: That is the only point to which I referred. I am glad to see that the hon. member has withdrawn any imputation such as that left with the committee in the early part of his remarks.


Mr. ARCHIBALD:: Seeing that the hon. member for Comox-Alberni brought me into the debate this afternoon, I should like to say a few words on this matter. The sweet reasonableness of the logging companies has been apparent only in the last few years of high prices. Prior to the war, there were such institutions as Black's logging agency and Black's black list.


John Lambert Gibson: The hon member would be on it.


Harry Grenfell Archibald: Yes, I would be on it.


William Ross Macdonald: I must insist that all remarks must be directed to the Chairman and not to hon. members. Hon. members must not interrupt without the consent of the hon. member who has the floor.


Harry Grenfell Archibald: The Minister of Reconstruction and Supply talked about the fact that reforestation was taking place on a reasonable basis alongside the cut in British Columbia. Seemingly the British Columbia government did not think so, because at the last session of the legislature they put through a bill conserving the timber resources and developing certain laws for reforestation. Therefore, in making the statement the minister must have been basing it on what has taken place in the last three or four months, because, prior to that time, the cut had been going on at a far greater rate than reforestation had been filling in the gap; otherwise I am quite certain that the provincial government would not have been driven to the necessity of enacting laws to see that reforestation would take place.


Mr. TIMMINS:: I understand that control has been lifted from wooden containers and *wooden boxes. How does that fit in with the picture of control? Is it the intention of the timber controller or of the department to decontrol certain features of the industry from time to time?


Clarence Decatur Howe: I thought we had been trying to explain in the last eight weeks that we were in the process of orderly decontrol. Boxes are an end product of the lumber industry. The purposes of control is to control the end products first and the basic product last. I think it is quite logical to start the decontrol of lumber by beginning with boxes.
83166-167J


Mr. BENTLEY:: I do not think it is fair for hon. members to make personal remarks across the floor. Some of the argument that took place here this afternoon may have been unfortunate. The hon. member for Comox-Alberni made a slighting remark to the hon. member for Yorkton. I believe the remark was that, had the hon. member for Yorkton as much ambition as somebody else who was taking part in the discussion at that time, he might have been a better man. I want to point out, Mr. Chairman, that I have known the hon. member for Yorkton for a great many years. In his capacity as principal of a school and, before that, as a teacher, no man has given more of his time and energy to the young people of our province than he. He has studied and worked in the interest of his fellow teachers and citizens. He may not have been as financially successful as the hon. gentleman who took part in the discussion.
Another thing that is sometimes unfortunately bandied back and forth is the intimation that nobody over here has any knowledge of the lumber industry. I should like to point out to the hon. gentleman from British Columbia, or to hon. gentlemen from any part of the house that, while they may know some things about the logging industry that I do not, the sum total of my knowledge of that industry is as great as that of anybody else in this committee. It may be that I know some things that they do not.


John Lambert Gibson: Oh, oh.


Thomas John Bentley: If the hon. member does not believe me let me tell him that, as old as I am, I shall follow him anywhere on loose timber in white water right now.


John Lambert Gibson: There is no white water in British Columbia.


Thomas John Bentley: I doubt whether the hon. member has ever worked under the tough conditions that I have worked. Statements of the kind which are made here should not be made. Since the hon. member for Yorkton has withdrawn any slight imputation he may have made regarding the person that so many people here want to defend. I consider it only fair that the hon. member for Comox-Alberni should indicate that he agrees the hon. member for Yorkton is at least as ambitious and as good a man as any other man in the house.
P.C. 1997 agreed to.
On P.C. 1665 and P.C. 469.


Mr. FLEMING:: May I say a word about these next two orders P.C. 1665 and P.C. 469? Actually they were passed in the committee on Thursday last. I have drawn to the atten-
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tion of the minister a clause in these two orders which does not fit the facts, and I would ask leave of the committee to reopen these two orders for the purpose of introducing correcting amendments which the minister has in hand.
May I just in a word mention the point involved in the two orders? These are orders dealing with the administration of property of persons of the Japanese race by the custodian of enemy property. Section 3 of the first order, P.C. 1665, reads as follows:
For the purposes of the control and management of such property hy the custodian, the consolidated regulations respecting trading with the enemy (1939), shall apply mutatis mutandis to the same extent as if the property belonged to an enemy within the meaning of the said consolidated regulations (as amended by P.C. 2483, March 27, 1942).
A. similar provision appears in order P.C. 469:
. . . and for the purpose of such liquidation, sale or other disposition the consolidated regulations respecting trading with the enemy (1939) shall apply mutatis mutandis as if the property belonged to an enemy within the meaning of the said consolidated regulations.
Actually these consolidated regulations of 1939 were superseded completely by new regulations in 1943, many of which were revoked in January of this year. It will be necessary to make changes in the wording to take account of the changes made in the consolidated regulations. I have discussed this matter with the minister, Mr. Chairman, and I believe he has an amendment prepared along these lines.


James Lorimer Ilsley: With the unanimous consent of the committee, we shall return to these items. I should like to move:
That the following be inserted in the schedule to the act in the column entitled "Amendments" so as to pertain to order in council P.C. 1665 of 4th March, 1942, as amended:
"Section 12 (3) is revoked and the following substituted therefor:
T2(3) For the purposes of the control and management of such property by the custodian the revised regulations respecting trading with the enemy (1943) or any act or regulation which may be substituted therefor, shall apply mutatis mutandis to the same extent as if the property belonged to an enemy within the meaning of the said revised regulations, act or regulation'."


[Stage Direction]
Amendment agreed to.
P.C. 1665 as amended agreed to.
James Lorimer Ilsley: I should like to move:
That the following be inserted in the schedule to the act in the column entitled "Amendments" so as to pertain to order in council P.C. 469 of 19th January, 1943, as amended:

"All the words after the semicolon in the final paragraph of P.C. 469 are deleted and the following substituted therefor:
'and for the purpose of such liquidation, sale or other disposition, the revised regulations respecting trading with the enemy (1943) or any act or regulation which may be substituted therefor, shall apply mutatis mutandis as if the property belonged to an enemy within the meaning of the said revised regulations, act or regulation'."


[Stage Direction]
Amendment agreed to.
P.C. 469 as amended agreed to.
On P.C. 133/510.
Alfred Johnson Brooks: I wish to say a few words on this order in council. There are two orders in council, P.C. 133/510 and P.C. 3396, dealing with merchant seamen, and I take it that we can discuss them both at the same time.


William Ross Macdonald: Does the committee agree? The committee agrees to discuss both orders in council at the same time.


Alfred Johnson Brooks: At this late hour it would perhaps not be right to make any extensive remarks, but we all recognize the great importance of the merchant seamen and the magnificent service they gave during the war. They were called, I believe, the fourth branch of the service, and, rightly so. It is pretty hard to estimate just what the people of the country owe to these men, but we get some idea when we realize that there were over 1,200 casualties among the merchant seamen during the war-over 600 fatal casualties. As a matter of fact, it has been estimated that the casualties were heavier among the merchant seamen than they were in any other branch of the services for the numbers engaged1 ir that work. Of 185,000 men engaged in the merchant marine of Great Britain, there were 38,000 fatal casualties. I say this in order to give some idea of the great risk, and the great sacrifice which was made by these men.
Enlistments in the merchant marine were, as we know, of young men and old men. Many of them were young men who had been turned down for service in the other branches, and the others were older men who were too old to serve in those branches. In our veterans affairs committee last year the services of these men were partly recognized, in that they were included in the Pension Act for disabilities during their service. However we understood then-


Mr. CHEVRIER:: I do not wish to interrupt the hon. gentleman, and I would be the last to attempt to stop him from discussing benefits or establishments of any kind to which merchant seamen are entitled. But I understand, from the ruling of the Chairman,

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already given, that the discussion should be centred around one or the other of these orders in council. The first one has to do with compensation for merchant seamen, for the loss of their effects; the other has reference to out-of-work benefits, and I presume my hon. friend wants to discuss benefits other than those to which merchant seamen might be entitled. My suggestion is that that is not in order.
Mr. BROOKS; I was discussing out-of-work benefits. There is one thing we have recognized, I believe, through all these orders in council, namely, that we have not been confined to the absolute wording of the order in council. There has been considerable leeway, and I contend that in discussing benefits in connection with the merchant seamen, and out-of-work allowances, we can give expression to what we consider are benefits that should have been extended to these men.


James Lorimer Ilsley: This is clearly out of order. My hon. friend must realize that he is talking about a different kind of benefit entirely. He is apparently going to advocate gratuities or something like that, which would come under veterans legislation or civil service legislation, whereas we are talking about compensation to seamen, war damage to their effects, and that does not open the door to a broad discussion of the problems of merchant seamen. If we do not get down to business some time this session we shall never get anywhere.


Alfred Johnson Brooks: We spent most of the evening in discussing H. R. MacMillan, and I consider a discussion of this kind with reference to merchant seamen is more important than the discussion of an individual.


James Lorimer Ilsley: It may have been so, and perhaps we should have taken exception then, but I am appealing to the sense of responsibility on the part of members and for a little bit of respect for the rules. This is so far afield that it is not at all arguable that it is in order.


Lionel Chevrier: And there will be several opportunities again to discuss it.


Howard Charles Green: On the point of order raised by the two ministers, these two orders in council dealing with pension allowances to merchant seamen-


Lionel Chevrier: They do not deal with that at all. Read them.


James Lorimer Ilsley: They do not deal with that.


Howard Charles Green: In effect, it is war payments to merchant seamen. These men do not come
under veterans legislation, unfortunately. I wish they did, and they certainly should have done, but I submit to Your Honour that we are entirely in order in going over the allowances paid to the merchant seamen. Certainly that is covered under P.C. 3396, and I am surprised that the Minister of Transport should try to curtail discussion on this subject at this time.


William Ross Macdonald: I think there has been too much latitude during the last few days in connection with the orders that were being considered, and it has been done only with the unanimous consent of the committee. We have not unanimous consent any longer. The committee feels that we should discuss the orders in council according to the rules. I have not the rule before me, but my recollection of the wording is that all discussion in committee must be directly relevant to the item under consideration.


Ian Alistair Mackenzie: The rule is 58, subsection 2.


William Ross Macdonald: The Minister of Veterans Affairs reminds me that the rule is 58, subsection 2, and in view of the fact that there is not unanimous consent to a wider discussion under the provisions of the order in council before the committee, I must ask hon. members to make their remarks directly relevant to the order under consideration.


Alfred Johnson Brooks: Under P.C. 133/510 this is for compensation to fishermen and personnel of the Canadian merchant navy for loss of effects during enemy action or counter action. Section 8 at page 159 of the office consolidation of the orders in council states that until the appropriate department otherwise directs, no compensation shall be payable under these regulations in respect of any claim which has not been made within one year after a war damage has been incurred. The date of this first regulation was in 1944, and there were manj' merchant seamen who had suffered damage and who lost their effects before that year. I should like to know from the minister just what if anything has been done to compensate these men for the loss of their equipment before that date, and why it says a year from the date of loss. I know that when we were discussing this matter in the veterans affairs committee it was considered that these men might perhaps be away from home for long periods and that it would be impossible for them to enter their claim. In view of the fact that this order in council was passed in 1944. would any provision be made for these many thousands of men who lost their equipment and personal effects through enemy action prior to that date?
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Lionel Chevrier: I will try to get the information for the hon. gentleman in a moment, but I can give him the number of claims that have been made under the order in council, which has been extended, as he knows, and which it is hoped to bring to a conclusion by the end of July of this year.


Harry Grenfell Archibald: I should like to contribute a few remarks to the discussion of these orders in council, especially P.C, 4306 dealing with the shortage of trained personnel in the merchant marine, and therefore the sending out of ships under circumstances where their trained personnel are not as qualified as they normally would be; and also with P.C. 3396, which deals with unemployment benefits to seamen, which are benefits, of course, mainly to non-technical personnel. The lack of a proper Canadian merchant marine in the past causes the shortage of trained personnel at the present time. The out-of-work and unemployment benefits are a direct result of large numbers entering the merchant marine during the war, of course through necessity; and now, because of the policy of the government of disbanding that merchant marine which we built up during the war we find that we have large numbers of sailors on the beach. I have had communications from the marine council of the Trades and Labour Congress of Canada and also from the seafarers international union of North America complaining of this fact. For example, the trend at the present time is to sell the whole of what was formerly the Canadian merchant marine to foreign interests; whether it be to British interests or others, it does not matter. In fact, they could be sold to Canadian interests. But what is happening is that the ships are being put under Panamanian registry, a country which has no maritime laws. Therefore crews can be hired under any conditions whatsoever and our Canadian seamen can be left on the beach. That is what is happening at the present time. What the seamen are interested in at the moment is this: Is the government going to bring down amendments to the Canada Shipping Act at the present time, and is the government going to stop the importation of foreign crews to man boats going out of Vancouver?


Lionel Chevrier: Is the hon. member directing his remarks to the first order in council, P.C. 133/510? The Chairman has made a ruling that the discussion is on that order in council. If my hon. friend wants to go all over the field of the merchant marine, I shall

be prepared to discuss that when the time comes; but I do not think this is the place to do so.


William Ross Macdonald: Order. I understood that at the opening of the discussion on the orders in council under the heading "Department of Transport", it was agreed that the four orders would be considered at the same time and passed at the same time. If that is so, the hon. member for Skeena would be in order in discussing P.C. 4306 and P.C. 3396. which I anderstand he is now doing.


Harry Grenfell Archibald: Thank you, Mr. Chairman. The fact that these orders in council are put through shows that there is a shortage of trained technical personnel. If there was a decent merchant marine policy, you would not have these orders in council. Granted you would have the unemployment benefits, but they' wtould not be needed with the heavy amount of shipping that is going out of our ports at the present time if we had a Canadian merchant marine. Are we to be faced once again with a crisis where we have to call in experts of foreign nations to take over the job of officering our ships in another crisis? That is what will happen owing to the lack of foresight of the government at the present time unless something is done.. I should be pleased now to hear if the government is considering bringing down amendments to the Canada Shipping Act at the present time, to protect seamen from this policy.
Let me give an illustration of what is happening. A ship will be taken out of the port of Seattle and towed up to the port of Vancouver to be overhauled. It will be manned with a United States crew to bring it up to Vancouver. Then a Chinese crew will be imported to put on board that ship in the port of Vancouver, because that cannot be done in Seattle. Canadian seamen are thinking of picketing these ships. You are going to have labour trouble about this. Can we expect any help from the government in protecting our Canadian seamen on jobs which should be their own?


Lionel Chevrier: I fail to see how the question which my hon. friend asks has anything to do with any of the orders in council which are under discussion. However, in case he may think that I do not want to answer the questions which he asks, I may tell him that amendments to the Canada Shipping Act are matters which cannot be disposed of in a short time. There are some eight hundred sections to the Canada Shipping Act. In my estimation not only one but many amendments are required. I have asked a group of

Emergency Powers
officers of my department to look into the question of amending the act. So far as I ean see at the moment, I do not think it will be possible to bring down amendments to the Canada Shipping Act at this session. However I hope that at the next session of parliament it will be possible to make amendments to the act which will perhaps not meet the situation which my hon. friend speaks of but which will have in mind a- number of complaints which have been made against the operation of that act, and to make a number of amendments which I think are justified.


Harry Grenfell Archibald: I should like to thank the minister for his answrer, because any improvement in the present situation will be beneficial. I recognize that it takes time to overhaul this act. In fact, when it was put through in 1934 the present Minister of Veterans Affairs and the present Minister of Labour objected to the speedy way in which this was done. I am glad that the department is taking plenty of time to go over it. I hope that it will bear with the representations made by labour and put in many of the points which labour is asking for at the present time, and which are incorporated in the laws of many of the modern seagoing nations.
P.C. 133/510, P.C. 2245, P.C. 4306 and P.C. 3396 agreed to.
On P.C. 9781.


James Lorimer Ilsley: I was asked for some information about this, by the hon. member for Calgary East. He asked that the matter stand. The specific question asked is whether heater treaters are covered by the provision for free entry. I have made inquiry and I find that they are not, because they are regarded as machinery connected with the processing or refining of the oil rather than the mining of it. The hon. gentleman said that if they were not covered he thought he should move an amendment. This is a revenue matter. It is a tariff item; I submit that it is not competent for a private member to move an amendment, and I would submit that this is not the place to move an amendment putting an item on the free list of the customs tariff.


Mr. HARKNESS:: Is the minister himself prepared to insert those words in this particular clause?


James Lorimer Ilsley: No. It cannot be done unless it is preceded by a resolution approved by His Excellency the Governor General. I would not be prepared to do it anyway, because of the object of the item. The item was to encourage mining rather than refining or processing; it is to encourage the drilling rather than the refining or the processing after the oil is brought up. This process here, I am told, is not directly connected with drilling.


Douglas Scott Harkness: I should like to point out to the minister that this is not a refining process. This particular piece of apparatus might really be considered as an extension to the piece of pipe which brings the oil up from the ground. The apparatus simply separates from that oil the sand and water found in it, enabling the oil to be shipped, particularly in the winter time. As I understand it, if this oil is put in tanks to be shipped during cold weather there is a freezing of the water contained in the oil, and consequently there is great difficulty in getting the oil out of the railway tank cars or other containers, with the likelihood of damage. As a result, the oil cannot be made use of in the winter time particularly, unless it is treated in this manner. So I do not think this should be looked upon as a refining process.


James Lorimer Ilsley: Probably I should not have said "refining"; I used the wrong word. The correspondence with the Department of National Revenue contains statements like this:
This apparatus has nothing at all to do with the well but is apparatus for taking the water out of the oil after it leaves the well.
That had not been the original purpose of the item at all. In any event, I do not think this is the place to make an amendment to the item. As I say, it would have to be preceded by a resolution, and dealt with in a different way.


Lionel Chevrier: May I be allowed to answer a question asked a moment ago by the hon. member for Royal, for which I did not have the information available at the time. He wanted to know what provision was being made in connection with claims made prior to 1944 for compensation for the effects of seamen lost at sea. The order in council covers all claims prior to 1944, and, as far as the department knows, no seaman has suffered any loss because he incurred it prior to 1944.


Gordon Benjamin Isnor: I should like to ask the minister one question; I intended to make some remarks on the subject, but somebody called "carried" and I allowed it to go. The minister will recall that last year my late colleague brought to his attention the question of a certain number of pilots who lost their lives off Halifax harbour. As I recall it, there were some eight in number, and I was won-
Emergency Powers

dering whether their claims had been settled. I believe this comes directly under this order in council.


Lionel Chevrier: I am informed that it was a marine risk and not a risk covered by any enemy action as set out in the order in council.


William Ross Macdonald: Order. The committee is now considering P.C. 9781. Does this order in council carry?


Douglas Scott Harkness: No, Mr. Chairman. I am quite prepared to accept the statement by the minister that -this is not the proper place to have this particular piece of apparatus dealt with under this provision. However I should appreciate it very much if the minister would indicate when the matter might properly be considered, so that I may take it up at the poper time and see whether some more liberal, broader interpretation cannot be made as far as this order in council is concerned or, otherwise, to have this apparatus, included in the regular tariff item.


James Lorimer Ilsley: I understood from the
budget speech tonight that tariff changes were not to be proposed this year. That being the case, it may be difficult to find an opportunity for the hon. gentleman to bring up the matter, other than to advocate it in a speech on the budget or something of that kind. Certainly it is a budget matter. It is just a matter of trying to persuade the Minister of Finance, I suppose, that he should take the duty off this particular piece of apparatus.


Howard Charles Green: How does one do that?


James Lorimer Ilsley: I am not taking any position on the matter, one way or the other; I am saying that, from the point of view of those who framed the order, they did not have anything like this in mind. The item was designed to assist in the production of petroleum, and the basis was an item relating to the production of petroleum. It does not cover apparatus which deals with the petroleum after it is removed from the ground.


Stanley Howard Knowles: I wonder if the Minister of Finance was able to get the information for which the hon. member for Kindersley asked when this item -was up previously. Unfortunately the hon. member is away, or perhaps I should say fortunately; he is on the trip to Lake Success.


James Lorimer Ilsley: I have reams of it here, which will take quite a long time to read. A number 
of questions were asked which were very difficult to answer. Is it necessary that I put it on Hansard? Can I not send it to the hon. gentleman? Did he have any purpose in mind in wanting a record made of it?


Stanley Howard Knowles: The hon. member for Kindersley was interested in a little history in connection with this matter. He was also interested in learning whether something could be done to restore the order in council to the way in which it read in the first part, so that it would not discriminate against material used in water wells. My colleague comes from a part of the country where they are interested in that kind of material.


James Lorimer Ilsley: I know, but I just have to make the same answer I gave the hon. member for Calgary East. We cannot just spread out from this item in every direction and put on the free list everything we think it would be nice to have on the free list. This was an item to encourage the production of petroleum; it was recommended by a production advisory committee in Alberta, who never had water wells or water equipment in mind at all. It got in there by accident or mistake, somehow or another, and then was taken out; it never had any place there. It is just another tariff matter, as to whether we want to put equipment for producing water on the free list. It is not something to be brought in collaterally in this way.


Stanley Howard Knowles: Then may I ask just two questions. First, was consideration given since April 18 to the point raised by the hon. member for Kindersley, namely restoring the order in council to its former status; and second, is the information the minister has in his hand such that he could furnish it to the hon. member for Kindersley?


James Lorimer Ilsley: Yes, I can furnish it all to the hon. member for Kindersley. There is one question we cannot answer. It is:
By whom were the importations made, and is the material imported duty free available in Canada from Canadian manufacturers?
The answer is:
It is not customary to disclose the names of individual importers and, furthermore, to do so would involve a long search through the files of customs entries. Since the imports under this item were not limited to "class or kind not made in Canada," it is probable that some of the imported material would be available in Canada from Canadian manufacturers.
I will send the whole thing to the hon. member for Kindersley.

Dairy Products and Eggs


Stanley Howard Knowles: In other words, if he wishes to raise the matter later on he may do
so?


James Lorimer Ilsley: Yes.
P.C. 9781 agreed to.
On the schedule.


Donald Methuen Fleming: There is one matter I
should like to speak to, and I can do so in the space of two minutes if I may proceed now. It is in relation to the schedule generally. AVe have just completed a review of a schedule which embodies 163 pages of fine print; yet if the bill is enacted in its present form, or with the schedule in its present form, it will appear as a bill about four pages in length. I submit that the schedule to the bill should contain the text in full of the orders as amended which are now to receive statutory effect. All that we have in the present schedule is a reference to these orders by number, date and name. I submit that the text of the orders ought to appear in the schedule to the bill itself.
My reasons are briefly these: First of all, there must be an official text of these orders which now receive the force and effect of statute. At present that is not to be found in the statute itself; one must refer to the original orders which are on file in the privy council office. I submit that that is not the proper form in which this parliament should legislate.
In the second place, there is a distinct gap in the statute books. People who wish to know the statute law of this country are entitled to find it in the statute books, and they will not be able to do so if this schedule is passed in its present form. Here is a whole volume which will be missing from the statute books if the schedule does not contain the full text of the orders. It may be that power is reserved to revoke certain orders, but I submit that when these orders become the statute law of the land they should appear in full in the schedule. Therefore, without further elaboration of the point, which I suggest is self-evident, I move:
That the schedule to Bill No. 104 as amended be further amended by printing therein the text in full of the orders in council numbered in the first column, as amended by those numbered in the fourth column in the said schedule.


James Lorimer Ilsley: I am sorry; I cannot accept that amendment.
Progress reported.
It being five minutes after eleven o'clock, the house adjourned, without question put, pursuant to standing order.
Wednesday, April 30, 1947