1948-06-02

[Stage Direction]
Fifth and sixth reports of the standing committee on banking and commerce.-Mr. Rinfret.

Mr. RAYMOND (Beauharnois-Laprairie):: 1.	How many agronomists or agrologists or technical agriculturists are in the employ of the Department of Agriculture of Canada, in each province?
2.	What is the total amount of salaries paid to such employees, in each province?



QUESTIONS

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

Mr. WINKLER:: 1.	By years since 1940, how much barley was exported to the United States, and for what portion were export permits granted?
2.	By years (or months or any convenient period therein) how much per bushel was charged for these permits?


Mr. McILRAITH:: 1. Exports of barley to the United States:
Calendar Year	Bushels
1941		2.608,273
1942 		7,390,389
1943 		44.631.379
1944 		40,695,503
1945 		17,812,456
1946 		5,258,640
1947 		120,074
January to April, 1948 ..	194,923
On August 25,1941, barley came under export control and a permit was required for all exports.
2. A fee of $2 was charged for all export permits, regardless of commodity, until May, 1946, when the practice was discontinued and permits were granted free. An equalization fee, however, was placed on barley in 1943, and the following table indicates the amount of equalization payment which was recovered on exports of barley.
1943	Bushels Value
April 1 to July 31 27,793,942	$ 456,642 83
Crop Year
1943-	44	27,032,5361944-	45	38,576,6271945-	46	525,8641946-	47	3,808,872
August 1, 1947, to
May 26, 1948	552,357
11,466,120 47 17,617,559 78 240,929 85 2,958,122 35
377,348 21


Mr. GARDINER:: 1. 2.
Prince Edward Island	
19	$ 62,040Nova Scotia	
46	146,460New Brunswick	
50	158,760Quebec	
138	437,460Ontario	
280	878,780Headquarters (Ottawa-Hull). 299	1,119,140Manitoba	
121	393,660Saskatchewan	
131	421,880Alberta	
132	426,240British Columbia	
134	421,680Northwest Territories	
1	3,720Total	1,351 $4,469,820
(annual salary)


*UNSURVEYED MINERAL CLAIMS IN YUKON TERRITORY
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:: Mr. Speaker, may I answer this question orally? It is not customary, nor, except under most unusual circumstances, is it appropriate, to make public reference by name to persons who communicate with departmental officials on matters of private concern. To violate this procedure might result in the disclosure of the personal and business interests of individuals or companies in a way that would be unnecessarily detrimental without serving any valid public purpose. In the present instance it is felt that the publication of the names of the persons and companies involved would not result in
Questions

any public benefit, but would be an unwarranted disclosure of documents which it would not be appropriate, nor in accord with official policy, to publish.
The question of substance involved in this matter has been fully answered in earlier replies to questions asked by the hon. member for Yukon.


George Black: Perhaps I might speak, on a question of privilege. The minister says that to answer the question would not be in the public interest. It would be more appropriate to say that it would not be* in the interests of some private institutions, and the minister knows it.


UNITED STATES BASES ON BRITISH TERRITORY
Mr. CHURCH:: 1.	Have there been any negotiations with the governments of Britain or the United States, with reference to the bases which the latter country was granted for a 99 years lease by Britain during the battle of the Atlantic, with a view to having this lease cancelled and charged to lease-lend, as is proposed?
2.	What action is being taken in the matter, or are any conferences being held in relation to the same?
Mr. ST. LAURENT:
1.	The Canadian government has not taken part in any negotiations on this subject and is not aware of any negotiations.
2.	The Canadian government is not taking any action in this matter and is not aware that any conferences are being held in relation to it.


INDIANS-TUBERCULOSIS
Mr. McIVOR:: 1.	What is the number of Indians under treatment for tuberculosis in each province?
2.	How does this compare with the number under treatment ten years ago?
3.	Is the present level of treatment considered adequate?


Mr. MARTIN:: 1. As at December 31,1947:
Yukon	 15
Northwest Territories	 76
British Columbia	 441
Alberta	 269
Saskatchewan	 97
Manitoba	 298
Ontario	 243
Quebec	 74
New Brunswick	 5
Nova Scotia	 22
Prince Edward Island	 4
1,544
2,	In 1938 there were less than 200 Indians under treatment for tuberculosis.
3.	No. There are approximately 900 deaths per annum from tuberculosis among Indians. It is considered by competent authorities that for a fully adequate program there should be three patients under treatment for each death per annum; in other words that an efficient survey program would find about 2,700 cases requiring treatment.


HOUSING-NATIONAL DEFENCE-DUNDURN AND CHURCHILL
Mr. KNIGHT:: 1.	How many houses under the national defence housing program (a) have been completed; (b) are now under construction; (c) are not yet commenced 'but are planned for 1948 (i) at Dundurn, Saskatchewan; (ii) at Churchill, Manitoba ?
2.	Of these houses at these points how many have been built, or are to be built (a) directly by national defence fo-rces; (b) under contract?


Mr. CLAXTON:: 1.	(a) (i) None.
(ii) None.
(b)	(i) 4 Permanent married quarters.
(ii) 12 Permanent married quarters.
(c)	(i) None.
(ii) 32 Permanent married quarters.
2.	(a) 48 by civilian and military day labour under military supervision.
In the case of Churchill, electrical installations inside and outside, plumbing and heating, asphalt tile flooring, siding (asphalt shingles), roofing, and all outside utilities, (water etc.), will be carried out by contract arranged through the Canadian Commercial Corporation, Ottawa.
(b) Nil.


RADIO BROADCASTING-TELEVISION
Mr. ISNOR:: If and when television is established and operated in Canada, will it come under the supervision of the Canadian Broadcasting Corporation or the national film board?


Mr. WINTERS:: The Canadian Broadcasting Corporation, under the Canadian Broadcasting Act, 1936.


USE OF FLUORINE IN DRINKING WATER
Mr. WARREN:: Is anything being done in Canada to discover whether the addition of fluorine to public drinking water supplies will reduce tooth decay?


Mr. MARTIN:: The dental health division of the Department of National Health and Welfare is co-operating with the city of

Inquiries oj the Ministry
Brantford and with the national research council to discover the effects of adding fluorine to the water supply at that city. A survey team is now at work. The teeth of the children of Brantford will be compared with those of two other Canadian cities (Sarnia and Stratford). This will require dental examination of about 5,000 children during 1948. It is expected that the examination will be repeated every two years for eight years.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. KNOWLES:: 1.	What was the total number of individual contracts (not including certificates to persons in group plans) issued by the government annuities branch from April 1 to April 19, 1947? How many were issued from April 19 to April 30, 1947? How many were issued during May, 1947?
2.	What was the number of certificates to individuals in group plans issued by the government annuities branch from April 1 to April 19, 1947? How many were issued from April 19 to April 30, 1947? How many were issued during May, 1947?
3.	What was the total number of individual annuity contracts (not including certificates held by persons in group plans) held as at the latest date for which (a) provisional, and (b) final figures are available?
4.	What was the total number of persons holding certificates in government annuity group plans as at the latest date for which (a) provisional, and (b) final figures are available?
5.	What was the total number of new annuity group plans put into effect from April 1 to April 19, 1947, also from April 19 to April 30, 1947, and also during May, 1947, for (a) governmental bodies, and (b) non-governmental bodies?
6.	What was the total number of government annuity group plans (a) governmental bodies, and (b) non-governmental bodies, in effect as at the latest date for which (a) provisional, and (b) final figures are available?



CANADIAN EMBASSIES AND OTHER AGENCIES

Mr. CHURCH:: What embassies or consulates or immigration or trade and commerce agencies, have been created by Canada and in -what countries (a) in 1947; (b) in 1948, and has a vote for the same been sanctioned by parliament?



MOTION FOR PAPERS


Mr. WRIGHT:: For a copy of all telegrams, letters or memoranda exchanged and agreements or contracts entered into between the government, any department or agency of the government and Prairie Vegetable Oils Limited of Moose Jaw,
Saskatchewan, or any official thereof with respect to the processing, extraction, storage or sale of rapeseed and rapeseed oil.



IMMIGRATION


[Stage Direction]
On the orders of the day:
James Angus MacKinnon: Mr. DOUGLAS G. ROSS (St. Paul's): I should like to ask a supplementary question arising out of the statement just made by the Acting Minister of Mines and Resources. I notice from the newspapere that some arrangements have been made in connection with the interest-free loan of $700 million which was 'made to Great Britain. Could the minister comment on that? Probably some arrangements are being made in order to give immigrants from Great Britain cash when they get here.


James Angus MacKinnon: I am not in position to make any comment on the situation, nor do I think it would be proper for me to attempt to do so.


Mr. ROSS (St. Paul's):: Perhaps the Minister of Finance could let us know.


Hon. DOUGLAS ABBOTT (Minister of Finance):: I am afraid I was not following my
Inquiries of the Ministry

hon. friend very closely, because I understood he was addressing his question to my colleague.


Douglas Gooderham Ross: I will ask the question again. I understand that some arrangements have been made in connection with immigration into Canada and the starting of new businesses under the interest-free loan of $700 million which was made some time ago. I should like to know what arrangements have been made.


Douglas Charles Abbott: I know nothing of any such arrangement. Of course that would be a matter entirely within the competence of the British treasury and not under our jurisdiction.


Douglas Gooderham Ross: I understand from the press that that is so. I understand that we would not insist on any further repayment of that interest-free loan in the meantime.


Douglas Charles Abbott: The report is completely without foundation.


Douglas Gooderham Ross: It is in the papers. WELLAND SHIP CANAL



QUESTION AS TO TRAFFIC REGULATIONS AFFECTING TOURISTS

[Stage Direction]
On the orders of the day:
Mr. N. J. M. LOCKHART (Lincoln):: Mr. Speaker, I should like to address a question to the Minister of Transport (Mr. Chevrier) which arises out of numerous protests that have been received from my own part of the country. I notice the minister is not in the house. I sent him notice of my question with regard to this important matter, and I was hoping that I might get some information at once. My question is this: When will the traffic regulations be lifted in connection with tourists visiting the Welland ship canal? Grave complaints are being made in this regard.
(Translation) :



COMMUNISM


[Stage Direction]
On the orders of the day:
Mr. W. ROSS THATCHER (Moose Jaw):: Mr. Speaker, I wish to ask a question of the Postmaster General (Mr. Bertrand). Would the minister tell me whether his attention has been drawn to a report which appeared this morning in the Montreal Gazette, to the effect that communists intend to support the Liberals in the coming Quebec election? Will the Liberal party accept such support?


Mr. SPEAKER:: Order.


Hon. ERNEST BERTRAND (Postmaster General):: Mr. Speaker, I thank the hon.
member for having asked his question in my mother tongue. The Liberal party accepts no responsibility as regards communists.


Wilbert Ross Thatcher: Neither does the C.C.F. party.


Ernest Bertrand: The Liberal party is
only too happy to know with whom those people mix at the present time.
(Text):



PUBLIC BUILDINGS


[Stage Direction]
Mr. W. CHESTER S. McLURE (Queens): On Thursday last I directed a question to the Minister of Public Works, to be found on page 4445 of Hansard. I should like to know whether he can give me an answer today.
Hon. ALPHONSE FOURNIER (Minister of Public Works):: I looked up the question, which concerns the choosing of a site for a public building at Charlottetown. The answer is that a decision has not yet been made. A second question was as to when the work would start. I cannot say that now.



WAYS AND MEANS

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

[Stage Direction]
2. That, for the 1948 taxation year, interest be allowed at the rate of 2 per cent per annum on overpayments of tax to the extent of $5,000 and J per cent per annum on overpayments in excess of $5,000 (no interest less than $1 to be payable); and that the rates payable on overdue taxes be increased from 4 per cent and 7 per cent to 6 per cent and 8 per cent, respectively.
Mr. FLEMING:: The first part of this resolution has to do with the rate of interest to be allowed on over-payments, while the second part has to do with the increase in the interest rate payable to the government on overdue taxes. Until several years ago this rate was eight per cent, but it was reduced at that time; it is now proposed to eliminate that reduction and to go back to the higher rates of interest that previously prevailed.
If the overdue taxes were attributable in all cases to default on the part of the taxpayers I do not suppose any of us would waste any great amount of sympathy on the taxpayer in arrears. But the difficulty in so many of these cases is that the overdue tax is attributable directly to the fact that that taxpayer does not know that he has not paid the full tax because he has not received his assessment.

Income War Tax Act
I drew the attention of the house, in speaking to this matter on May 24, to the fact that a return brought down to the house by the Minister of National Revenue two or three months ago showed that the number of income tax returns on which assessments had not been made as of December 31, 1947, was 2,336,879, and to give the house some idea of the length of time that some of these returns had been awaiting assessment I gave this further information. For 1913 and prior years -that is to say, some of these returns have been awaiting assessment for at least four years and some of them longer-the total number awaiting assessment was in round figures 44,000. For the year 1944, the number ol returns awaiting assessment was 110,000; for 1945, 265,000 and for 1946, 1,905,000.
What happens in altogether too many of these cases is this. The taxpayer makes his return. He thinks he has made a complete return and that his tax has been paid in full. But through some departmental ruling or some difficult question of interpretation of which he was entirely innocent at the time of making his return an assessment goes out three or four years after he has made his return showing that a substantial additional tax is payable by him, and interest is imposed, not from the date of the assessment but from the date on which the tax was originally payable. If the minister would make this increased rate operative only from the date of assessment, I do not think anyone would take serious objection to it, but these heavy rates of interest are most unfair when the taxpayer has waited a long time for his return to be assessed. If we ever get to the point, as I hope we shall, where the accumulation of returns to be assessed is caught up with by those engaged in their assessment and there are no long periods of waiting, this question may not be so important; but when there is a large accumulation of returns to be assessed this is not the time to increase imposts on the tax payer by collecting additional interest charges.


Douglas Charles Abbott: My hon. friend's presentation, of
course, has a superficial air of complete equity and reasonableness, but if the return has not been assessed, no interest penalty runs beyond twenty months after the date of filing the return. We have found by experience that a great many taxpayers are deliberately underpaying their tax. They compute their tax correctly but do not make full payment of the tax at the time they file their income tax return. They know they can borrow money from the government at four per cent, and
they know that, because of staff difficulties, and so forth, it may not be possible to assess their return for a year or eighteen months, and they figure it is a pretty cheap way to borrow money-at rates much less than those at which they could borrow money at any commercial bank. The interest charge of six per cent is frankly in the nature of a penalty; it is intended to induce the taxpayer to pay the full amount of his tax promptly. There may be cases, of course, in which the taxpayer honestly underestimates the amount of tax due, but after all, he has the use of the money for twenty months, so this six per cent interest charge is not too excessive a rate. A great many people cannot borrow from their own bank at much less than six per cent. I do not think there will be any serious hardship in charging six per cent for twenty months. The penalty rate only applies thirty days after the date of the mailing of the assessment. We know from experience, unfortunately, that there is a great deal of underpayment of tax presumably because it is a cheap way to borrow money from the government.


Thomas Langton Church: No public utility charges a rate like this.


Donald Methuen Fleming: No one has sympathy with the taxpayer who deliberately underpays his tax. I suppose it is impossible for the departmental officials to make inquiry as to the particular state of innocency of the taxpayer at the time of making his return. But surely twenty months at six per cent is too high. Will the minister, if he is going to press for this increased rate, not consider reducing the period of twenty months, which I regard as too long? If we are to accept as a government responsibility the duty of assessing all returns, I submit to the committee that twenty months is too long a period on which to charge this high rate of interest.


Douglas Charles Abbott: I will give consideration to that. I have inquired of the chief assessor, and he tells me that the number of cases of innocent under-estimation of tax is very limited.


Thomas Langton Church: In the first place the budget was brought down very late in 1948. Secondly, many industrial workers have had their tax deducted from their pay envelopes. I do suggest that in view of the high cost of living, high rents and everything else, this rate is very high, and if a person has not the money to pay the penalty, a heavy debt is placed upon him.


Douglas Charles Abbott: This proposed amendment relates only to the 1948 tax liability for which the individual returns will be made on April 30 of next year.
Income War Tax Act


Mr. HAZEN:: I am inclined to question the statement that the number of persons who innocently underpay their tax is limited. From my own personal experience, every year when I prepare my form and file my income tax I find I am unable to estimate it correctly, and it is not a very complicated form. To get the thing straightened out I always have to go down to the Department of National Revenue, see one of the officials in the city in which I live, and have him check it over. In most cases I find that my figures are wrong; that I have made a wrong assessment, probably an under-assessment, although it may be an overassessment. Certainly it is not a correct assessment. Although the average Canadian does not not like to pay taxes, he does not want to get out of paying it, and he is prepared to pay it if he knows what the correct amount is. When he files his return he can make out a cheque and pay the tax. It is not right that he should have to wait sometimes four years, as has been pointed out here. As of December 31, 1947, some 2,336,000 people had not been assessed. The explanation of the minister is not good enough, and I am going to move, seconded by the hon. member for Kamloops (Mr. Fulton) that the resolution be amended by deleting therefrom all the words after: "no interest less than SI to be payable." That would leave the interest rates as they were.


Douglas Charles Abbott: I understand my hon. friend's amendment. He is suggesting that we allow the provision to remain in the Income War Tax Act under which anyone who chooses to do so may not pay his tax, and thus permit people to borrow money from the government at four per cent per annum until such time as the income tax department are able to assess his return. That is the effect of the amendment. I am leaving aside the question whether the amendment is in order or not. I will discuss that in a minute.
The effect of the amendment is this. What the hon. member is saying is that anybody in this country can file his income tax return, pay five per cent of the tax and pay only four per cent interest on that return until the assessors are able to reach it. I do not think that is in the public interest. I do not think a four per cent rate on unpaid taxes is sufficient. Perhaps the six per cent rate is somewhat higher than the commercial rate, but I do not think it is an excessive rate. I think it is a rate which should be put in the act in order to constitute a real deterrent to the sort of thing that is mentioned. It is perfectly true, as my hon. friend has said, that it is difficult for people accurately to estimate the tax, particularly if they have a complicated type

of income, including a lot of dividends and income from other sources, and so on. I readily concede that it is difficult, particularly as applied to types of income where one is allowed to take certain deductions for depletion and so forth. But the information I get from departmental officials is that the amount of under-estimating is far greater than can be accounted for by innocent under-estimating. The cases of genuine under-estimating are of relatively small amounts, and the amount of interest which is involved is not a significant factor. By this amendment we are trying to get at the taxpayer who deliberately refrains from paying the full amount of the tax which he knows is due, realizing-


Mr. SKEY:: Perhaps he cannot pay.


Douglas Charles Abbott: Whether he can pay or not-realizing that it will be physically impossible for the income tax department to catch up to him for a year or eighteen months. That is the sort of practice that I do not think should be encouraged, and that is why we are putting the six per cent rate in here instead of four per cent.


Mr. HACKETT:: Should the minister not provide for the case that he has referred to? I agree that a person who has intentionally withheld amounts from the department might be treated as a person who is attempting to escape his duty; but the minister has not told us what proportion of the taxpayers fall into this group. I ask him to remember that the taxes are extremely high at the present time, and even if a person were to leave a balance owing, the penalty of six per cent is a very heavy one, because the current borrowing rate from the banks today, with reasonable security, is three per cent.


Douglas Charles Abbott: Oh, no.


John Thomas Hackett: Oh, yes.


Douglas Charles Abbott: Oh, no; I am a borrower, and I know.


John Thomas Hackett: I will tell the minister that with a security-


Douglas Charles Abbott: Of victory bonds.


John Thomas Hackett: -of victory bonds-


Gordon Benjamin Isnor: Three and a half per cent.
Mr. HACKETT; No; you can borrow at three per cent, and a great many persons, especially those who owe any considerable sum of money to the government, have victory bonds upon which they-


Douglas Charles Abbott: Then they should go and borrow at the bank and pay their, taxes.

Income War Tax Act


John Thomas Hackett: Yes; that is the assumption the minister is making, and I challenge it. He is imposing a hardship upon the total body of taxpayers because there is an occasional one who is unfair.


Douglas Charles Abbott: Let me assure my hon. friend that it is not an occasional one.


Mr. KNOWLES:: Can the minister give us some figures to prove it?


John Thomas Hackett: I cannot, of course, peer into the minister's record, but he has not given the committee any information which entitles it to believe that the mass of taxpayers are tax dodgers, and nothing else would justify-


Douglas Charles Abbott: It is not tax dodging. It is a thing which the statute allows.


John Thomas Hackett: If it is not tax dodging, then surely the individual should not be penalized because the minister has-


Douglas Charles Abbott: We are giving him too favourable terms; that is the point.


John Thomas Hackett: The minister is imposing punitive measures upon persons who innocently and honestly make a mistake. Unless he can state that a very large number of taxpayers are dishonest, there is no warrant for this punitive measure.


Douglas Charles Abbott: I am not suggesting that the great majority of people are dishonest taxpayers or dishonest people. What I am saying is that the law, as it now stands, permits any income taxpayer in this country legally to get an unsecured loan from the government at the rate of four per cent a year. I say that is not proper; it is not in the interests of the taxpayers who pay their taxes promptly. I say that it should not be open to any taxpayer who wishes to do so, because he has not the money on hand at the moment, or because he wants to buy a new motorcar, to file his return showing he has a tax liability of $2,000, $3,000 or $4,000, send in $1,000 on account and say: "Well, they will not be able to assess my return for a year or a couple of years, and in the meantime it will cost me only four per cent interest." I say that is not good business; it is not fair or in the interests of the majority of the taxpayers.


Mr. FULTON:: Mr. Chairman-


Douglas Charles Abbott: You will all have your chance in a moment. That is my submission. I say that there should be an element of penalty in the interest rate on overdue taxes.


John Thomas Hackett: Make it after notice.


Douglas Charles Abbott: I think a good case could be made for the old rate of eight per cent.


John Thomas Hackett: That was when the current rate was six per cent.	.


Douglas Charles Abbott: That existed up to two or three years ago. What we are suggesting here is a rate of six per cent, which is somewhat higher than a commercial borrower, with good security, can get from the bank.


John Thomas Hackett: It is double.


Douglas Charles Abbott: It is not double, if my hon. friend will forgive m,e. If anyone wants to borrow from the bank, under section 88 of the Bank Act, he pays 4} to 5 per cent. I know what I am talking about.


John Thomas Hackett: Not if he goes in with victory bonds.


Douglas Charles Abbott: Yes, they are virtually cash, or life insurance policies with a cash surrender value equal to the amount of the loan. In that case he can borrow at four per cent. But that is not the type of taxpayer who should be underpaying his tax and borrowing from the government at four per cent because it happens to be convenient for him to do so. I am putting before the committee the exact purpose of the amendment, and I say without fear of contradiction that it is a perfectly sound and equitable proposal. The law is clear. People should estimate their taxes as closely as they can, and most do. Most of them do not much underestimate their taxes. A good many do not pay in full at the time they file their return, and the law does not force them to do so, except that for underpayment there is a penalty of four per cent until assessment. That is not an adequate penalty, and the purpose of the amendment is to meet that point.


John Thomas Hackett: Why not, when the government pays only three per cent on money it borrows?


Douglas Charles Abbott: Because government security is the best in the world, whereas the security in respect of underpaid taxes is slim.


John Thomas Hackett: Let me put this to the minister. Why does he not remove the mote from his own eye? If there is-


Douglas Charles Abbott: Which mote is that? I have so many.


John Thomas Hackett: If there is delay in the payment it is because of deficiency in the department-I do not say his department, but the department that collects the tax-


Douglas Charles Abbott: There is a fallacy in that
Income War Tax Act


John Thomas Hackett: -because of the volume of work in that department. The taxpayer therefore is left for many months, sometimes for many years, through no fault of his own, without knowledge of the correct amount of his tax, and in fact without the ability to overcome the delay. He should not be treated as a criminal.


Douglas Charles Abbott: He is not treated as a criminal; moreover, he is left with the use of his money.


John Thomas Hackett: Yes, at four per cent. Is it not possible, without going into a great deal of additional expense or vastly increasing the personnel of the departmeitt which has to do the collecting of the income tax, to send out a notice advising the individual that he has paid less than he owes and putting him on investigation? Then he can go, if he must, to an accountant. He has some means of protecting himself against the penalty imposed upon him without his being aware of it.


Douglas Charles Abbott: My hon. friend's suggestion is not a bad one, but one must assess the return before one knows there is an underpayment. The gravest abuse is not on the part of those who substantially underestimate the amount of tax but on the part of those who underpay the amount of the tax they estimate when they send in a return. They send in a return showing that they owe x dollars, and they pay only ten per cent, and they say: "I will wait for a while, and when I am assessed I will pay it". In the meantime it costs only four per cent interest, and that, I have suggested to the committee, holds out too great an inducement to take advantage of an easy form of borrowing at a rate of interest which compares favourably with highly secured loans in any commercial institution. That is why the rate should be six per cent. There is no question of anyone being a crook or doing anj'thing that is improper. That is what the law sa,ys they have to pay, and delay in assessment is provided against. Everyone knows that with 2,000,000 taxpayers, and with the difficulties under which the staff has to work, it is not possible to assess returns within less than six months, and in some cases considerably longer, depending upon the complexity of the return. Actually, I am told, they are on the average only about two years behind. In the case of small income-tax payers, where for the most part salaries and wages are involved, notices of assessment are out within three, four, five or six months, and that is being gradually cut down as increased staff is taken on in the Department of National Revenue. The situation is, that because of the

physical limitations involved in the assessment of returns, it is not possible to assess them all within a month or two after they are filed. There is a limitation of twenty months in respect of liability for interest. If the department cannot assess the return within twenty months, interest stops then, so that the maximum penalty is six per cent for a period of twenty months on the underpayment of taxes, when the return has not been assessed. If hon. members will think it over they will, I believe, come to the conclusion that the penalty is not an unreasonable one to put upon the underpayment of taxes.


Lawrence Wilton Skey: This change in the Income Tax Act arises, I believe, from the lack of consideration, on the part of the government, of the human factors that should be kept in mind. People today are caught between rising prices and heavy taxes. In my opinion they are greatly overtaxed, especially in the income tax field. We know that the machinery for the collection of taxes is not as efficient as it might be, and this change which the government has proposed is merely a whip to make people pay. I suggest that the committee should vote for the amendment moved by the hon. member for St. John-Albert.


Douglas Charles Abbott: I indicated earlier that my hon. friend's amendment is entirely out of order, because he is asking for a change in what is in effect a rate of tax. I am prepared to discuss the question, but I make that point now.


Stanley Howard Knowles: Mr. Chairman-


The CHAIRMAN:: Before the hon. member speaks, I may say that I have been considering this amendment and I am under the same impression as the minister. Does the hon. member for Winnipeg North Centre wish to discuss the regularity or irregularity of the amendment?


Stanley Howard Knowles: No, I wish to speak to the substance of the matter.


William Ross Macdonald: Then I had better rule on the amendment. The responsibility for raising taxes is entirely a responsibility of the government, and a private member cannot move an amendment such as is proposed.


Edmund Davie Fulton: Mr. Chairman, will you permit discussion of your ruling now, or after you have made it?


William Ross Macdonald: Not after.


Edmund Davie Fulton: Will you permit it now?


William Ross Macdonald: Very limited discussion.


John Thomas Hackett: Why limited?

Income War Tax Act


Edmund Davie Fulton: The point raised by the minister falls under the general heading, in his submission, of a motion which would upset the balance of ways and means. Is that the idea?


Douglas Charles Abbott: That is the general view.


Edmund Davie Fulton: I submit that it does not fall under that heading, for the reason that the proposal is to increase a penalty and not to increase a tax. It is to increase the penalty if the department rules that the tax has been underpaid. It is not as though it were in effect now. We are not making a motion to reduce the amount of revenue already collected; we are simply trying to prevent the department from increasing the penalty. The minister cannot say that he has predicated the balance of ways and means on ithe assumption that he will get greatly increased penalties as a result of the amendment.


Douglas Charles Abbott: On that point, I feel strongly that the proposed amendment will have a substantial effect on the flow of revenues.


Mr. JACKMAN:: Oh, no.


Douglas Charles Abbott: My hon. friend makes it a debating point that it does not affect the balance of ways and means. The amendment is clearly out of order.


John Thomas Hackett: Mr. Chairman, we shall have before the committee presently a resolution which asks for an increase in penalties as a deterrent to smuggling. I do not think the minister would suggest to you that it was out of order for an hon. member to recommend a reduction in that penalty. It has absolutely nothing to do with the revenue of the government, unless we attribute to the government omniscience and a view of the future which enables them to say who is going to break the law in the future. This is a pure incident; the proposal in question cannot, I submit, by the widest stretch of the imagination be regarded as in the category of a money bill.


Douglas Charles Abbott: This is not suggesting that anyone be charged any penalty for breaking the law.. It is merely a proposal that the rate of interest on overdue taxes be set at six per cent instead of four per cent. I do not think that my hon. friend would suggest that the amendment could go so far as to say that no interest should be payable on overdue taxes. But in principle that is exactly what the amendment is doing.


Some hon. MEMBERS:: No.


John Thomas Hackett: That is not the argument.


William Ross Macdonald: Order.


John Thomas Hackett: The argument, Mr. Chairman, is-


William Ross Macdonald: Order. I think I have heard sufficient discussion on the point of order.


John Thomas Hackett: Mr. Chairman-


William Ross Macdonald: Order. Will the hon. member kindly resume his seat?


John Thomas Hackett: Yes. Will the hon. member kindly observe the rules of parliament?


Some hon. MEMBERS:: Oh, oh.


An hon. MEMBER:: Withdraw.


William Ross Macdonald: Was the hon. member referring to the chairman?


Mr. HARTT:: This is not a police court.


William Ross Macdonald: If the hon. member for Stanstead was referring to the chairman and reflecting on the Chair, I shall have to ask him to withdraw his remark.


John Thomas Hackett: I will begin by withdrawing anything that I said in haste. At the same time I will ask the Chair to permit members to express their views on the question which is before the Chair, and I hope it will not be necessary to render a decision until those views have been wholly expressed. I regret sincerely if I said anything that might be interpreted as offensive to the Chair, and I withdraw wholeheartedly.


William Ross Macdonald: Thank you.


John Thomas Hackett: But I ask for permission to address the Chair.


William Ross Macdonald: It is customary for the chairman to ask for the views of hon. members on points of order. Of course the discussion should be limited. I do not want to curtail discussion too greatly, but I thought I had heard enough. If the hon. member for Stanstead has something further to say, I certainly will not refuse to hear him.


John Thomas Hackett: I merely wish to point out that I understood the argument of the Minister of Finance to be that too many people were availing themselves of delay because the interest rate was low. Then he said there was a large body of people who made inaccurate returns and paid less than was owing. He made a distinction between the two groups. It seems to me that from his argument we must conclude that the excess in the amount of interest exacted is a penalty, and that, in consequence, this is not a money bill and does not come within the category of legislation which can emanate only from the government. I thank you, Mr. Chairman, for enabling me to state my case.

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William Ross Macdonald: The resolution before the committee is not a money bill, as the hon. member for Stanstead has said, but it is a resolution preceding a money bill. As I said previously, the government must take full responsibility for the raising of taxes. I would refer hon. members to Beauchesne, third edition, citation 497:
No member other than a minister of the crown may introduce a bill for reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue.
The ways and means resolutions are for the purpose of raising revenue and there can be no reduction in taxation which would affect the balance of ways and means. The government must expect to receive some revenue from this rate of interest. If it were reduced, it would affect the balance of ways and means; therefore I must rule the amendment out of order.


Edmund Davie Fulton: With respect, Mr. Chairman, for the reason that I feel that your ruling is not within the terms of the citation which you read, I regret that I must appeal from your ruling.


William Ross Macdonald: Order. I do not know whether the hon. member for Kamloops realizes that an appeal from the chairman's ruling is not to the committee but to the house, and that I would have to report to the Speaker. The ruling would then be presented to the house.


Edmund Davie Fulton: I realize that, Mr. Chairman.


Mr. ADAMSON:: While you are waiting, sir, may I ask the minister a question for the purpose of clarification? Do I understand-


William Ross Macdonald: Order.


Agar Rodney Adamson: I am speaking on the same subject.


Some hon. MEMBERS:: Sit down.


Douglas Charles Abbott: Summer is here.


William Ross Macdonald: The ruling has been given. I am about to ask the Speaker to resume the chair.


Agar Rodney Adamson: All right. I thought I might ask a question before you left the chair, Mr. Chairman.


Mr. McCANN:: There has been no protest against your ruling, Mr. Chairman. Your ruling stands unless there is a protest.


William Ross Macdonald: The hon. member for Kamloops appealed.


James Joseph McCann: He indicates that privately, but he has not indicated it to the committee.


Mr. GRAYDON:: Oh, he has indicated it all right.


William Ross Macdonald: I shall be glad to put the matter in a formal way.


Edmund Davie Fulton: If the minister wishes a formal appeal, all right.


James Joseph McCann: No.


Douglas Charles Abbott: I do not wish anything. I just want to get on with the resolution. If we are to do it by a vote, let us do it.


William Ross Macdonald: The hon. member for Kamloops has indicated that he wishes formally to appeal to the Speaker. If I am wrong, I should be glad to know.


Douglas Charles Abbott: That is wasting half an hour.
Mr. Speaker resumed the chair, and the chairman of the committee made the following report:
Mr. Hazen moved -an amendment to clause 2 of the Income War Tax Act resolutions as follows:
"That clause 2 be -amended by deleting therefrom the following words: 'and that the rates payable on overdue taxes be increased from 4 per cent and 7 per cent to 6 per cent and 8 per cent respectively'." The chairman ruled the amendment out of order on the ground that it disturbed the balance of ways and means. From that decision Mr. Fulton appealed.


John Thomas Hackett: Before you render your decision, Mr. Speaker, will you be good enough to read the whole of citation 497?


James Horace King: Order.


John Thomas Hackett: Only part of it was read.


James Horace King: I must call the hon. member's attention to the fact that I have no ruling to give. I have just to put the question to the house, to determine whether the ruling is to be confirmed.
The question before the house is an appeal from a ruling given by the chairman of the committee of ways and means. Mr. Hazen moved an amendment to clause 2 of the resolution -with respect to the Income War Tax Act, as follows:
That clause 2 be amended by deleting therefrom all the words after, "no interest less than $.1 to be payable."
The chairman ruled that the amendment was out of order on the ground that it disturbed the balance of ways and means. From that decision Mr. Fulton appealed.


Mr. MACKENZIE KING:: May I say a word of explanation? In the excitement of the moment I quite overlooked the fact that I was paired with the leader of the opposition (Mr. Bracken) and I voted inadvertently. When I saw my mistake I asked our whip if he would kindly refrain from voting so that the count would be the same, and he did so. I think this all goes to show that even the best of us may go astray at times.


Mr. GARDINER:: May I say to the house that I did not notice that the hon. member for Souris (Mr. Ross) was not in his seat, and I voted inadvertently, but I had the hon. member for Brandon (Mr. Matthews) pair in my place.


Mr. JOHNSTON:: I was paired with the hon. member for Halton (Mr. Cleaver). Had I voted, I would have voted against the ruling.


Mr. BLACK (Cumberland):: I noticed that the Minister of Transport (Mr. Chevrier) was not present, so I refrained from voting.


Mr. FERGUSON:: I was paired with the hon. member for Lotbiniere (Mr. Lapointe). Had I voted, I would have voted against the ruling.


Mr. PEARKES:: I was paired with the
hon. member for Fraser Valley (Mr. Cruick-shank), but when I saw the Prime Minister voting I thought all pairs were off.


Mr. CASSELMAN:: The hon. member for Huron-Perth (Mr. Golding) was inadvertently paired with two members on this side, I being one of them. I therefore refrained from voting, the other member of the triumvirate having voted at my request. Had I voted, I would have voted against the ruling.


Mr. MATTHEWS (Kootenay East):: I was paired with the hon. member for Victoria, B.C. (Mr. Mayhew). Had I voted, I would have voted to confirm the chairman's ruling.


Mr. HERRIDGE:: I thought I was paired with the hon. member for Fraser Valley (Mr. Cruickshank). Had I voted, I would have voted against the chairman's ruling.


Mr. NIXON:: I was paired. Had I not been paired, I would have voted to confirm the chairman's ruling.


Mr. HEALY:: I also was paired. Had 1 voted, I would have voted to confirm the ruling.
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Mr. GARIEPY:: I was paired with the
hon. member for Victoria-Carleton (Mr. Hatfield). Had I voted, I would have voted to confirm the ruling.
And the house, having resumed in committee of ways and means:


Stanley Howard Knowles: Mr. Chairman, the minister has stated that the reason for the amendment now before us is that there have been extensive abuses of underpayment of tax. Can he give us some statistics on that point? Can he tell us roughly how many people have taken advantage of the act to borrow, say, fifty dollars from the government at a low rate of interest, and how many have taken advantage of it to borrow five hundred or a thousand or a million dollars?


Douglas Charles Abbott: I have not detailed information of that kind here, but it could be obtained from the income tax records. Some idea could be given as to the average amount by which the tax is underpaid, but I could not give my hon. friend any detailed information today.


Stanley Howard Knowles: I am inclined to go along with the minister's argument on this point, but I do think that those who take the other view would be justified in asking for the information I am seeking, although I have noted they have not asked for it.


Mr. DIEFENBAKER:: We have to leave something for you to do.


Stanley Howard Knowles: My hon. friends to my right say they do not accept the minister's statement, and I would like to know what is behind it. I hope that my hon. friends to my right will note that I am agreeing with them in seeking support for the minister's statement. I do think that when the minister comes before the committee and says that he is asking for a certain provision to correct abuses that have been widespread, he should have the facts and figures to support his statement, and to show the extent of the abuse.


Douglas Charles Abbott: I will see what information I can give when we are in committee on the bill. Frankly I did not expect that I -would be asked for detailed information today. I am afraid I took it for granted that others would take for granted what I know to be so-that there are substantial underpayments of tax. The law does not impose any penalty for that, other than the interest penalty, and human nature being what it is, when April 30 rolls around, if you have money and there is something else you need, you are inclined to say: The government can wait a little while, and it will only cost me four per cent interest.


Stanley Howard Knowles: Has the minister figures now as to the total amount of arrears, or the average amount of arrears?


Douglas Charles Abbott: It is not in my department. The interest rate has always been in the act. At one time it was eight per cent, and in recent years has been reduced to four per cent.


Stanley Howard Knowles: And what happened?


Douglas Charles Abbott: My information is that there are substantial arrears of tax. The information I get from the officials of the Department of National Revenue is that apparently some advantage is being taken of this lower interest rate, and it is for that reason I suggest we establish it, not at eight per cent, but at six per cent.


John Thomas Hackett: Why not make it five per cent?


Douglas Charles Abbott: Perhaps I should do a little horse trading with my hon. friend. I will give figures to the committee, but it will take a day or two to dig them up. I will see what I can get for the committee when we come to the relevant section of the bill.


Edmund Davie Fulton: The minister is basing this change mainly on those who make their own assessment and then send a cheque for less than the amount they have assessed themselves-a wilful or knowledgeable underpayment. But is there not room to distinguish between persons in this category and others who innocently make a mistake in their assessment and send in a cheque for the full amount for which they have assessed themselves? Surely a distinction can be made between those two groups.


Douglas Charles Abbott: There is no doubt my hon. friend is right in theory; it should be possible to make a distinction. But my hon. friend is a lawyer, as I am, and he knows that it is sometimes hard to tell from an income tax return whether there has been a deliberate underestimate, or say a claiming of expenses which could not properly be claimed, or an honest mistake. I know that from my own experience. There are undoubtedly these two types of cases, but it would be difficult for the average assessor to distinguish between them. I suggest to the committee that six per cent for the use of money which in fact is the government's money from the time the return is filed, while in excess of the ordinary commercial rate, is not too greatly in excess of it. The information I have is that the cases of honest underestimates of tax are relatively small in number. I say frankly to

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the committee that the type of case we are trying to discourage is where there is a deliberate underestimate or a deliberate failure to pay a reasonably substantial amount. We want an interest rate that will discourage that sort of thing, and I would hope that this rate will do it. In hardship cases, where there is an honest mistake and it is felt some relief should be given, it is always open to the minister to recommend a remission of the interest penalty. But I feel from my experience in the administration of the act that the general rule should be there. The honest man who has innocently made a mistake and feels there is an injustice can ask for a remission.


John Thomas Hackett: I am going to suggest to the minister that before he arrives irrevocably at a decision he read Nehemiah, chapter 5, verse 4:
There were also that said, we have borrowed money for the king's tribute, and that upon our lands and vineyards.
If he sees what happened in the sequence I think he will be inclined to be more temperate.


Stanley Howard Knowles: Mene, mene, tekel, uphar-sin.


Douglas Charles Abbott: I shall certainly read my hon. friend's reference.


Mr. GILLIS:: I agree with the minister in what he is trying to do. It is just a matter of guarding against sharp practices by smart people who might want to get hold of $10,000 at four per cent and invest it at fifteen per cent. But there is another group who will be affected by this change. Suppose a person in computing his tax makes a mistake of a hundred dollars or so. The income tax department after eight months or a year-


John Thomas Hackett: It may be twenty months.


Clarence Gillis: Yes; they tell him that he has made a mistake and he is charged interest on the underpaid tax when he thought he owed the government nothing at all. If the minister intends to insist on the resolution going through as it is, the least that should be done is that, where the amounts are small, if the income tax department did not notify the taxpayer within a reasonable time the interest should be waived.
I have run into another problem which has to do with service personnel, persons who up to 1942 were working in industry. They went into the service in the latter part of 1942, ' filed an income tax return and went overseas. They came back in 1945 and then received a bill from the income tax department for arrears
of taxes in the year 1942. They are also being charged with three or four years interest on back taxes; in other words, the period during which they were in the services.


Harry Rutherford Jackman: With interest on interest,
I suppose.


Clarence Gillis: 
Douglas Charles Abbott: They were given exemption for the time they were in the services and a year afterwards.


Clarence Gillis: What I am talking about is what they owed on their income in 1941 or 1942, before they went into the services. It accumulated, and the interest ran on all the time that they were in the services. With that exception, I am quite satisfied that the minister is taking the right step against the type of persons who may try to get money very cheaply from the government in this way and invest it at higher rates of interest.


Mr. CARDIFF:: I should like to ask the minister a question, but I am not sure whether it is out of order or not. Like all other hon. members, I receive a salary and the tax is deducted at the source. Of necessity I have to make a return on my farm. If that farm shows a loss on the return, am I entitled to offset the amount shown on that return?


Douglas Charles Abbott: You are not entitled to write off the loss on your farm against your indemnity. As I understand it, it depends on which is the principal source of income. A man
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who operates a farm as a side line can write off losses on his farm against other secondary income which he may have, but he cannot write it off against income, or salary, or wages in his main occupation. It is a legal question. I suppose I should not attempt to give a ruling in the committee. It really revolves around whether my hon. friend's principal occupation is that of farming or that of being a member of the House of Commons.


Lewis Elston Cardiff: The reason I ask the question is this. In the first return I ever made I was satisfied to let them take the amount from my salary at the source. They said I had to make a return on the farm, which I did. Others are in the same position as I am. It does not affect only me. Many hon. members in all corners of the house are in the same position. Take my own case as an example. I have shown a loss on my farm back to 1942, but I have never received a rebate from the government.


Douglas Charles Abbott: Perhaps my hon. friend had better consult his own adviser in the matter. On the facts as he has given them, if his chief occupation is farming, and he shows a loss on his farm operations, he is entitled to charge that loss against his indemnity. These free opinions are worth just what you pay for them. Therefore I think the hon. member had better check with his own lawyer.


Mr. STEPHENSON:: Suppose a person overpays his tax one year; is that overpayment applied to an underpayment the next year without notification?


Douglas Charles Abbott: I am informed that each year is taken by itself. I am not too familiar with departmental administration.


Charles Elwood Stephenson: That is the point I wish to speak on now. The person to whom I should like to refer had an overpayment of $27 and some odd cents for one year. The next year he was short $21.61. The department did not refund the overpayment. He was notified that he owed the government $52.05. His underpayment was only $21.61, but the tax penalty was $30.44, making the total which he was required to pay $52.05. He had not been notified that he owed that money until some four years later. At the same time he had a balance of $27 coming to him which could have been applied to pay the $21.61. I cannot see the justice of that, and I cannot see the argument for the six per cent, particularly when a man has overpaid and there is money on hand to pay the amount. That money is worth as much to him as it is to the government, particularly if he had to go out

and borrow the money to cover the $27 or whatever he may be short. On that amount he has to pay five per cent or six per cent while the government holds his money, and yet the government charges him interest at six per cent because it has him over the barrel.


Douglas Charles Abbott: It is very difficult to deal with individual cases such as that without knowing all the facts.


Charles Elwood Stephenson: These are individual cases.


Douglas Charles Abbott: I am sure that if my hon. friend took the matter up with the office of my colleague, the Minister of National Revenue, or if he saw the deputy minister, ho would have it cleared up.


Charles Elwood Stephenson: There are thousands of these cases in the country. This happens to be one particular case. Last year when I spoke on it I asked if the penalty interest was justified, and apparently there was no answer. I asked the Minister of Justice if it was justified and he said the government was infallible.


Mr. GIBSON (Comox-Alberni):: I think the hon. member for Durham has a real point there. This is one of the sore spots with the taxpayers of the country. I could never understand why the Department of National Revenue did not have a ledger sheet of each individual with the credits on one side, the debits on the other and the balance carried forward.


James Joseph McCann: That would mean ledger sheets for everyone.


John Lambert Gibson: As the
minister says, that would mean ledger sheets for everybody, and the balance that a man owes ought to be the figure on which he pays interest.


Douglas Charles Abbott: The answer there is that perhaps it would be desirable to change the law and make it a current account. The law provides that each man owes a tax each year on a certain basis. He is called on to estimate his tax, file a return and pay the tax. If he does not do that he is subject to the usual penalty of interest on what he does not pay, and each year is taken as a separate unit. There are the provisions for averaging, of course, in the case of farmers and for writing back losses in the case of businessmen, and so on; but, broadly speaking, the principle of the law as it stands, and as it stood in 1917 when it was brought in, is that each twelve-month period the individual taxpayer, or the corporate taxpayer, must file a return and pay his tax for that year, or the balance of tax for that year. Now it is on an

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instalment basis. One way of borrowing money for your business at a cheap rate is to underpay your instalments. That is why I am so anxious to have this somewhat higher rate in the law. Tax collection is not a popular pastime any more than tax paying is a popular pastime. Taxes have to be collected if the services of the country are to be maintained, and that is the job of my colleague the Minister of National Revenue. Neither he nor I will win any popularity contest by pressing for taxes or charging interest on under-payment of taxes, but most businessmen know that some measures of that kind have to be enforced.


Charles Elwood Stephenson: When the taxpayer overpaid the tax, why was not the overpayment returned?


Douglas Charles Abbott: It is impossible for me to answer hypothetical questions in the house on a set of facts which I have not had a chance to look at. The answer is this. If a return is assessed and it is found that the taxpayer has overpaid the tax, a cheque is sent for the overpayment. If he owes the crown money, then the usual law of offset is applied, and a ruling must be got from the Department of Justice, or a certificate. But that applies in commercial life. If I owe a man $50 and he owes me $75 I do not send him the $50 and let him send me $75. He sends me a cheque for $25.


Charles Elwood Stephenson: The minister is not consistent in his policy, because he would not apply the over-payment to the next year's tax in order to bring the taxpayer up to date. As regards the refundable portion of the tax payable now, the government arbitrarily says, "We will take that and apply it to back taxes without asking the taxpayer's permission to do so."


Douglas Charles Abbott: They could not do so if
he did not owe them money.


James Joseph McCann: When an assessment is
made and it is found that there is an overpayment of, let us say for the sake of argument, $25, that is stated on the assessment return. The taxpayer has the option of getting that in cash or indicating to the department that he wishes it to be put to his credit for his next tax year.


Charles Elwood Stephenson: In the case I am speaking of, the taxpayer was not notified that he had any tax to pay, but when the matter was taken up and the mistake was brought to light they decided to apply it to 1944.


James Joseph McCann: Did he get a notice of assessment?


Charles Elwood Stephenson: Yes. He missed
1943 altogether and was charged $30 interest on a payment of $21. It is hardly consistent.


Gordon Benjamin Isnor: I am surprised at the attitude taken by many members sitting in the opposition. It is true that many of those who have spoken are lawyers. There are very few businessmen who have spoken against this proposal of the minister, and I wish to give the minister my support. Everyone seems to be objecting and to be criticizing the minister for carrying on in a businesslike way.
May I deal briefly with 'the small taxpayer. Today he is paid through his weekly envelope or monthly salary and deductions are made at the source; in fact, ninety-five per cent of his tax is collected in that way. There is really no opportunity for him to have large means at his disposal. On the other hand, the businessman receives a form and he is asked to estimate from the previous year his income for the current year. Then he is requested to make, I believe, four quarterly payments of twenty-five per cent. If the businessman, or 'the firm, decides to use two of the payments, he has fifty per cent of his total tax available for business purposes. Instead of going to the bank and paying 3i per cent, putting up Dominion of Canada bonds as collateral, or paying 4J per cent or up to six per cent as a business transaction, he borrows from the government, using government moneys for a certain period. Why should the businessman not be compelled to pay the same rate of interest to the government as to the bank or to any other lending institution?
That runs into many thousands of dollars. It is only, or it is very largely, the businessman who is being charged this particular interest rate, and I do not believe there are many of them who are opposing this change. It is a clear-cut business method of carrying on; and I rather compliment the minister, instead of criticizing him, upon the action he has taken in this respect. I should think every member sitting with the C.C.F. would welcome this, since it would be a clear indication that they were looking after the smaller man.


An hon. MEMBER:: Oh, oh.


Gordon Benjamin Isnor: The facts prove it is so, and "Oh, oh" does not count if you look at the matter in the right way.


Stanley Howard Knowles: We are trying to get the facts from the minister.
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Gordon Benjamin Isnor: Those are the facts as I see them. In regard to overpayments, if any hon. gentleman had to pay 15,000, $6,000 or $7,000 more, he should have entered it as E.P.T. in 1944, 1945 or 1946, and automatically it would have been transferred to his income tax. In that way the account would be more or less balanced and kept alive, and he would not be charged interest on that particular amount of his income, which otherwise might have been the case. Such a transfer is proper. Quite often in the past, businessmen have found that they had paid too much in the form of excess profits tax. I have before me a tax bill from a certain taxpayer showing that he has a credit of $7,066. That taxpayer will be credited from his E.P.T. to income tax.


An hon. MEMBER:: He must be a rich Liberal.


Gordon Benjamin Isnor: I just happened to have that bill here, and that is a real case. That taxpayer will have to pay, but he will be in the fortunate position of not having to pay as much income tax as he had anticipated for 1947-48.
I wish to congratulate the minister on this businesslike step he has taken. I make that statement as a businessman, because in my opinion he is trying to carry on in a businesslike way.	*


Agar Rodney Adamson: The love feast of joy and good-natured felicity among the Liberals-how pleasing it is to pay taxes and even to pay interest on taxes unpaid!-is marvellous. It indicates a strange philosophy and shows a wish to get somewhere, where they are not at the present time.


Gordon Benjamin Isnor: I wonder what the hon. member means by that. Would he explain? Would he enlarge on that?


Agar Rodney Adamson: The hon. member will read my remarks and understand them perfectly.


Gordon Benjamin Isnor: Mr. Chairman, in view of the fact that I was the last speaker, I think the hon. member will be fair and will not imply any such thing as that. I would ask him to be good enough to explain.


Agar Rodney Adamson: I am not imputing
motives at all. Nothing in my remarks implies the imputation of motives.


Harry Rutherford Jackman: It is a very worthy imputation.


Agar Rodney Adamson: I wish to ask the Minister of Finance this one question.


Gordon Benjamin Isnor: Mr. Chairman, as a matter of principle, I suggest that the hon. member has implied something in regard to myself. If he will be good enough to say he does not imply it in connection with myself or my remarks, I am happy: otherwise I will ask him to withdraw. There is no hidden motive as far as I am concerned.


Agar Rodney Adamson: It is like the hidden reserves in the banks. There are no hidden motives.


Gordon Benjamin Isnor: The hon. member is not man enough to withdraw.


An hon. MEMBER:: Now, now.


William Ross Macdonald: Order. The hon. member for York West has stated that there was no motive implied.


Gordon Benjamin Isnor: Did he say that?


William Ross Macdonald: Yes, definitely.


Gordon Benjamin Isnor: That is fine.


An hon. MEMBER:: Do you apologize?


Gordon Benjamin Isnor: No.


Agar Rodney Adamson: I want to ask the Minister of Finance just one question, if he will listen. Suppose a man has underpaid his income tax substantially. He does not get his assessment for the year for four years; I refer to his final assessment. That is quite a common occurrence among some of the taxpayers.


James Joseph McCann: No, that is not common at all.


An hon. MEMBER:: Yes, it is.


Agar Rodney Adamson: Unfortunately, I know of several cases where that has happened and where the assessment was not received for three and four years. He is charged this four per cent or six per cent on the twenty months of the four years before he gets his assessment, and not on the other two and a half years.


Douglas Charles Abbott: That is correct. At the end of twenty months, interest ceases to run if the assessment has not been made. Of course, thirty days after the mailing of the notice of assessment, the interest rate goes up on the amount due. There are thirty days in which to pay any balance of assessment, and then it goes up.


Agar Rodney Adamson: I assume that. I think it would be a great relief to taxpayers to have their assessments just as soon as possible so that their liability to the state would be known.

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James Joseph McCann: I should like to say a word in reference to that matter. It is the object of the department to have the business in such a position that the returns of one year will be assessed before the returns of the next year come in. For the year 1946 there were
3,566,000	returns. That is a great deal of business. That constituted 600,000 more returns than for the year 1945. The reason for that was that the men in the defence forces had returned to Canada. During the time they were overseas they were not taxable. They had returned and had gone into business or into some type of money-earning occupation, as a result of which they had become taxable. In addition to that, this large number of returns indicates a high level of earnings by the people of this country. Over 600,000 more returns were received in the year 1946 than in the year 1945. For the year 1947, returns for which were made at the end of May, there are many hundreds of thousands more than the 3,566,000 for 1946. I think it is fair to estimate that for the year 1947 there will be at least 3,800,000 returns, or somewhere between that and 4,000,000.
When the hon. gentleman says a great number of returns for years back-as much as four years-have not been assessed, he is not speaking according to the facts. If the percentage is taken, it is exceedingly low. There are reasons for that. All during the war years the staff of the taxation division was greatly undermanned. Business came along and took from us our trained assessors, auditors and chartered accountants. Why was that? Because of the level of the salaries, for the most part, that were being paid to those who were in the salaried positions in the taxation division. That has been changed. We have a great many more assessors. We have added to our personnel something over 2,400 people throughout the country, so that we are now getting to the stage where we believe that, within one to two years from now, we shall have the assessments made on a current year basis. At that time there may be a change made, so that if the assessment is not made in a period less than twenty months, the interest rate will not apply. At the present time we are approximately twenty months to two years behind in some cases, but that condition will be improved as time goes on.


Edmund Davie Fulton: It was interesting to hear the senior member for Halifax speak from the point of view of the businessman, of whose situation he has intimate knowledge. He was probably accurate in what he said with regard to the purely business basis of this tax. But I do not think he showed any great accuracy or
knowledge of the situation as it affects those others for whom we have been speaking. I refer to the small taxpayer, and particularly to the farmer, who does not make his return on a quarterly basis-


Gordon Benjamin Isnor: I dealt with the small taxpayer.


Edmund Davie Fulton: -and who has no knowledge of interest or why he should be charged interest when the error was made in good faith, and particularly when the time lag is not his fault. That is our main objection to this particular piece of legislation. One must appreciate what the minister is trying to do with regard to those who deliberately underpay their own assessments. But I do not think any legislation is good which, because of a certain situation of which a few people are taking advantage, hurts everybody simply so that those few people will no longer be able to take advantage of it. The suggestion we have been making is that the particular offenders should be dealt with, instead of the whole mass of honest taxpayers being penalized, as large numbers of them will be penalized under this legislation.
I wish to refer to a case as an illustration of what happens. A certain taxpayer, a farmer, in 1943 asked to be permitted to go on a different basis. He had been on a cash basis and wanted to go on an inventory basis. He received permission, furnished information back to 1936 and established his inventory as of that date. A few months ago he received a final assessment showing that he had some $1,100 additional taxes to pay because of the additional income which that change in the method of assessment involved, from 1936, and requiring him to pay an interest penalty on the unpaid taxes of $500, or nearly half of the tax arrears. I believe that particular case is to be adjusted, but I refer to it as an example of what happens when assessments are late and when the government insists on charging interest on taxes which are in arrears for no other reason than that the assessment has been delayed.
The amendment which we moved has been ruled out of order, but I think we shall have another one which would take care of the situation. I ask the minister again to consider whether it would not be advisable, rather than to pass this new resolution in its present form, to provide that the interest penalties shall apply only to those who underpay their own assessments. That is the group to which he referred and on which he based his argument. That is the group which is obviously, shall we say, taking advantage of what he says has been a low interest charge by the government in the
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past. But certainly some taxpayers have been charged interest when the twenty months' period has been exceeded and when the delay has not been their fault. Before this resolution is passed, I should like to know that more consideration will be given to preventing honest taxpayers from being penalized because there are a few whose motives are in question.


Douglas Charles Abbott: It is not a question of penalizing honest taxpayers, as I have tried to explain. This is a complex subject, and it covers all taxpayers. One of the ways in which substantial advantage can be taken of a low interest rate was touched on by the senior hon. member for Halifax. In the case of businessmen, they have to estimate their tax for the coming year. They estimate it on the basis of last year's tax. They are entitled to do that. Then they pay one instalment. Then, for one reason or other they do not pay the second instalment or the third. They know pretty well the chances are that, while last year was not such a good year, this year will be pretty good. There are many ways in which that can be done, and it is not illegal, but it enables a man to use money in his business which properly belongs to the government.
The cases of small taxpayers, about which so much has been made here, where they under-estimated the tax, honestly and otherwise, are usually pretty small. They might run to S25 or $50. The interest on that, even if it were $100, is only S6 for the first twelve months. And somebody can calculate rapidly what it would be for the next eight months.
All that is being suggested in the proposed amendment is that the present rate of four per cent, which I consider is too small or too low to accomplish the purpose for which it is placed there, should be placed at six per cent.
The hon. member for Eglinton suggested that consideration might be given to reducing this period of twenty months to a somewhat lower figure. My colleague the Minister of National Revenue has already touched upon that. Perhaps, if additional staff were obtained in the department and greater headway made, that period might be reduced in another year. But I say, as I said before, I think this is a section which it is in the public interest to have, and it will not cause hardship to anyone who pays his honest bills. Incidentally, this applies only to the 1948 tax period, returns for which will be filed next year.


Mr. TUSTIN:: How long has the twenty-month period been in existence?


Douglas Charles Abbott: Two or three years. I cannot remember offhand, but I am told it is up to and including 1945.


Mr. BARENESS:: Does the hardship provision about which the minister has been talking apply in respect of a farmer in this situation. On aocount of the way in which farmers' income tax is collected, he may, from the point of view of his figures, show a very 'large income in a particular year in which he has no income at all. For example, in the fall of 1947 a farmer might go to the bank and borrow $10,000 with which to buy cattle and another $5,000 to buy feed. Then, in the spring of 1948 he sells those cattle for probably $16,000, making a profit of $1,000 for his work. But so far as income tax is concerned, he is charged with having an income of $16,000.


Douglas Charles Abbott: No, no.


Douglas Scott Harkness: Oh, yes, he is.


Douglas Charles Abbott: No.


Douglas Scott Harkness: I have made these things up myself and I know. When a man is on a cash basis every cent he gets in from the sale of stock is considered as income.


Douglas Charles Abbott: On a cash basis; but he can average his income over three or four years.


Douglas Scott Harkness: But supposing he has not been operating on the three-year average. That is true of most farmers; they have not been on the three-year average, and in most cases they have not paid income tax at all. But the man in this particular instance is charged income tax on $16,000, plus any other crop he may have. Bet us say there is another crop valued at $4,000; then the result is that he is shown as having a total income of $20,000 for 1948. And on that, of course he is charged a large amount of income tax. I do not know what it would come to, because I have not figured it out. But he does not have the money to pay it.
In a case of that kind, what adjustment is made; and is the hardship clause about which the minister spoke brought into play? A man in that position is in a hopeless situation.


Douglas Charles Abbott: I would not think that would be a case where the hardship clause would apply. In the circumstances which have been given, the farmer goes to the bank and borrows $10,000 with which to buy cattle, which he sells for $16,000. He got the money back, plus a profit and he owes the government income tax. If he has not the cash he has to go to the bank and borrow money, the same as any other businessman who wishes to pay his liability. I can see that if he suddenly switched to a cash basis, in the circumstances given here it might sound as though his income were not real, and he would be taking this averaging

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procedure in the next year. Anyway, it is a problem of administration.


Douglas Scott Harkness: No, it is not. This is the case of the farmer who did not pay income tax at all in 1947. He borrowed money from the bank to buy cattle. I know of one or two cases where this particular point applies. Then the farmer turns in his income tax return for the next year. According to the way in which he has to make up his return he is charged with having income of 820,000, and the tax is levied on that amount. But he has not made that amount of money, and he has not the money to pay the tax. What I want to know is: What happens in a case like that?


Douglas Charles Abbott: The same as happens in respect of any other businessman. He has to find some way to pay his obligations. I should have thought that, in the light of the facts set out by my hon. friend, that particular taxpayer would be well advised to prepare his return on an accrual basis. He has the option of doing it in that way. If he prepared it on an accrual basis his income would be the 81,000 to which my hon. friend has referred. If he filed it on a cash basis, then I suppose he does it either because he is badly advised or because there is some advantage in doing so.


Douglas Scott Harkness: When the minister refers to the accrual basis he means the inventory
basis?


Douglas Charles Abbott: Yes.


Douglas Scott Harkness: But that will not help the man so far as the first year is concerned. And if he goes on a three-year average basis it will not help him so far as the first year is concerned. In other words, he is still caught for a large false income, and that is the thing about which I am asking the minister. What is he going to do about it? How is it to be adjusted? There must be some way.


William Ross Macdonald: I have not interrupted the hon. member but it does seem to me that we are getting away from the resolution under consideration. We are considering resolution 2 which deals with the interest payable on amounts paid in excess of the amounts chargeable, and also interest charged on amounts which are not payable. This resolution deals with what happens after the tax has been paid; not before.


Douglas Scott Harkness: The reason I am discussing it is that the farmer about whom I have been talking is charged with a tax on several thousand dollars, and he has not the money to pay it. Then he is charged interest at six per cent, and later at eight per cent. That
is the manner in which I am dealing with the matter. My first question was as to whether the hardship clause would apply in a case of that kind.


Douglas Charles Abbott: It does not sound like a case in which it would, no.


Douglas Scott Harkness: Secondly, I should like to know whether there is any provision, so far as the income tax law is concerned, whereby this man can get relief. Can the minister answer that?


Douglas Charles Abbott: Perhaps my colleague, the Minister of National Revenue, would answer that. It has not much to do with this resolution.


Douglas Scott Harkness: I think it has.


Mr. MacNICOL:: I should like to ask a question about the other side of the picture, where the income taxpayer pays too much. I have here a letter from a taxpayer advising me that, through an error in making out his assessments in 1942, 1943 and 1944, he used tables which applied to a single man. He is a married man with a child, and the result is that he has overpaid to the extent of $300. He has asked me to find out if he has any redress, or if he will be able to get the overpayment back again.
I might add that in my own case I have overpaid two or three times, and I must congratulate the department upon its accuracy. They looked over my assessment carefully, and where I overpaid they sent me a cheque for the amount I had overpaid, or stated that I could deduct it from next year's payment.


James Joseph McCann: The case to which the hon. member for Davenport has referred is one where the person in question can ask for a re-assessment. If it is not barred by statute his application would be granted.


Douglas King Hazen: In support of the second part of this resolution which deals with an increased rate of interest on overdue taxes and provides an increased penalty, the minister has told us that the purpose of the resolution is to prevent under-payment where payment is due. He mentioned a class of persons who, he says, when April 30 comes around, decide to spend their money to buy automobiles or for some reason other than paying their taxes. He says these people do not pay the full amount of their tax when they file their returns. There may be some people like that, but there is another class of people, the people who from year to year endeavour as best they can to rake up the money with which to pay their taxes when
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they become due. However, a man may meet with a misfortune. For example, his child or his wife may go insane. He may not live in the central part of Canada where he can get the best of medical treatment, and therefore he must bring his wife or child to Montreal or Toronto or some other place where specialists are available. He may have to go to much more expense than he can really afford. It seems to me that his first duty is to his family and not to the government. He must spend the money upon those in whom he is interested in order that they may have the necessary treatment. Then a man may have his property destroyed or meet with some other misfortune.
These people do not fail to pay because they do not want to pay; they do not pay because they need the money foT some other purposes. It seems to me that they are entitled to consideration. This may be a minor class, the same as those who want to buy an automobile.
As the minister knows, these returns are usually changed in some particular from year to year. It is difficult to make out a return correctly, but the average man attempts to do it. He computes what he owes and then he pays it. That is really a difficult task for the ordinary citizen. Then, after some considerable period of time he is informed that he has not paid sufficient taxes and this excessive rate of interest is imposed. These people should be protected and, in order to protect them, I am going to move, seconded by the hon. member for Kamloops:
That the resolution be amended by adding to clause 2 the following words:
"That the said rates shall become payable only from and after the date notice of assessment has been sent to the taxpayer by registered mail."


Douglas Charles Abbott: Obviously I must take the same legal objection to this amendment as I did to the other. The effect of the amendment would be that any obligation of a taxpayer for payment of taxes to the crown would bear no interest until such time as the notice of assessment was mailed to the taxpayer. I think it will be recognized that it would be physically impossible for any income tax department to get notices of assessment out to the great majority of taxpayers within less than two or three months, even at the best. In the interim the taxpayer would have the free use of money owed to the government for that period, whatever it might be. I think this amendment is, beyond question, one that affects the balance of ways and means and is therefore out of order.


Edmund Davie Fulton: While the government is responsible for ways and means, the house has

the fullest freedom to criticize it, and that freedom can be exercised by way of a motion to reduce the amount of taxation. Earlier this afternoon Your Honour read the first part of citation 497, to be found on page 182 of Beauchesne's Parliamentary Rules and Forms, third edition, but I should like to read the second part of that citation, which is as follows:
But the house enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
Although this actually does not reduce the tax, it reduces a proposed increase in penalty, and I submit that it falls within the same paragraph.


Douglas King Hazen: I should like to read
citation 511 of Beauchesne, second edition, which is as follows:
Each resolution can only be dealt with by being agreed to, reduced, negatived, superseded, or, by leave, withdrawn . . .


Stanley Howard Knowles: On the point of order, Mr. Chairman, I hope that one can speak to these points of order without being tied down to the substance of the amendment before the committee. But I feel that we should be consistent, in what we do in the house and in this committee. I am interested in this amendment, and I am particularly interested in how far a private member can go. I would remind you, sir, that on another occasion this session when some one in this group-it may have been myself-moved an amendment to cut out one of the taxes in Bill No. 3, it was ruled out of order.
Later on, having had my attention drawn to the citation that I intend to refer to now, I moved an amendment that a certain tax be cut out but that another one be put in its place so as to preserve the balance of ways and means. The chairman allowed that amendment as being in order. In other words, it substituted an alternative tax and kept the balance of ways and means.
The citation on the basis of which the second amendment to which I have referred was allowed, whereas the first one was not allowed, is citation 500 in Beauchesne, third edition, to be found a little further down on the page from which the hon. member for Kamloops was reading. He draws attention to the fact that you, Mr. Chairman, a while ago had read only part of citation 497 and he then went on to read the rest. I am going to go a little

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further and read citation 500. Before we get through, we shall have read the whole book. Citation 500 reads:
Though it is the function of the committee of ways and means to impose rather than to repeal taxes, example of the repeal of taxation effected in this committee are to be found upon the journals. Proposals for the variation or modification of taxation can therefore be made in the committee; but these proposals must be grafted upon the financial scheme submitted by the government, and must not affect the balance of ways and means voted for the service of the year. Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government, as, for instance, a proposal to substitute probate and legacy duty on real property as an alternative for an inhabited house duty, the necessity of new taxation, to that extent, being already declared on behalf of the crown.
The point I am making is that, on the basis in citation 500 and in line with what was done in committee of ways and means when we were considering Bill No. 3, this amendment, which merely strikes out a tax or a source of revenue and offers no alternative, is hardly in order. If the hon. member had moved some alternative tax so as to maintain the balance of ways and means, I think, Mr. Chairman, you would have a difficult time ruling it out of order.


Edmund Davie Fulton: Mr. Chairman, if I may-


William Ross Macdonald: Before the hon. member for Kamloops speaks, I should like to assure the hon. member for Winnipeg North Centre and all other hon. members that it is never my wish to rule any amendment out of order. All I wish to do is to see that the rules of the house are observed.


Edmund Davie Fulton: Dealing further with the point raised by the hon. member for Winnipeg North Centre, I do not think he read far enough. The point at issue is this. This is not a tax the repeal of which we are suggesting. What we ask in this amendment is that the penalty be not increased. I have read in support of our contention that our amendment is in order, citation 497 of Beauchesne. I now read citation 502:
A private member may move that certain specified taxes be readjusted and that the scope of tax exemptions be enlarged.


Stanley Howard Knowles: You told me it was not a tax.


Edmund Davie Fulton: I have read, in answer to the hon. member for Winnipeg North Centre, that it is not always necessary to move something in addition so that the balance of ways and means may be preserved.


Stanley Howard Knowles: But the hon. member for Kamloops just said that this is not a tax.


William Ross Macdonald: I thank hon. members for going into this matter so carefully. As I said previously, I like to hear the opinions of members of the committee before I make my ruling. I find, though, that when I do so a number of members of the committee call out: "Make your ruling." However, in spite of that, I usually listen to members, but I must decide when I have heard sufficient representations, and I think on this point I have beard sufficient representations. May I remind the members that we are in committee of ways and means and that this committee is now considering resolutions on which money bills will be based and which are a part of the financial proposals of the government. Those resolutions have now been presented to the committee. Amendments must not be such that they will disturb or interfere with the financial scheme of the government. The amendment which has been moved obviously would affect the moneys coming to the government; it may be to only a slight extent, but in any event it would disturb the balance of ways and means at least slightly. Therefore, in accordance with the citations which have been read, I must rule the amendment out of order.


Julian Harcourt Ferguson: Speaking as a private citizen, as a businessman, not a lawyer, and as a member of the House of Commons; speaking on behalf of what the C.C.F. would like to believe is the big man; speaking on behalf of all the citizens of Canada, both big and small, for they are the ones who sent us here, I think we should make more rapid progress if the Minister of Finance would turn the screw on the man who is trying to gyp the government.
But that is not the attitude we should take regarding the taxpayers of Canada in general. I do not believe that the majority of our citizens are trying to hurt the government or to use the government's money. I believe that what we are trying to arrive at is an over-all picture of a fair rate of interest during a period when interest rates are low, and I believe that five per cent, which is definitely the prevailing rate of interest today, would be adequate. Holders of government bonds are receiving only three per cent, and municipalities are selling their debentures at 2i and two per cent, so I believe that five per cent under the circumstances would be adequate. If the minister would reconsider this, he could solve the difficulty by making the interest rate five per cent. That would be doing a service not only to the little man but to my friends whom the C.C.F. would call the big men, men who
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have been successful in business in this dominion. They are just as much entitled to consideration as the little man.


Stanley Howard Knowles: May I just reply to the hon. member by wishing him today a happy birthday.


John George Diefenbaker: I do not want to intrude myself into this. As a matter of fact, I think that if members of the house had read what I should call McCann's book on income tax for the benefit of farmers, many of their difficulties would be answered. That 44-page booklet answers everything, and at the end of it the farmer finds himself in the position of wondering just what will happen to him. He asks himself: If I die who will make out my income tax return?


James Joseph McCann: Do you mean the farmer or me?


John George Diefenbaker: I am just congratulating the minister on that 44-page masterpiece which his department has put out, but he does not seem to take my congratulations in the spirit in which they were intended, but rather truculently. As a matter of fact, the Minister of Agriculture also had something to say in regard to taxation of the farmers.


James Garfield Gardiner: But not about the book.


John George Diefenbaker: But about the
results from the book. I would ask the minister this question. Have his advisers informed him that, by raising the interest rates from four to six per cent and from seven to eight per cent, there will be less evasion or less delay than there is today? What is the real reason for these arbitrary figures? Why were they fixed at these rates?


Douglas Charles Abbott: The rate used to be eight per cent instead of the six per cent we are now proposing. Following discussions which took place in the house, it was decided two or three years ago that eight per cent was excessive and we lowered the rate to four per cent. The indications are that the lowering of that rate has resulted in a greater deferment of payment of tax than existed before. It is, of course, hard to pin that down. The arrears may be due to the fact that there are more taxpayers and more taxes due. Nevertheless, there is a greater amount of taxes not paid on the due date, and my advisers believe that the four per cent rate may have had something to do with that, because it was easy to borrow the tax money until the assessment could be made and notice of the assessment sent out. I dare say that all of us at some time or another have got a little bit behind in our taxes. I know that on occa-

sions I have had to go to the bank and borrow money to make my tax payment. That is the only answer I can give to my hon. friend. This was not aimed at any particular group. Obviously the salaried man or wage earner, as the senior member for Halifax has pointed out, has not much chance to get behind in his payments because they are deducted at the source. The man who does have the opportunity is the professional man, the lawyer, the doctor, the businessman, the corporation and so on. I think it is fair to say that experience has shown that the low rate of four per cent has, to some extent, encouraged the deferment of payment of taxes which are due.


John George Diefenbaker: I am not going to take up any time, but I believe that the Minister of National Revenue is today engaged in a definite campaign to secure payment on a widespread scale from farmers throughout the country. The campaign in the western provinces has been very direct. Numbers of individuals working for the department are going from farm to farm, and going back over the records of farmers for a period of several years. As a matter of fact, I think this additional penalty will in the main fall on farmers who, over the years, may not have been paying taxes 'because they did not have the returns that made possible the payment of taxes. They now find themselves in the position of having a careful examination made of their records. In the main they are the ones who will be penalized as a result of this change.


Douglas Charles Abbott: This will not apply to them, because the four per cent rate would apply to taxes for 1947. The four per cent rate applies to previous years; it is not retroactive.


John George Diefenbaker: I appreciate that, but the fact remains that a definite campaign is on today. I think the minister would be frank to admit that, since assuming the position of minister, he has placed in the field a considerable number of officials who are doing everything possible to secure payment of income tax from farmers on every hand. There is no use in making representations to the minister in this connection, but I feel that the addition of this extra amount will add a still greater weight upon those people who, over the years, have not made payments because farming conditions were not what they should be. Today they are finding it very difficult to fill out the forms, and as a result of the delay they will find themselves penalized once more by an additional amount.
I hoped that the minister would have adopted the suggestion that there be no increase.

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I was particularly impressed with the suggestion of the hon. member for Simcoe North that the bank rate be charged. However, the minister takes the stand that he will not do that. There is very little use in doing anything other than recording one's objection. Once more I point out that in the ultimate result it will, in the main, fall on farmers throughout this country who are today being forced to pay income tax generally in all provinces.


Mr. FAIR:: There was one thing that the hon. member for Lake Centre left unsaid, namely, that a very large percentage of the farmer's income tax has been collected by the government through low prices being fixed for the products which he raises. That should have been stated by the hon. member for Lake Centre. Because he forgot about it, I am saying it now. The farmer has paid many many times the income tax he should pay 'by receiving much less than he should have received for the products which he grows.


William Ross Macdonald: Order. I do not know why the hon. member for Lake Centre did not raise that question. It may have been because he thought it was out of order. I rather think a discussion along these lines would be out of order. May I ask hon. members to confine their remarks to the resolution under consideration.


Agar Rodney Adamson: I want to correct an impression that seems to be in the minds of certain hon. members in the committee, that there was something ethically wrong or dishonest in the under-payment of taxes in order to utilize the money for some other purpose. The minister is imposing this extra interest because he wants the government to have the use of the money, and is making it a little less advantageous for the individual taxpayer to retain the money and make an under-payment of his taxes. I see his point, but I thought I should correct the impression that he is correcting an evil or something that is ethically wrong. This amendment does not do that; it merely makes it less advantageous for the individual to withhold his tax payment.


Douglas Charles Abbott: That is quite right.


Charles Elwood Stephenson: I have one further question I should like to ask the minister. It has to do with exemption for children going to university. Some have claimed it after the children have reached the age of twenty-one years, but they have had to pay the taxes. The question has come up several times. It is one that should be considered by the government in this way. Owing to the curriculum that is followed in the schools today, it is 5849-297i
impossible for children who are taking a Bachelor of Arts honour course, or medicine in particular, to get through the university at the age of twenty-one years. They are just as much a charge on the parent at twenty-four or twenty-five years of age as they are at twenty-one.


William Ross Macdonald: Order.


Charles Elwood Stephenson: My point is well taken, because persons have claimed exemption on that ground, and they have had to pay the extra tax. Would any consideration be given to children attending a university who can supply a voucher that they are doing so until they have finished their various courses?


Douglas Charles Abbott: I have dealt with this question each year on budget resolution to my certain knowledge for at least the last four years. I have given at length the reasons why it is felt that it is not justified to contribute out of tax money to the education of children at university. Since my hon. friend has made his little speech, I suppose I had better answer it again. The reason behind it is this. An exemption of $300 is allowed for children attending school or university up to twenty-one years. The normal exemption expires at eighteen. It is assumed that their ordinary arts course will be about finished by that time if they matriculate at seventeen. It may be true that some do not, but certainly it should not be the responsibility of the state to subsidize-because that is what it would be- the cost of university education, the postgraduate education or otherwise of these students. Suppose the average person sending children to college has -an income of $4,000. The value of the amount of $300 exemption may be in the order of $45 or $50. The sum of $45 or $50 deduction is something, but it is not a substantial contribution toward the cost of sending that particular young person to the university. I think some other way must be found, if assistance is to be given for university courses, than a tax exemption. Anyway, that is the reasoning which lies behind the cut-off date at twenty-one years of age. I have given this reason year after year. That is the reason why the exemption stops at that point. Perhaps my heart or that of some other minister of finance may soften at a later day.


William Ross Macdonald: Order.


Charles Elwood Stephenson: Mr. Chairman-


William Ross Macdonald: Will the hon. member kindly resume his seat? I have allowed this discussion, sin-ce I was under the impression that the point was whether or not this tax should be charged against those who did not pay the full income -tax because they thought
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there was an exemption for children going to university. I cannot allow the discussion to continue on that point. Does the resolution carry?


Mr. McLURE:: I have sat here for two hours and forty minutes and did not rise to take part in the discussion. I do not think I should allow the opportunity to go by without saying something. I learned something from this discussion, though, and from the decision of the chairman. I learned that taxes and penalty are the same thing in the eyes of the government. They say that, according to the ruling, this was put in for income purposes and not as a penalty. I thought it was a penalty, but now it is worse than ever because the rate of interest charged is fifty per cent higher than it was in other years. It is from four per cent co six per cent.


Douglas Charles Abbott: It used to be eight per cent.


Winfield Chester Scott McLure: It was only six per cent. You have raised it from four per cent to six per cent, which is a fifty per cent increase. The purpose is to bring in more income to make still greater this huge surplus that has been boasted about. There is another side to it. While it is a splendid thing to be boasting about this great surplus, I suggest that if the minister's ear were to the ground he would have found that not only was this the greatest surplus in all the history of Canada but also that the cost of living today is the highest in the annals of Canada or of any other country.


William Ross Macdonald: Order.


Winfield Chester Scott McLure: I come now to the reflection that has been made against those who are trying to pay their taxes, and I will speak of my own constituency. The people there are trying to pay their taxes, which perhaps are not quite as high, in proportion, as taxes paid in other places, owing to the absence of wealth on the same scale. However, the people there are -being dogged, one might say, by tax collectors, letters and bills, especially the people in the low-income brackets. They are quite willing to pay, but they cannot get the money at the present time, and now the department comes to them and says: There is no redress for you; we are going to whip you with the lash of scorpions and charge you fifty per cent more interest if you don't come across and pay in 1947-48.
I do not think the Minister of Finance was responsible for putting that provision in there, increasing it from four per cent to six per cent. I believe some undue influence was brought to bear.


Douglas Charles Abbott: No, he was all in favour of it.
[The Chairman.]


Winfield Chester Scott McLure: I did not think he would be
as hard as that on the people. I suggest to him now that this item should stand until he has given it further consideration, and possibly tomorrow he will propose that it be put back where it should be.


[Stage Direction]
Resolution agreed to.
3. That special deductions from income or taxes be allowed to taxpayers engaged in exploring or drilling for natural gas, oil or minerals in respect of expenses incurred in 1949 operations on the same basis as the deductions allowed in respect of 1948 operations.
Mr. PROBE:: What is the nature of these deductions?


Douglas Charles Abbott: They are exactly the same as those that have been made for the last two or three years. They are made, as my hon. friend knows, for the purpose of encouraging the development of natural resources and particularly having regard to the desirability of increasing the development of such products as oil and petroleum, which for exchange and other reasons we are anxious to have in this country. The deductions are these. First, they are allowed a write off on off-property expenses for exploration purposes, which under ordinary circumstances, under ordinary rules, would be capital expenditures. They are allowed to charge these against profit and loss account.


Agar Rodney Adamson: In toto.


Douglas Charles Abbott: Yes. That rule is general for mines, oil and gas wells. In- the case of what are known as deep-test wells-and incidentally these have to be certified as such by the Department of Mines and Resources,-the taxpayer is allowed credit, in addition to what I have stated, of thirty per cent of the cost of such deep-test wells against his tax liability on other operations.


John Oliver Probe: I am not quarreling at the moment with the fact that there is a deduction with the object of encouraging the exploitation of natural resources. However, the minister has not indicated whether we should interpret this resolution as suggesting that there is a comparable deduction for people who do drilling of other types required in primary production. I suppose the minister would say it is only with respect to drilling for natural gas, oil and minerals that this deduction could apply. As he knows, every year, at any rate since I have been in the House of Commons, a request -has been made of the Minister of Finance for something corresponding to this type of deduction in favour of people who drill for water. This is a

Income War Tax Act
matter of importance to the people in the area which I represent. In the Regina district, from Regina to Weyburn, in the heavy clay lands of southern Saskatchewan, the trend away from horse-drawn vehicles, and the tendency to get away from the raising of livestock, is, in my opinion, due in some measure to the cost of the deep wells that are necessary to provide water.
There has been some provision of surface water through various agencies provided by the Minister of Agriculture, but these are not a certain source of water supply and the farmers must drill deep wells down to 600, 800 and even several thousand feet. As a matter of fact, in the city of Regina our water supply comes from deep-bored wells. The city of Regina is not interested in this item, but rural residents of my area are, because if there is to be a reduction from income tax for the exploitation of natural resources by means of drilling, it would seem to me that drilling for the purpose of guaranteeing the production of primary necessities such as farm products and livestock, and the retention of livestock on the farms, should be taken into consideration and a proper deduction made from income tax, comparable with the deduction that is indicated in resolution 3.
Could the minister give some indication as to why there is that cut-off as between the exploitation of natural resources, of the type set out here, and the exploitation of primary products on the farm?


Douglas Charles Abbott: This is not really in connection with the exploitation of natural resources. It is a form of incentive to encourage the expenditure of money to discover new sources of a particularly valuable product such as petroleum, in which the country is sadly deficient.


John Oliver Probe: We are also sadly deficient in water.


Douglas Charles Abbott: But we do not have to import water from the United States, whereas we import petroleum products. This is a special type of legislation and that is why we continue it from year to year. The committee might be interested in the results obtained to date. These are deep-test wells, which are expensive operations:
Number of	wells	approved	
32Number of	wells	completed	
28Footage drilled for completed wells ..	226,260
Estimated footage for uncompleted
wells	 36,150
Number of	successful wells	 2
This last includes Imperial Woodbend No. 1, which came in this year as a crude oil producer, and Pincher Creek No. 1, which came in as a major wet gas producer but is being deepened in an endeavour to strike crude oil. Estimated cost of completed wells ..	$6,675,000
So it is clear that, unless something more happens, the fact is that, although people have put their own money into sinking these wells and tax credit has been given, results have not yet been produced. But it is done on a year to year basis. I do not think one could go into a large-scale system of assistance by tax credits for all types of natural products. I believe everyone is anxious to try to develop petroleum in this country particularly, because it is so essential to the economy of any modem country. When one must buy from outside the country, it involves exchange difficulties and the like. That is the reason why this special incentive legislation was brought in some years ago and has been continued from year to year. I personally am not yet convinced that it should be a permanent part of one's tax structure.


John Oliver Probe: I agree that there should be an incentive in some form-although I am not saying that this is the proper form-for the finding, exploration and exploitation of what natural resources we may have. That is commendable, although I see by the minister's own figures that he must have given a tax rebate of some $2,000,000, roughly, on those two producing wells we now have.


Douglas Charles Abbott: Yes; over $4,000,000 has been spent and with little result so far,


John Oliver Probe: Yes. I am conceding that. But the saving in foreign exchange is not the primary motive, because, as the minister says, this form of tax rebate started some years ago. Boring generally of an exploratory or prospecting nature is being given tax credits. There is not uniform treatment with regard to our farming communities, where people must bore expensive and deep wells as compared with others. It so happens that where I farmed as a young lad we could1 get water at sixteen feet to twenty feet from the surface. But that is not true of the Regina district; and there is no compensation to the farmer comparable with this provision.


Douglas Scott Harkness: To begin with, I should like to point out, for the benefit of the hon. member for Regina City, that there is no benefit to any oil company from these so-called special deductions, unless they have sufficient income from other wells or other sources so that they can deduct what would otherwise be a loss from the profit.


John Oliver Probe: I am arguing only against the restrictive feature of this clause.
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Douglas Scott Harkness: In other words, drilling an oil well is not comparable with drilling a well on a farm. I am certainly not going to talk against giving aid with respect to the drilling of wells on farms. But I should like to point out that the two things are not on a comparable basis.


John Oliver Probe: As the clause stands, exemptions for oil and water drilling are not comparable. I am not arguing your point with respect to oil.


Douglas Scott Harkness: The point is that there is just no relation between the two things. For example, a company which owns a quarter of a section of land, drills a well on it and finds that the well is dry, gets no benefit from this whatsoever.


John Oliver Probe: No.


Douglas Scott Harkness: Absolutely none. On the other hand, if a company has three wells which are producing oil and another one which is dry, they can get benefits under these clauses. In the last three years I have been urging- sometimes in strong language-the Minister of Finance to improve the so-called special deductions from income tax and so forth, in order to encourage the production of crude oil in this country. I am sorry to say that my representations up to date seem to have had no effect. I shall not repeat them at the present moment, inasmuch as I summarized them again this year in the debate on the address in reply to the speech from the throne.
However, I should like to ask the minister this question, first of all. What consideration has been given to making these so-called special deductions a part of the permanent tax structure? The oil people have been asking for that to be done for five or six years, at any rate, so that they would always be in a position to know what the situation was likely to be for the coming year. As it is now, they do not know whether or not they will have, in the following year, these deductions or this particular treatment with regard to taxation. That fact creates uncertainty. It reduces the amount of drilling which might go on. If for any reason the minister wants to change the tax structure, he can do so here in the house at the time he brings down his budget. I can see no reason in the world why these so-called special deductions and so forth should not be a part of the permanent tax structure of the country. Then the oil men would know where they stood. There would be a greater feeling of permanence among them with regard to their operations, and there would be more confidence. Before I go fur-

ther, would the minister tell me what consideration has been given to doing as I have suggested?


Douglas Charles Abbott: Some consideration has been given; as a matter of fact, a good deal of consideration has been given to whether it would be appropriate to make this a more or less permanent feature of our tax structure. But I felt that it was of such a special character that it should not yet be done. By the introduction of this legislation now, and the announcement that it will be in effect for 1949, those who are contemplating drilling are given a good long notice. They have, one might say, eighteen months at any rate. They could start a well now and have the full year of 1949 to do it in. Possibly at some later day-[DOT]


Douglas Scott Harkness: If the minister will excuse me for interrupting, I might point out that next February they will not have anything like that notice, or next March. In other words, they do not have it until the budget comes down. Just before the budget comes down they have a relatively short period in which they do not know what the situation is.


Douglas Charles Abbott: They know now. We are saying now that throughout 1949 this will be available. Under ordinary circumstances, budgets are brought down some time before the middle of the year and as nearly as possible in March or April, because that is the time at which the estimates are prepared and at which it is possible to prepare a budget. They would have at least seven or eight months before the end of 1949 to know whether the deduction would be available for 1950. I have not had any serious complaint, from those who are interested in this deduction, that there was not sufficient notice given to enable them to take advantage of it if they desired to do so. I have not felt that it is desirable yet to incorporate this as a permanent part of the tax structure.


William Ross Macdonald: Shall the resolution
carry?


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


William Ross Macdonald: We are considering the Income War Tax Act resolutions, and had been discussing resolution 3.

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Douglas Scott Harkness: When the committee rose at six o'clock I was on the point of asking the minister, through you, Mr. Chairman, as to the regulations in effect so far as deep-test well tax deductions are concerned, and as to the depth to which it is necessary to drill in order to obtain that concession. I was interested to hear that the Woodbend well of Imperial was one which came under that provision. I wanted to know how far to the east a man could drill and still come under that provision.


Douglas Charles Abbott: I do not know that I can give my hon. friend an answer at once. As he is aware, the question as to whether a deep-test well is one which qualifies under the provisions of the resolution is determined by the Department of Mines and Resources. My understanding is that the geologists or other officials of that department consider the circumstances in a particular case and approve, or otherwise, a particular project as a deep-test well qualifying under the legislation. However I cannot say as to what the depth is. I shall get the information and give it to the hon. member later this evening.


Douglas Scott Harkness: As the minister said at the beginning of this discussion, this is incentive legislation. I should like to make again the point I have made on several occasions before, namely, that it does not provide sufficient incentive. I would ask the minister once more to consider the various requests made to extend the deduction in various ways, that is in respect of deep-test drawback, depletion allowance and the like, so as to provide increased incentive to people to drill oil wells. I believe it is agreed by all that one of the things we need in Canada more than anything else at the present time is an increased production of crude oil, so as to make ourselves independent in respect of that important resource, particularly in view of the current shortage in the United States, which has been our chief source of supply. I suggest that this whole matter of incentive provided to people to drill oil wells might very well be reviewed, with a view to improving the legislation and increasing the incentive.


Mr. LOW:: I agree with what has been said by the minister in connection with resolution
3.	I believe he has accomplished many things by placing this provision in the act, and making it applicable to gas and oil wells. I was interested this afternoon, however, to hear what the hon. member for Regina City had to say, although I know his remarks may not have come strictly within this resolution.
In many sections of Canada, particularly in southern Saskatchewan and in areas such as the northern Peace river district the farmers do have to spend considerable sums of money to obtain water. Many times they have to go down 4,000 or 5,000 feet in order to get an ample supply. While I am satisfied that special legislation should not be passed, such as that which has been passed to induce exploration and discovery in connection with oil and gas, yet some provision should be made for a more liberal allowance as an exemption from income tax, so that a farmer could take care of that capital cost over a period of years. It is a costly process in many instances to get water in these areas.


Mr. BRYCE:: I am sorry I was not able to be in the house this afternoon, and because of that I may have lost contact with what has been said about obtaining water, the subject to which the hon. member for Peace River has referred. I have run up against that difficulty, myself, in connection with boring a well. My well cost me about $700. I thought it would be only fair that I should be allowed to take that off my income tax over a period of years. It is something that is useful for a long time.
I hope the minister will give this matter consideration. I do not wish to discuss it in further detail, however, because I do not know what has already been said. Perhaps I should ask to be excused for butting in at this time. I think, however, it is something to which the department should give consideration.


Douglas Charles Abbott: The matter was discussed at some length. The hon. member for Regina City pointed out that the drilling of wells for water in certain sections of Canada, particularly his own section, involved a very considerable capital expenditure, because they have to go down to great depths.
Hon. members in the committee will realize that this question of capital expenditures in connection with the drilling of wells for water, or other things, is a broad one. I have taken careful note of the representations made. Perhaps I should say to the committee that

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it involves an important principle, namely the distinction between capital expenditures and expenditures for revenue. Obviously these expenditures made for deep-test oil wells are capital expenditures, and they are so recognized in this legislation. This special tax concession, or whatever one cares to call it, is a special type of legislation to encourage this particular type of search for petroleum. I have serious doubts as to whether one can employ that general principle in connection with capital expenditures in drilling for water or other things. The matter has been brought to my attention, however, and I shall consider it.


William Scottie Bryce: You cannot get milk without water.


Douglas Scott Harkness: I was going to say something about water. Can the minister say whether a well bored on a farm, from which a man gets water, can be depreciated. I have an idea that it can be, but I am not sure. I believe it is two or three per cent a year.


Douglas Charles Abbott: I do not know what the rate would be; but a capital expenditure of that kind, creating a capital asset, could of course, be depreciated in accordance with the appropriate rules for that type of asset.


Solon Earl Low: I think it is provided at five per cent.


Douglas Scott Harkness: There is just this further point in connection with the matter. I have upstairs a letter from a man who complains that he spent about $1,200 in drilling a well for water, and that he failed to get water. He had to go ahead and drill another one. He was not complaining about the second well from which he got the water, but he did complain bitterly when he was not allowed anything in respect of income tax in connection with the dry well. He was of the opinion that the expense he had in drilling that dry hole should have been considered for income tax purposes, and that he should either be able to depreciate it over a period of years, or be allowed it as a straight expense. Could the minister give us any information or tell us what might be done in those circumstances.


Douglas Charles Abbott: I am afraid I cannot do that offhand. I could not give a definite answer. This question, of course, as to what

is a capital expenditure, and what proportion of it can be charged to current income, is one of the most difficult and complex parts of any income tax law. In the revision of the old act and the preparation of the new this one thing has perhaps given us more difficulty than almost any other. I certainly would not want to hazard any offhand opinion here in committee as to what rule should be followed.
Speaking generally, the rule is that a man has a right to depreciate capital assets over the earning life of the capital asset. Depreciation is allowed at varying rates on varying types of asset. Whether a dry water-hole could be written off in the same way as off-property exploration for oil I would not undertake to answer offhand.


Douglas Scott Harkness: If you get water you can depreciate on the basis of the tubing you put in and so forth. I think that is the basis upon which it is worked. You can write off a certain amount of depreciation, but apparently you cannot charge a hole that is dry as an expense for income tax purposes. It is just a dead loss, and this does not seem fair.


Douglas Charles Abbott: That may be. I do not know offhand just on what basis one could justify a deduction from income tax, which means a deduction from federal revenues, for an unproductive capital expenditure. If you accepted that principle I think you would have to expand it to a much wider field than the drilling of wells where you do not find water. The general principle on which depreciation is allowed is that you depreciate on the cost of a productive asset. The theory is that you take something which is a wasting asset, and you are entitled to get your capital back and not pay a tax on income for something that is not income. In a good many cases people, make capital expenditures which are unproductive; risk capital is ventured in things which do not produce results. The fellow who risks it has to take his loss.


Douglas Scott Harkness: Drilling a well on a farm does not come under that.


Mr. BENTLEY:: Let me tell the minister a thing or two. He said that he would not like to give an answer offhand, but it should not be necessary to give an answer offhand. For at least three years the united farmers of Canada and the Alberta farmers' union have

Income War Tax Act
been submitting briefs along this line. They should have given the minister and his predecessor and the departmental officials an opportunity to discuss this matter among themselves and to have a reply ready.
I leave that for the moment. The minister has said that venture capital put into the digging of a well that turns out to be unproductive is a difficult thing to allow for purposes of taxation. Granted that it is, but by this resolution we are giving exactly that privilege in connection with exploration for oil. If you strike, oil you usually strike something that is productive for a long while. That oil will be used to operate cars and machinery and do many other things. That may be used to operate cars and machinery and do many other things. That may be much more spectacular than the pail of water which goes into a cow or a horse, but we must not forget that if you strike all the oil in the world and do not have enough water your oil will not do you much good.
You have to have beef to move around in your trucks that are being operated by your gasoline. You have to have many other things to be used in a similar way. When a man puts capital into digging a well and gets a dry hole it is a serious matter. Anyone who knows anything about farming knows how difficult it is to haul water in a tank for long distances. It is an expensive and arduous farming operation, one that must be carried on in both winter and summer.
We need stock in this country. The farmers can only do what the oil people do, survey their land and get an expert with a willow or some other fellow to try to find water the best way he can. Even with all the advice or experts they can get, they sometimes do not get any water after drilling many hundreds of feet. It cost a lot of money to do that. If there is no water it means that they have either to return to the old method of tanking or else to try again. Eventually it may mean the difference between a prosperous farm, one that is just barely getting by, or one that is actually going in the hole.
If the minister is not prepared to give an answer tonight I suggest that he give serious study to the submissions made last year, the year before and, I think, the year before that
by the farm organizations and to the representations made here tonight.


Agar Rodney Adamson: I should like to say a brief word about this. First, there is probably nothing that is more important to Canada, today than the development of a real oil field. We have indications of an oil field in Alberta that may possibly become a major-field. This is the first time in- our history that such a statement can be made. The oil is apparently a heavy type crude, which would seem to indicate a large reservoir of oil. Great possibilities open up for that part of Canada, and when I say that I ask the committee to think of the effect on the whole of Canada. If we can develop a major oil field a great part of our dollar difficulties as well as those facing our whole economy can be solved, because we shall be able to produce the essential fuel to drive the machinery of this country and to utilize the petroleum industry in a way we have never been able to do before.
I am entirely in favour of this resolution.
I should have liked to have it made a permanent part of our tax law. We have the indication, and it is certainly the hope that a major field at Leduc will be developed. As yet we cannot say that is the case, but it is encouraging. The development of a major oil field takes usually a matter of years, not just one or two. That is so, despite the surprising successes recently in Texas and in California in previous years. The development of an oil field represents hundreds of millions of dollars of venture capital. I say that advisedly, because that is what it has cost to develop major oil fields throughout the world.
I want to suggest to the minister and to the committee that those who, in the years to come, will make available the venture capital which we hope and pray will develop an oil field, should be given encouragement that, if they lose, they will at least be able to get back their venture capital if they are successful elsewhere. I think that is all anyone who risks capital can ask. If he loses he loses, but if he loses in one place and hits oil in another he should be able to recoup for his dry wells through the wells which are producers.
I do not think there is anything more revealing in this whole matter than the state-
Income IYar Tax Act


[Stage Direction]
Resolution agreed to.
4.	That, for the 1948 taxation year, no expenses in respect of the earning of wages or salary may be deducted except where a taxpayer is an employee of a person Whose principal business is transport and his duties require him to be absent from his home regularly, in which case expenses for 'board and lodging may be deducted, and where a taxpayer is employed to sell property or negotiate contracts, is required to pay his own expenses and performs his duties away from his employer's place of business, in which case expenses may be deducted from commissions or other fees; and . . .
Donald Methuen Fleming: The effect of this resolution is confined to those whose income consists of wages or salaries earned.


Douglas Charles Abbott: Perhaps my hon. friend would allow me to make a brief explanation.


Donald Methuen Fleming: Perhaps the minister would cover these two points in his explanation: first,

Income War Tax Act
whether the definition of wages and salaries will include commissions. The other point has to do with the position of railway pullman conductors and others of the running trades who have to lie over. There have been several rulings by the Department of National Revenue dealing with these cases, and at the present time the ruling is, I think, to the satisfaction of the running trades. I should not like to see anything come out of this resolution to impair the position enjoyed by the running trades under the existing ruling.


Douglas Charles Abbott: I am glad that my hon. friend has brought up that point. The main purpose of this resolution is to make statutory the provision in the Income War Tax Act with respect to the deduction of travelling and other expenses from salaries and wages received by railway employees. The general rule of the Income War Tax Act for years has been that salaries and wages as such are net income, but an exception has existed to that rule since away back in the early 1920's with regard to certain railway employees who were paid on a mileage basis.


Stanley Howard Knowles: Or on an hourly basis.


Douglas Charles Abbott: Yes. By a ruling, that was extended last year to other groups of railway employees doing similar work such as parlour-car conductors, pullman attendants and so on. It seemed equitable to extend the provision to those who are engaged in the transportation industry. Those who were engaged in that industry, railway conductors and drivers of buses, for example, have to leave their home at a given day and go, let us say, from Montreal to Toronto and stay there overnight. They have to pay for their board and lodging overnight, and come back to their homes the next day. The same thing applies to pullman conductors and parlour-car conductors. I suppose the same thing applies to men operating busea


Thomas John Bentley: Does it include truck drivers?


Douglas Charles Abbott: Yes, transport drivers. The effect of the proposed amendment is to give statutory recognition to what has been recognized in the last year or so by an administrative ruling of the Department of National Revenue. It is being restricted, as I say, to people who are engaged in that type of activity. It is being done, because it has been
recognized in the case of these workers over a great many years that this is a proper type of allowance. In a good many other cases it can be charged as an expense, or it will be paid for by the employer and charged as an expense by him. In certain other cases it is included in the wage scale, but in the case of railway workers that wage scale or salary scale has become pretty well fixed by tradition, and does not include any provision for board and lodging expenses of this kind. That is the purpose of this proposed amendment. I cannot recall whether my hon. friend had any other question.


Stanley Howard Knowles: Before the minister leaves the point of railway workers, will he answer one or two more points for clarification? He spoke of the line that was drawn until perhaps a year and a half ago between railroad train conductors on the one hand and sleeping-car conductors on the other. I take it that it is now quite clear and statutory that sleeping-car conductors get the same benefit as train conductors. There was one other group that was always a problem, namely the sleeping-car porter.


Douglas Charles Abbott: They are included. The proposed legislation which will be based on this resolution covers workers engaged in that industry. It will cover such people as porters, sleeping-car conductors, travelling telegraphers who have to be sent away overnight for purposes of relief and so on. It covers those engaged in this particular field because of two things: first, because of the nature of their work, and, second1, because of the particular wage structure in that occupation.
The second point which the hon. member for Eglinton referred to had to do with the question of commissions. This will allow a deduction from gross commissions of expenses incurred in earning those commissions, if the nature of the commission earner's salary is such as to require him to pay his own expenses and perform his duties away from his employer's place of business. In that case expenses may be deducted from the commissions or other fees. It seemed reasonable that that should be done. It could not be deducted:, of course, from salary; it could only be deducted from the portion of his remuneration which was based on commissions.


Harry Rutherford Jackman: Why do you put this in statutory form?
Income War Tax Act


Donald Methuen Fleming: I am glad that the minister is taking the action proposed with reference to pullman conductors and others. I wonder if he will just clarify one point. He has indicated that the administrative ruling which was made about a year ago is to be given statutory effect by the resolution. I should like to be sure that there will not be any conditions introduced in the statute that would narrow the effect of the administrative ruling, because that was a good and sound ruling. In looking at the equities of the situation, I think it was fair. I may say I had some occasion to go into it, because I was acting for a number of these pullman conductors. I want to be sure that there will not be any condition attached by the statute.


Douglas Charles Abbott: I agree with my hon. friend that it is fair. There will not be any conditions in the statute. I think that, under the law as it stands, there was no statutory justification for the ruling which was given. I question whether the law as it stands justifies that deduction. As I have said, this proposed amendment is to give statutory recognition to a practice which has prevailed for twenty-five years in connection with the running trades which are paid on a mileage or hourly basis. It will be extended to others who perform similar services but who are paid on a somewhat different basis. It will cover trainmen, engineers, parlour-car conductors, parlour-car porters, and others of that kind, who, in the performance of their duties, are required to be away from home overnight, but it will not apply-it never did apply-to train crew on yard engines, for instance, who are operating switching engines in the yards.
I may say I discussed this matter at some length with the representatives of the railway brotherhoods, and they assured me that, in the case of yard enginemen, yard trainmen, yard foremen and so on, they were not entitled to claim deductions of this kind, and were not claiming them. It is for those whose duties require them to be away overnight in the performance of those duties. They can claim their actual expenses for board and lodging.


Donald Methuen Fleming: The doubt expressed by the minister as to the-


Thomas John Bentley: Who is doing the talking, Mr. Chairman?


William Ross Macdonald: The hon. member for Eglinton has another question.


Donald Methuen Fleming: A doubt has been expressed by the minister with respect to the legality of the ruling. I take it that it will not be intended on this statute coming into effect to upset the ruling which was applied in earlier years.


Douglas Charles Abbott: Oh, no, of course not.


Thomas John Bentley: I want to ask the minister two questions. The questions have to do with two different parts of this resolution, and I shall ask them one at a time, if I may. The minister said that all the running trades on the railroads, also bus drivers and truck drivers who are required to be away from home are included.


Douglas Charles Abbott: If they are engaged by a transport company.


Thomas John Bentley: Yes, of course. That would apply also to air transport crews?


Douglas Charles Abbott: Yes.


Thomas John Bentley: Does it apply to water transport crews, crews on canal boats or lake seamen, or even seamen on the salt water?


Douglas Charles Abbott: No. This applies to what I might describe generally as the overnight type of employee, the man who is not away for extended periods of time. The others should be taken care of now either by the employer or by the wage scale. But there are a great many transport workers, railway employees, bus drivers, truck drivers, aeroplane pilots and so on, who have a home at a given place where they spend most of their time, but their duties are such as to require them necessarily to be away overnight at the end of their run, and they have to make an expenditure for board and lodging which, if they could go home at night, they would not have to make. For instance, it does not apply to deep-water seamen who may be away for four or five months at a time, or, to a lesser degree, to those who operate on the lakes.


Thomas John Bentley: I thank the minister for that answer. The resolution goes on to say:
. . . and where a taxpayer is employed to sell property or negotiate contracts . . .
It almost looks as if it refers to one who is engaged in the sale of real estate. I notice

Income War Tax Act
that it does not say goods or merchandise. I wondered why it was worded in that way.


Douglas Charles Abbott: I am told by my legal advisers that property is all-inclusive there, and as a lawyer I would agree with that. It includes property movable and immovable. It is intended to describe in the resolution the sale of tangible assets; and negotiation of contracts refers to such things as arranging the sale of an insurance policy, and that sort of thing. The essence of it is that if a man is engaged on a commission basis and receives his remuneration in the form of a commission he may deduct from those gross commissions the expenses he is put to in earning them.


Stanley Howard Knowles: I have one other question with respect to the other part of this resolution. The hon. member for Eglinton just asked the minister whether his doubt about the legality of the administrative order would have any continuing effect. Perhaps I should ask my question of the Minister of National Revenue. Has that administrative order been carried out in the last year and a half or the two years that it has been in effect in all parts of Canada? The reason I ask that is that one has sleeping-car conductors and sleeping-car porters speaking to him about these matters on the train. Although the men in the west learned of the provision and were able to take advantage of it, I have learned that sleeping-car conductors and porters on the trains in the east, in the city of Montreal, for example, were not allowed that deduction.


Douglas Charles Abbott: I find that hard to understand, because the railway brotherhoods, after the ruling was made either last year or the year before, sent out a circular. I have a copy of it.


Stanley Howard Knowles: So have I.


Douglas Charles Abbott: That circular went to all their employees, and I believe my colleague will confirm me when I say that the income tax inspectors have recognized that ruling since that time.


Stanley Howard Knowles: There is no doubt but it was supposed to apply to 1947.


Douglas Charles Abbott: I think it applies only to 1947.


Winfield Chester Scott McLure: 
Douglas Charles Abbott: If the commercial traveller is exclusively on a commission basis he gets his expenses anyway, and has always got them. He is entitled to deduct his expenses. In the case of the ordinary commercial traveller who is an employee, it frequently happens that the employer pays his expenses. He goes away on a trip and keeps track of his expenses and turns them in to his employer, and when he returns, those expenses are paid. They are an expense of the employer, and not income of the employee. This relates to the independent operator, the fellow who is not engaged as an employee by anybody but operates pretty much as an independent agent on a commission basis. He is entitled, and quite properly so, to deduct his expenses. The ordinary commercial traveller who works for X company is entitled to turn in his expense account to his employer, who pays the account, and that is not part of his taxable income.


Percy Chapman Black: I do not suppose the minister wants this to apply to members of the House of Commons. They are in the running trade, however, because the member is required to be "absent from his home," especially those from the maritime provinces, for long periods. The language of this resolution refers to the man whose duties "require him to be absent from his home regularly, in which case expenses for board and lodging may be deducted". I wish to warn the minister that he may be involved in a legal contest in the supreme court, and therefore I should not like to see him pass this legislation too hastily.


Douglas Charles Abbott: We members of parliament are engaged in all kinds of running.


Stanley Howard Knowles: Many people run but do not get here.


[Stage Direction]
Resolution agreed to.
5.	That the 15 per cent income tax on nonresident persons be extended to apply to patronage dividends paid on or after May 19, 1948.
Mr. BURTON:: Approximately how many people will be affected by this provision, and what is the estimated amount of revenue involved?
Income War Tax Act


Douglas Charles Abbott: I cannot say; but I should think it would be small, because most members of co-operatives are residents of Canada, and consequently the patronage dividends they receive would be income in Canada. It was felt, however, that there might well be members of co-operatives who would be in receipt of patronage dividends while living outside Canada, and since patronage dividends are income in the hands of residents of Canada, it seemed appropriate that nonresidents who receive them should pay the regular non-resident tax, which is at present fifteen per cent on income received from Canada. I have no information as to what the amount would be. I should think, from general knowledge, it would be pretty small. It appeared to be the logical move. Since recipients of patronage dividends in Canada include such dividends in their income for tax purposes, it seemed only proper that nonresident recipients of similar dividends should pay the regular non-resident tax, which is fifteen per cent. The recipient can take credit for it in his income tax return in the country in which he resides.


Joseph William Burton: I thank the minister for the statement he has made, but I am curious to know what brought this matter to the attention of his advisers. What caused them to deem it necessary to bring this in? Surely there must have been some reason that prompted the minister's advisers to suggest it.	.


Douglas Charles Abbott: I have inquired about it, and I do not know that there was any special reason that brought it to the attention of my tax advisers. But, as members of the committee know, these tax questions are under constant consideration, particularly by officers of the finance department, whose special job it is to be considering representations with respect to tax matters, and legislation in connection therewith. It was suggested to me that it was appropriate that this type of income should be subject to the nonresident tax, patronage dividends being subject to taxation. This is a comparatively new departure. It is only in the last two or three years that we have had this provision in the act. That is the only explanation I can offer. We have always taxed dividends going abroad, and the purpose of this is simply to make sure that the technical provisions of

the act shall cover patronage dividends as well as dividends paid by ordinary stock companies.


Joseph William Burton: Once again I thank the minister, but I may say to him that I would feel much happier if he could assure me that the action taken a year or so ago in taxing patronage dividends was not simply the thin edge of the wedge. Can he assure me that there will not be a gradual extension of this line of taxation?


Douglas Charles Abbott: Oh, no. It was not the thin edge of the wedge. I do not think there has been any serious suggestion that patronage dividends should not be considered as income. Those of us who are interested in the cooperative movement have recognized that patronage dividends received by the owners of a co-operative are income and subject to taxation. That has not been questioned. There has been serious difference of opinion as to whether some other things should be subject to taxation, but there has been no question that patronage dividends are properly income and, as such, taxable in the hands of the people who receive them. All we propose is that the non-resident who receives dividends of this kind should pay the same non-resident rate of taxation that any other non-resident pays in respect of income received from Canada. That is all the amendment does.


Joseph William Burton: I have no desire to protect the non-resident, but I was interested to know what brought this on.


Douglas Charles Abbott: There is nothing else behind it.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
1. Resolved, that it is expedient to introduce a measure to amend the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, as follows:-
(a)	By repealing subsection one of section three and substituting the following:-
"3. (1) Subject to the provisions of this act and of the Customs Act, there shall be levied, collected and paid upon all goods enumerated, or referred to as not enumerated, in schedule A to this act, when such goods are imported into Canada or taken out of warehouse for consumption therein, the several rates of duties of customs, if any, set opposite to each item respectively or charged on goods as not enumerated, in the column of the tariff applicable to the goods, subject to the following conditions, viz.:

Customs Tariff
(a)	The rates of customs duties, if any, set forth in column (1), 'British preferential tariff', shall apply to goods the growth, produce or manufacture of the following British countries when conveyed without transhipment from a port of any British country enjoying the benefits of the British preferential tariff into a sea, lake or river port of Canada:
United Kingdom of Great Britain and Northern Ireland
Union of South Africa
Australia
New Zealand
India
Pakistan
Ceylon
Eire
Newfoundland
British West Indies, including:
Bahamas
Jamaica
Barbados
Trinidad and Tobago Antigua
St. Christopher-Nevis
Dominica
Montserrat
Virgin Islands
Grenada
St. Vincent
St. Lucia
Turks and Caicos islands Ascension Bermuda British Guiana British Honduras British North Borneo Brunei Basutoland
Bechuanaland Protectorate
British Solomon islands Protectorate
Cyprus
Channel islands Cayman islands
Cameroons, British sphere of the
Cook islands
Fiji
Falkland islands Gold Coast Gambia
Gilbert and Ellice islands Isle of Man
Kenya Colony and Protectorate Malay States, Federated Malay States, Unfederated-
Johore
Kedah
Kelantan
Perlis
Trengganu
Malta
Mauritius and dependencies thereof
Northern Rhodesia
Nyasaland Protectorate
Nigeria Colony and Protectorate
New Guinea
Norfolk island!
Nauru, Mandated Territory of
Papua
St. Helena
Southern Rhodesia
Sierra Leone
Straits Settlements
Seychelles
Sarawak
Somaliland Protectorate Swaziland
Tanganyika Territory Togoland, British sphere of Tonga or Friendly islands Uganda Protectorate Western Samoa Zanzibar
Any other British colony or protectorate or territory under British trusteeship, admitted to the benefits of the British preferential tariff in Canada, in the manner hereinafter provided;
Provided, however, that goods entitled to the benefits of the British preferential tariff shall be accorded such benefits when such goods are shipped on a bill of lading consigned to a consignee in a specified port in Canada when such goods are transferred! at a port in a British possession, and conveyed without further transshipment into a sea, lake or river port of Canada;
(b)	The rates of customs duties, if any, set forth in column 2, 'most-favoured-nation tariff' shall apply to goods the growth, produce or manufacture of any British or foreign country to which the benefits of such most-favourednation tariff shall have been extended in the manner hereinafter provided or to goods the growth, produce or manufacture of any foreign country to which the benefits of the intermediate tariff applied on May 1, 1948, when imported into Canada direct from a country entitled to the benefits of the most-favoured-nation tariff;
(c)	The rates of customs duties, if any, set forth in column (3), 'General Tariff', shall apply to all goods not entitled to admission under the most-favoured-nation tariff or under the British preferential tariff, or to goods entitled to rates of customs duties more favourable than those of the British preferential tariff;
(d)	Proof of origin, as prescribed by the minister, shall be furnished with the bill of entry at the customhouse for goods admitted to entry under any of the tariffs in schedule A; and the decision of the minister shall be final as to the tariff or surtax applicable in any case to imported goods by reason of their origin;
(e)	Goods for which entry is claimed under the most-favoured-nation tariff must be bona fide the growth, produce or manufacture of a country which has been admitted to the benefits of the most-favoured-nation tariff and a substantial portion of the value of each manufactured article must have been produced by the industry of such country,
(f)	Every manufactured article to be admitted under the British preferential tariff must be bona fide the manufacture of a British country entitled to the benefits of the British preferential tariff, and a substantial portion of the value of the manufactured article must have been produced by industry in one or more of such countries."
Customs Tariff
[Stage Direction]
(b)	By repealing subsection one of section four and substituting the following:
"4. The governor in council may, by order, from time to time:
(a)	Extend the benefit of the British preferential tariff, in whole or in part, to any British [DOT]colony or any protectorate or territory under British trusteeship not named in paragraph (a) of section three, and from and after the date specified in such order the British preferential tariff shall apply to goods the growth, produce or manufacture of such colony, protectorate or territory, subject to the provisions -of this act;
(b)	Withdraw the benefit of the British preferential tariff, in whole or in part, from any British country or colony or any protectorate or territory under British trusteeship, which has received the said benefit, and from and after the date specified in such order the most-favoured-nation tariff or the general tariff, as mentioned in the said order, shall apply to goods the growth, produce or manufacture of any such British country, subject to the provisions of this act;
(e) Extend to any British country the benefit of rates of customs duties more favourable than those of the British preferential tariff, and from and after the date specified in such order the rates of duties so ordered shall apply to goods the growth, produce or manufacture of such British country, subject to the provisions of this act;
(d)	Withdraw from any British country to which they have been extended rates of customs duties more favourable than those of the British preferential tariff, and from and after the date specified in such order the British preferential tariff, the most-favoured-nation tariff or the general tariff, as directed in the said order, shall apply to goods the growth, produce or manufacture of such British country, subject to the provisions of this act;
(e)	Extend the benefit of the most-favourednation tariff, in whole or in part, to any British or foreign country goods, the growth, produce or manufacture of which have previously been subject to the rates of customs duties set forth in the general tariff, and from and after the date specified in such order the rates of duty set forth in the most-favoured-nation tariff, so far as they are mentioned in the said order, shall apply to goods the growth, produce or manufacture of such British or foreign country, when imported into Canada direct from a country entitled to the benefits of the mostfavoured-nation tariff, subject to the provisions of this act;
(f)	Withdraw the benefit of the mostfavoured-nation tariff, in whole or in part, from any country to which it has been extended, and from and after the date specified in such order the rates of customs duties set forth in the general tariff shall apply to goods -the growth, produce or manufacture of such country, subject to the provisions of this act;
(g)	Every order passed under the authority of this section shall be published in the Canada Gazette."
(c)	By repealing section six and substituting the following:

"6. (1) In the ease of goods exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value or the value for duty of the goods as determined under the provisions of the Customs Act, there shall, in addition to the duties otherwise established, be levied, collected and paid on such goods, on their importation into Canada, a special or dumping duty, equal to the difference between the said selling price of the goods for export and the said value for duty thereof; and such special or dumping duty shall be levied, collected and paid on such goods although not otherwise dutiable.
(2)	The special duty imposed by the preceding subsection shall in no case exceed) fifty per cent ad valorem and the following goods shall be exempt from such duty:
(i)	Goods of a class subject to duty under the Excise Act;
(ii)	Goods which though of a class or kind made or produced in Canada, are not offered for sale to the ordinary agencies of wholesale or retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade;
(iii)	Goods or classes of goods declared exempt by any order or regulation made by the governor in council.
(3)	Duties and taxes imposed in the country of export shall be disregarded in estimating the value for the purpose of the said duty.
(4)	'Export price' or 'selling price' in this section means the exporter's price for the goods, exclusive of all charges thereon after their shipment from the place whence exported direct to Canada.
(5)	If at any time it appears to the satisfaction of the minister that the payment of the special duty toy this section provided for is being evaded toy the shipment of goods on consignment without sale prior to such shipment, the minister may in any case or class of cases authorize such action as is deemed necessary to collect on such goods or any of them the same special duty as if the goods had been sold to an importer in Canada prior to their shipment to Canada.
(6)	If at any time it appears to the satisfaction of the minister that any person owning or controlling or interested in a business in Canada and also in any other country, or any person carrying on a business in any other country and owning or controlling or interested in a business operating in Canada, and by reason thereof is enabled to import goods for further manufacture or assembling or for resale, and while complying with the legal requirements on importation disposes of such imported goods, whether in the form as imported or as further processed, assembled or manufactured, at prices below the duty paid value thereof as entered at customs plus or including all charges upon the goods after shipment from the place whence exported direct to Canada, including sales, distribution and advertising costs, and plus, if any, the cost of processing, assembling or further manufacturing in Canada, the minister may declare that goods of such class or kind were and

Customs Tariff
are on importation subject to an additional special or dumping duty not exceeding fifty per cent, and authorize such action as is deemed necessary for the collection thereof.
(7)	If the full amount of any special duty of customs as herein provided has not been paid on goods imported, the customs entry thereof shall be amended and the deficiency paid upon the demand of the collector.
(8)	The minister may make such regulations as are deemed necessary for carrying out the provisions of this section and for its enforcement.
(9)	For the purpose of this act goods shall not be deemed to be of a class or kind made or produced in Canada unless so made or produced in substantial quantities; and the governor in council may provide that such quantities, to be
substantial, shall be sufficient to supply a certain percentage of the normal Canadian consumption and may fix such percentages."
(d)	By repealing section eighteen.
2. Resolved, that schedule A to the Customs Tariff be amended by striking thereout tariff items 15, 65a, 82'(b), 82(c), 180d, 186, 199g, 208i, 21'lb, 216d, 232e, 269, 271, 274, 275, 296b, 296e, 326c, 328, 349b, 359, 364, 386(d), 386 (p), 392a, 403(a), 410a, 410h, 410m, 410n, 410o, 4lOo (ii), 410q, 410w, 410y, 412, 413, 427c, 427f, 431c, 431d, 431g, 437, 438b, 438c, 438d, 438e, 439c, 442d, 445m, 445n, 445o, 476, 539, 587, 587b, 657, 682a, 692 and 693 (iii), the several enumerations of goods respectively and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:

Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff15	(i) Beeswax, unrefined	Free	Free(ii) Beeswax, refined but not bleached	Free	15 p.c.(iii) Beeswax, n.o.p	15 p.c.	15 p.c.20b	Illipe butter	5 p.c.	10 p.c.65a	Special dietary breads and biscuits under regulations of the Department of National Health	Free	7J p.c.79d	Mulberry trees, cuttings, roots and buds, for seri-cultural purposes	Free	Free82	(b) (i) Raspberry, loganberry and blackberry bushes or roots	each	Free	1 ct.(ii) Rhubarb roots	each	Free	I ct.(c) (i) Asparagus roots	each	Free	1/5 ct.(ii) Strawberry plants	each	Free	i ct.180d	Photographs, paintings, pastels, drawings and other art work and illustrations of all kinds, n.o.p., whether originals, copies or proofs, for reproduction in periodical publications enjoying second-class mailing privileges	Free	9 p.c.181b	Provided that goods which are entitled to entry free of duty or at a lower rate than as indicated in this item shall not be entered at the rates specified in this item. Paper, in single sheets, containing not less than 144 square inches, not exceeding [DOT] 012 and not less than [DOT] 003 of an inch in thickness, specially processed and printed, for use in duplicating machines	Free	7i p.c.186	Paper calendered to between * 006 and * 008 inch thickness adapted for the manufacture of shot shells; and felt board sized and hydraulic pressed, and covered with paper or uncovered, adapted for the manufacture of gun wads	Free	FreeGeneral Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	Free	Free	20 p.c.20 p.c.	Free	18 p.c.	20 p.c.15 p.c.	15 p.c.	20 p.c.20 p.c.	15 p.c.	15 p.c.	20 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.10 p.c.	Free	71 p.c.	10 p.c.30 p.c.	124 p.c.	121 P-c.	30 p.c.1 ct.	Free	1 ct.	1 ct.1 et.	Free	9/10 ct.	1 ct.1 et.	Free	9/40 ct.	1 ct.i ct.	Free	i ct.	i ct.25 p.c.	Free	9 p.c.	25 p.c.35 p.c.	174 P.c.	25 p.c.	35 p.c.Free	Free	Free	Free15 p.c.	221 P-c.	25 p.c.4690	COMMONS
__________Customs Tariff
192e
Gasket stock, wholly or in part of vegetable fibres, coated or impregnated, in sheets or rolls, when imported by manufacturers of gaskets, for use only in the manufacture of gaskets in their own factories
Free
192g
Roofing felt, single ply, not coated or impregnated, in rolls containing not less than 500 square feet, when imported by manufacturers of asphalt roofing (including shingles and siding) for use only in the manufacture of such materials in their own factories
Free
198c Tape, coated, not exceeding three-eighths of an inch in width, for use exclusively in the recording and reproduction of sound	 5 p.c,
199g Duplex backing papers or wrappers including those printed and/or skived for use in the packaging of photographic roll film; inter-leaving and wrapping paper, for packaging flat photographic films and photographic papers; when imported by manufacturers of photographic films and photographic papers for use in their own factories in the packaging of such films and papers	 5 p.c.
208i
(i) Animal glands and animal glandular organs, and extracts thereof, wet or dry, (whether alcoholic or not), when imported by manufacturers of pharmaceutical or medicinal preparations for use exclusively in the manufacture of such preparations in their own factories	
Free
208i
(ii) Animal bile, in liquid or paste form, not further processed than concentrated, for use in the manufacture of bile acids	
Free
Free
71 p.c
10 p.c
121 P-
Free
Free
211b
Kyanite, crude or calcined, but not further processed than ground	
Free
216d
Phthalic anhydride, adipic, abietic, maleic and succinic acids, hexamethylene diammonium adipate, hexamethylene diammonium sebacate, hexamethylene diamine, caprolactam, and ethyleneglycol, when imported by manufacturers of synthetic resins, for use exclusively in the manufacture of synthetic resins, in their own factories	
Free
216e
Materials of a kind not produced in Canada when imported to be used for plasticizing synthetic resins
[Stage Direction]
Free
Free
Free
Free
Free
Free	Free	Free25 p.c.	15 p.c.	22J p.c.35 p.c.	17j p.c.	25 p.c.35 p.c.	5 p.c.	12j p.c.15 p.c.	221 p.c.Free	Free	FreeFree	Free	15 p.c.25 p.c.	Free	4* p.c.Free	Free	FreeFree	15 p.c.Free	Free	Free15 p.c.	20 p.c.Free	15 p.c.
35 p.c. 35 p.c.
35 p.c. 25 p.c.
Free
25 p.c.
25 p.c.
Free 25 p.c.
Free 25 p.c. 25 p.c.
5!
to
><>.
[Stage Direction]
Customs Tariff

Tariff Item	-	British Preferential Tariff	Most-Fa voured-Nation Tariff216f	Materials of a kind not produced in Canada when imported for use only in the manufacture of the goods specified in tariff items 237 (a), (b), (c) and (d), 238a, 238b, 238c, 238d, 238e, 238f and 238g	Free	Free219g	Yeast, dead or inactive, containing only those vitamins inherent in or developed by the yeast during its culture or propagation in which the Vitamin D does not exceed 1,000 International units per gram, when valued at more than twenty-five cents per pound, under regulations which the Minister may prescribe	Free	Free225a	Ouricury wax	Free	Free231d	Synthetic resin glue	15 p.c.	17| p.c.231e	Phenol when imported by manufacturers of synthetic resin glues, for use only in the manufacture of such glues in their own factories	Free	Free232e	Cereal or starch products which require only to be ground in order to form, when mixed with cold water, an adhesive paste	per pound	3/5 ct.	11 cts.236o	Surgical bandages and slabs composed of textile fabrics specially coated with Plaster of Paris compound...	10 p.c.	10 p.c.246c	Finely divided metals or compounds of metals, whether dry, or suspended or dissolved in a liquid, for use exclusively in the manufacture of glassware and of tableware of china, porcelain or semiporcelain	Free	Free263b	Methyl ethyl ketone, furfural, methyl normal propyl ketone and methyl isobutyl ketone, when imported for use only in the refining of oils	Free	FreeGeneral Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most-Fa voured-Nation Tariff	General TariffFree	Free	Free	Free15 p.c.	20 p.c.	25 p.c.Free	15 p.c.	20 p.c.17i p.c.	20 p.c.	25 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.10 p.c.	5 p.c.	7} p.c.	10 p.c.25 p.c.	15 p.c.	18 p.c.	25 p.c.Free	Free	Free	Free2 cts.	3/5 ct.	1-7/20 cts.	2 cts.35 p.c.	25 p.c.	25 p.c.	35 p.c. and 4 cts. per pound22i p.c.	Free	Free	22} p.c.17} p.c.	20 p.c.	30 p.c.25 p.c.	Free	Free	25 p.c.4692	COMMONS
_________Customs Tariff
203c	Materials of a kind not produced in Canada for use only as catalysts in the refining of petroleum	Free	Free269	Products of petroleum, n.o.p.:- (i) Lighter than -8236 specific gravity (40-3 A.P.I.) at 60 degrees Fahrenheit, .per gallon	1 ct.	1 ct.(ii) -8236 specific gravity (40-3 A.P.I.) or heavier at 60 degrees Fahrenheit	per gallon	i ct.	$ ct.271	Lubricating oils composed wholly or in part of petroleum:- (a) Valued at less than 25 cents per gallon, per gallon	1$ cts.	2$ cts.(b) N.o.p	10 p.c.	12$ p.c.274	Petroleum coke, ground or unground	Free	Free275	Liquefied petroleum gases for heating, cooking or illuminating purposes, when imported in containers.	10 p.c.	12$ p.c.295b	Vermiculite, crude, or not further processed than ground and screened	Free	Free29Gb	(i) Magnesite, dead-burned, sintered, caustic calcined or plastic magnesia	15 p.c.	15 p.c.(ii) Magnesium carbonate, basic or otherwise, excepting crude rock	20 p.c.	20 p.c.296e	Magnesite, calcined, and magnesium carbonate, not further manufactured than ground, when imported by manufacturers of insulating materials for use exclusively in the manufacture of such insulating materials, in their own factories	Free	Free309a	Granules, whether or not coloured or coated, for use in the manufacture of roofing, including shingles and and siding	Free	Free326c	Blanks of uncoloured clear glass, when imported by manufacturers to be used exclusively in the manufacture of silvered mirror reflectors or acid-etched reflectors or refractors, for lighting systems	Free	9 p.c.328	Spectacle and eyeglass frames and parts thereof,	15 p.c.	17$ p.c.
25 p.c.
2 cts.
1 ct.
2} cts. 20 p.c. Free
25 p.c.
25 p.c.
30 p.c.
30 p.c.
Free
25 p.c.
10 p.c. 20 p.c.
Free Free 15 p.c.
10	p.c.
| ct.
1 ct.
11	cts.
121 P-c.
Free 15 p.c.
10 p.c.
10 p.c.
15 p.c. 20 p.c.
20 p.c.
Free 20 p.c.
15 p.c.
Free
15 p.c. 15 p.c.
Free 15 p.c.
20	p.c. 10 p.c.
1 ct.
1 ct.
21	cts.
171 P-c.
Free 20 p.c.
131 P-c-
10 p.c.
15 p.c. 271 P-c.
20 p.c.
Free 271 P-c.
15 p.c.
9 p.c.
171 P-c 20 p.c.
Free 25 p.c. 25 p.c. 25 p.c.
2 cts.
1 ct.
21 cts.
20 p.c.
Free 25 p.c.
25 p.c.
25 p.c.
30 p.c. 30 p.c.
30 p.c.
Free 30 p.c.
25 p.c.
10 p.c.
20 p.c. 25 p.c.
[Stage Direction]
c£>
Customs Tariff

Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff348f	Copper covered steel wire not less than one-quarter inch in diameter and rods, when imported by manufacturers of trolley, telegraph and telephone wires, electric wires and electric cables, for use only in the manufacture of such articles in their own factories..	Free	10 p.c.349b	Alloys of magnesium, viz.: ingots, pigs, sheets, plates, strips, bars, rods and tubes	5 p.c.	10 p.c.354c	Aluminum capsules for bottles	Free	7] p.c.On and after March 31, 1950	15 p.c.	22} p.c.359	Gold and silver, in ingots, blocks, bars, drops, sheets or plates, unmanufactured; gold and silver sweepings; bullion fringe or gold fringe; scrap jewellery, fit only to be remelted, under such regulations as the Minister may prescribe	Free	Free364	Diamond dust or bort and black diamonds, for borers; diamond dust mixed with a carrier, in cartridges, the component material of chief value being diamond dust	Free	Free376b	Materials imported by manufacturers of sintered hard metal compounds of the tungsten carbide type, for use in the manufacture of such compounds in their own factories	Free	Free386	(d) Sheets, hoop, band or strip, coated or not, polished or not, when imported by manufacturers of saddlery hardware and saddles for use exclusively in the manufacture of such articles, in their own factories	Free	Free(p) Sheets or strip, of iron or steel, hot or cold rolled, with silicon content of -075 per centum or more, when imported by manufacturers of electrical apparatus, for use in the manufacture of electrical apparatus in their own factories	Free	12] p.c.
General
Tariff
10 p.c.
25 p.c.
30 p.c. 30 p.c.
Free Free 10 p.c.
Free
124 p.c.
Rates in Effect Prior to Rates Proposed in this Budget		
British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	10 p.c.	10 p.c.5 p.c.	Hi p.c.	25 p.c.15 p.c.	224 P-c.	30 p.c.Free	Free	Free15 p.c.	20 p.c.	25 p.c.Free	Free	Free124 p.c.	174 P.c.	274 P-c.Free	Free	10 p.c.Free	Free	Free7§ p.c.	20 p.c.	20 p.c.5 p.c.	124 P-O-	15 p.c.Free	124 P-c.	124 P-c.7J p.c.	20 p.c.	20 p.c.4694	COMMONS
_________Customs Tariff
392a	Forgings of iron or steel, in any degree of manufacture, hollow, machined or not, not less than 12 inches in internal diameter; and all other forgings, solid or otherwise, in any degree of manufacture, rough turned or rough machined or not, of a weight of 20 tons or over	Free	15 p.c.403	Wire, of steel:- (a) Spring, not less than -40 per centum, by weight, of carbon, when imported for use exclusively in the manufacture of springs for mattresses, cushions or upholstery;- (i) [DOT] 128, [DOT] 116, [DOT] 104 and -092 inch in diameter, with a tolerance not to exceed [DOT] 003 inch	Free	5 p.c.(ii) -144, -080, -072, -064, -056 and -048 inch in diameter, with a tolerance not to exceed -003 inch	5 p.c.	5 p.c.409q	Auxiliary internal combustion engines incorporated in or attached to agricultural implements or agricultural machinery	Free	Free409r	Milk evaporators for dairying purposes and complete parts thereof	Free	10 p.c.410a	(i) Loading machines; shaker trough, belt trough, chain or elevating conveyors; air engines; flameproof enclosed driving motors; of a class or kind not made in Canada, and parts of all motive power or machinery mentioned in this item, for use exclusively in mining operations	Free	Free(ii) Trucks or tractors, self-propelled, mounted on wheels or on endless tracks, including motive power, when of a class or kind not made in Canada, for use exclusively underground in mining operations; parts of the foregoing	Free	Free(iii) Diesel-powered self-propelled trucks, mounted on rubber-tired wheels, side or rear dump, having a rated capacity, by struck volume, of not less than 9J cubic yards and, by payload weight, of not less than 15 tons, and complete parts thereof, for off-highway use in carrying minerals, ores, rock, stone, sand, gravel and other excavated materials in open-pit mines, quarries, gravel and sand pits or at construction sites	Free	10 p.c.
30 p.c.
7} p.c. 7b p.c.
Free 25 p.c.
35 p.c. 27b p c.
Free 10 p.c.
Free
15 p.c.
15 p.c.
10 p.c.
Free 10 p.c. Free 15 p.c. 15 p.c.
Free 15 p.c. 15 p.c.
Free
15 p.c. 25 p.c.
5 p.c.
15 p.c.
20 p.c.
25 p.c.
10 p.c. 25 p.c. 10 p.c. 22} p.c. 22} p.c.
17b p.c. 22b p.c. 22} p.c.
17} p.c,
30 p.c. 35 p.c.
7} p.c.
20 p.c.
30 p.c.
35 p.c.
12} p.c. 35 p.c. 35 p.c. 30 p.c. 37} p.c.
27} p.c. 30 p.c. 37} p.c.
27} p.c,
[Stage Direction]


t-*
00
[Stage Direction]
27£ p.c.
Customs Tariff

Tariff Item	British Preferential Tariff	Most-	Rates in Effect Prior to Rates Proposed in this Budget	Favoured-Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff410h	Equipment and integral parts thereof for distributing stone dust in mines	Free	Free	10 p.c.	Free	5 p.c.	10 p.c.410m	Diamond drills and core drills, not including motive power, electrically operated rotary coal drills, and coal cutting machines, of a class or kind not made in Canada, and parts of the foregoing, for use exclusively in mining operations	Free	Free	Free	Free	Free	Free410n	Diamond drills and core drills, not including motive power, and electrically operated rotary coal drills, n.o.p., and parts of the foregoing, for use exclusively in mining operations	Free	10 p.c.	10 p.c.	Free Free	10 p.c. 10 p.c.	10 p.c. 10 p.c.410o	(i) Coal heading machines; electric or magnetic machines for concentrating or separating iron ores; automatic scales for use with conveyors; and integral parts of all the foregoing, for use exclusively in mining or metallurgical operations	Free	Free	Free	Free	Free	Free(ii) Chock release apparatus, for use in coal mines to facilitate the safe removal of chocks forming the roof support	Free	Free	10 p.c.	Free	10 p.c.	10 p.c.410q	Pumps and vacuum pumps, and complete parts thereof, for use exclusively in the extraction of precious metals by the chlorination or cyanide processes...	15 p.c.	15 p.c.	20 p.c.	15 p.c.	17] p.c.	20 p.c.410w	Machinery, n.o.p., for the concentration orseparation of ores, metals or minerals, viz.: flotation machines, flotation cells, oil feeders and reagent feeders for flotation machines and flotation cells, pumps, vibrating and impact screens, jigs, magnetic separators, magnetic pulleys and filters, for use in the concentration or separation of ores, metals or minerals, and integral parts of all the foregoing	5 p.c.	7] p.c.	20 p.c.	15 p.c.	17] p.c.	20 p.c.410y	Heavy duty mine hoists, of a size and capacity not made in Canada	Free	Free	10 p.c.	Free	[ 5 p.c.	10 p.c.4696	COMMONS
Customs Tariff _______
412
Machinery, being presses ior use in the printing of newspapers and telephone directories, of not less value by retail than fifteen hundred dollars each, of a class or kind not made in Canada, and complete parts thereof, not to include saws, knives and motive power; mechanical deliveries or conveyors for use with newspaper printing presses	
Free
412e
Articles and materials which enter into the construction and form part of the machines and apparatus provided for in tariff item 412a, when imported by manufacturers of such machines, apparatus and parts thereof, for use exclusively in the manufacture of such goods in their own factories under such regulations as the Minister may prescribe	
Free
413	(i) Machinery and apparatus, of a class or kind
not made in Canada, and parts thereof, specially . constructed for preparing, manufacturing, testing or finishing yarns, cordage, and fabrics made from textile fibres or from paper, imported for use exclusively by manufacturers and scholastic or
charitable institutions in such processes only...
(ii) Materials for use in the manufacture of the goods specified in tariff item 413(i)	
427c Machinery and apparatus for dairying purposes, viz.:-Power churns, power milk coolers, power fillers and cappers, power ice cream mixers, power butter printers, power cream savers, power bottle sterilizers, power brine tanks, power milk bottle washers, power milk can washers; ice-breaking machines, valveless or centrifugal milk pumps, sanitary milk and cream vats; none of the foregoing machinery to include motive power	
Free
Free
Free
427f
Machines for the manufacture of veneers and plywoods, viz.:-Veneer clippers; veneer clipper knife jointers; veneer glue spreaders; veneer jointers; veneer lathes; automatic veneer reelers with supporting trays and hoists; automatic veneer unreelers, veneer conveyers specially designed for use with automatic veneer reelers and unreelers; veneer taping machines; complets parts of all the foregoing..
Free
431c
Machinists' or metal workers' precision tools and measuring instruments, viz.:-Calipers, micrometers, metal protractors and squares, bevels,
Free
Free
5 p.c. 5 p.c.
15 p.c.
10 p.c.
Free	Free	Free	FreeFree	10 p.c.	15 p.c.Free	Various	Various	Various10 p.c.	Free	5 p.c.	10 p.c.10 p.c.	(T	oo numerous to lis	t)35 p.c.	Free	15 p.c.	35 p.c.10 p.e.	25 p.c.	35 p.c.35 p.c.	Free	10 p.c.	35 p.c.
g
[Stage Direction]
to
Customs Tariff

Tariff
Item
431o
-Con.
431d
431g
verniers, gauges, gauge blocks, parallels, buttons, mercury plumb bobs, dividers, trammels, scribers automatic center punches, hand speed indicators, straight edges, key seat clamps and other clamps and vises used by toolmakers for precision work, precision tools and measuring instruments, n.o.p, parts of all the foregoing, finished or not	
Engineers', surveyors' and draftsmen's precision instruments and apparatus, viz.:-Alidades; altazimuth surveying instruments; aneroid barometers, engineering, military and surveying; angle prisms; boards, military sketching; box sextants, clinometers; compasses; cross staff heads; curves, adjustable, irregular, railroad and ship; curvimeters; drafting instruments of all kinds, including fitted cases containing the same; dipping needles; drafting machines; heliographs; integrators; levels, tripod and hand or pocket types; levelling rods; liners section; meters, portable for hydraulic engineering: pantographs; planimeters; protractors; parallel rulers; parallel ruling attachments; poles, ranging; pedometers and paceometers; plane tables, military and topographic; scales, flat and triangular; slide rules; splines; straight edges, steel and wooden; tacheometers; tallying machines, pocket; tee squares, steel and wooden; telemeters; theodolites; transits, tripod and hand or pocket types; triangles of all types; tripods for use with any of the foregoing instruments; parts of all the foregoing, finished or not	
Fixed or stationary meters, of a size or capacity not made in Canada, for hydraulic engineering; gauges, indicators and recorders for water or other liquid levels, volume or flow, of a class or kind not made in Canada	
British Preferential Tariff
Free
Free
Free
Most-
Favoured-
Nation
Tariff
9 p.c.
9 p.c.
17jp.c.
General
Tariff
10 p.c.
Rates in Effect Prior to Rates Proposed in this Budget
British
Preferential
Tariff
Most-
Favoured-
Nation
Tariff
General
Tariff
Free
10 p.c.
(9 p.c. on some)
10 p.c.
10'p.c.
Free
10 p.c.
(9 p.c. on some)
10 p.c.
20 p.c.
Free
20 p.c.
(18 p.c. on some)
35 p.c.
4698	COMMONS
__________Customs Tariff
5819-29SJ
431h
Geophysical surveying precision instruments and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following: magnetometers; gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, nonpolarizing electrodes, and electrical equipment for making measurements in drill holes; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; all the foregoing of a class or kind not made in Canada, and repair parts, tripods and fitted carrying cases for any of the foregoing	
Free
Free
437 Locomotives, cars and coaches and repair equipment, belonging to railroads, brought temporarily into Canada for the purpose of clearing obstructions, fighting fires or making emergency repairs on railway lines within Canada; detector cars when imported to test rail in tracks in Canada	
438b Bearings, clutch release; bearings graphite; bearings steel or bronze backed, with non-ferrous metal lining; bearings, steering knuckle thrust; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manufactured than burned and glazed, printed or decorated or not, without fittings; collars, crankshaft thrust; compressors, air; commutator copper segments; commutator insulating end rings; tapered discs of hot rolled steel, with or without centre hole, for disc wheels; distributor rotors and cam assemblies; door bumper shoes; electric wiring terminals, sockets, fittings and connectors and parts and combinations thereof, not to include battery terminals; gaskets of any material except cork or felt, composite or not, parts and materials therefor; ignition contact points; keys for shafting; auxiliary driving control kits, designed for attachment to motor vehicles to facilitate their operation by physically disabled persons and parts thereof; lenses of glass
Free
30 p c.
Free
2J p.c. Free 15 p.c. Free Free
15 p.c. 15 p.c. 22^ p.c. 10 p.c. Free
Free 20 p.c.
30 p.c. 30 p.c. 30 p.c. 15 p.c. Free
Free 35 p.c.

Customs Tariff

Tariff Item	-	British Preferential Tariff	Most>- Favoured- Nation Tariff438b -Con.	for motor vehicle lamps and for light reflectors; lock washers; magnetic plugs; piston ring castings in the rough, with or without gates and fins removed; propeller shaft tubes of steel bonded by rubber; rails of lock seam section, corners, locks and catches, unplated ventilators and parts thereof, the foregoing being of metal other than aluminum, for the manufacture of window sashes for bus bodies; steel bolts, studs, plugs, rivets or nuts, capped with stainless steel, and parts thereof; switches, relays, circuit breakers and solenoids and combinations and parts thereof; vacuum control assemblies and parts thereof; vulcanized fibre in sheets, rods, strips and tubings; all of the foregoing when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 424 and 438a, or for use in the manufacture of parts therefor	Free	Free438c	Ammeters; arm rests and wheel housing lining of indurated fibre, pressed to shape; axle housings, one piece welded, machined or not, including parts welded thereto; carburetors; chassis frames and steel shapes for the manufacture thereof; cigar and cigarette lighters, whether in combination with a cigarette holder or not, including base; control ventilator gear box; cylinder lock barrels, with or without sleeves and keys thereof; dash heat indicators; engine speed governor units; external ornaments unplated, not including finish or decorative moulding; fluid couplings, with or without drive plate assemblies; front axle cross channel king pin support section assembly of steel, in the rough; fuel pumps, vacuum pumps and combinations thereof; gasoline gauges; grilles not plated, polished or not before assembly, and parts thereof not plated or polished, not to include added finish or decorative moulding; hinges, finished or not, for bodies; horns; instrument bezel assemblies; instrument board lamps; instrument panel, glove compartment,	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff30 p.c.	Free 10 p.c.	Free 25 p.c.	30 p.c. 33 p.c.4700	COMMONS
___________Customs Tariff
luggage compartment, hood compartment and door step lamps and wire assemblies; locks, electric ignition, steering gear, transmission, or combinations of such locks; mouldings of metal, with nails set in position, lead filled or not; oil filters; oil gauges; pipe lines of tubing, rigid or flexible, covered or not, with or without fittings and tubing therefore for oil, fuel, air, or liquid for actuating hydraulic brakes; purifiers for air; purifiers for oil or gasoline; radiator shutter assemblies, automatic; radiator water gauges; radiator shells not plated nor metal finished in any degree; shackles, bearing spring; speedometers; spring covers of metal and closing strips or shapes therefor; stampings, body, cowl, fender, hood, instrument board, of metal in the rough, trimmed or not, but not metal finished in any degree; starter switch assemblies; steering wheels, rims and spiders therefor; sun visor blanks of gypsum weatherboard; thermostatic controls; throttle, spark, choke, and hood lock release assemblies, including buttons therefor; tire clamping rings of steel, plated or not; universal joint ball assemblies; voltage control regulators; windshield and window wipers; parts of all the foregoing; all of the foregoing when of a class or kind not made in Canada and for use in the manufacture or repair of the goods enumerated in tariff items 410a (iii), 424 and 438a or for use in the manufacture of parts therefor	
(1)	Provided, that if the above articles are imported for use as original equipment by a manufacturer of automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in tariff items 438a. 424 and 410a (iii) whose total factory output during the year in which importation is sought, does not exceed ten thousand complete automobiles, motor vehicles, electric trackless trolley buses or chassis, and provided that not less than forty per centum of the factory cost of production of such automobiles, motor vehicles, electric trackless trolley buses or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
(2)	Provided, that if the above articles are imported for use as original equipment by a manufacturer of automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in tariff items 438a, 424 and 410a (iii) whose total factory output during the year in which importations is
CO p.c.	Free
Various
20 p.c. Various
30 p.c. Various
<3
[Stage Direction]
to
25 p.c.
Free
Free
25 p.c.
Customs Tariff
. Abbott.]
Tariff
Item
438c
-Con.
438d
sought exceeds ten thousand automobiles, motor vehicles, electric trackless trolley buses or chassis, and provided that not less than sixty-five per cen-tum of the factory cost of production of such automobiles, motor vehicles electric trackless trolley buses or chassis, not to include duties and taxes, is incurred in the British Empire, the rates of duty
under this item shall be	
(3) Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
ront and rear axles; brakes; clutches; drums; hubs; internal combustion engines; steering gears; magnetos ; rims for pneumatic tires larger than thirty inches by five inches; transmission assemblies; hydraulic or fluid couplings and torque convertors; drive shafts; universal joints; steel road wheels; power dividers or transfer cases; and parts of the foregoing, when of a class or kind not made in Canada, and imported by manufacturers of the goods enumerated in tariff items 410a (iii), 424 and 438a for use only in the manufacture of motor trucks, motor buses and electric trackless trolley buses, or for the manufacture of chassis for the same	
British
Preferential
Tariff
Free
Free
(1)	Provided that if the above articles are imported for use as original equipment for motor trucks, motor buses and electric trackless trolley buses, or for chassis for the same, by a manufacturer of the goods enumerated in tariff items 410a (iii), 424 and 438a, and provided also that during the year during which importation is sought, not less than forty per centum of the factory cost of production of such motor vehicles and chassis therefor, not to include duties and taxes, is incurred in the British Empire, the rates of duty under this item shall be	
(2)	Provided that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
Free
Most-Fa voured-Nation Tariff
Free
17£ p.c.
p.c.
General Tariff	Rates in Effect Prior to Rates Proposed in this Budget		
British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff25 p.c.	Free	Free	25 p.c.273 p.c.	Free	17j p.c.	27* p.c.10 p.c.	25 p.c. '	35 p.c.27j p.c.	Free	7i P-c.	27| p.c.4702	COMMONS
__________Customs Tariff
438e
Parts, n.o.p., for automobiles, motor vehicles, electric trackless trolley buses or chassis enumerated in tariff items 438a and 424, not to include wireless receiving sets, die castings of zinc, electric'storage batteries, parts of wood, tires and tubes or parts of which the component material^of chief value is rubber:- (1) Brake linings, and clutch facings whether or not including metallic wires or threads:- (a) When made from crude asbestos of British	Free
(b) When made from crude asbestos, n.o.p		15 p.c.
(2) Automobile and motor vehicle engines, stripped, n.o.p., and complete parts thereof, n.o.p		Free
(3) Parts, n.o.p., electro-plated or not, whether	Free
Provided, that parts in chief value of iron or steel which were classified for duty purposes under tariff items 427 or 446a, as of January 1,1936, shall	Free
(4) Parts, n.o.p., of brass or copper, whether	Free
Farm wagons, including four-wheeled farm wagons equipped to be tractor-drawn; farm sleds; logging wagons; logging sleds; and complete parts of all the	Free
	
Materials, including all parts, wholly or in chief part of metal, of a class or kind not made in Canada, when imported by manufacturers of goods entitled to entry under tariff items 410g, 4101, 410n, 410o, 410p, 410q, 410u, 410w, 410z, 411, 411a, 411b, 427b, 427c, 427f, 428c, 428e, 440k, and 447a, for use in the manufacture of such goods in their own factories, under such regulations as the Minister may pre-	Free
Provided that materials and parts which are entitled to free entry or to a lower rate of duty than is specified in this item shall not be dutiable under this item.	
25 p.c. 25 p.o.
25 p.c.
30 p.c.
25 p.c. 27 p.c.
15 p.c.
5 p.c.
35 p.c.	Free
35 p.c.	15 p.c.
35 p.c.	Free
40 p.c.	Free
	15 p.c.
40 p.c.	Free
40 p.c.	Free
25 p.c.	Free
	15 p.c.
10 p.c.	Free
25 p.c. 25 p.c.
25 p.c.
30 p.c. 225 p.c.
25 p.c. 27 p.c.
15 p.c. 221 pc.
10 p.c.
35 p.c. 35 p.c.
35 p.c.
40 p.c. 45 p.c.
40 p.c. 40 p.c.
25 p.c. 35 p.c.
10 p.c.
3
[Stage Direction]
to
Customs Tariff

Tariff
Item
British
Preferential
Tariff
445m
(1) flameproof electric switchgear, for use underground in coal mines, and complete parts thereof (ii) flameproof electric transformers, rectifiers, cable-connecting devices, trailing cable extensions with couplers moulded on, junction boxes, and complete parts of the foregoing, when of a class or kind not made in Canada and for use underground in coal mines	
Free
Free
445n
Flectrical instruments and apparatus of precision of a class or kind not made in Canada, viz.:-Meters or gauges for indicating and/or recording altitude, amperes, comparisons, capacity, density, depth, distance, electrolysis, flux, force, frequency, humidity, inductance, liquid levels, ohms, operation, power factor, pressure, space, speed, stress, thrust, synchronism, temperature, time, volts, volume, watts, weight; complete parts thereof.
Free
445o
(i) Acid-free capacitor tissue and paper, plain and gummed; metal cans, extruded, plated or unplated; automatic record changers; parts for pickups; bias cells and holders; frames, yokes, brackets, pole-pieces, gaskets and field covers, separate or assembled for use in speakers with mounting diameter not exceeding 6| inches; cones, spiders, spiders suspensions, voice coils and voice coil dust covers, separate or assembled; magnetic structures and parts thereof for permanent magnet speakers; glass dial crystals and scales and metal dials or scales made by the silk-screen process; metal cabinet escutcheons without crystals, plain or finished; high frequency circuit switches and essential components thereof; high frequency iron cores with or without inserts moulded therein; motors and gears for automatic tuning; radio frequency ceramics; raw low loss mica; sheets and punchings of low loss mica; tube shields and parts thereof; vibrators; vulcanized fibre in sheets, rods, strips or tubing; high frequency coil forms and tubing having an outside diameter not
Most-
Favoured-
Nation
Tariff
20 p.c.
10 p.c.
15 p.c.
General
Tariff
30 p.c.
37£ p.c.
Rates in Effect Prior to Rates Proposed in this Budget
British
Preferential
Tariff
30 p.c.
Free
15 p.c. 15 p.c.
Free 10 p.c.
Most-
Favoured-
Nation
Tariff
20 p.c.
22* p.c. 22j- p.c.
General
Tariff
30 p.c.
37* p.c. 30 p.c.
15 p.c. 20 p.c.
30 p.c. 35 p.c.
4704	COMMONS
__________Customs Tariff
445o -Con.	exceeding one inch; for use in the manufacture or the repairs of the goods enumerated in tariff items 445d, 597a, and other apparatus using radio tubes, or for use in the manufacture of parts thcre-	Free
	(ii) Metal powders; etched aluminum foil; alloy resistance wire having a diameter of less than [DOT] 005 inch; spring-drive motors for record turn-tables; automatic record-centering mechanisms with tone arm, not including motors or turntables; metal cabinet escutcheons with crystals, plain or finished; when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 445d, 597a, and other apparatus using radio tubes, or for use in the manufacture of parts therefor		Free
	(iii) Materials and parts, not including motors, for use by manufacturers of apparatus using radio tubes, or of parts therefor, in the manufacture, in their own factories, of the goods enumerated in tariff items 445o (i) and 445o (ii)		Free
476	Surgical and dental instruments of any material;	
	surgical needles; clinical thermometers and cases therefor; X-ray apparatus; microscopes valued at not less than fifty dollars each, retail; complete parts of all the foregoing		Free
480a	Invalid wheel chairs, with or without motive power,	Free
	and parts thereof		
499a	Walnut shell flour, wood flour, and bark flour		Free
404a	Ponderosa pine lumber (pinus ponderosa) and Califor-	
	nia sugar pine lumber (pinus Lambertiana), not further manufactured than planed, dressed, oi	Free
523n	Seamless cotton bags		15 p.c.
	and, per pound	
Free
Free
Free
Free
10 p.c. 5 p.c.
Free 22j p.c.
30 p.c.	Free Free	Free	30 p.c.30 p.c.	10 p.e.	20 p.c.	35 p.c.Free	30 p.c.	30 p.c.Free	20 p.c.	30 p.c.10 p.c.	25 p.c.	35 p.c.15 p.c.	20 p.c.	30 p.c.30 p.c.	Various	Various	VariousFree	Free	F ree	Free20 p.c.	25 p.c.	35 p.c.15 p.c.	22J p.c.	45 p.c.12| p.c.	22| P.c.	40 p.c.15 p.c.	20 p.c.	25 p.c.15 p.c.	Free	10 p.c.	15 p.c.Free	17! P-c.	27! P.c.20 p.c.	15 p.c.	20 p.c.	25 p.c.Free	Free	Free	Free25 p.c.	15 p.c	22! P.c.	25 p.c.4 cts.	4 cts.
a
fe!
[Stage Direction]


Customs Tariff

Tariff
Item
British
Preferential
Tariff
Most-
Favoured-
Natiou
Tariff
Cordage, exceeding one inch in circumference, wholly
of vegetable fibres, n.o.p	
On and after July 31, 1949	
7J p.c. 17J p.c.
m p.c.
22j p.c.
585a
Tall oil, tall oil pitch and blended tall oil and tall oil pitch	
Free
Coke, n.o.p.
Free
654a
Pins or pegs of synthetic resin used as bristles in the manufacture of brushes	
Free
Free
Free
5 p.c.
682a
Mouthpieces in the rough, screws, aluminum pipe fitments, pipe bowls moulded from briarwood dust, bowls of wood not further processed than frazed, corn cobs and corn cob bowls not further processed than shaped, when imported by manufacturers of tobacco pipes for use in the manufacture of such pipes, in their own factories	
Net floats of any material except wood, for use exclusively in commercial fishing	
Collections of coins and/or medals; postage stamps; medals of metal and other metallic articles, which have been bestowed as trophies or prizes and received and accepted as honorary distinctions, or which have been donated by persons or organizations abroad for such purposes; trophy cups of metal and other metallic prizes (not usual merchantable commodities) won abroad in bona fide competitions, or donated by persons or organizations abroad for such purposes in Canada. The foregoing not to include medals, trophies or prizes which are regularly presented by organizations or business companies to their members, employees or representatives	
Free
Free
Free
Free
Free
Free
General Tariff	Rates in Effect Prior to Rates Proposed in this Budget		
British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff25 p.e.	17£ p.c.	22§- p.c.	25 p.c.25 p.c.	Free	15 p.c.	20 p.c.	25 p.c.Free	Free	$1.00	$1.00per ton	per ton20 p.c.	15 p.c.	20 p.c.	25 p.c.25 p.c.	Free	Free	25 p.c.15 p.c.	20 p.c.	25 p.c.Free	Free	Free	Free15 p.c.	20 p.c.	25 p.c.Free	Free	Free	FreeVarious	Various	Various4706	COMMONS
________Customs Tariff
693	(iii) Antiquities (other than spirits or wines) produced prior to January 1, 1847, under such regulations, including proof of antiquity, as may be prescribed by the Minister	Free	Free696b	Provided that, notwithstanding anything to the contrary in this Act or in any other law or regulation relating to Customs, antiquities as described in part (iii) of this item shall, for entry thereunder, be relieved from the requirements as to origin or British Empire content. Films produced by or issued under the authority of government tourist bureaux, railway authorities, airway authorities or steamship companies; subject to such regulations as the Minister may prescribe	Free	Free696c	Phonograph records for bona fide libraries, and being the property of the organized authorities of such libraries and not in any case the property of individuals or business concerns, under such regulations as the Minister may prescribe	F roe	Free848	All machinery and apparatus and parts thereof (including motive power) and drilling mud, for use exclusively in exploratory or discovery work in connection with, and development, depletion and production of petroleum or natural gas wells; seamless, lapwelded and electric welded iron or steel casing, tubing and drill pipe for use in connection with natural gas or oil wells	Free	FreeFree	Free	Free	FreeFree	Free	Free	FreeFree	10 p.c.	15 p.c.Free	15 p.c.	20 p.c.	30 p.c.Free	Free	FreeFree	Free	Free	Free
e-H
Cj
5z|
[Stage Direction]
o
Customs Tariff

3. Resolved, tnat schedule A to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, be further
amended by striking thereout tariff items 523, 523a, 523b, 523e, 523j, 523k, 523), 524a, 5321) and 561, the several enumerations of goods respec-tively and the several rates of duties of customs set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
Item
523a
523b
		Most-	General Tariff
	Preferential Tariff	Favoured- Nation Tariff	
Woven fabrics, wholly of cotton, not bleached, mer-			
	Free		25 p.c. 4 cts.
and, per pound		3 cts.	
On and after July 1, 1949	15 p.c.	15 p.c.	25 p.c.and, per pound	3 cts.	4 cts.Woven fabrics, wholly of cotton, bleached or mer-	cerized, not coloured, n.o.p	Free	27] p.c. 4 cts.and, per pound	3 cts.	On and after July 1, 1949	171 p.c.	17] p.c.	27£ p.c.and, per pound	3 cts.	4 cts.Woven fabrics, wholly of cotton, printed, dyed or coloured, n.o.p.:-	Free	32] p.c. 4 cts.and, per pound	3 cts.	On and after July 1, 1949	17] p.c.	17] p.c.	32] p.c.and, per pound	3 cts.	4 cts.(ii) \ alued at 50 cents or more but not more than	80 cents per pound	Free	5 p.c.	32] p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	17] p.c.	22] p.c.	32] p.c.and, per pound	3 cts.	4 cts.(iii) Valued at less than 50 cents per pound	Free	7] p.c.	32] p.c.and, per pound	3* cts.	4 cts.On and after, July 1, 1949	17J p.c.	25 p.c.	32] p.c.and, per pound	3] cts.	4 cts.(iv) Woven fabrics, wholly of cotton, commonly known as denims, when imported by manufacturers for use in their own factories in the	manufacture of garments	Free	32] p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	17] p.c.	17] p.c.	32] p.c.and, per pound	3 cts.	4 cts.
Rates in Effect Prior to Rates Proposed in this Budget
British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff15 p.c.	15 p.c.	25 p.c.3 cts.	4 cts.17] p.c.	17$ p.c.	27$ p.c.3 cts.	4 cts.17] p.c.	17] p.c.	32] p.c.3 cts.	4 cts.17] p.c.	22] p.c.	32] p.c.3 cts.	4 cts.p.c.	25 p.c.	32} p.c.3£ cts.	4 cts.17] p.c.	17] p.c.	32} p.c.3 cts.	4 cts.4708	COMMONS
Customs Tariff
523e
523j
523k
524a
532b
Woven fabrics wholly of cotton with cut pile, n.o.p....	Free	10 p.c.	32} p.c.and, per pound	3} cts.	4 cts.On and after July 1, 1949	15 p.c.	25 p.c.	32} p.c.and, per pound	cts.	4 cts.Shadow cretonnes, wholly of cotton, with printed	Free	15 p.c.	32} p.c.warp and plain weft	and, per pound	3j cts.	4 cts.On and after July 1, 1949	10 p.c.	25 p.c.	32} p.c.and, per pound	3} cts.	4 cts.Gabardines, wholly of cotton, with not less than 2S0	Free	15 p.c.	32} p.c.ends and picks of ply yarn per square inch	and, per pound	3} cts.	4 cts.On and after July 1, 1949	10 p.c.	25 p.c.	32} p.c.and, per pound	3§ cts.	4 cts.Woven fabrics, wholly of cotton, composed of yarns, of counts of not less than 80 and not more than 99, including all such fabrics in which the average count of the warp and weft yarns is not less than	Free	7} p.c.	32£ p.c.80 and not more than 99	and, per pound	3 cts.	4 cts.On and after July 1, 1949	12} p.c.	20 p.c.	32} p.c.and, per pound	3 cts.	4 cts.Fabrics with cut wreft pile, wholly of cotton or of	Free	20 p.c.	32} p.c.cotton and synthetic textile fibres or filaments....	and, per pound	3^ cts.	4 cts.On and after July 1, 1949	5 p.c.	25 p.c.	32} p.c.and, per pound	3£ cts.	4 cts.Woven fabric, wholly of cotton, for covering books	
and, per pound	Free	12} p.c.	35 p.c. 4 cts.27} p.c.	35 p.c. 4 cts.On and after July 1, 1949	
and, per pound Woven fabrics wholly or in part of synthetic textile fibres or filaments, not to contain wool, not includ-	15 p.c.	Free	5 p.c.	45 p.c.ing fabrics in chief part by weight of silk, n.o.p....	and, per pound	40 cts.	40 cts.On and after July 1, 1949	22} p.c.	27} p.c.	45 p.c.and, per pound	40 cts.	40 cts.
10 p.c.
10 p.c.
12} p.c.
15 p.c.
22} p.c.
25 p.c. 3} cts.
25 p.c. 3} cts.
25 p.c. 3} cts.
32} p.c. 4 cts.
32} p.c.
4 cts.
32} p.c. 4 cts.
20 p.c. 3 cts.
32} p.c. 4 cts.
25 p.c. 3} cts.
27} p.c.
32} p.c. 4 cts.
35 p.c. 4 cts.
27} p.c.	' 45 p.c.
40 cts.	40 cts.
4 Ttecnlved that anv enactment founded upon the foregoing resolutions to amend the Customs tariff or schedules thereto shall be deemed to hive cSw into^ forcron the nineteenth day of May, one thousand nine hundred and forty-eight and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.

Customs Tariff _	__
Customs Tariff
Douglas Charles Abbott: Before we come to the detailed consideration of these resolutions, there is a brief statement that I should like to make on one aspect of them. When I introduced the resolution at the time of my budget address I announced that it was proposed to suspend temporarily the British preferential duties on cotton and rayon piece goods in order to enable Canadian consumers to obtain larger quantities of these essential materials at reasonable prices. As I stated then, we have received assurances from the United Kingdom that the reduction in landed prices made possible by any removal of duties would be passed on to Canadian buyers and that the United Kingdom government would take all possible steps to see that the target which has been set for shipment to Canada of 80,000,000 yards of cotton piece goods in 1948 will be met.
I explained also that, in acordance with our commitments in the Geneva trade agreement, under which preferential margins may not be widened, the proposal to suspend the British preferential rates on cotton and rayon piece goods includes a reduction in the mostfavoured-nation rates on these items by the same amount until July 1, 1949. However, in the case of scheduled countries imports are limited by quota under the Emergency Exchange Conservation Act.
It is expected that the proposed temporary suspension of duties will have a generally beneficial effect in helping to make available larger quantities of important supplies needed by our consumers. It is proposed that the suspension should remain in effect until July 1, 1949, when the whole matter could be reviewed in the light of the results achieved.
It has been thought desirable, however, that there should be some provision whereby this matter may be reviewed from time to time before that date. In the light of the widespread dislocations which exist in international trade and the many uncertainties which prevail, particularly with regard to the effects of the consequent reduction in the most-favourednation rates made necessary by the Geneva agreement, it is felt that the governor in council should have the authority to withdraw the suspension in part or in whole if, by any chance, the assurances given are not lived up to, or if it is found that the reduced duties are in fact operating in a manner detrimental to Canada. As far as we can see now, we do not expect that any difficulties will arise which would make it advisable to use this authority, but I think hon. members will agree that it is prudent to make provision for unforeseen developments in the unsettled circumstances of

today. For that reason I would ask my colleague, the Minister of National Revenue, to move an appropriate amendment to the resolutions which I tabled on the night of the budget
address.


John Thomas Hackett: I take it that the temporary suspension in no way affects Canada's status or Canada's right to maintain the status quo ante. By suspending these duties Canada is not yielding up her right to reimpose them, by reason of this temporary action?


Douglas Charles Abbott: No. That is quite correct. In fact, as a result of the amendment which I will ask my colleague, the Minister of National Revenue, to move, we shall not ask that the statutory rates as contained in the tariff be changed. The Geneva rates are in effect, as hon. members of the committee know, by order in council. They have been given provisional effect and they will remain in effect for the time being until the house decides whether or not the Geneva agreements will be approved. But there will be no change in the customs tariff so far as the rates in schedule A are concerned. The effect of the proposal which I am making is that the duties on cotton and rayon goods be suspended until July 1, 1949. Since, under the Geneva agreements, we are bound not to widen the preferences which exist in favour of the United Kingdom, this means that the same treatment must be extended to the most-favoured-nation countries, which include, as hon. members of the committee know, France, Belgium and most of the western European countries.
The only significant proposal that I am making in the proposed amendment is that, in view of the unsettled conditions and the possibility that assurances which we have received would not be lived up to-


Stanley Howard Knowles: From whom?


Douglas Charles Abbott: -and the fact that we have to extend these tariff suspensions beyond the United Kingdom to these other countries, the government should reserve the right, in the event of some unforeseen development occurring, to cancel this suspension. I do not anticipate for a moment that this will be necessary, but it seems only prudent to reserve the power if some unforeseen development should occur which would be detrimental to the interest of Canada, and that we should have the right to do that. Hon, members will recall that these duties were suspended during the war by the War Exchange Conservation Act of 1940. In effect we shall be continuing the same practice here; it is a

Customs Tariff
suspension, not a removal. I did not suggest in my budget address that this should be a permanent thing, because we must see what we do about the Geneva treaties. What I have proposed-and, of course, what I am still proposing-is that these duties should be suspended for a little more than a year from now. But when we are committed under the Geneva agreements, which have been given provisional application, to extend that treatment to a great many other countries as well, it seems to me that it is prudent to reserve some discretion empowering the governor in council to suspend the suspension, if I may put it in that way, with respect to some or all of these tariff items, should unforeseen circumstances arise.


John Thomas Hackett: I should like to ask two questions. The first is this. If our markets were flooded from some source of supply which is not on our horizon now, or if serious unemployment should result, a remedy would be at hand?


Douglas Charles Abbott: A remedy would be available. Frankly, I do not anticipate any such contingency, because the situation with respect to textiles, as most hon. members know, is that in most lines they are in exceedingly short supply. There is nothing in the information I have 'been able to get-from any of my expert advisers on this matter to indicate that any such condition as my hon. friend suggests would arise. But the world is in an unsettled state; this special suspension is being extended to a great many countries besides the United Kingdom; and I think it is the part of wisdom to retain this power. I should say, as I have said already, that I do not contemplate that there will be any necessity to exercise it; I can see nothing on the horizon which would make it likely that we should. But I think it is the part of wisdom to do that.


John Thomas Hackett: The second question I wish to ask is this. Is the power to terminate the law by order in council to 'be incorporated in the act, or is it to be dependent on the continuation of controls and the general law under which they are perpetuated?


Douglas Charles Abbott: It will be incorporated
temporarily in the act. The amendment, which I will ask my colleague to move, restricts the suspension of duties, as I indicated in my budget speech, to July 1, 1949, and provides that the governor in council be empowered at any time to withdraw in whole or in part the suspension in duty provided for; I am quoting from the proposed amendment, in paragraphs (a) and (b). That is the safeguarding clause to which I am referring. It will be incorporated in the customs tariff.


Stanley Howard Knowles: The minister made a fairly plausible argument for the proposed amendment, particularly when he used such words as "prudent"; but I confess that with me it is only plausible. Frankly I do not like it. The minister said a moment ago that there was some similarity between what he is asking for now and what happened during the war. There is a similarity, 'but it is in reverse. During the war the government, by virtue of the wide powers it had under the War Measures Act, took off certain duties. The minister is now asking for peacetime, order in council power to put on certain duties.


Douglas Charles Abbott: We are seeking the power to suspend them, with the right to reimpose them at any time at the discretion of the governor in council.


Stanley Howard Knowles: I am tiying to get away from the use of double negatives and talk in terms of what actually happens. I do not think it is completely comparable. Also, I do not like the continued extension of the delegation of authority to the government in this way. It seems to me that we are getting to the place where we make laws in this parliament, but we make only the laws that the government brings in, and then we put loopholes in them to give the government a chance to change those laws in between sessions. I did not expect this legislation to come up, so that I have not case histories in front of me. But most hon. members 'know we have had a great deal of manipulation of tariff policies in this country by both parties that have been in power down during the years. I can think of many an editorial which the Winnipeg Free Press has run on this subject, and in which it has pointed out that, whereas parliament has passed certain tariff rates, by administrative methods the effective rates have been changed.
We have, in addition to that way of changing the will of parliament, another way, namely this, the provision that by order in council this tariff which is now being removed for a period of thirteen or fourteen months can be-


Douglas Charles Abbott: Suspended.


Stanley Howard Knowles: Yes, suspended, but so far as the effect during the fourteen months is concerned; it is off, just off. Just ask the
Customs Tariff

hon. member for Beauce, and he will tell you it is off. I am glad to see the hon. member for Winnipeg South in his seat, because I am sure that as a Liberal he will welcome this removal of tariffs on certain British goods, if only for a period of fourteen months. And I do not think he will feel very happy about the government now taking by order in council, for reasons which may seem good to them, the power to put those tariffs back on before that time is up. I shall not take further time to argue the matter now, but it does seem to me to be a little extreme and a little strange to have still another move like this from a Liberal government.
If the Liberals believe in freer trade policies and start to move in that direction, then why back up? Why leave the back door and several windows open as a means of getting out? I would much rather that parliament would endorse the proposal the government made that these duties be off from now until July 1, 1949, and that we make it definite for that period of time, with only the one over-riding exception that always holds, namely, that parliament could change it. The house will be meeting in the meantime, possibly this fall. At any rate the government can call parliament together at any time, and I feel that the supremacy of parliament in the matter should be maintained.


Douglas Charles Abbott: May I say one word in reply to the hon. member. I wish to point out, as I did in my budget speech, that the purpose of this suspension of duties is to assure a supply in Canada which is needed, at a reasonable price. Before agreeing to recommend it to parliament, I received assurances from the board of trade of Great Britain that they thought they could assure us that advantage would not be taken of the reduction in duties by British manufacturers, and added on to the price. I have no doubt, of course, that those assurances will be lived up to. Nevertheless the action was taken with the assurance that certain things would be done.


Stanley Howard Knowles: It is also good Liberalism.


Douglas Charles Abbott: It is understood that the Canadian consumer would get the benefit, and that we would get the supply.
There are other countries which benefit from this suspension, but from whom it was not possible to get similar assurances. I think it is only reasonably prudent to retain the power to remove this concession if it does not produce the results which we expect and believe it will produce. That is the reason for this suggested amendment. I do not think it will be necessary to do this.


John Thomas Hackett: I should like to make
it quite clear that the questions which I put to the minister, and which he has been good enough to answer, are not to be interpreted as indicating in any way any change in my unalterable opposition to government by order in council. I say the tariff should not be subject to alteration by order in council. I merely wish to make my position clear in the matter, even though I have asked the minister for some explanation concerning the amendment which he is about to introduce.


William Ross Macdonald: Does the resolution
carry ?


Stanley Howard Knowles: Mr. Chairman, I understand you have not yet put the amendment.


James Joseph McCann: I move the amendment.


William Ross Macdonald: 

SCHEDULE

[Stage Direction]
Tariff Item	-	British Preferential Tariff	Most-Fa voured-Nation Tariff	General Tariff
523	Woven fabrics, wholly of cotton, not bleached, mer-			
				25 p.c.
and, per pound	3 cts.	4 cts.On and after July 1, 1949	15 p.c.	15 p.c.	25 p.c.and, per pound	3 cts.	4 cts.Woven fabrics, whollv of cotton, bleached or mer-	27* p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	174 p-c.	17* p.c.	27* p.c.and, per pound	3 cts.	4 cts.523b	Woven fabrics, wholly of cotton, printed, dyed or	coloured, n.o.p.:-	(i) Valued at more than 80 cents per pound...	I ree	32* p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	17* p.c.	17* p.c.	32* p.c.and, per pound	3 cts.	4 cts.(ii) Valued at 50 cents or more but not more	than 80 cents per poupd	Free	5 p.c.	32| p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	17* p.c.	224 p.c.	32* p.c.and, per pound	3 cts.	4 cts.(iii) Valued at less than 50 cents per pound	Free	7* p.c.	32* p.c.and, per pound	3* cts.	4 cts.On and after, July 1, 1949	17* p.c.	25 p.c.	32! p.c.and, per pound	3* cts.	4 cts.(iv) Woven fabrics, wholly of cotton, commonly	known as denims, when imported by	manufacturers for use in their own factories	32! p.c.and, per pound	3 cts.	4 cts.On and after July 1, 1949	17* p.c.	17* p.c.	32* p.c.and, per pound	3 cts.	4 cts.523e	Woven fabrics wholly of cotton with cut pile, n.o.p..	Free	10 p.c.	32* p.c.and, per pound	3! cts.	4 cts.On and after July 1, 1949	15 p.c	25 p.c.	32* p.c.and, per pound	3| cts.	4 cts.Rates in Effect Prior to Rates Proposed in this Budget	Most-	British	Favoured-	(JeneralPreferential Tariff	Nation Tariff	Tariff15 p.c.	15 p.c.	25 p.c.3 cts.	4 cts.17* p.c.	17! p.c.	27* p.c.3 cts.	4 cts.17* p.c.	17* p.c.	32* p.c.3 cts.	4 cts.17* p.c.	22! p.c.	32* p.c.3 cts.	4 cts.17* p.c.	25 p.c.	32* p.c.3* cts.	4 cts.17* p.c.	17* p.c.	32* p.c.3 cts.	4 cts.15 p.c.	25 p.c.	32* p.c.3* cts	4 cts.
[The Chairman.]
SCHEDULE-Concluded
Tariff
Item
523]
523k
524a
532b
Shadow cretonnes, wholly of cotton, with printed
warp and plain weft	
_	,	ana, per pound
On and after July 1, 1949	
and, per pound
Gabardines, wholly of cotton, with not less than 200
ends and picks of ply per square inch	
and, per pound
On and after July 1, 1949	
and, per pound
Woven fabrics, wholly of cotton, composed of yarns of counts of not less than 80 and not more than 99, including all such fabrics in which the average count of the warp and weft yarns is not less than
80 and not more than 99	
and, per pound
On and after July 1, 1949	
and, per pound
Fabrics with cut weft pile, wholly of cotton or of cotton and synthetic textile fibres or filaments...
and, per pound
On and after July 1, 1949	
and, per pound
Woven fabric, wholly of cotton, for covering books.
and, per pound
On and after July 1, 1949	
and, per pound
Woven fabrics wholly or in part of synthetic textile fibres, or filaments not to contain wool, not including fabrics in chief part by weight of silk, n.o.p...
and, per pound
On and after July 1, 1949	
and, per pound
British
Preferential
Tariff
Free 10 p.c.
Free 10 p.c.
Free X2\ p.c.
Free 5 p.c.
Free 15 p.c.
Free 22] p.c.
Most-Fa voured-Nation Tariff
15 p.c. 3] cts. 25 p.c. 3] cts.
15 p.c. 3] cts. 25 p.c. 3] cts.
7] p.c. 3 cts. 20 p.c. 3 cts.
20 p.c. 3} cts. 25 p.c. 3] cts.
12] p.c.
27 j p.c.
5 p.c. 40 cts. 27] p.c. 40 cts.
General
Tariff
32] p.c. 4 cts. 32] p.c. 4 cts.
32] p.c. 4 cts. 32] p.c. 4 cts.
32] p.c. 4 cts. 32] p.c. 4 cts.
32] p.c. 4 cts. 32] p.c. 4 cts.
35 p.c.
4 cts.
35 p.c.
4 cts.
45 p.c. 40 cts. 45 p.c. 40 cts.
Rates in Effect Prior to Rates Proposed in this Budget
British
Preferential
Tariff
10 p.c.
10 p.c.
12] p.c.
5 p.c.
15 p.c.
22] p.c.
Most-Fa voured-Nation Tariff
25 p.c. 3] cts.
25 p.c. 3] cts.
20 p.c. 3 cts.
25 p.c. 3] cts.
27] p.c.
27] p.c. 40 cts.
General
Tariff
32] p.c. 4 cts.
32] p.c. 4 cts.
32] p.c. 4 cts.
32] p.c. 4 cts.
35 p.c. 4 cts.
45 p.c. 40 cts.
4714	COMMONS
_______ Customs Tariff

Customs Tariff
Then follows the schedule. Does the resolution carry?
Stanley Howard Knowles: The only part that implements the suggestion just made by the minister with respect to giving power to the governor in council is paragraph (c)?


Douglas Charles Abbott: That is right.


Stanley Howard Knowles: Of what the Chairman has just read?


Douglas Charles Abbott: Yes.


Stanley Howard Knowles: I think there are some others who wish to speak about this. Are there any copies available?


Douglas Charles Abbott: It is not too complicated. If the hon. member will turn to page 4094 of Hansard for May 18, he will find that subsection 3 contains the resolution which is now amended. It is really not so complicated. The substantial effect of the amendment is, as I have indicated, that the duties on the tariff items enumerated in the resolution with respect to rayons and cotton goods, are suspended until July 1, 1949. There is a provision that the governor in council may be empowered to withdraw in whole or in part the suspensions of duty for which provision is made in the resolution. I can assure my hon. friend that is all the amendment accomplishes. The resolution is long, with an enumeration of tariff items, and a technical description of the things covered. That is all there is to it.
I have explained to the committee the reasons why I am suggesting that this amendment be put forward.


Clarence Gillis: The minister is recommending definitely that the tariff be removed up to July 1, 1949?


Douglas Charles Abbott: That is right.


Clarence Gillis: The governor in council, then, has no authority to make any changes in that schedule?


Douglas Charles Abbott: That is right.


Clarence Gillis: Until July 1, 1949?


Douglas Charles Abbott: Yes, but it may remove this suspension-and I should like, if possible, to get away from the double negative. If unforeseen conditions arise such as I have indicated, the governor in council may withdraw this special privilege which is extended to a very considerable number of countries if, to put it bluntly, they do not live up to what we fully expect they will honour and live up to.


John Thomas Hackett: You may by order in council put an end to the law?


Douglas Charles Abbott: Yes. The normal tariff would then come into effect again.


Clarence Gillis: In other words, if the amendment carries and if the governor in council so desires, next week or next month it may change the whole thing?


Douglas Charles Abbott: It can; it would revert to the regular tariff.


Clarence Gillis: Next week or next month?


Douglas Charles Abbott: Yes.


Clarence Gillis: I do not like that. Surely this House of Commons can see at least a year ahead. This house will again be in session-


Douglas Charles Abbott: It is better than some of the rest of us, then.


Clarence Gillis: It will be in session in 1949. The policy being pursued now is a Liberal policy. In other words, you are living up to the Atlantic charter, and the provision in it for free access to raw materials of the world-some of the beautiful slogans on which we fought the war.
Surely we are in a position in the House of Commons to say we are going to legislate that far ahead with respect to a restricted number of items as between ourselves and the United Kingdom.


Douglas Charles Abbott: But I have a sort of constitutional objection to removing the tariff on an item and then allowing the fellow in the other country just to take that into his price. That is one of the main reasons why we should reserve this right. If other countries do not fulfil the assurance they have given us, then we would have the right to withdraw the special concession we have extended ito them. That is all this is.


Clarence Gillis: I still cannot see that. As the hon. member for Winnipeg North Centre pointed out, it is a continuation of government by order in council. Parliament should be supreme in matters of this kind, and I do noit think the matter is serious enough, as far as the schedule under discussion is concerned. As far as I am concerned, as a member of this house I do not intend to delegate in peacetime the authority of the House of Commons to someone behind the scenes. I am going to be quite frank and say that when the minister and his advisers drafted this budget I believe they received some fairly decent Liberal advice, but I am afraid-I hope this is not true-that considerable pressure has been exerted upon the minister to leave in this escape clause. I think the amendment is
Customs Tariff

actually an escape clause designed to protect manufacturers of this country who are afraid-


Douglas Charles Abbott: There has not been any pressure at all.


Clarence Gillis: -that they may not be in a position to compete with those who believe in free enterprise and unrestricted trade and competition and all the other things that are supposed to enter into our economy. I consider this matter serious enough for this House of Commons to refuse the amendment. I have confidence enough in the Minister of Finance and the Minister of Trade and Commerce and their advisers to think they will be able to do business with the countries affected by this tariff change without delegating any authority to anyone outside the House of Commons to change the law tomorrow if he so desires.
I am prepared to have it run until the House of Commons meets again, say in June, 1949. If in the interim there is any difficulty I do not think it would be so serious as to affect the country to an extent where we should be prepared to abrogate the rights of the House of Commons. There is a principle at stake. That principle is the right of this house to retain in peacetime the power to pass Jaws and have them remain effective until such time as the house may convene again.


Douglas Charles Abbott: There is nothing new about this, since the same sort of thing exists all through the tariff schedule. I am not an expert on tariffs, but I have before me tariff item 62, which reads:
Rice, uncleaned, unhulled or paddy . . . The governor in council, when satisfied that Australia can supply Canadian requirements, may, by order in council, direct that there be substituted for tariff item 62 in schedule A of the customs tariff, and the enumeration of goods and the rates of duties of customs set opposite the said item in schedule A the following . . .
As I say, this is not a new departure,. As I have said before, I think, under existing circumstances, this is a wise provision to insert.


Clarence Gillis: Let us try it for a year and discuss it the next time we meet.


John Thomas Hackett: I feel that the legislation as it appears before the amendment is ill-advised, because of the effect it may have upon employment in those centres where large numbers are engaged in the textile industry. Much as I regret it, I feel that this house is constantly belittling itself when, without any reason at all, it yields up to the governor in council its hard-won supremacy in matters of legislation.
Just a few days ago we saw fifty pages torn from the merchant shipping act, when many articles having to do with the life, safety and

well-being of crews and people on ships as well as the ships themselves could be suspended by order in council. This was done to enable a servant of a department to determine that something like an emergency existed and then suspend the law.
We are a highly industrialized country, dependent to a greater extent upon foreign markets than practically any other country. We must sell at home and abroad, or we cannot continue to exist. We have increased our capital equipment and our industrial plant, We must find markets, and the best market is always the home market.


An hon. MEMBER:: Is where you find it.


John Thomas Hackett: I am not going to debate that point with the hon. gentleman, because I think he will admit that the best market is the home market. If this legislation is denying occupation to our own people, then it is short-sighted. If we are to introduce into our fiscal and trade policy the same uncertainty that exists in other realms of public affairs; if we are to create in that realm the chaos which exists elsewhere I fear that we are in for a sad and sorry time.
We should know for at least one year what our tariff legislation is to be. I submit that, surrounded as the minister is with competent officers and men of some experience, he should be able to see at least twelve months ahead or until the house meets again. Laws which are vital to our economic existence and to our trading position should have some stability and not be altered until reasons are given in open debate.
We are spending time in committees devising ways for the introduction of democratic government as it obtains here. Yet we have become disrespectful of the very elements of democratic government; we delegate to some gentleman in the Department of Finance the power and the right to determine for you, for me and for the people whom we represent what shall be the fiscal policy of this country. I believe that is wrong and we shall rue the day we have openly and without necessity accepted that principle.


Stanley Howard Knowles: The case has been stated so excellently by the hon. member for Stan-stead that little more needs to be said. But I feel that we should register, in the best way we can, a protest against this request of the minister for this power by order in council. A moment ago the minister cited an example from the tariff schedule he has before him. Even though I was not able to follow it as closely as I might have, I understood that it did prescribe certain conditions under which the governor in council would have the author-



194S

[Stage Direction]
ity to make a change. That is not the case in connection with the amendment now before the committee. I have now been able to get a copy of it, and I find that clause (c) of the proposed amendment moved by the Minister of National Revenue reads as follows:
(c) The governor in council be empowered at any time to withdraw in whole or in part suspensions in duty provided for in paragraphs ta) and (b).
I submit, along the lines already argued so well by the hon. member for Stanstead and others who have taken part, that this parliament should not give that power to the government at this time. I therefore move, seconded by my colleague the hon. member for Cape Breton South, the following sub-amendment:
That clause (c) of the proposed amendment be deleted.
In other words, I do not try to disturb any other of the changes made by the amendment or in the schedule attached thereto which the minister has proposed. I only ask that this special order in council power be not granted by the house to the government.
Douglas Charles Abbott: I am very glad my hon. friend has moved that sub-amendment, because I want to make it perfectly clear that the amendment is not one on which the government lays any particular stress, and I give it to the committee for what it is worth. I think it is in the interests of this country that the government should retain this discretionary power under these exceptional circumstances; but let me say this, that if the committee feels that we should give this unrestricted suspension of duties until July 1. 1949. I am not going to stand up strongly in opposition. I give it as my considered opinion, after having given the matter a good deal of consideration, that it is the part of prudence to retain that discretionary power, but I am going to lay the responsibility for voting for or against it squarely on the members of the house. I personally shall vote against my hon. friend's amendment, but if the committee sees fit to adopt it, that is all right with me.


Edmund Davie Fulton: The situation is this. The minister, in introducing this change, is not sure how it will work out. and he wants the power given to him to change it at a moment's notice if it works out badly. That is an instance of the risks which this government is willing to run with the economy of the country. Here we have a tariff change introduced by the government, and now they ask power by the amendment to undo the tariff change at a moment's notice if it should turn out that it works against the interests of Canada. If they have not examined the whole situation so care-
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fully that they can say to us that this tariff change is bound to work in the best interests of Canada, the tariff change should not have been introduced and should not have the support of the house. It convinces me of something I have suspected for some time, that this whole change is ill-conceived and not designed to work in the best interests of Canada's economy. I think we should oppose the change and the amendment, and I propose to do so.


Douglas Charles Abbott: That is all right with me. As I explained this proposal, it is for the purpose of endeavouring to ensure a supply of cotton and rayon textiles to Canadian consumers at reasonable prices, and we had the assurance from the main source of supply that advantage would not be taken of this tariff concession to boost prices. I have no doubt that this assurance will be carried out. But on second thought I consider it wise to have a safeguard in case the assurance could not be carried out, or in case concessions given to other countries did not work out. But if the committee feels that this concession should be continued until July 1, 1949. without any such safeguard, that is all right with me. It is no government issue so far as I am concerned.


Mr. BLACKMORE:: I support the minister's attitude in this matter. We are living in a world of bewildering complexity; no one can foresee what the situation will be one month ahead. Surely members of the house realize that. I find myself at a loss to understand the attitude taken by the two speakers of the C.C.F. and of the Progressive Conservative party. So far as leaving power in the hands of the minister is concerned, we have to leave power in the hands of ministers in regard to every aspect of our government, and we can hold them responsible if they misuse that power. Consequently I am going to vote against the sub-amendment of the C.C.F. I think it is just plain foolishness.
There is one more aspect. We are dabbling around with a whole lot of experiments in nondiscrimination and a whole lot of other things involved in the Geneva trade treaties. No one has seen those treaties in operation. How can we foretell how they will work out? Certainly it is the part of merest prudence to give the minister power to do whatever seems fit to him under the circumstances.


Mr. HARRIS (Danforth):: I should like to make one or two observations, following what the hon. member for Stanstead had to say. His anxiety and that of a good many members of this house is to get parliament back as
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quickly as possible into the position where parliament is supreme. I think we are all agreed on that. During the last four or five years of necessity we had to have many things done by order in council and we had to depend on the ministers' deputies for their advice in matters of great concern. I should like to make this observation now', that we have been very fortunate in the calibre of the men who have served the different departments of government, and particularly the Department of Finance and especially those charged with this work. I pay tribute to these men. Most of them are still advising the ministers.
What bothers me now is the statement made a couple of moments ago by the minister, who said he "thought" this was necessary. I wrote the word down. If he thinks it is necessary because he has been advised by a capable civil servant who knows all the ramifications of each individual item and knows what is for the general advantage of Canada, why not have the intestinal fortitude to stick to it? We have had a welter of orders in council under the War Measures Act and the transitional powers act; and if, after all that, it is necessary to give the minister this power I think the committee ought to be broad-minded enough to grant him that power until such time as the economy not only of Canada but of the whole universe irons itself out.
My private enterprise friend the hon. member for Cape Breton South rose in his place and, with his tongue in his cheek, championed the cause of free enterprise. I say to him that when he was talking a moment ago he probably had in his mind the same idea that is in the minds of all the rest of us, and that is, in the final analysis, are we to be able to keep the employees of the textile organizations working steadily right through the piece, not only till July 1, 1949, but from there on? In common with him there are not only hon. members anxious about that, but the personnel behind the Minister of Finance, whether they say so or not, when they deal with these items are thinking of its effect on the employment of men and women in industry. They do not say so, and we do not say so often enough, but they are thinking, will it make more employment, will it make more production for Canada or will it not? From that angle they very often give their judgment.
I would suggest to the minister that when they are thinking about how they are to frame orders in council or frame advice to the minister, one of the first things in the back of their minds-at least I hope it is one of the first things in the back of their minds-is, will it give more employment, or will it maintain
fMr. Harris (Danforth).]
the present employment level in Canada? That is what they think about, or at any rate that is what they ought to think about. I charge them now with that responsibility. I am hoping, when we consider this, that we can perhaps see the end of the rainbow where parliament will again be supreme. It is almost there now. We will help you, Mr. Chairman, to put it through. But in these troubled world affairs which we are now trying to unscramble, let us be a little bit patient. Ninety per cent of the unscrambling of orders in council has been completed. We are now at the tail end of it. I ask the minister to accept some of the advice of those who served us so well during wartime. Accept their advice here and there, and depend upon them. I am of the opinion, sir, that if we do that we shall come out on the right side of the ledger.
In closing, I would say this to the minister, if I can get him away from his other conversation, from the Hollywood sort of atmosphere that envelops him now and again, to the realities of his responsibility as Minister of Finance. When his advisers advise him on such and so I remind him that he is one of the senior ministers of the crown in Canada. Mr. Chairman, I was addressing myself particularly to the Minister of Finance.


Douglas Charles Abbott: I am sorry; I was interrupted.


Joseph Henry Harris: I know he hears, whether he listens or not. When he acts, he acts because his responsible advisers have recommended action. His responsibility to parliament is not only to think but to act and to stick to that, so that Canada itself will say: Well, we have a strong government which means what it says.


Douglas Charles Abbott: We have that.


William Ross Macdonald: There is a resolution before the committee on the customs tariff. An amendment was moved by the Minister of National Revenue, and a sub-amendment by the hon. member for Winnipeg North Centre.
Sub-amendment (Mr. Knowles) negatived; yeas, 21; nays, 59.


William Ross Macdonald: Does the amendment carry?


Some hon. MEMBERS:: On division.
Amendment agreed to on division.


William Ross Macdonald: Does the resolution carry?


Stanley Howard Knowles: That is resolution 3? We still have resolutions 1 and 2 to deal with.

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Douglas Charles Abbott: That is correct.


William Ross Macdonald: Does resolution 3 as amended carry?


Donald Methuen Fleming: There are some questions I wish to ask with regard to the resolutions as a whole. In the first place these resolutions purport to contain the exact text of the amendments that are proposed to be introduced into the customs tariff. I have been in the house for only four sessions, but this is the first time I have seen resolutions purporting rto give the exact text of the proposed legislation. Before we proceed with the resolution, I would ask the minister to give assurance that if the committee does approve the resolution there will be no suggestion, when we come to the bill containing legislation in exactly the same form, that we do not enjoy the usual freedom in connection with the review of the bill.


Douglas Charles Abbott: I will gladly give that assurance. Although I have been in the house for eight years, in that period there have not been any extensive changes in the customs tariff, and I have not had a great deal of experience myself with tariff matters. There will be a schedule to the bill amending the customs tariff, which will have to be considered in the committee item by item. I give my hon. friend the assurance that there will be full opportunity on the bill, if it is deemed necessary to do so, to discuss the matter item by item. The general principle, as I indicated in my budget address, of the changes here is, with the exception of the textile items where the tariff is suspended, to make certain downward revisions, chiefly in connection with matters of a technical nature, productive goods and the like. I outlined in general terms in my budget speech the nature of the tariff changes. By reason of the amendment which has just been passed, there will not be incorporated into the customs tariff schedules the Geneva rates with respect to any of the items. These will be dealt with in due course when the agreements, which are now before the committee or before the house itself, are approved.


Donald Methuen Fleming: One other point. It has to do with the proposed sections dealing with the power to suspend the dumping duties. I refer to the proposed repeal of section 6 and the substitution of a new section. We have had some discussion tonight about the powers proposed to be given to the government under legislation of this kind. I think the committee ought to realize, in passing the resolution, that it proposes to give the
minister the power to suspend certain duties of a special dumping nature. The committee ought also to be aware that the classes of goods with respect to which this power is to be conferred on the minister are not defined in the section. The committee would like to have from the minister a further statement concerning the classes of goods to which this section is proposed to be applied.
When the minister was introducing his budget he made the following statement, as reported at pages 4070 and 4071 of Hansard:
Finally, among the resolutions pertaining to tariff and customs matters, I am including a proposal which would enable the governor in council to relieve certain goods or classes of goods from special dumping duty. Under this proposal such relief could he granted in cases where the governor in council determines that the importation of the goods is necessary to meet essential requirements in Canada or could be used to advantage in Canada without causing hardship to Canadian producers. In view of continuing scarcities, it is clearly desirable that it would be possible to grant relief from dumping duty in such circumstances.
That is quite a definition the minister has given there, and before the committee approves the section, which will have the effect of giving the minister power to suspend duties with respect to undefined classes of goods, or goods the definition of which is to be made by the minister, there ought to be a clear statement from him as to the classes of goods to which it is proposed that this section shall apply.


Douglas Charles Abbott: The provision to which my hon. friend is referring will in some respects give a bit more flexibility to the rigid dumping duty provisions now contained in the Customs Tariff Act. At the present time the act provides that if goods are sold in the country of origin at a price below that at which they are sold in the exporting country, then the dumping duty automatically applies to the goods imported into the other country.
There are certain cases in which the domestic price of goods may be somewhat higher than the export price, and the proposed amendment will authorize the administration, in effect, to exempt from dumping duty certain goods, under conditions that may be imposed:
The special duty imposed by the preceding subsection shall in no ease exceed 50 per cent ad valorem and the following goods shall be exempt from such duty.
The goods are:
(i)	Goods of a class subject to duty under the Excise Act;
(ii)	Goods which though of a class or kind made or produced in Canada, are not offered for sale to the ordinary agencies of wholesale or
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retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade;
(iii)	Goods or classes of goods declared exempt by any order or regulation made by the governor in council.
That is to be amended to provide that, for the purpose of this section, goods may be deemed to be of a class or kind not made or produced in Canada where similar goods of Canadian production are not offered for sale to the ordinary agencies of wholesale or retail distribution or are not offered to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade.


Donald Methuen Fleming: I do not think the minister has touched the point I was raising. I appreciate the terms attaching to the power to which he has referred, but I am concerned about the type of goods to which this is to apply. Under this section the minister is to have power to select the goods; they are not enumerated in any statutory enactment. Under this section it is left to the minister to select the goods and to suspend the effect of the dumping duty as applied to such goods. We still have not had from the minister a statement as to the kind of goods to which it is proposed that this section shall apply.


Douglas Charles Abbott: The purpose of it is to give the governor in council power to exempt from the dumping duty in cases where the imposition of such duty would in effect impose a prohibitory tariff preventing the importation of goods which are needed in Canada and which, on their importation, will not injure any Canadian goods of a similar nature. I am told that an example of this under existing conditions might be certain types of British motorcars which are not manufactured in Canada and in respect of which the strict application of the dumping duty might require the imposition of a stiff duty on the landing of such cars in Canada, which under existing conditions are needed in the country and for which there is a ready market.
Mr. FLEMING; I take it that this section has not been introduced without there having been some demand for it in certain quarters. Surely there must be other examples than the one the minister has cited, namely British motor cars. The committee is entitled to know what classes of goods the minister has in mind when he asks us to give effect to a provision of this kind. There must be more to it than the one case of British motorcars.


Douglas Charles Abbott: As my hon. friend knows, while we are making every effort to increase imports of goods into Canada from what might

be generally described as soft-currency countries, the effect of our rigid anti-dumping law is to discourage some of these imports which would be brought in without injury to Canadian trade and which, as a matter of fact, would help the Canadian consumer. That is because the domestic selling price of some commodities in other countries is deliberately placed at a high figure, for taxation or other reasons, in order to discourage consumption in those countries and to encourage exports. It was felt desirable that there should be some degree of flexibility in the dumping provisions of our tariff, and that is the purpose of the proposed amendment.


William Ross Macdonald: I was first going to ask if resolution 3 as amended carries.
Resolution 3 as amended agreed to.
The CHAIRMAN; Shall resolution 1 carry?
Resolution 1 agreed to.


William Ross Macdonald: Shall resolution 2 carry?
Mr. KNOWLES; I should like to ask some questions, and they are really for information, with regard to two items in the schedule to resolution 2. The items to which I direct the minister's attention are 410a and 445o. I understood from the minister's speech that any changes being proposed in the tariff were downward. I notice that in many cases there have been reductions in tariff rates, column by column. But I notice that in the case of item 410a, as it is set up in the booklet I have in front of me, the general tariff at the present time is 12] per cent and the new general tariff is to be 35 per cent.


Douglas Charles Abbott: The rates are 12] per cent, 35 per cent, 35 per cent, 30 per cent, and 37] per cent.
Mr. KNOWLES; I see. That goes down on the next page. Would the minister explain that, because it looks to me, if you have a collection of rates such as the minister has just read out-12] per cent, 35 per cent, 35 per cent, 30 per cent and 37] per cent-and you drop all those rates and put in their place an over-all rate of 35 per cent, you may in fact have provided for an increase.


Douglas Charles Abbott: The explanation of that is this. As of course my hon. friend knows, the general tariff is of really no consequence now. Nearly all countries are under the mostfavoured-nation tariff, and incidentally that type of material dealt with in item 410a- loading machines and so on-would come from most-favoured-nation countries. I do not think there is any general tariff country from which those articles could come. If there were,

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I would think it would tend to force such countries to enter into a most-favoured-nation agreement with us. The effective tariff rates are the British preferential tariff and the most-favoured-nation tariff. There are few countries that are still under the general tariff rates. Technically it may be that the tariff rate of 35 per cent, which is one of the rates now under the general tariff, would apply; but the effective reduction is to place those things on the free list.


Stanley Howard Knowles: I am glad to know that. At least it carries out the intention of the minister's tariff changes. What bothered me was, as I say, that there was at least the appearance of an increase.


Douglas Charles Abbott: My hon. friend is right there.


Stanley Howard Knowles: Here was a case where, with respect to loading machines, and so on, there was a 124 per cent rate and now there is to be a 35 per cent rate; that looked to me like a reduction in reverse.


Douglas Charles Abbott: All that stuff comes from most-favoured-nation countries or British preferential tariff countries.


Stanley Howard Knowles: I understand. The other item to which I wished to direct attention was 445o, paragraph (iii). There I noticed that all three of the rates were simply listed as "various". Now it is free, free, and 30 per cent. This is with regard to materials and parts not including motors, for use by manufacturers of apparatus using radio tubes, or parts therefor, in the manufacture, in their own factory, of the goods enumerated in tariff items 445o (i) and 445o (ii). In connection with the general tariff, previously the rate was listed as various. Now it is listed as 30 per cent. That is the only case like it in the whole schedule. Can the minister assure us that there is not an increase when it goes from "various" to 30 per cent?


Douglas Charles Abbott: No, I am told there is not. Here again the applicable rates are really the British preferential and the most-favourednation rates. Probably a typical case of the various rates, as I am informed by the officials in front of me, would be the ones in 445o (ii), which are 35 per cent, 30 per cent, 30 per cent, 35 per cent and 30 per cent. The 30 per cent would be the lowest of those rates. But here again in this item, the general tariff rates have really no practical application because these items are not coming to us from general tariff countries.


Stanley Howard Knowles: So we can be assured that all the changes, where changes are made, are downward.


Douglas Charles Abbott: I am told by my tariff experts that that is the case.


John Thomas Hackett: Will the minister turn to item 410a (i), which deals with loading machines; shaker trough, belt trough, and so on. The general tariff at one time was 35 per cent. When did that general tariff cease to be effective?


Douglas Charles Abbott: When we made the first trade agreement with the United States in 1935, effective January 1, 1936.


John Thomas Hackett: That was in 1935. And it was reduced to what figure?


Douglas Charles Abbott: At that date the United States was transferred from the general tariff to the most-favoured-nation tariff, and the rate then became 10 per cent. Before that, it had been 12| per cent.


John Thomas Hackett: Under the present arrangement the tariff of 10 per cent disappears?


Douglas Charles Abbott: That is correct.


John Thomas Hackett: Then all of the items that are listed in-what is this, the third item?


Douglas Charles Abbott: Item 410a?


John Thomas Hackett: I was thinking of the items beginning with tariff item 15 and going on to the bottom of page 25, item 848; they have been affected by the recent change so that they all become free?


Douglas Charles Abbott: They do not all become free, no. There are varying rates which are shown on the schedule here. There are some moderate reductions in tariff in some cases. The columns in Hansard of May 18 show the proposed rates of duty and the rates in effect prior to the rates proposed by the present budget. There are varying rates there. My hon. friend can pick them out. In some cases they are free and in other cases there are reductions. Eor instance, as to item 431d, which is, engineers', surveyors', and draftsmen's precision instruments and apparatus, the previous rates were free under the British preferential tariff, 10 per cent with some at 9 per cent under the most-favoured-nation tariff and 10 per cent under the general tariff. That item is still free from British preferential countries, and 9 per cent under the most-favoured-nations tariff, and 10 per cent under the general tariff.


John Thomas Hackett: Yes. But in most items there has been a substantial reduction in effect where the United States is concerned?


Douglas Charles Abbott: Substantial in some cases ; in other cases, not. For instance, let us take item 410q, pumps and vacuum pumps. The
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reduction in the case of the United States is from 17| per cent to 15 per cent, a reduction of 2J per cent. It varies through the schedule.


John Thomas Hackett: Yes; then there are other items-


Douglas Charles Abbott: There are some items where there is no change. In connection with diamond drills, for instance, there is no change. It is still 10 per cent. There is a big reduction in wheel chairs.


John Thomas Hackett: The chairs are for the ill and the paraplegics, and everyone is grateful to the minister for having granted relief to a body of unfortunate men and women. On the whole, however, I understand that these reductions apply particularly to the United States, which has been the chief external supplier of articles appearing in the schedule.


Douglas Charles Abbott: Yes. Most of them are production articles-articles such as mining equipment, which enter into (the cost of production and which, by and large, are not produced in this country. I believe for many years we have been following the principle of either exempting that class of articles from duty entirely, or putting them in a reasonably low class of duty. For instance, in respect of item 410a (i), which covers loading machines, we know that kind of machinery is used in mining. It was formerly restricted for use exclusively at the face of the mine. That restriction is being deleted, because under the former item the same equipment was in many instances dutiable at a higher rate when it was used a short distance away from the actual mine face. I cite that as an example of an adjustment.


John Thomas Hackett: I had understood that a great deal of the plant development which has been going on in Canada since the war was to enable Canada to produce for herself many of these items, some of which appear in the schedule, and which hitherto she has been forced to import from the United States. The result of this reduction in tariff will be serious competition to Canada, and will expose to great danger our own labour market.


Douglas Charles Abbott: I have been informed that in by far the greater majority of the articles in respect of which tariffs are reduced or
eliminated, those articles are of a class or kind not made in Canada.


Donald Methuen Fleming: I have one question concerning item 445o at page 22 of the resolutions. It is a complicated provision. In the first place, as I read it there would seem to be no change in sub-item (i). It is printed here only

because of the changes in sub-items (ii) and (iii). Is that not correct?


Douglas Charles Abbott: I am told there is no change in wording or in rates of duty. It is a continuation of the former item 445o which provided for duty-free entry of certain named parts used in the manufacture of radio apparatus, and it is to conform to the wording incorporated in our trade agreement.


Donald Methuen Fleming: There will be no change in the tariff on radio dials?


Douglas Charles Abbott: No.


John Thomas Hackett: What is illipe butter? It is not margarine, is it?


Douglas Charles Abbott: No, it is not margarine. Illipe butter is used mainly as a substitute for cocoa butter in the manufacture of chocolates and chocolate coatings for the biscuit trade. The addition of illipe butter provides a fat that has a somewhat higher melting point than cocoa butter and which tends to prevent the bloom on, the chocolate or coating.
Imports during the next twelve months are estimated to range from 1,000 to 2,000 tons. Illipe butter is selling today at from 83 to 84 cents a pound, c.i.f. without duty, whereas the present price of cocoa butter ranges from 81.10 to $1.20 a pound.
Illipe butter is made from the illipe nut, which is found in the Netherlands East Indies, Borneo and Malaya. These nuts are processed in Holland. The illipe is a genus of a tall evergreen East-Indian tree of the family Sapotaceae.


John Thomas Hackett: Will the minister look at item 181b, which deals with paper in single sheets. I note the general tariff is 35 per cent. What is the reduction?


Douglas Charles Abbott: The rate prior to the proposals in the budget under the most-favoured-nations tariff was 25 per cent, and it is reduced to 7i per cent.


John Thomas Hackett: Are we not very much interested in the manufacture of paper? Is this some particular type of paper?


Douglas Charles Abbott: I understand that this is paper which is not made in Canada. I am told the new item provides for a new type of stencil paper, now widely used in duplicating machines. The paper described in this item was provided for under order in council P.C. 6868 of September 1, 1943. The order was under the War Measures Act and lapsed on March 31, 1947. In 1946 the imports were valued at $44,950. There are no exports and no Canadian production.

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Mr. GAUTHIER (Portneuf):: With respect to item 192g, roofing felt, I note that the tariff has been changed from 224 per cent to 74 per cent, under the most-favoured-nations column. I have had representations from two mills in my county, and I have sent a letter to the minister about it.


Douglas Charles Abbott: I have had similar representations.


Pierre Gauthier: Would the minister give consideration to this matter and tell my people that there is a chance that the tariff will be reconsidered. There are nine mills in Canada interested in roofing felt. There is Philip Carey Company Limited of Lennoxville, the Viceroy Manufacturing Company at London, Ontario, and the Barrett Company Limited at Jo'liette. In my county there are the Bishop Asphalt Papers Limited, and J. Ford and Company Limited.
These mills are complaining of the change in tariff and say that it will force them probably to close their doors. Since there are over 700 workers interested in those two mills, and since there is a third company, Building Products Limited, interested in this, I suggest that the minister should reconsider the matter, and not place these gentlemen in a position where they would be obliged to decrease their production. They say the market is not yet fully satisfied; but if the tariff stays in the suggested state, production from the United States will kill their market, and they will have to close their doors.


Douglas Charles Abbott: I have received my hon. friend's letter and representations from the concerns to which he has referred. The information I have at the present time is that the supply situation in Canada is such that the tariff should be reduced, and that importations are required. However I am considering the matter, and if some change is desirable I shall be prepared to recommend it. I do not think at the present time, however, the mills to which my hon. friend refers will suffer any injurious consequences.
I have found that people who are affected by tariff reductions usually do fear that there may be some adverse consequences. However, the situation at the present time with respect to roofing felt is this, that I am informed that other roofing manufacturers find it difficult to obtain roofing felt from the Canadian manufacturers. That is an essential and vital building material. The information I have at the moment is that the proposed reduction in tariff is justified, but I am looking into the matter.


John Thomas Hackett: Has the minister any definite information that there is a shortage of this commodity?


Douglas Charles Abbott: There is still tariff protection. I am advised that there is a shortage of roofing felt.


John Thomas Hackett: The protection is reduced
at 74 per cent?


Douglas Charles Abbott: It is reduced from 224 per cent to 74 per cent; by 15 per cent. It is only the manufacturer who can import. The complaints we have received are that some independent manufacturers of roofing materials who do not manufacture their own felt are finding it difficult to get felt from Canadian roofing manufacturers. It is for that reason that the tariff is being reduced at the present time, in order to ensure supply at a reasonable cost.


Pierre Gauthier: The information I received from Bishop Asphalt Papers Limited is as follows:
It is quite possible that one or two of the other felt producing companies would have surplus tonnage. Toronto Asphalt Roofing Manufacturing Company is a subsidiary of U.S. Gypsum Company, one of the largest roofing and allied manufacturing organizations in the States with several felt plants and who, I believe, will shortly have in production an additional new plant of large capacity. My information is that the felt situation in the States has eased considerably in recent months so that the U.S. Gypsum might be desirous of shipping excess tonnage into Canada.
That is what they are afraid of. They are not afraid of the free entry of roofing felt from England, but they are afraid that there will be some kind of dumping from the United States. They have three grades, and the United States people can play up grade three as well as grades one or two. They can try to make people believe that grade three is as good as the other two grades. That is the way they work. These important manufacturers are afraid of that and they are asking most vehemently that the minister take this matter under consideration.


Douglas Charles Abbott: I am looking into the whole question. As the committee will appreciate, roofing felt is not used by the general public; it is used only by manufacturers of roofing. The change in tariff is not on roofing but on roofing felt, the raw material which goes into the process. It is the manufacturers of roofing and also of roofing felts who are apprehensive about the reduction in duty. The other manufacturers who manufacture roofing but who have to buy their felt as a raw material are finding difficulty in getting it from the people
Customs Tariff

who manufacture both roofing and roofing felt. These representations have commended themselves to my tariff advisers. In order to enable the roofing manufacturers to get their raw materials at a somewhat lower cost, this reduction in duty is proposed. I have received representations in addition to those made by the hon. member for Portneuf; I have received representations from other manufacturers of roofing felt and roofing here in Canada which I am now studying. If I come to the conclusion that some modification is justified it will be made when the bill is brought in.


John Ritchie MacNicol: I understand that we are permitted to jump from one item to another and I should like to ask a question with reference to 445o. Back in February or March or April the radio manufacturers carried on correspondence with Mr. Callaghan who, I presume, was in Geneva at the time. One of the items under discussion at that time was that referred to in line 15 of item 445o, which reads:
High frequency iron cores with or without inserts moulded therein.
Was a satisfactory agreement made between the makers of those goods and the department?


Douglas Charles Abbott: I am told that the manufacturers of these cores need the mdtal powders which come under (iii) of item 445o. These may be imported free to be used in the manufacture of these cores.


John Ritchie MacNicol: Were they not asking for a concession in connection with the metal powders to manufacture these articles?


Douglas Charles Abbott: That is what is being given by the proposed amendment; metal powders for the manufacture of these cores are being allowed in free.


Douglas Gooderham Ross: How long will these rates of duty remain in force?


Douglas Charles Abbott: Until changed by parliament.


Douglas Gooderham Ross: They will have to be changed by parliament?


Douglas Charles Abbott: That is correct, with the exception of the suspension of the textile items. Those are not under the list we are now considering.


Douglas Gooderham Ross: Will any of these items be affected by the Geneva treaty?


Douglas Charles Abbott: Some of these items are included in the trade treaty.


John Thomas Hackett: In the result are not these changes final; as long as we are bound by tthe treaty, we shall never be able to put the duties back where they were?


Douglas Charles Abbott: That would apply only to the ones mentioned in the trade treaty. There are a few in here that are mentioned in the trade treaty.


John Thomas Hackett: The majority of them are mentioned.


Douglas Charles Abbott: I am told not.


John Thomas Hackett: In that regard this list is distinct from the textile list to which the minister referred earlier in the evening?


Douglas Charles Abbott: That is correct.


Douglas Gooderham Ross: The minister says these can be changed at some future time by parliament, but if they are under the Geneva trade treaty they will not be changed.


Douglas Charles Abbott: There is nothing here
relating to the Geneva treaty. What I mean to say is that these tariff schedules are not implementing the Geneva treaty in any way.


Douglas Gooderham Ross: But many of these items are in the Geneva treaty as well?


Douglas Charles Abbott: Only the ones which are bound, and there are only one or two here.


John Thomas Hackett: On those which are bound we cannot put up the duty? We cannot do that as long as we are bound by the treaty.


Douglas Charles Abbott: I would point out that any item here which is lower than the item in the trade treaty can be brought back to the trade agreement rate.


Douglas Gooderham Ross: There are many items here where the margin under the British preferential is reduced. I should like to know if the British government were advised in the cases where margins are reduced?


Douglas Charles Abbott: We can bring any rate back to what it was in the trade agreements, whether it is a preferential rate or anything else.


Douglas Gooderham Ross: We still have the preferential rates with Great Britain. Are_ we allowed under the existing treaties to narrow the margin between the preferential duty and the other rates?


Douglas Charles Abbott: We have to extend the same reduction to most-favoured-nation countries in order not to widen the margin of preference, but if we wish to reverse that action and bring the rates back to what they were before this reduction, we can do so.



[Stage Direction]
Customs Tariff
Douglas Gooderham Ross: The rates under tariff item 410a, for instance, were British preferential, free; most-favoured-nation tariff, 10 per cent, and general tariff, 124 per cent. The new rates are British preferential, free; most-favoured-nation tariff, free, and general tariff, 35 per cent. Actually what we have done under that item is to wipe out the British preference altogether. I do not know whether we can get any of these machines from Great Britain.
Take item 410q. The old rates were British preferential tariff, 15 per cent; most-favourednation tariff, 174 per cent, and general tariff, 20 per cent. The new rates are British preferential tariff, 15 per cent; most-favoured-nation tariff, 15 per cent, and general tariff, 20 per cent. I have been wondering why the British preference has been wiped out on many of these items.


Douglas Charles Abbott: We have to import these goods from the United States, and it is to lower the cost to the Canadian importer. Of course it is open to us at any time to restore the duties if we want to.


Douglas Gooderham Ross: The British preference has been wiped out on a good many items. Will it follow that the rates will have to remain the same when the Geneva treaties go through?


Douglas Charles Abbott: No. -


Douglas Gooderham Ross: We can go back under the Geneva treaties?


Douglas Charles Abbott: I am told that is correct.


Mr. TIMMINS:: In item 192g, roofing felt, the British preference has been reduced from 15 per cent to free. Is that a bound item?


Douglas Charles Abbott: No, it Ls not. We do not get any roofing felt from the United Kingdom.


Harold Aberdeen Watson Timmins: But we have made the British preference free. It is not connected in any way with Geneva?


Douglas Charles Abbott: That is right.


Harold Aberdeen Watson Timmins: I see in another item that the British preference has been dropped from 15 to 5 per cent, and that was bound. Would we not be bound for all time to come, having dropped the British preferential tariff under a bound item?


Douglas Charles Abbott: I am told that we can restore it to the rate under the Geneva treaty, whatever that may be.


Harold Aberdeen Watson Timmins: You mean that if the 5 per cent was less than Geneva we could go up to
Geneva? Would the minister tell us why in 192g the British preference was dropped from 15 per cent to free?


Douglas Charles Abbott: That was in order to maintain the margin of preference which existed prior to the change. We dropped the mostfavoured-nation tariff from 224 to 74 per cent, a reduction of 15 per cent, and the British preferential tariff was reduced by 15 per cent.


Harold Aberdeen Watson Timmins: Why did we drop the mostfavoured-nation rate?


Douglas Charles Abbott: Because we wanted to import roofing felt from the United States. We are not getting it from the United Kingdom anyway. It is to reduce the cost to the Canadian consumer.
Resolution 2 agreed to.
Resolution 4 agreed to.
Resolutions reported, read the second time and concurred in.
Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 333, to amend the Customs Tariff.
Motion agreed to and bill read the first time.



INCOME WAR TAX ACT

[Stage Direction]
Resolutions reported, read the second time and concurred in.
Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 330, to amend the Income War Tax Act.
Motion agreed to and bill read the first time.

[Stage Direction]
Resolutions reported, read the second time and concurred in.
Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 331, to amend the Dominion Succession Duty Act.
Motion agreed to and bill read the first
time.

[Stage Direction]
Resolutions reported, read the second time and concurred in.
Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 332, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.
Supply-Agriculture

[Stage Direction]
Resolution reported, read the second time and concurred in.
[Stage Direction]
The house in committee of supply, Mr. Macdonald (Brantford City) in the chair.

[Stage Direction]
396. Administration and investigations of the dominion coal board, $82,608.
Item stands.

[Stage Direction]
293. General administration, $1,329,134.
Item stands.
Stanley Howard Knowles: Mr. Chairman, we were not informed last night, were we, that there were new departments to go into supply today ?
Mr. FOURNIER (Hull)1: No, but there are still three other departments. The Minister of Reconstruction and Supply is at hand, and I wanted to get his department in. I will keep the undertaking that, during the first days of every week, we shall move to go into supply, so that if there is any grievance it can be discussed, even though no item will be called. There are three more departments to be put in.


Stanley Howard Knowles: The minister's undertaking is that during the first days of the remaining weeks of the session there will be a motion to go into supply, even though no further departments have to be opened?


Alphonse Fournier: That is right.


DEPARTMENT OF AGRICULTURE
[Stage Direction]
Special-
30. Prairie Farm Rehabilitation Act and water storage (does not include the costs of survey and engineering work on the Medicine Hat irrigation and Red Deer diversion projects in Alberta and the South Saskatchewan river project in Saskatchewan, which costs are to be made available from the item of $1,000,000, No. 409, Department of Reconstruction and Supply), $3,000,000.
Mr. NICHOLSON:: I believe the hon. member for Selkirk wanted to say something on this item. Could we let it stand and go on with something else?


James Garfield Gardiner: I had hoped that we could have this all cleared up.
Item stands.

Special

SI. St. Mary river dam project, $2,200,000.


Douglas Scott Harkness: Will the minister outline to us how far this St. Mary river dam construction has proceeded. I notice that the estimate this year is up 8700,000 over last year. I know that last year they were putting in foundations, tunnels and things along that line. How far have they got on with the work? What is this estimate to be used for? What proportion of the construction has been completed?


James Garfield Gardiner: There are two tunnels to be constructed in connection with the St. Mary dam to get the water around the construction. One of these tunnels has been completed, and they are about ready to start on the second.


John Ritchie MacNicol: On which side of the river?


James Garfield Gardiner: I think it is on the southeast side. I am not just sure of the direction there.


John Ritchie MacNicol: On the left bank?


James Garfield Gardiner: The only one which has been started, the one which was started last year.


John Ritchie MacNicol: The left bank.


James Garfield Gardiner: No, on the right bank coming down stream.


John Ritchie MacNicol: That is the left bank, as you are coming down stream on the left hand side?


James Garfield Gardiner: Yes.


John Ritchie MacNicol: That would be the left bank.


James Garfield Gardiner: That one is completed. There is some difficulty about the matter, which probably I should explain. It will be recalled that at the time the tenders were called for the two tunnels, there was some discussion in the house with regard to these tenders. I said at the time that we had some doubts with regard to the possibility of the bidder completing the work at the price which had been asked. That question was taken up with him by the consulting engineer, Mr. Ferguson. As a result of the discussions, he took the very strong stand that it could be completed on the basis of the tender. It has developed that it cannot be. As a matter of fact, the amount that it would have to be increased by in order to carry it out on that basis would be a price which would be higher than the second bidder put in. We have some doubts as to whether we should allow that.

Supply-Agriculture
We have had some discussion with the contractor. and this being the first contract which has been let for this kind of work, we had some hesitation in making an adjustment on the contract which would put the price up higher than the second bidder had bid. Discussions have led to the thought that probably it might be better to have the firm, which has done tile first tunnel, discontinue that work and make other arrangements for the other tunnelling. The reason is this. There is a possibility that if we permitted the adjustment to be made after the discussions which had taken place, it was thought that bidders on new contracts might have the idea that the way to get contracts was to bid them down low and get an adjustment.. It may cost us more to finish it by making some other arrangement, but we thought that in the first work we have started along this line it might be better to do that. I am not saying that it will be done in that way, but it probably will be done in that way. By making some adjustments it may cost more to get this particular job done but we think it will probably be better than to try and make adjustments now in the light of the discussions that took place.
I should like to say in regard to that, that there has been no dissatisfaction at all with the work which has been done other than that the contractor has not been able to do it as rapidly as we had hoped for. The first tunnelling is done. If any adjustment is made, it will be made with the complete understanding between ourselves and the contractor who has been on the job, and it will not put him in any bad light so far as any future contracts are concerned, if he bids on any works. I thought probably I should say that to the committee at this time in order to explain anything that might be done in connection with it in the future.
The other contract is let to a contractor named Wells, who contracted for the building of the dam. He is on the ground, and has all of his machinery there. He has been doing some work for the past summer. He is ready to go right ahead with his work as soon as we can have the tunnels completed.


Douglas Scott Harkness: Does that mean that no work will be gone ahead with excepting the tunnels until the tunnels are finished?


James Garfield Gardiner: I doubt very much
whether any work can be done until the tunnels are through, because the water has to be taken past the dam site. At the present time, for example, if these tunnels were not in, and any construction had been done, the
amount of water that came down this stream the past spring would have taken out any work that had been there. It is almost impossible to do much work without the tunnels.


Douglas Scott Harkness: This vote is almost entirely for the other tunnel, then?


James Garfield Gardiner: Yes.


John Ritchie MacNicol: Of course no work can be done on the dam until the tunnels are completed. The object of a tunnel is to provide a conveyance for the water to pass through, so that the contractor will have a dry cross-section of the river in which to start pouring his concrete or make the foundation for the dam. It is important that all the water be diverted first. With regard to the tunnel that is built there, has the contractor the proper kind of machinery for drilling a tunnel through the kind of material that he has to go through?


James Garfield Gardiner: Yes; one is all completed, and the cementing of the tunnel is completed. I was there last year. It was very nearly completed then. It is completed now. They did the final work at the end of the month of May. The other contractors who are in the vicinity have the equipment to do that work if it is necessary to select another contractor.


John Ritchie MacNicol: One tunnel has been thoroughly concreted?


James Garfield Gardiner: Yes, it is completed entirely.


John Ritchie MacNicol: It has to be concreted to permit the rapid flow of the water. What is the volume capacity of each tunnel? How many cubic feet per second can it carry? Perhaps the minister could give the volume of ithe two tunnels together.


James Garfield Gardiner: I might as well read the whole description of the construction there. It will not take long and it will give all the information regarding it.
St. Mary-Milk river development.
The first stage in this development has been started and a dam on the St. Mary's river is being constructed some 40 miles southwest of Lethbridge and 4 miles northwest of Spring Coulee. The dam will be half a mile long, a quarter of a mile thick at the base and 180 feet high above the river bed. A tunnel through a hill at the south end is necessary to divert water during construction of the dam. The tunnel will be 20 feet in diameter and 2,100 feet long. Another tunnel will be built, to carry water to the canal for irrigation purposes. This tunnel will be 17 feet in diameter and 2,600 feet long and will discharge water through control gates at the rate of 3,200 cubic feet
Supply-Agriculture

per second. The contract for the main dam has been let in an amount of $2,081,700 and also the contract for the diversion and irrigation tunnels in an amount of $798,016 and construction is continuing in accordance with the report of the St. Mary's and Milk rivers water development committee dated February 16, 1942. The reservoir created will be 17 miles long, 6 miles wide and 176 feet deep. Its storage capacity will be some 320,090 acre feet. The dam and connecting canal should be constructed by 1949. The present stage of development when completed will improve the water situation on about 120,090 acres of land non- under irrigation around Lethbridge, and will also supply water for another 95,000 acres. The St. Mary-Milk river project when the Belly river and Water-ton river contributions are included will irrigate some 465,000 acres of land. The total construction cost of the whole development is estimated at $15,178,439. The program proposed provides for a 14-year period of construction in a series of stages.
I should say that these are the estimates which were made a few years ago at the time the contract was let, so that the costs will be somewhat higher than the costs given here. It will be noted that the tunnel which is to take the water past the dam is already finished, and therefore it will be possible to proceed with the construction of the dam. The other is the tunnel which is to take the water down past the dam for irrigation purposes.


John Ritchie MacNicol: Is the minister right? I understood that there would be two tunnels, one on each side of the river, to carry off the flow of water.


James Garfield Gardiner: I was under that impression too; but this is the engineer's description, and. according to it, there will be a tunnel on one side for the purpose of carrying the water off, the other being for the purpose of carrying water down for irrigation.


John Ritchie MacNicol: Did the minister say the tunnel was twenty-two feet in diameter?


James Garfield Gardiner: The first is twenty feet and the second seventeen.


John Ritchie MacNicol: What is the area of the face?


James Garfield Gardiner: Of the dam?


John Ritchie MacNicol: Not the dam, but the tunnel. How many square feet?


James Garfield Gardiner: I have not that here. I do not know whether my mathematics is good enough to figure it in a few minutes. It is all the water the river has in it in any event.


John Ritchie MacNicol: Is the maximum flow about 1,400 cubic feet per second?


James Garfield Gardiner: I think so.


John Ritchie MacNicol: Is that the maximum flow or the average?


James Garfield Gardiner: I cannot tell the hon. member. It is all the water there is in the river in any event.


John Ritchie MacNicol: I would not imagine that a twenty-foot tunnel would take away a flow of 1,400 cubic feet per second.


James Garfield Gardiner: Well, I cannot argue that with the hon. member. The engineer has decided how big it is to be, and it is big enough to take all the water in the river.


John Ritchie MacNicol: I hope so, because once they start the dam, they first have to put down a coffer dam which will have to be high enough so that they can continue to work and allow the water to flow off the side where they are building the dam. If one tunnel is all they are figuring on, there is no reason why they cannot proceed with the main construction of the dam.


James Garfield Gardiner: I would think so. That is the intention.


John Ritchie MacNicol: I understood that there was some doubt about the same contractors proceeding with the other tunnels.


James Garfield Gardiner: That will not slow up the construction.


John Ritchie MacNicol: That is, the irrigation construction?


James Garfield Gardiner: Yes.


[Stage Direction]
Item agreed to.
Special-
SO. Prairie Farm Rehabilitation Act and water storage (does not include the costs of survey and engineering work on the Medicine Hat irrigation and Red Deer diversion projects in Alberta and the South Saskatchewan river project in Saskatchewan, which costs are to be made available from the item of $1,090,000, No. 409, Department of Reconstruction and Supply), $3,090,900.
William Scottie Bryce: I may be a little out of order at this time, but I shall be only a couple of minutes. I have received a greats many letters from my constituents with reference to floods, and I have heard hon. members in the house complaining about flood conditions around Dauphin and other places. We have also read about these conditions as reported in the newspapers, and about an announcement regarding a survey. Many people in Manitoba believe that a survey should be made for the purpose of trying to do away with these floods. In conversation with the minister before, I have

Supply-Agriculture
been assured that, unless the river is navigable, the problem is up to the province. Am I
correct?


James Garfield Gardiner: In so far as building dikes for controlling a stream, and that kind of thing, is concerned ; but in so far as putting in a construction such as we discussed the other night in connection with the Assiniboine, namely, putting in a dam to prevent waters coming down from the headwaters, we put that in under OP.F.R.A.


William Scottie Bryce: Would that come under the survey that is to take place?


James Garfield Gardiner: Yes. Everything on that river comes under the survey.


William Scottie Bryce: How would it affect the north of my constituency? I am going to send over to the minister photographs of the town of St. Martin, where there are eighteen inches of water in the main street. That happened two years in succession.


James Garfield Gardiner: That would be the Red river?


William Scottie Bryce: No. That is away in the north, running into lake St. Martin. They have done considerable drainage up there. A correspondent says, in a letter to me, that appeals to the provincial governments result in nothing definite, and that the farmers all agree that what is needed is a proper survey of 'the district and money spent in 'the right place. They think a survey would be a step in the right direction.


James Garfield Gardiner: I take it this is along one of the lakes.


William Scottie Bryce: Yes. It is alongside lake St. Martin.


James Garfield Gardiner: The surveys such as that are made by P.F.R.A. We made such surveys in the vicinity of Dauphin, for instance.


William Scottie Bryce: This is across lake Manitoba.


James Garfield Gardiner: We have made surveys even outside P.F.R.A. areas, when we were requested to do so. But in so far as construction work itself is concerned, that would be a matter for the province. Nevertheless, we have made our engineers available to make surveys.


William Scottie Bryce: The correct procedure would be to get these people to apply to the provincial government to come to you.


James Garfield Gardiner: Have them ask for the survey. We could usually make available engineers to do this.


William Ross Macdonald: Item 30 carried. Item 32.


John Ritchie MacNicol: Mr. Chairman, would you mind reverting to item 31 for a moment?


James Garfield Gardiner: Can we not carry item 30?


John Ritchie MacNicol: You say, "Carried,
carried," Mr. Chairman, but I have a question to ask.


James Garfield Gardiner: This is item 30. Let us get item 30 out of the way first.


John Ritchie MacNicol: I am satisfied to let item 30 pass.


James Garfield Gardiner: It has not been passed yet.
Mr. ZAPL1TNY: I want to say something on item 30, while we are on the subject of floods. I want to continue what I started a few days ago when I gave way to another hon. gentleman. This is in connection with a matter with which the minister is familiar. It has to do with the construction of certain projects in the Dauphin area. I think we should get cleared up once and for all just how far the minister's department is prepared to go in assisting in a financial way toward the construction of projects which will prevent flooding. I should like to refer the minister to his own words on April 23, when, speaking in another connection, he said this in relation to the Dauphin situation, as reported at page 3291 of Hansard:
It is much more important that we get busy, as soon as possible, with some understanding as between ourselves and the province, and then between the province and the municipality, to have that job done and done in a way that will avoid that flooding. Then the people in that district will not need assistance under this act . . .
And so on. I took that to mean that the federal government intended to take some part in helping to construct control dams or drainage facilities so that flooding may not occur again.
I should also like to refer the minister to his letter of April 27 of this year to myself, in which he said this:
I think the point has been reached where some definite plan ought to be proposed by the provincial government to deal with the situation in which they and the municipalities are prepared to join with the federal on a three-way basis. This would put us in a position to consider whether we can assist to the extent required.
I took that to mean that the federal government was prepared to enter into an arrange-
Supply-Agriculture

ment with the municipalities concerned and the province on a three-way basis.


James Garfield Gardiner: That is under another item. I wish the hon. member would let us pass this item and get to the one in which he is interested. That is the item on the other page of the estimates. If we can get rid of this item, I should like to do so. We have been three days talking about everything under item 30. The hon. member is not on that item at all. The item he wants is a special vote over on the other page.


Mr. ZAPLITNY:: What item is that, Mr. Chairman?


James Garfield Gardiner: Item No. 39.


Frederick Samuel Zaplitny: No. That is clearing and settlement of new lands.


James Garfield Gardiner: Item 39 is the vote under which it comes.


Frederick Samuel Zaplitny: Item 39, the clearing and settlement of new lands? That seems a strange place for it; but if the minister says so, I will take his word for it.


Stanley Howard Knowles: The governor in council has to approve it, and that gives you a great deal of latitude.


James Garfield Gardiner: I will answer the question when we get to that item.


Frederick Samuel Zaplitny: That is all right.


William Ross Macdonald: Is item 30 carried?


[Stage Direction]
Item agreed to.
William Ross Macdonald: Item 32.


John Ritchie MacNicol: I was going to ask a question on item 31.


William Ross Macdonald: Item 31 was carried, but I understand that the hon. member for Davenport would like to ask a question in connection with it.


John Ritchie MacNicol: I shall be only a moment. In the details of services, on page 108, of the estimates, pertaining to item 31, I find the following:
Acquisition of land and/or construction of buildings, works and structures, $1,998,500.
Did those buildings not come from the air field?


James Garfield Gardiner: That is a term which is used in connection with every item, as the hon. member will notice if he turns back to the items as they appear. That terminology is used with regard to other items.


John Ritchie MacNicol: What land did we have to buy there?
fMr. Zaplitny.]


James Garfield Gardiner: Land that is flooded and belongs to some individual.


John Ritchie MacNicol: On one side of the river it belongs to the Blood Indians, does it not?


James Garfield Gardiner: Yes, on one side is the Indian reserve. We bought it. We had to
buy it.


John Ritchie MacNicol: As long as the Blood Indians received the same rate per acre as did the whites on the right side of the river did, I will not find any fault with regard to that. The buildings were brought down from some other place, were they not ? I saw those buildings before they were removed.


James Garfield Gardiner: There are no buildings of any account there that we have or that we are going to build, but that term is used to cover everything. The buildings may be worth only $1,000. I do not know what they would be.


John Ritchie MacNicol: There is a great deal more than that. The buildings belong to the government. They were at the airfield-


James Garfield Gardiner: There are a few of them. I do not know just what they are.


John Ritchie MacNicol: -near Lethbridge.


James Garfield Gardiner: Yes. There were two buildings brought from somewhere near Lethbridge.


John Ritchie MacNicol: It looked to me like quite a number of buildings.


James Garfield Gardiner: There were many buildings put up by the construction company. A whole village was built by the construction company; that was the Wells Construction Company. They built a school. That was to accommodate the people who were working on the job. All that has to be covered.


John Ritchie MacNicol: All right.
Special

S2. Prairie Farm Assistance Act, $500,900.


Mr. MILLER:: There are two or three questions which I wish to ask under this item.


James Garfield Gardiner: Might I ask the permission of the committee to go on for fifteen minutes or so after eleven o'clock, to see if we can pass some of these items and clear them up? It is just about eleven o'clock, but I should like to clear up some of these items.


Calvert Charlton Miller: I wish to ask a couple of questions.


Thomas John Bentley: On the point of sitting after eleven o'clock, may I ask if there is any good reason why we should do so, Mr. Chairman? If so, what is it?

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James Garfield Gardiner: There is a good reason; or at least there is this reason, although it may not be a good one. I am going away in the morning. That, however, does not make it impossible to carry on, as someone said the other night. But I am afraid that there will be no one here who will be able to give some of the answers that hon. members will want. If they wish to get along without those answers, that is all right with me.


Stanley Howard Knowles: Is the minister not coming back?


Joseph Henry Harris: It is not yet eleven o'clock. I would suggest that the hon. member for Portage la Prairie be allowed to proceed with his questions.


Calvert Charlton Miller: I will not ask more than about four or five questions anyway.


Thomas John Bentley: Just a minute. Are we to sit after eleven o'clock? If unanimous consent is necessary for that, it is not given.


Calvert Charlton Miller: It is not eleven o'clock yet. I can ask my questions before eleven o'clock, if the hon. member will allow me to do so.


William Ross Macdonald: Order. It will be necessary to ask for unanimous consent before eleven o'clock.


Stanley Howard Knowles: You are too late now.


William Ross Macdonald: Is it the unanimous will of the committee that the committee should continue to sit for fifteen minutes after eleven o'clock?


Some hon. MEMBERS:: Carried.


Thomas John Bentley: No.


Joseph Henry Harris: It is within one minute of eleven o'clock.


James Garfield Gardiner: I would remind the hon. member for Swift Current that one of his own group the other night asked to have us go on beyond the time for adjournment. I have no particular desire in the matter. I am quite prepared to sit, if it is the desire of the committee to sit; if not, it will not make any difference.


Stanley Howard Knowles: There are no by-elections on tonight.


James Garfield Gardiner: Somebody else will
handle the matter later on.


Calvert Charlton Miller: Mr. Chairman, I should like to ask my questions.


William Ross Macdonald: Order. I wish to clarify the situation.


Joseph Henry Harris: With all due respect, Mr. Chairman, may I point this out? The minister has been kind enough to say that he finds it necessary to absent himself tomorrow. It is just a few minutes that is being asked for. Perhaps a few questions could go on the record.


William Ross Macdonald: Does the committee give unanimous consent to sitting for fifteen minutes after eleven o'clock?


Some hon. MEMBERS:: Agreed.


Thomas John Bentley: No; because we cannot finish.


William Ross Macdonald: There is not unanimous consent.


James Garfield Gardiner: We do not need to finish. W'hy not allow the hon. member to ask those two questions?


Thomas John Bentley: I want to ask some, too.


James Garfield Gardiner: We will let you.


Thomas John Bentley: It will take until twelve o'clock.


James Garfield Gardiner: We will let you ask your questions in any event. I understand that one or two members have waited here for two or three days in order to ask one or two questions. It will take only two or three minutes to answer them. I think the members of the committee are quite prepared to sit in order to allow them to ask those questions and have them answered.	.


William Ross Macdonald: It is the unanimous decision of the committee then, that it should continue to sit for ten minutes.


Calvert Charlton Miller: I will get my questions in. In the first place, would the minister clarify two or three points for me in connection with the Prairie Farm Assistance Act? I should like him to put on record the answer to this question: Does flooding damage qualify under the Prairie Farm Assistance Act, provided that other conditions are satisfied.
Second, if flooding is such as to prevent any seeding can benefits be claimed under the Prairie Farm Assistance Act.
Third, in the event of no wheat being harvested in an area, what yardstick is used in order to compute the benefits?
Fourth, in connection with river lots which can be included under the act, through the amendment made this year, how can river lots which have not been included in the present order in council be brought under the act by order in council in order to participate in any benefits through flood damage this year?
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James Garfield Gardiner: The hon. member wrote me asking these questions. I am sorry that the reply has not yet reached him, although I wrote him today.
The answer to the first group of questions having to do with ithe method by which an area establishes itself to receive payment under the Prairie Farm Assistance Act is, I think, as follows:
In the first place, if all other conditions are met, payments can be made on account of the flooding; and payments have been made in quite a number of townships.
On the second point, as to whether payments can be made in an area where no wheat has been harvested, and with respect to the question concerning the yardstick in such case, may I say that if grain of any kind has been seeded, there would be no question at all about the matter. If wheat is not harvested and oats and barley are harvested, or any other grain crop, then the other grain crop is substituted for wheat; and there is an established relationship so far as bushels per acre are concerned. But if there has been anything seeded and nothing at all is harvested, then it is self-evident that there has not been a four-bushel crop. Of course that would be a complete crop failure which would warrant a payment of S2.50 an acre.
The suggestion, that there may be an area where, because of flood conditions, nothing is seeded at all, leads me to say that it is difficult to conceive of there being an area of a whole township where nothing is seeded. There are probably ten acres or a thousand acres seeded somewhere. If there were no crops seeded at all, there would not be any doubt; and I do not think there would be any doubt, either, if there were not any crops, and if conditions were such that the crops could not be seeded. For example, a farmer could be paid if he did not seed any ground at all, provided that he summer-fallowed and then cultivated the land. Those provisions are all made in the regulations and in the law.
Then, in connection with river lots, it will be recalled that earlier in the session we put through legislation which made it possible for us by order in council to indicate what the units are to be. As soon as that has been established, it will apply. It applies retroactively for the present crop year; that is, the year we have just gone through.


Calvert Charlton Miller: The order in council which has been passed includes only some of the river lots in the parishes of Baie St. Paul and St. Francois Xavier, whereas other lots at the present time are under water. If these, that

are not specifically named in the order in council, qualified, they could be entitled to claim benefits this year?


James Garfield Gardiner: Yes; I understand the legislation as it now stands gives us authority to pass any number of orders in council necessary to cover all the river lots. Those which are covered in the order the hon. member has are those which were affected in 1947. Any that are affected in 1948 will be covered by another order in council.


Calvert Charlton Miller: For instance, at St. Francois Xavier there are possibly 25,000 acres which may not be seeded and which might not be in shape for cultivation. It cannot be stated definitely yet, but that is possible. Would they be able to claim benefits? There might not be an acre either seeded or summer-fallowed.


James Garfield Gardiner: Yes, there is sufficient leeway under the act to make provision for making payments where no crop is harvested. The condition of flooding brings that about. We can take care of that.


Calvert Charlton Miller: Even though it is not seeded or summer-fallowed?


James Garfield Gardiner: That is right; it is not necessary to seed.


Frederick Samuel Zaplitny: In reply to a question asked some time ago in connection with overpayments made under the wheat acreage reduction arrangements, which were later charged against payments being continued under prairie farm assistance, the minister answered that it was contrary to the policy of the government as visualized under the act, and that it has been discontinued. I asked under what authority it was done, and the answer I received was vague. However I am not so much concerned about that at the present time as I am about whether in cases where deductions were made, and apparently contrary to government policy, refunds will be made. I have been receiving inquiries about the matter.


James Garfield Gardiner: We have not had any objections respecting any of those collected. I presume that the individuals from whom they were collected were quite satisfied that they had to pay the other debt, anyway, and they allowed it to pass. The reason I say it is contrary to policy is that we have put into the act a section which states that people cannot attach these moneys payable under the act. The reason is that these moneys are to carry people through the winter, into another season. It was not intended that any implement company, or anybody else, should attach these moneys. And I do not think that we as a

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government should attach sums which we do not allow anyone else to attach. So we have taken the position that this should not have been done. Some official did it, and payments were made. So far as I know, no one has made application to have the money refunded. It would simply mean that they would have to pay the debt again, and apparently they have allowed it to go by in that way.


Joseph William Burton: Owing to the lateness of the hour, I do not wish to go into any long controversy respecting the pros and cons of the matter I wish to raise. Yet at the same time I cannot let this opportunity pass without once again reminding the minister, and urging him, that consideration must be given to making the necessary changes in the act so as to permit payment to farmers who have suffered from loss of crop, so that compensation can be made without their being included in such a large area. While it is true that we possibly cannot get it down to an individual basis, for which some people are asking, at least I think the minister and his officials should' give serious consideration to the matter, and if it is not possible this year, then possibly in another year we may be able to extend the provisions so that farmers suffering loss of crop will be compensated.
It is unnecessary for me to give the whole argument again, but it does seem so unjust when we collect from the farmers on the percentage of the grain that they delivered in the years they had crops, and then when they lose a crop they cannot get compensation just because they happen to be on the other side of the township line from those who do receive compensation. I make this appeal once again and at the same time register a protest at this being allowed to go on.


James Garfield Gardiner: I think I said earlier in the session that the municipal association had suggested that I call a conference this summer to discuss the possibility of making an arrangement among the municipalities, the provincial government and this government to take care of these smaller areas. I wrote back and said that, in view of the fact that they had representations to make, I would prefer their calling the conference. I have had a letter back from them saying that they had no objection to doing that. I expect that they will be calling a conference and that we shall be considering this matter before the next session,


Joseph William Burton: During the years this act has been in effect, a good many farmers have gone without compensation who were morally if not legally entitled to it. I hope the minister will not try to keep too close to the line as to who should call the conference. Let us get together and have this thing done.


James Garfield Gardiner: We shall have it.


Thomas John Bentley: I hope the committee will appreciate my co-operative spirit in not vetoing the extension of the sitting. I have two things I should like to bring up. The first has to do with the amendment which was made to the act last year by Bill No. 261, by which the definition of farmer was changed to read:
"farmer" means a person who as owner or tenant operates a farm in the spring wheat area or who as a member of a co-operative farm association is engaged in farming in the spring wheat area.
During the sittings of the committee we understood that prairie farm assistance payments would be made to members of cooperative farms. I have two examples I wish to give tonight to show that the spirit of the act is not being carried out. I do not know whether this is legal, because I am not a lawyer, but I want to point out what has happened in two cases.
The first co-operative farm comprises 524 acres and it has six members. They made application for payment; it was considered proper that payment should be made, but it was done in this way. The 524 acres were divided by six, the number of people in the co-operative. Two of those members are not operating any land other than their share in the co-operative -farm. The four who were operating other land received one-sixth of the payment based on the 524 acres, but the two who were not operating any outside land received nothing. In my opinion that is not what was intended when the act was amended.
The other co-operative farm is smaller, comprising only 175 acres and having four people as members. One of them is not a farmer outside of his operations in the co-operative. The same type of division was made, the number of acres being divided by the number of shareholders. The three who were operating other farms received prairie farm assistance payments of one-quarter, but the other fellow got nothing. I think this is an entirely wrong situation and I did not want to let it-pass without bringing it to the attention of the minister.


James Garfield Gardiner: What are the names of those co-operatives?


Thomas John Bentley: The Turner co-operative farm and the McIntosh co-operative farm.


James Garfield Gardiner: I understand that the position is the same in both cases. There is a
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group of people farming co-operatively, and some of them have an interest in'pasture land which has been seeded. Some' erf them are not bona fide farmers. The group-that are farmers have received payment, but those who are not have not received anything. The principle is the same as that of a station agent who owns a farm, not a co-operative, but who does not live On it or work it. That man Would not be paid whether he is in a cooperative or not. I understand that the farmers who have farm land have claimed on part of that pasture land because it has been seeded. That has been added to their other farm in order to get the acreage. They have been paid the same as anyone else would be. It is impossible under the act to pay anyone who is not actually a farmer.


Thomas John Bentley: Am I to understand that the two in the Turner farm and the one in the McIntosh farm are engaged in other remunerative occupations?


James Garfield Gardiner: I understand that one is a domestic servant. I cannot tell the hon. member what the others are doing, but they are not bona fide farmers or they would be paid.


Winfield Chester Scott McLure: On a point of order. Is it eleven o'clock? Are we going to sit until twelve o'clock or until what time?


William Ross Macdonald: I understand that the hon. member is about through, and perhaps he might be allowed to complete his remarks.


Thomas John Bentley: I would point out to the hon. member for Queens that I withdrew my objection to unanimous consent being given, so that a member of his own group, the hon. member for Portage la Prairie, could complete what he wanted to say.
The other matter I wanted to bring up is whether a man who knows he is going to have a crop failure should be permitted to engage in sonie other occupation. If a man in a dried-out area takes a job as an elevator agent where the elevator will be open for only three months, is he considered to be earning other money?	[DOT]


James Garfield Gardiner: The act stipulated that a person must be a bona fide farmer from May 1 until November 1. Whenever a person loses a crop he can go and take a job under the interpretation of the act, but he must be back on his farm before May 1 of the next year in order to collect the payment, He is paid in the spring of the year,.when he comes back to the farm to take up his operations for the next year. If he never comes back to the farm to take up his operations he is not paid, because

the intention of the act is to make it possible for a man to live on a farm through the winter and to put in another crop. If he does not go back he is not paid; if he goes back he is paid. Where a man is operating an elevator during part of the season he has always been paid, but if a man operates the elevator all the year round and is paid every month, he does not get paid.


Thomas John Bentley: Is that carried out in every
case?	.	*


James Garfield Gardiner: If we get the facts.


Mr. QUELCH:: I want to ask a question arising out of the minister's reply to the hon. member for Portage la Prairie. Did I understand him to say that the act is wide enough to allow payment,of the bonus on land that is flooded, even though it was not seeded? I ask that question, because the bonus is paid on the basis of cultivated land, and cultivated land is defined as land that is seeded to crop or in summer fallow-. Is the government going to define all flooded land as summer fallow?


James Garfield Gardiner: We have paid the bonus in the district my hon. friend comes from on land that could not be summer-fallowed because they said it was too dry for summer-fallow.


Victor Quelch: But that land was seeded.


James Garfield Gardiner: It was neither summer-fallowed nor seeded, but we paid the bonus because the land was too dry to do summerfallowing. I think it would be just as justifiable to pay the bonus because the land was too wet.


Victor Quelch: It is the first time I have ever heard of the bonus being paid on land that was not cultivated or seeded. They have always insisted that a man should at least run a drill over the thistles or at least burn the thistles off and scratch the ground.


Mr. McCUAIG:: There is an increase of $200,000 in this item. Is that because of administration or payment of the bonus?


James Garfield Gardiner: We had to get a supplementary estimate last year. As my hon. friend will know, coming from almost the centre of the district, we had one of the largest drought areas there last year that we ever had, and the sum of money we had in the estimates for taking care of areas similar to those we had the year before was not sufficient, so that more money was required.	.


Duncan John McCuaig: The minister has just said that I come from the centre of that drought district. I should like to make one more

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appeal ito the minister to reduce the number of sections to fewer than nine, or, if possible, to pay the bonus on an individual basis. The argument used in the house before for making it nine sections was that the land was submarginal land, but, coming from that district,
I know that all ithe sub-marginal land has been eliminated in the last thirty-five years and now it is good land. A further argument was made about sandy land, but there is very little sandy land in the west. Any land thait has not had a crop did not get a crop because it did not get the rain, which will fall on some sections and miss others. This crop failure bonus takes the place of direct relief, and any time that a man needed direct relief in the township he was not barred because he lived in a section that did not get a crop. He was given relief because he needed it. This year the crop bonus came along to take care of crop failures; but just because a man is outside the township and has a row of sections in the north end, say, of another township, or on either side, he is debarred from getting the bonus. I would appeal to the minister to take into consideration that there is no possibility of these men getting any relief at all. They are denied relief by the municipality and by the provincial government, and there is no set-up to take care of them whatsoever.
Mr. GARDINER; That is the question to be discussed at ithe conference.


Duncan John McCuaig: I hope it will be, but in the meantime these men are counting on assistance and they do not get it. The intention of the act was to take care of land which has had a crop failure. Why should we pass laws that deny them this right? They paid in the levy of one cent a bushel, and now they are out. I know the minister is a practical farmer but probably he has not seen the cases of actual hardship caused by present conditions. At the present time every section is inspected, and the inspection department is efficient. I would
again appeal to the minister to pay the bonus on an individual basis.


[Stage Direction]
Item agreed to.
Progress reported.

[Stage Direction]
Mr. FOURNIER (Hull) moved the adjournment of the house.
Joseph Henry Harris: Mr. Speaker, now that it is eleven o'clock, may I ask the government what will be the business for tomorrow?


Alphonse Fournier: Tomorrow we shall proceed with the following bills: second reading of Bill No. 228, to amend the Excise Act, 1934; second reading of Bill No. 229, to amend the Customs Act; second reading of Bill No. 327, to amend the Canada Evidence Act; second reading of Bill No. 329, to amend the Judges Act, 1946; second reading of Bill No. 326, respecting the dominion bureau of statistics. I understand that these are very small and non-contentious bills. Then we shall go into supply and consider the estimates of the Post Office Department, Trade and Commerce, and Secretary of State.
Motion agreed to and the house adjourned at 11.30 p.m.
[The following items were passed in committee of supply]:



DEPARTMENT OF AGRICULTURE

[Stage Direction]
30.	Prairie Farm Rehabilitation Act and water storage (does not include the costs of survey and engineering work on the Medicine Hat irrigation and Red Deer diversion projects in Alberta and the South Saskatchewan river project in Saskatchewan, which costs are to be made available from the item of $1,000,000, No. 409, Department of Reconstruction and Supply), $3,000,000.
31.	St. Mary river dam project, $2,200,000.
32.	Prairie Farm Assistance Act administration, $500,000.
[Stage Direction]

						
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Thursday, Juue 3, 1948