1948-05-27

Hon. BROOKE CLAXTON (Minister of National Defence):: Mr. Speaker, because of its important relationship to the whole question of housing, I would like to announce to the house a very large addition to the program of construction of married quarters for personnel of the armed services and defence research. This will call for completion this year of 2,350 new houses in thirty-six different localities, at a cost of approximately $20 million. This will be a direct contribution to relief of housing shortages in civilian communities, as the moving into service married quarters will make housing available for civilian families.
On January 1, 1947, the armed forces had 1,241 married quarters. By March 31, 1948, 2,863 units were added and 1,864 were under construction, of which 1,179 were new houses, making, with the 1,171 to be begun after April 1, 1948, a total of 7,139 married quarters. These new houses are allocated on the basis of need, not rank, and rental rates will be the normal quarters allowance.
I am making available to hon. members a statement giving particulars of this program, which is one of the largest housing projects undertaken in Canada, and is part of the effort to provide as far as possible the condition of normal family and community life for armed forces personnel, particularly in remote areas.


Mr. PEARKES:: Will the minister say whether these houses are being built by the Royal Canadian Engineers, or by Central Mortgage and Housing Corporation, or by some other agency?


Mr.   OLAXTON@: Yes; twelve hundred of the houses are being constructed under the supervision of the Royal Canadian Engineers, and of these, two hundred are being built by the engineers themselves. The remainder of the houses are being built on plans and specifications approved by Central Mortgage and Housing Corporation, but on contracts made through the Canadian Commercial Corporation.
5849-282i
The supervision, however, is done by officers of the department, and almost entirely by officers of the Royal Canadian Engineers.


Mr. THATCHER:: Will the minister say whether any of these houses are being built in Moose Jaw?



REPORT AS TO REMOVAL OF TRELLISES FROM HOUSES IN WRIGIITVILLE

[Stage Direction]
On the orders of the day:
Mr. G. J. McILRAITH (Parliamentary Assistant to the Minister of Reconstruction and Supply):: Yesterday the hon. member for Eglinton (Mr. Fleming) asked a question concerning the removal of trellises from certain houses built by Wartime Housing Limited. The question was:
Will the government take steps to stop the removal of trellises, which is taking place at the present time, from houses built by Wartime Housing Limited in Wrightville?
The trellises being removed from wartime houses in Wrightville are those which have broken or are subject to breakage owing to frost heavage of the porch posts. These trellises will be replaced by a much sturdier type of construction.



QUESTIONS

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

Mr. BLACK (Yukon):: What are the names of the companies and individuals who the Acting Minister of Mines and Resources states have already made substantial investments in mining in the Yukon and are interested in its development in the future and who are unable to ascertain the limits of the properties that can be secured either by purchase or staking referred to in the notices sent to the owners of unsurveyed mineral claims in Yukon by the mining recorders of Yukon on instructions of the Minister of Mines and Resources.


Mr. MacKINNON:: I Should like to answer this question orally. I have discussed this question with the hoa. member and I find that he is concerned lest the order issued by the minister under section 78 of the Yukon Quartz Mining Act should be made to apply generally and arbitrarily throughout the Yukon territory to the hardship of many and
Questions

without compensating benefits in the way of facilitating development. In this connection may I explain:
1.	That there is no intention whatever of taking any arbitrary action. This has been explained to every person affected. If a claim holder is unable to put up the money for the survey, or the surveyor is unable to attend to it, or if there is any other bone fide reason why the survey cannot be made, no action will be taken to cancel the claim. There is of course a responsibility upon the claim holder to make the circumstances known to the mining recorder who will report to the minister for appropriate action. Moreover, I am advised that the surveyor will be able to make the surveys only in the areas which are considered immediately valuable from a development standpoint so there will be no question about the protection of the claim holders in other areas.
2.	From the standpoint of claim holders in what we may designate immediately valuable areas, I may say that lest there be concern over the cost of the survey we have decided to set a fee of $100 for the survey of a mineral claim. Those familiar with the quartz mining regulations will realize that this is exactly the amount of one year's representation work on the mineral claim which is required by law. Under the act the survey work can be accepted in lieu of one year's representation work.
I have had a communication, Mr. Speaker, from the hon. member, which I have today fully answered direct.


R.C.M.P.-KINGSTON OFFICES
Mr. KIDD:: 1.	Has the Royal Canadian Mounted Police offices in Kingston?
2.	If so, where are these offices located?
3.	Has the lease expired or when does it expire?
4.	What rent do they pay?
5.	How long have they occupied these premises?
6.	Are any arrangements being made for them to occupy new premises? If so, where and what rent do they intend to pay?


Mr. FOURNIER (Hull):: 1.	Yes.
2.	2314 Princess street.
3.	The lease expired on February 15, 1948. Now held on monthly basis.
4.	$480 per annum.
5.	Since February 16, 1941.
6.	Up to the present date no arrangements have been made to lease alternative premises.


UNEMPLOYMENT INSURANCE
Mr. McKAY:: 1.	How many persons were in receipt of unemployment insurance benefits in (a) the province of Saskatchewan; (b) the Dominion of Canada, during the months of (1) January;
(2)	February; (3) March; (4) April, 1948?
2.	What was the total amount of unemployment insurance benefits paid in the (1) province of Saskatchewan; (2) Dominion of Canada, during (a) 1947; (b) since the inception of the act?


Mr. COTE (Verdun):: 1.	(a) Persons in receipt of unemployment insurance benefits in the province of Saskatchewan during the following months:
(1)	January, 1948	
4;276(2)	February, 1948	
5,477(3)	March, 1948	
6,845(4)	April, 1948	
6,235(b)	Persons in receipt of unemployment insurance benefits in the Dominion of Canada during the following months:(1)	January, 1948	
106,367(2)	February, 1948	
138,417(3)	March, 1948	
154,754(4)	April, 1948	
139,4772.	(1) Total amount of unemployment insurance benefits paid in the province of Saskatchewan:(a)	During 1947	
$1,060,289.09(b)	! Since inception of act.. 3,204,735.70
(2) Total amount of unemployment insurance benefits paid in the dominion of Canada:
(a)	During 1947	 $ 32,039,339.36
(b)	Since inception of act 117,708,969.12


QUESTION PASSED AS ORDER FOR RETURN
Mr. DIEFENBAKER:: 1.	How many Reising sub-machine guns, 45 calibre, were purchased by the government, year by year, from 1939 to 1946 inclusive?
2.	From what individuals, firms or companies were such purchases made and what was value purchased from each?
3.	From whom were purchases made from June, 1944, in what quantities and what was the price per gun in each shipment?


PUBLIC BUILDINGS
[Stage Direction]
On the orders of the day:
Mr. STANLEY KNOWLES (Winnipeg North Centre):: I wish to direct a question to the Minister of Public Works on behalf of women cleaners in federal public buildings,

Inquiries oj the Ministry
My question relates particularly to Winnipeg, where I am familiar with the situation, but it may apply to other cities as well. Is consideration being given to an increase in pay for these women, in line with increases granted to other government employees?


Hon. ALPHONSE FOURNIER (Minister of Public Works):: I thank the hon. member for having handed me the question before I came into the house. I can only give the general answer that the rates of pay of these women cleaners are under constant review and consideration by the department. Nearly every week we sign some recommendation sent over to the Department of Labour, who advise us as to the rates of pay given to similar employees by private enterprise in different parts of the country. I will look into the matter so far as Winnipeg is concerned. I am sure the rates of pay of these women cleaners are taken into consideration.


REFERENCE TO PROPOSED CONSTRUCTION IN CHARLOTTETOWN
[Stage Direction]
On the orders of the day:
Mr. W. CHESTER S. McLURE (Queens): I desire to direct a question to the minister of Public Works. Has the minister approved the building location for the dominion building at Charlottetown? If so, when will work on the building be begun?
Alphonse Fournier: I received no notice of the question, Mr. Speaker. The government is purchasing so many sites from one end of Canada to the other that it is impossible for me to recall exactly the one referred to by the hon. member.


FLOOD CONDITIONS
[Stage Direction]
On the orders of the day:
Mr. G. A. CRUICKSHANK (Fraser Valley) :: Mr. Speaker, I wish to direct a question to the Minister of Transport, a copy of which I gave him. According to the morning press, dikes have broken in the Fraser valley and many farm families have had to be evacuated to safety zones. Mr. C. E. Webb, district engineer of the water power bureau in Vancouver, forecasts very serious conditions in the future, owing to the fact that only a comparatively small amount of spring run-off has occurred. Will the minister say what steps the Canadian Pacific Railway are taking to
assist in the protection of their lines from floods, seeing that since 1894-


Some hon. MEMBERS:: Order.


George Alexander Cruickshank: -this protection has been entirely paid for by the farmers of the district-


Some hon. MEMBERS:: Order.


George Alexander Cruickshank: -and they can no longer meet the costs without assistance from this company.


Some hon. MEMBERS:: Order.


George Alexander Cruickshank: Great friends of the common people over there.


Mr. GILLIS:: Your own members are stopping you.


George Alexander Cruickshank: You are all for the C.P.R.


Mr. BENTLEY:: It is your own members.


Hon. LIONEL CHEVRIER (Minister of Transport):: In answer to the hon. gentleman's question I must say that while I feel sympathetically towards those who have been evacuated as a result of these floods I have no responsibility in connection with floods, nor have I responsibility so far as the Canadian Pacific Railway is concerned. I shall be glad, however, to bring his question to the attention of the management of that railway.


FREIGHT RATES
[Stage Direction]
On the orders of the day:
Mr. GORDON B. ISNOR (Halifax): Mr. Speaker, may I ask the Minister of Transport when he will be in a position to furnish the necessary information to complete the return made on May 4 with respect to freight rates? Certain information is not contained in the return. I asked a question about this on May 6.
Lionel Chevrier: My recollection is that in tabling the answer to the hon. gentleman's question I gave all the information that was available, namely, the information that had been filed before the board of transport commissioners. Speaking from memory only, I believe the hon. member asked for additional information which I was unable to table since it was not given in evidence before the board.


Mr. ISNOR:: There is no reason why it should not be available in the 1947 returns, along lines similar to those for 1946.
Inquiries of the Ministry


Lionel Chevrier: The reason is that the information my hon. friend asks for was not submitted to the board.


Gordon Benjamin Isnor: That is an excuse.


INQUIRY FOR RETURN
[Stage Direction]
On the orders of the day:
Mr. C. E. STEPHENSON (Durham):: Mr. Speaker, I should like to address a question to the Secretary of State in regard to a question of mine which appeared on the order paper of April 26 and was passed that day as an order for return. I have had no answer to the question. Can the minister tell me when I may expect it?


Hon. COLIN GIBSON (Secretary of State):: I shall be glad to look into the matter and have the return brought down.


PRAIRIE FARM ASSISTANCE OVERPAYMENT UNDER WHEAT ACREAGE REDUCTION SCHEME
[Stage Direction]
On the orders of the day:
Mr. F. S. ZAPLITNY (Dauphin):: Mr. Speaker, on February 27 I asked a question about certain regulations under the Prairie Farm Assistance Act. I wonder if I can get an answer now from the Minister of Agriculture.


Right Hon. J. G. GARDINER (Minister of Agriculture):: I am not sure I remember what the question was.


Stanley Howard Knowles: It was so long ago.


James Garfield Gardiner: Perhaps the hon. member will indicate the purport of it. Was it with regard to flooding at Dauphin?


Frederick Samuel Zaplitny: No. The question was about regulations dealing with the withholding of certain benefits under the Prairie Farm Assistance Act owing to overpayments which have been going on under the wheat acreage reduction scheme.


James Garfield Gardiner: I thought I had given that answer orally, when the hon. member was not here. The answer was to the effect that some deductions had been made from the payments that were due under prairie farm assistance on account of wheat acreage reduction, but that that- was not in accordance with the genera! policy and it has been discontinued.


Frederick Samuel Zaplitny: My question specifically was, under what authority this was done. It is the answer to that question that I should like to have.


James Garfield Gardiner: It was done under the authority of an act which provides that when money is owing to the government by any person and money is also owing to that person, one may be deducted to make up for the other.


DAIRY INDUSTRY
[Stage Direction]
On the orders of the day:
Mr. R. E. DROPE (Northumberland, Ont.):: I wish to direct a question to the Minister of Agriculture. Is the minister aware that owing to the delay in announcing the policy of the government in regard to dairy products the dairy industry is in a state of confusion which is resulting in lower production?


Mr. SPEAKER:: Order. I suggest to the hon. member that in asking a question he should not make a statement. I would ask him to put his question.


Robert Earle Drope: Will the minister inform the house whether or not a floor price will be established on butter, and if so, at what level?


James Garfield Gardiner: I hope my estimates will be before the house tomorrow, and I will be in a position to discuss the whole matter at that time.


THE BUDGET
[Stage Direction]
The house resumed from Wednesday, May 26, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now7 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.
Clarence Gillis: I thank hon. members for the applause. I hope it will continue after I am through.


Mr. HARTT:: If you deserve it, it will.


Clarence Gillis: Last evening, Mr. Speaker, when the house adjourned, I was discussing the budget; I mention that just in case someone may have forgotten. I had concluded my remarks on the Conservative amendment and was suggesting seriously to them that they might withdraw that amendment and get it out of the way, so that we might take all the discussion on the subamendment proposed by the members of this group. I suggested that because we definitely recommend something that the government did not include in the budget. Second, I was pointing out some of

The Budget-Mr. Gillis
the disabilities of the budget, as I see it. In concluding my remarks of last night I took a few minutes to point out that a table put on Hansard by the Minister of Finance (Mr. Abbott), when he made his budget speech, suggested that the tax rates in the United States were much lower than they were in Canada. I also put a table on Hansard having to do with the category of a married person with two children. It showed quite definitely that the tax rates in Canada in that group are much higher than they are in the United States.
I personally feel that the government made a mistake in not giving some relief to those in the low-income tax brackets. I say that for this reason. During the year 1947 the real wages of those in the low-income tax brackets were cut drastically by the increase in prices. We hear a good deal in this house about initiative and incentive. I think that the graduated form of tax as applied to the industrial workers, the farmers and fishermen, who in the final analysis produce all the real wealth of the country, militates against initiative and incentive. I know that many times during the war we seriously suggested to the government that it would be much better to impose a flat rate and make a cut-off at some point, where overtime work was necessary-that is, when during the war you wanted workers in industry to work a great deal of overtime. The same thing applies now.
For the minister's benefit, so that we may be able to amend the section dealing with exemptions, I should like to say this-and I am going to deal now with the part of the country from which I come. I have here an analysis made by the research director of the mine workers, taken from government statistics, which points out definitely that real income in Nova Scotia has been reduced drastically by inflationary prices. It reads:
From November, 1946, to December, 1947, average earnings of 75,000' workers in Nova Scotia increased by $2.07 per week, or by 6-7 per cent. During the same period the government cost-of-living index climbed 21-2 points or 17 per cent.
This means that real weekly earnings in Nova Scotia fell during 1947, by as much as 10 per cent.
For the low income family with more than the average number of children the decline in living standards was much more than 10 per cent.
The minister should at least consider keeping living standards where they were in 1947. Unless there be some move on the government's part to increase the exemption in the low-income groups, there must be a drastic reduction in the living standards of the people in that income group.
To continue-and this is from the same
source:
During the year 1947 the cost-of-food index increased by 24 per cent, and clothing by 23 per cent.
I should like to bring sharply to the minister's attention the fact that ninety per cent of the wages of those in the income group under $1,500 or $2,000 a year goes into food and clothing; and those increases of 24 per cent and 23 per cent brought about a considerable reduction in the standard of living in 1948 as compared with 1947. Here are a few items the prices of which increased in 1947:
Increase
during
Item	1947
per cent
Butter . Bacon . Lard .. Potatoes Cheese . Tea ...
20
44
27
These are commodities that are on the table of the average working person in this country every day. The exemption from excise or sales tax will not affect these items to any great extent, because, as the minister pointed out, while he is relieving some food items from sales tax, the exemption may not be reflected in the price structure. My guess is that it will not. It will be added to it, because no one in this country today can tell anyone else what price he must charge for any given commodity.
I think that the exemption levels that were advocated by the hon. member for Rosetown-Biggar (Mr. Coldwell)- $1,250 for a single person and $2,500 for married persons-would compensate the taxpayer to some extent for the increase in the cost of living and the lowering of living standards in 1948 for that income group, and would also create some incentive and initiative. But if you are to keep dragging them down, without any recognition, then you are just creating frustration and hopelessness in this country.
I cannot understand the attitude or the mentality of the minister's advisers who suggested that the exemption for persons who are sixty-five years of age and older should be increased by $500 a year. That suggestion might have come from gentlemen in the other place. Most of them will be relieved.


Mr. ABBOTT:: No; it was the minister's bright idea.


Clarence Gillis: It may have come from members of this house, some of whom will be relieved. There may be a few people with substantial annuities who will be relieved;
The Budget-Mr. Gillis

but it is not going to relieve anyone in that age group who has been engaged in agriculture, fishing, industry, or any of the wealth-producing activities of this country. In the case of ninety-nine per cent of them, when they are finished, when their backs are broken, they are no longer productive and are relegated to the scrap heap, to live on $600 a year if single and a little more if married. They do not come within the income tax brackets at all. I do not believe it was the minister's bright idea, because I think he is brighter than that. There must have been some powerful prodding from somewhere behind the scenes.


Douglas Charles Abbott: No; the hon. member is quite wrong.


Clarence Gillis: I suggest that after serious reflection, instead of making that increased exemption applicable to the age group sixty-five and over, which does not mean anything, the minister might see his way clear to extend the $500 exemption to the income groups recommended by the hon. member for Rose-town-Biggar and step up the exemptions to $1,250 and $2,500. In that way the minister would create incentive. Thousands of young people across this country, men and women, are on low incomes. Many of them would like to get married, make a home, and take their part as citizens of this country. But when they look at the tax structure; when they see the little consideration that is given by persons in high places to the question whether they shall be able to live a full and complete life, they are afraid to take a chance. An increase in the exemptions would encourage people to drive their roots into the soil and really become citizens of the country. There is fear and frustration among many in the low-income groups. To increase the exemption would assist the thousands of families who have suffered a substantial reduction in their standards of living because of the increased prices of the necessities of life which they must provide for themselves and their children. Again, many families would be able to keep their children in school if they had that relief. For humanitarian reasons, therefore, if for none other, I believe the minister should take this suggestion into serious consideration. That is the one quarrel we have with the budget under the present mechanics of society. In my opinion the minister was short-sighted and ill-advised, because I know that in view of increased prices and the lowering of standards which has resulted, the people were looking for some relief through increased exemptions for the low-income groups.

I am not going further with that line of criticism. As I pointed out last evening, the budget itself is merely a statement made by the government to the country, showing what they have done in the field of finance. My quarrel with that sort of budgeting is that in addition to a financial statement from the government I believe it is also a part of the responsibility of the government to the people, in a country such as this, that the Minister of Mines and Resources, or some other minister who may be charged with the responsibility, should bring into this house a capital budget which would take the resources of this country as between province and province and endeavour to develop those resources in order to make for equality in the distribution of income, so far as that can be achieved. Certainly the distribution of income is badly out of line today. We are living in an age when the planning of our resources and their proper development are absolutely essential.
Some members of this house may say: Well, we do not believe in planning. But I noticed yesterday that the Prime Minister (Mr. Mackenzie King) told the house he was bringing in a bill for the purpose of planning the national capital. Surely if the government thinks the planning of this one city as a national capital requires legislation to be passed by this house, setting up a commission and all the rest of it, then the same principle should be followed in the whole economic set-up of this country. If it is essential to plan the capital city of Ottawa, surely it is much more essential that the government, which is charged with the responsibility of exploiting the resources of the country and is the custodian of those resources, should take steps to see that there i3 justice and equality as between the different sections of the country. I suggest that this kind of capital budget should be brought in also.
I say that for the reason that I come from the maritime provinces. I am sorry so few of the members from the maritimes are vocal in regard to the problems and disabilities of that end of the country. Yesterday afternoon the Minister of Justice (Mr. Ilsley) fully justified the present budget, as I said last night, based on the maintenance of the status quo. As I think the minister himself asked at one time, "What is the status quo"? That is the mess we are in; but he justified it on the basis that we are going to stay as we are, that we are not going to make any changes. On that basis he made an excellent speech and an excellent case for the budget. But if we are to remedy some of the injustices that exist under the present system, we cannot just stop there.

The Budget

Mr. Gillis
I have in my hand a government publication released a few weeks ago. It comes from the Department of Trade and Commerce, the Dominion Bureau of Statistics, and is entitled "The maritime provinces in their relation to the national economy of Canada." The opinions expressed in this publication therefore come from the government. I have gone through it very carefully, and for the benefit of the Minister of Finance I should like to point out some of the economic and social c'onditions that exist in our end of the country. We must remember that the minister, whether he comes from Westmount or from Vancouver, represents all people of this country, including the maritimes, in the finance department. Perhaps the reason he is not paying more attention to the maritimes is that apparently many maritime members are quite satisfied. You know, you do not get a seat in the senate by quarrelling with the government about disabilities that may exist in your part of the country. Here is just an extract from this report; I could pull out dozens of them, but I am going to give just a few which rather stand out, touching various social and economic aspects down there. The first one is at page 29:
The proportion of persons in the younger and older age groups in the maritimes is above the national average, while for the in-between ages the proportion in the maritimes is considerably below the -all-Canada figure. The latter reflects the exodus from the maritimes of workers in the prime of life. They leave after having been educated at the expense of the provinces and when young, vigorous, ambitious, and enterprising. By their departure the maritimes lose not only .the most efficient type of workers, but also the enterprising lability important to further development. Their loss reduces, too, the taxable capacity of the region, a fact which is all the more serious in view of the large proportion which the dependent groups-the children and the aged-constitute of the total population of the region. Persons below' the age of 15 comprise 3-0-2 per cent of the total population in Prince Edward Island, 29-2 per cent in Nova Scotia, and 31-9 per cent in New Brunswick-
As compared with 5-2 per cent in Saskatchewan and Alberta. The point I am trying to make for the benefit of the minister is that the productive people of the maritime provinces are obliged to leave that part of the country. What we have there are the youth, those in school whom we are educating. We are spending our resources on them. When these young people are educated we lose to the United States about 15,000 of them every year. We have been doing that for the last thirty years.


Mr. MacINNIS:: Longer than that.


Clarence Gillis: The hon. member for Vancouver East (Mr. Maclnnis) says it is longer than that. He is a little older than I am, and perhaps can go back a little farther; I would say that it is at least thirty years.
The paragraph from the survey I have read means that we have the aged, the unproductive men, persons on small old-age pensions or inadequate company pensions. The paragraph shows that the maritime provinces are fast becoming a place from which we wring whatever little wealth is left in the educational field, so that people can be trained to go to the United States or to be siphoned off into central Canada. That situation is a government responsibility.


Mr. BLACKMORE:: Or they enter the civil service at Ottawa.


Clarence Gillis: I would not advise them to do that, after looking over the salaries.


John Horne Blackmore: A good many of them do it.


Clarence Gillis: The condition to w'hich I have referred is something the government will have to consider. So far they have not made any appraisal of it, with the exception of this statistical survey which will be put into the archives to gather dust. I bring it out today for the purpose of focusing the attention of the government upon it.
I turn now to page 40 of the same report, where it deals with production in the different industries. I shall not read from the report at greater length, because I do not like reading material into the record. I do suggest, however, that hon. members read the report for themselves.


John Horne Blackmore: Go ahead and read it.


Mr. GRANT:: Give it to the hon. member down here.


Clarence Gillis: I bring it to the attention of hon. members to my right who criticize controls, condemn government regulations, and all that kind of thing.


John Horne Blackmore: The member for Lethbridge will read some himself.


Clarence Gillis: Just after the war started, and at other times during the war, hon. members referred to the fishing industry as the forgotten industry of Canada. It was pointed out that the fishermen had cash incomes as low as 8300 a year, that the fisherman was the forgotten man. I think even the senior member for Halifax (Mr. Isnor)-


Gordon Benjamin Isnor: Make your own speech.
4450
The Budget-Mr. Gillis


Clarence Gillis: He said that many times. Let me point out to the hon. member that, according to this survey, fisheries production in the maritime provinces increased between 1938 and 1945 by 196 per cent under government regulation and management.


Mr. GIBSON (Comox-AIberni):: No civil servants have caught fish.


Clarence Gillis: Today, in 1948, the fishing industry of the maritime provinces is just about where it was in 1938. Why? Simply because the government withdrew the regulations.


Thomas Vincent Grant: Because the war is over.


Clarence Gillis: And withdrew its assistance.


Thomas Vincent Grant: No; because the war is over.


Clarence Gillis: No, it is not because the war is over. There is a greater market in the world today for fish than there was when the war was on. As I have said, production increased by 196 per cent between 1938 and 1945, and since the war it has gone back to about where it was in 1938. These figures indicate, all the way through, the inequality of the distribution of income in different industries. For instance, ten per cent of the population of Nova Scotia are engaged in agriculture, but we receive only 4-6 per cent of the national income from the field. If we were receiving our just due we would have at least ten per cent of the national income. Therefore, I say agriculture is away down. The same ratio would apply in manufacturing, and in all other lines of endeavour.
Let me make it clear to hon. members from Quebec and Ontario that as one of the members from the maritime provinces I am not asking for anything more than a square deal.
I would say this to them, that the base for many of their industries in Quebec and Ontario came from the maritime provinces in the first instance. The production is siphoned off by centralization.
Again, in this statistical report-


James Horace King: I must remind the hon. member that his time has expired.


Some hon. MEMBERS:: Go ahead.


Clarence Gillis: I do not like to exceed my time, but I could finish in about two minutes if I have permission.


James Horace King: Only if the hon. member has unanimous consent.


Some hon. MEMBERS:: Go on.


Clarence Gillis: Thank you, Mr. Speaker.
I will conclude by reading briefly from the statistical report in support of my contention
[Mr Isnor.]
that centralization of industry in Canada, short-sightedness and lack of planning on the part of those in authority, are responsible for the difficulties of the maritime provinces. We find this at page 96 of the report:
Concentration grew through the agglomeration process,-
That is a good word; look it up in the dictionary.
-the tendency of manufacturing and service industries to concentrate where there is already some concentration of industry because of the greater availability of labour, managerial and technical skills, industrial and financial and other services. Moreover, the central provinces are geographically-
Remember this; listen to it.
-an extension of the greatest industrial area of the United States.
The concentration in Ontario and Quebec is considered merely as an extension of the industrial area of the United States.
-a fact which undoubtedly stimulated the industrial development of these provinces. United States capital and the establishment of branch plants contributed to the same result.
I shall not read further from the report. I hope, however, that some of the maritime members will make a check of the survey and examine the disabilities outlined in this economic and social survey of the maritime provinces.
I suggest seriously to the minister that that problem has been further aggravated by the increase in freight rates. The picture today for the maritime provinces is bleak indeed, unless the government is prepared, as I suggested a moment ago, seriously to consider bringing in a capital budget to the house which will give to the maritime provinces greater equality of distribution of income and a greater decentralization of industry which has been concentrated in the central provinces. For example, we should break the integration of the two economies and try to stand Canada on her own feet as a nation.
I could go on for some considerable time with this subject, but I shall not. I thank the house for the short extension of time that has been given me.


Hon. W. EARL ROWE (Dufferin-Simcoe):: Mr. Speaker, in rising to take part in this debate I do not intend to burden the house, if I can avoid it, with repetition of what has already been said. I had not thought of speaking on the budget until I listened to the rather spectacular speech that was made yesterday afternoon by the Minister of Justice.
The budget has been the subject of great national concern, as it properly should be and has been on many other occasions. It is per-

The Budget-Mr. Rowe
haps the largest budget we have had in normal times, and it is a very interesting document. Some have called it a vinegar budget; some have called it a black budget, and I believe the minister has almost admitted that it is an austerity budget. In looking it over and finding that the consumer's dollar is worth only two-thirds of what it was a few years ago, and that there is very little direct relief, one might term it a Black Douglas budget. However, I do find disguised and almost hidden in it a semblance of the old traditional policy of Liberalism, despite the quotas, restrictions and prohibitions. I notice that some duties have been removed, and it is interesting to know that we can now get beeswax and mulberry trees in free. It is an indication that the old dusty doctrine of free trade is not quite dead.
Despite all that has been said, and the almost reckless disregard some have when dealing with billions or hundreds of millions, one is reminded of Canada's greatness and her ability to withstand such a spectacular experiment. This is indeed a great country. I believe that all this country needs is the magic of confidence in ourselves and in our development. Undoubtedly we have more resources than any other country with a similar number of people. Members of this house have basic and common interests and desires for the development of our resources, the employment of our people, their prosperity and security, and indeed national unity as well; therefore I thinik we are justified in criticizing policies which do not enhance these developments.
We need stability to replace fear and doubt and uncertainty. We need steadiness to replace changes, hectic and reckless as sometimes they appear to be. We hear a great deal about our national pride. We have the minister of external affairs and others talking about our foreign policy and the great part we have to play in world affairs. We sometimes seem to forget that we are just 13,000,000 people. We are reminded of this when we try to match armies overseas with other large powers.
It is a fine thing to have national pride, but it would be a greater thing in this era of change and transition to have a little more national policy and a little less boastfulness about our national pride. I think we should have more national thinking in our economy in Canada and less international dreaming and theorizing as to what we will do in some great world conflict side by side with other nations of 130,000,000 or 140,000,000 people.
Under the regime of those to your right, sir, every year since they have been in power the number of people leaving this country to find 5849-283i
employment has been almost more than those graduating from our universities. It is time we began thinking in Canadian terms and having more of the confidence that is essential to our development to which I have referred, and the stability that is required to meet our great obligations.
Stability cannot be restored by borrowing $300 million from a foreign country to maintain an artificial or dishonest dollar here at home. Trade cannot be developed by putting a twenty-five per cent excise tax on our production at home and then putting quotas and restrictions by ministerial decree on articles coming in. Trade has never been built up in that way. I have listened for many years to the great apostles of free trade who have told us that they will reach out to all the corners of the earth and sell what they can sell for ihe most money and buy what they need for the least money. But I am amazed to find that under ministerial decree we have quotas, restrictions, restraint, and strangulation of trade. Then in order to stop production at home we put on a special excise tax of twenty-five per cent on our requirements; and this at a time when other ministers are talking about the high cost of living. I refer to the tax imposed on frigidaires, vacuum cleaners and kitchen utensils.
Confidence cannot be restored in the development of our great resources, by so few people, by taking $670 million a year more from the people than is required. It is fine to talk about having a surplus, but that is just like a' man going to the bank and borrowing $5,000 more than he needs so that he will think he is richer than he was before he left home. Confidence is not encouraged in that way. It is not encouraged either by a difference of opinion among cabinet ministers. It is not encouraged or sustained by political expediency conflicting with government policy. It is not sustained by the Prime Minister making a speech in Geneva and saying we are going to have great international trade, and the Minister of Finance saying at home that we are to have quotas and prohibitions to stop trade. Those things do not help.
A week before the budget the Prime Minister brought down a great health program. We have had periods of progress in this country toward social reform every time there is a provincial election, every time there is a byelection, every time there is a dominion election. It is then that we make strides toward taking a social interest in our people.
I have listened to the same old story every year from 1919. What about Drew? He will
The Bridget-Mr. Rowe

be the next premier of Ontario, and his opposition will be doing as his other opposition did- listening to the grass grow on his beautiful farm.


Thomas Vincent Grant: That is what happened to you one time.


William Earl Rowe: The iron, member never got that far. I am not going to be distracted by those who want amusement rather than enlightenment.
The Prime Minister talks of spending millions on health, and yet the Minister of Finance thinks that over and above the expenses of government he must take $670 million from us because we do not know how to spend it. When they are in a hurry they do not need to get provincial approval, but for twenty-nine long years from 1919, action of this kind could not be taken without provincial approval. Now when these old, weary statesmen of the sea begin to see the danger signs in the offing, when they see that there is no chance of retrieving the situation in the province of Ontario, when they see that it is doubtful that they will win any one of the three by-elections, then the Prime Minister says: I promised that in 1919; it was part of my old chart and compass. The ship of state has been drifting around the islands of by-elections in the meantime, but we must pull that one out now.
Yes, Mr. Speaker, they talk about inflation. The ex-minister of finance, the present Minister of Justice (Mr. Ilsley) referred to it yesterday. Hon. members remember how serious he got. He talked about intellectual honesty. I often wish I belonged to some of the fraternities as he does, so that I could get as serious and sanctimonious, and thus make men believe me.


Douglas Charles Abbott: You cannot.


William Earl Rowe: 
An hon. MEMBER:: Oh, oh.


William Earl Rowe: You may win some, but you will not win as many as you think, and you will be lucky yourself if you come back here.
This country needs a government that will keep a strong hand on the helm. We are drifting apart. Our unity is disturbed. Two provinces are out in the cold on the tax agreements. Seven provinces are rudely snubbed on the freight rates issue. Yes, Mr. Speaker, the Liberal party played ball with the communists until the communists left and tried to play with the C.C.F. Now nobody knows who owns the child. Anything to keep in power.
Let me return now to dominion-provincial affairs, and all these private deals of horse trading-and I know something about horse trading. I know that when you get behind the box-stall door you can make a deal if you give the other fellow enough to boot. It is amusing to realize that when these trades were made behind the box-stall doors in secret conferences-


Douglas Charles Abbott: No secret conferences at all.


William Earl Rowe: Not secret-private deals; the public found out afterwards, you mean. In the final deal the dominion collects seven times as much as it pays to British Columbia, five times as much as it pays to Manitoba, I believe about three times as much as it pays to some of the other provinces, and one and a half times as much as it pays to one province. How much am I bid? Going at $1.50; make it $3; make it $7, if necessary. If these provinces had known, they would have made it $9. I would like to be negotiating with you fellows on these deals. I am not at all surprised that our able premier in Ontario cannot negotiate with you.


Douglas Charles Abbott: Neither am I.
The Budget-Mr. Rowe


William Earl Rowe: I did not expect you would be. I believe I have a clipping here from one of your splendid papers. It is a good paper, and it is getting better all the time- the Vancouver Sun, which says, "Hello Sucker!" I will not take the time to read the article. After all, about the only thing that is free in the country now is the press.
In my opinion the government has not very much to boast about, so far as dominion-provincial relations are concerned, in respect to the type of deals to which I have referred. The confidence of the people is not strengthened when the Minister of Agriculture says he will bring in from 12,000,000 to 15,000,000 people to eat our wheat in Canada, and the minister of reconstruction, or the minister of many activities, states that the immigration problem should be left to the provinces.
I am bound to say, Mr. Speaker, that I followed with keen interest the speech made yesterday by the Minister of Justice. I was going to refer to this before now, because I had expected he would return. I have always appreciated the intellectual honesty he spoke about, but I was getting rather confused when he talked yesterday about intellectual honesty, when he said that no one on this side of the house had opposed the revaluation of the Canadian dollar. I remember that on the night it was announced-and, by the way, they must have known about it first on the Montreal stock exchange and in Toronto, because stocks reacted seriously that day- when someone on this side of the house wanted to oppose it, he was howled down by the cheer-crier who saved my hon. friend on so many occasions last night.
I do not doubt the honesty, intellectual or otherwise, of the Minister of Justice. He is a grand gentleman. I must say, however, I was amused last night when he said he was not sure whether his judgment or his memory was failing him. As I listened I thought they were both going, because I could not help thinking-


Douglas Charles Abbott: But that was not what he said.


William Earl Rowe: -that he was on a sort of sightseeing tour, the "mystery" tour you sometimes see advertised here. As he went on that mysterious tour he was trying to find excuses for the errors that have been committed by his government, and he went back to July 5, 1946, when he said he did not think that ten per cent either way meant so much. Premier George Drew said it might mean $100 million more, but the right hon. gentleman said he read in a Toronto paper-probably the Tele-

gram or the Star, but an evening paper-an estimate of only $15 million having been suggested, and he said that Premier Drew had no basis in reason for saying that we would have had $100 million more.
On July 5, 1946, when our dollar was revalued at 100 cents, at an artificial value, a dishonest value, it was reported by some that many persons in the department believed that the dollar might go back to sixty-five cents. I think that was absurd, but they were afraid it would go to eighty cents and they thought they would put it at 100 cents and bluff it there. It was mysterious indeed, and it is of great significance, because it was a great change, it was a great risk born of a great fear. It was the putting back of controls when we were told that we were leaving controls. The action was taken because we did not want inflation ; we wanted more production at home and less buying abroad; and so they told the people: We will make your dollar worth more where you want to buy and worth less where you want to sell.
It was a new type of economy, apparently, on the part of a controller whose influence is great around here. Probably he was born since I came here first. As I listened to the Minister of Justice I could not help thinking that in the first half of his speech, his voice sounded like the voice of the minister, whereas, in the latter half the hand seemed to be the hand of the deputy minister of finance.
We all know-these are tragic, historical truths by this time-that in the sixteen months subsequent to July, 1946, no matter what anyone says he thinks will happen, what actually did happen was that $1,100 million of American reserves disappeared. We know that we were that much short, $60,000,000 or $70,000,000 per month. The primary producers across the dominion paid a still greater penalty for this novel type of experiment. We know that it encouraged imports, because imports increased; it discouraged exports, and moreover, it very nearly ruined the great gold mining industry of the dominion.
In the old days, when people wanted to praise something, they said that it was as good as gold, and then it was as good as wheat in the bin. We heard investments talked about last night as speculative. We do not consider United States investments speculative; for the fact is that some $7 billion of United States money has helped to make this country what it is.
I listened to the manifestation of intellectual honesty of the Minister of Justice last night when he told us that taxes were higher in the United States than in Canada. Of course you can add up a set of taxes and

The Budget-Mr. Rowe
show almost any figure, and figures do not lie, even though some people figure. But, Mr. Speaker, the minister did not tell you last night that we have a sales tax in Canada. And, by the way, I remember hearing what the Prime Minister used to say when I first came here. I wish the right hon. gentleman were here now, because, as I well remember, he almost wept over the fact that we had a sales tax of two per cent in 1921 and in 1925. It was terrific. In 1935 we were told that we were ruining the people, we were strangling trade, because there was a five per cent sales tax. Now we have a sales tax of eight per cent, and the Prime Minister does not weep at all.
These political twists, turns and manoeuvres are all interesting and no less expensive to the Canadian people, but last night I was more disturbed than I was interested when I heard the Minister of Justice say that we had to be so careful. So that I shall not misquote him,-because I have some intellectual honesty too-I wish to quote his views: "But it would be undesirable, I feel sure, having in mind public opinion in the United States, to have a situation arise such as this: that the people in the United States should be keeping their taxes up to the high levels they have now attained, and that Canada, not contributing toward European recovery by way of credits, should seize the opportunity to push taxes down and cash in on the situation in such a way that we would inevitably be severely criticized and penalized by others." I have been a long time in this house, Mr. Speaker, but I have never witnessed a spectacle which more conspicuously illustrated an inferiority complex in relation to a foreign power than that. Surely, by that quirk of policy, the Minister of Justice is not going to force me, after all these years of campaigning in Ontario, to go to the western states and campaign among the farmers there to see if they will allow their congressmen to allow Canada to lower tariffs. It is so ridiculous that I am afraid that some scarcely comprehend the significance of it. I feel that we would be laughed at in Washington. If I made that statement in Dufferin-Simcoe, I am sure I would be laughed at; worse than that, I would not get back here. But, Mr. Speaker-


Maurice Hartt: The hon. member does not know what we think.


William Earl Rowe: No. I think you think about
the same.


Maurice Hartt: But we don't say anything.


William Earl Rowe: No, you don't say anything, but you think a lot. I do not blame you. The
loyalty to leadership is marvellous. You think as you like, but you vote with your leader.
The present Minister of Justice has no monopoly on this at all, because when the twenty-five per cent excise tax was put on the new home builder, the Minister of Finance stated on December 16, 1947, his second reason for these taxes. These are taxes that were put on by order in council, by radio or telephone; I think the Toronto Star had them first, but they were put on anyway, and were collected before they were passed on by parliament. They were to be returned if they were not passed. They finally got through. These were the novel taxes that had to be put on quickly. This is what the Minister of Finance said, as reported at page 336 of Hansard of December 16, 1947:
A second reason for these taxes was to limit so far as practicable the degree of discrimination-
Follow this, Mr. Speaker:
-against regular suppliers in the United States and their dealer organizations in Canada. For the time being, many of these suppliers and dealers are losing a part of their business because of the unavoidable necessity of restricting imports from the United States. Regrettable as it is, we cannot help that. But by imposing these excise taxes we are doing something to protect the legitimate longer-range interests of these businesses.
There we have two ministers who are in unison at least on one thing. You can call it whatever kind of budget you like, but it looks like a made-in-Washington budget. It is not novel with the two ministers today, because prior to 1934 I sat in this house and listened to what the present Prime Minister had to say when the Hawley-Smoot tariff closed our markets in the United States to Canadian farmers. The Prime Minister said that we dare not raise tariffs against the United States at this time for fear we provoke the United States of America. I should like to ask the new aspirant for leadership, the Minister of Agriculture, if he agrees with that.


James Garfield Gardiner: It is my hon. friend who is the new aspirant over there.


William Earl Rowe: I might be there as soon as the minister; you never know. However, I do not believe I am as anxiously seeking it. In all fairness I am not so sure that I would be as well fitted for it as he will be.


James Horace King: Order. I must point out to the hon. member that his time has expired.


Some hon. MEMBERS:: Go ahead.


An hon. MEMBER:: Seven minutes yet.


James Horace King: If the hon. member has unanimous consent, he may continue.
The Budget-Mr. Rowe


William Earl Rowe: I will not take long. I do
not want to debate the matter of how much time I have left. Some say seven minutes and some say three. In view of your courtesy, Mr. Speaker, I will conclude as quickly as possible.
I asked the Minister of Agriculture if he agreed. I know the Minister of Finance and the Minister of Justice agree, and I expect the Secretary of State for External Affairs (Mr. St. Laurent) would agree. If they all agree, then I am not much surprised that it was reported the other day in the papers that the present Prime Minister, when he looks over these aspirants to carry the mantle of leadership of the once great Liberal party, is in more distress than ever, and says: "Anyway, no matter who takes it on, I will have to carry on as prime minister." I am not surprised.


James Garfield Gardiner: He is a good one.


William Earl Rowe: That gives you encouragement, because no doubt you cannot miss if you can pass excuses on to him for a while. I notice that the Winnipeg Free Press mentions this matter on May 20, on the editorial page, in the following words:
The position of Mr. King's successor, a man chosen by the party in office to lead it in the House of Commons, would be in a strange position indeed if he were not Prime Minister, and if a statesman no longer a party leader were still head of the government. Under our parliamentary system, power must go with responsibility.
The Winnipeg Free Press believes that. But with the bureaucratic development we have had here, we have seen a great deal of responsibility given to those who are not elected.
I am not going to delay matters further, Mr. Speaker, but will merely say this in conclusion. I hope I am not emphasizing too vigorously the statements that have been made by the Minister of Finance and the Minister of Justice and agreed to by the Minister of Agriculture. Surely we do not want to provoke the United States; let us mind our own business. It seems to me that we have to wait and see what the United States are going to do in respect to many things. I can imagine some of my friends to the left-the hon. member for Cape Breton South (Mr. Gillis) who just spoke, for example-going down and asking John L. Lewis if the miners of the United States would let us reduce the taxes of the miners in Canada. No wonder, Mr. Speaker, our people are nervous. Let us be honest with ourselves and with our neighbours. Let us remove these restraints and this strangulation and get down to business. Let us

appreciate the resources we have and unloose the energy and enterprise of our people that made us so great during the war and can do the same in time of peace. Do not be fearful. There is nothing so fearful as fear itself. Nothing so certainly assures failure as to think you are going to fail.
I would urge the minister and, despite his claims and appeals last night that he had not made an error, I urge the Minister of Justice, the former Minister of Finance, to call in all the economists-they are the men who have been doctoring our economy and planning our way of life-and say to them: Let us look this situation over and see if something cannot be done; let us put a "new look" on Canadian development, put new hope into Canadian enterprise, and put a new spirit into Canadian courage and faith in ourselves. Let them say to the people of Canada: We will put an honest value on our dollar, because we know that when we put an honest value on our dollar we will improve the position of the primary producer in Canada and discourage buying in the United States; and, as a business proposition, we will put this country on an honest road to success. Give us a free dollar; give us a free market for our wheat; give us a free market for our gold; give us a free market for our products. Give us free enterprise. I say, Mr. Speaker-and I speak for myself when I say it-that I am convinced, after many years in politics, that the more strangulation, restraint and restriction you place on trade, the more you discourage enterprise, initiative and the genius that made this nation what it is.
I have no apologies to offer to my friends *who talk about state planning. They are only one degree worse in the proposals they have made than the practices of those who sit to your right, Mr. Speaker. But I urge upon the one-time traditionally great Libera# party to get back, if not to the principle of laissez-faire they boasted of for fifty years, at least to free enterprise, and give us a chance to take the shackles off and be honest with ourselves.


James Horace King: I must apologize to the hon. member who has just taken his seat. I interrupted him and told him he had exhausted his time. Unfortunately I find I made a mistake. He had seven or seven and a half minutes more.


William Earl Rowe: Thank you, Mr. Speaker.


Mr. VICTOR QUELCH (Acadia):: Mr. Speaker, perhaps it is a healthy sign of the times when a large budget surplus is frowned upon in this house instead of being acclaimed; and I am sure the minister would be the first

The Budget-Mr. Quelch
to admit that very little enthusiasm was shown in this house, either on this side or on his own side, when he announced the size of the budget surplus and at the same time that there would be little or no relief from taxation. I believe the reason can be found in the concluding remarks of the minister, which will be found at page 4072 of Hansard:
Canada today enjoys a level of employment, prosperity and national income, and a standard of living and of real social security never achieved before in the history of our country.
I think the government's budget stands condemned by that statement. If it is true that today we enjoy a higher level of employment, prosperity and national income and a higher standard of living than ever before, then certainly there can be no justification for the lack of social security in this country. We have no provision for those who are physically disabled or for the aged widows; no one can feel satisfied with the very low rates of the old age pension, or the amount of money paid the recipients of the war veterans allowance. I would ask how members on the Liberal side could be enthusiastic when they know that today thousands of physically incapacitated people, many of them bedridden for years, have absolutely no provision made for them, of course apart from the blind. How can the Liberals cheer a surplus when today old age pensioners have to take a miserable pittance of anywhere from $30 to $40 a month, while recipients of war veterans allowances are tied down to the same figures? And how can we condone reducing low incomes still further by taxation, while no provision is made in the budget for increasing the exemptions?
When hon. members were discussing the menace of communism they emphasized the fact that the democracies would be at fault if they were hesitant about taking the necessary steps to prove themselves more dynamic and humanitarian than the communist countries. I have heard this budget called many names, but I have not heard anyone refer to it as a dynamic or humanitarian budget. No doubt the minister will call it a cyclical budget; and of course a cyclical budget is based upon the premise that depressions are inevitable. So in good times we tax heavily in order to reduce the national debt and also reduce the standard of living of the people and their purchasing power. In depression years we reduce taxation and increase debt, and at the same time endeavour to prevent the standard of living from falling below starvation levels.
I think all hon. members will admit that this is a rather dreary kind of roundabout, because
you never catch up with your objective. In other words, you have to wait for a war before a realistic policy is forthcoming and artificial financial limitations are modified. Then the national debt is allowed to skyrocket. After the war is over, the government once more takes it for granted that booms and depressions are inevitable, and adjusts its policies to that procedure. That has always been the record of orthodox finance. Of course, from the point of view of the usurer that may be regarded as sound finance, but from the point of view of many of the people it is a policy of despair.
If the present situation had evolved in peacetime I would agree that steps were necessary in order to prevent an inflationary rise. But the situation during the past two years has been the inevitable outcome of the war and the national financial policies of the government. That situation is rapidly changing today, due mainly to three things: the fact that people in the low-income brackets have largely spent their war savings; the fact that our loans to foreign countries have been largely spent, and the fact that reconversion in this country has been practically' completed. Our plant capacity has been greatly' increased, and either is in the process of putting forth or is about to put forth a tremendous volume of consumer goods.
Strangely enough, that situation seems to cause the hon. member for Muskoka-Ontario (Mr. Macdonnell) a great deal of concern. I should like to quote what he said on this point during his budget speech, which is to be found at page 4246 of Hansard;
According to this report, a survey of some four thousand companies, 2,241 of them in operation in 1939 and 1,971 coming into operation since, shows that these companies, when alterations are completed, will have a manufacturing capacity of $8-5 billion, as against $1-8 billion in 1939. In other words, the excess over 1939 is 377 per cent. The comparable figure in the United States is fifty per cent. That is, proportionately we have gone seven and a half times as fast as the United States.
When I mentioned that the other evening the Minister of Reconstruction and Supply said: Well, what's the matter with that?-or words to that effect.
I would also interject, "What's the matter with that?" As a matter of fact, I think the Minister of Reconstruction and Supply (Mr, Howe) should be highly complimented upon the rapid progress that has been made in reconversion. Then the hon. gentleman went on;
The answer is this. If we can find markets for all these things; if we can sell all these goods and our producers of natural products can also sell all their goods, so that we will
The Budget-Mr. Quelch

capital will be provided for private investment, and we shall be able to develop our own resources instead of depending upon the United States for capital. It will tend also to stimulate venture capital in this country and will provide as well for a progressive reduction in the national debt.
W e all realize that the only way to overcome inflation and at the same time plan for a maximum standard of laving is by converting and expanding our industrial plant to a high degree of efficiency and productivity. It is true that this program in its initial stages is inflationary until the resulting flow of goods catches up to and satisfies demand. We are rapidly approaching that situation today. Obviously, if we had carried on our program of reconversion and expansion of plant more slowly, the situation would have been less inflationary. On the other hand, the sands of time are running fast and people expect today that the same vigorous action which won for us the war by high levels of production must also win for us a high standard of living in peacetime, this to be achieved as rapidly as possible.
As the hon. member for Muskoka-Ontario has already emphasized, we are rapidly reaching the time when a tremendous volume of consumer goods will be available to the people of Canada. This will bring an end to the inflationary pressure. I urge upon the minister the need of easing up on his anti-inflationary or deflationary policies before they land us in a position where demand lags behind supply and thus reduces our standard of living. With these facts in mind and knowing that three years after the war the people have the right to a certain basic standard of living, the hon. member for Peace River submitted certain proposals to the house as an alternative. For a moment I should like to summarize these briefly since they have been already placed on the record.
I have already placed on the record the proposal for effective control over the monetary system and a reduction of the national debt. The hon. member for Peace River proposed the following changes in expenditures in addition to the expenditures submitted by the minister. He proposed a cancellation of existing reductions in family allowances for each child after the fourth and later, as production increases, a forty per cent increase. He proposed also immediate provision for an increase in old age pensions at seventy years without a means test, with the age limit to be reduced progressively downward to sixty years as production expands.
Also pensions to needy widows of sixty years and to all disabled people not otherwise provided for; provision to increase war 
veterans allowances from $40 to $50 for single and $70 to $85 for married persons; to increase 100 per cent disability pensions to $100 a month, and the encouragement by subsidy or otherwise of the increased production of primary products the importation of which from tlm United States had caused a shortage of United States dollars. The estimated cost of those five proposals would be $289 million.
Then the hon. member proposed certain changes in revenue. He proposed that the sales tax and the twenty-five per cent excise tax be abolished, which would cost approximately $395 million. He proposed raising the exemptions for income tax for single persons from $750 to $1,500 and married persons from $1,500 to $2,400, incomes in excess of $3,000 to be taxed on a basis beginning at forty per cent. This would cost approximately $300 million. The proposed changes in corporate tax would not mean much change either way.
The total estimated loss in revenue would be $695 million; adding to that the increased expenditures of $289 million would give a total change or budget upset of $984 million. This amount to be provided for by using from the estimated surplus $484 million with a saving in interest charges of $100,000. There should be an increased revenue from remaining sources arising from taxation over and above the calculation by the minister and resulting from increased buoyancy amounting to $100 million. The remaining $300 million would be taken care of by the use of national credit. If the minister has underestimated the revenue for this year as he did last year there might very well not be any deficit at all.
In the budget debate it is permissible to-have only one amendment and one amendment to the amendment, otherwise the hon. member for Peace River would have moved his proposals as an amendment. So I shall say a few words about the two amendments that are before the house. First we have the amendment moved by the Progressive Conservative party, which is a straight vote of want of confidence. This reads:
This house is of the opinion that the government does not possess the confidence of the-country.
That of course, is just a statement of fact which I do not think anyone would dispute.. Mr. ABBOTT: Just wishful thinking.


Victor Quelch: Since no alternative proposals are included in that amendment, there-is nothing to disagree with and naturally we shall be able to support it.


Stanley Howard Knowles: Even the government, will have to agree with it.

The Budget-Mr. L. Dionne


Victor Quelch: They should and perhaps they will before very long.


Thomas Vincent Grant: The people do not agree.


Victor Quelch: If you go back to the last election you will find that the statement is true, because certainly the majority of the people did not support the government, and the number will probably be still less at the next election.


Thomas Vincent Grant: A majority over all.


Victor Quelch: You did not have a majority. The C.C.F. amendment reads:
That the said amendment be amended by inserting after the word "government" and before the word "does" in the second line of the amendment, the following words:
". . . has failed to relieve the excessive burden of taxation on the low income groups of the Canadian people:
(a)	By failing to increase the amounts of exemption from income tax from the present levels to $1,250 for single and $2,500 for married people, and . . .
The only difference there is that we feel the $1550 should be raised to $1,500. In our opinion it costs a single person more than half as much to live as it does a married couple. In many cases a single person is living in accommodation which could be used for two people. The C.CF. no doubt feel there should be some form of encouragement to get bachelors to marry, and therefore they will tax them a little bit heavier and persuade them, but we have the obvious fact that some bachelors are what one might call choosy. I do not necessarily mean to say choosy in regard to the type of female they pick up, but rather choosy with regard to the type of accommodation they want to get ready before they become married. Therefore, if you tax them too heavily they will never be in a position where they can set up house. Consequently we feel that we should reduce taxation on bachelors by raising the exemptions up to $1,500.
(b)	by failing to remove or substantially reduce the burden of sales and excise taxes which bear most heavily on those suffering from low income and the present high cost of living.
There is no question about it; we would support that.
And further, the government has failed to establish a public investment board to assure the channeling of capital investment into socially desirable projects .as a means of maintaining full employment, increasing production and raising the standard of living of the Canadian people, and . . .
We interpret full employment as meaning the full employment and development of our natural resources. With regard to the investment board, we have from time to time urged the setting up of a national monetary authority
to control the monetary system, and to bring about a proper relationship between the production of capital goods and consumer goods. We also realize that it is essential to regulate investments in the interests of the Canadian people, and prevent over-development of industries for export at the expense of the home market, and also to expand the production of these goods which at the present time we have to import from the United States, thereby draining away United States dollars. Therefore on the basis of my interpretation, we will support the C.C.F. amendment, although it does not go as far as our proposals to safeguard the welfare of the people; and furthermore, it does not provide any alternative to heavy taxation as a means of reducing our national debt.


Mr. LUDGER DIONNE (Beauce):: Mr. Speaker, I have not much to say with respect to the budget as a whole, but I understand that the Minister of Finance (Mr. Abbott) wishes to take-


Some hon. MEMBERS:: Move farther down toward the centre.


Mr. NICHOLSON:: Mr. Speaker, I am sure that the reporter cannot hear the hon. member. I think he will have to speak louder or come down this way.


Mr. MARQUIS:: Why cannot you move down?


Alexander Malcolm Nicholson: We cannot move the reporter down.


Douglas Charles Abbott: He can hear; he has good ears.


Stanley Howard Knowles: Do you not want to hear the hon. member for Beauce?


Ludger Dionne: I have not much to say with respect to the budget as a whole. I understand that the Minister of Finance wishes to take advantage of the prosperous years to try to reduce our debts, and I cannot object to such a sound policy.
However, I wonder whether the minister is logical in his policy in dropping the duty on cotton piece goods imported from foreign countries. The minister should know that British goods are being sold to us at prices far above the British home market. Why? I imagine it is because the Britishers want to make more money in their trading with us. In addition to that, why is it that British industry is bound to sell its goods at a cheaper price for home consumption than it does abroad? Evidently because England wants to avoid inflation at home. If this policy is good for England, I do not understand why
The Budget-Mr. L. Dionne

it should not be good for Canada. Then, how shall we control inflation in Canada if through a reduction of duty we encourage our people to buy goods from England at fancy prices? That is exactly what our people did in 1947. They bought at any price everything that appealed to them. What has happened? The government had to institute an austerity program to stop this spending spree. Any intelligent man will admit that it is not a sound policy to buy goods at prices above the market. We are no longer in a buyer's market. If the minister had got in touch with Canadian manufacturers of textiles he would have heard that we have definitely entered into a seller's market.
I know many manufacturers of textiles who have orders on hand for hardly a few weeks in advance. I know a lot of them who have a substantial amount of manufactured goods on hand, which are not sold. Mostly all Canadian manufacturers of textiles report that they receive only hand-to-mouth orders from their customers. Precisely at the time when Canadian manufacturers are preparing to undergo a severe depression in their business the minister should be very careful not to create any more undue competition. The enlargement and modernization of textile plants in Canada have been such within the last few years that the Canadian market cannot absorb our production in normal times. Canadian manufacturers are looking for export markets to keep their plants in operation. Unfortunately the sterling area seems to have created an iron curtain which does not permit goods coming from dollar countries to penetrate, namely. New Zealand, Australia, Ireland, India, British West Indies and some other countries.
I shall relate the facts to show how our export markets are gradually being closed by England. Recently a Canadian manufacturer was offered an initial order for textile goods from India, amounting to $150,000. The Canadian manufacturer accepted it. The buyer in India could not obtain a permit from his government to get the necessary dollars to pay for the goods. Why? Last year we bought $10,000,000 worth of goods from India, and we sold to India only $4,000,000 worth. There is no question of a shortage of Canadian dollars in this case. India had $6,000,000 in her favour to buy our goods. Where had the $6,000,000 gone to? The answer is England. This situation exists all over the sterling area. In such a serious circumstance I should like the minister to tell us where we shall sell our surplus of manufactured products. Shall we always be

at the mercy of England to dispose of them? If so, I can see pretty tough times ahead for the Canadian people.
Would it not be a better policy for the Minister of Finance to put his natural sympathy aside when dealing with the English people, and act like a businessman. Does the Minister of Finance imagine that the Britishers will protect our national economy? I am sure he does not; therefore, why not act accordingly?
During the war the export of textiles was forbidden by the government. A large amount of business was lost to the Canadian textile mills. On this account most of the connections that textile business had with foreign countries were disrupted. Now that the textile business is trying to regain these markets, the doors are closed by England. How long shall we have to witness our own economy being destroyed in favour of England? Are we Canadians or Britishers? This is a very serious situation, more particularly with respect to the Canadian textile industry.
The fact that Canada imported in the year 1947, 275 million yards of cotton does not prove that our Canadian industry cannot supply our markets. It only goes to show that the shelves were empty at the end of the war, and had to be replenished. The Canadian industry, which had devoted its efficiency to the production of war material, was not in a position to fill the shelves all over Canada all at one time. This explains the large volume of importations of textile goods which took place in the course of 1947, but I do not believe that all these goods are sold. A substantial quantity is still on the shelves and creates an abnormal situation for our Canadian manufacturers, because 275 million yards average over twenty-two yards for every Canadian, including babies, in addition to our own production. At present our Canadian manufacturers have to pay twenty pence to English manufacturers for synthetic fibre or rayons. The price to the English manufacturer is only sixteen pence for the same material. Before the Canadian manufacturers begin to use this English rayon, it costs them over seven cents a pound, or twenty-five per cent more than the English manufacturers.
If you compare the wages of English and Canadian labour you will note that the Canadian manufacturers have to pay at least sixty per cent more than English manufacturers to everyone of their employees. You will have the proof of this in reading the report of the Aronson wage agreement. These were British government appointed commissioners under the chairmanship of Lord

The Budget-Mr. L. Dionne
Evershed. This is a part of the agreement with reference to some textile jobs:
Per week
Picker tenders	 22.22
Strippers and card grinders	 24.00
Card tenders	 13.00
Drawing frame tenders	 16.97
Roving frame operators	 13.45
Slubbers operators	 15.76
Spinners operators	 15.76
Repair man	 22.22
Anyone can guess the enormous amount of money involved for Canadian manufacturers in this wide difference in wages.
Under such circumstances, I dare say that this drop in the duty may compel many Canadian manufacturers to reduce their production, with the result that numerous employees will be out of jobs and the national unemployment office will have to provide means of living for all of them for an indefinite period, notwithstanding the dislocation it will produce in our industry.
If English labour was not standardized; in other words, if an English employee had the right to work, to the extent of his ability and ambition, our sympathetic minister might have some kind of justification for introducing such legislation. But this is not the case. Textile plants in England are not allowed to operate on two shifts. None of these industries can operate for more than eight hours a day and no employee is allowed to perform more than a certain amount of specified work during his working time. These are the rules and regulations of the unions in England. The English businessman knows all that, but he has no control over the situation. The socialist government in England does not dare to interfere in union regulations, for reasons that everyone knows. Now our Minister of Finance indirectly asks us to support these unsound, uneconomical English labour practices to the detriment of Canadian labour.
A textile plant is so expensive that when it operates for only eight hours a day the overhead is prohibitive and the material produced in such a plant has to be sold at a very high price in order to leave a profit to the producer.
Here in Canada, labour understands this situation and in general is willing to work to the extent of its ability. Mills are operated on two shifts and sometimes three, in order to reduce the cost of the material produced in such mills.
I leave it to the house to imagine what kind of reception Canadian textile labour will give to this reduction in tariff. I do not think the Canadian Minister of Finance has any reason to take the risk of producing such a profound
disturbance in our Canadian labour for the benefit of English labour.
It should be the duty of the English government to enact proper legislation in order to enable English manufacturers to produce at a cost which will permit them to compete for foreign business.
The English government is doing exactly the contrary. Precisely when our Minister of Finance announces the drop in duty on English textile, the English government raises the price of raw cottons to British manufacturers as follows: The price of American cotton bought by the English government has been increased from 2-20 to 3-40 cents a pound. The price of Egyptian cotton has been raised 8-40 cents a pound, as published in the May 17 World Market Review of New York.
Furthermore, England is short of labour. She will naturally do as some Canadian manufacturers did last year. She will send raw cotton or synthetic fibres to be manufactured in Italy, Germany or some other country where labour is still cheaper than in Great Britain and where they are willing to work on three shifts.
The same review announces a trade pact by which England will supply raw cotton and bleached sulphite to Germany. This cotton, as well as the bleached sulphite, will be manufactured there into textile goods and filament rayon and will be shipped back to England. It involves a transaction of $55,000,000.
Broadcloth for shirts is in short supply in Canada, as well as filament rayon. We could have made the bargain direct with Germany just as well as England. We could have bought and supplied raw cotton and bleached sulphite to make cotton piece goods and filament rayon and have paid for the manufacturing of it with foodstuffs and thus begun to create a market outside of England for our agricultural products. We could thus have obtained the exact kinds of textile goods which we are short of, at a much lower price.
Unfortunately, we never thought of that. So the United States will sell cotton to England. We shall sell Canadian bleached sulphite to England. England will take a substantial profit on United States cotton and on our bleached sulphite that she will ship to Germany. England will probably pay Germany for the transformation of this raw material into any kind of textile goods with our own foodstuffs, on which she will, no doubt, make another substantial profit. She will ship us back the textile goods that she will get from Germany and again make another substantial profit on them. See how
The Budget*-Mr. L. Dionne

smart these Britishers are. How do we compare in the picture? If England cannot dispose of this $55,000,000 worth of textile goods at market price, she will dump it at any price she can get on foreign markets. She may dump it right into the Canadian market if she cannot succeed in getting the exorbitant prices she is at present asking. How can we reasonably conceive that this enormous amount of textiles will not affect our industry? How can we expect to open the doors of other countries for our textile goods under such circumstances?
Who will get the benefit of this deal? England. Who will pay for these indirect large profits and high prices? The Canadian people. Who will lose by it? The Canadian government. Who will be penalized by it? Canadian labour and the German people, who will have to accept whatever wages England decides to impose upon them.
Now, let us consider the action of the British government in regard to the German people. Here is a nation which has been living on the charity of the American people for three years. The United States wants to help put these people back on their feet and is giving away billions of dollars for this purpose. England is so managing as to make a profitable deal out of it. Is it not a pity to see the British government take advantage of American charity to exploit the misery of the starving German people?
It might be interesting for hon. members to know the national income of our people compared with the income of countries in which some of these textile piece goods will no doubt be manufactured. On referring to page 44 of congressional United States proceedings volume 4, No. 1, December 1947, I find the following information:
"The united nations conference on trade and employment now meeting in Havana, Cuba, had assembled some interesting figures on national income in terms of United States dollars," continued Mr. Javits. "The United States national income of $1,200 per person per year was probably the greatest ever attained by any people. In France, it was $300; in Great Britain, $400; in Italy and Austria, $100 and in Greece, $70 per annum. In Argentine it was $300; in Brazil, less than $100 and in Chile, about $150 per person per annum."
How do you expect our labour to compete under such conditions with labour of foreign countries where the national income is so low? The more I think of the matter, the more I am inclined to conclude that it is unfair, unjust and unwise legislation to impose on the Canadian people.
When England wants to buy something from Canada, she sends representatives here to bargain wdth us. The Minister of Agriculture (Mr. 
Gardiner) knows something about the matter. My colleagues and I also remember the wheat deal of two or three years ago when England got our wheat at $1.35 to $1.55 a bushel when the market price was around $3 a bushel.
I recall the loan of $1,250 million made to England to buy our wheat. Heaven only knows if we shall ever be repaid this amount. I think the Minister of Finance has still something to learn from these Englishmen. I am practically convinced that if an English minister had the courage to propose to his government legislation such as that now submitted to us by the Canadian Minister of Finance, he would, to say the least, receive a very cold reception from his colleagues.
In proposing that cotton and rayon piece goods be admitted free in this country, the Minister of Finance states that the United Kingdom has for many years supplied an important part of our requirements of these commodities. I question this logic, because for many years England has been gradually losing her market for cotton textiles. Before the war her cotton industry was the despair of her industrialists, and her industry was unable to compete because of the labour unions' refusal to operate more than one shift. Furthermore, the labour unions opposed the introduction of automatic machinery on the ground that it would displace workers. Finally they had to admit in 1944, when they sent an official commission to the United States and Canada, that their textile industry was non-competitive. This is the handicap the English government should try to overcome. This would be a constructive and lasting move in the right direction.
The minister knows that British manufacturers sell their products at prices which are too high for us to buy. He knows these prices are very much higher than those prevailing in England. However, he is ready to let these goods come into Canada duty free. How can he justify such a strange business conception? It is simply amazing to hear such an unusual business proposition.
Does the minister think he is helping England by so doing? I dare say he is simply prolonging her agony. I know of no country, no industry and no people who can prosper without working. England will have to stop scheming and will have to abide by this universal law if she wants to get out of the rut. What England needs is to put her people to work. It is about time somebody told them that such a deal as that cannot help her. It will simply delay the greatly needed cleaning of her house. The sooner she is compelled to do it, the better for all concerned.

The Budget-Mr. Cockeram
With respect to income tax, I have already declared on two different occasions in this house that I did not favour any income tax on revenue of $1,500 for a single person and $3,000 for a married man. I do not like this method of taxation, because it is unjust, unfair and dishonest on account of the many people who evade the law. It is also a matter of great concern and anxiety for the farmers who do not know the law and who cannot comply with such legislation. How do you expect a farmer to answer properly a questionnaire such as the one printed on form T-l, a copy of which I have in my hand? It would take a competent auditor to answer intelligently every question printed on this form, and this auditor would have to follow it up year after year. Many farmers come to my office frequently with such forms asking me what to do with them. How do you want me to answer? I cannot tell them not to obey the law. On the other hand, they are unable to answer properly and intelligently practically any one of these questions. If I advise them to answer to the best of their ability, I know the income tax collectors will start to correspond with them regularly, asking for more information, until such time as the farmers get exasperated and throw the whole correspondence into the stove. Legislation should not be drafted in order to make people miserable.
I realize that the government will lose a substantial amount of revenue in exempting people with revenues of $1,500 and $3,000 respectively. But I have made suggestions to the government to compensate for this loss of revenue. I believe that if my suggestion had been given due consideration it would have helped to overcome inflation and would have been a source of satisfaction among the Canadian population.
I do not speak frequently in this house, but when I do so I try my best to co-operate in the creation of sound and honest legislation. Unfortunately, the suggestions of the backbenchers do not seem to create much of an impression on the Minister of Finance, but I hope that he will amend his ways. If he does not, we may just as well stop kidding ourselves any longer by using resounding hollow words like "autonomy", and take our colonial status which is the only rank we deserve.


Mr. ALAN COCKERAM (York South):: In entering this budget debate, Mr. Speaker, I do not propose to occupy the time of the house at any great length, but I do wish to bring to the attention of the Minister of Finance (Mr. Abbott) a few pertinent facts in connection with the oppressive taxation now existent, and to make a few suggestions which I feel warrant serious consideration.
For a nation of twelve and one-half million people, our burden of taxation is excessive when considered in relationship to the stage of our development, and the problems facing us in this regard. Last year the total revenue of all governments in Canada-federal, provincial and municipal-amounted to approximately $4,058 million. This figure represents no less than 37| per cent of the national income for 1947. If w-e consider taxation from the aspect of the personal income of Canadians for 1947, which totalled $10,110 million, 40 per cent was required to maintain our various governments. By far the greater amount of this revenue, $2,819 million, was taken by the federal government.
The effect of this oppressive burden of taxation on the individual Canadian is apparently quite evident to everyone except the Minister of Finance and his colleagues in the cabinet. I am sure that members who support the government in this house will agree with me in that statement.
We have come to the unfortunate position in this nation where forty cents out of every dollar of personal income last year was required to maintain our governments in the federal, provincial, and municipal fields.
One of the reasons advanced for the high percentage of personal income taken by governments in Canada is the demand for services and social security made by our people. Today in Canada, 16-2 per cent of the gross expenditures of our federal government is required to meet the costs of family allowances, old age and blind pensions, and unemployment insurance. Another 14-85 per cent of our gross expenditures goes to meet the cost of veterans' pensions. Agricultural and price control subsidies require another 4-3 per cent. Servicing of our public debt takes another 21-21 per cent. These are all charges which, in the opinion of a great many people, will in the aggregate increase rather than decrease in the years ahead.
I believe that as a democratic nation we must not only maintain but expand our social security measures in this country. As a member of this house I approve the policy of adequate pensions for those entitled to a better deal. I approve the steps which have been taken by different governments in the past in the field of social security, and recognize that the costs to the nation for social security, medical services, pensions, et cetera, will tend to increase rather than to decrease as the years go on.

The Budget-Mr. Cockeram
Last year, 8-87 per cent of our gross expenditures was required for national defence. I believe that our expenditures in this regard will tend to increase rather than to decrease in. the years that lie ahead.
With regard to national defence expenditures, I think the present program of the government is wholly inadequate and unsound. Located as we are between two countries where war hysteria is rampant-in one country because of lack of facts outside the iron curtain, and in the other country because of lack of facts inside the iron curtain-our present national defence program is wholly inadequate. We do not know whether or not Canada will be dragged into another war in the not distant future. I recognize, however, that our greatest security is preparedness, and that the Canadian people must spend money and effort to protect themselves.
I recognize, also, that we cannot build up adequate defences for this nation and at the same time lower our expenditures in this regaid, and that our defence program must necessarily be a long-range program. Unfortunately, the Russians today are obsessed by their insecurity, which leads them to believe that behind every action by the democratic nations in international affairs there must be some sinister design. As a neighbour nation of Russia, we must realize that probably generations must pass before people of that country can be expected to view the international scene with detachment, and without a feeling that every move by the outside world is designed to attack them.
Recognition of this, Mr. Speaker, should make it clear to the government and to the people of Canada that the need for us, as a nation, to build up our defences for our own security will be with us for many years and will, over those years, cost this nation vast sums of money.
In short, recognizing (a) the cost of essential services, including the servicing of our national debt; (b) the need for adequate defences for our own survival, and (c) the need for maintenance and expansion of social security measures for our people, it means that billion dollar budgets are with us to stay, as I said when I spoke on the budget last year.
I do not. however, approve the method followed by this government in meeting the costs of these things I have mentioned as essential, by the oppressive taxation with which the individual Canadian is now burdened, and which we apparently must bear until we come closer to an election. I recognize, further, that the. money has to come from somewhere, and as an alternative to this oppressive taxation I suggest a policy of expansion and development,

designed to broaden the basis of taxation and to lower the burden now carried by the Canadian people.
As a first step, I suggest the appointment of a full-time minister of mines, forests and scientific services. The action taken by the government last fall in establishing this branch of the Department of Mines and Resources was a step in the right direction, but unfortunately does not go far enough. I believe that this nation requires a full-time minister for the work now under the jurisdiction of the mines, forests and scientific services branch, and that the expenditures by this government in regard to the work of this department have been most niggardly, and penny wise and pound foolish, in the past.
With a total gross expenditure by this government last year of $2,634 million, the total expenditure to develop and assist the mineral industry of Canada was only $3,356,000. In other words, of every dollar spent by this government, approximately one-eighth of a cent was all that was spent to encourage and assist the mining industry in all its phases; and this, notwithstanding the fact that the estimated value of mineral production for 1947 was approximately $620 million, or an estimated figure of $49.60 per capita.
The mineral industry of Canada, under the able guidance and with the assistance of a fulltime minister, is capable of increasing its production to over a billion dollars annually; and if one is optimistic one can look, in the course of a few years, for an annual production in excess of the gross expenditures of this government last year.
I would suggest that the following matters of policy be taken under consideration immediately by a full-time minister of mines, forests and scientific services:
1. Decide with the Minister of Trade and Commerce (Mr. Howe) what is to be the policy of this nation in regard to the processing in Canada of primary mineral products, giving due regard to domestic demand and ability to sell in foreign markets.
2.	Review with the Minister of National Defence (Mr. Claxton) our present position with regard to existing supplies of strategic minerals both from a domestic and a continental defence aspect. It is no secret that dangerous shortages of strategic minerals exist in the United States today, particularly in regard to lead, zinc, copper, high-grade iron ore, and petroleum, and I would be most surprised if similar conditions do not prevail in Canada at the present time.
3.	Review with the Minister of Labour (Mr. Mitchell) anticipated demands for employ-

The Budget-Mr. Argue
ment in Canada-a problem which could quite conceivably become a matter of urgent national importance.
It is recognized that for every man in Canada employed underground in the mining industry, employment is provided for ten other people in servicing the demands of the industry in various fields.
4.	Review with the minister of immigration the ability of the industry to absorb, in gainful employment, above Canadian demands, those who come to this country from abroad in search of a new home and a new life.
5.	Reconsider the question of assistance to the provinces to defray the costs of improving transportation facilities into mining areas discontinued by this government last year.
This work in the past has had the effect of encouraging active development in many promising areas hitherto devoid of transportation facilities. I refer more particularly to the Snow lake district in northern Manitoba and to the Yellowknife district of the Northwest Territories.
6.	Provide for scientific technical and other investigations designed to further the development of the mining, metallurgical and related industries in Canada and the production of commercial products from otherwise waste materials.
7.	Provide greater governmental research facilities for the purpose of discovering greater efficiency in lower mining costs, and greater recovery from ores at present available.
8.	As mineral production increases, and since minerals are a wasting asset, I suggest that such a program is essential and that a greater appropriation should be made for geological survey work than has been provided for in the past.
9.	Reverse the present policy of the bureaucrats behind the government of this country, and take immediate steps to develop among Canadians an appreciation of the economic importance of the mining industry to this nation.
I believe that these suggestions warrant serious consideration by this government. True, they involve expenditures beyond those at present provided; but they are expenditures which will be repaid many times over in increased production, increased employment, increased revenue to the government in the way of taxes, and, last but not least, increased security for this nation.
All parties in this house are in accord with the principle of budgeting for a surplus of revenues over expenditures. But we are not in agreement with such a policy at the expense of:
1. Oppressive taxation on lower incomes.
2.	Paying off a large proportion of war debts by the present generation without corresponding governmental assistance to facilitate making the natural resources of this country available to the present generation to meet these heavy taxes.
3.	Without any appreciable effort on behalf of the government to curtail and eliminate waste and extravagance.
It is significant that in the presentation of his budget the Minister of Finance failed to give concrete evidence of any real effort by his department and other government departments to eradicate duplication, waste and extravagance.
I listened with particular interest to the speech delivered this afternoon by my good friend the hon. member for Dufferin-Simcoe (Mr. Rowe). The hon. member recalled the statement made eighteen years ago when, in the face of the Hawley-Smoot tariff, the Prime Minister (Mr. Mackenzie King) urged parliament and the people of Canada to frame our tariff policies so as not in any case to provoke the United States. He recalled the words of the Minister of Finance uttered in this house six months ago that we must tax Canadian industries twenty-five per cent so as to protect the long-range interests of United States firms.
Last night we heard from the Minister of Justice (Mr. Usley) speaking for the government and telling the house that before tax reductions are considered in this house we must conduct ourselves so that we shall not be "severely criticized and penalized by the United States".
In the words of a member of the press gallery, the budget was written "by the uneasy light of the stars in fear of the stripes".


Mr. H. R. ARGUE (Wood Mountain):: Mr. Speaker, when introducing the budget the minister gave us a summary of world conditions today. In my opinion, and I believe it is all to the good, the war hysteria which was so rampant in Canada some months ago has now ebbed considerably. I believe that only through working in the united nations with the other great countries can Canada do her part toward bringing about peace and prosperity in the world.
I am sorry that the government has not yet seen fit to recognize the new state of Israel. Our Canadian delegation supported the partition of Palestine. It seems to me that partition is now a fact, and our government should follow the governments of the United States, the U.S.S.R., and now our sister commonwealth nation, the Union of South Africa, in recognizing this state of Israel, so that Jewish people throughout the world may have in fact their long-hoped-for national home.
The Budget-Mr. Argue

It has been said often in this debate that the Canadian people were disappointed by this budget. That is putting it mildly. The Canadian people generally expected more from the government. They expected more, because the government has said to them during the war and also during the 1945 election, "If .you elect us we will prevent inflation, we will provide stability of prices and we will implement with the provinces an over-all social security program." So the people of Canada were disappointed. When, on the one hand, they saw a large surplus of revenues over expenditures, namely $670 million, and at the same time they saw in the budget no real evidence that the government was prepared to improve the lot of the average working man, they were disappointed.
In my opinion the government in this budget has done nothing to improve the lot of the average Canadian. Moreover, the lot of the average Canadian has worsened considerably since the budget of 1947, as a result of government policy. The people of Canada at this time were hoping that the eight per cent sales tax would be removed, that exemptions from income tax would be increased and that the government would undertake a social security program to provide better and more adequate old age pensions, and to provide an over-all health program.
There are many people in Canada at the same time-a growing number-who in a sense are not disappointed in the budget because they could not expect much from this government. I refer to the rank and file membership of the Co-operative Commonwealth Federation. The C.C.F. has become a national party because it believes that the present free enterprise system of the Liberal government, or any alternative free enterprise government, will not and cannot bring forward the legislation that is necessary to provide all Canadians with a decent standard of living and a fair share of the great wealth Canada can produce.
The members of the C.C.F. party across Canada know that their party has an alternative to the present inadequate, reactionary and backward-looking budget. The C.C.F. record is clear. It stands for price control; it stands for the removal of the sales tax on the necessities of life; it stands for a national labour code with adequate minimum wages and with a work week of forty hours. The C.C.F. party believes that profits of corporations should be kept within reason. Profits should not be allowed to run wild until they reach the point where, as the minister emphasized in his budget speech time and time again, capital expansion on
[Hr. Argue.]
construction and equipment reaches the stage where it adds severely to the inflationary spiraling of prices. The C.C.F. party believes that the only way to handle the great monopolistic corporations which so dominate the economic life of the Canadian people today is to bring those corporations under public ownership and operate them for the benefit of the Canadian people at large.
Canadians did not expect that in May, 1948, three years after the war, the cost of living would be as high as it is. Canadians did not expect to see inflation rampant in this country. At one time the minister prophesied that he expected the cost of living index would settle around 145, but today it is 152. The Ottawa Citizen of January 16 contained an article giving statements by various members of government made during the past few years in relation to the problem of inflation and price control. The statement is headed in this way-


Mr. PROBE:: Mr. Speaker, on a question of privilege. I am wondering if we lack a quorum just now?


James Horace King: It being six o'clock, I shall now leave the chair.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Hazen Robert Argue: Mr. Speaker, when the house rose at six o'clock I was about to deal with some of the commitments made by members of the government to the people of Canada, namely, that the government in the post-war period would undertake such measures as would prevent inflation. I was about to quote from an article which appeared in the Ottawa Citizen of January 16, 1948. The first part of the article reads as follows:
During the past seven years federal cabinet ministers and officials have been giving warning of the evils of inflation and high prices in announcing their determination to guard the Canadian people from them. At a time when inflation threatens to become acute through the abandonment of controls and subsidies, the following quotations make interesting reading.
J. L. Usley, May, 1945:
"Sharply rising prices in -the demobilization and reconversion period would undoubtedly be followed by deflation and serious unemployment afterward. Stable prices are therefore essential so that there may be a smooth adjustment to peacetime economy."
Annual Report of Bank of Canada for fiscal year ending March 31, 1947:
"Any excessive run-up in prices and costs would set the stage for subsequent deflation. It would affect different economic groups very un-

The Budget-Mr. Argue
equally and the resulting distortions would necessitate fresh adjustments before the basis would exist for a balanced and stable prosperity."
Mr. Abbott, Minister of Finance, January 11, 1947:
"A further orderly removal of emergency controls becomes effective on January 13, 1947. It is part of a deliberate and carefully-considered plan, designed to eliminate war-imposed restrictions as promptly as is consistent with the prevention of the sort of boom and collapse in prices -which was typical of developments after the first world war. The goal of the government's stabilization policy has always been and still is to preserve orderly conditions with a view to cutting off the disrupting peak in postwar prices and to avoiding, or at least greatly lessening, the drop which inevitably follows.
Throughout the past seven years, the government has committed itself to an anti-inflationary policy. Through many statements of ministers and officials the government has promised that price controls would be abandoned only after the danger of inflation no longer existed. Events during the past twelve months prove beyond the shadow of a doubt that the government has not kept its commitment to the Canadian people. Instead, it has removed price controls until today the cost of living is so high that the average Canadian finds it difficult to purchase the necessities of life from the shrinking value of his dollar.
In 1946 the increase in the cost of living index over 1945 was only 4 points. Throughout that time controls were maintained; but from February, 1947, to February, 1948, the cost of living increased by 22 points; an increase of only 4 points when the government was maintaining general price controls, with subsidies, and an increase of 22 points when the government abandoned its own program of price controls. So bad had the inflation situation become that the government found it necessary to do something to relieve itself from the attack of the Canadian people upon its price decontrol policy. And so the government set up a committee of the House of Commons to inquire into prices. Members of Parliament well know that, even since that committee has been set up, prices have continued to rise. Not one thing has come out of that committee that is known to have reduced the prices of any important commodities. In my opinion, by setting up the prices committee the government was merely trying to relieve itself from the justifiable wrath of the Canadian people. That committee has turned out to be nothing less than a whitewash, a poor substitute for the government's once good price control policy.
In his budget speech the minister repeated time and time again that one of the main
causes of the increase in prices was that corporations were expanding too rapidly in the field of reconstruction and in equipment replacement.


John Lambert Gibson: You mean, employment was too high?


Hazen Robert Argue: Oh, don't be ridiculous. I am merely quoting back to you what the Minister of Finance (Mr. Abbott) has told the house. My hon. friend, being a good independent Liberal, should accept the minister's word for it, as I do. However, Mr. Speaker, the minister's statement bears out the belief of the members of this group that the great financial interests in Canada should be nationalized. If they were placed under the control of parliament those policies could be inaugurated which would channel investments into such industries as at this time would increase the quantity of consumer goods available to the people of Canada.
Throughout the last year members of this group have from time to time quoted figures of various corporations, showing that profits have reached an all-time unprecedented high. When members of this group did that there was a general pooh-pooh from members opposite, who stated that we were merely selecting a few corporations and then making a broad, sweeping statement that all profits had risen accordingly. However, the figures presented in the white paper prove that the great corporations of Canada are making the highest profits in their history. What the Canadian people wish to know is how they as individuals have been taken care of through government policy as compared with the giant corporations.
On December 31 last, the government removed the excess profits tax. That tax on excess profits in the fiscal year 1945-46 yielded the government revenues of approximately $494 million, and in 1946-47, $448 million. These revenues will no longer be obtained because the government has removed the excess profits tax. I believe that tax was a fair tax; it was a just tax; it was a tax on excess earnings, and surely the companies that make excess earnings could better afford to pay taxes to the national exchequer than a single man earning something more than $750 or a married man struggling along on something over $1,500 a year.
The figures in the white paper prove beyond the Shadow of a doubt that within the last twelve months corporation income has increased much faster than the income of the Canadian people. Corporation income in 1946 amounted to $1,421 million; in 1947 it was
The Budget-Mr. Argue

$1,821 million. That was an increase of twenty-eight per cent. In the white paper the government tells us that personal incomes increased by only seven per cent, so that the profits of big corporations increased in 1947 over 1946 by an amount four times as great as the increase in the personal income of Canadians.


John Lambert Gibson: Where do you get your figures?


Hazen Robert Argue: Out of the government's white paper.


John Lambert Gibson: I am studying it now and I cannot see that.


Hazen Robert Argue: Read it carefully and you will find out. Corporation profits after taxes amounted in 1946 to $751 million and in 1947 to $1,017 million, or an increase of thirty-five per cent. That is corporation profits after taxes. Individual incomes, after direct taxes, increased from $704 per capita in 1946 to $741 per capita in 1947, or an increase of five per cent. So that the sum available to business, after paying taxes in 1947, had increased by an amount five times as much as the income of individual Canadians.
That, I submit, shows beyond contradiction that the government's policy within the last year has been one to make certain that the profits of big business in Canada increased to a far greater extent than wages, salaries and incomes of Canadians generally.
The cost of living index in February, 1948, as compared with February, 1947, had increased by seventeen per cent. During that period, personal incomes of Canadians had increased by only five per cent. The cost of living index had gone up by seventeen per cent, and individual incomes had gone up by only five per cent, so that the average Canadian in 1947 had twelve per cent less real income than he had in 1946.
I now come to undistributed profits of corporations, or, in other words, savings of corporations. In 1946 undistributed profits amounted to $411 million, and in 1947, to $609 million, an increase of $198 million, or forty-eight per cent. But individual Canadians within that period were unable to save at the same rate that they had previously, so that we find personal savings of individuals in 1946 were $957 million, and in 1947 those individual savings had shrunk to $588 million, a reduction of $369 million, or thirty-eight per cent. Undistributed profits increased by forty-eight per cent, but the savings of Canadians decreased by thirty-eight per cent.
In a situation such as that, one would expect that any government that had the interests of
(Mr. Argue.]
the Canadian people at heart would increase the taxes of big business and decrease the taxes of individual Canadians. But on page 4061 of Hansard, in his budget speech the minister estimates that corporation taxation in 1948-49 will be $591 million as compared with total corporation taxes of $687 million in 1947-48, or a reduction in the amount of tax levied on corporations to the extent of $96 million.
Personal income taxes, the minister estimates, will produce $15 million more revenue in 1948-49 than in 1947-48, so that, in spite of the fact that corporations have increased profits tremendously, in spite of the fact that the average Canadian cannot save as much as he did a year ago, the government in this budget is reducing taxes on corporations by $96 million and expects to extract $15 million more in personal income taxes from individual Canadians.
The minister, on page 4056 of Hansard, in the budget speech, says:
As consumers, -we are bidding eagerly for a limited supply of goods, throwing into the auction not only most of our current incomes but also part of our past savings and additional funds obtained by instalment credit.
He is saying that the individual Canadian is now throwing into the auction most of his present income and part of his past savings and is going into debt. In other words, the average Canadian is going bankrupt today at a time when big business is making large, unprecedented and unjustifiable profits.
The minister last year, in his budget, which foretold the removal of excess profits tax, which foretold his policy of removing price control, made the following statement on page 2626 of Hansard:
With the orderly removal of controls, with increasing supplies of material, with efficient and co-operative labour, and with ample markets, Canadian business enterprise is in a most favourable situation. We all expect it to show its mettle, both in production and in marketing.
Then note this:
We expect it to show its ability to keep down costs and prices. In its own long-run interest, as well as in the national interest, business must keep its prices down and its profits writhin reason.
The minister last year placed his hope in business. He said that in its own interest business must keep its prices down, but business did not keep its prices down. Prices have gone up tremendously, and still, in spite of the fact that big business had not warranted the faith the minister last year placed in it, the minister in his budget this year is doing nothing about the matter.
Does the minister think an increase in corporation profits of twenty-eight per cent is

The Budget-Mr. Argue
keeping profits within reason? Does he think an increase of thirty-five per cent in corporation profits, after taxes, is keeping profits within reason? Does he think an increase in undistributed profits in one year of forty-eight per cent is keeping profits within reason?
The members of the C.C.F. group believe that these profits are far too high. We believe that corporation taxation should be increased. If the government did that, they could get hundreds of millions of dollars of additional revenue, and at the same time they would slow down the huge capita;! expansion program which the minister has said is a factor causing much of the present day inflation. But after last year, when events have shown that the minister's faith in business was not justified, he states this year, on page 4056 of Hansard:
The policy of the government has been to return to a free price system and to moderate the inevitable increases in prices at this time by whatever fiscal and other methods are possible under such a system.
The minister this year tells the house that increases in prices are inevitable. But last year he was telling business to show its mettle, and to keep its prices and costs down.
Then we come to the changes outlined in the budget. One of the changes was to increase the tax exemption for a married couple over sixty-five years of age. Last year a married couple earning $2,000 paid an income tax of $70. This year they will not have to pay any income tax at all. The people in Canada over the age of sixty-five who last year had a net income of $1,930 will this year be given an additional income of $70 to bring their income up to $2,000. But the old age pensioners, the couple who are living on $60 a month, or $720 a year, are getting nothing from this budget.


John Lambert Gibson: That is not so in British Columbia.


Hazen Robert Argue: I said they are getting nothing from this budget of this government. That has nothing to do with the provincial government in British Columbia.


John Lambert Gibson: I thought the hon. member referred to the provincial government.


Hazen Robert Argue: The minister announced that that proposal would reduce the government's revenue by $5,000,000. Then the minister announced that an estate would in the future be exempt up to the sum of $50,000 instead of the present $5,000, and that the government would, as a result, lose another $5,000,000 in revenue. I think it would have been much better had those changes not been made and had that
$10,000,000 been spent on the old age pensioners today. There were 210,000 old age pensioners in Canada in 1947. That $10,000,000 would have meant an additional $48 per pensioner per annum, or an increase of $4 a month.


John Lambert Gibson: Why do you not start in with Saskatchewan?


An hon. MEMBER:: We have.


Hazen Robert Argue: We are paying an additional $5 a month in Saskatchewan and also providing free hospitalization, medical and dental care. I am sure the old age pensioners in Saskatchewan believe that the present Saskatchewan government has treated them well.


John Lambert Gibson: Why are they moving out to British Columbia?


An hon. MEMBER:: Keep on asking questions.


James Horace King: Order.


Hazen Robert Argue: I think it is a crime that throughout the budget the various changes made by the minister mean that the people in Canada who have already received or are receiving a high income will get a higher income while those people who are struggling along on a low income will get no benefits from this budget.
The C.C.F. group believe in better old age pensions. The government has led the Canadian people to believe, through its proposals to the provinces, that a general old age pension would be paid to everyone at seventy years of age, without a means test; and that the federal government would make a fifty per cent contribution available to the provinces for the pensions of people between the ages of sixty-five and seventy. But the government has not done that. The Liberal government had not provided the social security legislation that the Canadian people were looking for.


John Lambert Gibson: And British Columbia pays for it.


Hazen Robert Argue: But the government took care of the security needs of some Canadians. In 1947, this government introduced a bill, and passed it in spite of C.C.F. opposition, which increased the salary of the leader of the government in the other place by $7,000, giving him a total salary of $13,000.


John Lambert Gibson: How about our own increase?


An hon. MEMBER:: Was that a salary or a pension?
The Budget-Mr. Argue


Hazen Robert Argue: I have heard it called an "old man's home"; but when I hear of a salary of $13,000, it seems to me to be a pretty good home.
The same government in 1946 presented and passed in this house a bill to increase by one-third the salaries of judges. The government said, with regard to a judge who had been receiving $16,000, that for him to be a good judge, he must have a good income; and that $15,000 a year was not enough for a judge. So the government said, "We will give him $20,000 a year and we will give the old age pensioners $30 a month."


John Lambert Gibson: Why did we not study law?


Hazen Robert Argue: The C.C.F. party does not agree with a policy of that kind.
Then there was the famous pension for the members of the diplomatic service. The government guaranteed them a pension of from $3,000 to $7,000 a year, even if they had been in the diplomatic service for a period of only five years.
The government, in its proposals to the Canadian people in 1945, stated that it was prepared to assume sixty per cent of the national health insurance program. It estimated at that time that that sixty per cent would cost the federal treasury $150 million a year. The government did nothing for a long time after the 1945 election. A few weeks ago it announced proposals whereby the provinces could obtain, through various steps, up to $30 million a year. The federal government in 1945 promised the Canadian people $150 million a year for better health services. It waited for three years and then brought in a scheme to provide only $30 million a year. In this regard, Mr. Speaker, the government has kept its promise to the extent of only twenty per cent.


An hon. MEMBER:: Shame.


Hazen Robert Argue: I do not think I should end my speech on the budget without emphasizing the problems that face farmers at the present time. I can remember that ten years ago tractor gasoline could be bought for sixteen cents a gallon. That same gasoline todays costs thirty cents a gallon. Combines have gone up until now one of the better combines-a 14-foot self-propelled combine

will cost $5,000. The fanners beieve that their machinery is costing from two to three times as much as its value. Imperial Oil profits for 1947 were over $3,000,000 higher than in 1946. Massey-Harris profits in 1947 were almost fifty per cent more than in 1946. The Cockshutt Plow Company profits had increased by fifty per cent. The
[Mr. Gibson (Comox-Al'bernd) .1
Canadian Pacific Railway Company in applying for an increase in freight rates, estimated that its net railway income in 1947 would be $14,800,000. Instead of that, its net railway income turned out to be $22,800,000, or $8,000,000 more than it had estimated.
The picture across Canada is the same for almost all other corporations. Profits are going up by leaps and bounds. Companies can now charge everything the traffic will bear. The packing industry has told us that it charges the highest prices it can obtain for its products and that it buys the farmers' produce at the lowest possible prices.


John Oliver Probe: Good old free enterprise.


Hazen Robert Argue: The record of the Liberal
government today shows that, in all its major legislation, it has increased the profits of big business. It is increasing the net income of certain individuals over sixty-five years of age who are now earning $2,000 a year or more. At the same time it has not increased the old age pension. It is paying higher salaries and pensions to people in the other chamber, to judges and to tired diplomats, and at the same time this government is allowing prices to go sky-high, until today the average consumer in Canada does not know where he will get the money to buy an adequate supply of food and proper clothing, to educate his family, and to pay for a decent home. It is time the government changed its program.


An hon. MEMBER:: Change the
government.


Hazen Robert Argue: We will leave that to the Canadian people. Some seventy-six per cent of the Canadian people believe in price control, and I think it fair to assume that seventy-six per cent do not believe in the government opposite.
The Canadian people would like to see the following changes made at this time:
1.	Reimpose price controls on essential commodities and reinstate subsidies on essential goods.
2.	Increase corporation taxes and reinstate the excess profits tax.
3.	Raise the income tax exemptions to at least $1,250 for a single man and $2,500 for a married couple.
4.	Socialize the chartered banks so that loans may de directed in such a way as to increase the production of consumer goods.
5.	Increase old age pensions to $50 at the age of sixty-five, without a means test.
6.	Implement a national prepaid health service program.
7.	Levy the farmers' income tax in a fair and equitable manner; and this is important if we are to get the production we need.

The Budget-Mr. D. G. Ross
8.	Remove the unjust twenty-one per cent increase in freight rates; and I wish to emphasize that the increase in freight rates is a most important issue in the west at this time.
Mr. DOUGLAS G. ROSS (St. Paul's): Mr. Speaker, the hon. gentleman who has just taken his seat says the socialists advocate an increase in the corporation tax. I wonder if he realizes, and if he does not I should like to point out to him, that the corporation tax now collected by the government is figured in the cost of doing business, so that to increase the corporation tax would mean that the products of business would have to go up in price.
In taking part in this debate I want to congratulate the Minister of Finance (Mr. Abbott) on the way he brought down his budget on Tuesday, May 18, the budget to which all the people of Canada had been looking forward with high hopes for so long. The people of Canada expected some relief from taxation as a result of information which had been given out with respect to the surplus we were to have at the end of the year; but they were sadly disappointed. With the exception of one or two features, this budget was a disappointing document. It marks a departure from sound principles of taxation.
I would point out, Mr. Speaker, that in 1946 the government budgeted for a deficit of 8300 million and showed a surplus of $374 million. In other words, it took in $674 million more than it budgeted for. This may have been an error in judgment, but believe me it was some error. Again in 1947 the government budgeted for a surplus of $190 million and turned up with a surplus of $670 million, a miscalculation amounting to the huge sum of $480 million. In the two years the miscalculation in its forecasts amounted to only $1,054 million. These miscalculations must come as a bit of a shock to many people. It may be a pleasant shock, but just the same it is a shock.
I cannot think they were altogether errors in judgment; they were too large. Even taking into consideration the immensity of the calculations necessary in preparing a budget, it seems to me that a more accurate forecast could have been made. The government had all the information at its disposal; it had the experience of the 1946 forecast, and the actual results that year. I cannot help thinking-and many others feel the same.-that it was either the result of a combination of guesswork and incompetency, or deliberately arrived at for some ulterior motive. Perhaps the government felt it would Like to prepare for an early general election this year, and wanted' to turn up with a surplus of $670 million in order to 5849-284
show the people of Canada what fine fellows they were. It can be fairly assumed that mistakes and errors of judgment are to be anticipated, but surely not on this scale.
As I said before, the surplus was anticipated by the public from at least the middle of the year, according to the information they had been given. In fact they thought it would be closer to a billion dollars; and certainly they thought there would be a substantial easing of taxation in the various fields. What a let-down the people have had 1 They have been given practically no relief. This year taxes are proposed not only to provide for expenditures but for the sum of $549,000,000 in excess of requirements, the largest amount ever budgeted for in the history of Canada. Apparently one of the objectives is to cut down expenditure by taxpayers with a view to guarding against inflation. This is not a taxation principle; it is but an extension of the controls which most people wished to have diminished as rapidly as possible following the war and finally done away with. This country has been built up and has prospered largely through the thrift and enterprise of its people. I am sure- it would be better and safer to depend upon the thrift of the individuals than to take all available money away from them in order to prosecute plans which may not be quite so successful as the planners hope. I believe the people of Canada want to provide for themselves with as little government aid as possible.
It always happens that one control leads to another, and results in an increase in the cost of living. Taxation comes out of all the people, not just a few. The people in the middle brackets are just about as hard hit as anyone. It is very difficult for them to get on with the high rates of taxation in effect at the present time.
The minister tried to point out that the government was exercising every possible economy. It does not seem to me like that. If one looks at the estimated expenditures he will find that the onlv economy contemplated is to be imposed on the taxpayers of Canada. While in 1939 we had
49,000	civil servants, today we have 117,000, all of whom are non-productive.
I would point out that for every thousand millions dollars by which we reduce our debt, we reduce our interest charges by about $27,000,000. Let me point this out, that for every ten thousand civil servants we are able to do without today-and if the government would use better methods of economy, I
The Budget-Mr. D. G. Ross

believe we could do without many of them- we would make a saving of at least $20,000,000 to the taxpayers of Canada.
Going through the estimates, we find that in the ordinary expenditures there is an increase this year of more than 8174,000,000- an increase, in this day and age, over last year. That is in the main estimate. It is right there, on ordinary expenditures. Certainly this does mot look like vigilance on the part of the government in reducing expenditures. I say there should have been a reduction instead of an increase in these ordinary expenditures.
And, by the way, I should like to quote an article that appeared in today's Ottawa Journal, which states:
There is another line of attack parliament might take 'and more usefully. Attack upon expenditures.
It goes on to say:
Increased expenditures since 1938 due to the war total $831,753,373. Increased expenditures since 1938, not due to the war, total $737,681,383.
And then the Journal goes on to say:
Here is Parliament's real job. The job of watching what the government does with the great surpluses it has on hand, land will have on hand; checking the temptation to spend which will be born of such great sums of money.
And it goes on to say:
The checking of estimates, with audit of accounts, is parliament's traditional function. Parliament has been betraying that function.
The article states that is one reason why taxes are high and expenditures are high. That is true. Some method will have to be taken by parliament to check on these expenditures.
It will be noticed that when the estimates are under consideration it is very difficult to get any detailed information on expenditures. For the average member of parliament it is impossible to get from the ministry any details with respect to expenditures. Ministers should be able to give that information. Surely there is some way of getting it, some way in which the ministers of each department could be questioned-in a committee, or in some other way.
For instance, in this year we shall find that hundreds of millions of dollars will be put through before the end of June. There has been much talk about one thing and another; but the real business of parliament is to get down to the matter of seeing that expenditures in this country are kept down, and to see that the government is not overspending.
As I said before, in 1946 there was a reduction in taxes with a budget forecast deficit of

S300 million. This reduction was hardly expected, but it came. It is true that when the $374 million surplus was announced in 1947, after the year's operations, the people expected an easement of taxes, and they got it. Now, with an estimated surplus of $549 million for 1948-49 and a surplus of $374 million in 1946 and $670 million in 1947 there is practically no relief for the taxpayer of Canada.
I want to say, no matter what anyone else says, that the people of Canada are good and mad because they have not had some relief from taxation. It is all very well and most commendable to reduce the debt, but in reasonable amounts. In 1946 the net debt rvas $13,421 million; in 1947 it was $13,069 million, or a reduction of $352 million. In 1948 the net debt was $12,377 million, or a further reduction of $692 million; or a total reduction in two years of $1,044 million, or eight per cent.
People certainly expected they would be given some relief by way of a reduction in taxation. Also I am sure they expected there would be some debt reduction as well. Might I say in passing that there are many more thousands, if not millions, of people needed in Canada to help develop this country, to produce and to work out their living for themselves on their own behalf. The more we have here, the fewer we shall have to feed overseas. The more we have here, the more we shall have to help feed those who are overseas. The more we have here, the more we shall have to help service our $12,377 million debt.
Now, what about the estimated surplus of $549 million for 1948-49? With the example of the 1946 forecast, which was underestimated to the extent of $647 million; and with the 1947 underestimation of $670 million, how accurate is the 1948 calculation? Should it be $800 million, $900 million or $1,000 million?
In any event, the mounting cost of living is not underestimated. Under present government policy it may be expected that the cost of living will continue to rise. It has risen in Canada from an index of 131 in April, 1947, to an index of 152 in April of this year, or an increase of 21 points. The cost of clothing has gone up 36 points. It will probably approach the cost of living index in the United States index of 168. The cost of living in the United States has risen by only 12 points in the year. If this occurs-and it probably will-revenues will increase rapidly. Everything points to a much larger surplus, and also everything points to an election next year.

The Budget-Mr. D. G. Boss
I do not know whether the minister has deliberately underestimated, for the purposes of an election next year. I cannot say that definitely. But, judging from his budget, I would suggest that this might be so. And what a hurrah there will be when the election is called-when the government is deader than it is now. It will have to have artificial life from somewhere. The public will have to have some kind of shot in the arm in order to keep them sweet with the government. I suppose that shot in the arm from the government will be a huge surplus and huge tax cuts. I cannot say that will happen, but I am bound to forecast that I believe it may happen, and I shall be more accurate than the minister.
The Minister of Justice (Mr. Ilsley), speaking in the house on Wednesday, said that this kind of budget does not provoke immediate commendation. Indeed it does not-it has provoked condemnation. He said that it will get more approval as time goes on, but he does not need to fool himself. The people do not like to be mulcted for political reasons under any guise or excuse, but that is what they think this government is doing. It is a bid for power next year, but they will not forget.
The hon. member for Dufferin-Simcoe (Mr. Rowe) referred to what the Minister of Justice had given as a reason for there being no reduction in taxation this year, that because of the tremendous efforts the United States people are putting forth by way of aid to Europe we could not do much more than we are doing; they would resent our shoving our taxes down. What utter nonsense!
Let me point out that Canada has done more in this connection on a per capita basis than has the United States. Despite the tables in Hansard with regard to federal and state income taxes, the people of Canada are paying far more than are the people in the United States when we take into consideration sales and excise taxes and customs duties. The people of Canada have nothing to be ashamed of, nor need they make excuses to their friends to the south even if our taxes were lowered. I would also point out that we in Canada are paying for two years more of war than are the people of the United States. So no reduction of taxes because they might be annoyed! In the meantime the people are mulcted of their hard-earned wages.
As I said before, the public expected an easement of taxation. Only last week when I was home in Toronto, several office managers informed me that a day or so after the budget was announced employees began flocking to their offices requesting wage increases. These increases are asked because the government's
5849-284J
inflationary policy has increased the cost of living. Increased wages will increase costs, further adding to inflation.
Because of taxes-personal income tax, sales tax and excise tax on soft drinks, candy, cigarettes, et cetera-the average man finds it most difficult to put anything aside. His income is exhausted by taxation and current bills. Wage earners seek relief from the high cost of living by demanding more take-home pay. Without there being some reduction in taxation, that is bound to happen.
What about the eight per cent sales tax? The eighty cents that was paid by way of tax on an article which sold for $10 wholesale in 1939, in most cases, because of the increased price of the article, is now $1.20, $1.40 or even $1.60. Hon. members can see how inflationary that is. It tends to hamper and discourage the production of goods. Production is the real cure for inflation. As I pointed out, even with the present level of the corporation tax, part of the cost of doing business is such that the selling price of manufactured articles must be increased.
Let us consider the inexcusable and iniquitous excise tax of twenty-five per cent. In many cases this tax is imposed upon the retail price which includes the sales tax. Also take the tax on automobiles as another example. The cheapest car on the market sells for $1,655 retail. The excise tax on this car is $256; the sales tax is $82.20, or a total tax of $328. The mark-up of twenty per cent on these taxes amounts to $67, making a total increased cost of $405 to the buyer. Automobiles of this type are not luxuries. There is no more room in the large cities and people have to go to the suburbs. A car is a necessity because the hard pressed man has to get out of the city. But he finds that he must pay $405 more. That is inflation; you cannot get away from it.
All these taxes are being left on with this budget to obtain an advantageous position next year in the case of a general election. The minister says the government is unwilling to lighten the burden of taxation because of its policy of fighting inflation with taxes or, in other words, the planned control of spending. He terms this policy anti-infiationary, but that is a misnomer.
Taxation in this country has aggravated inflationary tendencies because it is too onerous and unjudiciously applied. What has happened? Bank statements show that the rate of public saving has dropped because of the rising cost of living as expressed in the wholly fallacious price index for consumer goods and the heavy impost on personal earnings. The desire to save and the pride of ownership have to a great degree been destroyed. As a matter of fact,
The Budget-Mr. D. G. Ross

they have been made impossible because of these taxes. It is not only those in the low-income brackets who are having a bad time; those in the middle income brackets are having just as tough a time.
As I said, the budget is inflationary because the present taxation brings savings out of the bank or out of the old sock. It tends to liquidate savings in bonds and discourages investment in productive enterprise and thus hinders production. The collection of so much money by taxation tends toward improvident spending on the part of the government. It draws money out of productive employment and spends it on an overlarge army of government employees and bureaucrats, most of w'hom are non-productive, as well as pumping the money back into consumer channels by way of salaries and wages, with no production of real wealth.
If there ever was a policy which was not anti-inflationary, the policy of this government is certainly one. Talk about controls; one control just leads to another and you never know where you are going to end. It is just about as hard to control individual spending without inflation.
Then, as to the government policy with respect to importations from Great Britain, the minister is reported on page 4063 of Hansard as follows:
If we diverted our prospective surplus into a redutetion of taxes now, it would add hundreds of millions of dollars 'a year to the already intense demand of Canadians for goods and services-
I doubt that very much.
-but it would add nothing to the volume of Canadian goods and services available for sale. People would try to buy more, but there would not be more to buy, unless tbe effort to get it resulted in more. imports that we cannot afford and which we would have to shut out somehow or other. Prices would be sure to rise.
Unless it resulted in more imports that we cannot afford to buy. There are imports from Great Britain which we can afford to buy. In fact it is most necessary to do so. We have a staggering but stagnant balance with them now. We all know that Great Britain needs goods and foodstuffs from Canada. London will have to dip into her dollar and gold reserves to the tune of $1 billion for the year ending December. It shows that they do need the money. We must do everything we possibly can to see that they get the money. Canada can produce the food that Great Britain needs, but Britain needs the cash to buy these goods. This government is taxing the people at the present time to buy from themselves to send to Britain; in other words, we are lifting ourselves by our bootstraps,

creating a false prosperity. We have that right here at the present time. We are selling to Great Britain for no productive return. Quality and quantity of goods on the market are the best things in the world to stop inflation.
This policy is having only one effect, augmenting and emphasizing the impact of scarcity of consumer goods in Canada, and further increasing inflation. The government is hoping that the Marshall plan, the ERP program, will have some effect and will save Canada from its present dilemma. I think the government's hopes are groundless, if we may judge from the information we get on the condition of the countries over there. In the meantime the government has prohibited the importation of certain goods and placed other goods under quotas and import controls in the austerity program. That is inflation. It prevents the goods from coming in; therefore it increases prices. This program is, of course, government control in Canada-with a vengeance.
Great Britain comes under the same category as that of the United States in this program. Why should this be? Why should Great Britain be placed in the same category, when she needs our funds and our goods? I suggest that all these controls against the importation of goods from Great Britain be done away with at once. There are many hundreds of products of the British isles which could come in here in normal trade. It would be encouraging to the people of Great Britain. The suspension of the preferential tariff on British cottons and rayon goods is to be commended. Remove all the articles, or most of them, from schedule I, the prohibited list and it will increase the supply of goods in Canada and be anti-inflationary. It will help Britain and Canada.
The reduction of taxes, combined with the supplementing of supplies from Great Britain, will aid in reducing prices and combating inflation. The plans of 'the planners have gone wrong. They have not stopped inflation in prices or reduced the cost of living. Taxes have a great bearing on it. The government must cut down on its expenditures and get away from so much paternalism and regimentation, and the control over the spending of the people. The people want to stand on their own feet. They want an opportunity to make their own way in this wonderful country of ours, to use their own initiative and to spend and save their own money according to their better judgment. I ask the government and the parliament of Canada to trust the people.

The Budget-Mr. Maclnms
Mr. ANGUS MaeINNIS (Vancouver East): Mr. Speaker, the best that one can say of this budget is that its sins are sins of omission rather than of commission. It is indeed the kind of budget that one would expect from a bright young Conservative lawyer called to administer an important government department. If I may be allowed to paraphrase a famous statement I would say of this budget that seldom did a finance minister say so little in so many words; nevertheless there are a few items in it that deserve analysis.
I wish to refer for a few moments to the raising of the income tax exemptions on incomes of persons sixty-five years of age and over. There are valid reasons for raising income tax exemptions at this time, but surely it should be done on the basis of income and not on the basis of age. This is adopting a new principle in Canadian taxation, and may I say it is a most illogical principle. If it is carried to its logical conclusion, some day when you give your little boy eight cents to go to the store to buy a chocolate bar the person behind the counter will ask him, "Is it for yourself or for your grandmother?" That is exactly the sort of absurdity that this principle of making exemptions according to age leads to. Why should a person who has, let us say, the income that I have been receiving for the last few years, namely, $6,000 a year, receive an extra exemption of $500 a year just because he or she is 65 years of age or over? Surely no argument can be made for that sort of thing, but an argument can be made for the change that was not made, namely, raising the exemptions of all persons in the low-income groups by $500.


Mr. McIVOR:: There are not many of them.
Mr. MaeINNIS: If my hon. friend was not a preacher I would doubt his word. However, since he is, I suppose I have to take his statement, but he will have, when he goes home to Fort William, to square it with the people there.
When the minister made the proposal in his budget speech the other evening he said at page 4067 of Hansard:
Having in mind the large number of elderly people living on small fixed incomes, and out of consideration for the particular trials and increased expenditures that usually come with advancing years, I am proposing that an additional exemption of $500 be granted to a taxpayer of sixty-five years of age or over.
It is too bad that the Minister of Finance (Mr. Abbott) did not have a talk with the Minister of National Health and Welfare (Mr. Martin) before he drafted the amendment to the Old Age Pensions Act last session. It is
too bad that the latter did not have an opportunity to tell the Minister of Finance of the troubles and trials of people in the seventy years of age group, and the increased income they should have because of their increasing disabilities. Evidently that was not done.
I agree with the minister that many in the sixty-five years and over group find it difficult to exist on their present incomes, but I want to tell him that very few of those who need assistance and need it most, will be helped by the exemption, because their incomes are not high enough to be taxed. Surely these are the people who need help.
Having mentioned the old age pensions, let me compare these exemptions with the government's old age pension policy. The old age pension is $30 a month, or $360 a year. Remember also, that if the wife of a pensioner is not eligible in her own right, although she may be sixty-five years of age and cannot earn an income, there is no contribution on her behalf. The two of them have to get along on $360 a year if they have no extra income. If they have extra income, a single person can have income up to $600. A married couple can have an income up to $1,080. If, however, the income goes above these amounts their pension is reduced accordingly.
Surely there must be something wrong with the sort of reasoning that gives an increased exemption to a person who has an income of $750 or over, if single, and $1,500 or any amount over that, if married, and then refuses to allow to a single person the right to increase his income over $600 without being penalized, or a married couple to increase their income over $1,080 without penalty.
Old age pensioners, as I have pointed out, cannot receive benefits. This provision does not allow for it, because under it their incomes are not high enough. According to the 1947 report on the Old Age Pensions Act, forty per cent or more of the population of Canada at. the age of seventy or over are now in receipt of old age pensions. The number last year was, I believe, 209,029. I do not know how many will benefit under the government's proposal for raising the exemption, but I am satisfied that it is not anywhere near one-half this number. I would say the figure would be about 80.000, or about eight per cent of all persons sixty-five years of age and over.


Mr. MARTIN:: The total number is 275,000.
Mr. MaeINNIS: Does the minister say the total number of old age pensioners is 275,000? My figure was for the year ended March 31, 1947.
The Budget-Mr. Maclnnis

The economic condition of persons seventy years of age and over is tersely, and I presume correctly, put in the green book containing the government's proposals to the provinces in 1945. At page 37 I find, under the heading of "Deficiencies of the present scheme", that is to say, the scheme we have now, the following:
The means test is generally recognized as undesirable after a certain age. It has been noted that about 40 per cent of all persons of seventy years of age and over make application, satisfy the means test requirements and receive pensions. There is little doubt that a very considerable number in addition are not able entirely to support themselves, but are dependent upon their family, and refrain from applying for pensions because of embarrassment occasioned by the means test.
None of these people will benefit under these exemptions. Then, as regards those in the sixty-five to sixty-nine age group, the same green book states:
The minimum age of seventy, though convenient as a dividing line with respect to the payment of any kind of universal old age pension, is nevertheless too high in a number of eases of actual need. A strong case can be made for reducing the age limit to sixty-five in order to provide assistance, at least for those in the age group sixty-five-sixty-nine, who are actually in need.
It seems to me it would be much better, and it would serve a much greater need, if the government, instead of allowing additional exemptions to those who least need them, had done something to help those who are in dire circumstances.
I suggest to the Minister of Finance that income tax on the age basis is wrong in principle, that the people who need assistance are those whose incomes are not sufficient for a standard of living that can maintain health and decency. Therefore, income tax exemptions should apply not only on the income of persons of sixty-five years of age and over but on all incomes below $1,250 for single and $2,500 for married persons.
By way of a little advice to the Minister of National Health and Welfare, I would say that the government's proposals for increased exemptions for persons of sixty-five years of age and over make the means test for old age pensions more illogical than ever, and I suggest that he bring in a bill, even at this session, to eliminate that. There is no longer any logic or justice in maintaining it after the proposals for the new income tax exemptions have been approved. The abolition is also, as the hon. member for Winnipeg North Centre (Mr. Knowles) reminds me, mentioned in the proposals set out in the green book, in which the government agreed to assume the whole pension without a means test for persons seventy years of age and over.
[Mr. Maclnnis.)
I am not quite sure, but I believe the minister said in his budget speech that one of the reasons for not raising exemptions in the lower income groups was the fear of its inflationary effect. On page 4056 of Hansard he said:
As consumers, we are bidding eagerly for a limited supply of goods, throwing into the auction- not only most of our current incomes but also part of our past savings and additional funds obtained by instalment credit.
I am wondering whether the minister realized the implication of his own words. Speaking in the budget debate last year, I drew attention to the fact that instalment buying was on the increase and that this could mean one thing only, and that was that people were not able to buy the necessities of life with their current income. If that was the case a year ago, it is more the case this year, because prices have risen considerably in the meantime.
In a recent report by the dominion bureau of statistics, it is stated that, although the money value of retail sales is still increasing, the volume of goods sold has been decreasing since October of last year, and that the decrease in volume since that time is about ten per cent. What is happening, then, is this, that as consumers we are paying more money for fewer goods. To those in the higher income brackets that is not of very great importance. It means one of two things. They can reduce their savings or they can reduce their luxury buying; but, as far as the essentials or the necessities of life are concerned, they can still buy sufficient to maintain their living standards. For those in the lower income groups the situation is quite different, For them higher prices mean a lowering of living standards and also going into debt. That situation needs to be rectified, in my opinion, as soon as possible. One way of rectifying it is by raising the exemptions and giving more income to those in the lower income groups, even if this has to be done by raising taxes in the higher income brackets.
The drastic increase in prices in the last year and a half or two years make the raising of the exemptions in the low-income groups nothing more than a straight matter of justice. Let us just see what the situation is. The exemption of $750 for a single person and of $1,500 for a married couple came into effect on January 1, 1947. The cost of living index at that time was 127. The index today, as it appears in the minister's budget statistics, is 152, or in other words, there is a rise of approximately twenty per cent in the cost of living. This means'that the $750 of January 1, 1947, is worth only $600 now and that the $1,500 is worth only $1,200 now. Yet with all

The Budget-Mr. Maclnnis
those facts before him, the Minister of Finance and the government expect the people of this country to carry on as if nothing were wrong. I am afraid they will have a rude shock some day, because you cannot treat people over a period of time in that fashion, without producing certain changes in their mental outlook and on their loyalties.
Considerable was said, Mr. Speaker, about the large surplus announced by the Minister of Finance. I will say at once that I have no objection whatever to the Minister of Finance showing a large surplus. Any objections that I have in the matter are based not on the size of the surplus but on the way in which the surplus was raised. Too much of it was raised by indirect taxes and too little from direct taxes, at a time when incomes in certain quarters were at an all-time high. It seems to me that if the government at this time did not provide for a substantial surplus, it would be subject to severe censure by the people of this country. We have a huge debt occasioned by two wars and ten years of depression. Surely we are not to continue paying interest on that debt forever or until, if economic conditions get bad-as they were before the war-we shall be adding again to the debt.
I should like to point out to hon. members who are objecting 'to this budget that the interest on the national debt last year, in 1947, was $466 million, or more than twenty-one per cent of the total expenditures. May I also point out that that is only $50 million less than the total estimated revenue for the year 1938, just ten years ago.
I think it was the hon. member for Mus-koka-Ontario (Mr. Macdonnell) who the other day said something about being old-fashioned. I may be old-fashioned. I do not like debt and I do not think debt is any better for a country than it is for an individual. The time when we should budget to reduce the debt is a time like the present when the government finds itself in the same position as the people who appeared before the prices committee who say, according to their evidence, that they made money in spite of themselves. They said they could not help it. When it was pointed out that their profits were unduly high, they replied that they just could not help it, that they made the extra money because the market was that way; and the market was that way because the government removed price control. Because the government did not maintain price controls, it has more money than it budgeted
for; and just because it has that, I think the country should get the benefit of it in reduced debt.
There are a number of other items I should like to refer to, but I want to have time to refer briefly to some comments made by the financial critic for the official opposition. I am doing that because the hon. member made a plea for clear thinking. Because he made a plea for clear thinking, I took the trouble to read his speech most carefully, and I am bound to say that seldom have I read a speech that is so full of cliches and catch-phrases as is the speech of the hon. member for Muskoka-Ontario last Friday. I hope the hon. gentleman will pardon me for saying that, because I have a high regard for him. But as he in the same speech also made a plea for intellectual honesty, I am bound to say what I have said.
I shall refer to only two or three points. At page 4242 of Hansard he is reported as having said:
I am sure everyone will agree, even those who do not share the view that private enterprise is the solution to our economic^ problems, that the lifeblood of private enterprise is that new and small businesses should constantly be coming into the picture and be encouraged to become bigger.
It usually happens that a small industry does get bigger, but as it gets bigger, the smaller ones have a tendency to disappear. I have no objection to the hon. gentleman wanting small industries because they are the lifeblood of the country, but when at the same time he says he hopes they will get bigger I really cannot understand him.


Mr. MENARY:: You would not want them to get smaller, would you?


Angus MacInnis: The average life of an industry in the United States is eight years. From the way they were going under during the ten years between 1930 and 1939, I do not know whether their span of life is longer in this country, but we may find out.


Mr. FULTON:: He means he hopes they will prosper.


Angus MacInnis: Well, I hope so, too. Then at page 4247 of Hansard the hon. member gets down to the matter of saving. He said:
I am going to say a word about savings, though one is almost self-conscious in talking about savings these days. Many people think that is a silly old-fashioned thing only talked about by people who are still living in the nineteenth century. My own belief is that there is great danger in the view which is so widely held that wealth consists in pieces of paper. If only we could think of it in terms of goods I believe we would be much more sensible. If we would also remember that at the present
The Budget-Mr. Maclnnis

time we are living largely on savings, as I say both government realizations and the savings of private 'individuals, who are spending more than they are saving, as a whole, we would appreciate how important it is.
I think we should be clear in our own minds as to what are savings, because I do not think the hon. gentleman is clear. What are savings? My own definition is that savings are that part of the national income not spent on consumption goods, if it is invested in capital goods for the production of new wealth. As long as savings can be invested in producing new wealth, saving is desirable. When savings cannot be used in that way, saving becomes socially undesirable; it becomes hoarding, and is a detriment rather than a benefit to the economy. As a matter of fact, anyone who believes that the money used to exchange the goods we produce is wealth is backward in his economics. It is so elementary that it is hardly necessary to refer to it.
The fact of the matter is that at present we are not living off our capital; that is, we are not consuming capital without replacing it. In one or two places during his speech the minister said that a part of our trouble was that we were trying to replace too much capital too quickly. I am going to quote some figures, not in dollars but in terms of production.


Mr. HACKETT:: Before the hon. gentleman goes on, would he permit me to ask a question, for purposes of information only? Is not unproductive capital about the only kind of capital the proprietor can keep at the present time, in England, under the income tax laws?


Angus MacInnis: 
Edmund Davie Fulton: Did you hear what your deskmate said about Russia the other day?


Angus MacInnis: I do not know what he said.


Edmund Davie Fulton: He said it was the sort of socialism we should have here. The hon. member for Cariboo (Mr. Irvine) said that.


Angus MacInnis: There are no strikes in Russia, either-I suppose there are not. And we are getting to the stage where there may be no strikes in this country. John L. Lewis, that champion of private enterprise, was fined twice and his union was fined twice, not so long ago, for going on strike. The railway employees in the United States were told that they could not go on strike, either. And if it

The Budget-Mr. Heon
comes to a showdown, the railway employees in Canada may be told that they cannot go on strike, either.


Stanley Howard Knowles: Or they will lose their pension rights.


Angus MacInnis: Let us be reasonably and at least intellectually honest, as the hon. member for Muskoka-Ontario says, in what we do and in what we say. There is a tendency-and let me tell hon. members it is a dangerous one-as one hon. member mentioned in the house a few evenings ago, to label everyone you do not like as a communist, a nazi or anything that you do not like.


Mr. CASE:: There is a box factory in Saskatchewan run by the government, and the workers were not allowed to strike.


Angus MacInnis: The government of Saskatchewan has the best trade union act in Canada. That is not my say-so; it is the assertion of heads of labour organizations in this country. And they have collective bargaining in all its phases, even in the civil service.


Wilfrid Garfield Case: They would not let them strike, though.


An hon. MEMBER:: They fired the strikers.


Angus MacInnis: They did not fire the Strikers. Everyone of them is back in his job.
I see, Mr. Speaker, you are rising to tell me that my time is up, and I shall draw my remarks to a conclusion. I say we are living in dangerous times. When people have proven by their stand on various questions over periods of years that they have integrity, that they have understanding and that they believe in democracy, then other people, even if they do not like their philosophy, should not for political purposes try to confuse the minds of the people; because confusion is dangerous.
(Translation):
Mr. GEORGES H. HEON (Argenteuil): Mr. Speaker, the budget proposals for the current fiscal year, presented to this house on May 18, may have seemed perfectly orthodox to those who drafted them, but they were received by our aggravated people with no more enthusiasm than was displayed by the Minister of Finance (Mr. Abbott) in presenting them or by hon. members in digesting them. This statement of the government's tax policy has brought no relief, no easing of the burden of income tax which the taxpayer of less than sixty-five years of age has to bear, whether he be a farmer, a merchant, an industrialist, a professor, an office employee, a professional or a labourer.
Among the chief victims of this new tax policy will be the heads of families, especially in the province of Quebec, where large families are not uncommon. Already they were overburdened by those numerous and irritating taxes, by the dwindling away of their pay envelopes from which were deducted the taxes collected at the source, unemployment insurance contributions and the like, by the ever-increasing cost of food and clothing and by a disheartening decline in the buying power of our Canadian dollar.
In fact, because tax exemptions remain unchanged while the people's purchasing power has been cut down by the higher cost of living, the income tax, though remaining at the same level, may well be considered higher in comparison with former years. This very afternoon, I went to the Dominion Bureau of Statistics to get definite information on the cost of living index.
In April of 1947, it stood at 130-6 while today, May 27, 1948, it has reached 151-6, highest point in the history of this country, not excepting the period that followed the first great war, although at the time there were no such things as controls and cyclical budgeting.
In the past twelve months therefore, the cost of living index has gone up 21 points. In view of this inordinate increase, taxes and exemptions that remain at the same level as last year are causing taxpayers a substantial degree of hardship of which they have good cause to complain. Some waggish newsman has called these proposals a "vinegar budget". Well, many a taxpayer will agree that the expression is sufficiently bitter to describe their feeling in the matter.
Canadian taxpayers, especially those who supported this government in the 1945 general election, had a right to expect a substantial tax cut. In fact, in the Liberal party's 1945 election platform, which I have before me as I speak, I find at pages 4 and 13 the following pledges:
Tax reductions-the Liberal government will gradually reduce taxes when the war is over.
Taxes will be lowered in order to release the people's purchasing power and give Canadians prosperity, employment and freedom.
Then, again at page 7:
Tax reductions-war taxes will be lowered or repealed on May 11, 1945. Consumer goods will soon be back on the market at 1941 prices. Income tax reductions will come next.
The steady rise in the cost of living index which has now climbed to 151-6 and the government's tax policy are a far cry from the
The Budget-Mr. Heon

pledges I have just quoted. If that is what is understood by cyclical budgeting, a system praised so highly by various theorists, it were perhaps better to return to the old principle that allowed the taxpayer to benefit fully from any accumulated surplus. This year, the apparent surplus amounts to $679 million, and will be devoted almost exclusively to reducing the national debt that now reaches the astronomical figure of $12,378 million. Is it expected that we shall pay off this debt, resulting largely from our economic and military assistance to Great Britain, by means of cyclical financing? Shall we stick to this new policy of debt reduction by keeping taxation at present levels until the debt is wiped out? I am afraid the Canadian taxpayer will not have the patience to go that far, because after all, he is the one who pays.
During the war, Canadians sacrificed much in the way of life, money and labour. They now have a right to expect tax relief when a huge surplus is declared. It is fitting that part only, say half of this astounding surplus, be applied to debt reduction. And in all fairness and equity the other half should be used to relieve the taxpayer, particularly in those years of high costs. In recent years, Canada has given or loaned without security billions and millions to nations more powerful than itself. Such munificence made us feel strong, wealthy and able to dispose of staggering amounts. It is therefore very hard to understand how today, we must suddenly clamp down and deprive the taxpayers of reductions fully justified by the high cost of living and the surplus declared.
I repeat that the man in the street, the ordinary civil servant, the salaried man of the so-called1 "white-collar" class, the good industrial worker and above all the family man who, without flinching, witnessed the dance of billions during the war and to whom every promise was given that we might win the war, have a right to complain about those low exemptions and high taxes. Some people go on repeating that Canada has become with the last two great wars a great international power and that she plays a leading part in foreign affairs. Let us be careful lest a too heavy burden of taxes, too long maintained, seem too high a price to pay for the privilege of contributing, from the background, in the making of peace treaties, and lest Canadians decide at last to start minding their own business by

looking after their own social and financial security.
We have heard a lot lately about social justice and just salaries; countless labour disputes have broken out these last twelve months and our conciliation and arbitration boards have had their hands full, settling these disputes. It can be stated in a general way that, as a result of this arbitration workers have obtained redress of their grievances while employers have paid the salaries which their income allowed. However, the cost of living has reached the highest level yet, and might increase still further. There will surely be more such claims from the ranks of labour and as most employers will be in no position to increase wages indefinitely, strikes, some of them possibly violent, will paralyse our economy. It is therefore up to the government to follow the only course that is left open if these new conflicts are to be avoided. Income tax exemptions must therefore be raised substantially, both for single people and married people with dependents.
It is unfortunate that the government did not see fit to take note of the suggestions contained in the brief submitted by the Catholic bishops of Quebec, and by other religious denominations, respectfully suggesting an inorease of income tax exemptions. I sincerely hope those suggestions will eventually be followed. They are distinguished by their authoritative nature and their plain common sense.
Let us have a look at today's exemptions:
For single persons, the exemption is $750. In view of the high cost of board, clothing, and other necessaries, and of room or apartment rent, how can a single man save anything and prepare to establish a home? This paltry exemption is not far from being antisocial and anti-religious and it should, in my opinion, be raised to $1,500.
For married persons, the exemption is now $1,500. In their case also the cost of living fritters down the exemption enough to make it insignificant, greatly reduces opportunities for saving and establishing a comfortable and modern home. The exemption should be raised to $2,400, which would ensure a reasonable margin of financial security and encourage thrift and industry.
But, to my mind at least, it is particularly with regard to children that the present exemption is distinctly antisocial. At the present time, if a child benefits from the family allow-

The Budget-Mr. Dorion
ance which cannot exceed $120 a year, the exemption is $100, which makes up a total of $220.
With the pace and requirements of modern life, who can properly feed, bring up, clothe, give an education to a child on $220 a year? It is impossible and even if parents should resort to cyclical finance and jugglery, they will not be able to make both ends meet without denying themselves or borrowing money.
In the case of children over 15 years of age and not in receipt of family allowances, the present exemption is $300. It is well known that at the age of 15, a child usually has completed his elementary course and is ready to undertake classical studies or enter some other institution of higher learning. He needs an entirely new wardrobe, because he has grown up. Clothing, books, pocket money, and fairly high boarding and tuition fees must be provided for. How can parents meet all these necessary expenditures with $300? As everyone knows, that is quite impossible, so much so that higher studies are often abandoned for lack of money or savings. It therefore seems that both in order to encourage large families and to facilitate higher or specialized studies among our people, a total exemption of $500 for each child would be essential, especially in view of the high cost of living. To my mind, such an investment would bring valuable dividends in the future and ensure the living and educational standard to which the younger generation is fully entitled.
It is all very well to practise internationalism, to accumulate huge surpluses, but it is still better and much more practical to grant our own people religious, social and economic security. Tax exemptions should be immediately increased to $1,500 for single people and $2,400 for married people, with an additional exemption of $500 per child. That would prove an excellent means of disposing of our estimated or anticipated surplus.
Since the present budget offers no relief to the farmer, the wage-earner or salaried man of less than 65 years of age-except for the abolition of the tax on alarm clocks, watches, bets on horse races, vinegar and a few consumer goods-and since my electors are dissatisfied with the government for having failed to reduce the income tax or tax exemptions, I shall have to vote against the motion.
Next year, with general elections in sight its system of cyclical financing or financial cycling will no doubt enable the government to grant substantial income tax reductions. Should these reductions be of the kind I have
been advocating tonight, and which should have been granted in the present budget, I shall support them by my vote.


Mr. FREDERIC DORION (Charlevoix-Saguenay):: Mr. Speaker, I feel called upon to say a few words on this budget.
First, I must say that, like at least 90 per cent of the Canadian taxpayers, I was deeply and painfully shocked to realize that as I shall presently show-this budget is but a further indication of the anti-family and antisocial policies which have victimized us for so long.
Honest and conscientious citizens are all the more disappointed in finding that this anti-family policy, which is becoming more and more apparent in our legislation, is but an offshoot of an economic system managed by an irresponsible bureaucracy which seems bent on destroying or at least weakening the family sole basic unit of a well-organized society.
I know that many hon. members to your right, Mr. Speaker, watch the developments of this policy with fear; I realize that many of them eagerly wish for more human legislation that will be kinder to families. I know what many of them think of this budget but, unfortunately, party discipline compels them to vote for it though they would like to disapprove and censure the government's policy in this instance.
Surely, I need not speak at great length to prove that the existence and expansion of the family are essential to social life.
To confirm my statement I need only quote the late and lamented Cardinal Villeneuve.
During a week to social studies, in 1923, Cardinal Villeneuve, at that time Father Villeneuve, said, in Montreal, in reference to the family considered as social unit:
Thus family, not the individual, is the social unit; it is a simple body in society, made up of elements so numerous and so different. To understand social order, one has to begin with the family. Political society is superimposed upon organized families, without however destroying them.
And further on:
Public legislation, therefore, ladies and gentlemen, should take scrupulous and constant care not to crush or break up the family, a cell in the social structure. On the contrary, according to Antoine, it is the great and peremptory duty of the legislator to recognize, protect, and strengthen the fundamental rights which the family has received, not from the state, but from God, author of nature.
4484
The Budget-Mr. Dorion

Social organization aims today at protecting, apparently at least, through an abundance of texts, the individual, his fortune, his political rights, his outside relations with his neighbours, but it holds nothing or practically nothing, it destroys all, or nearly all of what is left of old legal traditions that could protect the family against so many undermining assaults. It kills rather the principles of life, the organic ties which sustain the family, and through the family it affects society, and through society human happiness. Neither the authority of the father, nor the primacy of the husband, nor the subordination of the son and the servant, nor the vital indissolubility >and the exclusive unity of the matrimonial tie are preserved, rather they are surrendered for the sake of peace, often quite gladly.
I believe, Mr. Speaker, that to a certain extent that statement contains a criticism that applies to the budget we are now discussing. Indeed, one of the anti-family aspects of this budget is the fact that, against the hopes of everybody, the wishes of every taxpayer and the request of every family head, no tax reduction has been announced.
There is no doubt that in view of the huge surplus announced by the minister, he should have raised to at least S2,500 the taxable minimum of the married taxpayer. I shall not take time to go over all the reasons already given in support of that request, but there is no doubt that such a change is absolutely necessary because of the increase in the cost of living.
The government should at least have granted relief to heads of families by increasing the exemption to which he is entitled for his children. It is astounding to see how, through this income tax measure, parents are penalized for wishing to give their children the care and education they require. It seems that none of those responsible for the present state of affairs have the slightest notion of what it means to support a son or daughter who wishes to continue his or her studies. There is another objectionable feature in the present Income Tax Act. That is the deduction at the source irrespective of the type of employment. In my constituency, for instance, and in others too, there are quite a number of logging-camps which for part of the year hire only farmers, sailors or fishermen to work in the woods during the off-season.
Were the wages paid these loggers put on a yearly basis, they would be liable to income

tax; so the employers have to deduct it at the source.
Now, at the end of the year, those people have to file returns and produce receipts which are often mislaid, and afterwards they have to wait nearly a year before being refunded what has been deducted from their salary. That system causes much inconvenience and trouble, in addition to considerable administration expenses. What is more serious, those taxpayers are generally in urgent need of that money, which is theirs anyway, and as often as not their families have to suffer.
Why does not the government eliminate all those difficulties by deciding, for instance, that the salary of certain seasonal employees will no longer be subject to such a deduction? Since a distinction is made between seasonal and regular employment in other legislation, for example in the Unemployment Insurance Act, why should it not also be done in the case of the Income Tax Act?
In this connection, there is also another matter which I should like to point out. It so happens that quite a number of young people who, during the war, had left their homes to work in industrial plants have gone back to their rural communities. They have settled there, have married and have resumed an occupation which pays less than their wartime jobs, their income being, at times, barely sufficient to provide a living for their new families.
Now a great number of these new heads of families are at present receiving from the Income Tax Division certain claims for balances owing for 1943, 1944 and 1945. I know of many cases where these young bread-winners have had to deny their families the necessities of life in order to repay the revenue department.
This makes for social unrest. I would therefore ask the government to cancel all claims of less than $500, against heads of families, for income tax levied during the war years. The total of those claims would certainly not be very large and it would mean a great relief for those young families.
Mr. Speaker, the government has been swamped with requests for special consideration to family men. The bishops' request for higher exemptions is significant. They had given it much thought and they were surely not looking after their own interests. I agree

The Budget-Mr. Lacombe
that during the war every Canadian without exception was expected to contribute fully to the war effort. Perhaps it is necessary to impose unduly high taxes during tihe war, but I contend that the government is violating the rights of the family by keeping the taxes at the same level in peacetime.
I was particularly impressed by the fact that the minister did not deem it advisable to grant tax reductions, although he encouraged night clubs, places of entertainment and similar organizations, by abolishing the tax formerly levied upon tihem. It is admittedly a strange attitude. I remember that on the day following the budget speech, newspapers were filled with advertisements from places of amusement, night clubs and so forth, soliciting young people's increasing patronage.
Taxes still fall heavily upon the shoulders of the family man, while habitues of night clubs and other places of amusement are encouraged to patronize such places which certainly do not help bring the family closer together.
As most of those who seek this kind of entertainment are single, everything seems planned to entice them away from their family.
Mr. Speaker, if our legislation were imbued with a more Christian, a sounder moral spirit, there would be no need to fear the menace that is now hanging over society.
It is useless to pass social legislation if we give it the anti-family character found in so many of our enactments such as the Family Allowances Act with its decreasing rate, the various housing acts that promote the building of two and three-roomed apartments and many other pieces of legislation. Such enactments can never be effective; they will give maximum results only if based on the interests of the family rather than on those of the individual.
(Text):


Mr. LIGUORI LACOMBE (Laval-Two Mountains):: Mr. Speaker, the budget produced by the Minister of Finance (Mr. Abbott) will greatly deceive the taxpayers in the low-income brackets. The burden of taxation is still too heavy for the average wage earner with dependents. A government cannot proclaim a surplus and at the same time leave under the burden of taxation and excessive cost of living those who work and toil in the interests of their families and of society.
Everything can be bought at a ransom price because the administration could not or did not want to foresee the present situation. Family allowances have become null and void because the government allowed trusts to accumulate shameful profits at the expense of our families. In these difficult times the good elements still remaining in democracy should unite against the profiteers who sooner or later will ruin it in favour of communism.
The time has come to hand out to the diplomats and public men, responsible for the communist invasion which is now threatening civilization., the treatment they deserve. Many times I have raised this issue in this chamber. I have pointed out often enough the inherent danger of the government's attitude toward communist Russia and its satellites, and I believe I can free myself from the responsibility for the impending danger which will soon destroy the civilized world.
So far as I am concerned, I cannot support the Secretary of State for External Affairs (Mr. St. Laurent) when he asks for appropriations for the carrying out of a blameable policy. For a long time, when he was Minister of Justice, he refused to outlaw the communist party in Canada. Why, then, did the minister show such haste in appointing an ambassador to the government of Yugoslavia, a renowned persecutor of bishops and religion? Why manifest this open sympathy toward the deceiving and communist government of Poland? Why mobilize the Royal Canadian Mounted Police in order to locate property which belongs to the church and which the Polish government wished to misappropriate and steal in communist fashion?
Why tolerate in Canada the hatred and treason of the Labour-Progressive party, while refusing to appoint an ambassador to the Vatican, whose supreme appeal to charity, justice and peace is the only hope in these extremely difficult times?
The nations refused to receive the illustrious pontiff's appeal to charity, justice and peace. Because they ignore the only logical advice, the allied nations won the war twice and lost peace twice within thirty years.
What has happened to the war aims of the united nations? Christianity was sacrificed to the communists by the very people who claimed they were defending it. In the
The Budget-Mr. Lacomhe

underworld of international diplomacy Poland was sacrificed with the shameful co-operation of the Canadian government, this same government which declared war when the German hordes were dominating that country, which was invaded and dismembered many times in history.
What did our rulers do? When Poland was agonizing in devastation and ruin, they officially recognized the usurping and communist government of Lublin. As servants of Soviet Russia, they came to terms with the invertebrate people of Yalta in order to impose upon Poland the communist bandits who are now presiding over the destinies of that country.
This hypocrisy has gone far enough. Nobody will believe that an atheistic government was instituted in Poland without the connivance and co-operation of the present government. Tomorrow we shall see the government imposing compulsory military service in order to stop communist Russia, which only recently our government was cherishing, feeding, equipping and arming on behalf of the great principles of the Atlantic charter, which never even existed. This is national and international life. Insidious propaganda, condemn-able concealments, lies-everything is used in order to deceive the people. The government proceeded gradually when it imposed upon the population its policy of participating in the war, its mobilization and conscription.
Stalin also proceeded gradually in his policy of invasion. The government of Canada and the Secretary of State for External Affairs freely opened the door for him by recognizing the satellite of the Russian dictator as the communist government of Poland. We shall soon be called to the colours. Once more Canada will sacrifice its blood and its economy through the error of the government, which contributed to installing communism in Poland first, and then in the other satellite countries of Russia.
The war which is threatening the world will be more horrible than what we have yet seen. Whole countries will be destroyed by infernal inventions whose power will be irresistible and frightful. Death germs will be scattered everywhere. Those responsible for this calamity will pose as crusaders. Nobody will refuse to defend Canada if this country is attacked. But I know some people upon whom history will cast a slur because unconsciously they gave away our country to communism. These people will still require the obligation to serve. Since it is easier, but less noble, to vote other people's death rather than one's own, once more they will vote the sacrifice of our sons.

Hiding in remoteness, they will be awaiting fearfully a guiding light in the night into which their disastrous policies have plunged the world. Because they could not prepare peace, they are now preparing wTar. In this twentieth century in the Christian era, we are reverting to barbarism through the selfish interests of predatory nations. We are being led to the abyss by military and financial imperialism. The true doctrine of charity and love was trampled upon. The solemn warnings of the Vatican were ignored by Canada as well as by other countries. As an illustration, I only wish to quote the following excerpt from the Vatican organ, L'Osservatore Romano:
Si vis pacem, para helium . . .
Vatican City (PA)-The Osservatore Romano, the official organ of the Vatican, stated today that the world is reverting to the times of the old principle "Si vis pacem, para helium", "if you want peace, get ready for war."
Before the Christian civilization, this was the only valid principle. But Christianity has changed this principle; it proclaims: "If you want peace, prepare for peace."
According to certain Vatican sources, this editorial was written by Count Guiseppe Della Torre. It also contained this sentence: "If we are compelled to replace faith by strength, even in a defensive manner, it is because Christianity is far below its object." Is it not deplorable to witness what is now going on? Let no one eulogize democracy, a corrupt and corrupting regime. As we know it today, it is not worth while fighting for it. When governments instil into it the dose of Christianity which it requires to survive, then and then only will it deserve our protection.
The best way to combat communism is to solve the problem of slums and replace them by dwellings worthy of the average man and his family. In this twentieth century is it decent to tolerate in our midst, all these shacks and slums? The housing problem is a national one. It is up to the federal government to solve it. Let the government take money wherever it can. Economic liberalism has lasted too long. It is the source of the worst infringements. The Canadian people are fed up with this laissez-faire policy of the government. The average families are shamefully exploited by the ruthless trusts. Some high-class robbers are controlling certain companies which dominate our Canadian politics.
One of the most disgusting instances can be found in the profits accumulated on the sales of butter by Canada Packers. During a short term of eleven months, this company made more profits than during the previous twenty years. And this disgraceful robbery goes on under the eyes of a servile government

The Budget-Mr. Lacombe
which reserves all its sympathies for these trusts which are essential to its electoral organization. The exploitation of the people by trusts is the life source of communism.
To this add the co-operation of the government when Poland was betrayed by the most powerful nations on earth, in favour of communist Russia, when they officially recognized the impostor government of Lublin, and then you have the lamentable picture of the leadership of communism in the world.
Czechoslovakia was sacrificed at Munich by five statesmen who were branded by history: Stalin, Hitler, Mussolini, Daladier and Chamberlain. Since then, that country seems to have lost all faith in the great nations which then were at the maximum of their power. It was the same Stalin who stabbed Poland in order better to dominate it. Poland had to undergo the shame of treason; her political leaders are now the victims of the communist gestapo.
Smaller nations were misled by the lies and hypocrisy of powerful democracies and proud dictatorships. Their leaders were not up to their duties, since they were bound by the selfish interests of financial imperialism which has been dominating history and governments for many years. They bear the responsibility for the present situation. Even here in Canada, for many years the motto of the government is the same as Talleyrand's: "Governing means dissimulating." The same situation exists throughout the world. Truth, charity and justice have been replaced by a policy of falsehood, persecution and hatred. The Vatican, where Pope Pius XII is reigning, is the greatest power in the world, because this illustrious pontiff is always preaching a doctrine of charity, peace and love. I have often asked the Secretary of State for External Affairs to appoint an ambassador to the Vatican. The minister does not seem to be interested in the Vatican. He answers by appointing an ambassador to Marshal Tito, the persecutor of the primate of the church of Yugoslavia. This is an insult to five million Roman Catholics in Canada, and an insult to Christianism. The minister and the government do not like me to bring forth this most important matter. They turn a deaf ear to it; but some day they will wake up facing a situation beyond remedy, in Canada and in the rest of the world, for which they will be responsible.
When will political leaders have enough courage to assume their responsibilities and squarely face events? From that day Canada
will not be called upon to sacrifice her sons and her economy every ten or twenty years in disastrous and useless wars.
Finally, may I mention a regrettable event which happened recently. The United States refused to consider as persona grata a certain diplomat recently arrived from Czechoslovakia; and our government readily accepted the same individual as consul of his country in Canada. One would think our country has become the refuge of all communist miscreants intent on promoting revolutions and causing trouble.
If a member of this house introduces a bill to outlaw the communist or the Labour-Progressive party in Canada, immediately an endless debate starts, while it would be preferable to remain silent so that the bill could go through. Eventually we shall be convinced that communism is well protected in this country. Such an attitude is not new. During the 1936 session the Liberal party voted the repeal of section 98 of the criminal code, which prohibited all unlawful associations and all associations whose purpose was to undermine lawfully constituted authority in Canada.
We have no use for all these communist agents. The government and the Secretary of State for External Affairs should be extremely firm and should send back to their own countries these communists with doublebreasted suits, since among this underworld they are the most affluent and the most powerful. Then only will the Canadian people know security under the protection of the free institutions which Canada won through sacrifice and struggle.
Is he a true Canadian who allows and tolerates the formation of communist cells in our country, and then preaches a crusade throughout the world against this obnoxious doctrine? Such a degree of cynicism is beyond me. I have seen so much treachery during the twenty-five years I have been sitting in this house. I have seen so many solemn pledges violated and trampled upon. I have been a witness to such deceitful and insidious propaganda that I do not hesitate to state that one needs courage to witness the political somersaults of certain politicians who are always prepared to sacrifice Canada in the defence of theories which they themselves created and strengthened by helping atheistic and godless Russia at the expense of small but courageous Christian countries which are now agonizing under Stalin's heel. Let these politicians bear this formidable responsibility.


Alphonse Fournier: After consulting the leaders of the opposition parties, I desire
The Budget-Division

to move the following motion, seconded by the Secretary of State (Mr. Gibson), which seems to meet the wishes of everyone:
That the house shall not adjourn this day at eleven o'clock pun., and that standing order No. 7 be suspended in relation thereto.


[Stage Direction]
Motion agreed to.
James Horace King: Is the house ready for the question?
And Mr. Speaker having put the question.


Mr. JOHNSTON:: Mr. Speaker, before you take the vote I should like to say a few words.


James Horace King: I am sorry, but I put the question to the house: Is the house ready for the question? No one rose, and I have read the question. The question is on the amendment to the amendment.


Ludger Dionne: Mr. Speaker, I was paired with the hon. member for Quebec (Mr. McLure). That is why I refrained from voting.
(Text):


Charles Edward Johnston: I was paired with the hon. member for Halton (Mr. Cleaver). Had I voted, I would have voted for the subamendment.


Victor Quelch: I was paired with the hon. member for Kent, N.B. (Mr. Leger). Had I voted, I would have voted for the subamendment.


Mr. HARRIS (Danforth):: I was paired. Had I voted, I would have voted against the sub-amendment.


Charles Edward Johnston: Mr. Speaker, I should like to adjourn the debate.


Some hon. MEMBERS:: No.


Some hon. MEMBERS:: Oh, oh.


James Horace King: Mr. Johnston, seconded by Mr. Blackmore, moves that this debate be now adjourned. Is it the pleasure of the house to adopt the motion?


Some hon. MEMBERS:: No.


James Horace King: Those in favour will please say "yea".

The Budget-Mr. Johnston


Some hon. MEMBERS:: Yea.


James Horace King: Those against will please say "nay".


Some hon. MEMBERS:: Nay.


James Horace King: In my opinion the nays have it.


Charles Edward Johnston: Mr. Speaker, had I been permitted to say a few words a while ago, I would have kept within the hour of eleven o'clock, but I am afraid that the remarks which I have to say at this time may extend just a little beyond that. In view of the fact that the house has agreed to continue sitting after eleven o'clock, I do not think I should necessarily curtail my remarks.


Some hon. MEMBERS:: No.


Charles Edward Johnston: On this occasion-


Mr. DENIS:: Take two hours, if you wish.


Charles Edward Johnston: -I want to say, Mr. Speaker, first that I would consider myself derelict in my duty if I did not express an opinion on this budget. I am well aware of the fact that some hon. members are anxious to get away. I am also aware of the fact that it is a great disappointment to them. I am equally sure of this fact that their disappointment is no greater than the disappointment the people of Canada had when the Minister of Finance (Mr. Abbott) presented his budget. I can assure you, sir, that the people of Canada are getting very little relief today in the way of taxation from the budget which was brought down the other day.


Hazen Robert Argue: Take forty minutes.


Charles Edward Johnston: When the Minister of Finance spoke the other day he said he was fearful lest the tax concessions which might have been given would be taken by those who were conducting business in this country. In order that I may not be accused of misquoting the Minister of Finance, I shall use his own words. On page 4064 of Hansard the Minister of Finance gave the reason why he did not think tax concessions should be passed on to the general public at this time. He said:
Demands are so excessive in relation to supply that we cannot rely upon competition or other market forces to ensure that the consumer would get the benefit of any general or widespread reductions we might make. Producers or distributors are in a favourable position to gain whatever the treasury gives up, and they could probably find plausible reasons for doing so, notwithstanding the high levels of profits at present.
That is a very weak excuse for the Minister of Finance to give as his reason for not passing
on these tax reductions which all the country expected. It is lamentable that we in this country find ourselves in the position that we dare not reduce the taxes to the common people lest some others in preferred places might take that profit. It speaks very poorly for government policy, if they have no better safeguards for the public than that. Probably the Minister of Finance does not know of any way in which the public can be protected. Perhaps he is not aware that already in this debate proposals have been set forth which would thoroughly protect the people of this country, if these tax concessions had been allowed to be passed on to them.


Mr. FAIR:: On a question of privilege, I wonder whether hon. members on this side of the house have any rights here, and whether they can be allowed to proceed with their speeches without further interruption from the other side of the house. I think it is about time that a little order was kept here.


Azellus Denis: That is not fair.


James Horace King: I ask hon. members behind the curtain not to talk so loudly.


Azellus Denis: Proceed.


Charles Edward Johnston: In case the minister may have overlooked the fact that others who have already preceded me in this debate have already offered him some excellent suggestions as to how the public might be safeguarded against the imposition which he thought should come about, I should like to refer to the speech of the hon. member for Peace River (Mr. Low) the other day when he gave an effective safeguard for protecting the people in this country, once the government decided to pass on tax concessions to them. If we turn to page 4259 of Hansard of May 21 we shall see that the leader of this group had this to say:
Corporate income tax requires considerable adjustment if proper incentives to all-out production are to be provided, and if we are to ensure the passing on to consumers of benefits resulting from sales tax abolition. Therefore I propose exemption from corporate income tax on a basis that would represent 10 per cent return on capital, this figure to be arrived at by a procedure similar to that used by the board of referees, formerly set up and used by the Minister of Finance; this exemption to be conditional upon the corporation furnishing satisfactory evidence that savings in cost resulting from sales tax abolition have been passed on to consumers.
If the government had taken cognizance of such a measure as that I am sure that the people of Canada would have received the tax concessions which they expected would
The Budget-Mr. Johnston

be passed on to them. There are other ways in which purchasing power to the people could be increased without its being interfered with by any group of persons in this country. The ones to which I refer now are those which have been advocated by this party for some time. The first was the national dividend. In the past we have been criticized for advocating a national dividend. It is true that we are not being criticized to the same extent today that we were in days gone by, because the government saw, and quite properly so, that the things which the Social Credit party were advocating were worthwhile. Therefore they did adopt one of them, and one of the most important ones, namely, the national dividend, except that they called it family allowances. In principle I agree with family allowances, and have always agreed with them, but I object to the manner in which the money is raised to pay family allowances. But from the standpoint of principle it is one of the ways in which the people's interests can be protected, if there was a tax reduction. This might be called incentive controls; incentives which would induce people to produce more, because they would know that the consuming public would have the increased purchasing power with which to buy the increased production.
I do not think there is a party in the house; in fact I am positive there is not a party in the house, certainly not on the opposition side, which has put down its proposals in such clear-cut. fashion for all to see as has the Social Credit party. We may be criticized on them; but had these proposals been used, instead of the taxation club, to beat the consumer into humble submission, I am sure that the average citizen of this country would be much more satisfied than he is today.
The minister seemed to take great delight in the fact that he had a surplus this year of $727 million. May I say this is not the result of sound economics, but rather the result of an outdated orthodox financial system, which this government is endeavouring to make work, even though it may cause severe hardship on the people.
One of the ways in which the government raised this surplus was by taxation. It was not a true surplus in any sense of the word. It was a surplus which was acquired by exorbitant taxation. The sales tax is one of the most outstanding examples of that. The sales tax is one of those taxes that bear most heavily on the people who are least able to stand the strain. Then there are the other taxes which are referred to as indirect or nuisance taxes, and they, too, bear upon the common people more than upon the others. At any

rate, they bear equally upon the rich and the poor, but the rich have the money and the poor have not.
If those taxes had not been so high in the past year; if the government had not used that taxation club to extort this money from the people, the minister's surplus would not have been that grand total of $727 million. Again, the government not only increased their taxes in this budget, but they increased them by twenty-five per cent a while ago in the twenty-five per cent excise tax. The minister might think that is not a tax, but I was interested the other day when I came across the following newspaper article which I clipped out. I think it expresses the thought as well as I could. It is taken from the Ottawa Citizen:
For Mr. Abbott's information.
At least he is getting some worthwhile information today.
Mr. Abbott insists, goodness knows why, that taxes in Canada are lower than in the United States. We would suggest to Mr. Abbott that he try out buying a family car. On the modest purchase of a Ford or a Plymouth he would pay between $500 and $600 more than he would have to pay if he were buying the same type of car in the United States. And if Mr. Abbott thought he would like or could afford something better, say a Chrysler or a Buick, he would pay between $800 and $900 more than if he were buying in the United States. Most of the difference would be represented by taxes-higher Canadian taxes. We hope Mr. Abbott would agree that $500 or $900 would pay (for the average man) a lot of income tax. Also that it would buy a lot of eggs and butter.
So when we thoroughly scrutinize the tax bill which the minister has inflicted upon the people of the country, we find that not only are there all the taxes shown in the budget which he brought down, but there are many other taxes which bear most heavily upon the common, poor people of the country. One outstanding example is that which I have just read from this newspaper.
A car nowadays is not a luxury. It has become a necessity, and when people have to buy these necessities they have to pay an added tax of $500 or $900. Not only is the excise tax inflicted on people through the purchase of automobiles, but it is imposed on other necessities such as electrical equipment for household use, and we find that the veteran today cannot furnish the house he lives in because of excessive taxes which are piled up on top of the already high cost of production. In most cases these are hidden taxes and the manufacturer gets the blame. Of course he is the one who is criticized rather than the one who should be criticized, namely the government.

The Budget-Mr. Johnston
When looking through the budget speech, I was particularly interested in what the minister said about the great surplus. I was interested in the different ways he had of using that surplus. First of all, he thought the surplus would offset a depression. He was going to put that away for a rainy day.
I believe, Mr. Speaker, we are all conversant with the old saying that you cannot tax yourself into prosperity or borrow yourself out of debt; neither can we tax the country into prosperity. That is a certainty. I am not convinced that the minister will be able to fix his financial position by this surplus to such an extent that we shall be relieved of further excessive taxation. So the people must not expect, even though we have had a large surplus this year, that tlhey will not continue to bear heavy taxation in the years to come.
Another way in which the minister was going to use the surplus was to prevent inflation. I could not help wondering, if the minister were really sincere that this surplus would help to offset inflation, and, if there is a severe danger of inflation in this country, why he should not have postponed the payment of the compulsory savings. By paying out the compulsory savings at this time he was putting that amount of money into circulation. If there was already too much money in existence, that may have caused further inflation, but if it did cause inflation he should not have done it but should have postponed it for a year or two.


Alexander Malcolm Nicholson: Do you advocate that?


Charles Edward Johnston: Yes; I would under these circumstances, because what has happened is this. He has given the compulsory savings out today and he is taking them back by increased taxation tomorrow. I say definitely that if there were a danger of inflation the proper thing would have been not to pay out the compulsory savings. He may have had them postponed for a year or so, but he would not have had them confiscated as he has in the excessive taxation program.
He will use the surplus in another way also. I do not know whether he will get all the money he wants out of the $727 million, but he also wants that surplus to pay for the excess of exports over imports. How he will stretch it to that extent I do not know, and if that is not enough he wishes to use it for national defence.
Well, Mr. Speaker, all the good that $727 million would do if another war broke out would not be very much, and I wonder what would happen if another war did break out. Would we limit defence preparations to $727
million? I do not believe he could build more than one battleship with that amount. I am sure that if war broke out we would find more money for defence than that $727 million.
We recall vividly that just before the last war, when this country was in one of the greatest depressions the world had ever seen, when a million and a half people were unemployed, we did not have enough money to keep families from starving to death; yet, almost the day after war was declared, we found millions and billions, in fact so much money that our national debt went from three and a half billion to around seventeen billion gross debt or about fourteen billion net debt.
Where did the money come from? It certainly did not come out of taxes, because the people did not have the money to pay the taxes; and if we can finance war to the extent we did the last time, it seems extremely strange that we cannot finance peace as well.


An hon. MEMBER:: It is the present system.


Charles Edward Johnston: Yes, absolutely it is the present system. The government is endeavouring to make the old worn-out orthodox financial system function in time of prosperity and the only time it will function is in time of scarcity. And the government through its present policy is forcing the country into that position of scarcity.
If the minister is not satisfied with using the $727 million that way, he has another way and that is to reduce the national debt. I never saw' so many uses for a fixed amount of money. On page 4066 of Hansard the minister said, with regard to the national debt:
The general policy for this year should 'be to use our surplus to reduce our debt and thereby to fight inflation in the manner most suited to our type of government and our way of life.
I wonder if the $727 million which the minister has as a surplus would in any way materially reduce our debt? Our net debt is around $13 billion. The interest on that debt alone is in the neighbourhood of $480 million a year. If we reduced that by the approximate $700 million surplus, we would still have a debt of about $12,300 million. I think this will have little meaning as a great achievement by a nearly bankrupt nation. The mere fact that our debt will be reduced to $12,300 million will not in itself make any great difference as far as our financial standing is concerned. For the minister to suggest that this would in any way benefit the nation to any material degree is just pure nonsense. When one considers that we in this country have a national production of around about $13 billion, and that
The Budget-Mr. Johnston

would represent an increase of about twelve per cent or thirteen per cenfi, that should mean that the purchasing power of the people would have to be increased over what it was last year; that is, if they are to be able to buy the total production.
Some might say that part of that will be used for export. True, it will be. But when you export goods, you must bring back goods in return; either that, or you are giving them away. When those goods are brought back here and put upon our market, our people must be in a position financially to buy those goods and consume them. Otherwise we shall have a continuing spiral of unemployment; and we have quite a serious unemployment situation today. Whenever there is a shortage of effective demand for goods and services which the people are producing, then of course you immediately start into a period of unemployment.
I wonder if the minister was sincere about reducing the debt. I hate to accuse him of insincerity, but I must say that I do not think he was sincere. I say that for this reason. I wish to direct your attention for a moment, Mr. Speaker, to a statement which was made by the governor of the Bank of Canada, Mr. Graham Towers, before the banking and commerce committee in 1939. It is found at page 80 of the proceedings of that committee and is in answer to a question by the hon. member for Acadia (Mr. Quelch). The hon. member for Acadia asked this question:
Is it possible for you to imagine any way by which we are ever going to pay the debt we have got?
Mr. Towers replied:
As the debts of the government are an asset of the Canadian people, I do not see much point in the thing; except that, to the extent that the government thinks that the distribution of those assets of the Canadian people-which are its debt-is unsatisfactory, it may take steps to remed.y that distribution in any way that lies within the legislative power; in fact, in anyway, I suppose-by income tax or succession duties or any other action it cares to take.
I should like to point out to you, Mr. Speaker, that the governor of the Bank of Canada says this is an asset, and as long as it is owned by the Canadian people it will be all right. But of course we know it is not owned by the Canadian people. I think the estimate at one time was that less than one per cent of the people of Canada owned over * sixty per cent, of the national debt. That is quite a tribute when the rest of Canada must pay homage in the form of interest to these

few. Then Mr. Towers went on further to say, at page 235:
So that all I can say would be this, that in a country where the sum total of public and private debt was decreasing you have a country which is going backward and which is becoming more poverty-stricken. Generally speaking, in a country where you find there is no public and private debt you have a country resembling darkest Africa; there is nothing else.
Following out the opinion of the governor of the Bank of Canada in this regard, if the minister followed the plan which he says he intends to follow, that of reducing the national debt, lie would be putting this country back on the level of darkest Africa; and I do not think anybody will agree with that. I do not agree with it. I do not think that, if we did away with the public debt, it would put this country back on a par with darkest Africa.
But the government has no plan of reducing the national debt. Let there be no mistake about that. If there were a plan, this government would be coming forth with it quickly. If the government were sincere in its endeavour to reduce the national debt, it would do something similar to what the province of Alberta did. Alberta put into operation a plan whereby they would abolish the provincial debt in a matter of twenty-five to thirty years, and it is done on a scientific and logical basis. The dominion government could do that if it wanted to reduce the national debt. I am quite sure that the Minister of Finance agrees with Mr. Towers. If the Minister of Finance wants to find out how to reduce the national debt without putting further burdensome taxation on the people, I would again advise him to refer to the speech made by the hon. member for Peace River, for he clearly outlined the method there.
Some may ask if we should reduce taxation. My personal opinion is that we should reduce it greatly; for certainly the government does not need the taxation which it is putting on the people today. That is evidenced by the fact that the minister had a $727 million surplus. Some of the best monetary authorities in this country agree that we should not at this time go into heavy taxation. Let me refer again to the same governor of the Bank of Canada, Mr. Towers, when he had this to say about taxation. This was in an argument, or I should say it was in a broadcast put on between different persons; and among those who participated were Mr. Quelch and Mr. Towers. That was on April 4, 1943. Mr. Quelch asked this question of Mr. Towers:
After the war the need will be to encourage private spending. Heavy taxes and public bor-

The Budget-Mr. Johnston
rowing will be contrary to the public welfare. Will the government finance all desirable public projects by credit expansion when necessary?
Mr. Towers replied:
In circumstances such as Mr. Quelch describes,
I would say there would be grounds for government not meeting the entire cost of its programs by taking and drawing on public savings. The desire would be to encourage private spending and make government investment more of a residual item. If part of the necessary money had to come from credit expansion-and the projects were sound and in the public interest-then I should say go ahead.
That is just the opposite, Mr. Speaker, of what the government is doing. It is endeavouring to take from the people at this time all the taxes that the traffic will bear.
It seems to me also, Mr. Speaker, that if the government were really sincere about helping the people of this country, something could have been done to lift the present tax burden, in view of the fact that the government has lifted the tax on pari-mutuels, which is gambling, and on amusements, taxes imposed upon a minority who are best able to pay. Yet the government has not seen fit to do so.
I want to refer to one other thing that seems important to me. During the last few days here we have heard quite a good deal of discussion in regard to communism, which we are trying to combat. We are assisting the people of Europe by giving them goods and services under the European relief plan, and also by giving grants and lend-lease, in order to combat the forces of communism. Yet here at home we are actually fostering the growth of communism by depressing the standards of living of our own people through excessive taxation. I do not know where this logic is leading us. One of the greatest things we could do to combat communism in this country would be to lay off this tremendous, unjustifiable taxation	and raise	the	standard	of
living of our people to such a point that communism would not thrive. That is the proper way to kill communism; make conditions in our country such that people will not tolerate a policy of that kind.
Then for a	moment I	want	to refer	toannuities, because in my view this is another way in which the government has taken a crack at those in the low-income brackets. To make it short,	I should	like	to read	an
editorial which appeared in the Ottawa Citizen the other day dealing with this subject. It said: Annuitants are not rich
There is little basis for the suggestion made from time to time on behalf of insurance companies that "in all too many eases" it is only the well to do who have taken maximum advantage of the lower rates for government annuities. When government annuities were established in 1908	they were	devised to enable
people of moderate means to make provision for a small income in their declining years. That purpose has largely been fulfilled.
In his royal commission inquiry into taxation of annuities four years ago, Mr. Justice Ives, former chief justice of Alberta, found that about 87 per cent of the recipients held contracts for less than $900 a year and that three-quarters of all annuitants were receiving less than $600 a year. In the main those who took out annuities were unable to afford even the maximum of $1,200 a year which the plan permits.
For ten years it was possible to purchase annuities which would return as much as $5,000 a year. Yet at the time of the Ives report there were only 131 annuitants drawing more than $1,200 a year-less than one-half of one per cent of the total.
In 1931 the maximum was reduced to $1,200 a year and it now stands at that figure. At current living costs this is a small amount, especially if it has to cover all the living expenses of the annuitant. Its purchasing power amounts to less than $800 by prewar standards. The government last month sharply increased the premium rates with the result that applications have fallen off. If prices are to remain at anything like their present level the maximum annuity should be raised at least to $1,600'. Otherwise it will be impossible to make provision for a moderate living standard in old age.
Here I say the government has taken away the only opportunity of these people in the low-income brackets to assure themselves of some decent standard of living in their old age.
I am not going to detain the house longer, Mr. Speaker, but I do say the case for reduced taxation is overwhelming, and that at the next election the people will demand the results they wish.


Mr. MACKENZIE KING:: I was paired with the leader of the opposition (Mr. Bracken). Had I voted, I should certainly have voted against the amendment.


Paul Joseph James Martin: I was paired with the hon. member for Cape Breton South (Mr. Gillis). Had I voted, I would have voted against the amendment.


Mr. GRAYDON:: That is what the Prime Minister said.


Paul Joseph James Martin: I do not do whatever he says.


Gordon Graydon: That was what I was afraid of.


Mr. BEAUDOIN:: I was paired with the hon. member for Calgary West (Mr. Smith). Had I voted, I would have voted against the amendment.


Mr. GARIEPY:: I was paired with the hon. member for Victoria-Carleton (Mr. Hatfield). Had I voted, I would have voted against the amendment.


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


Mr. NIXON:: I was paired with the hon. member for High Park (Mr. McMaster). Had I voted, I would have voted against the amendment.


Mr. WHITE (Middlesex East):: I was paired with the hon. member for Middlesex West (Mr. McCubbin). Had I voted, I would have voted for the amendment.


Joseph Henry Harris: I was paired. Had I voted, I would have voted for the amendment.


Air. AYLESWTORTH:: I was paired. Had I voted, I would have voted for the amendment.
(Translation):


Ludger Dionne: Mr. Speaker, I was paired with the hon. member for Quebec (Mr. McLure). That is why I refrained from voting.
(Text):


Charles Edward Johnston: I was paired with the hon. member for Halton (Mr. Cleaver). Had I voted, I would have voted for the amendment.


Victor Quelch: I was paired with the hon. member for Kent, N.B. (Mr. Leger). Had I voted, I would have voted for the amendment.


Edmund Davie Fulton: I was paired with the hon. member for Montmagny-L'Islet (Mr. Lesage). 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. Golding in the chair.
Progress reported.

[Stage Direction]
Mr. MACKENZIE KING moved the adjournment of the house.
He said: In regard to tomorrow, the first matter to be taken up will be the resolution in the name of the Minister of Agriculture concerning the reclamation and development of marshlands in the maritime provinces, being No. 11 on today's order paper. Then the house will go into committee of supply to consider the estimates of the departments of agriculture, transport, national health and welfare, and public works if there is time. I cannot indicate the order, except that the estimates of the Department of Agriculture will be the first to be taken up.
Motion agreed to and the house adjourned at 11.58 p.m.
[Stage Direction]
Friday, May 28, 1948