1952-04-22

[Stage Direction]
Second report of standing committee on banking and commerce.-Mr. Cleaver.


[Stage Direction]
Mr. David A. Croll (Spadina) presented the second report of the special committee on defence expenditure, and moved that the report be concurred in.
Motion agreed to.


Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, as recently
announced in parliament, the federal government has agreed to establish a floor price on cattle until the United States embargo on Canadian cattle and beef shipments is removed. This price, until July, will be on the basis of $25 per hundredweight for good steers at Toronto, Montreal and Moncton; $23.35 at Winnipeg; $22.80 at Saskatoon; $22.55 at Edmonton and Calgary, and $23.40 at Vancouver. At the beginning of June a floor price for the month of July will be announced, and at the beginning of each month thereafter the floor price for the next month will be announced in order that the producer may know what the floor price on his cattle will be for the next two months.
In 1951 Canada exported about 400,000 head of cattle, either as cattle or beef, for which no outside market is at present available although it is hoped that domestic consumption will increase with the lower consumer prices for beef. If the market is oversupplied, it means the price to producers will remain at the floor. With the fixing of a floor price, it will be possible for the producer to market his cattle in an orderly manner with only finished cattle reaching the market, and if this is done the producer may expect to continue to sell all his cattle without undue market gluts, and may from time to time receive prices higher than the floor.
There are various reasons why it will be in the best interests of the cattle industry to delay the marketing of cattle while the
United States embargo is still in effect, and attention is drawn specifically to the following:
1.	When the American embargo is lifted, that market will again be available.
2.	Orderly marketing will relieve market congestion and undue pressure on prices received by farmers.
3.	The establishment of a floor price means the producer will always be in a position to obtain a minimum price for the particular grade of animals which he has to market until such time as the United States embargo is lifted. It is possible that the extra feeding, with the resulting weight gain, may improve the grade and therefore increase returns to the producer.
4.	During the pasture season, cattle make their most economical gains on grass, and this is available on most farms and also in community pastures in western Canada.


Mr. Charlton:: With reference to the floor price on beef, can the minister say whether or not the government has set any differential for the grades, or is that being left to the packers?


James Garfield Gardiner: No, the prices for the different grades are related to the $25.


Mr. Quelch:: Will the minister say whether the floor price is in operation now, or is it dependent upon the removal of all provincial embargoes?


James Garfield Gardiner: The floor price is in operation now.


Mr. Fulford:: In view of the fact that floor prices have been set for beef cattle, is the minister in a position to state whether any consideration is being given to stabilizing the market for dairy farmers?


James Garfield Gardiner: There is a floor price under butter, of course, and, as I said yesterday, there is a legalized position in Ontario in relation to cheese. Since most of the cheese is made in Ontario, the cheese position is quite well governed by that.


Mr. Fulton:: May I ask a supplementary question with respect to this grading which will be based on the floor price? Will there be any close supervision by the government of the grading methods as a result of the institution of the floor price policy? The minister will appreciate that it means a great deal to a farmer how these grades are applied.

Livestock
Unless there is some supervision, with a floor price of $23.40 in Vancouver a farmer may get a price far below that for the cattle marketed.


James Garfield Gardiner: There is always supervision when there is a floor price. I can best illustrate that by saying it is only a few weeks ago that it was found that a floor price was established on hogs. Immediately following that it was found that at certain places a price of 25 cents less per hundred pounds was being paid. This was immediately checked and in a very short time it was levelled out at 26 cents. The same kind of supervision will be applied to cattle as has been applied to hogs.


Mr. Cardiff:: Will the minister state whether the 25 cents a pound is for red brand beef?


James Garfield Gardiner: That is for good steers; choice is above that, and there are red and blue in the choice.



FOOT-AND-MOUTH DISEASE-FURTHER OUTBREAK IN SASKATCHEWAN

James Garfield Gardiner: I am sorry to be required to announce that we have one more case of foot-and-mouth disease. The case was first reported on Saturday, April 19, and veterinarians visited the premises immediately and quarantined them. Dr. Carlson, of Regina, and Dr. Mulhern, United States foot-and-mouth disease specialist, on clinical examination diagnosed the disease on Monday morning as foot-and-mouth.
The herd is located six miles south and five miles east of Ormiston, Saskatchewan. The livestock involved is made up of twelve cattle and one hog. There is one contact herd belonging to a neighbour in which there are ten head of livestock. There are very few animals in the district, and no other contacts have yet been established. The burial pit is being dug today and slaughter is planned for tomorrow.
It has been reasonably established that the disease was transmitted from the area where it was originally found. May I say by way of further explanation that Ormiston is located five miles almost straight west of the southwest corner of the quarantine district.


Mr. Diefenbaker:: How far is that from Regina?


James Garfield Gardiner: It is about fifty miles
straight south of Moose J aw.


Mr. Argue:: Since the new outbreak is just a few miles from where I live, may I ask the minister what effect this will have 
on the opening of the Ormiston P.F.R.A. pasture, which normally takes about 2,500 head of cattle?


James Garfield Gardiner: The hon. member probably knows that this question was under consideration last week-that is, whether stock would be allowed into the pasture out of the buffer zone immediately adjacent to the pasture. At that time it was thought that probably stock would be permitted to enter the pasture, but I doubt very much whether stock will be permitted into the pasture now.


Hazen Robert Argue: I have a further question. Will the government assist those farmers in obtaining whatever local pasture there is, and if there is not pasture available will some other compensation be made in the way of provision of feed supplies?


James Garfield Gardiner: The authorities who are taking care of the situation there will, I am sure, give every possible consideration to the matter. There are other pastures, and some of them are so located that stock probably could be put in them from that district; but that is a matter which would have to be handled entirely by the men who are in charge of control of the disease.


John George Diefenbaker: Is this the case to which the minister made reference yesterday in his speech to the Rotary Club in Ottawa?


James Garfield Gardiner: Yes, Mr. Speaker.



REPORTS AND PAPERS


Hon. Paul Martin (Minister of National Health and Welfare):: I should like to table copies of the Alberta health survey concluded in 1950.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, April 8, 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.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, I do not know what the answer is to the applause from the government benches.


An hon. Member:: Silence.


James MacKerras Macdonnell: One answer, of course, could be not to make a speech at all. Such an answer might be very effective so far as this house is concerned, but one always has the hope that what one says may attract some small attention outside the house.

I shall, therefore, go ahead with the speech. As I proceed I very much doubt whether I shall have anything like the feeling of good will surrounding me that prevails at the moment, or indeed as large an attendance. I will say that if the intention was to make it extremely difficult to be critical, I shall strive to resist it as well as I can.
There may be some good things about this budget, Mr. Speaker, but I have not been able to think of any, except a few cases where the minister repaired mistakes which he made last year in spite of the warnings that we then gave him.
So far as I can find, my feelings are widely shared throughout the country. When I spoke on April 8 I said that the taxpayers of this country were becoming tax-angry, and the last two weeks have convinced me that I did not exaggerate. In choosing the date for his speech, I presume the minister thought that by throwing the remainder of the debate over until after the recess there would be a cooling-off period; but I am inclined to think he will find that actually there has been a bit of warming up.
The following extracts from the press, a few of which I shall read briefly, I think will go some distance toward indicating what I mean.
The Hamilton Spectator that well-known independent paper says:
If Mr. Abbott ever again has to perform the income tax sleight-of-hand he achieved on Tuesday's budget we suggest that he let us know in advance so we can get in the mood for it.
The Globe and Mail, in more serious vein, says:
He (Mr. Abbott) has had time to study the government's need of revenue for its three major spending activities, administration costs, social security plan and the defence program, but in none of these categories has he given any evidence of relating fiscal policy to either the means of taxpayers or the ends to be served.
I myself have felt that to be one of the great difficulties confronting us now, and I propose to say a little bit more about it later.
The Toronto Telegram says:
Douglas Abbott has bewildered the public by his juggling of the personal income tax rate.
I doubt if the minister realized quite what a job he was doing two weeks ago tonight.
The Calgary Herald refers to the minister in very spirited language, as follows:
It can be said without fear of contradiction that Mr. Abbott makes most vaudeville magicians look clumsy. His hand is indubitably faster than the eye . . . With a casual wave of his hand he can shrink an elephant of a surplus to half size in a twinkling. And when he places a glittering gold piece in the palm of the little guy in the audience, he is not content like ordinary magicians just to
22, 1952
The Budget-Mr. J. M. Macdonnell make it disappear. He not only gets the gold piece back, but he simultaneously extracts a few nickels from the little guy's back pocket.
I do not know whether the minister recognizes himself in this guise, but the feeling is very widespread.
Then, again in more serious vein, the Ottawa Journal quotes-Mr. Muir, president of the Royal Bank, as questioning whether the government was justified in raising "such vast revenues". I think that is a thing that bothers us all, Mr. Speaker. It quotes Mr. Muir further as questioning whether the large amount slated for defence might not be spent this year and thus another large surplus be realized. That also is a question that I think is in many people's minds.
I have noticed a great change of heart. First of all the press showed an inclination to say: well, whatever we criticize, we must not criticize defence or defence production. That inclination has been abandoned and I think people are now looking carefully at this $2 billion and feel that we need to know a great deal more about it.
L'Action Catholigue raises a far-reaching question which really goes to the root of the matter. It says:
If the federal government has so many taxation powers that it prevents the provinces and the municipalities from functioning normally, this certainly goes against the spirit of the fathers of confederation.
L'Action Catholique gives an illustration, and a vivid one, of what it means. It goes on:
On the 28th of March of this year, when the municipal budget of the city of Quebec was brought down, Alderman Mr. Henri Beaupre said:
"During the last few weeks, we did everything we could to cut down the estimates-"
That is the estimates of the city of Quebec.
"-in order to be able to make both ends meet and during all that time some administrators in Ottawa were sweating in their efforts to find means to dispose of a huge surplus. Is that not enough to ask ourselves If there is not something wrong with our taxation system?"
In the light of what has happened, it is not surprising that these questions are being asked. As I said, people are warming up, and I think they should be warming up, because what is happening is that we seem to be getting back-in the lukewarm or cold war- to something like the war conditions that we had a few years ago when we spent over fifty per cent of our national income on war measures. The percentage is smaller today, of course, but on the present basis, say $4,800 million, as I said before, expenditure will amount to $13,150,000 per day, $547,000 per hour, nearly $10,000 per minute, or, putting it differently, $343 for every man, woman

The Budget-Mr. J. M. Macdonnell and child, or $1,715 for a family of five, and, taking a rough figure, about $30 per week in taxation.
We can see that in spite of ourselves we are drifting back into the position in which we were in wartime, and we can also see that in wartime there was-and inevitably so-a great deal of government domination. We can remember also that at that time an enormous percentage of the business of the whole country was carried on by government, that the government was the great source of business to individuals, the great source of contracts; and of course the persuasive power of that huge amount of spending gave the government a tremendous hold over the people. I think it is fair to say that in retrospect we can see that in wartime we had not a few of the characteristics of the total state, and this could recur, if we are not watching it, in what I call a lukewarm or cold war.
There may be those who profit from government contracts and who think this is a pleasant state of affairs, but on the other hand I think critical voices will become more and more critical, as they are doing in the United States; they will realize and point out that the government's taking over industry is not the only way by which socialism can come; that we can have virtual socialism by reaching a stage where the government has taken such a large part of the whole income of the country that they would have unlimited power, or virtually so. The "point of no return" is hard to fix, but it is interesting to point out that even now taxation has become the biggest industry in the country so far as income is concerned. If we take the federal taxes at $4-8 billion, that amount is greater than the total value of all manufacturing in Canada in 1950, which was $4,378 million; and it is nearly three times as great as the value of agricultural production that year, which was $1,792 million.
As the Winnipeg Free Press says, these are appalling figures. They are appalling figures, they should stagger us, and they are staggering people and making them think about the cost of government as possibly they have never done before.
There are three questions I should like to ask and attempt to answer. First of all, is all this expenditure really necessary? Is there no hope of retrenchment anywhere? In my opinion the answer is that not all of this expenditure is necessary and that we should press for retrenchment to the point that we get it.


The second question is: Can the Canadian economy stand the strain? The third question is: What is the effect of the present high taxation on our people?
As to the first question-is all this expenditure necessary-I am going to leave it until later. I will deal now with 
question No. 2-can we afford it? My trouble is that there is nothing in the minister's speech which asks that question. I find no attempt to say whether we can afford it or not. In our private affairs when we make commitments we have to try to reckon up whether we can afford them and how we are going to meet them. But apparently in government affairs that is not so. I have no doubt that members of the government will agree that there is some point at which expenditures would become too heavy for free institutions, some point at which, in spite of ourselves- and without any intention of doing so, if you wish-we would slip virtually into a collective state, a socialist state, with freedom gone. But at any rate I say that the question, can we afford it, has not been answered by the minister; indeed, so far as I can see it has not been seriously asked.
There are some people who try to work out a formula. There is an economist, an Australian, I believe, who is called Clarke, who has tried to fix the danger point, which he says is 25 per cent of the national income; when you take more than 25 per cent, the danger signals are up.
As I said a moment ago, the point of no return is very difficult to fix. The only answer we get from the government is this. The attitude of the government seems to me to be inevitably the answer of the restaurant keeper in the southern states, who, in those dim days when pies sold for 5 cents apiece, asked a dollar for a piece of pie, and when the customer expressed outrage, the answer was: "Stranger, we need the money." I have a feeling that that is about the only answer we can get now.
What is the effect of the present situation on our own people? Well, we know the usual answer. The usual answer is to picture to us the tremendous capital investment, the increase in G.N.P.; and then we have pious admonitions that we should be thankful to live in such a country and under such a government, and we are told to compare ourselves with those who are less fortunate -and indeed, of course, most of the world is less fortunate. But, as 1 said the other night, there is not much satisfaction to many of our taxpayers to hear these millions and billions bandied about-they do not live in

a world of millions and billions; they live in a world of fives and tens, and less than that. It is the ordinary taxpayer that I am interested in, and it is the ordinary taxpayer that this house exists to protect.
As I said, many have done well out of inflation and currency debasement, and I regret to say that some of those who are doing well out of it seem content and practically say: It is not hurting me; I am getting by, and why should I worry? Before I sit down I want to suggest that we should all be much worried about it, not merely because many of our fellow citizens are so greatly affected, but because, if it goes far enough, it may ruin us all. But at any rate, our duty is to protect our people, and at the present time a great body of them are suffering.
It is always good to get an outside view of your position. In the Atlantic Monthly for May I ran across what struck me as an interesting and unusual assessment of our Canadian situation. Most of what comes from across the border seems to me to have not very much thought behind it. They seem to be dazzled by figures of investment and gross national product; but here is a statement from a responsible periodical which certainly tries to go to the mat. I quote from it briefly:
The dominion government, which last year anticipated a surplus of $30 million in a budget of S3 [DOT] 7 billion, found itself embarrassed by a whopping surplus that exceeded $500 million.
The minister will have to look into this, Mr. Speaker, because apparently they have not heard the news that the surplus is not $500 million; it is some smaller figure. The minister, I am sure, will observe this figure. I continue with the quotation from the Atlantic Monthly:
If Canadians were living through the most prosperous year in history it was certainly a queer kind of prosperity that nobody enjoyed. It was a twilight hazy kind of thing that fell rods short of everyone's notion of what prosperity should be like. Employers faced with cost of living statistics caved in before demands for higher wages. Prices kept rising.
The article goes on:
The combination of pockets of unemployment, agrarian discontent, and a continued rise in the cost of living made trouble for the Canadian Liberal government.
The article concludes:
More than likely Canadians are destined for more of the things they experienced last year-
I should have said that they pointed out the American investment in Canada, and then the article went on:
More than likely Canadians are destined for more of the things they experienced last year-higher
22, 1952
The Budget-Mr. J. M. Macdonnell wages and less real income, more jobs and more unemployment, greater farm income in dollars and less to show for it at the end of 1952. And if all this adds up to prosperity, Canadians at the moment would as lief try something else.
Now, Mr. Speaker, I am not asking people to accept that statement as necessarily the last word, but I would state without hesitation that we do have in this country, despite our glowing figures, those grandiose figures, uneasiness, and the feeling that we have been on the crest of a boom year after year, and there is the fear that one day the boom will end and the reckoning come. Perhaps some people remember the old song no bird ever flew so high it didn't have to light.
The Atlantic writer was of course speaking of those elements in the community best able to take care of themselves, wage earners with a cost of living bonus, and that sort of thing. What he would say about the position of those of our fellow citizens whose income is still related to the dollar before its debasement, our citizens who have had no protection against the inflationary storm, but have had to bear the full fury of the blast-what he would say about them is hard to imagine. But what it means is that in spite of our fortunate position, which we talk about so much, in spite of our great natural wealth, we are out of balance, rather grievously out of balance. And of course one great reason, to which I shall add a word later, is the inflation of our currency by what the Winnipeg Free Press calls government profligacy of expenditure, as well as by other things.
I have tried to provide a background against which we can assess government tax policy, what it has been in the past year, and what it is proposing today. A year ago the government increased sales, excise and income taxes. We pointed out that this would increase prices. I give an illustration. Washing machines before the budget speech last year sold for $159.50; after the budget speech for $184.50. Before the speech, sales and excise tax on washers were $5.91; after the budget $20.30. Take toasters. The price before the budget was $9.95; the price after the budget was $10.95. The tax before the budget was 98 cents; the tax after the budget $1.50. There is not much room for doubt as to what happened there.
The fact was that the taxpayer got hit again and again. The higher taxes, instead of being deflationary as the government predicted, raised prices. Taxes went up; prices went up; national revenue went up, and of course the minister in a way is a beneficiary of it all, because his revenue went up and his surplus went up.

The Budget-Mr. J. M. Macdonnell
The feelings of the taxpayers who were taxed so heavily were keen enough. But, to add to their distress, the taxpayers, groaning under the minister's exactions, watched with amazement and irritation the surplus which had been estimated at $30 million grow in nine months to $722 million. If the minister, when he spoke on the air in February, had contented himself with explanations, even if the taxpayers had not accepted his explanations entirely, they might have had sympathy with him; but the minister took a very different line, a very bold line. He said the surplus was a fortunate thing. He said he was pleased that he had taken several hundred millions more than were necessary, and he must not be surprised if the impression grew not only that the surplus was welcomed, but that it was not entirely unexpected. And of course when the Prime Minister also said it was a fortunate matter, that strengthened the impression.
Here are some excerpts from the Minister of Finance's words, taken from his radio broadcast. He said:
it-
That is, the surplus.
It has been an excellent thing, not only for the government but for each and every one of you.
He was talking then to the citizens of Canada. Again he says:
We had to use $300 million of our budgetary surplus to meet non-budgetary expenditures-
And that means the loans, advances and investments.
-leaving about $400 million of the total surplus available for paying off a part of the national debt and increase in our working cash balance.
Later on he says:
Supposing we had not had this large budgetary surplus. Where would we have got the money for all these necessary loans, advances and investments?
Then he goes on to explain that the money would have had to be borrowed.
In other words what the minister told us in February last was that in April of 1951 he did not provide for these other expenses, which he now takes care of out of this unexpected windfall.
But, secondly, and even more surprisingly, in his broadcast the minister said, while warning us that the surplus might be reduced by the end of the fiscal year, that he had spent virtually all the money in the surplus, that he had used virtually the whole of it.
The minister's comment on that was that it was used for purposes which had been approved by parliament. No one of course suggests that the minister had misappropriated the money, or that the money was not used


for things which in themselves were useful. But that does not alter these following facts:
1.	That the minister in April last did not provide in his budget for the items which he took care of out of this unexpected surplus.
2.	That he told us that he had used virtually all of the $722 million and-
3.	-and this is important-that this amount will have to be replaced; and there is only one place to get it, in the end, and that is out of the pockets of the hard-pressed taxpayer, who will have to find roughly $700 million more than he would have had to do at this time. Or, to put it differently, if this money had not been used by the minister it would have been available at this time of peak expenditure to give some relief to the taxpayer.
Instead of this, the taxpayer's money has been used for various loans and investments which need not have been taken out of the taxpayer's dollar, and also for the paying off of debt, which is good in itself, but which should be done according to plan and not because a blunder has been made in budgeting. That is the position; and the taxpayer will only get his money back indirectly and over the years.
In the circumstances, it is not surprising that there is confusion and indignation, wide confusion and indignation and that the taxpayers still believe that to this extent they were taxed unnecessarily in the last year.
I just mention this in passing, because I am sure the minister would like to have it on the record, that in a recent cartoon he was shown as a juggler making the surplus rabbit disappear.


Mr. Abbott:: That is the one the hon. member was going to put on Hansard.


James MacKerras Macdonnell: Unfortunately I cannot put a cartoon on Hansard. But the title I gave to it can be placed on Hansard, namely Abbott's Rabbit. I am sure that will be remembered for a long time.
So much for last year. I now come to the minister's proposals for this year which, if I may say so, are introduced with a mixture of well-assumed self-satisfaction and well-disguised repentance. When he said, "I feel justified this evening in saying that our policies have proved to be wise and right," I could not help asking: Is this the man who has already gone into reverse on so many of the things he did only a year ago?
And, to point up the irony, the very next sentence contains a really devastating argument against his own words, because in that sentence he said:
Events show that the inflationary virus in our bloodstream-

I think that is a good phrase.
-has taken a stronger hold than I had anticipated and that the prices increases that occurred before our measures took full effect were about five per cent greater than the forecast on which the budget was based.
Now, where does the minister think this virus came from? We told him where the virus was coming from; that it came out of his own taxes imposed last year. He did not have to be a clairvoyant to see that. Anyone could see what was going to happen-and what did, in fact happen.
I come back to the phrase "wise and right". Was it "wise and right" to retain the sales tax? Of course the minister seems to have a fixation on the sales tax, and refuses to admit his error. Or is he keeping it there in order to keep prices up and add to his revenue?
"Wise and right"-were the excise taxes of last year, which raised prices and caused unemployment, wise and right? The only wise thing was to abandon them. The minister, of course, gives high-sounding reasons for introducing them a year ago, ignoring completely the criticisms we made. And he now says:
We can ill afford much loss of revenue and I have given much personal study to this question. In this I have been helped by a considerable number of carefully prepared and thoughtful briefs from consumers, dealers and manufacturers. I am satisfied that a lower tax will now meet our reauire-ments.
I think the minister might have been generous enough to give us some of the credit for his change of mind. The truth is that the course of events, which we accurately predicted, has proved too much for him.
We now come to the cigarette tax-another mistake. The minister said:
In the case of cigarettes, I had forecast an
*C*fase	'"'-lion and I experienced a decline
of $1 million.
That does not seem very wise and right However, we will agree that the minister recognized that he had received a "knockout" and later he said:
I therefore propose, effective immediately, to move the cigarette tax back to where it was a year
If he had applied the phrase "wise and right" to his actions this year, instead of last year, we might have been able to go along with him. I am sure in due time the minister will come to the point where he will be much more ready to accept our advice, and not to delay it for a year. Because to delay for a year often causes trouble.
I now come to the income tax reduction. I was going to call it trivial, but you cannot call a thing "trivial" which does not exist at all. Actually when you include the social
22, 1952
The Budget-Mr. J. M. Macdonnell security tax-which, after all, is the same kind of money, and comes out of the same pockets-it results in a $12 million increase.
Of course we realize what a difference an election year makes. It is interesting to go back to 1949, when the minister had a surplus of $410 million. Of this he "translated into tax reductions"-and that is a nice phrase, so I shall repeat it-he "translated into tax reductions" $323 million. But at the same time the minister gave this assurance, one which I think should be bracketed with the modest statement he made the other night, that the government had "carried through a program of tax reduction such as no parliament has ever made before, here or anywhere else." Well, that is an expansive phrase from an expansive minister on the eve of an election. I suppose we have not time this afternoon to carry the study far enough to make sure whether we can find a greater reduction. At any rate we realize why it was made then. And I point to the fact that this year, with a surplus practically as large, the minister has given virtually no tax reduction at all.
Then, as to the corporation tax. Of course we need not spend more than a minute on it. Everybody knows that 52 J was lowered to 52. The question is whether the minister, who told us how much he disliked the corporation tax, had any feeling of discomfort when he watched this surplus roll up, a surplus based so much upon taking taxes from corporations, taxes which he himself admitted were unwise.
No one knows better than the minister what a disaster it will be if, by reason of taxation, corporation earnings begin to shrink, so that his tax returns will begin to shrink-and there are some indications, which we certainly hope will not prove true, that corporation earnings may not survive the tremendous onslaught made upon them last year. And this, of course, is another reason for urging the need of retrenchment.
Then, we come to the income tax changes. We need not spend more than a minute on them, because already they have been laughed out of court by the public.
The minister, after his cat-and-mouse game of April 8, went on on April 15 to make another statement. I think the only comment one could make on that is that those who followed the vagaries of the surpluses, beginning at $722 million and then ending up at $356 million, would say that they are prepared for anything. Of course, in so far as the taxes which were over 100 per cent are concerned, they have been remedied. That is something which should never have been

The Budget-Mr. J. M. Macdonnell done a year ago, but obviously it should have been set right. We hope that there is no catch in it.
There will be criticism of the apparent discrimination against people with smaller incomes. If we compare the income tax rates, including the two per cent for social security, we find that for the first half of 1952 with the new rates, in the case of a taxable income of $1,000 the taxpayer will pay $10 more; in the case of a taxable income of $2,000 he will pay $16 more; in the case of an income of $7,000, he will pay $20 less, and in the case of taxable income of $10,000 he will pay $52 less. From there on the disparity increases.
Just one further word as to corporation taxes, which of course are making it most difficult for new businesses to start up, something which we are urgently in need of. Also a word to remind ourselves that corporation taxes of necessity go largely into prices.
There is one other thing I should like to point out. Repentance is a good thing. Of course when you repent of a sin you oannot repent of all the things that have happened by reason of your actions. The minister's repentance cannot relieve the sufferings already caused in this last year. We must remind ourselves that the taxes last year were not imposed mainly on luxuries but were on household necessities such as stoves, washing machines, and so on, with the result that those who were establishing homes either had to pay the extra1 prices or do without.
Even now the trouble is not over, because when the tax reduction was made the other day it hit many merchants who had articles in stock on which they had paid the old price and in many cases they will be unable to recover.
Nor should we pass this item without dealing with the aspect of unemployment in the electrical appliance industry, which makes washing machines, stoves, refrigerators, vacuum cleaners, and many other electrical articles. In January of this year employment was only 52-6 per cent of January 1951, and production was 40 to 45 per cent of January 1951. The figures would have been lower still except that the industry, hoping for better days, had continued to manufacture beyond their needs and to increase their inventories.
I was quoting from the Atlantic a little while ago. The Atlantic was concerned with those who were in the best position to protect themselves. If they had been dealing with those people who are really the victims of inflation no doubt they would have spoken much more emphatically than they did. I wish now to say a word about those victims of inflation, partly because I think there is
[Mr. Macdonnell (Greenwood) .1
great danger of their being forgotten, and partly because I think it is most desirable that we should still be on our guard against further measures of the kind which have already debased our currency.
These people that I speak of are experiencing the sad truth about inflation, that it makes the rich richer and the poor poorer. It is not too much to say that there is widespread havoc among certain elements in the community who have no means of protecting themselves. We know who these people are who tare being victimized. In many ways they are the backbone of our country. They are the people who have sought to provide their own social security by means of personal savings, insurance policies and what not. They have tried to provide for their own old age and the security of their families.
Consider the case of those who are living on the benefits of life insurance policies or under wills. Take the case of a widow whose husband has saved so that they might live decently and educate their children. These are the people who have depended on what I would call the honest dollar. All these people have been betrayed. I do not mean intentionally; I mean by the unwisdom of the policy which has debased our currency.
You have only to take the case of people who were persuaded by propaganda in the last few years to buy government bonds on the assurance-it was virtually an assurance -that three per cent government bonds would not go below par. Those words were not actually used, but they came very close to it. I will read what was said, because I think we should keep these people in mind. Many of them have suffered; many of them have seen their securities go down almost ten points in some cases. That is the extreme case. Here is what they were told by a prominent and respected official of the Bank of Canada:
Government bond prices reflect the level of interest rates. A decline in bond prices could happen only if interest rates were to rise. In my opinion the needs of the future will require and enable the kind of monetary policy which has brought about the current level of interest rates. Continuation of this policy means stability in victory bond prices.
If the English language means anything that was virtually saying to these people that their three per cent bonds would not go below par. I think we can probably feel that the salesman, having been given a statement that went ninety-nine per cent of the way would not have much difficulty in going the extra one per cent. To me the amazing thing is that a statement like this could be made. It could only be made by one who believed in the omnipotence of the financial

authorities-that they were going to be able to maintain this rate and that there would be no change. It is wise for us to remember that, because nothing could show more clearly what happens to people who enjoy almost dictatorial powers in wartime.
It is no exaggeration to say that those whom I have described, those who depended on the steady value of the dollar, have taken the rap. They are really the people who are carrying the heat and burden of the day.
Let us consider for a moment the position they are in. Their goods cost more, nearly twice as much. The money which they invested is worth less today. This would apply to money invested in an insurance policy. The three per cent they receive on their victory bonds is worth only about one and a half per cent on the basis of the 1939 dollar. When the bond matures and the $100 capital is paid, it will be worth only about $50.
It is interesting to remember that the people holding these bonds will get $3 interest but in effect they have lost ten per cent because during the past year prices have risen to that extent. Do not forget also that these people pay taxes. It is therefore no exaggeration to say that these people are suffering dreadfully.
There is one other thing we should remember-that nothing has been done in any way to relieve them. It is a difficult problem, but we must bear in mind that many other people have the benefit of cost of living bonuses or wage or salary increases. Professional people have increased their fees, but these people are left, as I say, to take the rap. The government should never be allowed to forget the part which inflation, owing to the policy of debauching the currency, has played in this. It is the same as when kings used to clip the currency.
I believe it is essential to recall this. Serious people should be trying to remind their fellow citizens of this because it seems to me that little attempt has been made to help these people. I know there are a great many-I know some personally-who practically take the line: I am doing very well and I am not going to worry yet. These people should not forget the history of currency during the last twenty years and realize that if inflation really gets out of hand it will ruin everything. Another reason I think it is important to emphasize this is that we have no guarantee the government will not resort to inflation again. After all, at the present time members of the cabinet are not seeing quite eye to eye. The Minister of Finance (Mr. Abbott) says
22, 1952	1479
The Budget-Mr. J. M. Macdonnell he is drawing up his budget on the basis of a small rise in prices; I think he said two per cent.


Douglas Charles Abbott: No; I said either no rise or a maximum of two per cent.


James MacKerras Macdonnell: We will say a small rise. On the other hand the Minister of Trade and Commerce (Mr. Howe) tells us there is good reason to believe that the thing which sent the cost of living index up last year now is working in reverse. I suggest the ministers get together and tell the same story.
It is useful to have a realistic picture like that in the Atlantic Monthly, because we get so much rather indiscriminate praise from the United States, usually from people who have made rather a mess of things themselves. I always think it is a little like the pot calling the kettle white.
Now I come to the question I reserved. Is all this expenditure necessary? A year ago when the minister placed before parliament his estimates for this year he foresaw a reduction of $35 million below last year. That seems a long, long time ago; and of course it was only a few months until that hoped-for reduction was replaced by an increase. I suppose if the minister felt free to do so he would say, "We should not have promised retrenchment and at the same time put on taxes which shoved prices away up," but that is a hard thing to expect the minister to say, and I certainly would not expect him to stand up and say it now. We sympathize with the minister in his task, or rather we would sympathize with him if it were not that all our sympathy must be reserved for tne taxpayers.
As I said before, we are in danger of getting back into a semi-war atmosphere where economy is outmoded. The other evening I quoted the rather strong words which had been used by that great government supporter, the Winnipeg Free Press It spoke about government profligacy, which means wild and unrestrained expenditure. That is a strong word, especially coming from the mouth of a friend. What I am afraid of is that we are back in a war atmosphere again, and I am a little afraid that the familiar phrase uttered some years ago by the Minister of Defence Production (Mr. Howe) may have infected the whole service.
I propose to refer just briefly to a few items which seem to me to rather stick out. There is an item of $46 million for travelling and removal expenses. I think that might easily stand some investigation. Of course it includes the cost of transportation to Korea and Germany; but as I recall those figures they

The Budget-Mr. J. M. Macdonnell are not staggering in themselves, and would still leave a very substantial portion of this $46 million for other purposes. It seems to me there has been an awful lot of moving around. The impression I get from those who have more to do with public servants than I have is that years ago if a public servant were going to travel, a certain amount of formality had to be gone through. You did not just do it all on your own. I understand now it is very much easier, and they are apt to descend upon one like a cloud of locusts, not just one person but that they travel in very considerable numbers. I should think that item would bear investigation.
Then, of course, we come to our old phrase, and what wonderful words they are: "Publication of departmental reports and other materials. Films, displays, advertising and other informational publicity." I find those words hard to pronounce, but we all know what they mean. They really mean that the public gets a certain amount of information and the department gets a certain amount of advertising. I should think it would be about one for the public and two for the , department. Well, there we have these millions of dollars; yet I find that is not quite the whole story, because that figure does not include some of the people in the departments who get paid for working on publicity. It is very hard to find out how much of a man's time is devoted to publicity and how much to other things. It is very difficult to press that beyond a certain point of inquiry, but I do think this matter would repay investigation.
There is another thing which interested me very much and which I think will interest all people, particularly those who are not economists, as I am not. I think the ordinary man would be interested if he knew there were a dozen or fifteen departments of government each with its own economics department. External affairs, for instance, has 15 economists; agriculture has a staff of 125. As compared with those we are almost relieved to find that the finance department, where one would expect to find economists, has many less than the Department of Agriculture. Finance has only 24. I think that department had better buck up; it is being left away behind. In the labour economists research, branch we have 141. I have not added all these figures, but if that were done I am sure we would get a very imposing total. Whether there are fifteen branches of economics, I do not know. Whether economics in the Department of Agriculture is different from economics in the Department of External Affairs, and whether that again is different from the
economics in the Department of Labour, let us say, again I do not know. But it would seem to me there might be some sort of central bureau anyway.
I remember being given this bit of advice years ago when I was in business and a small new department was being set up. My wise chief said to me, "Now remember, that means you are going to create a new king, and he will want to have as many subjects as possible." So I think when you have similar branches in fifteen departments you are bound to have a lot of overlapping.
Well, now we come to national defence. I want to make some comments later on about the big, broad figure of $2 billion, but there are some other matters, trifling in the face of $2 billion, I would like to mention first. Here is a figure that interests me. Apparently national defence spends $4,891,000 on telephones, telegrams and other communication services. This seems to me to stick out like a sore thumb, when we recall that after all almost any part of Canada can be reached by air mail within 24 hours. It seems to me you could send an awful lot of telegrams and other information and make a lot of telephone calls for $5 million; and I would have thought a good deal of the information could have been supplied by using Her Majesty's mails, royal or otherwise.
Now I want to say just one thing about the Petawawa incident because it calls up something we in this party tried to do, with an utter lack of success. When we learned that quite apart from military personnel nearly 40,000 civilians were employed one way or another in the Department of National Defence we urged that some kind of expert assistance should be brought in to organize this huge enterprise. Well, we got the brush-off, as we in the opposition are accustomed to getting the brush-off; but the explanation was very unconvincing. I remember being told that efficiency firms could not deal with anything as big as this, that they could deal only with small companies. As it has turned out, that was just 100 per cent wrong. Now we have this incident which apparently makes it perfectly clear that it would have been wise if the department had taken our advice at that time, just as it would be so wise if the Minister of Finance would take our advice from time to time. At any rate here we have a splendid instance of locking the door after the horse has been stolen. Apparently the minister has known for some months that things were not good, but of course we could not expect him to tell us. Now he is getting Mr. Currie from Montreal to investigate, and a most competent person he is. I hope Mr. Currie's investigations will cover a lot of territory.
[Mr. Macdonnell (Greenwood) .1

Just as one small straw to show the way the winds can blow I should like to mention a little incident that took place in the defence expenditure committee last autumn. It came to my attention that an invitation had been sent out to tender for 63,000 serving forks. The man who got it felt that this was a strange request, and he sent it down to me. I made some investigation about serving forks, and I found that a serving fork is apparently something which is used at a formal dinner where the waiter comes along and takes meat from a platter with this special fork to put on the guests' plates. I was told that a large hotel might need a score or two. I would not have imagined that in any military mess, outside of the officers' mess, there would have been a large number of serving forks used. I have had some experience with military messes, and I believe it is mainly a case of rugged individualism there; everyone looks after himself. I must say that this number of 63,000 was questioned and the defence department did reduce it to 40,000, but apparently there was still no doubt that they wanted tens of thousands of serving forks.
I produced this serving fork at the committee. I took great risk because I carried it in my pocket, and it extended out in such a way that if I had fallen I would have injured myself. I did, however, at great personal risk to myself bring this fork into the committee. It was presented there, but so far as I know no action has been taken.


Mr. Croll:: At the committee meeting this morning a statement was tabled showing the number to be 14,000 and not 40,000; action was taken.


James MacKerras Macdonnell: I congratulate you. I do feel that this is progress. The number was reduced from 63,000 to 40,000 and now down to 14,000. If we strike off a few more zeros we may get it down to somewhere near the right figure. Speaking seriously again, this is a case where obviously something incredibly foolish was done. The action was questioned, and it seems to me if there had been any efficiency in the organization at all they would have jumped on it in a second. They would have found at once what a foolish thing was being done. If there had not been some complaint we would apparently never have had this figure reduced to 14,000. All I can say is that the more one hears about this matter the worse it is. I am not going to risk my life by taking this fork around any longer, but I hope the department will do something about it. A colleague points out to me that there is now one fork for every five men.
22, 1952	J481
The Budget-Mr. J. M. Macdonnell It may be that we now have such refinement in the service that the men are going to wait upon each other, and perhaps they will need these serving forks.
Perhaps this case affords some explanation of another thing. It is not surprising, if there is a need for 40,000 serving forks, that the department needs such a large number of civilians to look after these things. It turns out that in the defence department we have something like 23,000 permanent and temporary civilians, and in addition something over 14,000 casual civilian employees. This figure represents about 20 per cent of the total of all the rest of the civil servants in all departments including the post office. I do not know how it strikes hon. members, but at least to me it suggests the need for careful inquiry.
I come now to the $2 billion figure for defence and defence production. I want to make some comments on that. I think it should be fully explored. I want to make it clear that in this party we wish to make an all-out effort on defence. There is no question about that, but that is not to say that we should mechanically assume that the figures given to us are the final word in economy. We must inquire into that.
What about the defence department itself, I mean the personnel? We have been given the picture of the multiplication of officers, and how well we know that picture! One instance in Calgary was cited where a staff was sent in at an estimated cost of $50,000- the minister did not question that in his reply-and the work was done .by a colonel and several other officers. If I recall correctly the work had been previously carried on by a reserve officer and some N.C.O.'s at a suggested cost of well under $1,000.
We should not expect men in the services to be interested in expenses, Mr. Speaker.
I think we would be naive to expect that. It is not their job, but the job of parliament. As a matter of fact, we ask the man in the service to provide us with protection. I have some knowledge of the army and I would think that anyone who expects military officers to be careful about the money they spend is naive to an extreme degree. Add to that the fact that most of the officers got their training in the recent war and you realize that, as those of us who have been in the army know, when a country is at war the idea of having regard to the money cost of what you are using is rather remote. Being of a thrifty nature myself, and tainted with a certain amount of Scottish blood, I did try to look after government property as well as I could, but I was regarded as something
1482	HOUSE OF
The Budget-Mr. J. M. Macdonnell in the nature of a lunatic. This is not the job of the officer, it is the job of parliament.
To whom do we look? The Minister of National Defence (Mr. Claxton)? He is completely surrounded by the spenders. He has to be in the hands of his technical advisers. As I said, their business is to strengthen defence and not to ask how much can be spent to strengthen it; that is our job.
We come now to the Minister of Defence Production (Mr. Howe), and he will understand the way in which I am using these expressions. I think his history is very much the same as the history of these military officers in so far as money is concerned. He is inoculated with the same virus; he is a kind of war baby, too. He blossomed and flourished in wartime. In those days he had all the money he wanted. The question was not, "how much will it cost?" but "can we get it and how soon?". Therefore, we must not be surprised if he talks in an offhand way about large sums of money which, however important they may be to the rest of us, seem to him rather like the small dust in the balance. How can he worry about the odd millions? He has other things on his mind, and that may be one of the reasons that he was $284 million wrong in his estimates of expenditures during the last fiscal year. I should like to refer to that because in the defence expenditures committee we had somewhat of a close-up of one or two items which gave me an understanding of the difficulty which faces the department. This experience also made me feel how foolish we would be if we regard the figures which are shown to us as ascertainable and well established figures.
I am going to read a little bit of the evidence given at the meetings of the defence expenditures committee last December. We in the opposition would have liked to go a little further with the inquiry but the committee was shut off on December 13 because we had to begin getting ready for Christmas! -although some hon. members will recall that we were here beyond that time. The civil servants were extremely co-operative in getting us the information and I want to make it clear that what I have to say is no criticism of them. Nevertheless, the results were profoundly disappointing. They certainly made one feel that estimates were little more than guesses.
Mr. Mackenzie, the deputy minister of defence production, in discussing construction contracts said:
The estimated values that are given are in some instances too low, although it is not yet possible to revise those estimates in any firm way.


Mr. Harkness then questioned Mr. Mackenzie as follows:
Q. What do you mean by estimated values there? As I understand this you have a list of the contracts that have been let. A. That is right.
Q. That is not an estimate is it? A. The first column of figures in each case is the estimated value of the contract.
Q. In other words, these are not firm contracts then? A. Oh yes, these are firm contracts.
Q. I mean, as far as the total amount is concerned? A. Many of these contracts do not state a firm price.
Q. That is what I mean-I should have said a firm price. A. We have had to estimate what the ultimate cost would be.
Later, Mr. Mackenzie said:
Some of the contracts are as I said in my earlier statement cost-plus contracts, where we do not know at all what the ultimate is going to be.
Later, questioned by Mr. Wright regarding purchases of howitzers:
Q. And for the United States government there is an item of 38 105mm. howitzers, with an estimated value of $1,457,646. Approximately the same amount of money is being paid for only 88 of these howitzers bought from the United States government as compared with $1,500,000 for 138 of these howitzers being paid to Sorel Industries Limited. Might we have an explanation for that?
A. This is just an illustration of what I was saying, that the estimated values can be very misleading. The 88 howitzers were being bought from the United States government and that is the estimate we got from them on what we would have to pay. That is not a firm contractual price, that is an estimate which was received at the time. Now in addition to buying 88 howitzers from the United States, it was decided to manufacture this particular type of howitzer in Canada and it was thought at the time that the order would amount to one and one-half million but whether that will prove to be the case only time will tell.
Q. Then these figures do not really mean very much?
A. I was particularly careful to say that, when talking about these orders for equipment that are being made for the first time in Canada, it is practically impossible to be categorical as to what the items are going to cost.
Q. You will notice that there is a vast difference in these two items. A. It may well be.
Q. It would look as if they could be made much cheaper at home than brought in from outside the country.
A. It may well be that the purchase from the United States will not amount to as much as that, or it may well be that the cost of manufacturing them in Sorel will be higher.
Mr. Speaker, I draw attention to the fact that this is not an order for some new type of radar gadget which was just invented the day before yesterday. I suppose that howitzers are 50 years or 60 years old. This order is for the manufacture of howitzers.
Hon. members will notice the utter vagueness of the figures which are given. Apparently they are not contracts. They are
__what shall I say?-expressions of intent.
Yet with vague figures like that, I presume, we have built up this figure totalling altogether $2 billion.

There is one other item that I should like to mention in passing, namely the item of $213 million for the acquisition of land and the construction of buildings in Canada. That amount apparently is in addition to the $311 million spent for that purpose last year. The hon. member for Nanaimo (Mr. Pearkes) mentioned that matter and raised the question whether, in these times when we are so greatly extended, we need to spend this huge amount. The gossip, of course, is that we are going to have our own Pentagon building all dressed up in modern fashion, underground and all that; that is the talk. One wonders whether these expenditures have to come. If we were as far astray as $284 million in 1951, heaven knows where we will be in 1952 with the larger figure.
In this same Atlantic Monthly from which I read I was interested to note one or two things from the United States experience which I should like to mention briefly. Speaking of waste in military procurement the Atlantic Monthly said:
A decision to change the design of a plane or tank when production is under way can cost hundreds of millions of dollars.
An efficiency drive is in progress there and two instances of what they have done are worth mentioning. The secretary of defence who is an active fellow, whose name begins with "Mac", has reduced catalogue items carried by the armed forces from 15 million to 1-5 million. Another interesting incident is that they have discovered how to manufacture a certain part going into an airplane, which formerly cost $2, at a cost of less than one cent. The Atlantic report goes on to say: The real elimination of waste will come through a combination of constant probing plus consistency in policy decisions.
These illustrations from the United States should be useful in two ways. First, they should make us doubly and triply critical of all estimates put before us; and second, they should give us great confidence that economies can be made if those who are spending the money are forced to make every effort to find them.
Mr. Speaker, the situation in which we find ourselves reminds me greatly of the situation of a year ago. We then had before us a surplus estimated at $30 million; now it is $9 million. Having regard to the huge amount involved, they are both what you call nominal surpluses. At that time we reminded the minister of the surpluses, so unexpected, in the years past. Now we have a fresh instance. The minister therefore must not be surprised if we are dubious about accepting estimates at their face value. I should 55704-94J
22, 1952
The Budget-Mr. J. M. Macdonnell like to remind the house of the surpluses which we have had in the last five years. They are as follows:
1947-	48
1948-	49
1949-	50
Million $676 . 595 .	131
That was the big year-the year of the election-that we had the tax melon cut.
1950-	51
1951-	52
Million

The total for the five years is $1,970 million. Nothing the minister has said to us this year makes one feel that this might not happen again. I read to you, Mr. Speaker, the shrewd comment of Mr. Muir of the Royal Bank who was not born yesterday and who suggests what I am sure many of us thought, namely that the surplus for next year may be in the $2 billion. There is a lot of room for economy in $2 billion. I have indicated some soft spots, and I have no doubt that there are a great many more.
There is one other consideration which should not be overlooked and that is that it is not reasonable to suggest that a minister who may quite well be facing an election next year has stripped himself of all hope of a surplus, with 1953 as a possible election year. After all, let us remind ourselves again that there was $284 million shortfall in defence expenditures last year. For these and other reasons I think it proper to ask again and again that retrenchment should still be sought, particularly in this $2 billion, and that we may still have hope for a reduction in these appalling expenditures.
Mr. Speaker, I move, seconded by the hon. member for Wentworth (Mr. Lennard):
That all the words after "that" to the end of the question be deleted and the following substituted therefor:
"the proposals of the Minister of Finance are unsatisfactory because they would continue to levy excessive and unjust taxation instead of assuring substantial tax reductions.
This house condemns the government for taxing far beyond actual requirements and for its waste and extravagance.
And this house regrets the failure of the government to assure efficient administration in all departments of the public service."


Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, in following the hon. member for Greenwood (Mr. Macdonnell) I do not propose to cover quite the same ground, but in several respects I shall underline some of the points that he made so ably in the course of his remarks. When I listened to the Minister of Finance (Mr. Abbott) introduce the budget my mind went back to the first budget which was introduced in 1936 after my election to the House of Commons. That budget, including interest on the national debt, loans to our

The Budget-Mr. Coldwell railways, and every other expenditure of government for the year 1936-37, amounted to *approximately $530 million. The budget now before us, again in round figures, amounts to almost $4,300 million or approximately eight times as much as the budget which I heard introduced by the Hon. C. A. Dunning in 1936. Both of these budgets were peacetime budgets. And what a strange twist of fate it is that in this period of peacetime the Canadian people should be called upon to raise, one way or the other, the enormous sum of $4,300 million. Of course the levels of the income cannot be compared, they are so different. At the present time we are spending over $2 billion for defence, defence against external aggression-and I am not complaining of these expenditures so long as they are carefully made, and so long as they are necessary, but I would point out that we had grave internal dangers in 1936, with hundreds of thousands of people on the verge of starvation or of want, with young men herded in relief camps getting 20 cents a day, and people being sent out to the backwoods of our prairie and other provinces and receiving allowances amounting to as little as $6 a month for a family. In other words, we can find, when we have to do it, money to protect ourselves from external aggression, but apparently we cannot find money in other times to protect the people of this country from the burden of poverty, of misery and of want such as they experienced during those fateful years between 1930 and 1939.
I could not help but think of these matters and make this contrast when the minister delivered his budget speech the other night. While I am going to criticize what he said, once again I think the drafting of the statement he made, his speech and the manner of delivery left nothing to be desired. I think that we could follow it intelligently and understand what the minister was saying, although at times he seemed to be saying quite contradictory things.
First of all, I want to agree with the hon. member for Greenwood when he said that the minister, in bringing down the budget, spoke as though he were actually effecting a reduction in personal income tax. Indeed, in describing the new change in the income tax structure, namely, the incorporation of the 20 per cent surcharge tax for defence into the regular taxation rate, the minister said this, as reported at page 1254 of Hansard:
I expect the revenue loss as a result of these changes to be about 6 per cent in a full year and this loss in revenue is a general indication of the average gain to the individual taxpayer. In other words, the average taxpayer will pay 6 per cent less than he would otherwise have done under the income tax law as it now stands.
[Mr. Coldwell.l
However, a comparison of the 1952 tax rates with 1951 rates will soon show that the minister's statement was, in my opinion at least, entirely misleading. It is true that by incorporating the 20 per cent surcharge into the regular tax structure in the manner in which the minister has done, we shall pay in a full year, beginning this July, approximately 14 per cent instead of the 20 per cent we would otherwise pay under the existing law. But the minister has found it convenient to overlook the fact that the full 20 per cent defence surcharge has never yet been imposed. Last year, for example, we paid a 10 per cent surcharge, and now by the minister's indicated change we shall pay roughly 17 per cent for 1952 and 14 per cent in the full year commencing in July.


Douglas Charles Abbott: My hon. friend wants to be accurate. He knows that the 20 per cent surcharge will have been in force for a full year on July 1.


Major James William Coldwell: Yes.


Douglas Charles Abbott: That covers 95 per cent of the taxpayers. They will have a full year.


Major James William Coldwell: But different calendar years.
I still say this cannot be considered as a reduction in the sense that the Minister of Finance used the words. What the minister has done is to use the originally imposed 1952 defence surcharge tax of 20 per cent instead of the actual 10 per cent surcharge tax figure in effect up until the end of 1951 in his comparison of the 1951 tax rates with the tax rates for 1952.
The changes in personal income taxes are therefore deceptive, for while they ostensibly reduce income tax, in reality they have the effect of increasing them. For example, a single person with an income of $2,000 last year paid $165 in tax. This year he will pay $175, or an increase of $10 before the social security tax of 1 per cent is levied. And in the same way a married taxpayer with no children and having an income of $3,000 paid $165 last year, but will, under the new changes, pay $175, exclusive of the social security tax. I think this demonstrates very clearly that our income taxes have been increased over the 1951 rates before the social security tax is included. The minister has, however, given the impression that if it had not been for the social security tax the income tax rates for 1952 would be lower.


Douglas Charles Abbott: What are my hon. friend's figures again? To what bracket is he referring?


Major James William Coldwell: The bracket I used was for a married man without children with an income of $3,000.


Douglas Charles Abbott: I will have to check this.


Major James William Coldwell: I would like to stress another point-


Douglas Charles Abbott: The increase is owing to the imposition of the old age security tax.


Major James William Coldwell: No.


Douglas Charles Abbott: Well, it is.


Major James William Coldwell: No; the increase I have shown is before the old age security tax is imposed.
I would like to stress one other point before
I leave the subject of income tax. It is with regret that we learn that the minister has imposed a heavier tax increase on the lower income groups than he has done in the case of those in the higher income brackets. For example, a taxpayer who is married and without children and earning $3,000 per year -and that is the same category-has had his over-all personal income tax for 1952 increased by 12 per cent over his 1951 rate. On the other hand, a taxpayer who is married and without children, and receiving $20,000 a year-earning $20,000 a year, I should say-finds that his taxes have risen only about 6 per cent above what he paid in 1951.
I say that is hardly fair. Certainly it is not a fair way of allocating the burden of raising government revenues, if it is to be on an equitable basis, and on the basis of ability to pay.
It is interesting to note, too, that our criticisms of the so-called 2/2/2 formula introduced at the last session of parliament for the purpose of financing old age security become more than ever justified in the light of the minister's indicated sources of revenue to pay for this pension. Let us look at the sources of revenue that will be tapped in order to pay for this social security.
The minister has estimated that the 2 per cent sales tax allocated for this purpose for the present fiscal year will yield $135 million; that 2 per cent of the taxable personal income will yield another $52 million; and that 2 per cent of corporation income will produce an additional $48 million. This adds up to a total of $235 million, and leaves a deficit therefore of roughly $87 million necessary to finance out of general revenue to meet old age security.
Last autumn, when the old age security bill was before parliament, we of the C.C.F. criticized those features of the bill which imposed the flat rate of 2 per cent on the taxable portion of personal incomes, with a maximum payment of $60 a year; and we criticized, too, the 2 per cent on corporation
The Budget-Mr. Coldwell incomes. At that time we pointed out in particular that contributions could only be made equitable if this maximum of $60 were removed and a graduated tax on personal incomes levied for this purpose.
If that had been done, not only would the social security tax have been made more equitable, and consequently more fair to all concerned, but there would have been less than $87 million to be made up from the general revenue. As it now stands, 42 per cent of the amount necessary to finance this pension must come from the sales tax, which is a particularly oppressive tax for the lower income groups to bear. We have said that before, and I wish to repeat it. We see that 16-1 per cent is to be derived from personal income tax and only 14-9 per cent from corporation tax levies, with the remaining 27 per cent to be derived from the general revenue.
Indeed, if we examine the manner in which the personal income tax for assisting in the financing of old age security is apportioned, we find that this tax lies most heavily on those in the lower income groups. The house will remember that last fall we of the C.C.F., as well as others in the house, criticized the unfairness and discrimination of exempting from this tax that portion of a taxpayer's income above his taxable $3,000. This means that the burden of financing this program falls upon those with taxable incomes up to $3,000 a year, to a greater extent than upon those with more than $3,000 a year of taxable income. Above this income tax level the tax stops with individuals paying the maximum of $30 for this year, whether they make $10,000 or $100,000.
I say it is disappointing that this unfair apportionment of income, together with the sales tax out of which most of the money will be found for financing this social security program, will, as I have noted, cause the cost of the program to bear most heavily upon the lower income groups, and the middle income groups, which in our opinion are at the present time quite hard enough pressed.
The minister's abolition of the 15 per cent excise tax on various commodities imposed by the last budget, and the reduction from 25 per cent to 15 per cent on other commodities, are in themselves to be commended heartily. However, as the hon. member for Greenwood indicated, putting these taxes on one year and taking them off in the next points up the grave injustice which has been inflicted upon those who furnished their homes last year. I wish to say to the minister that this shows either incompetence
1486	HOUSE OF
The Budget-Mr. Coldvoell or the governments disregard of the needs of the people who must furnish their homes in this highly inflated post-war period.
The Minister of Finance has once more demonstrated the government's disregard- and I wish to emphasize this-of the expressed wishes of the House of Commons by his failure to remove the four per cent floor on medical expenses. Just two weeks prior to the introduction of the budget the House of Commons unanimously adopted a C.C.F. resolution, moved by the hon. member for Winnipeg North Centre (Mr. Knowles), which in effect would permit taxpayers to deduct from their incomes before computing the amount of income tax to be paid the aggregate of their medical expenses, rather than only the portion in excess of four per cent of the taxpayer's income, as now provided in the act.


Douglas Charles Abbott: I think the resolution asked the government to consider doing that.


Major James William Coldwell: Yes; I put it that way.


Douglas Charles Abbott: I did not think you did.


Major James William Coldwell: I put it that way; I said that the Minister of Finance had demonstrated the government's disregard of the expressed wishes of the House of Commons.


Douglas Charles Abbott: And what did you say after that?


Major James William Coldwell: That is exactly what I said.


Douglas Charles Abbott: What did you say after that?


Major James William Coldwell: I said that just two weeks prior to the introduction of the budget the House of Commons unanimously adopted a resolution which would, in effect, permit taxpayers to deduct-


Douglas Charles Abbott: "which would, in effect"- those are the words to which I take exception.


Major James William Coldwell: Oh, that is quibbling; that is really quibbling.


Douglas Charles Abbott: The Minister of Finance never refuses to consider any suggestion, whether it is from the House of Commons or from any other place. That was the reason that resolution was not voted down.


Mr. Knowles:: You voted down my motion for the deductibility of trade union dues a year ago


Major James William Coldwell: As a matter of fact, what I say is perfectly clear-


Douglas Charles Abbott: I want my hon. friend to be fair.


Major James William Coldwell: Let no one quibble over the matter; the House of Commons expressed the desire that this should be done. And that desire was-


Douglas Charles Abbott: The House of Commons
expressed the desire that this should be considered by the government.


Major James William Coldwell: As a matter of fact-


Douglas Charles Abbott: And the parliamentary assistant, who spoke on the motion, made it perfectly clear that that was the case. I heard my hon. friend on the radio misrepresenting it, as he is doing now.


Major James William Coldwell: The minister should not lose his temper. I have not lost mine.


Douglas Charles Abbott: I am not losing my temper.


Major James William Coldwell: I do not intend to lose my temper over it; but the only way in which a resolution of this description can be presented to the house is through asking for consideration, and by expressing a desire; and that is precisely what the resolution did. And I say that in this respect there is disregard by the government cf the expressed desire of the House of Commons-and that, I suggest, is a statement of fact.
The increase in the total amount of medical expenses which can be deducted, namely $750 to $1500 in the case of single, and $1000 to $2000 in the case of married people, will provide benefits to some people who are hard-pressed, but it will provide little if any benefit to those in the lower income brackets who in most cases could not afford, even if they were pressed, to pay these amounts themselves for medical aid. The removal of the four per cent floor would have benefited everyone who incurred medical expenses. I want to say-the minister may not like my saying this-that the ignoring of the house on this matter emphasizes the lack of respect the government has shown for parliament from time to time. For example, in August 1946 the house voted to ask the government to consider the continuance of the milk subsidy, but as soon as the house adjourned the subsidy was discontinued by order in council. I want to say that if we are to maintain our democratic institutions and traditions the authority of parliament must be restored by electing members who respect and believe in the authority of the elected representatives of the people.
I want now to turn to a relatively small matter, the tax reduction of from 30 to 15 per cent on soft drinks. In our opinion this was done to placate the manufacturers who, we are told, will benefit rather than the consumer. No reduction is to take place in the

tax on children's candy bars. I always thought that that was a very petty tax. The tax reduction of three cents on cigarettes will prove negligible in benefiting those who use cigarettes. While the government saw fit to change the corporation income tax in the interests of some corporations, it did not see fit to alter the sales tax which, as I have said already, hits the purchasers of large groups of commodities and is especially burdensome to people in the low salary and wage brackets whose necessities of life are indeed so heavily taxed.
I regret to say that the minister gives us no other alternative but to conclude that the result of this budget will be to militate against the interests of those in the lower salary and wage brackets and the farm groups. We find that in some parts of Canada very few farmers have incomes which place them in taxable brackets. I say that this aspect of the budget is most unfortunate. We had hoped that the lower income groups who have suffered the main burden of taxation, the weight of the special excise and sales taxes, who are unable to save little if anything as insurance against sickness or other unforeseen events, would have been given a much better break than the government has seen fit to give them in this budget.
I was interested to note that the minister has estimated that nearly $1,000 million is earmarked this year for social security purposes. On the other hand, his estimated gross national product for the year is $22,500 million. In other words, this $1,000 million will be equivalent to approximately 4-4 per cent of the country's gross national product. This is certainly an indication that Canada is far from having become a welfare state, as some would have us believe, when such a small percentage of our total national product is used for that purpose. On this point I was interested to read an address entitled "The Pattern of Canadian Progress" which was delivered recently in Toronto by the Minister of National Health and Welfare (Mr. Martin). The minister underlined what I have just said, when he used these words:
In 1937 , 30-6 per cent of Canada's federal budget was for social security. In the fiscal year just ended, this percentage was only 22-9 per cent-a drop of 5-3 per cent since 1948. In other words, social measures today account for a smaller percentage of our federal budget than they did four years ago or fourteen years ago.
That is a statement by the Minister of National Health and Welfare. I think it is the clearest evidence possible that we are far from doing all we could to provide Canadians with decent social security. As our economy
The Budget-Mr. Coldwell expands surely we have the right to expect that the government will effect a greater distribution of this increased wealth by providing better old age pensions and, most of all, a national health insurance program. These are social measures which an expanding economy should be able to afford.
I want to turn to something that I have raised in the past and which has been raised by others, although not actually included in the present budget. I refer to the matter of farm implement prices. I make this reference particularly in view of the fact that we are witnessing a fall in farm returns and farm prices. Floor prices for cattle to be adjusted month by month were announced this afternoon by the Minister of Agriculture (Mr. Gardiner), which may be an indication that we may see falling cattle prices because of surpluses that may be piled up.
In that regard I should like to make a suggestion which I have made in the house before. In fact, I think I made it on the address. If the surpluses of beef and other meats pile up they are bound to have a depressing effect on our markets and may cause the government to lower the floor prices. I am afraid that we have lost the United States market for longer than we anticipated a short time ago since a new case of foot-and-mouth disease has been discovered in western Canada.
Consequently I think an effort should be made by the government to enter into some arrangement with the United Kingdom. We may have to finance payment to the farmers in the sale of cattle on the Canadian market or if necessary take sterling or make loans as the case may be so that we can get these surpluses into the hands of people who need them badly, people who would be glad to take these depressing surpluses off our hands should they arise. I think the government should consider a plan of that description. We have an obligation under the North Atlantic Treaty Organization to assist the economic welfare of those who are allied with us under that agreement. This might be one way of fulfilling it.
I wanted to say something about farm implement prices. I have just examined a copy of the final report submitted by the Saskatchewan legislative committee on farm implements and passed unanimously by the legislative assembly of that province on April 4. This committee was appointed to inquire into the prices of farm machinery with the object of determining the possibility of establishing parity in prices between farm machinery and the prices of farm products.

The Budget-Mr. Coldwell
Its significance can be determined when one considers the importance of machinery to those engaged in modern mechanized agriculture. The trend toward mechanized farming, not only in Saskatchewan and the prairie provinces but indeed all across Canada, has progressed with great rapidity over the years with the result that farm implements are more important than ever to the farmer. Yet despite the importance of this subject to a large section of our economy the committee reports that the four major companies of the farm implement industry, namely, John Deere, International Harvester, Cockshutt and Mas-sey-Harris, failed to provide the committee with the necessary information to carry out its inquiry. However, this did not prevent the committee from obtaining evidence which clearly indicated high prices and resulting high profits in that industry.
A provincial legislature, of course, cannot undertake investigations to ascertain whether a combine is in existence or whether a combine did exist. It is handicapped by not being able to secure certain information because of lack of provincial jurisdiction. As the committee in its report points out, a provincial authority can only act within the province, whereas a federal authority is legally entitled to obtain evidence, written or oral, anywhere in Canada. The committee recommends, therefore:
That, in view of the failure of the above companies to comply with the committee's request for information, and in view of evidence submitted indicating very high prices and proats, the federal government be urged to immediately institute an investigation of the farm implement industry by a parliamentary committee.
The committee further recommends in its report that the federal government take the necessary steps to prevent additional increases in the price of farm implements or, failing this, to increase the price of farm produce to offset the present adverse effect of high machinery prices on the farmer. This report calls to mind the inquiry that was made by a select special committee of this house, of which I may say I was a member, appointed on February 1, 1937. The authority given the committee was-
-to continue and complete an inquiry begun by the standing committee on agriculture and colonization, pursuant to a resolution of the house on March 2,
1936,	into the causes underlying the high prices of farm implements-
It is interesting to note that the conclusion reached by the parliamentary committee in
1937,	fifteen years ago, with regard to the prices of farm machinery, coincides with the conclusion of the Saskatchewan legislative committee of 1952, namely that prices on farm implements are out of proportion to

the returns received by the farmer on his produce. The parliamentary committee in its report of 1937 declares that it-
-is of the opinion . . . that there is competition in the matter of securing sales but little or no effective competition in the matter of prices as between companies. It is true that one company cannot increase its price unless other companies, particularly the larger ones, follow suit but, as illustrated in January, 1936, and throughout the period, increases in the prices or maintenance of prices when a decrease should have been expected, occurs simultaneously in all the companies. The companies insist that no understanding existed between them in the matter of the January, 1936, increase and that the increases resulted from the same conditions arising in each company. It is extremely difficult for the committee-
So the committee reports.
-to understand the remarkable coincidence of the increase occurring in the same month of the same year and, generally speaking, on the same implements and to the same extent. The companies state that it is the practice in the industry to exchange price lists, and it may well be that this practice enables the companies to quickly gain uniformity in the matter of price levels.
In one of its findings the parliamentary committee says:
-that over the period 1891 to 1936 retail prices of farm implements have been maintained at too high a level as shown by the financial returns to the companies engaged in the industry during that period.
It should be noted that shortly after the report was tabled in this house in 1937 the companies showed their contempt for it by further increases in implement prices. When one turns to the present report of the Saskatchewan legislative committee on this subject, one finds evidence to the effect that the farm implement industry continues to be guilty of maintaining too high a level of prices, and prices that bear little or no relation to the prices the farmer receives for his products. The parliamentary committee of 1937 recommended that since such corporations tend to limit free competition in so far as prices are concerned-
-a well managed, well financed and independent co-operative movement might be encouraged by the consumers.
Interestingly enough, the report of the Saskatchewan legislative committee notes that Canadian Co-operative Implements Limited, created by the farmers after the 1939 inquiry of the Saskatchewan legislature, found retail prices of farm implements and repair parts to be excessively high, and had-
-succeeded in establishing efficient manufacturing operations and were producing implements which were closely related to the needs of prairie agriculture.
The committee goes on to point out that with regard to the whole question of distribution and the larger and more important

question of the contribution of Canadian Cooperative Implements Limited to the Saskatchewan economy-
-it was apparent to the committee that this organization had afforded large savings to its members. This was indicated in the submissions by C.C.I.L. representatives which showed that a minimum dividend of 18 per cent had been realized by members in the period 1946-51.
I should add that the dividend referred to, of course, was the patronage dividend, not profit or return on capital but a return of what are in effect overpayments for farm machinery made by members. In view of the serious nature of this problem and the difficulties encountered by the Saskatchewan legislative committee as a result of its legal limitations we of the C.C.F. urge-and I want the government to note this-that the federal government immediately undertake to complete the inquiry begun by Saskatchewan into the oauses underlying high prices on farm implements. We further recommend that if a parity cannot be established between prices of farm implements and the prices the farmer receives for his products, the government assist farmers in the implementation of the recommendation made in 1937 by a select committee of this house pertaining to the establishment of a nation-wide co-operative movement in connection with the farm implement industry.
As I have already said, in view of the situation developing in the diairy industry and in the cattle industry, and since we cannot know what kind of world agreement there will be on the price of wheat, I think it is particularly important that every possible step should be taken not only to find markets but to see to it that the implements of production are available to producers at reasonable and proper prices.
Now I wish to move, seconded by the hon. member for Winnipeg North Centre (Mr. Knowles):
That the amendment be amended by adding thereto the following words:
"This house further regrets that the government has ignored the wish of this house, as expressed by a unanimous vote on March 26. that the 4 per cent floor under medical expenses deductible for income tax purposes should be abolished."
There is one other matter I would like to discuss particularly, since it affects not only my own province but my own constituency. I want to say a few words about the South Saskatchewan river project. I think there is an urgent need not only to come to a decision but to undertake this important project as quickly as possible in order to provide water for irrigation and reclamation purposes for a large area in the province. This spring we have seen an unprecedented demonstration of the tremendous flow of water that occurs;
The Budget-Mr. Coldwell yet perchance in the course of a few weeks the land will lack moisture. By that time the water will have gone down the river to the sea, having done incalculable damage as it moved on. It is expected that the project would provide for the irrigation of approximately 431,000 acres of land, thereby improving agricultural conditions in a large area of central Saskatchewan. It has been estimated that the productivity of the land to be brought under irrigation may be more than doubled with a consequent major increase in farm revenue. It is also expected that, as a result of this irrigation, the number of farms in the district would more than double. I believe that is a very conservative estimate. I would say that they would multiply because there are some very large farms in that area, and under irrigation those farms would be divided up into much smaller acreages. Instead of a declining population in those areas, as has been the case, both rural and urban populations should show some substantial increase.
Of course, in addition the irrigation project might also-and I say might also because I think that this is incidental to the plan- provide electric power to supplement the electric power that may be generated by gas, oil or steam, and thus provide cheaper and more abundant power to the people on the farm and the rural and urban centres. I hope that the commission will soon complete its inquiry and make its recommendations, and that those recommendations will be favourable to the undertaking. I do not think I have had the opportunity of saying this before, but I believe the government chose a very able irrigation expert from Salt Lake City to advise them in this regard. I hope that if the advice the expert on irrigation gives is favourable, the undertaking will be proceeded with at a very early date. As a matter of fact I think perhaps the time has come when, not only in the interests of the area to which I have referred, a great part of which is in my own constituency, but of Saskatchewan, the whole of Canada should receive consideration. We know quite well that periods of dry weather occur in that part of Canada. We know that this involves not only suffering to the people who live in the area but also often involves the country in large expenditures of money. It seems to me that this is one of the forms of insurance that could be undertaken by this parliament against the recurrence of the conditions that we knew in the thirties. I know that all the available information has been placed before the commission by the government of Saskatchewan, and that the commission itself said it required no further submission from that government until the public hearings

The Budget-Mr. Low
were held across the province. I know that the people oi the area wish to co-operate in every possible way with the federal government in this regard.
Before I sit down, Mr. Speaker, I merely want to say, as I said earlier in my address, that we are disappointed with the budget. We think it emphasizes inequities in the imposition of federal taxation. We believe that the expenditures that are to be made should be very carefully scrutinized by this parliament. I cannot deal with the matter at any length, but I want to add to what the hon. member for Greenwood has said regarding the necessity of looking carefully into military expenditures. I was in Pembroke last night and met a group of prominent citizens there. My mission was a non-political one. Afterwards I had the privilege of chatting with them for a couple of hours, and they told me that they believe that the matters that are now under investigation should not be the only matters investigated, but that the accountants and so on should inquire into expenditures that have been made on equipment that has gone on over the past number of years. Apparently the common rumour in Pembroke, which is in the neighbourhood of Petawawa, is that what has been uncovered lately has been going on for a considerable time. I hope, therefore, that every effort will be made by the government to investigate this matter at Petawawa, and indeed at other military establishments from one end of this country to the other.


Mr. Solon E. Low (Peace River):: 
Douglas Charles Abbott: Not this year.


Solon Earl Low: I just read exactly the words the minister used.
In other words, the average taxpayer will pay 6 per cent less than he would otherwise have done under the income tax law as it now stands.


Mr. Sinclair:: Quite right.


Douglas Charles Abbott: Not less than he paid in 1951.


Solon Earl Low: Mr. Speaker, what the taxpayers of this country want to know and what they are entitled to know is exactly, in dollars, what they have to pay in income tax in 1952, and by how many dollars that sum is greater or less than what they actually paid in 1951. That is exactly what the people want to know and that is exactly what the minister did not tell them. In fact, he told them something from which they simply could not get those figures and it left them completely up in the air.
An examination of the two schedules which I have already placed before the house reveals the fact that the picture presented by the minister is a far different one from the average or a 6 per cent decrease in personal income tax which was announced on budget night. There is no decrease, Mr. Speaker, in income tax from last year's payment by individuals. I repeat that there is no decrease. It is all increase all the way along the line. What the hon. member for Rosetown-Biggar (Mr. Coldwell) said is quite 55704-95J
The Budget-Mr. Low
true. The people in the lower income categories are getting it in the neck far more heavily by way of increase than are those in the upper income groups; and so it is all the way along in this budget. It is not a poor man's budget at all. It is a rich man's budget.


Stanley Howard Knowles: It is just a poor budget.


Solon Earl Low: Even when you exclude the old age security tax of one per cent of the taxable income, the individual taxpayers of Canada will pay more in 1952 than they did in 1951. I repeat that when you exclude this payment, they will pay even more in 1952 than they did in 1951. I say that no juggling of figures in schedules, and no parenthetical expressions slipped in in various places in his budget speech-in rather queer places, in my judgment-can change that fact. As a matter of fact, the taxpayers of Canada, I think, resent the misleading statement made by the minister on budget night more than they resent the actual increase in the taxes that they will have to pay. They were quite prepared to face the facts but they wanted the facts. Their resentment is therefore extremely strong. The people generally are fast waking up to the fact that the Liberal party have developed to a high degree the hidden tax complex. This is just another demonstration of it. Down the years since this government came into office, there has been a continuous increase in the number of hidden taxes imposed upon the people as well as in the volume of revenues that have been derived from hidden taxes. It continues, as any study of the budgets down the years will show.
I am sure that the Canadian people had every reason to expect that the minister would include in his budget a provision making it possible for taxpayers to deduct the total of their medical expenses from their net income in order to arrive at a taxable income. The hon. member for Rosetown-Biggar has dealt with that matter very well, and I agree entirely with what he says. Inasmuch as I agree, it follows that I shall support his subamendment.
In the light of the unanimous vote of this house on the resolution presented by the hon. member for Winnipeg North Centre (Mr. Knowles) and also, I might say, in the light of the encouraging statement made in this house on March 26 by the parliamentary assistant to the Minister of Finance, I think that we had every reason to expect something very different-


James Sinclair: No; it was only a resolution to give the proposal consideration that we voted on.

The Budget-Mr. Low


Solon Earl Low: Maybe that is another misleading statement.


Stanley Howard Knowles: Quibble, quibble, quibble!


James Sinclair: That is what we voted on.


Stanley Howard Knowles: They voted for it that day; maybe they will vote for our subamendment.


Mr. Deputy Speaker:: Order. The hon. member for Peace River has the floor.


Solon Earl Low: I repeat that, in the light of things that went on here on March 26, we had every reason to expect something very different from these meagre concessions that were granted in the field of medical expenses. What the Minister of Finance (Mr. Abbott) did in the budget will certainly be of little or no use to the taxpayers in the lower income brackets. They are not getting anything beyond what they have now. Considerable relief, of course, is there for those in the upper crust of income. As the hon. member for Rosetown-Biggar (Mr. Coldwell) said, it is quite evident that the minister is not prepared to take any direction from the members of this house who represent the sovereign people of Canada.
I am justified in wondering whether the present Minister of Finance is not following in the wake of his predecessor who told this house in no uncertain terms that the cabinet of this country derived their powers from the king and not from this sovereign parliament. It is about time that that issue was settled. I maintain that the sovereign power of this country is the people of Canada, and that the elected representatives in this house must be obeyed by the executive council in any matter where a majority vote or a unanimous vote is taken from the members in this house.
I should like to have something to commend the minister on. I would not like to criticize him all the way along. I want to commend him for taking off the 15 per cent tax on washing machines, electric stoves and refrigerators; but I have to remind him that when this tax was imposed last year we of the opposition-I think perhaps every speaker on the opposition side who spoke- protested vigorously on the ground that the tax struck unfairly at young married couples, as well as established householders in the lower income brackets.


Stanley Howard Knowles: It stank.


Solon Earl Low: Yes, it stank. The minister at that time s-coffed at us, just as he scoffed at our suggestion that his tobacco tax had passed the point of diminishing returns and would likely cause him trouble. A year later the

minister says that we were right in both cases, but I suspect that he would not have taken off the 15 per cent special excise on household appliances if the work of the opposition in this house had not aroused the people to a tax consciousness, the like of which they have never had before-and I say that advisedly. I have met it everywhere in Canada more strongly than I have ever before, and I say the opposition in this house has justified itself and its existence on that one point alone of arousing the people from one end of Canada to the other to a tax consciousness. I think it is high time. That is the main reason I think for that concession being found in this budget. Public resentment is making itself felt, and when the taxpayers become more fully aware of what the government's hidden sales tax is doing to them by way of enhanced prices and by way of placing an unequal or uneven burden on them, particularly those in the lower income brackets, as was so well said by the hon. member for Rosetown-Biggar, I think they will show such displeasure that even the most callous minister of finance will be forced to reduce the rate or abolish the tax altogether. And believe me, I am going to try to get that done. I think that every hon. member in this house who understands anything at all about the ill effects of the imposition of the sales tax will go out with the same idea. Let us get that thing out of the way just as soon as we possibly can. I have dedicated my efforts for some years to achieve no less than the complete abolition of the sales tax, because I believe it is a vicious tax. I believe that it bears most heavily upon the poor. I believe it pyramids prices for all consumers, and it has within it a shadow tax, a substantial shadow tax that the government does not get at all. It goes to inflate profits where perhaps they should not be inflated. I think the minister should be censured for neglecting something very important in connection with his removal of the 15 per cent excise tax on household appliances and the reduction in excise on automobiles, soft drinks and some other things. I think he should have made the reductions conditional upon the manufacturers handing on to the consumers a corresponding reduction in price, and he failed. It is quite clear now that the purchasers of automobiles are not receiving the full benefit of the reduction from 25 per cent to 15 per cent in excise tax on cars and trucks. It looks as if industry is taking advantage of the leeway that the minister has given them to enhance their prices. I did have some sympathy for the soft drink manufacturers when they put on a real clamour some time ago for the return of the five-cent

bottle of pop for the kiddies, and I believe on that occasion I spoke of it here in this house. But when the minister cut the tax from 30 per cent to 15 per cent on the soft drinks themselves and also reduced substantially, I believe by 50 per cent, the tax on carbonic acid gas, and the soft drinks people decided to hold consumer prices at the seven-cent level, I am afraid I lost a great deal of my sympathy for their cause. I am afraid they will have a hard time convincing members of the House of Commons in the future that they are sincere when they go out for the nickel bottle of pop for the kiddies. I do think the minister acted wisely when he put competitive products like soft drink powders on the same tax basis as the soft drinks themselves. That was only fair, and perhaps it should have been done some time ago.
In the spring of 1951, Mr. Speaker, I appealed to the minister on behalf of thousands of sick people who have to buy quantities of certain drugs and medicines in order to live. I asked at that time especially that the minister place di-alpha tocopherol on the sales tax and duty-free list along with such things as cortisone and ACTH. Alpha tocopherol is at the present time very widely used by Canadians in the treatment of heart and vascular illnesses. I personally in the past year have seen remarkable results from its use by patients suffering from such diseases as phlebitis, varicose ulcers and various forms of heart ailments. The trouble is that there is only one manufacturer of the base product in America, and that is at Rochester in the state of New York. When the substance is brought into Canada it is subject to a heavy customs duty and sales tax of 10 per cent. As a consequence, the sick who need the substance have to pay greatly enhanced prices for it, prices they simply cannot afford to pay in so many cases. It would not be serious for them to have to pay duty and sales tax, plus the high price that they do have to pay, if they had to be treated only for a short time with it, but if deterioration of the heart and the vascular system has gone to the point where di-alpha tocopherol is needed, the patient as a rule must take heroic doses of it every day for the remainder of his life, and that is the special circumstance, Mr. Speaker, which would justify the minister in placing the remedy on the tax-free and duty-free list. I want to hasten to say that if di-alpha tocopherol were placed on the duty-free and sales-tax-free list the loss of revenue to the government would be negligible, but the benefit to the thousands of heart and vascular sufferers who are getting relief from the use of the concentrated vitamin "E" would be tremendous.
The Budget-Mr. Low
I am convinced that more good results are being derived from the direct use of di-alpha tocopherol in heart cases and in preventing thrombosis than can be demonstrated from the use of cortisone in the treatment of arthritis, and that is going a long way. There is certainly at least just as much justification for putting di-alpha tocopherol on the free list as there was for putting ACTH and cortisone on. I am appealing to the ministers concerned on behalf of the 1,500 members of the vitamin, E society of Canada, and the many more thousands of heart sufferers who are not members of the society, to make provision in their budget resolutions for the free entry of vitamin E concentrates under the tariff, and for remission of the sales tax on the same substance.
The Minister of Finance appears to think, because Canada's gross national product was high last year-$21.2 billion, I think he said in his budget-and because it is expected to rise to more than $22 billion this year, and also because prices have remained very high, that our Canadian people are exceedingly prosperous and have few if any worries. I should like to spend a few minutes of time to present the whole picture.
I think it does us good occasionally to take a look at all sides of the case. It may prove enlightening to some of us to learn, and it is a tribute to our enterprise in Canada, that we were able to produce $21.2 billion worth of goods and services in 1951. The efficiency and capacity of our machine power are particularly evident in that achievement. And it is all the more challenging, to my mind, when we remember that fairly large numbers of Canadians were unemployed for substantial periods during the year. The minister himself admitted that there were certain areas of unemployment. I have heard the numbers variously estimated up to 400,000 in Canada. I say that achievement is all the more remarkable in the light of those unemployment figures, and it does bear vocal testimony to the efficiency and capacity of our productive powers here in this country.
The minister seems to take great comfort from the fact that the cost of living index has shown infinitesimal declines over the last three months, and that the index is now back to the August 1951 level. Well, he is optimistic about inflationary pressures, too, and their having been brought under control at least for the time being. I must say that his optimism certainly could not have arisen from the amount of the decline in the cost of living index. I would be surprised if that were the case. Perhaps the registering of any

The Budget-Mr. Low
decline at all is considered remarkable; I think so. Maybe that is what caused the minister to be somewhat optimistic.
This question arises: What has happened to the purchasing power of the dollar since the cost of living began its steady climb back in 1939? It will do us good to take a look at it. The purchasing power today of the Canadian dollar is only about 52 cents, as1 compared with the 1939 dollar. But the value of the dollar today depends upon what one wants to buy.
For instance, the food dollar is worth only 40 cents in terms of the 1939 dollar. And if one wishes to build a house his dollar is worth only 39 cents. A dollar spent in home furnishings will buy only 50 cents' worth, and' the clothing dollar is worth only 47 cents. The rent dollar is higher, having a value of 70 cents in terms of the 1939 dollar.
Of course the minister or his parliamentary assistant will reply immediately to me, and I hasten to take it up right now because I know they will reply, by stating that although the purchasing power of the dollar has shrunk to the levels I have indicated, the average Canadian is earning considerably more dollars in 1952 than he did in 1939. I hasten to say that that is true. The figures show that the per capita income in the fiscal year 1938-39 was only $381, while in 1951 it was more than $1,000. So, while the value of the dollar has shrunk by nearly a half in twelve years, on the other hand the per capita income has increased 2J times since 1939.
I imagine the minister would think he had us by the scruff of the neck in the light of those figures. It would appear, then, that Canadians generally are financially better off now than they were at any other time. And they probably would be, all right, if it were not for taxation.
Let us take a look at what happened to tax rates since 1939-and this is the third factor we must take into consideration. In the financial year 1938-39 the federal government taxed the average Canadian $39.12. Let that figure sink in, because it is important. Provincial and municipal governments taxed him another $30; so that the total for 1939 by municipal, provincial and federal taxation was $69.12.
By 1951 federal taxes alone amounted to $260 for every man, woman and child in Canada. When one adds to that what the provincial and municipal governments took by way of taxation-another $100-it appears that the total tax load carried last year by the average Canadian was $360. That figure is more than five times what it was in 1939.

So that when we consider all three of the factors-that is, the decline in the value of the Canadian dollar, the increase in the average earnings of the Canadian people, and the terrific increase in the tax load that has been imposed upon each citizen-there is only one conclusion that can possibly be drawn, and that is that the average Canadian is certainly very little, if any, better off today than he was thirteen years ago, in spite of the great progress our country is supposed to have made since the beginning of world war II.
So what good does it do us to boast to the world of an expected $22.5 billion of production this year? If this is going to go on, what good does it do us?
I have to ask this question: Why is it that on the average our people are little if any better off than they were thirteen years ago, while we boast of the wonderful progress our nation has made, our tremendously increased productive power, our new and expanded factories and machinery, and our new skills? But our citizens are not getting the advantages that these things should bring.
We Social Crediters make the claim that failure to hand on to the average run of Canadians the results of our technological progress flows mainly from an outmoded financial system which is incapable of reflecting in a financial way the abundance of real wealth which our people are capable of producing, and which they are willing and anxious to produce.
The financial policy which the minister persists in following produces, in the main, a ghastly fear of over-production. That fear grips the farmers of Canada today; and they dare not produce to the extent of their capacity because they fear-and quite rightly so -that the present situation would destroy their market. It certainly would.
Fear of overproduction is beginning to manifest itself not only in the farming industry but also in many fields, in spite of the world's need for food, and other necessities of life, and in spite of hunger and suffering in many lands. Did anyone ever hear of anything more paradoxical than that? Did anyone ever hear of anything crazier than that? And so long as the present financial policy governs Canada, that fear of overproduction will constantly be present to overshadow any short periods of prosperity that we may experience.
Back in the early thirties the low prices of farm produce made it almost impossible for even the most efficient farmer of that day to stay in business, and keep his head above water. The situation then was very largely

the result of a large-scale withdrawal of purchasing power from circulation and, I might say, out of existence, coupled with a rigid restriction of credit.
These two things were then, as they are today, the only methods which orthodox financiers recognized to correct inflation. They will not recognize anything else. The inflation of the years immediately prior to 1929 was a direct result of the financial policy in effect during the first world war, and those years especially between 1924 and 1928.
Today farm prices, it is true, are relatively more fair in relation to taxes and interest rates; but the general price level is so high that there is widespread fear that the present abundant situation will come to a sudden collapse. This fear I am sure will prevent continued steady progress in our economic development unless something very different by way of a financial policy is laid out and followed in this country. Consequently the financial interests are doing their best today to convince the people that the remedy lies in heavier taxation and restricted credit. That is exactly the policy that did so much to bring on the depression of the hungry thirties. How are we going to change the end result by applying the same policies today?
When people begin to fear a business recession or depression some of them stop buying because they think prices are too high and probably will soon be lower. Others think that now is the time to make their hay and so they help to boost the inflationary spiral by charging all the traffic will bear by way of prices. The Minister of Finance and his advisers think that they can improve things by confiscating more of the people's purchasing power through heavier taxes, especially commodity taxes; but instead of helping the situation they succeed only in increasing prices.
It must be apparent to any thinking person who has delved into the mysteries of finance that all these distresses which I have mentioned, and more too, have been brought about by the mismanagement of Canada's financial policy. Inflation is the result of mismanagement in the issue and withdrawal of money purchasing power. Inflation is a man-made muddle and the only way it can be cured is by a man-made solution. The only solution that I know of, or anyone knows of, for inflation is the proper management of the financial policy of our country. I do not think there is any other way it can be done.
The government has blundered along for many years under the delusion that somehow money comes automatically into the consumer's hands in sufficient quantity to enable
The Budget-Mr. Low
him to buy back all the goods that are produced. This just is not so. I would like to have some of the people who think that this is so accept my challenge and in this debate lay bare all the facts concerning that proposition.
The proper management of financial policy of Canada demands that the money to buy goods as fast as they come on the market should be supplied to the consumers, either in the form of wages and salaries, price discounts or tax remissions, or dividend arrangements including family allowances, old age pensions and perhaps others. If wages and salaries are insufficient then other forms of income would make up the deficiency. In this way, if the goods are wanted they will find a ready sale.
If enough purchasing power is in circulation, just enough and no more, to buy the goods we produce at fair prices, then business in the country will be steady and a general confidence is bound to result. I see no real reason why prosperity cannot last just as long as production can continue at a high level, provided of course a realistic financial policy is laid down and followed. That realistic financial policy must be a kind that will encourage productive effort. It must impose only a minimum tax on the efforts of the primary producers so that they will feel that it will pay them well to produce to the limit. That is what we must have if we are to supply the world's needs. Taxes that discourage wage earners from putting in their full time must be avoided.
What we need in Canada is a financial program that will induce enthusiastic production without the fear of punitive taxation or unemployment and depression, which are the inevitable consequences of the present financial policy. I bear testimony to this fact: There is a school of economic thought that would and could change the present policy so that abundance would not carry the present threat of unemployment, and so that inflation would not arise to rob the people of a large percentage of their wages. I commend to hon. members of this house a study of the social credit financial policy which I am certain would do the job.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock. PRIVATE BILLS

Mr. A. J. P. Cameron (High Park) moved: the second reading of Bill No. 143, respecting the Royal Canadian Academy of Arts.

Private Bills


Some hon. Members:: Explain.


Alan John Patrick Cameron: The purpose of this bill is very well set out in the explanatory note, which reads as follows:
The principal purposes of this bill are to increase the number of academicians and to grant the associate members a larger voice in the affairs of the academy.
It is proposed also to clarify the language of sections 2, 3, 4, 5 and 10 of this act.
A short historical review of the academy may be in order. The Royal Canadian Academy of Arts is the oldest official art institution in Canada. It was founded by the Marquis of Lome, Governor General of Canada, in 1879, and was chartered by act of parliament on May 17, 1882. A new charter was granted in 1913. Its objects were and are:
The encouragement of design as applied to painting, sculpture, architecture, engraving and the industrial arts, and the promotion and support of education leading to the production of beautiful and excellent work in manufactures.
Among its earlier achievements was the founding of the national gallery, and for a long time it was the only organization which sponsored regular art schools or classes in Canada. For 50 years it was the prime influence in promoting progress and taste in architecture.
Times have changed, and many of the original purposes for which the academy was established have been fulfilled or superseded by new purposes suited to modern needs. But its principal function remains that of "encouraging, improving and cultivating all the arts of painting, et cetera." Its present membership includes about 40 academicians and about 75 associate members, architects, painters, sculptors and designers in the graphic and decorative arts, leaders in their profession.
The 1913 charter is now found to be an impediment to development of the primary aims. The new constitution proposes changes in the construction and operation of the academy which will permit a more liberal approach to modern conditions and make its membership more inclusive and its management more elastic and democratic. These purposes it hopes to accomplish by increasing the number of academicians and by granting the associate members a larger voice in the affairs of the academy. The proposed bill also is intended to clarify the language of certain sections of the present act.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.


[Stage Direction]
The house resumed, from Monday, April [DOT]21, consideration of the motion of Mr. Knowles for the second reading of Bill No. 4, to provide for the jurisdiction of the Exchequer Court of Canada in matters of divorce.
Mr. R. R. Knight (Saskatoon):: Mr. Speaker, this is not the first time dissatisfaction has been expressed in this house over the method of handling divorce bills. I was looking at Hansard for February 16, 1914, when there was an interesting discussion, at which time Mr. W. B. Northrup, then the member for East Hastings, moved the following resolution:
That, in the opinion of this house, the procedure under which divorces are granted by parliament and the subsequent unreasonable expense thereof are so unsatisfactory, besides being prohibitive to the great majority of the people of Canada, that the same should be taken into immediate consideration by the government with a view to reform, during the present session.
I might repeat if not the words at least the sentiments there expressed, that something should be done about this matter by way of reform and at this session. I listened with tremendous interest last evening to the hon. member for Portneuf (Mr. Gauthier), whose speeches I always follow with pleasure. In criticism of the hon. gentleman, however, I must say he spent most of the time attacking divorce as such. As far as I know no one was defending divorce as such. As far as we are concerned we simply want the consideration of divorce matters removed from this place, and we are not too particular where it may be removed to as long as the cases get proper consideration.
With a great deal of what my hon. friend said I can agree. He deplored the growing prevalence of divorce, and I have no doubt the headline will make good reading for my hon. friend's constituents in Quebec: "L'honorable depute de Portneuf attaque le divorce." That is always a popular subject. He argued that transplanting divorce from the established divorce court of the other place and this house would facilitate divorce and result in more and more cases coming from the two provinces with which he was concerned. But my hon. friend made no attempt to prove that statement. It was merely an assertion, and I, for my part, can make the contrary assertion with equal vehemence and conviction.
The hon. member asserted that we must not set up a divorce court for the province of Quebec. With that I am in complete agreement. This house has no right to impose

anything of the kind upon any province. But already we have a divorce court for citizens of Quebec and Newfoundland, which divorce court is to be found in the Senate and this house. We simply wish to transfer that court to another place, though certainly not to the province of Quebec. I think the statement that there would be any essential difference in the strain upon the conscience by transferring that court elsewhere, as compared with the method we now follow, is if not double-talk at least certainly the splitting of hairs.
The hon. member quoted with satisfaction and evident respect the words of the Prime Minister (Mr. St. Laurent) when he spoke on this subject not long ago. I would point out, Mr. Speaker, that the Prime Minister spoke on the rights of minorities, and said that the minority which generally speaking in Canada comprises the population of Quebec, which for religious reasons is opposed to divorce, must not have anything like this imposed upon it. I think that we all agree their rights must be respected. No one has suggested that the court should be imposed upon the province of Quebec or upon Newfoundland.
Then the Prime Minister (Mr. St. Laurent) went on to speak-I was proud to hear him- about the rights of the smaller minority, those who, in their personal lives, feel that a divorce is necessary. The Prime Minister said that for them some way must be found, and some way had been found in the procedure which we now use. But I would remind the Prime Minister and the hon. member for Portneuf that there is another minority that I think should have some consideration, and that is the minority of members of parliament in this house who accept their responsibility, and who try to give to these cases with which they are saddled proper consideration as they pass through our hands. I ask you, Mr. Speaker, why should we be asked-yes, I know in violation of some of our consciences-to deal with these matters when the hon. members who object on religious grounds abstain- from having anything to do with them? I know that they have good precedents for such abstention. In the debate to which I have referred, and which can be found on page 828 of the Hansard for 1914, Mr. Rodolphe Lemieux, when addressing the Speaker, stated:
You, sir, will have noticed that when a bill granting a divorce comes from the Senate to this house, the members who belong to my church do not take part in the debate and do not vote.
There is a precedent for the actions of many hon. members in this house. I am going to suggest to my hon. friends, who through their
Divorce Jurisdiction
consciences and their religion are opposed to divorce, that they should prove their sincerity by remaining in this house and voting against these divorce bills as they are presented.


Mr. Fournier (Maisonneuve-Rosemont):: Wait and see.


Robert Ross (Roy) Knight: The hon. member says that they will, and in a few cases I know that they do. In my experience, however, the majority do not take any action at all. May I make another suggestion, and it is this. If anyone is to abstain from voting then those who come from the other provinces ought to have the greater reason to abstain because the greater responsibility for dealing with these cases should rest with the representatives from the provinces from which these applications for divorces come. I come from a province in which there are local legal arrangements for handling divorces. Why should I occupy my time in dealing with cases which come here from Newfoundland?


Mr. Stick:: It is the law of the land and you are supposed to carry out your duty.


Robert Ross (Roy) Knight: The hon. member says it is the law of the land. We change the law of the land every day that we live and come into this house.


An hon. Member:: And the constitution.


Robert Ross (Roy) Knight: Oh, the sacred constitution.


Edmund Davie Fulton: Every other day we change the constitution.


Robert Ross (Roy) Knight: I have heard the constitution put up as an excuse for every form of reaction in this house, the sacredness of this constitution. Have we not made our arrangements during my time here so that we can change that constitution independently? To me no constitution is sacred. Constitutions change as time goes on. Tempora mutantur, nos et mutamur in illis. Times change, and we change with them. As we grow we change our constitution. When the present arrangement for divorce was set up, I am sure that no one visualized the state of affairs which the hon. member for Portneuf so vividly painted for us. If a procedure were being established today, with this growing number of divorces, no one would set it up on this basis because we could not handle such a large number of cases. If this House of Commons is to be turned into a divorce court, not a pseudo or phony divorce court as we have it now, but a divorce court giving decent consideration to the affairs of these people, then we shall have no time to deal with anything but divorce cases.

Divorce Jurisdiction
When this procedure was established no one visualized this state of affairs, yet my hon. friends say they must stick to the constitution. The constitution must bend to the exigencies of the times. Was man made for the constitution or was the constitution made for man?


Mr. Gauthier (Portneuf):: It is certainly more important than divorces.


Robert Ross (Roy) Knight: I read in one volume of Hansard that when the arrangement was set up to handle divorces the hon. members of that day took two years to decide one case. Here we have forty, fifty or a hundred of these divorce cases passed en bloc, without any consideration whatever or, so far as I know, without a reading of the evidence in any particular case. Here we are passing them by the dozen or by the hundred without any consideration, at least in this place; the wheels of this divorce mill, which is the parliament of Canada, are grinding out these decisions.
We talk about the dignity and decorum of this house. In my time nothing has detracted from the dignity of this parliament more than this divorce business. Some members approach it with levity, some approach it with shame, but I think the most of us approach it with a feeling that we would be well rid of it. I was not elected to be an adjudicator in divorce cases; that is not what my people sent me here to do. I doubt if most of them know whether I have to deal with divorce cases at all. We are saddled with these cases, and I would urge that the members get them off our back, and the sooner the better. I agree with the Hon. Rodolphe Lemieux when he said that we should reform this thing and we should reform it at this session.


Pierre Gauthier: Why not reform the people?


Robert Ross (Roy) Knight: The hon. member for Portneuf, who seems to be seriously concerned about this thing, does not want to make the transfer to the exchequer court. He thinks that will be an unsuitable court. He may be right. I do not know anything about courts. I do not know anything about the law. I only know the things that I think and the things that I feel. Since the hon. member has interrupted me, I would like to ask what he has to suggest as an alternative?


Pierre Gauthier: I said it last night, no divorce at all.


Robert Ross (Roy) Knight: The hon. member has nothing to suggest because he knows, whether or not he likes it, there is always going to be a scheme for the obtaining of divorces in this

country and for the citizens of his own province. He has nothing to suggest. What he did suggest was that if we could not do away with divorce altogether, then we should leave the present arrangement as it is. This arrangement, as I have described it, is certainly not an ideal condition. I say that if we were to assume our responsibility-I believe I said this before-and give to those cases proper-and I emphasize the word "proper"-consideration, we would have time to do nothing else. I deplore the number of divorce cases just as much as my hon. friend.


Pierre Gauthier: That is a good point.


Robert Ross (Roy) Knight: The number of them is so great that it is a full-time job for some institution or some court, but I say that the court should not be this House of Commons which is, after all, fundamentally a legislative body. I therefore urge that this thing which has become a scourge to all of us should be removed from this House of Commons.


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


Some hon. Members:: Question.


Mr. Speaker:: Those in favour of the motion will 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.



STATUTORY HOLIDAYS


[Stage Direction]
The house resumed, from Friday, March 21, consideration of the motion of Mr. MacDougall for the second reading of Bill No. 2, to amend the Dominion Day Act and the Victoria Day Act.
Mr. J. L. MacDougall (Vancouver-Burrard):: Mr. Speaker,-


Mr. Speaker:: Order. If the hon. member speaks now he will close the debate.


An hon. Member:: Go ahead.
Statutory Holidays


Edmund Davie Fulton: When this bill was last discussed sometime before the Easter recess I said, just before nine o'clock, that in view of the divergence of opinion which had been expressed as to whether or not the days on which these holidays are celebrated should toe changed from the actual dates, namely, May 24 and July 1 respectively to the Monday nearest to those dates, I felt it was not an appropriate time to proceed further with consideration of the matter. I think I said on that occasion that as far as I was concerned no other time would be any more appropriate. I must say, Mr. Speaker, that I still hold that opinion; but since I have seen that the hon. member who sponsors the bill is anxious that debate should toe closed- and I presume anxious that a decision should be taken-and since I am certainly not disposed, even if I were capable of thinking of sufficient things to say about it, to occupy the remainder of the time allotted for private members' subjects this evening, and if the hon. member is still of the same opinion, and unless somebody else shares my view, then undoubtedly a decision on the matter will be taken and we shall have the opportunity to indicate by our vote how we feel on the matter. Therefore I shall just take a very few minutes to summarize my reasons for opposing the bill at this time.
The subject matter of the bill asks us to authorize a change in the effective dates of the two holidays, both Victoria day and Dominion day. As to Victoria day itself, I must confess that I have not a very settled feeling that the date should not be changed, although I have a very definite feeling that the date of Dominion day should not toe changed. After all, this country became one dominion under the name of Canada on July 1, 1867, and I have not yet heard any valid reason advanced why that date should not continue to be celebrated as the national holiday of this country, the date upon which in fact we became a nation.
The point is that if we make it the Monday nearest to that date we shall have six other dates besides July 1 on which that holiday could be celebrated; and I do not see that there is any other conclusion that could be drawn than that if we do that the holiday will lose its national significance. I share fully the views of those who feel that the question of giving another long week end is of entirely secondary importance. If it is our desire to give ourselves, the people of Canada, a long week end, that matter should be discussed as a separate issue. Just because somebody feels that it is desirable to have a long week end I certainly do not see that we should change the effective date of the celebration of

Statutory Holidays
our national holiday. As has been pointed out in the course of the debate, it may well be that Dominion day would be celebrated on the fourth of July, which would be the same day upon which people in the United States celebrate Independence day. Someone has to think of that possibility. We must realize just how meaningless under those circumstances Dominion day would become.
I understand the hon. member sponsoring the bill has indicated privately that he would be prepared to accept the suggestion that the bill be separated into two parts, so that the part affecting Victoria day might be considered separately from that affecting Dominion day. As I said before, I have no strong objection to that part of the bill dealing with Victoria day, although I feel to some extent the same argument applies. My feeling would be that if Victoria day is to be celebrated as a holiday it should be celebrated upon the day the occasion arises, namely May 24. If on the other hand we wish simply to have another long week end, and if that is the object of the bill, then to be logical let us not celebrate them as Victoria day or Dominion day but simply fix a long week end about that period of time, without any mention of the name of the holiday or the occasion being celebrated.
At the moment I would be inclined to vote against the suggestion to change both days, but I would not oppose a suggestion that the bill be divided into two parts, if within the rules of the house that can be done, so that the two matters could be considered separately. It is my information, based upon discussions I have had with hon. members, that perhaps a majority would oppose changing the date of Dominion day, while perhaps not so many would be inclined to oppose a change in the date of Victoria day.
As I have said, I feel the same argument applies to both days. While I have strong views in regard to Dominion day, and would vote against the bill in its application to that day, if for no other reason, I would not oppose a suggestion that the bill be divided into two parts so that the two matters could be considered separately. If that is the desire of the sponsor of the bill, and if there is any way in which that can be done, perhaps we might proceed with that in mind.


Mr. C. W. Hodgson (Vicioria, Oni.):: Mr. Speaker, if the hon. member for Vancouver-Burrard (Mr. MacDougall), the sponsor of the bill, is prepared to separate it, I shall have very little to say. But if he is going to interfere with Dominion day, then I am prepared to talk the bill out tonight. However, it will be all right if he is going to split it.


Mr. Speaker:: If the hon. member for Van-couver-Burrard speaks now he will close the debate.


John Lorne MacDougall: Mr. Speaker, I appreciate the unanimous consent given to my speaking at this time. Before the hon. member for Kamloops (Mr. Fulton) spoke, it was my intention to ask unanimous consent to make a statement. My statement is this, that I have listened to the objections made by various members to changing the date for the celebration of Dominion day. I rise to my feet with a scalpel in my hand, not only, with unanimous consent of the house, to amend the bill, but also to bisect it. If the house is prepared to give second reading, then immediately upon reaching the committee stage I would move that the title of the bill be changed to "An Act to amend the Victoria Day Act", that section 1 of the bill be deleted, and that section 2 be renumbered section 1 so that the bill would apply only to Victoria day, or May 24.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Beaudoin in the chair.
On section 1

Dominion day.
John Lorne MacDougall: It is my intention to move that the title of the bill be changed to "An Act to amend the Victoria Day Act."


Louis-René Beaudoin: I would point out to the hon. member that the proper procedure would be to move first that the present section 1 be deleted. We will come to a discussion of the title later.


John Lorne MacDougall: In conformity with your suggestion I move:
That section 1 of the bill be substituted by section 2, and that section 2 be renumbered as section 1.


Mr. Graydon:: If the substitution of section 1 by section 2 means the adoption of that section, then I should like to take this opportunity to make a suggestion. I made it in the debate last session. It will be understood that I am working against time, and with no desire to hold up the bill. I do not believe however that it should be passed in its present form. This year the queen's birthday is to fall on June 9, the Monday after June 5, when it is celebrated in the United Kingdom. This brings about a condition whereby the two holidays would come very close together.
I was wondering if the sponsor of the bill would consider having the holiday on the Monday before May 24 rather than the Monday after. Otherwise we would be hiving

the holidays into a comparatively short space of time. It might be found at some stage that they were only a week apart.
I know this matter was discussed before, at which time the objection was raised that the suggested date for the celebration of Dominion day would interfere with the school year, and the examinations at the end of June. That would not apply however in respect of May 24. I would ask the mover to consider my suggestion, because I believe it would be preferable to have the holiday on the Monday preceding May 24, so that the holidays would be more staggered and would not come on succeeding week ends.


John Lorne MacDougall: My only objection to the suggested amendment would be that there are ten provinces in Canada, all claiming banana belts. We know that all of them are not in banana belts. We know, too, that frequently May 24 comes in comparatively cold weather. I am thinking about the real benefit that would accrue by having the holiday later rather than earlier. I would not wish to mention any province that might be snowbound on the 24th of May, but I think all hon. members recognize that in some provinces the weather is still cold at that date. That was why I felt it would be more adequate if it were made "Monday following the twenty-fourth day of May."


Gordon Graydon: When we considered this bill before the question of the queen's birthday was not quite so prominent in our minds and it would seem to me that there is now an additional reason for the change which perhaps was not so obvious when the bill was being discussed before. I urged the mover to accept that change because it does seem to me to be rather ridiculous having two statutory holidays coming in the one week end, certainly in one year.


John Lorne MacDougall: I accept the suggested amendment.


John George Diefenbaker: Has the hon. member given consideration to adding a clause providing that the bill shall not apply this year? In the event that it does pass I cannot see how it could apply this year having regard to prior commitments and plans and reservations that have been made.


John Lorne MacDougall: I had not given particular consideration to that because I did not expect the bill would get as far as it has tonight.


Louis-René Beaudoin: Is it agreed that section 1 shall be deleted?


Some hon. Members:: Agreed.
Statutory Holidays


Louis-René Beaudoin: Is it agreed that section 2 shall be renumbered as section 1?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Louis-René Beaudoin: Is it agreed that the section shall be amended by substituting-


Gordon Graydon: May I suggest that the word "following" in line 2 be deleted and the word "preceding" substituted therefor?


Some hon. Members:: Agreed.


Gordon Graydon: May I ask why it is the "twenty-third day of May" instead of the "twenty-fourth day of May"?


James Sinclair: The twenty-fourth could be a Monday.


Mr. Lennard:: You will have your chance.


Gordon Graydon: Parliamentary assistant in a hurry.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On the title.
Louis-René Beaudoin: The title must be amended in conformity with the suggestions made.


Edmund Davie Fulton: I wonder if the hon. member would consider another amendment by adding a new clause providing that the bill shall come into effect on the first day of January, 1953?


Stanley Howard Knowles: I realize that the hon. member is a lawyer but it should be "act" instead of "bill".


Edmund Davie Fulton: I stand corrected.


[Stage Direction]
Amendment agreed to.
Title as amended agreed to.
Bill reported.
Mr. Speaker:: Shall the amendments be read the first time?


Some hon. Members:: Agreed.


Mr. Speaker:: Shall the amendments be read the second time and concurred in?


Mr. Fleming:: It is a little difficult for some of us to hear what has been said during the discussion of the amendments and I wonder if we could have the precise wording of section 1 of the bill as amended?


Mr. Speaker:: The motion before the house is not debatable.


Donald Methuen Fleming: I was not debating, I was simply asking that the amendments on which we are to vote should be read.


Mr. Speaker:: I think that it would be quite in order to read the amendments, but they
1502	HOUSE OF
The Budget-Mr. H. O. White are not debatable. The title as amended is, "An Act to amend the Victoria Day Act." The preamble remains the same. Clause 1 has been deleted. Clause 2 is now clause 1 with the word "following" deleted and the word "preceding" substituted. A clause has been added reading:
This act will come into effect on the first day of January, 1953.
Amendments read the second time and concurred in.


Mr. Speaker:: It being nine o'clock, the house will resume the business which was interrupted at six o'clock.



THE BUDGET


[Stage Direction]
The house resumed 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. H. O. White (Middlesex East):: Mr. Speaker, I rise tonight to take part in this budget debate principally because I have had an opportunity during the last ten days to discuss the budget with the people whom I have the honour to represent. I found that they were not surprised, but they were disappointed. Newspaper articles had indicated that there were not likely to be any great changes, but the people in the lower income groups were hoping for some relief in the way of income tax because of the ever-increasing cost of living. Apparently the political calendar was such that it was deemed advisable to reserve these deductions in taxation until a more important time.


Mr. Murphy:: Call a spade a spade.


Harry Oliver White: We may have an election in 1953 or 1954 when these so-called surpluses can be brought out to perform the service they have performed before and help to win the election. I recall that in 1949, at the most critical moment, the right hon. Minister of Trade and Commerce (Mr. Howe) came through with a $25 million contract from Britain, to which I referred at the time as a phony contract. Today the farmers would be glad to see a real contract come through, because now we have lost every contract we had with Britain except in connection with wheat.
Yesterday, I understand, the right hon. Minister of Agriculture (Mr. Gardiner) threw into the laps of the provinces the problem of


the cheese producers. Only this week in my own village a cheese factory which has operated for many long years closed its doors. Farmers are wondering just where this is leading, because after all the cheese industry was the market for much of the surplus milk produced during the summer months, and Canada's reputation as a producer of the finest Cheddar cheese was known far and wide.
The budget is a review of Canada's financial position and of the proposals to increase or decrease the income of the government for the ensuing year. As I said, many taxpayers hoped that a bit of relief would be forthcoming, but such was not the case. The only relief was given to pressure groups, of which I could mention three. Today we heard the Minister of Agriculture announce that there had been a further outbreak of foot-and-mouth disease in Canada. That is another serious blow to agriculture, coming just at a time when everyone hoped the disease had been brought under control and that in the not too distant future we would be able to re-enter at least one of our exports markets.
In my opinion the tax burden is becoming unbearable. It is said, as I think I mentioned in this house once before, that about one-third of our working hours are required to pay taxation. In the minds of many people there is a question as to how far this can be carried. If we were to go the whole way and do as Russia does, and work for the government all the time instead of one-third of the time as we do in Canada, it would not be a very big step to take as things are today. People do not mind taxation to meet the pressing needs of the country. They do not mind taxation for national defence or to carry on the regular business of government, but they do resent being taxed for things that are not budgeted for. They do resent taxation when they see money wasted or thrown away. I am going to mention once again the $49 million provided for public relations, information, leaflets and publications that are sent out. In my opinion the press of the country could do the job as well, if not better, without any expense to the taxpayers. Probably more people would read it, too, because today most people take a look at all the literature they receive in the mail from government sources and unless it comes from the income tax branch they throw it into the wastepaper basket. Some would like to throw their mail from the income tax department there also, but they dare not. After the first shock was over and people had time to digest the budget a bit, and see that while the government were giving with one hand they were taking away with the other, I heard this comment. People were reminded of the funeral service, and

the words "the Lord has given; the Lord has taken away". Another thing the taxpayers resent is the sort of thing which was announced just recently, the pilfering and looting going on at the military camps, especially Petawawa. When they begin to take railways and everything else they can lay their hands on, it becomes a serious matter.
I want to come back to our loss of markets, because after all it is only through exports that we are able to pay our taxes. Now that we have lost the markets for our agricultural products and prices are decreasing, I am wondering where the government is going to get all the money it needs. I have here a clipping from the London Free Press of April 16, and perhaps instead of interrupting the members from British Columbia will listen to this:
Salmon contract with the United Kingdom not renewed, the canneries say. Great Britain will buy no canned salmon from British Columbia this year, it was confirmed today by a spokesman from the canneries.
In 1951 Britain bought $6,700,000 worth of B.C. salmon. Australia, New Zealand, South Africa discontinued salmon orders some time ago, and other foreign buyers decreased their purchases.
Not long ago in the supplementary estimates we voted something over $1 million for the apple industry in Nova Scotia and British Columbia. The apple growers of Ontario and Quebec are paying their share of that amount. In other words they are subsidizing the growers on both coasts, and then finding themselves competing with this subsidized fruit which is sent into these two provinces. Of course one thing the Minister of Finance (Mr. Abbott) has achieved since 1939 is a fifty-cent dollar.
I feel quite sure Canadians would be prepared to buy a goodly amount of British goods in order to build up a market there for Canadian farm products, because in that way Canadian dollars would be made available to purchase goods in this country. But apparently it is the avowed purpose of this government to have nothing to do with the empire or the commonwealth, or with Britain, though for many years they have been the market for Canadian farm products. Since 1939 we have had 143 contracts in those markets. Now nothing is left but wheat. The contracts for apples, cheese, bacon and everything else have disappeared.
When we were dealing with the supplementary estimates an amount of $35 million was also set aside for the refinancing of Polymer at Sarnia. It was my understanding that this plant had been already financed, so it would seem that this $35 million has been just swept under the carpet so it can be dragged out again for the next election.
The Budget-Mr. H. O. White Then there was the building up of the civil service pension fund, $75 million. I see no reason why that could not be used to assist. It was a way to hide an extremely embarrassing surplus that the minister had on his hands. I noticed that in his budget speech he forecast that in the years that lie ahead taxation could be reduced. I wonder if he is any more accurate in that forecast than he was in the forecast of a $30 million surplus for this year which turned out to be- you see so many representations about it that I do not know exactly-around $356 million. At one time it may have been ten or twelve hundred million. If the minister can be that wrong in one forecast, he can be just as wrong about the reduction in taxes in the years that lie ahead. I can forecast when taxes will be reduced, and that is just before the next election. I think the electors of this country are just as much aware of that as I am. They were taken in in 1949 by that method, but I do not think they will be caught so easily the next time.
The Minister of Finance was greatly concerned about having a healthy state, but it is just as necessary to have the taxpayer in a healthy state. If the taxpayer is not in a good financial position, certainly the tax collector's income is not going to be very good.
A day or two ago I asked a question of the Minister of Public Works (Mr. Fournier) concerning the possibility of some aid to Pelee island. I am glad that on that occasion, while I could not debate the issue, the Prime Minister (Mr. St. Laurent) took it upon himself to reply. The press mentioned the fact that I was the fifteenth Tory who had asked for some relief for the dwellers along the Great Lakes because of the damage being done by high water. Under the rules I was not able to discuss the issue, but could only ask questions. I want to point out to you, Mr. Speaker, and through you to the government that not so long ago aid was given to Rimouski and Cabano because of the loss through fire. Fire insurance was available to the people of that area but Pelee island is in a different position, different even from the coast line on the great lakes. The principal part of the island is below the level of the lake so that once the water gets over the outer rim the whole of the island will be under water.
This island produces a lot of agricultural wealth. I suppose there is more income tax per farm paid into the coffers of this government from that area than from any other like agricultural area in Canada. In addition to that it is a spot where many United States tourists spend a lot of money during the summer months. We are always anxious to obtain United States dollars. Then those
1504	HOUSE OF
The Budget-Mr. Herridge tourists, and some of the Canadians I presume, buy some of the spirituous liquors on the island. Not only the provincial but the dominion government gets some income from that. If this island were situated in the arctic or on the other side of the world, we would have a research group, technicians, military observers and experts on it. We would be spending money on it, but here we have an island which is peopled by taxpaying Canadians and the government refuses to spend any money on it. I believe that is one of the things that are bothering a lot of people back home, the fact that we have money for every other place in the world but we cannot protect our Canadian taxpayers at home.


Mr. H. W. Herridge (Kootenay West):: In
view of recent press reports indicating a decidedly unconventional disposal of government property under the jurisdiction of the Department of National Defence, prior to yesterday it was my intention to move the adjournment of the house to discuss a matter of urgent public importance. However, quite naturally the leader of the opposition (Mr. Drew) had the first go at that proposal and he was ruled out of order. I am taking your advice, Mr. Speaker. When you ruled the proposal of the leader of the opposition out of order you suggested that we -would have an opportunity to discuss this matter of urgent public importance during the budget debate. This evening, therefore, I am going to take that opportunity for a few minutes and deal with a question which, in my opinion, and in the opinion of quite a number of the members of this house, is of considerable public importance.
In my opinion the Department of National Defence at this time has a tremendous responsibility to this house and to the people of Canada. When you realize that, under these conditions, the department will be spending over $2 billion of the Canadian taxpayer's money or something over half of the Canadian budget, I think that huge expenditure means that this house has to give the closest scrutiny to the estimates of the Department of National Defence. This house must not, because of time or personal convenience, attempt to limit discussion of this important matter. I believe that the members are entitled to complete and detailed information from the minister when his estimates are before the house. There is no question about that. Mr. Speaker, as a result of the recent press reports and the statement the minister made in the house yesterday, public attention across Canada is now focused upon the Department of National Defence. 

I am sure that every member in this house was glad to hear the minister's statement concerning the recent unfortunate happenings at Petawawa, and the fact that a complete investigation was to be held at Petawawa and other places across Canada. I trust that even at this late date the minister's investigation will be thorough and complete and will cover all parts of Canada where national defence expenditure is taking place. I was very pleased also to hear that the minister has engaged a former deputy minister, who is known across Canada as an exceptionally competent chartered accountant, to assist the departmental officials in an examination of the records, accounts and accounting system. The members of all opposition parties in this house, particularly during the last two or three years, have expressed their concern over the methods and procedures and expenditures of the Department of National Defence. I think I am safe in saying that the minister has been inclined to brush aside those criticisms and those suggestions advanced by members of the opposition. More than that, I think members of this house have repeatedly expressed concern on a number of occasions about expenditures. Evidence from the Department of National Defence, as presented by officers of the various branches of the Department of National Defence, indicates that some of these officials were aware of the deficiencies in the administration of the department and were concerned about them. They were aware of and concerned about waste. They were aware of and concerned about duplication; and they realized -that there was a certain lack of co-ordination within the various services of the Department of National Defence. They were aware of expenditures without any thought of the taxpayer who is footing the bill. To support that statement I just want to quote briefly from a few excerpts in order to indicate that even some of the minister's prominent officials were aware of the deficiencies in his own department. For instance, a naval memorandum dated October 26, 1949, read in part as follows:
Instances are continually being reported of excessive demanding by ships and establishments for consumable stores. A good example is the extravagant use of paint without reference to the limitations imposed by naval general order 23.00/10.
I might say that the memorandum also drew attention to the growing tendency of asking for two things when one would do. When the hon. member for Greenwood (Mr. Macdonnell) was speaking in this debate this afternoon I think he gave a good illustration of this tendency when he mentioned the number-I forget the exact original figure;

1 think it was some 60,000-of serving forks that were ordered for the use of the Department of National Defence. After protests on the part of the member and possibly on the part of others we finally were informed this afternoon that the order for approximately 60,000 was reduced to 14,000.
Then, Mr. Speaker, I can produce further evidence of the department's own willingness to admit waste. A national defence memorandum of May 11, 1950, stated in part:
It is noted with great concern that the use of Form HQ 48, Department of National Defence envelopes, has reached the fantastic figure of approximately 300,000 a month.
That statement was made before the public accounts committee on May 24, 1951, and is to be found at pages 460 and 462 of the committee's reports.
In that connection I might say that my opportunity to investigate national defence is circumscribed and limited, but I remember on one occasion being at a certain headquarters. There I saw stacks and stacks of unused forms; there was a supply of forms that I would say was in excess of the ten years' requirements of that establishment. In the ordering of these forms, in the way they were stored, in the way they were being wasted-in one case even being used to light the fire-there was indicated a complete lack of concern about the costs of these forms and these supplies to the taxpayers.


Mr. Claxlon:: Which war was that?


Herbert Wilfred Herridge: I will give the minister the name of the establishment after I have finished speaking. Once more, Mr. Speaker, I want to give proof of the unconcern about the costs and the waste of the taxpayers' money. Department of National Defence memorandum from the vice-quartermaster general to the deputy chief of the general staff dated December 13, 1948, as tabled before the public accounts committee on May 24, 1951, found at page 465 of the committee's reports, reads in part as follows:
The question of whether or not we can afford to undertake these projects does not seem to come up for examination until they are reflected in our annual estimates.
I think that attitude of mind has been proven, Mr. Speaker, on a good number of occasions across Canada. I want to make this point. I am not this evening speaking of the Department of Defence Production. I have no hesitation in saying that I think Canada has been most fortunate in having as deputy minister of the Department of Defence Production Mr. Mackenzie who, from all accounts, has done an excellent job for this country. I might say at this time that
The Budget-Mr. Herridge I think it is most unfortunate that the public service of this country is in the near future going to lose his services to private business.
I think that attitude on the part of the military to plan extravagantly without concern about the cost to the taxpayer, to plan elaborately, or as this statement says, "to undertake projects that do not seem to come up for examination until they are reflected in our annual estimates", has been indicated on a number of occasions. I think the minister will know that on a number of occasions across this country the Department of National Defence has indicated the necessity for a certain building and then the tenders to construct that building have been too high for the money provided. Then the Department of National Defence has had to trim its sails a bit, do away with some of the frills or some of the unnecessary things, and finally the building has been constructed at a cost within the estimate and has proven quite satisfactory, and sufficient. '
I want to be quite fair. I think the situation is rapidly improving, from what I have been given to understand; and I think the present minister has done a great deal to improve the co-ordination between the different branches of the various services of the Department of National Defence. But in my opinion there is no question that there is still a certain amount of interdepartmental jealousy that prevents the best of efficiency, and that is not to the advantage of the taxpayer or of the defence effort as a whole.
Even the Industrial Preparedness Association mentioned this fact in its bulletin of April, 1951, and at the same time said that the army was being starved for the benefit of other services. I understand that the Industrial Preparedness Association is an association of manufacturers working together with a view to securing some efficiency in the production of defence needs. You do not usually expect them to be critical of defence procedures; but in that bulletin of April, 1951, even they were critical of this aspect of the administration of the Department of National Defence. To indicate further that there has been interdepartmental jealousy and some lack of co-ordination, I want to quote as follows:
At the air force's 25th anniversary banquet in Ottawa on April 1, 1941, a former chief of air staff, Air Marshal I,. S. Breadner, publicly deplored the fact that the navy had infringed on air force priority in the air, and said of the decision: "It is ridiculous-absolutely ridiculous. Air forces the world over are not too well recognized even yet. The other services have not given up the fight to subordinate us one iota.'' The next day an embarrassed government official said that Canada's navy would continue to invade R.C.A.F. skies "whether Air Marshal Breadner likes it or not."
1506	HOUSE OF
The Budget-Mr. Herridge
I think that this house must insist on intelligent co-operation and planning between all the services, regardless of the jealousies that may arise from latent traditions, priorities and things of that sort. We must insist on intelligent co-operation and planning in this department if we are to get value for the taxpayer's dollar.
I have quoted a few excerpts and given a few illustrations of the opinions of persons in important positions in the Department of National Defence. Before proceeding I want to quote one more person's opinion on matters of defence, an opinion that is respected in this house and in the country, an opinion of a gentleman with a long and excellent record as a professional soldier, and with an excellent parliamentary record. I refer to the hon. member for Nanaimo (Mr. Pearkes). I find that on page 2810 of Hansard of May 8, 1951, the hon. member for Nanaimo said:
I have never known an admiral, a general or an air marshal who did not begin by asking for more than his share of anything.
Who speaks with better experience in this house than the hon. member for Nanaimo? To ask for more is a natural failing. Perhaps some of us practise it in other directions. But who should know better than the hon. member for Nanaimo, and to whose advice should we listen more than to the hon. member for Nanaimo when it comes to speaking from experience in military affairs? This attitude mentioned by the hon. member for Nanaimo, and attitudes indicated by other statements I have mentioned, show a state of mind that spells waste and unnecessary expenditure of the taxpayer's money, unless it is arrested by the supervision of the minister's senior officials, by constant vigilance and by the greatest co-ordination between the various services.
This waste and unnecessary expenditure are caused without doubt, on the evidence of what has happened recently at Petawawa, by lack of satisfactory and adequate supervision, by lack of co-ordination, and without a doubt by the state of mind that I have mentioned, which has little regard for the cost of this service to the taxpayers; by the state of mind that fails to remember from day to day that this money is provided as a result of the work and the toil and the sweat of the producing and working people of this country.
Well, I have attempted to give some evidence to prove that waste and lack of coordination exist. I wish to give one or two illustrations of the state of mind that I have been talking about, the state of mind that I would say illustrates a complete lack of understanding of the working of the processes
	|

of democracy, of an understanding of the principles of government economy, and an understanding of responsibility to the Canadian people. The incidents I shall mention will be trifling in some instances, because this department is different from other departments. As I said before, it is different from the Public Works Department, where you can go and look at the wharf and see what you got for your money, or where you can go and look at the public building and see what you got for your money. Because of the necessity, and the proper necessity, for secrecy in some respects in the Department of National Defence, and because of the innate nature of the expenditure and the purpose of the expenditure, it is very difficult for a member of parliament, or for any person, to detect the expenditures of the Department of National Defence and be at all certain that the people of this country are receiving value for their money. It is on that account, Mr. Speaker, that I maintain that the heaviest responsibility, so far as public expenditure is concerned at this time, rests upon the Minister of National Defence (Mr. Claxton), and also because of the vast amount of expenditure and the peculiar nature of the department which he is called upon to administer.
I frankly admit, Mr. Speaker, that we all recognize the minister has a very heavy task, and that he has been working long hours for many months. We give him credit for that, and any suggestions we have to make from this side of the house are not made in a harping or critical spirit, but they are made in an effort to be constructive and co-operative in the administration of this department.
As I said before, Mr. Speaker, the average member in this house, or the average citizen, has little opportunity to deal with big things, and in fact, in many respects, he is not competent to do so. But sometimes small events, small incidents, indicate a state of mind, as I said before, the direction in which the wind blows. I am going to bring to the attention of the house a few things that have come to my notice in travelling about this country, and I trust that in his examination of the situation the minister will continue to do all he can to stamp out this state of mind and to arrest its development. This is the state of mind that I mean, that does not consider the public purse. I got on a train once, a branch line, meeting a main line train. This is not recently. A colonel got out of the drawing room on the main line track and got onto the branch line train. The branch line train had no chair car. It just had two day coaches. He arrived on the train and he said to the conductor: "Where is the chair car?" The conductor said: "There is no chair car on this

train, sir. You have to sit in this coach." In the coach there were the ordinary working men and their wives, the ordinary people of Canada. Well, this self-appointed nobleman straightened up and said "Impossible! I am not going to ride with these people." And he got off the train and he telephoned, and this country paid for a car to travel forty miles along a road parallel to the railroad because this gentleman was not going to ride in an ordinary day coach twenty miles to his destination. I just use that as an illustration. I am not suggesting that there are large numbers like that. That is the type of man who is not concerned with the expenditure of the people's money and does not understand responsibility in the real sense of the word.
I was coming to Ottawa for a session, and the train stopped at a prairie city for 40 minutes. Like most people, I got out of the train and walked around the station. I went to get back about twenty minutes before the train left. A C.P.R. constable was standing there. He said: "I am very sorry but you cannot get on. They are switching sleeping cars, or something." So we stood there. In front of me was a lady with a baby in her arms. Along came a brigadier and he said: "Stand aside, please." So the lady with her baby in her arms stood aside, and he went on to the platform and got in a coach. I said to the C.P.R. constable: "Why did you let him through and keep the mother with her baby in her arms standing here for twenty minutes?" He said: "Sorry, sir, that is orders; he is a brigadier." That shows a complete lack of democracy and of the things we stand for.


Mr. McCusker:: Will the hon. member permit a question? I want to ask the hon. member whether that is the same colonel that he stated he had cleaning out his pigsty and his cow barn last year?


Herbert Wilfred Herridge: No, it is not the same gentleman at all.


Emmett Andrew McCusker: That was recorded in
Hansard.


Herbert Wilfred Herridge: Quite right. I have just mentioned that a group of people were irritated by this lack of consideration, this thoughtlessness. You should have heard the comments of some of the elderly ladies around there, because they were not at all complimentary. One lady said, "Where does that red-headed woodpecker think he is going? What does he think he is?"
I mention this in all seriousness, because little things are things that disturb people and do not add to unity or to the development of a spirit in which we are all working together to the same end. When I got on
The Budget-Mr. Herridge the train I thought that I would see where this gentleman had placed himself. I found he had a drawing room although he was going only a hundred miles. Is it necessary to have a drawing room to travel a hundred miles on a train? I say that was a totally unnecessary extra expense.
I mention these things realizing that while the sums involved may not be large, they indicate the state of mind involved. I do hope the minister will do everything possible to check that sort of thing, because, while the amount involved may be small, it does bring about considerable public irritation and does not improve our defence effort.
I should like to deal with another matter brought to my attention because, while it is only a minor thing, it does indicate a lack of thought for the expenditure of public money. I was talking to a permanent army sergeant who is to be retired at the end of this year. This man told me he was going on a course which would last six months. I said, "What for?" He said, "It is a course in modern weapons", to which I replied that I thought it was a useless expense. Here was a man who was approaching 21 years of service and was being sent on a six months' course on the latest type of weapons, with a view to instructing others in the use of those weapons. Surely it is not in the interests of economy to give a course to a man who is about to go on pension. The giving of the course would have no value to the Canadian taxpayer, because in a short time this man would not be in the army. I mention this to show a lack of consideration for the taxpayer's dollar. When I mentioned my view to the man he said, "Well, why should I worry?" I had told him that I thought it was a totally unnecessary expense. However, I did not tell him who I was because, as I said before, I like to travel incognito.
All this indicates that there has to be a determined drive from the top to have some persons realize that this money is the taxpayer's money, and that it should be spent to the best possible advantage. I have every respect for the minister and his deputies. I believe his deputies are striving to do their best, and, while possibly under some handicaps, are making every effort to improve the services.
Then, I would pay my respects to a number of men I know who are serving in the reserve army. I know some good officers and men who are giving their evenings, and some considerable time in the summer, to assist in the reserve army, and I am convinced that they do not receive the credit they should. Those men give careful consideration to expenditures, and are trying to

The Budget-Mr. Herridge carry on with limited equipment, and with a view to developing a corps which can give service to this country.
I was greatly impressed recently by the keenness shown by some young engineering officers, and the concern they showed with respect to expenditures, and what equipment would cost. We have large numbers of those people in the services, and I pay my respects to them, to their efficiency and their integrity.
While it is our right and duty to criticize, I must say that in this country we are very fortunate, when we stop to compare the situation in this country with that in the United States.


James Sinclair: Or anywhere else.


Herbert Wilfred Herridge: No one questions the integrity of the minister or his officials. One does not hear things said in Canada about ministers and officials that he hears in the United States. All we question is procedure, methods, supervision and administration, and we bring these important things to the attention of the minister.


Brooke Claxton: It would be nice to have some names, too, so that we could check on the stories related. I would be glad to have them.


Herbert Wilfred Herridge: I will give them. The hon. member for Regina City (Mr. McCusker) seems to think this is a laughing matter. I would point out to him that this is a question involving the taxpayers' money, and that it is not a laughing matter.


Emmett Andrew McCusker: I was not laughing. When the hon. member spoke last year he referred to having two senior officers, a colonel and a major, cleaning out his pigsty and cow-barn; and when he was talking about the great expense of transporting staff I was wondering if, perchance, he was referring to those two officers who were cleaning out the pigsty and the cow-barn. I do not consider it a laughing matter when an hon. member is making insulting allusions to the army.


James MacKerras Macdonnell: You were laughing, and several others, too.


Herbert Wilfred Herridge: I did not make any insulting allusions to anyone; and I hope that is the last time the hon. member will play that record.


Emmett Andrew McCusker: Mr. Speaker, if we are to have it on the record, then let me say that I did not try to break the record; the hon. member tried to efface it from Hansard last year.


Herbert Wilfred Herridge: I am trying to suggest some reforms here this evening. I am always in favour of reforms many of which we have


not obtained to date. But, in so far as the hon. member for Regina City is concerned, I would have no hesitation in advocating chloroform.


Stanley Howard Knowles: Pentothal is quicker.


Herbert Wilfred Herridge: I suggest the minister should investigate such things as this, including the hours of work put in by administrative officers who are doing clerical work, with a view to finding out whether there are too many men doing too few jobs. I make that suggestion because I have heard a good deal of talk, and I do not know the facts.
I suggest that the minister should investigate qualifications for the receipt of flying pay. Along with the hon. member for Greenwood, I say there could be an investigation to see if there is any excessive use of telegrams and telephones. I believe the hon. member made a good suggestion this afternoon when he said that possibly many of these communications could be carried out by ordinary airmail.
Then, in connection with unnecessary travel, I realize of course the difficulty in centralization, that if there is too much centralization there is often not as much flexibility and efficiency. Unless there is a watchful eye on them all the time, there is a tendency on the part of some people to travel unnecessarily and to use expensive forms of travel. I do suggest the minister should go into this matter of travel, and any unnecessary expense in connection therewith.
Then the hon. member for Greenwood made a further reference to the unnecessary and wasteful use of paper and stationery. Waste occurs even in businesses of any size which are not checked up. It is so easy to stack forms, waste them and fail to use them properly. Also I suggest that he investigate the purchasing of gasoline for army motor vehicles, particularly when it has to be purchased in relatively small quantities.
We recognize that it is the minister's responsibility to have a complete investigation made of all the instances that have been brought to light. It is the minister's responsibility to adopt methods and procedures that will provide adequate supervision with adequate local responsibility. It is the duty of the minister and his officials to do everything to eliminate waste.
It is the duty of members of this house to get the facts and details so far as possible from the minister when his estimates are under discussion. We must watch as carefully as we can over expenditures and make constructive suggestions. Further than that, I think the Canadian people have a responsibility. At the present time their attention

is focused on the Department of National Defence as a result of recent happenings at Petawawa, but that is not sufficient. If government, if parliament is to remain at a high level of efficiency and function properly the Canadian people must be concerned about the administration of the various departments of government. The Canadian people can play a great part by showing the government that they are interested and concerned, on this particular occasion, about the affairs of the Department of National Defence. They must show by continued interest that they are concerned that we obtain good value for the taxpayer's dollar.


Frank Exton Lennard: Mr. Speaker, there are two matters I should like to place briefly before members of the house. The first is one which I have brought up on other occasions during the past few years, the serious erosion of the shores of our great lakes. On February 12 of this year an important meeting was held at the Brock hotel, Niagara Falls. This was attended by municipal authorities and land owners along the shores of lake Ontario from Niagara-on-the-Lake to Toronto and by members of the Lake Land Development and Beach Protective Association Incorporated of New York state.
After considerable valuable discussion it was decided that the two governments should be petitioned to take immediate action. As far as the United States end of the business was concerned, the United States department of state approached the Canadian government on February 22 requesting that this matter be brought before the international joint commission. According to press notices of the following day the Department of External Affairs stated that this was not by any means the way to deal with this matter, that it should be dealt with in some other manner concerning which so far I am a bit in the dark. I have requested that correspondence between the two governments be produced but so far this has not been done. Sometime in the future we may learn the true picture.
Most certainly this is an international matter, it is not one for Canada to deal with alone. This business of passing the buck between the province and the dominion in connection with lakeshore erosion has been going on for the past seven or eight years. I feel that this matter is of such vital interest to Americans and Canadians living along the shores of our great lakes that it should be taken up by the international joint commission. I am unable to understand why the Canadian authorities did not agree to this when they were approached by the state department.
The Budget-Mr. Lennard
When the opportunity arises later this session I shall probably have a great deal more to say on this serious matter of lake-shore erosion. It is a serious matter because people are losing their homes and farmers are losing their fruit land. The great Niagara fruit belt is gradually being worn away, as I have stated before. Nobody seems to care very much about it as far as our governments are concerned, and I am referring to the provincial as well as the dominion government.
Another matter with which I wish to deal momentarily this evening will also likely receive attention later on. I think this calls for some answers from the government. Sessional paper 18A was brought down as a partial answer to some questions which I had asked this session. One question was:
How many contracts for defence footwear were let from April 15, 1951. to February 29, 1952?
I also asked the amounts of the contracts, to whom they were let and at what price.
I did not secure all the information that I desired because the return does not indicate the number of pairs of shoes contracted for, simply stating the amounts of the contract, the different firms to which contracts were let with the amounts, and the total amount.
At the present time the total number of our armed forces is under 100,000, and that would include all men, women and children. The total of the contracts awarded for footwear in this ten-month period was $15,292,241.70. I do not know whether members of the armed forces are provided with walking-out shoes, combat shoes, mess footwear, dress shoes and all that sort of thing, but if the shoes were contracted for at a cost of $15 per pair that would mean over one million pairs of shoes for the 100,000 personnel in our armed forces. That is over ten pairs of shoes for every man, woman and child. I include children because some of the contracts were let with baby footwear companies.
I think it is the duty of the government to inform this house as to the number of shoes contracted for in this period. I regret that I did not ask for the contracts let in a longer period but I thought that my questions would provide the information I desired. I think it is the duty of the government to provide this house with detailed information in respect to this huge quantity of footwear contracted for during that ten-month period, because to me that seems enough shoes to equip the armed forces for the next six or seven years at the present rate of enlistment.
As I say, my questions were not fully answered, and I would ask that the Department of Defence Production look into this matter a bit more thoroughly. I also understand that this answer merely indicates the

The Budget-Mr. Gillis amount of leather footwear procured for the armed forces, and does not include the rubber footwear also contracted for during that period. If the whole picture were shown, the amount might be far greater than is indicated by these contracts.
In conclusion I repeat that it seems to me an expenditure of more than $15 million to equip our armed forces with footwear, when they number well under 100,000, is exorbitant. This would seem to be just one more indication of the lavish way in which these defence contracts are being let and have been let for several years past.


Mr. Clarence Gillis (Cape Breton South):: Before I begin to talk about the budget I would like to say a few words in reference to what was said by the hon. member for Kootenay West (Mr. Herridge) and others in regard to defence expenditure. When the present defence set-up was discussed in this house I, along with others, argued that no one man in this country could handle the business of national defence and look after the interests of three departments, the army, the navy and the air force; and I have not changed my mind. Any man who tries to do that job, I do not care how brainy he is or how strong he may be physically, is not going to last very long. Anyone looking across the house at the present minister will realize that he has been asked to carry a load that has just about got him down.
When this set-up was being discussed I argued that at least there should be another minister, a minister for air. We are practically back to where we were in 1940. We are starting to re-organize our air force on a new basis, and judging by the recruiting campaign that is going on it is not going to be a small force. No minister can handle those three departments, check and sign the requisitions himself, and determine whether or not the money is being spent wisely. We did not get much support for our suggestion that another minister be appointed. Three deputy ministers were appointed, however, and they are doing a good job. They can handle the correspondence, but don't forget that when decisions are made or large requisitions come in, the minister has to look at them and decide. He has to make all the decisions; he also has to run around the country doing the inspecting and so forth.
At that time we suggested that a defence committee be set up in this house; not the public accounts committee, who merely take a look at the public accounts and try to check expenditures and so on, but a competent committee of this House of Commons. In my opinion such a committee should have [Mr. Lennard.l
been sitting, dealing with defence expenditures only as they are made from month to month. I believe such a committee would have been very helpful to the minister; and it might have helped prevent the sort of thing we are seeing at Petawawa. That leaves a pretty bad taste in the mouth of the average man who is paying high taxes. He does not object to paying high taxes if he knows he is getting something for them; but when he reads the sort of story that came out of Petawawa the average man is led to believe that instead of organizing an army, spending your money wisely and doing a patriotic job, you are just setting up a gangster machine which is in there to get everything it can for itself. It is pretty bad, and I hope the situation will be cleaned up soon.
However, I have no intention of taking a whip and starting to beat the Minister of National Defence (Mr. Claxton). I have a fairly good realization of what he is up against. I know it is not humanly possible for any one member of this house or any one man outside this house to go in there and do the kind of job that man is expected to do. The sooner the government smartens up and realizes that more help of a ministerial nature is required, the sooner we will get away from this gangsterism that is going on in connection with the unwise spending of our money. I still think that defence committee should be set up in this house. It should be meeting continuously and examining national defence so the house would be assured the money was being spent wisely, and kept informed as to the plans of the department.
I got up primarily to talk about the budget. Whether or not we agree with the minister,
I like to see a job well done; and I do not think any member can deny that when the minister presented his budget he gave one of the best exhibitions of footwork I have ever seen in this house. I think that was the best speech he ever made, and I compliment him on it. He was right on the bit and was inspired that night. I admire a good job, whether or not we agree with all the minister said. It was pretty hard to catch him out then, but we have had a lot of time to think it over since.
I am not going into the facts and figures the hon. member for Rosetown-Biggar (Mr. Coldwell) dealt with this afternoon. I do not like to duplicate a job done by somebody else. To the extent that he could pull something out of the mess of words the minister put on the record, I think the hon. member for Rosetown-Biggar did an excellent job of showing that taxes were not lowered but that in fact in the over-all picture there

would be an, increase this year. The hon. member showed that the budget was not popular and was not an election budget. But it is a good let-down now tor a build-up later on, and that is not bad strategy either. I believe the hon. member for Rosetown-Biggar made a good case this afternoon, and I am not going to duplicate it. We gave him the job of giving the main talk, and I think we should leave it with him.
However, I should like to say this on the question of medical expenses. I believe the minister slipped up a bit there. I believe that floor should have been taken out altogether. It seems to me a person should be able to charge all his medical expenses, and that there is a great deal of discrimination in the application of that feature of the budget. For example, in upping the ceiling the minister did give relief to the person who is able to go to the Mayo clinic, and who can write a cheque for a couple of thousand dollars. If you can go to Dr. Penfield and write a cheque for a couple of thousand dollars, you get some relief under the change made by the minister. However, by leaving that floor in the act the person who can merely take care of ordinary medical expenses gets little relief. In a lot of industries throughout this country there is a system of paying the doctor and the hospital by the check-off, just as you pay your taxes. In my end of the country that system has been in operation for a good many years. It is a group system whereby the doctor is paid $52 a year and there is a subscription rate for the hospital of $52 a year. This $104 is paid as an insurance, and perhaps 50 per cent of the people who pay it never receive any benefit from it because fortunately they have no sickness. They pay in order to help the fellow who is sick most of the time. Out of an income of $1,600 or $2,000, that $104 per year is a heavier burden than the $2,000 for the man who can write that cheque and who receives exemption for it under this new regulation.
If the minister had removed that floor and had permitted the deduction of the type of payment I have described for medical expenses-the system I am talking about only covers ward charges and there is an addition to that if you happen to go into hospital but at a lower rate than if you were not a subscriber-the ordinary man would have obtained some relief. I still think the minister should give consideration to that It is seldom that a budget is changed, but if the minister wants a good election budget next time he should remove that floor so that those in the lower income brackets who try to maintain some kind of insurance for
The Budget-Mr. Gillis themselves against sickness will be able to write that off for tax purposes.
There are other items that I should lit to bring to the minister's attention. Practically every business in this country is allowed to write off the purchase of new equipment or a Neon sign in so far as income taxes are concerned. These things can be charged to operating expenses. Commercial travellers can write off their expenses in travelling, and make certain deductions for the use of their cars. I should like to bring a specific case to the minister's attention. In this budget he has permitted the deduction of union dues for tax purposes, and that was welcome. I have had representations, and no doubt the minister's department has also always had representations from industrial workers on many occasions. I am going to take the coal miner as an example. He has to purchase his explosives with which he blasts the coal. This runs into quite an amount of money during the year. Secondly, he has to purchase a certain type of hat which he buys from the company. It is a hard fibre hat to protect his head and save compensation costs in the event something falls on him. In addition to that, he has to purchase a certain type of shoe with a metal toe-cap. Then, if a 180-pound machine falls on his toes it will not crush them but merely jam them up a bit. The explosives, the hat and shoes are the tools of the miner's trade. They are a part of the machine of production. It is necessary for him to spend that money and secure the equipment in order to produce coal.
If the merchant and the commercial traveller, all those persons doing business, are permitted for tax purposes to write off the money spent on expansion or improvement of their business, I do not see why the minister would not give serious consideration to permitting the coal miner to deduct the cost of purchasing that type of equipment. I am putting this on the record so that when the next budget is being prepared the minister can give some consideration to what I have said.
While I am on that point, I should like to say that democracy is never taken from you in one blast. It is slowly but surely chiselled off a little at a time. I was rather disappointed that the government did not give serious consideration to the vote of the house concerning deduction of medical expenses. I say that in all sincerity. I remember the vote of this house on the milk subsidy. Later on, it was changed by order in council. I remember that the veterans affairs committee brought a recommendation

The Budget-Mr. Gillis into this house that a half acre of land would be the requirement to come within the scope of the small holding section of the Veterans Land Act. This recommendation was accepted in the house and a short time after we left here, to my disappointment, the land requirement was stepped up by order in council to three acres, thus eliminating hundreds of applicants who would have qualified under the recommendation made by the veterans affairs committee. I am afraid that in this day and age, when the tendency is to usurp the powers of parliament as a government by the people, you are setting precedents, and if you allow that to continue you will arrive at the position where the House of Commons will be a place in which people can talk but not much attention will be paid to them. Slowly but surely the supremacy of parliament is being lost. It is a development that I do not like to see.
When there is a free vote in this house I believe the government is morally obligated to accept the results of that vote. If a vote were taken in most fraternal organizations or trade unions across the country, I do not think there is any officer or any executive who would for one moment consider that they could take action contrary to the vote cast by the membership. I am a little bit leery of this business of a small group like the cabinet taking the power unto themselves to say that the House of Commons did not know what they were doing when they voted. Three times since the end of the war that type of action has been taken, and I suggest that members on the government side, particularly the cabinet, stop and think about it. If that sort of thing continues there is not much use in the members being here. I want to leave that thought with the members of this house because democracy is chiselled off very slowly. For some considerable time I have seen growing up in North America, not so much here as in the United States, a kind of managerial society. They are managed from the outside. This business of not paying attention to what goes on in the house, and ignoring the votes of this house, is in my opinion a bad development. It certainly should be stopped by the members.
There is another item which I should like to bring to the minister's attention. I went through his budget speech and the resolutions, but it is rather difficult to find anything that you can get your teeth into. As I said before, the minister did a good job in presenting it. It is not popular in the country; but when you ask someone to tell you just exactly what is wrong with it, the only thing he can say is that we did not get a tax reduction but we got a slight increase. When you go over the 
budget, it is not easy to say what is wrong with it. It is generally the things that are not in it that you have to quarrel with.
On several occasions I have had correspondence with the department about allowing as a tax reduction the housekeeper of a person who maintains a home and who is obliged, through sickness-his wife being ill and in hospital-to hire a housekeeper. I have written to the department about the matter and I have a letter here in my hand-I am not going to read it-with bills attached, wherein this person showed that the cost of maintaining his home had gone up considerably because he had to hire a housekeeper, pay her wages and maintain her, and at the same time had his wife in hospital and was paying a hospital bill.
I figure that that housekeeper is a legitimate expense. In my opinion it is a more legitimate one than new equipment and that kind of stuff that is purchased at a plant. The home is a first requisite of the nation; without the home to hold you together as a nation you have not got anything. That man is struggling to maintain his home for himself and his family while his wife is ill. If you can write off the expense of maintaining your father or mother who may be dependent on you-and that is just a minor expense compared with the cost of maintaining a housekeeper, paying her wages and maintaining your wife in an institution-in my opinion you should be able to write off this expense.
I wrote to the department and I have a reply dated as late as April 16 of this year.
I am just going to read that reply because I think it is rather cold-blooded. It reads:
Dear Mr. Gillis:
In reply to your letter of April 7 on behalf of Mr. Fraser Goodwin of Glace Bay, Nova Scotia, you are advised that the amount expended by Mr. Goodwin for a housekeeper is a personal living expense of the taxpayer.
The Income Tax Act specifically provides that no deduction can be allowed from income for personal living expenses.
It is not personal living expenses at all. It is an abnormal expense that cannot be budgeted for. It is likely to hit you at any time, or it may never hit you. I agree that the person who wrote that letter for the director general of the assessment branch is correct when he says that there is in the Income Tax Act no provision for exemption for that particular type of expense; but I am asking the minister now to give consideration to perrhitting that type of deduction if and when he has the problem under consideration. Maybe he could bring in an amendment when the budget resolutions are up for consideration, and I strongly suggest that he should do so. This is the type of case that creates

a great deal of hardship in the home where a person with a small income is obliged to employ a housekeeper in order to maintain his home.
I have here another resolution, and no doubt the minister has it. It is from the office of the city clerk, Fort William, Ontario. It has been circularized all over the country. The copy that I have comes from Sydney, Nova Scotia, and it deals with that question of federal aid to education. I am not going to argue that question. It has been argued by several members in this house, through a resolution. I put my opinions on the record, and I stated that it is a matter of either federal aid or a revision of the tax agreements as between the provinces and the dominion. I am convinced that there is no way to solve the problem of the cost of education in this country unless it is centralized with the federal government and grants are made to the provinces, earmarked for that purpose, the administration being done in the provinces.
In this resolution it is suggested that the total cost of education in the country should be paid out of income tax. I am not particularly anxious about specifying what particular tax it should come from; I think it should come out of general revenue. I am bringing that matter forward again because it is a serious problem, particularly in the maritimes, and I hope that the minister is thinking about it when the new tax agreements are finalized, so that the provinces which desperately need aid may get a proper revision in their agreements until such time as some of the provinces who oppose federal aid smarten up and get around to the point of realizing that it is absolutely necessary.
I have quarrelled a bit with odds and ends, and I never like just to oppose without having something to propose. Tonight I am going to say a few words with regard to new methods of financing that I think are necessary. I have spoken before in this house on the same matter. The reason that I cannot quarrel so much with the minister over the budget that he brought in is that, following the methods of financing in this country as agreed to by most of the members in the house, he has to get his taxes in a certain way and he has to spend them in a certain way; it is the orthodox method and it has to be carried on in that way. When the Industrial Development bank was proposed in this house I think maybe I was about the only one in the house that opposed it. I opposed it on the ground that it was just another adjunct to the chartered banks, that it was never going to mean much in the development of this country, and that it was an organization that was being set up to 55704-96
The Budget-Mr. Gillis underwrite doubtful investments. I said that it would provide some plant expansion but that it would create no new industry in this country. That has been the history of it since it was set up. In the maritime provinces the bank did not even establish an office. Anyone who could get a loan from that Industrial Development bank could get it through the chartered banks because he had to have collateral to back it up. As to creating any new industry, or as to being of much value in the creation of small subsidiary industry at least, the Industrial Development bank has not accomplished much.
At that time I suggested that, instead of an Industrial Development bank, what was needed in this country was a national co-operative bank, creating a new chain of finance. I am firmly convinced, and have been for a good many years, that changes are coming in the economic structure of North America, whether we like it or not. There is only one way in which you are going to expand democracy and hold onto it, and that is by giving the people of this country more ownership; by that I mean more ownership in homes, in financial institutions and in the development of the general co-operative movement. I have been convinced of that for a good many years. When a man owns his home he has his roots in the soil; he is a citizen; he belongs to the country and to a certain part of it.
There are thousands of credit unions across this country. They have developed a lot of brains in that field of finance in the way that they see it. They have amassed a lot of capital. The co-operative movement is today proposing-and I know that representation has been made to the government-the setting up of a national credit society to co-ordinate all of the credit movement across this country. They have been turned down on that application; but the time is coming, in my opinion, when it should be done. Just while I was home over the Easter recess I attended a meeting in the city of Sydney where the Sydney credit union-there are four of them in that city-with a membership of about 2,000 had purchased a new hall. It is fitted up like a modern bank. It is as good looking inside as any of the banks that I see in this city. It is modern in every way, and fully staffed. We had Dr. Watson Kirkconnell, president of Acadia university at the present time, there. He was the main speaker. Well, nobody can accuse him of being a socialist.
I just want to read a little bit about what he had to say at that meeting. Knowing the gentleman as well as I do, I was a little bit surprised to hear him express the views that
1514	HOUSE OF
The Budget-Mr. Gillis he did express at that gathering. In one part of his speech Dr. Kirkconnell had this to say:
Dr. Kirkconnell said one of the most notable features of the credit union system is the extremely small margin of losses through bad debts. In Prince Edward Island, for example, loans from 1936 to 1949 totalled nearly $1,500,000 and the uncollectable loans $1,041, a loss of one-fourteenth of one per cent. New Brunswick in 1946 reported loans written off since inception of $2,116, or one-fortieth of one per cent of a total of over $8 million.
The Sydney credit union was launched in October, 1935, and since that time has acquired 2,000 members and assets of slightly over $350,000. Since its inception it has loaned out $1,750,000 and during that time has written off less than $900 in bad loans.
That is only just one small credit union in that city where there are four of them. The island of Cape Breton has a chain of them. The province of Nova Scotia has a chain of them right across the province, linked up with a central credit union league in the province, where they are trying to arrange long-term loans. That is true in New Brunswick, Prince Edward Island, Newfoundland, Quebec, Ontario, Manitoba, Saskatchewan and clean through to British Columbia.
This is a new chain of finance, and what I suggested, instead of the Industrial Development bank, was to set up a national co-operative bank. This is not new. They have had it in Europe for years. The United States has a national credit union act today, similar to the one that the Canadian credit movement is looking for at the present time. If that organization was set up on a national scale, all of the credit unions across the country could be members of it. If shares were sold to the general public at anywhere from $10 to $100 it would give everybody in the country who wanted to participate an opportunity to become members of the new chain and use that co-operative money to develop small subsidiary industries across this country that you cannot find risk capital to undertake. If that were done it would, in my opinion, be driving the roots of democracy further into the ground by giving people ownership in the development of new wealth in the country. It would also help by setting up a yardstick for the chartered banks.
In my opinion the government annuities have done much to keep the old line insurance companies in balance in regard to their rates, and so forth. The government has already set a precedent by going into crown corporations. In my opinion Trans-Canada Air Lines would never have been developed if it had not been for government initiative and government money. The Canadian Broadcasting Corporation is another example and so is the Polymer Corporation at Sarnia, and also Canadian Arsenals and atomic energy, and now television. These are good examples,


in my opinion the best examples on the North American continent, because every one of them is successful. They were properly developed. In my opinion the government should give serious consideration to the request from the credit union movement across this country to set up a national credit union act to utilize the brains and the money that are now found in that movement, to give it proper national direction and assist in developing industry in this country that risk capital will not touch.
I hope the minister is listening, and I hope that he will give today's Hansard to some of his advisers, and check the whole matter, because the credit union movement has arrived at the position where it is demanding this. They know they are ready for it. I consulted them three years ago as to whether this kind of thing should be pursued, and they said they were not ready for it. But they are ready, and they made application for it, and they have been rejected by the government. Of course it may be that the government was not ready for the presentation because they had not studied the matter as well as they should. I trust that the government will give serious consideration to what I am talking about at the present time, because I think the time has come when we shall have to start giving the people more ownership.
I myself have never objected to the wealth that the big corporations had. What I have always objected to is the power they had to prevent the creation of new wealth by the people themselves. This credit movement now has sufficient capital at their disposal. They have linked themselves up on a national scale so that they can act for interprovincial purposes and develop small industry or big industry. It is a step in the right direction. It is driving the roots of democracy further into the soil, and in my opinion that is the only way democracy can plan, because you will go either backward or forward. A backward step is a step back towards fascism. Do not make any mistake about it; fascism or communism is not the product of any particular country; it is the product of a system, and the system being older in the countries where they capitulated to these ideologies is an indication of what can happen on this continent unless we smarten up and get more ownership into the hands of our people, give them some incentive and establish them as good citizens with roots in the soil of this country. In my opinion that is the only way you can continue to expand democracy. The only way it can be done is through that ownership as far down as you can get it in the proper direction.

I still think that the minister is not out of the woods so far as inflation is concerned. He has a right, a legitimate right, to ask me: Well, what do you think should be done. You do not think that we have got inflation stopped, and all that kind of thing. I am going to put back on the record what I think should have been done. We recommended this in the last budget and in the budget before. Before we are through with this business of inflation and deflation we are going to have to carry out this kind of program.
I believe there should have been a renewal of price controls with subsidies to bring down the cost of essentials. I believe that will have to be done sooner or later. I believe that there should be some regulation preventing any further general increase in rents. That is another scare to most of the people of this country who are renting homes. Go to Montreal, Toronto, or to any of the larger cities where rent controls are handled by the provincial governments or by the municipalities. They are not very effective, and there is a general fear of eviction on the part of our people at least once a year.
I believe you have taken some steps to prevent price fixing by monopolies, and I hope that this resale price maintenance will be followed up. It is at least bringing the rule of law for the first time into the field where most of the money of the average person is spent. We enact laws to prevent people from picking our pockets, robbing banks, slugging us on the street, hijacking, and all that sort of thing. But where 80 per cent of our money can be filched from us by inflated prices and crooked practices, we have done nothing. I believe that if resale price maintenance is followed up it will establish a rule of law -that will be respected by those who have been fixing prices and who have been robbing people indirectly in the past.
I believe the Winnipeg grain exchange should have been closed to eliminate speculation in foodstuffs. I believe it was LaGuardia who said some years ago, in discussing the possibility of feeding the rest of the world, that if he had his way he would close down every grain exchange in North America.
I believe in a wage program worked out with trade union representatives to help hold the price line, while assuring workers of a fair income, and I have stressed that time and again. I have said that each industry should have an industrial council which would meet with the Department of Labour, and that would have full knowledge of the economic picture, and what the continued demand for wages would mean in the field of inflation. I believe that an industrial coun-
The Budget-Mr. Gillis cil should have been set up right after the war, and in time we will have to get around to it.
Then, I believe in a minimum price program worked out with farmers' representatives, to ensure primary producers a fair share of the national income. The committee on agriculture does that to some extent, but I believe farmers would be more satisfied if they had direct representation.
Then, there are other measures such as credit restrictions, and the like. The government has already taken some steps in that direction.
In conclusion I would urge that the minister and his department take a look at the possibility of introducing a national credit union act. They should examine the movement right across the country, and get the facts and figures. Let them see the large number of people who, voluntarily and in their spare time, have studied this system of finance, through groups, and have perfected an organization second to none across this country today. Let the minister see if such an organization could not be advantageous to the whole country, if it was linked up on a national scale, so that interprovincial negotiations could be carried on for the development of the country and the benefit of small industry-and perhaps for big industry, too, because there is a considerable amount of money involved in it today.
I trust the time is not far distant when I will see the minister introduce a bill along these lines-because, if he does not, sooner or later I shall do it myself, and have a vote of the house recorded in connection with it.


James Sinclair: I move the adjournment of the debate.


Edmund Davie Fulton: There is a quarter of an hour yet.


Douglas Charles Abbott: It has been a long day.


James Sinclair: It is not debatable.


Mr. Casselman:: We want to hear you tonight.


James Sinclair: You will not sleep unless you do?
On motion of Mr. Sinclair the debate was adjourned.



BUSINESS OF THE HOUSE

Mr. Fournier (Hull) moved: the adjournment of the house.
He said: Tomorrow we will continue with the budget debate.
Motion agreed to and the house adjourned at 10.45 p.m.
1517

Wednesday, April 23, 1952