1950-04-27

Hon. Milton F. Gregg (Minister of Veterans Affairs):: Yesterday the hon. member for Peterborough West (Mr. Fraser) asked the following question:
Can the minister tell the house whether there are any new regulations under the Veterans Land Act affecting men who served in the British armed forces?
The answer is no.



QUESTIONS

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

Mr. Thatcher:: 1.	What loans or credits has Canada extended to overseas nations since June, 1945?
2.	What amounts of these loans have been repaid?
3.	Are any of these loans in arrears? If so, to what extent?


Mr. Sinclair:: 1.	United Kingdom, $1,165,000,000.00; Belgium, $68,843,287.68; China, $52,215,997.48; Czechoslovakia, $16,673,706.82; France, $251,043,900.19; Indonesia, $15,452,188.21; The Netherlands, $123,949,275.97; Norway, $23,656,985.07; Union of Soviet Socialist Republics, $2,866,098.69.
2.	Belgium, $6,554,287.68; China, $2,033,322.64; France, $16,739,900.19; The Netherlands, $5,812,703.86.
3.	See report on the operations under part II of the Export Credits Insurance Act for the fiscal year ended March 31, 1950, tabled in the House of Commons today.



CANADIAN NATIONAL TELEGRAPHS


Mr. Browne (St. John's West):: What have been the earnings and expenses of the Canadian National Telegraphs in Newfoundland, for the year ended March 31, 1950?


Mr. Chevrier:: The Canadian National Railways advise as follows: Operating revenues, $692,632; operating expenses, $971,540.



CANADIAN BROADCASTING CORPORATION


William Joseph Browne: What have been the earnings and expenses of the Canadian Broadcasting Corporation services in Newfoundland for the year ending March 31, 1950?


Mr. McCann:: Earnings are estimated at $135,000; expenses at $275,000.



FAMILY ALLOWANCES

Mr. Wright:: 1.	How many employees are there in each of the provinces administering the distribution, investigation and other work necessary for the payment of family allowances?
2.	Is all investigational work with respect to the administration and payment of these allowances done by dominion government staffs?
3.	In what provinces is this work or any portion of it carried out by the provincial welfare departments?
4.	What is the basis of remuneration to those departments for such work?
5.	What is the total number of family allowances paid in each province?
6.	What is the number of investigations carried out with respect to these payments in each province?
7.	What is the number of cases in each province where payments have been withheld from parents because of failure to properly carry out the provisions of the act?


Mr. Marlin:: 1.	Number of employees as at April 1, 1950 (exclusive of treasury employees): Newfoundland, 35; Prince Edward Island, 7; Nova Scotia, 45; New Brunswick, 42; Quebec, 210; Ontario, 187; Manitoba, 48; Saskatchewan, 48; Alberta, 49; British Columbia, 46; Yukon and Northwest Territories, 5.
2.	No.
3 and 4. British Columbia, Manitoba, Ontario and Nova Scotia: $5 for each requested and completed investigation.
Newfoundland:	$5 for each requested
and completed investigation, provided that a guarantee of a minimum amount of $5,000 is given for the first year, commencing November 1, 1949.
5. Number of families in pay as at March 31,	1950:	Newfoundland, 50,694; Prince
Edward Island, 13,165; Nova Scotia, 91,012; New Brunswick, 72,410; Quebec, 507,727; Ontario, 603,847; Manitoba, 105,611; Saskatchewan, 116.917; Alberta, 130,686; British Columbia, 156,367; Yukon and Northwest Territories, 3,833.

Questions
6.	Number of investigations completed during the month of March, 1950: Newfoundland, 65; Prince Edward Island, nil; Nova Scotia, 232; New Brunswick, 60; Quebec, 125; Ontario, 82; Manitoba, 120; Saskatchewan, 15; Alberta, 41; British Columbia, 29; Yukon and Northwest Territories, 11.
7.	Total number of accounts in suspense for all reasons as at March 31, 1950: 13,765.
A large number of these accounts are suspended for purely technical and administrative reasons, such as: change of address, change of payee due to death of former payee, return of cheques by postal authorities, et cetera. It is not possible to segregate from the total number of accounts in suspense those accounts specifically withheld from parents because of failure to carry out properly the provisions of the act.



CANADIAN OVERSEAS TELECOMMUNICATION CORPORATION

Mr. Kirk (Anligonish-Guysborough):: 1.	How many directors are there on the Canadian Overseas Telecommunication Corporation?
2.	What are their names, present and former addresses?
3.	By whom are they appointed?
4.	Who is the president?
5.	For how long are they appointed?
6.	What are their respective salaries, remuneration andi expense allowances?
7.	Has any director been appointed representative of any of the following provinces: (a) Nova Scotia; (b) New Brunswick; (c) Prince Edward Island; (d) Newfoundland?
8.	If not, was consideration given to appointment of such a representative?
9.	Are there any vacancies at present?


Mr. Chevrier:: 1.	Five.
2.	Mr. D. L. Howard: previous address,
204 Hospital street, Montreal, P.Q.; present address, president and general manager, Canadian Overseas Telecommunication Corporation, Pascal building, 901 Bleury street, Montreal, P.Q. Lieutenant-Colonel Henri Gagnon:	previous address, president Le
Soleil, Quebec city, P.Q.; present address, no change. Mr. C. P. Edwards, previous address, deputy minister for air services, Department of Transport, Ottawa, Ontario; present address, no change. Mr. R. M. Brophy, previous address, president, Rogers Majestic Corporation, Toronto, Ontario; present address, no change. Major James Hamilton: previous address, vice-president British Columbia Telephone Company, Vancouver, B.C.; present address, no change.
8.	His Excellency the Governor General in Council.
4.	Mr. D. L. Howard.
5.	All above appointments are dated March
15, 1950. Mr. Howard, president and general manager: term of office as prescribed in the Canadian Overseas Telecommunication Corporation Act, seven years; Messrs. Gagnon and Edwards: appointed for three years; Mr. Brophy:	appointed for two years; Mr. Hamilton appointed for one year.
6.	Directors will not receive salaries. The act of incorporation provides that directors are entitled to receive for attendance at directors' meetings such fees as may be fixed by the bylaws of the corporation, but the bylaws have not yet been approved by the governor in council as required by the act. The director who is an officer of the Department of Transport will not receive any such fees. Directors will be reimbursed actual expenses incurred in attending meetings.
7 and 8. Mr. D. L. Howard, president of the corporation, is a native of New Brunswick.
9.	No.



INCOME TAX


Mr. Knowles:: 1.	In what way is income tax assessed on lump sum retiring allowances?
2.	Are all such lump sum retiring allowances treated in the same way for income tax purposes?
3.	H there are any exceptions, what is the basis for such exceptions?


Mr. McCann:: 1.	A lump sum retiring allowance may, at the option of the taxpayer, be either included as part of his income for the year it is received and tax levied accordingly, or it may be excluded from the rest of his income. In the latter case, the taxpayer shall pay a separate tax on such payment at a rate equal to the effective rate of tax which the taxpayer paid on his income for the last complete taxation year he was employed by the employer from whom the allowance was received.
2.	Yes.
3.	Answered by No. 2.



PRIME MINISTER'S SECRETARIAL STAFF


Mr. Diefenbaker:: 1.	Is a home being provided for any member or members of the prime minister's secretarial staff?
2.	If so, are any works of construction or rebuilding now going on, and what is the anticipated cost?


Mr. Fournier (Hull):: There is no intention of providing a home for any member or members of the Prime Minister's secretarial staff. There is, however, a residential property on the grounds of the proposed residence of the Prime Minister and consideration is being given at the present time to the question

whether it should be torn down, or alternatively, in view of the shortage of housing in Ottawa, put in shape for rental at a fair rent to such person as the Prime Minister might designate.



ROYAL CANADIAN NAVY


Mr. Pearkes:: 1.	What firms successfully tendered, during 1948 and 1949, for the supply of foodstuffs, blankets, clothing, uniforms, and other necessary items, for the Royal Canadian Navy?
2.	What was the amount of each tender?
3.	What firms successfully tendered1, during 1948 and 1949, for the supply of fuel, oil and coal for the Royal Canadian Navy?
4.	What was the amount of each tender?


Mr. Howe:: I have been looking into this question, the first part of which asks what firms successfully tendered during 1948 and 1949 for the supply of foodstuffs, blankets, clothing, uniforms and other necessary items for the Royal Canadian Navy. Then there are three other questions.
With reference to the first part of the question, in 1948 the Canadian Commercial Corporation placed 13,616 orders for the navy, and in 1949 placed 19,292 orders, making a total of 32,908 orders in the two years for which the information is requested.
In order to compile the information as to the firms to whom the contracts were awarded and the amounts involved in each contract, the corporation has estimated that, by having the staff work overtime in order not to interfere with normal business procedure, it would take approximately two months at a cost of about $2,000, to answer this question. I suggest that my hon. friend would hardly wish to have the information to that extent. Perhaps he would allow the question to be. dropped.


Mr. Pearkes:: Yes; drop it. I would not like the staff to have to work overtime.


Mr. Speaker:: Dropped.



RIDGEDALE, SASK., POSTMASTERSHIP

Mr. Wrighi:: 1.	Was a postmaster appointed at Ridgedale, Saskatchewan, on or about October 13, 1949?
2.	If so, was this vacancy advertised?
3.	Is it customary to make such appointments without notification to residents in the area who might be interested?
4.	What are the departmental regulations governing such appointments?


Mr. Lapointe:: 1.	Yes.
2.	No.
3 and 4. Where an assistant has had fifteen years' satisfactory service, the last ten years of which have been continuous and in the
Orders for Returns office which is vacant, the assistant is promoted when it is in the best interests of the public service.



ROYAL CANADIAN NAVY


Mr. Pearkes:: 1.	What has been the actual annual expenditure on the Royal Canadian Navy, including both active and reserve divisions, during each of the years 1947, 1948 and 1949?
2.	What is the actual, total estimated expenditure on the Royal Canadian Navy in 1950, including any sums to be spent during this year from commitments previously voted?


Mr. Claxton:: 1.
1947-	48	$42,942,028.741948-	49	
44,649,773.50*	1949-50	
73,315,000.00*	Subject to adjustment when final returns
are recorded.
2.
1950-51	$82,000,000.00



QUESTIONS PASSED AS ORDERS FOR RETURNS


FEDERAL GOVERNMENT EMPLOYEES


Mr. Gagnon:: 1.	What was the total number of employees of the government of Canada, including employees of departments, boards, commissions, crown corporations and all other agencies, as at January 1, 1949?
2.	What was the total amount of salaries, wages and allowances paid to such employees during the month of January, 1949?
3.	What was the total number of employees of the government of Canada, including employees of departments, boards, commissions, crown corporations and other agencies, as at December 31, 1949, or the latest available date?
4.	What was the total amount of salaries, wages and allowances paid to such employees during the month of December, 1949, or the month for which the answer to question No. 3 was given?
5.	How many employees appointed by federal authority during 1949, or the closest period for which figures are available, were bilingual?



FEDERAL GOVERNMENT PUBLICITY DIVISIONS

Mr. Fraser:: What are the names, duties, salaries and travelling expenses, during 1949, of all those engaged in publicity or information work in each department of the government?



FOREST AND BUSH CLEARANCE AND SOIL DRAINAGE

Mr. Argue:: 1. What sum was paid by the federal government in each of the provinces, during each of the years 1946, 1947, 1948, 1949, towards (a) forest and bush clearance: (b) soil drainage?

Inquiries of the Ministry
2.	What percentage of the cost of each project was paid by the federal government?
3.	From what vote or votes was the money obtained?
4.	What acreage was reclaimed through (a) forest and bush clearance; (b) soil drainage, in each of the provinces, during each of these years?



FLOOD CONDITIONS


[Stage Direction]
On the orders of the day;
Mr. Stanley Knowles (Winnipeg North Centre):: I should like to ask a question of the Secretary of State for External Affairs. This question has to do with flood conditions in the Red river area of Manitoba, and it is based upon an answer given on May 3, 1948, to a question asked by the hon. member for Provencher (Mr. Jutras). Has the international joint commission, at any time since the date of that answer, given consideration to ways and means of preventing the recurring floods in the area through which the Red river flows?


Hon. L. B. Pearson (Secretary of State for External Affairs):: The hon. member for Provencher brought this matter to my attention only this morning. I told him then that I would try to get an answer right away, and I shall be glad to make that answer cover the question asked by the hon. member.



DOUKHOBORS


[Stage Direction]
On the orders of the day;
Mr. H. W. Herridge (Kootenay West):: should like to ask a question of the Minister of Justice. In view of the joint announcement made by the Minister of Justice (Mr. Garson), and the attorney general of the province of British Columbia of a new three-point program to solve the "Sons of Freedom" Doukhobor problem; and in view of a press report that the attorney general of British Columbia stated that there has been recognition by Ottawa that the Doukhobor problem amounts to civil insurrection; and in view of the great importance of this question to residents of the southern interior of British Columbia and the Canadian people, would the minister make a statement to the house with respect to this program and the degree of responsibility the government is willing to accept toward the solution of the "Sons of Freedom" Doukhobor problem, and does the dominion government consider this situation a state of civil insurrection?


Hon. Stuart S. Garson (Minister of Justice):: I wish to thank the hon. member for having given me notice of his question. May I say


first of all that one of the alleged facts upon which the hon. member's question is based is incorrect. The announcement to which he refers was not a joint statement, but one issued solely by the attorney general of British Columbia, as is clear from its opening sentence.
My hon. friend asks whether the federal government considers this Doukhobor situation a state of civil insurrection. There has been no occasion for the federal government to form an opinion on this point. The point has never been discussed between the attorney general of British Columbia and myself, and it will be noticed that in his press statement there is no allegation that the problem in question amounts to civil insurrection. Such recognition is not necessary to the planning or working out of this joint program. It has been possible for us to co-operate in an effective way without any consideration of this point.
As the statement by the Hon. Mr. Wismer indicates, we supplied Mr. F. G. Mead, a former high officer in the Royal Canadian Mounted Police, as a member of a two-man committee "to advise the British Columbia government as to the action necessary to stop these crimes"-and when I use these words I am quoting from Hon. Mr. Wismer's statement. That is to say, Mr. Mead was to advise on the law enforcement aspect of the Doukhobor problem in British Columbia, which is a provincial responsibility.
At the same time Mr. Mead was to act as an adviser to our government on the custodial care of the Doukhobors in the federal penitentiaries, which is our federal responsibility. So acting he will be a liaison between the two governments to assist in harmonizing and co-ordinating provincial actions on law enforcement and federal actions with regard to the custodial care of Doukhobor prisoners in federal penitentiaries.
In this way we are managing, on a friendly and co-operative basis, to achieve a very considerable measure of co-ordination in our respective efforts. This I think will be further assisted by the fact that the British Columbia government has taken power to enter into a contract with this government to have the Royal Canadian Mounted Police look after the policing work of the province of British Columbia, as that force has been doing successfully in several other provinces for some years past.


Mr. Green:: May I ask the minister when that contract comes into effect-in other words, when the mounted police will be taking over?


Stuart Sinclair Garson: The contract is in process of negotiation at the present time, and the answer to the hon. member's question will depend upon the course of those negotiations and upon the length of time it will take to deal with all the necessary preliminary matters in an arrangement of this kind which will determine when the contract will be in effect.


Howard Charles Green: It will be some months yet?


Stuart Sinclair Garson: Yes.



FLOOR PRICES


[Stage Direction]
On the orders of the day:
Mr. H. O. White (Middlesex East):: I should like to ask a question of the Minister of Agriculture. What arrangements have been made between the Canadian beekeepers council and the agricultural prices support board as to a floor price for the 1949 honey crop; and what are the agreed upon floor prices, if any?


Right Hon. J. G. Gardiner (Minister of Agriculture):: The honey council has not asked me for floor prices on honey this year. I have discussed with them the possibility of an advertising campaign, but beyond that I have not had discussions with them.



INDIANS


[Stage Direction]
On the orders of the day:
Mr. William Bryce (Selkirk):: I should like to ask a question of the Minister of Citizenship and Immigration. Can the minister tell the house what steps are being taken to supply food to the Indians three hundred miles northwest of Churchill, who are on the verge of starvation?


Hon. W. E. Harris (Minister of Citizenship and Immigration):: I received notice of
this question only as I entered the chamber, and I am asking for a report. However, I believe I can answer by stating that I am not aware that there are any Indians facing starvation at the present time. My department keeps a very close eye on them, and looks after them better than that.


William Scottie Bryce: May I tell the minister that one of the army medical officers has reported Indians as being in that condition.
27. 1950	1931
Inquiries of the Ministry LABOUR CONDITIONS



PRINTING BUREAU EMPLOYEES


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: I should like to ask a question of the Secretary of State (Mr. Bradley). I realize that his absence is due to illness; however, I sent notice to his office in the hope that some minister would answer it. Has the Secretary of State received a request from the Ottawa typographical union for an opportunity to appear before the committee of the house on printing to deal with matters of concern to employees of the printing bureau? If so, will the Secretary of State consider making arrangements for a meeting of that committee so that this request can be granted?


Alphonse Fournier: Only a moment ago I received a note from my office stating that this question was to be asked by the hon. member. I understand that the department is preparing an answer. However, I hope that the hon. member will wait until the Secretary of State is here, so that he may answer.



SHIPMENTS TO GERMANY


[Stage Direction]
On the orders of the day:
Mr. Alistair Stewart (Winnipeg North):: should like to ask the Minister of Agriculture how we are being paid for the butter we are sending to Germany. Are we being paid in dollars or in kind?


James Garfield Gardiner: It is being paid for in dollars.



THE BUDGET


[Stage Direction]
The house resumed, from Wednesday, April 26, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell (Greenwood), and the amendment to the amendment of Mr. Coldwell.
Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, a Canadian Press dispatch appearing in yesterday's newspapers drew attention to the fact that this budget debate has been characterized by speeches which, with few exceptions, have been related to the budget and have not strayed far afield. In the modest contribution I hope to make to this

The Budget-Mr. Fleming debate this afternoon I also propose to confine my remarks to the budget and matters related directly thereto.
Those who heard the budget delivered in this house by the minister several weeks ago must have found it impossible to refrain from contrasting the speech, its proposals, and the manner of its delivery with the efforts of the same minister one year ago. Gone on this occasion was the debonair manner, the air of confidence, which characterized the speech and manner of the minister in 1949. This was a gloomy, sober occasion in 1950. The speech was gloomy; the manner of delivery was indeed sober; and the final paragraph in which, before concluding, the minister sought to arouse a faint cheer, was in striking contrast to the manner with which he approached his task. In 1949 the minister's mood was to give anything that was asked. The 1950 mood was to refuse everything. Indeed, the only resemblance between the Minister of Finance in 1949 and the Minister of Finance in 1950 was the fact that, as I read in the press, he wore the same suit on both occasions.


Mr. Abbott:: Another economy measure.


Donald Methuen Fleming: How the Minister of Finance reconciles the note struck in his budget speech with the vaunted optimism, more accurately described as flights of fancy, in which the Minister of Trade and Commerce (Mr. Howe) is wont to indulge with enthusiasm generated for political occasions, yet remains to be determined.
The Minister of Finance has grown up in a political school which has attached great importance to timing. As a matter of fact, following his budget speech in 1949 he permitted himself to say something on this subject for the guidance of future generations. A Canadian Press dispatch appearing in the newspapers of March 24, 1949, pictures the scene following the delivery of the give-away election budget. It pictures the Minister of Finance making his triumphant withdrawal from the chamber and his triumphant entry into the government lobby. It speaks about the members gathering around him, cheering, shaking his hand one after the other, Mr. King among them. Then the report goes on:
Mr. Abbott grinned1, took off the big brown-rimmed glasses and rocked from foot to foot on his heels, as he does.
He looked across the faces at the retired Prime Minister and said, "As Mr. King says, boys, the timing of what you do can be just as important as the thing you're doing."
The lesson in timing in 1949 will not have been lost on those members of this house who owe their presence here to the donations made for their benefit by the Minister


of Finance on that occasion; but this year the Canadian taxpayer has looked in vain for the same delicate sense of timing that characterized the speech of the minister one year ago.
The Canadian taxpayer, who is a pretty sound individual, will be applying a little of his common sense to this doctrine of timing. He will not have forgotten, of course, that 1949 was the election year, and the minister was prepared to "shoot the works", as he did. In 1950 we find the cupboard bare, because this is not an election year. In this budget speech the Minister of Finance has gone out of his way to make it abundantly clear to the Canadian taxpayer of 1950, 1951, 1952, and perhaps down as far as 1953 or 1954, that if he is expecting reductions in taxation he is doomed to disappointment. That same delicate sense of timing will dictate, in the light of what the minister has said, that any reductions in taxation shall be carefully preserved for the next preelection session of parliament, whenever that may be. The net result is that we have a complete exposure of the purpose and guiding principles of budgeting as practised by the government. It is budgeting for and by political expediency, nothing more.
Well, at times the Minister of Finance gives indications of being a realist. In a speech over the C.B.C. national network on April 11 he correctly described his own budget in these words: "It was not a popular or exciting budget." Amen, say all those who heard it. If one were to summarize the budget in a sentence, I suppose that sentence would be to this effect: the picture for the overburdened taxpayer is utterly hopeless; no reductions in taxation are possible for him.
Before I go further I wish to put in direct contrast with that attitude on the part of the government the position of the official opposition. We altogether reject the idea that expenditures and taxes cannot be reduced, and I shall endeavour to indicate some proposals that we have made and shall continue to make along these lines. We take issue with the attitude of the minister when he says in effect that it is just no use trying, so why bother making the effort to pare expenditures or reduce taxes?
Mention has been made of the subject of cyclical budgeting. In this same radio speech the minister undertook to comment on that subject. He did not know whether he had ever used that expression before, but in his speeches in the house he has certainly subscribed to the theory of cyclical budgeting; there can be no question about that. Those of us who sat in this

house in 1948 will not forget the discussions that took place at that time on the budget, when for the purpose of frightening this house and the people of Canada the minister was holding up what he pictured as the dire calamities that would follow any abandonment of the theory of cyclical budgeting. His idea then was that when times are good he should draw off that surplus of money in the pockets of the people and in that way do the people a favour, because he would be helping them out of a difficulty and helping to meet the problem of inflation. If the picture now is half as bright as that drawn by the Minister of Trade and Commerce in those flights of fancy of his, then surely this is one of those occasions for doing that	very thing.	But	the Ministerof	Finance	knows quite	well	that politicalexpediency would not permit it; that would be	equal to	an exposure	of the manoeuvresof	the 1949 budget.	The	Minister of
Finance, sir, has buried cyclical budgeting.
A word now about the position of the minister in regard to expenditures. It is fair to say that the budget speech contained more references to expenditures than previous budget speeches. As a matter of fact, it may be that the minister is at long last showing some faint indications of becoming aware that there are such things, and aware of the problems connected with them. I am sure this house will condemn with all its might the fatalistic acceptance of this ceiling on expenditures which the minister took for granted in his speech. We have his acceptance of a sort of inevitability of a continuing level of expenditures at $2,400 million per annum. We have, on the part of the minister and the government, a confession of helplessness, or a lack of will;
I do not know which it is.
I was brought up in Galt, a city largely populated by people of Scottish descent. I was brought up to understand that in all honourable undertakings, and particularly in matters related to money, where there is a will there is a way. It does not fit into the upbringing I had in that environment to have the minister sit back and, with this gesture of futility, say that nothing can be done about it; that we have to accept $2,400 million per annum as the inevitable floor on expenditures. Before I go any further, let me say that I join with the hon. member for Brandon (Mr. Matthews) in the condemnation he offered in this house the other night of the fatalistic attitude toward so-called "uncontrollable" expenditure.
_ I go on from that, sir, to say that inherent in the minister's attitude there is something
55946-123J	[DOT]
The Budget-Mr. Fleming of the altitude he has demonstrated towards'-parliament. It is not unfair-and I want to-be fair to the Minister of Finance-to say that whenever we have considered this subject of the necessity of a close examination of proposed expenditures, and the need for exercising the greatest sense of responsibility, the-attitude of the minister has been one of defiance.
In his speech as reported on page 1213 of Hansard the Minister of Finance gives us a picture of the treasury board reviewing these estimates, and he seems to be saying to the House of Commons: "Well, that job is done; what remains for you is to go through the motions and pass them." He glories in defying the efforts of the opposition to get these expenditures pared down by the elimination of things we can do without, without suffering a loss of needed government services.


Mr. Cruickshank:: What, for instance?


Donald Methuen Fleming: If the hon. member will be patient, he will hear about it. The member for Churchill (Mr. Weaver) exposed a frame of mind which I think it is only natural to-expect on the part of supporters of this government when he spoke with admiration about what he called "the billion-dollar mentalities" on the treasury benches. He regards that as something worthy of glowing praise. It recalls to my mind the remark of the Prime Minister several years ago, made in reference to a sum of $175 million, which I would have thought was a substantial sum, but to which he referred rather disparagingly as "peanuts". There are, of course, also the recorded remarks of the Minister of Trade and Commerce, who said "A million dollars-well, what is a million dollars?"


Douglas Charles Abbott: May I ask the hon. member if he is suggesting that the former prime minister used the phrase "peanuts" in this house?


Donald Methuen Fleming: No sir, I did not suggest the former prime minister used the expression peanuts". I said the present Prime Minister used that expression in referring to the sum of $175 million. I have referred to the occasion previously in the house, and I think the minister's parliamentary assistant will recall one occasion last year.


Mr. Sinclair:: The parliamentary assistant has no recollection whatever of the occasion.


Donald Methuen Fleming: I do not know what the hon. member said, but it probably will not be the first time his memory has been lacking or seriously in error.
We have -made proposals, and we plan to continue to make them. I might refer briefly in passing to the proposals that have already been put forward by hon. members of the
1934	HOUSE OF
The Budget-Mr. Fleming official opposition. The house will recall the concrete proposals made by the member tor Kamloops (Mr. Fulton), and the member for Peterborough West (Mr. Fraser), about the publicity expenditure of $6 million, the expenditure on sundries of $17,500,000, and travelling expenses of $26 million. These items total $49 million. The suggestion was made that we could probably cut those expenditures in half without suffering a loss of anything essential.
I am sorry that my friend the Minister of Public Works (Mr. Fournier) is not in the house, because I should like to refer to something that concerns him. It also concerns the government, and I hope it is a matter of concern to the house. You will remember, sir, that when the government announced in the house it was proposing to use as a residence for the Prime Minister a property which had been expropriated by the government some four or five years ago, there was no voice raised in the house in opposition to this principle of establishing a home for the Prime Minister at the expense of the nation.
I want to make it abundantly clear that, so far as I am concerned, there is no thought at all of quarrelling with the idea of acquiring proper housing accommodation for the Prime Minister at the expense of the nation. But I think this house wants to see some business principles applied to the procedure being followed by the government. I say, sir, in this respect, as well as in respect to many other matters that have been exposed in this house, the government did not follow business principles that would even do justice to the proprietor of a peanut stand.
What did we find when this subject was discussed in the house on March 21? To begin with, the minister could not remember the exact price of the land and buildings. It was somewhere in the neighbourhood of $130,000 or $140,000. I suppose $10,000 is a mere bagatelle about which they do not worry. He proceeded to tell us that he could not say what the project was going to cost; he indicated, if you please, that the government embarked upon the great expenditure they were proposing to make on this property, yet did not know before they started what they were going to spend. Is that not an amazing situation? They embarked gaily on the venture of improving this old property, but when they started they did not have any idea what the improvements were to cost them. They now say the main building is to cost, for renovation and reconstruction, probably about $135,000; they are still not sure. The improvements on the grounds will cost another $10,000, and it is not known yet what the furnishings will cost. I should like 

to make it clear that I am not condemning the acquisition of a suitable property as a residence for the Canadian Prime Minister, but I do condemn with all my heart such a wanton disregard of elementary business principles as applied to the expenditure of money on this or any other project.
In this connection hon. members will not overlook the words of the scripture to be found in the fourteenth chapter of the Gospel according to St. Luke, where this question is asked by Our Lord:
Which of you, intending to build a tower, sitteth not down first, and counteth the cost?
Apparently the government is animated by other ideas.


Stanley Howard Knowles: This is an ivory tower.


Donald Methuen Fleming: A further example of the kind of proposal that we have put forward is that made by my leader yesterday when he urged that the duplication of services as between dominion and provinces should have the attention of the government with a view to the elimination of that duplication and the cost thereof.
Now I come to something that is, in my humble opinion, fundamental to our whole approach to this question of the elimination of extravagance and the exercise of greater responsibility in the house in the voting of public moneys. I wish to speak about the method followed in this house in relation to the review, if it ever may honestly be called such, of the estimates of expenditures. The fact of the matter is that today the method that prevails in the house is so awkward and so clumsy that it makes any proper check of expenditures impossible. The Auditor General said truly of late:
It is generally recognized that the task of reviewing estimates produces a feeling of frustration. The limited time available and the broad diversity of public services permit only a scratching of the surface.
Indeed, Mr. Speaker, little more than a scratching of the surface is possible under the procedure that prevails in this house at the present time. It seems to me to be the greatest self-contradiction for the minister to be hurling defiance at the opposition to put forward concrete proposals, as we have been doing even in the face of handicaps, while at the same time he insists upon defeating every effort we have made to devise a method that will make possible a proper and adequate review of the estimates.
What is possible? There was a time when it was at least an expression of wish on the part of Liberal leaders in the house that the house might find the kind of method that I am speaking of, a method that does not prevail today, even by faint resemblance. It

was no less a person than Mr. W. L. Mackenzie King who in this house in 1928, in a debate in which the then leader of the opposition, Mr. Bennett, had put forward the same kind of plea that I am making here today, said, as reported at page 4048 of Hansard of that year:
I entirely agree with my hon. friend that the system at present in force, under which a minister of the crown is necessarily dependent in the House of Commons on his deputy for much of the needed information, with the deputy also of necessity, often not wholly familiar with all the details of particular branches, is most unsatisfactory. Speaking for the government I would say that we would welcome a change in the present method, a change which would not only afford fuller opportunity for discussion but which would carry with it an obligation on the part of the heads of different branches of the public service to appear before a committee of the house and explain fully the reasons which have occasioned the recommendations which find their place in the estimates submitted to the house.
Those were the words of Mr. Mackenzie King in 1928.


John Ewen Sinclair: Did Mr. Bennett change. it when he came to power?


Donald Methuen Fleming: Mr. King did not change it. He was a long time in office and did nothing about it, and the voluble and talkative member who has just offered his words of wisdom apparently has not the slightest intention of carrying into action the commendable statement made by his then leader, Mr. W. L. Mackenzie King.


John Ewen Sinclair: Did Mr. Bennett do it?


Donald Methuen Fleming: For the edification, of the parliamentary assistant-because he is getting the habits of the minister; I think the minister and the parliamentary assistant, if I may say so, are a bad influence on each other-I may add that the Auditor General, in a comment on that statement of Mr. Mackenzie King, went on to say this:
If civil servants, who recommend amounts to ministers, know they may be subjected to direct questioning by parliamentarians, they will put forward only such amounts as they can readily justify.
Mr. King's deliverances on the subject did not end there. As late as 1944 we find him delivering himself of similar sentiments. In that year I was not a member of the house, but it happens that-


George Alexander Cruickshank: I am glad of that.


Donald Methuen Fleming: Perhaps I am glad I was not too, if we are obliged to submit to clumsy methods such as this as an excuse for doing public business.
In 1944 apparently the house had considered the inadequacy of the methods of examining the estimates, and a committee was appointed to review the subject. The committee came back with some recommendations: and one
The Budget-Mr. Fleming of the recommendations, if you please, was that there should not be a committee on estimates. What did Mr. King do about the report of the committee? Listen to what Mr. King said in 1944. He was speaking of the suggestion in the report of the committee that estimates should be referred to standing or select committees. The committee condemned that suggestion because they said it struck at the root of ministerial responsibility. Here is what Mr. King said, as reported in Hansard of 1944, at page 1255:
I cannot accept that as a correct statement. For years estimates have been referred to special committees at Westminster, and the parliament at Westminster is as careful in observing ministerial responsibility as any parliament in the world.
And then further down,:
I had hoped very much that the committee might have found it possible to endorse the reference to a committee, not of all estimates but at least of certain of them, while, of course, safeguarding the right of every hon. member to criticize the estimates in whole or in part when they came back to the house for discussion.
Apparently that has been forgotten by those who occupy the treasury benches.


Stanley Howard Knowles: Mr. Bennett has not been in power since then.


Donald Methuen Fleming: Why does the Minister of
Finance stubbornly refuse to countenance the idea of having estimates referred to a committee or committees? Apparently the government fears that there will be too much independence on the part of government members in such a committee, that the members supporting the government will not be subject to the same close supervision on the part of the ministers and the party whip as obtains here in the house.


George Alexander Cruickshank: Oh, baloney.


Donald Methuen Fleming: I recognize at once and
acknowledge the complete authority of the hon. member for Fraser Valley (Mr. Cruickshank) on the subject to which he has just referred.


George Alexander Cruickshank: Do you accuse me for one minute of being told what to do?


Donald Methuen Fleming: Now I propose to say a word on the subject of the way in which these estimates are prepared. The Minister of Finance does not do all his talking in the house. As a matter of fact, he has sometimes said more outside the house than he has inside. On March 7 he journeyed to Toronto and there he made a speech which is recorded in the Globe and Mail of March 8. I should like to quote a paragraph from the report.


Douglas Charles Abbott: I hope it is correctly reported.

The Budget-Mr. Fleming


Donald Methuen Fleming: The speech was made to a group of women, the University Women's Club, and the report reads in part as follows:
Mr. Abbott told the women his first step in its drafting-
That is, of the budget.
-was consideration of the nation's revenue position. This done, he requested and eventually got departmental estimates, which were invariably higher than their need.
That is a most interesting comment on the part of the minister as to the way in which these estimates begin their course.
I think it is worth recalling also that when the Auditor General made an appearance before the public accounts committee in 1949, he was questioned on this subject of a cushion in the estimates, and also about the desirability of having a detailed examination by members of the house of officials who have submitted those estimates-not insulated by some minister who holds whispered conferences with the official at the desk in front of him, and then raises his head and gives the house secondhand information. At page 42 of the proceedings of the standing committee on public accounts of 1949 we find this interesting passage. Mr. Watson Sellar says:
The Witness: In every vote a department puts in a cushion and the smaller the vote the bigger is the cushion, relatively speaking.


George Alexander Cruickshank: There is a pretty small cushion in my riding.
I do not know whether that is the one he sits on, sir, or not. The report continues:
The Witness: When I was in the treasury I could run salary costs of a staff of 1,000 people at one per cent less than the amount which I asked from parliament because I would have during the year sufficient resignations, deaths, and casualties of one sort and another that I had a cushion actually within my total. Therefore, I say that when a vote is mainly a salary vote you do not need a cushion of more than one per cent or one and one-half per cent, if it is a fairly large vote. If you have a lot of small votes you are going to put in a cushion of five per cent to ten per cent and therefore you are voting more money than is actually needed. You can see that by the amounts which lapse. When we apply to the treasury board for estimates they ask us how much we spent last year and if we can show that we spent every cent we have an argument which is accepted in our favour. Therefore we may have spent money we did not actually need just because we had a margin.
It is no answer for the minister to say: Oh, well, if they are lapsed, these moneys are not spent because this enters into the preparation of the estimates and the planning of expenditures. I am recorded further down on the page as asking this question:


Donald Methuen Fleming: May I ask Mr. Sellar a question about this matter of the cushion? Do you find it general practice in estimating to set up cushions on all items?


Mr. Croll:: Of course it is.

He has been raised in this school which flourishes on the treasury benches. He knows that the practice of setting up cushions prevails. I continue with the quotation:
The Witness:	We will never admit, sir, that we
have a cushion in, but we all put cushions in.
By Mr. Fleming:
Q. To what extent do these cushions exist?-A. You can go by the lapsings. That is what you have to go by to see the real cushion. As a rule it will rim anywhere from two per cent to five cent of the votes.
Q. Your recommendation with regard to showing in the estimates the actual expenditure for the last year is made because you feel you can eliminate those cushions, or reduce them?-A. No. There is nothing which scares civil servants more than to face criticism from the House of Commons, and if you have actual figures to criticize us upon we are more vulnerable than when you have got to pull figures out of the air.
Now, sir, there is some pretty good common sense there for hon. members to follow if they seriously want to tackle this problem of eliminating extravagance and unnecessary expenditures. Mr. Watson Sellar has made concrete proposals about the revamping of the form of the estimates, a drastic revamping of the form in order that hon. members may have before them more and more information when they are called upon to vote these moneys. I am sure it will not escape the knowledge of the house that what are called "details" in the estimates have no statutory effect whatsoever. They do not become part of the Appropriation Act. It is high time, sir, that there was a complete revamping of the form in which estimates are submitted to the house, and that the suggestions, the very useful suggestions, put forward by the Auditor General, not on one occasion only but on many occasions, should be adopted.
This subject was before the public accounts committee in 1947, and that committee made a recommendation to the house, which is to be found at page 752 of the Journals of the house for that year. This is part of the report of the committee received by the house on July 9, 1947. There are two recommendations only that I shall quote. First:
Your committee is also of the opinion that consideration should be given by the government to amending the Consolidated Revenue and Audit Act, 1931, in the light of Mr. Sellar's memorandum dated July 3, 1947, supplementing the oral evidence given by him on July 2.
And further:
Your committee is also of the opinion that the house should explore the desirability of establishing a standing committee on estimates.
That suggestion, sir, has been before the house on subsequent occasions, and the Minister of Finance has objected to it. What valid reason can there be for denying to the

house a sensible procedure which would give hon. members sitting on that committee an opportunity of conducting a detailed review of the estimates, and an examination of the officials who are responsible for the preparation of those estimates, so that they would be in a position to make proper reports to the house? It would save the time of the house, and it would enable the house, by a sensible procedure, to discharge a responsibility which rests upon it, but which, sir, is not discharged by this house today, and cannot be discharged as long as we are left to flounder around under an antiquated, clumsy, awkward procedure.
There is one further concrete suggestion that I put alongside those that I have already made this afternoon. It has to do with the subject of national development, because national development, as you will recall, sir, plays a leading part in the amendment put before the house by my leader. The reason for recommending this policy of national development is that not only will it increase the prosperity of the people, extend employment, help this country to meet the still serious problem of unemployment, and help the people to raise the standard of living, but it will also enable the country, in respect of its public business operated through parliament and the government, to sustain overhead.
An unusually heavy overhead of government has been built up in this country. We have such an overhead as would not have to be greatly increased if we had a substantial increase in population. For instance, when we are called upon to vote large amounts of money to meet the deficits on the Canadian National Railways, we know perfectly well that with a larger population and a higher volume of traffic moving there would be smaller deficits to bear, and overhead on that account would be reduced. There are other examples that one could cite.
There is the subject of national defence. If we had a substantial increase in population, a larger population helping to carry the load of overhead, the amount required for defence would not be correspondingly increased. These are things that represent today a relatively fixed overhead. An increase in population would not tend to increase it, but would help us who are here today to carry it. Therefore, sir, this subject of national development is one of first importance, both in relation to the prosperity of the country, and in enabling the country to carry the load of expenditures to the extent required to meet necessary government services.
The Budget-Mr. Fleming
There were some other subjects and other concrete proposals I had hoped to make to the house, but I see that my time is almost up, and I shall have to reserve them for the committee stage.
Sir, I shall conclude these remarks by saying that I hope the house will not sit back and simply be content to share that demonstration of fatalistic acceptance of the burden of taxation, the heavy load of expenditures, which has been exhibited on the part of the Minister of Finance. Surely, in a red-blooded country like this, inhabited by an intelligent people, we can muster in this house-if the government will not continue to sit on the lid and attempt to thwart the efforts of the house to devise a proper method of reviewing expenditures and grappling with this problem of high taxes and high expenditures-surely we can muster enough intelligence, given that opportunity, to cope with this problem, and to give some relief to the people of Canada.


Mr. Fournier (Maisonneuve-Rosemont):: May I ask the hon. member for Eglinton (Mr. Fleming) a question before we have the pleasure of hearing the hon. member for Iles-de-la-Madeleine (Mr. Cannon)? I should like to ask the hon. gentleman whether he will be kind enough to inform this house as to the ways and means or the procedure used by the government of Ontario to discuss and vote the estimates.


Donald Methuen Fleming: I have never been present in the legislature of Ontario when such a subject was before the house. I never sat in that legislature and therefore cannot give to my hon. friend that authoritative answer which alone, I know, would satisfy him.


Mr. Charles A. Cannon (Iles-de-la-Madeleine):: Mr. Speaker, when I decided to speak this afternoon I did not know that I would have the pleasure of speaking after the hon. member for Eglinton (Mr. Fleming). Before continuing with the remarks that I had prepared I should like to say a few words about some of the things the hon. member has said. I was greatly amused and interested in the comparison he made between the budgets of 1949 and 1950.
I should like to remind him that one cannot reduce taxes every year as the government did in 1949. If that were done, pretty soon there would not be any taxes left. Let me tell my hon. friend that every day cannot be a Sunday. There are certain years when the government can afford to reduce taxes, there are other years when they cannot afford to do so. It depends upon the condition of the affairs of the country and the state of the national income; if
1938	HOUSE OF
The Budget-Mr. Cannon depends upon the expenditures the government has been obliged to make in the past but can afford to reduce.
It so happened that in 1949 there were many of the heavy expenditures that had resulted from the war that had reached the point where they could be reduced. The national income had reached a higher level and the government was able to make substantial reductions in taxation.
' My hon. friend insinuated that those reductions were made simply because it was an election year. I assure him that he is being led into error by pure coincidence. It just so happened that the situation that year was such that it was possible to reduce taxes.
My hon. friend also said something about the expenditures being made on the house being renovated as a residence for the Prime Minister (Mr. St. Laurent). There we have another example of the kind of opposition we are having in the house. The opposition has been saying to us session after session, "We like what you are doing, we are for it, but we do not like the way you are doing it." That is all the criticism the opposition has been able to make. I submit that it is a mark in favour of the government and its policies in general that the only criticism the opposition is able to make is about methods and not about facts or principles. As to the amount being spent on the residence for the Prime Minister I would ask my hon. friend-I am sorry to see he is leaving-whether he has ever had to repair an old house.


Donald Methuen Fleming: I must go to the public accounts committee.


Charles-Arthur Dumoulin Cannon: The hon. member can read my remarks in Hansard. I am sure there are many hon. members who have had personal experience with repairing an old house or who have friends who have had this experience. They know that it is practically impossible to tell what a job like that will cost when you start to do it. You must wait until it is finished to know the exact cost. This is due to the inherent nature of the work to be done. Something is pulled down and you find that something else has to be repaired. It is physically impossible to determine beforehand exactly how much a job like that is going to cost.


Stanley Howard Knowles: Better to tear down the old house and build a new one.


Charles-Arthur Dumoulin Cannon: That was suggested during the debate in the house. No doubt it would have cost a lot more than to do the job now being


done. Let me say to the house and particularly to the members of the opposition that they need not worry about the way the job is going to be done. The Department of Public Works and the Liberal government will do a good job on this as they have done on other things they have undertaken in the past.
The hon. member of Eglinton during the course of his remarks said that one of the reasons why the estimates were not submitted to a committee was that the government was afraid Liberal members might consider they had greater latitude in committee and might be more difficult to control there than they would be when speaking in the house. I am pleased to be able to say to the hon. member for Eglinton and to other members of the opposition that no Liberal member is censored by anybody as to what he is to say. He gets up and speaks and there is no control over what he wants to say. It was insinuated that our esteemed whip had something to do with it, but I can assure you, as the house probably knows, that the only thing the whip does is to decide who is going to speak and in what order the speeches will be made.
I simply wanted to develop a few notes that I made while the hon. member for Eglinton was speaking. I shall leave the substance of his speech to the minister concerned; I know he will know how to deal with it if he can find any substance in it.
As the member for Iles-de-la-Madeleine I want to take advantage of this opportunity to thank the government for the amounts that have been included in the estimates this year to cover work in my county. There are several suggestions that I intend to make later on. An amount has been included in the estimates for the building of a breakwater at Etang du Nord. Etang du Nord is on a bay on the north side of the island. This bay is frequented by a great number of fishermen but for some time fishing has been difficult because of changed conditions. This bay used to be sheltered from the north wind and seas by a natural breakwater formed by a cape. That cape has been slowly eaten away by the waves and for some years the fishermen have had no protection. The bay has been gradually filling up with sand and they are not able to bring in their boats as far as they used to. For some time they have been asking the government to build a breakwater to replace the natural one that disappeared. I am glad to be able to tell them that finally their requests have been recognized by this government as being well founded and that the necessary amount is included in the estimates to build this breakwater.

Another important item of public works for which the government has provided in the estimates is on Hospital bay. Hospital bay is also on the north side of the island and is exposed to the north wind and the high seas. There is a natural lagoon deep enough and large enough to provide shelter for the fishing boats, but unfortunately it is separated from the sea by a sandbar. An amount is included in the estimates this year to dig a channel through the sandbar. This channel will be lined with steel stanchions which will provide a permanent channel. The fishermen will then be able to get the necessary protection from the elements. This public work has been demanded for a great many years by the fishermen of my county and I am glad to be able to thank the government in their name for including this item in the estimates.
Unfortunately the people of my county will not be so pleased with the estimates of the Department of Transport. The Department of Transport is in charge of the building of airstrips. During the year the main means of transportation for passengers between the islands and the mainland is by air. Aircraft take off from Charlottetown twice a week for the islands, and there they land on a sandbar. While they have been landing on the sandbar for some years, the fact remains that Maritime Central Airways render a good service. They have excellent pilots, and I wish to congratulate them upon the service they are giving. However, we know it is better to land on a landing strip than to land on a sandbar.
Last year an amount of $25,000 was set aside to build a landing strip on Amherst island, and also $25,000 to build another landing strip on Grindstone island, which is the main island in the group. Grindstone and Amherst islands are the islands upon which the greater part of the population live. Last year the $25,000 was used in connection with the airstrip on Amherst island, and that work was completed, with the exception of the surfacing. An extra amount of $10,000 would be required for surfacing, but unfortunately that amount is not included in the estimates. It is very necessary that it should be spent this year, because the surface of the airstrip is soft, and when it rains, or when the weather is mild, the airstrip cannot be used. In the autumn and also in the spring of the year there are long periods of time when it is completely out of use.
Therefore I take this opportunity of asking the Minister of Transport (Mr. Chevrier), in the name of my electors, to see whether 55946-124
The Budget-Mr. Cannon it would not be possible to find $10,000- I am told it would require that amount-to finish that airstrip.
There was also voted last year an amount for the airstrip at Grindstone island. Because of difficulties with the municipal corporation in connection with the site of the airstrip, the contract was not signed and the money was not spent. As all hon. members know, after March 31, that money was lost, so far as its expenditure was concerned. I am told now however that the municipality has found another location which would be satisfactory to them. They are now ready to sign an agreement, and I would ask that this $25,000 be included in the estimates for this year. Grindstone island is the main island, and it would be of great help to my electors if we could have an airstrip at that point. If that were done we would not have to' continue to make landings on the sandbar to which I have already referred.
I wish also to thank the government for having asked me to serve on the joint committee of the Senate and the House of Commons on old age security. I realize this is an important committee. It is important to all the electors in Canada, and particularly to those in my county. Eighty-five per cent of those people are fishermen, and are engaged in a difficult and hazardous profession. They cannot continue fishing in their old age; and as a certain number of them are invalids social security is important to them. Therefore I thank the government for having placed me on the committee, and I assure my electors that I shall do my best to act in their interests and to see that social security is developed as it should be.
In that connection I should like to say a word about pensions for invalids. In this country we have no pensions for invalids. In the literature I have read in connection with my work in the committee on old age security I have found that in several other countries they have pensions for invalids, people who are unable to earn their own living. Those pensions are tied up with old age security programs. I suggest the time has come when this country might also give its attention to the question of giving pensions to invalids. We give pensions to the blind, a procedure of which I am very much in favour. I am sure however that every hon. member knows that in every constituency there are a certain number of invalids who are just as incapable of earning a living as are the blind people. I believe we should extend the principle, and see what can be done by way of social security for these poor invalids.

The Budget-Mr. Cannon
A resolution now stands on the order paper in the name of the hon. member for Terrebonne (Mr. Bertrand) which deserves the support of hon. members who have similar problems in their constituencies. It should be impressed upon the government that the time has now come to do something about giving pensions to invalids.
May I take this opportunity also to congratulate the government upon the good work that has been done for the fishermen and the fishing industry generally by the fisheries prices support board. I have had occasion to deal with that board several times since coming to the House of Commons, and I must say I have always found them most helpful and co-operative. I believe they are doing excellent work within the scope of the powers given to them. I submit however that the scope of their powers is not wide enough.
The fishing industry in our country has become very important indeed, particularly in view of the fact that we now have Newfoundland as our tenth province. At least seven provinces are vitally interested in the fishing industry. There are, of course, Newfoundland, the three maritime provinces, Quebec, also Manitoba because of the extensive fishing industry in lake Winnipeg, and the province of British Columbia. When seven provinces in our country are vitally interested in the fishing industry, then I say the government ought to do as much for that industry, on a smaller scale of course, as it does for agriculture. The organizations having to do and dealing with fishing ought to have the same scope of action as those which deal with agriculture.
We find in the statutes of 1944-1945 the Agricultural Prices Support Act. In the same statutes we find the Fisheries Prices Support Act. These two statutes are practically identical. The powers of the boards as set out in them are, briefly, to prescribe from time to time, with the approval of the governor in council, prices at which the board may purchase agricultural or fisheries products on the market. The Agricultural Prices Support Act then sets out this further power:
To purchase at such prices any agricultural product, if such product, on inspection, meets standards as to grade and quality-
And so on. The corresponding statute dealing with fisheries contains a similar provision. The statute dealing with agriculture continues:
To sell or otherwise dispose of any agricultural product purchased by the board.
Then there is in both statutes a provision to make up the deficiency between prices set by the boards, as the prices the producers
[Mr. Cannon.)

should receive, and those prices they actually do receive, both for agricultural and fisheries products. The provisions in the Agricultural Prices Support Act continue:
To package, process, store, ship, transport, export or insure any agricultural product.
Then there is the provision permitting the board to enter into contracts, and this further provision:
To purchase at market or contract prices and export any agricultural product under any contract between His Majesty in right of Canada and any other government or agency thereof and to do all things necessarily incidental thereto.
And there is a similar provision concerning fisheries. These two statutes were passed in 1944. Evidently in 1947 the government felt it had not gone far enough in connection with agricultural products, with the result that it passed in that year the Agricultural Products Act. The long title is "An Act to Provide for the Sale and Export of Agricultural Products". This statute gives the minister, subject to regulations made by the governor in council, authority to-
(a)	sell or export agricultural products to the government of any country or any agency thereof pursuant to any agreement made by the government of Canada with the government of such country or with such agency and for those purposes may purchase agricultural products and make such arrangements for the purchase, sale or export of agricultural products as he considers necessary or desirable;
(b)	on behalf of the government of any country or any agency thereof purchase or negotiate contracts for the purchase of agricultural products;
(c)	by order require any person-
That is not important.
(d)	enter into contracts for the storing or processing of agricultural products.
We all know that under the authority of that statute the government has made some very good contracts with other countries for the sale of agricultural products, which have been very helpful to our farmers. I believe we should have something similar for fisheries products. I give as an example a body that was organized and has been in existence for some time in Newfoundland; that is, the Newfoundland Associated Fish Exporters Limited. This is a central body that markets all the fish caught in Newfoundland. It has done a very good job in finding and keeping markets for the fishermen of that province. Now that Newfoundland has become a part of Canada I suggest we should have a statute similar to the one I just read, which would enable the government to set up a central marketing agency for all fisheries products including those of Newfoundland. In view of the importance of the fishing industry to this country, as I have outlined it, I believe the two industries should be placed on an equal

footing. When the need arises the government should be in a position to do for the fishing industry what it now can do for the industry of agriculture.
One other subject that interests me and my electors is unemployment insurance. Fishermen are excepted under the act at the present time. Recently the government found it possible to extend the Unemployment Insurance Act to lumbermen, and I suggest that attention should be given to the possibility of also extending it to fishermen. As a first step I suggest it might be extended to fishermen's aides. Most of these people are employed on a salary basis, and that being so I submit there is no reason why they should not be permitted to contribute to the fund and draw unemployment insurance just like any other worker in Canada. I understand that in the case of fishermen not employed by anyone, who are their own masters, there are certain administrative difficulties which would make it necessary to have the act extensively amended, but in the case of fishermen's helpers who are on salary I submit that the unemployment insurance commission already has all the powers necessary. I draw this point to the attention of the government in the hope that it may be possible to do something about it.
This is about all I have to say, Mr. Speaker. In conclusion I should like to reiterate the thanks of the electors of my county for the amount that has been placed in the estimates for their benefit.


Mr. R. R. Knight (Saskatoon):: 
John Ewen Sinclair: I agree, but they would all stay in British Columbia.


Robert Ross (Roy) Knight: My friend is bound to interrupt, even when someone is making a speech which is not controversial. I recommend to the gentleman to whom the member for Fraser Valley (Mr. Cruickshank) refers as the junior from Capilano that he cultivate the habit of keeping quiet when someone is making a speech, unless he is definitely challenging the material in that speech.


John Ewen Sinclair: I was supporting you.


Robert Ross (Roy) Knight: I do not know what the member was doing, but I would suggest, sir, that you keep the hon. gentleman quiet until I have finished, at which time he can make a speech of his own.
I was mentioning these excursions to Churchill and saying that some of the eastern Canadians would be amazed at some of the things they would see. I was amazed at some of the things I saw. One may see, as I did, an Eskimo child chewing a piece of frozen fish while lying on the doorstep of one of the most modern stores in western Canada,
tMr. Knight.]

containing refrigerators and all sorts of electrical equipment. Perhaps if one is a sportsman, one may be interested in ptarmigan or caribou, or may like to see the white whales playing in the harbour which, I understand, already form the basis of a small industry. As a strange contradiction one can see the finest port in the world, I mean from the point of view of a natural shelter as well as from the point of view of the artificial things, the manmade equipment that has been put there for handling grain.
If one crosses the harbour to the other shore, one finds the old Prince of Wales fort. My French-speaking confreres would be particularly interested in that fort if they would read its history. On the day I was there we were fortunate enough to be able to cross over on a little tug owned by the Department of Transport. I am afraid that the Department of Transport did not know we were doing that, because I understand the department has now prohibited the tug from carrying passengers. I asked a question about it, and received that answer. Personally, I think it is a reasonable attitude, because one could not expect a tug to be run in passenger service unless there were adequate provisions for safety, adequate insurance and so forth. Perhaps the member for Churchill (Mr. Weaver) might exercise his good offices to persuade the government that it would be worth while to have some sort of vessel there to perform that particular service. It would add greatly to the pleasure of the tourists who gc. up there. I have found that one can always make oneself popular in this house by telling someone how we can get United States dollars. I do not put such great faith in dollars as some of my hon. friends, but I may tell you that some people from the United States make an excursion up there every year, and do leave a considerable amount of that commodity behind. So much for some of the things one may see.
The romance of discovery, I think, has disappeared from western Canada. When I was a boy and went out to homestead in western Canada, the cry was, "Go west, young man." We went west in that spirit of adventure to which I have alluded. The western lands have now been explored and exploited; there is no longer any unexplored part of the west. The future belongs to the north. When I say the future belongs to the north, I am thinking of various things. I am thinking of the natural resources, some of them known and I am sure many unknown. I am thinking that in that vast country there must be more than one Flin Flon, with its variety of minerals. I am thinking of the new oil

fields, and wondering if they do not extend somewhat into that northern country. I am thinking of the vast areas of land. May I say that in many of the countries from which my friends have come they have seen much worse land used for agricultural purposes than some of the vast expanses one finds contiguous to The Pas and along parts of the Hudson Bay railway, notably perhaps around Wabowden. Yes, there is the great north still to be explored, and there is a great outlet for that adventurous spirit, which was evidenced in opening up the western plains.
This question, sir, is not just a matter of the encouragement of the Hudson bay route as such, although I am sure we are interested in that. But when it comes to the whole exploration and opening up of these vast spaces in that new empire to the north, we find that the two questions are interdependent. Population is required in that north country if the Hudson bay route is ever to be a success. Population is needed in that country if it is ever to be explored and settled as it should be. There are a great number of people needed for the handling of the grain at certain times at the port of Churchill, and as my hon. friend knows that is a seasonal matter. Up to the present, grain handlers, dockers, loaders of ships-I do not know what the technical term is- have had to be brought in from other ports such as Montreal. If we had industry and population in those northern areas we would have a skilled body of personnel living there who could be used year by year when the proper shipping season comes around, without the expense of shipping them in from eastern Canada. We need that population to develop those thousands of acres of land to which I have made reference.
There is another question about the country and that is the strategic importance of this particular route. That point, of course, has been developed. It is an unfortunate thing that we must think about the necessity for defence, but indeed we must. The strategic importance of that particular route has been coming to our attention more and more in the last number of years. In a former speech I proposed that the government, in carrying out naval operations, might well find out a good deal about the geography and meteorology of Churchill if they would send some of their ships up into those waters, where they could perform their naval manoeuvres. I am glad to say that was done though to a small extent last summer. That raises the point of whether one of the necessities at Churchill now is not some sort of naval station which could be a base for such operations.
One of the drawbacks, by the way, in
The Budget-Mr. Knight building up population-this is a small point, but I think I will mention it here as I go along-is that it is impossible to own land in the townsite of Churchill. I was talking to some of the townspeople up there, particularly to one young man and his wife who were building their own house. They were greatly distressed that they were not able to own the land upon which their house was being built. It appears that one can get only a lease for one year. Those who have had anything to do with mortgage companies and real estate people will know that that is not a good basis upon which to raise a loan if you want to build yourself a house.
As I said, from time to time in the last five years I have made a speech or two in this house upon this Hudson bay route. I did so in 1945, in 1947, and in 1949, and I again made a short reference to it when the supplementary estimates were being considered in March of this year. I am not going to cover today the arguments which I put forward in those speeches. They were documented. The figures are there and anyone who is interested in the subject can look them up. My intention was merely to give a few general ideas.
There is no doubt in my mind that the greater use of this route and port would be beneficial to the farmers contiguous to it. From statistics I know that it is beneficial to the importers of goods who use that port as an importing point. I know that it was a benefit to Britain in buying wheat through that port. At the moment there is some controversy as to whom there is the greater benefit and I think it is largely due to the ambiguity or, shall I say, the vagueness of the statement made by the Minister of Trade and Commerce (Mr. Howe) some time ago. There is some doubt as to whether the western farmer or the importing countries will benefit the more from the making of the port of Churchill into a basing point for the sale of wheat, a point which would then be on equality in that respect with Montreal and Vancouver. I do not want to go into that particular argument. It will be settled in due course. I know, however, that there is a benefit and I know that someone gets it. There can be no doubt about that.
For years there has been a deficit in the operation of this port. Those of us who are interested in it and who, I think, may say that we know something about it, believe that, in so far as any deficit is detrimental to the taxpayers of this country-and any deficit must be-such deficit could be wiped out entirely if that port were given its proper use. We have worked it out on the basis of statistics and the expert opinion-which includes
1944	HOUSE OF
The Budget-Mr. Knight that of the manager of the port, officials of the wheat pool, officials of the railways and the Minister of Transport (Mr. Chevrier)- that if we could once put fifteen million bushels of wheat through that port there would in that particular year be no deficit in connection with the port or with the railway which serves it. I want to put that statement on the record once more. To my eastern friends who at times, through a lack of knowledge about the subject, are inclined to look upon this particular project as a white elephant, I also want to say that this railroad was built not with money out of the pockets of the taxpayers of Canada but with money which was procured from the sale of western land.
As I have said, the port has never been fully used. If everybody were as anxious to see the success of that port as we in that part of the country are, and if everyone would co-operate, I believe that not merely fifteen million bushels but from twenty million to twenty-five million bushels of wheat could be put through that port in any given year. As I see it, its success depends upon the good will of four particular government agencies which I would name as the ministry of transport, the Canadian National Railways, the harbours board and the wheat board. As I say, if these four agencies were willing, anxious and enthusiastic, that port could be made a success.
I shall now mention one or two of the difficulties which the port has had to fight in the past. If you talk to westerners you -will find the distinct opinion-as to whether at is justified I shall make no assertion here /today-that one of the things that work against the success of that road is that there are certain influences in the east here which, mistakenly I think, are opposed to it through the idea that it would interfere with their particular interests. As to the five and a half million bushels that were put through there last year, or the fifteen million bushels which would be necessary to make it pay its way; or the twenty million bushels which I would advocate and which I think would make it possible to operate at a profit, may I say that after all even the twenty million bushels are only a drop in the bucket having regard to the amount of wheat that is handled for shipment out of this country through the major ports. Surely the great ports of Montreal, Halifax and Vancouver should not grudge to us prairie people the use of our own port, which is at our back door, to the extent of such a small percentage of any year's wheat crop.
I mention that as one of the difficulties. Next I shall mention the question of insurance. There has always been a prejudice
(Mr. Knight.]

against this route. There has always been a lack of investigation about the possibility of that harbour and that route. The insurance companies, who were not particularly interested in the route in any case-they would get the business whether the wheat went through Montreal or through the port of Churchill-have, I think, always been prejudiced against that road. It is true that some adjustment has been made that has been welcomed.
The insurance period has been inflexible. It has been a period of only 65 days. I have never had anybody answer this question, but I have put it on several occasions. Why should that period be an inflexible one? The weather is not inflexible. The break-up or the freeze-up in our country comes at different times of different years. Now that we have meteorological stations in the north, now that we have people on the ground, could we not get information from time to time on which flexible rather than inflexible periods could be set?
I had lunch with a captain of a Dalgleish boat in the port of Churchill a couple of years ago. He told me that it seemed rather ridiculous to him that on a beautiful sunny day, when the sea was as calm as glass, for 48 hours he had to stay outside the limits with his ship because he dared not cross that line before the date at which he could get the protection given by insurance. Practically every captain that comes in there says the same thing. Furthermore, practically every captain that comes in there speaks in favour of the port as compared with, for instance, the port of Montreal or the port of Halifax.
I shall mention one thing which comes in a smaller category. I shall not go into it. I refer to this business of diversion charges. They are one of the drawbacks connected with the use of that port. I suppose that hon. members generally will not be interested in having a definition of diversion charges. My own definition for them is money paid for services not rendered. I think I shall let it go at that. If anyone here is curious he may look the matter up.
These are some of the things I wanted to say. There is much more that could be said. One could talk for a week on this particular subject.
I should like to put before the house the main conclusion of the brief which was presented by the association of which I spoke. This brief was presented on Monday last to the Prime Minister. Before I do so I should like to mention a man up in the north country, namely, the Rev. Father Ferron. It was my privilege and pleasure to hear him speak on

the whole subject of Hudson bay and the north country in the city of Prince Albert some time ago. He is a most interesting speaker, a man who is intimately acquainted with everything in the north country, and whose services have been used by this government in various capacities, particularly in connection with giving advice on matters related to the country north of Churchill. His talk was rather in story form. If you look through it you will find that its main theme is the theme of the brief which was presented the other day by the delegates representing the Hudson Bay association. I am going to quote a line or two from Father Ferron's address, as recorded in this little pamphlet, at a meeting in the city hall in Prince Albert-on February 7, 1950. I shall quote here and there at random the things which I think may be of some interest. They are as follows:
The drastic decision of the underwriters allows ships to be along the wharf at Churchill approximately from the eighth of August until the tenth of October, both dates inclusive, which is a total of sixty-five days. Of these sixty-five days, last summer, there were twenty days when there was not one single grain ship in the harbour.
Then further down on the same page:
To render conditions worse, out of the remaining forty-five days, there were twenty-seven when there was but a single ship in the harbour, which left only eighteen days out of the sixty-five when the present harbour worked at anywhere near capacity:
These are the facts on which I have based what I have already said in the matter of this port not being used to its full capacity even during the time covered by insurance. We firmly believe that at least three weeks could be added to the length of this particular insurance season, because there are three insurance seasons at Churchill. There is the natural one, the period during which ships are physically able to sail. Then there is the captains insurance period, a little longer than the actual one, a little shorter than the natural one; then there is the insurance one which gets very small indeed. Father Ferron's conclusion is this:
I would strongly suggest that an advisory board be formed to deal with these problems. The different departments involved in our federal capital; the provincial governments interested; the wheat pool; and your association, should all have representatives on such a board. Until such time as the different efforts are consolidated through the medium of such a board, the undertaking cannot succeed. With all the dexterity possible, this board or commission should be set up. Such is our democratic way of proceeding based on common sense and our common love of our great country of Canada.
The Budget-Mr. Robertson
As a comment on that, and following along the same idea, the delegation which presented its case to the Prime Minister the other day said this:
Our submissions take the form of a respectful request that the dominion government give consideration to;
1.	The immediate appointment of a board or council under the Department of Trade and Commerce to deal with the multitude of problems surrounding the developments' of the port of Churchill and the areas and railway referred to above.
These areas with Churchill as their natural outlet might very well, in the near future, prove to be the nucleus of a separate northern province in the scheme of Canadian confederation.
2.	That if and when such a board or council be appointed, the membership of the board be drawn from various organizations such as Canadian army, navy, and air force, commercial interests, farmers' organizations, and the Hudson Bay route association.
3.	That the duties of such a board be to keep such government departments as may be concerned informed of improvements and changes required from time to time, in order to ensure the greatest possible development of the vast northland and the utmost utilization of the harbour at the port of Churchill.
To that, sir, I would add with my own voice a plea in the same direction.


Mr. F. G. Robertson (Northumberland, Onl.):: In joining in this budget address, I would wish first of all to congratulate the Minister of Finance on his very able review of our national economy in his budget speech. The Minister of Finance has already presented four budgets in this house. He has proven not only that he has a knowledge of finance but that he is well acquainted with the economic situation in Canada. I believe that he has the confidence of the people of Canada, and I hope that he will continue to bring down such satisfactory budgets in the future.
This budget was well received by the people of Canada. It represented a continuation of the sound financial policy which was undertaken by the government during the war. During the war the government adopted a "pay as you go" policy. Taxes were kept high, and as a result the threat of inflation was largely controlled.
During the war we had a far-sighted program of price control, and as a result the transition from war to peace was uneventful. Price controls have been removed, without any great disruption of our national economy. Today we are approaching a more normal period, but we are still enjoying great prosperity in Canada. Of course, no matter what our financial policies may be, no matter how great our prosperity may be, we cannot please the members of the Conservative opposition. Last year tax reductions amounting to $323 million were announced by the Minister of Finance (Mr. Abbott) but the members of the opposition called it bribery. Then in the next
1946	HOUSE OF
The Budget-Mr. Robertson breath they said that the bribe was not big enough. Today they say that this is a defeatist budget, but I consider it was a most able presentation of the present situation in Canada. I can see no signs of defeatism in the budget; rather, to me it indicated optimism through and through.
When we consider the fortunes of our friends of the opposition during the last fifteen years, their successes in the last election and their prospects for the future, we must agree that it does not tend toward optimism. But I would ask them not to link the fortunes of our country with the fortunes of their political party. For years we have been hearing this cry of despair from the members of that group, and yet prosperity in Canada continues. The financial critic of the opposition criticized the government for not developing our natural resources, and then in the next breath he spoke of how we were obtaining $100 million of scarce United States dollars through the development of Alberta oil-just another example of the inconsistency of members of the opposition.
I am sure that all hon. members of the house favour the development of our natural resources, but we want that development to take into consideration the ability of our economy to absorb it. We do not want to be wasteful of our resources because we shall need them in the years to come.
I listened this afternoon while the hon. member for Eglinton (Mr. Fleming) covered a great many subjects. He questioned what he referred to as the billion dollar philosophy of this government. Does he not realize that Canada is expanding rapidly and that the running of our country demands huge expenditures? We must talk in billions. That is one example of the great prosperity of our country. Evidently those figures overtax the hon. member for Eglinton. I judged that to be the case by his remarks on the budget.
I believe Canada's economy is in a strong position and I base that statement on certain examples I shall give. In the first place our capital investment is high, being five per cent over the record of 1949. There has been a marked improvement in our foreign reserves. From a low of $401 million in 1947 they have increased to $1,200 million at the end of March. Wages are still high. It is true we still have some unemployment, but I am prepared to accept the statement of the Minister of Labour (Mr. Mitchell) that this condition will soon be improved. If it is not, then I believe that all levels of government, federal, provincial and municipal, should join together in a program to alleviate this condition. But for the present I am prepared to


accept the word of the Minister of Labour that this condition will soon be satisfactorily dealt with.
While our trade is not at the level of a few months ago, it is still satisfactory. We know the British people are short of dollars and cannot buy what they might like to buy from us if they had sufficient dollars. The Minister of Finance has pointed out that our exports to the United States have increased more than our exports to the United Kingdom have decreased. Taking the over-all picture I think we can conclude that our trade position is not too unsatisfactory.
We have a balanced budget and in these days that is an outstanding achievement. I ask hon. members to compare our budget with the budgets of the United States. For four years we have had balanced budgets while in the United States there has been a huge deficit each year. I understand that at this time it is in the nature of $7,000 million. Surely when we compare our economy with the economy of the United States there is no reason to conclude that conditions in Canada are unsatisfactory. I would point to the great reduction in our national debt which has taken place during the past four years when I believe the national debt of our country was reduced by approximately $2,000 million. That is an indication of how stable our economy is today.
I should like to take advantage of this opportunity to tell the house something of my own county of Northumberland. As many hon. members know, Northumberland county lies in central Ontario on the north shore of lake Ontario. Its western boundary is almost at the town of Port Hope and it extends eastward to the boundary of the town of Trenton. Going north the western border reaches Rice lake, and then the boundary of the constituency travels along the southern shore of Rice lake and the Trent canal to and beyond the town of Campbellford. From that point it takes a southerly direction to the town of Trenton.
Northumberland county is noted for the beauty of its towns and countryside, for the fertility of its fields and for the prosperity and high qualities of its citizens. Many hon. members who have driven through Northumberland county have mentioned the many attributes that it possesses. At the last redistribution the township of Monaghan South was added to the county of Northumberland. Previous to that time it had been in the constituency of Peterborough West. I am sure that all citizens of the county of Northumberland welcomed the addition to the township of Monaghan South.

The basic industry in Northumberland county is agriculture. I would say that approximately one-half the citizens of Northumberland county are engaged in agriculture. Mixed farming predominates in Northumberland county, but dairying is an important branch of agriculture. We have many fine dairy herds in the county of Northumberland. We ship a great quantity of fresh milk to Toronto and there is large butter production. I have been told that Seymour township, which lies in the northeast corner of the county of Northumberland, is the largest producer of cheese of any township in Canada.
Our herds have been tuberculosis tested and we are an approved area. It is therefore possible for our farmers to ship cattle to the United States and receive very high prices for them. We have fine beef herds in the county of Northumberland. I have heard certain hon. members state that their constituencies have the finest beef herds in the Dominion of Canada, but I know that they have never tasted a steak from one of the beef cattle from Northumberland county.
Northumberland county produces a great many hogs; I believe it is one of the largest producers of hogs in Ontario. Poultry is an important industry in our county, not only as a branch of agriculture but also as a commercial proposition. We are proud of the fruit and vegetable production in Northumberland county. A great many canning crops such as peas, tomatoes, corn, et cetera, are produced and there are many canning factories distributed over Northumberland county.
I believe we produce the finest apples in the Dominion of Canada. I think the McIntosh and Northern Spy apples grown in Northumberland county can outdo even the wonderful apples of the Fraser valley.
We have two large towns in Northumberland. Cobourg, the largest of these, is my home town, and one of which I am very proud. It is considered to be one of the most beautiful towns in Ontario and is, in fact, one of the oldest in the whole of Canada. I have been told, and American tourists have said for many years, that we in Cobourg have the finest ozone to be found anywhere on the whole of the North American continent. And if anyone asks me what I mean by that, I would say it is my understanding that it means the health-giving properties of the atmosphere.
The second largest town in Northumberland is Campbellford, a very beautiful town lying across the Trent river in the northeastern part of the county. It is surrounded
The Budget-Mr. Robertson by Seymour township which, I believe, is one of the most productive agricultural communities in Ontario.
In my county we have many diversified industries. I believe we have the largest plastics company in the whole of * Canada, located at Cobourg. We have several tanneries, some foundries, gun manufacturing industries, to mention but a few of them. All these industries are successful and lend much stability to Northumberland county. We have developed there a very thriving tourist trade. Being situated on lake Ontario, and having Rice lake and its connecting waters to the north, we have a perfect haven for American tourists in Canada. Each year they come in increasing numbers to enjoy the great beauties of our county.
Northumberland county has many service clubs, each of which is carrying on its own particular work of social service in the community. They take great interest in all community affairs, and the life of the county is made much richer by the activities of these clubs.
Prominent among the clubs in Cobourg is the Cobourg branch of the Canadian federation of business and professional women's clubs. As may be known to some hon. members, the business and professional women's clubs are organized internationally in nineteen countries of the world, having local groups within the United States and throughout Canada.	.
Among the objectives of this organization are the following: (1) to promote the interests of business and professional women throughout Canada; (2) to encourage a spirit of cooperation among the business and professional women in Canada; and (3) to extend occupational opportunities to business and professional women through industrial, scientific and vocational activities.
The Cobourg branch was formed in 1946 and has a present membership of 115. It was honoured by being made host for the second provincial conference of clubs which was held in Cobourg in October of 1948. Within the town the club has been very interested in civic affairs and matters of government generally. There is a standing committee of the club known as a municipal research committee, whose duty it is to keep members informed on municipal affairs within the local municipality. Of interest to hon. members of the house will be the activities of this club in connection with certain of its meetings. On April 16, 1947, the club sponsored a meeting of industry and labour in the town of Cobourg, and obtained the attendance of Mr. R. A. Wilson, field representative of
1948	HOUSE OF
The Budget-Mr. Robertson the federal Department of Labour. This meeting was widely attended and, from the point of view of the Department of Labour, was such a success in fostering better understanding and co-operation between the groups that on JVlarch 6 of this year, at the request of the officials of that department, a second similar meeting was arranged.
Of interest to members of the house will be the work of that club in assisting new Canadians. There is a committee of the club whose work it is to advise and help new Canadians resident in Cobourg. On coming to the town the chairman of the committee gets in touch with these girls, and the committee stands ready to assist in any problem the girls might have. Members of the club are to be congratulated upon their accomplishments and their influence in fostering and developing a better and broader sense of Canadianism.
In the county of Northumberland, as in other parts of Canada, organized labour plays its full part. We have in Cobourg an allied labour council composed of representatives of all the unions in the town, which meet regularly and discuss conditions as they exist in Cobourg. I believe these men compose a fine body of citizens. They are ever zealous of the true rights of labour, but still they also know their responsibilities to the community. I am glad to say that the splendid labour relations which have existed in Canada are found in my own county of Northumberland. I think all hon. members will agree that the Minister of Labour (Mr. Mitchell) has done much to bring about this better understanding between the various groups in Canada.
I would also bring to the attention of the house the fact that on the outskirts of Cobourg we have the most noted exponent of ceramic art in Canada. He is Mr. Jarko Zavi, who came from Czechoslovakia to Canada just before the opening of the last war. May I read to the house an article which tells something of this art:
In 1939, after the German army had marched into Prague, Jarko Zavi, ceramic artist, left his native Czechoslovakia, and came to Canada. A few years ago ceramic art in Canada was practically unknown and non-existent. People had become aware that Canada had her own painters, poets, composers and sculptors. In the home, however, most of the ceramic objects were ornaments from foreign countries which expressed the character of those countries, and about which very few Canadians knew anything . . . The war has brought many European artists and craftsmen to Canada. Because Canada has not yet a history in this art, these artists should be encouraged to transfer their knowledge to young Canadians. I do not see any reason why this cannot be done, for Canada is rich in material for ceramic modelling. We have our harvesters, miners, lumberjacks, trappers, fishermen, Eskimos and Indians; we


have horses, buffalo, Rocky Mountain goats, deer, wild geese. These are bases from which to guide our imagination. We do not have to try to force ourselves to model a Chinese figure or to make an Egyptian jug on the potter's wheel.
We in the county of Northumberland are proud of Mr. Jarko Zavi, and welcome him to our county.
I note that social security payments have been increased by $62 million to a total of $457 million this year. These sums are spent for old age pensions, family allowances and unemployment insurance. I for one am happy to support such a vast expenditure. Old age pensions and unemployment insurance give a new sense of security to the people of Canada. Family allowances give to the children of Canada a better opportunity to enjoy the full benefits of life in Canada. In my opinion the greatest single achievement of the Liberal party has been its social security program. How fortunate it has been for Canada that the Liberal party has had power for so long, in order to fully develop this program. I often wonder how much of our present program would have been developed had our Conservative friends been in power. We know the inconsistencies of the supporters of the Conservative party with regard to social security.


Mr. Ross (Souris):: Page the hon. member for Winnipeg South (Mr. Mutch).


Frederick Greystock Robertson: You know all about it, now. In this house we hear impassioned pleas from members of the Conservative party for social security; yet at the same time we read articles in the leading Conservative newspaper in Ontario criticizing this government for some of its social security plans and advising against any further extension of that program. Had our friends of the C.C.F. been in power I do not know what would have happened. Probably they would have rushed ahead with some program without properly laying the foundation, without due consideration for its cost, and I am sure the whole program would have ended in confusion. I believe that is one thing we cannot disregard, for there is nothing more important to the success of our social security program than that we have public support for it.


Stanley Howard Knowles: The public are away ahead of you.


Frederick Greystock Robertson: That is what you think. I am confident the government made a wise decision in setting up the special committee on old age security. This study should reveal much, and I am sure the committee will be able to offer the government a great deal of help in formulating a policy to be followed in future. I should like to re-echo what was

said by the Minister of National Health and Welfare (Mr. Martin) in presenting that motion: we aim to devise the simplest, most effective and most humane system of social security it is possible for us to develop, having in mind our over-all social security responsibilities, other government responsibilities, and the ability of the country to pay. I sincerely believe that the production of this country and its vast resources permit a great liberalization of our old age security program. Great as have been the social benefits, there is an added value which I am sure is well recognized by all hon. members. The huge sums of money paid out under this program are a great stimulus to the business activity of the nation. This money invariably goes into immediate circulation and plays an important part in maintaining our economy, and I believe it is a bulwark against any possible recession in future.
I support wholeheartedly the $40 million being spent on our health program. That program has been in existence for only two years, but already it has accomplished much. It has placed Canada in the lead among the nations of the world in health services. By providing federal funds the government, in co-operation with the provinces, has stimulated research, provided much needed hospital beds, extended mental health care and cancer and tuberculosis control, and launched a war against arthritis and rheumatism, to mention just a few of the accomplishments under this program. We know that already the national health program has paid splendid dividends. Its value will be reflected in future in a decline in illness and disease among Canadians, and in an increase in the production and prosperity of our country. I should like to quote an article which appeared in the Toronto Daily Star a few months ago containing the remarks of an eminent visitor from the United States:
In the provision of public health services, Canada has far outstripped the United States, Dr. Leonard A. Scheele, surgeon-general of the U.S. public health service, told an audience at a Toronto club last night.
Canadian health programs surpassed those in the U.S., he declared, because of effective utilization of research discoveries . . .
In the allocation of federal funds to provide hospital beds, Canada was also far ahead of the U.S., Dr. Scheele declared. The Canadian hospital construction grant program had in a single year allocated federal assistance for the construction of 13,000 additional beds, or nearly one-third of the expected 40,000 to be provided in a five-year period.
For the information of the house I may say that I believe this figure now is closer to
The Budget-Mr. Robertson
25,000	beds, which I think is a remarkable achievement under this program. Then the article goes on:
"At the rate we in the U.S. are going it will take twenty years to provide the necessary hospital space," he added.
So it will be seen that this visitor from the United States, an eminent authority, recognized the great part our national health program is playing in Canadian life. Therefore I say this $40 million we are spending on health services is perhaps the most wisely spent $40 million in our whole budget.
I come next to a discussion of the appropriation for national defence. I note this has been increased to $425 million. It is ironical, I would say, that at a time when we are making every effort to reduce human suffering from disease we are forced, like many other nations, to spend such huge sums on national defence. We are making great strides in the twin arts of taking and saving human life. However, with the situation that exists in the world today, I think there is no alternative. Important as our expenditures on social security may be-and as I said before I take second place to no one in my support of that program-nevertheless I believe that our most important duty as members of this house is to make sure that Canada has an adequate defence. There can be no doubt that if we do not have national security we shall not enjoy any of these social security measures that we prize so much. Therefore I support without question the large expenditure on national defence, and I believe that in the present minister, despite the criticism of the opposition, we have a man well qualified to be in this important post.
Hon. members of the opposition have repeatedly asked the minister for certain secret information with respect to the defence forces of Canada. I believe the minister has been wise and far-sighted in refusing to give this information. As he very well said in a radio address the other evening, what is the use of spending so much money on defence and then telling the Russians exactly what we are doing? Yet that would be the situation if he were to accede to the wishes of the opposition.
I want to take strong exception to some of the remarks which have been made in this house by the leader of the opposition (Mr. Drew). Many times he has implied, if not actually stated, that there are many Liberal members in this house who vote for the government against their convictions. I for one wish to reject that implication in its entirety. I consider it an effrontery to my sincerity, and to the sincerity of other hon.

The Budget-Mr. Robertson members in this house. When we were chosen by the people of our constituencies to represent them in this House of Commons, it showed that they believed in our sincerity. I say again that I reject any suggestion by the leader of the opposition that we are adopting any such course.
In his self-righteous manner, the leader of the opposition has called upon Liberal members to say in parliament what they are saying outside the house. I am ready to accept that challenge. I am ready to tell you what I tell the people of the county of Northumberland. In the first place, I say that in the present Prime Minister (Mr. St. Laurent) we have a man whose ability, sincerity and humanitarian convictions mark him as one of the most outstanding leaders this country has ever had. I tell them also that I believe the present administration is giving sound government to the people of Canada. We have only to review the prosperity of the years under the Liberal administration to prove that point. I tell them that the social security program that has been developed by the Liberal party is one of the best social security programs to be found in any country in the world. For any further advance in social security, they must look to the Liberal party.
As many hon. members know, the annual meeting of the Progressive Conservative Association of Canada was held in Ottawa not long ago. One of the most remarkable features of this meeting, so far as I can see, was that for the first time there was no suggestion that they should change the name of the party, nor any suggestion that it was about time to call for a new leader. For many years we have been used to that procedure on the part of the Conservative party. I should like to read a quotation from the remarks made by the leader of the opposition as they appear in the Ottawa Journal. In speaking to that meeting, he said:
This is a crusade to return to the people through their elected representatives the control of the business of the country.
We sang, "O Canada, we stand on guard for thee."
Let us organize as this party never organized before so that when another election comes the people of Canada will indeed be able to stand1 on guard for the country they love.
That is the type of material the leader of the opposition gives to his followers.
I should like to quote from an article containing the remarks of a man who spoke at the same meeting, one of the front men in the Conservative party in Canada, Mr. Grattan O'Leary. The article reads:
He said the March budget brought down by finance minister Abbott was nothing more than a documentation of failure, a cry of despair.

"It was a statement to the people that the government did not know what to do and proposes doing nothing," said Mr. O'Leary.
I should like to quote the remarks of another member who spoke at that meeting, the member for St. John's East (Mr. Higgins). I ask hon. members to mark this:
"There is an attempt to set up a dictatorship and that is being preached by Prime Minister St. Laurent himself," said Mr. Higgins.
"This Liberal party has been too long in power and its leaders have become arrogant. The situation has become a serious menace to Canada. An alternative party is essential if democracy is to survive in Canada."
That is the type of material that is given to the people of Canada by the responsible members of the Conservative party. When I came to this house last session, I thought the members of the Conservative party had learned something from their experience in the election last June. But when I read such stuff as this I do not wonder that their prospects for getting control of the government in Canada are very slim indeed. To speak of the Prime Minister as did the member for St. John's East is to my mind reprehensible, because if any man represents democracy in Canada it is our present Prime Minister. He is a man who came from humble beginnings, and who rose to a position of great prominence in Canada. He stands high in the regard of all citizens in Canada. Yet a member of this house says that there is an attempt to set up a dictatorship, and that this is being preached by Prime Minister St. Laurent himself. To me such a statement is almost too ridiculous for comment.
We all agree I am sure, Mr. Speaker, that there are difficult times facing all the nations of the world. It was that great American, Franklin D. Roosevelt, who said that to some generations much is given, and of some generations much is expected. I think that we, as Canadians today, must admit we are enjoying the greatest freedom and the greatest privileges that have ever been enjoyed by any generation in any country in the world. I think it is equally true that we, as Canadians, face the greatest responsibility of any generation in Canada. I believe we have even greater responsibility ahead of us, both as individuals and as a nation. In the final analysis, the real strength of any country lies in the feeling of responsibility which exists in the heart and mind of the individual citizen. I say, therefore, that we must brace ourselves for the days ahead, because even in peace the cost will be great. Not only must we complete adequate defences at great cost, but we must also see that even our most humble citizen enjoys the full privileges of citizenship. That must be our answer to

communism, rather than a police state in which every citizen is subject to intolerable suspicion.
Communism will become dangerous only if there are hundreds of thousands of Canadians who feel in their heart they are receiving less than their just due. Should war ever come to us, the cost will be great. It will require all to gain victory; all our wealth, temporarily our freedom, and for many their lives. It will require great moral as well as material rearmament. I believe that in Canada we have the resources, both material and spiritual, to carry us to final victory. There can be no other course. We must continue to give our support to the United Nations. We must continue to lend support to the North Atlantic security pact. We must see that all our citizens enjoy a full life. We must put our faith in divine wisdom. Having done that, if war still overtakes us, then we must face the inevitable threat to our survival with calm determination, skill and courage. We must never buy peace with our freedom and our liberty.


Mr. E. G. Hansell (Macleod):: I feel
prompted to take part in this dqbate, Mr. Speaker, not by reason of the budget itself, for it was quite an ordinary budget revealing that the government had no idea in mind as to any changes in financial policy. I am prompted to speak more by reason of what has been said by some of those who have already taken part in the debate. I notice that both in the session of last fall and this session in this parliament there appears to be an attack levelled against our social credit proposals. This attack seems to be carried on by some of the younger or, shall I say, junior members of parliament who have recently come to this house.
To me it is significant that the Minister of Finance (Mr. Abbott) himself guards against entangling himself in any arguments with this group with respect to our financial proposals. I think I can say the same thing with respect to his predecessors. The Right Hon. J. L. Ilsley also refused to entangle himself in debate with respect to the monetary proposals which we have made over the years. We can even go back to one of his predecessors and mention the Hon. Charles A. Dunning, who was minister of finance in the Liberal government some years ago when we in this group first made our appearance in the house. He also avoided any entanglement in arguments proposed by us for the revamping and changing of the financial policy of this country. All that finance ministers seem to do with respect to our proposals is not to argue against them but simply to say, "We will not follow your suggestions". If we ask "Why not?" they
The Budget-Mr. Hansell appear to have no answer. As a matter of fact, some of us are becoming a little bit suspicious that some of the older boys in parliament who have met us before in combat have now resorted to the position of chewing the spit wads for some of the younger men to throw.


Stanley Howard Knowles: That is a dirty trick.


Ernest George Hansell: I might say that it seems to be almost habitual that when we come along and make our proposals, which we believe to be sound and which have never been proved to be otherwise than sound, a cry goes up that the country must not dare to have anything to do with our social credit proposals. They do not say why. The cry does not seem to be made in terms of logic. It is simply a cry of danger. Why there should be any danger, nobody appears to know. At this point I think I might read just a few lines from a well-known book written many years ago. The title of it is "Looking Backward" and its author is Edward Bellamy. It was written in fictional style. He transposed himself over the years and then looked backward. In this particular part that I am going to read he assumes that he has been scanning the geography of a certain nation whose lands have been parched but which lands are capable of tremendous productivity. He sees a stream flowing through that land and in his mind he likens the stream to the flow of money. This is the way he puts it:
Let but the famine-stricken nation assume the function it had neglected, and regulate for the common good the course of the life-giving stream, and the earth would bloom like one garden, and none of its children lack any good thing. I described the physical felicity, mental enlightenment, and moral elevation which would then attend the lives of all men. With fervency I spoke of that new world, blessed with plenty, purified by justice and sweetened by brotherly kindness, the world of which I had indeed but dreamed, but which might so easily be made real. But when I had expected now surely the faces around me to light up with emotions akin to mine, they grew ever more dark, angry, and scornful. Instead of enthusiasm, the ladies showed only aversion and dread, while the men interrupted me with shouts of reprobation and contempt. "Madman!" "Pestilent fellow!" "Fanatic! "Enemy of society!" were some of their cries,-
How often have we in this corner of the house, as we have gone through the country, in the early days particularly, been called crackpots. The writer goes on to say:
-and the one who had before taken his eyeglass to me exclaimed, "He says we are to have no more poor. Ha! ha!"
That is a laugh.
"Put the fellow out!" exclaimed the father of my betrothed ... It seemed to me that my heart would burst with the anguish of finding that what was to me so plain and so all important was to them meaningless, and that I was powerless to make it other.

The Budget-Mr. Hansell
That seems to be the picture that is posed for us when we propose how to distribute the abundant production of this land. Our proposals are met with scorn but never are they proved to be false. I must say here that this scorn is not heaped upon us by members like the Minister of Finance (Mr. Abbott) nor by men who have studied and who should know. Whether they regard our proposals as feasible and correct or not, I do not know. They do not argue against them. They simply say: "We will not try them." It is some of these other men who suddenly arise and pose as critics that seem to bring scorn down upon our proposals without showing where they are fallible or where they lack logic or common sense. And when they do try to prove we are wrong, they very often prove that they do not know what they are talking about. I might read a little quotation from the London Economist, which is an ultra-conservative paper. It says:
In monetary matters more than In most matters there has been a revolution in the past ten years. But in monetary thought and practice more than in most matters, established habits have in the past been not so much convictions that could be abandoned when circumstances alter, as articles of faith to be carried to the grave.
The hon. member for Churchill (Mr. Weaver), who I believe in general matters is an intelligent man, the other day assumed the role of the critic. I should like to read a passage-


Mr. Low:: A ridiculer.


Ernest George Hansell: My leader said, not only a critic but a ridiculer. Perhaps he did attempt to bring some scorn upon our proposals. Let me read from Hansard what he said, as recorded at page 1838. After quoting the hon. member for Peace River (Mr. Low), who is the leader of this party, he said:
This statement does not silence those critics. The creation of money as advocated by the hon. member can be done, but it is only another form of hidden taxation, and the most extreme and insidious form of all. Let us assume that we have $10 worth of production, and that there is $9 of purchasing power available. Then assume that the government listens to our social credit friends and creates an additional $9 of purchasing power.
May I interject here: Never, never, never have we proposed issuing $9 of additional purchasing power when only $1 additional purchasing power is needed. Never has the hon. member for Churchill heard us say such a thing, nor has he ever read such a thing in anything we in this corner of the house ever proposed. Where he got it from-


Solon Earl Low: It is one of those spitballs.


Ernest George Hansell: Yes, that somebody chewed for him to throw, and if he says he chewed the spitball himself, then all he does is to show the measure of his own intelligence. Further down on that page he said:
Money is only goods and services produced.
I do not know with what authority he makes that remark but I should like to have the opportunity to say a word or two about it. Remember, he says, and I repeat: "Money is only goods and services produced". During the depression days we had the experience of banks desiring to collect their debts. Some of the farmers had no money, but they had produced their grain. On one occasion a farmer came in to a banker and he said: "I would like to pay my note, but I have no money. I have plenty of grain." And so one day he drove his truck up to the bank and he began to shovel grain out. He said to the banker: "Here is my money." I do not know if the hon. member for Churchill would have done that, but if production is money why did the banker not take the wheat?


Solon Earl Low: And cancel the loan.


Ernest George Hansell: Yes, and cancel the loan. They did not do that. They called the police. The man had to shovel the grain back in his truck and take it home to the granary.
What is money anyway? I will read from an authority who I think is perhaps on a level slightly higher than the hon. member for Churchill. I read from Professor Walker who, I believe, is professor of economics at Harvard university. I may have to stand corrected on that. He is a very eminent economist, and in his answer to the question, "What is money?" he says:
Any medium which has reached such a degree of acceptability that no matter what it is made of, and no matter why people want it, no one will refuse it in exchange for his product.
May I quote another authority, whom I think we Will accept, none other than Dr. W. C. Clark, who is the deputy minister of finance. Dr. Clark said:
Money, in the broad sense (now sanctified by popular usage), is any medium of exchange which is generally acceptable in day-to-day business transactions and the settlement of debts and contracts.
I have read that definition which is part of a treatise which Dr. Clark gave before the banking of commerce committee in 1939.
Before going on to another subject in respect to this definition of money may I ask you, Mr. Speaker, to call it six o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Ernest George Hansell: Mr. Speaker, before the house rose at six o'clock I was dealing with a rather bold statement made the other day by the hon. member for Churchill (Mr. Weaver), who said that money is only goods and services produced. I was attempting to give definitions by expert authorities as to just what money really is. Sometimes it is necessary to retrace one's thoughts and go back to the rudimentary principles that were proposed in days gone by.
Quite often when discussing the principles of social credit with those who are perhaps less informed I find that they often turn and say, "Well, I just do not understand social credit." After we get talking with these same gentlemen we are surprised to find that it is not social credit they do not understand, it is the present money system they do not understand. When one talks in terms such as those used by the hon. member for Churchill and says that money is only goods and services produced, he is not talking about social credit money. He is talking about our present system of money. He is talking about Abbott money. Anyone reveals by such a statement that he knows very little of what he is talking about.
Very often we are asked, "Well, now, if you put in social credit, where would you get the money?" Then I turn to my friends and say, "Where do we get money from at the present time?" I find that they do not know. It is not social credit they do not understand, it is the present order of money that they do not understand. When we tell them that the vast amount of our money comes out of the end of a fountain pen they laugh us to scorn. All we have to do is to ask some of the competent authorities where money comes from and they will tell us that after all money is only a system of financial accountancy, merely figures backed by law and applied to prices and other relative matters.
To indicate the intelligence of a good many people, I recall on one occasion asking a medical doctor where money comes from. I even used his own terms and I said, "You are accustomed to the birth of human beings. Tell me how money is born. How does money come into existence? How do we get it? It does not grow on trees. It does not drop down from heaven. How does it come into existence?" I did not expect this medical man to be an expert economist, but he had had several years of university training and
The Budget-Mr. Hansell I think we can assume that a medical practitioner is an intelligent and logically thinking man.
When I asked this doctor where money comes from he said, "Oh, well, I have a field of wheat out here, that is money." I said, "Do you mean that dollar bills grow on the end of the stalks?" He said, "Oh, no, no, I do not mean that." I said, "What do you mean then?" He replied, "I sell my wheat and get money for it." I said, "That does not tell me how money comes into existence," and he responded, "Oh, well, well, well." That was his answer, "Well, well, well." That was the answer of a very intelligent man.
I recall one occasion during the first years of our presence here an hon. member on the other side of the house-he is not here now-made a certain statement. Of course it is known that a member of parliament does not have to have any brains, but usually we expect a man who is intelligent enough to reach this place to have ordinary common sense. A little exchange and play was going on between this hon. member and myself and I asked him on the floor of this house where money came from. Do you know what his answer was? He said, "Why, we earn it."
That was a display of intelligence, was it not? After the house rose I was talking with him out on Sparks street. He was a good friend of mine even though he was a Liberal. I said to him, "How do you account for the fact that one year there is more money in existence than in a previous year? How do you suppose that other money came into existence?" Do you know what his answer was? He said, "Well, I have a mare at home and she casts a foal which is worth $100. In a couple of years that foal grows up to be a very valuable race horse worth $1,000. There is $900 more money in existence." Can you imagine a man of intelligence saying that. I looked at him and said, "Do you mean to say that money increases with the age of a horse?" He did not know what to say. That is the reasoning of some men.


An hon. Member:: Horse sense.


Ernest George Hansell: I asked the same question one day of a farmer. I do not suppose he was particularly well educated but he was a sort of wise old gentleman. I asked him, "Where does money come from? How does it come into existence?" He closed his eyes and said, "Search me, I do not know, I guess maybe the banks make it." The fact of the matter is that the answer of that old gentleman was closer to the truth than the answer of the medical doctor who had spent seven years

The Budget-Mr. Hansell in university and the answer of a Liberal member of parliament who had eventually arrived in this chamber.
Let us see what some authorities say concerning this. I am going to read from the evidence taken in the parliamentary committee on banking and commerce in 1939, and I am quoting no other authority than Mr. Graham Towers, governor of the Bank of Canada. No one will doubt that Mr. Towers knows what he is talking about. Mr. Landeryou, who was then a member of the house, questioned him as follows:


Mr. Landeryou:: The credit they use to purchase
these bonds is not the bank deposits or the savings of the people, it is a credit created by the bank?


Mr. Towers:: No, it is that money that is now
the savings of the people, so to speak. The bank in purchasing the bond places, shall we say, $1,000 to the credit of the government, if a process of expansion is going on, otherwise, the bank would not purchase additional bonds.
Might I interject here that Mr. Towers is a little reluctant in coming out definitely and stating definitely yes or no until he is forced to that position. Let us read on from the evidence, which is to be found at page 113:


John Charles Landeryou: Do you use the people's savings to purchase that bond?


Thomas Gordon Towers: I would put it the other way, I
would say they purchase the bond by placing $1,000 to the credit of the government. The government spends the money. The people who receive the money put it into their savings accounts with the banks. Those savings accounts then are an asset of the depositors but a liability to the banks. Against that deposit the bank will hold $1,000 in government bonds so that it can respond to the liability if need be.


John Charles Landeryou: Yes, but X cannot get the question over to you. X am not suggesting that there is not a $1,000 bond behind the deposit. It may be in the bank. But in the first instance, when the government delivers a $1,000 bond to the bank what does the bank use to purchase it with? Is that the creation of additional money?


Thomas Gordon Towers: It is the creation of additional
money.
And then at page 238:


John Charles Landeryou: Now, if the government went
to the bank with $1 million in bonds there would be an increase of $1 million in the amount of money in the hands of the people in the form of deposits?


Thomas Gordon Towers: Assuming that no other change
had taken place in the bank's position at that time, yes.


John Charles Landeryou: In other words, when the $1
million worth of bonds is presented to the bank a million dollars of new money or the equivalent is created?


Thomas Gordon Towers: Again assuming that there is no
decrease in its other investments or loans.


John Charles Landeryou: I mean at the time, at the
moment.


Thomas Gordon Towers: Yes.


John Charles Landeryou: It is a fact that a million dollars of new money is created?


Thomas Gordon Towers: That is right. Of course, governments should not always go to the banks in that connection; they should sell their bonds to investors.


John Charles Landeryou: Yes. Now the same thing holds true when the municipality or the province goes to a bank?


Thomas Gordon Towers: Or an individual borrower.


John Charles Landeryou: Or when a private person goes to a bank.


Thomas Gordon Towers: Yes.
And later:


John Charles Landeryou: What is the proper way? Is the
proper way this, that when I borrow $100 from the bank as a private citizen the bank makes a bookkeeping entry and there is a $100 increase in the deposits of that bank, in the total deposits of that bank?


Thomas Gordon Towers: Yes.
Mr. Speaker, that is clear, that during a time of credit expansion money is born into existence by the direct action of banks in making loans, and it exists in figures in bankers' books. When anyone goes into a bank to borrow money, he does not borrow the depositors' savings. That is a fact. He goes into a bank; the bank puts a credit entry opposite his name in the form of figures, and when the man walks out of the bank there is that much more money in existence than when he walked in. There is no dispute on that fact; that is the evidence of Mr. Graham Towers, governor of the Bank of Canada.
Let me read some further evidence which seems to me rather striking. These are questions by Mr. McGeer, who was then a member of the house:


Mr. McGeer:: Will you tell me why a government with power to create money should give that power away to a private monopoly and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?


Thomas Gordon Towers: We realize of course that the
amount which is paid provides part of the operating costs of the banks and some interest on deposits. Now, if parliament wants to change the form of operating the banking system, then certainly that is within the power of parliament.
But never once has the government of this country, since we have been here, attempted to change that banking policy whereby they, themselves, would be able to create the money they need.
I have cited that evidence because I believe it is as well for some of these critics of the Social Credit policy who ask, "where would you get all the money from?" to know where the present government gets this money, and how money at the present time-real, good Abbott money-comes into existence. I am not talking about social credit money. And might I add that Social Crediters would get money from exactly the same place whence it is born into existence today. The one thing we would do would be to see that there was not a shortage of money, and that the power to consume, in terms of money, would be equivalent to the production of the country in terms of prices.

There is just one further point I would like to mention, because it is rather striking. At page 771 of that same banking and commerce evidence Mr. Jaques asked this question:
Would you admit that anything physically possible and desirable can be made financially possible?
To that Mr. Towers answered, "Certainly".
I noticed in the Ottawa Journal the other day an editorial taking Mr. Douglas of Saskatchewan to task because he had made a similar statement. I am not going to take time to read the whole article, because I wish to conclude with a statement in respect to the way we are going to vote. But this editorial in the Ottawa Journal of April 15, written by one of the editors-I do not know who-is captioned "Slogans and Realities" and quotes Premier Douglas as saying, "what is physically possible is financially possible." Whether the quotation is correct or not, I do not know; but we Social Crediters add the word "desirable" so that the statement is, "what is physically possible and desirable can be made financially possible." The editorial takes Mr. Douglas to task for that which they call a slogan, and they say it is not true.
I would ask this question: who is the greater authority, one of the editors of the Ottawa Journal, or Mr. Graham Towers, the governor of the Bank of Canada?
Then, Mr. Speaker, I might also call attention to an advertisement which appeared in the Ottawa Journal of April 5, and I believe in other newspapers throughout this country. It was inserted by the Bank of Toronto. It is very significant that a campaign is now being carried on in Canada to discourage any thinking about monetary reform. And why? Because they recognize that we are approaching the point of underconsumption, which they like to term overproduction, when there will not be enough money to buy the goods we are able to produce. Getting in on the ground floor of argumentation, they are attempting to warn the people not to change monetary policies. This bank advertisement is headed, "What happens to the money you put in the bank?" It goes on:
Business men, large and small, borrow it to expand so that they can serve you more fully and provide a wider range of consumer goods you need.
That statement is an absolute falsehood. I do not know whether the publicity directors of this bank know what they are talking about. Those in charge of publicity do not always know, and are not always expert in the things they have to publicize; but that statement is absolutely false. If those who publicized it knew what they were talking about, then they did it deliberately to deceive
The Budget-Mr. Hansell the people of this country. Banks do not loan the money of their depositors. They create money in the form of loans, which afterwards becomes the money of the depositors.
I wish I had time to read all this advertisement; other parts of it are along the same line.
In the few moments remaining at my disposal I want to state our position with respect to the amendments; it will take only a moment or two. There are two amendments before the house. On April 4 the hon. member for Greenwood (Mr. Macdonnell) moved an amendment to the motion of the Minister of Finance (Mr. Abbott) that you do now leave the chair. The hon. member for Rosetown-Biggar (Mr. Coldwell) took part in the debate and moved a subamendment. I should like to say something about each of those amendments, and I shall start by considering the one moved by the leader of the C.C.F. party. The first paragraph of that subamendment reads:
This house regrets that the policies of the government. as announced by the Minister of Finance.
(1) indicate that the government is prepared to accept the present level of production as adequate for this country and as placing a limit on the services and security to be provided for our people:
There is no doubt in our minds that the Liberal government is afraid of abundance. For many years they have demonstrated that they have mentalities geared to scarcity. Times without number, almost, we in this Social Credit group have complained against Liberal policies which without question have had the effect of discouraging production. Liberal taxation policies have definitely limited the extent of Canadian production. I go so far as to say, and I do not think anyone can successfully contradict me, that had it not been for the war Canada never would have reached, under Liberal policy, a gross national product of $16,000 million as it did last year. As the consequence of an accident as far as Canada was concerned, but which might have been a deliberately planned war, our people put forth a supreme effort to win the war. Of necessity national production soared to unprecedented heights. We reached a yearly production of $16,000 million of all kinds of goods and services. Now, however, it is clearly evident that the government is as scared as a certain friend of mine who found himself for the first time boosted on the back of a saddle horse. As the horse started to gallop down the road my friend held on to the saddle horn with both hands, fervently wishing that he was safely on the ground again. I am quite sure the government, with their mentality of scarcity, would feel much more at home if Canada's total production were to shrink somewhat below its present

The Budget-Mr. Hansell level. At any rate, no one reading the budget speech carefully can get any other impression than that the Liberals have decided we have reached the limit of their ability to manage an economy. If it gets any bigger it will be beyond them, and someone else will have to take over. They would rather strangle growth than let that happen. Their trade policies; their decided and almost tragic lack of national fuel, steel, sugar, and agriculture policies; their ineptitude in the field of finance: all stand as vocal evidence of the truth of the contention embodied in the first paragraph of the subamendment.
We Social Crediters are apostles of abundance. We sincerely believe there is no good reason why any artificial limit should be placed upon production in Canada. Our production of all kinds of wanted goods and services should be limited only by the extent of our manpower and natural resources. And when we as Social Crediters are entrusted with the management of the people's affairs, the affairs of government, we will stimulate all-out production. What is just as important, or even more so, we will know how to manage a financial policy that will be able to distribute that abundant production equitably to our people so that none will be wasted. For these reasons we find ourselves in complete agreement with clause 1 of the subamendment, and we could vote for it.
Now we come to clause 2, which reads:
(2) make no provision for increased national production through economic planning, public control of investment, public ownership of monopolistic industries, and the full and proper development and use of our resources, so as to ensure a rising standard of living and comprehensive social security for the Canadian people.
I am sure I speak for all my colleagues when I say we are in agreement with the objectives that seem to have been envisaged by the C.C.F. when they drafted this clause of their amendment. Over the years I have noticed that the Social Crediters and the C.C.F., and other groups, have championed the cause of the downtrodden, the underprivileged and the ordinary fellow in the street. I think it is fair to say that both our groups have been fighting for social justice. But, while we seem to be seeking the same objectives in the economic field, there is a very great difference in the methods we would use in trying to reach those objectives.
The C.C.F. subamendment criticizes the government for making no provision for increased national production through economic planning. I think probably that statement is true; but, if I correctly understand the C.C.F. term "economic planning", it is to be done by a planning board whose

powers are set out on page 150 of the book "Make This Your Canada," where I find this-


The Acting Speaker (Mr. Beaudoin):: Order.


Ernest George Hansell: I should like to read that statement, if I may:
The task of the commission will be to plan for the production, distribution and exchange of all goods and services necessary to the efficient functioning of the economy: to co-ordinate the activities of the socialized industries; to provide for a satisfactory balance between the producing and consuming power, and to carry on continuous research into all branches of the national economy in order to acquire the detailed information necessary to efficient planning.
My time is almost gone, and I want to add just one statement. To get the full significance of this definition one has to look at examples of the application of the socialistic planning idea. Let us take Britain as an example. In that country they have had a national planning commission consisting of a small group of economists, engineers and statisticians. They have tried to plan the national economy. When the plans were made by this commission they were pretty much in detail. The next step in the process was to see that the plans were enforced; and, though many thousands of people were opposed to the plans, they were forced or compelled to submit to them. In other words the whole basis of the socialistic type of planning is compulsion.
We Social Crediters believe it is necessary that economic planning be done, but most of it should be done by individual enterprise. We have constantly criticized the government for not having given proper leadership in the development of national policies such as fuel policies, production policies of various kinds, transportation policies and so forth. But our idea of planning so far as government is concerned is that it should be a planning of objectives, with leadership being exercised by departments of government or commissions established by the government and responsible to parliament. When it comes to the realization of those objectives that have been planned, Social Crediters have consistently taken the position that inducement ought to be used instead of compulsion. Human beings will do their best under inducement; they will nearly always do less than their best under compulsion. It is because of this fundamental difference in the approach to making and applying economic plans that we cannot support paragraph 2 of the C.C.F. amendment. Our approach to public control of investment, public ownership of monopolistic industries, and the development of our resources is also fundamentally different from that of the C.C.F.

I have another paragraph to read, Mr. Speaker, but I see that you are anxious.


Douglas Charles Abbott: Finish your statement.


Some hon. Members:: Go ahead.


Ernest George Hansell: You have only to look to the Social Credit policies in action in Alberta, with its outstanding achievements and most excellent results, and the C.C.F. policy in action in Saskatchewan, to see what I mean. In the Social Credit province of Alberta development has been phenomenal, and the people of the province have benefited away beyond their expectations. In Saskatchewan development has lagged away behind, and the government and the people face financial difficulties and stringencies as a result. We will not, therefore, be able to support the C.C.F. subamendment, although taken merely as a statement of objectives we find ourselves pretty much in agreement.
I thank you for your patience, Mr. Speaker. I thank the house for its patience, too. May I conclude by simply saying that this is indeed a great country, and under proper financial policies we believe it could be taken on to a destiny far more glorious than has ever been envisioned before.


Mr. Angus Maclnnis (Vancouver East):: Mr. Speaker, I did not intend to take part in this debate, but realizing the dilemma in which our amendment has placed the member for Macleod (Mr. Hansell) and his party, I think I should try to do something, if not to remove the dilemma at least to enlighten him and show him some of the contradictions in the argument that he was just making. A little while ago he accused the government of not taking steps to control the banking system of Canada, so that the government itself could make the money at the point of a fountain pen instead of having the banks do
it.	Does the member for Macleod really expect a government that believes in a policy of scarcity, as he said, would do anything that would obviate that scarcity? To do that would be asking the government to do something which it is not in its nature to do.
The member for Macleod further believes that a government that is operating in the interests of free enterprise, of a system that believes in scarcity, and as a matter of fact cannot be prosperous in times of plenty, would do something against its own interest. He has said that the present government is a government that believes in scarcity. Why scarcity? So that there will be an inducement for the people to meet the needs that scarcity creates. The moment you create plenty you take away that inducement. Now the hon. member believes that by the adaption
The Budget-Mr. Maclnnis of a free enterprise that believes in scarcity to the Social Credit money policy, we would have abundance; but since free enterprise does not want abundance, obviously it is not going to adopt the Social Credit financial policy. The peculiar thing is that Social Crediters believe free enterprise would do for them what free enterprise will not do for the people who have been operating it for generations, that is, that it would create plenty and keep on creating plenty. That is just a fantastic dream.
So far as compulsion is concerned, I may say that I did not know this sort of speech would be made, although I could have suspected it because it is the sort of speech my friends on my left always make. Less than a year ago in this house I showed that the compulsion that would be imposed by a C.C.F. government would be the essence of liberty, in comparison with the compulsion that would be necessary under a Social Credit system. I showed, by reading from Social Credit literature, from Major C. H. Douglas's plan for Scotland, that a census would be taken of every bit of capital in the country. I showed that the compensating price would of necessity mean price control on every article. Surely if compulsion is all they are afraid of, my friends should not have any difficulty in supporting the C.C.F. subamendment. They admit to agreeing with one-half of our amendment; that is more, I am convinced, than they understand of the policies which they advocate. As they are continually talking about things they do not understand, I do not expect them to understand anything as simple as the policies of the C.C.F., or the policies of democratic socialism.
My friend referred to Britain, and the mess they were making of things there. Let me tell him that I was talking to a woman who just came from the British isles today, and what she told me I am sure the member for Macleod already knows, and if he doesn't know he can find out. She said that the people of Britain today, despite their many difficulties, despite the obstacles that they have had to overcome since the end of the war, taken by and large, are better off than they ever were before. For the great mass of the people of Britain, she said, who .never in their lives had been free of poverty poverty does not exist today.
Then the hon. member credits the Social Credit party with the present prosperity in Alberta. Remember that Social Credit policy is purely financial, and I should like any Social Credit member to show me one monetary change the Social Credit party has so far made in Alberta, one item of monetary

The Budget-Division
policy that is any different from the policies of other governments that administered the affairs of Alberta.


Solon Earl Low: We have been demonstrating it for the last fifteen years.


Angus MacInnis: You have been demonstrating it not by producing money at the end of a fountain pen; you have been demonstrating it because you found oil in Alberta. If oil was found in the Sahara desert, there would be prosperity there too. 'Social credit does not enter into the picture at all. If the oil wells in Alberta dried up tomorrow, so would social credit.


Solon Earl Low: The oil wells came into existence because of social credit policies.


Angus MacInnis: No. Social credit did not put the oil in the ground. God did that.


The Acting Speaker (Mr. Beaudoin):: Order.


Solon Earl Low: There is probably oil in the soil of Saskatchewan.


Angus MacInnis: It may come out of the soil in Saskatchewan.
for this country and as placing a limit on the services and security to be provided for our people: and
(2) make no provision for increased national production through economic planning, public control of investment, public ownership of monopolistic industries, and the full and proper development and use of our resources, so as to ensure a rising standard of living and comprehensive social security for the Canadian people.
Those in favour of the amendment to the amendment will please say "yea".


Some hon. Members:: Yea.


The Acting Speaker (Mr. Beaudoin):: Those against it will please say "nay".


Some hon. Members:: Nay.


The Acting Speaker (Mr. Beaudoin):: In my
opinion the "nays" have it.
And more than five members having risen:


The Acting Speaker (Mr. Beaudoin):: Call in the members.
The house divided on the amendment to the amendment (Mr. Coldwell), which was negatived on the following division:


Solon Earl Low: Never while the C.C.F. government is in power.
++YEAS
Messrs:


Angus MacInnis: It may or may not. But that does not alter the situation. The people of Saskatchewan today are better off than ever they were before. If you do not believe that, compare the taxes the farmers of Saskatchewan pay with the taxes paid by the farmers in any other part of Canada.
I did not intend to make a speech, Mr. Speaker. If I had ten minutes for preparation, I could really make a good speech on what social credit is and isn't.


Some hon. Members:: Question.


The Acting Speaker (Mr. Beaudoin):: The
question is on the following motion. Mr. Abbott moves, seconded by Mr. Fournier (Hull):
That Mr. Speaker do now leave the chair for the house to resolve itself again into committee of ways and means.
Mr. Macdonnell (Greenwood), seconded by Mr. Green, moves in amendment thereto- shall I dispense with the reading of the amendment?


Some hon. Members:: Dispense.


The Acting Speaker (Mr. Beaudoin):: Mr. Coldwell, seconded by Mr. Maclnnis moved:
That the amendment be amended by deleting therefrom all the words after the words "Minister of Finance" and by inserting instead thereof the following words:
(1) indicate that the government is prepared to accept the present level of production as adequate
[Mr. Maclnnis.)
Argue
Bryce
Coldwell
Herridge
Jones
Knight
Knowles
Maclnnis
Noseworthy
Stewart (Winnipeg North)
Thatcher
Wright-12.
NAYS Messrs:
Abbott
Adamson
Applewhaite
Arsenault
Ashbourne
Bater
Beaudoin
Beaudry
Benidickson
Bennett
Bertrand
Beyerstein
Blackmore
Blair
Blanchette
Boivin
Bonnier
Boucher
Bourget
Bradette
Breithaupt
Brisson
Brown (Essex West)
Browne (St. John's West)
Byrne
Cameron
Campney
Cannon
Carroll
Carter
Catherwood
Cavers
Charlton
Chevrier
Conacher
Corry
Cote (Verdun-LaSalle)
Coyle
Croll
Cruickshank
Darroch
Dechene
Decore
Demers
Denis
Dickey
Dion
Douglas
Dumas
Eyre
Fauteux
Ferguson
Ferrie
Fontaine
Fournier (Hull)
Fournier (Maisonneuve-Rosemont)
Fraser
Gagnon
Gardiner
Garson
Gauthier (Lake St. John)
Gauthier (Sudbury)
Gauthier (Lapointe)
Gauthier (Portneuf)
George
Gingras
Gingues

Goode	Masse
Gosselin	Maybank
Gour (Russell)	Monette
Gourd (Chapleau)	Mott
Gregg	Murray (Oxford)
Hansell	Murray (Cariboo)
Harkness	Mutch
Harris (Grey-Bruce)	Nixon
Helme	Pearkes
Henry	Pearson
Hetland	Picard
Higgins	Poulin
Hodgson	Pouliot
Hosking	Proudfoot
Howe	Prudham
Huffman	Quelch
Hunter	Ratelle
Isnor	Richard (Gloucester)
James	Richard (St. Maurice-
Jutras	Lafleche)
Kent	Richard (Ottawa East)
Kickham	Riley
Kirk (Antigonish-	Roberge
Guysborough)	Robertson
Kirk (Digby-Yarmouth)	Robinson
LaCroix	Rooney
Lafontaine	Ross (Souris)
Laing	Rowe
Langlois (Gaspe)	St. Laurent
Lapointe	Shaw
Larson	Sinclair ,
Lefrangois	Smith (Queens-
Leger	Shelburne)
Lennard	Smith (York North)
Lesage	Smith (Moose Mountain)
Little	Stanfield
Low	Stewart (Yorkton)
Macdonnell (Greenwood)	Stick
MacKenzie	Stuart (Charlotte)
MacLean (Cape Breton	Studer
North and Victoria)	Tremblay
MacNaught	Tustin
McCulloch	Viau
McCusker	Ward
McDonald (Parry Sound-	Weaver
Muskoka)	Weir
McGregor	Welbourn
Mclvor	White (Hastings-
McLean (Huron-Perth)	Peterborough)
McLure	Whiteside
Me William	Winkler
Major	Wood
Maltais	Wylie-167.


Mr. Smith (Calgary West):: I was paired with the hon. member for Edmonton East (Mr. Macdonald). Had I voted, I would have voted against the subamendment.


Mr. Gillis:: I was .paired with the Minister of National Health and Welfare (Mr. Martin). Had I voted, I would have voted for the subamendment.


Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, it grieves me greatly to have to hold up the house for a while, but the speech delivered on April 24 by the hon. member for Churchill (Mr. Weaver) requires a certain amount of attention and I intend to give it that amount of attention before we have another vote. This speech will be found on pages 1836 to 1842 of Hansard.
I think it would be a good thing if I were to lay down what I believe are some of the
The Budget-Mr. Blagkmore responsibilities of a member of parliament. I think the people have a right to expect, first of all, that a member of parliament shall either know something of what he talks about, or talk about only those things that he knows something about. When a member of parliament rises on the floor of this house and makes remarks the people all over the country have some right to believe that he is somewhere near right. I think that is a pretty sound principle to lay down.
According to the Parliamentary Guide of 1950, page 265, the hon. member for Churchill was educated at the Royal Military College and obtained a certificate of graduation with honours. He is stated to be a metallurgical engineer. A gentleman with such credentials certainly should be expected to know what he is talking about.
I should like to draw attention to four passages in the speech which he delivered. I shall not read them completely, but will give the first and last words of each passage and later on I shall deal with one or two of the passages in detail. On page 1838 of Hansard we find a passage commencing with the words, "My point" and ending with the words "money is worthless". There is another passage on page 1838 commencing with the words, "This statement" and ending with, "called inflation". There is still another passage on page 1838 commencing with the words, "Money is only goods" and going down to "against these goods". The next passage is on page 1839 commencing with the words, "In the same way" and going down to the words, "lose their value". I do not know to what extent I shall be able to give attention to these passages, but certainly each one needs attention.
May I draw attention to the first one I referred to which is to be found on page 1838 and which reads:
My point is that the Social Credit theorists lead themselves down the garden path by focusing their attention on money and not on production. Without production money is worthless.
Those two statements constitute a complete falsehood with regard to social credit. In the first place we do not know what the hon. member means by theorists, but if the word "theorists" is taken to include Social Credit members of parliament or members of the Alberta legislature or government, then it is completely wrong. The fact that the hon. member uses the word "theorists" will give him a way out in case he needs it. I grant that there are theorists and practical men, and I suppose there are such in the Social Credit movement as there are to be found in plentiful numbers in the Liberal party; but no responsible individual such as a member

The Budget-Mr. Blackmore of parliament at Ottawa or those whom I have mentioned in the Alberta legislature can be included in the statement made by the hon. member.
I challenge the hon. member to produce any passage in Hansard from 1936 to the present time that either proves or even vaguely justifies the statement he made in that passage. The hon. member said:
My point is that the Social Credit theorists lead themselves down the garden path by focusing their attention on money and not on production.
That is absolutely false. Social Crediters base all their thinking and all their talking and all their reasoning on production. They point out that because of the abundance we are able to produce, so much more than the people are able to buy, we have got to the point at which some adjustment has to be made in the purchasing power in the hands of the people so that they will be able to buy the production they are able to produce.
The hon. member can find that idea reiterated dozens of times since 1933. He tells us he went to hear Premier Aberhart in that year. If he did hear Premier Aberhart, and was in Alberta in 1933, then he heard the expression reiterated time and again until the whole province was like a beehive with the expression, "shortage of purchasing power in the hands of the people." And he heard, on the other hand, the bankers and all their supporters saying that we had overproduction. If we have overproduction on the one hand, then certainly we have a surplus of goods. If we have a shortage of purchasing power in the hands of the people we also have a surplus of goods. So that no matter which way the hon. member approaches the problem, his statement is absolutely false and erroneous, entirely. He should know it; and if he does not know it there is something seriously wrong with that member. He threw this false statement on the pages of Hansard before tens of thousands of people from one end of Canada to the other, something which I maintain no member has the right to do.
Let me say to the hon. member that he would have found many, many statements in Hansard giving the truth about social credit if he had taken the time to look for them.
May I refer to the first speech I delivered in the house in 1936, when I first came to parliament. That was my first regular speech in this chamber. Let me read a passage from Hansard for 1936, page 115, and see whether there is any disregard for goods in that speech. I said:
At the same time, what banks can so generously do, and lend the proceeds to the government, and charge them good stiff interest for, I submit that governments ought to be able to find some way or another of doing for themselves.

I am speaking about the creation of money. I continue:
Here is another example. Mr. A. de V. Leigh, secretary of the London chamber of commerce, in a statement reprinted in the Ottawa Citizen on June 8, 1934, makes the following statement:
"The war was paid for as to 30 per cent by actual money belonging to the people-"
Is there anyone who can see any reason why, then, the people of Great Britain should be taxed almost to death to pay for that war, when they already have paid for it?
"-earned by the people; which was invested by the people in war loans;-"
Then note particularly these words:
"-and 70 per cent of the total cost of the war was paid for by the banks very kindly making these book entries, costing them nothing except the ink, paper and the time of the clerk, and lending the result to the nation at interest. The nation owes them money in exchange for their promises-to-pay money which they have not got. Further we have been paying them interest on these promises-to-pay ever since. Interest on war loans amounts to something like five million dollars a day."
Now if the government is going to assert complete freedom for the Dominion of Canada, it is going to take control of such issue. It must be safeguarded, we will grant. It must be managed by men who are responsible and who are trained, men who will honestly and successfully manage that aspect of the nation's life in the interests of the people and not in the interests of any private group.
There is one more thing which must be very carefully considered, and we assume that the Prime Minister has this in mind. Up to the present time the backing for money has been gold. Men have got to the point where they virtually worship the gold standard. It is like a golden calf which they worship to their ruin, but the time must come when we will all realize that the backing of money is not necessarily gold. May I read here a statement by an eminent authority which none will presume to question, the Midland Bank, England, the largest bank in the world? Here is an extract from its monthly review, June-July, 1935.
"In the past four years the progress of ideas has been rapid-the gold value of sterling has dwindled by 40 per cent-neither the government nor the bank does anything about it, and no one is in the slightest degree disturbed, since the pound buys just as much goods and services as in 1931."
In other words, the gold standard has been gradually displaced in England as a backing for goods and services. In our country, with new machinery and scientific knowledge, a high degree of technical skill, and good organization, we can produce an almost infinite amount of goods, and we have hundreds of thousands of men in the country ready to render services; so there ought to be virtually an unlimited backing for what money we wish to produce; at least there should be enough backing to give us the money we need.
That passage alone should have warned the hon. member, if he had taken the time and pains, making him realize that the statement he was about to make was completely wrong. Then I made the following quotation:
"Stability of the value of the pound in terms of goods has replaced stability in terms of gold. At the heart of the matter is a change in the official conception of stability-internal stability is bringing us far greater benefits, in solid economic welfare, than the pursuit of fixity of exchange cpuld

conceivably yield. Clearly this change is nothing short of a revolution-it indicates an almost complete transformation of the monetary system."
And then I went on in my own words:
The social credit group in this parliament believes that the Prime Minister favours the introduction of such a revolutionary change. First, that the dominion government will take control of the issue so as to manage it for the people's welfare; and, second, that little by little in so far as it is necessary they will gradually depart from the gold standard and substitute a goods and services backing, and that such other measures will be taken as will tend to the well-being and increase of the wealth of this country.
While I was not particularly discussing the question raised by the hon. member's statement, nevertheless it is surprising how well I answered him, considering my speech was made over fourteen years before his.
I now wish to read a statement by the hon. member for Acadia (Mr. Quelch). Since we came to the house the hon. member and I have been endeavouring to carry the burden of explaining the views of this group with respect to financial problems; so that whenever we have spoken we have been pretty well expressing the ideas of the group and of the movement. The hon. member for Acadia, speaking on March 3, 1939, had this to say about the $750 million loan, as set out at page 1517 of Hansard tor that year:
Now, we fully realize that there is a well defined limit to the amount of money that can be issued in any period, and so long as it does not go beyond that limit there need not be any fear of inflation.


Mr. Dunning;: What is the limit?


Mr. Quelch:: The limit is the amount of money necessary to make the great physical demand of the people effective against the production of the country; that is to say, if you have on the one hand goods unsold and on the other hand people requiring those goods, you can give them enough money to buy those goods without any possible danger of inflation.
I believe the hon. member, if he is listening-and I have not had time to notice whether he is or not-will find in that a contradiction of what he has said. He may say, "Oh, I have not had the time to read all the speeches made by members of the Social Credit party." The hon. member has been in this house during one and a half sessions. There have been here ten members of the Social Credit group, any one of whom could have put him right. So there is no excuse, not only for his failing to get correct information regarding Social Credit concepts and policies, but for rising in the house and scattering misinformation throughout the country.
I should like now to quote from speeches delivered since the hon. member for Peace River (Mr. Low) became leader of this group. When he became leader he also became spokesman for the group, spokesman for the
The Budget-Mr. Blackmore Social Credit movement. Speaking on November 7, 1945, as reported at page 2573 of Hansard, he said:
It is different from our present money-I am speaking, of course, of social credit money-but only in this respect, that it is issued into circulation without adding to the nation's debt. And remember that Social Crediters advocate issuing new money only when there are goods and services already in existence to be distributed by money; a dollar of purchasing power for a dollar's worth of goods and services available, no more and no less. I suggest that under such circumstances there could not possibly be any inflation.
Now let me suggest to the government that when unsaleable surpluses of goods begin to pile up on the shelves of the warehouses, as sooner or later they will because of the inherent weakness of the financial system, and when at the same time there are Canadians who need and want these goods for their own use, the government should arrange another credit expansion equal to the value of the goods to be removed, and see to it that this new money finds its way, debt-free, into the hands of consumers, starting first with old age pensioners, the blind, scholars who want to stay in school to finish their education but have not the means to do so, and the unfortunate of the country. I suggest that no Canadian should henceforth ever have to go hungry.


Mr. Pouliot:: I am interested in what the hon. member is saying, and I would ask him not to read so fast, so that we will not miss a word of it.


John Horne Blackmore: I thank the hon. member for his interruption. However, my chief reason for reading fast is that I have quite a number of passages before me, and I should like to have them all on Hansard. The hon. member can read them tomorrow.


Charles Eugène Pouliot: I will tell the hon. member why I say that: It is because that doctrine has never been explained in that way by the so-called supporters of the so-called Social Credit party in the province of Quebec.


John Horne Blackmore: If they ever had any people from Alberta down there they had it explained in exactly that way.


Charles Eugène Pouliot: I admit that the Social Crediters from Alberta are much more clever than those of the province of Quebec.


John Horne Blackmore: Perhaps a better way of putting it is that the Social Crediters of Alberta are in touch with the original source.


Charles Eugène Pouliot: Those of the province of Quebec are bloody fools.


John Horne Blackmore: We cannot be responsible for what the people down there may say. If one of them had been elected to the house and we had control over him, we would help him get right in his thinking.


Gordon Knapman Fraser: Control over him?

The Budget-Mr. Blackmore


John Horne Blackmore: Yes; advisory control. At page 3234 of Hansard for 1946 I find these words by the hon. member for Peace River (Mr. Low):
To reassure my hon. friend, let me say that as he learns more about social credit principles he will see that for more than twenty years we have emphasized consistently this fact:	money without
goods is useless. We have also emphasized its necessary accompaniment:	goods without money
is stupid.
That sets it out pretty well. Now I quote from a speech by the same hon. member on May 6, 1947, as it appears at page 2813 of Hansard:
Thoughtful people are asking what there is in the budget to indicate that, as we advance into the period of mass production of consumer goods, the government will have in readiness a policy and machinery to maintain consumer purchasing power at a level sufficiently high to maintain a balanced economy.
At page 2816 of Hansard for the same year, during the same debate the hon. member said:
It is the quantity of money in the pockets to buy that makes employment. Our biggest job in the future will be to maintain that kind of purchasing power at a level high enough to ensure the distribution of our whole production. If we fail in that, our way of life, our freedom, the individual system of responsible enterprise are all doomed.
Again, on page 2817, referring to the Minister of Finance:
I challenge him-and I hope he will listen to what I say to him at this time-to rise in his place in this house and in his rebuttal say what he will do when there begin to appear unsaleable surpluses of goods in our country, the first signs of coming depression.
Again, on December 11, 1947, as recorded at page 187 of Hansard for that year:
Surely, Mr. Speaker, it is not a new idea to advocate that the people themselves are the best controllers; certainly it is not a new idea to advocate that the best way in the world to make it >
possible for the people themselves to control prices and the cost of living is for them to have in their hands at all times sufficient purchasing power with which to buy all the goods they have produced if they want them. Our present financial system does not do that. Over a long period our industrial system has resulted in the distribution of less purchasing power than the people needed to buy the goods they produced. That is one of the principal reasons we had to have such things as are being suggested today; that is why we have had to have the most-favoured-nation clauses, and Bretton Woods in trade treaties.


An hon. Member:: And war.


Solon Earl Low: Yes, and war. The simple fact of the matter is that internal pressure to get rid of goods that are in surplus-not surplus above what the people want and can use but surplus above what the people can buy-is one of the greatest causes for the necessity for these bureaucratic or planned controls.
Again on May 21, 1948, at page 4261 of Hansard:
Mr. Speaker, those words of the hon. leader of the opposition exactly fit the proposals I have made


today, because I have called for the use of tne national credit for family allowances, old age pensions, floor prices, and .so on. Such use of the national credit to the amount of $300 million means that purchasing power to that extent would circulate amongst the people without creating a debt at its source and without accumulating an interest burden throughout its whole life. It need never be cancelled out of existence until that day when production falls short of the purchasing power available in this country.
These passages are unmistakable. Surely if the hon. member had been a little concerned about getting things straight he would have at least consulted the speeches of the hon. member for Peace River. Now I quote from a speech made by the hon. member for Acadia (Mr. Quelch) during the debate in reply to the speech from the throne on March 11, 1949, at page 1404 of Hansard:
In order that a high standard of living may be maintained, we have always advocated that it would be necessary to use a certain amount of national money for the purpose of maintaining the purchasing power of the people at a level sufficiently high to maintain an effective demand against the production of the country. We have never advocated that more money should be issued than was necessary to maintain an effective demand. In other words, we are advocating that national money shall be issued to equate demand with supply.


John Horne Blackmore: We have always said that.


Victor Quelch: It must be quite obvious that this
is essential if we are to maintain the full development of our resources, because just the minute that demand lags behind supply, industry will reduce production, since no industry can continue to produce unless it can sell.
I should think that would leave no doubt whatever. I think it is a good thing just to show the hon. member that since he has been here in this house there have been statements by Social Crediters in which the whole situation in respect to production and money has been made perfectly clear. May I quote from the remarks of the hon. member for Peace River, following the quotation from Professor Plumptre which the hon. member for Churchill quoted before he proceeded to make his speech at page 1838 of Hansard, to which I have referred. At page 1537 of Hansard for April 4 the hon. member for Peace River said, referring to the expansion of credit:
What for? For the war effort: not to take care of the unemployed, not to offer social security, not to close the gap between the national product and the national income-
Showing once more that before any money whatever would be issued there would have to be production to justify it, and to absorb the money once it was put into circulation.
Now I should like to refer to something I said on the very day the hon. member for Churchill (Mr. Weaver) spoke. At that time I made a statement which, if the hon. member had been able to be here and listen to it,

would have set him right. In referring to the speech of the hon. member for Kamloops (Mr. Fulton), at page 1826 of Hansard I said:
-I would say that it would be a good thing for him to give a little attention to this general question: Canada since 1938 has more than doubled her production. She now is producing by way of $16 billion worth of goods a year; and she expects to be able to produce $16,250 million this year.
Judging by Canadian resources, I find it difficult to believe that we cannot double our production in the next twelve years, as we did in the last twelve. If brilliant young men of the type represented by the hon. member who has just taken his seat would devote their attention to the question of how to turn that full production into well-being of the Canadian people, they would not be cheeseparing, cutting off a little here and a little there. They would really open their eyes as to what could be in the future in a country so abundantly blessed with resources and the ability to transform those resources into the goods and services necessary for mankind.
There was another reference to the rapid increase in production and the possibility that money could be created to distribute that production among the people and enable them to consume it. Then I should like to quote another passage from the remarks of the hon. member for Lethbridge on October 25, 1949, appearing at page 1118 of Hansard. This is another passage which the hon. member for Churchill certainly could have read.
How much money can be created and used by the state? Enough money can be created and used, spent wisely into circulation, to enable people to buy the surplus goods on the market. If this is done and no more money is issued than enough to enable people to buy the goods, if that money is put into the hands of people who will buy, and is used to consume goods, then there will be no adverse results from the creation and issue of debt-free money.
Certainly that was clear enough; I do not see how words could make it any clearer. The big question is whether the hon. member was trying to find the truth. Now I shall leave that passage I have been discussing and refer for a moment to the statement to which the hon. member for Macleod (Mr. Hansell) alluded, the second one I referred to a while ago. I quote from page 1838 of Hansard: This statement does not silence those critics. The creation of money as advocated by the hon. member can be done, but it is only another form of hidden taxation, and the most extreme and insidious form of all. Let us assume that we have $10 worth of production, and that there is $9 of purchasing power available.
Then assume that the government listens to our Social Credit friends and creates an additional $9 of purchasing power. We now have $18 of purchasing power and still only $10 worth of goods to back it up. By this indirect method the government will have taken in taxation half the goods. This type of hidden taxation has been used by unscrupulous governments many times in history; it is called inflation.
Once more the member implies, if he does not completely assert, that, in a case where there was $10 worth of production and only 55946-125
The Budget-Mr. Blackmore $9 worth of purchasing power, Social Credit-ers would advocate the creation of $9 of extra purchasing power. This is absolutely fallacious as the statements I have just read indicate. Would it not have been much better if he had said that, the government having $10 worth of production and $9 worth of purchasing power, it created $1 worth of purchasing power? How different it would have been in that case. The $9 worth of purchasing power would have been supplemented by the creation of $1 worth of extra purchasing power, so that you would have then had $10 worth of production and $10 worth of purchasing power. It would have balanced the economy; the surplus would have been distributed and prices maintained. Why any member would stand up and misrepresent the position of any other group when that position is scientifically stated, as the position of this group has been, it is utterly beyond me to comprehend. I wonder if someone else wrote the speech for him.
If the hon. member was in Alberta at the time he says he was, he heard Premier Aberhart in the days when he was campaigning. I do not see how he could very well have avoided hearing about certain books. One of those books was "Unemployment or War", by Maurice Colbourne; one was "This Age of Plenty"; and another one was "Distribute or Destroy". Those three books very adequately and clearly set forth the surplus production which has resulted from the widespread use of machines and technological skills, and the consequent shortage of purchasing power which has resulted in overproduction or underconsumption. There can be no possible excuse for a man who wanted to find the truth failing to get one or other of those books and read it.
People will say, it is a little bit strange that you should name those books. It is not strange at all. The thing that taught Premier Aberhart the truth concerning social credit and the unbalance between production and consumption in our day was "Unemployment or War" by Maurice Colbourne. I remember clearly the time when Premier Aberhart first got a copy of the book. I remember he read it over four times before he would leave it. When he first got it he sat up all night reading it. It gave him a new idea. It showed him how production increases so rapidly that surplus production develops and the only way in the world whereby purchasing power balances production is to have a war or to destroy a whole lot of production. As we have seen in the last two wars production is destroyed and purchasing power is increased in such a way that we have prosperity during the war. The Social Credit stand has been
. 'X-
1964	HOUSE OF
The Budget-Mr. Blackmore that we certainly do not have to have a war in order to increase purchasing power in relation to the goods. We have found a means whereby we can do that without a war a means that will make everybody well off.
This gentleman I think should read the book "This Age of Plenty", written by C. Marshall Hattersley. The book is written in a scholarly manner that would be appreciated by the hon. member for Churchill (Mr. Weaver). The book "Distribute or Destroy" is very clear; the title conveys the meaning that has been developed in the book.
It will be wondered by some whether what I have said about the stand which this group takes conforms with the stand of the social credit secretariat in London. Social Credi-ters throughout the world, when they are well informed, are more or less in close touch with the social credit secretariat in London, generally speaking, as to the philosophy and teaching. I have in my hand a book entitled "Elements of Social Credit", which was published in 1946 under the direction of the social credit secretariat of London, of which the advisory chairman is Major C. H. Douglas. He was the originator of the social credit idea, and from him we have all gathered our inspiration. What this textbook says then is fairly authentic concerning social credit-in fact, I will say it is absolutely authentic. I should like to read several passages from the book, but they will be couched in the careful language of Major Douglas, will be rather scientific and not very clear. If anyone will study them, however, the meaning will become quite clear. It is not observable on first reading.
I quote now from page 4:
The course, then-
That is the course on social credit making up the book.
-aims at as complete instruction as possible in a limited number of matters concerning social credit. All the matters which concern social credit have not yet been investigated. It is the youngest of studies, though possibly the most vitally important.
Notice these words.
It concerns the efficiency of human beings in association (or in society) as measured in terms of human satisfaction.
And now put in the ordinary language of the man in the street, that simply means that social credit means the production power of a group of people working in a community with their resources to produce goods and services and deliver them as, when and where required; that is the meaning of social credit. The social credit movement is a


movement based on the philosophy or technique in virtue of which it becomes possible for the community to gain access to its social credit and use it.
Now, I wish to read two or three other small excerpts from this book. I shall read now from page 7. There social credit is defined as:
. . . the efficiency, measured in terms of human satisfaction, of human beings in association (or in society).
This passage has the same meaning as the other passage I quoted. Again on the same page, we find this:
The power of human beings in association to produce the result intended, measured in terms of their satisfaction.
Of course this means the power of the community to produce goods. The attention of the reader is concentrated upon goods and services.
On page 8 of this book we have the following quotation:
Social Credit, then, is a fact, not a theory. We shall try in this course to get to know as much as possible about this power-about every means of increasing it and every means of diminishing it.
The power referred to there is the power to produce goods with the resources the community has.
The result will be more power in our hands to control it, whether we use that power or not.
On page 25, I read the following:
The speculations concerning such matters have nothing to do with us as Social Crediters, unless they can be shown to affect the power of society to produce the result intended as measured in terms of human satisfaction.
Once again, that means goods.
It is the definition of social credit that limits our technique.
There is one more quotation I should like to read from page 41:
. . . the efficiency of human society as measured in terms of satisfaction to individuals (for all of those who support human society, or participate in human association, are individuals).
Now, the quotation as I have given it there once more refers to goods, so that the whole social credit attitude is based on the goods supply which is available and which may be rendered available with the means of production at the disposal of the community and the resources which are there to be worked up into goods and services beneficial and desirable to the community.
I trust, Mr. Speaker, that from this time forward all the members of the House of Commons, of any party whatever, will at least take the pains to know just exactly what social credit stands for. We are going to endeavour to understand the things for which

the other parties stand. We shall never advance this country by misrepresenting each other's stand.
If the Liberals cannot discredit social credit by placing the true meaning of social credit before the people and attacking it, that is clear evidence that social credit must have a far better case than they would have us believe.	Surely if	the case against	socialcredit is	strong, all	that	is necessary	is totell the truth about it. There is a group of people right here in the house who are able to show	the truth	and	to establish	it toanybody's satisfaction here in the house, to any degree that is desired. All we ask is the privilege	of letting	the	people understand
what social credit is, so that, when they talk, the people in the country can find out what it is. If social credit is sound, everybody wants to know; and I am sure even the Liberals want to know if it is sound. If it is unsound, everybody wants to know, and Social Crediters want to know.
I hope, Mr. Speaker, that it will not be necessary for me to make another speech like this as long as I am in parliament.


Solon Earl Low: I promise, Mr. Speaker, that I will not detain the house for more than two or three minutes from this vote that is to be taken. My kind and learned friend the hon. member for Temiscouata (Mr. Pouliot) has supplied me tonight with the perfect example of the kind of dollar that we do not want in Canada, this one which I am holding in my hand. Unfortunately, however, it is exactly the kind of dollar that the Minister of Finance (Mr. Abbott) is using today, and I am going to demonstrate that it is. Furthermore, I will not expect the minister to refute this in his rebuttal; but when his estimates come up, I want him to be prepared to meet what I am going to tell him now and to explain whether I am right or wrong.
If anyone will just take the trouble to examine an authentic work by Professor James Holladay called "The Canadian Banking System", which was written not too long ago and which now reposes in the parliamentary library, he will find that it is a book in which there is a foreword written by C. M. Short, an economist for one of the chartered banking companies in Canada. In his foreword Mr. Short writes an unqualified endorsement of what Dr. Holladay said. On pages 150 and 151 of the book Dr. Holladay shows the kind of money that Canadians are dealing in today as a result of the money system that they have adopted under the various finance acts and banking acts. This is what he says: "Under the present banking 55946-1251
The Budget-Mr. Low
system in Canada, one dollar of basic gold deposit can be expanded and stretched into $84 worth of purchasing power". That is the kind of stretch there is, 84 times, in the kind of dollar you are using. Whenever anybody starts talking about rubber money and Social Credit funny money, I will challenge him to produce a funny money to compare with what you are using.
Furthermore, it is not just the question of stretch that causes the difficulty. When the stretch takes place, it must be remembered that unless something is done to ease the tension, the stuff will fly back and knock your head off. That is exactly what happens when the banking system begins to call in the expansion of credit that they have made in the course of stretching one dollar of basic gold deposit into $84 of purchasing power. It is deflation that is the real danger. What we are trying to get away from is the amount of stretch followed by the amount of retraction. Social credit money would not do that. Social credit money would not allow of an unprecedented expansion or stretch of that kind followed by some type of deflationary contraction. Social credit money would be based upon a 100 per cent cash reserve system, and therefore would be without that stretch.
I just point out to you the fact that in the last year before the war the total amount of gold, currency and bank deposits in Canada was approximately $2,248 million. What is it today, in 1950?. It is three times as large. Where did it come from? It came from the amount of stretch, which the hon. member for Temiscouata has demonstrated so kindly by bringing in this rubber dollar that I hold in my hand, stretch through the banking system, as a result of expanding credits. As I have pointed out time and again, the danger is that at some time or other the banks may begin to lose confidence in borrowers' ability to repay and, when they do, start calling in loans which represent expansion. Then they will contract the credits and leave quantities of goods unsold or unmovable. Social credit says that that is not the state of things that should prevail in Canada.
I thank the hon. member for Temiscouata for bringing in this rubber dollar, because it demonstrates exactly what I wanted to put over, namely that the kind of dollar being used today by the Liberal government is a rubber dollar that has been stretched 84 times.


Mr. Rowe:: Be sure to send that rubber dollar back to him.


Charles Eugène Pouliot: I will say to my hon. friend that he has given an interesting explanation-

The Budget-Division Mr. Knowles: Of your money.


Charles Eugène Pouliot: -of the money he has now
In his hand, a sample of rubber money. But I will remind him that there was also a social credit dollar.


Solon Earl Low: Yes.


Charles Eugène Pouliot: And it had to be taken back by the Social Credit party-


Solon Earl Low: It was redeemed.


Charles Eugène Pouliot: -because you could not do
anything with it.


Solon Earl Low: Oh, yes, you could. It did its job. It did not stretch.


Charles Eugène Pouliot: It was brought out among themselves, and it is precisely because it was worthless that they had to take it back.


Solon Earl Low: No. It did its job and finished its work.


Charles Eugène Pouliot: If it were good, they would still have it.


Solon Earl Low: It finished its job.


Mr. Speaker:: Order. Is the house ready for the question?


Some hon. Members:: Question.


Mr. Speaker:: The question is on the amendment moved by Mr. Macdonnell (Greenwood). Shall the amendment carry? Those in favour of the amendment will please say "yea".


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will say "nay".


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the "nays" have it.
And more than five members having risen: Mr. Speaker: Call in the members.
The house divided on the amendment (Mr. Macdonnell, Greenwood), which was negatived on the following division:
Adamson
Argue
Beyerstein
Blackmore
Blair
Browne (St. John's Bryce
Catherwood
Charlton
Coldwell
Coyle
Ferguson
Fraser
Gagnon
Green
Hansell

++YEAS
Messrs-.
Harkness
Herridge
Higgins
Hodgson
Jones
West) Knight Knowles Lennard Low
Macdonnell (Greenwood)
Maclnnis
McGregor
McLure
Noseworthy
Pearkes
Poulin
Quelch Ross (Souris) Rowe Shaw Stanfield
Thatcher
Tustin
White (Hastings-Peterborough) Wright
Stewart (Winnipeg North) Wylie-43.
++NAYS
Messrs:
Abbott
Applewhaite
Arsenault
Ashbourne
Bater
Beaudoin
Beaudry
Benidickson
Bennett
Bertrand
Blanchette
Boisvert
Boivin
Bonnier
Boucher
Bourget
Bradette
Breithaupt
Brisson
Brown (Essex West)
Byrne
Cameron
Campney
Cannon
Carroll
Carter
Cavers
Chevrier
Conacher
Corry
Cote (Verdun-La Salle)
Cruickshank
Darroch
Decore
Denis
Dewar
Dickey
Dion
Douglas
Dumas
Eyre
Fauteux
Ferrie
Fournier (Hull)
Fournier (Maisonneuve-Rosemont)
Gardiner
James
Jutras
Kent
Kickham
Kirk (Antigonish-Guysborough)
Kirk (Digby-Yarmouth)
Lafontaine
Laing
Langlois (Gaspe)
Larson
Lefrancois
Lesage
MacKenzie
MacLean (Cape Breton North and Victoria) MacNaught McCulloch McCusker
McDonald (Parry Sound-Muskoka)
Mcllraith
Mclvor
McWilliam
Major
Maltais
Masse
Maybank
Monette
Mott
Murray (Oxford)
Murray (Cariboo)
Mutch
Nixon
Picard
Pouliot
Proudfoot
Prudham
Ratelle
Richard (Gloucester) Richard (St. Maurice-Lafleche)
Richard (Ottawa East)
Riley
Roberge
Robertson
Robinson
Garson	Rooney
Gauthier (Lake St. John) Sinclair
Gauthier (Lapointe)
Gauthier (Portneuf)
George
Gingras
Gingues
Goode
Gosselin
Gour (Russell)
Gourd (Chapleau)
Gregg
Harris (Grey-Bruce)
Harrison
Helme
Henry
Hetland
Hosking
Huffman
Hunter
Isnor
Smith (Queens-Shelburne)
Smith (York North) Smith (Moose Mountain) Stewart (Yorkton)
Stick
Stuart (Charlotte)
Studer
Tremblay
Viau
Ward
Warren
Weaver
Weir
Welbourn Whiteside Winkler Wood-129. #


Clarence Gillis: I was paired with the Minister of National Health and Welfare (Mr. Martin). Had I voted, I would have voted for the amendment.


Arthur Leroy Smith: I was paired with the hon. member for Edmonton East (Mr. Macdonald). Had I voted, I would have voted for the amendment.


Mr. Leger:: I was paired with the hon. member for Royal (Mr. Brooks). Had I voted, I would have voted against the amendment.
Main motion (Mr. Abbott) agreed to on division and the house went into committee, Mr. Beaudoin in the chair.



EXCISE TAX ACT AMENDMENT

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, amongst other things:
1.	That the excise tax of five per cent on toilet soap be repealed effective on and after March 29, 1950.
Resolution agreed to.
2.	That the sales tax on the following articles be repealed effective on and after March 29, 1950-
ice cream: drinks prepared from fresh milk; prepared whipping cream.
Gordon Knapman Fraser: Would this also include prepared drinks made out of milk such as Oval-tine and chocolate malted milk?


John Ewen Sinclair: As far as the trade-named article is concerned, the answer is "No." As far as the second article is concerned, the answer would be "Yes", if it is prepared from fresh whole milk.


Gordon Knapman Fraser: There would be as much or perhaps more prepared milk in the Ovaltine than in the chocolate malted. I refer to the chocolate malted milk that is prepared and sold in the can.


John Ewen Sinclair: I am not an expert on this sort of milk, but my recollection is that chocolate malted milk is sold as such as a preparation whereas Ovaltine is put out in a prepared form with which milk is mixed afterward. Milk itself is sales tax free, anyway.


Mr. Coldwell:: Whole milk.


John Ewen Sinclair: Fresh milk.


Major James William Coldwell: Chocolate drinks are made of skim milk.


John Ewen Sinclair: I should have said fresh milk.


Gordon Knapman Fraser: These prepared drinks in the containers are at least half made out of milk. Half of the contents is milk. They contain milk, eggs, and things of that kind. Why is that not included here?
Excise Tax Act Amendment


John Ewen Sinclair: The answer is the same as I gave before. Somewhere there has to be a dividing line, and the dividing line requested last year by many members on this side of the house and on the other side was an exemption for dairy products such as ice cream and drinks made out of fresh milk. That has now been granted. It has not yet been considered proper to give such an exemption to these very special prepared drinks. The intent here of course is to assist the dairy industry. That can be best done by the adoption of this motion.


Gordon Knapman Fraser: I wish to ask another question. We have here a reference to prepared whipping cream. Does that refer to the new gadget now on sale, in the plastic container?


John Ewen Sinclair: It includes more than that. Actually most whipping creams have some ingredients in them to make them whip more easily. It includes that type, and this new one which has the carbonic acid gas in it, so that when the cream comes out it is already whipped.


Gordon Knapman Fraser: It includes that?


John Ewen Sinclair: Yes.


Gordon Knapman Fraser: You said first that whipping creams have something in them. I do not think the pure food regulations would allow anything like that. I am referring to these prepared whipping creams in the plastic container. Are not those containers manufactured in the United States? Are they manufactured here in Canada?


John Ewen Sinclair: I am afraid I have not the least idea.


Gordon Knapman Fraser: If they are manufactured in the United States-I understand it is an American product-I do not think this should apply to them at all. The cream would be all right, but it has all kinds of mixtures in it.


John Ewen Sinclair: Getting back to the purpose of the resolution: it is to give aid to the dairy industry. No matter whether the containers are made in Canada or in the United States, the cream in those containers is Canadian cream.


Stanley Howard Knowles: Now that we are dealing with the sales tax, could the parliamentary assistant indicate, perchance by placing it on Hansard, a list of articles on which the sales tax still applies?


John Ewen Sinclair: Last year I placed on Hansard the schedule to the Excise Tax Act. That information is to be found there. There is a long list of articles on which the sales tax does not apply. Anything not mentioned in that long list which is set out as schedule III to the Excise Tax Act of last year is affected
1968	HOUSE OF
Excise Tax Act Amendment by the sales tax. Anything not there has the sales tax on it. I do not know why we should place on Hansard a schedule Irom the act, but if there is any desire we can place schedule III on Hansard, showing the list on which there is no sales tax.


Major James William Coldwell: It might be useful to the people who read Hansard.


John Ewen Sinclair: With the consent of the house we can place on Hansard schedule III of the Excise Tax Act, a list of goods on which there is no sales tax.


Stanley Howard Knowles: Before that is done, I do not think we should clutter up Hansard-even though I started the idea-with a list which would not be useful. It seems to me it would be more useful to have a list of articles on which the sales tax does apply.


Major James William Coldwell: It applies to everything, I understand, except these. If the exceptions are placed on Hansard, then it is clear.


John Ewen Sinclair: I am very glad to have the help of the hon. member for Rosetown-Biggar because if the other list were placed on Hansard it would be a list as thick as Hansard.


Stanley Howard Knowles: I am glad to have that admission from the parliamentary assistant, that the list would be a list as thick as Hansard. Does he mean as thick as Hansard of March 28 or of yesterday? In that connection may I point out that at page 30 in the budget papers appended to Hansard of March 28 the Minister of Finance has indicated that of the total revenues of the federal government last year 49-8 per cent were derived from direct taxation and 39-9 per cent from indirect taxation, the remainder of 10-3 per cent being attributable to non-tax revenue and special receipts and credits.
This amount of 39-9 per cent of indirect taxation includes excise taxes; and by looking at the figures in the table higher up on page 30 they would seem to run to more than half of the so-cailed indirect taxes. It seems to me if we are going to get away from these indirect taxes, which do not bear any relationship to ability to pay, that a very good place to begin would be by way of a further elimination of the sales tax.
Since the parliamentary assistant feels it is not wise to put on Hansard a volume as thick as Hansard, may I ask him if he has any information concerning the percentage of purchases made by Canadian people that have the sales tax applied to them?


John Ewen Sinclair: That would be difficult to obtain. When I referred to a list as thick as Hansard, I would say to the hon. member that he need only step into a jewelry shop, look around him and see all those articles

displayed, every one of which has a sales tax on it, to realize why the exact description of these articles would fill many pages. On the other hand, to give at least the headings in schedule III, might I point out that almost all foodstuffs are exempt, almost all things used in farming, mining and quarrying operations, and equipment for marine and fisheries are exempt, and things connected with religious, charitable and educational activities. A very large list of building materials is exempt.
Perhaps it might be helpful to readers of Hansard if this list were placed on Hansard.


Major James William Coldwell: I think so.


The Deputy Chairman:: Has the parliamentary assistant permission to place the list on Hansard?


Some hon. Members:: Agreed.


John Ewen Sinclair: It is as follows:
SCHEDULE III Foodstuffs
Barley; bread; butter; cheese; cream; eggs, egg albumen and egg yolks; glucose; honey; ice; lactose; lard; rice; salt; soups; split peas; sugar; yeast; yogurt;	...	, .
Bakers' cakes and pies including biscuits, cookies or other similar articles;
Cereal breakfast foods not including beverages;
Fish and edible products thereof;
Flour including pastry, cake, biscuit, and similar mixes;
Foods prepared and sold exclusively for feeding infants;
Fruit, fresh, canned, frozen, dried or evaporated;
Grain grits and meals;
Jams, jellies, marmalades, and preserves;
Malt syrup, except when sold for beverage purposes;
Maple syrup; corn syrup; table syrups, molasses, and materials to be used exclusively in the manufacture thereof;
Meats and poultry, fresh, cooked, canned, frozen, smoked or dried;
Milk, including buttermilk, condensed milk, evaporated milk, and powdered milk;
Peanut butter and shortening and materials for use exclusively in the manufacture thereof;
Spaghetti, macaroni, and vermicelli;
Vegetables, fresh, canned, frozen or dehydrated, not including pickles, relishes, catsup, sauces, olives, horseradish, mustard, and similar goods;
Vegetable juices; fruit juices which consist of at least ninety-five per cent of pure juice of the fruit.
Farm and forest
Bees: casein; fertilizer; hay; hops; shorts; straw:
Alfalfa meal;
Animals, living;	,
Baling twine for baling farm produce, and articles and materials to be used or consumed exclusively in process of manufacture thereof;
Beet pulp, dried;
Drain tiles for agricultural purposes;
Farm produce sold by the individual farmer of his own production, not to include flowers, flowering plants or bulbs, when the sales thereof exceed five hundred dollars per annum;
Feeds for fur-bearing animals whose pelts have commercial value:
Forest products when produced and sold by the individual settler or farmer;

Furs, raw;
Gopher poison, and materials for use exclusively in its manufacture;
Grain or seed cleaning machines and complete parts thereof;
Grains and seeds in their natural state;
Harness for horses and complete parts therefor, and articles and materials to be used exclusively in the manufacture thereof;
Hides, raw and salted;
Logs and round unmanufactured timber;
Milk albumen, when for use exclusively in the production of animal or poultry feeds;
Nursery stock;
Oil cake, oil cake meal;
Peat moss when used for agricultural purposes, including poultry litter;
Poultry, cattle and other stock feeds;
Poultry, living;
Preparations or chemicals sold for disinfecting, dipping or spraying and so used in agriculture or horticulture, and materials for use exclusively in the manufacture of such preparations;
Sap spouts and sap buckets, evaporators and complete parts therefor, when for use exclusively for the production of maple syrup;
Sawdust and wood shavings;
Settlers' effects;
Vegetable plants;
Wool not further prepared than washed;
Woollen rolls or wool yarn milled for a producer of wool from wool supplied by him for his own use;
Engines
Internal combustion traction engines, and portable engines with boilers in combination, for farm purposes, or for use exclusively in the operation of logging, such operation to include the removal of the log from stump to skidway, log dump or common or other carrier, and complete parts of all the foregoing, and articles and materials, not to include plant equipment, to be used or consumed exclusively in the manufacture of the foregoing engines, boilers or parts thereof;
Mines and quarries
Crushed stone or crushed gravel;
Gold and silver in ingots, blocks, bars, drops, sheets or plates unmanufactured;
Ores of metals of all kinds;
Sand, gravel, rubble, and field stone;
Marine and fisheries
Boats bona fide purchased by fishermen for use in the fisheries, and articles and materials to be used exclusively in the manufacture, equipment or repair of such boats;
Carrageen or Irish moss;
Cotton duck and cotton sail twine to be used only in the manufacture of equipment for ships or vessels;
Rope and cordage of cotton, hemp, manila or other vegetable fibre, not exceeding one and one-half inches in circumference, for the fisheries, not including these articles for sportsmen's purposes, and materials for use only in the manufacture thereof;
Materials for use only in the construction, equipment and repair of ships;
Materials used as ingredients in canned fish;
Ships licensed to engage in the Canadian coasting trade;
Sinkers, and floats including trawl kegs, when for use exclusively in the fisheries, not including these articles for sportsmen's purposes;
Religious, charitable, health, etc.
Insulin; radium;
Articles and materials for the sole use of any bona fide public hospital certified to be such by the
Excise Tax Act Amendment Department of National Health and Welfare, when purchased in good faith for use exclusively by the said hospital and not for resale;
Artificial eyes;
Artificial limbs, and parts thereof;
Bibles, missals, prayer books, psalm and hymn books, religious tracts, Sunday school lesson pictures, books, bound and unbound, pamphlets, booklets, leaflets, scripture, prayer, hymn and mass cards and religious mottoes and pictures unframed, for the promotion of religion, and materials to be used exclusively in the manufacture thereof, but not including calendars, parish reports, forms, stationery or programs;
Donations of clothing and books for charitable purposes;
Liver extract for use exclusively in the treatment of anaemia;
Memorials or monuments erected in memory of members of the armed forces who lost their lives in the service of their country;
War veterans' badges;
Printing and educational
Manuscript; newspapers;
Books for the instruction of the deaf or dumb;
Magazines and literary papers unbound, regularly issued at stated intervals, not less frequently than four times yearly, and printing paper and printing ink for use exclusively in their production;
Photographs, paintings, pastels, drawings and other art work and illustrations of all kinds, whether originals, copies or proofs, and printing plates made to reproduce the same, for use exclusively as non-advertising news pictures or for illustrating non-advertising articles or stories in periodical publications enjoying second-class mailing privileges, the pages of which are regularly bound, wire stitched or otherwise fastened together;
Text books, printed, authorized by the department of education of any province in Canada and photograph records so authorized for instruction in the English and the French language, and materials used exclusively in the manufacture thereof;
Diplomatic
Articles for the use of the governor general;
Articles imported for the personal or official use of the heads of diplomatic missions, high commissioners representing other of His Majesty's governments, counsellors, secretaries and attaches at embassies, legations, and offices of high commissioners in Canada, trade commissioners, representing other of His Majesty's governments, consuls general of foreign nations who are natives or citizens of the countries they represent and who are not engaged in any other business or profession; automobiles, cigars, cigarettes, manufactured tobacco, ale, beer, stout, wines, spirits, purchased in Canada by any of the foregoing;
Certain building materials
Bricks; building tile, building blocks, and building
stone;
Plaster; lime; cement;
Lumber; sash; doors; shingles; lath; siding; stairways;
Plaster boards, fibreboard, building paper and materials, other than wallpaper, manufactured wholly or in part of vegetable or mineral fibre for wall coverings or building insulation;
Paints, varnishes, white lead and paint oil;
Prepared roofings;
Shower baths, bath tubs, basins, faucets, closets, lavatories, sinks and laundry tubs, not including repair parts therefor, nor pipes and pipe fittings;
Cast iron soil pipe and cast iron fittings therefor;
Glass for buildings;
Furnaces, hot water and steam radiators not to include fittings, for the heating of buildings;
Locks and lock sets;

Excise Tax Act Amendment
Structural steel to be used exclusively for the framework and support of buildings;
Articles and materials to be used exclusively in the manufacture or production of the aforementioned building materials;
Coverings
Usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax and materials to be used exclusively in the manufacture of such coverings;
Fire Brick, Refractories, Etc.
Fire brick, plastic refractories, high temperature cement, fire clay and other refractory materials for use exclusively in the construction or repair of a furnace, kiln or other equipment of a manufacturing establishment, and materials to be used or consumed exclusively in the manufacture of such fire brick or refractory materials;
Processing Materials
Materials (not to include lubricating oils) consumed, otherwise than by waste or wear, in the process of manufacture or production of taxable goods;
Machinery and Apparatus to be Used in Manufacture or Production
Machinery and apparatus, as defined by the Minister of National Revenue, and complete parts thereof which, in the opinion of the minister, are to be used directly in the process of manufacture or production of goods;
Provided that this exemption shall not apply to office equipment or motor vehicles, except diesel powered self-propelled trucks, mounted on rubber tired wheels, for off-highway use exclusively at mines or quarries, and complete parts thereof;
Miscellaneous
British and Canadian coins and foreign gold coin;
Electricity;
Fuel for lighting or heating, but not including fuel when for use in * internal combustion engines; crude oil to be used in the production of fuel;
Natural gas and gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes;
Goods Enumerated in Customs Tariff Items
173, 209b, 236b, 352a, 364, 406, 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, and complete parts thereof, 409j, 409k, 409q, 439c, 440k, 460, 476, 476a, 480, 480a, 538, 663b, 666, 667, 682, 692, 692b, 693(i), 695a, 695b, 696, 696a, 698, 700, 701, 702, 703, 704, 708, 786, 848;
Articles and materials which enter into the cost of manufacture of the goods enumerated in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409j, 409k, 409o and 439c, when imported by manufacturers for use exclusively in the manufacture in their own factories of the goods enumerated in the aforesaid tariff items, under regulations prescribed by the minister;
Articles and materials to be used exclusively in the manufacture of goods enumerated in Customs Tariff items 173, 406, 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 409q. 410b, 411, 411a, 411b, 439c, 440k, 476, 476a, 480, 480a, 538, 663, 663a, 663b, 666, 667, 696, 848;
Materials not to include plant equipment consumed in process of manufacture or production, which enter directly into the cost of goods enumerated in Customs Tariff items 406, 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 409q, 410b, 411, 411a, 411b, 439c, 440k, 476, 476a, 480, 480a, 538, 663, 663a, 666, 696.
1948, c. 50, s. 14; 1949, c. 21, s. 12.


Robert Ross (Roy) Knight: The parliamentary assistant has mentioned exemptions in respect of educational equipment. I am thinking particularly of books. I do know that books on the curricula of recognized universities and schools are exempt from sales tax. I also believe that that sales tax, however, is applied to reference books which professors in universities and teachers in educational institutions require for reference either in connection with work in the curricula or for the improvement of their own standard of education.
This seriously affects professors and teachers who in view of their qualifications, as a class, are not particularly well paid, as compared with people in business, or other vocations. I believe we need more rather than less books. For example the number of books per capita read in Canada compares very unfavourably with the record in other countries, notably Great Britain. It should be the policy of the government to encourage rather than to discourage the reading of books by such a device as placing taxes upon them. I am referring to books of an educational nature entering the country. This should be brought forcibly to the attention of the government. I know it has been asked for in the past, but I do not know to what extent the government has given it consideration.


John Ewen Sinclair: I agree with the hon. member that it is an important matter, and it is a point which has been discussed at some length. I might point out, to begin with, that a very great range of books today are free from sales tax and, if they are imported, from customs tariff. They include:
Books which are included in the curriculum of any university, college or school in Canada for use as textbooks or as works of reference, not to include dictionaries; printed books, pamphlets and cards for use in schools to test the degree of intelligence of pupils; all books for bona fide libraries, and being the property of the organized authorities of such libraries and not in any case the property of individuals or business concerns, under such regulations as may be prescribed by the minister; directories for free reference libraries; books received from free lending libraries abroad, subject to return under customs supervision within sixty days.
The great difficulty with the class of books to which the hon. member refers, those in private possession, is to draw the line between what are educational books and what are not. It is a very difficult line to draw, a line which also greatly affects these gentlemen in the taxation division, because obviously they have to keep abreast by buying these very expensive books. At the moment the best division that can be devised as far as tax purposes are concerned is the one I have just read.


Ernest George Hansell: I trust the question I am going to ask will not be considered trivial, because I am interested in the welfare of the boys and girls of the country. I should like to know the minister's answer when I ask him how the repeal of the excise tax on ice cream and drinks prepared from fresh milk is passed on to the consumer. The boys and girls still buy ice cream cones that are scooped out of the freezer with the same scoops, and are just as small as ever. They pay the same prices as before. Drinks prepared from fresh milk are still poured into the same size tumblers we have always used, and we still have to pay the same price. It is an admirable thing to repeal the excise tax on these articles, and I am not disappointed with that; but so often these tax reductions or removals are not passed on to benefit the consumer. I should like to know how the repeal of that tax is passed on to the benefit of the consumer. I do not know why this budget should not go down in history as the government's ice cream budget. On the whole it has been cold comfort to most people. When the youngsters cannot get any more ice cream for their money than they got in the past, or a larger drink of malted milk than in the past, certainly it is cold comfort to them, though I do not suppose the boys and girls know very much about budgets.


John Ewen Sinclair: Well, Mr. Chairman, I am forcibly reminded of the debate in this connection last year. At that time the hon. member for Melfort, who is sitting right in front of the hon. gentleman, raised the same point. I told him then our calculation showed that the saving would be about one-sixth of a cent on an ice cream cone and one cent on a brick. As I recall it, the response to that observation, particularly by members coming from Quebec ridings, was that that was all right, because it would be the primary producer who would pick up that extra saving. Obviously it is impossible for the retailer to pass on a saving of one-sixth of a cent, but it does make his ice cream a little more attractive to sell in competition with other goods a child might normally buy with his five cent piece. As far as the saving on ice cream bricks is concerned, I believe in some localities the saving of one cent has been passed on. Once again, however, I do not think the intent here was to aid either the child or the retailer. The plea I heard last year was for aid to the dairy farmer, who had been hard hit by the sale of margarine.


Major James William Coldwell: One other way would be to fix a standard for ice cream, and say that the ice cream could be somewhat enriched. It seems to me the ice cream we have been
Excise Tax Act Amendment getting for the last several years has been made very largely with powdered milk, and with very little cream in it. If they put a little more cream in their ice cream I think it would help a great deal.


John Ewen Sinclair: I shall draw my hon. friend's remarks to the attention of the Minister of Agriculture.


Gordon Knapman Fraser: Last session I asked the Minister of Agriculture if the cream content of ice cream could not be raised, and shortly afterward I was informed that it could be, and it was raised from 10 per cent to 13 per cent.


John Ewen Sinclair: Thank you.


Victor Quelch: Does the retention of the sales tax on schoolbooks also apply to all school equipment?


John Ewen Sinclair: No, it does not apply to all school equipment.


Victor Quelch: What is the situation regarding school busses? I believe the excise tax was taken off last year, but does the sales tax still apply?


John Ewen Sinclair: The excise tax was taken off; the sales tax still applies.


Stanley Howard Knowles: Has the parliamentary assistant the answer to the question I asked a moment ago? What about clothing?


John Ewen Sinclair: There is a sales tax on clothing.


Stanley Howard Knowles: Then I have just this further comment on this resolution. We are all glad to see the sales tax taken off some items, but our point is that it should be taken off still more. I refer once more to the table I have already indicated, on page 1306 of the budget papers which were appended to Hansard for March 28. That table shows not only the larger brackets I gave a few moments ago, but also in more specific detail that excise taxes, in the whole of the last fiscal year, accounted for 22-3 per cent of the revenue of the federal government. That heading of excise taxes would include some taxes other than the sales tax, but I think I am correct in saying that the sales tax is the major item. On the other hand the percentage of the total raised by individual income taxes was only 24 per cent; in other words they are about the same. Canadians were led to feel that something generous was done for them when the income tax was lowered in 1949, but I think most Canadians will realize the significance of the percentages I have just mentioned. These show that taking Canadians as a whole, for every dollar we pay in income tax, and know we are paying, we pay a dollar in excise tax that we do not know about.

Excise Tax Act Amendment
The most undesirable feature about the dollar we pay and do not know about is that it is assessed against Canadians without any necessary relationship to ability to pay. Amounts collected under the income tax are related to some extent to the ability of the taxpayer to pay, but these excise and sales taxes are the same whether the purchaser is living on an old age pension, or a superannuated civil servant's pension, or a veteran's or disability pension, or a war veteran's allowance, or is a worker at $150 or $200 a month, or is a person in the higher income brackets. In other words I am pleading with the government again, in assessing the whole financial situation with respect to federal revenues, to get away from the indirect taxes that are not based upon ability to pay, and move in the direction of a fairer kind of taxation.


John Ewen Sinclair: I only wish I had at hand the very excellent reference to Hugh Dalton which I gave last year, about the place of indirect taxation in any practical taxation field. It is quite true that theoretically the income tax is the fairest tax, being based on ability to pay; but every country that in time of war has imposed excessive rates of income tax has found they have had a very bad effect on the production of individuals, groups of individuals and companies. Somewhere there must be a balance, that is a balance between what we obtain from direct taxation and indirect taxation. In this country we have tried to make our indirect taxation progressive, as is the income tax. In the case of the income tax, the higher your income the higher the tax.
With our indirect taxation, first of all there are the lists, which you willsee in Hansard tomorrow, of the goods on which there is no sales tax or excise tax. It will be found that the person to whom the hon. member referred, the person on old age pension or burnt-out pension, would obtain a great part of his actual requirements from the goods in that list. Then there is the other group, containing practically everything else in the country, on which sales tax is levied. It is quite true that one of the items there is clothing, but once again there is the matter of progression. The purchases of clothing by persons in those circumstances will be far less than those of persons with higher incomes.
Then there is. the third group in our taxation structure of less essential goods on which a further ten per cent is levied. This covers luxury goods such as perfumes, leather goods and things like that. Once again one does not expect the people on these small pensions to purchase many of these articles.
Lastly, we have the excise duties which are traditionally high on liquor and tobacco.


It is quite true that many of these people do derive great comfort from tobacco. On the other hand, so far as the liquor tax is concerned, you will *not find very many purchases being made by the people in these low income groups. On the other hand, the people in the higher income groups do spend an increasing part of that income on goods upon which there is a heavier tax. We have tried, therefore, even with our indirect taxes, to have a measure of progression so that the higher a man's income the more he is likely to have to pay in such taxes.


Stanley Howard Knowles: May I just ask the parliamentary assistant to confirm or deny this comment? An impression might be obtained from what he has just said that a fairly large proportion of these excise taxes might be taxes on liquor and so on. As I read the table the Minister of Finance gave on page 1213, it seems to me to be clear that the sales tax accounted for $400 million in the last fiscal year, and that the other excise taxes-which I take it are the liquor taxes-accounted for only $153 million. If I am wrong, will the parliamentary assistant correct me?


John Ewen Sinclair: The fourth level is the group with no sales tax. The first group is with the sales tax, then the group with excise tax, the group with ten per cent, and then there is this top group, including liquor and tobacco, on which there is an excise tax at a very high rate. Last year we raised from them $229,190,669, and from the sales tax, we received-perhaps it would be easier to put it in round figures-$415 million; and liquor and tobacco taxes, $229 million.


Mr. Shaw:: Mr. Chairman, during our discussion on the sales tax last fall, I had occasion to make a rather strong plea for the remission of sales tax on machinery purchased by municipalities. As I pointed out on that occasion, that arrangement does exist under which the moneys paid in this way are remitted to the provincial governments. I suggested that the government might extend this same consideration to municipal governments. A partial explanation was given on that occasion, but I believe it was said that further consideration would be given to this matter.
Obviously, if consideration was given it had no particular bearing upon the attitude of the government because no concessions have been made in that direction. In my plea last fall I was supported by members from other parties within the house, in fact by members who had a good deal of municipal experience and who sit on the government benches. The association of rural municipalities in my own province unanimously

endorsed a resolution asking for favourable consideration of this matter. I rather fancy that the same action has been taken by municipal governments through their organizations in other provinces. No doubt the government has received representations in this respect, and I should like to ask the parliamentary assistant if he can give some justification for the decision which the government still persists in adopting in this connection.


John Ewen Sinclair: Representations have been received within the last year from the municipalities in every province in Canada on this matter, I believe. Naturally every group who have a tax of any description, whether it be income tax, sales tax or excise tax which applies to them, are always keen to see that tax removed.


Hugh Murray Shaw: But this is a government.


John Ewen Sinclair: Yes. and through their
endeavours consideration was given to the request, as it is always given to a request for the removal of a tax; but the budget committee decided, and the government approved, that because of our need for revenue we could not at this time remove the sales tax on that equipment.


Mr. Macdonnell (Greenwood):: Do you
ever have anyone asking to be taxed?


John Ewen Sinclair: We did in one instance.


Robert Ross (Roy) Knight: There are machines purchased by municipalities upon which no tax should be applied, and that is fire-fighting equipment. We read of the tragedies which happen in this country in which people lose their lives because the municipality in question was unable, through economic circumstances, to buy the proper fire equipment. We read continually of the poor type of engines, and some places go without fire equipment at all because of the high cost of that machinery. I do not see how any government can ju'tify the imposition of a tax on machines used for the preservation of life. The Minister of National Defence quite freelj admitted to me in the course of debate in this house that these machines form part of the defence equipment of this country. Municipality after municipality is in the position of having either inadequate fire equipment or none at all. I should like to hear a comment from the parliamentary assistant on the justification of the present tax against such fire equipment. Has he anything to advance?


John Ewen Sinclair: I cannot add anything to the answer I have just given.
55946-126J
Excise Tax Act Amendment


Mr.   Baler@: In connection with the taxes on macninery owned or purchased by municipalities, will the parliamentary assistant say whether the provincial governments in every province of the dominion pay these taxes?


John Ewen Sinclair: The answer is no.


Donald Methuen Fleming: May I ask the parliamentary assistant about another type of equipment, and the reason why some consideration has not been, or may not be, given to it? The parliamentary assistant may be aware of a resolution passed by the Canadian construction association at its annual meeting in Montreal last January. I should like to bring it to his attention. It reads as follows:
Whereas:	The incidence of the federal sales tax
of eight per cent falls inequitably on many types of building and road construction material, some being exempt and others, without apparent logical reason, continuing subject to the impost.
And whereas: The previous action of the government in removing the sales tax from certain construction materials was of great value in reducing construction costs.
Therefore be it resolved: That this association petition the Hen. Minister of Finance to further reduce construction costs and to remove the present uneven incidence of sales tax on building and engineering materials by extending the exemption from such tax to all building and engineering materials.
And further: That similar representations be made to all provincial and municipal governments which impose similar taxes on building and engineering materials.
May I ask the parliamentary assistant whether any consideration has been given to the removal of sales tax on that type of equipment?


John Ewen Sinclair: A great deal of consideration has been given in the last three years to the exemption of building materials. The exempted list has been continually revised and today it covers almost every item used in the construction of the ordinary house. When you get into the more elaborate type of construction, such as theatre construction and the fancy types, some of the fittings used there are subject to sales tax. Once again it gets back to this idea of getting some measure of progression into our sales tax. We have been reviewing that list with regard to building materials, and I believe we have exempted most of the things that go into the construction of the ordinary home. If you look, you will find that almost every possible thing which is used in the construction of the ordinary home is being exempted from sales tax.


Mr. Wright:: I should like to refer to the case which occurs along the border where a United States firm may come in and bid on a contract for road work, digging a pipe line

Excise Tax Act Amendment or on other contracts which may be let in Canada. They bring their equipment in from the United States to do that work. As to the Canadian company obtaining their equipment, with the sales tax and tariff it costs them approximately 35 per cent to 40 per cent more than the equipment costs the United States company bidding on the same contract. What is the position of that equipment being brought in here? Is there any charge or tariff against it? If not, there is some most unfair competition in the contract being bid on.


Louis-René Beaudoin: Order. Before the parliamentary assistant replies to this question, there is something I should like to draw to the attention of the committee. I should have interfered before. It seems to me that speeches in committee of the whole ought to be strictly relevant to the item or clause under discussion. We have now before us paragraph 2 which repeals the sales tax on a number of items, namely, ice cream, drinks prepared from fresh milk and prepared whipping cream. I am not going to make a ruling. I am merely asking myself how far I can permit hon. members to go when they ask questions on machinery and various other items. We are on paragraph 2; and although I am not making a ruling I repeat that I should be inclined to think that once questions have been asked on ice cream, on drinks prepared from fresh milk and on prepared whipping cream, we should be prepared to carry the item.


David McKenzie Wright: I am sorry, Mr. Chairman.
I thought we were on paragraph 3.


Louis-René Beaudoin: Shall paragraph 2 carry?


Donald Methuen Fleming: May I thank you, Mr. Chairman, for your statement, because I thought we were on paragraph 3.


Louis-René Beaudoin: Shall paragraph 2 carry?


Donald Methuen Fleming: No. I was sorry I had not. entered the house in time to ask a question or to make an observation on paragraph your interjection therefore is most timely and I thank you for it.


Louis-René Beaudoin: Order. Since the discussion has been proceeding on paragraph 3, shall we consider paragraph 2 as having been allowed to stand? We shall carry on with discussion of paragraph 3 and come back to paragraph 2, provided that the hon. member for Eglinton is the only one who wants to ask a question.


Victor Quelch: Will the parliamentary assistant explain what articles are referred to in
[Mr. Wright. 1

paragraph 3? Does that mean that articles of every kind and character bought by an institution are exempt from sales tax, including hardware, clothes and furniture for the use of the insiitution?


John Ewen Sinclair: That is the intention. There has always been a strong feeling that this exemption which was granted to the hospitals should be extended to a group of institutions which are closely allied to hospitals. For example, in my province, and I am quite sure in other provinces also, there are the homes for incurables which are not properly hospitals. But nevertheless they require, for the treatment of these old people, a great deal of hospital equipment such as hospital beds; in addition, they supply medical equipment which would be supplied free if these incurables, instead of being in a home for incurables, were in a proper hospital. As you know, one of the great attempts being made today is to try to clear our hospitals of that type of case and put old people in old people's homes or nursing homes. That is one of the reasons.
The second class to which this section applies is orphanages. It seemed unfair that this sales tax exemption should be given to all hospitals and not to orphanages. There are some hospitals which are in not too bad financial condition whereas no one knows of any orphanage which is in a good financial position. So this resolution, which has been demanded again and again by members in all parts of the house, has been brought forward. It is going to be necessary when the bill is brought down to spell out clearly just what type of institutions are going to be covered so that there will not be any abuse. We have had to do that in connection with the hospitals too. With the hospitals we take the certification of the provincial government as evidence that they are bona fide hospitals. But the group of institutions which are covered in this resolution will be carefully enumerated when the actual bill is brought down, and goods bought by those institutions for use in those institutions will be free from sales tax.


Louis-René Beaudoin: Shall paragraph 3 carry?


Mr. Thatcher:: No. There is one point I am not quite clear on. I think this is a first-class amendment. Suppose one of these institutions goes to a retailer or to a wholesaler to buy certain merchandise. How do they get that eight per cent sales tax back?


John Ewen Sinclair: Provision will be made in the act for refund of the sales tax which was paid.


Wilbert Ross Thatcher: Who will refund the money, the retailer or wholesaler?


John Ewen Sinclair: It will go to the institution. The institution itself will file, as do hospitals today, for refund on those things which were bought.


Wilbert Ross Thatcher: Is that on anything they buy, no matter how small it may be?


John Ewen Sinclair: No matter how small or large.


William Joseph Browne: Reading this paragraph, I notice it contains the words "public institution". Is there any provision to exempt private hospitals from the payment of sales tax on similar materials or articles purchased?


John Ewen Sinclair: The distinction is that a private hospital that has been run for gain or profit has never qualified for this. They had to be public institutions which take in the general public and were supported by grants from the public treasury, provincial, municipal or federal.


James MacKerras Macdonnell: Perhaps it is run for profit but makes a loss.


William Joseph Browne: Like the one in Montreal; Notre Dame, I think it is. It is nearly bankrupt.


John Ewen Sinclair: Articles and materials for the use of any public hospital certified as such by the Department of National Health and Welfare, when purchased in good faith for the exclusive use of such hospital and not for resale, are exempt.


Louis-René Beaudoin: Shall the paragraph carry?


William Joseph Browne: No. I would suggest that the government should give consideration to a revision of that section to enable private institutions which are really being operated for charity, such as those institutions or hospitals which are conducted by the Sisters, to get this advantage.


John Ewen Sinclair: Those are covered in this, as are the hospitals.


Mr. Benidickson:: They could be certified.


William Joseph Browne: But they are private institutions, are they not?


John Ewen Sinclair: They are not private institutions in the sense that they are run for gain or profit. Such hospitals have been covered in this previous section and it is the intention to cover in the bill such religious hospitals, orphanages or old people's homes. In the bill it will be necessary to spell out carefully exactly the type of public institution to which we are going to give this aid. We
Excise Tax Act Amendment do not intend this aid to be given to old people's homes which are run for profit or hospitals which are run for profit.


Percy John Rowe: Old people's homes that are run by a municipality will be included?


John Ewen Sinclair: If they receive grants from the provincial government by way of assistance, that qualifies them.


Hugh Murray Shaw: I for one support paragraph 3 in its reference to these institutions and the exemption from sales tax. I notice it refers to the aged, infirm or incapacitated persons. This brings to my mind an important matter which I have brought to the attention of this committee upon previous occasions. We have in Canada, for example, an organization known as the Red Cross which solicits funds and does excellent work for the unfortunate in cases of flood, fire, disaster and so on. After working hard to procure the money, from which it gets no personal benefit since it is used for the assistance of the unfortunate, the government jumps into the picture and grabs sales tax on many of the commodities which it purchases and gives to the unfortunate. I have often wondered what justification there could be for the government grabbing this slice.


John Ewen Sinclair: The slice to which my hon. friend refers could best be referred to as a crumb. All items used in Red Cross hospitals are exempt, just as are those in any other hospital. Most of the aid given by the Red Cross, as I recall it, is in the nature of food, and food is exempt from sales tax, or medical equipment; and you will find that most medical equipment is also sales tax free.


Hugh Murray Shaw: It is all a question of whether you kick a man hard or not so hard. There is a principle involved. While I appreciate the fact that many things are exempt, it is true that certain things still bear that sales tax. It was a matter of principle, not so much a matter of dollars. If there is such a small amount of money involved, there should be all the more reason for the government cutting the sales tax out there, because a moment ago the parliamentary assistant emphasized the necessity for procuring revenue as his reason for the government not giving favourable consideration to the other matters which I brought up a few moments ago. This was just a matter of principle.


John Ewen Sinclair: The matter of principle goes a little beyond the Red Cross. There are many good charities in this country; there are some doubtful charities.


Hugh Murray Shaw: I suppose so.


John Ewen Sinclair: The thing is, any act applied to charities would have to indicate very care-
1976	HOUSE OF
Excise Tax Act Amendment fully the qualifications of the charity, and that is a very difficult thing to do. It is much easier, as far as administration is concerned, to see that the principal thing is handled by the Red Cross, and all things handled by Red Cross hospitals are sales tax exempt.


Mr.   Baler@: There are many old folks homes that may be operated for gain. How will this repeal apply to the Salvation Army, which operates old folks' homes?


John Ewen Sinclair: The Salvation Army today have their hospitals classed as public institutions and if they run their old folks' homes -and I am sure they do-in the same fashion, they will get it. The type of old folks' homes which will not be exempt are fairly common on Vancouver island. They are places to which people who have some means actually go and pay for their care. People live together in a small community in pleasant cottages, and these cottages are classed as old folks' homes. They are not in the same category as hospitals run by the Salvation Army or by a municipality or a province.


Stanley Howard Knowles: I should like to know if institutions which at present can pass these other requirements and receive aid from institutions like the Red Feather will qualify?


John Ewen Sinclair: I would ask the hon. member to wait until he sees what is actually in the bill. Let us not discuss it in too much detail just now.


David McKenzie Wright: Before the resolution carries I want the parliamentary assistant to answer the question I raised with regard to United States contractors coming into Canada with equipment and bidding on contracts against Canadian contractors who have to pay sales tax, excise tax and customs duties on their equipment.


John Ewen Sinclair: I would ask the hon. member to hold that question until the third group of resolutions on the customs tariff are up. It is a very interesting question. I myself would like to have the answer to that. If the hon. member will ask the question when the third set of resolutions on the customs tariff are up I shall have the answer then.
Resolution 3 agreed to.


Louis-René Beaudoin: We will now revert to resolution 2.
2. That the sales tax on the following articles be repealed effective on and after March 29, 1950-ice cream, drinks prepared from fresh milk; prepared whipping cream.


Donald Methuen Fleming: This resolution proposes the removal of the sales tax on ice cream, drinks prepared from fresh milk, and prepared whipping cream. I wish to make one or two brief


observations. These foods that are enumerated here fall within the category, generally speaking, of prepared foods; but there are a number of prepared foods that are still subject to sales tax. One can certainly approve the proposal to remove the sales tax on these three, but one wonders at the same time why the government should stop there. In the case of prepared foods that are essential, why should not the removal be extended to them? We are now faced with the situation where the cost of living is the highest in the country's history.


Louis-René Beaudoin: Does the hon. member propose to make a proposal modifying this resolution? If he is not prepared to do so I would say he is not in order unless he speaks on ice cream, drinks prepared from fresh milk, and prepared whipping cream.


Donald Methuen Fleming: I am speaking on the subject of prepared foods, of which these are three examples selected by the government. In his budget speech the Minister of Finance was able to put an estimate on the loss of revenue on these three items. At page 1216 of Hansard, referring to this particular proposal, he says;
We have received strong representations from the dairy interests that the removal of this tax will give encouragement to the consumption of ice cream and dairy drinks at a time when sales of certain other milk products are declining. The loss of revenue in this item will be about $2 million in a full year.
I submitted an inquiry some weeks ago to the following effect:
What amounts have been collected, by years, and in the aggregate, by way of sales tax from the outset of levy thereof on (a) ice cream; (b) other foods; (c) clothing; (d) household furniture?
The answer submitted by the Minister of National Revenue was, to say the least, cryptic. It said:
Information not available. No separate statistics are maintained of sales tax collected on individual commodities.
Nevertheless it has been possible for the Minister of Finance, on giving some thought to this question, to put an estimate on the actual loss of revenue to be anticipated from the removal of the sales tax on these three particular commodities. It seems to me, since the Minister of Finance is in a position to do that, the Minister of National Revenue should be in a position at least to give some information in reply to the inquiries that I submitted; and I wonder if it is still not the intention of the department to submit the information in reply to the questions asked about the other foods.

I am not going to risk your disapproval by saying anything about the subject of clothing or household furniture. I am confining myself strictly to the subject of prepared foods, of which these are examples.


John Ewen Sinclair: Mr. Chairman, the principal reason, of course, why these three prepared foods have now been made exempt, where there are still a variety of prepared foods such as pickles, catsup, sauces, olives, horseradish, mustard and so forth still not exempt, or mainly excluded, is that demands have been made by farmer members of this hoo'e for further aid to their industry. That was the advice given by the minister, and it is the advice that was given nere a little earlier on the same thing.
The actual list of these prepared foods which are still not sales tax exempt is a fairly small one, and they are not of the types which are nominally regarded by the average family as being essen'ial for their daily diet. These foods are commonly used, but what apparently is more importani to the farmer members of this house is that it gives a little more encouragement to the dairy industry.


Donald Methuen Fleming: Is the list of foods the parliamentary assistant has ju=t read a complete list of the foods on which sales tax is still levied?
Excise Tax Act Amendment


John Ewen Sinclair: No. They are under the one heading here. I think if hon. members will study their own lists they will find therein not very many of the ordinary foods. I think there are none of the ordinary foods and not very many of the more special types here that are not exempt from sales tax, and certainly the inclusion of these three is a thing which will be welcomed not only by the farmers of the country but by the people generally.


[Stage Direction]
Resolution agreed to.
Progress reported.

Alphonse Fournier: Tomorrow we will go into committee of ways and means, and continue the consideration of these resolutions. If they pass, we will go into supply and take up the estimates of the Department of Veterans Affairs.


Donald Methuen Fleming: May I ask in which order the remaining resolutions will be taken up, income tax and then customs, or vice versa?


John Ewen Sinclair: Income tax next, and then customs.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, April 28, 1950