1947-05-06

Mr. GEORGE BLACK (Yukon):: With the leave of the house I present to the honourable the House of Commons of Canada in parliament assembled the petition of a number of Canadian and British subjects residing in Yukon, petitioning parliament not to add the Mackenzie district of the Northwest
83106-178$
Privilege-Mr. Tucker

Territories to Yukon electoral district, and giving their reasons for such petition. I think the petition will be found in order according to the form.



PRIVILEGE


[Stage Direction]
On the order of motions:
Mr. W. A. TUCKER (Parliamentary Assistant to the Minister of Veterans Affairs):: I should like to speak on a question of privilege affecting this parliament and a committee of parliament. It has to do with a letter which is being sent through the mails bearing. the signature of Tom L. Poulsom, Rochfort Bridge, Alberta. From time to time since the session started members of parliament have drawn to my attention copies of this letter which they have received by mail from constituents. They have suggested that as the conduct of the special select committee on veterans affairs for 1946 is called in question, as chairman of that committee I should make a statement. I had hoped that the sending out of these letters would cease and perhaps a statement would not need to be made. However these letters seem to be still going out so I decided I should give the facts to the house.
This letter makes general accusations of forgery and theft against the soldier settlement board. It suggests that the veterans affairs committee should have called him, Poulsom, as a witness, and that in not doing so, criminal civil servants, in his words, were being "shielded" and "wet-nursed" and that swindling of the veteran, dominion treasury and taxpayer was being permitted to go unchecked by members of parliament.
At the start of its work the veterans affairs committee, in accordance with the usual practice, set up a steering committee. This committee, consisting of Messrs. Green, Brooks, Wright, Quelch, Croll, Tremblay and myself, was to decide, among other things, on what witnesses should be called. When Poulsom made his first accusation, pursuant to instructions by the steering committee I asked him to send details of his charges giving specific facts, names, dates, places and details; otherwise the committee would not consider them. Mr. Poulsom's response was to repeat his general charges.
The steering committee thereupon on May 23, 1946, further considered the matter. It had formerly decided that so much work lay before it that it was doubtful if it could be completed no matter how assiduously the committee worked. The steering committee had there-

fore recommended to the committee as a whole that no individual case would be heard unless same was sponsored by some representative organization. This recommendation had been communicated to the committee as a whole and was accepted and approved by the committee. The committee, as the house knows, consisted of sixty members of parliament, all ex-servicemen. In view of this policy of the committee and the further fact that Poulsom had not been willing to bring forward a single fact to substantiate his general charges or even to make a. specific charge of wrong-doing, the steering committee on May 23, 1946, decided to recommend that Mr. Poulsom be informed of the committee's policy not to hear representations from individuals unless sponsored by representative veteran organizations or other responsible bodies. This recommendation of the steering committee was concurred in on May 23, 1946, by the committee itself on a motion duly made and carried. References to the matter may be found in the records of our proceedings of May 21 and 23.
From the foregoing, it will be seen that my actions in the matter were taken on the instructions of the committee itself.
To the extent that Mr. Poulsom's charges relate to his own dealings with, the soldier settlement board the director reports as follows: T. L. Poulsom was established under the Soldier Settlement Act by an agreement for sale dated October 16, 1919. Due to his failure to live up to his agreement he was served with notice of rescission of contract on December 8, 1942. Poulsom's appeal was heard by Judge Matheson at Edmonton on March 29, 1943. Matters in dispute were fully heard. Poulsom's solicitor was J. Boyd McBride, K.C. A final settlement was reached between Poulsom and the board.
Confirmation of the settlement is contained in an official letter dated March 29, 1943, from Poulsom's solicitor to the district superintendent at Edmonton in part as follows:
This is a final and absolute settlement of all points which heretofore have been in dispute extending over a period of many years . . . this letter has been dictated in Mr. Poulsom's presence.
The director reports that he has carried out his part of these proposals.
He also reports that Mr. Poulsom has from time to time circulated charges against the soldier settlement administration alleging perjury, forgery, theft and other crimes. The director reports that there is no evidence in departmental records indicating that any of the alleged offences have been committed by members of the departmental staff, but if Mr. MAY 6, 1947
Privilege-Mr. Stuart
Poulsom thinks any offence has been committed, he may lay a charge before a magistrate. He was invited to do so a year previously, but no such action has been taken by him.
So far as I am concerned I repudiate any suggestion that our veterans affairs committee shielded any wrongdoer. Such a suggestion is most unfair and unjust to the members of this house who were members of our veterans affairs committee. Poulsom was given a chance to make a specific charge. He refused to do so but continues to circulate his general charges. These charges are of such a general nature that it would be difficult for anyone to take action on them to disprove them, and so they are unfair to the civil servants involved. They are also unfair to a committee of ex-servicemen who did a great deal of work in two sessions considering and recommending legislation to improve the programme for the rehabilitation and reestablishment of our exservicemen and women. I need hardly say that in the course of its work our committee protected or shielded nobody.




Mr. A. W. STUART (Charlotte):: Mr. Speaker, I rise to a point of privilege in reference to statements in the Halifax Herald of April 26 and 30, which I feel should be brought to the attention of the hon. members of this house, particularly the maritime members.
The first article appeared on the front page of the Halifax Herald of April 26, and featured, "Canso project laughed down in house session," by Evelyn S. Tufts, staff correspondent of the Halifax Herald. The second item appears on the editorial page of the Halifax Herald of April 30:
And with Mr. Gillis laughed down, one may wonder what the other maritimers were doing? Was no voice raised to champion the questioner?
Surely important public works projects which afford new facilities for maritime industry and transportation are worthy of the consideration of all maritime members, regardless of party. Surely any move towards relieving unemployment in maritime areas is their concern, as well. Let us believe that, if they did not support the member for Cape Breton South, at least they refrained from the ill-timed laughter.
I was in my seat, Mr. Speaker, when the hon. member for Cape Breton South (Mr. Gillis) rose to ask the Minister of Transport the question I have mentioned, which was ruled out of order by the Speaker. If a scene such as described in the Halifax Herald did take place at that time, I failed to see it. "The general uproar-the cruel, vulgar, illtimed laughter"-this statement is unwarranted and greatly exaggerated and would appear to be steeped in political prejudice.
As I have stated in this house on previous occasions, constructive criticism is very helpful and should be appreciated.


Some hon. MEMBERS:: Order.


Mr. SPEAKER:: I would ask the hon. member to state his question of privilege as briefly as possible.


Mr. GILLIS:: Without reading it,


Mr. GRAYDON:: Stop making a political
speech.


Andrew Wesley Stuart: This is of great importance to the maritime provinces. As I have said in the house on previous occasions, constructive criticism is very helpful and should be appreciated.


James Horace King: Order.


Andrew Wesley Stuart: Criticism of this nature, however, contributes little and has a very damaging effect.


Some hon. MEMBERS:: Order.


James Horace King: I really believe I have given the hon. member enough latitude.


Mr. KNOWLES:: Too much.


Andrew Wesley Stuart: Mr. Speaker, it is this type of journalism


James Horace King: Order. I would ask the hon. member to abide by the rules. He has had ample time to state his question of privilege, and should not use it to make a speech.


Mr. MacINNIS:: Let him make the rest of his speech on the budget.



TRANS-CANADA AIR LINES VANCOUVER AIRPORT-PROPOSAL TO TRANSFER FACILITIES TO ABBOTSFORD

[Stage Direction]
On the orders of the day:
Mr. G. A. CRUICKSHANIC (Fraser Valley):: Mr. Speaker, I should like to ask a question of the Minister of Reconstruction and Supply or, in his absence, his parliamentary assistant, This might be taken as a notice. According to the press, Mayor G. McGeer is not willing to accept an agreement for the Vancouver airport. If this is correct, will the minister arrange to transfer Pacific coast Trans-Canada Air Lines facilities to the Abbotsford airport, which is the only one on the Pacific coast free from fog the year round and capable of expansion to handle the largest Trans-Pacific aircraft?
Inquiries of the Ministry


Mr. G. J. McILRAITH (Parliamentary Assistant to the Minister of Reconstruction and Supply):: I have not had an opportunity of getting an answer to the question. Perhaps the hon. member would let it stand as notice.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. HUMPHREY MITCHELL (Minister of Labour):: Mr. Speaker, the hon. member for Cape Breton South (Mr. Gillis) is interested in the present position of the men who left the Cape Breton area of Nova Scotia to work for the Massev-Harris Company, Limited, at Brantford, where there is a stoppage of work. I would like to inform him that ninety men left the area referred to in order to work in the factory at that plant. Since twenty-four moulders walked off the job on April 30, the entire factory, employing 500 men, has been closed. All the ninety men from Nova Scotia have been offered1 other employment by the company, that is, clean-up work, yard work, etc., at the minimum rate of pay they were guaranteed before leaving Nova Scotia. So far, sixty men have accepted the offer, leaving 30 men not now working. All these men are being furnished with board and accommodation in the company's bunk-house.


Clarence Gillis: Thank you very much.



STRAIT OF CANSO


[Stage Direction]
On the orders of the day:
Clarence Gillis: Mr. Speaker, I should like to ask
a question of the Minister of Transport. Have tenders yet been called for the construction of a causeway across the strait of Canso? If not, are they in the course of preparation?


Hon. LIONEL CHEVRIER (Minister of Transport):: Mr. Speaker, the hon. member
asked that question the other day. At that time he was called to order, and told that the question should have been put on the order paper-just as this one could. But I will say this to him now, that the method of transportation at Canso is being given very serious consideration. When a decision is arrived at it will be announced in this house as government policy.
[Mr. Cruickshank.l



CANADA EVIDENCE ACT


[Stage Direction]
Right Hon. J. L. ILSLEY (Minister of Justice) moved the third reading of Bill No. 175, to amend the Canada Evidence Act.
Motion agreed to, and bill read the third time and passed.


[Stage Direction]
Hon. J. A. GLEN (Minister of Mines and Resources) moved the third reading of Bill No. 10, to amend the Immigration Act and to repeal the Chinese Immigration Act.
Motion agreed to, and bill read the third time and passed.


[Stage Direction]
The house resumed from Tuesday, April 29, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. M. MACDONNELL (Muskoka-Ontario):: Mr. Speaker, I shall have to ask some indulgence from the house today because I have been ill and have not been able to prepare myself as I would have liked. However, the house will at least benefit, inasmuch as I shall not speak as long as I otherwise would.
When we adjourned on Tuesday last we were in what I suppose might be called a sort of sunshine atmosphere. The budget which the minister had read was one which it so happened that most of us in this chamber were able to benefit from, and we were inclined to think well of it. But I am inclined to think that as time has gone on there are people who began to reflect and as other considerations entered into the matter some misgivings may have entered their minds and they may not be quite so sure that all is well.
I do not intend to labour again the question of the surplus. That has been dealt with, and I have no doubt will be dealt with again. I think really it was a bit of good clean fun, but it does occur to me that if some of the finance ministers of former days, men like Mr. Fielding and Sir George Foster, were able to come and ask the minister, "Is it really true that you were able to have a surplus which was

The Budget-Mr. Macdonnell
made up by selling things which you had not had to pay for out of taxes, which were paid for out of borrowed money?" and if the minister had said, as he would have said, "Yes, that is quite true," they would have said, "Well, these are rather strange and wonderful days; you have certainly progressed beyond the days when we lived."
What should we ask of a budget? What is it for? Obviously, first of all, it is a statement of the country's expected receipts and disbursements, and also it is a statement of any changes in taxation. In the second place, and perhaps just as important, it should try to give us, and the minister did at considerable length, a picture of the country's position -not merely a set of figures, although they are important, but an attempt to try to make the people of the country understand the situation that they are facing. In the old days when one year merged into another, and there was practically no change except a few dollars here or there, that was not of great importance, but in a year like this, when we stand on the verge of so many new and strange things, it becomes of vast importance. Later on I shall have some things to say about that.
I come now to the matter of the budget, and I want to say one or two things about it. We have a measure of taxation relief which has been given to a group of people in the country that I think deserve great consideration, people whom I call-I am speaking now of people with incomes of from $3,000 to $7,500-the middle class. It seems to me that all history shows that where the middle class is strong, then the state is strong. Where the middle class disintegrates and disappears, then the state is weak. I want to come back to that.
At the moment all I say is that I welcome- I hope it is not an entirely selfish remark when I make it-what the minister did. My only regret is that there were other things that were not done. My only regret is. and I shall have more to say about this later, that it seems that the minister has taken the view that he cannot do anything for business because business is doing pretty well and therefore he would just let well enough alone, until the end of the year at any rate. There is another great class in the community which is affected mainly by indirect taxes such as sales and others for which nothing has been done. Indeed their position at the present moment is being rather worsened.
I know the difficulties that have arisen, and I sympathize with the minister because of his position at the present time. This is perhaps a difficult moment for advantages to
be given to others and not to these people because at the present time they are suffering from nothing more than this: I fear that during the war they got the idea that there was never going to be any readjustment, that the big money was going to go on, that somehow or other they could have big money and that prices would be kept down. In other words, they thought they were going to have it both ways.
At the moment it is particularly unfortunate that we here who believe in removing controls, and I am one of those, at the present time are at a most unsatisfactory moment, as you might say, from the point of view of the people of the class of which I am speaking. We are in a period when there is bound to be a certain shaking out of prices, a certain inequality. In the United States they are beginning to get the benefit of production and I am glad to observe that for the last three weeks the trend of prices has definitely been downward. We have not that condition here as we would like to have it, and therefore at the moment we have the unfortunate situation, to which I shall refer again, that the minister has done absolutely nothing- I think that is a fair statement-to take measures to meet the difficulties which notwithstanding his optimistic statement he himself sees only too clearly.
Having said that, I wish to say also that while the minister has put in many caveats- I am going to read one or two of them- while the minister has brought out this and that difficulty, nevertheless as a whole the minister's line is that things are good, that things are booming, that everything is going well and that all we need to do is to keep along in that way. I want to point out first of all that the minister is cautious. He has several caveats here and I shall read one or two of them. He said:
... We must also recognize the special and temporary character of much of the expenditure that is the stimulus of our present high level of income . . .
He says again:
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.
Again he says:
Consumers, too, are probably . . . spending more and saving less than they normally would with incomes at present levels.
All these things he says, and yet I leave it to anyone who heard or read his speech that the general tenor left in our minds was that we are virtually in the midst of a boom; that
The Budget-Mr. Macdonnell

we ought to be satisfied and extremely happy, that there is nobody on the whole who should be more contented than we are, and of course that is correct. Nevertheless I am not satisfied with the position which the minister gave.
If you will remember, the minister talked constantly about money, money. He measured things in terms of money; he measured progress in terms of money. I have had for many years a friend whose business it was to try to gauge the course of business in various countries of the world, and he always used to say to me, "Don't talk to me money. Talk to me commodities. Talk to me quantities of goods-real things." Therefore when I find the minister saying as he did say and' apparently confining himself to that, that our national income was such and such, I say: Don't talk to me national income. I say talk to me commodities, goods, quantities of this and that.
The minister laid great stress on the fact that our income had gone up from 1939, when it was $5-5 billion, to 1947, when it was $11-1 billion. That sounds in a way quite magnificent. You will say we have doubled our national income. And not a word was said to warn us:	Oh, but there is a great catch in
this. You must remember that the money is twice as big but the quantities are not twice as much, the goods are not. twice as much. Though I confess it is hard to arrive at the true correcting figure, nevertheless if you take the rise in prices and apply them you will reduce that S11T billion of money to something not very far from S7-5 billion in goods. If that is correct then the increase from 1939 is not double, from $5-5 to $11T; it is really from $5-5 to something like $7-5 billion. What does that mean? That to me is the explanation of what we hear every day, of what we have dinned into our ears every day. It is the explanation of shortages and I confess I have found it perplexing. That is why we hear everywhere and every day that something or other is short, and we all do hear it. Therefore I suggest that when we talk about this figure of money, when we deal only with that and talk only of national income, we are dealing with something which is illusory, something which means nothing until you begin to define it.
And so I say that this situation which the minister shows us is not anything like as good as those figures would indicate. In fact it is a very dangerous situation because it is a situation such as was described to the British people in a white paper that said something like 'this. They said that in England there are seven billion pounds of money chasing around

six billion pounds of goods, and they said of course that that situation is fraught with great danger because it is one of the greatest pressures towards inflation. I think at the present time that truths like this are needed to be told and understood. There is no question in my mind that we are in for a difficult period. There is no question in my mind that people have got to understand that there has to be forbearance, that if everyone rushes off without delay seeking what seems his own immediate interest the common interest may be so greatly injured that the interests of every one of us may be injured. I think what we need is a great deal of wholesome telling of the truth in a way that people can understand it. We are not in an easy position. The minister was very frank to say that. He has protected his position. He has given us really a very fair position except for this, that he has left us with this picture of wonderful progress. He has left us on the whole with the feeling that everything is good, and that if it is not good there is nothing we can do about it. Because, mark you, while the minister outlined these difficulties, and in particular said that if things went bad in the United States that would be very serious for us here, as it will, nevertheless if things go bad in the United States there will be a lot of things here that we shall have to try to do and we should be trying to prepare ourselves for that now.
I want to say a word about this question of prices. It is so full of importance and so full of difficulty. Let me take a case that is before us right now, one that is in everyone's mind because it happened no longer than within a day or so of the minister's budget, and because it affects every household. Let me take the price of butter. The average price of butter from 1926 to 1929-some farmer correct me if I am wrong-was 44 cents. Then in the depression from 1935 to 1939 it went down to 28 cents, and in August 1939 it was 27 cents. I suppose there is not one of us who went through that depression who did not think what a dreadful thing it was that the farmers were getting only 27 cents. When I say one of us I mean people like us who are intelligent. There was no serious man who was not troubled about the fact that the farmer was getting so little, and who did not want to find a way for the farmer to get more, and who did not realize that an improvement in the farmer's position would improve the position of all of us. Well, very good. The farmer was getting 27 cents in August 1939, and gradually during the war the price was allowed up to 45 cents, which I suppose was

The Budget-Mr. Macdonnell
little if any more than the cost. Bear in mind, if you go back to 1926-29 the price was 44 cents then.


Mr. FAIR:: How do 1929 and 1935 compare?


James MacKerras Macdonnell: I told you. I said the price was 28 cents in 1935.


Robert Fair: And between 1929 and 1935?


James MacKerras Macdonnell: I will just go back to this. The price in the reasonably good years was 44 cents. It came down to 27 cents in 1939. During the war it went up to 45 cents, which was the price it had been away back in 1926, and now it has been increased. Some people talk as if the end of the world had come. Why is that? It is not because these people are unreasonable. It is because they have been deluded. It is because they have somehow or other got the idea that wages could go up and that other prices could be maintained indefinitely. The fortunate thing is-and this is what the hon. member for Stanstead (Mr. Hackett) has been saying for many months-that butter production is now beginning to increase, and we may have the better situation which we have been waiting for so long.
I want to end this by making this point. We need I think a great deal of wholesome plain truth-telling from those in authority so that there shall at the present time be the maximum self-restraint, self-control, mutual understanding, unwillingness to believe that every other man in the community is a crook. The place to get that from is in wise and considered statements from those in authority.
I would like to turn for a moment to deal with the three bases of our economic position as it is. I suppose it would be fair to say that the three main bases are: first, government expenditures; second, foreign trade, and third, the improvements and extensions being made by individual companies.
As to government expenditures I shall say nothing. That has been dealt with. We know that this year they will be less than last, but they will still be substantial.
As to foreign trade, all I wish to say at the moment is that there we have a situation which has been painted for us so clearly many times, and that is one of the reasons why I feel so regretful that the Minister of Finance has done nothing to consider the situation of business, the situation which has been painted so many times so clearly, and recently by the governor of the Bank of Canada. Much of our foreign trade is made possible only by the fact that we lend the money.
I wish to say a word about improvements and extensions, because this item is astonish-83166-179
ingly large, and I think it is well for us to dwell on it. It is well for us to dwell on it for a moment, particularly because of some observations that were made in the house some weeks ago by the hon. member for Rosetown-Biggar (Mr. Coldwell). The figure for improvements and extensions during the current year is $1,700 million, a staggering sum, much the largest on record. In the low point of the depression I believe the corresponding sum was only $200 million. In 1929 I believe it was $1,100 million and it was the same in 1945. Here we have a record of $1,700 million. Most of that comes from where? Most of it comes from profit. It is desirable for us to know that. I took occasion to check up to make sure whether most of these amounts would be made up of bank loans, and I was assured it was not. The great bulk of it would be made up of profits, from the accumulation of companies themselves. I want to point out what an enormous work that is doing; and that leads me to say just a word about the question of profits.
In the house some weeks ago the hon. member for Rosetown-Biggar mentioned quite a list of profits, many of them large. I hope I do not do him an injustice, but if my memory serves me rightly, when he gave these profits he practically said, isn't that terrible? He did not ask whether fair prices had been charged; he did not ask whether fair wages had been paid; he did not ask whether moderate dividends had been paid; he did not ask whether this money was available, as we know it is, for the most useful social services that oan be given. I do not believe that these points were absent from the mind of the hon. member for Rosetown-Biggar, but I fear he felt it was enough for him to say that there were large profits and that that wias what interested a great many people. I suggest to him that if he finds that the prices and the wages are fair and that there are no inordinate dividends-^and he can satisfy himself on that -then these profits are a perfectly social thing, and that as we see it now, they are being used in a most social way.
I wish to say a word' about these companies' expenditures. No one will agree more readily than the minister-and he has already stated it-on how vital they are for our well being in this very year; how vital it is that the confidence, the courage and the readiness to take risks which impels people to launch out the vast sums, shall continue. He will agree that if want of confidence should arise, if the situation should change, it would be a very serious thing indeed. Therefore I find myself regretting very much two things: first of all the excess profits tax was not done away with.

The Budget-Mr. Macdonnell

I would not have dared to say that in the house eighteen months ago, but I hope I have been here long enough, whatever people may think of my opinion, that they now believe I express at any rate my own opinion and do not speak for anyone else. I just wish to say this about the excess profits tax. I am all in favour of corporations being taxed, but I believe they should be taxed intelligently. The former Minister of Finance (Mr. Usley) spoke stronglj- about the excess profits tax in the beginning of 1945. The present Minister of Finance did nothing to show that he disagreed with him, and yet that tax, I regret to admit, induces people sometimes to hold back when they should not. It has a tendency to induce business to carry on business in a bad way, in an inefficient way, in an extravagant way. There is no reason that I can see for continuing it. It just seems to me as though no one was ready to make a decision.
The second thing I want to say is that I think it is the greatest pity in the world that nothing is done in this country to try to encourage new industry, new enterprises. I was surprised to learn not so long ago that in the United States they gave advantages, preferences to new industries to a considerable amount-I believe as high as 38 per cent in taxation so that they can get on their feet. Those of us who believe in free enterprise must believe that, the very cornerstone of it is that new enterprise must come in; that it must correct the balance; that it must provide competition; that it must be the balance wheel which prevents the evils which my friends to the left often speak about, and that difficulties sometimes exist.


Mr. IRVINE:: Always.


James MacKerras Macdonnell: No, not always; we would not be here if they existed always.
I wish to say just a word about the method of tax collection. We have heard about that for some time, and I think we are growing disappointed that so little is done. The other day I took occasion to call up a friend who has a great deal to do with tax collection, and I said to him: "Is it just as bad as ever?" He said: "Yes, practically as bad as ever." He said: "Of course, it is not the fault of the department; it is the fault of the law". I was relieved to hear the minister say the other day that a new act was on the way. I was relieved to see that he was taking time off to look at it himself, because he is an expert and an experienced man; but it is only one of the many things he has to do. I believe it is

so urgent to get it done that I hope at last it will be shoved along and that we shall have no more dilly-dallying with it.
I am not going to say anything today about economy. I hope and believe that some of my colleagues will fill up the gaps in my speech. I just wish to say that I think it is terribly hard, when one has been spending billions, to get down to mere millions, and when one has been spending millions to get down to mere thousands. I shall not do more than mention the classic remark of the Minister of Reconstruction and Supply (Mr. Howe), made to myself, incidentally: "Oh, yes, we may have saved a million, but what is that?" or words to that effect. I was struck by the speech made by the present Minister of Finance a year ago in connection with the budget, in which he laid a great deal of stress on the fact that members of the opposition had been a little irresponsible in asking for expenditures. I would refer him to the third chapter of Genesis where he will find words to this effect, "The woman tempted me and I did eat." Speaking seriously, I would say that the government is the government and we here after all can only bat things up to them. They have to make the decision. But I was disappointed, because I have always regarded him as a very serious man, with the remark made in this house last summer by the present Minister of Justice (Mr. Ilsley) in his reply on the budget speech. If I remember correctly, after referring almost with contempt, I must say, to various suggestions which had been made on this side for economy, which he characterized as rather unworthy of serious consideration, he then said, "Well, we will have to try to think up something ourselves." I thought that was late. The estimates were down-I am not sure whether the supplementaries were down -and it seemed to me to show an attitude towards this question which is not likely to produce the results that we want.
I want to say a word about inflation, just a word dealing wholly with the question of money supply. The minister did not deal with that, and in a way I was sorry that he did not because I think it is important. I think it is important for us to remember that the means of payment in the hands of the public, that is to say, the money or its equivalent which people have in their hands, is two and a half times what it was in 1939. It was then $2,400 million and now it is $7 billion. I would urge strongly that that huge amount should be reduced, and incidentally I am glad to see the minister the other day began a measure of reduction by partly pa}dng off a maturing loan

The Budget-Mr. Macdonnell
out of the government's own resources. I will not say more about that, particularly as I see that my time is running on.
I want to say a word about the whole question of easy money policy and I want to connect it with the question of interest rates. I also want to connect that particularly with ' that middle class that I spoke of a while ago, because in my opinion the existence of a strong middle class is vital and I believe the existence of a strong middle class is imperilled and perhaps made almost impossible by the conditions of today. I will not spend more than a minute in recalling to your minds what has happened to those countries where either they had no middle class or where the middlle class disappeared.
Let me say that by middle class I mean people, neither rich nor poor, who have a great desire to look after themselves, to provide for their present and for their future, and to be beholden to nobody, not even the state. They used to be regarded without question as the backbone of the community. They existed , only to a very small extent in Russia, and_that was why revolution could so easily- make itself felt and control Russia. The middle class used to be strong in Germany. We can remember when before the first great war the socialists were strong. They were not socialists in the modern sense; perhaps they would be called radicals or leftists; nevertheless they were strong and they had an influence. But they disappeared. There was inflation first of all in 1924 and then around 1931, and then finally in Hitler's day they were wiped out and that made possible this terrible abortion of the constitution, the terrible abortion of human relationships which prevailed in Germany.
For that reason I say that I believe the preservation of a strong middle class is important not merely economically but as going down to the very roots of our political being. What is happening to the middle class at present? Let us compare them with, say, fifty years ago. I think three things have happened. First of all of course costs have gone up; secondly, to a considerable extent, payment by special effort has become less common and they have not been able relatively to make the same wages; thirdly, the rate of interest has struck them. Fifty years ago the man who retired with a modest competency could get five or six per cent on it and he could reckon on living the rest of his life upon the proceeds. What happens today when he receives three per cent? And he is lucky if he gets that.
83166-179J
I believe that when we are considering this matter of the low-interest rate policy-and I know it is difficult, though it is attractive from the government's point of view-when, I say, we are considering this low-interest rate policy I suggest that this very important factor be taken into consideration-it is very important indeed-that there are large elements in the community who are suffering greatly by that policy. One other thing I would like to say in this connection. I would ask whether we can go on freeing other things and leaving the rate of interest tied down tight. Personally I very much doubt it and I think it is a matter worthy of the most serious consideration.
I want to say a word about the United States exchange. I thought the minister dealt with that in rather an airy fashion. He did say that we had suffered a loss of resources of some $600 million, but he pointed out, what is true enough, that that is because we were prosperous and had to import a lot. Nevertheless the fact is that our resources were greatly depleted. Then he went on to say, and this surprised me: "Well, if it gets difficult, after all we had a difficult situation in 1942 and we took some quiet, effective measures then"- as much as to say, "We will deal with the situation now in the same way."
Well, let us look at 1942. Although there was wisdom on our part, it was not our unaided wisdom in 1942 that dealt with the situation. The truth is that in 1942 the war dealt with it; the needs of the United States dealt with it. We remember very well that in 1942 the United States had need of many things from us. We for example had skills in war manufacture which they did not have at all. We were ahead of them in radar and in this and that, and for us to look with equanimity upon this situation now and bring in 1942 as a parallel is to me not dealing with the matter at all.
Finally I was disturbed with a remark which is attributed in the press to the governor of the Bank of Canada. I want to be very careful on this because it was only in the press and I think it may have been an offhand remark. I would not take it too seriously, but the governor was quoted as saying that it would be to our advantage-this is in connection with the whole question of exchange-if the price of gold were increased in the United States. That disturbed me very much because, I suppose, there could not be a more inflationary measure and because it seemed to me that if that was the only way, or was one of the serious ways, which the government regarded as a possibility of dealing
The Budget-Mr. Macdonnell

with this thing, or of finding a way out, then it seemed to me the matter was not being dealt with as it should. Of course we all know that the final solution of exchange is trade, and I think we all agree, with reservations-I mean reservations in that we do not give up what we have until there is something better-that what we need is multilateral trade. But I call attention to the fact that even in our own cabinet we seem to have very great disagreement on that point. We 'have the Department of Finance in favour of multilateral trade, but apparently we have the Department of Agriculture absolutely against it, because whatever can be said for or against the bulk agreements with Britain, certainly they are not in accordance with multilateral trade. Certainly they are going to make it difficult; and incidentally it is highly open to question whether it was necessary for us to sell all the wheat to Britain at such a low price and whether we needed to entirely let out the United States from carrying some of the load.
So, Mr. Speaker, I would say that to me this budget, in spite of its sunshine features, is disappointing. It is a kind of wait and see budget, a kind of do nothing budget; yet before the year is out there may be a good many things that need to be done, and we may look back and regret that at least some of them were not done.
But the thing about which I complain most in this budget, the thing I wish to mention in closing, is this. I think of all the neglects of this budget by far the greatest is in respect of the field of dominion-provincial relations. I make no apology for coming back to this question, as I have done several times, because I believe not only that it is of vast importance but that somehow or other it is being relegated to a sphere far below that which it is entitled to . occupy. It seemed to me that the other night the minister spoke about the relations between the dominion and the provinces as you might speak about the relations between any group of eight or nine persons or institutions who had found it convenient to make a business arrangement with each other and who had carried on that arrangement as long as it was convenient, but who must be always ready to face the fact that perhaps they might not continue to find it very convenient to work along together. To me that is not only profoundly wrong; to me it attacks the very basis of our society. I should like to read, to the minister particularly, some words of a man who is often quoted. I understand he was a very dull speaker, and always emptied the House of Commons, but certainly he wrote well. I 
want to read these words, and as I do so perhaps some hon. members will be inclined first of all to say, "Well, that is just a lot of high falutin' sort of sermon stuff." I do not think it is, and later I shall say why I do not think so. This is Burke on society:
Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure-but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties. It is to be looked on with other reverence; because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be horn. Each contract of each particular state is but a clause in the great primeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact which holds all physical and all moral natures each in their appointed place.
Now I want to make the statement that if it were not that what I have read is a plain statement of fact, we would not be in this house today. It is only because those things are true, and practically true, and because there always have been enough men who lived up to them and made them true, that we are here today. Consider what is happening now. Here am I. an ordinary member of the opposition. I am able to stand up and express my views; I have just the same right, or almost the same right to speak as the Prime Minister has. Is that not a remarkable thing? Does that not mean this is a marvellous institution? What is the genius of our whole institution? It is the rights of minorities. Why, when we put pieces of paper in ballot boxes every five years, do we accept the verdict? Several times during the last twenty years I have not liked the verdict at all, but I have always obeyed it; and why? Because deep down I felt that the rights of the minority would be protected, that the minority would have a chance, and that this great institution built on these principles, spiritual principles and no others, would see to that; and that it was worth protecting, even though in the judgment of the electorate we had not been able to persuade them that we were right. Then take another thing; take the majesty of the law, on which we very often fail to reflect. Think of the majesty of the law; and I need not go further. I simply say that the principles I read to you

The Budget-Mr. Macdonnell
very briefly go to the very basis. They are practical. There is nothing illusory about them. We would not be here today; we would not be enjoying the prosperity we have today if it were not for the moral background which is behind this.
Now I want to read a short extract from a very different person, a brilliant man well known in this country, who died in his prime. I often think of what he might have done had he only lived. These are the words of D'Arcy McGee, speaking just before confederation :
Miracles would cease to he miracles if they were events of everyday occurrence; the very nature of wonders requires that they should be rare; and this is a miraculous and wonderful circumstance, that men at the head of the governments in five separate provinces, and men at the head of the parties opposing them, all agreed at the same time to sink party differences for the good of all, and did not shrink, at the risk of having their motives misunderstood, from associating together for the purpose of bringing about this result.
I have just one thing to add. I suppose we must admit there have been times within this last year when it would have been difficult to reconvene the dominion-provincial conference. It might have been suggested that on the part of one or other it was being done from weakness, that it was an act of appeasement, that somebody was going down on his knees to somebody else. But I suggest, Mr. Speaker, that the present economy is free of all those difficulties. The governments have balanced their budgets. Tiles'- are out in the open. Nobody need take off his hat to anybody else. Everything is free and clear, and they can talk man to man.
But I do suggest this, that in this confederation nobody can suggest that things are happy at the present time. We have our difficulties. Here in the House of Commons we learn from each other-at least I hope we do. They have a saying in French, I believe, tout comprendre c'est tout pardonner. We learn to understand each other better here, and therefore we overcome our difficulties. But the difficulties are there. And it seems to me that every day that goes on, as things are now, the matter gets worse. Mark you this: things are well enough now, but of some of the difficulties outlined so clearly by the Minister of Finance should come upon us, let us say within the next six, nine or twelve months, we should need every ounce of strength that comes from standing shoulder to shoulder. And if this time should come, and we were not all together, the people of this country might well ask some questions. We have always
said-and everyone is guilty of this-that there are certain things which needed unity, which needed the action of all.
Here you have a family-and I am not forgetting the late Mr. Lapointe's saying that the dominion was not the father but, as I believe he said, the child of the provinces. I am not speaking constitutionally; I am just speaking in a human way. Here we have a family capable of working together, and yet we have at the present time the two eldest-


William Irvine: The prodigal son.


James MacKerras Macdonnell: My hon. friend knows his bible well, but sometimes wrongly. Here we have the two eldest who have grown up to be bigger and stronger than the others, but who want to play their part together-we have them for the present, I say, partly outside. Is it necessary that we should go on like that? I said the other day that a friend of mine had said that it was a scandal, and I do not know if that word is too strong. But I would say this, that it seems perfectly clear the initiative must come from the dominion.
The Prime Minister (Mr. Mackenzie King), as was fit and proper, was the chairman of the conference. But I say again that if there are those who can recapture enough of that spirit-and it was a real spirit-which put this country together, and carried on through unbelievable difficulties, and if that spirit could be recaptured today, we would have a chance to get together, and to go along together, instead of as at the present time, hopelessly divided.
I wish to move the following amendment, seconded by the hon. member for Vancouver South (Mr. Green):
That all the words after "that" be struck out and the following substituted therefor:
"This house regrets that the proposals of the Minister of Finance
(a)	offer no relief from the oppressive burden of indirect and hidden taxes on staple necessities that compose the family budget, all of which taxes directly increase the cost of living;
(b)	offer no encouragement to those engaged in the development of our natural resources, especially mining and agriculture;
(c)	fail to provide for reconvening the dominion-provincial conference in order to complete satisfactory agreements with the provinces and a dominion-provincial programme of social security, health and public investment."


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I wish first of all to congratulate the Minister of Finance (Mr. Abbott) upon the great honour conferred upon him in his being selected to follow a distinguished line of ministers of finance and to introduce the annual budget. I was unable to be present
The Budget-Mr. Coldwell

that evening, but I am told by my colleagues that the minister's speech was of a kind which followed well the traditions of his predecessors.
I wish to say, too, I am glad to see the hon. member from Muskoka-Ontario (Mr. Macdonnell) back in his seat this afternoon, and able to act on behalf of the official opposition. I disagree with most of what he said, but I appreciate the contribution he makes to the debates of the house.
First let me make a comment on his criticism of my reference a few weeks ago to the profits that had been made in Canada over the past year. I had drawn attention to the largely increased profits made at a time when the costs of living were rising and the ordinary common man found it difficult to meet his obligations and to provide for his family. The figures I used on that occasion were, I believe, all from the Financial Post, although one or two may have been taken from some of the published reports in the Globe and Mail. I pointed out that one company showed an increase in profits for 1946 over 1945 of 309 per cent, that the Brack Silk Mills Limited showed an increase of 255 per cent. I admit I was wrong in one of my percentages, that dealing with Moirs Chocolate Company. I am glad to correct that this afternoon. The error was not my fault, but was due to a typographical error in the Financial Post. They gave a figure of $266,000 as profits, when the figure should have been $206,000. So I shall have to reduce the amount of profits which I gave, on a percentage basis, from an increase of 226 per cent down to 153 per cent.
But, Mr. Speaker, I still contend that even if the profits are used in the manner in which my hon. friend from Muskoka-Ontario says they are used, and not for the immediate payment of dividends, yet they are retained and added to the capital of these vast incorporations; so that after a period of time what actually happens is this, that the community has paid for the industry, and the shareholders own it. That is the effect of adding to capital from profits. May I point out that at the very outset of the war we urged the imposition of a capital gains tax. We foresaw large accumulations of capital in the war period, and prices and depreciation allowances were such that we contended it would be appropriate for the government to introduce a capital gains tax. Such a tax sooner or later will have to be considered by a successor to the present Minister of Finance.
I was particularly interested in the argument of the hon. member for Muskoka-Ontario with regard to purchasing power. Hon. members will recall that he gave the amount of

circulating medium or money at the present time as $7,500 million or thereabouts, and suggested that this should be reduced-at a time when it is essential that our people shall have circulating medium in order to buy what we hope will be the additional products of peace time industry. It seems to me that that is going entirely the wrong way about the matter. As for interest rates, an increase of course would be satisfactory to the people who clip coupons and collect interest, but it would be most unsatisfactory to the hundreds of thousands of people who lack houses and other facilities and who would have to pay that interest. I am glad that the government intends to maintain the kind of cheap money policy that has been followed in this country for the past number of years.
I want to come now to a criticism of the budget from the point of view of this party. As I said, the minister made a remarkable speech, and he introduced a remarkable budget. Not only did he place before the house the results of the country's financial activities last year, the receipts and expenditures, but he showed in cold figures the effect of the great struggle we were lately engaged in and which not so long ago was brought to a victorious conclusion. The condensed estimated balance sheet of the dominion given by the minister to the house shows that on March 31 this year our net national debt had reached the colossal figure of $13,069,261,000. That is more than half the estimated value of the assets of every kind of all the people in Canada in 1927. The interest on this colossal debt is more than three times as large as it was before the war.
If we take the unmatured funded debt of Canada, which was given also in the table submitted to the house by the minister last week, of $16,524,161,000, we find that the interest obligation on that huge sum amounts to $437 million a year, or, as my recollection serves me, within $120 million of the total pre-war budget of this country. Thus apart from the sorrow and suffering occasioned by our losses in killed and wounded, we see what modern war entails in financial debt and interest obligations. May I take this opportunity of saying again that the lessons of this war should teach us that not only is war costly, but if we are to play our part to end the anarchy in international affairs which lies at the root of all war, we must be prepared not only to stand with the united nations against aggression wherever it may occur, but to do all in our power to remove, within as well as without our borders, the economic anarchy which produces war. Of course that this will

The Budget-Mr. Coldwell
involve the nations in a surrender of a portion of their national sovereignty should not deter them from the task.
I think the budget was greeted with rather premature approval. The minister was able to make some statements which caught the public eye but which will not withstand close analysis. He was pleased that the government had entered the year with-and' I use his words-a surplus larger than the accumulated total of all previous surpluses in our history. I am going to join the hon. member for Mus-koka-Ontario in the criticism he made the night the budget was introduced of the large surplus of the financial year, but I shall do so from an entirely different standpoint. I question, not the amount but the manner in which this surplus was achieved.
The minister said that the total revenues for the year exceeded1 by S509 million the forecast made in the budget speech last year. The hon. member for Muskoka-Ontario said that we should not be grateful because the government took several hundred million dollars in taxes more than they needed to take. Neither the minister nor the financial critic of the opposition pointed out the real causes of this very large surplus, which I think in the main were two. First, there were the huge profits extracted from the people by industry and corporations, and which were reflected in the large increase in the proceeds from excess profits taxes and corporation income taxes. These accounted for the receipt of an additional $147,700,000. The second factor, however, I think is more important. I refer to the reduction or the elimination of subsidies on various consumer goods such as milk, edible oils, starch, sugar, beans, molasses, soap, tea, coffee, wool, cotton and other essentials which enter so largely into the cost of living of persons in the lowest income brackets. Some of these were removed only recently and did not affect it to any great extent, but the milk subsidy was removed last October. If profits had been curbed and the subsidies continued the surplus would have been far less.
In other words, the minister's surplus was achieved at the expense of every consumer in Canada, an expense falling most heavily on those least able to bear the burden. It is therefore not a matter which should invite congratulation, but on the contrary it should invite some condemnation. Incidentally this condemnation should be directed not only at the members of the government but at the members of the official opposition and such other hon. members who were persistent in their efforts to remove subsidies and controls.
Equally deceptive is the widely heralded approval of tax reductions. Newspapers last
Wednesday morning headlined their stories with such captions as, "Personal income tax slashed." They took the minister at his word when he said:
I am consequently proposing to make a substantial reduction of taxation in this budget. Moreover I am proposing to concentrate this reduction almost entirely in the field of personal income tax.
But did he do so? No. The total reduction in personal income tax is about $110 million, but the reduction in the excess profits tax of $279 million made in last year's budget, and the additional $10 million in this year's budget, make a total reduction of $289 million. Thus the estimated total excess profits tax for the fiscal year ending March 31, 1948, is $160 million as against $449 million for the fiscal year ending March 31, 1947.
Viewed in this light one can characterize the budget as a big business budget, which should satisfy our friends of the official opposition.
Nor will the reductions in personal income taxes bear very close scrutiny. The minister contended that the greatest proportion of relief was given to taxpayers in the low income brackets. He based his contention on what I think was a deceptive calculation, that of percentage reduction from the old tax levels. He said this:
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.
As a statement of fact, of course, that is quite true. Then the minister put on Hansard three tables of three different categories of taxpayers, comparing the new and old rates on the percentage basis. I have looked up the records and I cannot find when a similar percentage comparison was used before. On the contrary in some cases where there have been sharp increases or sharp decreases in personal income tax the amounts have usually been stated to the house in dollars. I am therefore going to ask permission of the house to table the same three categories of income taxpayers with the percentages given by the minister translated into dollars. May I have the permission of the house, Mr. Speaker, to do that?


Mr. DEPUTY SPEAKER:: Has the hon. member the permission of the house?


Some hon. MEMBERS:: Agreed.


Major James William Coldwell: Thank you. I may say this is the first time in my twelve years here that I have asked to put a table on Hansard, and I am pleased to get the permission of the house to do so this afternoon.
280S
The Budget-Mr. Coldwell

The tables follow:
Proposed income tax reductions, in dollars Single Taxpayer
Actual $ Reduction
Income	1948 Rates
$	750
800 900
1,000
1,200
1.500
1,800
2,000
2,250
2.500
2,750
3.000
3.500
4.000
5.000
7.500
10,000
20,000
30.000
50.000
75.000
100,000
200,000
17
44
77
113
153
220
370
785
1.385 1,672 2,635 4,098
5.385 10,385
Married Taxpayer, No Children
$ 1,500	 $
1,600	 12
1.800		 32
2.000		 48
2.250		 60
2.500		 73
2.750		 83
3.000	  113
3.500		 153
4.000		 193
5.000		 303
7.500		 533
10.000		 733
20.000		 1,348
30.000		 1,673
50.000		 2,598
75.000		 4.023
100.000		 5,348
200.000		 10,348
Married Taxpayer with two children of Family Allowance Age
$ 1,700	'	 $
1.800		 10
2.000		 32
2.250		 50
2.500		 63
2.750		 77
3.000		 97
3.500		 137
4.000		 177
5.000		 281
7.500		 517
10.000		 717
30.000		 1,338
30.000		 1,673
50.000		 2,588
75.000		   4,003
100.000		 5,338
200.000		 10,338
income brackets amounts to only $6 per year, but the 7 per cent reduction for the taxpayer in the $200,000 bracket means a reduction of $10,385.


Mr. ABBOTT:: You might put on a table showing what the increase was.


Major James William Coldwell: The man with an income of $5,000, in the group for which the hon. member for Muskoka-Ontario was making a plea just now, has a reduction more than fourteen times as great, and a man with an income of $10,000 a reduction more than thirty times as great as the man with the $1,000 income.
The minister said, that in making these reductions he wished to remove any serious barrier against a taxpayer working overtime. In our opinion the effective means to that end would have been to increase the exemptions to say $1,000 for a single man and $2,000 for a married man. Any objection that this would be reflected in the higher brackets, and of course objection would have been raised, could have been met by making the necessary adjustments in the graduated income tax. Increased exemptions, I might add, would have removed entirely, perhaps, in the case of the average working man, and almost entirely or at all events would have gone a long way towards meeting the criticism in the case of the farmer, doing away with what I consider to be entirely legitimate grievances.
Equally deceptive was the comparison between the proposed new Canadian personal income tax and the proposed new taxes in the United States. The minister's table is designed to support his contention that he is taxing the low groups in Canada less and the higher groups more than in the United States. That is incorrect, because be takes no account of the fact that in most of the states of the United States there is a state income tax as well as a federal income tax.


Douglas Charles Abbott: I put a footnote to the table to that effect.


Major James William Coldwell: I think that is probably right, but I am taking the minister's statement in his budget speech. New York, for example, imposes a state tax of 7 per cent on incomes of $10,000 or more. The married man with an income of $10,000 in New York state would pay $1,619 in federal income tax, plus $700 in state income tax, or a total of $2,319, while the same taxpayer in Canada will pay $1,990 or $329 less.
Those tables give a very different picture of the reductions. Thus the minister's 54 per cent reduction for a single taxpayer in the lowest 
The minister said that Canada could not carry a tax burden significantly higher than that in the United States because, and again

The Budget-Mr. Coldwell
I use his own words, "There is a risk of a serious drain of Canadian personnel to the south for this reason alone". I wonder if the minister really thinks this is a significant reason for the loss of young Canadians to the United States. To my mind the real cause of the drift of our young people to the United States is that the standards of living as expressed in wages and agricultural returns in Canada are too low in comparison with the costs of living and the costs of farm production. I think that is probably the reason.


Mr. JACKMAN:: How about the C.C.F.?


Major James William Coldwell: The hon. member asks me how about the C.C.F. We were not in power anywhere in Canada from 1930 to 1935 when emigration to the south and deportations to England were on a scale such as we had never had before in the whole period of our history. I would hope that any kind of government in the future would endeavour to see to it that.-


Mr. MACKENZIE:: We were not in power then.


Major James William Coldwell: No. I thought my hon. friend would assume, the question having come from a supporter of the government that was then in power, that that in itself was an adequate answer to the question put.
The minister also said that because of the influence exerted by the larger economy, that of the United States, upon the smaller one, Canada, we cannot for long follow widely divergent tax policies without causing serious stress. Mr. Towers, the governor of the Bank of Canada, made a similar statement quite recently. He said that sooner or later our price level would have to be adjusted with that of the United States. One is hearing that quite frequently these days. It implies that Canada's economic and tariff policies must inevitably be governed by what the United States does. I think that practically ' all members of the house will agree that that is a dangerous attitude to take. If we accept the domination of our economy by the United States we admit that we have lost the battle for full employment and continuing prosperity as well as our long-continued struggle for Canadian independence. My colleagues and I refuse to submit to such domination in this field-and, may I add, in any other field.


Douglas Charles Abbott: There was no suggestion
by Mr. Towers or myself that we were under the economic domination of the United States


Major James William Coldwell: It is implicit in the
minister's statement.


Douglas Charles Abbott: No, it is not implicit.


Major James William Coldwell: We shall not quarrel
about that. I am simply expressing our point of view. We are not narrow nationalists, but we want Canada to occupy her proper place among the family of nations to which alone we are willing to allot certain aspects of our national sovereignty.
No; this budget does not do what the government would have us believe it does. The exemptions under the new budget are $750 for a single person, $1,500 for a married couple, and $1,700 for a couple with two children.
During the course of his argument the minister made *a significant statement which I should like to underline. He said, as reported at page 2554 of Hansard:
The exemption levels established last year are high enough to exempt completely from tax more than half the people earning incomes in Canada.
No doubt this statement was carefully checked by his advisers, but surely, Mr. Speaker, it is a sad commentary on the standard of living in this country, during the period of the highest national income that Canada has ever experienced. Indeed the minister expressed satisfaction because, as he said, as reported at page 2543 of Hansard:
Today we see a Canada enjoying a degree of prosperity never exceeded in living memory.
He commented:
We would appear to have ample excuse for self satisfaction and easy optimism if we took account only of our immediate situation here at home.
But the Toronto welfare council estimated that in 1944 a family of five required $1,864 a year in order to meet their bare living requirements. No frills were provided, no insurance, no allowance for health services, no provision for telephone, none for old age and so on-just the bare necessities of living. Since then, as I said a moment ago, the costs of living have risen sharply. The night before last I heard that the bureau of statistics had issued its recent figures showing that the cost of living jumped sharply in the month of March-not April, when a number of controls were removed, including rents-by 1-7 per cent, and that we w'ere now over 30 per cent higher in cost of living than the pre-war level. So that according to the minister more than half the people of Canada are living below a minimum standard. Where is the cause for easy optimism and self satisfaction of which he spoke? Where is the justification for sticking to the exemptions which were in effect last year? Indeed apparently the minister intends to profit by the increases in price level. Last
The Budget-Mr. Coldwell

year he collected $298 million in sales tax. This year he expects to collect $325 million through the sales tax. Again let us remember that these bear most heavily upon those whose incomes are small, and like the tariff, the excise tax and so forth, they are hidden taxes; they are subjected to pyramiding as the articles pass from the wholesaler to the retailer, to the ultimate consumer and so on.
Then, too, the government is retaining the refundable portion of the income tax paid in former years. Food, clothing and shelter have risen sharply. Many families require these amounts now to meet the necessity of the purchase of houses, furniture, and clothing. To my',mind, the consumer, and indeed the small business man as well, could very well do with payment of these refundable amounts. I know that that would mean that the government would have to change the policy which it has laid down, but I think it would be justified in doing so. Because of what I have already said I wish to move a subamendment, seconded by the hon. member for Vancouver East (Mr. Maclnnis):
That the following words be added to the amendment:
"(d) fail to raise the income tax exemption levels; and
(e) fail to make any provision for the more than half of our population who are compelled to live on incomes below the present exemption levels."
Indeed I find the budget speech in other respects somewhat illogical. The minister said, for example:
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.
The minister then argued that since the tax level had been raised for war purposes, it must be reduced. In other words the productive peacetime purposes of national development, well-being and social security must be secondary to the unproductive purposes of war. That is post-war defeatism which we must not accept. Indeed the minister warned that a recession might come-I put it mildly. This house should be concerned in maintaining those high levels of production, accompanied by a wide distribution of purchasing power, to ensure that depression will not come. The answer as to how higher standards of living can be secured is summed up in just two words, higher production. The major aim of the government's fiscal policy should be directed to maintaining and

enhancing the high levels to which the minister referred in such glowing terms. But the budget will not do this.
Another criticism I make of the budget is this. A modern budget must be more than merely a discussion of revenues and expenditures. Its financial proposals should form a part of an integrated national plan for increased production and the distribution of purchasing power among the people. Ever since the movement represented by this group was founded-and indeed long before that time-the men who represented labour and farmer parties in this house, the old Progressive party, the old Independent Labour party and so on, contended that what is physically possible is also financially possible. This, of course, depends upon intelligent planning for the increased production of goods, and their equitable distribution being regarded as the principal problem facing this nation. Upon its solution depends the maintenance of full employment and the level of agricultural returns. These depend again on spending. Spending is of two kinds, consumption spending and investment spending, spending for capital equipment. Consumption spending gives employment, while savings give employment only if they are invested for the purpose of capital equipment, such as factories, machines and so on. This is where conscious economic planning in the public interest becomes essential; for there is nothing under private enterprise which automatically maintains both types of expenditure at a sufficiently high level for prolonged periods to guarantee the maintenance of employment and of purchasing power.
Under private enterprise, decisions to save and to invest are made by different people at different times. If a boom develops, investment is high; but if a recession threatens, investment capital remains idle and after a while a depression follows. Obviously the state , can have very little control over the rate of saving of the individual under capitalism or indeed under any modern democratic system. Hence it is essential in a highly developed society like ours that there shall be a considerable control over investment if we are to maintain anything approaching a high level of employment. Indeed at times it will be necessary, we believe, for the state to supplement savings by financial operations through a publicly controlled financial system to maintain both a satisfactory rate of investment and purchasing power. But under our system of private enterprise and private banking there is no adequate machinery to direct

The Budget-Mr. Coldwell
investment into desirable socially useful and effective channels. Indeed, no private agency could possess either the knowledge or the facilities to perform the task. Government reports all indicate that plans made by individual private businesses last year fell far short of their targets because they did not know the over-all picture concerning available supplies and so on. I venture to say that the statement tabled in the house this afternoon on behalf of the Minister of Reconstruction and Supply (Mr. Howe), giving an outline of the business possibilities for the coming year, will have exactly the same defect, because each individual planning does not know what the over-all picture of the economy is in which he plans.
The view that investment must be planned and controlled by public agencies is not peculiar to the C.C.F., nor is it peculiar to socialists. Lord Keynes in his book on the "General Theory of Employment, Interest and Money", said:
The duty of ordering the current volume of investment cannot safely be left in private hands.
This view was emphasized by Sir William Beveridge in his report to the British government several years ago on "Full Employment in a Free Society". Hence the modern budget should devote attention, and considerable attention, to the planning of investment, and this parliament should establish a national investment board to operate under a statute of parliament, defining its responsibilities and its powers.
Now obviously the control of investment cannot be effective without proper control of the banking system. The Bank of Canada under the present system can and does exercise some, if inadequate, control over the volume of credit, and that is a great gain over what we had some years ago. But the national central Bank of Canada can exercise no control over the direction of credit. This is in the hands of private chartered banks. They must be governed by the protection of the interest of their shareholders and, I do not think it is unfair to say, of the corporations and interests in which they, that is the banks or those who control them, have some interest. But lest someone should say that I am making a charge against directors of banks, may I say that there is nothing improper in their doing that-as long as the banks are private institutions. The Financial Post survey of corporate securities, and the directory of Canadian directors, show that 94 directors of three of the largest banks in Canada hold
between them some 800 directorships in 484 corporations and dozens of major industries. Included in the 800 directorships are 185 chairmanships or presidencies of companies, and knowing the conditions within the industries they direct, and being responsible for their success, they might be expected, to say the least, to be overcautious in financing the establishment or expansion of competitive enterprise.
Thus we believe that the banking, monetary and investment policies as well as taxation must be under the control of economic organizations responsible to the Canadian people through their elected representatives. The rules of the house preclude our moving for the socializing of the financial system. On February 3 of this year we sought to amend in this particular, the motion to adopt the address and approve the speech from the throne. The house did not then approve of our oft-repeated demand in the words we used calling for "the socialization of the financial institutions and monopolistic industries of the country" so that we could "plan the full and proper use of our natural resources and our currency and credit, in such a way as to provide full production and a rising standard of living for the Canadian people." That is what our amendment in February stated.
Events since then-this budget itself, and fears expressed by the minister and highly-placed economists and authorities, that a recession may come and come soon-emphasize the need for the policy outlined in our amendment to the address, and if the rules of the house permitted we would have moved it again today instead of what we have moved, although we believe that what we have moved is an important criticism of the budget policy.
In our opinion, then, the budget on the whole is disappointing, for it neither relieves the man in the lower brackets from burdens imposed by government policy and rising prices caused by removal of desirable controls and the abandonment of useful subsidies, nor indeed does it plan adequately for the future welfare of the Canadian people.
Mr. SOLON E. LOW (Peace River): I have listened with great interest to the two speeches that have been delivered this afternoon and I must say that with much of what both speakers have said I can agree. There were, of course, in each some things which I could not accept, but as the leader of the C.C.F. (Mr. Coldwell) spoke I could imagine that if he remains long enough in the house he will become a pretty good social crediter. He is making real progress. There were a number of
The Budget-Mr. Low

things, which he said in a considerably better way than I could have said them, which reflected entirely the views which I take on a number of important problems that face Canadians at this time. I want to congratulate him and also to congratulate my hon. friend the member for Muskoka-Ontario (Mr. Mac-donnell). It was unfortunate that the hon. member for Muskoka-Ontario was not physically up to par today. I should like to have seen him in form, ready to tear into the budget, as I know he could very well have done had he been well.
With those words I should like to place squarely before the house the position of this group with respect to the budget. My first words must, of course, be words of sincere congratulation to the Minister of Finance (Mr. Abbott) on his maiden effort in presenting the budget. I believe everyone in the house enjoyed, as I know I did, his clear and rather jaunty but forceful presentation. In fact the minister had a way about him, an air of jovial, good-natured flexibility that carried us along in such a happy mood that we did not fully appreciate for some hours afterwards just what kind of medicine he was prescribing for members of the house and the people of the country. The minister's announcements of a huge surplus and of his income tax reductions were greeted with more real enthusiasm, I believe, than any budget announcements have received in a good many years.
But upon more sober reflection during the days following the presentation of the budget the enthusiasm of members of the house and of the people generally throughout this country subsided to a considerable extent. I believe most hon. members fully appreciate the indications in the budget of the strong present position of Canada and the highly satisfactory degree of stability with which we seem to have emerged from a disastrous war. Whether those indications are real or somewhat fancied will, of course, become apparent in the years to come, but I think the Minister of Finance has much reason for satisfaction in that he has been able to begin his career in the treasury department by bringing in one of the few balanced budgets Canada has had since confederation, and that he has been able to report at the outset of his experience that Canada's prestige is high throughout the world. It is only to be regretted that the retiring minister of finance (Mr. Ilsley) did not have that privilege after the burdensome war years during which he occupied that position.
I feel certain the minister himself realizes that, while he has been able to bring down a budget reflecting among other things Canada's 
strength, stability, balance and prestige, in reality we are at a most critical stage in the development of our country. There is no need for me to emphasize that the eyes of the world are on Canada, because our responsibilities in the world community of nations are very great indeed. We are poised in an in-between period. The war, with its strained activity, its restrictions, scarcities and lavish spending for destruction, is behind us, and we face an era in which our newly realized powers of production are seeking to be set free to make available a great abundance of much more diverse products than Canada has ever before known in her history. We are one of the remaining countries committed to a system of individual enterprise; and, though sometimes it appears that our commitment in that respect is something of a half-hearted, vacillating affair, nevertheless we are committed. And because that is so, the eyes of the world are upon us, some hoping we shall succeed in demonstrating to a confused world the superiority of that system, others hoping and planning that we shall fail utterly. That is why this is such a critical time. That is why people had every right to look for some evidence in this budget that the government is aware of our position and that it realizes the necessity of bold and sensible action to meet the needs of the challenging, dangerous time immediately ahead.
I do not wish to be pessimistic at all in my approach to a criticism of the budget. Actually I have great faith in our country and considerable optimism about its future. But when I think of what governments and finance ministers of the past eighty years have done to Canada I feel much as the old churchman felt when, in commenting upon the results of the missionary work his church had been doing, he was led to explain, "Surely God is with us, or these missionaries would have ruined the church a long time ago." I am sure Canada can achieve a glorious future, but if we are to realize that future I say that governments and finance ministers will have to repent immediately of the errors of commission and omission that have made waste of so much of our heritage.


Mr. BELZILE:: And listen to the prophets.


Mr. LOW:: Yes, and listen to some of the prophets, but I do not see very many in front of me, particularly in the section occupied by the intruder.
As I view this budget, Mr. Speaker, I fail to see in it any tangible evidence that the government realizes the extremely critical nature of the times in which we are living.

The Budget-Mr. Low
Perhaps when the minister gives his rebuttal he will point out to us what things in the budget provide for a serious programme of conservation and an orderly development of our resources. Perhaps in his rebuttal he will tell us what there is in the budget to indicate any determination on the part of the government to do its part in keeping the gross national production high; what provisions in the budget reflect the government's determination to keep useful employment at a high level, at least a level high enough to guarantee widespread contentment on the part of the Canadian people; and what encouragement there is in the budget for business to expand to meet the pressing need for goods and services in this country. ' Thoughtful people are asking what there is in the budget to indicate that, as we advance into the period of mass production of consumer goods, the government will have in readiness a policy and machinery to maintain consumer purchasing power at a level sufficiently high to maintain a balanced economy^ These and many other questions are being asked by Canadians as they search this budget for signs upon which to base their hopes for the future.
In a general way, the budget is a whopping big $2,450 million baby. I must say that, buoyant as were the spirits of the minister when he presented it to us, he himself must have been aware that this offspring will take considerable nourishment from the Canadian people. The sum of $2,200 million is a large amount to lift from 3,000,000 families in one year, but $2,200 million is what the minister proposes to tax out of the Canadian people in 1947. This means that the average Canadian family will have to dig up over $700 in taxes during next year. The average Canadian family therefore wonders if it can carry that load and still meet its own needs in these times. Wearily most of them look ahead wondering if there is to be any substantial relief from the heavy burden they bore so patiently during the war. I commend them for their patient forbearance during that time.
The average taxpayer is to be congratulated on what he did during the war. Without complaining he met conditions as they arose, and he met them extremely well. But as our taxpayers strain to see into the future two facts stare them straight in the face. The first of these is this. It appears that the government has committed itself to yearly expenditures of around $2,000 million, a sum more than three times the budget of the last year before the war. The second fact is that the load can be borne only if the gross national production and Canada's business activity
remain at or very near their present high levels. These are sobering facts, to be sure, and no one will blame the Canadian taxpayers if they show some anxiety about the future. Even if this national production remains at over $11,000 million a year, we shall have to pay over to this government twenty per cent of that production in the form of taxes. .
At first glance the budget appears to have made sweeping reductions in the income tax rates. This phase the minister emphasized with such gusto that most of us were at first inclined to overlook the fact that he disappointed many thousands of Canadians by not raising the exemptions as they confidently expected him to do. Speaking for this group, we have always advocated the raising of the exemptions, and we will not relax our efforts in that respect. We still feel that these exemptions should have been raised and that more taxpayers in Canada should have been relieved entirely of the burden of taxes, particularly in the light of the fact that so many of our people, as has been pointed out already by the hon. member for Rosetown-Biggar (Mr. Cold-well) have been languishing on a standard of living away below what they should have had. One newspaper writer put it in this way: "It will be Liberal strategy, of course, to whoop up the size of the cuts in the income tax and to hush up the omission of reductions in sales and excise taxes." But let us take a look at the income tax reductions and see if they really are sweeping. I think hon. members will recall that a few weeks ago the Ottawa Citizen carried a budget for the married man living in Ottawa, and having a weekly income of $40. How would he fare under this budget? He will pay in 1947 the sum of $94, as compared with $118 under the old rates. He will save the huge sum of $24, or about forty-eight cents a week! His saving will be cold comfort in the light of the increase in the cost of his living which came at about, the time the budget was brought down.
This example gives a fair indication of what has been done to taxpayers generally. Let me hasten to say to the minister that he is to be congratulated upon framing his income tax proposals at least with a view to encouraging wage-earners who are in the middle brackets, and wishing to provide them with an incentive to higher earnings, and therefore a greater productive effort. Had the cost of living remained at pre-budget levels, the minister's action would have done much to settle labour generally. Reductions in their income tax would have been clear salary or wage increases,
2S14
The Budget-Mr. Low

as indeed they will be in the future when an abundance of consumer goods available will bring living costs down.
It will be much to the advantage of wage-earners, therefore, to hasten the day of lower consumer goods prices by maximum effort now to produce goods, so that the finance minister's promise for the next year might be made good. Labouring men and wage-earners generally are not likely soon to forget that the so-called tax relief for this year is only a gesture. About
2,000,000 wage-earners in Canada are fully conscious of the fact that this budget does not mean a single thing for them, except higher living costs for some months to come, a thing largely avoidable when one considers that another $100 million could have been taken off taxes in such a way as to reduce the cost of living, and without in any way endangering the financial stability of the government.
The minister is planning for a large surplus, anyway, a surplus much larger than he has any right to expect the Canadian people to be happy about, in the light of their present circumstances. It is my judgment that the government owes it to the Canadian people generally to tackle the problem of hidden and nuisance taxes, and to tackle that problem with earnestness and sincerity. That would indicate, it seems to me, whether or not the Liberal party is really interested in the common man-the little fellows-as they so often say they are.
The government proposes to take from Canadians this year $1,045 million in the form of indirect taxes, most of which are hidden or nuisance taxes. That means that around forty-seven per cent of all the tax revenue this year will represent feathers plucked from the goose in the so-called painless method. From the government's point of view there is, of course, something to be said for these indirect, hidden taxes. But from the point of view of the common man there is much more to be said for the removal of many of them at the earliest possible time. These are the taxes which are responsible for the increasing costs of production. They are applied at various stages of manufacture and the assembly of consumer and capital goods, so that they have a general pyramiding effect upon prices. The ultimate consumer is the goat who has to pay them. And it is mainly those taxes which have been responsible for the widening divergence between farmers' incomes and the cost to them of the many things which they have to buy.
I should say it would make a most interesting research problem, if one were to attempt to untangle the maze of hidden and indirect

tax applications to a selected list of common things bought every day by the people. But I will say this, that I have gone far enough into the matter to be convinced that it would be far from easy, and I am convinced it would take the skill of highly trained cost accountants to get anything like an accurate picture of the whole complicated mess; because that is just what it is, a complicated mess.
I have not the full facts before me, but one can get some idea of what is involved by taking cigarettes as an example. I am told that the actual legitimate cost involved in a package of cigarettes that sells for thirty-two cents is about eight cents. The remainder of twenty-four cents is pyramided taxes of a great many varieties. This may be an extreme example; it probably is.
I am not so much concerned about luxuries as I am about things we have to buy from day to day in order to live, but the example illustrates the general effect that hidden taxes have on consumer prices. Certainly the Minister of Finance could have performed a real service to the Canadian people by removing some of these taxes altogether, and by reducing others to a lower economic level. He could have taken off safely this year, in my estimation, $110 million of this particular tax burden; and, had he done so, the resulting possible decrease in living costs would have made his income tax rates reductions worth something to the Canadian consumer. Before I leave that may I say that it would have meant something tangible to the more than
2,000,000 wage-earners in this country who are not included in the benefits derived by the reduced income tax rates.
In this connection there is another angle which I should like briefly to mention. In my estimation the best barometer for measuring efficiency of government is the tax level, compared with the services that are being granted to the people for their money. People can readily measure the efficiency of their government only if their tax levels are easy to see, if they are right out in front of them, like a huge thermometer. But if the goose is to be plucked without knowing it is losing its feathers, or, in other words, if fully half our taxes are hidden ones that people cannot see, or cannot immediately discern, then Canadians can have no accurate way of telling whether or not their government is doing a decent job.
For this, and also for the reason that indirect taxes do add to the cost of production, the minister has utterly failed the Canadian people at .this time by not including in the budget provision for abolishing and/or lowering sales, excise and nuisance taxes. When the people

The Budget-Mr. Low
of Canada leam the true facts about our tax system, they will surely rise in righteous indignation, and put into office a government which will begin at once the simplification, and downward revision of the whole process of tax structure.
I should like to turn for a few moments to the matter of trade. In his speech the Minister of Finance made these two statements :
We now have 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.
And again he said:
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-too-distant future, and we must be prepared for the changes and adjustments in our production necessary to fit it into a more permanent pattern.
With regard to the first statement, I shall content myself at this time by simply saying that I sincerely trust it is not merely an expression of a pious hope. At the time we ratified/ Canada's approval of the Bretton Woods agreement, I did not hear much, if anything, from the government about what action they were prepared1 to take to impress upon large creditor nations with which Canada does business that a high and satisfactory level of international trade must depend upon their willingness to accept imports of goods from us to pay for their exports of goods to us.
The government, as we have already pointed out, rushed into that agreement without stopping to consider the very high price that Canada is likely to have to pay for a very doubtful privilege. But, now that we are a party to this tax, our job is to use our influence on every possible occasion to drive home to our neighbour to the south, especially, her sacred responsibility in this whole matter of trade. I believe I am right when I say that to a very large extent the economic stability of nearly every country on the earth and the peace and security of the world depend upon the attitude of the United States of America toward' trade. Somehow the man on the street in that great country must come to understand how great that responsibility really is.
With regard to the second extract from the minister's speech I should like to say just a few words. Canada ought to prepare herself and her machinery right now to meet what the minister has forecast with respect to a reduced foreign demand for Canadian goods. Two
things are prominently in my mind about that matter at this time. The first is this. It stands to reason that as keener competition for markets develops throughout the world- and that will come sooner than many people expect-we in Canada will be forced to lower our cost of production of a good many things if we are to retain our markets abroad. Here again I contend is a strong argument for the complete overhaul of our taxation structure and for the abolition of much of our indirect taxation that adds to the cost of production. In my judgment it would be worse than shortsighted for us merely to wait and see what happens, as is so often the attitude adopted. The removal of these taxes now will help to put us in a much better competitive position later on when the need is upon us.
In the second place, we ought to be giving much attention to the local market. After all, only a comparatively small percentage of Canada's business is done with countries abroad. We ought to be turning our attention to the fullest possible satisfaction of our internal demand for the goods and services which we in Canada can produce. I do not mean by this to neglect our foreign trade. Far from it; let us expand it to the utmost without lowering the standard of living of the Canadian people; I emphasize that, without lowering the standard of living of the Canadian people.
That means, of course, balancing our exports with our imports. AVhat I have in mind is that when the time comes that the present abnormal demand for our products drops off abroad we should be well on our way to potential economic self-sufficiency in the essentials of living. I am sure that is the only safe position for Canada in the next fifteen years or so. We should take every precaution to see that if strikes or social upheavals in other countries or war interfere with our sources of supply our people will not suffer because we have neglected to develop our own resources at least to the extent that we could1 within reasonable time satisfy our own basic needs. I would have felt much better about the budget if I could have found in it some evidence that the government intends putting Canada into such a position at the earliest possible time.
It was gratifying to note from the minister's speech that he expects production in Canada during 1947 to reach $12,000 million at prices slightly higher than those prevailing in 1946. We may be fairly hopeful then that employment will continue at a high level during the year. It is most important that such be the case, for without a high level of income the people will not be able to pay the tre-
The Budget-Mr. Low

mendous volume of taxes required by the government to fulfil its commitments. In fact there can be no guarantee of real prosperity if we do not make possible the production of vast quantities of goods and their distribution to the masses of the Canadian people. I wonder if this government is facing up squarely to the problems associated with keeping production high. There is little in the budget to indicate its attitude in this respect.
Competent authorities estimate that it will require production to the value of approximately SI,000 a year per head of population if we are to maintain a high and satisfactory level of wage-earning employment. Investigation in the United States, where conditions are not very much different from our own, indicate that that country must produce not less than $170 billion worth of goods a year to reach anything like full employment. From that it would appear that in Canada we must maintain between $11 and $12 billion worth of production a year to do a similar job. Henry Kaiser recently made this statement:
If we fail to have full employment we will not only face national bankruptcy but a social upheaval in which the American democratic form of government might well be swept away.
I believe it is just that serious a matter. Now I do not like the term "full employment", because there is something about it which reminds me of Schikelgruber and his "full employment", but I do recognize the need of providing opportunities for useful employment with appropriate incomes for the vast majority of our people. I believe this calls for careful organization and for vision on the part of the leaders of this nation.
Many leading men in the United States have been studying the whole problem of employment, with its related problems of production, markets and maintenance of purchasing power at a level to balance with the production. The United States congress has recognized its responsibility in meeting the problem by passing the full employment bill. They are determined to provide jobs with pay to all Americans who wish to work. There is much evidence that leading thinkers in the United States now recognize that the major difficulty to overcome in any programme of high production and employment is that of maintaining consumer purchasing power at the point where the goods produced and the services offered can be taken off the market and consumed and used by the people.
Beardsley Ruml, about whom the hon. member for Acadia (Mr. Quelch) spoke a few days ago, educator, social scientist and business executive, chairman of the board of R. H.

Macy, Incorporated, and a director of the national bureau of economic research in the United States, said recently in an article he wrote for Cosmopolitan magazine:
We were able to sell what we produced in 1946 as a result of four strong abnormal forces operating in 1946

reconversion spending, inventory building, net exports abroad, and lower government receipts than expenditures during most of the year. The forces that gave us full employment in 1946 will be weaker in 1947. And so we will have a weakening of the 1946 basis for full employment. The future must find the substitutes for the abnormal wrar and war conversion props to consumer purchasing power. Will they be found in 1947?
The production in 1946, to which he refers, in the United States was approximately $180,000 million. What Mr. Ruml said of his own country holds good here in Canada. There will be no use in thinking that pent-up wartime savings will prop up consumer demand. Mr. Ruml had something to say about this, too, and I quote:
There is no solace in a so-called pent-up demand. There has always been a pent-up demand, even at the lowest points of depression. The question is not demand, but effective demand. Our economic reconversion must be to find a peace-time substitute for those non-recurring strong forces which were the legacy of war and post-war disorder.
rft is the quantity of money in the pockets to buy that makes employment. Our biggest job in the future will be to maintain that kind of purchasing power at a level high enough to ensure the distribution of our whole production. If we fail in that, our way of life, our freedom, the individual system of responsible enterprise are all doomed. There are a great many people thinking in just those terms today. Take a look at what Harper's magazine crack writer John Fischer has to say, as reported by Richard L. Strout:
Russians are seared by their cast-iron Marxist logic about American capitalism. No amount of argument will shake their doctrinaire belief that American capitalism will produce a major depression in the next fifteen years, that this will produce fascism, and that this will produce war.
He continues:
Thus if there isn't a depression in the next fifteen years, the Russians might change their *tune. Facts will speak louder than words. From all this it can be argued that one way to preserve international peace in the world is to prevent that depression which the Russians believe will lead to war.
That argument applies equally to the widely-held opposite thesis that Russia is hoping for a major depression in the United States, with the consequent weakening of American economic and political power abroad, paving the way for further Russian expansion and influence. Thus a healthy American economy and wise trade policy are considered imperative checks to the spread of communism.

The Budget-Mr. Dechene
2S17
Mr. Speaker, however we look at the situation we are facing a most serious situation and problems which have their very roots in our economic system. In Canada we are challenged by the same forces that challenge the United States. If we fail now to meet that challenge, if we fail to make the necessary adjustments in our financial and economic organization by which we can avoid these disastrous depressions, we might just as well make up our minds that freedom of enterprise and every other kind of freedom will move out of Canada and communism will move in.
The minister, it seems to me, could have made himself the white-haired boy if in his budget speech he had declared he would find a way of maintaining purchasing power in the people's pockets sufficient to guarantee continued high production and employment for our people and freedom from the fear of depression and insecurity, even if it means the necessity of cutting loose from the present restrictive outworn system of distribution. I recommend to him, we have always recommended and we continue to recommend, the compensated-price discount or subsidy machinery put forward by the group with which I am associated, together with the earliest possible institution of a debt-free money system. I say there is yet time for the hon. Minister of Finance to become the white-haired boy.^I challenge him-and I hope he will listen to what I say to him at this time-to rise in his place in this house and in his rebuttal say what he will do when there begin to appear unsaleable surpluses of goods in our country, the first signs of coming depression.' *A bold declaration from him would do more than even he could imagine to settle the minds of the people and to make the enemies of our way of life crawl away into their holes to stay. Let the Minister of Finance remember that communism and marxism and fascism do not thrive and spread amongst a happy and contented people who have dynamic faith in their way of life, a faith that is buttressed by the treatment which their way of life metes out to them in the form of security and freedom.
I do not wish to speak longer. If the rules of the house did not forbid I might at this time move an amendment, but the rules forbid that until one or the other of the amendments at present before the house is disposed of.


Stanley Howard Knowles: You cannot do it even
then on the budget.


Solon Earl Low: No; I was mistaken. Under
the rules we are not allowed to present an amendment. But were it not that the rules
forbid it, we would have presented an amendment along the lines of our economic policies in which we in this group have great faith.


Mr. J. M. DECHENE (Athabaska):: Mr. Speaker, as I rise this afternoon to ask you for the privilege of the floor and to address this august assembly I assure you that I shall present my own thoughts, not written and rewritten and corrected, but the sincere beliefs that I hold myself, which possibly may not make as fine reading as the impeccable language we have heard this afternoon, but will, I repeat, be my own thoughts and those, I believe, of the majority of the people of the great province from which I come.
As I enter the arena this afternoon I do not do so with the thought of breaking a lance with the redoubtable warriors who have already entered it. I wish only to help the Minister of Finance (Mr. Abbott) and this Canada of ours by once more pointing out to him and to the hon. gentlemen of this assembly the tremendous possibilities of the resources of Alberta which I am going to ask all hon. members to help develop.
Some of the statements made by speakers who have preceded me struck me as requiring some answer; but, having recently sustained an injury which has compelled me to be quiet and from which I am not yet fully recovered, I thought my duty would be better fulfilled were I to speak only of the things I mentioned at the outset.
Lately the Imperial Oil Company has made a great discovery of oil. I am not boosting the Imperial Oil Company; I am simply reciting a fact. They have discovered one of the most important oil wells ever found in Alberta, a few miles south of the city of Edmonton, near the town of Leduc. Many times in this house I, as member for Athabaska, have tried to impress the people of this country with the possibilities of the tar sands of that great Athabaska region. I have said to the doubting Thomases of eastern Canada that over there lie resources which are so vast and so immense as to stagger the imagination and which could make this Canada of ours, in spite of the doubts expressed in this budget debate so far, one of the wealthiest and most self-contained countries in the world.
First I mention oil, then gas and coal. No nation can be powerful in time of war and rich and prosperous in time of peace unless it has a plentiful supply of these resources. We all know but often forget that Alberta possesses more coal, lignite, bituminous, semi-bituminous and semi-anthracite, than all the rest of the provinces put together, and that they constitute a large percentage of the coal
The Budget-Mr. Dechene

resources of the British empire. I do not overlook the fact, and I hope nobody does, that a shortage of this material, without which no nation can be great and powerful, may develop. Experts in the United States are predicting today a shorter life for the oil resources of that country than for Canada's. Lignite was used by the Germans for years as a source of oil and gas. In the tar sands of McMurray and along the great Athabaska river are hundreds of millions, yes, billions of barrels of potential oil if we Canadians would only use the talents and the courage that we have in this country and show the same adventurous spirit of our ancestors who centuries ago were drawn there by the appeal of this great western country. I say to the Minister of Finance, who presented such a wonderful budget, cheerful and able, that if we develop the resources of Alberta alone, in a few years, in a few decades at most, the Minister of Finance can close his books and not worry about surpluses or meeting the obligations of Canada.
Some hon. members listening to me today may doubt the incredible, the staggering resources we have in that province which today has a population of less than the city of Montreal. That population may be only
800,000,	but what a great population it is, what a population of pioneers! When I was a young fellow in the Edmonton district with my father, who homesteaded some twenty-five miles north of that city nearly sixty years ago, we had confidence in that country; we bad confidence in ourselves. Some years later, in the legislature of Alberta as well as in the House of Commons of Canada, this country of youth, I was astounded and sorrowed by the expressions of doubts, of despair even, of the future of that great county and particularly of the possibilities of Alberta. I am now, sir, walking in the shadow of life, but I still have the spirit and the courage of youth, and I use my voice to the best of my ability to boost Alberta.
In 1922, on the floor of the legislature of Alberta I predicted that under the soil of the province-and may I say that that soil is good enough for anything; its fecundity is beyond comparison-there was the wealth of which I have spoken, immense resources of oil and of all minerals; but I was made the butt of jokes when I asked the province of Alberta to pay a bonus of from 850,000 to 8100,000 to the first company or individual that would find this oil and bring in a producing well of at least 1,000 barrels a day. How they laughed at me! Today, Mr. Speaker, the work has been done and the field has been proved. At that time I deplored and I still deplore the fact

that our public men, the provincial government as well as the federal government, never saw fit to retain to the holders of the topsoil the natural resources underneath. When a homesteader went out west, thirty, forty or fifty years ago and gave everything he bad, gave his health, his brawn and his courage in order to develop that great western country our government, if you please, saw fit, I suppose for the sake of the large corporations now benefiting by their development, when they gave title to the homesteader, to give him title to the surface only. He could cut the trees, pull the stumps, take out the stones and through that labour break his heart and his back in developing that great country, but if there was a million dollars under it, it went to somebody else; he had no right to it.


Mr. BLACKMORE:: It is still going on there.


Joseph Miville Dechene: I do not wish to be interrupted, Mr. Speaker, in the picture I am giving of that great country, but I say to the hon. member for Lethbridge that both of us should be boosting Alberta.


John Horne Blackmore: You are doing a splendid job.


Joseph Miville Dechene: from the soil that they had cultivated, but the answer is obvious. That soil would no longer grow anything for them. They suffered from these conditions for two, three, five years and we had to take them out of that part of the country. We brought these people to the north country.
I have seen hundreds of these people going through my own town with broken-down hay racks and wagons, their horses played out, with a cow or two, which they had somehow or another saved from starvation, lagging behind because they were too weak to keep up with the procession. But these people had one thing left. They had the courage and the guts to move hundreds of miles to the north country, and there they are now. And, believe it or not, under those conditions they have made good again. There are prosperous settlers now in that country. Let us give them those lines which they have been depending upon in order that the fruits of their toil and of their courage, seeing that they have started life twice over, so to speak, shall not be lost to them.
I do not know what politics has in store for me, and that is not very important. The fate of an ordinary man in politics is of no consequence; it is only a drop in the bucket, and as a man gets older it is worth still less to him. But I should like to live long enough to be able to tell those people, whose sacrifices I have witnessed, to whose courage I can testify, that the transportation facilities which we promised them have been built by the country.
I am making this plea tonight for those people and, I repeat, I am not asking a favour. I am not asking for anything on bended knee, or hat in hand, because we never do that in that country. I do not very often ask for the privilege of holding the floor, Mr. Speaker, and this is the first time I am speaking this session, so that I am sure you will bear with me as I tell the story of the people in that part of Canada. Some weeks ago, over in the Chateau Laurier, one of the engineers of the Department of Mines and Resources presented a report on the new findings in the Fort McMurray field, some twenty or twenty-five miles west of the location where we had been working in connection with the Abasand oil. In that district they found clear lakes of bitumen. Anyone who wishes to inspect them can see the plans in the department which the engineers brought back and the description of the lakes containing bitumen to a considerable depth ready to lay on the roads of the country to make pavements. These lakes, according to the chief engineer, who is one of the best in the country-I do

not suppose I need to mention his name- have a capacity of 500,000,000 barrels of bitumen; something simply staggering. To those hon. gentlemen from eastern Canada these figures may appear incredible, but they are not so to the people in that part of the country. We have heard farmers talking about yields of from fifty thousand to sixty thousand bushels of wheat, and that is not a dream; it is true. Well, if you operate on fifty acres and you lose your crop you can get by; but when you operate on an area of a thousand or two or three thousand acres, failure means a very great deal to you. That is why our farmers are so greatly interested in the prices of twine, gas and everything else. I suggest to hon. gentlemen that they should not criticize the farmers too severely if the latter seem to be bitter at times, because they have to operate on such an extensive scale that it is a tremendously expensive business to them, and if we do not help them to secure the instruments of production as cheaply as possible, we cannot be surprised if they complain.
May I ask. Mr. Speaker, that you call it six o'clock. I had hoped to be able to complete my remarks before the dinner hour, but I have taken only twenty minutes and I should like to speak for the other twenty minutes this evening.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Mr. DAVID CROLL (Spadina, for Mr. Maybank) moved the second reading of Bill No. 155, for the relief of Marjorie Winnifred Bearman Smeall.
He said: Mr. Speaker, I have on the order paper resolution No. 42, which I realize I cannot hope will be reached this session, so that I am going to take this opportunity of saying what I had intended to say in speaking on that resolution. First, I want to bring to the attention of the house the fact that the divorce laws of Canada are perhaps the most restrictive in the western world, and I think reforms are long overdue to remedy the grievances brought about by our present ironclad: laws. In order that the house may appreciate the shortcomings of our legislation, I should like to relate briefly the history of divorce in England, on whose laws the Canadian law is founded.

Private Bills
Ian Alistair Mackenzie: I Enow I am completely out of order, but I wonder if my hon. friend would' permit the committee to give consideration to the non-divorce bills on the list, and then take up this divorce legislation?


William Ross Macdonald: Do I understand that the debate is being adjourned?


Ian Alistair Mackenzie: No; let it stand temporarily. If Your Honour will be kind enough to call those bills on the list which are not divorce bills the house might deal with them and then consider any objections there may be to the divorce legislation.


Mr. CHURCH:: Under what rule is that done?


Ian Alistair Mackenzie: No rule at all, but I think it would be a sensible thing to do.


William Ross Macdonald: With the unanimous consent of the house Bill No. 155 stands.



CANADIAN NURSES' ASSOCIATION

[Stage Direction]
Mr. W. M. BENIDICKSON (Kenora-Rainy River) moved the second reading of Bill No. 171, to incorporate Canadian. Nurses' Association.
Mr. MARTIN:: I just want to say that I have discussed this bill with the sponsor, and I will offer a suggested amendment in committee, which may well be considered there. I need not take up the time of the house with the proposed amendment this evening.


Thomas Langton Church: I understand that this bill will be considered by the private bills committee. That is necessary, because there is a difference of opinion among the nurses as to the desirability of having a Canadian body at present, at a time like this.
Motion agreed to and bill read the second
time.



GUARANTY TRUST COMPANY

[Stage Direction]
Mr. D. F. BROWN (Essex West) moved the second reading of Bill No. 172, respecting Guaranty Trust Company of Canada.
Thomas Langton Church: Would the mover explain the bill? We have quite a few of these trust compa-nies now.


Mr. BROWN:: As sponsor of this bill I shall be very happy to explain it if my hon. friend would like an explanation. It so happens that in the statutes of 1931 the parliament of Canada, enacted that the aggregate of the sums of money borrowed and money entrusted to the company for investment, the repayment of which is guaranteed by the company, shall not exceed seven times the amount
of the company's unimpaired paid-up capital and reserve. The annual statement of Guaranty Trust Company for 1946 shows that authorized and fully paid-up shares amounted to $500,000 and the reserve fund to $400,000, or a total of $900,000. Seven times this amount would be $6,300,000. It also shows that the guaranteed trust account, being trust funds for investment, were $5,683,042.28, which is nearly seven times the amount of the authorized, fully paid-up capital stock and the reserve fund. So in order to protect investors and persons such as widows and orphans whose funds are entrusted to this company, it is necessary that an application be made to increase the capital stock.


Gordon Graydon: May I ask my hon. friend if this is the same company that is reported in the newspapers to 'have recently purchased the Capital Trust Company of Ottawa and Toronto?


Donald Ferguson Brown: I do not know whether this is the proper time to discuss these matters. My understanding is that bills of this kind are referred to a committee where full disclosure is made and questions are asked by members of this house. For the information of my hon. friend, however, I may tell him that I understand it is the same company; but this has absolutely nothing to do with the taking over of any other trust company.


Thomas Langton Church: Some of these trust companies are not for the general advantage of Canada at all. They have been much criticized in one or two court decisions, and this parliament should be very careful. A number of companies were established during the war; many of them moved their head offices around and increased their capital stock. This company is moving from Windsor to Toronto and increasing its stock from $500,000 to $1,000,000. There are some paper charters out at the present lime, and I just wish to protect public rights. The public who have business with these trust companies deserve some protection, because the matters dealt with and the properties covered are very largely provincial. There has been some criticism by the securities commission of certain companies coming here to Ottawa and getting federal charters when they are not federal at all. I hope this bill will be carefully examined by the private hills committee as to the necessity for the change, the increase in capital and the objects; I hope they will investigate the finances of the company and all the rest of it, and if it is all right, then parliament can act.
Motion agreed to and bill read the second time.
Private Bills

woman's auxiliary, missionary society,



CHURCH OF ENGLAND IN CANADA

[Stage Direction]
Mr. T. L. CHURCH (Broadview) moved the second reading of Bill No. 173, respecting the Woman's Auxiliary to the Missionary Society of the Church of England in Canada.
He said: This is purely a change in name; formerly it was just called the woman's auxiliary.
Motion agreed to and bill read the second time.

[Stage Direction]
The house resumed from Friday, May 2, consideration in committee of Bill No. 106, to incorporate Quebec North Shore and Labrador Railway Company-Mr. Rinfret-Mr. Golding in the chair.
On section 7-Line of railway described.
Mr. DORION:: Mr. Chairman, as I am the representative for the constituency in which this railroad is to be built, I believe I should say a few words on section 7, especially in view of the amazing contentions introduced into the discussion recently by some hon. members. I should like to say, first of all, that, notwithstanding the wishes of certain individuals there are still in Canada provinces which have their rights and powers, and it seems to me that it might as well be said once and for all that no one can foresee the day when there will be only one central power in Canada. If any such thing should ever happen, the confederation would be broken altogether.
As has been already said by the hon. member for Outremont, section 7 deals exclusively with the right to build a railroad. It has not anything to do with mining development. According to paragraph 5 of section 92 of the British North America Act, each provincial legislature may exclusively make laws in relation to matters comihg within the class of subjects therein enumerated; and paragraph 5 refers to the management and sale of the public lands belonging to the province and of the timber and wood thereon.
Then, if we want to know what are the public lands belonging to the provinces we must refer to section 117 of the British North America Act, which states:
The several provinces shall retain all their respective public property not otherwise disposed of in this act, subject to the right of Canada to assume any lands or public property required for fortification or for the defence of [DOT]the country.

And we must also refer to sections 108 and 109, which state that in matters such as this the provincial governments have the absolute right to dispose of the lands, and to grant permits to mining corporations.
In virtue of the powers thus given, 'the legislature of Quebec passed a law in 1946, which is set out as chapter 42, 10 George VI, of the statutes for that province. This measure is entitled, "an Act to promote mining and industrial development within New Quebec. In sections 1 and 2 it is stated:
1. The minister of mines-
That is the provincial minister.
-is authorized to grant to Hollinger North Shore Exploration Company Limited, in replacement of the special licence number 4676 which it presently holds, a special exploration licence under conditions specified in-

the following sections.
And in section 2 of the same act it is stated:
This licence shall be issued for a period of time running from the date of its issue until June 30, 1952.
Therefore, Mr. Chairman, it is entirely out of order to discuss in this chamber the granting to the Hollinger company of the necessary permit for the exploitation of the mining fields in that area. That must be taken as a fait accompli; and the only question is this: Is this parliament to give to another company the right to build a railroad to facilitate the exploitation of these mining fields? Therefore I am entirely in favour of the principle of the bill, and I shall support section 7.


Mr. HERRIDGE:: I should like to make a few remarks on section 7, which gives the right to build this railroad. Before we proceed to give this right I suggest that we should be most careful. Looking back over the history of this country, one realizes that similar rights have been granted without full information and without guarantees as to what was to be done with these rights. In many instances this has resulted in restricting the development of the country.
I was a member of the committee which dealt with this bill and gave it serious consideration. This is an important matter, but no record was kept of the proceedings of that committee. A record should be kept of a committee of that type, something in the nature of our Hansard report, so that we may have some record of what was said in committee by witnesses.
In addition to that, this large corporation- I presume it is such-had the unmitigated gall to come before the committee without pre-

Private Bills
senting any proof or any complete information as to what they intend to do, as to what developments are intended, nor did they give any guarantees for the future. It is because of that that I wish to speak on this section.
I remember when I was a small boy, coming from England to this country, that we traversed the west looking for land, and considered settling in Saskatchewan at one time. That was the time, of course, when no Englishman need apply, except at a real estate office or a recruiting office. We applied at the real estate office, and put down $100 an acre, cash, for heavily timbered land in British Columbia. That was forty years ago. ft was land which had been purchased by a lorporation connected with a railroad.


The DEPUTY CHAIRMAN:: Order. I rould ask the hon. member to confine his /emarks to the section.


Herbert Wilfred Herridge: I am illustrating the principle of granting this right. It is only one illustration out of hundreds, where companies bought land previously from the government for $5 an acre, surveyed it, often incorrectly and sold it to British settlers in the following year for $100 an acre, cash.


William Henry Golding: Order. Section 7 deals only with "line of railway described." The section only describes the railroad, and has no reference to what happened forty years ago.


Herbert Wilfred Herridge: Mr. Chairman, I think I have the right to illustrate what happened years ago, and what may happen again in the future.
This is a most important matter. As I pointed out before, there was no verbatim report of the committee proceedings, and the sponsor of the bill has not given a complete and elaborate statement to this committee. If I am permitted to do so I am going to present some facts as to what has happened in the past, to illustrate that this very same procedure in the past has worked to the detriment of many Canadian people, and to the detriment of the development of Canada.
Hundreds of those people, many of them without any substantial means, sweat out years of their lives in developing those properties. The owners who purchased from the government guaranteed certain rights and also guaranteed certain road developments. Those developments did not happen. Why? Because at that time they were not tied down. They made a verbal bargain, and had made certain promises in their literature. The government of the day had nothing concrete from which they could work to keep those people to their agreements.
That is why I object to this bill, without knowing more about these proposals. I have before me a book called "The History of Canadian Wealth," by Myers, a volume I would recommend to hon. members who are interested in the development of Canada. They will get it in the parliamentary library, and I recommend that they read it, because it gives dozens of illustrations of what happened in the past in connection with the development of this country. I am just going to read the preface before going on with my argument. It reads:
The rapid concentration of wealth in Canada is no mere fancy. Already, it is estimated, less than fifty men control $4,000,000,000, or more than one-third of Canada's material wealth as expressed in railways, banks, factories, mines, land and other properties and resources.
To say that this small group of individuals control so vast a wealth and the agencies of its production does not imply that they own it all. Between ownership and control there is a difference, yet the reverse of that is commonly supposed. By means of their control of financial markets and distributive systems, a small number of men may effectively control sources of wealth which still may remain under individual ownership, as witness the case of the farms, of which control farmers throughout Canada are bitterly complaining. Also it is not necessary for magnates to own all of the stock of railroads, banks, factories and mines; much of that ownership may be distributed among small shareholders, yet by their predominantly large holdings of stock, and through their power of directorship, those magnates can and do control those diversified, and often financially interconnected, sources of wealth.
The process of centralization of wealth has been steadily going on for nearly thirty-five years. The removal of unrestricted competition was first evidenced in the case of t'he railways of Canada. Beginning in about the year 1879, a considerable number of smaller and formerly independent railways (some of which had already amalgamated) were absorbed by the large systems such as the Grand Trunk-


Mr. SMITH (Calgary West):: Surely this is all out of order?


William Henry Golding: I agree with the hon. member for Calgary West. The section states that the company may lay out, construct and operate a railway starting at a point on the St. Lawrence river, and I do not see how the hon. member, when he is dealing with this particular clause, can bring in something that happened long ago.


Herbert Wilfred Herridge: I am trying to bring it in, in this way-


William Henry Golding: I think the point of order raised by the hon. member for Calgary West is sound and I ask the hon. member to deal specifically with the clause.
Private Bills


Herbert Wilfred Herridge: Do you rule that I am out of order when I am quoting this in support of my argument?


William Henry Golding: I am asking the hon. member to deal specifically with the clause.


Clarence Gillis: May I say something on the point of order? I can understand why the hon. member for Calgary West does not like this story, because apparently it is treading on the corns of some of his friends. The particular bill before the committee is simply history repeating itself. The hon. member for Kootenay West is dealing with boundaries and territories and resources which were handed over to previous railway companies, and section 7 describes the territories that this company is to take over. He is trying to avoid a repetition of the handing over of the resources of this country which was done in the past.


William Henry Golding: If the hon. member will deal specifically with the territory through which this railway proposes to go he will be in order, but surely he is not in order in dealing with something that happened long ago. My hon. friend knows that speeches in committee must be strictly relevant to the section being considered. If the hon. member will deal with this section he will be perfectly in order;


Arthur Leroy Smith: On a point of order, the hon. member for Cape Breton South said that I was raising the point of order because this hurt some of my friends. I do not even know the name of one man who is connected with the railway, nor do I know any person who has anything to do with it at all.


Clarence Gillis: I was referring to the little bit of history being read by the hon. member for Kootenay West, not to this bill.


William Henry Golding: I would ask the hon. member to try to keep within the terms of the section.


Herbert Wilfred Herridge: I am quoting from this book to show what happened in the past when clauses of this kind were passed by former parliaments without any guarantees. The preface continues:
The highly centralized character of the Canadian banks is well known; the branches of the important banks extend over an immense territory; twenty-six of these institutions have 2,888 branches.


William Henry Golding: Again I ask the hon. member to deal with the territory through which this line is going; to deal particularly with this section.
[The Deputy Chairman.]


Mr. POULIOT:: On that point of order,
what the hon. member is reading has reference to grants of land being made for the building of railroads, but this case is entirely different. The area belongs to the province which has made a deal with the company. An act has been passed by the legislature of Quebec and there is no question of property rights. There is no question of our granting lands to this company; the only question is giving them the right to build a railroad on land which they already have. That is entirely different and that is why the hon. member is out of order. What he is reading may be interesting but it is not at all pertinent to the case.


Mr. ADAMSON:: This bill does not pretend to deal with the granting of land, which in this case belongs to the province of Quebec.


Herbert Wilfred Herridge: Mr. Chairman-


Jean-François Pouliot: Mr. Chairman, will you
decide my point of order?


William Henry Golding: I think the hon. member for Kootenay West should deal with this clause.


Herbert Wilfred Herridge: I	quite understand
that lands are within provincial jurisdiction, but this parliament can ask that certain information be given by this company before the bill is passed, in order to protect the rights of the people in the province as well as the rights of the province concerned. We all know that the granting of a charter to a transportation system will give monopolistic control over the area concerned. I maintain that this parliament can do something to protect the people of this country and the people of that province by making certain that this railroad will be built within a certain time and by insisting upon having full information as to the owners of this company, their intentions, the developments they intend to undertake, when they intend to complete the road and so on. That is why I take exception to this bill being passed without that information being given to this committee.


Mr. RINFRET:: A full opportunity was
given to every hon. member to go to the committee on railways and ask the representatives of the company any questions they wished.


Mr. SINCLAIR (Vancouver North):: I
should like to rise to a point of order. No member of parliament has to go before a parliamentary committee as do outside people. Our place to ask questions is in committee of the whole, if we so wish.

Private Bills


Thomas Langton Church: I want to ask one question about section 7. We are giving the company the right to build a railway and, as the Secretary of State for External Affairs said the other night, we can only give them jurisdiction in Canada, and only capacity to act. I would call the attention of the government to a meeting held today between fifteen representatives of Newfoundland and the British government in London, England, regarding Newfoundland's future government. The representatives of Newfoundland were insisting that Labrador be part of that country, and said they are now to come to Canada in June and go into the question of the tenth province of Canada's federation, Newfoundland and Labrador. and the whole future of it. Under section 7 the company is given power to act, capacity powers only as a corporation to construct within Canada. To proceed with construction beyond Canada they will have to deal with Newfoundland and Labrador. I understand that they dealt with them twenty years ago but spent only about $100,000. While I do not believe in railways and coal mines and electric distribution systems being taken over as is now being done in England, I believe that the Canadian National Railways should have had a survey made of this territory not only-in Canada but in Labrador. The policy of our national railway in the past has been to go into territories far less profitable than this proposition may turn out to be. While these mining men are going in at their own expense and surveys have been made under section 7, the fact remains that we are giving away- public property. We have only the capacity to give the company railway and subsidiary powers to operate within Canada. For anything else the company wants outside Canada, hotels, power, highways, ocean services, vessels, elevators, wharves, it will have to deal with the provisional government of Labrador and Newfoundland. I would ask the Secretary of State for External Affairs if that is not right?
Mr. ST. LAURENT: I think the hon. gentleman is quite right, though perhaps not quite complete. The purposes of this bill as I read it are two-fold. One is to incorporate a company, thereby giving it the capacity to acquire powers through any jurisdiction that may be willing to grant powers to it; and the other is to build a railway from a point on the St. Lawrence in Quebec to the border between Quebec and Labrador. That is something which, under the British North America Act, can be granted only by- parliament. There is no doubt that the parliament of Canada cannot grant the right to the company to build 83166-180
a railway- in Labrador, but the parliament of Canada can grant the capacity to the corporation to go to the government of Labrador and acquire from that government the right to build in the territory governed by the commission government.


Jean-François Pouliot: A moment ago I heard one hon. member say that he has the right to argue in this committee just as well as in the railway committee. He is perfectly right. The difference is that in the railway committee witnesses and experts can be heard and be asked questions to satisfy the minds of hon. members who desire information.
(Translation):
Mr. Chairman, in order to ascertain the opinion of the provincial government in regard to this bill, I sent a copy thereof to the premier of Quebec, asking him to kindly let me have his views.
I received today the following telegram, copy of which I shall hand over to the hon. member for Outremont (Mr. Rinfret). It reads as follows:
Thank you for your kindness in sending me copy of Bill "H" re Quebec North Shore and Labrador Kailway Company, which I have received this morning, a few moments before the house met. Insofar as the territory of the province of Quebec is concerned, it is obvious that the provincial authorities alone have the power to deal with hotels, water power and their operation as well as with transportation by truck, bus and automobile. In the province of Quebec, there are proper agencies having the power and the duty to supervise and control the operations arising from the use of highways and the development of provincial natural resources. As always, we are prepared to cooperate sincerely with the federal authorities in order to solve the problems which concern both the dominion and the provincial authorities, according to their respective constitutional rights and on a friendly basis if possible. However, you understand that encroachments can never serve as a basis for cooperation. Again I thank you for your courtesy in this connection.
Maurice L. Duplessis.
I wish to ask the hon. member who has sponsored this bill whether it is the intention of the company to have subsidiary companies exercise the rights which may be granted to it under this bill. It is necessary to distinguish as between the right itself and the power to exercise such right.
This information would be of great interest to the public.
(Text):


Édouard-Gabriel Rinfret: I do not think the general remarks just made by the hon. member for Temiscouata apply to section 7. They might apply to section 11. I will reserve my reply until we reach that section.

Private Bills


Thomas Langton Church: The subsidiary companies
operating power sites, elevators, hotels, ocean services, wharves, aeronautics services outside Canadian territory are not under the control of the province, and must deal also with Labrador. High power costs have added heavy costs to mining production in Canada.


[Stage Direction]
Section agreed to.
On section 8-Issue of securities.
Mr. FRASER:: This section says:
The securities issued by the company shall not exceed the cost of the railway constructed or under contract to be constructed.
How does section 16 fit into that? Section 16 says:
The company may lay out, construct, instal, maintain, equip and operate a pipe line or lines for the purpose of the transportation or transmission of oil . . .
And so forth. Does that mean that the securities issued under section 8 could not be used for this purpose?


Édouard-Gabriel Rinfret: Section 16 was amended
in the committee.


[Stage Direction]
Section agreed to.
On section 9-Agreements with other companies for sale, lease or amalgamation.
Herbert Wilfred Herridge: Would the sponsor of
the bill explain this section?


Édouard-Gabriel Rinfret: It deals with working
agreements with other railways. At the present time there are no other railways in sight there or near this railway, and therefore it may appear curious to have this provision in the bill. But, as the hon. member will have seen by section 7, the Labrador government will be asked to grant permission by way of agreement for this railway line to pass through Labrador, and it might well be that Labrador might insist on having a railway company incorporated in Labrador. In that case this railway will have to be connected with the Labrador railway and power has to be taken to make the necessary agreement with this new company. That is the purpose of section 9.


Angus MacInnis: With reference to subsection 2, section 147 of the Railway Act prohibits the railway company from either directly or indirectly employing any of its funds in the purchase of its own stock. Why is that section being set aside? Does this come under a special act, or is it otherwise provided for in the Railway Act itself?


Édouard-Gabriel Rinfret: As the hon. member has
pointed out, section 147 of the Railway Act prohibits any one railway company, unless specially authorized, from investing in the

shares or security of another railway company, but, as I have pointed out, it might be that another railway company will have to be incorporated in Labrador which will have to be financed by this company. Of course we shall have to get the power to incorporate under subsection 2 of section 9. That is the purpose of it.


Thomas Langton Church: I should like to ask a question on section 9, subsection 2. There is no railway company yet. How can they acquire the stock, shares, bonds or other securities of other companies?


Édouard-Gabriel Rinfret: I have just explained it.


Thomas Langton Church: I do not see how they can do it; they are not an entity yet, or a railway yet. It is contrary to the Railway Act also, and outside Canada.


Clarence Gillis: This road will not be built for ten years, anyway.	_


Édouard-Gabriel Rinfret: Five years.


Clarence Gillis: I should like to find out if under section 9 of this bill as worded it would be permissible for the company now seeking the charter to form holding companies outside Canada. The note in the margin says: "Agreements with other companies for sale, lease or amalgamation." The section itself concludes by saying, "whether within the legislative authority of the parliament of Canada or not and whether within or outside Canada." Does this section permit the company to set up holding companies outside Canada over which this parliament or the Quebec legislature has no jurisdiction?


Édouard-Gabriel Rinfret: I do not think the section goes that far. It authorizes the company to enter into agreements with another railway company outside Canada, such as a railway company in Labrador, in case the government of Labrador insists upon having a railway company incorporated under its laws instead of coming to an agreement without any incorporation.


Clarence Gillis: What I have in mind is not particularly a railway company. With this road goe.s a lot of other powers, the development of electricity, pipe lines, gas and that kind of thing. Could this company form a holding company in the United States and sub-lease the resources in that area to a company outside Canada over which none of our legislative bodies have any jurisdiction?


Édouard-Gabriel Rinfret: Section 151 of the Railway Act deals with exactly that, and section 9 is subject to the provisions of section 151 of the Railway Act. Does that answer the hon. member's question?

Private Bills


Mr. KNIGHT:: In reading section 9 of the bill, the sponsor has referred to another railway company. Section 9 says "any other company"; it makes no reference to a railway company.


Édouard-Gabriel Rinfret: That is exactly the last answer I gave. If the hon. member refers to section 151 of the Railway Act he will find the answer.


Clarence Gillis: Will the hon. member give us a brief explanation of it?


Édouard-Gabriel Rinfret: It is a long section.


Clarence Gillis: Summarize it.


Édouard-Gabriel Rinfret: The note says: "Agreement for sale, lease or amalgamation of railway." Then it refers to "approval of shareholders; board to recommend sanction; notice in Canada Gazette; newspapers", and so forth. The notice has to be put in the Canada Gazette and in the newspapers. Then it refers to proceedings upon sanction, notice of evidence and exemptions in certain cases.


Clarence Gillis: They deal with railways.


Édouard-Gabriel Rinfret: With railways.


Clarence Gillis: This section deals with other companies.


Édouard-Gabriel Rinfret: Section 9, subsection 1 reads:
Subject to the provisions of sections one hundred and fifty-one, one hundred and fifty-two and one hundred and fifty-three of the Railway Act . . .
I have just referred to section 151 which refers only to railway companies.


Mr. ZAPLITNY:: Subsection 2 of section 9 reads:
Notwithstanding the provisions of section one hundred and forty-seven of the Railway Act the company may acquire the stock, shares, bonds or other securities issued by any such railway company or acquire any interest in any such stock, shares, bonds or other securities.
Is it necessary in this case to set aside section 147 of the Railway Act?


Édouard-Gabriel Rinfret: As I said a moment ago, section 147 of the Railway Act prohibits any railway company from investing in shares and securities of any other railway company except as specially authorized. The connection in this case will be between the Canadian railroad and what might be the Labrador railroad. Because of that, there has to be a special authorization from parliament to authorize this company to buy the shares or stocks of the other Labrador railway.


[Stage Direction]
Section agreed to.
83166-180J
Section 10 agreed to.
On section 11-Electric and other power.
Thomas Langton Church: Has anybody control over the power rates under this section? High power costs have been fatal to mining production in Canada.


Frédéric Dorion: This section deals with powers that come under provincial jurisdiction. It deals with electric power, power to generate, acquire, use, transmit and distribute electric and other power. My submission is that we cannot give to the board of railway commissioners any power to deal with matters that come under the jurisdiction of the province of Quebec. Quebec has a board to deal with such matters. The board is set up under the provincial electricity board act, which was passed by the Quebec legislative assembly in 1945. If we were to pass this section as it stands it would come in conflict with what we already have in Quebec. Therefore I move, seconded by the hon. member for Chicoutimi (Mr. Gagnon):
That, in the first and second lines of section eleven, the words "section three hundred and sixty-eight of the Railway Act" be deleted and that the words "chapter twenty-one of the Statutes of Quebec, 9 George VI, 'l945" be substituted therefor.


Édouard-Gabriel Rinfret: A few moments ago the hon. member for Charlevoix-Saguenay (Mr. Dorion) referred to various sections of the British North America Act. I did not answer him because I knew this amendment was coming. Section 92 of the B.N.A. Act, subsection 10, reads as follows:
In each province the legislature may exclusively make laws in relation to matters coming within the classes of subjects next hereinafter enumerated; that is to say,-
10. Local works and undertakings other than such as are of the following classes:
(a) Lines of steam or other ships; railways, canals, telegraphs and other works and undertakings connecting the provinces with any other or others of the provinces, or extending beyond the limits of the province.
Therefore, under section 92 of the B.N.A. Act railways extending beyond one province do not come within provincial jurisdiction, but within federal jurisdiction. So far as section 117 is concerned, which he referred to a moment ago, it reads as follows:
The several provinces shall retain all their respective public property not otherwise disposed of in this act . . .
I suggest that section 92, subsection 10, to which I have just referred, deals with property which has been otherwise disposed of. To my way of thinking, what is now being attempted
282S
Private Bills

is much more an encroachment by the province upon federal rights than the other way around.
So far as the telegram which the hon. member for Temiscouata (Mr. Pouliot) read is concerned, and the question which he has put on that matter, I wish to assure him that if at any time the company have a surplus of power over what they need for their own purposes they will certainly form a new company which will have a provincial charter and which will come under the jurisdiction of the provincial board.
So far as sections 14 and 15 are concerned

I know the question is going to be put there -if at any time the bus service becomes more extensive than for the company's own purposes a new company will be formed to render public service, and that company will be a provincial company and will therefore come under the provincial board.


Frédéric Dorion: The hon. member has
referred to subsection 10 of section 92 of the British North America Act. That subsection deals only with lines of steam or other ships, railways, canals, telegraphs and so on. Here in section 11 of this bill we are dealing with electric power. As I said a few minutes ago, we are called upon to give the company power to generate, acquire, use, transmit and distribute electric and other power, and this comes under provincial jurisdiction. That is why I moved the amendment.


Édouard-Gabriel Rinfret: I would refer the hon. member to section 368 of the Railway Act, which reads:
Whenever in any special act passed after the seventh day of July, one thousand nine hundred and nineteen, it is stated or provided that a railway company shall have power to acquire, transmit and distribute electric and other power or energy, such company, subject to the provisions of this Act, may for the purposes of its undertaking acquire, but not by expropriation, electric and other power or energy, and transmit and deliver the same to any place in the municipalities through which the railway is built, and receive, transform, transmit, distribute and supply such power or energy in any form; and may dispose of the surplus thereof, and collect rates and charges therefor, but no such rate or charge shall be demanded or taken until it has been approved of by the board, and the board may revise such rates and charges whenever it deems proper.
So that I may satisfy the hon. member for Charlevoix-Saguenay as far as I possibly can, I would move-


William Henry Golding: Order. The hon. member is about to move an amendment, but we can have only one amendment at a time.


Frédéric Dorion: 1 have only one more word to say. In section 368 of the Railway Act, just read by the hon. member, it is stated that the company might have the right to organize electric power, but the section states definitely "for the purposes of its undertaking". Here in section 11, however, we are giving a general power to generate power and distribute electricity.


Lionel Chevrier: I am not interested in this bill except from the point of view of the Department of Transport, and I have read carefully the amendment which my hon. friend has proposed. The amendment, if passed, would have the effect of delegating from the federal parliament powers to a' provincial government, and the effect of that would be to render this section wholly unconstitutional. Anyone could thereafter move before the courts to strike out and declare this section unconstitutional. That is borne out by the judgment of the Supreme Court of Canada in the case of Quebec Railway versus the city of Beauport.


Arthur Leroy Smith: Has he not something there in the words "for the purposes of its undertaking"?


Frédéric Dorion: The minister has referred to the Quebec Railway, Light and Power Company case. I have here the judgment of the supreme court, which will be found in Canada Supreme Court Reports, 1945 at page 16. The notes were read by five judges and, as the report states at page 17, this question came before the supreme court when the Quebec Railway, Light and Power Company asked the board of railway commissioners to fix rates of tolls that were to be charged. The company applied for an order of the board of transport commissioners approving its tariff of tolls for the carriage of passengers on the motor buses operated by it. It was held by Justices Rinfret, Kerwin and Rand that in 1939 an amendment to the charter of the Quebec Railway, Light and Power Company was passed by this house which amendment read:
It is enacted and declared that the company's now existing powers-


Ian Alistair Mackenzie: I rise to a point of order, Mr. Chairman. Just before we began the discussion of these particular bills, my good friend the hon. member for Spadina (Mr. Croll) moved a resolution in regard to certain other bills, and I think it would be proper to have that debate adjourned so as to keep the proceedings in order.	.
Progress reported.
[Mr. Rinfret.I

The Budget-Mr. Dechene



MARJOHIB WINNIFRED BEARMAN SMEALL

[Stage Direction]
The house resumed consideration of the motion of Mr. Croll (for Mr. Maybank) for the second reading of Bill No. 155, for the relief of Marjorie Winnifred Bearman Smeall.
William Ross Macdonald: Earlier in the evening the hon. member for Spadina moved the second reading of certain divorce bills. He now moves that the debate be adjourned.
Motion, agreed to and debate adjourned. THE BUDGET



DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE

[Stage Direction]
The house resumed consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell (Muskoka-Ontario), and the amendment to the amendment of Mr. Coldwell.
Joseph Miville Dechene: Mr. Speaker, it is with deep regret that I admit I could not complete my remarks before six o'clock and that therefore I must inflict myself upon you for a few minutes longer. I believe that in my style -as you notice, I have nothing written before me-and being in the habit of saying what I think and talking about things I am supposed to know something about, I have made a point as to the necessity of this government and the government of Alberta coming to a thorough understanding of the immense possibilities in the development of the tremendous natural resources of that province, which I discussed for a few minutes. I know that this time will not be lost.
Some time ago I was reading one of the greatest writers and thinkers of his century, Victor Hugo, and I was struck with one statement he made at a time when things were most desperate for his great country, France, as bad almost as they were in the' last war. I speak of 1871, and I would ask for a minute of your time to refer to those days, because at that moment everything seemed to be lost. The country was absolutely defeated; its armies were dispersed over the soil of France; the conquerors were tramping through the halls of the nation with their hobnailed boots, imposing harsh terms of peace. Hugo was himself a member of the chamber of deputies, which met under the walls while the commune was burning the city. Everything seemed desperate; they said, "Well, what is the use?" Then Hugo uttered these words: "Gentlemen, no effort is ever lost." You all
know how true that is. Sometimes you have wondered what is the use of what you are trying to do. I see around me young members, men of talent, ability and courage, who one day are going to make their mark in this chamber where I am so proud to be tonight. Sometimes they will be inclined to be discouraged and to ask, "What is the use?" If they remain true to the cause they espouse; if they keep pressing forward they will find later, when perhaps they think their ideas have been forgotten, that their efforts have not been lost. Therefore tonight I repeat that celebrated phrase, which I am unable to translate: "Fut-on un million d'esclaves, je suis fibre." It is because I know I am appealing to a friendly house, because I feel that I am appealing to real Canadians, because I know, as I said a moment ago, that tnese efforts will not be lost, that I am asking the house to consider building the gaps in these railroads about which I have spoken so often. I say again that if the Canadian Pacific Railway Company are unable to complete the gaps on their fine because they must produce profits for the shareholders, we have the right here to cancel the charter they obtained in what, after all, was Canadian National territory. They were granted these charters away back in the boom years of 1927, 1928 and 1929 because even then they could see the tremendous possibilities of that great northland, which knows no crop failure.
I remember in 1937, when Saskatchewan suffered drought, hearing a man express the view that Saskatchewan was done. What an awful thing to say! W'hy, we have only started in the west. We are only beginning; and all we are asking you, through my feeble voice as member for one of the largest ridings in this dominion, is to lend us your help so that the development of that great western country may be carried out as promptly as possible. The province of Alberta cannot by itself construct the highways and railroads that are needed. For instance, they are unable to construct the highway from Fort McMurray to Edmonton which would make available those great tar resources of which I was speaking this afternoon.
If I had time I should like to say a word about another resource.


Some hon. MEMBERS:: Go ahead.


Joseph Miville Dechene: My voice is giving out. I know [DOT]what I am about to say will sound like heresy to my good friends from the east and west coasts, but I say quite sincerely that the greatest fish in the world, bar none, do not come from our coastal fisheries but from our northern lakes. I have in my constituency
The Budget-Mr. Dechene

Cold lake, where we catch trout at depths of three and four hundred feet. They are so good, so incomparable that we find it hard to get any for our own use, because the Chicago and New York markets will take every fish they can possibly get from that part of the country. In that connection hatcheries should be built. I maj' be told that this is a provincial matter, but that is not entirely the case. We must work this thing out together.
Having said so much, let me say this. I would not speak in this way if I did not have confidence in this government and in the Minister of Finance (Mr. Abbott). I know that all of us, no matter what may be our political affiliations, are proud of the tremendous job done by the former Minister of Finance (Mr. Ilsley) during the war. I met him on a street-car one day after a difficult evening during one of the most sombre, terrible years of the war, when he was being criticized not only from across the way but right from this side of the house by some very able men. If I tell this incident I know you will all appreciate it. He said to me, "I hope I am doing the right thing; that is all I worry about, doing what is right." He went on to say, "Those two men may drive me out of political life, but if they do I will go down with the feeling that I have done my duty to my country in its years of struggle and peril." I said to the Right Hon. J. L. Ilsley, "Your name will stand high. It will be remembered in the schools of this land when those other men have been absolutely forgotten." And in his successor I salute one of the ablest young men in the political life of this country. Under the former Minister of Finance the bonds of the province of Alberta were redeemed, so that today our credit is 100 per cent. I know when the province of Alberta comes to the present minister it will be received as that province and its people ought and deserve to be received.
I will not keep the house any longer. I regret having inflicted myself upon you; but since I have a few minutes left I should like to describe northern Alberta in June. Let us go home for June. Then the wild roses grow rank along the highways. Their aroma is the first thing that strikes a stranger. They grow almost like trees, and they are the colour of the cheeks of our girls and women. There is nothing more beautiful than northern Alberta in June, nothing lovelier than a northern Alberta June bride. Now. in spite of a late spring, our farmers are on the land. They may crab about the price of gas, the price of twine, the price of this and the price of that, but don't worry; the strong, valiant, courage-

ous yeomen of Alberta are on the land now patiently putting in their crops. Through you, sir, may I tonight address a prayer from the bottom of my heart to Providence to bless their labour and give them a bumper crop.


Gordon Knapman Fraser: Mr. Speaker, after listening to the hon. member for Athabaska (Mr. Dechene), I realize that there is a place in Canada almost as beautiful as my own riding of Peterborough. The hon. member spoke about the wonderful fish in Athabaska. I know he has never been to my riding and caught some of our wonderful muskellunge, because I believe Peterborough is the best game fishing district in the whole of Canada.
In talcing part in this debate, I consider it proper to offer some constructive suggestions and also do a little critieizing of the government, because I believe they deserve quite a bit of criticism. I happened to be in New York city, attending the assembly of the united nations, when the budget was brought down, and I noted that the New York newspapers placed a rather rosy appearance on it. But that rosy appearance was only on the surface, and was likely created only by the rose-coloured spectacles of the Minister of Finance (Mr. Abbott). When the average Canadian citizen had a chance to sit down with a copy of the budget speech before him and, with the aid of his own reading glasses, had an opportunity to digest the speech, he found it was not as rosy as it appeared at first glance. Indeed, one worker in my constituency said to me last Saturday that he thought the Minister of Finance was trying to follow m the footsteps of Barnurn, that great founder of the circus, and the man who coined the expression, "There's a sucker born every minute". He built his circus on that assumption.
However, today the people of Canada are not fooled as easily as they were in those days. Although we find some reductions in the income tax, the reductions which the people of Canada expected, after two years of peace, are not there. In fact, at the present time war taxes are still found in the budget. The Minister of Finance failed to remove luxury taxes on articles which are not luxuries at the present time. In that connection I would refer, first of all, to table silverware- knives, forks and spoons-which we require in our ordinary everyday lives. Veterans returning from the war had to pay a twenty-five per cent tax on all the flatware they required for their tables.
Another luxury tax is the one on alarm clocks. I am particularly interested in this.

The Budget-Mr. Fraser
because they are manufactured in my own city, and I do not think an alarm clock is a luxury.


Mr. MAYHEW:: It's a nuisance.


Gordon Knapman Fraser: A worker has to pay about S3 for an alarm clock, and on top of that a luxury tax of seventy-five cents. He must pay for the luxury of having an alarm clock to waken him in the morning so that he may go to work to earn a living, and to earn enough so that at the end of the week he may have the luxury of seeing taxes deducted from his wage cheque, by way of income tax.
As I said before, on the surface the budget looks all right, and it would seem that the government had been able to manage the country efficiently. But that is only on the surface; because the methods used by the government, as pointed out this afternoon by the hon. member for Muskoka-Ontario (Mr. Macdonnell), to balance the budget, were certainly unethical, and methods which would not be allowed in any ordinary business in Canada or in any other country of the world. They have robbed Peter to pay Paul; they have taken money out of one pocket and put it into another. They have taken capital and used it for income. And when I say that I mean that their surplus is nothing more than the proceeds from the sale of war assets, war assets which were bought by the taxpayers of Canada during the years of war, and with their money. But today, instead of those proceeds being placed back in capital account to pay off part of our tremendous debt, they are shoved into income. We see listed the sum of 8372 million from the sale of war assets; and in this amount is included amounts received from the sale of ships which were built after the close of the war at a cost of S80.000, but which were sold off the ways for only S20.000. Then, office equipment was sold in the original crates at practically scrap prices. Many more millions of dollars could have been added to that $372 million from the safe of war assets if War Assets Corporation had been run on a businesslike basis, instead of on the catch^as-catch-can basis on which it was operated. According to a return tabled in my name on March 15, War Assets Corporation spent $210,631.08 last year, just to remodel and alter their office building in Montreal to take care of some of their 7.000 employees.
In his budget speech the Minister of Finance said there would be a reduction of twenty-nine per cent right across the board. This, too, was featured in the newspapers. But he did not tell us that that was only twenty-nine per cent off present income tax. and that even
with that percentage taken off it was far from putting the taxpayer back on the level of prewar years.
In 1938 a married man with his wife and two children, and with an income of $3,000, paid only $9 in taxes. But in 1948 the same man must pay $230 in taxes, or an amount twenty-five times as great as that he paid in 1938. A single man with an income of $3,000 paid $104 as a tax in 1938. while in 1948 the same man must pay $420. or four times the former amount.
No consideration whatsoever has been given to the fact that a married man with a family must look after and rear his children. Believe me, the man with a family finds today that it costs at least three times as much to bring them up as it did in 1938. on account of increased taxes and prices.
After a comparison of the taxes of 1918 with those of 1938, it is clear that there is absolutely no reason in the world why the government should not have a real instead of a false surplus this year, because they are getting in so much extra taxation, as compared with the amount taken in before the war. But they have not been able to declare that, real surplus because they have been extravagant in practically every department. Until they cut out that extravagance and waste they will never have a real surplus.
After paying income tax, the average family today finds that there is no chance of putting anything aside for a rainy day, no chance of saving anything to buy a home-even if they could buy one, because the government has certainly failed to provide homes for the people of Canada. The average family today finds it almost impossible, after paying income tax, to put aside a little money even to take a summer holiday. Prices are at an extremely high level. When I was speaking on the budget last year I said that the cost of living index was based, not on what you could buy but on what you could not buy. This year the cost of living index is still not right. If any hon. member doubts my word all he has to do is to go on the street and ask any housewife. She will soon tell him what is what. Here is a clipping with regard to that which states:
Finally admit cost of living index wrong The dominion bureau of statistics confirmed with figures Friday what any housewife could have told it a long time ago:	That the cost of
keeping the larder filled, the body clothed and the house furnished is considerably more than the official cost of living index.
Between August, 1939. and the end of 1946 the official increase was 26-1 per cent. By last month it had risen an additional 2-8 per cent.
But while these figures represented the official average advance, they did not give much indica-
The Budget-Mr. Fraser

tion of some of the things housewives have been howling about. Egg prices are 70 per cent higher than they averaged in the period 1935-39. In the same class are cheese, round steak, rolled rib roast, stewing beef, veal, bacon, lard, rice, beans, corn syrup and lemons.
The bureau computes its index by averaging the weighted representative price figure for each of six main essential item groups:	Fuel,
rent, foods, clothing, home furnishings and services and miscellaneous.
The food group advanced 47-4 per cent, clothing 31 -1 and home furnishings and services 28-2. Fuel moved ahead 10-3 per cent, rent (computed before the recent increase in domestic rentals), 9-2 and miscellaneous, 12-6.
The clipping does not say that at the present time, in order to secure things for her home, the housewife must wear out shoe leather going from store to store trying to find the things she wants. She can find1 no shirts for her husband, no diapers for the baby and no soap with which to wash them. Butter is up ten cents a pound; bacon is up over seventy per cent and is as scarce as hens' teeth. Rentals are supposed1 to be up only nine per cent, but try to find a house, an apartment, a room or even a dugout. You will find it is almost impossible. If you can get an unfurnished room, you will find that it will cost you almost as much as a furnished room cost in 1938, perhaps with board thrown in. The poor taxpayer has been getting it in the neck right along and it is time that more consideration was shown for him, especially the man in the low-income group.
It costs more for clothes, more for home supplies, and more for a car if you can get one. Then, added to that, in order to make the taxpayer's life more miserable, the government has retained the sales tax on electrical power. There is also the tax on telephones, and the transportation tax which gets you coming and going. A few departments have reduced their expenditures this year but they should have been cut far more. It would have been easy for them to cut expenditures this year, because some of the departments last year had carryovers from the war which they have not this year. Perhaps it is time that all departments had a real good house-cleaning. I feel quite sure that if a survey were made of each department hundreds of thousands of dollars could be lopped off the estimates.
I should like to give a few cases. While these may represent only small amounts, when enough small amounts are added up it runs into the millions. The government have been thinking in billions and I know it is hard for them to get down again to millions. They should remember that Canada has a population of only 12,000,000; we are not in the billion dollar class.

I had an answer a short time ago to a question I had asked regarding a piece of property the health department was renting on Parkdale avenue, Ottawa. The department is paying 818,000 a year rental for this property. There is no reason why that department should rent this building at the present time, because the government has buildings which were erected during the war and which would be suitable to house this department for the time being until building materials are more plentiful and until such time as building is needed in order to give employment to our people.
I said the rental of this building was $18,000 a year and I should like to figure this out in income taxes. A married man, with a wife and two children dependent upon him, paid no income tax on a $2,000 salary in 1938, but in 1948 his tax will be $36. On that basis it would take 500 taxpayers paying $36 each into the government treasury to look after this one rental. On top of that the health department is going to remodel the building. I have not the figures, but from what the return says I should judge that will run into another $18,000. That means another 500 taxpayers to look after the repairs, or a total of 1,000 taxpayers to look after the total expenses of one building which is not needed at all. That is certainly poor business on the part of the government. The return states that it is the intention of the Department of Public Works to have this building fitted up with special plumbing, sinks, partitions, et cetera, to meet the requirements of the health department.
I have another case, small as it may be, but, as I said before these small amounts run into the millions when they are added up. The Central Mortgage and Housing Corporation issue a booklet every two months, or six times a year. This booklet is fifty-two pages in size and weighs about half a pound. I have one of them here. It does not help building in Canada one bit, because it deals only with housing in the United Kingdom, the United States, Australia, New Zealand, South Africa, Sweden and so on. It may be interesting but it does not help the veteran in Canada to get a home. I consider this is something that is absolutely useless and could be done away with.
Another thing that could be done away with because it is not of much use to Canada is the short-wave broadcasting station on the Atlantic coast. It is no use for Canada to try to keep up with the Joneses. This is costing us over $3,000 a day. I have here a clipping stating that the appropriations committee of the house of representatives in the

The Budget-Mr. Fraser
United States have definitely decided to do away with their short-wave station. This report, which is dated April 23, states:
House group kills programme of U.S. broadcasts abroad.
The state department's entire programme for broadcasting the American way of life to the world has been doomed by an appropriation sub-committee of the house of representatives, it was learned today.
Mr. Speaker, I imagine that you and most hon. members have visited a circus at one time and perhaps you carried water for the elephants, as I have done. You know what an elephant eats; you know how much they eat. At the present time the dominion government has a white elephant on its hands. This is just as much an elephant as any you have ever seen or ever expect to see. This year that white elephant is asking for $819,409 more than last year. In fact it is keeping the poor old taxpayer doubled up trying to pay for the feed of that elephant. The elephant I am speaking of is the film board. The film board perhaps is doing some good in putting out films for schools and for educational purposes, but the process of making these films is an extremely costly proposition. There are other ways in which the films could be made that would cost the county a great deal less money.
That same film board is at the present time subscribing to 127 magazines, periodicals and journals. I do not know what they cost, but I have my doubts whether there are ten men or women in the film board who ever read a quarter of these publications. This year nearly every branch of the film board is asking for more money. There does not seem to be any real check on the expenses of this outfit. I have a sample of their expense accounts here on my desk. Here is one for the period just before and during the 1945 election. It is for different members of the film board: trip to Quebec city, April 14, $200; May 28. another trip, $120; trip to Quebec, $300; May. another one, $350; other trips, $50 and $48. These are all for different persons and are dated around April, May and June. Here are two more trips, one for $150 and another for $300; June 7, trips to the maritimes, trips to Toronto. There are trips all over the country.


An hon. MEMBER:: One to Halifax?


Gordon Knapman Fraser: They will likely be going to Halifax for the election there.
We also have the Canadian information service, now under the Department of External Affairs. The cost this year of that information service as far as I can gather from the estimates is $241,200. That is not bad if it 83166-181
were not for the fact that nearly every department of the government advertised last year through the civil service commission for additional staff to handle advertising publicity in the respective departments. This extra help they are taking on in each department will amount to over $91,000, plus several other thousand dollars on which I have not been able to get the exact figures.
The Canadian information service, according to a return that was tabled in my name this year, show that in their offices in London they have three men receiving salaries, living allowance and travelling expenses; in Paris they have three men or women all receiving salaries, living allowance and expenses; in Washington they have twelve in the office, all receiving fairly good salaries, living allowance and travelling expenses; in New York they have seven, all receiving salaries and a living allowance which runs as high as $1,680, and travelling expenses-$424 is the highest. In all, the total is $82,872. They are getting nearly as bad as the C.C.F. in Saskatchewan, where they have jumped the expenditures on their information service from some $31,000 up to $73,000 in the last couple of years. They are using it to put out C.C.F. literature, or at all events they were. The Canadian information service, as I have said, have offices all over the country. If they are going to do a job they should keep it in one office and not have it in every branch of the government.
This year the following departments of the government have all increased their expenditures: Transport, up over $5,000,000; Secretary of State; Reconstruction and Supply, up over $10,000,000; Public Works, Public Archives, Prime Minister's Office. Post Office, National Revenue, up over $5,000,000; National Health and Welfare, up over $13,000,000; Mines and Resources, Legislation, Labour, Justice, Fisheries, External Affairs, up $1,779,000; Agriculture. I could go on for hours


An hon, MEMBER:: No, no.


Gordon Knapman Fraser: Yes, I know you do not like to hear of the government wasting the taxpayers' money.
I have a few suggestions to make before I sit down, and I hope that they are constructive. During the past year, many people have spoken to me about deductions from their income tax for medical expenses. The majority of people feel that the present exemption is not right. They consider that all medical and hospital expenses should be allowed, especially for those in the low-income brackets. A man with a salary or wage of $2,000 a year would have

The Budget-Mr. Fraser

to have medical and hospital expenses in excess of $80 a year before he could make any deduction for medical expenses.


An hon. MEMBER:: Try the C.C.F. plan


Gordon Knapman Fraser: And you pay for it through the nose in Saskatchewan. If a man's medical and hospital expenses amount to $82 he could deduct $2 from his taxable income, and that is all. This question of deductions for medical expenses should have been considered by the Minister of Finance when making, up his budget. If he would allow all deductions for medical and hospital expenses we would have a healthier Canada, because people would feel a little more free to go to the doctor if they felt that there would be some relief for them. But at the present time there is absolutely none.


Arthur Leroy Smith: That is always a problem, going to the doctor for relief.


Gordon Knapman Fraser: If more people would go to the doctor before they are sick we would have much less sickness in Canada. An ounce of prevention is worth a pound of cure.
Another method by which the taxpayer could be saved1 a few dollars is in the cashing of war savings certificates, some of which become due this year. The chartered banks of Canada should be allowed to cash these certificates for their customers whom they know and who have accounts with them. In that way the government would be protected; the holder of the certificate would be protected, and the bank would be protected'. As it is now holders of these certificates must take them to the post office and must wait for perhaps months for their money to come back to them, and there is the chance that their certificates might get lost as many certificates were lost when people were subscribing for them.
I should like to ask the minister a question. He is not in the house at the present time. Before he left the chamber he told me that he had a bad cold, and he excused himself. At that time I suggested to him that he go to his hotel and go to bed, That is the only way to get rid of a cold. His parliamentary assistant is in the house, and I shall put to him the question that I intended to put to the minister.


Robert Wellington Mayhew: If the hon. member has any good suggestions they will reach the minister.


Gordon Knapman Fraser: It is not a suggestion; it is a question. Is there anything in the income tax act which says that the taxpayer must

make out his own income tax return? If he is wrong he is penalized for it. If he makes a mistake they charge him extra. I know we are all told we have to make out our own income tax returns.


Robert Wellington Mayhew: No.


Mr. McCANN:: You make your own returns.


Gordon Knapman Fraser: Yes. It is the job of the Minister of National Revenue (Mr. McCann) to collect the revenue, but the Minister of Finance (Mr. Abbott) is, I understand, the one who checks the returns.


James Joseph McCann: Not at all; he has nothing to do with it.


Gordon Knapman Fraser: It all has to go through the hands of the Minister of Finance.


James Joseph McCann: No.


Gordon Knapman Fraser: If the return is wrong the taxpayer is charged an extra tax. A simple form should be prepared by the Minister of National Revenue. On that form the taxpayer should be asked what is his income, what is his status, and what are his deductions. That form should be sent in to the minister's office and the minister's department should figure out what the tax is.


James Joseph McCann: No. The law is that every man must assess himself.


Gordon Knapman Fraser: I know, but look at the mistakes which have been made. That is the reason I am bringing this up. I have a return here which proves I am right. It is dated February 14, 1947. The first question was:
How many income taxpayers (a) individual; (b) corporation were paid rebates during 1946?
The answer was:
(a)	1,312,112.
(b)	1,033.
That meant all kinds of extra work for the minister's department. It would have been much easier-


Mr. GIBSON (Hamilton West):: There was tax deduction at the source.


Gordon Knapman Fraser: Yes; that could be done too. The minister's department will eventually have to make out the taxes for the people. Last year there were $49,538,800 rebated to the individual taxpayer.


James Joseph McCann: That shows good work.


Gordon Knapman Fraser: It might be good work, but a lot of that rebate went away back to 1940 because the minister's department is so far behind in its work.


James Joseph McCann: No, it is not.

The Budget-Air. Winters


Gordon Knapman Fraser: Perhaps not now; the
department is gradually catching up. I know some people have not received final receipts for their 1943 returns yet.


James Joseph McCann: Excuse me for interrupting. I can say that with reference to the assessments, if you take the district of Ottawa, at the end of December, 1946, 99-5 per cent of the 1945 returns which were made on April 30, 1946. were assessed and completed. You can-lot beat that record. I will admit that in some divisions, in some district offices it was away below that. We have had an enormous shortage of staff.


Gordon Knapman Fraser: That proves what I have said. In Ottawa where they have the head office to look after their returns and do not have to bother with four or five different offices to check on them the return is looked at, checked, and sent out again, but with the district offices it is an entirely different proposition. In these offices they tell you that your return is all right. You make out your cheque and give it to them. Some months, or perhaps two or three years after, you are told that you owe an extra $2, $3, $4, $5, or perhaps S200, $300, $400 or S500, and then you are charged interest on that.
In closing, I wish to quote two paragraphs from an editorial of the Peterborough Examiner of May 1, which I believe hits the nail on the head.


Ian Alistair Mackenzie: Which nail? I thought there were none left.


Gordon Knapman Fraser: I do not mean wire nails.


Colin William George Gibson: Fingernails.


Gordon Knapman Fraser: It is only a figure of speech. The Secretary of State said "finger-nails." But the builders of Canada find1 it impossible to get nails of any kind.


Paul Joseph James Martin: Stick to income tax.


Ian Alistair Mackenzie: How can you hit them on the head?


Gordon Knapman Fraser: The Minister of National Health and Welfare suggests that I should stick to income tax. He does not know nails. Perhaps there are none left in his riding.


Robert Wellington Mayhew: What about the editorial?


Gordon Knapman Fraser: The editorial reads as
follows:
Each citizen would be wise to balance some of his increases in living costs against the reduction in his income tax. Butter has just risen ten cents a pound; what does that mean to you in a year? What will the increase in your fuel bill be? Do these, and other increases leave you much of what you are supposed to gain by your tax reduction?
You will find that you are in the hole and very much so. I continue with the editorial:
It may be that the budget has hidden virtues which have escaped us. We hope so. But we shall not feel any benefits which may be inherent in it for some time. Meanwhile, it appears to us to do little except make certain adjustments designed to preserve the existing balance.
Mr. R . H. WINTERS (Queens-Lunenburg): Any hon. members 'who reflect the feeling of the house when the Minister of Finance (Mr. Abbott) brought down the budget on April 29 and any of those who represent the true feelings of their constituents, must, I am convinced, come to the conclusion that the budget was generally satisfactory to all Canadians and outstandingly satisfactory to the vast majority of them.
At the outset, Mr. Speaker, I wish to pay tribute to the former Minister of Finance (Mr. Ilsley) who, in recent years, through his untiring efforts helped to develop Canada to the point where such a budget was possible. But for him it might well be that the relief granted would not have been anything like the amount it was. In saying this, I do not wish in any way to detract from the present Minister of Finance, who certainly started out on the right foot in presenting his first budget.
What was needed to counter the widespread criticism as well as to stimulate necessary production was a sizeable decrease in personal income tax. The relief afforded was beyond the hope of most. In a country the size of Canada it is entirely impossible to satisfy everybody. There will be complaints from private citizens and from opposition members. Many of these complaints may be bitter and a few of them may even be justified, but it cannot be denied that the government is steering a safe and steady course. It is the even breeze and not the squall that results in a ship's best over-all progress.
From Nova Scotia's point of view one of the main considerations in the dominion-provincial financial discussions is the matter of the small tax fields, particularly the electricity, amusement, and pari-mutuel taxes. The revenues from these sources in Nova Scotia are not large, but there is a worth-while principle involved if it is acknowledged that the provinces, in order to obtain a full measure of autonomy, are to have tax fields of their own. These particular fields can be regarded as emergency fields. They were entered into only during the war, when it was necessary to tap sources of revenue previously untouched. I share the opinion of the Hon. Angus L. Macdonald and the Nova Scotia government that the federal government should withdraw
2S36
The Budget-Mr. Winters

from these fields at the earliest possible date, and, having done so, should not return to them unless there is another emergency.
The budget speech dealt briefly with subsidies. This is a word that, in itself, is the antithesis of free enterprise because, ;f an industry or function can flourish on its own merits, subsidies are not necessary. It is only when industries are not self-supporting but when they are nevertheless essential to the over-all economic structure that subsidies a? we know them become necessary. Nova Scotia is in the unfortunate position of being concerned with subsidies probably more than any other province, and I know that in Canada there is an impression, either conscious or subconscious, that the particular subsidies which Nova Scotia is paid, or has been paid, for the operation of her coal mines, and is being paid on freight rates and other phases of her economy, are a shameful indication of the province's weakness. This impression does not reflect the true situation.
When one analyses the circumstances more closely, it becomes evident that this matter of subsidies is anything but one-sided. That Nova Scotia and other outlying provinces have subsidized Ontario and Quebec since confederation is well known and evidenced by many facts, among them being that the large percentage of our manufactured goods is obtained from these two provinces, and that in many instances the large taxable revenues in these provinces are derived from estates and other sources built on moneys funneling to them from the outlying provinces.
The transactions of the Canadian export board and the Canadian Commercial Corporation alone will serve to underline my point in this connection. In a reply tabled on March 17, 1947, to a question I placed on the order paper, it was shown that the total value of contracts awarded by the Canadian export board and the Canadian Commercial Corporation as of that date was $330,872,575. This amount was broken down by provinces as follows:
British Columbia	 $32,356,280
Alberta	 1,273,956
Saskatchewan	 70,990
Manitoba	 931,626
Ontario	 122,637,489
Quebec	 171,102,255
New Brunswick	 348.628
Nova Scotia	 2,151,351
A closer analysis will reveal that of this amount, by provinces, Ontario received $30 per capita, Quebec $47 per capita, and Nova Scotia $3-4 per capita. The over-all average for all of Canada was $27 per capita. On a percentage basis Ontario received 37 per cent, Quebec 51-5 per cent, and Nova Scotia -65

per cent. It might sting New Brunswick and Prince Edward Island members to know that their provinces received -105 per cent and zero per cent respectively.
It is true the above returns show that the prairie provinces fared rather badly, but when one considers the amounts accruing to these provinces from contracts for wheat, beef, hogs and other farm products, Prairie Farm Rehabilitation Act and Prairie Farm Assistance Act, it becomes clearly evident that the maritime provinces get anything but the best of the deal. British Columhm members will be pleased to know that their province stands third highest in point of benefits from the contracts in question.
I do not wish to create the impression that I am criticizing the manner in which the Canadian Commercial Corporation or its predecessor, the Canadian export board, have placed these contracts. I have seen no evidence of partiality and with very few exceptions I believe the contracts to have been awarded in the best possible way. I have the highest regard for Mr. Low and the other officers of the corporation. I am merely trying to show the disadvantages Nova Scotia suffers through force of circumstances and the fact that she is not a producer of products which are normally in primary demand by foreign countries.
When the question of loans to foreign countries was before the house, maritime members supported it strongly. We took the stand that being favourably located on the Atlantic seaboard, and with good harbour facilities available at Halifax. Saint John, Sydney, Lunenburg, Liverpool and elsewhere, we were naturally in line for a large return, because we have always felt that, based on tradition as well as practical considerations, our natural field was export to European and South American countries, the United States and other countries which are more readily accessible from our ports than from any other ports in Canada.
With such disappointing returns developing in the face of our optimistic expectations, the various members may draw their own conclusions as to how they would feel if the province they represent found itself in the same predicament.
At the risk of drawing this argument too fine, but with the purpose in mind of placing clearly before the house Nova Scotia's attitude toward the over-all economic set-up and this matter of subsidies, I should like to go a few steps farther, using as my basis this total amount of $330,872,575 in contracts awarded by the Canadian Commercial Corporation.
Quebec and Ontario together, with sixty-three per cent of the population in Canada, derived, from contracts let in these provinces,

The Budget-Mr. Winters
a financial return of 88-5 per cent of the total, whereas Nova Scotia, with five per cent of the population, received only -65 or slightly more than one-half of one per cent of the financial return. If one considers that the average return per capita for all of Canada from contracts let was $27, and that for Nova Scotia it was only $3-4, it is a simple matter to show that on this deal alone Nova Scotia subsidized the rest of Canada in the amount of approximately $15 million and, Mr. Speaker, this is by no means an isolated illustration. It goes on all the time, year in and year out. Nova Scotia, New Brunswick and Prince Edward Island are, in fact, subsidizing the rest of Canada, despite the fact that some of the other provinces choose to give the impression that they are subsidizing us. This is the reason why, when coal subsidies were removed some time ago, I stated in this house, during the debate on emergency powers, that Nova Scotians need not feel badly in accepting payment of subsidies, and that this practice is not nearly as iniquitous as many people would have us believe.
Then, too, we must not lose sight of the fact that many products are manufactured in central Canada under the protection of tariffs, and we in the outlying provinces are forced to buy from these sources goods that we could obtain cheaper from other countries if there were no tariffs. This, in our opinion, is a direct subsidy, paid by provinces such as Nova Scotia to central Canadian industry. This is an old and well recognized story, but I again wish to make it clear that these problems are real. Nova Scotians are realistic; they want to see Canada go forward as a nation, and if these tariffs help toward our industrial development as a country, we cannot oppose them; but Nova Scotia wants an equal opportunity to advance with the rest of Canada. I wish to emphasize again that we do not seek or wish any of our undertakings to be subsidized to the point where industry or labour feel they do not need to exert their greatest and most efficient efforts to achieve maximum output, but where subsidies are indicated in order to allow outlying provinces, having economic problems such as those facing the maritime provinces, to assume their rightful place in Canada's economy, we do not make any excuse for justifying them.
This inequality in Canada's economy is one of the reasons, too, why Nova Scotia was justified in seeking the best possible settlement under the dominion-provincial tax agreements, because the proposals offer a means of tapping the revenue of the more fortunate provinces and distributing it to the less fortunate provinces.


Mr. FLEMING:: If the hon. member would permit a question, does he think the dominion government ought now to reconvene the dominion-provincial conference with a view to bringing about satisfactory agreements covering the tax fields, social security and public investment?


Mr. WINTERS:: In that regard, Mr. Speaker, I do not believe I can improve upon the statement made in this house by the Prime Minister (Mr. Mackenzie King).


Donald Methuen Fleming: If the hon. gentleman will permit me, I did not direct my question to the Prime Minister; I asked the hon. gentleman's view on that matter, if he cared to give it.


Robert Henry Winters: While dealing with Nova Scotia's economy, I should like to draw the attention of this house to a few problems respecting our fisheries. I will not deal with fishing operations at any great length at this time, because there will be another opportunity later, when the fisheries estimates are before the house; but I wish to say a few words about labour problems as they apply to our fishermen. Before doing so, however, I should like to express the view held by all fishermen that this budget is eminently satisfactory to them, in that it provides a good measure of relief from personal income tax. The policy of averaging incomes over three years is also meeting with universal approval. In Nova Scotia generally, and in Queens-Lunenburg in particular, we have always prided ourselves on the harmony existing between labour and management. Communities and towns are comparatively small, with the result that people in all walks of life grow up together as neighbours. Almost without exception they have known each other well, and I am aware of no other place Where there is less of what is commonly called "class distinction." Without fear of contradiction I can say that we have had happy community lives. During the war, returns from fishing were good, and when compared with many other industries it must be accepted that a relatively high standard of living obtained. Then suddenly into this harmonious picture were injected seeds of dissension, culminating in what may yet prove to be a ruinous strike in which the issue boiled down to one of union recognition, the union involved being the Canadian fishermen's union.
Let me say at this point that the lot of the fisherman has not always been happy. He was the poor relative in our working class. His hours were long and his returns small, but in
recent years the government has assumed its
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The Budget-Mr. Winters

rightful responsibility on his behalf, with the result that his status has been considerably improved. With respect to the recent strike, then, one cannot help seeking in one's mind the underlying reasons for the strange and contradictory developments. It came as a sad realization to us within the constituency, and a surprise to the rest of Canada, to know that the worm boring from within, as is so often said, was communism. We are usually led to believe and we generally accept as a fact that communism breeds on dissension and poverty, but in this instance neither of these elements was present. This was not a classical field for communism, and that fact, in itself, makes the happenings all the more sinister. That this element could come into communities where happy, harmonious relationships prevailed, and where pride in standard of living abounded, should be a matter of the gravest concern for every thinking Canadian.
That the fishermen should be entitled to collective bargaining and other union privileges is denied by no one; in fact I personally and, almost without exception, the fish operators feel that labour should be encouraged and guided in this direction for its own good and the good of the country at large. I am sure that if the fishermen wish to organize within the framework of applicable legislation they will be given every support and encouragement, so that they may have an opportunity of enjoying the benefits of collective bargaining. In fact the Nova Scotia government is enacting measures to provide the legal facilities.
As a class, fishermen must not be discriminated against, and I am sure they will find there is no such intention. The rank and file of the fishermen realize that the right to organize and enjo3T the benefits of unionization involves responsibility, and that they must develop their organization on a sound basis in order to inspire trust and confidence. It goes without saying that part of this responsibility is the selection of good leaders. No one denies the fishermen the right to choose their own leaders, but they will realize that in large measure the success they achieve as a union will depend upon the men they elect to direct them; and I am sure they are aware that their future is not associated with communism, which has shown itself to be vicious and irresponsible. The welfare of the fishermen is emphatically not its first consideration. As Hon. Angus L. Macdonald, premier of Nova Scotia, said when speaking in the Nova Scotia legislature, "communism is not a political party; it is a revolution".

Too often the farmer is the forgotten man in Nova Scotia's economy. Our farmers feel that in many respects the farm policy is based upon the western farm colony and overlooks the small farmer who is contributing in a worth-while way without any opportunity for a sizeable return. There are in Queens and Lunenburg counties hundreds of farmers struggling under what would be considered by western farmers to be extremely adverse conditions. It is almost impossible to obtain farm labour, and when it is available it is at rates which are almost prohibitive. Costs of feed are high, and the fear is that they will go higher. A recently authorized increase in the price to the western farmer of barley and oats resulted in an increase of feed prices in Nova Scotia which in many cases turned a self-supporting operation into a losing one. I refer particularly to poultry. At about the same time that the price of feeds was increased the ceiling on eggs was lifted as a measure of compensation, and at a later date it was completely removed. However, instead of the price of eggs going up it actually went down, and the farmers were forced to destroy thousands of chicks. It is hoped that the recent upward revision in the price of eggs sold under British contract will rectify this situation. I refer to the announcement made by the Minister of Agriculture in this house on April 30.
Another handicap to the farmers of Queens and Lunenburg counties is the lack of the bovine tuberculin test. This test has not been applied for some years, with the result that farmers in these two counties are not allowed to sell their stock in tuberculosis-free counties and are obliged to accept correspondingly lower prices for their products. I am well aware that there is an over-all shortage of qualified veterinarians in Canada, but I would impress upon the minister the great importance attached to this problem and urge him to take the necessary action to have these tests applied at the earliest possible day.
In closing, Mr. Speaker, I would say that Nova Scotia's economic problems are far-reaching. The budget as such did not provide a solution of our provincial problems, but we hope that the dominion-provincial financial agreements, which were presented last year and subsequently modified, will go a long way in that direction. The average individual in Nova Scotia feels that the budget has gone a long way to solve his own personal problems, and as such the citizens of the constituency of Queens-Lunenburg endorse it.

The Budget-Mr. McKay


Mr. E. B. McKAY (Weyburn):: Mr. Speaker, at this time I wish to discuss a subject which is of the utmost importance to western Canada; that is the subject of irrigation. This is now considered by the people of western Canada as of paramount importance to the rehabilitation of the dried-out areas of the western prairies. The interest in irrigation which has recently developed in western Canada is the logical result of the associating of memories of the drought-stricken prairies of the thirties with the evidence of the value of irrigation, which ha3 been so well demonstrated by successful projects in southern Alberta and in the semi-arid regions of the United States. One need hardly recall the suffering which the series of dry years brought to the prairie people, and in particular to the residents of southern Saskatchewan. The fear of those terrifying and depressing years still persists. That is the major reason why, during the past dozen or more years, people have been moving from southern Saskatchewan in such large numbers. A larger proportion of these people have abandoned farming entirely, since for them it was a hopeless venture. These farmers were so disillusioned that they decided to seek other means of making a livelihood. And because Saskatchewan is largely an agricultural province, people desirous of seeking other occupations were obliged in a great many cases to seek emploj'ment elsewhere.
The drift from Saskatchewan has been most alarming. The census of 1941 showed that the province had 25,000 people less than in 1931. When the natural increase of some 11,000 persons a year is added to this loss, it will be observed that in the decade 1931-41 more than 135,000 people have migrated from Saskatchewan, the great majority of them to British Columbia, eastern Canada or the United States. And I would point out that this vast loss occurred before the present C.C.F. government took office in that province; it took place during the regime of a Liberal administration. But no one would, I hope, be so unwise as to blame any provincial government for this trek from the Saskatchewan plains. It is the result of repeated years of drought; and no government has control over climatic conditions. If blame is to be placed anywhere for this situation, one must fix it on the federal governments of the nineties, and the first quarter of this century. While these governments could not control the weather in the area affected, they did have, at that time, control of immigration and colonization. It is now generally accepted in the west that the peopling of the Palliser
triangle was a grave mistake, and federal governments of the nineties, and even later, are responsible for this error. Certainly the people who settled there are not responsible, because they knew very little about the country when they settled in that particular region. Thousands of people from eastern Canada, the United States and Europe came to this area with faith in their hearts, and with the hope of making a good living on the land. They remained only to lose faith and to find poverty, where the promise of wealth was held out to them by colonization officials.
The rainfall in many parts of the region is too uncertain to permit of successful farming, except for those who can afford modern power machinery and large acreages of land. The early settlers had limited resources, and therefore in most cases were unable to cope with the vicissitudes of the drought-ridden areas. By dint of hard labour, and by depriving themselves and their families of the necessities of life, few have become independent; but they are all too few.
Why this mistake was made it is difficult to understand. Almost a hundred years ago Palliser reported that most of what is now populated country was little more than a semiarid desert. People were nevertheless induced to settle in that area, by the gift of free land by the federal authorities. Railways were constructed; towns and villages sprang into being, while the newcomers looked to the future with hope. Occasionally there was a good crop. Farmers then paid off their most pressing debts, allowing the remainder to wait in the hope of another bumper yield.
But there were more failures than big crops. In the past forty years, at least twenty crops were recorded as failures in a large part of southern Saskatchewan. That is the cause of the decline in population of that region in the west today. But despite this depopulation, there are still hundreds of thousands of people residing in the area of the Palliser triangle. In that area are many millions of dollars of investments in railways, elevators and other properties. The removal of this whole population to other regions is unthinkable, and quite unnecessary if the country were irrigated. And, despite unfavourable weather conditions at times, the people of southern Saskatchewan love the prairies. They are remaining in the hope that irrigation projects will make living there more pleasant and profitable in the future, and that Canada will soon realize that the irrigation of that area is practicable.
The region I have been discussing can produce great wealth in agricultural products. This has been amply shown when the rains
The Budget-Mr. McKay

come. The provision of irrigation works to provide moisture would meet the need when the rains fail. This huge area cannot be set aside as wasteland without seriously disturbing the national economy of the country. Many people and organizations are today advocating increased immigration to Canada. Thousands of newcomers to this nation could find homes within the Palliser triangle, if the region were irrigated.
It is necessary to provide water only during the crop growing season of a few weeks each year. Many small streams such as the Souris, Qu'Appelle, Long and Waseana creeks have sufficient spring flow, if conserved, to provide moisture for hundreds of thousands of acres of land, the finest in Canada.
The period of reconstruction following a devastating war has arrived. Irrigation of the Palliser triangle could make of the vast dried-out areas a populous and Eden-like garden of fertility. The value of irrigation has been well demonstrated in the Lethbridge district of Alberta and in scores of semi-arid regions of the central and northwest United States. These projects are rehabilitating farm land and have resulted in the production of millions of dollars worth of agricultural products.
More than 500,000 acres have been irrigated in Alberta and 4,500 successful farm units have been set up. Farms in the irrigated district now have assured yearly incomes. New industries have followed this development and employ many workers. To illustrate, I need only refer to the sugar refining industry which has contributed so largely to Alberta's economy. Last year this industry produced millions of pounds of sugar; in fact, eleven - per cent of Canada's 1946 consumption.
Irrigated farms also permit of more stock raising and dairying because a supply of fodder is assured. Ranges which supported one steer on forty acres now finish for market two animals per acre. Soil which formerly produced sixty-five cents worth of beef now produces $130 worth of sugar beets per acre. Land which could barely average ten bushels of wheat per acre now produces thirty bushels and upward. It is estimated that for every square mile irrigated the population in the district increased ten-fold.
That is only a small part of what irrigation can do for the prairie lands within the Palliser triangle. It will make the output of new wealth constant and will direct into the national economy a stream of revenue which will not fluctuate with recurring periods of drought. Irrigation has done great things in the United States. The following article

clipped from the Globe and Mail of April 30 of this year indicates what is happening in the United States:
The large scale "grass roots" movement like that now taking hold in the west is a proved device in the United States. Several years ago, to stimulate the development of irrigation in the northwestern states, a similar organization was set up. The results have been truly remarkable. Since the movement commenced, 5,000,000 dry acres have been placed "under ditch" and plans call for the extension of water facilities to a further 10,000,000. Washington has spent about one billion dollars on this work. If this figure seems extravagant, one need only balance it against dividends on investment. The total cash returns from crops in the reclaimed areas in the United States for the combined years of 1945 and 1946 equalled almost $900,000,000, or 90 per cent of capital outlay.
Subsidies and Prairie Farm Assistance Act benefits may temporarily relieve a condition and have served a useful purpose, but they cannot solve the problem of recurring drought. Irrigation is the only answer. The proposed irrigation scheme on the South Saskatchewan river would irrigate a large tract of land. The experience gained by the operation of the Prairie Farm Rehabilitation Act justifies embarking on such a venture. The cost of such an enterprise on the Saskatchewan river would involve the expenditure of upwards of $25,000,000. This, together with other suggested projects, might even necessitate an expenditure of $100,000,000. But this programme would provide water for some 2,000,000 acres of excellent soil, and 20,000 farms of 100 acres each would be established. The servicing of the newly irrigated area would require thousands of people. In all, a project of this kind would support more than a quarter of a million population.
Such a development would create millions of dollars of new wealth. Small industries associated with agriculture would be set up. Sugar refining, canning, meat packing plants and dairying are accepted as certainties. Young people who seek employment elsewhere in Canada could find profitable employment in their own province. The drift of population from the prairies would be retarded, if not wholly stopped.
This new wealth will make a prosperous prairie region. As a result, eastern industries could not help but profit from the increased sales of consumer goods to the western provinces. But the major benefits are not to be measured in dollars and cents. The people in the west would have a new faith in confederation. They could look to the east with a feeling of friendship and appreciation. A new unity would result and a harmony prevail which hitherto has often been lacking.

The Budget

Mr. McMaster
The development of a full-scale irrigation programme for the prairies would be an investment in the future of Canada. I submit that such a project would be a sound reconstruction venture which would return tremendous dividends to the whole of Canada's economy. The undertaking would require a large initial outlay of capital, but the war proved to Canadians that what is physically possible is financially possible. Officials of P.F.R.A. state the project is physically possible, so I ask: Why the delay? The need is obvious. The land in the area is the world's finest and the water potential available in the Saskatchewan river and the other streams in the province. Canada cannot afford to procrastinate in this matter. The area must be rehabilitated. A western Canada irrigation programme should be the government's major reconstruction measure. I appeal to the government to embark on this national project without delay.


Mr. W. A. McMASTER (High Park):: Mr. Speaker, I rise at this late hour to make a few observations on the budget and with regard to several subjects dealt with therein. I should first like to say something about the method of bookkeeping which has been carried out during the last year by the Minister of Finance (Mr. Abbott). It is unfortunate perhaps that news was given out early in the year by the Minister of Finance that there would be a substantial surplus, because it started a great demand for lower taxes. The minister said frankly that perhaps this was not justified by the facts, and he stated, as reported on page 2553 of Hansard:
Economic conditions alone would hardly justify immediate tax reduction. 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.
I would suggest that that is a poor foundation for a reduction in taxes unless a corresponding cut is made in the expenditures of the country. The matter is really worse than it looks. The minister has stated that the expected surplus of $352,000,000 was simply because we had received from War Assets $372,000,000 from the sale of certain articles, which by every system of good bookkeeping should have been capital return. If that had been capital return there would have been a deficit of $20,000,000.
I have watched with a great deal of concern the operations of the foreign exchange control board. I have felt certain over the past year, as I am today, that the operations of
the board will work a great hardship on the people of Canada, It will mean that we shall have to take an immense loss which we would have been saved if the exchange had been allowed to find its own level. It is a sort of system of subsidies which people do not appreciate and which benefits most perhaps those who need it least, and in the long run the loss to the country will be considerable. On page 17 of the 1946 report of the foreign exchange control board appears this statement:
Canada's external United States dollar assets were reduced by $330 million in 1946, of which $263 million is accounted for by the decline in liquid reserves of gold and United States dollars.
If I understand the operations of this board that means that we have lost $330 million just as surely as though we had spent it in another way and that we have nothing to show for it except perhaps greater trade with the United States. This must have been known to the board. It was so, because in the proceedings before the committee in the other place the governor of the bank said that would likely be the case and then he made the remarkable statement that he thought it would be good for Canada to import as much as she could, regardless of how it was to be paid for.
In the last year it has been stated that our trade with the United States was an adverse one of $603 million. That was progressively getting worse during the year. According to a recent statistical report for the month of March, that trend is continuing, because in that month our imports from the United States amounted to $136,606,000, while our exports to that country amounted to $79,453,000, showing an adverse balance of over $57,000,000, and if that is continued during the year it will mean a greater adverse balance than we had last year. It is likely to continue, because in the month of February our exports had dropped from approximately $79,000,000 to approximately $63,000,000. The latest report does not give the imports. But there was a falling off in our exports to the United States of $16,000,000 in February. If that continues, then as surely as anything in this world Canada will lose a substantial amount of money by the operations of the foreign exchange control board and this will be another debt to be shouldered by the people of Canada,
The minister expected a revenue of about $2,450 million during the present year and against that he had estimated ordinary expenditures of $1,285 million, or an increase over the previous year of about $52,000,000, and a very great increase over the year before that.

The Budget-Mr. McMaster
He has also other expenditures of $710 million, or total expenditures of $1,995 million. Yet nothing is said about the large amounts of money that must be advanced to the United Kingdom during the present year. About $600 million of the one and a quarter billion has already been given; another $600 million is to be advanced, and perhaps $300 million more will be advanced to other countries of the world on the three quarters of a billion dollar loan promised to them. So in the immediate future Canada will not be paying her way, because these are very doubtful assets, and the rate of interest paid by the people of Canada will increase to a great extent during the coming years.
There has been an advantage given to the taxpayers in Canada in all income brackets, but the advantages are much less for the taxpayer with a low income than the benefit he would nave received if some of the hidden taxes were removed. I have made a computation of some of these hidden taxes, using as a basis the amount that an ordinary man with a family would spend on these taxes. I have dealt with only four or five special taxes. I have dealt, of course, with the sales tax, which produces $328 million, or an average of $27 for every Canadian citizen. I have preferred to say that each ordinary citizen might spend $13.50 a year as his share of this sales tax, leaving the man in the higher income brackets, the wealthier people, to pay a considerably larger proportion. But the man in the lower brackets has to pay his share of the sugar tax, for instance, the soap tax and the amusement tax and for candy and other things like that which the children must have. I have found that the average man with a wife and two children would be paying $60 a year in these taxes.
On that basis I find that the ordinary family is paying a considerable amount of monej- in this hidden way, far more than the relief it is getting through the income tax deductions just made. I find that married men under the $3,000 bracket without children, who are saving in income tax, according to the latest statistics of taxpayers issued by the income tax office, $8,170,000, are paying $10,000,000 in these hidden taxes. That is, they have been saved $8,170,000 in income tax and they are paying 810,000,000 in hidden taxes. Married men, with an income less than $3,000, with a wife and one child, have a saving of $7,350,000, and they are paying hidden taxes amounting to $9,S50,000. Married men, with two children- and this is the favourite example given by the Minister of Finance-make a saving in the case

of those with incomes of under $3,000-I am dealing only with incomes of $3,000 or less

of $2,800,000. But actually the men in that class, including those who do not pay taxes at all, pay $13,500,000 in hidden taxes. Married men with three children save $1,300,000 and contribute to these hidden taxes about $7,000,000. Married men with four children save only $500,000 by these income tax reductions, yet contribute in hidden taxes, $9,000,000. The family with five children or more, because of the greater amount they must buy, save nothing but must pay in sales tax alone at least $15,000,000. I am speaking only of those with incomes of $3,000 or less.
Therefore 726,000 people of Canada have been saved $18 million. These same 726,000 people contribute the sum of $64 million to the treasury in these hidden taxes. These are all people in income brackets of less than $3,000. The minister has said that in these brackets he is relieving a great many taxpayers. The computation which I have made leads me to believe that, while it has relieved some, there are at least 720,000 single income taxpayers and about one million married taxpayers who are still paying taxes.
I have tried to prove my figures of who have paid sales taxes and other taxes by the number of families that receive family allowances. From the last report which I have at hand I find that 1.592,751 families receive family allowances. They have a total number of children of 3.638,030. On the basis of $60 for each family they would spend about $94 million in these taxes. There are 475,000 married people with no children who are spending on the basis of half the amount of $60 a family on these hidden taxes. They spend $14 million a year. If we take it in that way it would amount to $108 million that is spent by married men w'ith children and without children on these hidden taxes. For that reason I believe the minister should have reduced the sales taxes and these other hidden taxes. They are hidden taxes, but they affect the people more nearly and more severely than do the income taxes. They see the income tax; they know about it, bat these sales taxes they do not see. The larger the family, the more of these taxes they pay. For this reason I would say that the minister has not framed his budget in a way which will relieve the family man and the man in the lower income bracket. It will relieve them to only a small extent. It does give a measure of relief to some, but it does not go far enough to help those whom it should be his duty to help.

Questions
On motion of Mr. Thatcher the debate was adjourned.
On motion of Mr. Mackenzie the house adjourned at 10.45 p.m.
Wednesday, May 7, 1947