1947-05-27

[Stage Direction]
Hon: LIONEL CHEVRIER (Minister of Transport): Mr. Speaker, I rise to a question of privilege. The Montreal Gazette of this morning carries a Canadian Press dispatch concerning the introduction of Bill 254, to amend the Canadian National - Canadian Pacific Act, 1933, which gives the impression that the proposed amendment is to permit the federal government to invade the provincial field in regard to the labour relations of the railways.
The purpose of the bill is to give the federal government jurisdiction over rates of pay, hours of work and working conditions of the employees of the Canadian National and Canadian Pacific Railways. Parliament has exclusive jurisdiction over these railways, and the object of the bill is to occupy the field in so far as labour relations of their employees are concerned. The government considers it is now time for parliament to exercise its jurisdiction by legislating in the field of labour relations as affecting the construction, operation or maintenance of these railways.
Mr. GRAYDON:: Did not the minister use the word "invade" yesterday?


Mr. CHEVRIER:: Yes, I did use the word "invade", but I intended to use the word "occupy". But then the press report went on to say that a question was asked by the hon. member for Peel (Mr. Graydon) with reference to whether the government intended to invade this field without the consent of the provinces. I do not think the hon. member used any such word. He simply asked whether we had obtained the consent of the provinces, and I said it was not necessary. The press report stated that I replied, "not necessarily",

and clearly indicated an intention to invade the field. There is no such intention at all. We already have the field.



COMMITTEES OF THE HOUSE


[Stage Direction]
Right Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved:
That the name of Mr. Maedonnell (Muskoka-Ontario) be substituted for that of Mr. Harris (Danforth) on the standing committee on public accounts.
That the name of Mr. Knowles be substituted for that of Mr. Moore on the standing committee on industrial relations.
That the name of Mr. Moore be substituted for that of Mr. Maclnnis on the standing committee on marine and fisheries.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Gordon Graydon: I should like to direct a question to the Secretary of State for External Affairs. Perhaps it should more properly be directed to the Prime Minister, but I sent notice to the Secretary of State for External Affairs because I knew it was at least partly within his purview. Does President Truman's request to congress yesterday for enactment of legislation "authorizing a programme of military collaboration with all countries of the western hemisphere" mean that there has been any alteration in or extension of the policy of collaboration between Canada and the United States which was announced by the Prime Minister earlier this session?


Right Hon. W. L. MACKENZIE KING (Prime Minister):: The answer is no.


Gordon Graydon: Then in view of the fact that the legislation requested evidently would open the w'ay for Canada to make purchases from the United States through a new avenue, would not that be an extension of what was originally announced to the house?


William Lyon Mackenzie King: I have seen nothing in the statement which to my mind extends the meaning of what I said in the house some time ago. I do not know if my hon. friend has something in mind that I cannot fathom, but I gather he wdshes to know if the statement made by President Truman

Inquiries of the Ministry
alters in any particular the statement I made here some little time ago, and my answer is no, it does not.



FOREIGN EXCHANGE CONTROL


[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: Last week I asked the Minister of Finance about the storage of gold by certain mining interests. Yesterday I believe an announcement was made regarding the reimposition of certain measures of foreign exchange control as they concern United States currency. Could the minister give the house a statement regarding the latter matter, and is he prepared to answer the first question, which I asked him last week?


Hon. DOUGLAS ABBOTT (Minister of Finance):: No, I am not yet prepared to make a statement on the question asked last week. It is continuing to receive very careful consideration. As my hon. friend will appreciate, it is not a simple question, nor is it free of certain complications, but I will make a statement to the house at a very early day.


Major James William Coldwell: What about the reimposition of foreign exchange control?


Douglas Charles Abbott: On that matter it is a fine question as to what announcement should be made in the house and what should not. There is no change in policy with respect to the regulations announced yesterday. The house will recall that when the foreign exchange control bill was before the committee last year it was suggested that Canadians should have the right to retain in their possession a certain amount of United States dollars, and an amount of up to S100 was suggested. It was decided to do that as a trial measure. It has been found that the retention of United States dollars by Canadians, presumably as a result of that general provision, has substantially exceeded the amount involved in a similar period last year. For that reason it was decided to change the regulation and provide that amounts up to $10 only could be retained, and that a person going to the United States could take only $25 in all without obtaining a permit, of which $10 could be United States currency. There is no change in the regulations which allow any Canadian wishing to go to the United States for travel or other purposes to obtain reasonable amounts of United States dollars. The only difference is that he must go to the bank, obtain a permit on form H and have that permit when he reports at the customs office at the border.

INQUIRY AS TO PAYMENT ON 1944 CROP On the orders of the day:


Mr. T. J. BENTLEY (Swift Current):: Can the Minister of Trade and Commerce inform the house w'hether a payment on the 1944 wheat will be made at an early day?


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: There will be a payment on the 1944 participation certificates this summer. This morning the hon. member sent me notice of his intention to ask this question, and I was in touch with the wheat board in an effort to give my hon. friend and other hon. members of the house more definite information in this regard. The best information I can get now is that every effort is being made to get these payments out as quickly as possible, but they cannot be more definite than that it will be as early as possible this summer. Later today I hope to have an opportunity to make a statement in connection with participation payments and other matters connected with wheat.



INQUIRY AS TO STEPS TAKEN TO RELIEVE ALLEGED SHORTAGE

[Stage Direction]
On the orders of the day:
Mr. C. E. STEPHENSON (Durham):: I believe hon. members have received letters pointing out that many factories in Canada may have to shut down owing to a shortage of tin. Would the Minister of Reconstruction and Supply make a statement as to whether anything can be done immediately to rectify the situation?


Right Hon. C. D. HOWE (Minister of Reconstruction and Supply):: I received
notice of this question only a few minutes ago. While Canada's allocation of tin for 1947 was only 75 per cent of the allocation for 1946, supplementary purchases have been made and I was told recently that the situation is improving. However, I will try to find out the situation as at the present date and give a more detailed answer tomorrow.



TRANS-CANADA AIR LINES

[Stage Direction]
LOSS OF TRANSPORT PLANE ON PACIFIC COAST On the orders of the day:
Clarence Decatur Howe: Yesterday the hon. member for Weyburn (Mr. McKay)
34G6
Inquiries of the Ministry

inquired about the lost T.C.A. plane. His first question was:
Has the search for the T.C.A. plane lost on April 29 on the Pacific coast been abandoned?
I am instructed that the R.C.A.F., who carry on searches and rescues in connection with planes, as the official government service, advise that the search has been officially abandoned. T.C.A. report that they are still following any clues that may come in, in an attempt to solve the fate of the plane. The second question was:
When will the investigation of cause of loss be commenced and what will be the personnel of the investigating body?
The answer is that the investigation has been completed. The board was composed of R. Carter Guest, Mervyn Fleming and Norman Terry, all senior officers of the civil aviation division, Department of Transport. The third question was:
Have any claims for damages been filed?
T.C.A. advise us that no claims have been filed.


Mr. FULTON:: If I may ask a supplementary question, is the minister in possession of any information with regard to the report that messages from the plane were heard at Ashcroft and Lytton? I believe these reports came in during the course of the last week. Has any further information come to light in that regard?


Clarence Decatur Howe: Complete investigation indicates that there is no authenticity in these reports.



COASTAL FISHERIES


[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: As the house will recall, last session I brought the matter of offshore fisheries to the attention of the government, and in this connection I would like to direct a question to the Secretary of State for External Affairs or the Minister of Fisheries. It arises out of a statement made in the house last week by the Prime Minister, in which he said that among the resolutions to be introduced in the house this session was one respecting the conservation of fisheries on the high seas. The question is, has the government decided whether or not it will adopt a policy of conservation of coastal fisheries on the high seas similar to that enunciated by President Truman in his declaration of September 28, 1945?

Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): On September 28, 1945, President Truman made two declarations. In order to make the answer complete and intelligible I think I should recite the first one, which was as follows:
By virtue of and pursuant to the authority vested in me as President of the United States, it is hereby ordered that the Secretary of State and the Secretary of the Interior shall from time to time jointly recommend the establishment by executive orders of fishery conservation zones in areas of the high seas contiguous to the coasts of the United States, pursuant to the proclamation entitled "Policy of the United States with Respect to Coastal Fisheries in Certain Areas of the High Seas," this day signed by me, and said secretaries shall in each case recommend provisions to be incorporated in such order relating to the administration, regulation and control of the fishery resources of and fishing activities in such zones, pursuant to authority of law heretofore or hereafter provided.
The second declaration had to do with placing the subsoil and sea bed of the continental shelf under the jurisdiction of the Secretary of the Interior for administrative purposes pending the adoption of legislation. I take it that the hon. gentleman's question refers to the first declaration, which has to do with the conservation of sea fisheries adjoining the coast. The answer to his question in that sense is in the affirmative. The government intends to introduce a resolution in that regard, as the Prime Minister stated on May 21, 1947.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Gordon Graydon: Mr. Speaker, I should like to ask the Secretary of State for External Affairs whether the government has yet made any decision with respect to the projected acquisition of property for the purposes of the Canadian embassy at Washington.
Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): Yes, Mr. Speaker, a decision was made this morning, and before coming into the house I ascertained that it had received the approval of His Excellency, authorizing an offer for the property for residential purposes which was under consideration.


Gordon Graydon: How much is the offer?
Mr. ST. LAURENT: $300,000.

The Budget-Mr. Langlois



THE BUDGET


[Stage Direction]
The house resumed from Friday, May 23, 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.
Mr. J. G. LEOPOLD LANGLOIS (Gaspe) (Translation):: Mr. Speaker, I shall make the most of the opportunity I am afforded of taking part in the budget debate to discuss exclusively the important matter of relations between the central power and our various provinces.
We have heard several hon. members express divergent opinions on the subject and we have noticed more particularly the objections raised by hon. members who, in line with the principles that their provincial leaders have advocated, stand against the dominion government's policy in this respect.
I shall first point out that those who do not favour acceptance, on the part of the provinces, of the central power's proposals, have put forward no new argument but repeated only those which were stated by anti-confederation-ists during the conferences held by way of preliminary to Confederation. In fact, on October 24, 1864, Mr. E. B. Chandler, of New Brunswick, member of the legislative council, speaking on a motion of Mr. Oliver Mowat, said the following:
We agree to a legislative union.
We set about destroying the constitutions of local governments, thus relegating the latter to the humble status of great municipal corporations.
Mr. A. A. Dorion who, at the time of Confederation, led the anti-confederationist movement in Quebec, expressed similar opinions and claimed that the resolutions passed at conferences were an attempt to establish a centralized federative union, as is shown by the following excerpt from one of his speeches on the subject:
The confederation I suggested was a true confederation, entrusting vast powers to local governments and allotting only a certain amount of authority to the federal government.
He continued:
Such a confederation is very different from the one now suggested to us, for the latter hand over powers to the central government, reserving for local governments the slightest possible degree of freedom of action.
You will recall that Hon. Maurice Duplessis, ever since he came to power in the province of Quebec, has often quoted these two excerpts. Yet, in spite of arguments put forth by Mr. A. A. Dorion and others, including Hon. Maurice Duplessis, confederation has been in effect since 1867 and the provinces have not yet been reduced to the status of great municipal corporations, far from it.
In fact, our Canadian provinces have grown and prospered together with the rest of the nation and have thus contributed to the building of one of the most prosperous and free countries of the world. Our past constitutes a brilliant refutation of the arguments put forth by the opponents of the proposals submitted by the dominion government. However, we must not pause there because the achievements of the past compel us to prepare our future. As the Canadian nation develops, it must solve administrative problems of ever increasing importance.
In 1867, one of the main obstacles to Canadian confederation was the settlement of financial problems. The task consisted in granting subsidies to compensate the loss of revenue incurred by certain provinces entering confederation, on the one hand, and enabling those provinces, by means of subsidies to establish, on the other hand, provincial budgets sufficient to permit the various provinces to meet their obligations towards the people and act as local governments within the framework of the confederation.
Mr. Speaker, a brief study of the expenses incurred by the provinces since confederation under the three main administrative headings clearly shows that the subsidies provided in 1867 are no longer sufficient. For instance, as far as education is concerned, the current expenses have increased in the following proportions from 1867 to 1930:
1867: $2,500,000 or 78 cents per capita;
1896: $8,000,000 or $1.60 per capita;
1913: $37,500,000 or $5.00 per capita;
1921: $88,000,000 or $10.05 per capita;
1930: $119,200,000 or $10.54 per capita.
The maintenance expenses of highways have doubled from 1921 to 1930, increasing from $364,000,000 to $734,000,000. From 1867 to 1937 there has also been an increase from $1,200,000 to $284,000,000 in the budget of those same provincial governments as regards social services and public welfare. The logical conclusion, Mr. Speaker, is that the subsidies granted the provinces in 1867 are no longer sufficient, in spite of the increases obtained since, and especially in 1907, when the Canadian constitution was amended.

The Budget-Mr. Langlois

Is it not a fact that one of the provinces was once on the verge of bankruptcy, while the financial position of two others is far from steady.
Moreover, our country's development since 1867 has increased the scope of the administrative problems of the various governments which make up confederation; those national problems require settlement on a national scale.
The first step in that direction was taken in 1927 by the dominion government when they introduced old age pension legislation in order to help provincial governments who could not afford expenditures on such a large scale. When the act first came into operation, the federal authorities paid only 50 per cent of expenses, but in time they had to raise their contribution to 75 per cent of the total cost. The pension provisions for the blind are another example of federal intervention directed towards helping the provinces in the solution of purely provincial matters. I could also mention the Unemployment Insurance Act and the Family Allowances Act.
Who would dare contend that our country will keep on growing through strict adherence to what was laid down in 1867 by the fathers of confederation? Moreover, the dominion proposals would simply apply to our present needs the principles on which confederation was based in 1867.
Those who oppose the federal plan claim that such proposals are directed against provincial autonomy and are conducive to centralization. The argument with respect of autonomy cannot possibly be serious. Autonomy means independence, neither restricted nor limited, but full and complete even in the financial field.
Economists might say that as long as the family, the municipal corporation and the province are financially independent, so will be the country as a whole. But such autonomy and independence may not be achieved when the contrary is true, as it is unfortunately so at the moment in too many cases.
Is an invasion of provincial autonomy possible, when an amendment to the constitution is not even necessary to authorize provincial legislatures to negotiate with the dominion? Is an attack on provincial autonomy possible, when the legislatures are perfectly free to accept or to reject the federal proposals? Is centralization possible, when the dominion is willing to surrender to the provinces exclusive jurisdiction in the administration of social legislation? Are we threatening the autonomy of provinces, when we provide them with the means of meeting their obligations to the

people? Do our provincial premiers believe that the autonomy of the provinces is better protected when, in order to balance their budgets, they must resort to foreign lenders, as was too frequently the case in the province of Quebec from 1936 to 1939? In the 1930-1935 period, when the central government, under the leadership of the Right Hon. R. B. Bennett, distributed unemployment relief benefits and contributed 50 per cent of the cost of municipal works, why did the province of Quebec not worry about its autonomy as it does today? Was the fact that such unemployment relief benefits and 50 per cent contributions came from a government wholly sympathetic to the present leader of the Quebec government sufficient to protect her autonomy? I leave it to my hon. friends of the opposition to answer this last question.
The hon. member for St. Maurice-Lafleehe (Mr. Hamel) speaking on this matter on Wednesday, May 21, quoted figures that I cannot accept. Indeed, as shown by the record, at page 3309, the hon. member stated:
Even the dominion proposals, however, uphold an intolerable discrimination. Subsidies vary according to each province, here as elsewhere: the per capita grant paid to the province of Quebec will be the lowest in the country. Ontario's will amount to $18.04, Alberta's to $18.64, Saskatchewan's to $19.03, Nova Scotia's to $19.20, New Brunswick's to $19.69, Manitoba's to $19.77, British Columbia's to $21.29 and Prince Edward Island's to $24.31, while that of Quebec will be only $17.29, namely, $2.37 less than the average rate.
My hon. friend seems to have followed the example of the member for Charlevoix-Saguenay (Mr. Dorion) who is reported, on page 1689 of Hansard, as having said:
In the last twenty-five years, when I had to plead cases before the courts of my country, I always made it a point to present facts, and once the facts were proven, draw conclusions.
The hon. member should have added: but only such facts as could serve the purpose of the cases which I pleaded.
That is possibly why, following that example, the. hon. member for St. Mauriee-Lafleche quoted only such figures as enabled him to draw conclusions in line with his opinion on the government's policy in the matter of direct taxation.
I shall therefore immediately demonstrate this serious omission of the hon. member in his summary of the dominion's proposals to the provinces.
I have chosen to outline the proposals made to four of the provinces: Quebec, Ontario, Nova Scotia and British Columbia, i.e., two central provinces, one of the maritimes and one of the western provinces.

The Budget-Mr. Langlois
The proposals were as follows: $12.75 per capita (which amount was offered to all provinces without exception), plus the statutory subsidies guaranteed by confederation; plus 50 per cent of the personal income and corporation taxes as collected in 1940 in each of those provinces, plus the family allowances already paid, and the dominion's contribution to payment under the pensions act for the aged and the blind. The aggregate amounts for the four provinces mentioned are as follows:
Quebec-$42.66 per capita.
Ontario-$38.01 per capita.
Nova Scotia-$44.86 per capita.
British Columbia-$39.84 per capita.
The average for all provinces in Canada is $41.43. It will be seen therefore that Quebec's share exceeds the average by $1.23 per capita, whereas Ontario's will be $3.42 short of the average. Can it now be held that the dominion's proposals discriminate against the province of Quebec?
Family allowance statistics show that, under the act, Quebec is getting $22.24 per capita while Ontario gets only $16.69, British Columbia $15 and Nova Scotia $20.82. According to our estimate of what the province will obtain from the financial agreements proposed by the central government, Quebec, in case of acceptance, would receive a total sum of $63.011000 in 1947, or three times what she collected in 1940 in personal and corporation income taxes, plus $1,511,000. Besides, the central government guarantees minimum subsidies to the provinces and this amount, would be $56,383,000 in the case of Quebec. In addition, the federal government makes an alternative offer of $15 per capita, instead of $12.75 plus 50 per cent of personal and corporation income taxes, to those provinces who had no income or very little income from these sources, in 1940. Each province is free to accept this uniform amount if she thinks that her interests are better served thereby. It seems, however, that Saskatchewan and Nova Scotia alone could benefit by this alternative offer.
Such are the proposals of the federal government to the provinces. They were submitted to them in the best interest of our people as a whole and, to use the words of the Right Hon. Prime Minister of Canada (Mr. Mackenzie King), on a totally free and temporary' basis.
Mr. Speaker, I have prepared a table which I will be glad to show the hon. member for St. Maurice-Lafleche, whenever he wishes to secure information so that, in future, when he speaks on the matter he may state all the facts without reservation.
83166-222J
In the last few days, Mr. Speaker, we have followed an interesting debate on the legal aspects of the proposals submitted to the provinces. Our so-called nationalists, who have now taken the name of autonomists, claim that the British North America Act grants the provinces exclusive jurisdiction in matters of direct taxation.


Mr. HAMEL:: Would the hon. member permit a question?


J. G. Léopold Langlois: Surely.


René Hamel: Could he tell us who stated in this house that the provinces had exclusive jurisdiction in matters of direct taxation?


J. G. Léopold Langlois: The hon. member for Charlevoix-Saguenay (Mr. Dorion) speaking on the budget, a few days ago-I cannot specify on what day, but it was last week-


René Hamel: Could the hon. member quote the statement?


J. G. Léopold Langlois: The hon. member for Charlevoix-Saguenay' quoted part of a judgment, which in fact was not a judgment, but a statement by' a judge, who was attempting to prove that the province of Quebec, in a special case had obtained a [DOT]favourable ruling from the privy council, granting her not only the exclusive right, but priority, in case of conflict.


René Hamel: Quite so.


J. G. Léopold Langlois: Mr. Speaker, as I was saying a few moments ago, we have heard for the last few days an interesting debate on the legal aspect of the proposals made to the provinces and I stated further that oui so-called nationalists-I believe I did hit at least one of them-who assume today the title of autonomists, claim that the British North America Act confers exclusive jurisdiction on the provinces as regards direct taxation. I certainly do not share that view, which is at variance with numerous decisions by our highest courts and is not consistent with the way sections 91 and 92 of our constitution should be construed. However, that does not prevent me from respecting the opinion of our friends in the opposition who claim further that our language, our fadth and our most sacred rights are endangered by those they are wont to call "the Ottawa centralizers". I wish, nevertheless, to suggest to those hon. members, whose sincerity I do not question in the least, to face the facts as they are. It is not by voicing protests, and expounding nationalist arguments that they will safeguard our rights and freedoms, should such rights and freedoms be really imperilled, as they claim. Let us suppose, for a moment,
The Budget-Mr. Langlois

that those gentlemen are right and let us ask them if, in the light of existing texts, and especially in the light of the decisions given by the privy council, and finally taking into account the opposite views expressed both in this house and outside, they are justified in taking refuge behind the protests they voice as protectors of their race and as the last bulwarks of our rights and freedoms. I believe that we must rather be realistic in approaching that important problem and that we have no right to harbour a feeling of false security. Moreover, I claim that if we want our rights and freedoms to be safeguarded, we should not merely assume that they are sacred and inviolable, but rather that it behooves us to ensure such inviolability through concrete and definite facts.
My hon. friends opposite must realize that there is now in Canada an important group of socialists whose aim is to establish a planned economy and who do not hesitate, at all times, to prophesy, should they ever assume power, a complete upheaval in the economy and the mode of life until then known in this country. Therefore, are we not justified in dreading the future should those socialists ever come to power ii* Ottawa, because their policy of planned economy and what they call social planning cannot be carried out without encroachment on provincial prerogatives? Would it not be better if, to show its respect for provincial autonomy, the dominion should set a precedent giving further practical evidence of its intention not to take advantage of prior or exclusive jurisdiction in the field of direct taxation?
This precedent is now being set when this government offers the provinces a temporary agreement-and I insist on the word temporary-recognizing provincial jurisdiction and asking the provinces to enter into such an agreement for the simple purpose of avoiding duplication of taxation and costs of collection. The opportunity is given us to set this precedent for the benefit of the future generations of this country as a whole and of each of the provinces. It is a new idea but one to my mind worth trying for it implies a genuine guarantee of our rights and liberties, and especially because I should be extremely loath to let my French-speaking compatriots' future depend solely on the right of veto held by the present Prime Minister of Ontario, as our opponents would have us do. Recent statements by the originator of the famous principle "equality of sacrifice" are still too fresh in my mind.
Mr. Speaker, I am dealing with the concern expressed by the hon. member for St. Maurice-

Lafleche who in a nightmare of nationalist apprehension-I was going to say alarm- sees our racial group ruled with a rod of iron and deprived of its essential freedoms.
In answer to his remarks, may I remind him that it is not by preadhing fear and suspicion to our French-speaking compatriots that we shall encourage them to go on playing the part which they have taken up to this day in this great and wonderful Canada of ours.
I submit that French civilization in America is past the survival stage and is waiting only for the growth of a new generation of bold and proud youths to burst into bloom. I am sorry for my hon. friend, but I cannot conceive of a French-speaking Canadian who takes pride in the achievements of his forebears, wishing that his racial group be confined within the limits of some Canadian reserve.
I have no hesitation in saying that we need have no fear to go forward in Canada side by side with our compatriots of any race or creed. I say also that our French civilization compares with any other. What would have been the point in surviving, if we chose to perish within the confines of self-imposed limitations.
Mr. Speaker, I say also to my hon. friend for St. Maurice-Lafleche that we are not a group of failures who should be segregated in a separate enclosure. We have enough courage and mettle not to surrender our own heritage in order to seek refuge in a narrow and benumbing separatism. My hon. friend might, find a source' of inspiration more in keeping with the aspirations of our fellow countrymen if he borrowed the words with which the Right Hon. the Prime Minister of Canada, during the war, urged French-speaking Canadians to raise the torch of French civilization which had fallen from the hands of agonizing France.
Mr. Speaker, returning to the important problem of dominion-provincial relations, I state that the people of my province do not share the views of their present leader; if the hon. the premier of the province of Quebec has any doubt on the matter I challenge him, on behalf of the French-speaking members on this side of the house, to vindicate his policy by immediately going to the people on this very issue.
Moreover, if he is sincere and if he still claims that our rights and freedoms are really threatened, it is his duty to appeal to the people. I need not have an exceptional amount of courage to challenge Mr. Duplessis and his satellites to fight that issue with us before the Quebec people, because I am convinced that the population of my province still

The Budget-Mr. Argue
possesses enough pride and courage to continue its magnificent contribution to the building of a powerful Canadian nation on the American continent.
(Text):


Mr. H. R. ARGUE (Wood Mountain):: Mr. Speaker, I think all hon. members would be happy to see this debate concluded at the earliest possible moment. However, this is indeed an important budget and deserves the conscientious attention of all hon. members. As has been said so many times already in this debate, the most glaring fault in the budget is that nothing was done for that half of Canadians who find themselves with incomes less than the minimum necessary to get into the taxation bracket at all. The government surely has slipped up badly in not having done something to increase the living standards of these people, who are finding it so difficult to get along under present conditions.
On looking over the changes in the amount of income tax for this year, I can see that the reduction for those in the lower brackets has been considerably more than it has been for those in the higher brackets, in relation to what they paid at the beginning of this year. It seems to me that to reduce by 54 per cent something which is unfair is to take away only 54 per cent of the unfairness and still leave something which is exceedingly unfair. I have worked out a little table of my own, comparing the relief granted in the various income tax brackets. I have done this with regard to a single man, but the same thing applies generally to a married man, to a married man with two children, and so on. If one takes the income tax relief in dollars for 1947 as a whole, as compared to the tax at the beginning of this year, and then relates that tax relief to the man's income, one sees that the effective amount of relief has been low in the low income brackets and relatively high in the middle and higher income brackets. If the man with an income of $1,000 should be given tax relief of $10 or one per cent, surely all will agree that the man with an income of $10,000 should not be given relief of more than $100, which is one per cent, the same proportionate amount. The single man, however, with $800 income has been given tax relief in this budget amounting to S3 or -375 per cent of his gross income. To the single man with an income of $2,000, the tax relief is $47, which amounts to 2-35 per cent of his income. Not only is the man with an income of $2,000 already making two and a half times as much as the man with an income of $800, but the government are giving him in tax relief six times as much, on a proportionate basis, as they are giving the man with the $800 income.
The same thing applies going up the scale to the higher brackets, and to a greater extent, until one reaches the $7,500 bracket. A man with $10,000 income is granted relief of $393, which is 3-93 per cent, or more than ten times as much relief as is granted to the man with an income of $800. I say that the emphasis has been placed entirely wrongly in this budget. The only basis for fairness would have been to increase the exemptions far above the present $750 for a single man and $1,500 for a married man.
I note also that a married man with an income of $1,800 pays $36 in taxes and a single man with the same income pays $180. The married man with an income of $1,800 is given, through the income tax laws, an additional net income of $144 compared with a single man earning the same income. Going up to the $10,000 bracket, a single man pays a tax of $2,253; a married man with, that income pays a tax of $1,190. To a married man earning $10,000. the government allows $263 with which to maintain his wife, as compared to a single man earning that amount and as compared to the $144 for maintaining his wife allowed to a man who earns only $1,800. I think that that difference in tax, as between a married man and a single man, should be the same in all income tax brackets. Here is a married man with $10,000 income who, gets $7,767 net income on which to maintain himself and his wife, and he is paying to the government $263 less in taxes than a single man with that amount.	r
As 1 said before, the tax relief for a single man with an income of $800 amounts to -375 per cent of his gross income, the magnanimous sum of $3. The married man earning $2,000 gets tax relief in 1947, compared with the present rate, of $24. or 1-2 per cent.. A married man with two children earning $2,000 gets tax relief of $16, or an increase in his income through tax relief amounting to [DOT]8 per cent.
The government through this tax relief is giving to persons in these income tax brackets increases in income anywhere from about one-third of one per cent to 1-2 per cent; and the change in the cost of living index from March this year to April this year amounted to 1-7 points. The change in the cost of living in one month has more than wiped out all the tax relief the government is giving the people in the year 1947. Surely that is not good enough. The government should have given a good deal of tax relief to the people in the lower income brackets, and

The Budget-Mr. Argue
maintained price control, so that the people in those brackets would be able to obtain the necessities of life.
But while the average income earner in Canada is not faring well, we see that the corporations are making very large profits. An article in the Financial Post of April 12 says this:
Caught between high taxes and sharply rising prices consumers are not going to be any more complacent when they learn that company profits have been mounting. A survey of the combined results of sixty companies show earnings almost 30 per cent higher than in 1945.
Then it goes on to say:
The same trend is abundantly apparent in the United States where President Earl Bunting of the National Association of Manufacturers bluntly warns if the constant sudden upward winding of the spiral continues you will see one of the most terrible busts this country ever had.
Corporations are making more money than they have ever made. The government is giving them in addition great taxation relief. And the corporations in return are going to give to this country "one of the most terrible busts".
The Nesbitt, Thomson and Company revised index of dividend payments shows that corporation dividends are on the increase. Taking the index of 100 for the period 1935-39, the following figures will show the upward trend:
January, 1946	 131-2
July, 1946	 140-2
January, 1947	 155-3
March, 1947	 156-8
Dividends are going up by leaps and bounds. I have figures here showing the profits of some of the companies which supply goods of great importance to the consumers of Canada. The table is as follows:
Company
Easy Washing Machine Company ..
Building Products Limited	
Canadian Western Lumber Company Canada Cement Company	
Net Profit After Taxes, 1945
$	25,496
335,242 459.619 1,080,440
Net Profit	Increase
After Taxes,	in Profits
$	50,594 about 100 per cent
1,295,434	286	per cent1,019,428	121-8	percent2,178,523	10,1-6	percent
It will be noted that some of these com-tpanie.- supply building materials. No doubt the great increase in profits is one of the main reasons why houses cost so much more [DOT]today than they did a few years ago.
But the cost of living is not the only thing tthaJt is going up. The cost of production for farmers in western Canada has gone up at a tremendous rate in the last year and a half. A year ago this spring the government removed the subsidy of 45 cents a barrel which was paid on crude oil shipped to the prairie provinces from the United States. At the time of the withdrawal of the subsidy the companies were allowed a two cents a gallon increase in the price of gasoline. That two cents would take care of the subsidy of 45 cents, and perhaps a little more. But the two cents a gallon increase was allowed on all petroleum products sold in western Canada, even including gasoline manufactured from crude oil taken from the Turner valley-. The companies were thus able to make large profits on the increased price granted for all their gasoline, irrespective of the crude from which it happened to be made.
On April 1 of this year the government removed its three-cent wartime tax on gasoline. At the same time it removed the ceiling on that product. The companies absorbed the tax that the federal government was otherwise
getting. It is too bad that the government had not removed the three-cent wartime tax on gasoline before it lifted the price ceiling. Then the people would know that the companies have, in effect, taken over the taxing powers of this government, because they increased their price by- that three cents, or more. In tractor gasoline in Saskatchewan there was an increase of four and a half cents -and that is the most important fuel sold to farmers in that province.
The oil companies did not do so badly in 1945 and 1946. These figures will serve to show the profits:
Net Profit, Net Profit, Company	1946	1945Imperial Oil Limited $17,326,112 $16,6'16,586 B.A. Oil Company ...	3,319,572	3,151,334
McColl-Frontenac Oil
Company	 3,218,596	1,464,515


Mr. MACKENZIE:: Was that a net profit?


Hazen Robert Argue: Net profit after taxes. I am sure that with the large increase in price they are obtaining for their products in western Canada, and to a lesser extent throughout the rest of the nation, these companies will make still higher profits in 1947. Another reason they will make higher profits lies, of course, in the removal of the excess profits tax, which is to take effect at the end of the year.

The Budget-Mr. Argue
A year ago t'he agricultural implement companies got a 12| per cent increase in price. The two Canadian companies made considerably more profit in 1946 than they did in 1945. The profit of Cockshutt Plow Company increased 18-4 per cent. The profit of the Massey-Harris Company increased from $1,588,480 in 1945 to $2,125,570 in 1946, an increase of 29-5 per cent.


Mr. MAYHEW:: Can the hon. member give the profit on domestic business and export business?


Hazen Robert Argue: I tried to get the figures of those companies broken down in that way, and I was told they did not keep their books in that manner. All I am pointing out is that the trend is upward. I venture to say their profit in 1946 was greater than in 1945, and certainly I would be pleased to have the assistant to the Minister of Finance, if he can. bring forward evidence to show that the reverse was true. I 'have tried to find out what were their profits on Canadian business only, but I do not think that is too important because I believe the trend is definitely upward. If that is not so with these companies they are different from almost all other companies doing business in Canada.
The government is claiming to give income taxation relief amounting to anywhere from 54 per cent to seven per cent. It is estimated that personal income taxes for 1947-48 will bring in $625,000,000, or a reduction of $70,000.000 from $695,000,000 estimated for 1946-47. This represents a decrease of about ten per cent in the amount of money the government expects to get through personal income tax in 1947-48 as compared with 1946-47. Then the government estimates that in 1947-48 it will obtain $300,000,000 in corporation taxes as compared with $239,000,000 in 1946-47; but it expects to get only $170,000,000 in 1947-48 through the excess profits tax whereas in 1946-47 it obtained $449,000,000. The total taxes the government expects to get from the corporations of this country in 1947-48 amount to $470,000,000, as compared with $688,000,000 in 1946-47. This reduction in taxation on corporations amounts to more than 31 per cent, as compared with 10 per cent for the salaried men, the wage earners and the farmers. I say this government has fallen down badly; that it is giving tax relief where tax relief is not needed, and that it is not giving tax relief to those who today are suffering through the rise in the cost of living. I have friends in this city; I have friends in western Canada, and in talking to these people I find many of them are actually in dire need
because of the rapid rise in the cost of living. These people were expecting that if the government would not maintain price control at least it would exempt those in the low income groups from the payment of any income tax whatever.
When one reads the daily and weekly press, or almost any magazine, one finds scattered throughout warnings that a depression or a recession is imminent. I think it behooves the government to state in the budget what its programme is to maintain prosperity and see that a depression or recession does not come. I believe one of the most important things it could do would be to take complete control of the banking system of this nation, and there are very good reasons for that. One is that in 1945 the chartered banks of this country had three times as much invested in government securities as they had by way of loans. In that year they had $3 invested in government security for every $1 they had on loan. In other words the governments of this nation, federal, provincial and municipal, are supplying the income of the banks; and I say that when any corporation depends upon the government for its income it is time the government owned that corporation.
The banks, too, have done very well in the last few years. I was able to get the 1946 profits of only a few of the banks. I have here the figures for the Bank of Montreal and the Royal Bank of Canada. In 1945 the net profits of the Bank of Montreal were $3,514,522, while in 1946 their net profits were $4,487,782.91. The profits of the Royal Bank increased from $3,828,143 in 1945 to $4,020,895.51 in 1946. The dividends paid by the Royal Bank increased from $2,100,000 in 1945 to $2,800,000 in 1946. If we are not to experience a depression then we must see that purchasing power reaches the hands of the people who want to spend the money on consumer goods. Banks are willing and glad to lend in times of prosperity, but in times of depression they are not willing to lend and do not lend. It does not matter what steps the government may take to see that the reserves of the chartered banks in the central bank are adequate; if a depression is upon us they do not lend, not matter how high their reserves may be. So I suggest to the minister that by nationalizing the chartered banks the government will obtain a very good instrument for preventing depressions.
Throughout the budget speech of the minister. on one page after another, he refers to our dependence for our prosperity on what happens in the United States, pointing out how
The Budget-Mr. Argue

closely our economy is linked to the economy of that country. According to an article appearing in the Toronto Daily Star of May 15, ten leading economists in the United States, of whom three were former heads of the OPA, believe that a crisis is imminent in that country. The Minister of Finance stated that our prosperity might continue to be reasonably good provided there was not a depression, or a recession as he called it, in the United States. Well. I think it is time we saw to it that we had a measure of prosperity in this country all the time depending upon the resources of this nation, not depending upon what may or may not happen in the United States. I do not believe the United States is following or will follow economic policies that will enable Canada, if our present practices are maintained, to have prosperity; and that applies to all the other nations of the world as well. I do not think the United States is going to admit the imports necessary for foreign nations to have the American dollars they need to buy the imports they require from the United States. The minister pointed out that we were short of American dollars, had an adverse balance of some $603,000,000 in 1946; and an article in the Financial, Post of May 24 states that at the present rate Canada is buying United States goods, and the present rate at which we are selling goods to the United States, this year we shall be short of American dollars to the extent of $850,000,000. The government should take steps to see that that situation is corrected, and I suggest that as they have seen fit to make a contract for the bulk sale of Canadian wheat to Great Britain, they should be willing and prepared to make contracts for the bulk importation into this country of the goods we need from countries like Britain which need our dollars to pay for our wheat.
In conclusion, Mr. Speaker, I think that the budget falls short in many respects. The most glaring fault is the lack of a single provision for improvement of the economic position of the majority of Canadians whose income is so small as to keep them out of the income tax brackets.
2.	The tax relief granted in the lower income brackets is proportionately much less than that granted1 in the middle and higher brackets. For example, the tax relief in 1947 for a single man earning $800 is $3. This relief equals only -375 per cent of his total income. But a single man earning $10,000 is afforded tax relief of $393, which is equal to 3-93 per cent of his income. This relief is proportionately ten times greater for the man

in the $10,000 bracket than for the man in the $800 bracket.
3.	The government's headlong policy of decontrol has resulted in a sharp rise in the cost of living. This trend is shown by the increase in the cost of living index from 121 in April, 1946, to 130-6 in April, 1947, a rise of approximately 8 per cent. This 8 per cent increase in the cost of living far exceeds the tax relief granted in the budget, which for a married man in the $2,000 income bracket with two children, amounts to only -8 per cent.
4.	The 1948 income tax for a married man earning $1,800 is $144 less than the tax for a single man earning an equal amount. But not only is the married man earning $10,000 left after taxes with an income of $7,747 as compared with $1,636 for the married man earning $1,800; he is taxed $253 less than the single man with an income of $10,000.
If a married man in the $1,800 bracket is allowed only an additional $144 on account of being married, this amount should apply throughout all the brackets.
5.	At a time when the standard of living of the mass of the Canadian people is being reduced, company profits are at a record high. Dividends, too, are on the upgrade from the index of 131-2 in January, 1946, to 156-8 in March, 1947. Profits of the major Canadian oil companies are much higher in 1946 than in 1945 and promise to be still greater in 1947 with the large and unwarranted increase in gasoline prices.
In the midst of all this, the reduction in anticipated taxation revenue from corporate enterprises is from $688,000,000 in 1946-47 to $470,000,000 in 1947-48, a reduction of more than 31 per cent. This compares with a reduction in anticipated personal income tax revenues of only ten per cent.
6.	Because of the increasing dependence of chartered banks for income on holdings of government securities, and because of the need to increase the volume of purchasing power in the hands of the public at the onset of a depression, I believe the time has arrived when it is in the public interest that the chartered banks be nationalized.
For all of these reasons, Mr. Speaker, I feel that the budget has failed the Canadian people and consequently I shall be forced to vote against it.


Mr. ANTHONY HLYNKA (Vegreville):: Mr. Speaker, on his first budget speech the Minister of Finance (Mr. Abbott) has been showered with bouquets from all sides of the house. The kind references to the minister are a good indication of the esteem in which

The Budget-Mr. Hlynka
he is held by members of all parties. These references may be taken as a recognition also of the minister's all-round ability. I too should like to join with those who have already congratulated the minister on the delivery of his first budget speech in the house. I should like to add, however, that along with their congratulations hon. members should have also expressed sympathy for the minister in his present position because, as he no doubt knows, he is now the chief target on the government side not only for members of this house but for the Canadian people generally. It is my view that if the minister does become the subject of bombardment from this side of the house it will not be as a result of any weakness on his part but because he has allowed himself to become the spokesman of the old debt-creating system which belongs to the sixteenth century but persists in running Canada's financial policy in the twentieth century.
Whatever the outcome of my forecast may be, I would in all sincerity suggest to the minister that he request the leader of the house to place him on the front benches, as near to the Social Credit group as possible, so that it may be easier for us to get at him. The present seat which the minister occupies may foe convenient for him as he appears to be well shielded, but that seat is definitely inconvenient for the opposition members. What I am saying bears out the contention of the Social Credit members that it does not matter how able or how popular a member may be before he is appointed a minister of finance; he is bound to fail because he is given an impossible task, that of operating a money system which cannot distribute to the Canadian people the goods and services which they require. So we sympathize with the Minister of Finance, but we sympathize even more with the Canadian people.
During the debate thus far, government supporters have lauded many features of the budget, and of course the opposition have criticized it. quite severely on some points. So far as I am concerned I shall undertake to show that this budget does not meet with the requests of the Canadian farmer.
On the 16th day of April, 1947, a delegation of farmers presented a nine-page brief to the Minister of Finance, his deputy and their advisers, requesting that the government do something to assist the Canadian farmers, at least in the west, in keeping the agricultural industry on a stable basis. The delegation placed fourteen recommendations before the minister. Let me read each one and then
express my opinion whether or not these requests were granted. No. 1 reads as follows:
Four year average for income tax purposes.
In parenthesis, the Alberta Farmers' Union states:
We were advised that this was a matter of government policy and would have to be dealt with by the Minister of Finance and his cabinet.
The fact remains that the Minister of Finance and the cabinet have not acceded to this request. Let us take No. 2:
That in case of dispersal sales of live stock, an equivalent number of animals to those owned on January 1, 1941, be considered a capital asset and not subject to income tax.
Has the government granted this request? The reply is, of course, no. In parenthesis, the delegation which interviewed the Minister of Finance, in publishing the report of their visit to Ottawa, said:
. . . would be given consideration and they could see logic in our argument that foundation herds should be established as the year of 1941. They were going to look into this matter and see what recommendations could be made along this line.
Well, so far the government, and I presume the Minister of Finance or his advisers, have had time to look into the matter and either grant this recommendation or refuse it. In his budget the Minister of Finance said nothing on this point, so I take it that the request was not granted.
Recommendation No. 3 read as follows:
That exemptions be raised to $1,200 for single and $2,400 for married persons and proportional increase to dependents.
We all know that the minister did not grant this request. In their report the delegation also said:
This also was a matter of government policy.
Therefore recommendation No. 3 was not granted either. Let us take No. 4:
Allowance for labour of farm families in connection with production on the farm.
Has anything been done in this regard? Well, the reply is obvious. The government has not granted this request either. Let us take No. 5:
No further responsibility for income tax on farm wages.
The reply of the government spokesman was that it would be quite impossible to grant this request because it was felt that the tax should be collected at the source, and the farmer should be expected to collect it the same as any other employer; therefore request No. 5 was not granted.
Let us take request No. 6:
Board of arbitration on income tax cases.
The Budget-Mr. Hlynka

The reply which was given to the delegation was to the effect that this had already been set out in the act, and it was only a matter of time before this board would be appointed. The fact remains that so far the arbitration board has not been appointed; consequently thus far the request has not been granted.
Recommendation No. 7:
That payment of arrears of interest and principal on the home farm, due before 1940 be allowed as deduction for income tax purposes.
After having listened to the Minister of Finance and after having read his speech carefully, I did not find a single reference to this particular request, which is an important one so far as farmers are concerned. The delegation urged that payment on old debts and arrears of interest be deductible for income tax purposes. The government officials stated that they would look into the matter after they had pointed out to them the reasons why the delegation asked for this concession. It was due to the trying times of the thirties when the farmers were not in a position to pay off their mortgages, and a considerable amount of this debt accumulated interest over a period of years. On this question I may point out that industrialists, some of the oil companies and gold mining companies, are granted certain privileges when they begin their operations, to enable them to get the proper start. I commend the government for that, but why should not the same principle be applied to the farmers?
Recommendation No. 8:
Provision for final clearance to all taxpayers within two yqars.
The delegation was told that the government would give immediate attention to this as soon as they were able to get sufficient staff. In parenthesis, the delegation said:
They have had this in mind for some time and consider the taxpayer entitled to clearance and they were hoping to do it within one year instead of two.
The argument there is that the government is unable to do it at the present time because of insufficient employees. What is wrong with our veterans? Why not employ these young men? I know many of them who are qualified and are certainly eager to learn, and they could learn to handle this problem and to do this type of work. Why not ask them to come in to do this work? Surely they are entitled to it. To say at (his time that there is insufficient staff is, to my mind, a poor excuse. The government has not granted this request.
I now come to request No. 9:
No special exemptions to any class but full provision for proper expenses.

We know there are certain types of employment where expenses are not allowed. Hon. members know that until a year and a half ago they were obliged to pay for telegrams and other expenses; that they were not allowed to charge these expenses to the expense of being a member. We are now compensated in another way. It matters little what provision it may be, every taxpayer should be entitled to deduct legitimate expenses when they are connected with the obtaining of income. So far, No. 9 has not been altogether adjusted.
I now come to No. 10:
Simplification of income tax forms.
Everyone who has had to calculate his income tax knows that this year as in previous years it was still a difficult job. Unless one studies the various clauses of the act and the various questions in the form, it is quite difficult even for a man who has had something to do with filling out forms of various kinds. Let us take a farmer. I maintain that it is absolutely impossible for a fanner to know where to begin and what to enter and what to leave out, to know whether to claim exemption or not. So that simplification of income tax forms is one thing the minister should look into, and the government should provide assistance to every person who cannot compute his own income tax deductions. This has not been done so far.
11.	In computing net worth statements over the years 1941-1945 the increase in value of live stock and implements, which has come about through the general advance in prices, should be discounted, and an equal amount of this property valued on the same basis per unit for both years.
I might say a word about this net worth system of collecting taxes. I understand that the net worth system is applied in the three western provinces, and in Alberta the income tax officials go as far back as 1941. I understand that in Saskatchewan they go back to 1942, and in Manitoba, in some districts, they go back to 1941, while in other districts they go back to 1942. Why the difference? Surely this government fully realizes that it is unreasonable to demand that a farmer at this particular time should pay for the first years immediately after the outbreak of the war, because the farmers had just got through a ten-year depression. The government were not concerned then with the problem of siphoning back to the farmer a certain amount of purchasing power but now that he is making a little money, they feel that they should siphon it off as fast as they can. This system of computing the farmer's tax is unfair.
I took up several cases with the officials of the income tax branch, and I do not believe, although the officials were very kind, that the

The Budget-Mr. Hlynka
farmers in general felt they were being treated as well as they should have been. They felt that the inspectors simply came around and put down what they thought the farmer's income was and what his expenses were. I feel that number 11 has not been granted them.
12.	Uniformity of interpretation and administration of the income tax act. It should not be left to the discretion of district inspectors to vary the provisions of the act.
Incidentally, the officials of the department agree with the delegation on this point, but so far nothing has been done. As a result, this request was not granted. I come now to a very important one:
13.	The brushing and breaking of new land should be considered as a current expense.
I have already pointed out that certain companies drilling for oil are allowed, for the first three years, I believe, certain privileges. Why should not the farmer be entitled to the same privilege? So far, however, that has not been done.
14.	Money expended in drilling or boring wells or excavating dugouts on the farm, together with all equipment for same, should be chargeable as a current expense.
This is the last request of the Alberta Farmers' Union delegation,, and this request has not been granted.
When we study this budget from the point of view of the farmer we must conclude that it is a poor one, because it has not granted a single request of the fourteen which were submitted by the farmers; and this organization, by the way, is the largest farm organization in Alberta. Other farm organizations have placed before the government similar requests and they have not been granted. In other words, the requests of one-third of our total Canadian population have been ignored, and that is something that I feel the Minister of Finance should review, to see what can be done for this group of citizens who, as we all know, constitute the basic industry of this country. So much for income tax as far it affects the farmers.
When the Minister of Finance made his speech he placed several tables on Hansard and compared the proposed income tax on Canadians with that imposed on United States citizens. I happen to have run across an issue of World Report of May 27, 1947. This publication sets out a table giving a comparison between the taxes paid by Canadian citizens and those paid by Americans.
Let us take the tax paid by a married couple with two children. In Canada, under .the old system, the one still in existence, the taxpayer in the $2,000 income tax brackets, having a wife
and two children, pays $68, and under the new system, $36. In the United States, under the old system, the one that still operates, the taxpayer did not pay anything. Under the new system he will not pay anything.
Let us take next the $2,500 brackets. In Canada, under the old system, the taxpayer would pay S192, and under the new system, $130. In the United States, under the old system, he paid $95 and under the proposed system, $66.
We now come to the $5,000 class. In Canada, under the old system, the tax was $910, and under the new system, $630. In the United States, under the old system, it was $589 and under the new system. $471.
In the $10,000 brackets, in Canada it was $2,646 under the old and $1,930 under the new. In the United States it was $1,862 under the old and is $1,489 under the new.
I think that is sufficient to show that the United States taxpayer does not have to bear the burden which the Canadian taxpayer has to bear; and we all know that the earning power of Americans is greater than that of Canadians.
There are two other things to which I wish to refer. From groups of farmers in my constituency, I have received a number of resolutions and requests in regard to the increase in the price of binder twine. One of these resolutions reads in part as follows:
Members of the Alberta Farmers' Union, local No. 77, wish to draw your attention to the proposed increase in the price of binder twine. In view of the fact that all commodities purchased by farmers have increased tremendously and prices on farm products have been kept under rigid control, it is needless to say that the proposed increase in the price of binder twine would be acutely felt by the farmers, and would tend still further in upsetting the balance of economy in the agricultural industry.
We therefore request your assistance in making a firm stand against any such increase.
I feel that I am justified in placing this request before the government so that they may give it the proper consideration.
The other point I wish to mention is in regard to the refundable portion of the income tax which was collected by the government from Canadian citizens. As we all know, the refundable portion which was deducted in 1942 will be refunded some time after March 31, 1948. I have had several requests from persons all across this country-persons who find themselves in a difficult financial position and persons who have become sick-that their refundable portion be refunded to them on making application at this time. I discussed the matter with the Minister of National Revenue
347S
The Budget-Mr. MacKinnon

(Mr. McCann), and he prided himself on the fact that so far the government refused to refund this refundable portion to a single person, regardless of circumstances. Well, it may be a source of pride to the minister, but it seems to me that it is unreasonable. The government should appreciate the fact that these small wage-earners cooperated with the government throughout the years of the war. When these people find themselves in dire circumstances, if they can produce an affidavit or a medical certificate to show that their health has been impaired or that they cannot earn a living, it seems to me that we could make an exception and refund the entire amount that is due them. I know there are two exceptions. Persons who are sixty-five years of age or over may make application to the Minister of National Revenue and may get the refundable portion which is coming to them. The other exception is with regard to persons who die; they can get the money refunded, but they do not need it then. I should prefer to see the man who is living, and perhaps sick, get this money back so that he can recover. It is less important to pay out the money to whoever shares all his belongings after he is gone. Let us try to prolong the life of the living men. I know a man-he is not in my constituency; he happens to live in Edmonton-who requested that I do everything posible to get this refundable portion for him, because he has been in bed for weeks and weeks and has not a. cent to his name. So far the minister has refused to do anything about the matter. I just wish to remind the government and the ministers concerned about this matter and I would plead with the government to do something along this line. Surely we can make exceptions when conditions warrant a certain change.
I realize that the house is anxious to conclude this debate tonight and take the vote. Therefore I shall not take up any more time on this occasion, and I wish to thank the house for the kind attention it has given me.


James Angus MacKinnon: Mr. Speaker, on Thursday last the hon. member for Calgary West (Mr. Smith), in the concluding portion of his remarks while speaking in this debate, referred to the Canadian wheat board. I was in the house enjoying the speech of the hon. member and enjoying the nature of it and admiring my hon. friend's pleasant manner of speaking. That may be the excuse for my not following too closely just what was being said. However, over the week-end , I took occasion to glance over Hansard, as I sometimes do, and I read for the first time that portion of the hon. member's remarks dealing

with the Canadian wheat board. In fairness to him, as well as to me, to the department and the Canadian wheat board, I think I should refer to some of his remarks. He said, as reported at page 3341 of Hansard:
I come now to discuss something of a serious nature, namely the wheat board . . . First I want to say this. There has been no meeting of the agricultural committee of this house, I think since 1942. At no time in the history of the wheat board since 1936 have the audited accounts of that board ever been placed on the table of the House of Commons. I do not want to be misunderstood. I realize that, by statute and in fact, statements have been filed by the board itself, but no audited statements have ever been filed as such and were never filed before any public body in Canada until a few weeks ago when they were tabled in a senate committee.
Later on in his speech, the hon. member said:
This wheat board of ours cost, in 1939, in administrative and overhead expenses, $677,342; in 1942, $842,149; in 1945. $1,592,543. You will remember that this is all handling the same crop. I will admit they did take up some minor things like rape seed and a few incidentals which do not very much restrict or enlarge the picture.
Later, the hon. member dealt with a comparison of salaries, rentals and various other matters between the years 1939 and 1945, showing the difference in these figures in the total costs for each year. I think the hon. member will agree with me that to show a clear and proper comparison the cost should be based on the number of bushels handled in each crop year. However I shall deal with that in more detail later.
The hon. member went on to say:
In the period, from 1936, when it was instituted, to 1945, the end of the crop year of 1944, this board lost in its operations $112 million.
And he stated further:
We in this House of Commons endeavoured to have this matter referred to a committee where there might be an examination of the operation of this board, but we were refused that by the government. May I also say that both the groups to my left, if my memory serves me correctly, voted with the government.
This is a minor point. Although I believe I intimated in the house that the legislation should not, in my opinion, be referred to the committee on agriculture, I do not believe there was any vote on the matter. While there was an intimation from other parts of the house that the legislation should not be referred to the committee on agriculture, no one in any part of the house asked for a vote on that point. There was an overwhelming vote from all parts of the house, including the official opposition, in support of the legislation as introduced.

The Budget-Mr. MacKinnon
Then the hon. member for Calgary West states:
My second criticism is this: here we are paying in one year to a firm of auditors-
And so on. I know every hon. member, including the hon. member for Calgary West, would be anxious to be fair to any business firm which cannot speak for itself in the house. I think it is only fair to point out that this firm of auditors was first appointed in 1935, at the time of the establishment of the Canadian wheat board by the then Conservative government under the leadership of Mr. Bennett. I believe this is a capable firm of auditors, although I have no special knowledge about, them, except by reputation. They have continued down through the years since that time.
Toward the close of his remarks the hon. member said this:
I close, sir, by repeating that I am not making any sign of a charge of dishonesty against anybody. But I say that this business has now cost the taxpayer $100 million odd, aside from what it has cost the farmer.
I know the hon. member for Calgary West was not thinking of making any charge of dishonesty. I know he and many other hon. members know personally the personnel of the Canadian wheat board, know them well and know them favourably. And the last thing they would wish to do would be to cast any reflection upon the wheat board; nor do I think that any such reflection was in the mind of the hon. member for Calgary West.


Mr. SMITH (Calgary West):: I tried to make that clear.


James Angus MacKinnon: On more than one occasion during the course of his remarks the hon. member did say that, and that is why I read part of the context, to show that such was the hon. member's desire.
But there have been occasions when references have been made by hon. members, principally those of the official opposition, in regard to the general question of the accountability of the Canadian wheat board to parliament. I wish to show that the wheat board has fulfilled all its obligations in this regard. Annual reports have been submitted each year and have been tabled in the house by the responsible minister. In addition, the activities of the board have been the subject of examination by the committee on agriculture.
I wish to recall that I drew to the attention of the house on February 27 last the fact that-


Mr. DIEFENBAKER:: When were the
reports of the wheat board submitted to the committee on agriculture, and in what years?


James Angus MacKinnon: If the hon. member will wait a minute I shall be glad to give him that information.
I wish to recall that I drew to the attention of the house on February 27 last the fact that the reports and audited financial statements for the 1939-40, 1940-41, 1941-42. and 1942-43 crop years were given an exhaustive examination by the committee on agriculture and colonization in 1942, 1943 and 1944.


John George Diefenbaker: I do not wish to interrupt the minister unduly, but as a member of that committee may I say that in every ease we were denied information, as a result of votes in the committee.


James Angus MacKinnon: No doubt the hon. member will be answered in what I purpose saying before I take my seat.
The report of the committee on agriculture and colonization dealing with the 1939-40 and 1940-41 annual reports of the Canadian wheat board reads as follows:
The committee directed its attention to a review of the annual reports of the Canadian wheat board as referred to in the order of reference and matters arising therefrom. These reports contained detailed information as to the amount of wheat (actual and under future contracts) handled by the board and its operations in the marketing of same.
Your committee was impressed, during its inquiry with the capacity and ability of the members and officials of the Canadian wheat board and desires to record its opinion that the marketing of Canada's wheat is being carried out by them in an efficient and businesslike manner.
The annual report for the crop year 1941-42 was also referred to the committee on agriculture and colonization and became the subject of exhaustive examination.


John George Diefenbaker: The minister will admit that no minority reports are permitted.


James Angus MacKinnon: Mr. Speaker, I would appreciate it if the hon. member for Lake Centre would just let me finish. What I am submitting to the house is not being submitted in any acrimonious spirit. It is simply offered in reply to observations made in the house concerning which I do not want any misunderstanding. And I am sure the hon. member for Calgary West does not want them misunderstood, either.
Particular attention was given to orders in council which became effective during that
The Budget-Mr. MacKinnon

particular crop year. In its report, dated July 20, 1943, the committee on agriculture stated:
The committee commends the officers of the Canadian wheat board for the comprehensive, detailed and lucid manner of presenting reports and accounts.
In its report at that time the committee on agriculture and colonization made certain recommendations in regard to the Canadian wheat board and government policy in regard to the handling of grain.
The report of the Canadian wheat board for 1942-43 was submitted to the committee on agriculture and colonization in June and July, 1944. After studying wheat board operations, the committee reported on July 7, 1944. Among other points dealt with in the report of the committee were the following:
The committee again commends the officers of the Canadian wheat board for the comprehensive and lucid manner of presenting the reports and accounts. The committee was gratified to learn that four of the recommendations of last year's report concerning policy with respect to flaxseed. to the allocation of cars, and the referring of the annual report of the Canadian wheat board to a committee of the house, have been given effect.
Owing to the pressure of other parliamentary work, the standing committee on agriculture and colonization did not meet in either 1945 or 1946, and I personally have no recollection whatever of any request or suggestion in either of those years that there should be a meeting of that committee to deal with the report of the Canadian wheat board. As I stated the other day, it is the intention of the government to refer the more recent annual reports of the board to the committee on agriculture during this session. Members of the agriculture committee at that time who are now in this house will recall the thoroughness of those discussions; and if lion, members who were not members of the agriculture committee will read the various proceedings of that committee they will find that a most exhaustive analysis was made of wheat board operations. In the light of this, surely the criticism of wheat board operations up to July 1, 1943, made by the hon. member for Calgary West, is definitely not well taken.
As far as the wheat board was concerned,
I believe it was quite prepared to be examined on its later reports had an opportunity been provided through a meeting of the agriculture committee. As I stated during discussions in the house last February, the government is quite prepared to have the agriculture committee review all wheat board reports which have not been examined by this committee up to the present time.

Then the hon. member for Calgary West made certain comparisons between the cost of board operations in 1939-40 and certain subsequent years. Anyone who has closely followed the grain discussions in this house is aware of the vast expansion which took place in wheat board operations during the war. These enlarged activities have continued into the present crop year. It is quite natural that this increase in board operations should be accompanied by a positive increase in operation costs. Surely no one in this house expected the Canadian wheat board to undertake the responsibilities it carried in 1942-43 and 1944-45 at the same absolute cost figures as prevailed in the crop year 1939-40. I might state that in 1939-40 board operations consisted of the selling of wheat delivered to it

and at that time the grower could sell where he liked-from the 1939 crop and the disposing of stocks carried over from the 1938 crop. By way of comparison I would refer briefly to the 1944-45 report of the board, which sets forth clearly the board activities in regard to wheat, both western and eastern, and in regard to barley, oats, flaxseed, sunflower seed and rape seed; the administration of the drawback in respect of flour and other human foods containing wheat sold and delivered in Canada; the administration of price ceilings on whole wheat on behalf of the wartime prices and trade board, and the administration of equalization funds with respect to both oats and barley. This report also refers to the work of [DOT] the board in connection with crown wheat supplies and the provision of wheat to countries in receipt of mutual aid.
To complete the picture, reference must be made to the circumstances under which the wheat board operated. As members of the house know, during the first four years of the war this country accumulated a vast wartime reserve of wheat. Responsibility for the storage and financing of wheat largely rested with the board. Hon. members will recall that on July 31, 1943, the carryover of wheat in Canada in public storage and on farms amounted to nearly 600 million bushels. The amount of wheat carried in storage facilities in this country exceeded our entire pre-war storage capacity. From August 1, 1943, this great accumulation of Canadian wheat started to move abroad and was almost completely disposed of, along with deliveries from succeeding crops, by July 31, 1946. The distribution of these stocks of Canadian wheat over a period of three years, in accordance with the food strategy of the final years of the war and in accordance with the urgent requirements of a hungry world since the war, represent a tremendous admin-

The Budget-Mr. MacKinnon
istrative problem for the board. During these same years our board has been engaged in making very large payments to producers from surpluses accumulated by the board in the crop years 1940-41, 1941-42, 1942-43 and 1943-44, and the adjustment payment in respect of the 1945 crop. These are the circumstances under which the board has operated since the early part of the war, and these are the circumstances which fully justify an enlargement in board operating costs.
In regard to the operating costs of the board, I believe the hon. member for Calgary-West should have related the figures he quoted to the bushels of grain handled by the board. Had he done so, I am sure he would have drawn other conclusions. The administrative costs of the board on the wheat handled for producers remain today approximately what they were in 1939. a small fraction of a cent a bushel, in fact less than one-quarter cent a bushel, despite the added administrative load. I do not propose to deal with specific cost figures. As I have stated, ample opportunity will be given for the discussion of items of this kind in the agriculture committee during the present session of parliament. Participation payments available to the producers have amounted to $138,081,969.41 since 1940, of which $127,794,718.34 has been paid out and a balance of approximately $10,287,251.07 remains to be claimed by producers who are entitled to it.


Arthur Leroy Smith: That is up to what date, which crop year?


James Angus MacKinnon: That is up to the end of the 1943 crop year. It should be made clear that these payments are additional to all payments received by producers at the time of delivery of their grain to country elevators; that is, the initial payment. Moreover, the board has on hand over $60,000,000 for distribution as final payment on the 1944 crop year. Distribution of this money will
commence this summer, and when this payment is made the total participation payment distribution will have amounted to over $200,000,000.
The largest wheat board deficit, of $60,000,000-actually it is within a few dollars of $61.000.000-resulted from the marketing of the 1938 crop, when the board purchased wheat from producers at eighty cents a bushel. I wish to interject that this loss would, of course, have been much greater had the government acceded to requests from many parts of this house for a higher price for wheat. This initial price was approved by parliament, which was fully aware that a deficit might result from establishing a fixed initial price as high as eighty cents a bushel. At that time the government had1 in mind that western Canada had gone through a prolonged drought and a prolonged depression, and I am very glad indeed that we had in Canada an instrument through which a measure of stability could be placed behind the western economy when very low prices were prevailing in the markets of the world. The same basic position prevailed in 19391940, when a further deficit of some $9,000,000 was incurred by the board.
I should like to submit to the house a table showing the total amounts paid to producers, the cheques cashed in each crop year and the balance outstanding for each crop year on the crops from 1940 to 1944. The table is short, and I would appreciate it if the house would permit me to have it inserted in Hansard.


Mr. DEPUTY SPEAKER:: Has the hon. member unanimous consent?


Some hon. MEMBERS:: Agreed.


Mr. ROWE:: Is 1944 the last year for which the minister has accounts?


James Angus MacKinnon: Yes. The table is as follows:
The Canadian Wheat Board
Payments to Producers to April 30, 1947
1940	wheat crop	
1941	wheat crop	
1942	wheat crop	
1943	wheat crop	
1945 wheat crop-10 cents adjustment payment.
1942	oats and barley crop	
1943	crop oats	
1944	crop barley	
1944 Ontario wheat	
Total amounts payable to producers $ 26,081,800 16 15,305,476 69 19,692,770 12 36,725,167 12 23.543.840 58 1,570,750 97 8,867,004 74 6,106,932 94 188,226 09
Cheques cashed to April 30,1947 * 25,751,563 50 15,096,749 02 19,505,680 01 31,219,595 92 19.578.863 26 1,564,938 55 8,834,031 12 6,058,607 21 184,689 75
Balance payable, April 30,1947 $	330.236 66
208.727 67 187.090 11 5,505.571 20 3,964,977 32 5,812 42 32,973 62 48.325 73 3,536 34

The Budget-Mr. MacKinnon

From an operating point of view, I would point out that members of the Canadian wheat board have been drawn from the private grain trade and the pool organizations. The government has been fortunate in securing, as members of the Canadian wheat board, men with a wide and practical experience in the marketing of wheat. I believe that this has been an important factor in the efficient operations of the Canadian wheat board over a long period of years. Since I have been Minister of Trade and Commerce, and have come in close contact with the operations of the board, there have been several changes in its personnel but I think that all during those years the quality of service given by the board has been exceedingly high. We have lost men from the board from various causes, men who gave tremendously of all they had to the work of the board and then had to retire. We have had a recent loss in the person of Mr. Huntting who left the board some time ago. All these men have given great service. I should like to give the house a remark that was made to me by Mr. Huntting when he told me that he intended resigning from the board within a matter of a few weeks. He said that he intended taking a rest for a few months and then possibly entering into private practice. He told me that the people of Canada would lose the services of the type of men we have been able to get to serve Canada on the wheat board unless we took into greater account the actual monetary returns that should be made to them for their services. I think every one of these men could leave the government service and get from 50 to 100 per cent more for their services elsewhere. From my own personal knowledge I know that to be a fact, and it is for that reason I have taken this opportunity to express my high appreciation of the work of the members of the Canadian wheat board.


Arthur Leroy Smith: If the minister will permit one question, he does not dispute, does he, a single figure I gave?


James Angus MacKinnon: If the hon. member will follow what I have said he will note that there is a very great difference in our statements.


Arthur Leroy Smith: But the minister does not dispute a single figure that I gave, does he?


James Angus MacKinnon: Oh, yes, I do.


Arthur Leroy Smith: Which one?


James Angus MacKinnon: What I have said speaks for itself, and clearly shows the difference.


Mr. G. H. CASTLEDEN (Yorkton):: Mr. Speaker, my speech will be somewhat shortened by what has been said this afternoon by the hon. member for Vegreville (Mr. Hlynka). I want to congratulate him and his compatriot in our group, the hon. member for Dauphin (Mr. Zaplitny) upon their contributions to this house. They are a credit to themselves and an evidence of the real greatness of the Canadian people.
The 1947 budget was presented to us as one granting great relief to the income taxpayers of Canada. But reviewing the budget in its entirety and analysing its figures, I find that the greatest relief has not been in the income tax field at all but in the granting of exemptions from the excess profits tax as af December 31, 1947. It has been evident to the Canadian people and to us here for many, many months that monopoly enterprise as we know it in Canada has been putting pressure on this government to give it relief from the excess profits tax, along with its demands for the removal of price controls. Price controls were removed during the first few months of this year in spite of the tremendous increase in company profits which were being made in almost every field of Canadian industry. Attention has already been drawn to the tremendous increase that has taken place in company profits for 1946 in most of the industrial firms in Canada, and with the removal of price controls we shall find that these prices will rise abnormally. What justification the government had for removing price controls when profits were climbing as they were is best known to them. But the Canadian people are alert and are watching these things.


Mr. MAY  HEW@: Then the hon, member's prediction of gloom and despair is really a bogey. He actually expects prosperity?


George Hugh Castleden: I shall come to the point which the hon. member raises if he will listen.


Mr. GIBSON (Comox-Alberni):: You will be disappointed if we have prosperity.


George Hugh Castleden: The final surrender has been that this government, on top of taking price controls off, now permits the removal at the end of 1947 of the taxation of excess profits. It should be remembered that the excess profits tax was imposed as a check on profits arising out of war business. It will be remembered that this government passed a special order in council setting aside the legislation passed in 1939 which limited profits on war contracts to five per cent, when these industrial firms refused to make badly needed

The Budget-Mr. Castleden
war goods so long as that act remained in operation. The excess profits tax was a tax on above normal profits arising out of war conditions. We maintain that the present situation, under which these companies are still making excess profits, arises out of conditions which are a direct result of the war; namely, there is an abnormal purchasing power in the hands of Canadian people as a result of war savings, gratuities and so forth, and, in addition, the ordinary peacetime requirements of the Canadian people in food, clothing and other goods were not available to them during the war. There has been this long period of security of goods, linked with a long period of pre-war scarcity of purchasing power, so that today the demand for goods was never greater.
In view of those conditions the checks of price control should have been maintained. If they are to be removed the least we could expect was that the government would continue to tax excess or abnormal profits. But price ceilings are being removed and the companies can now charge on most commodities all that the traffic will bear. The scarcity of goods and the purchasing power in the hands of the people in the form of war savings and war gratuities provide an effective market, and for a few months the industrialists of this country will enjoy greater profits. They are going on a profit spree today. We are opening the floodgates to an inflationary period which, I fear, will bring its consequences, and unfortunately, while the industrialists and those who are making these profits are having their spree today, all the Canadian people will suffer and suffer deeply in what will happen afterwards. Higher prices mean higher costs of living, and higher costs of production. The agriculturalist is not able to keep up, and the falling wages mean lower standards of living. All the benefits of the prevention of inflation are going to be lost to the Canadian people.


Mr. MITCHELL:: The hon. member talks about falling wages. Would he give an example?


George Hugh Castleden: I am talking about the natural fall in wages which will come as soon as the purchasing power of the Canadian people has been used up. With increased cost of living, savings will be taken away; people will not be able to purchase commodities at high prices and commodities will not be there.


Humphrey Mitchell: That is emotional
economics.


George Hugh Castleden: It is one of the minister's balanced economies, speaking in a large w:ay. The Canadian people have been left to
the uncontrolled and unrestrained profiteering of those who control many of the necessities of life, and essential commodities, such as food, clothing and shelter. The government in power has finally yielded to the pressure put on by those who are engaged in the distribution of Canada's necessities at the expense of the great mass of the people. I maintain that the results will not be felt for a year or two, but they are inevitable. There will be first a greater concentration of wealth in the hands of a few; second, a rapid depletion of the purchasing power in the hands of the Canadian people-


An hon. MEMBER:: You hope.


George Hugh Castleden: -and a period of excess profits. When this is over and Canadians can no longer purchase, production will be reduced; wages will fall and lay-offs in industrial plants will then be common. To prevent these results, controls should be maintained, and, above all, excess profits should be taxed.


An hon. MEMBER:: You want to see a depression.


George Hugh Castleden: I do not want to see a depression; I want to prevent it. The removing of controls and the allowing of an increase in profits, and then on top of that taking off the taxation on excess profits are two steps which make for an ultimate depression. The fight of the government of the country during the wrar to control inflation was an example to the world. The Canadian people benefited tremendously from the measure of control to which they subjected themselves, and they did so in most cases with very fine grace.
Great credit is due to the previous minister of finance for the way in which he dealt with those people, who came asking for special privileges and the right to increase prices. This saved the Canadian people from years of inflation. We were the envy of countries outside of Canada; we were looked upon as an example, but today that is gone.


Mr. RINFRET:: We still are.


George Hugh Castleden: With prices going the way they are today, with costs soaring, with no limitation on them?


An hon. MEMBER:: Not so high.


George Hugh Castleden: I hear hon. members to my right mumbling. They have complained that price control and rationing were killing the initiative of Canadian industrialists. Well, today they are really enjoying a very high profit era, according to all the financial reports
The Budget-Mr. Castleden

received today. The Canadian industrialist is now being given his freedom and initiative to clean up for himself. The government is apparently giving him a free rein. The present uncontrolled monopolistic enterprise system is dying throughout the world except in the United States and Canada. I doubt very much whether it could withstand another depression.
I now wish to compare the treatment which the government has given to these privileged industrialists by the removal of the excess profits tax, with the treatment which has been given to another group of people at the opposite end of the economic picture, people who seldom reach the income tax level. 1 want to place before the house the treatment that these people are receiving under the income tax regulations, and particularly in western Canada.
The farmers of Canada, like most Canadians, did not object to paying just and equitable taxes. That particular injustice with which I wish to deal has not affected all the farmers across Canada, because the present injustice arises out of particular government regulations and restrictions which were placed upon these farmers in western Canada during the years 1942 and 1943. In those years the wheat farmers and wheat growers were, by very necessity, singled out by special regulations by this government.
Back in 1945 the Canadian Federation of Agriculture presented to the special senate committee on taxation a brief in which they protested against the inadequate and inequitable application of present income tax regulations to farmers, because those people who framed the present income tax regulations had apparently intended them for general business operations, and had failed to take into consideration the unique position in which the Canadian farmer found himself.
It is interesting to note that the present Minister of Finance (Mr. Abbott) in his budget speech intimated that the act was being revised. So far as the particular grievance which I wish to present is concerned, I fear that the revision will come too late. The damage has already been done and the injustice has been perpetrated; but I would urge the minister to have the act revised as quickly as possible. I would suggest also that in the name of what is proper, decent and right, steps should be taken immediately to right an injustice, which I am going to place before the house this afternoon. I think it is so glaring an injustice that it will arouse any fair-minded person who is familiar with its operation.
Two changes have been made in the farm income tax regulation, one which allowed the farmer who has a loss in any one year to charge that loss against the next year's operation. It was a rather useless piece of patchwork, because when a farmer gets into the position where he has an absolute loss in any one year, assessing him for income tax in the next year is not much of a relief.
The next amendment, which allowed the farmer to average his income over a period of five years, was the first real improvement, but it was apparently implemented by experts who were in touch with the situation, and it very nicely missed the most important year to the western grain farmer, namely, that of 1944. It has come too late to prevent grave injustice.
The complaint which I wish to present to the house-and I have mentioned it on several previous occasions-occurred in 1944. The Canadian people will remember that during 1942 and 1943, because of lack of shipping facilities and the war situation generally and the shortage of storage space and cars, the Canadian government found it necessary to place a quota against farmers delivering their grain. The government requested them, in an effort to assist in winning the war, to store their grain on the farm ready for the hungry people of the world and the armies in the field as soon as they could take it out. Again in 1943 a quota was placed against the farmer and he was requested to keep his grain on the farm. This the farmers did willingly. In some cases the quota was raised. It was as high as eleven bushels; but many of the farmers were compelled to take their production of those two years and store it on the farm at their own expense.


Robert Wellington Mayhew: Which was very profitable.


George Hugh Castleden: I shall show the hon. member in a moment how profitable it was. They did not even ask the government to pay them something on production for that year. In 1944 the farmer was asked to deliver his grain, since the starving people of the world and the armies needed it to help bring victory. In the spring of 1944 the farmers hauled in their grain as rapidly as possible, only to find in 1945 their patriotism rewarded by having all their surplus grain production which they had stored in 1942 and 1943, and delivered in 1944, raise them into the income tax group. The officials came along and took all that production and placed it in one year and charged against them all the moneys they had received in the one year. No appeal from the treatment of the taxation branch has been successful. Some years later the farmer, who never even suspected that he would be placed

The Budget-Mr. Castleden
in the income tax group, is called into town by the income tax inspectors and asked for the permit books. The books are checked and the income is assessed for that year. Let me give some examples of actual cases that came to my notice.
A. This farmer in 1942 had an income of $950. The grain was still on the farm. His expenses were $1,100. He had a loss of $150 in storing the grain on the farm.


An hon. MEMBER:: How much grain
had he ?


George Hugh Castleden: There were several hundred bushels. In 1943 he had an income of $1,657 and his expenses amounted to 11,376, or a profit of $2S1. The grain is still on the farm, but he has not the cash income. Now we come to 1944. They ask him to deliver the grain and he hauls it out. In 1944 his total income was $4,764, and his expenses for that year amounted to $1,579, so that he had a profit of $3,185. On that he is taxed $380.


Humphrey Mitchell: Was that not spread over the three years?


George Hugh Castleden: No, it was not, and that is the very point. In 1945 his income was $2,155 and his expenses were $1,237. He had a profit of $918.
This is the important point. His annual net profit over that period of four years was less than $1,100, or below the income tax level fixed by the Canadian people for a married man. '


An hon. MEMBER:: Would it be plus his living?


George Hugh Castleden: His living for himself and his family is chargeable. He has to mark that in his returns as so much produce taken from the farm.


An hon. MEMBER:: Why did he not show that he had so many bushels in stock? He should have shown that he had so many bushels.


George Hugh Castleden: He was not liable for income tax because these fellows never paid income tax. Even in 1945 he was not told by the income tax inspectors of that time that it was possible for him to go on the accrual basis. I will give the figures and the information he has to fill out, in order to indicate his difficulties. As I say, this man's annual income over that four-year period was some $1,100, which is less than the amount the government fixes as taxable minimum.


Humphrey Mitchell: That is not a fair
statement.


George Hugh Castleden: You are not taxed on any income less than $1,200 for a married man. This man was under the impression that he was doing a patriotic service by building granaries at his own expense and storing grain when the government could not take it. If he had been allowed to deliver his grain he would not have been taxable. He would have been in the same position as any other farmer in Canada. But because he is a western farmer growing grain trying to fulfil the regulations of the government he is forced into that position. He was not informed in 1944 of what would be done. He did not find out until 1945. Such people did not earn enough money in any year to make them liable for tax. Government regulations forced this man into tax levels by compelling him to withhold sale. He could not believe that he would be taxed for carrying out the government's instructions. He was willing to suffer a loss in 1942 of $150 and live on a miserable profit of $281 in 1943. His appeals to the taxation division in Regina were, however, unavailing. He was charged a five per cent penalty for late filing, and eight per cent interest was charged against his arrears for the period during which he had not paid. He received the following letter from the income tax division under date of March 5, 1946:
Re: 1944 income tax assessment-$416.67
It would appear that your income tax assessment is in arrears as noted above, notice of which was recently forwarded to you. Will you please make arrangements for settlement immediately as interest at the rate of 8 per cent per annum is accruing.
This is not an isolated case but one that can be repeated in every village, town and hamlet in my part of the country, where the income tax officials have suddenly swooped down on the district and called the farmers in.


An hon. MEMBER :: It is not only in the west.


George Hugh Castleden: I can give the figures for the east. Let me take now case B. This man in 1942 was not assessable; in 1943 he was not assessable; in 1944 his assessment was $298 and his tax was $56.
Let us take case C in the same town. In 1942 he was not assessable, nor was he assessable in 1943, but they got the permit books and checked deliveries in 1944 of grain grown and all the work done in 1942 and 1943. In 1944 he delivered 2,397 bushels of wheat, most of which was delivered during the months of January to June and therefore could not have been grown in 1944. This amount was taxed
The Budget-\lr. Castleden

$187.95 for that year on grain which he stored for the government and the people of Canada. As one farmer wrote to me:
They taxed me for two years' work and for storing my grain for them. I do not mind paying what is right but surely not this. If they think I will work and slave 16 to 18 hours a day and keep this grain for the government and then pay it over to the income tax, when they compel me to put all three years' production into the one year, they are badly mistaken. I will quit farming as soon as I can.
It is little wonder, then, that among the income taxpayers on the farm, the grain growers in western Canada, for the year 1945-46, Saskatchewan farmers paid more farm income tax than all the farmers of Ontario and Alberta put together, and that the grain growers of Manitoba were in many cases caught almost as badly.
If this is an example of justice as handed down by the present government it is little wonder that these fanners protest against it. The undeniable fact is that grave injustices were perpetrated under the present farm tax regulations. The Minister of Finance in his budget speech promised some action in the rewriting of the income tax act, which would indicate that he and his colleagues are aware that these wrongs and injustices exist.
The instances which I have given of injustices as applying to the grain farmers of the west are one explanation of the remarkable fact that in 1945-46 Saskatchewan farmers paid, for the 1944 income year, the sum of $2,587,632 in income tax, while Manitoba was caught similarly, whereas only 280 Quebec farmers were assessed and the total amount of their payments was $59,913.


An hon. MEMBER:: Diversified farming.


George Hugh Castleden: Yes, but they were allowed to deliver their produce. In this case, however, the government prohibited the farmers, by its regulations, from delivering their produce. What would your farmers say if there were regulations that prohibited them from delivering for a period of three years and then lumping it all in one and charging income tax on it? Yet that- is what is being done here, and in the whole of the maritime provinces only 318 farmers were assessed for income tax, their total payments amounting to $82,588.
I should like to review the kind of forms which the farmer has to fill out, Along with the regular information given in the special form, he has to give his income, gross wages, and net income from professional fees, net profit from farm or ranch, net income from rentals and income from interest, dividends and so on, and total income, subtracting donations to charitable organizations, medical [DOT]Mr. Castleden.]
expenses and so on. Then under section 13 there is a tax on item 12-K, found in the tax tables on pages 3 or 4, less a 4 per cent reduction of item A as per the 1945 statutes. Then there is C, tax after subtracting B from A, and
D,	less applicable portion, if any, of British and foreign income tax paid. Then there is
E,	tax after subtracting D from C, then there is the provision with regard to family allowance, under section 17, and so on.
What I am trying to point out is that the complicated income tax form is far beyond 'the comprehension and ability of an ordinary person to gather together the information and do all the arithmetical work and accounting necessary. On top of this, the farmers have to include the special T-l supplemental in which they give their farm receipts for the calendar year, showing their production from crops, grain; live stock, meats, et cetera; dairy products; fruits and vegetables; miscellaneous sales such as maple syrup and sugar; patronage dividends; produce raised on farm and consumed in the farm home. This is for garden produce, I suppose.


Mr. LESAGE:: That is right.


George Hugh Castleden: The government do not tax a person 'living anywhere else on that. I think it is absolutely ridiculous. Then farmers must show farm expenses; purchases of seed, purchases of live stock, cost of repairs and maintenance; general farm expenses; taxes on farm; interest paid; wages paid. The trouble is that very few farmers have the time to be accountants. What is required is a simplified form of farm accounting-


Joseph Arthur Lesage: Have you a sound proposition?


George Hugh Castleden: -where farmers can write down in a simple way what their produce is, what their income is for each member. The farmer is taxed as an individual for the income of the whole family. His wife and family all go together. The work of five or six is all lumped together and placed on the one man. That is not right. The form of the income tax forms put out by the government is unjust if you apply this type of thing to the average farmer.
The recent reduction in hog production in western Canada, which again this year shows a reduction, amounting to some thirty-seven per cent, can be traced to a large extent to the injustices which farmers feel with regard to their treatment under the farm income tax regulations.
Farm organizations have requested and suggested to this government, in view of the

The Budget-Mr. Castleden
peculiar nature of the set-up of farm industry, the violent fluctuations in income and the uncertainty of return for the work, that higher exemption be granted for every farmer for production in poultry, hogs and dairy products. If they would grant an exemption of $500 for the farmer in that type of thing, it would go a long way to relieve the feeling of injustice under which he is suffering.


Joseph Arthur Lesage: The form would be more complicated.


George Hugh Castleden: I think the form would be simplified, and it must be simplified. Exemption for farm income should be raised. There is not just the one man concerned. It is the man and his whole family. The Canadian Federation of Agriculture, in their 1947 annual convention, passed a resolution asking that the government increase the exemption to $2,400, if they are to maintain this type of return to be handed in by the farmer.
I realize that there are great difficulties in connection with this problem, by its very nature. The farmer does not keep records. If he had done so, and realized his actual position, I am afraid we should have had very few farmers left on the farms of western Canada to produce wheat. I think the same is pretty well true of farmers across the whole of the dominion. Those who have done that essential work need proper recognition, not discrimination and this kind of thing. I urgently request the government to implement immediately some change which will rectify this gross injustice which was done to the farmers in 1944.
I understand, Mr. Speaker, that the matter of Canadian immigration is before a committee of this house and that one is not allowed to discuss the subject at this time. If I had the opportunity, I would voice a protest for the people of my constituency against the present regulations. I will, however, refer to what our sister dominion, Australia, has done. Although less favourably situated, she is doing a great job in providing the people of Australia with an immigration policy. I believe arrangements were made for that country to take in some fifty thousand orphans from Europe. The Canadian people know what Canada can do, and the excuse that we have not the shipping is just not good enough. The Australian government have undertaken a programme of converting their shipping into passenger boats to bring immigrants to that countiy, and their programme calls for some seventy thousand a year. Canada and this government achieved great things in the war. What we did in the way of the British empire air training plan,
our conversion in industry, in synthetic rubber production and the atomic bomb reveals what the Canadian people can do. The record is just too good for this government to turn around and say, "Oh, we can't do anything about it; we haven't the shipping." If the Canadian people and the Canadian government wanted the shipping, they could have it.
In closing, I should like to make a national plea for the government of this country and the Canadian people as a whole to realize what is happening and put a stop to what I will call the rapid Americanization of this Canada of ours. For years there has been a gradual draining off of Canada's wealth- our resources, human and material-to the great and wealthy nation to the south of us. United States capital is developing and controlling our natural resources such as pulp, minerals, oil and water power. Recent purchases, according to financial news, reveals the gradual passing of financial control of Canadian industry into the hands of United States capital. Wall Street is moving into Canada. During the war, control of a large block of Canada's water power was handed over to the subsidiary of a world aluminum combine. The Imperial Oil Company was granted by the federal government the sole right of exploration for oil and a large tract of oil-producing territory in the Mackenzie river basin. Holiinger interests have recently obtained the right to the development of what appears to be one of the greatest mineral resources in the northeastern part of Quebec and Labrador. Just a few days ago this house passed a bill to grant them the right and privilege of constructing a railway from the St. Lawrence river up into that area.
What is wrong with Canada? What prevents Canadian capital from developing Canada's resources for the benefit and welfare of the Canadian people? If Canada is to play her great part in interpreting the old world to the new and the new world to the old, we must make Canada here a land which will provide for our Canadian youth as a land of greatest opportunity for them, and a land which will attract the best from other countries. "Canada for the Canadians", might in many respects again become a slogan for the Canadian people if it is to prevent itself from becoming dependent upon a rich uncle to the south. We should be looking forward to the development of our own birthright, to making ourselves a growing nation, willing and capable of asserting herself as one of the united nations making her contribution to a world of peace.
The Budget-Mr. Picard

It would appear at the present time that some such spirit as this is necessary if we are not to be absorbed entirely by our rich and powerful neighbour to the south. We have been greatly enriched by the diversity of our population, each group making its own contribution through its wealth of culture and ability. It is now the duty of the Canadian people to show that their unity creates a strength which can illustrate to the world that the peoples of the world can work and unite, and by cooperating can make a contribution to a world of peace.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Mr. L. PHILIPPE PICARD (Belle-chasse):: The Budget-Mr. Picard

ant question of education. A country like ours needs more and more educated and well-informed citizens. The greatness of a country depends on the value of its citizens, and t'he service of the citizens to the community is influenced in no small degree by the extent of their knowledge. It is true that, under our present constitutional set-up, education is a provincial responsibility and prerogative, but this does in no way exempt the government of the country from contributing its share to the betterment of education in any way it can, or rather in any way in which the provinces will allow it to do so.
One of the best ways, it seems to me, would be to encourage parents to keep their children in school and college and, if gifted, send them to a university. We have seen by some figures given to us that the average income of wage-earners and of all gainfully occupied people is not so high as to enable all to enjoy a high standard of living, far less to enable many to divert a large part of their earnings to the higher education of their children.
There are two ways we could adopt to help remedy this situation. One would be to extend the age for family allowances in the case of children pursuing their studies past sixteen. That would be just a token of encouragement but it might help a little.
Another way would be to extend the special exemption of income tax to a higher age for children pursuing their studies. This, I know, has been advocated by others, but I have always felt so keenly about the charges that have to be borne by parents who understand the importance of giving their childen the best possible educational equipment with which to go through life that I feel I must join with other voices which have been raised in this matter.
There is another question I should like to mention in regard to the assessment of taxes on the farmers. I will admit that a very small number fall in the category of income tax payers, but in the case of those who do I have noticed an anomaly which may be peculiar to our part of the country but which at all events deserves our attention. Cases have happened of farmers who, when getting more prosperous, have been subject to income tax, and I think the assessment has been made without taking some most important elements into consideration. This has to do mainly with salaries to farmers' sons and other members of the family. Our Quebec farms are operated most of the time as a family concern. The children work on the farm from the moment they can and no salary above their bed and board is paid to them. They

contribute to the community and get no wages, but when they reach the age for marrying their father takes out of his accumulated capital, whether it is all in land or partly in cash, the value which he considers equal to his son's share in the prosperity of the family, and he gives him part of the land he has acquired during his life, or he gives him cash to buy a farm. This is a form of what I might call delayed salary. When the income tax assessors try to compute the actual income of that farmer over a number of years they do not accept that system and, in order to arrive at the income, they establish the capital and in it include the son's share as the father's gain. I think decent salaries should be allowed to farmers' sons in such income tax assessments. Whether they are paid monthly, yearly, or in a lump sum after a number of years should not be material. I commend this to the attention of the minister because I know personally of such cases and, this being a practice much followed in rural Quebec, it may be that others will have to suffer if the attitude of the department is not changed in this regard.
Now that I have advocated the reduction of taxes, I would not be following the regular pattern if I did not advocate some expenditures. I notice that it is a general practice on all sides of the house to complain about taxes and the next moment to put in a claim for public expenditures. I shall not impose on the house a list of the public works that would be needed in my constituency, but I should like nevertheless to submit to the government that consideration should be given at an early day to a programme of public works or capital expenditures in the country.
Wharves need to be rebuilt; public buildings are badly needed in many parts of the country; irrigation projects and other improvements are necessary. The time will quickly come, according to many economists, when men will again be looking for employment instead of jobs looking for men. The closing of war industries has been partly compensated for in some parts of the country by the reconversion to peacetime production, but in many parts of the country such readaptation has gone on more slowly and I cannot but feel that it is high time to start elaborate plans for a programme of public works, to be ready when the needs arise.
In conclusion, Mr. Speaker, I may say that the budget now under consideration is a source of satisfaction and relief to a large part of the population. Owing to our actions of the past, it cannot be lightened much more, and we realize that the taxpayers of Canada are paying for what they wanted during the

The Budget-Mr. Bracken
war and for what they wanted in the way of social security for the period of peace. I think the cut in the sources of revenue is in the right direction, with the qualification I have made with regard to the excess profits tax.
Much has been said of our system of government in relation to others and of the necessity to fight for its preservation. I personally think it is better because it respects the individuals and their liberties, but let us not forget that our aim should not stop at respect for the freedom of the individual but should also include the improvement of his standard of living and his freedom from want. The time has come for the drafting of a far-reaching Liberal programme if we want our system to justify itself.
I believe it is right that the Liberal party in Canada should be the one to put it into effect. I believe that such a programme could easily be worked out under the system of improving the fate of the masses, while at the same time permitting a fair but reasonable return to those who, having worked and gained, are willing to risk their oftentimes hard-earned money in new commercial and industrial ventures.
Let us not get too panicky in our fears of communism. The best way to vindicate our present system is to work hard and plan well for the future. Some people consider our present form of capitalism as a permanent institution and fear the world will regress if it disappears. The same things were said when the French revolution gave a death-blow to monarchial systems throughout the world.
No system of government has yet proven itself perfect. I am quite satisfied that the present one with improvements is best suited for our country, but I am convinced that the world will experience many philosophies of government before it succeeds to give to all its inhabitants a fair and enjoyable life on this planet.
The government of the world has been in constant evolution and up to now it has never gone backwards for a very long period of time; its march has been onward. A proportionately larger number of people live well today than in the previous centuries, and I am confident that this will continue improving with the years and that Canada will rise to its opportunities and make for itself an ever larger place among the nations of the world.


Mr. JOHN BRACKEN (Leader of the Opposition):: It is not my expectation to speak at any length tonight. The debate has already continued for a considerable period and practically every aspect of the subjects dealt with has been referred to. Before the debate concludes, however, I wish to make some 83166-223i
observations on certain questions that are before the house and the country and then to state the position we propose to take with respect to the main motion and the two amendments made to it.
The motion by the Minister of Finance (Mr. Abbott) is, in effect, a motion of approval of the government's budget. The amendment moved by the hon. member for Muskoka-Ontario (Mr. Macdonnell), and the subamendment moved by the hon. member for Rosetown-Biggar (Mr. Coldwell) are criticisms of that budget. It is these questions that we are now called to vote upon. I may say at the outset that when the subamendment comes up, which will be the first upon which a vote will be taken, we in this party will support these criticisms; and when the main amendment comes to be voted upon, we shall, of course, support it too. We shall support both of these amendments for the reason that the tax reductions are both inadequate and inequitable.
What are the issues upon which we are asked to vote tonight? I want to deal first with the main issues in the budget itself and then with the points raised by the two amendments. The government's tax proposals do two things: first, they perpetuate a tax burden 300 per cent greater than in any peacetime year. That is the main fact which we must not lose sight of in this debate. And they do one other thing. They reduce taxation by only seven per cent for this current year and by only twelve per cent for the year which follows. Those are basic facts in the government's budget position.
With respect to the amendments, they touch upon five points. They express regret that the budget provides no relief from indirect and hidden taxes; that the government offers no encouragement for the development of certain natural resources, such as agriculture and mining; that the government has failed to reconvene the dominion-provincial conference; that it has failed to raise the levels of income tax exemptions; and that it has failed to provide relief for the most needy half of the population of Canada. The question before us is, are these statements facts; are they correct, or are they not? To the extent that they are true the government deserves our censure.
I wish to ask first, is the statement of the government's fiscal position correct, namely, that the tax burden is 300 per cent greater than it wras in the highest taxation period prior to the war? And is it correct to say that there has been only a seven per cent reduction in this fiscal year and only a twelve per cent reduction for the next year in the present
The Budget-Mr. Bracken

budget? The facts are, from the government's own records, that the largest tax per year prior to the war was, in round figures, $550 million in 1939. The proposals in the present budget are in the neighbourhood of $2,200 million, or 'our times as much, or 300 per cent more than in that 1939 fiscal period.
The government's tax proposals this year, as I read the minister's address, are a reduction of S160 million this year and $265 million next vear, which, on the basis of the last year's budget, is a reduction of seven per cent for this year and twelve per cent for next year. We take the position that that degree of taxation is too high, and that those taxation reduction proposals are too little.
I want now to examine the statements of criticism as outlined in the two amendments, taking them in order, (a), (b), (c), (d) and (e). Does the budget provide relief from indirect and hidden taxes? The answer is no. No one in the house will dispute that answer. The reductions are confined almost wholly to the income tax. That part of the dominion's revenues collected from regressive taxes, the hidden and indirect taxes which bear heavily upon the poor, is not reduced in any way. That was the first criticism in the amendment moved by the hon. member for Muskoka-Ontario, a criticism which was expressed in different words in paragraph (e) of the amendment moved by the hon. member for Rose-town-Biggar. As I said, regressive taxes are taxes which bear unduly upon the poor; and these taxes provide practically half of the revenues of the Canadian budget. There has been no reduction in those taxes. The consequence is that the poorest section of the nation receives no relief by this budget, even at a time when the cost of living is going up -it is said to have gone up three per cent in the last four months-and even at a time when the government has taken off subsidies amounting, in the total, to $200 million.
With respect to the second criticism in the main amendment, does this government offer any encouragement to the development of our natural resources, particularly the resources of agriculture and mining? We maintain they do not. The policies of the Minister of Agriculture (Mr. Gardiner) have the whole country baffled. I wonder if the Prime Minister (Mr. Mackenzie King) himself knows what the Minister of Agriculture is up to. The Minister of Agriculture has the government handle all the wheat and sell it at prices that force the farmer into growing coarse grains; then the government seizes the coarse grains and
disposes of them in Canada at prices that encourage the production of bacon; then it finds that it cannot fill its bacon contracts with the old country and calls upon the taxpayers of Canada to put up, as some estimate, twenty-five per cent by way of bonus for every hog that Britain buys.
These are basic things in the government's agricultural policy. Our agricultural and mining policies are the two sections of our economy which should, if properly managed, help us with the solution of both our internal and external problems.
You may ask, how is the government failing the farming industry? It practically denies the farmer the dollar market in the United States. It practically shuts us out, and even outside the dollar market it makes the farmers sell at prices lower than those received by their competitors in the British market. It makes our contracts in Canadian dollars and then does nothing to protect the value and integrity of the Canadian dollar. It asks us to sell our products to Britain and other countries on time, at prices lower than other countries are demanding and getting. We are denied the market across the line where we could get higher prices and obtain United States dollars for which our economy is crying out so loudly.
In point of fact, the government's bilateral trade policies are imperilling our own exchange situation on this continent. It is selling huge amounts of our agricultural produce overseas at less than world prices and buying from the United States much more in the way of commodities than we sell to them. In the crop year 1949-50, all that the farmer is certain of is the Canadian dollar, and he has no idea what it will buy. In recent weeks the price of butter has increased ten cents, and 8^ cents of the increase is the withdrawn subsidy. The government gives with one hand and takes away with the other. There is no relief in the budget except for those who are reasonably well off. That is the basic criticism from the humane point of view.
With respect to mining, I will take only a moment to deal with that. It has been discussed fully by others. The government admits its own failure. Its action in revaluing the dollar on July 5 deprived Canadian gold producers of $3.50 for every ounce of gold sold to the United States. The government got panicky about holding the price line and our dollar situation has been going from bad to worse.
If these observations with respect to agriculture and mining are not accepted at their face value, I would refer to but one statement in a government document published

The Budget-Mr. Bracken
by the bureau of statistics. It is entitled "Canadian Constitutional Data". I will read only a portion of one paragraph. It has to do with the question of developing our own resources and whether we are doing enough in that direction. The statement is as follows:
Canada is one of the last countries to have her frontiers pushed back, and this process has not yet reached its limit, nor have the natural resources on much of the land been explored, exploited or harnessed.
This is from a government document published only within the last few weeks.
I come now to the third criticism in the main amendment. Has this government failed to reconvene the dominion-provincial conference? One has only to ask that question to answer it. A few months ago the government came forward with a programme in connection with dominion-provincial relations, and among other things it proposed a policy of social security, health insurance and public investment or public works-the purpose of which was partly to help head off depression. The combined policy was variously estimated to cost the different taxing jurisdictions in the country, S400 million or $500 million, or $600 million a year, when completed. This cost added to our present budget makes a total budget approximating ninety per cent of the highest wartime taxation we ever had.
What has happened? The government says, in effect, "We can only proceed with that policy if a large proportion"-it is a little vague about it-"of the provinces agree". Seven have agreed and two have not. The government now says it cannot proceed with that policy without having the assurance presumably of more provinces than have agreed, and yet the government does not call a conference. As a result, those policies which the government says are good, which it says it can only proceed with after some more general agreement, it now lets fall by the wayside because it fails to provide the opportunity for that more general agreement; and so those policies of social security and health insurance and public investment remain up in the air. Nothing is done. That is one of the criticisms in the amendment.
I come now to the first of the two criticisms in the subamendment. Has the government failed to raise the exemption levels in the income tax? Again one has only to ask the question to answer it. It has not. The question now is whether it should or should not have done so. The simple fact is that the government today is taxing people who are receiving less income than will maintain a decent
standard of living for many families in this country. If the government considers it is good policy to tax people who are already not getting enough income to pay their way, then the government's policy can be understood; but if it is bad policy to do that, then the government should be censured for its failure in this year's budget to give them relief.
The final criticism in the sub-amendment raises this question. Has the government failed to provide relief for the most needy half of the population? At page 2554 of Hansard the Minister of Finance said:
The exemption levels established last year are high enough to exempt completely from tax more than half the people earning incomes in Canada.
Mr. Speaker, on the statement of the minister half of the Canadian people have received no benefit from this budget-no relief whatever-at a time, as I said a moment ago, when their costs of living are going up and when this government has taken off the subsidies which formerly helped keep the costs of living down. If it is wise to give no relief to the most needy section of the Canadian population, then the policy of this budget is understandable. But if it is unwise to continue to ask the poor to bear an unfair share of the burden of taxation, then, as I said a moment ago, the government should be censured.
So much for the basic facts in the minister's motion and for the five criticisms outlined in the two amendments. I now wish to touch upon three or four other questions which have to do with us here and wdth our economy as well. The first is the question of foreign exchange control. Our United States dollar situation has been referred to several times in this debate. It was never so serious as it is now. As the hon. member for York South (Mr. Cockeram) pointed out, the report tabled in this house the day before the budget was brought down does not fully reveal the current situation. If the year that this report covers-1946-were divided into three-month periods our deficits and commodity trade with the United States would be shown as $93 million, $120 million, $126 million and $158 million-a steadily worsening situation. When it is stated in that manner, it means much more than when an average of those four figures is taken.
By contrast, we sold to Britain over S597 million worth of goods; and we were able to take from Britain, or Britain was able to supply to us only $201 million worth of goods. Yet Britain has taken up approximately
The Budget-Mr. Bracken

half of our one and a quarter billion dollar loan. On a per capita basis we are lending Britain more than four times as much as the United States did. We supported that policy, but what use will it be either to Britain or to ourselves if we assume a load which will crush us down? We may thus become more of a hindrance than a help to Britain. Last year we made her turn over to us $150 million worth of gold, three-quarters as much as she sent us in goods. It is clear from the minister's statement that the government has no present solution for the unbalanced United States dollar situation. All it can do is hope and pray that something will happen in the United States, though that something may be a recession which will do us harm.
This so-called dollar situation which, in other words, simply means the trade position, has always been a Canadian problem; as I said, it is particularly acute now. The facts behind it are these. On July 5 last our government became unduly apprehensive about United States prices and decided that they must do something to make it easier for Canadians to buy United States goods. The result is twofold. They have made it relatively too easy to buy from the United States, and relatively too difficult to sell to the United States. We maintain in Canada a price ceiling which they do not maintain in the United States. As long as we have this price ceiling there will be a gap between the amount of money coming to the counter and the amount of things on the counter. That surplus money for which there are not goods to spend it on in Canada drives purchasers to the United States to buy goods there. The remedy is one which has been referred to often in this house and elsewhere; it is increased Canadian production.
We have made bilateral deals which make it difficult for us to obtain United States dollars for our farm products. There are other considerations involved, I know. Nevertheless that is one of our great difficulties. Our present United States trade situation as it developed from July 5 is a perfect example of how controls work. One control makes another control necessary. The government decided to maintain a price ceiling, and therefore had to revalue our dollar so as to lessen the cost of United States imports. Now it finds adverse trade balances running against us more acutely month by month.
With respect to international trade generally, some of our policies are blocking, not promoting, the Geneva programme of multilateral trade and the lessening of restrictions against trade. The government talks multilateral agreements, but certain of its policies
cut across those of the whole international trade organization. We were given to understand that this government did not like the empire trade agreements. But now, as the Secretary of State for External Affairs (Mr. St. Laurent) says, the government regards the empire preferences as something quite precious. If the other countries at Geneva know as little about this government's trade policy as the government itself apparently knows, they surely must see through a glass dimly.
I now wish to refer briefly to one of the special commodities in connection with trade, and because it has been discussed so often and so fully in this house I shall be very brief. I refer to the subject of wheat. In my opinion, the British wheat agreement killed the London wheat conference, a conference which was called to try to get an international agreement with respect to wheat prices, wheat quotas and so on-a conference which failed. As I said, in my judgment the Canadian-British wheat agreement killed that conference. Why would Britain agree to a $1.80 price ceiling? She had already established a ceiling of $1.55 in the agreement made with this government a year or two ago. By contrast, her idea of a floor price was somewhere around $1; and that idea of a $1 floor price was also sold to Britain by Canada. Is it any wonder that Britain and some others objected when certain of the nations wanted a higher level than a $1 floor and a higher level than $1.55 as a maximum price? It was difficulties such as those which caused the break-down of that conference which had such great possibilities.
I now wish to add a word about the situation in Europe which, over many decades, has been the chief market for our surplus products. The United States is talking about facing the problem in realistic terms. They talk about getting back to lend-lease, as contrasted with loans. Mr. Acheson, then secretary of state, renewed pleas that congress provide $17 billion in post-war lend-lease. General Marshall has also spoken along similar lines. The United States is thinking in terms of big things, as we expect her to do. That must be done to reestablish Europe and restore a workable peace. But the United States is not tying one hand behind its back as it plans to undertake the job.
What are we doing? If it is good policy to help Great Britain or other parts of Europe by turning over our wheat at $1 less than the world price, it is the United States which should be doing it, and not us. But the reverse is the case. We cannot afford to continue to do it indefinitely. Yet we embargo the sale

The Budget-Mr. Bracken
of our farm products to the United States. If our farm products or a larger portion of them were sold to that country they would collect United States dollars, now so badly needed here, and they would, in addition, bring a larger measure of equity to our agricultural industry. As a matter of fact, if our farm products were allowed the benefit of world market prices, our United States dollar difficulty would be considerably lessened.
I come now to my final point, namely the menace of communism in Canada. The British and the United States governments are beginning to understand that a policy built on weakness, instability and appeasement, in dealing with Soviet Russia, is as futile, and as ineffective, as the same policy proved to be against the Hitler and Mussolini gangs.
Too many people have forgotten that it was the bolsheviks who set the precedent for the modern totalitarian leaders. Hitler and Mussolini were diligent students of bolshevik tactics, and now that these pretenders have been destroyed, we find, in state after state of Europe, the very shoes they walked in are being filled by agents of the soviet power centred in Moscow.
The nazis, and the bolsheviks are alike in that they are guided by only one political principle in seizing power. That principle is that the end sought justifies any means. They have the one-party system with its special privileged role in public life. They give the secret police a paramount position in the state. They organize and affiliate with similar parties abroad, and employ these parties for their own global and strategic purposes to fight democratic governments everywhere.
They assist their fellow travellers with public funds, and they give them the protection of their own diplomatic services. They direct them to attain their ends by sabotage and espionage. They employ the same technique in imprisoning political opponents and putting them to death by administrative decree; they have the same ideas about concentration camps, and the same primitive instincts that led them to inflict punishment on the families of their political exiles. They have the same methods of propaganda.
We have had in this country a partial expose of Moscow-directed espionage activities in our own public service. I did not agree with all of the government's methods, but I refrained from public criticism on the theory that the devil must be fought with fire. My only regret now is that the government did not act sooner; that it did not act more effectively, and that it is not now following through.
What is happening on our labour front? That is the part of our economy in which we should have the most concern at the present time. We have all heard of the Pat Sullivan exposures with respect to the Canadian Seamen's Union. I turn to the May 31 issue of Liberty, in which a well-known Ottawa correspondent deals with this subject under the startling caption, "Could the Reds Cripple Canadian Industry?" The author says, among other things:
If the communist party could bring simultaneous pressure in the vital spots where its influence is great, it could cause industrial chaos in wide areas of Canada.
And he says that on the available evidence the communists could now play havoc in the coal mines and fisheries of Canada, in our logging camps, in lake and coastal shipping, in great electrical manufacturing companies, and possibly in the automobile industry as well.
He maintains that in every one of these individual industries there have already been communistic red strikes. He points to the Sydney coal mines, to the maritime fisheries, British Columbia and Ontario logging camps, the Montreal and Toronto fur industry, the Ontario electrical factories, the Windsor automobile plants and Pat Sullivan's Seamen's Union which I have already mentioned.
This is a startling report going out from the capital city of this country, and written by a responsible member of the press gallery. Either these statements are true, or they are not. If they are true, the government should do something to correct t'he situation. If they are true, as many believe they are, the government should be ashamed of its own indecision in so important a matter.
We know now how these communistic organizations work. Every youth movement, every practical organization to improve the economy and social status of individual workers -all these the communists use, or try to use, for purposes that are not Canadian.
We know how difficult it is for some workers to resist them. We are promised during this session legislation covering a labour relations code. If this parliament cannot provide machinery so that Canadian organized labour can protect itself against communist activities, there is something sadly lacking somewhere. This parliament should see to it that Canadian labour unions, and Canadian cooperatives are not used by Moscow agents to become the stalking horses of the Soviet Union's imperial designs.
We in Canada are now no longer isolated from world affairs. We are now on the main highway over which this issue is likely to be
27ie Budget-Mr. Bracken

fought, if it is fought. Let us then address ourselves to the problem of mopping up communistic activities in Canada. There are many governments of many countries today hanging in the balance. They do not know which way to move. If they give the democratic process a chance they fear the great democracies will not back them up. This is one of the great hours for decision in our history and in the world's history. Canada should be prepared to make its decision, and let the whole world know what its decision is.
All dictatorships are alike to us. I believe that the second world war could have been prevented if the nations of the British commonwealth and the United States had let the dictators know in time that if they continued their aggressive ways they would have a fight on their hands.
What is mainly needed now is to let the communists know, in a frank but nevertheless friendly way, that, so far as we are concerned, they are entitled to their own type of economy, as long as they desire it, but that we have no use for their underground activities in this country, and that we propose to send their agents back home wherever we can root them out.
Let me now summarize briefly what I said in the earlier part of my remarks. With respect to the budget, it is dishonest in so far as it claims a real surplus. It has taken money secured from the sale of capital assets and counted it as current revenue, in order to say that it had a balanced budget. The surplus is said to be greater than any in Canadian history, greater than all surpluses put together. It well might be, because no other government in Canada had the assets arising from the expenditure of 810,000 million of the money of the Canadian taxpayers to sell, and then to apply the proceeds to the current revenues of the country.
The budget is also unsound in so far as it continues regressive taxation at its present height, thus levying an undue tax burden upon the poor. And it is misleading in so far as it leaves the impression that all is well in Canada. The government's policies are making us sell on credit at low prices in markets where much of the debt will not be repaid, and denying us the right to sell in a market where we can get higher prices in cash which we must have if we are not to run the risk of bankruptcy.
In regard to the government's motion asking us to approve a budget 300 per cent higher the third year after the war is over than in any previous peacetime budget, and giving us reductions of only seven per cent in the total tax for this year and twelve 
per cent for next year. On this matter our position is that the taxes in the budget are too high and that the tax reductions are too little.
With respect to the five criticisms in the amendments to which I have referred, the truth is simply and clearly stated in each of them. There has been no reduction in the regressive taxes, in the indirect, hidden taxes. There has been no stimulation of the development of our great primary industries of agriculture and mining upon which our internal and external problems so largely depend for solution. There has been no resumption of the dominion-provincial conference, which the government says it must have before it can carry out its own policies. Yet it neither carries out those policies nor calls a conference. It is afraid to meet the huge costs those policies involve and afraid to admit that it is afraid to face them. It is afraid to say it is going to add now or in the near future four or five or six hundred million dollars to the tax burden of this country. And so it does nothing. The budget does not increase the level of tax exemptions. It thereby imposes a tax upon people receiving incomes less than the amount necessary for a decent standard of living. Nor does it provide any relief for that half of the Canadian people who are below the level of income tax exemptions, and very little relief for large numbers of those above that level. The Minister of Finance spoke about a fifty-four per cent reduction in taxation at some of the lower income levels. But he did not emphasize that this fifty-four per cent reduction might mean only $6 a year in some cases, S10 a year in other cases, and $12 in others. So more than half the people of this country get' no relief at a time when their costs are going up and when added costs are put upon them through the action of the government in taking away its own subsidies.
In these circumstances, we in this party feel we have no choice but to support both the amendment and the subamendment to the budget motion.


Douglas Charles Abbott: Mr. Speaker, it was just four weeks ago tonight that I had the honour of presenting to the house the government's financial proposals for the coming year. Since that time we have heard many speeches, most of them very good; and as usual in a budget debate they covered a wide variety of topics.
I do not propose to detain the house for more than a moment or two. In listening to those speeches-and I listened attentively to almost all of them-it seemed to me that

The Budget-Mr. Abbott
hon. gentlemen opposite were hard put to find any effective criticism of the budget proposals themselves. Such criticism as they made I think I shall be able to deal with when we are in the resolution stage, and rather than detain the house in the taking of the vote that is what I propose to do.
I cannot, however, allow the vote to be taken, without expressing my deep appreciation for the many generous personal references to myself which came from all sides of the house. Hon. gentlemen opposite confined their expressions of appreciation to the form rather than to the substance of what I had to say, but I attribute that fact to the natural and inevitable inclination of oppositions to show a singular lack of judgment with respect to proposals made by the government side of the house. Therefore I feel that I can take genuine satisfaction in the remarks they made with respect to myself personally as to the form. But with respect to hon. gentlemen on this side who praised the substance as well, I think they showed better judgment than hon. gentlemen opposite; and from what I have read in the press of the country, editorial comment and otherwise, I think their remarks reflect the judgment of the country as well.
However, I conclude these brief remarks by expressing my genuine appreciation of the very kind references which have been made from all sides of the house as to the manner of presentation, if not the substance.


Mr. BRIDGES:: I was paired with the hon. member for Edmonton East (Mr. Ashby).
Had I voted), I would have voted against the amendment to the amendment.


William Ross Macdonald: I was paired with the hon. member for London (Mr. Manross). Had I voted. I would have voted against the amendment to the amendment.


Mr. HARRIS (Grey-Bruce):: I was paired. Had I voted, I would have voted against the amendment to the amendment.


Mr. MARQUIS:: I was paired with the hon. member for Charlevoix-Saguenay (Mr. Dorion). Had I voted), I would have voted against the amendment, to the amendment.


Mr. ISNOR:: I was paired with the hon. member for Colchester-Hants (Mr. Stanfield). Had I voted, I would have voted against the amendment to the amendment.


Mr. McCUBBIN:: I was paired Had I voted, I would have voted against the amendment to the amendment.


Mr. McLURE:: I was paired with the hon. member for Beauce (Mr. Dionne). Had I voted, I would have voted for the amendment to the amendment.


Mr. LENNARD:: I was paired with the hon. member for Westmorland (Mr. Emmer-son). Had I voted, I would have voted for the amendment to the amendment.


Mr. WYLIE:: I was paired with the hon.
member for Shefford (Mr. Boivin). Had I voted, I would have voted for the amendment to the amendment.


Mr. RODNEY ADAMSON (York West):: Mr. Speaker, when I spoke previously I made the suggestion that the parity move had been brought about by pressure put upon this government. This was denied by the then minister of finance, the present Minister of Justice (Mr. Ilsley). We must accept his statement as an hon. member of this house, but we cannot accept-


Mr. SPEAKER:: Order. I would ask hon. members to moderate their voices. It is mpossible to hear what is being said by the aon. member who has the floor.


Agar Rodney Adamson: Thank you, Mr. Speaker.
We cannot accept all that he said, in that the supposition was absurd. There are certain inescapable facts which I must bring before the house at the present time. The first question into which we must examine is this: Would the United States government have interfered-


James Horace King: Order. I would ask hon. members not to speak so loud. To hon. members who are speaking behind the curtain, I would appeal and ask them to carry' on their conversations in the lobby.


Agar Rodney Adamson: Thank you, Mr. Speaker.
We must examine other actions of the government about that time, and it is germane to the subject to look at what the United States government did with regard to the extremely ticklish question of Palestine at the time. The United States government did interfere, and it interfered definitely and considerably, in that a statement was made last year at about the same time to the effect that, on the suggestion and request of the United States government, it was proposed that 100,000 Jews be admitted immediately into Palestine.
At that time the question of Palestine was one of the most ticklish in the entire international sphere. Therefore it is obvious that if the United States government would have interfered in that, they would have interfered in other matters. For the record I wish to quote two paragraphs from Keesing at page 8198:
In London, where President Truman's message caused much embarrassment and irritation, a government spokesman stated that on receiving the text of the message Mr. Attlee had immediately sent a request to the President to delay the issue of the statement until Mr. Bevin could be consulted and a further telegram sent to Washington explaining the British point of view, but that President Truman had replied that he was unable to comply with Mr. Attlee's request.
"The British government," said the spokesman, "has been working hard to bring the Jews and Arabs together. It is not correct that the discussions have been broken off. Consultations with the Jews are actually in progress at this moment. It is, in the British government's view, most unfortunate that a statement of this kind should have been made. It may well jeopardize the settlement of this difficult problem."
That is significant, because the statement of the President had been given to the British government before it was published. The British government protested that it should not be made, and the LTnited States government. went ahead and published the statement. The significant thing there is that the machinery used by Washington was to inform the

The Budget-Mr. Adamson
British government secretly of what it proposed to do before it did it. I wish to quote one more paragraph from the same authority, at page 8198:
It was felt in London and openly admitted in America that President Truman's message had been prompted by purely internal political considerations in view- of the forthcoming elections in New York state, with its important Jewish vote, and to anticipate a statement on the Palestine question by Governor Dewey on behalf of the Republican party.
I bring that up because it is important, for it shows that the United States government were prepared-that is the history of it-to interfere, and they were prepared to and, in fact, did interfere for political purposes, in the internal affairs of other states.
The second question that we must examine is this: Could the United States government have made the suggested proposition concerning parity? It is obviously impossible that the United States government could have made it now- with a hostile senate, a Republican controlled house and Republican controlled senate. But at that time the Democratic party was in control of both the senate and the house, and with an election year coming up, it is quite simple to understand that the administration could have put pressure on the members of its own party in both the house and the senate to assist this legislation, on a quid pro quo basis.
I wish to mention some of the statements made by Democratic members of the United States senate with regard to the British loan. These were made prior to the beginning of July. The first quotation I wish to use is from a radio speech by Senator Johnson of Colorado, on February 16, 1946:
The British loan is not to provide relief for starving people. It is to provide relief for a decadent empire. My slogan is: Billions for the relief of starving children but not one cent of American taxpayers' money for the relief of empires.
That is a Democratic senator. The next authority I have is Senator Wheeler, who was at that time chairman of the interstate commerce committee, one of the senior committees in the whole United States senate. He had this to say in a radio speech on February 16, 1946:
If we have $4 billion more to give away, let us turn our attention to the United States, where we have some very difficult problems. We have millions of veterans coming back. They are going to make large demands upon the country. We have slums all over the United States where the money could be used profitably for the public good.
That is an important Democratic senator.


Gordon Benjamin Isnor: He changed his opinion later.
83166-224J


Agar Rodney Adamson: He did not change. Some of them did. but Senator Wheeler did not.


Gordon Benjamin Isnor: He did.


Agar Rodney Adamson: He did, eventually. I now quote Senator McFarland of Arizona. I have the quotations here, and I shall be pleased to give them to Hansard, with the date and page of the Congressional Record. Senator McFarland had this to say, at page 4586 of the Congressional Record:
What I do want to address myself to is the proposition that our government should not enter into an agreement for a tremendous loan to a foreign power except on a sound business basis, w-hich cannot be done without first having reached some agreement and understanding with that power regarding an existing unpaid obligation. What I am contending for is simply plain common-sense business principles.
Then I quote Senator Richard B. Russell. And I may say that all these are Democratic senators and supporters of the administration. Senator Russell of Georgia had this to say, at page 4591 of the Congressional Record:
I referred, Mr. President, to the fact that future generations of Americans would be paying for the more than $40 billion of lend-lease supplied to our allies in this war. The same future generations, yet unborn, will be contributing taxes to defray the $4 billion British loan which is proposed by the pending joint resolution.
I think it is interesting to note that Senator Russell was one of those who changed their opinions and supported the resolution. Then w-e have Senator Johnston of South Carolina, who says this, at page 4333 of the Congressional Record:
I cannot even call this proposal a loan. It is, instead, the most munificent gift in history, and from the most heavily indebted nation in the world to a nation that will continue to be, as she always has been, unappreciative, unreliable, and totally without conscience in dealing with us.
That was a Democratic senator, a supporter of the administration. Then w-e come to Senator Allen J. Ellender of Louisiana, and his statement has a great deal of charm in it, which I am sure the house will appreciate. It is found at page 4187 of the Congressional Record:
So, in order to give the British the dominant position which they occupied in the past as was described by the distinguished senator from Utah, it will be necessary to keep on pouring money into London, just like pouring money into a rat hole, and expecting it to reach the rats. I simply cannot see it otherwise.
Then, of course, we get a statement from Bilbo. I w-ould not mention Bilbo because I do not think it is important, but he opposed
The Budget-Mr. Adamson

it, and I will just quote a line or two of what he said, as found at page 4160 of the Congressional Record:
Shall we grant this gift-loan to Britain? No, no, a thousand times no.
I have other quotations from the house of representatives which I shall not use, but there was a feeling which cannot be considered as anything but one of extreme hostility expressed by the Democratic party, with a Democratic President to a Democratic piece of legislation. These were only the people who spoke, but there were many others who opposed it. When a joint resolution was introduced into the senate, after all these condemnatory statements, the committee on banking and currency submitted the following report, and the date here is important. This is an extract from the Congressional Record, July 8, 1946, pages 8401-2, which was the beginning of the debate. Here is the Democratic party committee supporting the British loan, and it does so in these words:
The committee on banking and currency, to whom was referred the joint resolution (S. J. Res. 138) to implement further the purposes of the Bretton Woods Agreements Act by authorizing the Secretary of the Treasury to carry out an agreement with the United Kingdom, and for other purposes, having considered the same, report favourably thereon without amendment and recommend that the joint resolution do pass.
On the 4th of July we get condemnation from the Democratic party themselves, entirely outside the Republican party, and bitter denunciation of the bill. On July 8 we get a unanimous resolution from the Democratic committee on banking and currency, recommending that the loan do pass. What caused the change of policy?
Then we come to the next point we must observe. Was it to the advantage of Canada for the United States to pass the loan? We have just had' it pointed out tonight that we lent to the United Kingdom four times as much per capita as did the United States. Had the loan not passed, we in Canada and our entire economy would have been in serious jeopardy. We are in difficulty now. We do not see our way clear. We are in great fiscal difficulties with regard to exchange. But had this three and three quarter millions of hard currency not been available, nothing we could have done would have supported the United Kingdom or allowed the United Kingdom to have even a slim chance of recovery. I do not have to say to you, Mr. Speaker, or to the house, that unless we do have recovery in the United Kingdom, this country and1, in fact, the world will suffer a serious dislocation not only of trade, but of all peaceful commerce throughout the entire world. I say that with regard to the United Kingdom.

The next question we must ask ourselves is this: Was it to the advantage of the United States to have the Canadian dollar at par? I think the answer must again be yes.


Mr. ILSLEY:: Is the hon. member arguing that pressure was brought on Canada by the United States to revalue the dollar, or that the matter was discussed with the United States government? Does he argue that?


Agar Rodney Adamson: No, I am glad the minister asked that. I am not disputing the minister's word, at all. He was the responsible minister at the time. A little later on, I propose to bring out a few more reasons. The reason for parity was external pressure brought on this government. The minister has said it was not, and I accept his statement. But I do not accept that suggestion on the assumption that the supposition I stated was, in his words, absurd.


James Lorimer Ilsley: I repeat it. It was both absurd and naive. As a matter of fact, I debated some time before I decided which adjective I would use.


Agar Rodney Adamson: All right; I am merely making my statement, and I shall leave it to the house to decide.
Let us consider our trade with South America, one part of the world in which we were in competition with the United States. We look at United States exports to Latin America for the year 1946, based on the third quarter of United States trade, and which reached the large sum of 82 billion in exports and .81,777 million in imports. With Canada the United States exports were $1,555 million and the imports were S940 million. Trade with Asia, which was largely on a credit basis, was valued at 81,250 million, with imports valued at 8860 million. With England the exports are valued at 8740 million and the imports at $150 million.
That trade with South America and the Canadian trade with South America had increased in many instances as much as thirty-times over the pre-war figures. That was the point where Canadian trade was definitely in competition ' with United States trade, and the advantage that the dollar at a discount gave us was obviously of considerable value.
I have mentioned dates. The OP A lapsed on June 30; parity on July 6; the joint resolution was introduced on July 8 and passed on July 13-passed despite all adverse criticism, and with the united endorsation of the democratic committee on banking and commerce.
We are now asked to look at the government's case. First of all, I want to mention

The Budget-Mr. Adamson
one or two things parity has done to Canada. This very day we see the stringent restrictions on ownership of United States currency, scaled down to S10. The drain on United States currency in Canada must obviously be terrific, or the government would not have taken this emergency step. When 1 spoke on May 14 I suggested that there were three possibilities. They could reimpose restrictions; they could put up a tariff; they could devaluate. There was no other way, once this step had been taken, of preventing the drain on our currency.
The first step has already been taken; restrictions are being reimposed. The parity move has cost the country untold hundreds of millions of dollars. The first cost was the loss of S160 million in exchange. Equities in the stock market have decreased in the order of S200 million. Risk capital has all but dried up, and the production of vitally needed monetary gold is seriously restricted.
Those are the results. Why was this move made? We are asked by the government to believe that the move was made to protect the Canadian dollar against the inflation they suspected in the United States. If you have a suspected currency and you are worried about its worth, in order to protect your own currency do you tie your currency to the one that is suspected? I think that is most extraordinary. It is the same as the case of a man who, we believe, has smallpox. We are not sure, but we think that is the ailment from which he suffers. What we are going to do is that we are going to handcuff ourselves to him, get into bed with him, eat with his knife and fork and clean our teeth with his tooth brush. Is that the way to isolate ourselves from a contagious disease? Is tving our dollar to the United States dollar likely to isolate our Canadian dollar against the contagion of expected inflation? Could there not be some other reason?
The other reason advocated by the finance department was this, that we were frightened of the impact of panic United States money on the Canadian economy. We were frightened of loose United States funds coming into Canada putting up our price structure. There was one very simple way to overcome that. That was adopted, namely the procedure of putting on export embargoes in respect of certain foodstuffs. It was done at Windsor and at other border points where Americans came over and bought Canadian foodstuffs. There was a serious meat shortage at the time, and they were restricted in the amount
of meat and other foodstuffs they could export from Canada. It was a very simple thing which was done.
The second point is that theoretically they were frightened of United States panic dollars, United States currency coming into Canada and pushing up the price structure. That is inflation. But once you had secured your basic foodstuffs and your commodities, which was done, I suggest that a few hundred million dollars-if there were that much money of which the government was frightened- of United States funds coming into this country woidd be pretty useful to have in Canada at this time.
I suggest, Mr. Speaker, that the reasons given by the government need further explanation. The results are becoming cumulatively more serious. The minister says those were the reasons for putting the dollar at parity. I accept his word; but I do say that the case for parity, as put forward by the government, needs more explanation than has been given thus far.


Walter Edward Harris: I was paired. Had I voted, I would have voted against the amendment.


Hedley Francis Gregory Bridges: I was paired with the hon. member for Edmonton East (Mr. Ashby). Had I voted, I would have voted against the amendment.


William Ross Macdonald: I was paired with the hon. member for London (Mr. Manross). Had I voted, I would have voted against the amendment.


Eugène Marquis: I was paired with the hon. member for Charlevoix-Saguenay (Mr. Dorion). Had I voted, I would have voted against the amendment.


Winfield Chester Scott McLure: I was paired with the hon. member for Beauce (Mr. Dionne). Had I voted, I would have voted for the amendment.


Frank Exton Lennard: I was paired with the
hon. member for Westmorland (Mr. Emmer-son). Had I voted, I would have voted for the amendment.


William Duncan McKay Wylie: I was paired with the hon. member for S'hefford (Mr. Boivin). Had I voted, I would have voted for the amendment.
Motion (Mr. Abbott) agreed to on division.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Macdonald (Brantford City) in the chair.

[Stage Direction]
Resolved, that it is expedient to amend the Special War Revenue Act and to provide:-
1.	That the tax in respect of transportation tickets or rights of transportation
(a)	be removed in respect of transportation by vessel or aircraft extending outside of the northern part of the western hemisphere, except in respect of any part of such transportation that is between any port or station in Canada or the United States and any other port or station in Canada or the United States; and
(b)	be extended to apply in respect of all transportation by vessel wholly within the northern part of the western hemisphere;
and that the second proviso to subsection 1 of section 32, under which section the tax is imposed, be repealed.
Mr. FRASER:: Will the minister give us an explanation of this change?	.


Douglas Charles Abbott: The purpose of the proposed amendment to the transportation tax is to bring the competitive position of Canadian companies into line with that of United States companies. Generally speaking, the amendment will exempt foreign travel under tickets purchased in Canada. The chief effect of the change, from the point of view of the Canadian tax, is to exempt transatlantic and transpacific air travel. Previously, air tickets from Canada to the United Kingdom have

Special War Revenue Act
been subject to tax. In future, no tax will apply on direct travel from a point in Canada to points in the United Kingdom. The tax will still be payable on tickets purchased in Canada for travel in and over the United States, just as tickets purchased in the United .States for travel to points in Canada will be taxable.


Gordon Knapman Fraser: This is the only place that I can see where I can bring up the question in regard to the luxury tax.


Douglas Charles Abbott: I am afraid it would not be relevant to discuss luxury taxes under this resolution relating to the transportation tax.


Gordon Knapman Fraser: This is the Special War Revenue Act, is it not?


Douglas Charles Abbott: Yes, but this is a resolution on which will be founded a specific amendment to the war revenue act. The hon. member may have an opportunity to discuss the luxury tax on the second reading of the bill to amend the Special War Revenue Act, but under the rules of the house he cannot do so in connection with this resolution.


William Ross Macdonald: Under standing order 58 (2), all discussions in committee must be strictly relevant to the clause under consideration. At present we are considering clause 1, that the Special War Revenue Act be amended as indicated. It deals wholly with transportation, and I would ask hon. members to confine their remarks to the clause.


Gordon Knapman Fraser: Then I take it that it will be all right to bring the matter up on the second reading of the bill to amend the Special War Revenue Act?


Douglas Charles Abbott: My hon. friend will be perfectly free to say anything about the luxury tax when I move the second reading of the bill to amend the Special War Revenue Act.


Mr. COCKERAM:: Last year, during the budget debate, I brought up the question of taxation on air transportation to remote areas in Canada, and I have taken up the matter with the minister on several occasions. This is a very unfair tax on workmen working in the bush and mining districts, in that they have to pay fifteen per cent on air travel where there are no other means of communication. Take the district of Pickle Crow. The fare is $35 and the tax is approximately $6. For the same distance by rail, the tax would be seventy cents. I think it is very unfair that men working in remote areas should be called upon to pay a tax which, under normal conditions, if railways or bus lines were available, would amount to seventy cents, as against $6. I would ask the minister to consider the removal of this unjust imposition. This tax alone makes it difficult for mines operating in the Yellowknife, where the fare is $200 and there is a $30 tax, to get men into the area so that they can earn their living. It is time the tax was removed.


Douglas Charles Abbott: I gave consideration to the point which my hon. friend raised, as he said, and decided that I could not recommend this year the complete exemption of this transportation tax for that type of travel, but I am advised that, under the act as it stands, by a ruling of the Department of National Revenue, unscheduled trips pay only one cent per passenger mile, which is very much less, I am told, than the fifteen per cent tax.


Mr. HOMUTH:: What is meant by
unscheduled trips?


Douglas Charles Abbott: Where there is no regular route with a regular tariff, I am advised.


An hon. MEMBER:: And no time table.


Alan Cockeram: In those mining districts such as Red Lake, Pickle Crow, Yellowknife and San Antonio these are scheduled trips, and therefore these men going in there to earn their living must pay a fifteen per cent tax on air transportation, which is many times what they would pay on ordinary transportation, and it makes it very hard to get men to work in those areas.


Karl Kenneth Homuth: I might add to what the hon. member has said. It was my privilege a year ago last winter to go into Red Lake on several occasions. At that time the Ontario government was trying to lay out the road to Red Lake, and it was difficult for them to get people into that district, difficult because once they get in there, it is hard for them to get out again owing to cost of transportation. They had to fly in and out. Now the Ontario government is building a highway in there which will make it a little easier. There is a community that,	once	they	can	get	housesbuilt, will be a	city	of fifteen	or	twentythousand in a short time. In fact, if they had houses today Red Lake would be a city of 20,000 people. It is difficult to get labour there to develop these mines, which would bring extra revenue to the country' and extra income tax. We should develop our gold resources, but people simply cannot afford to go in and out as they would like, and have their families, because	there	are	no	accommodations there	for	them	to	take their
families in. In such cases some special consideration should be given them.
Special War Revenue Act


Douglas Charles Abbott: The point has been discussed with me and the officials of the department, and a number of hon. members who are familiar with conditions in the mining districts have also brought it up. After very careful consideration, I came to the conclusion that this year I could not exempt that particular class of travel within Canada from the fifteen per cent tax which applies to all air travel, with the exception of unscheduled trips where the special rate applies.


Mr. JACKMAN:: The committee is entitled to know the minister's reasons. He has the same opinion as he has held for some time, and I should like to know why, where there is no alternative means of mechanical transportation, this tax must apply. The hardships in these various regions, as has been pointed out, are rigorous, and everything should be done to encourage the development of these outlying territories, which are so rich in natural resources. Will the minister tell the committee his reasons? May I ask, further, where one can find the law that exempts unscheduled flights from the fifteen per cent tax?


Douglas Charles Abbott: There are a variety of reasons. For one thing, it is difficult to confine the areas to which it applies.
An hon.	MEMBER:	Administrative
reasons?


Douglas Charles Abbott: Yes, and they are important. Moreover, it is difficult to segregate luxury travel. Hunters, trappers, tourists want to go in and see these areas, and so on. On balance, I came to the conclusion that I was not justified in exempting this particular class at this time. The reasons may be good or they may be insufficient, hut there were a number of reasons.


Harry Rutherford Jackman: Where does one find the law that exempts non-scheduled flights from the tax; or is it a departmental ruling?


Douglas Charles Abbott: I am not familiar with
the details because it is not my own department, but I am advised that the particular reason is this. These are done on charter at a named rate and not in accordance with the recognized tariff, and the department ruled that the rate which would be established by the air transportation company, with one cent per passenger mile added, would be roughly comparable with the tax of fifteen per cent imposed on the regular scheduled tariff.


Harry Rutherford Jackman: But the minister just
said it would not. The minister said that the tax on these unscheduled flights was small and did not compare with the fifteen

per cent tax, and now he tells us, on the advice of his assistants, that it is comparable. May I suggest to him that the people who use these non-scheduled flights are more likely to be in the luxury class to which he referred and which we should also encourage, although not at the cost of other less fortunate people. Hunters and fishermen are the ones who will get the non-scheduled planes more than the ordinary miners who go up to these out-of-the-way posts and develop our country. A group of these men do not hire a plane; they use the scheduled service and are subjected to a fifteen per cent tax. In other words, if there is any discrimination here at all, it is discrimination against the worker and in favour of the man who can afford to pay the tax.


Douglas Charles Abbott: I am informed that there
is one added reason for the differentiation in connection with the unscheduled trips, namely, that in a good many cases the plane will carry a good deal of freight and equipment in addition to passengers. That is taken into account in fixing the one cent rate with respect to passengers.


Mr. HACKETT:: Will the minister say
whether the tax is paid in full and a rebate given, or whether the tax is paid at the reduced rate when the transportation is arranged for? Is it necessary to arrange for each exceptional case, or is some organization set up which deals with cases of a specified character?


Douglas Charles Abbott: I am informed that the
tax is collected at the time the payment is made for the flight.


Mr. CASE:: I have been handed a pamphlet by someone. It is entitled "Ways and Means Resolutions, Resolutions of April 29, 1947; Income War Tax Act."


Douglas Charles Abbott: Over the page. We are
on the Special War Revenue Act legislation.


Wilfrid Garfield Case: I am going to discuss the title of the copy I have in my hand. I want to know if Canada is still at war. I have asked the Minister of National Health and Welfare and others. Apparently we are still at war, and I should like to know with whom. No one has ever told me. I understood there was a proclamation at the beginning of the year stating that Canada was no longer at 'war. But I have sought to find out and I am told that we are still at war. If we are, I want to know whether we are at war with Russia, with the United States, or with whom?


An hon. MEMBER:: With the government.

Special War Revenue Act


Wilfrid Garfield Case: If this is the Income War Tax Act, I want to know with whom we are at war?


Edmund Davie Fulton: It is the Special War
Revenue Act.


Wilfrid Garfield Case: It is the same thing. These people are talking about transportation into remote areas. I should like to get to my home once in a while, and that is not so remotely situated. But I want to know if Canada is still at war and, if we are, with whom we are at war. If we are not still at war, when was it determined that we are not at war? I do not know whether that is a proper question for the Minister of Finance, but no one has ever been able to tell me; and I have sent notes across the house hoping that those who favour me would advise me. We are apparently still at war with someone, but I do not know with whom.


Douglas Charles Abbott: I will do my best to set my hon. friend's mind at rest. As he will see when the bill which is to be founded on the resolutions is brought in, we are removing the word "war" from the title and it will be called the Excise Tax Act.


Karl Kenneth Homuth: In view of the situation which the hon. member for York South and others have placed before the house, I should like to move, seconded by the hon. member for York South:
That the following words be added to paragraph (a) of resolution No. 1: "or areas not served by any other form of transportation than aircraft."


William Ross Macdonald: It occurs to me that this would disturb the balance of ways and means and accordingly would not be in order. I must therefore rule that the amendment would be out of order.


Karl Kenneth Homuth: Let us carry them all if ;hat is the idea.


Mr. MacNICOL:: Are these words complete and significant enough to describe what is meant, "extending outside of the northern part of the western hemisphere"? What does that embrace?


Douglas Charles Abbott: Of course my hon. friend appreciates that the language of the resolution is not, as a rule, as specific as the language of the statute which will be founded upon it. I am advised that in the bill which will be introduced there will be definitions which will clarify exactly what that means.


Agar Rodney Adamson: I want to say one thing about this Red Lake business. In these remote areas-and Red Lake is remote, being 100
miles away from a railway-you cannot get there in any other way than by air, and the rates are about twenty cents a mile. I think the return there to Kenora is $36. Men going into Red Lake have to pay four times as much per mile for transportation, and there is the hardship owing to this tax, which is $3 one way and $6 return. That is quite a considerable outlay on top of the $36 you have to pay for transportation for the round trip.


William Earl Rowe: Mr. Chairman-


Mr. NICHOLSON:: Eleven o'clock.


William Earl Rowe: Just before eleven o'clock, I want to urge, whether the motion is in order or not-and you have ruled it out of order, Mr. Chairman, and we accept that decision- that the minister give some consideration to the suggestion which has been made. After all, the revenue which is collected is very small in this case, and the hardships which have been mentioned are, I think, generally felt by a great many labouring men who cannot afford to pay the extra amount. I want to urge upon the Minister of Finance that he give some consideration to the suggestion.


Douglas Charles Abbott: Before moving that the committee rise, may I say that I will give consideration to the matter again before I bring in the bill. As I say, I do not want to hold out very much hope, but I will take into consideration the points which have been brought forward here and discuss the matter again with the officials of the department.. I will consider it again before bringing in the bill. I move that the committee rise and report progress, unless you want to report this resolution.


Some hon. MEMBERS:: No.


William Ross Macdonald: Does the committee desire to carry clause 1?


Some hon. MEMBERS:: No.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, May 28, 1947