1949-03-22

TRANS-CANADA AIR LINES REFERENCE OF ANNUAL REPORT AND AUDITORS' REPORT TO RAILWAYS AND SHIPPING COMMITTEE

Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, I desire to table the following reports in English and in French: Annual report of Trans-Canada Air Lines for the year ended December 31, 1948, and the auditors' report to parliament for the year ended December 31, 1948, in respect of Trans-Canada Air Lines. These reports are being distributed today.
By leave of the house I move:
That the annual report of Trans-Canada Air Lines for the year ended December 31, 1948, and the auditors' report to parliament for the year ended December 31, 1948, in respect of Trans-Canada Air Lines tabled this day, be referred to the sessional committee on railways and shipping owned, operated and controlled by the government.


[Stage Direction]
Motion agreed to.


Hon. Lionel Chevrier (Minister of Transport):: I desire to table the budget of the Canadian National Railways and the Canadian National (West Indies) Steamships Limited for the calendar year 1949; also the annual report of the Canadian National Railways Securities Trust, in English and French, for the year ended December 31, 1948.
By leave of the house, I wish to move:
That the budget of the Canadian National Railways and the Canadian National (West Indies) Steamships Limited for the calendar year 1949, and the annual report of the Canadian National Railways Securities Trust for 1948 tabled this day, be referred to the sessional committee on railways and shipping owned, operated and controlled by the government.


[Stage Direction]
Motion agreed to. '

Lionel Chevrier: By leave of the house I desire to move: That the annual reports for 1948 of the Canadian National Railways system, the Canadian National (West Indies) Steamships Limited, and the auditors'
report to parliament in respect of the Canadian National Railways system and the Canadian National (West Indies) Steamships Limited, tabled on March 18, 1949, be referred to the sessional committee on railways and shipping owned, operated and controlled by the government, together with the following of estimates for 1949-50:
Vote 488-Maritime Freight Rates Act, Canadian National Railways;
Vote 489-Maritime Freight Rates Act, railways other than Canadian National;
Vote 556-Prince Edward Island car ferry and terminals, deficit 1949;
And that the resolution passed by the house on March 14, 1949, referring certain estimates to the committee of supply, be rescinded in so far as the said resolution relates to votes Nos. 488, 489 and 556.


Mr. Case:: I notice, Mr. Speaker, that in each case the ministers moved resolutions that certain reports be referred to the sessional committee "owned, operated and controlled by the government." I do not know whether that is the way they want it to read.


Lionel Chevrier: That is the name of the committee.


Wilfrid Garfield Case: Owned, operated and controlled by the government?


Lionel Chevrier: That is right.


[Stage Direction]
Motion agreed to.


Mr. J. G. Diefenbaker (Lake Centre):: Mr. Speaker, I rise on a question of privilege. On March 21 the following resolution appeared on the order paper, in the name of the hon. member for Quebec-Montmorency (Mr. LaCroix):
That, in the opinion of this house, the government should seek the co-operation of the provinces with the view of the adoption by parliament of a new constitution for Canada and Canadians which would be a statute of Canada repealing the British North America Acts, 1867 to 1946, resulting in the making of Canada a truly sovereign and independent nation, a separate republic outside of the British commonwealth of nations, free of economic or other commitments, whether in peace or In war.
If that resolution had been called and debated it would have placed hon. members in the position of debating something which is contrary to the oath of allegiance which each member took before he entered the house. The resolution is changed on today's order paper. Where in the original resolution the word "co-operation" appears, the word "consent" is substituted, and where the words "a separate republic outside of the British

Inquiries of the Ministry commonwealth of nations" appear in the original resolution, the words "a separate republic, free of economic or other commitments toward the British commonwealth of nations" are substituted.
My point of privilege is this, sir. Did you, in your position as Speaker, consent to the alteration of this resolution? Was it placed before the house, or was the alteration made at the request of the government?


Right Hon. L. S. St. Laurent (Prime Minister):: Answering the last part of my hon. friend's question, I may say that the government had nothing whatsoever to do with it.


John George Diefenbaker: I was just wondering, because the hon. member is a supporter of the government.


Mr. Speaker:: I shall take the remarks of the hon. member into consideration and give him an answer.



EXCHEQUER COURT ACT


Hon. Stuart S. Garson (Minister of Justice) moved: the first reading of Bill No. 87 (from the Senate) to amend the Exchequer Court Act.
Motion agreed to and bill read the first time.



PUBLIC ACCOUNTS


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: On March 14, as recorded in Hansard on page 1420, I asked the Prime Minister whether arrangements could be made to refer to the public accounts committee the public accounts for the year ended March 31, 1948, and the Auditor General's report attached thereto. The Prime Minister answered as follows:
The matter will receive consideration, and an announcement will be made by the Minister of Finance.
My question is: now that the public accounts committee has been set up and organized under the chairmanship of the hon. member for Bellechasse (Mr. Picard), will the Minister of Finance move to refer the public accounts and the Auditor General's report to that committee?


Hon. Douglas Abbott (Minister of Finance):: I shall be glad to propose such a motion tomorrow.
	.



TRANS-CANADA HIGHWAY AGREEMENT AS TO CHOICE OF ROUTE

[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: I should like to direct a question to the Minister of Reconstruction and Supply. In his absence, perhaps I can put my question as notice and he can reply to it later. Can the minister inform the house whether an over-all agreement has yet been reached as to the route of the trans-Canada highway? If so, is he in a position to advise us when construction will begin?



FLOOR PRICE OF FIFTY-EIGHT CENTS

[Stage Direction]
On the orders of the day:
Mr. R. E. Drope (Northumberland, Onl.):: I should like to address a question to the Minister of Agriculture. Since he is not in his seat, perhaps his parliamentary assistant will answer it. It has to do with the announcement of the minister on Thursday last about a floor price on butter. There seems to be some confusion as to just what the announcement means-whether it is hoped that the floor price of fifty-eight cents will be held and all butter bought at that price, or whether a subsidy will be paid and the price of butter allowed to go below the floor. May we have a statement clarifying the position?


Mr. Robert McCubbin (Parliamentary Assistant to the Minister of Agriculture):: It
is my feeling that the government will be willing to buy all No. 1 butter when it drops to fifty-eight cents a pound. No subsidy will be paid.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. J. H. Blackmore (Lethbridge):: I should like to put three questions to the Minister of Veterans Affairs. I did not send him a copy of these questions, therefore he may take them as notice and answer later.
My questions are: Is veteran M. J. Cummings, regimental number 142082, at the present time in care of the public trustee of Ontario,-


Mr. Speaker:: Order.


John Horne Blackmore: -actually in bed suffering from haemorrhage from T.B.?


Mr. Speaker:: Order. The hon. member knows-


John Horne Blackmore: Will Your Honour speak so that I can hear at this end of the chamber?


Mr. Speaker:: Order. The hon. member knows the rules. A question which is put before the orders of the day are called should be urgent and brief.


John Horne Blackmore: Mr. Speaker, I find it extremely difficult to think of anything more urgent than the means of getting assistance to a man who is in bed suffering from bleeding T.B. That is why I have asked the question.
My second question is: If so, what is the department doing to ensure that veteran Cummings is receiving appropriate-


Mr. Speaker:: Order. I would ask the hon. member to put his question on the order paper.


John Horne Blackmore: I was unable to hear what Your Honour said.


Mr. Speaker:: I said-


John Horne Blackmore: I still cannot hear you because of the noise.


Mr. Speaker:: I asked the hon. member to put his question on the order paper.


John Horne Blackmore: Then I shall do it on your responsibility, Mr. Speaker.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mr. Douglas G. Ross (Si. Paul's):: May I ask
the Minister of Mines and Resources when I may expect the return which was passed on March 9?


Hon. J. A. MacKinnon (Minister of Mines and Resources):: I believe that the information asked for was tabled by the Prime Minister some days ago.



FOREIGN EXCHANGE CONTROL ACT


[Stage Direction]
The house resumed from Monday, March 21, consideration in committee of Bill No. 85, to amend the Foreign Exchange Control Act- Mr. Abbott-Mr. Golding in the chair.
Douglas Charles Abbott: Yesterday afternoon the hon. member for Kingston City (Mr. Kidd) asked for some information about one C. A. Rowe, an employee of the foreign exchange control board. I have that information now and I should like to give it to him.
Mr. Rowe was born in Durham, Ontario in 1913. He attended the university of Western Ontario from 1931 to 1935 and Osgoode Hall from 1935 to 1938. He was called to the bar
Foreign Exchange Control and practised law in Ontario until joining the army in 1944. Upon his discharge he joined the staff of the wartime prices and trade board in Ottawa, on October 31, 1946. On June 1, 1947, he was taken on the staff of the Bank of Canada and assigned to the enforcement section of the foreign exchange control board, where he dealt with seizures made under the provisions of the Foreign Exchange Control Act and general enforcement matters under the supervision and direction of senior officers of the board. On September 1, 1948, Mr. Rowe was transferred to the office of the board at Windsor, Ontario, where he has remained since that time.
Speaking generally, I believe that Mr. Rowe is a relatively junior employee of the board.


Edmund Davie Fulton: Am I correct in my understanding that the difference between the cost of purchasing, let us say United States currency, and sales from time to time of United States currency, is a charge on the consolidated revenue fund; or is it taken from some special fund that is at the minister's disposal?


Douglas Charles Abbott: I understand the foreign
exchange control board charges a commission when it sells United States funds, and receives a similar commission when it buys them. That is the margin of profit, if I may so describe it, which is intended to cover the operating expenses of the board. Of course if there were an exchange loss it might wipe out that profit. Is that the hon. member's question?


Edmund Davie Fulton: No; I did not have operating expenses in mind. I mean actual money used to purchase foreign exchange. The minister has referred from time to time to the building up of our foreign exchange reserves. That could only come out of the consolidated revenue fund.


Douglas Charles Abbott: That is correct. The foreign exchange control board acts as the agent of the Minister of Finance, and the foreign exchange account is provided with money furnished by the Minister of Finance as Receiver General for Canada out of the consolidated revenue fund.


Edmund Davie Fulton: The minister answered a question on February 28 in which I asked for the amount expended for the purchase of gold, United States currency and other foreign currencies since the enactment of the Foreign Exchange Control Act. The answer was given in the form of figures showing net purchases and net sales for each year, the net purchases indicated by a plus sign and the net sales by a minus sign. On setting the figures up and taking a rough total, one finds that the excess

Foreign Exchange Control of plus over minus under the three headings, namely purchase of gold, purchase of United States dollars, and purchase of other foreign currencies, is $981 million over a nine-year period. I should like to know if I am correct in assuming that the payments for the operation of foreign exchange control resulted in a charge upon the taxpayers of Canada of $981 million for the past nine years.


Douglas Charles Abbott: I do not know that I would put it just that way. The result of course is that while the government of Canada has advanced to the foreign exchange control board or the foreign exchange account an amount such as the hon. member suggests, there is an asset there for the corresponding liability. It is included in our account as an active asset of the government.


Edmund Davie Fulton: Presumably if control were to end tomorrow it would be represented by an amount in the consolidated revenue fund, so that perhaps we could operate without taxation for a year. But since the government has only two sources of obtaining funds, namely, taxation and borrowing, to finance the operations so far $981 million has been raised by taxes from the Canadian people.


Douglas Charles Abbott: Or by borrowing.


Edmund Davie Fulton: It is an asset standing to their credit. Nevertheless that asset can be raised only by taxation; is that not correct?


Douglas Charles Abbott: No; it could be raised by borrowing.


Edmund Davie Fulton: By taxation or borrowing?


Douglas Charles Abbott: Yes.


Mr. Jackman:: If the hon. member is correct in saying that there is an apparent cost of $981 million incurred by the foreign exchange control board, how much is the active asset carried against that cost? When we revalued the currency we lost the premium of ten per cent which we had paid out to acquire some of those assets. What was the profit when the foreign exchange control board took over all the gold holdings of the banks of Canada, and perhaps any private holdings as well? I think the take-over price was at the old rate of $20 an ounce, and then it was revalued upward. The board would have a fortuitous profit there at the expense of the banks and the holders of gold in Canada. Will the minister tell us what the active asset is against this $981 million exchange, and how much profit was made by the board when gold was taken over?


Douglas Charles Abbott: As to the last part of the hon. member's question, I believe that figure has been brought out in previous reports of the foreign exchange control board. The so-called profit to which my hon. friend refers was of

course realized some years ago. The assets the foreign exchange control board holds against the liabilities to which the hon. member for Kamloops referred are those holdings of gold and foreign currencies, principally United State currency; and they are shown in the annual report of the foreign exchange control board which I tabled a few days ago.


Mr. Hazen:: I should like to ask a question with respect to section 35 (1) (e) of the Foreign Exchange Control Act, which reads:
35(1) The governor in council may make regulations . . .
(e) Notwithstanding anything to the contrary contained elsewhere in this act, exempting any person or any class of persons or any transaction or class of transactions from any provision of this act.
As I read it, this provision gives the governor in council the right in certain cases to overrule this act passed by parliament. Have any regulations been made under paragraph (e) exempting any person or any class of persons or any transaction or class of transactions from any provision of the act?


Douglas Charles Abbott: Yes, there have been; and I should be glad to give my hon. friend an enumeration of those exemptions. Most of them relate to exemptions from various permit requirements of transactions between Canada and Newfoundland. Exemption from permit regulations has been provided under section 35 (1) of the act concerning the change of address of the owner of a bank account from Canada elsewhere.


Douglas King Hazen: The minister is dealing with section 35?


Douglas Charles Abbott: Yes, section 35 (1) (e), which provides for regulations exempting persons or transactions from the provisions of the act. The cases in which this power is exercised under the regulations are, first, exemptions from various permit requirements of transactions between Canada and Newfoundland- I have a long list of them here. They are technical, and perhaps the hon. member would be satisfied if I were to place them on Hansard. They are set out in detail, and would give him all the information he wants.


Douglas King Hazen: Yes.


Douglas Charles Abbott: 
Douglas King Hazen: I should like to ask a question respecting section 36 of the act. The pertinent part reads:
36(1) Subject to the provisions of this act and the regulations and under the control and direction of the minister, the board may . . .
(b) In particular cases or classes of cases, from time to time prescribed terms and conditions for permits additional to those prescribed by regulation or prescribed special forms of permits in cases where none is prescribed by regulation.
As I read that section it gives the board the power to make regulations that would override regulations made by the governor in council. It gives the board the right in particular cases to amend or add to regulations, and apparently the regulations that the board makes do not have to be published in the Canada Gazette as do those made by the governor in council under section 35. In what particular cases or classes of cases has this section been acted upon?


Douglas Charles Abbott: Here again this is a provision inserted to give a reasonable degree of prac-
1750	HOUSE OF
Foreign Exchange Control tical flexibility to the act, and the variations from the formal regulations are somewhat minor in character. Section 36, subsection 1(b), as my hon. friend has pointed out, authorizes the board to prescribe special forms of permits and terms and conditions of permits additional to those contained in the regulations. Under this provision, for example, special forms of permits have been introduced for the export of currency by travelers; these are issued in lieu of the normal permit on form H.
First, there is the special border permit issued to commuters and others having occasion to cross the border frequently, authorizing them to carry a specified amount on any one trip. The permit is exhibited to a customs officer on each trip but need not be surrendered. Then there is the special business travel permit which is issued to business firms whose employees frequently require to travel to the United States on short notice when banks may be closed.
Special terms and conditions are attached to permits in various circumstances, examples of which are as follows:	First, foreign
exchange is made available for any reasonable amount for genuine business travel. Businessmen obviously cannot, in many cases, estimate in advance what expenditures they will have to make, and where large amounts are asked for, they are normally made available on condition that on his return the traveler will furnish a statement of his expenditures so that the board can satisfy itself that they were in fact for business purposes.
Second, in certain cases of capital transfers from residents to nonresidents, payment is approved on condition that the nonresident reinvest the amount in certain classes of Canadian domestic securities. The effect is that the nonresident, while retaining his investment in Canada, is able to change its character if he wishes to do so. This procedure is applied principally in the case of capital payments between related parties.
Third, where a resident is authorized to make a new capital investment abroad to establish a business, it is normally made a condition of providing exchange for that purpose that earnings from the investment will be brought back to Canada.
I think these are fairly typical examples of the latitude given under that section to the administrative body to vary the formal conditions of the general applications which are set out in the regulations.


Douglas King Hazen: Section 48 gives the board power to prevent a person from dealing with his own property. Has this power been exercised to any considerable extent?


Douglas Charles Abbott: I am informed that this power has been authorized in a number of cases, in most of which the prohibition related to withdrawals from bank accounts or access to safety deposit boxes by owners who, the board had reason to believe, were exporting capital from Canada. In one case a railway company was prohibited from delivering a shipment of Christmas trees for a nonresident who had bought the trees for unofficial Canadian dollars, pending adjustment of the transactions so that United States dollars were provided.


Douglas King Hazen: Have there been a number of cases?


Douglas Charles Abbott: My information is that there have been a number of cases in which it was suspected that capital export was being attempted.


Douglas King Hazen: May I ask two questions about another matter under the regulations? Suppose a farmer who is growing old has sold his farm, has liquidated his assets and proposes to go to the United States to live with a son or some other relative; how much will he be permitted to take with him from this country?


Douglas Charles Abbott: I shall have to get that information and give it to my hon. friend in a few minutes. I have an idea, but I do not want to say positively.


Douglas King Hazen: There is another question along the same line I should like to ask.


Douglas Charles Abbott: It is an annual amount. If he cannot take the whole amount, we allow a certain amount annually.


Douglas King Hazen: Take the case of a businessman whose health is bad and whose doctor tells him that if he wishes to live he must leave this country and go to a more favourable climate. If such a man liquidates his assets with the idea of moving to another country in order to go into business there, how much will he be permitted to take under the regulations?


Douglas Charles Abbott: There again I shall have to get the information. I know that he would be allowed to take a reasonable amount, but he would not be allowed to take all his capital, particularly if it were a substantial amount. I hope to have that information in a few minutes.


Mr. Cockeram:: I notice that there is an increase of fifty-two in the staff of the board, whereas the cost of operating the board has increased from $810,668 to $1,334,930 in 1948, an increase of over sixty-two per cent. It would not seem that that increase in administrative cost is justified. Will the minister explain it?


Douglas Charles Abbott: I may have to inform myself a little more accurately on it. Certainly part of the increase in cost would be due to the general increase in salaries and expenses which occurred during the past year. Whether that would account for the entire amount to which my hon. friend refers, I would not want to say now. I shall try to give him a more specific answer later.


Alan Cockeram: The increase is $524,262, while the increase in staff is only fifty-two.


John George Diefenbaker: Following the answers given by the minister last evening I should like to preface what I have to say in regard to refunds by asking the minister what recourse a person has who believes he has been unjustly deprived of his money under the provisions of the act and where forfeiture has been ordered?


Douglas Charles Abbott: I am glad my hon. friend raised that question, because last evening I was not thoroughly familiar with the procedural steps which could be taken under the act. I have had it looked into, and here is the position. The only case in which the board can make a decision as to forfeiture is the case involving $100 or less. The procedure is provided in sections 61 and 62 of the act. Briefly it is that when the seizure is made the board notifies the owner of the reasons therefor, and calls on him to furnish within thirty days evidence relating to the seizure if he wishes to do so. If evidence is furnished it is considered by the board, and the owner is notified whether or not the seizure is to be maintained. The owner may, within thirty days thereafter, object to a decision to forfeit the funds, in which case the board is required, upon request of the owner, to refer the matter to a court. Does that answer my hon. friend's question?


John George Diefenbaker: The provisions of sections 61 and 62 are applicable only when there is a large amount in dispute. A person who has $20, $40 or $60 taken from him, irrespective of how unjust the circumstances may be, is in effect denied any recourse. I mentioned two cases last evening. I have at least another half dozen cases in which individuals, and properly so, resent the orders that were made. In effect they have no recourse. If they decide to go to court under the provisions of sections 61 or 62, the costs are out of proportion to the benefits that will come to them. At the end of a lawsuit, even if they are successful, they will have nothing to speak of as a result of the litigation, because the legislation does not provide for their costs to the extent that it should. I am going to make a suggestion to the minister. According to the records, those who get in touch with me, and
Foreign Exchange Control through me communicate with the foreign exchange control board, are not nearly as successful as some others must be. During the last two or three years I have followed the course of not submitting cases that in my opinion are unjustifiable. With a number of them I have done nothing, because I felt that while the applicant resented having his money taken from him, in effect he had no proper cause for complaint. In the several cases I have brought to the attention of the board I have met nothing but a blank wall.


Mr. Kidd:: Hear, hear; that is right.


John George Diefenbaker: When I read the records for 1947, which indicate that 347 seizures were maintained and 321 released, the failure of my advocacy on behalf of these people as their member becomes obvious. Apparently I have not the modus operandi, or the proper method of approach.


Douglas Charles Abbott: Or bad cases.


John George Diefenbaker: Well, I am speaking about these cases. I mentioned two last night, and the minister was kind enough to say that, if the facts were as I had stated them, these were proper cases for review. When I put the cases before the house I quoted from the findings of the board in regard thereto. Then I find that in 1948, out of 1,501 seizures, the number of releases is again correspondingly large, namely, 975. I make an appeal to the minister that as to these cases, inasmuch as individuals are in effect denied their right of complaint because of the expense and the trouble, there should be a review.
I do not want to press individual cases. I do so merely by way of illustration. A man who lives in a small town in Saskatchewan gets word on Sunday of the funeral in the United States of a close relative. He picks up a few United States dollars that happen to be in the town, gets to the boundary, announces that he has them, and has no other means of getting to the United States. The money is taken from him. He appeals, but all he receives from the board is the answer that the forfeiture is upheld. That is not good enough. I have never made it a point to bring particular cases before the committee, but orders such as those are arbitrary, unjustifiable, and exactly in keeping with the manner in which certain persons in a position of bureaucratic power exercise that power irrespective of the will of the people.
Last evening the minister said with regard to one case that I brought to his attention- not the one to which I have just been referring -that if the facts were as I had stated them it was a case to which consideration should be given. There are more than those two cases; there are many. After all, one of the

Foreign Exchange Control reasons that we are in parliament is to bring before the executive any injustices that may be perpetrated by officialdom on Canadian citizens. These are not isolated cases. Again I urge upon the minister that, as to cases in which less than $100 has been taken from individuals, there should be some method of review that will not place upon the applicant for review the costs incidental to the taking of action.


Douglas Charles Abbott: My hon. friend knows that there is that method of review now by the board.


John George Diefenbaker: Oh, yes; I have the statute here, but in effect you are appealing from the employee to the employer. In Great Britain this type of thing is bitterly criticized in a report made in 1932 when the Lord Chancellor's committee was set up on the question of the exercise of extraordinary powers by officials. One of the recommendations was that where the rights of the individual are interfered with, that individual should have his right freed from unnecessary expense in challenging or having reviewed any order that has been made.
Those who have had less than $100 taken from them are not criminals endeavouring to evade the law. I gave an instance last evening, that of a man who, on a Sunday, arrived at the boundary and did not have a form H with him. He was asked if he had any money, and he said that he had. He was then told that he must deposit it somewhere. I have the name of the official who told him that. The man who wanted to cross the border said, "Well, the banks are closed today, and I must go over the line." The officials said they would take his money and he would have his right to apply against forfeiture. These are not isolated cases; these are cases of Canadians who are law-abiding, and who are being treated unjustly. Even at this stage I ask the minister if he will not have a review made of these cases to the end that justice be done.
The figures given last night were for the little fellows. In how many cases were seizures made of over $100, and in how many of those cases were the moneys returned as a result of representations made?
There is a third question that I should like to ask the minister. Canadians are law-abiding. Some of them want to go to the United States as tourists, and they are restricted to $150. When one sees in his own locality people who are able to spend three or four or five months in Florida or California,
I do not think they get very far on $150. I should like to know in how many cases persons desiring to spend the winter in another country have had special regulations made to the end that they may be provided 
with the necessary funds. Matters such as these arouse resentment and ill-feeling, and when coupled with obvious injustice in cases such as those to which I have referred, there is not only resentment against the government; there is resentment against parliament for permitting individuals to enjoy power almost unchallengeable by Canadians as a whole.


Douglas Charles Abbott: Well, Mr. Chairman, as to the various points raised by my hon. friend, of course I shall look into the two cases he has cited, as I am continually looking into similar cases. Members on all sides of the house get in touch with me in connection with these seizures of United States dollars, and I look into each case to see if it is one in which the action of the customs officer, or whoever it may be, should be reversed.
As to the seizures in these larger cases, these have to be made under section 60 by proceedings in the exchequer court, and the figures show that in 1947 there were 91 prosecutions, with fines totaling $34,805. In 1948 there were 216 prosecutions, with fines totaling $75,032. In 1947 and 1948 there were five cases in which charges were laid where the accused were acquitted, and in seventeen other cases the charges laid were withdrawn before trial.


John George Diefenbaker: What were the largest penalties in each of those cases?


Douglas Charles Abbott: The largest group penalties were nonresidents importing unofficial Canadian funds, mainly in the form of drafts, and acquiring United States dollars illegally in Canada. There the total fines were $26,720. Then in 1948, 53 prosecutions were still pending, and the breakdown shows attempts by resident travelers to export currency, 21; residents exceeding annual travel allotment, 7; residents failing to sell United States dollars to authorized dealers, 13; and under the category of "others", 12, making the total of 53.
As to the people who spend the winter in California or Florida, like my hon. friend I occasionally read the social and personal columns of the newspapers, and I do see that this is done. Perhaps I should say that in spite of the necessity for imposing fresh travel restrictions a little over a year ago, the board has been following as liberal a policy as possible with respect to health applications. So far as health travel is concerned, I am told anyone over sixty-five years of age can get permission almost as a matter of course to reside in a warmer climate during the winter.


Mr. Fleming:: May I ask the minister when that policy became effective? It must have been just recently.


Douglas Charles Abbott: It has been effective certainly for a year or more. Those of us who are somewhat younger must have a medical certificate to show that for health reasons it is necessary for us to reside in a climate other than that of Canada. As I say, speaking generally the board has endeavoured to follow a liberal policy with respect to health applications. I notice the hon. member for Eglinton shakes his head, and I have had some experiences myself in which it seemed to me they should have accepted the medical certificates. However, generally speaking that is the case.
While I am on my feet I think I should answer the hon. member for Saint John-Albert as to the export of capital by those who may wish to sell their property and move to the United States. Section 36, subsections 1 and 2, authorize the board to determine residential status for the purposes of the act, and that power is exercised principally in dealing with applications for change of status from resident to nonresident, made by persons who wish to move from Canada and take up permanent residence elsewhere. Where the move is to a United States dollar area country the emigrant is authorized to transfer a maximum of $12,500 during the first year, in Canadian dollars, through the unofficial market. Regulations have been issued with respect to that; and at the end of one year from the departure from Canada, and at annual intervals thereafter, depending of course upon how long the restrictions may continue, the owner may apply to the board for authority to make additional transfers from Canada from these resident assets. One addition I might make to that is that a United States citizen who has been resident in Canada and who desires to return to the United States to live is normally authorized to transfer his assets to the United States at the time of departure, provided that the excess over the amount authorized for transfer in Canadian dollars is invested in Canadian domestic securities having a term of maturity or authorized call date of not less than three years.


Douglas King Hazen: What about the second year? What additional amounts can be transferred?


Douglas Charles Abbott: I understand nothing is fixed as to the second year, but the same maximum of $12,500 would apply.


Douglas King Hazen: Would the answer the minister has given apply to a man who for reasons of health had to give up his business here and go to the United States to live? Would it apply to a farmer who has sold out in Canada and is going to live with a relative in the United States?
Foreign Exchange Control Mr. Abbott: I think the same maximum would apply. Of course a man who moves down to the United States is entitled to take all his revenues there. If he is given a change of status for exchange control purposes he can take all his Canadian revenues down in United States dollars which he can acquire from the board at the official rate; but with respect to capital transfers he is limited to $12,500 the first year.


Douglas King Hazen: I think that works a hardship on a man who is obliged to give up his business here for health reasons, who has a family to support and who wants to go to the United States and start up some kind of business or industry there. If he is allowed to take only $12,500 with him-


Douglas Charles Abbott: The first year.


Douglas King Hazen: -of course that will amount to less than $12,500 when exchanged into United States currency. He has to get a house to live in, and he needs capital to put into a plant or a farm, if he is going to run a farm.
I am referring more particularly, however, to an industrialist who wants to go into business of one kind or another in the United States. It leaves him in a very difficult position. He cannot live here for reasons of health; he has to go to a drier climate, and when he gets there he is practically stranded because he is allowed to take only $12,500 with him, or its equivalent in United States funds, and is allowed an equivalent amount from year to year.


Douglas Charles Abbott: No doubt my hon. friend is right, and a hardship may be involved in a case of that kind. The limitation prior to November, 1947, when we had to take further steps to conserve our exchange resources, was $25,000 the first year. That was cut in half. Perhaps as our position improves it may be possible to increase that again, but I must point out to the committee that our exchange difficulties have necessitated the imposition of the present prohibitions on the transfer of capital from this country. That is the main purpose of the restrictions, and of course there is inevitably some hardship incidental to that prohibition.	.
To answer the question of the hon. member for York West, the concluding paragraph of the report of the chairman of the foreign exchange control board states, in reference to the increase in costs:
The increase was due to a continued rise in the volume of foreign exchange and other transactions coming under the board's review and added duties arising out of the exchange conservation measures introduced by the government in the latter part of 1947. These were reflected in an increase in the over-all cost of administration from $810,668 in 1947 to $1,334,930 in 1948.
i754

Foreign Exchange Control That increase consisted entirely of increased expenditures for staff, premises, office supplies, equipment and traveling expenses. There were some minor expenses paid out of the parliamentary appropriations, such as telegrams, stationery, printing, enforcement and cost of coin shipments. But the main increase is in the items to which I have referred.


Alan Cockeram: Can the minister get a breakdown of that figure, and also comparative figures for 1947? Can he also get a breakdown of the public information program, $99,957? There is an increase of fifty-two in the staff of the foreign exchange control board, which seems a good deal. The staff is increased by one-eighth. I think that increase is out of line. I should like to get a breakdown, and also the comparative figures for the previous year.


Douglas Charles Abbott: I will see if I can get the information.


Mr. McMaster:: I should like to ask a question arising out of an answer given to the hon. member for Kamloops. The minister said that the foreign exchange control board is in the market. Does the foreign exchange control board acquire any considerable sum of money except such funds as the people are bound to hand over to them of the United States dollars they receive?


Douglas Charles Abbott: No. What I meant was that it acquires all the United States dollars that Canadian exporters receive from their customers.


William Alexander McMaster: Do they go into the market?


Douglas Charles Abbott: Perhaps I was inaccurate in using the word "market". It has a monopoly on foreign exchange.


Mr. Hansell:: I should like to ask the minister what the policy of his department is with regard to goods coming into this country for charitable purposes. I have one case, which is no doubt one of quite a number, and three different government departments seem to be involved. I am at a loss to understand the extent of the co-ordination among these three departments. The position is this. Some goods were ordered to be brought into Canada to be used by a Lions Club for charitable purposes. The goods were not bought. The goods were coming in. No funds were exchanged between this country and the United States. Furthermore, the goods were to be used for charitable purposes. No money was to be made from the sale of the goods. There was no transfer of title of the goods. Yet now, because those who were bringing the goods into Canada were not aware that they had to get the proper permits, the goods are held up at the border. 
They have been held up for some time while correspondence has been going on between the Department of Finance and the Department of Trade and Commerce; now the Department of National Revenue comes on the scene and wants its cut from the duties that would be imposed upon the goods, in spite of the fact that there is no transfer of funds, and the goods are not bought.
I am not now making any criticism. X am taking the case up with the department, but I cannot quite unravel it. Two or three departments are all mixed up in it. If I could get a picture of the government policy with respect to such a matter, I think I could perhaps unravel it in my own mind.


Douglas Charles Abbott: If my hon. friend will give me the name and the particulars, I shall be glad to have the matter looked into. It sounds to me as though it were a case in which the emergency import restrictions were involved, and not foreign exchange control. The only interest I have as Minister of Finance, or which my agent the foreign exchange control board has, in imports, is to see that they do not constitute a concealed export of capital from this country. But the case that my hon. friend appears to have in mind would likely be in relation to a commodity which is on either the prohibited list or the quota list under the Emergency Exchange Conservation Act. In those cases the Department of National Revenue acts as agent for the emergency import control division of the Department of Finance. But without knowing the exact circumstances and the parties involved, it is difficult to give a specific answer. I shall be glad to look into the case.


Mr. Green:: I should like to ask the minister to give us some further clarification of the policy of the foreign exchange control board with regard to the export of goods from Canada. He will find at page 24 of the annual report for the year 1948 an interesting outline of that situation. It begins:
Under the Foreign Exchange Control Act a permit from the board is required for the sale of goods for export from Canada otherwise than on terms providing for payment of the fair value within six months in a currency designated as acceptable therefor. In general the currencies designated by the regulations are as follows:
Then it sets out the ordinary method in which these deals are financed.
1.	Exports to any destination-United States dollars or foreign currencies which are freely convertible into United States dollars:
2.	Exports to sterling area countries-sterling, other sterling area currencies which are freely convertible into sterling, or Canadian dollars paid from sterling area accounts;
3.	Exports to special arrangement countries (e.g. France, Belgium, Luxembourg, The Netherlands,

Norway, Czechoslovakia, Egypt and Palestine)- Canadian dollars paid from special arrangement country accounts.
We all agree, of course, that that is the way in which we should like to see Canadian export business financed. But the board is obviously concerned whether it will be possible to carry on in any one of those three ways, because the report goes on as follows:
Until recently there was little occasion for Canadian exporters to seek to export on terms other than those specified above. With the growing severity of import restrictions imposed by many countries, however, an increasing number of cases have arisen where Canadian exporters find it impossible to sell goods on the prescribed terms of payment. In these cases alternative proposals for payment are sometimes made by foreign buyers and where they are acceptable to the Canadian exporters, the board has indicated its readiness to consider applications for the necessary permits. The following appear to be the main types of case which warrant consideration:
I would emphasize there that the board itself says that these particular types warrant consideration. That is becoming increasingly true as the days go by. Of course it is particularly important to British Columbia, because we have the greatest difficulty in keeping up our exports to the sterling area countries.
These are the types of cases warranting consideration:
1. Exports for payment in the appropriate currencies but where payment is to be deferred beyond the normal six-month period.
We have had an example of that in the canned salmon trade. I hold in my hand a press dispatch of January 21 of this year, which reads as follows: "Salmon get last chance."


The Deputy Chairman:: Order. I question whether the hon. member is in order in reviewing the whole act. What is now before the committee is an extension of the time of operation of the act. Section 1 of the bill extends the time of operation of the act. I hope the hon. member will try to confine his remarks to the simple amendment which is now before the committee. The principle of the measure was agreed to on second reading. These matters could have been discussed at that time. Hon. members should confine their remarks to the clause before the committee.


Howard Charles Green: The question I am raising involves a good many millions of dollars to the people of British Columbia. The whole thing is tied up with the policy of the foreign exchange control board.


William Henry Golding: Order.


Howard Charles Green: I have not finished my statement.
Foreign Exchange Control


William Henry Golding: Order. 1 agree
with the hon. member that it is all involved in this act, but that is not now before the committee. What is before the committee is an extension of the time.


Howard Charles Green: This question is becoming of great importance. It is in the coming year, during which this act is to be extended, that the question will be of far more importance than it was last year. Surely I am entitled to ask what the policy of the board is on these particular points.


Douglas Charles Abbott: I think my hon. friend wants to ask me what the policy of the board or of the government is with respect to payments on exports in sterling, let us say. I imagine that is what he was leading up to, was it not? If so, it is a relevant question, certainly as relevant as any other questions which have been asked me this morning. I do not think we should go into a discussion of the plight of industries. I do not suppose the hon. member intended to do that.


Howard Charles Green: I am asking the minister first of all about the first type of cases which the board thinks warrants further consideration. My submission is that some much more definite policy should be adopted with regard to this type, which is:
Exports for payment in the appropriate currencies but where payment is to be deferred beyond the normal six-month period.
Before the war British Columbia sold to Great Britain over a million cases of canned salmon a year. Hon. members will recall that during the war there was no canned salmon available in Canada because it was all being sent overseas. Sales have now been cut off completely. The press dispatch to which I referred reads:
Fisheries Minister R. W. Mayhew has begun last-chance negotiations toward agreement for sale of B.C. canned salmon to the. United Kingdom, and upon his success or failure will depend to great extent the prosperity of this province's fishermen in 1949.
This was announced today as British food minister Strachey declared in London his ministry had turned down a Canadian offer of tinned salmon on a deferred payment basis.
I presume that is the basis mentioned by the board as type one. The dispatch goes on:
Reason: "It is not known when Britain will have enough dollars to pay.
"If they would agree to payment in sterling we could do business. We must keep our dollars for more essential food, like wheat."
Is there not some way in which deferred payments can be arranged for canned salmon?
My second question has to do with the fourth type of case to which the foreign exchange control board refers. It reads:
Exports to be paid for by the acceptance of goods of equivalent value.
1756	HOUSE OF
Foreign Exchange Control
The other day the Minister of Trade and Commerce explained that there had been one such arrangement of which he knew, and that was an exchange of apples for oranges between Brazil and Canada.


William Henry Golding: Order. Under this amendment it is not in order for the hon. member to review the whole act. It is entirely out of order. If the hon. member wishes to put a question, he can do so without going into the whole act.


Howard Charles Green: In order to put my question I have to make certain explanations. I have asked one question. I wish to ask the minister another question with respect to the fourth type of case in which lumber is involved. Obviously the British have made a deal-


Mr. Williams:: Can you not ask a question without making a speech?


Howard Charles Green: If you will just keep quiet.


Arthur Henry Williams: Bless your little soul. You have been fifteen minutes trying to ask three questions.


Howard Charles Green: The British have made deals for timber with Yugoslavia and Sweden, and apparently they are now dealing with Finland and Russia. Is there not some way in which a similar deal for timber can be made between Great Britain and Canada? Just last week in Vancouver Mr. Graham Towers said-


William Henry Golding: Order. I must call the hon. member's attention to the fact that he must deal with the amendment and not review the whole act. I think hon. members will agree with me that it is not in order to review the whole act.


Howard Charles Green: The bill before the committee is a provision to continue the whole act for a year.


William Henry Golding: Order. The amendment before the committee extends the time. The principle of the act, and all that was involved in it, could have been discussed on second reading. Second reading has been given to the bill, and we are now dealing with the amendment.


Howard Charles Green: I am not discussing the principle of the bill.


Clarence Decatur Howe: The hon. member is going back over discussions which lasted for an hour and which were finished.


Howard Charles Green: It is exactly the type of discussion that has been going on here all morning.


Clarence Decatur Howe: How many times do you have to discuss the whole matter?


Howard Charles Green: I am discussing how the board functions.


William Henry Golding: I ask the hon. member to put his questions as briefly as he can. I do not think he is in order in carrying on the discussion as he has. The amendment asks for an extension of the time of operation of the act. It does not ask for a review of all the ramifications of the act. That is not what we are dealing with in committee.


Howard Charles Green: I am not dealing with all the ramifications of the act, Mr. Chairman; I am asking a question concerning one paragraph of the board's report.


William Henry Golding: I should like to point out to the hon. gentleman that if we permitted him to continue his discussion as he has been doing, other hon. members who wish to deal with any other feature of the act would have the same right to do so. In committee speeches must be strictly relevant to the clause under consideration.


Howard Charles Green: The minister made a statement which is to be found at page 1644 of Hansard, and it was made during a discussion in the committee stage of the bill. He said:
We have been trying to hold off from what I consider to be this dangerous and vicious system of barter agreements.
With regard to the fourth type of case- that is, where the board says that exports shall be paid for by the acceptance of goods of equivalent value-I ask the minister whether the time has not come to take more definite steps to permit transactions of that kind, in order that we may not lose our trade with the sterling area, as we have already done with regard to some commodities?


Douglas Charles Abbott: I do not think this is the place to discuss the merits or demerits of so-called barter transactions. There is no foreign exchange control aspect involved in any case. It is true that the Foreign Exchange Control Act requires that any goods exported from this country must be payable in currency approved by the board. To that extent you cannot enter into barter transactions without permission of the board. The primary question whether a transaction of that kind should be entered into I shall not discuss at this time. My views are well known. I voiced them the other night. I believe that kind of transaction we should enter into only as a last resort.
As to the first question, with reference to acceptance of sterling as payment for exports, as indicated in the report of the board, there is no objection to that now, provided that the exporter is willing to accept that sterling and to wait until the Bank of England or the United States treasury is prepared to convert it into dollars. But if the foreign exchange control board were to take sterling from the

Canadian exporter, actually we would be simply extending further credits to the sterling area, and in addition to the credit risk we would also be incurring an exchange risk.
As I say, there is no objection; I think the board will now permit such transactions. If for instance any exporter of salmon, lumber or some other commodity is prepared to sell it and to take sterling for it, that is permitted -provided that his workmen get the necessary Canadian dollars. But the dominion government does not feel it can extend its foreign credit program by accumulating sterling.


Mr. Adamson:: I believe the minister was under some misapprehension in respect to what he regarded as a discourtesy on the part of the hon. member for York South and myself. What we said was "softer", not "louder". We realize that the minister has a heavy commitment this evening in the presentation of his budget, and we are conscious of the fact that his voice requires all the care it can receive.
My first question is this: Has the foreign exchange control board made purchases in the unofficial market for Canadian dollars in New York? Then I have a question with regard to the redemption of United States securities, or at least securities which call in United States funds-and in this I am thinking of two companies which have made heavy redemptions of bonds in the last two years; one is the Abitibi Company, and there are several others. They redeemed certain bonds in compliance with the first mortgage clause and also had payments in United States funds as one of the conditions of the purchase of the bonds. Can the minister say how much was redeemed in this way in United States funds? Is there a condition under which bonds of this kind are redeemed in United States funds?


Douglas Charles Abbott: The foreign exchange control board has not purchased in the so-called unofficial market any Canadian dollars. As to the second point, I do not believe I have with me figures showing maturities of Canadian securities payable in United States funds made prior to the imposition of restrictions in November 1947. They were fairly heavy in that year. I was going to give a figure, but perhaps I should not. It is readily available; I believe it appears in the report of the board for 1947. Perhaps I could get it in a few minutes.


Agar Rodney Adamson: I do not wish to hold up passage of the bill, but the policy is for redemption in United States funds to be made from funds of the foreign exchange control board?
Foreign Exchange Control


Douglas Charles Abbott: Since November 1947 we have not been allowing that type of capital to come in.


Agar Rodney Adamson: I understand that, but outstanding securities can be redeemed in that way?


Douglas Charles Abbott: Yes, to meet maturities as they fall due. But we cannot allow an anticipation of maturities. The hon. member was referring to maturities of securities to become due. Funds of course will be provided to pay them off. That has always been our policy. There has never been any deviation from that, even during the war.


Agar Rodney Adamson: The reason for my first question was that I wanted to know whether the unofficial market was completely unsupported by the government.


Douglas Charles Abbott: That is right.


Mr. Stephenson:: Knowing that in any case we have to have funds to purchase goods in the United States, if United States funds have been purchased, has Canada had to pay a premium on them?


Douglas Charles Abbott: No, there is no premium paid on those funds.


Donald Methuen Fleming: Earlier this morning the minister answered some questions as to the relationship between the foreign exchange control board and the consolidated revenue fund. I wonder if he would supplement the information he gave respecting assets and liabilities of the exchange fund account as it appears at page 28 of the 1948 report of the foreign exchange control board. This indicates that at December 31, 1947, advances from the consolidated revenue fund stood at $505 million, whereas at December 31, 1948, they stood at $1,025 million. These of course are calendar year figures. If we subtract the 1947 from the 1948 figure we have not a figure which would tally with the fiscal year for which the minister keeps his books. In other words the increase of $520 million in advances from the consolidated revenue fund as between December 31, 1947, and December 31, 1948, represents the twelve months of the calendar year 1948, and does not bear any relationship to the fiscal year ended March 31.
What is the position with regard to the effect in 1947 and 1948 of increases in the consolidated revenue fund on the books of the Department of Finance with regard to such things as surplus? I am aware of the figure appearing at page 1 of the report indicating holdings in United States dollars and gold. But what I want to get at is this: in 1947 we had a substantial reduction-

Foreign Exchange Control I believe it was about $700 million-in the board's holdings of United States dollars in gold. So far as I am aware, this was not reflected in the figures the minister gave the house. It was not reflected in a reduction of the national debt.
In 1948 we see a substantial increase in advances from the consolidated revenue fund. From a statement issued earlier in the year, which appeared in the Canada Gazette, it appears that these increases in advances from the consolidated revenue fund to the foreign exchange control board are going to have the effect of reducing the surplus available in the hands of the Minister of Finance for the reduction of debt. If it does not work in 1947, how does it work in 1948?


Douglas Charles Abbott: I am afraid my hon. friend has not read carefully the prepared statements I have issued in the last two or three months in connection with the comptroller of the treasury's monthly statements, where I have been endeavouring to demonstrate the difference in public accounts between what is referred to as budgetary surplus and cash surplus. In public finance there are many items which are not budgetary items but which have to be paid for in cash. On the other side there are a great many budgetary expenditures which do not have to be made in cash. If my hon. friend will look back at my budget speech of 1947 he will find that I referred in specific terms to the fact that during the then fiscal year we had received several hundred million dollars as a result of payments made to me in my official capacity from the exchange fund account. The trend has been reversed this year; in fact we have had to provide out of the cash resources of the government between $400 million and $450 million for the exchange fund account in order to provide dollars, mainly for exporters who have turned over their United States dollars to the exchange fund account.
That fact has nothing to do with the amount of the budgetary surplus which the government has at the end of its fiscal year. It has a significant bearing on the cash requirements of the government, which is something completely different. I am not revealing any budget secrets when I say that in the course of my economic survey this evening I shall have something to say on this particular subject. Perhaps my hon. friend will accept this short explanation this morning, and this evening I hope to be able to deal with the question he has raised, which is an important one, in considerably more detail.


Mr. McKay:: I should like to ask a question arising out of a news report in the Toronto Star of March 18, which reads:
Vancouver,, March 18-"Restoration of Europe might well be the task of a generation or more, and to that degree Canada will be without its traditional customers capable of buying from this country," declared Graham Ford Towers, governor of the Bank of Canada, in an address to the northwest credit conference yesterday.
Mr. Towers said European recipients of aid had been forced by dollar shortages to form trading arrangements among themselves and with countries outside the dollar area. "Some of these international trade policies are enough to make classical economists turn in their graves," he declared.
I assume that when Mr. Towers refers to international trade policies which are causing classical economists to turn in their graves he is referring to barter trade. On several occasions the minister has indicated to the house that he is at least in principle opposed to barter trade arrangements. If he is opposed in principle to barter arrangements, will he tell the committee what the government has to offer in place of those barter arrangements, other than granting Europe increased loans and credits so that they can purchase goods from Canada?


Douglas Charles Abbott: As I have said before, I am not going to enter into an extended debate on trade policy when we are in committee on this bill. I think it would be completely irrelevant. We had a long discussion on it the other day, and on a more appropriate occasion I shall have a good deal more to say on this question of barter deals. I do not think it is in order to go into the matter this morning, and I shall give, as I have done before, excellent reasons why I do not think it is in the interests of this country to go into them.


Mr. Campbell:: What percentage of the profits made in Canada by United States firms has been converted into United States dollars during the past year?


Douglas Charles Abbott: I cannot give my hon. friend the percentage, but every dollar of profit made in this country by a United States firm during the past year could, if the firm wished to do so, have been taken to the United States at the official rate of exchange. A good many of them, in accordance with past practice, have allowed current earnings to remain here and have reinvested them in the business. But Canadian policy is, and always has been, even in the worst days of the war, to allow nonresident investors to take their current earnings out of the country at the official rate of exchange.


Harry Rutherford Jackman: Following the questions asked by the hon. member for Saint John-

Albert, will the minister say whether a farmer or businessman who retired to the United States would be permitted to have all his income in Canada sent to him in the United States at the official rate?


Douglas Charles Abbott: That is correct.


Harry Rutherford Jackman: Irrespective of what the amount may be?


Douglas Charles Abbott: If he has been granted a change of status. That is my information.


Harry Rutherford Jackman: Is there any particular trick about being granted a change of status? Would that apply to a person who has been there, say, for a year, and has taken up domicile?


Douglas Charles Abbott: I think there must be some justification, as was indicated by the hon. member for Saint John-Albert, such as health or other reasons. If a Canadian feels that he must leave Canada, he is always free to do so, but it is discretionary with us to say whether he is given a change of status for exchange purposes-in other words, whether we will allow him to take his capital out of the country.


Harry Rutherford Jackman: Supposing a businessman or farmer wanted to go to the United States in order to carry on business, in order to get away from restrictions; would this government allow him to have the income from his Canadian investments at the official rate of exchange?


Douglas Charles Abbott: Not necessarily.


Harry Rutherford Jackman: In other words he must pass through the hands of the bureaucrats before it is decided whether he can go to the United States. Last night we heard the Minister of Justice say that this government is eager to get out of controls with the utmost possible speed, but we must not forget that when the Foreign Exchange Control Act was before us, the government would not consent to any limitation as to time. It was only because of the work of the other house that any limitation was placed on the act.
May I ask the minister why he has put a two-year limit on at this time? I say that partly because of what I see in the report that the staff has been increased from 420 to 472. Naturally I am concerned about the future of the young men and women who make up the staff there, to say nothing of the large additional expense which has been incurred and which amounts to no less than $10,000 per head for the fifty-two additional people.
I should like to ask the minister a question which is relevant to the time factor in the bill
Foreign Exchange Control before us. If in the eyes of the government our currency becomes sufficiently strong to stand on its own feet, is it the intention of the government to do away with the foreign exchange control board, or does the minister feel that under his obligations, as they now exist and as he contemplates they will exist under Bretton Woods, it will be necessary to maintain the foreign exchange control board with a fairly substantial staff? If it should come about that there was freedom and convertibility of currency, what staff would be required in addition to the staff now employed?


Douglas Charles Abbott: As I have said on other occasions, I am never too keen about answering hypothetical questions, and I certainly have no intention of stating what government policy might be under contingencies as yet undeveloped. I did point out either yesterday or the day before, or previously when we were discussing this measure, that it is perfectly open to parliament to repeal the measure at any time. The fact that there is a time limit does not prevent that.
As I have said on numerous other occasions, I think it would have been better to follow the ordinary British constitutional practice and not put in a time limit-leave it to parliament to repeal the statute when it was no longer necessary. However, that principle was accepted in the other place when the act was before that body for consideration in 1946. The approximately two-year time limit is put in because that period will terminate early in the life of the next parliament. But there is nothing to prevent parliament from repealing it this year or next year.


Arthur Henry Williams: In one of the answers given by the minister this morning he referred to prosecution of people who had been evading the rules and regulations of the foreign exchange control board. Is it possible to have an itemized statement, not giving the names of the people involved but in the form of case A, case B, case C, and so on? May we have such a statement so that we may see just what the situation is?


Douglas Charles Abbott: I gave a fairly well itemized statement, but I will see if I can give a little more. Let us take 1948, the most recent figures. There were 105 attempts by resident travelers to export currency without the necessary permit. There were twenty cases of residents obtaining United States funds in excess of the annual travel allotment by malArig false declarations to authorized dealers. Thirty-nine residents failed to sell United States dollars to authorized dealers, or illegally disposed of United States dollars.
1760	HOUSE OF
Foreign Exchange Control There were twenty cases of non-residents importing unofficial Canadian funds, mainly in the form of drafts, acquiring United States funds in Canada, or illegally attempting to export Canadian currency. There, as I pointed out to the hon. member for Lake Centre, the fines were the highest in the whole group.
As to other illegal dealings in foreign exchange, there were ten cases, and there is a classification' of miscellaneous, whatever that may mean, with twenty-two cases, making a total of 216. These were formal prosecutions before the exchequer court. I have not the breakdown here of the seizures of currency in amounts of $100 and over, but of course in the great majority of these cases people were attempting to cross the border with amounts of currency in excess of the legal limits provided under the regulations.


Mr. Drew:: Mr. Chairman, the comments that have been made as to the section that is now before the house indicate the necessity of recognizing exactly what the effect of the section is. On second reading the principle involved was simply whether or not foreign exchange control should be extended. That has been discussed; and naturally it is a subject which would embrace a very wide field.
The device that is being used to extend the life of this act is to carry forward an act of seventy-three sections by the adoption of a single section. It would be utterly impossible to discuss effectively at any point in the proceedings the consequences of this act, unless it were done in committee, because this section carries forward in detail the whole seventy-three sections of the act.
There is one feature of this amending section which is of basic importance and which should be given consideration in the light of remarks that have already been made both in and out of the house. The amendment to section 73 of the act proposed by the bill now before the house extends the life of the act for two years. I submit that under no circumstances should this measure be carried forward beyond one year under the present bill amendment, because when parliament meets in 1950 it can then deal with the question whether the act should be extended for another year.


Mr. Nicholson:: It might take us that long to get this through.


George Alexander Drew: Under the system of government that we have adopted in Canada the basic principle that has been accepted for hundreds of years is that, in relation to financial matters, there shall be an annual review by parliament, and that the authorization shall only proceed for a period of a year subject


to that review. It is questionable if there is sufficient recognition of the fundamental importance of the act which will be carried forward in toto by the amendment if it is adopted in its present form. No single act could possibly have a wider impact upon the future economic life of the country than one which can so definitely and powerfully influence the future trading relationships of Canada with all nations with which Canada deals.
To a greater extent than any other nation, with the possible exception of Switzerland, we in Canada are dependent upon the maintenance of a very large export business for continuing the standards of living which have been established in this country at a very high level. The Foreign Exchange Control Act, through its effect on exchange, which has such a bearing on trade in itself, and through its direct effect on trade under the import and export sections, can determine the whole level of trade carried on by this country in the years ahead. Therefore the act is one of immense importance to the future of Canada, and should be so regarded by those who are making a decision both as to its contents and its duration.
As the records show, an effort was made to limit the life of the act when it first came before the house. The efforts to impose such a limitation were defeated by the government and its supporters, but in the other place a limitation of three years was placed upon the life of the act. That at least was a limitation which has brought it back to the house for further consideration. In the ordinary course of events this act will not again be subject to review until after two years, no matter what disastrous consequences may ensue.
As the Minister of Finance has very properly pointed out, there is available information as to the details of the operation of the act, and the minister, under very heavy pressure in relation to other impending events, has unquestionably done everything possible to answer the detailed questions which have been put forward. But only information will be received; and while it is true that it is open to parliament at any session to repeal the act, the fact remains that under ordinary circumstances the act as it now stands would carry forward for two years, thus placing ordinary discussion of the operation of the act beyond the control of parliament for the whole of that period. That is undoubtedly something which should be regarded in the light not only of the general principle involved, but also of statements made by those who should be in a better position than anyone else in the house to know what the circumstances actually are or to advise hon. members.

As it stands at the moment, in view of the enormous and, may I add, humanitarian considerations which have guided the course of the United States in dealing with Marshall aid and the financial assistance of European and other countries, undoubtedly those charged with the responsibility of administration of those funds have more expert knowledge available to them than anyone else who could discuss the subject. For that reason it is of importance in considering this matter to recognize what has been said by Mr. Hoffman, administrator of the ECA, and the man charged with the major responsibility of allocating Marshall plan payments. Mr. Hoffman has said unqualifiedly that there must be stabilization of currency in 1949. If that is the view of Mr. Hoffman, the man more responsible than anyone else, outside the government of the United States, for what will be done either through the international monetary fund or through any other agency of the United States government or of the United Nations, it seems to me the parliament of Canada should not be prepared to extend the life of this foreign exchange control bill, which is also a control over export and import, beyond the period of one year. It is within the power of the government to deal with that matter by indicating its willingness to limit the life of this measure to one year, but that must be done while we are in committee if it is to be done at all, unless the bill is referred back from third reading for further consideration by this committee. I would strongly urge the Minister of Finance to recognize the basic principle involved in the continuation of this bill of seventy-three sections, and also to observe the explicit statement by Mr. Hoffman that there must be currency stabilization in 1949.
When it comes to the question of dealing with our own exchange rate, a great deal has been said about the use of the word "realistic" in relation to the actual value of Canadian money. So far as that is concerned, the word "realistic" has been widely used by the official advisers to this government; and one statement that has been made, which it seems to me should commend itself to hon. members of this house, is that fixed exchange rates have lost touch with economic realities. We are not the inventors of the word "realistic" or the words "economic realities." Obviously the officials who are dealing with the approval of any particular application for a large transaction at a definite level of exchange other than one hundred cents Canadian funds for one hundred cents United States funds, in their minds must be dealing with the word "realistic" and, if there is in fact responsibility on the part of those officials, they must be dealing with realities in deciding 29087-111 J
Foreign Exchange Control whether or not they will approve an application that has been made at a level other than parity.


John Horne Blackmore: In the course of his remarks will the hon. member tell us what he gathers to be the meaning of the word "realistic" as these experts are using it?


George Alexander Drew: I must confess that I am unable to improve upon either the Oxford or the Webster dictionary, and I am prepared to accept their definition of the meaning of the words "realistic" and "realities." I am saying in all seriousness that I do not know anywhere else to go for a definition of those terms. In any comments I make, the meaning of "realistic" or "realities" is the accepted dictionary meaning of those words.


John Horne Blackmore: After all, you have not only the dictionary or theoretical meaning; there must be a definition of realism in terms of goods and services as an actual fact.


George Alexander Drew: I attribute complete sincerity to the thoughts behind the actions of the hon. member, but I know that in his consideration of economic realities he has a different view than that which some of us hold; and I confess that my view of the word "realities" in relation to finance does not entirely conform to his. For that reason I do not propose to answer questions which could only have as their purpose the eliciting of an answer which would indicate a difference in our points of view in regard to the broad principles of economy which can be described by "realistic."
I have mentioned the expression used by Mr. Hoffman in the consideration of this subject. I should like also to point out that Mr. Snyder, United States secretary of the treasury, has said emphatically that currency devaluation must be considered as a means of meeting the problems with which we are all now confronted. After all, at a time when we are admittedly relating our own money value so directly to that of the United States, we can hardly ignore the views expressed on the one hand by the United States secretary of the treasury and on the other hand by the man charged with the responsibility of considering the effect of exchange on the moneys advanced in enormous amounts by the government of the United States, either under the Marshall plan or by other devices which would come within the purview of ECA.


Some hon. Members:: One o'clock.


The Chairman:: Does the hon. member desire to proceed further, or could we have this section approved?
1762	HOUSE OF
Foreign Exchange Control


Douglas Charles Abbott: Unless we can conclude within a few minutes I shall have to ask that the committee rise, since I am unable to be here this afternoon.


George Alexander Drew: I shall be glad to meet the wish of hon. members. I would certainly conclude these remarks in not more than ten minutes.


Douglas Charles Abbott: It would be a great accommodation to me personally if within ten or fifteen minutes we could complete the committee stage of this measure, though I do not want to press that.


Stanley Howard Knowles: Are there any other speakers in addition to the leader of the opposition?


Some hon. Members:: Go ahead.


William Ross Macdonald: Then it is agreed that the committee continue to sit for ten minutes.


George Alexander Drew: I want to quote also what has been said by one of the leading advisers of the government in regard to this whole subject. I refer to Mr. Louis Rasminsky, who on December 1 last, in a fairly long review of the general effect of foreign exchange control, had this to say:
And in the meantime, the restrictions and discriminations involved could impose severe burdens on Canada which continues to rely to a considerable extent on having a surplus of exports to the United Kingdom and western Europe and using the proceeds of that surplus to pay for a surplus of imports from the United States.


Clarence Decatur Howe: That has all been read to us by the hon. member for Muskoka-Ontario.


Mr. Macdonnell (Muskoka-Ontario):: Not
that part.


George Alexander Drew: The hon. member for Muskoka-Ontario also indicated to this house some of the things that had been said by Mr. Rasminsky, but I believe a check of the record will indicate that this is not one of the subjects mentioned, and this statement happens to have a direct bearing on what I am now saying.
I suggest further that the Minister of Finance should have regard to the warnings that have come from other hon. members about what is going to happen unless a realistic approach is made to the solution of this whole exchange question, which really got into its present difficulty by the ending of the interchangeability clause as between sterling and dollars in the Bretton Woods agreement. Sir Stafford Cripps in an interview with the Canadian Press in February, said that what had been done so far to reduce imports into the United Kingdom from Canada was insufficient, and that the government of the United Kingdom might be obliged gradually to limit its imports of bacon, cheese and eggs. Since he made that
[The Chairman.]

statement to the Canadian Press, he has even more emphatically pointed out that unless Canada is able to buy much larger quantities of goods from Britain than are now being bought, it will be impossible for Britain to continue to buy those things upon which the continuing stability of a substantial part of our domestic economy must depend in the years ahead.
The Minister of Agriculture-and in this case I agree that this has already been referred to-has dealt with this subject; he said as reported in Hansard of March 18 at page 1641:
I am inclined to agree with some of the statements that have been made from the other side of the house to the effect that something ought to be done about the convertibility of exchange between all countries who are trying to co-operate in doing the same thing in the world. X am inclined to agree with that; but in spite of the fact that some people have credited me with stating the position very forcefully over in London, I still say that the best way to get a final result is to listen to what the other people have to say, to put forward our own views from time to time with regard to the matter and, since we are all friends, to co-operate with them in trying to get the results as quickly as possible not only in our own country but in all countries.
What the Minister of Agriculture has said is exactly what has been put forward by the members of the Progressive Conservative party. In the amendment which was ruled out of order-I am not discussing the amendment beyond referring to it-it was clearly indicated that in our view it is necessary to carry forward, for a period of not more than a year, the operation of some measure of exchange control, so that this can be related to an orderly readjustment of the situation. But the position taken, either directly or by implication, is that this government must sit back and wait for others to do that job. Since Canada has very properly asserted its increasing importance in the world, there is no reason why Canada should wait for any other country, and there is a special reason why Canada should be the first nation to insist upon a realistic review of the whole situation and attempt, with the assistance of the best brains available in the western world, to find some way of restoring the convertibility factor between the pound and the dollar.
The situation as between Great Britain and Canada is no different today from what it was in the past. In fact, the unbalance between exports and imports is not as great as it has been on many occasions in the past. At a time when the pound and the dollar were convertible at a realistic rate of exchange, Britain was anxious to sell to Canada, and was not unduly concerned about the unbalance between exports and imports,

because in the broad movement of exchange it built up credits elsewhere with which it was able to balance its adjustments.


Douglas Charles Abbott: Britain then had not lost her investments.


George Alexander Drew: That was the traditional, the historic and the sound method of international exchange which made Britain one of the great trading countries of the world, and which has made Canada one of the great trading countries of the world as well. We are simply accepting a defeatist point of view if Canada does not say officially to those who administer the international monetary fund and to the governments which are members of that fund: We want an immediate review of the whole situation. It certainly is open to Canada to invite the other nations to meet and discuss this subject at the earliest possible date.


Arthur Henry Williams: Time.


George Alexander Drew: Canada is the nation most affected by the ability to continue its exports to the sterling area.


Arthur Henry Williams: It is ten minutes past one. Mr. Chairman.


George Alexander Drew: Canada is infinitely more affected than is the government of the United States in relation to its total export situation.


Arthur Henry Williams: Time.


William Ross Macdonald: Order.


Arthur Henry Williams: It is ten minutes past one. The leader of the opposition promised to finish in ten minutes, and he is still going.


George Alexander Drew: I have no intention, Mr. Chairman, of extending this discussion beyond what the committee desires. It was exactly three minutes after one when I said I would be finished in ten minutes, and I believe that I shall be.


Douglas Charles Abbott: Go ahead.


Arthur Henry Williams: Go on. Give him another ten.


William Ross Macdonald: Order.


George Alexander Drew: Since the Minister of Finance has questioned the use of the term "realistic" and "economic realities" in relation to question of exchange rates, I should like to refer to the report of the international monetary fund published on April 30, 1948, in which, at page 21, those who prepared this report on behalf of the international monetary fund made the bald statement to which I have already referred:
. . . stability exchange rates which have lost touch with economic realities.
I repeat, Mr. Chairman, that relatively Canada is more concerned in this matter than any other country now operating under the
Foreign Exchange Control international monetary fund. Unless a solution of this problem of interchangeability is found, this country may well be heading for disaster.	.
The Minister of Agriculture has indicated quite clearly the dangers to the export of our commodities under the rigidity which now exists. Sir Stafford Cripps has given us an ominous warning of what may happen if we do not find some way of restoring interchangeability. Mr. Hoffman has made it clear that the solution must be found this year. Therefore I urge the government without delay to press for an immediate meeting of the governments and their experts to explore the possibility of restoring interchangeability of these funds and of laying the foundation for the kind of trade that this country through a realistic exchange really can have for its people to meet the demands of a hungry world.
In accordance with our general practice, this act should be limited to one year. Mr. Hoffman has said that the solution must be found this year. For these reasons, among others, we shall vote against the bill. No matter how determined the government may be to carry this measure forward in its present form, I urge that this extension be limited to a period of one year, so that there may be some compulsion and within the year a solution may be found which will open the channels of trade for Canada to the whole world.
Bill reported.


Douglas Charles Abbott: the third reading of the bill.


Mr. Deputy Speaker:: Is it the pleasure of the house to adopt the motion?


George Alexander Drew: No, Mr. Speaker.


Douglas Charles Abbott: Next sitting.
At one-fifteen o'clock the house took recess.
The house resumed at three o'clock.



TRANSITIONAL MEASURES ACT. 1947 CONTINUATION OF CERTAIN ORDERS AND REGULATIONS

[Stage Direction]
The house resumed from Monday, March 21, consideration of the motion of Mr. Garson for the second reading of Bill No. 86, to amend the Continuation of Transitional Measures Act, 1947.
Mr. Speaker:: Before proceeding with the bill I should like to give a ruling on the amendment moved by the hon. member for Eglinton (Mr. Fleming).

Transitional Measures Act


Donald Methuen Fleming: Mr. Speaker, before you give your ruling may I point out that the amendment has not been read, and no objection has been taken to it. If you are proposing to give a ruling with regard to the amendment I would ask that an opportunity be given to hon. members to argue the point.
. For my part I wish to submit to you that the amendment is clearly in order. May I suggest that before you give a ruling the amendment be read?


Mr. Speaker:: It is my intention to read the amendment before giving my ruling upon it. It is moved by the hon. member for Eglinton (Mr. Fleming) and seconded by the hon. member for Peel (Mr. Graydon):
That the said bill be not now read the second time but that the subject matter thereof be referred to the standing committee on banking and commerce with instructions that they have power to recommend a specific measure relating to rent control, and other specific measures relating respectively to other matters provided for in the said bill.


Donald Methuen Fleming: Mr. Speaker, it is my submission that the amendment is clearly in order. It complies with the requirements of citation 657 in Beauchesne's third edition, which is the same as citation 755 in Beauchesne's second edition at page 217, which reads as follows:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move as an amendment to the question a resolution declaratory of some principle adverse to or differing from the principles, policy or provisions of the bill, or expressing opinions as to any circumstances connected with its introduction, or prosecution; or otherwise opposed to its progress; or seeking further information in relation to the bill by committees, commissioners, the production of papers or other evidence or the opinion of judges.
The effect of the amendment is that the bill should not now be read the second time, but that the subject matter of the bill be referred to one of the standing committees of the house, with instructions that the committee shall have power to bring in a specific measure with reference to rent control and specific measures with regard to each of the other subject matters touched upon by the bill in question. I submit that-


Mr. Lesage:: On a point of order.


Mr. Speaker:: Order.


Donald Methuen Fleming: This clearly-


Joseph Arthur Lesage: On a point of order.


Mr. Speaker:: Order.


Joseph Arthur Lesage: I submit that the hon. member for Eglinton is out of order. He is speaking for a second time.


Mr. Speaker:: I understand the hon. member raises a point of order.


Joseph Arthur Lesage: Yes.


Mr. Speaker:: Well, the hon. member for Eglinton is already speaking to a point of order.


Joseph Arthur Lesage: Who raised the point of order?


Donald Methuen Fleming: Mr. Speaker did.


Joseph Arthur Lesage: No; no point of order was raised.


Mr. Speaker:: I thought the hon. member was speaking to a point of order. As no point of order was raised by the hon. member-


Donald Methuen Fleming: Perhaps the house may have misunderstood you, but you intimated you were about to make a ruling on my amendment.


Joseph Arthur Lesage: That is not a point of order.


Donald Methuen Fleming: And I asked that before any ruling was given the house be given an opportunity of discussing whether the amendment is or is not in order-which, I take it, is to be the subject matter of your ruling. Therefore I was proceeding, as one member of the house, to make some submissions to Mr. Speaker on the question whether the amendment is or is not in order. I have given you the reference.


Joseph Arthur Lesage: Speaking to my point of order, the hon. member for Eglinton is now speaking a second time on second reading. No point of order has been raised by anyone, and on the motion for second reading he cannot speak twice. No one has raised a point of order.


An hon. Member:: He raised it himself.


Joseph Arthur Lesage: No, he cannot raise a point of order against his own amendment.


Mr. Speaker:: The hon. member will realize there is no point of order before the house, so that no member could discuss a point of order. I have given the hon. member who moved the amendment an opportunity to call my attention to the citation in Beauchesne's third edition, and I would ask him not to make a speech.


Mr. Smith (Calgary West):: Then I shall rise to a point of order; and my point of order is that this is not in order. Now he can speak.


Mr. Speaker:: Order.


Mr. Mutch:: Speaking to the point of order raised by the hon. member-


Donald Methuen Fleming: I thought I was discussing it.


An hon. Member:: Make up your minds.


Donald Methuen Fleming: I have made my submission that the amendment is within the terms of citation 657, which I have read, because it proposes to refer the bill to a committee. I would also point out to you, Mr. Speaker, that this is the precise procedure followed on at least one previous occasion in the lifetime of this parliament under circumstances identical with those now before the house.
I would refer you to a ruling which you made on May 14, 1946-or at least to the procedure which you accepted at that time as being entirely in order. On that date second reading was moved by the Minister of Labour to a bill entitled an act to amend the Reinstatement in Civil Employment Act. The reference is to be found in the Journals of the house for 1946, page 214.
An amendment was moved by Mr. Mackenzie that the said bill be not now read the second time but that the subject matter thereof be referred to the select committee on veterans affairs, with instructions that they consider same and report thereon to the house. That question was put and carried. That is the procedure followed. The present amendment follows precisely the terms of that amendment, and the case is on all fours with that of May 14, 1946, to which I have referred.


Mr. Speaker:: The amendment of the hon. member for Eglinton is:
That the said bill be not now read the second time but that the subject matter thereof be referred to the standing committee on banking and commerce with instructions that they have power to recommend a specific measure relating to rent control, and other specific measures relating respectively-
And I insist on these last words-
-relating respectively to other matters provided for in the said bill.
The amendment is totally different from the one just mentioned by the hon. member. There can be no question that, on the second reading of a bill, an amendment may be made to the end that the second reading do not take place but that the subject matter thereof be referred to one of the standing committees which may be given certain instructions. But the house cannot, under the guise of referring the subject matter, refer also certain provisions of the bill itself. The amendment asks that the committee recommend other specific measures relating respectively to other matters provided for in the said bill.
It seems to me that that is going beyond a reference of the subject matter. It is an instruction to consider certain provisions of the bill which could be done more easily if the bill were simply read the second time and referred to a committee in due course.
Transitional Measures Act The house cannot both refuse to give second reading and refer some provisions of the bill to a committee. It will have to make its choice. The amendment is therefore out of order.
I may add that the adoption of the amendment would cause the bill to disappear from the order paper. It would be killed without any hope of revival during the present session.


George Alexander Drew: I challenge your ruling, Mr. Speaker, and call for a vote.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Is it the pleasure of the house that the Speaker's ruling be sustained? Those in favour will please say "Yea."


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will please say "Nay."


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the "yeas" have it.
And some members having risen:


Some hon. Members:: Filibuster.


Mr. Speaker:: Call in the members.
Mr. Speaker put the question as follows:
The question before the house is an appeal from the ruling given by the Speaker on the amendment moved by the hon. member for Eglinton (Mr. Fleming). The amendment contains these words:
That they-
The committee.
-recommend other specific measures relating respectively to other matters provided for in the said bill.
It seems to me this is going beyond a reference of the subject matter. It is an instruction to consider certain provisions of the bill, which could be done more easily if the bill were simply read the second time and referred to a committee in due course. The house cannot both refuse to give second reading and refer some provisions of the bill to a committee. It will have to make its choice. The amendment is therefore out of order.
I may add that the adoption of the amendment would cause the bill to disappear from the order paper. It would be killed without any hope of revival during the present session.

Transitional Measures Act


George Alexander Drew: Mr. Speaker-


Some hon. Members:: Louder.


Some hon. Members:: A waste of time.


Mr. Speaker:: Order. I would ask hon. members not to interrupt the hon. gentleman who has the floor.


George Alexander Drew: In dealing with the effect of the adoption of this bill at this time, I do not believe it would be possible to put the situation which results from a decision to adopt an omnibus measure of this nature into more accurate terms than can be found in the words of the right hon. member for Glengarry (Mr. Mackenzie King) when he spoke in this house on April 1, 1932, when the government of that day sought certain powers under the general reference to peace, order and good government, the reference under which the present steps must be taken if they are to be taken at all. The words I now read are taken from his speech on that occasion, with certain omissions from the total of the speech:
Peace, order and good government include virtually everything. . . . That no doubt is the kind of thing the Prime Minister would like to bring about; to establish himself as a dictator, as a second Cromwell in his day, but I say that, before we

return to the days of the revolution, we shall do our utmost to prevent a reversion to any condition such as that.
Let me ask my hon. friend . . . how would he feel if a socialist government were in office at the present time and, under the rights claimed by the ministry of which he is a member, attempted to legislate with respect to peace, order and good government, and to deal with the very subjects with which he and his colleagues have dealt? How would he feel if they passed an order in council to amend the Bank Act without any reference to parliament? How would he feel if they said that, by virtue of a situation which had arisen, the banks of the country should no longer be permitted to carry on their business under the provisions of the act which parliament had enacted; that it was necessary to amend that act, and then proceeded, by order in council, to amend the Bank Act? . . .
Let us consider the question of the insurance companies. How would my hon. friend view the action of a socialist ministry which said; We do not care what the law is with respect to insurance companies, we are going to pass by order in council the legislation which we think is necessary in this time of crisis to make these insurance companies do whatever we believe to be in the interests of the country. . . .
That is the position in which we are at the present time. May I go a step further? . . . How would my Conservative friends feel if a socialist government in office, using the precedent of the action taken by the present ministry under authority to legislate on peace, order and good government, started forthwith to have the printing presses of this country manufacture whatever money they wished and to distribute that money broadcast, giving as a reason that this was necessary in order to meet a situation which existed? . . .
I hear an hon. member opposite say that there will be no socialist government. May I say to him that this is the kind of thing that breeds socialist governments of the most extreme type. This is the sort of thing that would provide any government with the weapons it might need in order, if it so desired, to deal in a subversive manner with the constitution and other rights of the people. . . .
I am endeavouring to place before hon. gentlemen the position as it would present itself to them if a socialist government attempted to do what they themselves are doing. I do not believe that any government, socialist or otherwise, except this one would attempt to go the autocratic lengths that hon. gentlemen opposite have gone, but I do say that any government would find ample justification in .he form of precedent for any extreme act, in the action of hon. gentlemen opposite in this particular measure which gives to the government of the day the authority which it does. That is the point I wish to make.
We all know very well that extreme action of the kind for which hon. gentlemen opposite are responsible does not come about in a day. Arbitrary authority helps to breed arbitrary authority. The enjoyment of a ce"tain amount of absolute power creates an appetite for more in the way of absolute power, and finally absolutism knows no bounds. That is the point we have now reached so far as the Prime Minister and his colleagues are concerned.
Those words of the right hon. member for Glengarry are in every respect applicable to the measure now before this house, except for the fact that it confers infinitely wider powers than were ever dreamed of in the bill under discussion at the time these statements were made.


Mr. Irvine:: What was the bill under discussion at that time?
Transitional Measures Act


George Alexander Drew: We are now asked-


Some hon. Members:: Order.


William Irvine: What was the measure under discussion when the former Prime Minister made the speech just referred to?


George Alexander Drew: It was the unemployment insurance act.


Some hon. Members:: No.


Some hon. Members:: Wrong again.


Mr. McCann:: The marketing act.


George Alexander Drew: I was right, as might have been expected. It was the unemployment continuance act.


Mr. Martin:: The unemployment relief act, was it not?


George Alexander Drew: The formal title is the Unemployment and Farm Relief Continuance Act, 1932.
Those words of the right hon. member for Glengarry were directed to a very limited field of the exercise of the emergency powers. They were limited to a specific measure. Before us now we have an omnibus measure which is the continuance of the application of extended powers; and the fact that these have been reduced to twelve in number in no way changes the principle which is inherent in the contention that this house should pass this omnibus measure covering all these wartime orders in council.
We are not asked as a House of Commons to consider a rent control bill. We are not asked to consider a price control bill. The only bill that the members of this house are asked to consider is a bill which gives to this government all the loose and undefined powers of a dictatorship over the whole timber industry, the whole steel industry, over all industrial and other building priorities, and several other extremely important activities of our people, as well as unsatisfactory and undefined authority over rent and prices. Whether they are tenants or not, Canadians generally know that the present rent control by government dictate, and not by law, has proved unsatisfactory in many important respects, quite apart from the dangerous principle involved in these arbitrary powers, which include the whole field under the declaration of a general emergency.
In many ways this rent control measure by government dictate is adding to the difficulties and preventing the building of satisfactory rental housing. We have urged over and over again that a rent control bill be introduced which will give tenants defined and assured legal rights and at the same time encourage the building of housing and apartments for rental purposes. That is the parliamentary way to deal with this subject. It is
1768	HOUSE OF
Transitional Measures Act the parliamentary way to deal with price control. It is the parliamentary way to deal with any other matter covered by this omnibus bill perpetuating wartime emergency orders in council which give to bureaucrats who are not answerable to parliament, and some who are, dictatorial powers over a large segment of our domestic economy.
When it is suggested that it is necessary to follow this arbitrary procedure in order to continue these other measures, that contention is simply unadulterated nonsense. There is no reason why a bill cannot be brought in separately to deal with any of these subjects. The same justification which would give the power to deal with the broad field would more than give power to deal with the specific field where an emergency is shown in that respect. This measure simply puts before us the continuance of powers that were put into effect in wartime, when everybody was under the pressure of war itself. Today there is no excuse for continuing measures of that kind. At the time that these arbitrary measures were first adopted, many unselfish citizens of this country were, at considerable sacrifice of their personal time, acting in the role of controllers or supervisors of some of these arbitrary measures. Those men are no longer available. Now the people who are directing these affairs are mostly civil servants-excellent civil servants-who should have the protection of dealing with the problems placed before them under clearly defined laws, not dictates of this government.
I did not of course hear the Minister of Justice (Mr. Gar son) last night. I must say that that was a saving of time. But nevertheless I do know something of what he said. When the Minister of Justice demonstrates the profound depths of his historic knowledge by referring to me as the Bay street Hampden, thus emulating his leader in the house, I do hope that he will not get into difficulties with his sponsors, the Siftons. I hope he will remember that those legatees of the great political beneficence of an earlier Liberal government have established the head office of the corporation which handles their great inherited wealth on the same Bay street in Toronto to which the Minister of Justice refers with such scorn. The Siftons might not like his attitude toward the street from which they have chosen to direct their great interests in western Canada.
When the Minister of Justice seeks to defend in this manner the conduct of a government so rapidly approaching parliamentary and physical dissolution, the description


which fits him most perfectly is to be found in the familiar words, slightly modified:
The boy stood on the burning deck,
Whence all with sense had fled.


Mr. Winters:: The hon. member is reading too quickly.


Mr. Speaker:: Order.


Mr. Fournier (Maisonneuve-Rosemont):: What is the leader of the opposition quoting from?


An hon. Member:: He would not know if he told you.


George Alexander Drew: The principle at issue on second reading is whether or not there is a general emergency in this country which would justify the extension of wartime emergency powers covering a considerable part of the daily lives of our people under the provision in our constitution which permits parliament to invade the field of provincial jurisdiction only in the event of a great national emergency.


Mr. Brunelle:: Find something new.


George Alexander Drew: Let no hon. member of this house be under any illusions as to what a vote in favour of this omnibus measure means. A vote in favour of this omnibus measure is a declaration by each member voting in support of it that he believes that now, four years after the war is over, there is a general emergency under which this government can step into any field of provincial jurisdiction given to the provinces by the constitution. When hon. members vote to declare that they hold such an opinion, they are not only voting for broad dictatorial powers-


An hon. Member:: We are not voting.


George Alexander Drew: No, they are just following the direction of the government. When they are called upon by the government to vote in support of a dictatorial measure of this kind, they are not merely asked to place on record a vote which declares the existence of a general emergency, but they are making a declaration which would empower a government, which already is centralizing in every way it can, to centralize full authority-if in fact that declaration by the members of this house could hold water. Therefore, Mr. Speaker, on second reading of this bill, the issue is whether war emergency powers continue, and whether a general emergency exists, which gives to our constitution at the present time no continuing sanctity except the whims of this dictatorial government.

Transitional Measures Act


Mr. Speaker:: Is it the pleasure of the house to adopt the motion? Carried.


George Alexander Drew: No.


Mr. Graydon:: Call the yeas and nays.


Mr. Speaker:: Those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those against the motion will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.	.
And some members having risen:


Mr. Speaker:: Call in the members.


Mr. Cardiff:: Transitional Measures Act
On section 1-Duration of act.


John George Diefenbaker: Mr. Chairman, there are certain matters that can be better discussed in committee than on second reading. I should like to deal with a number of these matters which were referred to last evening by the Minister of Justice. However, at the beginning I wish to reiterate the stand taken by this party, a stand which was made most clear in the amendment moved by the hon. member for Eglinton, which had just been ruled out of order. While respecting the ruling of the chair, in order to keep the record clear I should like to refer to the wording of that amendment. It reads:
That the said bill be not now read the second time but that the subject matter thereof be referred to the standing committee on banking and commerce-


Some hon. Members:: Order.


John George Diefenbaker: Mr. Chairman, I never saw so many Speakers in the house before. Hon. members apparently do not believe that the person occupying the chair can make rulings without their assistance. The amendment continued:
-with instructions that they have power to recommend a specific measure relating to rent control, and other specific measures relating respectively to other matters provided for in the said bill.
The amendment sets forth the stand taken by the opposition. We believe in the necessity for certain controls while at the same time accepting the necessity for decontrol as referred to by the Minister of Justice. We on this side of the house asked that the bill be referred to a committee so that evidence could be heard. It would be interesting to hear the evidence of some of these individuals occupying bureaucratic positions were they required to come before a committee and outline their ideas, which apparently have actuated the government all through the piece. We say that we require evidence on this matter.
That there was doubt in the minds of the cabinet on this legislation is perfectly clear from what the chairman of the transitional powers committee of the cabinet said on November 24 last. He, the Solicitor General, at a press conference, said among other things:
Possibly the last use of procedure by order in council under Canada's emergency transitional powers act has been made by the federal cabinet.
Apparently that was before the Minister of Justice achieved his portfolio. At that time the Solicitor General was speaking for the Department of Justice. The report continued:
Mr. Jean said he is due to present in Ottawa tomorrow his final report as head of a committee on application of the emergency powers.

The report having been referred to at a press conference, I think parliament should be let in on it. The Minister of Justice should present to parliament the report to which the Solicitor General made reference. The Solicitor General went on to say that he hoped there would be no further necessity for cabinet orders under the legislation designed to ease the country from war to a peacetime administrative footing. The minister should explain when the transition -not under the transitional powers act- took place in the minds of the cabinet. At what time since November 24 did the cabinet decide not to follow the recommendations of the chairman of the committee set up by the cabinet to consider this matter? That is an interesting document that should be before parliament when it is arriving at a conclusion respecting the existence of a general emergency.
The minister said last evening, as reported on page 1729 of Hansard:
Our powers are very narrowly limited and any suggestion about widespread totalitarian dictatorial powers which flout parliament is just so much nonsense.
He asked whether anyone could produce proof to the contrary. A case that I produce is one decided in 1948 in the exchequer court, Belleau versus Minister of National Health and Welfare. I shall not go into the details, but here is what was said by one of the protectors of the rights of the people in this country, namely, a member of the judiciary. The minister, speaking partly I believe as a politician and not exclusively as the custodian of justice in this country, said that there were no serious encroachments on personal rights, but this is what the judge said:
The court has no power under the law to prevent a minister from transgressing his administrative function and entering into the judicial field.
Mark these words.
There are, in my judgment, far too many encroachments by ministers, deputy ministers and functionaries in the judicial as well as in the legislative field;
Last night the minister said that there was no such danger as the leader of the opposition feared from this legislation, namely, the incipient beginning of a dictatorship, but a judge of the Exchequer Court of Canada, referring to ministers, deputy ministers and such functionaries, said this in his judgment: -if they are not curtailed the country may in a not too remote future be ruled by a dictatorial government.
I ask the Minister of Justice whether the opinion of a judge of the Exchequer Court of Canada has not a meaning which the words of a minister would not have. The judge decided that the minister had done wrong

and was unjustified in what he had done, in that he had entrusted his administration with wide and exorbitant powers, and concluded his judgment:
I have no other alternative but to accept reluctantly I must say the doctrine expounded on behalf of respondents.
In other words, however dictatorial and unjust an order made by a minister under legislation alike and akin to this legislation, or by a deputy minister or a functionary, the decision would be above the courts and could not be interfered with in any way.


Stuart Sinclair Garson: What is the citation of that case?


John George Diefenbaker: It is 1948, Canada Law Reports, page 288, and I read from page 321.


Mr. Rinfrei:: Who was the judge?


John George Diefenbaker: Mr. Justice Angers. The government say that there is no danger in such legislation. I now quote from the Fortnightly Law Journal an article which appeared in November, 1945, when this legislation was first introduced. I shall read from the issue of November 1, 1945, in which the following appears:
It seems to us that the dominion in its anxiety to prolong the bureaucracy that has got completely out of hand under the War Measures Act, falls between the two stools of the War Measures Act and bill 15. But really bill 15 lets the cat out of the bag.


Joseph Arthur Lesage: On a point of order-


John George Diefenbaker: Well, Mr. Chairman-


Joseph Arthur Lesage: Any member has a right to rise on a point of order, even against the member for Lake Centre. I am not going to be afraid of him. He can scare children, but he will not scare the members on this side of the house.


William Ross Macdonald: Order.


Joseph Arthur Lesage: On a point of order, Mr. Chairman, I wonder if the hon. member for Lake Centre is in order. May I read from Beau-chesne a part of standing order 58:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
I submit that the hon. member for Lake Centre has been out of order since the beginning of his remarks, and especially in his last quotation when he referred to Bill 15 which was under consideration about three years ago, but which was never adopted.


Gordon Graydon: He is too relevant for you; that is the trouble.


An hon. Member:: You are not enough for him.


William Ross Macdonald: The clause under consideration at the present time is clause 1 of Bill 86,
Transitional Measures Act and it refers to the duration of the act. I understood the hon. member for Lake Centre was giving reasons why the act should not be extended. Just how far I should allow him, or any other hon. member, to proceed in their remarks is difficult for me to say. The last words of the hon. member for Lake Centre as to a certain bill may not have been in order. I was not following him very closely. I think all I can do at this time is to ask all hon. members to respect standing order 58, to which the hon. member for Montmagny-L'Islet referred, and to make their remarks strictly relevant to the clause under consideration, which at this point is the duration of the act.


John George Diefenbaker: Thank you, Mr. Chairman. I can understand the hon. member rising on a point of order because after all sometimes the truth hurts, and naturally arouses those who must, because they are members of the legal profession, feel some pricking of conscience in participating in bringing into effect certain of these powers which are above the courts, and which they as officers of the courts cannot uphold except in a political way.


An hon. Member:: That will hold them for a while.


William Ross Macdonald: Order.


John George Diefenbaker: If we have more order and less disorder from over there, things will be much better.


William Ross Macdonald: I hope that the hon. member for Lake Centre will now discuss clause 1.


John George Diefenbaker: I was coming to the abuse of powers under this measure, a matter which I think is particularly relevant at the moment. Referring again to what my hon. friend, the Minister of Justice, said last evening, he went on to point out that there was no danger in this legislation, that after all it was apparently being administered with proper safeguards. I do not know where to begin in the quoting of editorials referring to powers such as are asked for under this legislation for the period of one more year. I am sure if I quoted the Globe and Mail it would meet with immediate support from the other side, but I am not going to do that. I am going to quote from the Winnipeg Free Press, which the minister must accept as an authority, and the Saskatoon Star-Phoenix, which has never been noted for its support of the opposition. As far as the Winnipeg Free Press is concerned, it has this to say:
It is easy to say that Canadian liberty is perfectly safe in the hands of the present government. The record shows it is not safe in the hands of the present government.
Yet we are asked to place these powers, and I refer to those with the exception of

Transitional Measures Act the matter of rent control and any other controls that may be necessary, in the hands of a government that has shown a psychopathic contempt for parliament, and has placed itself above the law in orders in council passed under the powers conferred by this act. I want to quote also what the Saskatoon Star-Phoenix had to say only a few days ago about the responsibilities of the present Liberal administration. The date is February 22. It reads:
It is unhappily true that the present Liberal administration, while it has devised and executed broad fiscal, trading and security policies . . . has failed miserably these past few years in keeping clean and free those points where policies impinge on the individual citizen, and on his rights and responsibilities as a citizen. So as Liberals meet to choose their candidates let them make their voices heard.
I point out that this quotation is not from a Progressive Conservative paper, but from a paper which at all times has given real support to the government of my hon. friend in the province of Manitoba, while he was premier and before.
Let them-
That is the Liberals.
-not deny that they resent and denounce government by order in council;
I repeat that those are not my words, that they condemn the delegation-


William Ross Macdonald: Order. Is the hon. member now discussing clause 1?


John George Diefenbaker: Yes, Mr. Chairman. These are some of the results that will flow from the continuation of these twelve powers for a period of one more year under section 7 of the Continuation of Transitional Measures Act.


William Ross Macdonald: I think probably there is relevancy, but I would remind the hon. member that under standing order 58 the wording is, "strictly relevant." I know that it is a difficult question to decide. I can only ask hon. members to do their best to abide by the rules.


John George Diefenbaker: Thank you, Mr. Chairman; I am trying just that very thing.


Paul Joseph James Martin: Let us try a little better.


John George Diefenbaker: I have been most restrained in my language. Instead of making statements myself I am adopting the words of organs that in the past have given the strongest support to the government, and I have been pointing out what will follow from legislation such as this. Last evening my hon. friend, the Minister of Justice, in the absence of the leader of the opposition made a very strong attack on him. The essence of that attack was that freedom was safe in the

hands of the government under this legislation by delegation whereas the experience of the last three years has shown that whenever the opportunity has arisen for this government to evade the responsibility of parliament it has done so under this legislation. I ask the right to read what is said in this newspaper editorial in regard to the exercise of these powers, because it represents exactly the criticism of the leader of the opposition as well as the criticism offered by the right hon. member for Glengarry on April 1, 1932, which was just quoted by the leader of the opposition. This editorial points out:
Let them not deny that they resent and denounce government by order in council; that they condemn the delegation of cabinet power and responsibility to boards, commissions and crown corporations elevated to a world where parliamentary interference is resented and beyond the control of our tested political system.
Can anything be stronger than that-that this government, under legislation such as this, has elevated bureaucrats in this country to a position where they have power to push individual Canadians about, without permitting those Canadians recourse to the courts? And they are asking for this power for one more year, though in November last the Solicitor General said in effect: "We are at the end of the road, as far as I can see, in connection with this legislation." Then the editorial goes on:
Let them as Liberals make it clear that they will no longer passively accept the interpretation of our laws by non-responsible officials and the progressive weakening of our judicial system to which alone we can safely entrust this function of government...
Let them reject and outlaw the political considerations which have led to state appointments which will scarcely enrich our public institutions. Let them refuse to accept or countenance interference in their deliberations by those of their leaders who are infected with the disease of machinism.
I shall let hon. gentlemen on the front benches determine which of the leaders are infected with the disease of machinism. We of the opposition have consistently followed the course-and I have the quotations over the years-that where there is necessity for individual controls because of scarcity or by reason of economic conditions, we accept them. But we demand that the government, while holding out as bait the bringing into effect of necessary controls, shall not at the same time bring in controls that are not necessary, in order to perpetuate and preserve the bureaucracy that has been rampant in this country during the last two or three years. That is the stand taken by the opposition. I could give quotation after quotation from Liberal newspapers in this country calling upon parliament to cease its passivity, and calling upon members supporting the government to forget that one of the major offences they can commit is to stand against

a decision of the government front benches; asking them to stand up in this house, as members representative of the people, against an oppression that is arising by reason of bureaucratic control above and beyond the reach of the courts.
You asked me, Mr. Chairman, not to refer to the 1945 act. I shall not do so, except to say that this is a continuation-


Some hon. Members:: Order.


William Ross Macdonald: I understand the 1947 act is under consideration at the present time. May I suggest that before we went into committee the house accepted the principle of an extension of this act, and I do not think any reconsideration of that principle is now in order. The only discussion that is in order at the present time is as to whether or not the act should be extended to 1950. Any representations either in favour of extending it to 1950 or against extending it for the full year are in order, or any question about changing the date; but a general discussion of the principle of extension which was approved on second reading would not be in order at this time.


John George Diefenbaker: Well, Mr. Chairman, I find it difficult to know what it would be possible to discuss on an occasion like this, if it were not the degree to which the powers that are being granted will be utilized in the period between now and March 31, 1950. I realize your fairness at all times, Mr. Chairman, and I do not want to do anything that would constitute even the slightest departure from your ruling, so I shall not press the point further. I realize that this is one subject my hon. friends opposite do not want discussed.


Clarence Decatur Howe: Don't take yourself too seriously.


John George Diefenbaker: As far as my hon. friend the Minister of Trade and Commerce is concerned the abuse of power is one subject which always arouses him. He is a Chesterfield of parliamentary manners until there is any reference to the way in which he and those associated with him have flouted parliament. Then he immediately becomes aroused and resorts to his usual attitude, which he is now displaying. I expect a higher degree of intelligence from my right hon. friend than he displayed in the interjection he just made. I can understand his attitude, however, for he is the man who was responsible for the order in council which denied to parliament-


Stuart Sinclair Garson: I raise a point of order, Mr. Chairman. Surely this is not in order.


Clarence Decatur Howe: I suggest that the hon. gentleman be allowed to proceed, for I should like to reply to him with the same latitude.
Transitional Measures Act


William Ross Macdonald: The right hon. minister made his point, and I have allowed the hon. member for Lake Centre to reply, so I believe he should return to the bill.


An hon. Member:: Another waste of time.


John George Diefenbaker: My hon. friend has some remark to make?


An hon. Member:: Get back to the bill.


John George Diefenbaker: Let me tell my hon. friend that ignorance, even though energetic, is still ignorance.


An hon. Member:: A waste of time.


John George Diefenbaker: It is difficult to continue against all this noise, Mr. Chairman. The area in the back is now engaged in general disorder. However, I want to ascertain from the minister the degree to which, when these powers are granted, the individual who is affected will have the right of recourse to the courts against injustice and unfairness. I think it only fair that there be an assurance in that direction. The principle has been decided by the house already, that there is to be an extension of powers for a further year; and as custodian of the rights of the people in this country I think the Minister of Justice should give the assurance now and place the necessary amendment in this legislation so that no longer will orders in council be passed by the Star Chamber method and kept in secret for several months, to be produced ultimately only when some hon. member discovers their existence. Will he make provision in the act whereby any person wrongly interfered with or unjustly treated or in any way discriminated against in his own class to his own detriment will have the right of recourse to the courts? We have a right to ask that if extraordinary powers are to be granted they shall be so circumscribed that no man in this country will be denied his right of appeal to the courts against injustice caused to him as the result of a misapplication, if you will, of the powers granted under this act.


Mr. Church:: I want to point out to the attorney general one feature of this particular bill. Since confederation it has always been the rule, by maxim and tradition, that the hon. gentleman who is Attorney General of Canada must not give to the house legal opinions. The hon. gentleman has been violating that rule every day of the week. I happened to have a pair in the first vote today. I was unfortunately not here at the time Bill 86 was called, but 1 was called in. Legal opinions have been given across this chamber every five minutes, and it is a breach of the statute law. The hon. gentleman may be brought into litigation between the attorney general of the dominion and the attorneys

Transitional Measures Act general of the provinces with regard to what is a general emergency under Bill 86 and what is not. A general emergency takes precedence over everything from coast to coast in Canada, provided that it is of general application and within the terms of section 91, which makes the dominion, in case of war and general emergency, supreme over section 92 and over everything we have in this country.
I wish to point out only four or five things in conclusion. I hope we shall not have any more violations of that kind by the present attorney general. I happened to point out this rule to his predecessor, who is now the Prime Minister of Canada, during the first three or four days he was in the house. At that time a bill was under consideration as a result of which litigation might arise between the Attorney General of Canada and the attorneys general of three or four of the provinces. It was pointed out that, by a decision of the privy council, this was a rule of law in England. While the names of their ministers over there are a little bit different, the principle is the same; the attorney general must not give legal opinions in the house, even if he is asked to do so.
The other question to which I wish to refer is one that I probably should have raised on the amendment moved by the hon. member for Eglinton. I shall not go far with it today. In three or four minutes I shall conclude my remarks. At the Canadian National Exhibition grounds in Toronto on May 20 there is to be an exhibition by the Home Builders Association with regard to prefabricated housing, and I hope all hon. members will find it possible to see it. I remember mentioning this matter of housing three or four years ago when Mr. Churchill, then Prime Minister of Great Britain, was getting lumber and many other things for that type of housing. I have here in my hand a pamphlet announcing the exhibition which is to be in the horticulture building. Houses that can be built for $1,200 are to be shown.
As I said before in connection with the building of civic car lines in our city, I remember when we had a similar situation in Toronto. The old street railway went only up to Bloor street, under the old street railway agreement. Between 1915 and 1921 a system of civic car lines was built-six tickets for ten cents-one on St. Clair running right out to the junction, one in North Toronto, in Eglinton riding, by the taking over of the metropolitan railway out there, one of these civic car lines on Gerrard street from Broadview to east end, and one on Danforth from Broadview to Main street. With these municipal civic car services, with six tickets for ten cents, the whole territory was opened up and the people built their own houses.

The last thing I wish to say is this. We have no steam suburban service, as they have in Montreal and every large American city. We must have one if we are ever going to solve the housing problem. Land could be bought by the acre in the country but as long as we have no steam suburban service we are not able to obtain it. Other large cities have such a service. I believe western Ontario is suffering badly, as is the Niagara district and the Toronto district especially, from choked railway facilities without a steam suburban service. In York, Peel and Ontario counties land is cheap but without municipal services, and in the city no lands are available for that type of housing at a cost that the workingman can pay.
As I said here the other night on, I believe, another section of this particular bill, it is time that we had some provision along those lines. Speaking as a private member of the house I went so far as to say that I believe the time has come when there should be some subsidy in connection with workingmen's houses. For the low-wage people there is a fund under the Workmen's Compensation Act to which the Minister of Labour makes considerable reference. This matter could be worked out under the Workmen's Compensation Act, plus a food subsidy along the same lines, through the Workmen's Compensation Act, to meet the needs of the low paid wage earners. I remember when Mr. Churchill, the former Prime Minister of Great Britain, made an address in which he was urging the building of 500,000 prefabricated houses. We need almost that many in Canada right now. With the cheap land which can be had out in the townships, and with a steam suburban service, a solution might be found. Take, for instance, Lome Park. There is only one train a day out there. In East York there are no trains at all. The city gives services and we paid large sums of money to build roads, the York highways which I instituted in 1907, fifteen miles out.
There are various classes of housing that might be referred to today. I am afraid I come pretty close to the rule that it is not in order to discuss these matters under this bill. I might mention that there is housing for the Indians and the Eskimos. We had committees on these matters. In my constituency three or four hundred people are being housed in the old jail, which has accommodation for only 130. We managed that by building two jail farms, one for men and one for women, when I was in office, and the old Toronto jail was used only for remands. It is a question of the sick. No doubt the Ontario government needed those two farms for the mental hospitals. They

are doing excellent work in that connection and have made a great deal of improvement. But the old Toronto jail should be used only for remands and the excess given new quarters.
There is the question of housing for the aged and infirm, and there are a great many other features of the housing problem which I shall be obliged to mention at another time.
I call to your attention, however, the fact that what we need in the Toronto district is a steam suburban service. Every large city has such a service. Without it there can be no solution to the housing problem, because that problem is almost ninety per cent a transportation problem plus municipal services problem. If these cannot be given at a small cost-and I hope the Minister of Labour can work it out in some way-plus some allowance for food for the workingman's family and part for cheap housing, then I do not know where we are going to be in the Toronto district, where we need such a large number of houses for the working classes.


Mr. Gibson (Comox-Alberni):: I do not
suppose there is much possibility that all members of this house will agree on this bill anyway. That would be too much to expect. The Progressive Conservative party naturally takes the attitude that we have too many controls embodied in this bill. Of course our friends of the C.C.F. party suggest that there are not nearly enough controls.
Last night I was particularly interested to hear the hon. member for Moose Jaw say that his party would not suggest that controls be continued for one moment beyond the time when prices were no longer rising. It seems to me that the attitude which they have taken recently shows their interest in retaining floor prices for most of the products which the farmers sell in Saskatchewan.
I: would suggest to the minister that he might adopt the philosophy of the Chinese. It might be helpful if he allowed all of us to save face in a matter of this kind. I suggest that one control that he could well remove is that on timber. I am not sure that he is convinced himself that he really needs the power to control timber.
In reply to a question asked by the hon. member for Victoria (Ont.) the minister said that he was interested in retaining sufficient clears in Canada to take care of the situation. I know the minister will concede immediately that there are all kinds of lumber available in Canada for building houses. If it is merely a question of controlling clears to take care of our flooring needs, I wonder whether it would not be wiser to let the individual buyer decide for himself what
Transitional Measures Act price should be paid for clear flooring. He may decide that he would like to put down shiplap flooring or something of that quality, and then cover it with wall carpet. It seems to me that each of us should be able to make the decision for himself. The price could very well be determined between the buyer and the seller, and there would be no hardship because there is always an alternative.
The same thing applies to the use of clear lumber for doors and for window stock. After all, there is always an alternative available in the form of plywood, or it could even be metal. I ask the minister whether he would consider getting rid of timber control, because I am satisfied he has sufficient administrative duties without taking on this extra one.


Mr. Hodgson:: I should like to follow the remarks of the hon. member for Comox-Alberni. As a matter of fact, he and I have talked about this on two or three different occasions. I have also had letters from quite a few lumber companies in Ontario, and I have talked to members here who are interested in lumbering or in the lumber industries in their ridings. I have also talked to men from the maritimes, Quebec and British Columbia. Since this bill controls the lumber industry from the tree to the root under the ground, and from the log to the finished product, there is no doubt in my mind that the government can do whatever they wish . about it. They have the power.
At the present time I have a carryover of lumber in my own yard, and I know that every lumberman has lumber in his yard. Pine, according to grade, is down from $5 to $20 a thousand. Spruce is down on the average $10 a thousand. Hemlock is down on the average about $5 a thousand, and you cannot sell hardwood flooring stock at all. There is no market for it. I should like to prevail upon the minister to throw timber controls out the window, because there is no doubt that lumber for houses can be obtained, flooring, or anything else. I should be glad to have the business at twenty-five cents a thousand.


An hon. Member:: Twenty-five cents a
thousand.


Clayton Wesley Hodgson: Yes, commission for supplying the government with lumber, or anybody else who wants to use it. The orders would be so big that I would make a lot more money. There is a market for hardwood in the United States, but because of the quotas we cannot fill them. The government should talk with some of the lumber concerns, and the Canadian lumbermen's association, and do something immediately. Now is the opportune time to do it because there are large cuts this

Transitional Measures Act year and some carryover from last year. Unless something is done along that line within the next few weeks the lumber industry will be left in a precarious position.
In my own riding this year there happens to be a hydro line being built which is occupying the time of 237 men from my own township. I made it my business to find out about that. If these 237 men had not been working on that hydro line, which has been cut out and is now practically finished, I do not know what we would have done with the men in Haliburton because there just would not have been any work for them to do. We had a cut of lumber taken out this year at a high cost.
I think the minister will agree that when he took certain controls off lumber in the past, when he took price control off, the lumbermen's association held the price down so that there was no increase. At any rate, there was very little, if any, increase in the price of lumber. I think he will agree also that the lumbermen are fairly reasonable fellows to deal with. He would be on safe ground in taking off these quotas and letting us ship some of this hardwood flooring to the United States.


An hon. Member:: The price has gone up.


Clayton Wesley Hodgson: The hon. member has not looked up the statistics. If he does that he will find that lumber has not increased in the last twelve months since controls were taken off. At the present time we do not need' timber controls at all. I have stacks of letters and telegrams which I would like to show the minister if he wishes to see them. I should like him to consider this immediately.


Mr. Fair:: There must be something radically wrong with the lumber and timber business, particularly when the hon. member who has just taken his seat has told us that he could not sell flooring any more. There is a good reason for that. The reason is that the price is entirely against better sales of flooring. In my home town last fall it cost only $315 a thousand for edge-grain flooring, and for oak flooring, mill run, only $350 a thousand, and half of it was not fit to put in a floor. Perhaps some of these things are responsible for the lumbermen not being able to sell their flooring. Other materials are in the same category.


Clarence Decatur Howe: I say at once that no one would like to get rid of timber control any more than I would. My difficulty is that when the trade as a whole are consulted their opinions are different from the individual opinions expressed in this house. I sent the co-ordinator of controls out to the Pacific coast a short time ago to discuss with the trade there 
whether we could not now drop timber controls. The reply was, "please, no". They gave as the reason that they were facing negotiation of new contracts with the United Kingdom and they wanted the government in there to work out with the trade any contracts that could be arranged with the United Kingdom.
Another case in point is the situation in the maritime provinces. Last year the maritime provinces had a timber contract from the United Kingdom for 60 million feet of lumber. Recently, the United Kingdom has come in with a demand, government to government, for more than twice that amount of timber. How would we be placed if there were no control of the industry? How would we know that the larger quantity could be supplied without upsetting the local market? By working out the larger exports on a quota basis we know that the quantity can be supplied.
In addition, the United Kingdom is coming in for 10 million feet of hardwood, which is the material my hon. friend spoke about. Suppose everybody were free to ship their hardwood wherever they liked. You could not touch that business. It is all very well for hon. members to rise in their places and say that this control bothers some individual, and that he could make more money if there were no control, and therefore there must be no control. We try to look at the industry as a whole, and Canada's interest in the industry, which is very real indeed. We are trying to cut the control down to the absolute minimum. My hon. friend knows that there is no price control. The control today is solely an export control. There is no other control. We think export control is needed. We would like the industry as a whole to tell us it is not needed, and we would then get rid of it. But when we ask the industry to do so, it backs away and says, "We think we should have it". I think we should have it, too, because otherwise I think the upset in our domestic economy would be considerable, and that the effect on exports, particularly on exports to the United Kingdom, would not be beneficial.
The timber trade of the United Kingdom is under government control. That buyer comes in for very large orders which no one firm could begin to handle. Whether the industry by itself is sufficiently organized to see that those orders are taken and fairly distributed among all the producers of lumber, I am not sure. I wish they would tell me that they are so organized.
As I say, there are always two sides to this question. The hon. member has suggested that there was no increase in price when

price control went off. I would remind him that the wholesale price on lumber on the Pacific coast for the domestic market was $29 a thousand when price control was removed, and inside of a month the price level soared to about double that level.


Clayton Wesley Hodgson: You can buy clears on the market right now for $45.


Clarence Decatur Howe: I was talking about $29, when we had price control.


John Lambert Gibson: How will the timber control allocate bulk purchases from the old country? If they want half a billion feet of lumber, how will the small producers in British Columbia obtain the same pro rata share of that business as the large producers? It is well known that there are several large exporting companies in British Columbia, and that they have had a number of smaller mills working for them under contract. How will those smaller mills receive their share of the business? Is it part of the business of the timber- controller to direct that?


Clarence Decatur Howe: Yes, and I think timber control has worked to that end. If the market gets slack, or if the chief outlet is a United States market, it is much more difficult to bring that about. But for United Kingdom market orders I believe timber control has always been able to see that the order was distributed among the large and small operators.


Mr. Thatcher:: I do not wish to appear persistent, but at some time in this debate I hope the Minister of Justice will tell us what the government has done about the report of the prices committee, or what it intends to do. I do not know if this is the place to do it, but some time before this debate is over I wish the minister would tell us that. What has he done about those fourteen recommendations, or what is he going to do about them -if anything?


Mr. Timmins:: The remarks of the minister are of considerable consequence. I took down some of them concerning control. One of his observations on timber control was that no one would be more pleased than he would to get rid of it. While these are not his exact words, he did say he had found the industry was anxious to continue controls.
That is not the basis upon which these control bills were first introduced. They were brought in on the basis of an emergency. I shall not attempt to go into that argument again, but that was the basis for their introduction. Now we reach the point where this business of timber control becomes a matter of marketing, to use the
Transitional Measures Act minister's words. He says that, looking at the industry as a whole and having regard to Canada's interests in it, the government feels that these controls should be continued for another year.
It seems to me that in respect of timber control we are now being told it is to be continued as a marketing project. We are now in the business of marketing timber. That may be a proper procedure in the ordinary course of events, but certainly it arrives at the wrong end of this matter of controls. So much for that.


Clarence Decatur Howe: May I answer the point the hon. member makes? I would remind him that I said timber control today was reduced solely to export control. I would remind him further that export control is a statute of the government which does not depend upon an emergency. It depends upon permanent legislation passed by this house. The hon. member ought not to get his blood pressure too high when he discusses timber control as it is today. There is no infringement of any other jurisdiction; export control is a matter within the federal government jurisdiction.


Harold Aberdeen Watson Timmins: I am not suggesting there is any infringement. I am simply taking the minister's reasons for having this control. If it could be done under the other measure, well and good. But why tell us that this control measure is necessary in respect of timber? Then, coming to the matter of steel-


William Henry Golding: Order. The clause before the committee deals with the extension of time.


Harold Aberdeen Watson Timmins: My point is directed to that. With respect to the control on steel, I believe the data handed out by the steel industry in Canada and in the United States all goes to point out that by the third quarter of this year steel will be in good supply in this country. The minister can correct me if I am wrong, but that is the statement made by the steel industry itself.
I know that in Toronto the transportation commission, which has been waiting for many years to begin work on a big project, has now made arrangements for its steel, and is getting it from month to month. I do not know whether the steel is being produced at the present time, but the contract has been made. As I see it, the minister has no problem in steel control for the year 1949. I see no reason why it should be continued for another year. It is tied up with the export-import control regulation. Under that measure we know that all the steel coming into this country is welcome. We want all

Transitional Measures Act we can get. The controller exercises no control over it, except that it is regulated from one plant to another in order that the best interests of industry may be served. But that is a matter of internal economy. I see no reason why that cannot be taken care of under the export-import control measure.
The minister has said that this bill, in respect of the export of timber, does exercise control of the timber of the country, but only to that extent. I think this control bill is being used now more or less for the purpose of regulating trade, rather than for its original purpose of dealing with an emergency in Canada. The minister is bound at this stage to state specifically why steel control should be continued for another year.


Clarence Decatur Howe: I think it would be well to let the committee know just what steel control has accomplished. I would point out to the hon. member that steel control directs the rolling schedules of the producing mills in Canada. It is all very well for the hon. member to say that we do not need steel control because in the third quarter we shall have an ample supply. I would remind him that we are still in the first quarter, and that we have to live through the second quarter.


Harold Aberdeen Watson Timmins: Will the minister tell the committee that he believes there will be plenty of steel in the third quarter?


Clarence Decatur Howe: Certainly not; and I suggest if my hon. friend is putting that out as his expert opinion he is misleading a great many people in Canada who should be better advised. Last year we produced about 3 million tons of steel and we imported about one million tons. Of the 3 million tons that were produced in this country, 330,000 tons were produced due only to the fact that the steel controller stepped into the distribution of basic steel. Under the authority of the emergency act the steel controller took basic steel from Algoma and Dosco and shipped it to the finishing mills at Hamilton which had an additional finishing capacity. The result was the production of about 300,000 tons of steel plate that would not otherwise have been produced.
Similarly, in the matter of pig iron we said to some of the big producers: We are sorry; we shall have to have part of your pig iron; it is true you need it for your own production, but you will have to do with less. Otherwise foundries will be closed unless we get additional supplies to them that are not available from usual market sources.
In the matter of scrap steel, the controller has arranged for the importation of about 300,000 tons of scrap from Cuba, Australia and other countries. A good deal is coming 
in now from Germany and other foreign countries that would not otherwise have been available to private industry; it was made available by the government agencies directed by the steel controller. In some cases it has been necessary to subsidize the movement of scrap so that it could be used by our steel industry without upsetting the prices of the products.
A good deal was said last year about nail production. We stepped into the distribution of wire and rod suitable for being made into nails. There can be only so much nail wire and nail rod produced in this country, because our capacity is limited. We stepped in and said: We are sorry, but you cannot use as much of that nail wire and rod for wire fencing as has been your custom; we have to have a certain additional proportion of it for nails. Recently we completed a most complicated transaction in which we have had the assistance of the United States government. Certain nail wire and rod from United States mills has been allocated to Canadian mills so that this year we shall be able to produce an additional 24,000 kegs of nails per month. It will not now be necessary to interfere with our wire fencing program.


Mr. Fraser:: Will any of those nails be exported, like those referred to a few weeks ago which were produced from wire that had been brought in?


Clarence Decatur Howe: No; that was simply a conversion process. In this case the mills have bought the wire and the product will be wholly distributed in Canada.
The steel controller is supporting certain national programs. In other words, he gives an undertaking to a manufacturer that if he takes on a program in this class which is approved by the steel controller, the steel controller will see that the necessary steel is produced. These programs include shipbuilding; freight car construction; hydroelectric expansion; railway maintenance and repair; locomotive construction; the expansion of the petroleum industry, both construction and refining; and housing construction.
Through the efforts of the steel controller and the government, the import of steel from England has been stepped up greatly. This steel has not gone into just one program; it has gone into a number of programs. The net result has been that we have been able to relieve the capacity of one of our own steel mills so that it can continue rolling plate for the pipe line required as a matter of urgency to distribute the production of the Alberta Leduc oil wells.
That is the function of the steel controller.
I do not know of anyone who has been subject to the control who would have it otherwise.

There is no doubt that it individual programs were able to shop around among the different producers, and there were no government co-ordinator, certain programs would be well supplied while other programs would be badly upset. I do not know of any producer of steel or pig iron or steel products who would like to see steel control abandoned. I certainly do not know of any user of steel in an important program who would gladly see steel control abandoned.
It has interested me very much to hear our friends say that they are for or against these controls. Apparently the attitude is: "Me too, but the method must be different."
I remember it was said that the Dewey campaign was conducted with the motto, "Me too, but not so much." I think, "Me too; but the method is wrong" accurately describes the Tory position on these matters. In taking that view I think they are overlooking the well-being of the steel industry and of those industries that depend upon steel for their existence.


James MacKerras Macdonnell: Would the minister agree, as to the feeling of satisfaction which he describes, and which I am very much afraid exists in many quarters- there is satisfaction on the part of those who are well established in business, who are content to have business remain as is, who want no one else allowed to come-it is those people who are as content as the minister indicates? If so, I should like to point out that that situation is most injurious to anyone who really believes in the free system.
I am very much afraid that the minister is right in saying that there are a lot of people who like to come down to see the Minister of Trade and Commerce. I am sure that they talk his language and think he is very sensible, but I wish to point out that the result of it is that those people who are pretty well enamoured of steel control are in the position I have described. However, it is extremely difficult for new people to get in. If they do not get in, then as to the system in which the minister says he believes-I think he does believe in it, but I always think the minister's belief in private enterprise is tempered somewhat by the personal attitude of the Minister of Trade and Commerce-if the small man is kept out it is likely to result in a very dangerous position.


Clarence Decatur Howe: If my hon. friend is asking me whether I believe in keeping out the small man, may I say that I certainly do not. I know of no small man who has been kept out. In fact I know of many small men who have been kept in business by the support they have received from the steel controller. You will And that in all parts of the country.
Transitional Measures Act


James MacKerras Macdonnell: I hope the minister is right.


Clarence Decatur Howe: Even my hon. friends in the C.C.F. know of little firms on the prairies that have been taken care of. They include new people, they include small people. The duty of the steel controller is to see that they all are looked after. The producers say that they want to distribute steel fairly and equitably, and they think that steel control has enabled them to do just that. The consumer says that he thinks the government has correlated all the demands of steel, that it has scheduled steel properly to fit requirements in the steel plants, and therefore he favours steel control.


Mr. Rowe:: In view of the minister's statement with reference to lumber and steel, do I understand that the present controls are merely for the export of lumber?


Clarence Decatur Howe: I did not say that. I wish my hon. friend would come to the chamber occasionally and listen to what I say. I did not say anything of the kind.


William Earl Rowe: The minister said that the foreign exchange control board controls exports, and if that is so it is not necessary to have this control.


Clarence Decatur Howe: I said nothing of the kind. I will tell my hon. friend what I did say.


William Earl Rowe: All right; say it again.


Clarence Decatur Howe: I hope that you do not mind listening this time, because I do not know anyone who can twist my statements any faster or farther than my hon. friend.


William Earl Rowe: You are a good subject to misquote.


Clarence Decatur Howe: I said that timber control as of today is reduced to export control. Export control is not administered by the foreign exchange control board. It is administered by the Department of Trade and Commerce.


William Earl Rowe: Export and import?


Clarence Decatur Howe: Yes, under the Export and Import Permits Act it is administered by the Minister of Trade and Commerce. Just keep that in mind for a moment. As for steel control, I spent at least ten minutes explaining all the various functions of steel control, which include the scheduling of rollings in mills, distribution of scrap, distribution of the finished product, and I said nothing about exports, for the reason that the export of basic steel is prohibited.


William Earl Rowe: That is the very point. Probably the clarity of your expression is somewhat similar to my intelligence and understanding.
1780	HOUSE OF
Transitional Measures Act Mr. Knowles: Agreed.


William Earl Rowe: In view of the fact that the minister can make his statements so clear, I should like to ask him now to say what condition would exist if there were export of steel. Would he believe in continuing controls on steel just as he has continued them on lumber?


Clarence Decatur Howe: I will tell my hon. friend what would happen if there were export of steel. On the present price scale, all steel in this country would move out to some other country. What would happen to people who need steel in this country would be that they would have to bid up the price or go without.


William Earl Rowe: Keep the controls either way?


Clarence Decatur Howe: I do not know.


Howard Charles Green: One question occurs to me as to steel control. In the speech from the throne it was announced that assistance was to be given to the producers of basic steel. Can the Minister of Trade and Commerce tell us whether that is to be done by new legislation, or whether it is to be done under the powers that are now possessed by the steel controller?
I notice that he has very wide powers. Paragraph (p) of subsection 1 of section 3 of the order reads:
Subject to the approval of the governor in council, to advance moneys to any person engaged in the business of producing steel, for the purpose of assisting such person in the carrying on of such business.
Is the assistance to the steel industry to be given by the steel controller under this order in council, or is there to be separate legislation?


Clarence Decatur Howe: I shall be very glad to bring down the bill as soon as we get through discussing these matters. Then my hon. friend will know all about it. Obviously it is a separate bill, but to discuss it now-


Howard Charles Green: I do not want to discuss it now.
I merely asked the question. I should like to make a suggestion to the Minister of Justice. This bill is an amendment of the Continuation of Transitional Measures Act, 1947. In the act of 1947 there is a schedule which lists fifty orders in council. The Minister of Justice has told us that there are now to be only twelve orders in council under the act.
I suggest to him that it would make it much easier for the legal profession, and for other people across the country, to understand the legislation if he would bring in a section of the present bill substituting an amended schedule including only the twelve orders in council. If he does not do that, when a person looks up the act he will go back to 1947 and will find fifty orders in council. It would be almost impossible for anyone, who 

has not been in the house and followed the discussion, to find out which of those orders in council are still in effect. I know it would be extremely difficult. I think it would simplify the legislation a great deal if the minister would simply add one section to the present bill which would set out that the schedule was to be amended. Then we would have a new schedule with only twelve orders in council listed. Of course that will have to be done while the bill is in the committee stage, if it is to be done at all.


Stuart Sinclair Garson: I do not think that the difficulty is nearly as great as my hon. friend believes. The schedule to the 1947 act lists these orders in council, and also lists certain amendments to them. Then there is an office consolidation of the orders in council which are specified in the schedule to the bill. That contains all of the orders in council specified in the schedule, and the governor in council is prohibited from making any amendments to those orders in council. Therefore the only question that remains is as to which are revoked and which are still in force.


Howard Charles Green: That is what is hard to find out.


Stuart Sinclair Garson: As regards the board orders made under the powers of the orders in council, in the matter of rental control, for instance, there is an office consolidation which I have in my hand, and which is dated February, 1949. It contains the wartime prices and trade board orders respecting maximum rentals, termination of leases for housing accommodation and shared accommodation. This is prepared as of February of this year so that it is right up to date. I do not think that the difficulty of getting at these regulations and ascertaining what they are, as indicated by some of the remarks that have been made, exists, because with no more trouble than simply getting these documents one can ascertain what orders are still in effect. The terms of these orders are accessible in these two pamphlets.
I suppose that we could bring in a new schedule with just the twelve orders in it, but they have been mentioned time and again during the course of the debate. I do not think that any person would be very badly discommoded or inconvenienced by not having them. Then there is the further matter that, inasmuch as the policy of the government is one of decontrol, one would expect that it would not be very long before the new schedule would be a bit out of date because of the decontrolling of some of the subject matters set out in the suggested new schedule. Upon balance I scarcely think that it would be worth the effort to bring in an amended schedule with a smaller number of orders in council in it.


Howard Charles Green: I take it from what the minister says that there is no serious objection to putting a schedule in the present bill. I would earnestly suggest to him that he give consideration to bringing in such a schedule because it will make the legislation very much clearer than it is at the present time.


Mr. Merritt:: I think the Minister of Reconstruction and Supply said that he had made arrangements whereby three or four thousand tons of rod would be brought in from the United States to make nails this year. The increase in the rod allocated to nails last year from wire fencing did not, I believe, result in any additional supply of nails reaching British Columbia through that means. Will the minister assure the committee that a part of this new allocation will be available to British Columbia?


Clarence Decatur Howe: Yes. I can assure my friend that the first order placed for this material, I was happy to note, was from the Morrison Steel and Wire Company.


Charles Cecil Ingersoll Merritt: Having said that timber control involves export only, and is administered in the minister's department by the export permits branch, why is it that the timber control order is needed any more? Why is it that the Export and Import Permits Act does not give the minister ample power to assist in these state trading deals?


Clarence Decatur Howe: Perhaps so, but at the moment we are keeping the powers of the timber controller. In any case, even if timber control were administered under the export act, it would still be necessary to have a, timber controller. The timber control legislation probably will be cancelled before many months go by.


Donald Methuen Fleming: I want to return to the answer which was given by the Minister of Justice to the question of the hon. member for Vancouver South. I think the Minister of Justice can well afford to be more reasonable in the position that he has taken. He says it would not be worth the effort to put the twelve orders in council as a schedule to the present bill. I want to point out to him that the office consolidation of the orders in council to which he refers has no statutory validity. It was merely circulated among members of the house for their convenience in discussing the bill. Quite apart from that legal aspect, however, think of the difficulty in which you are placing people who want to learn the law of this country. They come to look at the statutes to see what control measures are still in effect. When they come to read the present bill they find a measure with only two sections, and they do not find the text of the orders which are given continued statutory life by this legislation.
Transitional Measures Act
Then, sir, think of the position in which this house is placed. I trust hon. members will want to see introduced certain amendments to some of the orders. As the Minister of Justice has pointed out, the governor in council has no power under the 1947 act to amend, except as to the revocation of the orders in whole or in part. The governor in council may revoke any portion of the orders but cannot otherwise amend them. As the minister well said in the debate on March 18, the only way the orders themselves can be amended is in committee, the stage we are in at present.
For my part, difficult as the matter may be,
I think it essential that the house should consider necessary amendments with respect to some of these orders, because the powers conferred by them are far broader than there is any possible excuse for continuing today. There has been certain discussion here this afternoon. We talk in general terms about steel control or about timber control or about priorities control, but this is the stage at which the house should have full opportunity to consider these subjects in their particularity, in detail. When we talk about steel control, for instance, let us not confine ourselves to a general discussion. I think the house in committee should get down to an examination of some of the powers conferred upon the steel controller by article 3 of P.C. 245; and I defy the Minister of Trade and Commerce or any other member of the house to say that all these powers are necessary today in connection with the type of steel control for which the minister is arguing. Is he going to say, for instance, that it is necessary for the steel controller to have this power:
(a) To take possession of steel wherever found and to produce and/or deal in or with steel or equipment . . .
Is it necessary that he should have power to produce steel? Is the minister going to say it is necessary that the steel controller should have these powers:
(c) To enter on, take possession of, and utilize any mine, land, plant, factory, mill, refinery, smelter, foundry, warehouse, building, or place or any equipment used or capable of being used for the purpose of producing or dealing in or with steel and to deal in or with or take possession of any vehicles, cars, ships, locomotives, or other equipment deemed by the steel controller to be required or useful for the operation of any such mine, plant, factory, mill . . .
and so on. Is he going to say that power is necessary for the steel controller today? Here are powers which, if exercised, could make the steel controller a virtual dictator not only over the distribution of steel but over its manufacture and over every aspect of mining which may have to do with the production of steel in its finished form, over transportation and a thousand and one other things that may

Transitional Measures Act enter into the various processes which finally bring about the production of steel. There are many other provisions of the same nature that I say are totally unnecessary today.
I have referred to steel control, but look at some of the powers conferred on the timber controller. I say we should not be talking about timber control just in general terms. I ask if it is necessary that today the timber controller should have the power, as he has, under section 2 (d) of P.C. 1997, to enter on and take possession of and utilize, by himself or by any person duly authorized by him thereunto-


William Henry Golding: I am afraid my hon. friend is trying to raise the principle involved in these controls, which is the principle involved in the bill. That principle was dealt with on second reading, and it is a definite rule that speeches in committee should be strictly relevant to the clause under discussion. What is the clause under discussion? It is to extend this act for another year. I think the hon. member is completely out of order in dealing with the principle of these controls, the powers conferred and all the rest of it, because those matters should be dealt with on second reading. I hope hon. members will try to keep within the rules.


Donald Methuen Fleming: With all respect, Mr. Chairman, you say I am trying to discuss the principle of the bill. I assure you I am not. That principle, which has been approved by the house, is that there shall be an extension. In what I am arguing I am assuming there is to be the extension which was approved in principle on second reading. Within that principle I am saying the powers are unnecessarily broad, and that this section which is designed to extend every term, every letter and every syllable of these twelve orders is unnecessarily broad. I am pointing out the respects in which that unnecessary breadth continues. That is not to question the principle of the extension. It is to ask whether, the house having decided there shall be an extension, it shall be a completely unfettered extension, as is contemplated in section 1? What I am saying is completely within the scope of that section. I am pointing out to the committee the powers it is proposed to continue, which I say are quite unnecessary, assuming the house has decided there shall be an extension of the control system. I am saying many of these powers cannot be justified, that they are totally unnecessary even to the extension of steel control or timber control or priorities control, for which the Minister of Trade and Commerce has been arguing and which I am discussing now just as he discussed it.


Stuart Sinclair Garson: No one likes to be raising points of order on his fellow members of the house, on any side, because the less we do so the more harmonious can be our discussions and perhaps the more progress we can make. But surely in the present instance we are dealing with a section which changes only two words. It changes the words "forty-nine" in the third line of section 7 of the Continuation of Transitional Measures Act, 1947, to "fifty", and does the same thing in the following line. That is all it does. I would say about ninety-five per cent of the discussion since we went into committee has been irrelevant. What would be relevant is whether the date should be 1950 or 1951 or 1952-


George Alexander Drew: Or 1945.


Stuart Sinclair Garson: That is quite right; but it relates only to the question of the length of the extension. No amount of sophistry can disguise the fact that this is all this section deals with. If we are going to be strictly relevant, that is all we can talk about on this section. My hon. friend would be quite right in making these remarks on second reading, or he could make them on third reading, but not in committee on this section.


Howard Charles Green: May I point out that last evening the Minister of Justice laid great emphasis on the fact that, in each of the years these bills have been brought up, the house has had the opportunity to approve each order in council and has actually done so, and that therefore a decision has been made each year on each order in council. The very next day, when the hon. member for Eglinton tries to deal with an objectionable term in an order in council, we have the Minister of Justice, of all people, getting to his feet and saying that it is out of order to say anything about these particular orders in council. His stand today proves absolutely beyond a doubt that the point he was making last night was just ridiculous.


Stuart Sinclair Garson: Mr. Chairman-


William Henry Golding: Order. I think I should remind the hon. member for Vancouver South that when the minister was speaking he was speaking on second reading. At the present time we are in committee on the bill. I should like to say this to the hon. member, in all kindness. There is no proposal in this clause now before the committee to change any of the powers that were in the bill. The proposal is simply to extend the act for another year. I believe it would be perfectly in order when we are discussing it on second reading to draw to the attention of the house all these objectionable features

of the bill. But in my opinion it is not in order to go into all the phases of the bill when we are dealing simply with an extension for one year.


Howard Charles Green: On the point of order, may I point out that when you are on second reading of the bill you cannot discuss sections. You can discuss only the principle. How could we possibly have discussed the terms of any of these orders in council on the second reading of the bill?


William Henry Golding: My hon. friend will agree with me that, on second reading of any bill, you can point out all the objections to it that you may wish to point out, and you can move amendments to the bill if you wish to do so. You can raise all the objections you like. But when we come into committee the rule is strict that speeches must be relevant to the clause before the committee, that each clause must be dealt with, and that we pass on to the next. I do not want to interfere with the members, but I think we should try to keep to the rules and, as much as possible, try to have the speeches relevant to the clauses under discussion.


Howard Charles Green: Is the chairman ruling that when we were on second reading we could have taken all the different orders in council paragraph by paragraph?


William Henry Golding: Oh, no.


Howard Charles Green: And could have dealt with them there?


William Henry Golding: Oh, no.


Howard Charles Green: If not, when can we do it?


William Henry Golding: On second reading every member has the right to point out all the objectionable features in a bill and to use all the arguments he possibly can to defeat the bill, if he is not in sympathy with it. He may move amendments to defeat the bill. But once the house has decided on the principle of the bill and it comes before the committee, we should then confine our remarks to each clause that is before the committee.


Charles Cecil Ingersoll Merritt: Speaking to the point of order, I have in my hand Hansard of last year when this measure was discussed. I find that on March 16, 1948, at page 2256 under the heading "On section 1-Duration of act", each of these orders in council was discussed specifically. At the start of the evening sitting on that day the Chairman himself said:
The committee was considering P.C. 9029, wartime leasehold regulations as amended.
Right through the discussion of last year, on the section dealing with the duration of
Transitional Measures Act the act, the practice was followed of discussing the detail of the specific orders in council.


Mr. Fournier (Hull):: That does not mean it was in order.


George Alexander Drew: I submit to you, Mr. Chairman, that the whole problem that has arisen here in the discussion that is now taking place on the one hand is the direct result of the course that is being followed, and on the other hand indicates the highly unsatisfactory nature of that course. What comes before the committee is a short bill of two sections. The first section of the bill contains a provision that would extend the period of application of these twelve orders in council for another year. The second section refers to the powers of the wartime prices and trade board in connection with these regulations. But obviously the second section dealing with the restriction of the powers of the wartime prices and trade board is something of such a specific nature that it certainly would not be the place where the general or detailed effect of these twelve orders in council could be considered. Therefore unless they can be considered in detail in relation to section 1, there is no place in the whole course of the discussion where they can be considered in detail.
All that is before the house on first reading where there is no debate, on second reading where there is debate on the principle, and ultimately on third reading, is this bill of two sections, the first section carrying forward for another year these twelve orders in council in their entirety. The principle involved in the discussion on second reading was whether or not, in the opinion of this house, the circumstances were such that these twelve orders in council should be continued. If there is any point at which some reasonable limitation might have been placed upon the amount of detail, I think it would be at the time that clear principle was in issue.
Now when we come into committee, in the ordinary course of events there would be before us a bill including in express detail in succeeding sections those things that the government will have power to deal with by an act ultimately adopted by the parliament of Canada. But through the fact that these are not statutory provisions in the ordinary acceptance of that term, but are in fact wartime orders in council carried forward by an all-embracing act of this nature, then unless at this point in committee there is an opportunity to discuss in detail the effect of the provisions of these orders in council carried forward, there is no point during the whole course of the proceedings, from first reading to third reading, where there would be any

Transitional Measures Act opportunity to point out in detail exactly what the result is or to obtain from the ministers concerned an appropriate explanation of what their reasons are for continuing these particular powers or what the effect of the continuance of these particular powers would be.
I close my remarks-only in respect to this discussion that is taking place-by suggesting that the ordinary rules do not apply; because the ordinary rules relate to the introduction of bills which confer powers upon parliament and upon the administrative body of parliament, the government; whereas in this case you have the utterly abnormal situation, from the ordinary point of view of parliamentary procedure, of orders in council adopted under the War Measures Act which, in turn, was an act passed under these emergency powers. May I emphasize that point, Mr. Chairman. These were not orders in council adopted under any general powers available to the government and to parliament in the war. These were orders in council passed under the War Measures Act, which act was within the jurisdiction of this parliament only because of an emergency. That act has disappeared, but the orders in council passed under it are carried forward. Therefore the whole proceeding we have is completely abnormal and completely outside of the ordinary concept of the rules. I submit that, unless there is an opportunity to discuss these orders in council in detail at this point, there could be no opportunity at any time.


William Henry Golding: I think the leader of the opposition put his finger on the point when he said that the principle on the second reading was whether the house would agree to carry on or to extend these emergency measures. That was the principle. That having been agreed to, no change is proposed. No change was proposed in the amendment to change any control that anyone operating under the bill had. I am expressing my opinion that now the debate must be strictly relevant to the clause before the committee, whether we should carry this on for another year or not. I do not want to press the point any further but I think I am right in that.


George Alexander Drew: Mr. Chairman, let me just illustrate the difficulty, and I shall refer to this section only so that I may illustrate the point that I have in mind. As you have pointed out-and I can see the difficulty with which you are confronted in interpreting rules which relate to ordinary procedure dealing with bills in this house-it does confer the powers under which the government will act from the administrative Doint of view, and

under which the rights of people will be determined. For instance, there has been some discussion with regard to the need for the continuance of steel control. When hon. members are making up their minds as to whether there should be a continuance of steel control, it is certainly something for them to have in their minds, in arriving at a decision, that they should know exactly why these controls are necessary at this particular time. I do not know how else they can decide whether this act should be extended for one year or not.
Take the situation in regard to the control of steel and equipment. Section (a), which has already been read to the committee, provides that the steel controller shall have power available from time to time: to take possession of steel wherever found and to produce-
In order to realize the extent of that word and what it means, and what the powers are, you have to go to the definitive provisions before that and find out what produce means. It means something that every hon. member should bear in mind when we consider what the powers now are. This is what it means:
Producing shall include prospecting, developing, digging, mining, drilling for, melting, extracting, milling, concentrating, refining, smelting, processing, fabricating, machining, rolling, finishing, making, manufacturing and repairing-


Mr. Young:: On a point of order, Mr. Chairman, can you inform me whether the leader of the opposition at the moment is speaking to a point of order, or whether his remarks are being extended into a speech?


William Henry Golding: The leader of the opposition is speaking to a point of order.


George Alexander Drew: I explained, Mr. Chairman, that I was illustrating the effect of this word in relation to the explanation given in this order in council itself, which is carried forward. I continue:
-and "produce," "produced" and "production" shall have corresponding and similarly extended meanings.
Take the width and scope of this definition and relate it to the fact that the controller is given powers to produce. Then it seems that it is of the utmost importance that every hon. member have some explanation from the minister putting forward this measure, or the minister who will have the administrative responsibilities, as to why powers as wide as those, which in fact would mean a complete nationalization of the steel industry, if they were exercised, should be extended for another year.


William Henry Golding: It was all put on
the record last night by the hon. member for

Calgary West when the bill was given second reading.


Edmund Davie Fulton: I do not think any opportunity was given for explanation.


William Henry Golding: It was done on second reading. As I say, I am not going to press the point any further. I have tried to point out the rules and I think I am right.


Alphonse Fournier: I hesitate to intervene because in my little experience in this house I have found out that more time is lost on points of order than on serious discussions of a bill or resolution; but in this instance I cannot remain in my seat without saying one word. Last week we spent three days discussing the resolution, which was the basis of this bill. We spent two days on the principle and one day in committee. Every order in council which is covered by this bill was mentioned and discussed while we were discussing the resolution, the principle of the bill and in committee. We have been more than a day now on the principle of the bill on second reading. Even what the leader of the opposition has just read was read last night by the hon. member for Calgary West.


Howard Charles Green: Not that section.


Alphonse Fournier: He read the whole thing.


Howard Charles Green: He read another one which is just as bad.


Alphonse Fournier: But it means one thing, that all these orders in council have been discussed by each and every hon. member who spoke on both sides of the house.
This afternoon the Minister of Trade and Commerce read the whole thing concerning steel.


Stanley Howard Knowles: He was also out of order.


Alphonse Fournier: There is no doubt about that. I understand the point of order brought up in this instance. If we follow the rule we cannot get away from being strictly relevant to what is set out in the amendment. The Minister of Justice has mentioned it. It is a change of date, changing 1949 to 1950. The principle having been adopted on second reading, all that we can discuss on this section is the reason why it should not be extended for that one year; but it will be extended. The house has decided that point. Really, after two days discussing this-we can keep it up for a week; any hon. member could keep this up-I do not think we can get any more explanation than we have been given up to now. I would ask the Chairman to try, if possible, to follow the rules and have the discussion relevant to this section of the bill.
The Budget-Mr. Abbott


George Alexander Drew: The explanation which has just been given merely illustrates what this house is being asked to do here. This bill has only two sections.


Some hon. Members:: Six o'clock.


William Henry Golding: Shall the clause carry?


George Alexander Drew: No.
Progress reported.



BUSINESS OF THE HOUSE

George Alexander Drew: Before you leave the chair, Mr. Speaker, may we be informed if it is the intention to proceed with the budget immediately after the recess?


Alphonse Fournier: At seven-thirty the Minister of Finance (Mr. Abbott) will make his budget speech, and after that I understand that some hon. member from the opposition side will speak. At the conclusion of his remarks we shall revert to this bill in committee.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at seven-thirty o'clock.


Douglas Charles Abbott: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, once again it is my pleasant duty to bring down the annual budget amid conditions of sustained-one might almost say unexcelled-prosperity. Despite the grave uncertainties and the persistent difficulties that beset us in the field of international affairs, we Canadians as a whole have continued throughout the past year to enjoy higher standards of living than ever before. The volume of industrial output for civilian account, in the form of both consumer goods and capital goods, has never been higher. Cash income derived from farm crops, and the value of commercial fish landings in 1948 have also reached figures never before equalled. The output of our mines has increased by nearly one-third during the past three years, and is now running at a rate within two per cent of the wartime peak.
In other words, during the past year the Canadian economy-and by that phrase I mean this community of a million and a half farmers and fishermen, of three million

The Budget-Mr. Abbott industrial workers, and of hundreds of thousands of business, salaried and professional men and women, great and small-during the past year this community of free people has produced a record quantity of consumer goods, and at the same time has produced and installed a huge amount of new and improved capital equipment which promises still greater output in the years immediately ahead.
But what is even more satisfactory is that the energy, industry, skill and equipment which have been put into industry during the past three or four years is now bearing fruit in the form of a greatly increased flow of goods. Most of the serious shortages of goods have been overcome. The post-war world price inflation appears to have run its course. Since the late summer the price indexes have leveled out both here and in the United States -the two countries in which a free price market most nearly exists. In some sectors of the price structure, where the increases had been particularly great, prices have begun to recede to more healthy levels.
Prediction in a world so full of uncertainties must always be hazardous, but there is a wide measure of agreement, both here and abroad, that, barring the three major catastrophes of war, crop failure and widespread industrial work stoppages, the post-war price inflation has come to an end. That is not to say that there are not some acute shortages, as in steel or in housing, nor that there may not be considerable ups and downs in the prices of individual commodities from week to week and month to month. But the general assumption which I feel justified in making at this point is that when we come to the end of this year and look back we shall find that the price level as a whole will be no higher than it is now and that the prices of some groups of commodities at least will be somewhat lower.
The conditions and prospects which I have thus briefly sketched enable me to recommend to this house a series of proposals which combine a prudent provision against future uncertainties with a considerable measure of immediate tax reduction.
It seems to me that the time has now come when our objective should be to sustain our present high levels of output, avoiding the evils of unemployment on the one hand and further inflation on the other. The aim of both public and private economic policy should be to hold steady on the course. It cannot be the steadiness of inaction. To hold a steady course we must continue to devote much of our effort to further development and betterment. We should not seek just a balance, but a balance in motion.
Of course, we have our pessimists here and elsewhere. There are those whose eyes,
TMr. Abbott.]
fixed firmly on the past, see only the depressions that have followed the booms. But the best opinion I have been able to form leads me to believe that we can hold the current levels if we, and others in like position, act sensibly. I do not expect in the near future any serious decline in the high level of expenditures in North America, upon which our present prosperity is based. Businessmen, public authorities and consumers still have large demands to be filled, and the wherewithal to pay for what they want. Overseas countries still have many requirements to be met from north American production. Their own ability to pay is increasing and in the meantime is being supplemented by assistance from this side of the Atlantic. As I have said, no one can look far into the future with complete assurance in this uncertain age, but we can see far enough to make it possible to lay our plans now in the expectation that something like the present level of production and income for the country as a whole will persist throughout this coming year.
At the time of the last budget our most urgent and difficult economic problem was our shortage of foreign exchange. The progress made in this matter has been evident in our improved trade figures and in the recovery of our exchange reserve.
The present size of our exchange reserves shows the great improvement that has taken place since the end of 1947, when the emergency measures designed first to stop and then to reverse the serious drain on our reserves went into effect. From the dangerously low level of $502 million on December 31, 1947, our reserves rose to $998 million on December 31, 1948, and are now about $1,065 million, a level which, though not yet satisfactory, is much more nearly adequate to safeguard our position against the deficits which could develop without much warning in a trade as large and vulnerable as ours. In appraising this higher figure, one must bear in mind that it includes government borrowing of $150 million in the United States. On the other hand it also reflects the net foreign lending by the government amounting to about $100 million in this 15-month period.
All things considered, the change in our reserve position has been quite remarkable. During most of 1947 we were losing reserves at an average rate of $70 million a month. Since the beginning of 1948, excluding the long-term loan, we have been rebuilding our reserves at an average rate of about $30 million a month. In other words there has been a reversal of trend of the order of about $100 million a month. Improved tourist revenues as well as other invisible items on both cur-

rent and capital account have contributed to this result, but it is clear that the principal increase in our reserves has come through the improvement in our merchandise balance of trade, and in particular our balance with the United States.
The trade figures for the year 1948 as a whole, when compared with 1947, show in a striking way this principal reason for the improvement in our exchange position. Our total exports increased from about $2 [DOT] 8 billion to about $3-1 billion. Most of this increase was due to the higher prices at which our goods were sold, but in some groups of commodities there were satisfactory increases in volume. The total value of our imports remained almost unchanged at about $2-6 billion, despite an average increase in their prices of over 10 per cent. There was therefore an appreciable decrease in the actual volume of goods imported. Taking tourist business, freights, interest and dividends and other similar transactions into account, our net balance on current account transactions with all countries increased from a surplus of only $47 million in 1947 to one of about $450 million in 1948. Hon. members will realize, of course, that in 1948 we were not selling so much on credit and that this larger current balance was not offset to the same extent as in 1947 by large-scale foreign lending.
This improvement in our trade balance took place almost entirely in our trade with the United States. Our exports to Britain and its sterling area were reduced in total value by $130 million, or about 12 per cent, due mainly, of course, to their need to save dollars. Our exports to other countries-mainly European-were reduced by $30 million, or about 5 per cent, for similar reasons. Our imports from both these areas were increased substantially-by $230 million, or nearly 40 per cent. This improvement in the capacity of these areas to resume their pre-war share in supplying our needs has been most welcome. It reflects a fundamental improvement in their productivity and output, as well as their efforts to sell, and our efforts to encourage the resumption of something approaching the pre-war pattern of trade.
On the other hand, our 1948 imports from the United States were $170 million less than in 1947, or a reduction of about 10 per cent, and this despite some sharp increases in the cost of American goods. The reduction of $170 million is the net result of two contrasting trends. In the case of goods enumerated in the Emergency Exchange Conservation Act, the value of imports from the United States was reduced by $300 million; but the volume of all other imports rose by $130
The Budget-Mr. Abbott million. Increases in oil, coal and farm machinery alone amounted to more than $120 million.
But the feature of our trade which I find most encouraging has been the increase in our exports to the United States. Here, the total value increased from just over one billion dollars in 1947 to more than one and a half billions in 1948. Some of this increase is due, of course, to higher prices-especially for pulp and paper and metals. Some of it is due to very large exports of cattle. But much of it, I am glad to say, is the result of improved Canadian ability to produce for, and sell to, the United States market, and of the reductions in tariffs obtained in the Geneva agreements. This big improvement in our exports to the United States was the type of constructive solution to our exchange difficulties that we were hoping to achieve, and I am gratified-as I hope you, sir, and all other hon. members are as well-at the extent of our success in this direction.
To summarize these trade figures briefly, our debit balance with the United States has been reduced by $635 million, and our credit balance with all other countries has gone down by $400 million, leaving a net increase in our over-all credit balance of $235 million.
Our exchange problem is now approaching manageable proportions. As this house is aware from the discussions of the past few days, it is necessary to continue controls over imports as well as capital exchange transactions, in order to improve and safeguard our exchange situation, but these need not be so general or severe as to interfere seriously with the free working of our economy. I shall be announcing later in this statement some further welcome relaxations in these import restrictions, effective April 1.
I cannot leave this discussion of our exchange situation without expressing appreciation of the farsighted actions of the United States in promoting the economic recovery of western Europe. This sensible and practical program has already overcome some of the difficulties which eighteen months ago seemed almost insuperable. It is slowly but surely putting back on its feet one of the great productive areas of the world. This economic restoration is clearly a prerequisite for a stable and progressive political life in this key area, and as such it is a matter vital not only to our future economic well-being but to our very national safety. To us in Canada the general and longer-run benefits of European recovery and progress are of prime importance.	.
The grants and loans being financed through ECA are of great immediate value, but in another and more fundamental way

The Budget-Mr. Abbott the European recovery program is contributing to a betterment of our trading and income prospects. As a result of ERP, and more generally of the broad basic policy which underlies both ERP and the North Atlantic treaty, Europe is rapidly recovering confidence in its own future. The immediate crisis of confidence which was so alarming two years ago has passed. Without this restoration of confidence the large programs of financial aid would have proved merely palliative. As it is, the level of industrial production in western Europe, and for this purpose I include the German bizone, during the last quarter of 1948 was 20 to 25 per cent above the average of 1947, and most of the individual countries in this group have now reached or passed their pre-war levels of industrial output. Of course, much of this output is still going into the repair of the physical ravages of war, and is therefore not yet available for an improvement of standards of living or to pay for the additional imports which the restoration of a normal and rising standard of living demands. The future holds many uncertainties, but we can express gratification for the progress that the first year of ERP has witnessed.
There is one aspect, both of this exchange situation and our own general economic situation, which is clearly going to require continued attention from the government and parliament, as well as from Canadian businessmen. That is the problem of maintaining and extending Canada's overseas exports. In many traditional areas these have been declining during the past year under pressure of their dollar shortage, the adoption or tightening , of import restrictions, and the increased supplies becoming available from other countries. In the light of all these adverse conditions, our export trade has stood up relatively well, but we cannot be satisfied with its present situation or immediate prospects. We must seek improvement. We must search for those adjustments from day to day and month to month that will maintain as far as possible our traditional markets. It was for the purpose of re-establishing and maintaining these traditional markets that we undertook a large export credits program. To the extent that those markets are closed to us, we must develop alternative outlets. While attempting to overcome the immediate difficulties, we must persevere in working out the constructive solution through trade agreements on a wide, non-discriminatory basis, and by other measures of a basic character that will assist those countries that buy from us to find dollar markets for their own exports, in order that they may pay for what they would


really like to get from us. Over the long run, the establishment of prosperous trading conditions must come largely through the reconstruction of those countries overseas with whom we trade, through the expansion of their output and through the recovery of their productive efficiency, so that once again they will be able to earn enough to pay for the imports which they need.
It is only natural in the face of this problem that some should urge us to reverse our basic trade policy and embark upon barter deals, discrimination, and the balancing of trade accounts with individual countries. These are courses that many others are following. Discriminatory deals between others are interfering with our trade. It is tempting in the short run to consider doing similar deals, particularly to sell this or that, where our exports have been supplanted by others. However, it is too easy to look at only one side of the picture. If you look at the country as a whole, if you examine all aspects of the problem, I believe you will find that such a course would not serve Canada's best interests.
We believe that the inevitable effect of these bilateral, discriminatory deals is to diminish the total volume of world trade. However, even apart from this basic objection on grounds of principle, there are also, from Canada's standpoint, serious practical objections. In the first place, most of our trade takes place with the United States-both export and import-and we cannot deal that way there. There is a real danger that we may prejudice this greater part by trying discrimination and barter in the lesser. Secondly, we are not in a good bargaining position to make successful bilateral deals, deals which by their very nature would force us into bilateral balancing with each individual country. The normal and healthy pattern of our trade is triangular or multilateral. We might succeed in selling some surplus products by special deals-but we would have to take some other surpluses in return which we do not want and cannot really use; and for things we want we would be pressed into paying prices which our consumers would be unwilling to pay. In general, the advantage lies with the larger countries in these deals, particularly as sellers' markets give way to buyers' markets. If anyone feels tempted to start this kind of trading in a few problem cases, let him consider how we are likely to get along in the bargaining as we get drawn further and further into it.
The third practical objection to this line of approach is one in which most, but not all, members of this house will agree. It is that the application of a policy of barter, bilateral

deals, and discrimination requires widespread governmental control of private trade, and even the extension of trade by agencies of the government itself. Deals of this sort would require a multiplication of import controls, export controls, licences and permits. It is apt to lead to more government buying and selling, frequently involving subsidies and trading losses. This may fit into the philosophy of government prevailing in some other countries, but most Canadian don't like controls and don't want their government getting deeper and deeper into import and export business.
It is unnecessary, I believe, for me to go into any more detailed review of the economic situation, save such as may be relevant to the appreciation of our fiscal position and policy. As usual I am tabling a white paper that contains, in addition to the detailed estimates of revenue and expenditures for the year now closing, a review of the more important economic statistics for the past few years and recent months. There are also some paragraphs of exposition and comment prepared at my direction and which I commend to those who wish to consider the budget proposals against an economic background. Members of the house and others will recall as well the two recent reports by the governor of the Bank of Canada and the chairman of the foreign exchange control board in which he deals in his usual lucid and objective fashion with the current developments of importance in this field. Finally I should mention the informative facts and forecasts provided some weeks ago to the house by my colleague the Minister of Trade and Commerce, relating particularly to the prospects for capital expenditure and the supplies available for construction.
Several conclusions emerge from an examination of these facts and forecasts. The first is that the prospective amount of capital expenditure on construction and on machinery and equipment, taken together with the level of exports, appears likely to be sufficient to sustain incomes and employment this year at around their current levels. Although the supply of construction materials will be better this year, construction costs are still abnormally high and there is still evidence of some strain upon the industry. I continue to believe that all construction work under the control of the government which it is practicable to postpone should be postponed, except in those few areas where there may be some local unemployment. That has been the approach of the government in the formulation of its expenditure program for the year. I must say that it gets progressively more difficult to apply this policy from year to year, as really important requirements for
The Budget-Mr. Abbott construction of all kinds keep accumulating -some of them repeatedly deferred since long before the war. Other needs, too, are constantly arising-some of them from the necessary expansion in the defence program, others from more constructive developments, such as the need to provide improved airport runways and related equipment to accommodate the bigger and better planes now available. We have also given a fairly high priority to construction necessary to permit expansion in our government activities in the field of scientific research and the improvement of techniques and markets for primary production-government operations which we feel are as fruitful as much private work with which they must compete for materials and labour. I hope this view will commend itself to the house and the public.
A second conclusion that emerges from a review of the economic situation is that the pressure of consumer expenditures upon supplies available to consumers is slackening. This may be observed in respect of various particular commodities where consumers can get what they want more easily and promptly than before, even motor cars. In some cases we can observe the occasional emergence of surpluses and of bargain sales by retailers, something which we had almost forgotten to be a normal part of business at certain seasons of the year.
This improvement in the supply situation for consumer goods results mainly from an increase in their supply and, to a lesser extent, I believe, from the filling up of the more urgent needs of consumers deferred during the war and the post-war shortages. Larger supplies of food have resulted from good crops here and elsewhere last year, both in the United States and abroad. The post-war world food shortage is passing over from its acute stage to a less severe phase in which prices and the ability to pay them are governing considerations once more. In other types of goods we are beginning now to receive the increased output in Canada made possible by our extended and improved equipment installed in recent years, as well as the increased imports from overseas as a result of the recovery of production in Europe and elsewhere, and the efforts of various countries to export to our markets.
This improvement in consumer supplies has brought a welcome halt to the increase in the cost of living. The index of living costs has remained almost constant since last September at a level about 60 per cent above pre-war, and about 30 per cent above 1929. Decreases in food costs have offset slight increases in other items. Some further increases may occur in a few items; but I think we are unlikely to see any significant

The Budget-Mr. Abbott increase in the cost of living this year- unless, of course, there are serious crop failures-and it is quite possible that there may be some decline. Consumers should have more money to spend this year than last, partly because of the upward sweep in wages that took place last year, partly because of the distribution of wartime refundable taxes that has been going on this month, partly because of additional payments being made to farmers by the wheat board, and partly as a result of the tax reductions which I shall be inviting this house to approve. The time has now come, I believe, when these increased expenditures by consumers can be met by increased supplies of goods without endangering either our price structure or our exchange situation.
In the light of these conditions and in line with the policy to which we have steadily adhered of removing controls at the earliest appropriate time, the government has authorized the wartime prices and trade board to withdraw its price ceiling orders on flour, bread, butter, sugar and molasses, and on those fruits and vegetables which are not limited in supply by the operation of the present import restrictions. Concurrently the government is withdrawing the subsidy of 46J cents a bushel which has been paid since August 1 last on wheat going into domestic consumption in Canada.
Before turning to a review of the government accounts for the year, I wish to say a few words in regard to provincial matters.
We are now about to enter the third of the five fiscal years covered by our tax rental agreements with seven of the provinces. Those agreements have enabled the provinces concerned to obtain a more equitable share of revenue from the three great sources of direct taxation. They have done so without subjecting the taxpayers of these provinces to dual assessments, dual reporting and the other inconveniences and vexations which double taxation involves. They have enabled all these provinces to have the revenue from these major sources reflect the growth of population and the expansion of national income, and at the same time to have the assurance of an underwriting against the risks of economic adversity. This assurance that, come what may, cash receipts from these important tax sources could not fall below a guaranteed minimum has been, I believe, of great importance in enabling provincial governments to plan in advance their developmental programs and to undertake them with confidence. It has certainly also improved the credit standing of the provinces concerned. From the national point of view, it has removed or vastly lessened the risk that in


times of economic difficulty the financial strains to which some provincial governments would be subject might lead to a competitive scramble to impose new and higher taxes and to adopt other policies which would hamper and impede national policies designed to promote economic recovery. They have provided a partial, though not yet a complete, basis for the development of that comprehensive program of co-operation between the federal and the provincial governments which we envisaged as essential to promote the maximum development of our resources and to assure full employment and a wide measure of social security for the Canadian people as a whole.
In all these ways the agreements have contributed to the strength and independence of provincial governments and to the health and vitality of the Canadian confederation. They have added a large measure of economic autonomy to the political autonomy enjoyed by the provinces which have entered into them. It is a travesty to suggest, as has been done so many times in this house in recent weeks, that they have weakened provincial autonomy or created an undue degree of centralization in this country. Two attempts have been made to build a case to support this charge.
The first attempt was based on the argument that the tax rental agreements involved an excessive use of subsidies which threatened the freedom of action of the provincial governments. In reply to that it should first be pointed out that the payments being made to the provinces under the tax rental agreements, apart from the statutory subsidies, are not subsidies at all; they are rentals negotiated by provincial governments for the temporary use of certain rights possessed by them. They are business-like arrangements, subject to re-negotiation at least a year before their termination date, and they do not involve the element of charity nor the surrender of one jot or tittle of constitutional rights. In most of these respects they are in marked contrast with the alternative which some of the critics suggest, namely, fiscal need subsidies which would require the provincial governments to come hat in hand to the federal government and plead for assistance on the basis of need rather than of right.
That should be a sufficient answer to the argument. However, even if we take both the tax rentals and statutory subsidies, we find that the total payments being made by the federal government to the provinces constitute a lower percentage of provincial ordinary revenues than the percentage of statutory subsidies to total ordinary revenues

in the case of the four original provinces during the first fifteen years after they joined together to form our confederation. Let me give the figures. In the fifteen fiscal years 1868-1882, Nova Scotia derived 74-1 per cent of its ordinary revenue from federal subsidies; in the current fiscal year it is estimated that only 36-1 per cent of its ordinary revenue will come from subsidies and tax rental agreement payments. The corresponding figures in the case of New Brunswick are 77-9 per cent for the earlier period and an estimated 36-9 per cent for the current year. In the first fifteen years after confederation, Ontario derived 39-9 per cent of its total ordinary revenue from federal subsidies and Quebec 45-1 per cent; if these provinces were participating under the agreement, the percentage of their ordinary revenue derived from tax rentals and subsidies would, it is estimated, be moderately lower than the percentages I have just quoted. In the years following confederation up to 1882, all provinces, on the average, obtained 49-8 per cent of their total ordinary revenues from federal subsidies. For all seven provinces which enjoy the benefits of the tax rental agreement, the percentage of total ordinary revenues derived from tax rentals and subsidies in the current fiscal year is now estimated at only 32 per cent. If such percentages be the test, it is amply clear that we have far less centralization and make much less use of subsidies than the fathers of confederation thought to be necessary and provided for in the making of Canada.
The second attempt was based on the argument that between 1939 and 1947 the increase in dominion tax revenues had been much greater than in the case of the provincial and municipal governments. The simple answer to that argument, of course, is that during the period in question Canada has fought a major war involving the federal government in a perfectly colossal cost and leaving behind it an enormous burden in debt charges, pensions, treatment service costs, rehabilitation and other expenditures for which this government will be responsible for many years to come-and so will it also be for the vastly increased national defence expenditures which the state of the world left by that war is making it necessary for us to carry.
Neither of these arguments stands up nor do any of a similar kind. The simple fact is that the tax rental agreements promote and encourage provincial autonomy by making the provincial governments better able to carry out the heavy responsibilities assigned to them by our constitution. This government yields to no one in its desire to protect their rights and see them financially strong and independent. It yields to no one in its 29087-113
The Budget-Mr. Abbott desire to co-operate with them in that kind of constructive partnership which will best enable all governments to tackle and solve the complicated problems of today and give to the Canadian people the measure of peace, prosperity and happiness they have a right to expect.
In this search for co-operation, it will not let pettiness of spirit nor false pride nor undue emphasis on purely financial considerations stand in the way of mutual understanding and constructive results. It will constantly seek out ways of tackling mutual problems and developing practical solutions. -not merely talking about them as some other people do.
THE GOVERNMENT ACCOUNTS: REVIEW OP 1948-49 AND FORECAST FOR 1949-50
Before appraising the budgetary outlook for the coming fiscal year, it is my duty to report to the house the financial results of the year that is now drawing to its close. The white paper which I am tabling includes the usual detailed statements of revenues and expenditures, and of assets and liabilities. The figures for the year 1948-49 are necessarily preliminary and subject to revision. Our fiscal year ends next week, on March 31, but our books must remain open for several weeks thereafter to record various year-end adjustments and to include all payments made up to April 30 on account of expenditures originating in, and properly chargeable to, the current fiscal year. Final figures for this current year cannot be available for some time.
A year ago I forecast revenue and expenditure figures that would yield a surplus of $489 million. The present figures indicate that our revenues will be $2,768 million, our expenditures $2,193 million, and our surplus $575 million. This surplus of $575 million is $100 million less than we had in the preceding year, but it is $86 million greater than I had forecast for this current year.
A year ago I based my estimates on what I then called a "conservatively optimistic forecast." In fact the expansion of the national income has been somewhat greater than that which I had predicted, and as a result our tax revenues are turning out a little better than the forecast, but the excess is not very great-less than 2\ per cent. We will obtain more from non-tax revenues and special receipts and credits than I had forecast, but expenditures, on the other hand, are within 1 per cent of my forecast.
Considering the magnitude of the total sums involved and the length of time ahead that these forecasts have to be made, I take

The Budget-Mr. Abbott a good deal of satisfaction in the close relationship of these forecasts and the actual results.


Wilfrid Garfield Case: Almost a perfect score.


Douglas Charles Abbott: Yes, I think the hon. member is right.


Arthur Leroy Smith: At least a hole in one.


Gordon Graydon: The last inning you mean.


Douglas Charles Abbott: I am looking forward to hearing from my hon. friends later in the debate.


Mr. Speaker:: Order.


Douglas Charles Abbott: I do not propose to comment at length on the details of revenue and expenditure, but shall content myself, and I hope the house, with a few general remarks.
Direct taxes, which include personal and corporate income taxes, the excess profits tax and succession duties have yielded $1,369 million, or $51 million greater than a year ago. They accounted for more than 56 per cent of our total tax revenue.
Indirect taxes, which include all customs and excise taxes and duties, have produced $ls172 million, or $62 million less than a year ago.
The greater yield in direct taxes is a reflection of higher incomes and profits; the decrease in indirect taxes is the result of the lower rates of duty under the Geneva agreements, the restriction of imports under the Emergency Exchange Conservation Act and the removal a year ago of the amusement tax, the sales taxes on prepared and packaged foods, and certain other indirect taxes.
Non-tax revenues, that is, post-office receipts and revenues from investments, were $210 million, or $32 million greater than last year. Special receipts and credits, chiefly sales of surplus war assets and sundry refunds, amounted to $117 million. This is $125 million less than a year ago.
On the expenditure side the principal decrease is $229 million in demobilization, reconversion and special expenditures. This decrease was almost exactly balanced by increases of $203 million in ordinary expenditures and $21 million in the deficits of government owned enterprises.
To a considerable extent this increase in ordinary expenditures is due to transfers of activities from the demobilization accounts to the ordinary accounts, and for the rest it stems from higher old age pensions, increased numbers of persons entitled to family allowances, the expansion of health services, more exploration, survey and mapping work, increased research expenditures, improved roads and tourist facilities in our national parks, improvements in airports and aids to air navigation, the betterment of maritime ports

and harbours works, and generally from the effects of the higher price levels of all government operations, including the costs of construction and the costs of materials and supplies purchased, and including necessary adjustments in civil service salaries. I am very keenly aware of these increases in expenditures, and I can assure the house that we are constantly striving to maintain and improve both efficiency and economy in all government activities.
In summary then, our revenues for the year now ending are $103 million less than the preceding year, expenditures as a whole are down $2 million, and the surplus of $575 million is $101 million less than last year. There, in brief, is the result of our current financial operations for the year, and that is the amount by which the net debt of Canada has been reduced.
But, as has to be pointed out each year, the cash position and the cash requirements of the government, as distinct from its revenues and expenditures, are of almost equal importance in their bearing upon the incomes and expenditures of the individuals who make up this nation. Apart entirely from the sale of new securities or the redemption of old debt, the government receives and pays out each year large sums of cash that do not really belong to what an accountant might call its "income account",-they are neither revenue nor expenditure in the accounting or budgetary sense. Moreover some items of revenue and expenditure do not involve any cash receipts or cash outlays.
To arrive at our cash surplus, the $575 million budget surplus must be adjusted upward by $75 million on account of these non-cash items. Then we must add $128 million of cash receipts in the form of additions to various pension and trust accounts. This gives us a total of $778 million available for cash outlays that do not belong in the income account. Of this total $450 million were advanced to the foreign exchange control board to finance its increase in gold and United States dollar reserves, and $57 million were loaned to the United Kingdom and other countries to finance purchases of Canadian products. That is, $507 million were used in connection with the financing of our export surplus. Then we made loans and investments in Canada to the amount of $89 million, $71 million of which were advanced to the Central Mortgage and Housing Corporation for housing construction and housing loans. The total of all these loans, investments and advances is $596 million, and when you deduct that from the $778 million of cash available you get a cash surplus of $182 million. To this cash surplus were added $224 million resulting from sales of securities

rom our securities investment account. Of he resulting $406 million we used $372 nillion to make a net reduction in our funded lebt, and the remaining $34 million served
0	increase our cash balances.
Our securities investment account is the me in which the government temporarily lolds some of its own securities rather than lolding larger cash balances, and it is neces-ary to make allowances for changes in this ccount in order to get a proper figure for he change in funded debt in the hands of thers. Consequently the reduction of $372 lillion in our total funded debt should be ffset by the $224 million reduction in the unded debt held in our investment account. Ve then see the reduction in funded debt utstanding outside this account was $148 lillion. This may be considered as the mount of our cash surplus used to reduce ebt, the remainder of it being used to lcrease our cash on hand.
To summarize this explanation I should ke, with the permission of the house, to put
1	Hansard at this point a short table recon-iling our budget surplus and our cash osition:
Budget Surplus and Cash Position
(millions)
et cash balance arising from the current year's budgetary surplus (i.e. budgetary surplus of $575 million adjusted for noncash items)	 $650
dd other receipts:
Increases in annuity, pension, insurance and guaranty accounts $93 Increases in floating debt, deposit and trust accounts, and sundry
suspense accounts	 35

 128

educt other disbursements:
Advances to the foreign exchange
control board	 $450
Loans to the United Kingdom and
other governments (net)	 57
Advances to Central Mortgage and
Housing Corporation	 71
Increases in other loans, advances
and investments (net)	 18

	596
ash surplus-i.e. balance available for debt reduction and/or increase in cash
balances	 $182
dd:
Net sales of securities from securities investment	account	 224

educt:
Reduction in Canadian funded debt $472 Less increase in United States
funded debt	 100
Net reduction in funded debt	 372
et increase in cash balances during
the year	 $ 34
The Budget-Mr. Abbott
The greater part of the reduction in the funded debt has taken the form of repaying approximately $286 million on account of the compulsory savings portion of the personal income taxes of 1943 and 1944, and the refundable portion of the excess profits taxes of 1943. This completes the repayment of the refundable portion of personal income taxes.
I must not leave this part of my report to the house without referring to the very gratifying response to our offerings of Canada savings bonds to the general public. As hon. members know, the purchase of these bonds is restricted to individuals and is limited to not more than $1,000 of any one series to any one person. Sales of the second series of these bonds reached $288 million. A third series was opened for subscription last October, and sales to date are $248 million. The public response to these issues, and particularly the volume of subscriptions made through the payroll savings plan, shows that Canada savings bonds fill very acceptably a real investment need for the rank and file of the Canadian people.
These results for the year should be a source of gratification to all Canadians. We have reduced our net debt by $575 million at the time when we could best afford to do so. It is still a very large debt-a net debt of $11-8 billion, and a total funded debt of $15-6 billion. There will undoubtedly be years when we will need to increase it in order to finance expenditures in excess of revenue, when economic conditions make that wise or necessary. An indefinite growth in the debt, and in the cost of servicing it, must eventually undermine confidence in our currency and our national finances.
I think most Canadians will regard the policy we have followed as one of simple common sense. Yet some hon. members opposite have insisted that we should have been less prudent, that we should not have attempted to reduce our debt this year, that we should have borrowed to pay off refundable savings or to finance the recovery in our exchange reserves. While arguing that taxes should have been drastically lower, they have also been urging higher and higher expenditures on a bewildering variety of projects. I ask myself how anyone can take as serious and responsible criticisms of this kind. They ask us to believe that the people of Canada would have been better off this past year had taxes been substantially lower, and our debt substantially higher.
That is not the case. Large tax reductions last year would have come too early to be of real value to the public as a whole.


Some hon. Members:: Oh, oh.
1794	HOUSE OF
The Budget-Mr. Abbott


Clarence Decatur Howe: Even in June it will be pretty-late.


Douglas Charles Abbott: My hon. friends may not laugh quite so loudly in a moment, Mr. Speaker.
I repeat, large tax reductions last year would have come too early to be of real value to the public as a whole, because the public's expenditure, even without tax reductions, was large enough to buy everything available -indeed it was a bit too large, and buying pressure forced up the cost of living. Lower income taxes in 1948 would have meant a higher cost of living. Some might have gained, it is true-those whose incomes are high and whose concern with the cost of living is relatively small. But the general run of citizens and taxpayers would not have been farther ahead-they would have paid less to the public treasury but more to those private treasuries where the gains from a higher cost of living would have come to rest.


William Earl Rowe: What a change a few months have made.


Arthur Leroy Smith: Now we have heard everything.


Douglas Charles Abbott: The laughter has abated somewhat, Mr. Speaker.
It was plain for all to see that the nation as a whole was fully employed last year. More spending would not have led to any significant increase in production. To have reduced taxes then in order to let people spend more would have been a delusion. It made far more sense to use the surplus income-surplus from the viewpoint of the nation as a whole-to pay off our debt and restore our essential reserves of gold and United States dollars. It is hard for the individual taxpayer to see it that way, naturally, because it is true that if he alone had more to spend and less to pay in taxes he would be better off. He does not realize that there would be two or three million others doing the same, and the competition between them is what causes trouble-is what feeds the inflationary spiral. We in parliament have to see the picture as a whole, and it is when we look at it as a whole that we see the common sense in the- decisions we took here last year.
Let me turn now to the coming year. The total of the main estimates for next year, including statutory items and those to be voted, amounts to $2,217 million-a substantial increase over last year's estimates, reflecting mainly a considerable increase in the national defence program and also higher prices and rates of pay. We have also this year included in the main estimates a number of items of types which last year were more common in the supplementaries-not-


ably construction projects on which it i: hoped to get started well before the fall anc winter weather make this type of work mori costly. To the main estimates will have to b< added special estimates for Newfoundlan< which will probably exceed $50 million. Wi shall also have the usual supplementary esti mates, although I do not expect they will b nearly as large as in this past year. I fea that we face again a deficit in the C.N.K that will require a subsequent vote fron parliament. It will also prove wise, I believe to add further to our general reserve agains the active assets on our balance sheet. All ii all, I think I must budget in the expecta tion that total expenditures in 1949-50 ma; amount to about $2,390 million.
On the side of revenue, forecasting is a usual more difficult and uncertain, becaus our tax yields are now very sensitive t changes in economic conditions and th national income. On the basis of our presen tax laws, and in the expectation that price and production will hold to about thei present levels with only normal seasons changes, and that we have average cro yields this year, I now estimate that in th absence of any tax changes our revenues fc the next fiscal year would amount in all t about $2,800 million.
The make-up of this total is given in table, showing each of the major items in th forecast, together with the estimate for th year now closing. For the convenience c hon. members, I should like the consent c the house to have this incorporated i Hansard in the usual way without my takir time to read it.
Forecast of Revenue (Before tax changes)
Actual Fiscal	Fiscal
year	year
1949-50	1948-49
(Fore- (Prelim-cast)	inary)
(in millions of dollar:
Customs duties	
235	225Excise duties	
210	296Sales taxes (net)	
385	378Other excise taxes	
260	259
Income taxes
Individuals	
835	771Corporations	
550	490Interest, dividends, etc	
45	43Excess profits taxes	
[DOT] [DOT] [DOT]	40Succession duties	
26	26Miscellaneous taxes	
4	4Total tax revenue	
2,550	2,442Non-tax revenue	
200	210Total ordinary revenue	
2,750	2,652Special receipts and credits ....	50	1162,800	2,768
From the figures I have given it is evident hat in the absence of tax changes I would expect next year that our accounts would show a surplus of $410 million.
It is important, as in the case of the past fear, to consider not only this budget surplus Dut also our prospective cash position, in Drder to appraise properly the outlook for next year. Eliminating non-cash revenues and expenditures, this budget surplus of $410 million might yield a surplus of available cash of about $500 million. To this we must add various receipts in pension and trust accounts and similar deferred liability accounts, which are likely to amount to nearly $150 million. This sum would probably exceed various loans and advances other than those to the foreign exchange control board and to governments abroad by as much as $25 million. Consequently in the absence of tax changes we might expect a cash surplus of about $525 million, reduced by whatever amounts may be. required for financing our export surplus either by accumulating reserves or by foreign loans. It is still too early, with all the uncertainties of this present year to say, even roughly, what funds the government will have to find for financing our export surplus in one way or another.



TAX POLICY

[Stage Direction]
What I have already said in commenting upon the economic situation, the results of last year, and the prospects for the new year, will already have indicated to you, Mr. Speaker, that I feel the time has now arrived when this parliament should enact some further substantial reductions in taxes. The increasing flow of goods available for sale to consumers without higher prices makes tax reductions economically feasible. The prospective surplus of revenue over expenditure, in the absence of tax changes, and even of a substantial cash surplus over our requirements for loans and investments, makes tax reduction financially feasible. The reduction of more than $1,600 million in our net debt made in the last three years has put. us in a position now where we may prudently give consideration to further tax reduction. Finally, sir, I should say that I have been led to believe in recent months, as no doubt other hon. members have, that most of the Canadian people would support and even welcome an enlarged measure of tax reduction this year.
If this parliament should approve the program I am now going to propose, in addition to the tax reductions enacted following the
The Budget-Mr. Abbott Ilsley budgets of October, 1945, and May, 1946, and following my budgets of June, 1947, and May, 1948, it will have carried through a program of tax reduction such as no parliament has ever made before, here or anywhere else, I believe, and far more than most of us thought possible when we were elected following the victory in Europe in 1945. In approaching our task this year we should bear in mind that this is the continuation and rounding out of a program-not the beginning of a new policy. We have brought our high wartime taxes down by careful stages over a period of four years, and now we should aim at establishing a peacetime revenue system that may be varied up or down as the needs of the changing times require. We cannot complete this year all those improvements in the form and nature of our taxes that have been started in recent years, but we can carry them a long stage farther.
In selecting the fields for tax reduction we should bear in mind several general considerations. In the first place, we must recognize that most Canadians, like other peoples in recent years, have shown that they prefer to pay taxes in forms other than high income taxes. I think most of us believe the income tax on individuals is the fairest and best tax we have. The trouble is that we just don't like it, or at least we don't like too much of it. The public in peacetime will apparently only tolerate a level of income taxes that is far short of enough to yield the revenues that Canada requires now, and is going to require in years to come. Consequently we must plan on retaining as normal sources of revenue substantial taxes on goods and services, and taxes on corporate profits. In neither of these fields can we expect now to get back to the pre-war level of tax rates- at least not until the threats to peace disappear and the people cease to demand that the government carry out many of the types of services and transfer payments now being provided.
Consequently we face now, in addition to the problem of establishing a fair and proper schedule of income taxes, the need to adapt the form and nature of our taxes on goods and services and corporate profits to make them efficient, fair, and flexible sources of revenue, causing as little harm and irritation as possible for each dollar of revenue we must derive from them.
The second consideration relates more to the immediate future. The present economic situation is such that it is more appropriate this year to encourage increased expenditures
[Stage Direction]
The Budget-Mr. Abbott by consumers, rather than capital expenditures by business. Business profits are already high, on the whole, and a large part oi them is being devoted to capital expenditures. Markets for the goods and services required for additional capital expenditures by business are still relatively tight, and prices of machinery and equipment, and construction costs, are still very high. It would not be wise, I believe, to stimulate increased expenditures of this nature this year by general reductions in corporate taxation. On the other hand, there is, as I have already said, more opportunity now to satisfy increased expenditures by consumers. Consequently the principal tax reductions I am going to propose are those affecting individuals, both personal income taxes and taxes on things the consumer buys. I have, however, some important changes to propose in the distribution and nature of corporate taxes.
I propose now, Mr. Speaker, to state and explain our program of tax changes and tax reductions.
1.	PERSONAL INCOME TAX
the usual tables showing comparisons of the old and new taxes for single and for married persons at various income levels.
Present and Proposed Income Tax
Income	1948 tax	1949 tax	Dollar reduction	Per- centage reductior$	$	$	$	%750	800....	5	5	100900	16	16	1001,000....	29	29	1001,100....	44	15	29	661,200	61	30	31	511,500....	120	75	45	381,800....	180	120	60	332,000....	220	150	70	322,250	270	193	77	292,500....	320	235	85	272,750....	370	278	92	253,000....	420	320	100	243,500	520	415	105	204,000....	620	510	110	185,000....	835	700	135	167,500	1,465	1,270	195	1410,000	2,253	1,960	293	1320,000	6,515	5,960	555	930.000	11,728	10,660	1,068	950,000	23,456	21,814	1,642	775,000....	39,418	37,264	2,154	5100,000	56,631	53,714	2,917	5200,000....	133,056	126,414	6,642	5
The house will recall that there have been three substantial reductions in income taxes since hostilities ceased. Late in 1945 there was a general reduction of 16 per cent. Effective January 1, 1947, there was a second reduction in rates and an increase in exemptions; and in mid-1947 there was a third general reduction in rates. Tonight I propose still further substantial reductions in this tax in the form of both reduced rates and increased exemptions.
The present basic exemptions are $750 for single persons and $1,500 for married persons. I propose that these be increased to $1,000 and $2,000 respectively.
The exemption in respect of children eligible for family allowance is now $100. I propose that this be increased to $150.
The exemption for other dependents which is now $300, will be raised to $400.
By these moves we shall return to pre-war levels of exemptions, and in so doing will relieve about three-quarters of a million present taxpayers of all income tax liability.
I also propose a downward adjustment in the rates of tax. The complete details of the new rates are contained in the budget resolutions, and with the consent of the house I should like to insert in Hansard at this point
Note: In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the new 10 per cent tax credit for dividends.
Present and Proposed Income Tax Married Taxpayer-No Dependents
Per-
Dollar centage
Income	1948 tax	1949 tax	reduction	reducti$	$	$	$	%1,500....	2,000....	70	70	1002,100....	90	15	75	832,300....	130	45	85	652,500....	170	75	95	562,750....	220	113	107	493,000....	270	150	120	443,500....	370	235	135	364,000....	470	320	150	325,000....	670	510	160	247,500....	1,260	1,030	230	1810,000... .	1,990	1,660	330	1720,000	6,140	5,510	630	1030,000	11,315	10,160	1,155	1050,000	23,043	21,264	1,779	875.000....	38,968	36,664	2,304	6100,000	56,143	53,064	3,079	5200,000....	132,493	125,714	6,779	5
Note: In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the new 10 per cent tax credit for dividends.
[Stage Direction]
Present and Proposed Income Tax
Married Taxpayer with 2 Children of Family Allowance Age
Per-
			Dollar	centage
Income	1948 tax	1949 tax	reduction	reduction$	$	$	$	%1,700. .	1,800..	.! io	io	1002,300..	.. 90	90	1002,400..	.. 110	15	95	862,500..	.. 130	30	100	772,750..	.. 180	68	112	623,000..	.. 230	105	125	543,500..	.. 330	184	146	444,000. .	.. 430	269	161	375,000. .	.. 630	453	177	287,500.	.. 1,208	964	244	2010,000. .	.. 1,930	1,582	348	1820,000. .	.. 6,040	5,375	665	1130,000. .	.. 11,205	10,010	1,195	1150,000. .	.. 22,933	21,099	1,834	875,000. .	.. 38,848	36.484	2,364	6100,000..	.. 56,013	52,869	3,144	6200,000. .	.. 132,343	125,504	6,839	5Note:	(1) The	above figures show	the actual
income tax liability of a taxpayer with family allowance children, but in order to arrive at his
true net position the amount of family allowance received for his children must be offset against his tax liability. For example, assuming he receives the average family allowance payment of $72.00 a child, a taxpayer with an income of $3,000 and two children would find that under present rates his income tax exceeded his family allowance by $86.00, while under the proposed rates his family allowance payments will exceed his income tax liability by $39.00.
(2) In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the new 10 per cent tax credit for dividends.
In revising the rates of tax applicable to various income levels I have sought to achieve not only a reduction in rates, but also greater simplicity and greater equity. The two chief features of the new table of rates are first a large increase in the size of the first tax bracket to which the lowest rate of tax applies. Formerly this was a bracket of $100, now it is to be a bracket of $1,000. The second change in principle is to raise the point in the income curve at which the 50 per cent tax rate begins to operate.
Under the new table of rates three out of four persons who will still be paying tax will pay at a rate not exceeding 15 per cent on their income above the exemption level. No one will pay more than 15 per cent on any part of his income unless and until his income exceeds: $2,000 in the case of a single person; $3,000 in the case of a married person without dependents; and $3,300 for a married person with two children of family allowance age.
The Budget-Mr. Abbott
Let me give a few typical comparisons of the old and new rates.
A single person now paying $29 a year on an income of $1,000 will henceforth pay no tax whatever. A married person without dependents now paying $70 a year on an income of $2,000 will no longer have to pay any income tax. A married man with two children under 16 now pays $90 tax on $2,300 of income; henceforth he will pay no tax at all.
A single person at $1,500 will get a reduction of $45 or about 38 per cent; at $2,000 the reduction will be about $70 or 32 per cent; at $3,000 a reduction of $100 or 24 per cent; at $5,000 a reduction of $135 or 16 per cent; and at $10,000 a reduction of $293 or about 13 per cent.
In the case of married couples without children the reduction at $2,500 will be $95 or about 56 per cent; at $3,000 a reduction of $120 or 44 per cent; at $5,000 it will be $160 or about 24 per cent; at $10,000 it will be $330 or 17 per cent.
Comparison of the position of married couples with children of family allowance age is complicated by the necessity of taking the family allowance payments into account. All married taxpayers with two family allowance children having incomes of $2,300 or less henceforth will have no tax to pay and will, of course, receive the full amount of the family allowance payments. At $2,500 the amount of tax payable will be reduced from $130 to $30. If we offset family allowance payments against income tax such a family now receives on balance $14 a year from the treasury. In future they will, on balance, receive $114 from the treasury. At $3,000 this class of taxpayer, on balance, now pays $86 to the treasury; in future he will, on balance, receive $39 from the treasury. At $5,000 this same taxpayer will get a tax reduction of $177 or 28 per cent and at $10,000 a reduction of $348 or 18 per cent.
We propose, further, Mr. Speaker, that all these changes be effective as from January 1, 1949.
My colleague, the Minister of National Revenue, is expediting the preparation of new tax deduction tables for employers. These will be distributed as soon as available and employers are authorized to put them into effect immediately on receipt. It is expected that it will be possible to have the lower deductions in operation throughout the country within a few weeks. Furthermore, employers will be authorized to cease deductions immediately from those taxpayers no longer taxable under the new exemption <[DOT]
[Stage Direction]
The Budget-Mr. Abbott
and a table is being made public tonight showing the weekly or other pay period amounts below which employers need no longer make tax deductions. My colleague will immediately make arrangements in cooperation with employers to expedite the making of refunds to persons no longer taxable but who have had tax deducted at the source since the first of the year. This will be done as quickly as possible, but in view of the great number of refunds that will have to be made it will require some months to complete the job.
While most of the reductions resulting from the new exemptions and reduced rates accrue to the benefit of the lower and middle income groups, I have not been unmindful of those business and professional people earning somewhat higher incomes. I have had particularly in mind the point at which the taxpayer is required to surrender to the treasury 50 per cent or more of any additional earnings, and have raised it to a more reasonable level.
These are the major changes we are proposing in the personal income tax field. But there are a number of other proposed changes to which I should refer.
At present all investment income in excess of $1,800 bears an extra tax of 4 per cent. In keeping with the general increase in exemptions, this $1,800 exemption will be increased to $2,400 or to the total of the taxpayer's personal exemptions, whichever is the greater.
The present law requires that in determining the income of a dependent for eligibility purposes it is necessary to include income, such as war disability pensions, that is exempt from tax under the law. I propose that this requirement be removed. The effect of this change is that only income that would be taxable income will be taken into account.
With reference to permissible items under the medical expenses allowance, and in response to many individual representations, I propose to allow the cost of a wheelchair as a medical expense.
Some hon. Members:: Oh, oh.


Douglas Charles Abbott: I see the hon. member for Stanstead (Mr. Hackett) is applauding vigorously. His was one of the representations that I have had.
Under this same heading I also propose that the optional deduction of a flat amount of $500 now granted to a blind person be extended to persons confined throughout the taxation year to a bed or wheelchair.
Amendments will also be introduced confirming the exemption now granted to clergymen in respect of the rental value of a free residence provided by a congregation and in addition extending the exemption to 
rent paid by a clergyman renting his own quarters where a free residence is not provided by the congregation.
In the case of interest penalties accruing on unpaid amounts of tax where the taxpayer has received no assessment notice it is now possible, in view of the greatly expedited assessment tempo in the income tax division, to reduce the period beyond which interest will cease to accrue from the present twenty months to twelve months.
I estimate that the net effect of all these reductions and amendments affecting personal income taxes wall be a tax reduction in a full year amounting to $270 million or about 32 per cent of our total estimated revenue from this source. In the coming fiscal year, however, the loss of revenue to the treasury will be about $235 million, because part of the effects of the tax reductions in 1949 incomes will not be reflected in revenues until after March 31, 1950.
2.	SUCCESSION DUTIES
In view of the very considerable relief granted in respect of succession duties last year, Mr. Speaker, I am proposing no change in the Succession Duties Act this year. It will be recalled that my last budget provided for the complete exemption of estates up to $50,000 from liability for federal succession duties, and removed the ceiling on the amount of gifts that may be made for charitable or educational purposes free of succession duty.
3.	CORPORATION TAXES
I have several important proposals to announce relating to the corporate tax field. In last year's budget we undertook a successful general overhaul and consolidation of the Income Tax Act. Within this new framework I am now bringing forward a program of policy changes as part of the progressive improvement of our tax system.
At present we have a flat rate of 30 per cent on all corporate profits. I am recommending that this 30 per cent be reduced to 10 per cent on profits up to $10,000 and increased to 33 per cent on profits in excess of $10,000. The house will at once recognize this as tax relief for small businesses and will, I trust, be heartily in accord with the policy. Our country as a whole owes a great deal to the small family type of business. They have to struggle along, grow and develop in competition with large and well financed corporations whose activities may be nation-wide. My own belief is that small businesses should be encouraged and it seems to me that a useful way to do this is to lower the tax and take less out of the funds they need for growth and expansion.

All corporations, regardless of size, will, of course, receive this relief on the first $10,000 of profits but, as I have said, the rate of tax on profits in excess of this figure will be increased by 3 per cent. The net result of these changes is a decrease in tax burden for corporations whose profit is less than about $77,000; that is, the large reduction on the first $10,000 of profit more than offsets the slight increase in the rate on profits between $10,000 and $77,000. Where profits are in excess of $77,000 there is a greater tax under the new rate structure payable by the corporation itself, but in the light of my next proposal it will be seen that this additional tax may be more than offset by benefits to the shareholders if the corporation distributes a reasonable proportion of its profits.
My second proposal introduces a measure of reform which has long been a declared objective of this government. I refer to the removal of double taxation of corporate profits, which was one of the aims of the program we placed before the dominion-provincial conference in 1945-46. Today we find governments in this country, as well as in most other countries, taxing away at least a third of corporate profits. In addition, the personal income tax rates apply in full to what is distributed out of the remaining two-thirds. The tax may be as high as 80 per cent upon distributions to shareholders. It seems to me that under a system of private enterprise which depends for its existence on a steady flow of venture capital we cannot afford to neglect the implication of this defect in our tax system, which has been accentuated by the increase in both corporate and personal income tax rates. We had hopes that the working out of satisfactory arrangements with all the provinces would have enabled us to deal with this problem before now, but the government feels that it cannot longer defer a beginning in this field. It is not a question of the immediate profit position of Canadian business because I think it is clear that today we in Canada are prosperous as never before. Rather it is a matter of concern for the future under a system where we depend, and must depend, for full employment and the creation of new wealth on the willingness of our people to risk their money in constructive enterprises.
As a first step in dealing with this problem I am proposing that parliament should allow individuals a credit against their personal income tax equal to 10 per cent of the dividends they receive from common shares of Canadian taxpaying corporations. While I have used the expression "common" shares, the law will actually confine the credit to the most junior class of shareholders of a company, and it will not be granted in 29087-111
The Budget-Mr. Abbott respect of shares that enjoy any special preference. Generally speaking, the incidence of the corporate tax is upon the common shareholders, and I believe that they rather than preferred shareholders should be granted such relief as can be given at this time.
In discussing the increase in the general corporate rate by 3 per cent I said that this meant an increase in tax burden for the corporation itself where profits were above the $77,000 mark. The fact is, however, that if the corporation distributes more than about one-half of its profits after tax in dividends in respect of which the shareholders get a 10 per cent tax credit, there will have been a net decrease in the tax burden over-all from the point of view of the corporation and the shareholders considered together, that is, the corporate rate increase is more than offset by the decrease in tax for the shareholder in all cases where there is a reasonable distribution of profits. I should like to call particular attention now to the fact that as a result of the low corporate rate of 10 per cent coupled with the 10 per cent tax credit this budget removes completely double taxation on small businesses where profits are less than $10,000.
A further proposal affecting the taxation of profits is that the loss carry-forward period be lengthened to five years instead of the present three-year limit.
During the past year a great deal of study has been given to our system of allowances for depreciation. The problems in this field are highly technical, and I cannot in this speech enter into much detail regarding changes which are to be made. I shall, however, state briefly what they are, and a full explanation of them will be given when we are in committee on the budget resolutions.
In the past allowances have been granted on the basis of wear and tear of assets used in earning the income subject to tax. Under the new regulations which my colleague the Minister of National Revenue is proposing, the governing principle will be the amortization of costs of depreciable assets. Incidentally, an effect of this will be to allow for obsolescence hitherto unrecognized under our act. In the second place the rates of writeoff will apply to the written-down value of the asset account rather than to the total asset account. In the technical language of the accountant this means changing from the straight-line method of depreciation to the diminishing balance principle. Of course the rates of depreciation will be appropriately increased having regard to the diminishing base to which they apply. Thirdly, it is proposed to introduce what
1800	HOUSE OF
The Budget-Mr. Abbott might loosely be described as a recapture provision. This provision will operate to ensure in effect that the deductions for amortizing the cost of an asset shall not exceed the final proven cost of the asset to the taxpayer. It will call for an adjustment against future write-offs where assets are disposed of after some use. I might add here that the so-called add-back or adjustment will be limited to the written-down value at the end of 1948 regardless of the price realized on disposal of assets in order that there can be no possible claim that under this provision capital gains are being taxed, or that this recapture provision has any retroactive effect.
I believe that these principles which I have outlined will mean a great improvement over the old system and will be a further step towards greater simplicity in our system of taxing business profits. There should be a real reduction in the accounting work both for business concerns and the tax department as well. The system will likewise be more equitable to the taxpayer and to the treasury. I shall welcome a full discussion of these recommendations.
Another problem that has been given a great deal of study in my department and the Department of National Revenue during the past year is the difficult position that many family businesses may find themselves in when their growth has been financed by the plowing back of profits over a long series of years. At present, on winding up, the distribution of assets to the extent of undistributed income on hand becomes taxable in the hands of the recipient at personal income tax rates in the year in which the assets are distributed. So severe is the application of our present law in such cases that many such businesses have been driven into a great variety of extremely complicated and cumbersome devices to secure legal avoidance of the excessive tax burden to which they are now potentially liable. As a result we are losing revenue to which we think the public treasury has a justifiable claim.
The problem is an extremely difficult one and I think it fair to say that there has not been much unanimity of view among those who have studied it as to the most equitable and practicable solution. We have been considering a plan under which a straight percentage tax paid by such a corporation at the time of winding up or at the time of capitalization of earned surplus will relieve the earned surplus of tax liability in the hands of the eventual recipient. Whether this would be equitable and, if so, what the flat tax should be, are questions which require the most careful consideration. I am not


prepared to make specific proposals for enactment at this session of parliament. I hope that there may be an opportunity of having a plan of the type mentioned discussed when we are in committee.
In addition to the major adjustments in the corporation tax structure outlined a few minutes ago I am proposing some comparatively minor amendments affecting corporations.
I propose that the allowances now granted for expenditures on oil, mineral and gas exploration be extended for a further period of three years, that is, for 1950, 1951 and 1952. The present law now provides for deductions only in respect of expenses incurred to the end of 1949. The extra tax credit granted in the case of expenditures on deep test wells will be extended for one year, that is, to the end of 1950. Also the three-year tax exemption for new metalliferous and certain industrial mineral mines will be extended to cover such mines that come into production in 1950, 1951 and 1952.
There will be several amendments introduced affecting companies having business operations abroad. The more important of these will remove a complicated procedure by which corporations having controlled subsidiaries abroad are now allowed to claim a tax credit against their Canadian tax for taxes paid by these subsidiaries abroad and in some cases by companies which are in turn subsidiaries of the foreign subsidiary. In view of the fact that most countries in which Canadian companies are now doing business abroad impose corporation taxes as heavy or heavier than the Canadian tax, the effect of the present tax credit provisions is that no Canadian tax is imposed on this income. The procedure for attaining this result, however, is extremely complicated and it is proposed that the same result be achieved by an amendment which would allow dividends from such controlled foreign subsidiaries to be taken into Canadian income free of tax. This will greatly simplify one small but very complicated provision of the law at no appreciable cost in revenue.
A group of other miscellaneous amendments, mostly technical in nature, will be contained in the bill. They are not of general interest to the public so I shall not burden the house with the details at this time.
In concluding this discussion of corporation taxes, I estimate that all the proposals I have made, including the tax credit for dividends, will on balance result in no loss to the treasury. The three per cent increase in the general corporate tax rate will, in effect, enable the other changes to be made without any net loss of revenue.

4.	TARIFFS AND TRADE
Before taking up excise taxes and duties, I want to say something about tariffs and trade.
I have already discussed the major changes which took place in Canada's foreign trade position during the past year. The record reflects both the difficulties which some of our exports have encountered, and the large degree of success with which Canadian exporters and the Canadian government, working together, have sought out and developed alternative markets when traditional markets were closed to us. It must be regarded as a major achievement that Canadian exports reached a new peacetime record in 1948. This result is all the more remarkable when we consider that United States exports in the same period fell by nearly 18 per cent.
Chief credit for this achievement belongs to Canadian producers whose energy and resourcefulness made the right goods available for export at the right prices. But the government's achievements in reducing trade barriers and developing new trade opportunities contributed greatly to the maintenance and expansion of our trade.
The increase which took place in our total exports, and particularly the 44 per cent growth which took place in our exports to the United States, would not have been possible without the tariff concessions which we obtained under the Geneva agreement on tariffs and trade.
As I mentioned in my budget speech last year, most of the tariff reductions agreed upon at Geneva became provisionally effective on January 1, 1948. The first year's results are apparent from the trade figures which I have mentioned. These results, in my opinion, provide a strong endorsement of the policies which this government has followed in the field of international trade.
As hon. members know, trade negotiations with 13 additional countries are to commence at Annecy next month. As a result of these negotiations, the mutually beneficial concessions negotiated at Geneva will, it is confidentially expected, become applicable both to a wider circle of countries and to a broader range of commodities. As hon. members know, the legislation for the extension of the United States Reciprocal Trade Agreements Act is now before the Congress. When this legislation is passed, we will have the opportunity to seek a further trade agreement with that country. We would hope that it may be possible to conclude a further agreement similar to the three entered into in the past under that legislation, but one which would also open up wider possibilities for our exports of manufactured goods.
The Budget-Mr. Abbott
In view of the pending tariff negotiations at Annecy and other trade discussions which are envisaged, and in view also of the intention to introduce legislation at a later date to implement the general agreement on tariffs and trade, I am not proposing any tariff changes at the present time. For the same reasons the government does not intend to invite parliament to extend the special temporary provisions regarding the duties on cotton and rayon piece goods. These will expire July 1, 1949 in accordance with the legislation passed by parliament last year.
During the past 16 months we have had in effect certain emergency restrictions on imports into Canada. These restrictions have been an important factor in achieving the notable improvement which has taken place in our foreign exchange reserve position. When these emergency restrictions were introduced I stated that they would be relaxed or removed as rapidly as possible. Some relaxations have already been made, but the time has not yet come when these exchange conservation measures can be dropped entirely. Canada's foreign exchange reserves are still not as large as we would like them to be under present circumstances. A further increase is necessary if we are to face future uncertainties with confidence. However, the improvement which has taken place in our balance of payments justifies some further relaxations at this time.
After a careful appraisal of the situation, the government has decided to increase the present quotas on consumer goods listed in schedule II of the Emergency Exchange Conservation Act by approximately 25 per cent. In addition some items will be transferred from the prohibited list to the quota list as of April first, and on a few other items the restrictions will be suspended completely. As I announced last December, it is the government's intention to remove all the remaining import restrictions on fresh fruits and vegetables by next July. Complete details of these new relaxations are the subject of a statement, a copy of which I am now tabling.
At this time I wish to emphasize that it is still an important aspect of the emergency exchange conservation policy to facilitate the efforts of United Kingdom exporters to regain as much as possible of their historic share of the Canadian import market which they inevitably lost during the war years. This is particularly so in the case of cotton piece goods, which is the field where the greatest change between pre-war and post-war sources of supply occurred.
While United Kingdom cotton textile exports to Canada in 1948 did not reach the levels that we had hoped to see achieved,

The Budget-Mr. Abbott there was an encouraging improvement. The yardage of United Kingdom cotton goods exported to Canada in 1948 was more than four times that of 1947. We believe that Canada offers a sound long-term market for still larger quantities of United Kingdom cotton piece goods than are coming here now.
The quota applicable to textiles from scheduled countries is to be increased somewhat in the interests of Canadian users, but the continued operation of this quota will still give a strong incentive for further expansion in Canadian purchases of British textiles. It is to be earnestly hoped that both Canadian importers and United Kingdom exporters in their mutual long-run interests will continue to make every effort to consolidate and expand this trade on a sound business basis.
The Canadian government has taken and will continue to take all feasible steps to encourage the expansion of British trade with Canada. We are keenly aware that we must buy from our customers if we are to continue to sell to them. However, we cannot solve this problem alone. We have provided opportunities and created incentives for the purchase of British goods. It is up to British exporters and the British authorities to take advantage of these opportunities and to see that their goods are made available for export to Canada at prices which our consumers can afford to pay.
The most important lines of British exports to Canada have been greatly assisted, and are continuing to be assisted, by the operation of quotas under the Emergency Exchange Conservation Act. These quotas restrict competitive imports from the United States, and give British producers preferred access to their pre-war share of the Canadian market. This is one of many steps which have been taken in applying the Canadian government's policy of using every practicable measure to encourage imports from the United Kingdom.
Early in the war Canada granted a 50 per cent discount from the normal preferential duties to a wide range of British goods. The duties on British cottons and rayons were entirely removed. Moreover, these wartime tariff reductions were maintained in effect until January 1, 1948, when they were replaced by the reduced tariff rates negotiated at Geneva.
In order to remove any possible obstacle to British trade arising out of our anti-dumping legislation I introduced last year an amendment to the dumping provisions of the customs tariff. Under authority of this amendment several important classes of goods, which might otherwise have been subject to
fMr. Abbott.]

dumping duty when imported from Britain, have been declared exempt. Measures such as these, together with the special efforts oi the Department of Trade and Commerce and its commercial representatives in the United Kingdom to stimulate the interest of British exporters in the Canadian market, are playing a constructive part in expanding British sales in this country.
The government of Canada has made repeated requests at the very highest level that authorities in the United Kingdom and other commonwealth countries do all that they can to take advantage of the favourable opportunities which Canada has offered for their exports. The Canadian government has also made it clear that it does not look with favour on purchasing arrangements or bilateral trade deals which tend to divert away from Canada either British or colonial products which otherwise could be sent here, particularly in cases where we have established and are maintaining substantial tarifl preferences in favour of such goods.
Canadian import statistics which I quoted earlier make it clear that the efforts made both here and in Britain to enlarge Canada's purchases from the United Kingdom are bearing fruit. British export figures offer confirmation, if any is required. They show tha1 the United Kingdom's exports to all countries increased substantially in 1948, and thal its exports to Canada increased even more The value of United Kingdom exports to all countries was 39 per cent higher in 1948 than in 1947. In the same period its exports tc Canada increased 60 per cent. It will be agreed that this is a large and encouraging increase. I sincerely hope that this trend will be continued and thus provide a sound basis for the maintenance of our important exporl markets in the United Kingdom.
5.	EXCISE TAXES AND EXCISE DUTIES
Under the exigencies of wartime finance we were compelled in our search for revenue to get into a rather complicated structure ol commodity taxes. In addition to the traditional taxes on beer, wine, spirits and tobacco and the general sales tax, we developed i great variety of taxes. These were necessary indeed indispensable, taxes at the time; bu1 they varied considerably as to rates, as tc point of imposition, and as to method oi collection.
We cannot afford to forgo most of the revenue these taxes provide, but in my judgment the time has come for a major job oi simplification in this superstructure combined with substantial reductions in the numbei and the rates of these newer taxes.
I shall begin by listing those taxes whict we propose shall be entirely repealed.

First, there is the tax of 15 per cent on all travel tickets by air, land or sea, and special taxes on sleeping car berths and parlour car chairs. This tax has been a considerable burden in a country like Canada where distances are so great, and it bears somewhat more heavily on people living at greater distances from the main centres of business and industry. We propose that these taxes be repealed effective midnight tonight. The revenue from these taxes has been $22 million a year.
Closely related to the transportation taxes are those on telegrams, cables, long distance telephone calls and extension telephones. These also bear disproportionately on those living at greater distances from the main centres of business, and in addition they mean added expense to individuals at times of family emergency. It is proposed to repeal all these taxes effective tonight. The revenue reduction will be $7,500,000.
In the third place, the special taxes on soft drinks, carbonic acid gas, candy and chewing gum have never been popular, and administratively they have not been easy to collect. They have, however, been highly productive of revenue at a time when revenue was badly needed. In the year now closing they have yielded more than $49 million. They seem to have been among the least popular of all the so-called "nuisance taxes", and we have come to the conclusion that they can go. It is proposed, therefore, to repeal these also, effective midnight tonight.
Finally, there is one other excise tax that is proposed for outright repeal and that is the special 5 per cent tax on the manufacturer's selling price of buses. This is not a large revenue producer-last year it gave us only $150,000. No other form of public transit equipment bears such a tax, and its disappearance will be a modest benefit to municipalities who operate bus transportation systems.
These are the taxes which we propose for outright and immediate repeal. The total tax reduction involved is approximately $79 million in a full year, and about $69 million in the coming fiscal year.
I turn now to another group of special taxes in respect of which I propose simplification of procedure and reduction in rates effective midnight tonight.
I shall mention first the 25 per cent retail purchase tax on jewelry and related articles. This is the only tax in our whole system that is levied and applied at the retail level. At the time it was imposed, and having regard to the revenue then desired, there were sound reasons for putting it at the retail level; but in line with the simplification of our tax structure, the pattern of which will appear as I continue my speech, we propose that the tax be moved back from the retail level to
The Budget-Mr. Abbott the manufacturer's level, and that the rate be reduced to 10 per cent effective immediately. The existing exemptions to this tax will continue. The net tax reduction in this case is estimated to be $8 million a year.
In much the same class I put the present 35 per cent tax on the manufacturer's selling price of luggage, bags, purses, fountain pens and pencils and desk sets, and smokers' accessories; and the 25 per cent tax on cigarette lighters. We propose that all these taxes be reduced to 10 per cent at the manufacturer's level. This will involve a tax reduction of $5,800,000 a year.
Similarly it is proposed to reduce from 25 per cent to 10 per cent the tax on cosmetics, toilet articles and preparations, with a consequent tax reduction of $4 million a year.
The present tax structure on matches is a rather complicated schedule based on the number of matches in the box or package. We propose to repeal this whole schedule, and to substitute a straight 10 per cent ad valorem tax. This will mean a tax reduction of $2 million a year.
Rubber tires and inner tubes (but not including original equipment tires) are now subject to a tax of 5 cents a pound. It seems to me that this is both cumbersome and complicated. We propose, therefore, to repeal this poundage tax, and put these tires and tubes into the 10 per cent ad valorem group. No change in revenue yield is expected.
Finally, there is a tax, of minor revenue significance, of 25 per cent on coin-operated games and vending machines. This, too, will be reduced to 10 per cent.


Stanley Howard Knowles: Have you any taxes left?


Douglas Charles Abbott: The reductions in tax revenues as a result of all these shifts to this new 10 per cent rate will be about $20 million in a full year and about $17 million in the next fiscal year. Added to the reductions in the repealed items, this makes a total reduction in excise taxes of $99 million in a full year, and $86 million in the coming fiscal year.
I am not proposing any changes in the taxes or duties on liquor and tobacco or in the general sales tax rate.
As usual I must give public notice that no claims for refund arising out of these tax repeals and tax reductions in respect of goods on which tax has been paid or is payable will be entertained by my colleague, the Minister of National Revenue.
With these changes in effect our excise tax structure will be very much simpler and will be available to serve the people of this country as an efficient, equitable and flexible instrument of raising the revenues which are necessary to pay for the services which are now demanded of the federal government.

The Budget-Mr. Abbott
Let me recapitulate the substance of this commodity tax structure as it will now be.
First, the taxes at special and very high rates on beer, wine, spirits and tobacco.
Second, the general sales tax.
And third, a new group, or more accurately an enlarged group, where a 10 per cent tax in addition to the sales tax is imposed. The list will include such things as radios, phonographs, motorcars, jewelry, furs, cosmetics, luggage, purses, handbags, smokers' accessories, and so on.
This will provide a commodity tax system in which adjustments to varying fiscal requirements can be made by adding or subtracting from the list of goods covered, or by raising or lowering the general rates applicable.
Quite apart from the details of items and rates I commend it to all members of the house as constituting a very long step toward the desirable objective of a coherent and simple, yet efficient and flexible tax system.



CONCLUSION

[Stage Direction]
I can now summarize the net effects of all the tax changes I have proposed by saying that they will produce an estimated total reduction in taxation of $369 million in a full year and about $323 million in the next fiscal year. With the permission of the house I should like to insert in Hansard a recapitulation in tabular form:
Effect on Revenue of Proposed Tax Changes
Reduction
	Reduction	in Fiscal
	in full	Year
	Year	1949-50
Personal Income Tax	$	?
Increased exemptions and		
reduced rates		270,000,000	235,000,000
Ten per cent tax credit for		
dividends 		12,000.000	9,000,000
Corporate Income Tax		
Net increase in revenue		
from rate changes 		+12,000,000	+8,000,000
Excise Taxes Repealed		
Soft drinks 	28,000,000	24,500,000Candy 	19,000,000	16,625,000Chewing gum 	2,000,000	1,750,000Transportation tickets 	20,500,000	17,950,000Berth and parlor car seats	1,500,000	1,325,000Long distance calls, tele-	grams and cables	7,500,000	6,550,000Transportation buses 	150,000	130,000Carbonic acid gas	35a, 000	300,000Excise Taxes reduced to 10 per cent	Retail purchase tax	8,000,000	7,000,000Toilet articles	4,000,000	3,500,000Luggage 	4,000,000	3,500,000Matches 	2,000,000	1,750,000Smokers' supplies 	600,000	525,000Pens and pencils 	1,000,000	875,000Cigarette fighters 	250,000	220,000Total	$368,850,000 $322,500,000	

You will recall, Mr. Speaker, that at an earlier point in this speech I estimated that the present rates of taxation would yield us a revenue of $2,800 million in the coming fiscal year. After making allowance for tax reduction amounting to about $323 million on the basis of the fiscal year, my revised estimate of revenue for the year will be $2,477 million. With the permission of the house I will place on Hansard a table showing the revised revenue forecast in detail after taking account of the tax changes.
Revised Forecast of Revenue for Fiscal Year 1949-50 Taking Account of Tax Changes Reduction
Forecast in revenue Revised of in fiscal year forecast of
	revenue	1949-50 from	revenue
	from existing budget		for
taxes	proposals	1949-50?	$	$Customs duties.	235,000,000	235,000,000Excise duties ..	210,000,000	210,000,000Sales tax (net). Other excise	. 385,000,000	385,000,000taxes 	260,000,000	86,500,000	173,500,000Personal income	tax 	835,000,000	244,000,000	591,000,000Corporation income tax .. Interest and	550,000,000	+8,000,000	558,000,000dividends ... Succession	45,000,000	45,000,00026,000,000 4,090,000	26,000,000 4,000,000Misc. taxes 	
Total tax	revenue 	2,550,000,000	322,500,000	2,227,500,000Non tax revenue	200,000,000	200,000,000Total ordinary	revenue 	2,750,000,000	322,500,000	2,427,500,000Special receipts	50,000,000	50,000,000Total revenue	2,800,000,000	322,500,000	2,477.500,000
I said earlier that before making any tax reduction it was estimated that we would have a budget surplus of $410 million in the coming year. I have now proposed that $323 million of this be translated into tax reductions, which means that I am budgeting for a surplus of $87 million. This $87 million is a modest, I could almost say a nominal, budget surplus for it represents less than 3J per cent of our expenditures.
I repeat, and I emphasize, Mr. Speaker, that all these estimates of revenue and surplus are based on the assumption that current rates of employment, production and incomes will, on the average, be maintained during the coming year. Should this expectation not be realized, our budget surplus of $87 million could rapidly melt away.
A budget surplus of $87 million will mean a reduction in our net debt by that amount. This reduction may take place either as a result of an increase in our active assets by a reduction in our outstanding debt or by both. It is more difficult than usual to forecast what our cash surplus will be in this

coming year, because of the rapid changes that have been taking place in our foreign trade situation and the difficulty of foretelling now what cash the government will need to use in financing Canada's export surplus. Earlier I stated that in the absence of tax changes we could expect to have a cash surplus of $525 million next year, apart from the amounts required to finance our export surplus either by accumulating exchange reserves or making credits. The tax changes will reduce this figure to $202 million. I would hope that we shall succeed in selling enough abroad that our export surplus will be larger than this figure, and that we shall be able to bring our reserves up to a more satisfactory level. Should things develop this way and if, therefore, we need more than $202 million for this purpose, I think it would be the sort of situation that would justify us under present circumstances in borrowing our residual cash requirements.
This, Mr. Speaker, is the third budget that I have had the responsibility of presenting to this house, and the seventh in the preparation of which I have had some part. I take a good deal of personal pride in having been associated with the framing of Canada's economic and financial policy throughout these seven years. Wherever you go outside Canada, and almost everywhere you go within Canada, you find in the minds of those who know the record, a clear appreciation of the fact that the Canadian achievements in matters of economic and financial policy during and since the war rank second only to Canada's fighting record on land, on sea and in the air. We have been fortunate, it is true, but we have also, I think, been skilful, intelligent and prudent in the management of our affairs.
Before I take my seat may I summarize in a few short sentences the financial record of this Liberal government during the life of this present parliament.
In October 1945 we provided tax reductions of $300 million a year.
In June 1946 we provided tax reductions of $266 million a year.
In April 1947 we provided tax reductions of $265 million a year.
In the 1947-48 session we provided tax reductions of $92 million a year.
And now in March, 1949, we are providing tax reductions of $369 million a year.
In these five successive budgets we have made tax reductions which now mount up to nearly $1,300 million a year.
During the past three years we have reduced our net debt by $1,625 million.
During the life of this parliament we have extended social security, improved our health
The Budget-Mr. Abbott services, and have provided training, re-establishment credits and other benefits to our ex-servicemen on a scale more generous than that of any other country. We have greatly expanded our activities in research, exploration and surveys. And throughout the last four years the increase in employment, in wages, in farm incomes, and in general prosperity has never faltered. I know of no country in the world which can show a better record, or in which I would rather live.
I want to table now the budget resolutions.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend The Excise Tax Act and to provide, effective on and after March 23, 1949:
1.	That the following excise taxes be repealed, namely, the excise taxes on:
(a)	Soft drinks:
(b)	Chocolate, candy, and confectionery;
(c)	Chewing gum;
(d)	Cable, telegraph, and telephone messages, and on telephone extensions;
(e)	Transportation tickets or rights of transportation, and on seats, berths, or other sleeping accommodation;
(f)	Motor buses; and
(g)	Carbonic acid gas.
2.	That the retail purchase tax be repealed and replaced by an excise tax of 10 per cent, payable by the manufacturer or importer, on all articles now subject to the retail purchase tax.
3.	That the following excise taxes be reduced from 35 per cent to 10 per cent, namely, the excise taxes on:
(a)	Trunks, suitcases, bags, and luggage of all kinds;
(b)	Ash trays, tobacco pipes, and smokers' accessories; and
(c)	Fountain pens, propelling pencils, and desk accessories.
4.	That the following excise taxes be reduced from 25 per cent to 10 per cent, namely, the excise taxes on:
(a)	Toilet articles;
(b)	Devices commonly or commercially known as lighters; and
(c)	Coin, disc, or token operated machines and vending machines.
5.	That the sales tax on the following articles be repealed: Lactose; malt syrup except when sold for beverage purposes; diesel powered self-propelled trucks, mounted on rubber tired wheels, for off highway use exclusively at mines or quarries, and complete parts thereof.
6.	That the rates of excise tax on matches be amended from the present specific proportionate rate of tax on each package, to an ad valorem tax of 10 per cent.
7.	That the present specific tax of 5c per pound on tires and tubes be amended to an ad valorem tax of 10 per cent.

[Stage Direction]
Resolved that it is expedient to amend the Income War Tax Act and the Income Tax Act and to provide, amongst other things:-
1.	That, for the 1949 and subsequent taxation years, the following shall be the exemptions from individual income tax:-
(a) $2,000 in the case of a married person and persons allowed a deduction equivalent to that of
[Stage Direction]
The Budget-Mr. Abbott a married person and $1,000 in the case of all other persons; and
(b) $400 in the case of dependents not eligible for family allowances, $150 in the case of children eligible for family allowances.
2.	That, for the 1949 and subsequent taxation years, the schedule of graduated rates for individual income tax be replaced by the following schedule:-
On the first $1,000 of income or any portion thereof, 15 per cent per annum; or $150 upon the income of $1,000; and 17 per cent upon the amount by which the income exceeds $1,000 and does not exceed $2,000; or $320 upon the income of $2,000; and 19 per cent upon the amount by which the income exceeds $2,000 and does not exceed $4,000; or $700 upon the income of $4,000; and 22 per cent upon the amount by which the income exceeds $4,000 and does not exceed $6,000; or $1,140 upon the income of $6,000; and 26 per cent upon the amount by which the income exceeds $6,000 and does not exceed $8,000; or $1,660 upon the income of $8,000; and 30 per cent upon the amount by which the income exceeds $8,000 and does not exceed -$10,000; or $2,280 upon the income of $10,000; and 35 per cent upon the amount by which the income exceeds $10,000 and does not exceed $12,000; or $2,960 upon the income of $12,000; and 40 per cent upon the amount by which the income exceeds $12,000 and does not exceed $15,000; or $4,160 upon the income of $15,000; and 45 per cent upon the amount by which the income exceeds $15,000 and does not exceed $25,000; or $8,660 upon the income of $25,000; and 50 per cent upon the amount by which the income exceeds $25,000 and does not exceed $40,000; or $16,160 upon the income of $40,000; and 55 per cent upon the amount by which the income exceeds $40,000 and does not exceed $60,000; or $27,160 upon the income of $60,000; and 60 per cent upon the amount by which the income exceeds $60,000 and does not exceed $90,000; or $45,160 upon the income of $90,000; and 65 per cent upon the amount by which the income exceeds $90,000 and does not exceed $125,000; or $67,910 upon the income of $125,000; and 70 per cent upon the amount by which the income exceeds $125,000 and does not exceed $225,000; or $137,910 upon the income of $225,000; and 75 per cent upon the amount by which the income exceeds $225,000 and does not exceed $400,000; or $269,160 upon the income of $400,000; and 80 per cent upon the amount by which the income exceeds $400,000.
3.	That, for the 1949 and subsequent taxation years, there may be deducted from tax payable by an individual resident in Canada 10 per cent of the amount of his income that is from dividends on shares, having no preference of any kind, in a corporation resident in Canada that was liable to corporation tax in the taxation year: Provided that in the case of dividends deemed to have been received from a personal corporation the deduction shall only be 10 per cent of that part of the income deemed to have been received by the shareholder as a dividend that the income of the corporation derived from dividends is of the whole income of the corporation.
4.	That, with respect to income of corporations earned on and after January 1, 1949; the present rate of tax of 30 per cent shall be reduced to 10 per cent on the first $10,000 of income and increased to 33 per cent on income in excess of $10,000 with corresponding changes in the rates in the case of consolidations.
5.	That interest on unpaid taxes on incomes of the 1948 and subsequent taxation years for which

no assessments have been issued will cease to accrue twelve months after the date for filing the return in place of twenty months.
6.	That, for the 1949 and subsequent taxation years, the business losses that may be deducted from income shall include losses sustained in the five years preceding and the year following the taxation year in the place of the three years preceding and the year following the taxation year.
7.	That, for the purpose of computing income of the 1948 and subsequent taxation years of a member of the clergy or of a religious order or a regular minister of a religious denomination there may be deducted the value of the residence or other living accommodation enjoyed by him as such member or minister to the extent that it would otherwise be included in his income or the rent paid by him for or the fair rental value of such a residence or living accommodation.
8.	That, for the 1949 and subsequent taxation years, the exemption from income of an individual in respect of a spouse supported by him shall not be reduced because of exempt income of the spouse.
9.	That, for the 1949 and subsequent taxation years, all amounts whether in the form of lump sums or otherwise, received by employees from their employers, whether before, during or after their employment, shall be included in computing income of the employee unless it is established that they cannot reasonably be regarded as consideration for entry into the employment, remuneration for services or consideration for restrictions on the activities of the employee.
10.	That, for the 1949 and subsequent taxation years, payments made for a wheel chair may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
11.	That, for the 1949 and subsequent taxation years, $500 may be deducted from income for the purpose of computing taxable income of a taxpayer who, throughout the whole of the taxation year, was necessarily confined by reason of illness, injury or affliction to a bed or wheel chair.
12.	That special deductions from income to taxpayers engaged in exploring or drilling for natural gas, oil or minerals be allowed for expenses incurred in the 1950, 1951, and 1952 operations on the same basis as for expenses in 1949 operations.
13.	That special deduction from taxes to taxpayers engaged in exploring or drilling for oil for expenses incurred on deep-test oil wells be allowed for such expenses in 1950 operations on the same basis as for such expenses in 1949 operations.
14.	That the provision for the exemption of income derived from a metalliferous or industrial mineral mine that came into production during the calendar years 1946 to 1949 inclusive during the period of thirty-six months after the mine came into production be extended to exempt income from such mines that come into production during the calendar years 1950, 1951, and 1952.
15.	That tax concessions under Statutes of Newfoundland shall not apply in respect of taxes imposed by any Act of the Parliament of Canada.
(For details of the budget, see Appendix at page 1817 et seq.)
James MacKerras Macdonnell: Mr. Speaker, I gather that in a general way the Minister of Finance is fairly well pleased with himself tonight. We are generous people over here, and I do not think we will grudge the minister his moment of triumph. Indeed,
I think, without prejudice to what I shall

have to say later, we will not for the moment cavil at the words which he applied to himself and his colleagues-skilful, intelligent and prudent.
Of course the bearer of good news, even though it is long deferred and perhaps unnecessarily deferred, is always a popular figure. But, as I say, I do not think we should grudge the minister his moment of triumph. Indeed I think we should express to him our admiration of the way he has carried through his difficult task in spite of a heavy cold.
Now, I believe there is one part of his speech which it would be very proper, having regard to the presence here of the Prime Minister (Mr. St. Laurent) and the right hon. member for Glengarry (Mr. Mackenzie King), to make reference to particularly. That is the paragraph on page 1791, where the minister, after making certain references to dominion-provincial relations, went on with this:
In this search for co-operation-
That is a touching phrase.
-it will not let-
That is, the government-
-pettiness of spirit nor lalse pride nor undue emphasis on purely financial considerations stand in the way of mutual understanding and constructive results. It will constantly seek out ways of tackling mutual problems and developing practical solutions.
I have one practical suggestion to make in that connection, and it is that the practical way to deal with this, the way to further a practical solution, is for the government to do what it has refused to do in the last three years, to call the provinces together so that these things may be discussed in the way in which the minister has suggested.
I think one might say-and in this I believe the minister will agree with me-that whatever effect he expected to get from the budget tonight he did not expect to get the effect of surprise-because this situation, of course, has been clear for the last year. I am neither a prophet nor the son of a prophet, but I ventured to say in this house a year ago, referring to the fact that everyone was saying last year was not an election year-
The one universal comment made when the minister was through was: Well, no election this year.
That was last year.
The reason is obvious. The reason was that the minister did not, like Little Jack Homer, put in his thumb and pull out a plum.
Of course at that time the minister had a large surplus. He had a surplus of some $489 million which, as he has told us, has grown to $575 million. The minister at that time lectured to us about the beauties and the necessity of what he called cyclical budget. So far as I understand a cyclical budget, it was sponsored by Mr. Ilsley and carried us back to the Old Testament days, and the
The Budget-Mr. Macdonnell dream of Pharaoh who dreamed of the seven lean years and the seven good years. And the idea is that as a result of crystal-gazing it is decided that we are going to have so many good years and so many bad years, and we have to make hay in the good years in order to have it in the bad years.
The question which arose in our minds at that time, of course, was: Who is going to interpret the minister's dream? Who is his soothsayer? We may all guess who it is, but we will not go into that. The thing which has been clear in the last year, however, is that this was not an economic cycle at all, but that it was a political cycle. The minister was prepared to produce a lemon in 1948 in order to cut a melon in 1949.
I shall try to substantiate this statement. Just let us look back for the last few weeks or months, and we shall see what has been happening. It began at Digby-Annapolis-Kings. I shall quote what the minister said at that time, as reported in the Halifax Herald -and I mean the Minister of Finance; I am leaving out the Minister of Reconstruction and Supply (Mr. Winters). This is dated at Kentville, January 5:
Finance Minister Douglas C. Abbott has replied to a resolution passed at the eighty-fifth annual convention, Nova Scotia fruit growers' association, here last month, in which an appreciation to the federal government for Its financial assistance to the Annapolis valley apple industry was voiced in a letter read by the secretary at the first meeting of the new directorate.
Mr. Abbott, in acknowledging receipt of the resolution, said he was very glad to know of the expression of appreciation, but regretted this appreciation had not "taken the form of a larger vote for the government in the recent by-election."


Douglas Charles Abbott: It just shows you that one should not try to be humorous when one tries to write letters.


James MacKerras Macdonnell: At
the present time, of course, signs are arriving thick and fast, like the birds in the spring. It may be uncertain whether the government has a shelf of projects for unemployment, if it should arise; but nobody has any doubts that the government has a shelf of projects for election purposes.
We come first of all to the Canso bridge, about which the Minister of Transport (Mr. Chevrier) the other day tried to conceal his glee, looking all the while, in spite of himself, like the cat who had swallowed the canary when he told us about the building of the Canso bridge.
Was that a new idea? No; it is not a new idea. They have been pursuing it for many years. And in particular there was a report of a special committee which had studied it for years, and which was produced in January of 1944. But of course they could not get it then. They could not get it until

The Budget-Mr. Macdonnell now. It was not the needs of the citizens of Cape Breton which were of interest to the genial minister, I am sure-and I am sure his heart bled that it was so -but he could not consider the needs of the citizens of Cape Breton because what had to be considered were the election needs of the government. So they had to wait for the cycle.
The next contribution came from the Minister of National Defence (Mr. Claxton). We have the Hong Kong veterans being given a measure of justice; it is not a full measure, but a measure of justice.
Did their needs just arise this year?


Mr. Cruickshank:: That is pretty small coming from the hon. member.


William Earl Rowe: It is pretty late coming from you.


George Alexander Cruickshank: Where was the hon. member in either war?


James MacKerras Macdonnell: To do
the hon. member for Fraser Valley (Mr. Cruickshank) justice, I would have thought that he would have some feeling for the Hong Kong veterans.


George Alexander Cruickshank: I have some feeling.


James MacKerras Macdonnell: Regardless of the feelings of the hon. member for Fraser Valley, the fact is that this was held back year after year and it is only now that it comes because the political cycle is here. These men had to wait. It was not their needs that caused the government to move; it was the needs of the government, the political cycle. A rather deft touch is the fact that they have made it retroactive in the hope that the government will actually profit by their own negligence and delay.
I suggest to the minister that he should not forget to add interest to the arrears.
I have just one other observation to make with regard to this collection of birds in the spring. The Minister of Veterans Affairs (Mr. Gregg) is showing, I think, a much more generous and co-operative attitude than he has for a long time.


James Angus MacKinnon: Oh, no; that is not right.


James MacKerras Macdonnell: If it
hurts, do not squawk too much.
I am not suggesting that this is the first government that ever regulated its tax policy with some reference to an election, but I must say that by mulcting the public of huge surpluses for the last two years they have done a job which is beyond anything I have ever heard of. I hope you will let me know, Mr. Speaker, whether the word I intend to 
use is parliamentary, and if it is I would think that we are not wrong in calling this a bribery budget.


George Alexander Cruickshank: Oh, oh.


James MacKerras Macdonnell: I am
very fond of the hon. member for Fraser Valley but I wish he would let me make my speech.


Mr. Deputy Speaker:: May I suggest that the hon. member for Muskoka-Ontario be permitted to continue without so many interruptions.


James MacKerras Macdonnell: I think we should congratulate the minister upon the thoroughness with which he has set out to do his task. He has wanted to be beneficent and he has done a very thorough job. Indeed, as I listened to him I began to wonder if after all the largesse which he was distributing there would be any taxes left. Certainly the minister has not seemed to forget anyone. What a change from last year.


George Alexander Cruickshank: You have a new leader now.


James MacKerras Macdonnell: Last year there was a tidy surplus of $670 million and the minister pointed out that by taking in certain special receipts that could be raised as high as $1,180 million. However, I do not think we should regard the $1,180 million as being a true surplus because only $670 million was produced from taxation, only $670 million came out of the pockets of the taxpayers. When the minister was telling of the wonderful things they had done, when he was talking about these huge sums which the government was giving back to the taxpayers, I felt like reminding the house that the taxpayers were getting back just a little bit of their own money.
In spite of the high surplus last year there was only a beggarly reduction of some $60 million.


Douglas Charles Abbott: Ninety million.


James MacKerras Macdonnell: I will raise it to $90 million if the minister wishes, but I still consider it was a beggarly reduction.
I think the minister is wrong, I think it was $60 million. We could not have a decent reduction because there was no election last year. As I say, we had this surplus of $575 million, added to the surplus of the year before, which means that during the two years the government had $1,200 million of the hard-earned money of the people to play about with in various ways. I interject to point out to the minister that Philip Snowden, a great chancellor of the exchequer of Great

Britain, once said that any government that took even half a crown more from the taxpayers than was needed to run the government was getting money under false pretences. Obviously there is the great danger that when you have such large sums of money economy flies out the window.
I recall that a year ago the minister said that the budget gladdened his heart. But during the year, when he found out that the people were expressing considerable annoyance that they had not more of their own money to spend-indeed some people wondered why the government did not take it all and just give them a little back-when people found out that they had so little of their own money to spend they began to criticize the minister, and I doubt if his heart was as glad as it had been earlier. Indeed, he began to explain the matter away. One explanation he gave was that the taxpayers' money had to be used for various purposes, including the making of large advances to the foreign exchange control board. He made that statement some time in January when the advances to the foreign exchange board amounted to $275 million, and for the whole year it is something in the neighbourhood of $500 million. There is no more need for the citizens of Canada to take money out of their pockets to pay for the operations of the foreign exchange control board than there is for them to pay for the upkeep of the pyramids. It is an absolute misuse of the taxpayers' money.
The minister seems to take the matter very lightly. Perhaps that is the reason why he went on to give back these large sums this year when the cycle has come around. He is now giving back the taxpayers some of their own money. When the minister was taxed last week by the hon. member for Grey North (Mr. Case) as to why all this money had gone into the foreign exchange control board, he replied that it was just a bookkeeping entry. I said to the minister at the time that I did not believe the taxpayers regarded it as a bookkeeping entry.


Douglas Charles Abbott: I know my hon. friend wants to be correct. I made no such statement. I said that the writing down of the assets as a result-


Some hon. Members:: Order.


Douglas Charles Abbott: I know the hon. member does not want to misrepresent me.


James MacKerras Macdonnell: Oh, no.


Douglas Charles Abbott: In replying to the hon. member for Grey North I said-


Some hon. Members:: Order.


Douglas Charles Abbott: It does not matter anyway.
The Budget-Mr. Macdonnell


Mr. Deputy Speaker:: It has just occurred to me that the hon. member is referring to another debate during this session on another subject.


James MacKerras Macdonnell: Mr. Speaker, will you please make clear to me whether I am permitted to refer to what the minister said?


Mr. Maclnnis:: Not in another debate.


James MacKerras Macdonnell: It was
in another debate. The minister has questioned the accuracy of what I said. I brought Hansard here in order to be perfectly clear as to what was said. Is it your ruling, Mr. Speaker, that I cannot indicate exactly what the minister said?


Mr. Deputy Speaker:: It is not technically correct, but I will not rule against it.


James MacKerras Macdonnell: I shall read it because I think it is extremely desirable-


Douglas Charles Abbott: Read the hon. member's question as well.


James MacKerras Macdonnell: I shall read the whole thing. Do not fear. It is to be found at page 1637 of Hansard:


Wilfrid Garfield Case: But was there not taken from the reserves about $372 million for the foreign exchange control board? What was that for?


Douglas Charles Abbott: That was the bookkeeping entry, of course.


James MacKerras Macdonnell: It was not
a bookkeeping entry for the Canadian taxpayer.


Douglas Charles Abbott: The Canadian taxpayer suffered no
loss.
That is true. I did not suggest that he suffered a loss. All I suggest is that it should not be his money which is being used for entirely unnecessary and irrelevant purposes.


Douglas Charles Abbott: Will my hon. friend allow me to say something? I am sure my friend, the hon. member for Grey North (Mr. Case), will confirm that he was referring to the writedown in the assets of the foreign exchange control board as the result of the revaluation of the Canadian dollar. If he was not, that was certainly what I thought he was referring to. I do not care, but I certainly understood him to be referring to that.


James MacKerras Macdonnell: Then a little further down on the same page of Hansard there is the following:


Douglas Charles Abbott: I said that was the bookkeeping
entry.


James MacKerras Macdonnell: The taxpayer did not think of it in that way.
However that may be, I will go back now -and we will have no fooling about this- to what the minister said in a press statement on the 15th of January. He was
1810	HOUSE OF
The Budget-Mr. Macdonnell speaking about the cash funds provided for various purposes. He said:
In the first place these funds constitute the principal source of cash for financing certain large demands upon our cash resources. Among the largest of these are the advances which the government is currently making to the foreign exchange control board to finance increases in Canada's exchange reserves. During the nine-month period April 1-Deeember 31, 1948, the government's advances to the board on this account totalled no less than $275 million.
That is the point I am making, and I am saying there is no earthly need for that coming out of the taxpayers' money. I want to point out furthermore-


Douglas Charles Abbott: Use social credit money.


James MacKerras Macdonnell: -that the amount of roughly $500 million which went into the foreign exchange control board last year, and which should have been provided in another way, was equal roughly to three-quarters of the total personal income taxes collected, and it was equal to the income taxes, if my arithmetic is correct, paid by all people with incomes up to $8,000 in the taxation year 1947. I am not suggesting there should have been any tax relief like that. I am pointing out where the money went to, and I am asking why in those circumstances no relief was given last year.
Now I come to the relief which the minister has given this year. I shall not deal with it in detail. I applaud unreservedly the relief given to small companies, and I remind the minister with all modesty that that has been suggested not once but several times by the opposition. If he will look at some very excellent resolutions which were passed last October by the party to which I belong he will find that it is in there too.
In the second place I think that, when the taxpayer looks at the surplus which the minister has, he will feel disappointed and think that the minister might have increased the exemptions to the amounts suggested by our party last October, that is, to $2,500 for married persons and $1,250 for single persons. As far as I can estimate it from the figures I have, that would not have cost very much. Then, I think, the taxpayer will feel that the increase of $50 for dependent children is utterly inadequate, and that it should have been $200 as we suggested.


Douglas Charles Abbott: Did I hear a reference to bribery a short time ago?


James MacKerras Macdonnell: The
taxpayers will compare the relief given, which undoubtedly is substantial and which they will welcome, with the surpluses of the last two years, particularly of last year, and they will think that with a surplus of over $700 million, if I remember correctly, it is


not out of the way. Broadly speaking, I think what they will feel is that what has been given to them is a kind of partial restitution of the money which has been taken from them in the past. When the minister boasts that it is a greater tax reduction than has ever been given, I would point out to him that if you get your taxes high enough and keep them up long enough, unnecessarily long, you can get yourself into the position where it is rather easy to reduce. Further, I think the taxpayer will feel uneasy that there is no suggestion that I am able to discover from the budget that the government is going to discontinue the utterly unnecessary practice of mulcting the taxpayer in order to provide capital amounts for such government enterprises as the foreign exchange control board. Finally, I think the taxpayer will say, "Thank you very much for giving us back some of our own money, but you are late, very late, and while we are glad to get the money back do not imagine we are so stupid as not to realize the trick which you have tried to play on us." Mr. Speaker, I move the adjournment of the debate.
Motion agreed to and debate adjourned.



TRANSITIONAL MEASURES ACT, 1947 CONTINUATION OP CERTAIN ORDERS AND . REGULATIONS

[Stage Direction]
The house resumed consideration in committee of Bill No. 86, to amend the Continuation of Transitional Measures Act, 1947.
On section 1-Duration of act.
Donald Methuen Fleming: I would have been finished speaking this afternoon in another couple of minutes if discussion on points of order had not intervened to consume something like twenty minutes before the six o'clock adjournment. There are one or two observations I *wish to make to complete what I set out to say. In doing so, I assure you that I recognize the principle that was adopted when the house gave the bill second reading, namely, that the Continuation of Transitional Measures Act, 1947, should be continued for a further period.
The point I am dealing with now is whether the twelve orders to which the statute applies should be continued in their entirety for the full period referred to in section 1 of the bill.
I am urging that these orders are so broad and sweeping in their terms, and so vast in the powers that they confer upon the wartime prices and trade board, upon the government and government agencies, that they ought not to enjoy continuance in the present form for the full period during which the act is to continue to run in view of the decision

on principle made on second reading. I had made some reference to steel control, to the sweeping powers there that are unnecessary for the continuation of steel control for the period of a year. That was the kind of control referred to by the Minister of Trade and Commerce. I say also that the powers conferred upon the timber controller by P.C. 1997 are far wider and more extensive than are required to maintain the kind of timber control which the Minister of Trade and Commerce this afternoon contended was necessary for this period. I would point out that under section 2(d) the controller will continue to have powers as broad as these: to enter on, take possession of and utilize, by himself or by any person duly authorized by him thereunto, any land or premises or any plant, building, place, equipment or facilities used or capable of being used for producing and/or dealing in timber.
Does this committee appreciate the breadth of these words, the scope of the powers conferred upon the timber controller. Read with the powers I referred to this afternoon which are conferred upon the steel controller, these two men could be the twin dictators of the whole Canadian economy. It would be hard to conceive of powers more sweeping than those.
Then briefly I mentioned the unnecessarily broad powers conferred upon the priorities officer under P.C. 1619. I pointed out that he is given power to prohibit the making of or dealing in construction materials. His powers are not confined to control or regulation. He is given the power of life and death over every business concerned in the making of or dealing in construction materials, which under the order are given this broad meaning:
. . . any materials which are intended or are suitable for use in the construction, repair, alteration or improvement of any structure or are intended or are suitable for the heating, lighting or ventilating of any structure or the supply of water or power thereto or the disposition of sewage therefrom.
The priorities officer is given power to prohibit any kind of business coming within the scope of that definition of construction materials. I defy the Minister of Trade and Commerce or any other member of this house to stand up and stake his self-respect by asserting that these powers are required today in order to maintain priorities control of the kind we have heard the Minister of Trade and Commerce argue for in this debate. There can be no justification for this sort of thing in view of present conditions in Canada, particularly now that we have heard the Minister of Finance elaborate upon the condition of the country for which he is claiming so much credit. How can it be said now that in view of present economic conditions in Canada there is any justification for the con-
Transitional Measures Act tinuation of totalitarian powers such as those I have referred to? And, Mr. Chairman, I have referred to only three of the twelve orders in council.
We have been informed also that the list of commodities to which price control is to continue to apply is to be reduced by the elimination of bread, flour, and one or two other commodities. That is a change; and it would be interesting to learn from the Minister of Justice whether this reduction in the list is to come into effect before this bill is intended to become operative.


Stuart Sinclair Garson: Tomorrow morning.


Donald Methuen Fleming: Then, Mr. Chairman, the list of articles to which the powers of the wartime prices and trade board will extend under P.C. 8528 will be narrowed to that extent.
It is true the minister was proceeding quite rapidly, but 1 did not hear any reference to butter. Was butter included?


Clarence Decatur Howe: Yes.


Donald Methuen Fleming: It is included in those commodities mentioned?


Stuart Sinclair Garson: Flour, bread, butter, sugar, edible molasses and certain fruits and vegetables.


Donald Methuen Fleming: So from tomorrow morning forward those commodities will not be under price control.
I ask the Minister of Justice, as I did at the outset of my remarks, to take a reasonable and parliamentary view and insert, by suitable amendment in the annex to the bill, the orders in council which are to be continued. As a matter of fact the course the government ought to take is that of inserting in the annex to the bill not only the orders in council, but such orders as are made under the powers given in the orders in council to which legislative effect is to be given by this bill, so that those who are bound by the jaw will be able to find the law in the statute books and will not be compelled to scurry around all the offices in Ottawa to find the law to which parliament is now being asked to give this blanket assent.
I should touch on one other aspect of this matter of priorities control. A sensible kind of control that would have contributed much to meeting the housing needs of this country was abandoned by the government on April 1, 1946. I refer to permit control. The Minister of Trade and Commerce, then Minister of Reconstruction and Supply, defended his action on that occasion by saying it had become too difficult to administer from Ottawa. Therefore he was handing this difficulty over to the municipal governments,

Transitional Measures Act
which were not by any stretch of the imagination in a position to deal with it. It simply meant that this form of control completely broke down. After that time, instead of building materials-which were in very short supply-being channeled into the construction of the houses which were so badly needed by the people of this country, those materials were diverted into much nonessential building such as theatres, hot dog stands and all sorts of establishments of that kind.
Later on we found that the present Minister of Trade and Commerce was quite prepared to reverse his position. In November of 1947 he was quite ready to assert the very contrary of the proposition he had set up on April 1, 1946. He was then quite prepared to undertake the administration from Ottawa of a new, greater and more far-reaching form of control which is now embodied in the Emergency Exchange Conservation Act. If in the contention of the Minister of Trade and Commerce it is possible to administer that sort of control from Ottawa, then I say he has completely exposed the fallacies and inadequacies of the argument he offered this house on April 1, 1946, when he deliberately threw away the opportunity the government then had to channel building materials into the construction of needed homes for the people of Canada.


Charles Elwood Stephenson: I was interested in the statement by the minister this afternoon that there was a possibility of a greater supply of nails. This has been a problem in my riding, as I presume it has been a problem all over the country. I was wondering if the minister could tell us what control there is over these nails from the manufacturer down, how they are distributed to the wholesaler and from the wholesaler to the retailer, and if there is any possibility of getting more nails into the hardware stores, which are the usual means of distributing nails to the community. I was wondering if the minister could tell us also how many nails the government has held out of this production for government use or how many they now hold, or what possibility there is of getting some nails to the hardware stores of the country in order that they may supply the needs of the local municipalities.


Some hon. Members:: Carried.


Charles Elwood Stephenson: No. This is an important question.


Clarence Decatur Howe: I do not know that I have anything to add. I have made statements previously. The pattern of distribution has been approved by the wartime prices and trade

board. It is fairly efficient. Last year the additional precaution was taken of having a reserve of nails that could be supplied to priority projects, and all priority projects are home building. So far as I know, no home building was handicapped by lack of nails last year. With the purchases of wire that we have been able to make recently through government channels, I believe that by July nails will cease to be a source of discussion in this parliament.


Harold Aberdeen Watson Timmins: May I follow up that last question. I think the minister will admit that last year one reason why there were a great number of complaints about nails, particularly in the central provinces, was that down in the maritimes the system of distribution of nails to some extent fell down. In other words, the manufacturers there distributed the nails to the wholesale houses, and the demand on the wholesale houses in the maritimes was not sufficient to take up all the nails there for the purpose of use in the maritimes. Outsiders therefore came in and bought up those nails. The result was that they got into districts where they were used as bootleg nails. I think the minister who is responsible for setting up the machinery under which nails are distributed ought to tell us just what regulations have been put into effect this year in order to see that that situation does not develop again. After all, it is of little use to talk about the production of nails if they get into the hands of certain people who can profit from those nails to the disadvantage of the builders who are crying for them.


Clarence Decatur Howe: In answer to my hon. friend, I may say that any wholesaler or any retailer in the maritimes who sold his nails into bootleg channels immediately had his quota cut by the amount of those sales.


Charles Cecil Ingersoll Merritt: I want to ask the minister a question about priorities control. As I understand, priorities are now being exercised only in respect of Central Mortgage and Housing, veterans housing and integrated housing. Last year the minister said that total amounted to only 15 per cent of the housing being built. I want to ask him two questions. First of all, is the minister to administer this priorities control from now on, or is it to be handed over to the minister of reconstruction? Second, what are the government going to do in respect of the priorities order this year? In what way are they going to exercise their right to give priorities for building materials?


Clarence Decatur Howe: The priorities order will continue to be administered by the Minister of Trade and Commerce. It applies not to 15 per cent of the housing; it applies to all the small

housing. Anyone building a house can take advantage of the priorities system, and it is confined entirely to house building. It is a simple answer. I do not think it needs elaboration.


Charles Cecil Ingersoll Merritt: Since that statement represents a change from what the minister said last year, I should like to have the matter clarified. Last year the minister said that it applied to low-cost housing and to veterans' projects generally. To what type of housing does the priorities order not apply?


Clarence Decatur Howe: It does not apply to houses that cost over $10,000.


Charles Cecil Ingersoll Merritt: Anyone who is building a house at a cost of less than $10,000 can today get a priority for his building material. Is that correct?


Clarence Decatur Howe: That is right.


Lewis Elston Cardiff: I should like to ask the minister this question. How did the dealers get the United States nails that they were selling for twenty cents or twenty-five cents a pound? How did those nails get across here?


Clarence Decatur Howe: Anybody can import nails. There is no prohibition on their import. If they are foreign nails, and if the dealer can find anybody foolish enough to pay those prices, he can sell them to him.


[Stage Direction]
Section agreed to.
On section 2-Powers of wartime prices and trade board restricted.
Howard Charles Green: Will the minister explain what commodities will remain subject to price control?


Stuart Sinclair Garson: Yes. After the budget takes effect, it would apply to citrus fruits, canned citrus fruit juices, cabbage, carrots, imported new potatoes, imported grapes and the primary forms of iron and steel.


Donald Methuen Fleming: Much has been made by the Minister of Justice in his remarks in the course of this debate about the government's alleged policy of decontrol; and in the debate a good deal has been made of the limitations that were being applied to the control structure by this particular section. At this point I simply draw attention to the fact that this limitation, for what it is worth, affects only one order out of the twelve. It applies simply to the general order, P.C. 8528. We have reference here to the wartime prices and trade board. There is in section 2 (a) reference to "paragraph (f) of subsection one of section four of the wartime prices and trade regulations"; that refers to P.C. 8528. Then we have a reference in section 2 (b) to "subsection one of section eight of the wartime prices and trade regulations", which is also P.C. 8528.
Transitional Measures Act The minister is suggesting that it applies to some other order. There is certainly nothing in the language of section 2, as it now appears, that has any application to any other one of the eleven orders. If the principle is sound that limitation should now be put on the exercise of the powers conferred under this one order in council, why should not the principle be applied with equal soundness to the other orders? If the government is sincere in this policy of decontrol, why does it go on reserving under the eleven orders these vast and sweeping powers? It will be no comfort to be told: Oh, the wartime prices and trade board, or the priorities officer, or the steel controller, or the timber controller has made certain orders today. If this section passes in its present form, those controllers are at perfect liberty to exercise all the powers that are conferred upon them by those eleven orders as they stand today. This section imposes no restraint whatsoever upon the exercise of those sweeping and totalitarian powers that are conferred, by those other eleven orders, on the various officials and controllers. I say this to the Minister of Justice. If the government is sincere in its professions of a policy of decontrol, and if it is meaningful in setting up the principle of section 2 as applied to this one order in council, P.C. 8528, why is it not prepared to go further and apply the same principle to all other eleven orders in council which are the subject matter of the bill today, and to provide that no further power shall be exercised which is not in effect today by reason of some order or regulation made under the terms of those eleven orders in council?


Some hon. Members:: Carried.


Donald Methuen Fleming: Has the Minister of Justice something to say?


Stuart Sinclair Garson: I would draw my hon. friend's attention to the fact that of these twelve orders there will remain in effect P.C. 8528, which is a general order authorizing the wartime prices and trade board regulations; P.C. 9029, which is the rental control order; P.C. 7475, which covers the regulations of the Commodities Prices Stabilization Corporation, which is just getting wound up and has no price fixing or control significance; P.C. 34/4433, which extends the provisions of the Government Employees Compensation Act to the employees of the Commodities Prices Stabilization Corporation, and therefore has no price control significance; P.C. 3122, which effects the consolidation of supplementary and ancillary regulations, and therefore has no price control significance; P.C. 4600, which authorizes appeals upon leave to the court of appeal of a province and from there to

Transitional Measures Act the Supreme Court of Canada in cases involving breaches of wartime regulations, and has no price control significance; P.C. 6223, which provides for notice to the Attorney General for Canada, and therefore has no price control significance. Therefore, clause 2 of the bill in question applies to all of the goods and services except rentals. It limits the wartime prices and trade board's powers with regard to section 4, paragraph (f), of the wartime prices and trade board regulations, which gives wide powers to fix specific or maximum or minimum prices, or specific or maximum or minimum markups at which goods and services can be sold or offered for sale by or to any person; which prescribes the manner in which any price or markup shall be ascertained; which prescribes what shall constitute or be included in any price or markup; it prohibits the purchase or sale at prices which are at variance with the prices or markups so fixed or prescribed, and so on. This is a very long subsection. Then it also applies to section 8, subsection (1), which authorizes the prosecutions for selling for unjust and unreasonable prices.
Clause 2 of the bill as applied to all these provisions means that the board's power is further limited to enact price-fixing orders only with regard to those goods and services which are now affected by an order of the board. This embraces citrus fruits, canned citrus fruit juices, cabbages, carrots, imported new potatoes, imported grapes, and the primary forms of iron and steel. The same limitation applies also to granting leave to prosecute for violation of section 8 (1) of the wartime prices and trade regulations. Therefore under clause 2 of the bill, in fact we only have four orders in council which affect price control, one of which, P.C. 1997, is irrelevant because it applies to timber, in respect of which there is no existing board order. Another one is P.C. 245 dealing with the primary forms of iron and steel. Then the rentals control order, P.C. 9029, and then P.C. 8528, the wartime prices and trade regulations. The net effect of it all is that any person who wants to find out what his position is with regard to the law, which concerns my hon. friend, has only to look at these four orders in council and this bill. The powers of the board either to fix any prices or to authorize prosecutions are confined to these articles which I have named.


Donald Methuen Fleming: In his reply to my remarks the Minister of Justice has dealt simply with the matter of price control. He has completely ignored what I had to say, and the effect in relation to all these sweeping totalitarian powers which are conferred by these other orders. The five principal orders are

8528, -which is the one referred to in section 1. Then there is 9029, which has to do with these leasehold regulations; then 245 in relation to steel control; 1997 in relation to timber control and 1609 in relation to priorities control. The net result of it is that every power that could have been exercised under any one of these orders two years ago remains open to the officers such as the timber controller, the steel controller, and the priorities officer, to be exercised just as they could have been exercised two years ago. It does not matter whether he has exercised these powers in the meantime. These powers are there for him to exercise afresh or anew today, if this bill passes in its present form.
Talk about restraint in relation to price control. Yes, section 2 does confine the operation of price control. But no restraint whatever is placed upon the exercise of any of these sweeping and totalitarian powers conferred by these other four major orders in council: 9029, 245, 1997 and 1609; and there still remains in the hands of these officers, created by the government, the power to strangle and throttle the free economy of this country, if they choose to exercise them. And this government is responsible for asking this parliament to confer today, four years after V-E day, totalitarian powers as sweeping as those open to these officials. I submit to you, Mr. Chairman, that if that government are sincere in their profession of the policy of decontrol they should recognize the principle that they themselves have set up under section 2, and apply it to all the powers and all the orders issued under these other four major orders in council.


Stanley Howard Knowles: May I just say one word. We support the bill but we are opposed to the passing of this second section, because of what it now does. The fact is that in effect we are now committing to the ground, earth to earth, ashes to ashes and dust to dust, the soul of the wartime prices and trade board; and at this moment of its death I think a tribute should be paid to the good work it did through a number of years. But it is too bad that by this clause we are completely robbing it of its power.


Harold Aberdeen Watson Timmins: What the minister has said with reference to P.C. 8528 in relation to section 8 (1) is in effect, having regard to the decision in the McGinn case of about a month ago, throwing overboard all the effect of that section prior to the decision in the McGinn case.


Stuart Sinclair Garson: It has nothing to do with the McGinn case at all.
The Depuiy Chairman: Shall the clause carry?


Stanley Howard Knowles: On division.


Mr. Hackeli:: I wish to ask the Minister of Justice if it is not a fact that the provisions of 2 (a) and 2 (b) of the bill were not included in the War Measures Act; and is this act an extension of the War Measures Act to meet the holding in the Nolan case?


Stuart Sinclair Garson: No, I think not. It is not an
extension; it is a limitation upon the powers of the board.


John Thomas Hackett: Why does there have to be a statute passed to bring about a limitation? In the Nolan case all of the judges held that under the War Measures Act there was no authority to do that about which Nolan was complaining.


Stanley Howard Knowles: 



P.C. 1292.

John Thomas Hackett: Therefore I am asking the question whether the provisions of 2 are not outside and beyond the provisions of the War Measures Act and whether this legislation, if enacted, would not confer powers upon the governor in council to do things which it could not have done under the War Measures Act.


Stuart Sinclair Garson: If my hon. friend will read the section carefully he will see that it says:
Notwithstanding anything in the said act or in any order or regulation set out in the schedule thereto.
That is, notwithstanding the powers they have under this Continuation of Transitional Measures Act, the wartime prices and trade board shall not-and it limits the powers they shall receive under the act-
- (a) exercise any of its powers under paragraph (f) of subsection 1 of section 4 of the wartime prices and trade regulations-
Which deal with price-fixing-
.-or (b) grant leave to prosecute any person for violation of subsection 1 of section 8 of the wartime prices and trade regulations-
Which deal with functions such as the charging of undue prices-
-with respect to any goods or services other than the goods and services with respect to which an order of the board was made under that paragraph and is in force at the commencement of this act.
That is, the amending act. So that it is not an extension in any sense at all. It is a quite extensive limitation upon the powers of the board which it receives under the Continuation of Transitional Measures Act, 1947.


John Thomas Hackett: Is not the effect to extend its powers in matters not mentioned beyond
Transitional Measures Act those set forth in the War Measures Act? It refers to orders in force good or bad at the time this bill becomes law.


Stuart Sinclair Garson: No.


John Thomas Hackett: Is it not an attempt to give effect to the Continuation of Transitional Measures Act, 1947, which it would not otherwise have?


Stuart Sinclair Garson: No. Under the Continuation of Transitional Measures Act, 1947, the wartime prices and trade board would have power to authorize prosecutions and to fix prices. The effect of this section 2 is to say that, notwithstanding those powers which it received under that act, it cannot do so except in relation to those things as to which an order has been made and is in effect at the time of the coming into force of this amendment.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. Speaker:: Mr. Garson moves, seconded by Mr. Fournier (Hull), that this bill be now read the third time. Is it the pleasure of the house to adopt the motion?


Some hon. Members:: Carried.


George Alexander Drew: On division.
Motion agreed to on division, bill read the third time and passed.



BUSINESS OF THE HOUSE

Mr.   Si. Laureni@: The first order of business tomorrow will be the third reading of Bill No. 85, to amend the Foreign Exchange Control Act. Then the next order will be the resolution standing in the name of the Minister of Trade and Commerce for a bill to amend the Canadian Commercial Corporation Act. Then, if that is disposed of, the other item would be the resolution in the name of the Postmaster General to amend the Mail Contracts Supplemental Payments Act.


Stanley Howard Knowles: Can you tell us now what the date of the election will be?
At ten-thirty the house adjourned, without question put, pursuant to the order of the house passed on March 14, 1949.



APPENDIX


[Stage Direction]
Budget Papers presented by the Honourable D. C. Abbott, M.P., for the information of Parliament on the occasion of the Budget of 1949-50

[Stage Direction]
The purpose of this Appendix is twofold:
(1)	to make available in one place and in convenient form, as a supplement to the Budget, some of the more comprehensive economic statistics prepared by the Dominion Bureau of Statistics and other Government agencies;
(2)	to present a preliminary review of the Government accounts for the fiscal year ending on March 31, 1949.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
These tables were selected or designed to provide a broad factual background to assist in the analysis of the Budget accounts and proposals from an economic point of view. The principal source is the Dominion Bureau of Statistics.
The tables are grouped as follows:
National Income, Expenditure and Employment-
1.	National Income and Gross National Product.
2.	Gross National Expenditure.
3.	Government Expenditure on Goods and Services as Percentage of Gross National Expenditure.
4.	Estimated Canadian Labour Force and Employment.
Personal Income and Its Disposition-
5.	Sources of Personal Income.
6.	Disposition of Personal Income.
7.	Personal Saving and Spending.
8.	Personal Disposable Income Per Capita.
Saving and Investment-
9.	Sources of Private Saving.
10.	Disposition of Private Saving.
11.	Corporation Profits and Corporate Saving.
12.	Gross Home Investment.
Revenue and Expenditure of All Governments-
13.	Government Transactions Related to the National Accounts.
International Payments and Exchange Reserves-
14.	Canada's Net Balance of International Payments on Current Account.
15.	Summary of Canada's Net Balance of International Payments on Current Account and Related Changes on Capital Account.
16.	Holdings of Gold and U.S. Dollars.
Other Economic Indicators-
17.	Physical Volume of Industrial Production.
18.	Agricultural Production.
19.	Index Numbers of the Cost of Living.
20.	Money Supply and Related Bank Assets.
. Each group is prefaced by a brief explanation; each table is followed by a brief comment.

The Budget-Appendix

[Stage Direction]
National income measures the annual earnings of Canadian residents from productive operations. As such it includes salaries, wages and other forms of earnings by employees, in cash or otherwise, plus military pay and allowances. It includes corporation profits and other returns on invested capital. It includes the net income of farmers and of others who are in business on their own account.
Gross National Product is the value at market prices of all the goods and services produced in a year by the labour, capital and enterprise of Canadian residents. It is obtained by adding to National Income indirect taxes and such costs as depreciation allowances which may be regarded as entering into the cost of the goods and services produced, but do not form part of the incomes of Canadians. On the other hand, government subsidies, which reduce the price to the consumer or add to the income of producers, have to be deducted since they form part of the income of Canadians but do not enter into costs of production.
The goods and services produced in a year must be disposed of in some way. They are either sold at home or abroad or added to inventories. Gross National Expenditure indicates how the Gross National Product was disposed of. Thus it measures the same total as Gross National Product but in a different way. Since foreign expenditures on Canadian goods and services, i.e., exports, form part of the earnings of Canadians in the Gross National Product, they are likewise included in Gross National Expenditure. While Canadian expenditure on imported goods and services is included in the totals of consumer expenditure, government expenditure and gross home investment, it is not part of the disposition of Canadian production and is therefore deducted.

[Stage Direction]
MILLIONS or DOLLARS	MILLIONS OF DOLLARS
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1939	1946	1947	Prelim. 19481. Salaries, wages and supplementary labour income..	2,583 32 783 891	(Millions o 5,322 340 1,949 2,154	T Dollars) 0,235 S3 2,319 2,352	7,130 ,81 2,590 2,995
4. Net income of agriculture and other unincorporated				
5. NATIONAL INCOME (1+2+3+4)					
	4,289 737 5S2 -10	9,765 1,261 846 -9	19,989 1,600 1,010 -80	12,796 1,721 1,059 -162
0. Indirect taxes less subsidies					
7. Depreciation allowances and similar business costs.				
9. Gross National Product at Market Prices (54-6+7+8)					
	5,598	11,863	13,519	15,414
				
The value of goods and services produced by Canadians attained new levels in 1948, surpassing the previous year by 14%. Physical output showed a modest gain but most of the increase is accounted for by higher prices. The resulting additions to incomes were widely distributed. Total income of wage and salary earners -went up by $895 million or 14%, investment income by $271 million or 15% and the income of those engaged in agriculture and other unincorporated businesses by $643 million or 27%. In dollar terms the National Income in 1948 was about three times as high as in 1939. It is difficult to say exactly how much the gain has been in real output, but tentative calculations suggest that, when adjustment is made for price changes between the two years, the physical output of the Canadian people as a whole in 1948 was probably two-thirds higher than in 1939.

[Stage Direction]
-	1939	1946	1947	Prelim. 1948
		(Millions op Dollars)		
1. Personal expenditure on consumer goods and				
services	 2. Government expenditure on goods and services	3,861	7,913	8,949	10,000
(a) excluding mutual aid, UNRRA and military				
relief	724	1,731	1,512	1,725(b) mutual aid, UNRRA and military relief....	97	38	193. Gross home investment-	(a) plant, equipment and housing	554	1,321	2,057	2,540(b) inventories	327	467	866	5504. Export of goods and services (*) (excluding mutual	aid, etc.)	1,451 -1,328	3 197	3,629 -3,612	4,037 -3,6185. Imports of goods and services0)	-2,871	6. Residual error of estimate	+9	+8	+80	+1617. Gross National Expenditure at Market Prices	(1+2+3+4+5+6)	5,598	11,863	13,519	15,114
(') Minor adjustments have been made to the figures of current receipts and payments shown on page 21 of "The Canadian Balance of International Payments", 1948, Dominion Bureau of Statistics, to achieve consistency with the other component series. (See also Table 14).

The Budget-Appendix
Looking at the expenditure side of the national accounts, several developments are to be noted. Personal expenditure on consumer goods and services, which had risen by about a billion dollars in 1947 rose by the same amount in 1948. _ This increase of about 12% in dollar expenditure is less than the increase in the cost-of-living index of about 14% between 1947 and 1948, which would seem to indicate that there was some decrease in the physical volume of supplies purchased during the year. Post-war investment expenditure continued at an unprecedented level, absorbing 20% by value of total available supplies in 1948. The claims of federal, provincial and municipal governments on available supplies, which had fallen steadily from 1944 (when the war effort was at its peak) to 1947, rose somewhat in 1948. However, all governments taken together consumed a smaller share of total output in 1948 than in 1939.

[Stage Direction]
GOVERNMENT EXPENDITURES ON GOODS AND SERVICES AS PERCENTAGE OF GROSS NATIONAL EXPENDITURE (>)
1939	1946	1947	Preliminary 1948	$ Millions	%	$ Millions	%	$ Millions	%	$ Millions	%Gross national expenditure at market prices	5,598	100	11,863	100	13,519	100	15,414	100Federal government expenditure on goods and services	214	4	1,102	9	619	5	678	4Provincial and municipal expenditure on goods and services	510	9	726	6	931	7	1,066	7
(>) See Table 13.
During 1948 employment continued at very high levels. The total number of the unemployed was very small in proportion to the labour force as a whole although there are a few local areas where the situation is less favourable.

[Stage Direction]
-	June 1, 1939	June 1, 1946	May 31, 1947	June 5, 1948	Sept. 4, 1948	Nov. 20, 1948
		(Thousands or Persons)				
Total population 14 years and over		8,294	9,093	9,225	9,404	9,447	9,481
Total Labour Force, including Armed						
Forces	4,668	5,036	5,040	5,149	5,229	5,085Armed Forces	10	122	35	36	37	38Civilian Labour Force	4,658	4,911	4,995	5,113	5,192	5,047Employed	3,763	4,785	4,904	5,031	5,125	4,941Nonagricultural	2,483	3,511	3,741	3,845	3,878	3,955Agricultural	1,280	1,274	1,163	1,186	1,247	986Unemployed	895	126	91	82	67	106Persons Not in the Labour Force	3,626	4,060	4,195	4,255	4,218	4,396
Note:-The estimates do not in all cases agree with the estimates shown in the labour force bulletins of the Dominion Bureau of Statistics. To take into account the fact that the labour force surveys do not cover approximately 100,000 persons living in institutions, the number of persons not in the labour force has been increased correspondingly. Similarly, to take account of the omission of Indians living on reservations and persons in inaccessible areas, the nonagricultural employed and persons not in the labour force have both been increased by 83,000.
1824
[Stage Direction]
The Budget-Appendix

[Stage Direction]
How much income was received by individual Canadians in a year and how that income was disposed of is portrayed in tables 5, 6, 7 and 8.
The total of personal income differs from the National Income in several respects. For example, it includes only that part of corporation income which is actually distributed. Deductions from employees' total earnings must also be made for unemployment insurance contributions and similar contributions which, although forming part of the compensation for services performed, are not actually received by the employee within the year. On the other hand, transfer payments such as family allowances, old age pensions, veterans benefits and charitable contributions by corporations are included in arriving at the total of personal income.

[Stage Direction]
-	1939	1946	1947	Prelim. 19481.	Salaries, wages and supplementary labour income.. Deduct: Employer and employee contribution to social ins. and govt, pension funds	
2.	Military pay and allowances	
3.	Net income of agriculture and other unincorporated	2,583 -34 32 891 564 249 6	(Millions o 5,322 -147 340 2,154 878 1,113 10	p Dollars) 6,235 -181 83 2,352 1,037 849 15	7,130 -220 81 2,995 1,127 829 184.	Interest, dividends and net rental income of persons. 5.	Transfer payments to persons (excluding interest) (a)	from government	
(b)	charitable contributions made by corpora-	6. Personal Income (14-2+3+4+5)	4,291	9,670	10,390	11,960Personal income rose by $1,570 million or 15% from 1947 to 1948. As already pointed out, the additional income was widely distributed, the rise in farm incomes being particularly noteworthy. Transfer payments continued to decline, reflecting another drop in post-war payments to veterans which more than offset the growing total of family allowance payments and old age pensions. TABLE 6 DISPOSITION OF PERSONAL INCOME	-	1939	1946	1947	Prelim. 19481.	Personal direct taxes (a)	income taxes	
(b)	succession duties	
(c)	miscellaneous	
Total direct taxes	
2.	Personal expenditure on consumer goods and services-	61 28 21	(Millions o 711 54 31	p Dollars) 694 61 36	717 58 39110	796	791	8142,464 1,454 -57	5,666 2,258 -11	6,557 2,433 -41	7,368 2,758 -126(e) net expenditure abroad	
Total personal expenditure	
3.	Personal saving- (a)	personal saving excluding farm inventories... (b)	net changes in farm inventories	
Total personal saving	
4.	Personal Income (1+2+3)	3,861	7,913	8,949	10,000260 60	1,002 -41	750 -100	1,155 -9320	961	650	1,1464,291	9,670	10,390	11,960
The Budget-Appendix
Personal expenditure on goods and services increased by less than personal income during 1948. While direct taxes accounted for a smaller proportion of personal income than in any year since 1942, direct tax collections actually rose by $23 million from 1947 to 1948. There was also a noteworthy reversal in the trend of personal saving which, after declining steadily from the high levels of war years, rose from $750 million in 1947 to $1,155 million in 1948.

[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
12000
8000
4000
0
1938	1939	1940	1941	1942	1943	1944	1945	1946	1947	1948

[Stage Direction]
-	1939	1946	1947	Preliminary 1948	$ millions	%	$ millions	%	$ millions	%	$ millions	%Personal consumer expenditure....	3,861 320	92-3 7-7	7,913 961	89-2 10-8	8,949 650	93-2 6-8	10,000 1,146	89-7 10 3Personal disposable income 0)	4,181	100-0	8,874	100-0	9,599	100-0	11,146	100-0
(') Personal income less personal direct taxes (See Table 6).
The relation between personal spending and saving is set out more specifically in the above table 7. It shows that Canadians saved approximately 10% of the personal incomes at their disposal after payment of taxes in 1948, as against nearly 7% in 1947.
1826
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1939	1946	1947	Preliminary 1948Population	11,267	12,307	12,582	12,883Personal Income	S	381	786	826	928Deduct Personal Direct Taxes	$	10	65	63	63Personal Disposable Income	$	371	721	763	865
On a per capita basis, personal income was $928 in 1948, the highest on record, exceeding 1947 by over $100. In spite of this very much higher income figure, personal direct taxes per capita remained the same, therefore leaving individual Canadians, on the average, with the full additional income for saving or spending.

The Budget-Appendix

[Stage Direction]
Tables 9, 10, 11 and 12 are designed to illustrate how investment expenditures were financed out of savings. For the purpose of these accounts, a government deficit is regarded as a claim on public savings and a government surplus as an addition to public savings.

[Stage Direction]
-	1939	1946	1947	Preliminary 1948320 219	(Millions o 901 411 37 -8 846 -9	f Dollars) 650 590 57 -18 1,010 -80	1,146 890 -104 -4 1,059 -162
-56 582 -10			
				
				
				
	1,055	2,238	2,209	2,825
				
(') The adjustment has been made only to grain held in commercial channels. (') See Tables 1 and 2.
There was a very substantial increase in both personal and corporate saving during 1948, the total of these two items rising from $1,240 million in 1947 to $2,036 million in 1948. The only significant offset was a reduction in saving by the Canadian Wheat Board which made substantial payments out of its accumulated profits during the year.

[Stage Direction]
-	1939	1948	1947	Preliminary 1948
		(Millions op Dollars)		
Gross Home Investment		881	1,788	2,923	3,090
Net increase in foreign assets (including foreign				
exchange) adjusted (>)	123	326	17	419Government deficit (+) or surplus (-)(*)	42	116	-811	-845Residual error of estimated)	9	8	80	161Total	1,055	2,238	2,209	2,825(l)	See Table 15.
(a) See Table 13.
(3) See Tables 1 and 2.
[Stage Direction]
The Budget-Appendix
The claims upon savings represented by investment expenditures in plant, equipment, housing and inventories increased by very little in 1948. Foreign investment, however, rose from virtually nothing in 1947 to $419 million, represented for the most part by additions to foreign exchange reserves. The revenues of all governments taken together exceeded expenditures by $845 million in the calendar year 1948, a somewhat larger surplus than in 1947. This surplus on government account formed 23% of total savings by the Canadian people in 1948.

[Stage Direction]
-	1939	1946	1947	Preliminary 1948618 -112	(Millions o 1,421 -670	f Dollars) 1,821 -724	2,174 -744
506 -287	751 -340	1,097 -507	1,430 -540
				
				
	219	411	590	890
				
0) Includes depletion charges and is adjusted for corporate losses, renegotiation of war contracts and conversion to a calendar year basis.
(2)	Taxes paid or payable in respect of the calendar year's income, excluding the refundable portion of the excess profit tax. (See Table 13).
(3)	Includes charitable contributions made by corporations. (See Table 5, Item 5(6)).
(4)	(See Table 9).
Corporation profits before taxes increased by $353 million from 1947 to 1948. Almost the whole of the increase is reflected in the increase in corporation profits after taxes of $333 million because of the decrease in corporate taxes. Dividends paid out, however, increased by only $33 million so that retained profits showed another substantial increase, reaching a total of nearly $900 million in 1948.

[Stage Direction]
-	1939	1946	1947	Prelim. 1948
		(Millions of Dollars)		
Plant, Equipment, and Housing-Total(*)	554	1,321	2,057	2,540New Residential Construction(2)	145	338	492	614Other New Construction	126	349	564	710New Machinery and Equipment	283	634	1,001	1,216Inventories-T otal	327	467	866	550Grain in Commercial Channels (3)	127	-46	22	55Farm Grain and Livestock (3)	60	-41	-100	-9All Other Inventories(4)	140	554	944	484Gross Home Investment^)	
Percentage of Gross National Product	881 16%	1,788 15%	2,923 22%	3,090 20%
0) Includes private businesses and institutions, and publicly owned public utilities.
(2)	Excludes construction by Wartime Housing Limited which is included with Government
expenditure on goods and services (Table 2).
(3)	Value of physical change.
(4)	Change in value. Includes privately financed industrial and trade inventories.
(6) See Table 2, Item 3.

The Budget-Appendix
In dollar terms, private investment expenditures on plant, equipment and housing, including those of publicly owned utilities, rose by approximately 23% in 1948. In terms of physical units, there was a much smaller change. Analysis of the figures indicates a shift in the content of investment expenditures. The value of construction and equipment used by utilities was up sharply and increases are indicated for housing. Investment in manufacturing industries declined. The net addition to inventories was only $550 million in 1948 compared with $866 million in 1947.

[Stage Direction]
Table 13, "Government Transactions Related to the National Accounts", attempts to bring together in one statement and under uniform headings the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the national accounts, and consequently the surpluses or deficits shown here do not agree with those shown in the various public accounts. It has been necessary to adjust the conventional accounting statements of fiscal year revenue and expenditure to exclude purely bookkeeping transactions as well as the purchase and sale of existing capital assets. Extra-budgetary funds such as unemployment insurance, workmen's compensation and pension funds have been added, and surpluses or deficits of Government enterprises are likewise included. In the federal accounts some of the more substantial adjustments are as follows: addition of national defence recoverable expenditure, allocation of war refunds to prior years, adjustment of corporate taxes to an accrual basis, elimination of sales of war assets to business, and elimination of British Commonwealth Air Training Plan write-off from expenditure. In addition the federal figures have been adjusted to a calendar year basis by using the monthly figures published by the Comptroller of the Treasury. Government loans to foreign countries or accumulation of gold or foreign exchange are not included with government expenditure.
For purpose of analysis, expenditures by governments may be divided into two main categories: expenditures for the purchase of goods and services, and so-called transfer payments, i.e., family allowances, old age pensions, veterans benefits, the greater part of the interest on the public debt, etc., which do not arise from current production of goods and services. The first category represents the demands which governments place on the annual output of the nation. Transfer payments, on the other hand, simply add to the sums available for spending or saving by the recipient.
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The Budget-Appendix

[Stage Direction]
-	1939	1940	1947	Prelim. 1948
	(Millions or Dollars)			
Government Revenue-				
Direct Taxes-Persons		110	790	791	814
Income and Excess Profits-				
Federal					
Provincial and Municipal		15			
Succession Duties-				
Federal					
Provincial		28			
Miscellaneous-				
Federal		3			
Provincial and Municipal	18	25	32	33Direct Taxes-Corporations	123	699	759	785Income and Excess Profits-	Federal	98	Provincial	Ui)^	Withholding taxes-federal	a	29	35	41Indirect Taxes	720	1,502	1,780	1,796Federal	Provincial and Municipal	410	546	644	710Investment Income	99	379	343	336Federal	Provincial and Municipal	110	226	228	233Employer and Employee Contributions to Social Security and	Pension Funds	34	147	181	220Federal	Provincial and Municipal	28	68	81	91Transfers from Other Governments-	Provincial and Municipal	83	164	208	155Total Revenue	1,169	3,687	4,062	4,106Federal	Provincial and Municipal	700	1,065	1,296	1,373Deficit (or surplus-)	42	116	-811	-845Federal	Provincial and Municipal	32	-115	-96	-21Total Revenue plus Deficit (or minus Surplus)	1,211	3,803	3,251	3,261Federal	Provincial and Municipal	738	950	£ , I/O 1 1,200	1,352
The Budget-Appendix
TABLE 13-Concluded

[Stage Direction]
1946
Prelim.
(Millions op Dollars)
Government Expenditure- Goods and Services	
1,828
1,550
1,744
Federal-excluding mutual aid, UNRRA and military relief
-mutual aid, UNRRA and military relief	
Provincial and Municipal	
214 1,005 .... 97 510 726
38
659
1,066
Transfer Payments	
Federal	
Provincial and Municipal
194
1,570
1,351
1,313
1,049
1,287
1,006
Subsidies	
Federal	
Provincial and Municipal
241
5
175
75
5
Transfers to Other Governments- Federal	
164
155
Total Expenditure	
Federal	
Provincial and Municipal
1,211
3,803
3,251
3,201
473	2,853
738	950
2,051
1,200
1,909
1,352
1832
[Stage Direction]
The Budget-Appendix
Using the definitions appropriate to the calculation of the National Income and Expenditure (which, as already explained, differ somewhat from the accounting procedures used by governments), it is estimated that during the calendar year 1948, federal, provincial and municipal governments took in as revenue $4,106 million and spent $3,261 million, leaving an over-all surplus of $845 million of which $824 million was attributable to the federal government and $21 million to the provincial and municipal governments. Both the revenues and expenditures of the federal government declined, but expenditures fell more sharply, so that the federal surplus actually increased from 1947 to 1948. On the other hand, provincial and municipal governments, taken together, spent more than in 1947 and took in more by way of revenue, but the net result was a smaller surplus of revenue over expenditure.

[Stage Direction]
Tables 14 and 15 are designed to display the principal features of Canada's international balance of payments on current account and the related changes in capital items.
When goods are exported (unless they are given away) they give rise to payments or debts in favor of Canada. Similarly, when goods are imported they give rise to payments or debts in favor of the rest of the world. Other transactions, such as interest and dividend payments, the tourist trade, freight and shipping charges, also give rise to similar payments or debts in either direction. The difference between the debits and credits arising from these current transactions is referred to as the net balance of international payments on current account, as shown in Table 14. When total credits exceed total debits within a year, the rest of the world has gone into debt to Canada or Canada has paid off some of her debt to the rest of the world. When total debits exceed total credits, the net position is, of course, reversed.
It is also important to consider the related changes on capital account, i.e., the international transactions which do not arise from the movement of goods or the performance of services, such as borrowing and lending operations between Canada and the rest of the world. These are shown in Table 15. The changes in official exchange reserves, i.e., in Canadian holdings of gold and United States dollars, over a series of years are also shown in Table 16.

The Budget-Appendix

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-	1939	1946	1947	Preliminary 1948Net Balance-	377	(Millions 667	Dollars) 274	551-128	-430	-903	-289184	96	99	113259	028	773	51762	373	305	204-249	-242	-275	-255U.S.A	-193	-203	-239	-230- 75	- 46	- 41	- 3819	7	5	1368	80	84	150U.S.A	70	86	89	158- 4	- 4	- 62	- 1	- 2- 17	92	44	62U.S.A	- 68	-117	-844	103	116	97- 6	57	45	49-53	-143	- 42	-30U.S.A	- 34	- 88	- 64	-75- 8	- 16	30	47- 11	- 39	- 8	-8126	460	85	472U.S.A	-116	-607	-1,135	-401176	669	874	61766	398	346	256- 97	- 38	-19Total increase 0) in foreign assets (including foreign exchange)	126	363	47	453- 3	- 37	- 30	- 34
123	326	17	419
				
(') Other sterling area countries are included with U.K. and other Empire for 1940, 1947 and 1948 (s) See Tables 2 and 10.
290S7-116}
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The Budget-Appendix
The over-all surplus in Canada's balance of international payments rose from $47 million in 1947 to $453 million in 1948. The 1948 figure was substantially higher than the $363 million current account surplus achieved in 1946 and constituted the largest favourable balance ever achieved by Canada in a peacetime year. About three-fifths of the increase of $406 million in our current balance over 1947 is due to a larger surplus on commodity account and about two-fifths to the improvement in our balance on so-called "invisible" items.
The most important change in Canada's commodity trade in 1948 was in the geographical distribution of our exports. The destination of Canada's commodity exports in prewar and in recent years has been as follows:
-	United States	United Kingdom	Other Sterling Area	Other ERP Countries	Other Countries%	%	%	%	%1935-1939	37	37	10	7	91947	39	28	13	12	81948	50	23	10	10	7
The change in the destination of exports in 1948 was accompanied by an opposite change in the source of imports, as shown below:
-	United States	United Kingdom	Other Sterling Area	Other ERP Countries	Other Countries%	%	%	%	%1935-1939	61	18	n	6	41947	77	7	6	3	71948	69	11	7	3	10
TABLE is

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-	1939	1946	1947	Prelimi- nary 1948
United States and Other Non-Empire Countries-	(Millions op Dollars)			
Net Balance on Current Account- U.S.A	- 116	- 607	-1,135 +346	-401 +256Other	+ 66	+398	Total (including Official Contributions)	- 50	-209	-789	-145Related Changes on Capital Account- Net New Issues (+) or Retirements (-) of Canadian Securities	+ 24	-238	-231	+ 51Net Sales (+) or Purchases (-) of Outstanding Securities.	+ 87	+268	+ 4	- 13Export Credits and Interim Advances	- 210	- 140	- 74Other Net Capital Movements	-164	+ 77	- 54	+ 106Official Contributions	- 92	- 38	- 19Special Receipts of Convertible Exchange from Sterling Area	+ 2	+150	+505	+597Decrease (+) or Increase (-) in Canadian holdings of gold and U.S. Dollars	(*)	+251	+743	-496Balancing Item(2)	+101	+ 3	-	- 7Total	+ 50	+209	+789	+ 145
C1) Included with "other net capital movements".
(2) Includes multilateral settlements (in 1939) and errors and omissions in all years.

The Budget-Appendix
TABLE 15-Concluded
-	1939	1946	1947	Prelimi- nary 1948United Kingdom and Empire Countries- Net Balance on Current Account-	+137 + 39	(Millions +500 +169	if Dollars +633 +241	) +488 + 129Other Empire Countries (*)	
Total (including Official Contributions)	
Related Changes on Capital Account- Net New Issues (+) or Retirements (-) of Canadian	+176	+669	+874	+617-120 - 5	-	77 -	54 -652 + 89 +164 -	5 -150 + 15 + 1	-	41 -	9 -423 +104	-	14 -	4 -	52 + 64 -	18Net Sales (+) or Purchases (-) of Outstanding Securities Loans and Interim Advances (net)	+ 42	
Special Receipts of Convertible Exchange	 Decrease (+) or Increase (-) in Canadian holdings of	- 2		-505 - 1 + 1	-597
	- 91			+ 4
				
	-176	-669	-874	-617
				
(*) Other Sterling Area countries are included with Other Empire countries for 1946,1947 and 1948. (J) Includes multilateral settlements (in 1939), and errors and omissions in all years.
Deducting repayments, the Canadian Government made loans or advances to foreign countries to a net amount of 1126 million during 1948, as against $563 million in 1947. During the same period the United Kingdom repam $64 million on the $700 million interest-free loan of 1942, compared with $104 million in 1947, Official contributions for relief purposes fell by half from $38 million in 1947 to $19 million in 1948.
Included in the other capital movements vis-a-vis the United States and other non-Empire countries was an inflow of capital from the U.S. dollar area for investment in Canadian properties or business of $68 million. This figure does not include the ploughing-in of earnings by Canadian companies instead of their transfer to the non-resident parent company. The comparable figure of direct investments for 1947 was $48 million, for 1946, $41 million and for 1945, $17 million.

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-	F.E.C.B. and Bank of Canada	Government of Canada	Private (')	TotalSept. 15, 1939	238-7	(Millions o 22-4	f Dollars) 132-0	393-1Dec. 31, 1939	272-8	33-4	98-0	404-2Dec. 31, 1940	309-3	20-8	2-0	332-1Dec. 31, 1941	164-1	23-5	187-6Dec. 31, 1942	242-9	75-6	318-5Dec. 31, 1943	573-2	76-4	049-6Dec. 31, 1944	800-1	102-1	902-2Dec. 31, 1945	1,275-9 1,222-3 458-4	232-1	1,508-0Dec. 31, 1946...	22-6	1,244-9Dec. 31, 1947	43-3	501-7Dec. 31, 1948. .	975-8	22-0	997-8
(*) Exclusive of working balances.
[Stage Direction]
The Budget-Appendix

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The following tables are a selection of official statistics to illustrate some of the important trends in output, prices and money supply.

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Seasonally Adjusted, 1935-9=100
-	Total	Mining	Manufac- turing	Non- Durable Manufac- tures	Durable Manufac- tures	Electric Power1939	109	118	108	108	108	1081940	130	127	132	121	152	1151941	157	135	164	140	205	1281942	185	130	200	154	270	1421943	199	118	217	167	302	1551944	199	106	220	173	299	1551945	176	102	192	170	229	1541946	159	103	169	163	179	1591947	176	113	187	174	208	172194S	182	128	192	179	214	1711948, by months-	January	178	119	189	176	212	168February	182	120	194	182	216	162March	182	128	193	179	217	165April	184	137	193	181	214	175May	182	130	191	178	212	188June	180	124	190	178	212	179July	175	127	183	174	197	180August	£	176	123	185	175	202	176September	184	128	195	181	220	171October	185	131	197	181	224	165November	185	132	197	182	223	160December	185	133	197	181	224	159
There was a further substantial increase in 1948 in all types of industrial output except electric power.

[Stage Direction]
-		1939	1946	1947	Prelimi- nary 1948
			(Millions)		
Wheat	521	414	337	393Oats	384	371	279	359Bariev	103	149	141	155Rye, flax seed, mixed grain	62	68	60	105Shelled corn, buckwheat, peas and beans (dry)...	... (bush.)	18	20	15	20Potatoes and turnips	4	4	3	4Hay and clover, alfalfa, fodder corn, grain hay	(tons)	22	23	24	25Tobacco	108	141	107	109Milk production	(lbs.)	15,781	16,956	17,241	16,645Meat production	(lbs.)	1,490	2,350	2,220	*
* Not available.
Partly as a result of more favourable climatic conditions, production of field crops in 1948 recovered from 1947 levels but was still below wartime peaks. Milk production, however, was somewhat lower than in 1947 and, although final statistics are not available at this time, meat production also declined.

[Stage Direction]
INDEX NUMBERS OF THE COST-OF-LIVING (1935-39=100)
All Items	Foods	Clothing	Rents	Canada	U.S.A.	U.K.	Canada	U.S.A.	U.K.	Canada	U.S.A.	U.K.	Canada	U.S.A.	U.K.Monthly Avekages- 1939	102	99	104	101	95	104	101	101	107	104	104	102 103 103 103 103 103 104 1051940 	106	100	121	106	97	121	109	102	143	106	105	1941 	112	105	131	116	106	124	116	106	185	109	106	1942	117	117	132	127	124	119	120	124	200	111 112 112	109 108 108 108 109 111	1943	118	124	131	131	138	123	121	130	176	1944 	119	126	132	131	136	124	122	139	173	1945 	120	128	134	133	139	126	122	146	174	112	1946 	124	139	134	140	160	125	126	160	173	113 117	136 155	159 171	160	194	144	186	1948	i08(0	196	210	108(0	174	198	109(0	121	117	100(')148	169	1040)	182	210	1040)	161	192	103(i)	120 120	116 116 116 116 117 117 117 118 119 119 119 120	100(0 100 100 99 99 99150	168	106	186	205	108	165	195	104	151	167	106	186	202	109	170	196	105	120 120 121 121 121 121	152	169	108	187	208	109	173	196	106 107	153	171	108	191	211	108	174	198	154	172	110	194	214	114	175	197	109 110	July	157	174	108	201	217	108	175	197	99 99 100 100 100158	175	108	203	217	108	176	200	112	159	175	108	204	215	107	180	201	113	121	160	174	108	205	212	108	181	202	114	121 121 122	160	172	109	205	208	108	182	201	115	159	171	109	202	205	108	182	200	115	160	171	202	205	182	197	122	120	
(0 New Interim Index, based on June 17, 1947=100.
s
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The Budget-Appendix
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The Budget-Appendix
The chief development in Canadian prices in 1948 was the stability in the cost-of-living index during the closing months of the year. There was practically no change from September to the end of the year. In the United States the cost-of-living index at the turn of the new year was 4 points below the high point attained in August.

[Stage Direction]
Money Supply	December 31,			
1939	1946	1947	1948Currency Outside Banks- NotesO)	( 247 34	Millions c 1,031 65	f Dollabs 1,046 66	) 1,115 70Coin (p	Total Currency	281	1,096	1,112	1,185Bank Deposits- Chartered Banks Demand (3)	853 197 157	2,291 614 229	2,296 597 233	2,544 649 276Active Notice (4)	Other (excl. Government of Canada)!5)	Total	1,207 -136	3,134 -328	3,126 -362	3,469 -400Deduct Floats)	Net Total	1,071 18	2,806 94	2,764 68	3,069 81Bank of Canada "Other" Deposits(7)	Total Bank Deposits	1,089	2,900	2,832	3,150Money Supply	1,370	3,996	3,944	4,335
(') Note circulation of Bank of Canada and chartered banks, excluding notes held by chartered banks.
(*) Subsidiary coin issued by the Mint less coin held by Bank of Canada and chartered banks in Canada.
(s) Chartered banks' public demand deposits in Canada.
(*) Chartered banks' public notice deposits in Canada other than estimated aggregate quarterly minimum balances in personal savings accounts and non-personal notice deposits.
(6) Chartered banks' Canadian dollar deposits of provincial governments, Canadian, United Kingdom, and foreign banks.
(') Cheques on banks as shown in chartered bank month-end returns to the Minister of Finance.
C) Bank of Canada Other Deposits as shown in published month-end statements-i.e. excluding Government of Canada, chartered banks and foreign deposits.

The Budget-Appendix
TABLE 20-Concluded

[Stage Direction]
Related Bank of Canada and Chartered Bank Assets	December 31,			
1939	1946	1947	1948Government of Canada Securities, Gold & Exchange-	( 290 425 752	Millions c	f Dollars	)1,476 3,745	811 3,718	1,138 3,834
752	3,745	3,718	3,834
Total Government of Canada Securities, Gold & Exch...				
	1,467 -145	5,221 -366	4,529 -373	4,972 -330
				
	1,322 1,767 -1,544	4,855 2,297 -3,856	4,257 3,084 -3,143	4,652 3,341 -3,408
				
				
Total Related Bank Assets					
	1,545	4,296	4,198	4,585
				
(8) Bank of Canada gold and foreign exchange holdings less the amount of foreign currency deposit liabilities.
([DOT]) Bank of Canada and chartered bank holdings of Government of Canada Treasury Bills, Deposit Certificates, Treasury Notes and any other short term issues sold direct to bank of Canada and chartered banks.
(10) Bank of Canada and chartered bank holdings of Government of Canada direct and guaranteed securities other than those shown as banking issues.
(u) Canadian dollar deposits of the Government of Canada at chartered banks and Bank of Canada.
(12)	All loans in Canada of the chartered banks other than temporary advances in connection with Victory Loan issues, plus chartered banks' holdings of provincial, municipal and "other" securities, and Bank of Canada holdings of Industrial Development Bank capital stock.
(13)	Estimated aggregate minimum quarterly balances in chartered banks' personal savings deposits in Canada plus non-personal notice deposits in Canada.
From the end of 1946 to the end of 1947, the total money supply, as estimated by the Bank of Canada, showed virtually no change. During 1948, however, there was an increase of about $400 million. The reasons for the change are discussed in detail in the Bank of Canada annual report for the year 1948.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
REVIEW OF GOVERNMENT ACCOUNTS 1948-49 1. Introduction
The figures appearing in this Part must be regarded as necessarily preliminary and subject to revision. Although the Government's fiscal year ends on March 31st the books must remain open for several weeks after that date in order to record various adjusting entries, as well as all payments up to April 30th made on account of expenditures originating in, and properly chargeable to, the current fiscal year. For these reasons final figures for the current year will not be available for some considerable time.
2. SUMMARY OF GOVERNMENTAL FINANCIAL OPERATIONS

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Total revenues of the Government for the year ending March 31, 1949, are now estimated at $2,768 millions. Expenditures, on the other hand, are estimated at $2,193 millions. On the basis of these figures it would appear that the Government's accounting or budgetary surplus for the current year will probably total something in the neighbourhood of $575 millions. This compares with the all-time record surplus of $676 millions accumulated during the year ended March 31, 1948. As a result of the current year's estimated surplus of $575 millions, the Government's net debt (i.e. the excess of total liabilities over total active assets) will reflect a reduction of an equivalent amount.
In addition to collecting revenues and making expenditures in the narrow accounting or budgetary sense of those terms, the Government also receives and disburses substantial amounts of cash in other ways. These other receipts and disbursements relate to transactions which give rise to increases or decreases in the Government's assets and liabilities, and they do not, therefore, appear in what might be called the Government's income account for the year, nor do they enter into the calculation of the Government's annual surplus or deficit. In 1948-49 the total of these other disbursements greatly exceeded the total of other receipts, and a large part of the cash provided by the 1948-49 surplus had to be used to finance the difference. The balance of cash available for the reduction of funded debt was, therefore, considerably reduced.
The following summary shows the nature and extent of these non-income account transactions and their effect upon the government's net cash position. The figures indicate that although a total cash sum of $650 millions became available to the government as a result of the current year's budgetary surplus, this was reduced to a "cash surplus" of only $182 millions after financing the large cash requirements on non-income account.

The Budget-Appendix
(millions)
Net cash balance arising from the current year's budgetary surplus (i.e. budgetary surplus of $575 millions adjusted for non cash
items)*	 $650
Add other receipts:
Increases in Annuity, Pension, Insurance and Guaranty
accounts	 $93
Increases in Floating Debt, Deposit and Trust Accounts,
and Sundry Suspense accounts	 35
[Stage Direction]
 128
Deduct other disbursements:
Advances to the Foreign Exchange Control Board	450
Loans to the United Kingdom and Other Governments
(net)	 57
Advances to Central Mortgage and Housing Corporation. 71 Increases in other loans, advances and investments (net).	18
[Stage Direction]
	596
Cash surplus

i.e. balance available for debt reduction and/or
increase in cash balances	 $182
As shown above the total of other receipts during the year amounted to $128 millions, made up of $93 millions from increases in annuity, pension, insurance and guaranty accounts and $35 millions from increases in floating debt, deposit and trust accounts, and sundry suspense accounts. The total of other disbursements on the other hand amounted to no less than $596 millions, consisting of $450 millions by way of advances to the Foreign Exchange Control Board to finance increases in Canada's exchange reserves, $57 millions by way of loans to the United Kingdom and other countries for use in purchasing Canadian exports, $71 millions by way of advances to Central Mortgage and Housing Corporation for housing construction and housing loans, and a further net amount of $18 millions by way of miscellaneous loans, advances, and investments (including loans to veterans, farmers, and the Canadian National Railways).
Although total receipts from all sources exceeded total disbursements by only $182 millions, the government nevertheless reduced its outstanding funded debt by a net amount of $372 millions. This extra reduction in funded debt was made possible through sales of bonds out of Securities Investment Account. This account is the one used to record temporary holdings by the government of its own securities. Such securities are held either as temporary investments of surplus cash balances, or until the securities themselves mature or are cancelled.
* To calculate the amount of cash made available to the government as a result of the current year's surplus two types of adjustment are necessary:
In the first place there must be added back to the accounting or budgetary surplus figure of $575 millions any items included in total expenditure which did not involve current outlays of cash. In this category, for example, come the provision for possible losses on ultimate realization of active assets, $75 millions; the annual amortization of bond discounts and commissions, $8-6 millions; the 1948-49 subsidy payments and expenses of the Commodity Prices Stabilization Corporation (which were financed out of moneys advanced to the Corporation in prior years), $15-0 millions; etc.
In the second place there must be deducted from the budgetary surplus figure any items included in total revenues which did not represent current receipts of cash. In this category, for example, come the interest accruals on interim advances made during the year to foreign governments, which were added to principal on consolidation of such advances into a specific loan, $16-0 millions; and the transfer to revenue of a balance previously held in a deposit account for War Supplies Limited, representing reimbursement for inspection costs in connection with certain procurements made through that company, $11-0 millions; etc.
[Stage Direction]
The Budget-Appendix
A reconciliation between the "cash surplus" of $182 millions, the net reduction in funded debt of $372 millions, and the net change in the government's cash position during the year, is shown below:
(millions)
Cash surplus-z'.e. excess of total receipts from all sources over
total disbursements	
Add:
Net sales of securities from Securities Investment Account
Deduct:
Reduction in funded debt payable in Canada	$472
Less increase in funded debt payable in New York	 100
Net reduction in funded debt	 372
Net increase in cash balances during the year	 $ 34
3.	SUMMARY OF THE 1948-49 REVENUE AND EXPENDITURE

[Stage Direction]
The table which follows gives a summarized statement of revenues and expenditures for the year ended March 31, 1949, together with comparable figures for the four preceding fiscal years. More detailed tables, in comparative form, may be found at the back of this Appendix.
SUMMARY OF REVENUES AND EXPENDITURES (in millions of dollars)
Fiscal Year Ended March 31
1945	1946	1947	1948	1949 (Estimated)Revenues Ordinary revenues	$ 2,300-1 0-7 386-5	$ 2,363-2 0-4 649-6	$ 2,588-5 0-1 419-3	$ 2,629-8 0-1 241-8	$ 2,651-7 116-5Capital refunds	Special receipts and other credits	Total Revenues	2,687-3	3,013-2	3,007-9	2,871-7	2,768-2Expenditures Ordinary expenditures	767-4 3-2 4,418-4 7-5 1-3 47-8	1,061-9 4-5 4,002-9 17-4 1-3 48-2	1,236-2 11-2 1,314-8 31-9 10-7 29-4	1,380-0 15-7 634-4 63-1 18-7 83-7	1,583-3 19-5 434-4 34-4 39-7 81-9Capital expenditures	War, demobilization and reconversion expenditures	Special expenditures	Government-owned enterprises...	Other charges, including the write down of assets Total Expenditures	5,245-6	5,136-2	2,634-2	2,195-6	2,193-2Budgetary Surplus or Deficit(-)	-2,558-3	-2,123-0	373-7	676-1	575-0
Ordinary revenues for the fiscal year ending March 31, 1949, are expected to total approximately $2,652 millions, which represents an increase of approximately $22 millions over the total for the previous year. This increase was more than offset, however, by a decrease in special receipts and credits which are expected to total only $117 millions this year as compared with a total of $242 millions received during 1947-48. The reduction in these receipts, which consist largely of refunds of previous years' war, demobilization and reconversion expenditures, and sales of surplus war assets, reflects the normal decline which was to be expected in revenues from this source.
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Of special interest on the expenditure side is the decrease in demobilization and reconversion expenditures from a total of $634 millions in 1947-48 to an estimated total of $434 millions for the current year. Special expenditures also reflect a decrease, declining from $63 millions in 1947-48 to $34 millions in 1948-49. These reductions were almost entirely offset, however, by an increase of $203 millions in ordinary expenditures ($1,583 millions in 1948-49 as compared with $1,380 millions in 1947-48), and an increase of $21 millions in expenditures connected with government-owned enterprises ($40 millions in 1948-49 as compared with $19 millions in 1947-48). To some extent the increase in ordinary expenditures and the decrease in demobilization and reconversion expenditures resulted from a change in method of classifying expenditure as between the two years. Owing to their continuing nature, for example, all costs relating to pensions and treatment of World War II veterans are now classed as ordinary expenditure, whereas in previous years they were included under the heading of Demobilization and Reconversion Expenditure.

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MILLIONS OF DOLLARS____________________________ MILLIONS OF DOLLARS

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1939	1940	1941	1942	1943	1944	1945	1946	1947	1943	1949

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MILLIONS OF OOLLARS______________________________MILLIONS OF DOLLARS
+
1000
3000

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n
B-i
1939	1940	1941	1942	1943	1944	1945	1946	1947	1948	1949
+
1000
3000
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4. ANALYSIS OF REVENUES
Estimated revenues for the year 1948-49, classified according to major categories, are presented in the following table along with corresponding figures for the previous fiscal year.

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(In millions of dollars)
-	Fiscal Year E 1949 (Estimated)	nded March 31 1948	Increase or Decrease (-)Amount	Percent	Amount	Percent	Direct Taxes-	%	$	$Individual Income Tax	771 0	27-9	659-8	23-0	111-2Corporation Income Tax	490-0	17-7	364-2	12-7	125-8Excess Profits Taxes	40-0	1-4	227-0	7-9	-187-0Tax on Interest, Dividends, Rents and	Royalties	42-7	1-6	35-9	1-2	6-8Succession Duties	25-5	0-9	30-8	1-1	-5-3Total Direct Taxes	1,369-2	49-5	1,317-7	45-9	51-5Indirect Taxes-	Customs Duties	225-0	8-1	293-0	10-2	-68-0Excise Duties	206-0	7-4	196-8	6-9	9-2Excise Taxes	637-4	23-0	640-7	22-3	-3-3Other Indirect Taxes	4-0	0-2	3-8	0-1	0-2Total Indirect Taxes	1,072-4	38-7	1,134-3	39-5	-61-9Non-Tax Revenue-	Post Office	79-8	2-9	77-8	2-7	2-0Return on Investments	106-0	3-8	75-8	2-6	30-2Other Non-Tax Revenue	24-3	0-9	24-2	0-9	0-1Total Non-Tax Revenues	210-1	7-6	177-8	6-2	32-3Total Ordinary Revenue	2,651-7	95-8	2,629-8	91-6	21-9Special Receipts and Credits	116-5	4-2	241-9	8-4	-125-4Total Revenues	2.7G8-2	100-0	2,871-7	100-0	-103-5
It will be noted that of grand total revenues for the year 49 [DOT] 5% was derived from direct taxes, 38-7% was obtained from indirect taxes, and the remaining 11 [DOT] 8% was attributable to non-tax revenues and special receipts and credits.
(a)	Taxes on Personal Incomes
The personal income tax, which yielded an estimated total of $771 millions, retained its position as the largest single source of revenue. Although tax rates on personal incomes have remained unchanged since July 1, 1947, total collections from this tax showed an increase of some $111 millions over the 1947-48 total. This increase is a reflection of the high levels of income and employment which prevailed throughout the year.
(b)	Corporation Income and Excess Profits Taxes
Corporation income taxes yielded a total of $490 millions, an increase of $126 millions over the previous year's total. This very large increase is attributable not only to the high level of business profits being earned during this

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period, but also to the fact that the effect of the increase in corporation income tax rates (from 18% to 30%) which took place on January 1, 1947, was more fully reflected in 1948-49 revenues than it was in the revenues of the preceding year.
The yield from excess profits taxes totalled only $40 millions during the current year as compared with a total of $227 millions in 1947-48. These taxes were repealed as of December 31, 1947, so that collections during the year 1948-49 were largely in the nature of clean-up payments.
(c)	Taxes on Interest, Dividends, Rents and Royalties
Revenues under this heading represent withholding taxes on certain payments going to non-residents. The 1948-49 total of $42 [DOT] 7 millions represents an increase of approximately $7 millions over that for the previous year, this increase is due largely to a higher level of dividend payments during the current period.
(d)	Succession Duties
Revenue from succession duties is estimated at $25-5 millions for the current year. The decline of $5-3 millions below the previous year s total is attributable largely to the raising of exemptions on estates subject to duty from $5,000 to $50,000. This change, which was announced in the 1948 Budget Speech, became effective as of January 1, 1948.
(e ) Customs Duties
Net revenues from customs duties for the current year are estimated at $225 millions. This represents a reduction of $68 millions below the 1947-48 total, a decrease which is attributable almost entirely to the import restrictions put into effect in November 1947 as part of Canada's exchange conservation program.
(f)	Excise Duties
Excise duties, which are levied exclusively on alcoholic beverages and tobacco products, brought in an estimated total revenue of $206 millions during 1948-49, representing an increase of approximately $9 millions over the total for the previous year. Gross receipts in this category (before deducting refunds)are divided as follows: $105 millions from alcoholic beverages ($97-7 millions in
1947-48), and $104-3 millions from cigars, cigarettes and tobacco ($102-1 millions in 1947-48).
(g)	Excise Taxes
Excise taxes constituted the second largest source of governmental revenues, with total collections for the year estimated at $637-4 millions ($640-7 millions in 1947-48). Included here are a wide variety of taxes on commodities and services levied under the provisions of the Excise Tax Act. The most important of these taxes from the point of view of revenue is the sales tax which yielded a gross revenue of $391-5 millions during 1948-49, or an increase of $8-5 millions over the total for the previous year. This increase, which reflects a somewhat higher price level during the current year, took place despite the fact that the majority of prepared food products not previously exempt from sales tax were placed on the exempt list in May, 1948.
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The second largest revenue source among the excise taxes is the tax on tobacco products which yielded $76-6 millions. This represents an increase of 12% over the previous year's total, and indicates an upward trend in tobacco consumption.
The revenue from several other excise taxes also showed a substantial increase during the year. The revenue from soft drinks, for example, reached a new high of $27-8 millions, representing an increase of 17% over the total for the previous year. At the same time tax revenue from candy and chewing gum rose to $21-5 millions, representing an increase of 18% during the year. Excise tax revenues from automobiles, rubber tires and tubes totalled $37-4 millions for
1948-49, this increase of approximately 17% over 1947-48 revenues being attributable partly to the high rates of temporary taxes which were in effect until July 1948, and partly to the increased production and higher prices of automobiles.
Despite these increases, however, the over-all revenue from excise taxes was slightly lower in 1948-49 than in the preceding year because a number of previously important taxes no longer apply. The excise taxes on amusements, parimutuel bets, places of entertainment, and the special tax on importations, for example, were repealed in May, 1948 and yielded only small amounts of revenue during the current year. Moreover, excise taxes on gasoline and sugar, and the sales tax on gas and electricity, although they were repealed in 1947, yielded considerable amounts of revenue in 1947-48. Nothing, however, was received from these sources in 1948-49.		
To some extent the revenue from excise taxes for the year reflects the temporary tax levies or temporary tax increases which were imposed in November 1947 in connection with the exchange conservation program. These temporary levies or increases were all removed over a period of nine months following that date, with the last and most important group being removed on July 31, 1948.
Some of the tax sources which showed an increase in revenue during the year (together with the amount of increase in each case) are as follows:
Cigars, cigarettes and tobacco....
Automobiles, rubber tires and tubes.
Beverages	
Candy and chewing gum	
Electric and gas appliances	
Transportation and communications.
Estimated Increase over 1947-48
$	7,994,000
5.491.000
4.033.000
3.261.000
1.006.000 1,049,000
Some of the sources which showed a decrease in revenue during the year (together with the amount of decrease in each case) are as follows:
Estimated Decrease from 1947-48
Amusements	
Sugar	'''
Pari-mutuel bets	I"!""""!!!""")	
Gasoline	I!.'!!!"!!!!!!!!!!!"""	
Phonographs, radios and tubes....!!"!!!!!!!!!!!"!!"'
Special tax on importations	
Stamps, including payment of taxes on jewellery, chinaware, cabaret attendance, etc	
12.789.000
10.572.000
2.519.000
2.208.000
1.935.000
1.833.000
1.750.000

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(h)	Other Indirect Taxes
Small amounts of tax revenue are derived from the tax on chartered bank note circulation; from the taxes on the net premium income of insurance companies; from a tax on the export of electric energy from Canada, and from a tax on the export of furs from the Northwest Territories. Total revenue from all these sources for 1948-49 is estimated at $4-0 millions, a slight increase over the total for the previous year.

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1939	1940	1941	1942	1943	1944	1945	1946	1947	1948	1949
Direct taxes on income include individual income taxes, corporation income and excess profits taxes, and taxes on interest, dividends, rents and royalties.
(i)	Non-Tax Revenues
Non-tax revenues for 1948-49 are estimated at $210-1 millions, an increase of some $32 millions over the 1947-48 total. The greater part of this increase took place in the revenue classification entitled "Return on Investments", the total of which is expected to reach $106 millions in 1948-49 as compared with a total of $75-8 millions in 1947-48. The larger items entering into total receipts under this classification are: interest on advances to the Canadian National Railways, $21-2 millions; Bank of Canada profits, $19-2 millions; interest on loans to, and operating profits of, the Foreign Exchange Control Board, $13-4 millions; interest on bonds held in Securities Investment Account, $17 millions; interest on loans to foreign governments under Part II of The Export Credits Insurance Act, $26-2 millions; and interest on advances under the Soldier Settlement and Veterans' Land Act, $3-3 millions.
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Also included in the general category of non-tax revenues are post office receipts, which are estimated at $79-8 millions for 1948-49 as compared with a total of $77-8 millions during 1947-48. It may be of interest to note that the total costs of operating the Post Office Department during the year are estimated at $78-0 millions, so that receipts on this account exceeded costs by approximately $1 -8 millions. In making this comparison, however, it should be borne in mind that the total shown for Post Office receipts does not reflect the value of services rendered free of charge to other departments. Similarly the total shown for operating expenses does not reflect any charges for premises owned by the Government and occupied by the Post Office Department.
Other non-tax revenues of $24-3 millions represent receipts derived from the following sources: services and service fees, $8-6 millions; privileges, licences, and permits, $6-0 millions; bullion and coinage, $3-3 millions; proceeds from sales of publications, experimental farm produce, etc., $2-4 millions; refunds of expenditures, $1-9 millions; and miscellaneous non-tax receipts, $2-1 millions.
(j)	Special Receipts and Credits
The total of special receipts and credits for the fiscal year 1948-49 is estimated at $116-5 millions, as compared with total receipts of $241-9 millions for the preceding year. Receipts on war, demobilization and reconversion account again constituted by far the largest source of special revenues. The total of such receipts during the fiscal year 1948-49 was $113-8 millions, consisting of $80-8 millions from refunds of previous years' war, demobilization and reconversion expenditures; $24-4 millions from the sale of surplus war assets, and $8-6 millions from miscellaneous war, demobilization and reconversion revenues.
The largest item in this total, namely the $80 [DOT] 8 millions received by way of refunds of previous years' war, demobilization and reconversion expenditures may be further analysed as follows:
Refunds in connection with cost audits and re-negotiation of contracts.$ 58*0 millions
Reimbursement for inspection costs in connection with certain procurements made through	War Supplies Limited	 11*0	"
Refund by the Government of the United States of advances made by Canada in excess of amounts required to cover the cost of supplies and services furnished under lend lease and related programs (including the
Canpaj'-program)	 3-7	"
Amount received from Central Mortgage and Housing Corporation representing proceeds from the sale of certain of the properties and assets
transferred to that Corporation by Wartime Housing Limited	
3-3	"Miscellaneous refunds	
4-8	"l	____________
S 80 -8 millions
The amount of $24-4 millions realized from the disposal of surplus war assets does not include the residual cash balances or value of accounts receivable carried by War Assets Corporation as at March 31, 1949.
Miscellaneous war, demobilization and reconversion revenues totalling $8-6 millions include the sum of $5-0 millions derived from the operation of Park Steamships Limited, and the sum of $1-4 millions representing the Government's share of profits arising out of the wartime operations of Sorel Industries Limited.
Apart from war, demobilization and reconversion revenues, the only other important item included in special receipts and credits during the last fiscal year was a credit of $2-5 millions arising from the transfer to "Active Assets" of certain advances made in prior years in connection with the Snare River Power project, and previously classified as "Expenditure".

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5.	ANALYSIS OF EXPENDITURES
The table which follows presents a summary of expenditures, by major classifications, for the year 1948-49, together with corresponding figures for the previous fiscal year.

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(In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)
-	1949 Estimated	1948	Amount	Per cent	Amount	Per cent	Ordinary Expenditure	Public Debt Charges-	455-5	20-7	8-2Interest on Public Debt	463-7	21-1	Other Debt Charges	9-9	0-5	11-2	0-5	- 1*3473-6	21-6	466-7	21-2	6-9Subsidies, and Compensation to Prov-	155-9	7-1	-54-4inces under Tax Agreements	101-5	4-6	Family Allowances	271-0	12-4	263-2	12-0	7-8Old Age Pensions and Pensions to Blind Persons	67-0	3-1	58-1	2-6	8-9Unemployment Insurance Act-Administration and Government's Contribution	39-2	1-8	35-1	1-6	4-1Department of National Revenue	51-3	2-3	37-3	1*7	14-0Post Office Department	78-0	3-6	67-9	31	10-1Agriculture	20-7	0-9	16-3	0-7	4-4Mines and Resources	49-3	2-2	23-6	1-1	25-7Public Works	51-7	2-3	35-6	1-6	16-1Trade and Commerce	28-1	1-3	10-8	0*5	17-3Transport	43-4	2-0	30-1	1-4	13-3Veterans Affairs	183-5	8-4	97-3	4-5	86-2Other Departments	125-0	5-7	82-1	3-7	42-9Total Ordinary Expenditure	1,583-3	72-2	1,380-0	62-8	203-3Capital Expenditure	19-5	0-9	15-7	0-7	3-8Demobilization and Reconversion Expenditure	National Defence-(Army, Navy and	11-3	195-4	8-9	53-1Air Services)	248-5	Reconstruction and Supply	1-5	0-1	62-3	2-8	-60-8Veterans Affairs	88-8	4-0	237-4	10-8	-148-6Costs of administering the Wartime Prices and Trade Board including costs of subsidies, and costs ol drawback claims to millers	35-8	1-6	57-0	2-6	-21-2Agriculture	25-0	1-2	33-2	1*5	"8 * 2Trade and Commerce	18-7	0-9	01	00	18 [DOT] 6Other Departments	16-1	0-7	49-0	2-3	-32-9Total Demobilization and Reconversion	634-4	28-9	-200-0Expenditure	434-4	19-8	Special Expenditure	34-4	1-6	63-1	2-9	-28-7 21-0Government Owned Enterprises	39-7	1-8	18-7	0-9	Other Charges	81-9	3-7	83-7	3*8	- 1*8Grand Total Expenditure	2,193-2	100-0	2,195-6	100-0	-2-4
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WAR DEMOBILIZATION AND RECONVERSION EXPENDITURE OTHER EXPENDITURE*

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^ZZ

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Other expenditure includes capital and special expenditures, deficits of government owned enterprises' and other charges.
(1) Ordinary Expenditures
(a) Debt Charges
Interest on public debt again constituted the largest single item of governmental expenditure, with the 1948-49 total estimated at $463-7 millions or 21-1% of total expenditure for the year. The increase of $8-2 millions in this item over the 1947-48 total is attributable to the payment during 1948-49 of several years' accumulated interest on the 1943 and 1944 refundable portion of personal income taxes. The refundable portion for both these years is being repaid in Alarch, 1949 and the total interest accrued thereon amounts to no less than $19-1 millions. This compares with a total interest charge of only $5-3 millions in the 1947-48 year, when the 1942 refundable portion was repaid.
If interest payments on the refundable portion are separated from both years totals it will be seen that the aggregate of all other interest charges for the year 1948-49 was reduced $5-6 millions below the corresponding total for the previous year.
Of total 1948-49 interest charges of $463-7 millions, the sum of $438-2 millions represents interest paid on the government's outstanding funded debt, while the balance of $25 [DOT] 5 millions represents interest paid or credited to various annuity, superannuation, pension and trust funds.
The addition of annual amortization charges in connection with loan discounts and commissions, plus the costs of new loan flotations (not amortized), and certain miscellaneous service charges, brings the total of all public debt charges for the year to $473 [DOT] 6 millions.

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OTHER ORDINARY EXPENDITURE SOCIAL WELFARE *

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AGRICULTURE. FISHERIES	*

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1939
I 94 i

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194?
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Social welfare costs include family allowances, old age pensions and pensions to the blind, the Government's contribution to the Unemployment Insurance fund, and the ordinary expenditures of the Department of Labour and the Department of National Health and Welfare.
(b) Payments to Provinces
Total payments to provinces (including statutory subsidies and payments under tax agreements) amounted to $101-5 millions, a decrease of some $54-4 millions below the total for the previous year. This difference is attributable largely to the fact that the 1947-48 total included not only the current payments to the seven participating provinces under the 1947 Dominion-Provincial Tax Rental Agreements, but also the final holdback payments to six provinces under the old wartime tax agreements (which expired during 1947-48), and a special payment of $8 millions each to Alberta and Saskatchewan in final settlement of claims in respect of natural resources.
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Details of payments, by provinces, for the current year are as follows:
-	Statutory Subsidies	Compensation under the Dominion-Provincial Tax Rental Agreements Act, 1947	Total(millions)	(millions)	(millions)S 20	$ 10-7	$ 12-7Prince Edward Island	0-7	1-8	2-5New Brunswick	1-6	8-5	10-12-9	2-9Ontario	3-2	3-2Manitoba	1-7	13-4	15-1Saskatchewan	20	141	16-1Alberta	20	140	16-0British Columbia	1-0	21-9	22-917-1	84-4	101-5
(c) Family Allowances, Old Age Pensions, and Pensions to Blind Persons
Total expenditures in connection with family allowances for the year 1948-49 are estimated at $271 millions, representing an increase of approximately $7 [DOT] 8 millions over the total for the previous year. In addition, payments for old age pensions and pensions to blind persons are expected to total $67 millions, an increase of approximately $8-9 millions over the 1947-48 total.
The estimated distribution of these payments, by provinces, is as follows:
-	Family Allowances	Old Age Pensions and Pensions to Blind Persons
	(millions)	(millions)
Nova Scotia	$ 14-6	S 4-9Prince Edward Island	2-3	0-6New Brunswick	12-5	4-289-3	17-3Ontario	80-1	20-9Manitoba	150	4-3Saskatchewan	18-5	4-3Alberta	18-7	4-0British Columbia	19-4	6-5Northwest and Yukon Territories	0-6	271-0	67-0(d)	Department op National Revenue
The increase of $14-0 millions in the expenditures of this department is attributable largely to a general expansion of the Income Tax Division, as well as to increases in personnel costs in all sections of the department.﻿1853

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(e)	Mines and Resources
The increase of approximately $25-7 millions in the expenditures of this department is due chiefly to subsidy payments to gold mines under the new Emergency Gold Mining Assistance Act, together with some fairly substantial increases in expenditure in connection with National Parks, Immigration Services, and the Indian Affairs Branch. It is estimated that the total of subsidy payments to gold mines during the government's current fiscal year will aggregate approximately $10 millions.
(f)	Public Works
Expenditures on public works are approximately $16-1 millions higher than the total for the previous year, reflecting a general increase in the costs of operation, maintenance and repairs in the case of public works and buildings, and an increase in the costs of dredging, improvements, etc., in the case of harbours and rivers. The total of this department's expenditures would probably have been much greater had it not been for the policy of deliberately deferring, wherever possible, all expenditures on new construction and new equipment.
(g)	Transport
The increase of $13-3 millions in the expenditures of this department reflects a general increase in the costs of various departmental services. Air Services showed the greatest increase, with expenditures aggregating $18-4 millions in 1948-49 as compared with a total of $10-4 millions in the previous year.
(h)	Trade and Commerce
Although the total ordinary expenditures of this department show an increase from $10-8 millions in 1947-48 to $28-1 millions in 1948-49, the greater part of this increase is due to the transfer to this department during 1948-49 of many of the services or functions which previously came under the Department of Reconstruction and Supply. Included in this transfer, for example, were the Chalk River Project and the National Research Council.
(i)	Veterans Affairs
The ordinary expenditures of this department are estimated at $183-5 millions for the current year, an increase of $86-2 millions over the 1947-48 total of $97 [DOT] 3 millions. However, the greater part of this increase is due to a change in method of classifying expenditure. Owing to their continuing nature all costs relating to pensions and treatment of World War II veterans are now classed as "Ordinary Expenditure" whereas in previous years they were included under the heading of "Demobilization and Reconversion Expenditure".
To satisfactorily compare expenditures on veterans affairs as between the two years it is necessary to add together the Department's "Ordinary" expenditures and its "Demobilization and Reconversion" expenditures, and consider the combined total. As shown below the 1948-49 total of "Demobilization and Reconversion" expenditures for this department is estimated at $88-8 millions, as compared with a total of $237-4 millions for the preceding year. When these amounts are added to the totals of "Ordinary Expenditure" shown above it will be seen that the aggregate of all expenditures on veterans affairs declined from a total of $334-7 millions in 1947-48 to a total of $272-3 millions in 191 -49,
i.e. an over-all decrease of $02-4 millions.
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(2)	Capital Expenditures
Expenditures charged to capital are estimated at $19-5 millions for the year as compared with a total of $15-7 millions in 1947-48. The principal items in this category are the costs of constructing and improving civil airways and airports, the costs of dredging the St. Lawrence ship channel, and capital expenditures in connection with the Prince Edward Island car ferry and terminals.
(3)	Demobilization and Reconversion Expenditures
Despite a large increase in the expenditures of the Department of National Defence (which are estimated at $248-5 millions in 1948-49 as compared with a total of $195-4 millions for the previous year) the total of demobilization and reconversion expenditures decreased from $634-4 millions in 1947-48 to $434-4 millions in 1948-49.
The greater part of this decrease occurred in the Veterans Affairs Department, whose total demobilization and reconversion expenditure for 1948-49 is estimated at $88 [DOT] 8 millions as against a total of $237 [DOT] 4 millions for the preceding year. Part of this large decrease is due, of course, to the fact that costs of pensions, and treatment in connection with World War II veterans are, as already mentioned, included under "Ordinary Expenditure", whereas in previous years they were classified as "Demobilization and Reconversion Expenditure". In addition, however, some very substantial reductions did occur in such items as post-discharge rehabilitation benefits ($47-5 millions in 1948-49 as against $78-3 millions in 1947-48), and in war service gratuities and re-establishment credits ($36-2 millions in 1948-49 as against $84-2 millions in 1947-48.)
The total costs involved in administering the Wartime Prices and Trade Board (including costs of subsidies, and payments of drawback claims to millers) declined from $57-1 millions in 1947-48 to $35-8 millions for the current year.
A substantial reduction is also reflected in the expenditures of the Department of Reconstruction and Supply (which show a total of only $1-5 millions in 1948-49 as compared with $62-3 millions for the previous year). Part of this reduction is attributable to a change in the method of recording federal government outlays in connection with housing. Prior to June 30, 1948, construction work on federal housing projects was carried on through the medium of Wartime Housing Limited, and all outlays in this connection were treated as "Expenditure" in the government's accounts. As the various projects were brought to completion, the management and control of the houses was transferred to Central Mortgage and Housing Corporation. On June 30, 1948, in accordance with the 1948 amendments to the National Housing Act, the latter corporation became responsible for all future housing construction as well, and the activities of Wartime Housing Limited were thereupon brought to an end. The 1948 amendments to the National Housing Act also provided that all moneys turned over to Central Mortgage and Housing Corporation for housing purposes were to be treated as advances on the government's books.

The Budget-Appendix
As a result of this change in procedure there is nothing in the 1948-49 expenditures of the Department of Reconstruction and Supply which corresponds with the total of $36-5 millions (for Wartime Housing Limited) included in the Department's 1947-48 expenditures. Although amounts totalling approximately $63 millions were turned over to Central Mortgage and Housing Corporation during 1948-49 for construction purposes, these are recorded as advances in the government's books and are not included with the year's expenditures.
2000
0 1940
1941	1942	1943	1944	1943	1946	1947	1948	1949

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MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
5ooor
3000

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WARTIME PRICES AND TRADE BOARD*
3000
'The amounts shown for the Wartime Prices and Trade Board include administrative costs, subsidies due to application of price ceilings, and payments of drawback claims to millers
Part of the reduction in the expenditures of this department is also attributable to the fact that certain functions or services previously performed by the Department of Reconstruction and Supply were transferred during the year to the Department of Trade and Commerce. Expenditures in connection with the administration, reconversion and operation of Crown companies and/or plants, together with production and transportation subsidies for Canadian steel producers, and costs of research and development of jet engines and aircraft, which were shown under the Department of Reconstruction and Supply in 1947-48, are included this year in the expenditures of the Department of Trade and Commerce.
1856
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(4)	Special Expenditures
Special expenditures are estimated at $34-4 millions for the year, a decrease of approximately $28 [DOT] 7 millions below the 1947-48 total. The larger items making up the 1948-49 total are as follows: deficit of the Prairie Farm Emergency Fund, $8-9 millions; expenditures under the Prairie Farm Rehabilitation Act, $2-9 millions; expenditures relating to the St. Mary River Dam project $1-6 millions; deficit of the Canadian Wheat Board on flaxseed account for the crop year 1947-48, $4-5 millions; the grant to British Columbia for emergency relief and rehabilitation in connection with the Fraser Valley flood disaster, $5 millions; and Canada's share of the cost of repairing and reconstructing dykes in the Fraser Valley, $4-5 millions.
(5)	Government Owned Enterprises
. Expenditures under this heading comprise the operating deficits of, and nonactive loans to, wholly owned governmental enterprises established before the war.
The increase of $21 millions during the year in this category of expenditure was due largely to an increase of $17-6 millions in the deficit of the Canadian National Railways (which totalled $33-5 millions for the calendar year 1948 as compared with a total of $15-9 millions for the year 1947). In calculating its over-all deficit for the year the C.N.R. includes all interest charges paid on governmental advances. It should perhaps be noted, therefore, that although the government's 1948-49 expenditures reflect the absorption by the government of the C.N.R.'s total 1948 deficit of $33-5 millions, Federal revenues include (under the classification "Return on Investments") an amount of $21-2 millions received from the railway company by way of interest on advances.
Also included under the general classification of expenditures in connection with Government Owned Enterprises are the 1948 operating deficit of Trans-Canada Air Lines ($2-9 millions), the 1948 operating deficit of the Prince Edward Island Car Ferry ($1-2 millions), and losses of, and non-active loans to, the National Harbours Board ($2-0 millions).
(6)	Other Charges, Including the Write Down of Assets
. Total expenditures for the year in this category are estimated at $81-9 millions, as compared with a total of $83-7 millions for 1947-48. The largest item in both years' totals is an amount of $75 millions transferred to the general reserve to meet possible losses on ultimate realization of active assets. This reserve was first established in 1940-41, and $25 millions was set aside annually from that time up to and including the fiscal year 1946-47. In 1947-48, and again this year, the annual provision was increased to $75 millions-a larger provision being deemed advisable in order to offset the charges that have been made to the reserve during recent years, and also in order to bring the reserve to a level more in keeping with the magnitude of the government's active assets and the proportion thereof represented by loans to overseas countries.
Also included under the classification "Other Charges", are the annual write-off of Veterans' Land Act Loans ($1-2 millions) and the reserve provisions for conditional benefits under the Veterans' Land Act ($5-7 millions).
6.	ESTIMATED BALANCE SHEET POSITION AT MARCH 31, 1949
The following table presents, in summary form, the Government's estimated balance sheet position as at March 31, 1949, together with comparable figures as at March 31, 1948.

The Budget-Appendix

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(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1949 (Estimated)	1948	
Liabilities	$ 459 0 110-6 704-1 3-0 60-2 11-9 13-3 15,585-0	$ 458-6 115-7 610-7 4-0 31-4 11-9 7-6 15,957-4	$ 0-4 -5-1 93-4 -1-0 28-8 5-7 -372-4
			
			
			
			
			
			
			
			
	16,947-1	17,197-3	-250-2
Active Assets			
	72-2 11-0 4,273-7 951-5 2-3 65-7 20-0	38-0 11-7 3,676-7 1,175-2 2-3 72-7 20-0	34-2 -0-7 597-0 -223-7 - 7-0
			
			
			
			
			
			
			
	5,396-4	4,996-6	399-8
Less reserve for possible losses on ultimate realization of			
	-245-9	-170-9	75-0
			
	5,150-5	4-825-7	324-8
Net Debt (Excess of Liabilities over Net Active Assets)				
	11,796-6	12,371-6	-575-0
It is estimated that the aggregate liabilities of the Government at March 31, 1949, will amount to approximately $16,947 millions, a reduction of $250 millions from the total at the end of the previous year. Outstanding funded debt (which includes bonds, treasury bills, deposit certificates, and the estimated refundable portion of excess profits taxes) accounts for $15,585 millions, or approximately 92 per cent of the over-all total. A complete statement of the Government's unmatured funded debt at March 31, 1949, giving details of interest rates, dates of maturity, annual interest charges, and principal amounts for each individual loan, may be found in tabular form at the back of this appendix.
The other principal items on the liability side of the balance sheet are as follows: floating debt, (which consists of outstanding cheques and interest, matured funded debt, and similar demand liabilities), $459 millions; deposit and trust funds (which comprise sundry funds deposited with the Receiver General or held in trust for various purposes), $110-6 millions; annuity, pension, insurance and guaranty accounts, $704-1 millions; deferred credits (balances whose ultimate accounting treatment is known, but which are held until certain conditions are met), $3 millions; sundry suspense accounts (where some uncertainty as to disposition exists), $60-2 millions; province debt accounts (settlements arising from agreements at the time of Confederation), $11-9 millions; and reserve for conditional benefits under the Veterans' Land Act, $13-3 millions.
Offsetting these liabilities (and in a measure explaining their existence, because a substantial portion of the total debt is attributable to the loans, advances, and investments which form a large part of the assets) are the Govern-
1858
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ment's Active Assets. Essentially these consist of assets which yield interest, profits or dividends, together with very liquid assets such as cash and departmental working funds.
It is estimated (although some of the items are very difficult to forecast) that the totals of the principal asset classifications at March 31, 1949, will be approximately as follows: cash, $72-2 millions; departmental working capital advances, $11 millions; recoverable loans and advances, $4,273-7 millions; investments, $951-5 millions; province debt accounts, $2-3 millions; deferred charges (the cost of loan flotations in process of being amortized over the life of the loans), $65-7 millions; and sundry suspense accounts, $20 millions.
The reserve for possible losses on ultimate realization of active assets, which now stands on the books at $245 [DOT] 9 millions, is shown on the balance sheet as a deduction from total Active Assets.
7.	INDIRECT OR CONTINGENT LIABILITIES
It should be noted that the balance sheet as summarized above does not reflect any of the government's indirect or contingent liabilities. Included under this heading, for example, are the government's guarantees of certain securities issued by various government owned enterprises such as the Canadian National Railways, the Canadian National (West Indies) Steamships Limited, and various Harbours Commissions; the guarantee of deposits maintained by the chartered banks in the Bank of Canada; guarantees of certain loans made by chartered banks to veterans or farmers for certain authorized purposes; guarantees under The Export Credits Insurance Act; and certain commitments under housing legislation.
The following table gives details of the bonds and debenture stocks guaranteed by the government, and also indicates the nature and approximate extent of the government's other guarantees and contingent liabilities:

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Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
Sept. 1, 1951..	Canadian National	4i	48,022,000Aug. 1, 1952..	Saint John Harbour Commissioners	5	667,953July 10, 1953..	Canadian Northern	3	1,162,768Feb. 1, 1954..	Canadian National	5	50,000,000Mar. 1, 1955..	Canadian National (West Indies) Steamships Limited	5	9,400,000June 15, 1955..	Canadian National	41	48,496,000Feb. 1, 1956..	Canadian National	ih	67,368,000July 1, 1957..	Canadian National	4J	64,136,000July 20, 1958..	Canadian Northern	3*	5,636,507Jan. 15, 1959..	Canadian National	3	35,000,000May 4, I960..	Canadian Northern Alberta	3* 3*	550,727May 19, 1961..	Canadian Northern Ontario	3,597,518Jan. 1, 1962..	Grand Trunk Pacific	3	26,465,130Jan. 1, 1962..	Grand Trunk Pacific	4	7,999,074Jan. 3, 1966..	Canadian National	3	35,000,000Jan. 2, 1967..	Canadian National	21	50,000,000Oct. 1, 1969..	Canadian National	5	57,728,500Nov. 1, 1969..	Harbour Commissioners of Montreal	5	19,000,000Feb. 1, 1970.. Various dates 1949-54	Canadian National	
City of Saint John Debentures assumed by Saint John Harbour Commissioners	5 Various	17,338,000 88,3295	1,016,092 499,709 5,446,783 22,591 554,641,681u	5	it	4	Northern Railway of Canada Debenture Stock	4	
The Budget-Appendix

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Deposits maintained by the chartered banks in the Bank of Canada (Feb.
28, 1949)	$ 530,960,371
Bank advances, re Province of Manitoba Savings Office (Feb. 28, 1949)...	4,040,078
Province of Manitoba Treasury Bill (Feb. 28, 1949)	 3,300,000
Loans made by chartered banks under the Farm Improvement Loans Act,
1944 (Jan. 31, 1949)	 6,229,154
Loans made by chartered banks under the Veterans' Business and
Professional Loans Act (Dec. 31, 1948)	 1,586,223
Guaranteed Bank Loans-Acadia Coal Company (Feb. 28, 1949)	 584,000
Guarantees under Part II of The Export Credits Insurance Act (Feb. 28,
1949)	 11,610,917
Loans made by approved lending institutions under The Home Improvement Loans Guarantee Act, 1937 (Dec. 31, 1948)	 26,138
Loans made by approved lending institutions under The Home Extension
Plan (Dec. 31, 1948)	 612
Loans made by approved lending institutions under Part IV of the National
Housing Act, 1944, for home extensions (Dec. 31, 1948)	 5,704
Loans made by approved lending institutions under Dominion and National
Housing Acts	Indeterminate
Guarantees of land assembly projects under National Housing Act	 726,559
It will be noted that the total of guaranteed bonds and debentures outstanding at March 31,1949, is estimated at $554 [DOT] 6 millions, an increase of approximately $32-7 millions over the amount outstanding at March 31, 1948. This increase resulted from the issue by the Canadian National Railways of $35 millions in 3% bonds dated January 3, 1949, and maturing January 3, 1966, and the redemption on April 1, 1948, of New Westminster Harbour Commissioners' 4f% bonds in the amount of $-7 millions, together with certain other smaller redemptions.

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MILLIONS or DOLLARS	. MILLIONS Or DOLLARS
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8.	ANALYSIS OF CHANGES IN PRINCIPAL LIABILITY CLASSIFICATIONS DURING THE YEAR
The most significant change on the liability side of the balance sheet during the year was the substantial reduction which took place in the government's outstanding funded debt. Total funded debt decreased from $15,957-4 millions at March 31, 1948, to an estimated total of $15,585-0 millions at March 31, 1949 -representing an over-all net reduction of $372 [DOT] 4 millions. Details of the various loan redemptions and new borrowings which resulted in this net decrease are set out more fully in section 10 of this Part.
The only other important changes on the liability side of the balance sheet were the following: annuity, pension, insurance and guaranty accounts showed an increase of $93 [DOT] 4 millions during the year, largely as a result of an increase of $66 millions in government annuities and an increase of $14-3 millions in the permanent services pension fund; sundry suspense accounts showed an increase of $28 * 8 millions during the year, attributable largely to collections of provincial taxes on corporation incomes.
9.	ANALYSIS OF CHANGES IN PRINCIPAL ASSET CLASSIFICATIONS

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(a)	Changes in Loans and Advances
The total of recoverable loans and advances increased from $3,676-7 millions at March 31, 1948, to an estimated total of $4,273-7 millions at March 31, 1949-representing an over-all net increase of $597 millions during the year. The following table summarizes the changes in outstanding loans and advances during the year by principal classifications:
DETAILS OF ACTIVE LOANS AND ADVANCES (In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1949 (Estimated)	1948	
Loans to Canadian National Railways		$ 764-8 1,100-0 380-9 102-5 1,918-8 6-7	S 760-7 650-0 304-7 107-8 1,846-0 7-5	$ 4-1 450-0 76-2 -5-3 72-8 -0-8
Advances to the Foreign Exchange Control Board				
			
			
Loans to the United Kingdom and Other Governments				
Miscellaneous Loans and Advances				
			
	4,273-7	3,676-7	597-0
It can be seen that the substantial advances which the Government was making to the Foreign Exchange Control Board during this period constituted the principal reason for the large net increase in the "Loans and Advances" classification. These advances represent amounts transferred to the Board to enable it to finance the purchase of gold and foreign exchange. The addition of $450 millions during the year in the total of these advances is indicative of the satisfactory manner in which Canada's exchange reserves were increasing during this period.
The amounts shown as loans to the Canadian National Railways represent advances by the Government to the C.N.R. for capital expenditures (including purchase of railway equipment), for debt retirement, and for the temporary financing of current operations.

The Budget-Appendix
The balances shown as loans and advances to sundry government agencies represent amounts transferred to various government agencies of an independent or quasi-independent nature for working capital, construction, and other purposes. The following table gives details of the principal agencies included under this classification:

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(In millions of dollars)
-	Balance a 1949 (Estimated)	March 31 1948	Increase or Decrease (-)Advances under the Soldier Settlement and Veterans' Land Act...	$ 166-2 85-3 930 5-6 8-0 22-8	$ 145-5 85-1 22-5 20-7 17-4 13-5	$ 20-7 0-2 70-5 -15-1 -9-4 9-3Central Mortgage and Housing Corporation	
Commodity Prices Stabilization Corporation	
Sundry Products and Prices Support Accounts	
Miscellaneous Crown Companies	380-9	304-7	76-2
Under the heading "Loans to Provincial and Municipal Governments" are grouped loans to provinces made originally under Relief Acts and other legislation, and loans to municipalities under the Municipal Improvements Assistance Act.
The next category of loans, namely "Loans to the United Kingdom and Other Governments" consists of loans to the Government of the United Kingdom under the authority of The War Appropriation (United Kingdom Financing) Act, 1942, and The United Kingdom Financial Agreement Act, 1946, loans to other countries under Part II of The Export Credits Insurance Act, and miscellaneous foreign loans. Details of the changes in each of these individual classifications are as follows:

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(In millions of dollars)
-	Balance at 1949 (Estimated)	March 31 1948	Increase or Decrease (-)Loans to the United Kingdom under The War Appropriation (United Kingdom Financing) Act, 1942	
Loans to the United Kingdom under The United Kingdom Financial Agreement Act, 1946	
Advances under The Export Credits Insurance Act, Part II	$ 297-1 1,045-0 534-5 42-2	S 331-5 1,008-0 466-3 40-2	t -34-4 37-0 68-2 2-0
1,918-8	1,846-0	72-8
It is estimated that during the year ending March 31, 1949 the United Kingdom will have repaid $34 [DOT] 4 millions of the loan previously granted under the provisions of The War Appropriation (United Kingdom Financing) Act, 1942, leaving a balance of $297 [DOT] 1 millions still outstanding on this account at the end of the year. At the same time additional advances of $37 millions were made to the United Kingdom Government as part of the $1,250 million loan authorized by The United Kingdom Financial Agreement Act of 1946. The total of amounts advanced under this particular agreement now stands at $1,045 millions.
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Advances under Part II of The Export Credits Insurance Act represent loans to certain foreign countries to assist them in purchasing goods and services in Canada. It is estimated that the total of outstanding advances under this Act will amount to $534.5 millions at March 31, 1949, representing a net increase of $68-2 millions over the balance outstanding at March 31, 1948. The following table summarizes the changes in these advances during the year according to recipient governments:

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(In millions of dollars)
-	Total Outstanding at March 31, 1948	Additional Amounts Advanced during 1948-49	Interest Accrued (Con- solidated with Advances)	Repay- ments during 1948-49	Total Outstanding at March 31 1949 (Estimated)$	$	$	$	$Belgium	65-6	1-0	0-1	2-1	64-6China	39-5	11-5	1-2	1-7	50-515-2	1-2	0-3	16-7France	206-3	35-9	8-9	8-4	242-7Netherlands	104-8	14-0	5-1	5-8	118-111-6	3-4	0-4	15*420-4	3-2	23-6Union of Soviet Socialist Republics....	2-9	2-9466-3	70-2	16-0	18-0	534-5(b)	Changes in Investments
The total of the government's investments decreased from $1,175-2 millions at March 31, 1948 to $951-5 millions at March 31, 1949, representing an over-all net reduction of $223 [DOT] 7 millions during the year. This decrease was due to the reduction of $224-4 millions during the year in Securities Investment Account. As previously mentioned, this account is the one used to record temporary holdings by the government of its own securities. Such securities may be held either as temporary investments of surplus cash balances, or until the securities themselves mature or are cancelled.
A summary of the principal items making up the investment total which appears on the balance sheet is shown in the following table:

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(In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
	1949 (Estimated)	1948	
Bank of Canada-Capital Stock	5-9	5-9	Central Mortgage and Housing Corporation-Capital Advances. . .	25-0	25-0	Canadian Farm Loan Board-Bonds and Capital Stock	22-2	21-1	i-iBalances receivable under Agreements of Sale of Crown Assets....	11-2	11-6	-0-4Canada's Subscription to the Capital of the International Monetary	300-0	300-0	Canada's Subscription to the Capital of the International Bank for Reconstruction and Development	65-0	65-0	Securities Investment Account	462-0	686-4	-224-4Miscellaneous	60-2	60-2	951-5	1,175-2	-223-7
The Budget-Appendix
(c)	Changes in Reserve for Possible Losses on Ultimate Realization of Active Assets
As mentioned earlier a transfer of $75 millions was made to this reserve during the year with a corresponding amount being charged to "Expenditure in the government's accounts. The balance to the credit of the reserve now stands at $245-9 millions.
10.	SUMMARY OF SECURITY ISSUES AND REDEMPTIONS DURING THE YEAR
During the fiscal year ending March 31, 1949, government obligations totalling $3,081-7 millions matured or were called for redemption. Of this amount a total of $2,941-6 millions represented redemptions in Canada, the financing of which was effected as follows:
(millions)
By refunding or conversion into new issues	 $	2,233-3
From proceeds of new borrowing:
Sale of Canada Savings Bonds Series III	 236 [DOT] 0
From cash balances	 472-3
$	2,941-6
The redemption of $472-3 millions out of cash balances represents the net reduction achieved during the year in the total of Canadian debt.
The remaining* $140 millions of the over-all redemption figure of $3,081-7 millions referred to above represents the repayment of certain U.S. dollar loans previously made to the government by the Export-Import Bank of Washington ($50 millions of which were advanced during the fiscal year 1947-48, and the remaining $90 millions of which were advanced during the early part of the present fiscal year). This repayment of $140 millions was financed out of the proceeds of a new issue of $150 million 3% fifteen year bonds which were sold to three United States insurance companies in August 1948 at par.
The $90 millions in U.S. dollars which were obtained as a result of this year's drawings on the Export-Import Bank loan, together with the $10 millions in U.S. dollars remaining out of the proceeds of the new $150 million loan, were transferred during the year to the Foreign Exchange Control Board and added to the nation's exchange reserves. The net effect, during 1948-49, of all these U.S. dollar transactions was to increase the total funded debt payable in New York by $100 millions, and at the same time to increase the country's exchange reserves by an equivalent amount.
It can be seen from the above analysis that the over-all net reduction in the government's outstanding funded debt during the year amounted to $372 [DOT] 4 millions-i.e. the net reduction of $472-3 millions in Canadian debt together with the reduction of $0 * 1 millions in sterling debt, and less the increase of $100 millions in funded debt payable in New York.
More complete details of redemptions and new issues of securities during the year are set out in tables on the following two pages.
Apart from certain minor redemptions of sterling debt totalling $68,514.
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Maturity or Call Date	Interest Rate	Where Payable	Amount
	%		$
May 1, 1948		1 4		200,000,000 33,293,471
July 1, 1948				
Aug. 13, 19481	21 f f 4	New York	Sept. 1, 1948	uw 550.000.	000 100.000.	000 200,000,000 344,267,000 276,687,600 60,000,000 49,995,800 550.000.	000 100.000.	000Sept. 3, 1948	Nov. 1, 1948	Nov. 1, 1948	8 H a 3i 3i i	Nov. 1, 1948 s	Nov. 15, 1948 s	Feb. 1, 1949*	Mar. 1, 1949	Mar. 4, 1949	8 |	Non-Interest Bearing Certificates.. .	Canada	War Savings Certificates	3	50,826,494 68,514 140,781,000Various6	Canada Savings Bonds Series I and II...	2i	
Total Bonds and Certificates				
Repayment of Refundable Portion of Income and Excess Profits Taxes	 285,749,000
Total Redemptions of Debt	$3,081,703,794
Total payable in Canada	$2,941,635,280
total payable in New York	 140 000 000
Total payable in London	I	'..'.',".',	68,514
_______ $3,081,703,794
(*) Export-Import Bank Loan.
(*) Maturity Date Nov. 1, 1958, called for redemption Nov. 1, 1948.
(a) Maturity Date Nov. 15, 1951, called for redemption Nov. 15, 1948.
(*) Second call of First War Loan.
(*) These issues were vested by the Treasury of the United Kingdom in August 1941. Amounts purchased during the fiscal year were cancelled.
It may be of interest to note that the average coupon rate on the government s outstanding funded debt at the close of the current year is estimated at 2-64%. This compares with an average rate of 2-66% at the close of the last fiscal year, and an average rate of 3-52% as at March 31, 1939.
AVERAGE INTEREST RATE ON FUNDED DEBT*
¥811-£8062

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Payable in Canada
Issued to Chartered Banks Deposit Certificates. Three Year Bonds... Deposit Certificates.
Issued to Bank of Canada
Six Months Treasury Notes	May 1, 1948
Six Months Treasury Notes.
Three Year Bonds	
Six Months Treasury Notes. Six Months Treasury Notes.
Issued to General Public
Canada Savings Bonds, Series III-Net.
Issued to Prairie Provinces
School Lands Debentures	
Total issues payable in Canada..
Payable in United States
Issued to the Export-Import Bank of Washington One, Two and Three Year Notes	
Issued to Insurance Companies Fifteen Year Bonds	
Total issues payable in United States. Grand Total	
Issue
Date
Sept. 3, 1948 Nov. 1, 1948 Mar. 4, 1949
Sept. 1, 1948 Nov. 1,1948 Nov. 1, 1948 Mar. 1, 1949
Nov. 1, 1948 July 1, 1948
Mar. 4, 1949. Nov. 1, 1951. Sept. 2, 1949.
Nov. 1, 1948..
Various Aug. 1, 1948
Maturity
Date
Mar. 1, Nov. 1, May 1,
1949.
1951.
1949.
Sept. 1, 1949.
Nov. 1, 1958. July 1, 1949.
Various Aug. 1, 1963.
Interest
Rate
%
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i
1!
i
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4
2\
Price to Government
100-00
100-00
100-00
100-00
99-	375
100-	00
99-90
Yield at Price to Government
%
0-	625
1-	75 0-75
0-	625
1-	75 0-625 0-75
4-00
2-	50
3-	01
Total
Amount
Issued
100,000,000
250.000.	000
100.000.	000
450,000,000
200,000,000
550.000.	000
250.000.	000
200.000.	000
550,000,000
1,750,000,000
236,064,000
33,293,471
2,469,357,471
90.000.	000
150.000.	000
240,000,000
2,709,357,471
Renewals or Reconversion Included in Amount Issued
100,000,000
250.000.	000
100.000.	000
450,000,000
200,000,000
550.000.	000
250.000.	000
200.000.	000
550,000,000
1,750,000,000
33,293,471
2,233,293,471
140,000,000
140,000,000
2,373,293,471
Amount Issued for Cash
236,064,000
236,064,000
90.000.	000
10.000.	000
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>
*
o
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100,000,000
336,064,000
oi
cn
The Budget-Appendix

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Revenues
Expenditures
Loans and Advances and Investments Unmatured Funded Debt
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The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (Thousands of Dollars)
-	1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	$	$	$	$Tax Revenue-	Direct Taxes-	Direct Taxes on Incomes-	Individual Income Tax	767 755	691,586	694,530	659,828	771,000Tax on Interest and Dividends	27,053	26,824	28,428	33,929	40,500Taxes on Rents and Royalties	1,546	1,486	1,708	1,960	2,200Corporation Income Tax	276,404	217,834	238,792	364,131	490,000Excess Profits Tax	465,805	494,196	448,698	227,030	40,000Total Direct Taxes on Incomes..	1,538,563	1,431,926	1,412,156	1,286,878	1,343,700Succession Duties	17,251	21,447	23,576	30,828	25,500Total Direct Taxes	1,555,814	1,453,373	1,435,732	1,317,706	1,369,200Indirect Taxes-	Customs Import Duties	115,091	128,877	237,355	293,012	225,000Excise Duties-	Spirits, malt, etc	72,133	' 91,274	97,820	97,675	105,000Cigars, cigarettes and tobacco	83,142	98,228	101,163	102,116	104,300Licences	37	39	40	37	38Less refunds	-3,390	-2,815	-2,979	-3,034	-3,338Total Excise Duties	151,922	186,726	196,044	196,794	206,000Excise Taxes-	Taxes on Commodities-	Sales Tax	404,109	326,253	328,073	383,012	391,49098,164	41,198	338	Automobiles, rubber tires and	tubes	6,480	6,701	16,340	31,949	37,440Beverages	19,442	16,657	18,635	23,767	27,800Candy and chewing gum	12,874	11,904	13,277	18,279	21,540Cigars, cigarettes and tobacco	62,306	70,229	76,318	68,606	76,600Cigarette papers and tubes	6,658	4,645	6,943	6,419	6,840Electric and gas appliances	4,057	1,272	7	2,824	3,890Furs	5,217	4,976	3,102	3,139	3,55029,671	29,836	36,220	2,208	Matches and lighters	3,117	3,675	4,088	3,967	3,720Phonographs, radios and tubes	1,112	646	2,526	5,325	3,390Special excise on importations	545	787	1,185	2,113	28011,744	9,974	11,339	10,572	Toilet preparations and soaps	6,347	7,107	7,522	7,146	7,960Trunks, bags, luggage, etc	4,134	4,711	5,710	4,962	5,610Wines	1,772	2,066	2,394	2,342	2,070Sundry	2,977	3,811	5,109	4,716	4,320Taxes on Amusements and Services-	Amusements	12,284	13,387	14,552	15,369	2,5801,904	2,188	2,510	2,519	Transportation and communication	24,205	26,893	27,931	27,531	28,580Stamps, including payment of taxes	on jewellery, chinaware, cabaret	attendance, etc	18,296	21,697	24,437	24,300	22,550Licences, interest and miscellaneous	369	302	313	376	290Less refunds (mainly sales tax)	-194,719	-114,005	-29,845	-10,683	-13,100Total Excise Taxes	543,065	496,910	579,024	640,758	637,400Other Taxes-	Chartered bank note circulation...	350	270	220	188	160Insurance Companies	7,182	7,951	8,796	3,004	3,300Miscellaneous	702	751	690	613	500Total Indirect Taxes	818,312	821,485	1,022,129	1,134,369	1,072,360Total Revenue from Taxes	2,374,126	2, 4,858	2,457,861	2,452,075	2,441,560
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars)
-	1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	$	$	$	$Non-Tax Revenue-	66,056 60,749 4,586	68,613 70,915 4,954	72,978 69,439 2,098	77,759 75,800 1,731 3,736 18,745	79,800 106,000 3,300
14,080	16,322	16,355		21,000
					
	145,471	160,804	160,870	177,771	210,100
					
	2,519,597	2,435,662	2,618,731	2,629,846	2,651,660
					
Special Receipts and Credits- Refunds of previous years' Special	53	20	10	7	15 113,814Special Receipts-War and Deraobil-	352,918 177	626,616 161	412,763 170	225,757 138	60Canadian Wheat Board-	589	Surpluses in certain special accounts.. Canadian National Railways- Net credit due to increase in Canadian National Railways Securities	2,625 22,400 7,143	1,762	16	22,631 174	Investment in Crown plants trans-	2,053	3,704	2,454385,905	649,602	416,758	229,622	116,343Capital and Non-active Accounts- Capital Accounts- Refunds of previous years'	728	376	110	61	80Non-active Accounts- National Harbours Board, reduc-	19	10	82	1936 and 1937 Saskatchewan Seed Grain Loans Guarantees- Adjustment pursuant to The Western Provinces Treasury Bills and Natural Resources Set-	9,773 256	Canadian National (West Indies) Steamships, Limited, reduction	549	1,105	80Transfer to Consolidated Deficit Account from Capital Accounts -Airways and Airports (Air-wavs facilities, State of Michigan, U.S.A.)	158	Write-downs to Consolidated Deficit Account- Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment dur-	1,308 54	1,885 63	Seed Grain and Relief Loans	36	45	60Total Capital and Non-active	1,332	421	2,587	12,278	220Total Special Receipts and Credits..	387,237	650,023	419,345	241,900	116,5632,906,834 219,500	3,085,685 72,500	3,038,076 30,200	2,871,746	2,768,223Less estimated amount of refundable Income and Excess Profits Taxes..	
2,687,334	3,013,185	3,007,876	2,871,746	2,768,223
					
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(Thousands of Dollars)
-	1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	$	$	$	$Ordinary Expenditure	Agriculture	9,424	10,319	13,300	16,311	20,677Auditor General's Office	361	379	390	395	546Civil Service Commission	461	479	593	665	765External Affairs 	1,910	4,522	5,128	7,195	9,719Finance-	Interest on Public Debt	318,995	409,134	464,395	455,455	463,689Cost of Loan Flotations and Annual	Amortization of Bond Discounts and	Commissions	20,679	22,311	12,139	10,914	9,838Premium paid on redemption of called	5,842	271	35	27Subsidies to Provinces	14,445	14,447	14,383	33,394	17,094Miscellaneous Grants and Contribu-	tions	531	617	95	113	147Civil Pensions and Superannuation	325	293	253	224	194Government contribution to Superan-	nuation Fund	2,341	2,696	3,161	3,488	4,050Old Age Pensions, including pensions to	blind persons	32,187	(>) -	(*) -	0) -	(') -16,348	14,734	9,172	Compensation to Provinces under	Dominion-Provincial Taxation Agree-	ments-	Income and Corporation Taxes	82,977	94,343	94,380	122,497	84,38610,357	3,709	Administrative and Sundry Expendi-	ture	4,724	7,569	9,599	11,313	14,871Fisheries	2,159	3,262	3,599	4,097	5,280Governor General and Lieutenant-Gov-	ernors	223	227	252	239	245Insurance	185	199	212	237	281Justice	2,696	2,848	3,194	3,917	4,102Penitentiaries	2,936	3,258	3,806	4,564	5,950Labour	1,446	1,620	2,010	2,319	4,295Unemployment Insurance Act, 1940-	Administration	5,113	6,185	7,496	17,641	19,035Government Contribution	12,746	12,514	15,200	17,500	20,195Government Annuities-	Payments to maintain reserve	257	294	977	332	10,000Legislation-	House of Commons	1,612	2,235	2,786	3,022	2,724Library of Parliament	72	74	90	103	130Senate	485	727	881	946	748General	95	98	167	270	375Chief Electoral Officer, including elec-	tions	179	3,091	144	151	285Mines and Resources-	Ad m inistration	168	164	173	268	361Immigration	1,309	1,524	2,047	2,665	6,100Indian Affairs	6,162	4,466	5,948	7,180	10,6521,831	2,689	4,962	5,630	12,5611,610	1,323	3,444	2,554	1301,216	1,303	1,847	5,318	19,46019	Dominion Fuel Board Administration	2,737	(*) -	(J) -	(*) -	National Defence-	Administration and sundry services...	67	127	253	615	1,035Pensions-Militia Pensions Act	(*) -	(*) -	(*)	([DOT])	4,879Government contribution to Perma-	nent Forces Pension Fund	(0 -	8,004
(') See Department of National Health and Welfare.
(J) See Department of Reconstruction and Supply.
(*) Included under Veterans Affairs.
(*) Included under Demobilization and Reconversion-Army, Navy and Air Services.

The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	$	$	$	%1,725	7,294	8,616	10,815	14,261(S) _	33,715	35,928	58,090	67,000172,632	245,141	263,165	270,9738,67720,114	22,630	28,551	37,312	51,295838	5	54,629	57,730	64,213	67,944	78,01564	61	88	99	11481	419	808	1,287	3,802124	127	149	157	171232	238	293	536	87713,169	16,283	26,360	35,545	51,730969	2,103	1,932	12,342	3,376([DOT]) -	2,339	1,776	1,143	(7) -7,183	7,284	8,604	10,406	13,523864	954	1,157	1,345	1,6745,830	6,356	9,776	10,846	25,553-	-	-	-	2,585869	994	1,103	(.) _	([DOT]) -1,390	1,440	1,499	1,973	2,2583,939	4,196	5,653	10,390	18,4324,897	4,895	5,963	6,831	8,2823,306	3,391	3,702	4,073	5,4734,733	4,345	4,871	5,090	6,7581,764	2,171196	1,142	1,680	1,677	2,32939,372	39,996	40,771	41,227	C) "	([DOT]) -	C) -	([DOT]) -	103,67320,228	C) -	C) -	(* *) -	([DOT]) -19,845	28,551	44,303	46,286	69,2201,391	3,160	6,551	8,092	8,258767,376	1,061,902	1,236,235	1,380,002	1,583,310630	2,313	2,654	3,809	3,3162,534	2,195	8,546	11,847	16,2393,164	4,508	11,200	15,656	19,555189,S60	tss,40*-	-	4,090	6,084	1 16,069
Ordinary Expenditure-Con.
National Health and Welfare	
Old age pensions, including pensions to
blind persons	
Family allowances	
General health grants	
National Revenue (including Income
Tax)	
National War Services	
Post Office	
Prime Minister's Office	
Privy Council	
Public Archives	
Public Printing and Stationery	
Public Works	
Reconstruction and Supply	_
Dominion Fuel Board Administration,
coal subsidies and subventions..
Royal Canadian Mounted Police	
Secretary of State	
Trade and Commerce	
Dominion Fuel Board Administration coal subsidies and subventions... Mail Subsidies and Steamship Subventions	
Transport-
Administration and general	
Air Service	
Marine Service	
Railways and Canals	
Maritime Freight Rates Act	
Mail Subsidies and Steamship Subventions, including Canadian Maritime Commission	
Veterans Affairs-
Departmental Administration	
Pensions (World War 1 and military). Pensions (World Warsl and 2 and N.W
Rebellion, 1885)	
War Services gratuities and re-establishment credits	
Treatment and after-care of returned soldiers and allowances to dependents Soldiers Settlement and Veterans Land Act	
Total Ordinary Expenditure..
Capital Expenditure
Railways	
Public Works.
Total Capital Expenditure..
War, Demobilization and Reconversion Expenditure
National Defence-Army, Navy and
Air services	
National Defence-Defence Research.
(*) See Department of Finance.
(«) See Department of Munitions and Supply.
(7)	See Department of Trade and Commerce.
(8)	See Department of Transport.
([DOT]) See War, Demobilization and Reconversion Expenditure.
1872	HOUSE OF COMMONS
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
War, Demobilization and Reconversion Expenditure-Con. National Defence-Army-
Army Services	
Internment Operations	
Inspection Board of the U.K. and
Canada	
Inspection Board of Canada	
Sundry	
National Defence-Naval Services.., National Defence-Air Services-
Overseas War Establishment	
Overseas Operations	
Home War Establishment	
Western Hemisphere Operations____
Air Training	
Training Organization	
Repatriation and Demobilization...
Restricted Servicing Units	
General Servicing Units	
Surplus Equipment Units	
Headquarters and Commands Administration	
Sundry	
Reconstruction and Supply (formerly Munitions and Supply)- Administration, reconversion and operation of Crown Companies and/
or Crown Plants	
Administration	
Housing development	
Production and transportation subsidies for Canadian steel producers
etc	
Research and development of jet engines and aircraft	
Expansion of Industry	
Acquisition of U.K. Assets	
Acquisition of U.S. Assets	
Liquidation of Contracts	
Termination of Contracts	
Other	
Agriculture-
Disposal of agricultural products rendered surplus by the war	
Freight assistance on western feed
grains	
Fertilizer subventions and freight
allowance	
bsidies and bulk purchasing of fertilizer	
Subsidy on western wheat used exclusively as feed for live-stock	
Subsidy on milk and milk products.... Premium on hog carcasses suitable for
export to U.K	
To provide for reserve stocks of feed
grains	
Sundry	
External Affairs-
Contribution to International Refugee
Organization	
General post UNRRA relief	
Sundry	
1944-45	1945-46	1946-47	1947-48	Estimate t 1948-49S	$	i	$	%1,243,733	935,006	208,106	1,580	1,002	135	8,362	6,124	-	-	2,819	8,080	7,446	8,064	1,261,755	949,678	219,124	1,17,099	241,769	64,873	759,070	-	197,076	4,779	227,942	-	-	108,032	37,697	272,342	-	-	74,770	11,962	-	72,153	16,325	-	38,623	-	14,884	17,109	-	815J	-	17,880	11,315	102	97	84	1,259,1,66	624,660	99,271	10,784	1,558	(i°) _8,841	6,858	4,140	1,305	11835,323	38,558	1,000(")-	(") -	12,663	7,950 4 500	(.0) _205,039	112,675	\ )1,964	-	1,906	-	-	24,743	1,007	-	151,846	55,200	6,400	2,932	5,522	4,287	1,056	350218,776	278,807	147,140	62,334	1,4681,194	354	958	7	15,943	17,317	18,828	20,092	18,483446	438	283	-	-	-	597	3587,471	7,864	6,474	4,421	42,330	41,659	36,759	1,861	1,00014,091	9,573	4,506	5,474	5,125715	1,274	1,551	434	5,864	4,499	1,757	347	3188,064	82,978	71,116	SS,£SS	24,99716 Q27	296	383	837	' 5	88296	686	837	22,400	5,870
(n) Included in Expansion of Industry.

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS- Continued
(Thousands of Dollars)
-	1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	*	$	$	tWar, Demobilization and	Reconversion Expenditure-Con.	Finance-	Comptroller of the Treasury	9,216	9,369	6,072	1,702	(ii) _Wartime Prices and Trade Board-	Administration	12,720	14,753	12,738	5,794	3,570Subsidies due to application of Order	placing a ceiling over all prices	107,338	97,819	88,778	34,341	15,000Advances for payment of drawback	claims to millers and other manu-	facturers of wheat products	19,700	14,750	26,000	17,000	17,200Advances to the Canadian Wheat Board	to cover deficits in certain Board	operations	13,058	-	(")	(.*) _	(13) _House Conversion Program	4,053	1,764	(*) -	(") -	(*) _Old Age Pensions, increased benefits...	8,788	('*) -	(1S) -	(H) _	(") -Halifax V-E Day disorders and explo-	sion-	__	4,610	2,127	248	161	Sundry	1,646	958	999	363	1,369176,519	144,871	136,875	59,200	37,139Labour-	1,617	701	15	333	3	National Selective Service program...	11,098	11,268	11,230	(") -	(") -Removal of enemy aliens from pro-	2,137	2,203	3,161	Vocational training for discharged	members of the Canadian Armed	Forces	602	4,365	13,049	6,405	3,310Vocational Schools-Payments to	Provinces	-	607	2,442	3,264	(if) 	Sundry	3,877	3,712	2,757	1,723	1,76819,664	88,869	32,654	11,392	6,078Mines and Resources-	Prince Rupert - Terrace - Cedarvale	2,499	8	511	262	45	Aerial Photography	51	572	944	726	1,140Sundry	2,753	2,633	1,509	1,086	2335,814	3,475	2,498	1,818	1,373National War Services-	IS 933	13,070	1*856	859	8,193	316	29	85,988	14,845	29	National Health and Welfare-	Old Age Pensions, increased benefits..	05) -	9,103	9,517	996	(17) _Sundry	1,340	2,135	157	107	301,340	11,838	9,674	1,103	soPrivy Council-	Canadian Information Service (form	erly Wartime Information Board)..	1,700	1,229	58	43	45	8	1,758	1,878	45	8	6,500	6,805	3,651	1,248	3,709	4,775	1,896	1,627	Trade and Commerce-	6 749	Administration	-	-	-	993
(**) Included in ordinary expenditure.
(>*) Included in special expenditure.
(H) See Department of Reconstruction and Supply.
(i>) See Department of National Health and Welfare.
(>[DOT]) Included in ordinary expenditure (Unemployment Insurance administration). (") Included in ordinary expenditure.
(**) See Department of Finance.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(Thousands of Dollars)
War, Demobilization and Reconversion Expenditure-Con.
Trade and Commerce-Con. Administration, reconversion and operation of Crown Companies and/or
Crown Plants	
Production and transportation subsidies for Canadian steel producers,
etc	
Research and development of jet engines and aircraft	
Sundry	
Transport	
Acquisition of airfields and works from United States Government.
Veterans Affairs-
Treatment-Defence Forces	
Pensions-Defence Forces	
Additions, alterations and improvements to departmental hospitals
including land purchases	
Post-discharge rehabilitation benefits. War service gratuities and re-establishment credits	
Sundry	
Other Departments.
Write-off of Air Training Plan Loans and Advances as per United Kingdom
Financial Agreement Act, 1946	
Mutual Aid (excluding administration)..
Military Relief	
Canada's Contribution to UNRRA...
Total War, Demobilization and Reconversion Expenditures	
Special Expenditure
Agricultural and Other Projects..
Prairie Farm Assistance Act, 1939-
Administration	
Advances to Prairie Farm Emergency Fund	
Wheat acreage reduction plan-
Administration	
Payments of awards to farmers....
Deficits-Canadian Wheat Board	
Provision of reserve to meet deficits resulting from the operations of the Canadian Wheat Board not previously
provided for	
Subsidies on oats and barley used as feed for live stock-Dept, of Agriculture. Reimbursement to Canadian Wheat Board for expenses of regulating deliveries of grain-
Dept, of Trade and Commerce	
Reimbursement to Canadian Commercial Corporation for expenses in purchasing materials, etc., on behalf of Dept, of National Defence-Dept, of Trade and Commerce	
1944-45	1945-46	1946-47	1947-48	Estimated 1948-49$	$	$	$	$-	-	-	-	2,900-	-	-	-	7,500-	2,000670	1,772	682	126	5,3447,419	1,772	682	126	18,78716,4SS	15,016	9,726	6,687	1,82818,661	11,449	26,298	50,982	27,130	(!7) _11,939	22,200	33,763	40,517	(17) _5,738	7,371	8,334	6,805	4,9692,468	32,131	96,762	78,323	47,475(") -	239,585	318,325	84,175	36,1611,165	774	273	418	17462,769	628,659	608,469	287,868	88, 7792,960	2,456	2,181	805	596425,000	792,200	766,862	60,199	64,466	11,096	142,852	4,418,446	4,002,949	1,314,798	634,421	434,3613,869	4,423	4,432	5,253	9,666188	327	333	450	5011,295	12,052	6,597	10,744	8,905261	159	1,707	397	2	(**) -	20,562	31,450	4,454186	13,963	733	128548	768
(17) Included in ordinary expenditure.
(1#) Deficits charged to the War Appropriation in 1944-45.

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded (Thousands of Dollars)
1945-46
1947-48
Estimated
Special Expenditube-Con.
Fraser Valley, B.C., Flood Area- Repairing and reconstructing dykes... Grant for emergency relief and rehabilitation	
Repairs to Federal Government structures and telegraph and telephone lines	
Total Special Expenditure.
Government Owned Enterprises
Losses charged to Consolidated Deficit Account-
Prince Edward Island Car Ferry and
Terminals	
Canadian National Railways	
Trans-Canada Airlines	
National Harbours Board	
Total Charged to Consolidated Deficit Account	
Loans and advances non-active-* National Harbours Board	
Total government owned enter prises	
Other Charges
Write-down to assets chargeable to Consolidated Deficit Account- Reduction of soldier and general land
settlement loans	
Reduction of Veterans' Land Act
loans	
Yearly established losses in seed grain and relief accounts-
Department of Mines and Resources.. Cancellation of Canadian Farm Loan
Board Capital Stock	
Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment	
Provision for reserve for possible losses on ultimate realization of Active
Assets	
Provision for reserve for conditional benefits under Veterans' Land Act, Canadian National Railways Securities Trust Stock-
Net changes in Dominion's equity in
Canadian National Railways	
Transfer from Capital Accounts-Airways and Airports, to Consolidated Deficit Account (Airways facilities, State of Michigan, U.S.A.)	
Total other charges	
Grand Total Expenditures...
7,506
59
526
1,358
25,000
22,400
47,762
17,358
31,926
888
8,962
114
560
9,964
1,334
10,682
232
54
25,000
22,631
1,308
25,000
2,663
48,177
29,386
63,141
15,885
1,370
18,324
18,695
2,097
1,885
75,000
4,505
83,711
5,245,612
5,136,228
2,634,227
2,195,626
4,500
5,000
34,383
1,220
33,533
2,933
37,924
1,743
39,667
1,150
75,000
5,728
81,938
2,193,214
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(Thousands of Dollars)
Fiscal Years Ended March 31
-	1945	1946	1947	1948	Estimated 1949	$	$	$	S	SLoans and Advances	Railway and Steamship Companies-	Canadian National Railways	83,608	43,614	Cr.	20,521	81,717	4,100Canadian National (West Indies).	Steamships, Ltd	Cr.	450	
Net Total, Railway and Steamship										
Companies			83,608		43,164	Cr.	20,521		81,717		4,100
										
Sundry Government Agencies-										
Canadian Broadcasting Corporation.	2,000 151	1,200 200National Harbours Board	8	Cr.	66	Cr.	26	Soldier Settlement and Veterans	Land Act	3,948	18,677	55,202	37,522	20,700Central Mortgage and Housing Cor-	poration	22,500 14,686	70,500 11,600Cr.	16,774	Cr.	20,087	Cr.	49,948	Cr.	Cr.	Sundry Crown Plants, privately	managed	Cr.	10,909	Cr.	4,997 40	Cr.	41,100 23,932	Other	38	Cr.	Cr.	6,549	Cr.	4,800
Net Total, Sundry Government										
Agencies		Cr.	23,689	Cr.	6,513	Cr.	9,763		38,761		76,200
										
Provincial and Municipal Governments..	15,599		Cr.	4,350	Cr.	2,530	Cr.	63,629	Cr.	5,200
United Kingdom and Other Govern-										
MENTS-										
United Kingdom, loan under The										
War Appropriation (U.K. Financing) Act, 1942		Cr.	55,098	Cr.	63,946	Cr.	95,800	Cr.	111,285	Cr.	34,400
Union of Soviet Socialist Republics-										
Loan for purchase of wheat				Cr.	2,500	Cr.	5,000	Cr.	2,500		
United Kingdom, Australia and New										
Zealand-Air Training accounts...		81,586	Cr.	249,504	Cr.	2				
United Kingdom-British Common-										
wealth Air Training Plan-Settlement					200,000						
United Kingdom, food advance ac-										
counts	10,613	Cr.	9,311 67,412	Cr.	21,301 267,983	Export Credits Insurance Act	130,934	68,200United Kingdom Financial Agree-	ment Act, 1946	640,000	368,000	37,000War Supplies, Ltd	Cr.	71,158	Other (U.K. and Other Govern-	ments)	Cr.	4,215	123,308	Cr.	139,114	Cr.	3,212	2,000
Net Total, U.K. and Other Govern-										
ments		Cr.	38,272	Cr.	334,541		646,766		381,937		72,800
										
Miscellaneous-										
Dominion and National Housing										
Acts		Cr.	1,240	Cr.	14,721						
Sundry munitions contractors, etc.,										
(Department of Reconstruction and Supply)	7,975 74	Cr.	757	Cr.	10,868 4	Cr.	1,781 653	Sundry Loans and Advances	Cr.	Cr.	74	Cr.	Cr.	800
Net Total, Miscellaneous		6,661		Cr.	15,552	Cr.	10,872	Cr.	1,128	Cr.	800
										
Net Total, All Loans and Advances.	43,907		Cr.	317,792	603,080		437,658		147,100	

The Budget-Appendix
ANNUAL CHANGES IN ACTIVE LOANS AND ADVANCES AND INVESTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(Thousands of Dollars) (*)
	Fiscal Years Ended March 31				
	1945	1946	1947	1948	Estimated 1949
Investments Central Mortgage and Housing Corpora-		25,000 Cr. 2,401 36 Cr. 250 2,000			
Canadian Farm Loan Board	 Canada's subscription to capital of International Bank for Reconstruction and	Cr. 5,001		Cr. 600 48,750 299,970	99 16,250	1,100
Canada's subscription to capital of Inter-					
Central Mortgage Bank Capital Stock..					
Export Credits Insurance Corporation	500			2,500	
			42,886 13,503 4,297		
Balances receivable under agreements of	Cr. 1,972 Cr. 28	Cr. 300Other Investments	
Net Total, Investments	
Net Total of changes in Loans and Advances and Investmentsf1)	1,754	770	Cr. 2,747	25,188	408,806	16,849	80041,100	Cr. 292,604	1,011,886	454,507	147,900
(*) Does not include advances to the Foreign Exchange Control Board nor amounts temporarily invested by the Government in its own securities.
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The Budget-Appendix

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Date of Maturity
1949,	May 1	
July 1	
Sept. 1	
Nov. 1	
1950,	Feb. 1	
Mar. 1	
Nov. 1	
Nov. 1	
1951,	Feb. 1	
June 15	
Nov. 1	
1952,	Feb. 1	
Oct. 1	
1954,	Mar. 1	
1955,	May 1	
June 1	
June 1	
1956,	Nov. 1	
Nov. 1	
1957,	May 1	
Nov. 1	
1958,	June 1	
Sept. 1	
Nov. 1	
1959,	Jan. 1	
Nov. 1	
1960,	June 1	
Oct. 1	
1961,	Jan. 15	
1962,	Feb. 1	
1963,	July 1	
Aug. 1	
Oct. 1	
1966, June 1	
Sept. 1	
Perpetual	
1949,	April 8 Treasury Bills	
April 22 Treasury Bills	
May 6 Treasury Bills	
May 27 Treasury Bills	
June 10 Treasury Bills	
June 24 Treasury Bills	
Sept. 2 Deposit Certificates..
1950,	June 15 Non-Interest Bearing
Certificates	
War Savings Certificates	
Refundable portion of excess profits tax (estimated)	
Payable in Canada__
Payable in New York Payable in London__
Rate per Cent	Where Payable	Amount of Loan	Annual Interest Charge
		$ cts.	$ cts.
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1
[Stage Direction]
Canada
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200,000,000 00
[Stage Direction]
1,250,000 00
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4
[Stage Direction]
Canada
[Stage Direction]
33,293,470 85
[Stage Direction]
1,331,738 83
[Stage Direction]
1
[Stage Direction]
Canada
[Stage Direction]
550,000,000 00
[Stage Direction]
4,125,000 00
[Stage Direction]
ll
[Stage Direction]
Canada
[Stage Direction]
267,800,000 00
[Stage Direction]
4,686,500 00
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
49,991,850 00
[Stage Direction]
1,624,735 13
[Stage Direction]
H
[Stage Direction]
Canada
[Stage Direction]
325,000,000 00
[Stage Direction]
4,875,000 00
[Stage Direction]
1}
[Stage Direction]
Canada
[Stage Direction]
335,690,000 00
[Stage Direction]
5,874,575 00
[Stage Direction]
11
[Stage Direction]
Canada
[Stage Direction]
400,000,000 00
[Stage Direction]
7,000,000 00
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
(') 50,250,000 00
[Stage Direction]
1,625,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
649,969,592 50
[Stage Direction]
19,306,027 50
[Stage Direction]
H
[Stage Direction]
Canada
[Stage Direction]
500,000,000 00
[Stage Direction]
8,750,000 00
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
(3) 50,500,000 00
[Stage Direction]
1,625,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
324,945,700 00
[Stage Direction]
9,748,371 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
(*) 676,355,489 00
[Stage Direction]
20,089,767 00
[Stage Direction]
31
[Stage Direction]
London
[Stage Direction]
3,833,893 18
[Stage Direction]
124,601 53
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
40,000,000 00
[Stage Direction]
1,200,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
55,000,000 00
[Stage Direction]
1,650,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
(') 855,607,410 50
[Stage Direction]
25,414,081 50
[Stage Direction]
21
[Stage Direction]
Canada
[Stage Direction]
*327,055,000 00
[Stage Direction]
8,994,012 50
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,111,261,650 00
[Stage Direction]
33,337,849 50
[Stage Direction]
21
[Stage Direction]
Canada
[Stage Direction]
*186,710,000 00
[Stage Direction]
5,134,525 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
88,200,000 00
[Stage Direction]
2,646,000 00
[Stage Direction]
4
[Stage Direction]
London
[Stage Direction]
2,574,936 32
[Stage Direction]
102,997 45
[Stage Direction]
21
[Stage Direction]
Canada
[Stage Direction]
*236,064,000 00
[Stage Direction]
6,491,760 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,197,324,750 00
[Stage Direction]
35,919,742 50
[Stage Direction]
4)
[Stage Direction]
Canada
[Stage Direction]
289,693,300 00
[Stage Direction]
13,036,198 50
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,165,300,350 00
[Stage Direction]
34,959,010 50
[Stage Direction]
4
[Stage Direction]
New York
[Stage Direction]
100,000,000 00
[Stage Direction]
4,000,000 00
[Stage Direction]
31
[Stage Direction]
New York
[Stage Direction]
48,000,000 00
[Stage Direction]
1,560,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,315,639,200 00
[Stage Direction]
39,469,176 00
[Stage Direction]
31
[Stage Direction]
London
[Stage Direction]
2,847,428 94
[Stage Direction]
92,541 44
[Stage Direction]
3
[Stage Direction]
New York
[Stage Direction]
150,000,000 00
[Stage Direction]
4,500,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,295,819,350 00
[Stage Direction]
38,874,580 50
[Stage Direction]
31
[Stage Direction]
Canada
[Stage Direction]
54,703,000 00
[Stage Direction]
1,777,847 50
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,691,796,700 00
[Stage Direction]
50,753,901 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
55,000,000 00
[Stage Direction]
1,650,000 00
[Stage Direction]
[DOT] 411
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
308,250 00
[Stage Direction]
[DOT]411
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
308,250 00
[Stage Direction]
[DOT]412
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
309,000 00
[Stage Direction]
[DOT]415
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
311,250 00
[Stage Direction]
[DOT]424
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
318,000 00
[Stage Direction]
*[DOT]424
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
318,000 00
[Stage Direction]
[DOT]75
[Stage Direction]
Canada
[Stage Direction]
100,000,000 00
[Stage Direction]
750,000 00
[Stage Direction]
*268,300 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
*175,041,000 00
[Stage Direction]
5,251,230 00
[Stage Direction]
15,411,536,371 29
[Stage Direction]
411,474,519 88
[Stage Direction]
*173,500,000 00
[Stage Direction]
15,585,036,371 29	411,474,519 88
		15,277,780,112 85	98-01%
		298,000,000 00	1-93%
		9,256,258 44	0-06%
		15,585,036,371 29	100-00%
(>) Redeemable at 100) per cent.
(2)	Redeemable at 101 per cent.
(3)	Redeemable at 101 per cent.
(4)	Redeemable at 101 per cent. (s) Redeemable at 101 per cent.
* Estimated.
Amount outstanding includes Amount outstanding includes Amount outstanding includes Amount outstanding includes Amount outstanding includes
$ 250,000.00 redemption bonus. $6,435,342.50 redemption bonus. $ 500,000.00 redemption bonus. $6,696,589.00 redemption bonus. $8,471,360.50 redemption bonus.
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Wednesday, March 23, 1949