1952-04-08

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

[Stage Direction]
Mr. H. B. McCulloch (Pictou) presented the second report of the standing committee on railways, canals and telegraph lines, and moved that the report be concurred in.
Mr. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to suggest to the hon. member that he consider allowing this motion to stand until Monday. As I listened to the presentation of the report the only recommendation heard was that leave be granted to the committee to sit while the house is sitting. I may be wrong, but I was under impression that we were also to ask for leave to authorize the chairman to have as many copies of our proceedings printed as he might determine from time to time. I did not hear any reference to that in the report which he presented.
I think it is important that we should get on with the printing of the proceedings of the committee. I have some misgivings as to concurrence at this stage in a report which recommends only that the committee be permitted to sit while the house is sitting. Would the hon. member consider withholding the motion for concurrence until tomorrow or a week from Monday next so that the question of printing may be further examined?


Mr. McCulloch:: It was decided this morning that we would not meet until April 22. I think everyone was in agreement with that.


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


Edmund Davie Fulton: Do I understand from the hon. gentleman that he is withholding the motion for concurrence until Tuesday, April 22? I am sorry, but I could not hear what he said.


Henry Byron McCulloch: No.


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


Edmund Davie Fulton: I am not certain, but I gathered from what has been said that the hon. gentleman is not disposed to accept my suggestion. Under the circumstances I do not agree to the motion to concur in the report.


Mr. Macdonald (Edmonton East):: It has
just been stated by the chairman of the committee that the committee will not meet again until April 22 at eleven o'clock in the morning. I see no reason why this motion should not pass.


Mr. Mclvor:: There is nothing in this report apart from asking for permission to sit while the house is sitting. Surely that is not controversial.


Some hon. Members:: Carried.


Edmund Davie Fulton: I have raised a question with regard to another decision which the committee made this morning and which I understood was to be reported to the house this afternoon but has not been reported. I think it should be included in the committee's report. Under the circumstances I cannot agree to concurrence in the report this afternoon, because I think it is an incomplete report.


Mr. Speaker:: It would require unanimous consent to have the report concurred in this afternoon, Probably the matter can stand until tomorrow.


Some hon. Members:: Agreed.
Motion stands.



INITIAL PRICES FOR WESTERN WHEAT, OATS AND BARLEY

Right Hon. C. D. Howe (Minister of Trade and Commerce):: I would like to advise the house of the decision of the government in regard to initial prices for western wheat, oats and barley for the crop year commencing August 1, 1952.
As members of the house know, the Canadian wheat board is in the midst of a very large and difficult operation this year. In spite of unfavourable harvesting conditions last fall, and in spite of the fact that there is considerable threshing to be completed in the prairie provinces, the outturn from 1951 grain crops in the west is still very large.

Grain
It is likely that total grain deliveries by western producers in the present crop year will be in the neighbourhood of 700 million bushels, which is the largest delivery of grain in any single crop year in the history of the west.
The difficulties of the present crop year have not arisen from the quantity of grain which will be delivered to the board. The difficulties arise from the lateness of the 1951 harvest, the unprecedented quantity of out-of-condition grain threshed by producers, and the general quality of the grain harvested. In spite of these difficulties, good progress has been made in disposing of deliveries from the 1951 crop. The large crop in 1951 was accompanied by a good demand for grain, and this fact will be reflected in the operating results attained by the board during the crop year, in spite of all the difficulties arising from the lateness of the crop, delayed harvesting, and the fact that at least 250 million bushels of grain will be received from producers in a tough or damp condition.
So far as wheat is concerned, the major part of producers' deliveries during the crop year 1951-52 will be disposed of within the crop year. However, with the prospect of substantial marketings by producers in the final months of the crop year, some increase in the wheat carry-over can be expected' on July 31 next.
On the basis of progress to date in disposing of the 1951 wheat crop, and the prospect for a continuation of a broad demand for wheat, the government is establishing the initial price for wheat for 1952-53 at the same level as at the start of the present crop year, namely, $1.40 per bushel basis No. 1 northern wheat in store at Fort William-Port Arthur or Vancouver.
In general, the position in respect to oats and barley parallels that of wheat. While very large deliveries of both grains are expected during the present crop year, demand has been satisfactory. There will be some increase in year-end stocks of both grains, due to the lateness of the 1951 harvest, the volume of grain still to be threshed this spring and the necessity of conditioning large quantities of oats and barley prior to sale. However, the outlook is such that the government feels justified in establishing initial prices for both oats and barley at the same level as at the start of the present crop year. These initial prices are 65 cents per bushel basis No. 2 C. W. oats in store Fort William-Port Arthur, and 96 cents per bushel basis No. 3 C. W. 6-row barley in store Fort William-Port Arthur.
As I have mentioned on other occasions, these are initial prices, and it is always the

hope of the government that pooling operations conducted by the wheat board will result in surpluses which will permit either increases in the initial prices during the crop year, or final payments to producers after the close of the crop year, or both.


Mr. Cardiff:: Would the minister care to make a statement with regard to feed grain in Ontario? He has said that the price is to be 65 cents at Fort William, but it costs us in Ontario about 95 cents per bushel.


Clarence Decatur Howe: My hon. friend is referring to the initial price at Fort William. Beyond the initial price there is the participation certificate. The price in Ontario is based on the final price rather than the initial price.



SHIPMENT OF WHEAT THROUGH CHURCHILL


[Stage Direction]
On the orders of the day:
Mr. R. R. Knight (Saskatoon):: I did not
send notice of this question because it has been inspired by the statement of the Minister of Trade and Commerce. I should like to ask him under what authority diversion charges are made against wheat going through the port of Churchill, and if the government will not take into consideration the abolishing of this unearned levy-because that is what it is.


Clarence Decatur Howe: The wheat is delivered by the producer to a private elevator company, and it is necessary to divert the wheat from the usual outlet of the private elevator company to a government terminal elevator. There is always a diversion charge in that connection. If my hon. friend would like a more comprehensive statement I should be glad to obtain such a statement from the wheat board and give it to the house later on.



PRICE OF BREAD IN RELATION TO RETURNS TO WESTERN WHEAT GROWERS

[Stage Direction]
On the orders of the day:
Mr. Robert Fair (Baffle River):: I should like to address a question to the Minister of Trade and Commerce. Is it the intention of the government to continue its present policy of making cheap bread available to the people of Canada at the expense of the wheat growers of the prairie provinces?


Clarence Decatur Howe: It is the policy of the government of Canada to sell wheat to the Canadian consumer at the same price as to the consumer in Britain, the consumer in Egypt, the consumer in Germany and to other consumers throughout the world.



ANNOUNCEMENT OF PAY INCREASES FOR TEMPORARY EMPLOYEES

Mr. Speaker:: I have the honour to lay on the table a report of the civil service commission respecting certain employees of the House of Commons.
Recently I assured the house that the matter of increases in the salaries of our temporary employees was receiving my attention and that of the officials of the house, and that a report would be made as soon as possible.
I now desire to inform the house that salary increases in line with those recently granted to other employees of the public service have been granted to the temporary employees of the house, retroactive to December 1, 1951, for the continuous employees, and from the commencement of the session for our sessional staff.
I might perhaps add that in order to help make Easter more pleasant to the staff of the house, the cheques covering these increases, as well as the salaries for the first half of this month, will be issued on Thursday morning.



AERONAUTICS ACT


Hon. Lionel Chevrier (Minister of Transport) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend the Aeronautics Act to provide that the governor in council may make regulations for the zoning of airports and also to provide for the payment of compensation in respect of any property injuriously affected by the application of the said regulations.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the order for government notices of motions:
April 3-The Prime Minister-Resolved, that a select committee be appointed to consider the results of the census of 1951 and the readjustment of the representation in the House of Commons necessitated thereby, with power to consider whether the said readjustment should be made in strict accord with the rules presently set out in the British North America Acts 1867 to 1951, and the other statutes in that behalf, or whether it is desirable to provide that there should be no reduction of
Business of the House
more than fifteen per cent at any one time in the number of members assigned to any province and that there should be assigned separately two members instead of one to the Yukon and the Northwest Territories or any part thereof and that the total number of members should be increased accordingly; with instructions to prepare a bill or bills with schedules to give effect to its findings and conclusions and to contain and describe the several electoral divisions entitled to return members to this House of Commons; with power to send for persons, papers and records and to examine witnesses, and to report from time to time; and that notwithstanding standing order 65, the committee shall consist of thirty-seven members to be designated by the house at a later date.
Right Hon. L. S. St. Laurent (Prime Minister):: When the notice of motion concerning the resolution to set up a select committee on redistribution was referred to at the close of last evening's sitting I intimated that I might find it desirable to ask that this notice be dropped so that I might substitute one in somewhat different language which would make it less difficult for the house, without infringing any of the rules, to consider all the various aspects of this problem. I now find that that is so, and I should like to ask that this notice of motion be dropped.
I shall immediately hand the Clerk for inclusion in the Votes and Proceedings of today another notice of motion in a somewhat different form. Of course the result will be that the new notice will not appear on the order paper for tomorrow, but it will be on Votes and Proceedings. Now, should there be time to consider it tomorrow, and should it be the desire of the house to have it taken up, I would be quite prepared to submit the motion tomorrow, although it will still be only on the Votes and Proceedings as a notice.
Order withdrawn.
SUSPENSION OF STANDING ORDER 15 FOR THIS day's SITTING


Louis Stephen St-Laurent: That standing order 15 in relation to the consideration of private and public bills on Tuesdays be suspended for the sitting of Tuesday, April 8, 1952, so that the order for the house to resolve itself again into committee of ways and means (budget) may be proceeded with at 8 o'clock, p.m.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. W. F. Carroll (Inverness-Richmond):: Mr. Speaker, I should like to direct a question to the Minister of Labour, and I apologize for not having given notice. The minister no doubt is aware of the serious situation that exists in the mining town of Inverness. Six

Inquiries of the Ministry months ago the mine was closed down, and since that time three or four hundred employees have been out of employment. In most cases their unemployment insurance has run out. I ask the minister to consider the possibility of doing something outside the act for these people until something else can be done for their rehabilitation.


Hon. Milton F. Gregg (Minister of Labour):: I know something about the situation referred to by the hon. member for Inverness-Richmond. While it will be impossible for the unemployment insurance commission to continue the supplementary benefits which expired a week ago today, nevertheless I will ask the commission to have someone look into the matter referred to and see whether they can assist in finding employment either there or elsewhere.



QUESTION AS TO APPLICATION TO FISHERMEN

[Stage Direction]
On the orders of the day:
Mr. G. F. Higgins (St. John's East):: I wish to direct a question to the Minister of Labour arising out of an answer he gave me yesterday with respect to unemployment insurance for fishermen. In the report of the unemployment insurance commission survey of 1951, paragraph 279, appear the words, "Some form of unemployment assistance should be provided by the proper authorities". Would the minister clarify these words?


Milton Fowler Gregg: I think what is meant is that since the conclusion was reached by the commission as I announced yesterday in the house, that for the time being at least fishermen could not come under the Unemployment Insurance Act, any cases of need among fishermen would have to be taken care of by local programs of unemployment assistance or relief.



ANNUITIES


[Stage Direction]
On the orders of the day:
Mrs. Ellen L. Fairclough (Hamilton West):: I should like to direct a question to the Minister of Labour. In view of the payment of old age security commencing at age 70, has consideration been given to permitting the modification of existing contracts for deferred annuities so as to pay a greater annuity up to age 70 which would be reduced by $40 a month after age 70?


Milton Fowler Gregg: Yes, this is one phase of the question of annuities that is being studied by our officials.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough West):: should like to direct a question to the Minister of Citizenship and Immigration. Would the minister make a statement on the report from Buffalo that immigrants to Canada, or aliens, are being smuggled across the border? Has he any record of any of these people having had their passage from Europe paid by Canada?


Hon. W. E. Harris (Minister of Citizenship and Immigration):: I read the report in the newspaper, and that is the only notice I have had of the alleged action on the other side of the border. I think it ought to be made clear that our immigration policy is designed to admit to Canada persons who intend to reside here permanently and ultimately, we hope, take out Canadian citizenship. We have no knowledge of any large-scale smuggling of aliens such as was indicated in the newspaper report. If we do get evidence of it I shall bring it to the attention of the house.


Gordon Knapman Fraser: Is there any check on the Canadian side of the river to prevent these people from crossing there?


Walter Edward Harris: We have our usual officers on the Canadian side. I think my hon. friend's purpose would be served by my saying that if anyone is caught and returned of whom we have a record we would then consider whether he ought to be deported from this country.


Mr. Cruickshank:: Is there any compulsion on an immigrant or displaced person who comes to Canada to remain in Peterborough and not move to British Columbia?


Gordon Knapman Fraser: They would never move from Peterborough to British Columbia.



REQUEST FOR TABLING OF SURVEY REPORTS

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare, arising out of a return tabled yesterday in response to a question of mine of a few days ago. Will he consider tabling in the house the health survey reports that have been received thus far from several of the provinces, and the others as they come along?


Hon. Paul Marlin (Minister of National Health and Welfare):: The hon. member did not give me notice of his question.


Stanley Howard Knowles: Surely you do not need notice for this question.


Paul Joseph James Martin: I usually want to give his questions the greatest consideration. Characteristically I will give this matter my very serious consideration.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Francis Higgins: 1 wish to direct a question to the Minister of National Defence. Is the minister prepared to give details with regard to the proposed expenditure of $500,000 for the St. John's harbour defences?


Hon. Brooke Claxton (Minister of National Defence):: The hon. member asked a similar question on March 10. I said that a contract had been let, and I was then prevented from giving further details because the Speaker said the question should go on the order paper. I still have the same information. A contract was let on February 20 for a wharf, a slab and some other works. The amount of the contract is $543,450. It was let to the Diamond Construction Company.



[Stage Direction]
The house resumed, from Friday, April 4, consideration of the motion of Mr. Claxton for committee of supply.
Mr. E. W. George (Westmorland):: Mr. Speaker, when the house adjourned on Friday last I had just read the motion moved by the Prime Minister (Mr. St. Laurent) on Monday, October 22, 1951. This is one of the most important motions that has ever been passed by the house in peacetime, and for the sake of continuity I am going to read it again. It is as follows:
That this house approves the continuation of Canada's participation in the efforts being made through the United Nations to establish international peace, and in particular to defeat aggression and restore peace in Korea, and by the North Atlantic treaty nations to deter aggression and promote stability and well-being in the north Atlantic area.
I do not say that in assenting to this motion opposition members agreed with everything that the government or the services had done in connection with Korea and the North Atlantic treaty. I do say, however, that there was a wide opportunity, indeed an invitation, for anyone who did not agree 55704-78
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with everything that had been done, to say so. The hon. member for Nanaimo (Mr. Pearkes) did not say so. He said so just six months later, long after the brigade had arrived in Europe as announced, arranged and carried out. The military expert of the opposition said nothing about armour.
You know, Mr. Speaker, it is sometimes not a bad thing to go back and look at what has been said previously, in order to get our perspective right. When we were raising the 25th brigade to go to Korea we did not get much in the way of support or assistance from the Conservative opposition. This is what the hon. member for Nanaimo said in the house about the 25th brigade on September 1, 1950, at page 131 of Hansard:
The appeal was made to the young men of Canada. That appeal has been magnificently responded to. But what have we got? A conglomeration of men bearing the proud names of great units, unknown to their own special unit commanders, their officers, their N.C.O.'s. Any man who has had any experience in the service will tell you that it takes a long time to weld such groups of men together in order that they become a fighting team, because it is team work that counts, not merely the individual skill of an individual soldier to handle his weapon.
Then on page 133 the hon. member also said:
I fear that the brigade now in training will be ready either too late or just in time to take part in the victory parade.
That is the brigade which everyone who has seen it says is the finest fighting formation ever fielded by this country. So much has been said about this excellent brigade that there is no need of repeating it here. We are proud of them, and they are perpetuating the famous records of Canadian soldiers who have preceded them in other wars. I wonder what they think now of the remarks made about them by the hon. member for Nanaimo.
In conclusion, Mr. Speaker, I repeat that the hon. member for Kootenay West (Mr. Herridge) was not doing a service to the reserve forces when, by inference, he tagged them as he did. One or two isolated cases of personnel joining up only to participate in athletics does not mean that other units allow this sort of thing. I hope he has done as he suggested he would-that is, given the information to the minister. I do not mean that when conditions exist which are contrary to the rules and regulations and/or not in the public interest, they should not be exposed. Far from it; I am sure every citizen has an obligation in this regard, and especially members of parliament. When any of these cases come to light hon. members should report them immediately to the

National Defence
authorities or to the minister, instead of waiting for an opportune time to arrive to air the matter on the floor of the house.


Mr. Herridge:: It was reported immediately.


Edmund William George: That is not what you said in the house. Adverse publicity such as this is detrimental to recruiting for the reserve army and tends to lower the morale of those at present on strength.
We are also proud of the 27th brigade; and speaking of this brigade Waldo Frank in the Los Angeles Times, as reported in the Montreal Gazette of February 6, 1952, stated it was-
-the most cheering sight in the otherwise drab picture of western defence along the Ehine-Alps line.
Further in the same article he said:
. . . although the Canadians have been in Germany only since December, they already present a better picture of a battle-ready fighting team than any other allied combat unit in Europe with two exceptions-the U.S. 1st infantry division and the two brigades of the U.S. armoured cavalry.
A little further on he says:
Everybody in the brigade is a volunteer, with full understanding of why he is here and how long he will stay in Germany. Finally, all hands in the brigade are well clothed, well fed and well paid.
Canada has only fourteen million people, but the opposition experts talk as if we should supply the military components which would normally be supplied by a country with ten to fifteen times our population. We must continue to play our part in preserving peace, and there must be visible proof of our intentions. The peoples of Europe have been liberated once and they are not interested in having it done again. We must stop communist aggression where it is. Canada has provided the troops as agreed under NATO. They asked for and got infantry. Being a member of the armoured corps I am not talking against armour. I am simply insisting that armour must be properly supplied and used. Otherwise the results are disastrous.
All the opposition theories in favour of an armoured brigade group being sent to Germany instead of the infantry brigade group we did send are another example of the opposition's apparent non-constructive attitude toward most government legislation and policies.


Edmund Davie Fulton: Mr. Speaker, it is difficult to debate Canada's national defence policy as it now exists and as it is forecast for 1952-1953, because it is difficult to grasp anything clearly from the statement made by the minister in introducing this debate on Thursday of last week. I do not mean it was difficult to understand what the

minister said; he did give us some background in connection with defence, but it was extremely difficult to get from his statement any clear picture of the present position of our defence forces, exactly what we have in the way of forces in being today to meet aggression, and what exactly we may have in the way of forces in being at the end of this fiscal year as a result of the money we are being asked to spend.
I can only say that in reading over the speech carefully with a view to getting something from it which one might criticize sensibly and constructively, there seemed to be in it a complete sense of unreality. You cannot take that speech and analyse it, and say that for this expenditure of $2,100 million we are getting so many tanks, we are going to have so many guns, we shall have so many operational squadrons at the end of the year equipped with so many aircraft of such and such a type. That sort of break-down is impossible, however carefully you examine the minister's statement. It is impossible to take from his remarks anything more than a general statement of objectives for the end of 1954.
It is true the speech was lengthy. That was quite proper, because he was introducing an important subject, having to do with an expenditure of over $2 billion. The minister did give us the background of some of the decisions that have been taken as to the raising of our forces and the objective proposed for the end of the three-year program on which we have now embarked. He gave us some lengthy quotations from the statement by General Eisenhower, which already had received ample publicity in the press and over the radio. He then gave us a definition of "infrastructure", and referred to the word as having been drawn from a French word having to do with railways.
He went on to tell us that the word was first used in the western union countries, and he referred to all the uncertainty that surrounded it, until I began to wonder whether he was going to end up by suggesting that this subject be referred to the standing committee on railways, canals and telegraph lines rather than the committee on defence. For all we got out of the minister's speech in the way of facts upon which we might build a constructive debate, he might almost as well have been speaking about something to do with railways, canals and telegraph lines. When he referred to the western union, the threatened strike in the Western Union Company in the United States made me wonder whether we were not going to bog down to an equal extent in the creation of a defence effort in Canada.

The lack of reality in the minister's approach to this subject, and his reluctance to give us a clear statement of what we are to get for the money we are spending, is I believe typical of the situation we find when we look into the actual structure of our defence program. I can find it nowhere better illustrated than by an experience I had last year during a long week end-while the house was adjourned, not one of the Thursday to Tuesday variety-while driving back to Ottawa from Windsor. En route I gave a lift to a soldier who was wearing the shoulder flashes of the Royal Canadian Regiment. I asked him whether he had yet been with his battalion, and he told me he had been posted to the battalion shortly after joining up and had then been sent to an army cooking school. I thought that was interesting, because here was a soldier who was a member of a parachute battalion, one of the units of the airborne brigade, and I wondered what kind of cooking equipment they used. I asked him what kind of stoves they used, and said I wondered whether they were anything like the company cookers which we used in the field in the last war.	[DOT]
The soldier asked me what kind of outfit we had used, and I described to him as best I could what we called the hay-burner with the series of stands on which the containers were placed in which the food was cooked for the company. I said I did not believe that would be a suitable thing for packing and dropping from a parachute, and he said, "No, we do not have anything like that; we were not trained on that." I thought they were probably trained on something much more up to date and realistic, so I asked what kind of equipment they were trained to use. He said, "We have the most wonderful up to date sitoves in the world, a most magnificent set of gleaming Moffat electric ranges." I thought that was typical-to train a cook who is going to cook for a parachute regiment on a Moffat electric range. I did not like to ask the soldier, but I think I should like to hear from the minister what arrangements are being made for the soldier-cook to plug his stove in when he drops by parachute from an aircraft. Well, of course the illustration can be strained, but it indicates the sense of unreality pervading the whole defence structure in which we are trying to carry on this debate today.
The task is made much more difficult by the fact that the minister sought in advance, during the course of his introductory speech, to frighten us from criticizing the way in which his department is carrying out its responsibilities. He sought to do that by suggesting that for us to say that things should 55704-78J
National Defence
be done differently would in some way be disloyal and would tend to weaken the defence effort. He sought to discourage us from criticizing by saying-if you suggest something should be done differently you will only be displaying hindsight. I shall have more to say a little later about this outrageous suggestion, which I regard as indicative of a perverted attitude to parliament and to the responsibilities and functions of the Minister of National Defence in his relationship to parliament and the country. At the moment I think it must be said that the minister's attitude is typical of the means by which he seeks to distort the true picture of our defence effort and to throw a cloak of secrecy over the clear deficiencies that exist. Notwithstanding the minister's effort, I intend to refer to some of those deficiencies and shortcomings in the course of my remarks this afternoon.
The first general observation I wish to make by way of criticism is that to total up the amounts we have spent in the last two years, and add to that the amount we are being asked to authorize for this year, gives a total which is quite unjustified in terms of any concrete achievements which have been laid before us. If you compare the total spending with the figures of results which were given, it presents a clear indication of inefficiency and waste in our defence effort.
Some of the figures, Mr. Speaker, are interesting, if not alarming. In the fiscal year
1950-	51 the total spending for all defence purposes was $784 million; in the fiscal year
1951-	52 it was $1,944 million, making a total for those two years of $2,728 million, to which we are being asked to add this year authority for the further expenditure of $2,109 million. By the end of the fiscal year in March, 1953, therefore, we shall have spent in those three years alone a total of $4,837 million-just under $5 billion.
The question which must be asked-and which should be answered-is this: What shall we have by the end of the fiscal year 1953 to show for the expenditure of this staggering sum? It is there that the shortcomings and deficiencies in the minister's statement become obvious. When you try to see what you can find in the way of details concerning what we shall have in existence at the end of that time you find that, looking first at the navy, there is no clear picture of what will be operational.
I have the minister's statement before me, and here is what he had to say about the navy, as reported at page 1088 of Hansard for April 3, 1952:
By way of summary, Mr. Speaker, in the twenty months since Korea the navy has commissioned nine ships and launched six others. It has twenty-seven more on order, with forty awaiting refitting.

National Defence
It is operating sixteen schools. In Korean waters alone it has sailed over 450,000 miles.
When you try to find out exactly what will be in existence in the way of anti-sub; marine task forces, which we have been
*	told is the prime role of the Canadian navy : in the future, there emerges nothing. This
general statement does not tell us whether s we shall have one task force, or two, or only part of one. How many of those nine i ships which were commissioned are now operational? How many of those that have .been commissioned are at sea? What about 'those ships that have been launched? In what state of readiness are they? What about the [DOT]twenty-seven ships on order and the forty
[DOT]	awaiting refitting?
' The vague statement made by the minister : is useless so far as giving this house and this country any clear picture of naval defence preparedness is concerned. It makes it impossible to carry on any constructive
[DOT]	criticism of the government's policy. But what we do know with respect to the navy-[DOT] although we are not told this; we have to dig
*	it out of the mass of facts and obscurities which /surround it-is that we have virtually noth-ling now capable of discharging Canada's main s naval role which, as we have been repeat-'edly told, is to place in service, primarily in the Atlantic, an anti-submarine task force.
When we turn to the army to see what we shall have there, what do vve find? Well, we find that we have some specific information, but the information we have in this case /gives rise to no feeling of security but rather [DOT]to one of deep disturbance. We find that by [DOT].the end of 1952 we shall have in the field three isolated infantry brigades with not a vestige or a scrap of armour, not an operational tank; and of these three infantry .brigades themselves, only one of them, namely, the brigade in Korea, will be operational-ready to take the field and fight, that is-by the end of 1952. We have not the forces to form one complete division. We have no formation of divisional size. Most serious of all, perhaps, is the fact that we have no reserve capable of immediate mobilization.
With respect to the Royal Canadian Air Force, from the minister's statement it is again uncertain just what we shall have by way of squadrons in being and operational by the end of the fiscal year 1952-53. One looks in vain for this information in the minister's speech. But from a study of the minister's speech and the most recent white paper on defence-that which was tabled in June of 1951-we can guess that we shall have not more than a total of thirty R.C.A.F. squadrons in any shape or form by the end of that fiscal year; and of that thirty, there will be a maximum of twelve active air force
IMr. Fulton.]
squadrons. We are not told in what state of readiness or partial readiness or partial equipment and manning with respect to aircraft they will be; but it appears that that is the limit-that the very maximum we shall have in any state of operational readiness will be twelve squadrons of the Royal Canadian Air Force.
When we turn to the subject of equipment, what do we find? There have been so many boasts about the money we are spending- boasts completely unmatched by equal figures of what we are getting-that it is definitely disturbing to see how little we have actually secured to date in the way of equipment. In this matter I believe the Minister of Defence Production (Mr. Howe) has to take an equal share of responsibility with the Minister of National Defence. It must be admitted that in this regard we have been, to some extent, bedevilled by difficulties over the question of standardization; but I believe that our difficulties-big enough as they were in that field-were increased by a mistaken and too early decision to standardize on American patterns. The decision to standardize on American patterns-and we must be clear on this matter-did not refer only to certain specific and individual types which we felt, in the individual case, were the most desirable on which we could standardize. The decision went much further than that. It went most of the way, if not all the way, to a decision to standardize the equipment of whole divisions on the American pattern. As authority for that conclusion I refer to the statements of the Minister of Defence Production himself, in his report to the house given in February of last year, commencing at page 179 of Hansard, and the white paper on defence to which I have already made reference and in which you find such passages as this one on page 26, where, referring to the shipment to Europe of the arms for a complete division, it says:
This procedure was the only practical way for Canada to standardize on U.S. patterns.
Throughout the white paper and throughout the speeches of the Minister of Defence Production and of the Minister of National Defence over the past year, up until the present time, there have been repeated references to this decision to standardize on the American pattern. One result of this decision-which, as I have said, was an early and mistaken one-is -that we in Canada completely lack any adequate armoured formation. Recently we have received, I understand, a few tanks of the British Centurion type for training purposes. We are not in any position-and we are not beginning to approach the position-where we could equip and field an armoured regiment, let alone a brigade with tanks.

I believe that this lack of armaments is one of the most serious criticisms of the defence preparedness of the Canadian army today. It is now apparent that not only members of the opposition but sometimes even members of the government and ministers of the crown are wiser in their hindsight than they were in their foresight. We are now told that the Centurion tank has been recognized and approved as the most suitable tank in existence, in production at the present time, for modern warfare. The Minister of Defence Production has always resolutely set his face against the proposal that Canada build tanks. It is difficult to compete with the minister in a field of this type. He makes these statements-and they are accepted as gospel- that it is not logical for Canada to build operational combat tanks. But I cannot see why-


Clarence Decatur Howe: Will my hon. friend permit a question? Is he aware that Canada has built over 1,000 tanks comparable to the United States Mark IV?


Edmund Davie Fulton: I am not talking about the Mark IV. Is the Mark IV the same as the Centurion?


Clarence Decatur Howe: No. The Mark IV is the
American type.


Edmund Davie Fulton: I was not referring to that type of tank. Actually, I was not aware that we have produced 1,000 of those, but if we have, I would ask the minister and the Minister of National Defence to tell us where those tanks are? They are certainly not of the best fighting type and are not in the hands of any fighting Canadian formation today. We are given to understand that the decision has now been made to standardize on Centurion tanks. The question that we should have answered is why Canada had not made arrangements previously to build this tank in Canada under licence from the British authorities. I understand that the difficulty is that we cannot get them in quantity from British production now because the British themselves are short of them as a result of their production difficulties. I fail to see, however, why we could not have made arrangements earlier to standardize on this type of tank, which is now agreed to be the most suitable combat type, and why we could not have got busy with building some of them for ourselves and our allies.
There apparently have been mistakes of equal magnitude in connection with the production of the all-Canadian jet fighter, the CF-100. After all the boasts that were made as to the imminence of production so that Canadian squadrons might be completely equipped with an all-Canadian fighter, this
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aircraft is still not in production or anything approaching it. After the spending of many: millions of dollars, there is only one proto-, type of this fighter in existence. Compare this record of performance, after the spending of all that money, with the boastful statement made at page 27 of the white paper last June, 1951:	[DOT]
Delivery will soon begin of CF-100 Canucks from the A. V. Roe factory in Toronto.	'
It is disturbing-indeed, it is desperate-' when one views the situation in terms of the amount of money which is being spent, tO' see how far short performance falls of the promises which have been made with such' profusion. But the most serious indictment with respect to our equipment shortages and' deficiencies is the fact that the equipment, we do have in the hands of our troops who' are fighting is in many respects obsolete or. obsolescent. Here I should like to refer to what was said by Dr. Gordon M. Shrum, of the university of British Columbia. The Vancouver Daily Province of April 4 reports an address he made to the association of professional engineers in Stanley Park pavilion last Thursday evening. Dr. Shrum, by the way, is a member of the national defence board and of the national research council.. The newspaper article contains this report, of what.he had to say with regard to some, of the weapons with which we are fighting, and the deficiencies and shortcomings of the weapons being used in Korea:
"You'd be fed up if you were over there. We alii heard of push-button warfare, but there they are, using weapons, and even aircraft, of the last war. We have been spending money on research, but we haven't the equipment."	i
Jet planes, travelling at 700 miles an hour, are . using obsolete machine guns. "They might as well be shooting at each other with pea shooters." The, allies, he said, would be unwilling to "trot out our best things for Russian observers."
"However, we don't have these things anyway."
I well know it has been suggested previously in the house that the jet aircraft' manufactured in Montreal are being equipped' with a type of armament which to all intents and purposes is obsolete. We are spending something like $400,000 per aircraft, and turning them out with a type of armament comparable, as Dr. Shrum has said, to a pea-shooter. That is not hindsight. That is criticism that has been made in the house' and, I know, made privately to the minister as well. But in its all-pervading wisdom the government continues to produce this type o|i aircraft, with this basic type of armament. Then the Minister of National Defence in his speech in the house tells us that we must not dare to criticize the defence effort of the gov-' ernment because to do so would be to detract' from that defence effort.	i

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Another example of serious deficiency in equipment, in spite of the expenditure of nearly five billions of dollars which we will have made by the end of this fiscal year, is in the lack of an up-to-date aircraft carrier. It was suggested, not just recently but some time ago, that the carrier was then obsolescent, and it is suggested that it is now obsolete. One cannot talk carelessly about replacing an aircraft carrier as though it were something that could be done overnight or even in a year. But we have not been told of any steps being taken to replace [DOT]-not just to overhaul-the Magnificent, and to have an aircraft carrier capable of handling jet aircraft, which surely must be the minimum if we are to assume the antisubmarine role which has been assigned to us.
I turn now to the question of our reserve force. It is most regrettable that there was nowhere in the minister's statement any mention worthy of the name of Canada's reserve forces. Perhaps that is not as strange as it might seem at first sight, because it is my belief, after consultation with officers in the reserve army, and after reading some of the statements made by the defence association, that so far as the preparedness of our reserve force is concerned, so far as their readiness for mobilization is concerned, it is a matter of shame and regret and not one of pride. I use those words deliberately, and I want to make it clear that it is not the fault of the officers and men of the reserve forces, but rather the fault of the system under which they are compelled to work.
This deficiency with respect to our reserve force carries more significance and more cause for alarm and disturbance when we read the minister's statement made in the house on February 5 of last year when he was referring to the general subject of defence. Speaking in the' house on that occasion the minister, describing Canada's role and obligation to contribute forces to the North Atlantic Treaty Organization, said, as reported at page 95 of Hansard:
In addition to whatever army forces we have in Europe-
And that is of course the 27th brigade now over there.
-our army role in NATO is to provide a strategic reserve.
As has been pointed out, a strategic reserve in that sense does not mean anything like the reserve forces we have in Canada. A strategic reserve must be a reserve available to be placed in the field immediately as and when strategic reserves are needed- not a reserve which can be called up by a leisurely process of mobilization such as we knew in Canada when, at the time of the last
IMr. Fulton.]
war-and we were working under the same system then-it took us four years to mobilize five divisions. It is not that type of reserve at all, not a lengthy and leisurely mobilization of non-permanent forces until they are ready for the field. This type of strategic reserve refers to quite another concept of reserve forces.
Not only is the department to be criticized because we are not remotely prepared to discharge that type of obligation, in view of the sad state of Canada's reserve force, but it is imperative that we be informed by the minister what has happened to change the picture to such an extent that we have the Secretary of State for External Affairs (Mr. Pearson) declaring recently in the house that Canada has no commitments to the North Atlantic Treaty Organization beyond the one brigade now in Europe, and that that is the limit of our commitments up to 1954. That was the very clear statement made in the house a couple of weeks ago by the Secretary of State for External Affairs.
I should like to know how that statement is to be understood when it is read in conjunction with the earlier policy statement of the Minister of National Defence, that one of Canada's roles in NATO is to provide a strategic reserve.
In dealing with this subject of our reserve force, mention must be made of the Canadian rangers. When one talks to men out in British Columbia who had experience with the Pacific coast militia rangers during the last war, one realizes that there is obviously a tragic waste of the services of these men who are able and willing to make a most valuable contribution to the defence effort of this country. I should like to put in a word with the minister for the organization of the Canadian rangers, if that is what they are to be called-instead of the Pacific coast militia rangers-that at least in British Columbia he should let them be organized on a basis which has some semblance of reality. There are men out there who know how this should and could be done. Yet, so far as I am able to learn, their advice has been completely disregarded, with the result that the organizational structure of the Canadian rangers in British Columbia is completely unworkable.
What has happened? Apparently someone sat down in Ottawa and drew a series of lines on the map, dividing the province into zones and allocating one unit to a zone. In some cases these zone boundaries follow the lines of rivers. The result is that communities which have a complete identity of interest with other communities in the area find themselves on the other side of the line on the map, and thus in another zone, and

not placed with a community just across the river, or perhaps up the stream a little way on the other side of the river-they find that they are not placed with communities with which they have constantly and normally worked in matters of this kind.
This is just one further example of the state of unreality in our defence planning. It would seem that someone sits down and draws a line on a map, without consulting anyone who has had experience as to what would be the best way of organizing the Canadian rangers in British Columbia, either with reference to the proper boundaries of a zone, or the size and type of unit to be organized in a zone.
All this adds up to a situation which is desperate-and this applies to all aspects of defence preparedness, navy, army and air force, the state of equipment and the state of reserves, with which I include the Canadian rangers, formerly known as the Pacific coast militia rangers in British Columbia-all this indicates a situation that is desperate when viewed in terms of the money we have spent already and the money we are being asked to authorize this year.
Although we will have spent just under $5,000 million on defence by the end of this fiscal year, a careful review of what we have been told, read in the light of what we have not been told but should have been told, produces the numbing realization that those who are planning our defence and its integration with our North Atlantic allies are moving in a sphere as far removed from reality as it is possible to be.
What do we have? We have a navy stated to be primarily a submarine hunting force but with only one obsolescent carrier and so far as can be ascertained no additional or new carriers called for. Let me just refer to what the white paper on defence said with regard to the navy, as is found on page 7 of that document, as follows:
It has been demonstrated in the past that carriers and their aircraft are essential to the successful execution of naval action; especially is this so in the case of anti-submarine warfare which is expected to be a vital commitment of the Royal Canadian Navy in the event of another war.
We have a navy with only one obsolescent carrier and no plans made for additional or new carriers.
We have an army of three isolated and independent brigades, not trained to operate together and totally without armour. The brigade in Europe is virtually an orphan. There is no complete picture as to what operational role that brigade will be called upon to fill, under whose command it will be and with what formation it will serve. We
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have an army of 49,000 men without even a formation of division size, completely without reserves and with no reserve unit capable of immediate mobilization. We have an army where it is typical for cooks for a parachute battalion to be trained on electric ranges.
We have an air force with a conglomeration of aircraft, some jet-powered and some piston-engined. Many of the jets are obsolete; the piston-engine class are even more so. The special Canuck interceptor fighter is not even commencing production after we have spent scores of millions of dollars and after many loud boasts have been made about the imminence of the production of these aircraft in numbers.
We have an army which is virtually at a standstill with respect to equipping and training on new and up-to-date materials, with all the difficulties and delays that are imposed on training because of the premature and unwise decision to standardize on United States lines. That has apparently been now abandoned except with respect to some artillery weapons. This is not being wise after the event because we warned the minister of the dangers of an early decision to standardize on United States lines. We told him that in our opinion that decision should not be taken. It would be interesting to know, and I think we must be told, how much time and money has been wasted as a result of this decision and what the backing away from it will make necessary in the way of additional expenditure.
We find a situation where at the time of the last white paper 56,000 civilian personnel on a full and part-time basis were required to look after a defence force of 80,068, or nearly two civilians for every three service personnel. The proportion today is as great or even greater according to the information the minister has given.
This is a situation which is bristling with questions requiring answers, not evasions; requiring answers as to what is being done to bring our reserves into a state of readiness; whether mobilization will be made possible in a reasonable time and not a matter of years. It requires answers as to what is being done to make Canada well equipped with fighting tanks. What is being done as to standardization? What is being done so as to equip our air force with adequate armament? What is being done to equip and prepare our navy to discharge its submarine hunting role which has been laid down so clearly for it?
It is a situation that indicates without room for argument that the minister has a heavy responsibility to answer for a story of errors, inadequacies, waste, duplication and inefficiency.

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In closing I want to contrast this situation with some of the words which the minister used toward the end of his statement when he told us that to criticize would be only to say, "yes, but," and that to criticize would somehow or other be merely a display of hindsight. We are being asked to authorize the spending this year of $2,100 million. That being so, is anyone more entitled to say "yes, but" than the taxpayer, when he is the man who must pay the taxes from which this money is to come?
Surely the taxpayer is entitled to ask this question-or to have his elected representatives in parliament ask it for him. Does the minister really mean to say, when fifty cents out of every tax dollar asked for in this year's estimates is going to be spent by his department, that the taxpayer has no right to say, "yes, but"? Does he mean to say that the taxpayer has no right to say: Yes, I am willing to put up the fifty cents, but I think it would be better spent if it was spent on giving us a little more up-to-date armament and a few tanks, instead of spending so much to build up a public relations force for the minister, or to enlarge the scope of his headquarters by employing so many civilians to serve such a comparatively small number in the armed forces?
There is a definite right on the part of the taxpayer, and members of parliament on his behalf, to say, "yes, but". There have been many deficiencies and failings in the minister's discharge of his responsibility for the adequate preparation of our defences, but none so glaring as his totally unjustified assumption of omniscience and superiority in his condemnation of any possible criticism before it had even been voiced. We are dealing here with a proposed expenditure of $2,000 million, and yet the minister says: Do not criticize or attempt to show that we are doing anything wrong or that anything we are doing should be done in a different way; to do so will be merely showing hindsight.
The very fact that we have so tragically little in the way of forces in being at this moment and are proposing to spend this vast amount extra and will still have only very limited increases in our available striking force by the end of the year constitutes the strongest possible condemnation and criticism of the defence program of which the minister is in nominal charge. The whole situation with which we are confronted indicates to my mind that the minister, far from adopting this perverted attitude in connection with his relationship to the House of Commons and the country, should instead be inviting not only the house but the country to take a second look at defence; should be

explaining why after having spent $2,500 million in the last two years there is virtually nothing to show for it, and why we are being asked to authorize another $2,000 million. Up to date we have had little in the way of concrete information as to what we are going to have in being at the end of this year.
I believe that the whole situation calls for a total reassessment of our defence effort and a far greater concentration on the preparing of our forces in Canada with equipment and weapons which have some relation to reality and to the necessary state of preparedness and equipment to meet and to beat the only foe we shall ever be called upon to fight.


Mr. C. W. Carter (Burin-Burgeo):: Mr. Speaker, as one who had the privilege of serving in two world wars I am naturally interested in all matters pertaining to defence. Today I should like to draw attention to one aspect of national defence which in my opinion is of vital importance. Last Thursday the minister placed on Hansard, at page 1084, an estimate of the enemy's strength. One hundred and seventy-five active Russian divisions represent 2,800,000 men whom Russia now has under arms, and one-third of these are mechanized. On mobilization this number could be doubled. We are informed from various sources that Russia has about 25,000 tanks, 20,000 aircraft and 350 submarines. In addition she is feverishly rearming her satellites, Poland, Czechoslovakia, Roumania, Bulgaria and Hungary.
The question naturally arises: For what purpose has this overwhelmingly powerful force been built up? Certainly it is not to protect Russia against any possible aggressor. The Kremlin knows full well that there is no nation in the world today that wishes or is likely to wish to invade Russia. To find the answer we must examine the idea that dominates the rulers and people of Russia; the idea which determines everything they think, say and do; the idea which controls every phase of their national life, even their music. That idea was born 100 years ago in the mind of Karl Marx. Professor Theophil Spoerri, of Zurich university, has analysed it in these words:
With the communist manifesto (1848) comes the first expression of a new ideology: Marxism. Marxism would never have been so powerful if it did not arise out of reality. Marx's primary concern was man himself. "To be radical means to grasp the matter by the roots. For mankind those roots are man himself." Marx showed how through the economics of capital man himself became a thing. The worker sold his strength and time as goods. Thus work becomes the cause of alienation, divided personality. In this way being becomes materialistic.
Against this process of making things out of man, out of society, and out of nature, Marxism directs three positive basic principles. First, the "Praxis"

(practical program). "Philosophers have interpreted the world. The point is to change it." That is not only a challenge to action. It is a new philosophy: truth is only found in action . . . Secondly, the "Kommune,"-society. Man is not a private individual. He is a social creature. He becomes real only in relationship to other men. The goal of history is to do away with the barriers between men and classes: the "classless society." Thirdly, the "Totale," the whole. In this faith in a new order of society there lies an unconscious religious element. Through Karl Marx the Jewish Messianic creed has permeated the modern labour movement. It is in the sense of the whole (the "dialectic movement,"-through opposites towards a synthesis), that every individual finds his rights, all divisions are cured and all fixations broken.
In political terms this idea is described as a "people's" democracy to distinguish it from our "western" democracy. This "people's" democracy offers social justice, order, discipline and equality-but at a price; the price of tyranny and a brutal and ruthless suppression of the individual for the benefit of the masses. A former communist has summed up the religious aspects of communism in the words, "A vision of man without God." It is a system which denies the existence of God. It sets up the state as the supreme authority and forces man to live for society and not for himself. In social terms it is a force that transcends all frontiers and all barriers of class, wealth, race or colour. An ex-communist describes this force as follows:
Communists are bound together by no secret oath. The tie that binds them across the frontiers of nations, across barriers of language and differences of class and education, in defiance of religion, morality, truth, law, honour, the weaknesses of the body and the irresolutions of the mind, even unto death, is a simple conviction:	It is necessary
now to change the world. Their power, whose nature baffles the rest of the world, because in a large measure the rest of the world has lost that power, is the power to hold convictions and to act upon them.
The key then to the whole communist philosophy lies in these words: "It is necessary to change the world", to change it by every means available, economic, political, psychological; by peaceful means if possible but by force if necessary. This then is the reason and purpose for the huge Russian war machine; to change the world, to change the present system, to impose upon the world the communist way of life. We therefore have to meet two powerful forces, the Russian military might and the far more powerful communist ideology which it is meant to serve.
The Korean aggression alerted us to our real danger. Last Thursday the minister reported the progress we have made in building up our forces and our plans for the current fiscal year. A few days ago the Secretary of State for External Affairs (Mr. Pearson) brought us up to date on NATO; and this, together with reports from the 55704-79
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United Nations, indicates that on the political front we are holding our own and have even made some advances. The taxes we have to pay remind us continually of the efforts that are being made on the economic front, and we are well aware of the great advantages we enjoy on the industrial front by reason of our great natural wealth and our industrial potential.
But it is the ideological front with which I am concerned today. This is the most important front of all. The battle goes on continuously without ceasing and it is a struggle for survival. The Christian idea of man as a creature of God and the communist idea of man without God cannot exist side by side in the same world. The struggle must go on until one or the other triumphs. Success on other fronts cannot result in a lasting peace. The best it can produce is an armed truce in which the cold war will continue as fiercely as ever, with endless taxes and endless money and energy being poured into non-productive channels instead of being used to serve the needs of humanity.
On the other hand, if we win the war of ideas we cannot possibly lose on any other front, and lasting peace and all those other things for which our comrades fought and died in two world wars will be assured.
A great European scholar, Professor Eiliv Skard, dean of the faculty of humanities of Oslo university, has this to say:
We live in an ideological age. I think it is necessary to stress it. The man who is not clear on that fact does not really understand his time. We know from the history of the last years that a nation with a false ideology can ruin the world, and we know that a nation without an ideology will go down.
We have, Mr. Speaker, two enemies, the Russian military might and the communist ideology. We can meet military power with military power. We can match economic force with economic force. We can check political moves with political counter-moves. But no military, political or economic force can defeat an idea. An idea can only be conquered by a better idea, an ideology only by a superior ideology.	.
Do we have such an idea? Can we develop a superior ideology? The answer is yes. We in the western democracies are a little shy and timid when it comes to talking about ideologies. We almost feel it is a sign of weakness even to mention the word, so we try to meet the passion and plan of alien ideologies with talk, with lip service to high ideals, and as a last recourse with force. Then we hope to live on as we have always lived, selfishly, comfortably and undisturbed. The truth is that we do have a superior ideology.

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The Christian idea with its moral and spiritual values, upon which our western democracy is based, is far superior to the communist idea and far more radical and revolutionary. Communism does not go to the root of the trouble, because it seeks only to change the system. The Christian idea goes further; it seeks to change man himself.
The claim is made on every hand that human nature cannot be changed. That is the big lie of our time. It is the lie on which communism bases its justification for the class struggle. It is the lie behind which we hide when we are unwilling to change. It is a lie that has been disproved over and over again in the history of the Christian religion and is being disproved by overwhelming evidence around us every day.
We do have a superior idea capable of developing unity between people of every race, class, colour and nation. It is the Christian idea, which is the very foundation of our democratic way of life. The thing to do, as my colleague from Trinity-Conception (Mr. Stick) has pointed out, is to live it; because only if we live it can it achieve its full force and vitality.
Last Thursday the Minister of National Defence (Mr. Claxton) stated that NATO represented a new concept in international co-operation and organization. We are a partnership of free nations bound together by a common danger represented by a common enemy. That concept will become much more meaningful, however, and the partnership far stronger when the countries of NATO are bound together by a common ideology based on a common set of moral and spiritual values. Only then will we be equipped to move from a partnership of fear to a partnership of faith when the common danger is surmounted. It has been said in this house that our policy is one of peace through strength. No nation is strong that is ideologically weak; and it has been demonstrated that the strongest army cannot long defend a weak ideology.
Russia has mastered and perfected the art of ideological warfare. So skilful has she become in applying this new war strategy that already she has conquered eight nations of eastern Europe and gained the alliance of a large part of Asia without employing a single soldier and without firing a single shot. Today in every nation of the world communist agents full of zeal for their cause are busy undermining the nations from within so they will fall an easy prey to the communist idea. We know how these agents work, how they use propaganda to spread fear, confuse issues and undermine confidence in our national leaders; how they mobilize the negative forces of fear, greed, hate, resentment, suspicion, fMr. Carter.]
lust, pride, ambition and selfishness; how they seek by every means to weaken and destroy a nation's morals.
How else can we meet this threat, unless we begin at once to build up our ideological defences, to forge ideological weapons and learn to fight ideologically, as Russia does? Doubtless that was what General Eisenhower had in mind in the paragraph to which the minister called particular attention at page 1083 of Hansard, and which I repeat:
The momentum must be continued with renewed vigour, and since moral force is the genesis of all progress, especially progress towards security and peace, we must give primary attention to this vital element.
In his address to the senate foreign relations committee in Paris last July General Eisenhower had this to say:
The one thing I want to stress at the beginning is this: the struggle going on in the world is for the minds and hearts of men. It is an ideological struggle. There is every possible way of going about the thing, and open warfare is only one method.
No one can escape the ideological war. It is total war. It involves both civilians and the armed forces. Everyone needs ideological training. It has to start somewhere, and in my opinion the logical place to start is with the armed services, for these reasons. They have the organizational framework in which such training can be carried out immediately. Secondly, it is a weapon of definite value in battle, since soldiers inspired and moved by the fire and zeal of a militant ideology have a definite advantage over those who are not. I think this has been proved by the fanaticism and determination shown by the communist troops in Korea. Besides all this, should a war break out between the communist countries and the democracies, even if the democracies secured a military victory, what then? Can the democracies police Asia? Can they feed the teeming, hungry millions of India and Asia? If not, what is the answer? Surely the solution lies in giving them an idea bigger and better than communism to live for and be governed by.
Our armed forces are the ambassadors of the democracies among the people of the nations where they are serving. By their conduct they interpret democracy to those people, and if they give an adequate demonstration of the democratic way of life there is no doubt that this idea will capture the hearts and minds of the people among whom our forces are serving.
I think we have been somewhat reticent in facing realistically the need for ideological training for our forces because the armies of the communist world have attached so much importance to it. It is their daily fare,

completely integrated with their training in arms. We have tended to regard it with the distaste we feel for propaganda, a distaste that has been developed by the communist prostitution of that fundamentally decent word and procedure. However, we cannot afford the luxury of self-righteousness or oversensitivity in this respect. The attack is real, the weapons are real, and the techniques are real. It is an attack launched and maintained by trained men. We may hate the intent and its methods but to ignore either is to court disaster.
I should like to commend the step taken last year when the bureau of current affairs was set up for the Canadian armed forces, to help the serviceman determine that which he had enlisted to support and that which he must be prepared to oppose. As an initial step it was excellent. By introducing discussion group techniques it has enabled a trial and error experiment to be carried out which by this time should have established what problems have to be overcome, what methods are most effective and exactly what is required to achieve the objectives announced by the minister last year.
I had a great deal of experience with this kind of work in world war II and also in adult education in civil life, and for that reason I have had a special interest in the B.C.A. program. I know from my own experience and from the experience of my opposite numbers in the United States forces during the last war how difficult it is to get area and command headquarters to support such programs on their own initiative. I know how difficult it is for the young junior officer to initiate such a program without some special training, without proper accommodation and without other physical requirements essential to its implementation. I understand the reaction of the officer who regards it as just one more chore for which he is Joe. I know how easy it is for those who are hostile to the program to sabotage it, and discredit it as somebody or other's special pet whim. Finally, I realize the danger that negative and subversive elements may take advantage of it to defeat it and deflect it from its true purpose.
I should like to see the B.C.A. program integrated with other training programs. I should like to see adequate provision for training schedules, and the means of implementation in various formations authorized by national defence headquarters. I should like to see training schools and short courses for selected officers who are to implement the program, just as is given in the case of gas warfare, guided missiles and any other specialized arm. From my own experience, 55704-79J
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I know that mere information, in itself, is not sufficient. Academic discussion of topics, however timely, however interesting, is not enough. This has been proven over and over again by the discussions under ABCA in the British army, and the even more elaborate information and educational program of the United States army. To be effective for ideological training, the information must have ideological content, and both the information and discussion must be geared to ideological objectives. It is also essential that men giving leadership in this program are themselves convinced that we have the superior ideology.
In order that there be no misunderstanding, I should like to list what I consider to be some of the main objectives of an ideological training program:
1.	To give personnel a vision of what inspired democracy really is-a vision of mankind working out its destiny under the guidance of God.
2.	To give personnel a clear understanding of the moral and spiritual truths upon which this vision of inspired democracy is founded, which has given it strength in the past and upon which its future survival depends.
3.	To develop a fighting faith in an idea far bigger than man himself, an idea which will satisfy all their inner longings and aspirations and to which they can give themselves completely and fully. That is what communism does for communists.
4.	To train personnel to be ideologically minded; to be able to discern the ideological battlelines that run through all the issues and problems of our present day, whether in politics, business, industry or in the home.
5.	To enable personnel to recognize the ideological content of communist propaganda whether spoken, written or printed and to meet it with a counter ideology.
6.	To recognize material with ideological content and sources of such material.
7.	To give personnel basic knowledge of the nature of alien ideologies and their fundamental principles.
8.	To train personnel to recognize the ideological weapons and tactics used by the enemy, and to develop counter weapons and tactics for democracy.
9.	To enable personnel to understand
clearly in simple positive terms exactly what Canada is fighting for, and what we are fighting against. To say we are fighting for the four freedoms or against aggression is not sufficient.	.
It should be obvious that mere information and academic discussions cannot achieve any

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of these objectives, because ideological training affects the heart and will as much as the mind and intellect. I hope the minister will find it possible to give some consideration to these suggestions, because much of this kind of training need not cost the taxpayers one extra cent and the total cost is comparably insignificant. Without it, we cannot achieve maximum effectiveness of our efforts in other directions. With it, we cannot possibly lose. It is an iron-clad guarantee of total victory and lasting peace with minimum cost and effort.
I realize that there are difficulties. I realize that Canada, in military terms, is a small country, but a small country with a big idea can change the history of the world. Napoleon said that there are only two powers in the world, the sword and the spirit. In the long run, the sword is always defeated by the spirit. This dictum so applicable in Napoleon's time is even more pertinent today when the enemy is communist ideology as well as Russian military power.
. Hon. Brooke Claxton (Minister of National Defence): Mr. Speaker, this is not a substantive motion and I understand that consequently I have no right of reply. A number of questions have been asked, and if it were to meet the wishes of hon. members I would be glad to try to answer them.


Some hon. Members:: Agreed.


Brooke Claxton: In the course of the debate which has taken place a number of members have dealt with the same matters, and I have tried to collect their comments under as small A number of headings as possible. Perhaps the point that was made most often by members of the opposition groups was that our 27th infantry brigade in Europe should be an armoured brigade. To this, other assertions were added, such as those made by the hon. member for Kamloops (Mr. Fulton) that we have not got a scrap of armour, not an operational tank and so on. It was suggested also that we should have built tanks in Canada. These points of view are serious, and I believe have largely been dealt with by the hon. member for Westmorland (Mr. George) in his Speech last Friday night.
i There are additional points I should mention. This 27th Canadian brigade was announced for the first time in this house on fday 4, 1951, when its composition was announced. The next day there appeared in the newspapers a full page advertisement for the 27th Canadian infantry brigade group. That was eleven months ago. At that time the house was in session and there were many opportunities, including nine days spent' on the estimates, when anyone who was critical
fMr. Carter.]
of the organization of this brigade might have raised his voice. Then we had a fall session. During that session the question of defence was discussed on the resolution moved by the Prime Minister (Mr. St. Laurent) on October 22. While I do not suggest that the approval of that resolution by the house without a dissenting voice meant that the house approved everything the government had done, I do suggest it presented an opportunity for any hon. member who felt that something had not been done correctly to say so.
It was not, however, until the hon. member for Nanaimo (Mr. Pearkes) spoke on the radio program "The Nation's Business" in January that this suggestion was made. Long before that time this brigade had been equipped, trained and transported to Germany where it was stationed. If this suggestion was intended to be placed before the government in time for it to take effective action, it was too late. I think there appears to be a good deal of misunderstanding about the composition of an infantry brigade group. This term does not apply to any fixed set of formations, but generally speaking it is taken to mean a formation which includes three infantry battalions, an artillery regiment, a tank squadron and all the other formations necessary to enable that group to operate as an independent unit. It was that type of organization we created to send to Korea, where it has been found that its general balance of arms and of formations has met the need admirably. No other formation has a better record. The composition of the various formations has been the subject of continuous examination not only by the officers of our own armed forces but also by those of other forces. So far as I know, it has not been suggested by anyone in a responsible position we followed the wrong course either as to weapons or organization.
One of the newspapers said that this brigade "consists of foot-soldiers, the PBI, in army parlance, each man equipped with a rifle and nothing more". The fact is that only 40 per cent of the men are armed only with rifles. The rest have mortars, machine guns, 25-pounders, anti-tank weapons, rocket launchers, flame-throwers and, finally, tanks. As I say, the composition is designed to enable the brigade to train and fight alone or in association with larger formations.
The 27th Canadian infantry brigade group is practically identical in composition with the 25th brigade groups. It has tanks. The armoured unit in Europe is equipped with Centurions which we have bought from Britain, whereas in Korea we are using the No. IV, which is the latest model of the

Sherman which we bought from the United States. In Europe our brigade is operating as an independent brigade; it is not formed into any division or corps. It is training as an individual brigade; and it is planned to establish it in its own training area towards the end of this year.
An armoured brigade group is a new term, I think. We know of armoured brigades-


Mr. Harkness:: We had them in the last war.


Brooke Claxton: An armoured brigade group of the type such as I have mentioned, which can operate independently? I am informed that one has never been formed.


Douglas Scott Harkness: We had two of them in the Canadian army.


Brooke Claxton: We had an armoured brigade, as I understand it, namely, a brigade of armour which was not designed to operate separately but rather was designed to operate with one or more divisions. The establishment that I have been given to enable an armoured brigade to constitute an independent armoured brigade group operating separately would be, by a good many hundreds of men, a larger establishment than the one for the Canadian infantry brigade group. In other words, the suggestion that this procedure would save men is entirely ill-founded. It would take more men to operate this brigade group as an armoured brigade group than to operate it as an infantry brigade group.


Edmund Davie Fulton: I think the suggestion was that it would save men by establishing more efficient use of men.


Brooke Claxton: The suggestion was made that it would save men.


Edmund Davie Fulton: That was not the main import of the suggestion.


Brooke Claxton: Well, it was said. I do not know whether it was what was meant. The suggestion was made too that we should send not troops but technicians.
The next point I want to make is that it was never suggested to us that we should send an armoured brigade group. In fact the contrary suggestion was made.
We have been acquiring tanks from the British at the fastest rate they could deliver them to us. We have now received delivery of over 40. Some of them are in Europe and the rest are in Canada. We shall be taking more on an order which is well over 200. We are taking them as fast as we can secure them.


Edmund Davie Fulton: Are those all Centurions?
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Brooke Claxton: Yes. I do not believe it would have been possible to get Centurions before we got those that were delivered to us. Certainly it would not have been possible for us to manufacture Centurions in Canada, before the first Centurions were delivered to us inasmuch as they had not reached the stage, even in England, where production.' could have been commenced in Canada and developed to the point where there would be* actual delivery. From the point of view of time, I am informed by the Department of Defence Production that there is nothing in* that suggestion, that we are getting Centurions as fast as we could, and that we are getting them in as large numbers as we can.
With regard to the suggestion that we should manufacture tanks in Canada, I would, point out that we would not have a large, enough requirement for tanks to justify our setting up the tools, equipment and produc-' tion machinery necessary. We would also find' ourselves equipped with all the tanks we: could possibly conceive of our needing in' another world war, should it come; then the productive capacity would be idle and we' would find ourselves with an aging group of* obsolescent tanks and faced, at some stage or another, with the necessity of repeating the operation five, six or seven years later.
Mr' Fulton: 1 am sorry to interrupt, but if the minister will permit me to do so, may I. say that I am sure he will admit that the: suggestion was never confined explicitly to manufacturing tanks only for Canada. It was rather to manufacture tanks on the same; basis as that on which we are now manufac-s turing the F-86E, namely, for ourselves and. for our allies.


Brooke Claxton: To give them away?


Edmund Davie Fulton: I do not understand we are giving away the F-86E.


Brooke Claxton: Yes, every one of them; that is, to Britain. We have indicated what we propose to give away, and what we propose to give away are the types of equipment that we ourselves need and that other countries need, which are not being manufactured in sufficient quantities by other countries and which we have the special facilities to produce-for example, the gun plant at Sorel or Longueuil-whereas a tank factory would require entirely new facilities.
Finally, may I say that there are two additional reasons why it makes sense for us to purchase Centurion tanks. One is that, by placing this order in Britain, we enable the British to build up a production line and that enables them to produce larger numbers of tanks at lower costs, a result that is greatly to be

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desired from the point of view of over-all defence planning. It also helps to give economic assistance to the British by reason of the fact that we pay them for what we get, including these tanks.
As to -the equipment that we have ordered from the United States, we ordered tanks- Pattons and others-but it has been found necessary to make substantial modifications in those types, and they will not be in production by the time we hope to have delivery of the Centurions which have proved themselves to be good tanks in battle in Korea.
. With regard to other types of equipment which we were going to acquire from the United States, there have been delays; but surely hon. members were not surprised at the fact that there should be delays when they recall what happened in Korea after the orders were placed. Delivery had been commenced in respect of equipment we had ordered and which was to be delivered to us; but it was found that it was more urgently needed somewhere else. We had equipment to meet our own needs, both in Europe and here, and it made sense that the United States type of equipment we bad ordered from that country should be used for other purposes.
Referring to the air carrier, hon. members have suggested that we should modernize the Magnificent, or get more of them. Magnificent in its present condition is a carrier of a type still in current use in the Royal Navy. There is in process a procedure of modernization, refitting and the like; and when its turn comes Magnificent will be exposed to that procedure. That is taking place in accordance with arrangements which have been worked out with the Royal Navy.
We have considered adding another carrier to our navy, but it would mean giving up something else, or getting more money- because we cannot use the defence dollar twice. The operation of carriers is a large-scale business. There are only four countries on our side, so far as I know, which have carriers-the United States, the United Kingdom, France, and ourselves. And the number is not very great. However there are some in reserve. We feel it very desirable that we should have one carrier for training or operations, on anti-submarine activities; but to have two of them would be a pretty considerable undertaking for us in peacetime.
As our role is largely anti-submarine, the Avenger aircraft, with which our carrier is fitted, are very suitable for this purpose, and will probably continue for some time to be more suitable than any jet yet in sight for anti-submarine work. Jets, which have a

short range, a high landing speed and not a very high load-carrying capacity, are not considered yet as suitable entirely for the purpose. It is not expected therefore that for this purpose jets will come into active operation until some time in the fairly distant future.
Questions were asked about the progress of the CF-100. The CF-100 and the Orenda engine were started late in 1946. Detailed design was commenced in the middle of 1947, and the first prototype was flown in January, 1950. That is about three years after the start, which is considered good time for the first flight of a new type of aircraft. The tests both of the engine on the ground and of the aircraft and engine in the air proved satisfactory. As I have said before, both the manufacturer and the R.C.A.F. felt that they would be in production much faster than is the normal time for the development of a new type of aircraft. It turns out that it is not much faster, but about the same as is usual for similar types of aircraft of a totally new design. The CF-100 pre-production order is well on the way to completion now, with several aircraft about ready to be delivered. I saw them two weeks ago in Toronto. The engine plant will begin production on a regular production-line basis in June. It will be at half 'the planned rate in September, and running at the full planned rate in 1953.
I expect we will be producing enough Orenda engines to enable us to begin using them in the F-86E early in 1953. That engine will give the F-86E still more speed than it has today-and it is generally recognized as the fastest aircraft there is.
The next point mentioned was with regard to standardization. I did not say anything about it in my introductory remarks, because there have been no major developments. There is steady progress at the working level, working out the specifications and, in some oases, the design for equipment. A good many kinds of procedures and types of equipment have been standardized but the situation with regard to the rifle remains much as it was.
Following the meeting of defence ministers of the United States, France, Great Britain and Canada in Washington last year, we agreed to refer the matter to the standing group. The committee appointed by the standing group made a report to the meeting of defence ministers at the North Atlantic council. That report was considered, and was the subject of discussion between Mr. Churchill and myself in London in November, and here in January, in the course of which he told me that they had decided not to go into all-out production of the .280, but to

continue development work looking toward production at a date some time in the future.
Meanwhile the United States has said it will not be ready to change from the Garand .300 for several years. That is the situation. We have rifles of the .303 No. IV which are being used by our troops in Korea, and are still found satisfactory as the .303 always was. Our troops in Europe are also equipped with the .303. We have considerable numbers of .303's in Canada, and also of Garands. We do not propose to go into production of rifles until the situation becomes clearer. We have enough rifles to see us through the first year of a war. We have good production equipment, could go into production and reach a high rate within a short time so as to produce rifles for ourselves and our allies to meet our needs, and to assist in meeting theirs.
The suggestion was made that we are short of equipment in Canada. For example, take 25-pounders. We have all the 25-pounders we need. We have given away several hundred, and we will continue to keep the rest until we acquire the 105 millimetres, which we are going to produce in Canada, as well as the 155.
A question was asked also about the situation regarding anti-aircraft guns. It was said that we had given away all our anti-aircraft guns, and that we are doing nothing about it. We gave away one hundred 3.7 guns and replaced them by one hundred 90 millimetre guns acquired from the United States. We have more on order from the United States and we have a still larger number of 3.7's in our own possession in Canada. When we get the guns from the United States we shall probably release further guns to Europe.
I was asked to give some figures on construction. The 1952-53 program includes a carry-over from 1951-52 of $198 million. This represents contracts which have been let and which we expect to complete in 1952-53. The program for 1952-53 provides for an additional $46 million of contracts to be completed this year.
As I explained, this construction is required by reason of the greatly increased size of the armed forces and increased operations. We will have to carry on a construction program of somewhat this magnitude for several years yet before we have the accommodation and training and operational facilities needed for our forces as presently planned.
Reference was made to the number of civilians in the armed forces. Our position on this has been made clear on a number of occasions. The policy is to use a civilian in place of service personnel in every case
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where it would be possible to use a civilian in wartime. If we have a stenographer or telegrapher or clerk at national defence headquarters and do not need to have that person in uniform in war, then we employ a civilian.
The figure of 40,000 civilians which I gave includes both classified and prevailing rates. The actual number at February 28, was 39,398, of which 20,093 are classified and 19,305 prevailing rates employees. The latter figure includes some 5,000 casual workers who are engaged at camps and the like for short periods. The figure of 19,305 prevailing rates employees covers workers engaged in the dockyards, in the shops, at camps and so on, just as if they were employed by an ordinary employer. They receive the rates of wages prevailing in the locality for their types of work.
Since Korea, where the strength of the armed forces has increased 100 per cent, from 47,000 to 95,300, the strength of civilian employees has not gone up anything like that amount. Further, the number of service personnel at national defence headquarters has only increased by 255 or 12 per cent since Korea, whereas the total strength of the armed forces has increased by 100 per cent. These figures can be better examined when we get into a detailed discussion of the estimates. I assure hon. members that this question of the size of the armed forces and the way in which they are employed is receiving continuous consideration at every possible level.
We can say, and I have said before, that applying the same standards to the forces of other countries, our forces are equally operational or even more so. For example, over forty per cent of the men in the navy are at sea; our fliers have more hours of flying per month for each man on the strength of the air force, and that kind of thing. We are not satisfied merely to compare our standards with those of other countries and we must continue to do increasingly better in every respect.
The next point mentioned was that of obsolescent equipment, having regard I understood particularly to aircraft. We are going to replace obsolete equipment as fast as we can with better equipment. We are producing the F-86E at a rate which compares favourably with production in the United States. We expect to be able to meet our commitments for deliveries to the United States and to Great Britain and to equip our own twelve squadrons as well as the necessary reserves. We expect to be doing the same with the CF-100, using it for the defence of Canada. As the CF-100 comes

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into operation it will be issued to the squadrons, both active and auxiliary, which may be using Mustangs or Mitchells.
However, both the Mustang and the Mitchell have been found to be exceedingly rugged and useful aircraft right up to the present time. They would be very useful in connection with the kind of operation that might have to be engaged in should we be attacked in the near future. The Mustang has a range and speed which makes it well able to take on the type of bomber which might reach Canada according to our present information.
With regard to Harvards, our production rate is substantial and able to meet our requirements. We are not going to produce quite as many Harvards as we at first planned, but we will be producing more of the new jet plane, the T-33, which is the modern version of the P-81.
The hon. member for Brandon (Mr. Dinsdale) referred to the armament of the F-86. As he understands, the question of aircraft armament is highly controversial. It is also one that is much easier to discuss with the technicians. As I have told him, they will be available at any time. The situation as it has been explained to me is this: About a year ago it was felt that the F-86E should be equipped with a gun larger than the 50 calibre. Long before that research and development work had been going on with various types of 20-calibre guns and rockets. However, the record still speaks for itself and indicates that the armament of the F-86E is still adequate to shoot down far more MiG's than the reverse.
The MIG-15 has three heavier guns, but they have a slower rate of fire and a much lower muzzle velocity. Therefore their lethal quality is quite different from that of the F-86E. In the hands of a good gunner the latter appears to be the better equipment.
The hon. member for Calgary East (Mr. Harkness) referred to wastage and he mentioned a figure of 15,279 wastage as compared with an intake of 41,757. I would submit that statistically the correct operation is to relate wastage to the total strength. If you do that you get a figure of about 15 per cent which compares favourably with any figure we had during the second world war or in the period between world wars. Except in so far as it reduces the number of trained officers and tradesmen, wastage is one way of developing trained reserves. In countries which have compulsory military training of eighteen months or two years you have a very large proportion of the total trained personnel going back to civilian life every year. On a

two-year basis 50 per cent will go back every year, and that is considered a part of the normal operation of building up trained personnel who act as a reserve. In Canada we have had 26,000 officers and men leave the armed forces since the end of the second world war, and a very considerable proportion of them are available for service in the event of an emergency.
The hon. member, at page 1130 of Hansard, referred to the situation at Claresholm, where he said:
Apparently the housing situation was bad; houses were needed, so they sent in a whole bunch of metal prefabricated units. They came in and were put on a siding before the contracts had been let for their erection or for the plumbing, wiring and so on. As a result there was no one to unload them, so special people had to be hired to do that job.
Then he said a little later:
So they sent a bunch of people to load these prefabricated houses on railway cars and ship them out; then they started all over again. I do not know where those houses have gone, but I have been led to believe I would not be far wrong if I said they may be in England at the present time. How much money was lost in that deal I do not know, but it must have been many thousands of dollars.
The fact is that 150 prefabricated houses were ordered and delivered in January in accordance with the order on the site at Claresholm. Tenders were called by Central Housing and Mortgage Corporation for the erection of the houses this spring with the beginning of the building season. The contract was awarded ten days ago. The contractor is on the job and about to start work. None of these houses has been taken anywhere. There is nothing whatever in the story.
The hon. member also referred to the question of reserves. I mentioned the total strength of the reserves as being 58,000. We have had really remarkable support of the active forces from the reserves during the year. Over 5,000 members of the reserve forces have gone active duing the year 195152. Despite that the number of the reserves has increased, and despite the loss of what must have been some of their most active and enthusiastic members the amount of training done during the summer months was about the same as the year before. About 11,000 personnel engaged in summer training.
The reserves have a role which has been explained so many times in the house that there is no need for me to enlarge on it. I have referred repeatedly to the really great contribution they make by devoting part of their time to the service of Canada. It was on the base of the reserve forces that the Canadian forces in the great war of 1914-18 and

the second world war were built up. We are in a different position now with many more forces in being than we had before either of the two world wars.
The hon. member for Kootenay West (Mr. Herridge) referred to batmen. Batmen are provided only for single men living in barracks or camps and the scale is one to four junior officers. Only in the case of officers of the rank of colonel or above living in married quarters is a servant allowed.
The hon. member referred to men joining the reserve forces as athletes. I would be glad if he would bring such cases to my attention. I have heard about this matter from time to time. It is strictly against the regulations and the practice, but if it happens, we will take action.
Then he referred to a situation I could not quite place but I rather took from what he said that he had reference to Kildare barracks on Laurier avenue. The squatters were put out of there a year ago and it was occupied as single men's quarters. A complaint was made by people in the neighbourhood that we had these soldiers living there and there were no curtains or blinds. So blinds were installed long before the provost corps moved into the building, and it is now occupied by three officers and thirty-six men.
A question was raised as to education in the armed forces, and in that connection I might refer the hon. member to the answer given in the house to the hon. member for Winnipeg South Centre (Mr. Churchill) on the 20th of November, 1951. Provision is made for the education of members of the armed forces. It is done under the same system as that under which the Canadian Legion educational services operated during the war. The same material is used, but instead of using Legion personnel, who were paid by the Department of National Defence during the war, we now use Department of Veterans Affairs personnel who are paid by the Department of National Defence. In addition, we have educational officers with the units and they have staffs who distribute literature about the courses, make books available, collect papers, forward them to the Department of Veterans Affairs for correction, and so on. It is the same arrangement we had during the war.
The hon. member for Burin-Burgeo (Mr. Carter) referred to the bureau of current affairs. It is working well. Training courses have been given already for officers who are assigned to lead their men in discussion groups and the like, and periods of as much as an hour a week are provided for that activity.
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The hon. member for Three Rivers (Mr. Balcer) raised several questions. One was as to the status of our troops in Germany. He expressed surprise that our troops are not there as occupation forces, but that is the situation. We were not an occupying power and we thought it would be most improper for our troops to go there with the status of occupation forces, to be brought in as an occupying power, as was permitted under the statute, within a matter of months possibly of the end of this arrangement and while discussions for the termination of the occupation were actually under way between the representatives of Britain, France and the United States and the representatives of Germany. It did not seem to be a sensible course for us to take up a special role for a limited period. On the other hand, from the point of view of immunity from criminal law, taxation and the like, we have the same rights as if we were occupying troops. The only difference is that we do not add to the cost of occupation. As I pointed out the other day, we pay for what we get. The suggestion was made that we pay the British for our rations and they keep the money. That is not so, of course. We pay those whom we have to pay, either to the British or the Germans, in such a way that the actual costs of occupation are not increased by reason of our being there. On the other hand we took the view that since the accommodation we went into in December was required anyway, our having to go there did not add anything to the cost of occupation in that respect.
The hon. member also referred to the fact that we were using Russian supplies. I have heard of this before and assume it is correct that some of our troops received some salmon which came from Russia, as part of the British ration that was issued to them. I do not know if it is seriously suggested that I should take this up with my opposite number, Lord Alexander, and suggest that our troops be not issued with Russian salmon. Such a course would not do the Russians any harm; it would not do us any good, and it would not do the British any good, so I do not think there would be much point in taking that course.
Finally the hon. member for Three Rivers (Mr. Balcer) again referred to the fact that the armed forces do not have as high a proportion of senior officers of French origin as they should have. I wonder if he saw the answer I gave to the hon. member for

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Portneuf (Mr. Gauthier) on December 17, 1951, as it appears at page 2056 of Hansard. The question was:
What were the ranks of officers of French origin who were in the Royal Canadian Navy, the Canadian army, and the Royal Canadian Air Force active forces and what are their present ranks?
The relevance of that question is that the senior officers of the armed forces today with hardly an exception have been promoted from the officers who were in the armed forces in 1939. The only exception that occurs to me at the moment is the chief of the air staff, who was then in the auxiliary air force. The way to judge the proportion of officers of English and French origin, if you want to go in for that kind of thing, is to compare the rank in 1939 with the rank they hold today. That comparison has been made, and I think the hon. member will see that officers of French origin have done very well indeed. I followed through the career of each, and found that on the whole they have achieved their present status at about the same time as or a little ahead of and at a little lower age than their Englishspeaking comrades. I found the same thing to be true on making an examination of officers of the rank of major and above now in the armed forces. Those of Frenchspeaking origin have reached their rank with a little less service and at a slightly lower age than the officers of English origin. This I suggest indicates that any discrimination that exists is in favour of the Frenchspeaking officers, which it seems to me is desirable, because, as I have pointed out so many times, the possession of French is a positive military asset.
The hon. member for Kamloops (Mr. Fulton) made a number of remarks. I think most of the questions he asked and most of his statements having to do with facts already have been dealt with, and I will not say anything about the rest.
I have only one or two things to say in conclusion. One is that I do not think it is realized to what extent the activities of our armed forces are being carried on outside Canada. Since Korea over 30,000 members of the navy, army and air force have seen service outside Canada. Of these over 14,000 have served in the Far East, and most of the rest in Europe and the United Kingdom or at sea, with some in the United States taking courses. This indicates something of the size of the operation in peacetime, and the wide extent of our commitments today.
I cannot help mentioning the reference by the hon. member for Kamloops to the picture of a paratrooping cook coming down with a kitchen range from Petawawa camp.
I do not think that requires much in the way

of answer or comment. We have cooking equipment at Petawawa, and we have cooking equipment for use by paratroopers and others in the field. Men receive training in the use of equipment of that character in field operations, but fortunately they do not spend all their time paratrooping. The troops have to be fed 365 days in the year, so it is not a bad thing to have cooks trained to cook on ordinary kitchen ranges at static establishments.
In conclusion, Mr. Speaker, I should say that I agree with the leader of the opposition (Mr. Drew) that this was not the time to go into the figures in great detail, though I would have been prepared to do so had it been desired. Before the estimates are considered in detail in the committee of supply I expect to issue a paper, as we have done in previous years, which can serve as a useful basis for a full and detailed examination of the estimates.


Mr. Hees:: I wonder if the minister would permit a question. I referred to the matter of payment of a clothing allowance to Korean veterans, but in his remarks the minister made no reference to that matter.


Brooke Claxton: I beg your pardon. At page 1156 of Hansard the hon. member said:
When a man is released from the Korean force he receives one week's rehabilitation leave. That means that a private, first class, who is single and who has served in the Korean force for at least one year receives $28, made up of pay and allowances for one week. Before his discharge he makes out an application for war service gratuity, but he is given no indication as to when he may expect to receive that gratuity, or even if he will ever receive it. He is simply given his $28, and out he goes.
Now, at the end of world war II every man or woman in the service was given a clothing allowance of $100 upon discharge-
The hon. member left out a good deal of what the man receives. First of all he receives thirty days' leave. Then he receives two and one-half days leave for each month of service in the Far East. Then if he is a member of the special force he receives seven days rehabilitation leave, all with pay and allowances. Then he receives a war service gratuity of fifty cents for each day in the Far East; and if he is in the special force that is paid at once. He receives seven days pay for each 183 days of service in the Far East, and then he gets a re-establishment credit equal to the war service gratuity or a similar benefit under the Veterans Land Act. In addition he gets the benefits that are applicable under the veterans charter, as they have been extended to the men who served in Korea.
With regard to the clothing allowance, that has been receiving consideration but no decision has yet been made.


Mr. Drew:: There is one point which I do not think is quite clear on the record. In answer to a comment by the member for Kamloops (Mr. Fulton) concerning the production of airplanes for our associates in NATO, the minister said "Would you give them away"? Then, in response to a further question he said that we are giving them away, every one of them. It seems to me that may leave an incorrect impression on the mind of anyone reading that statement. I would refer the minister to a statement which was issued on February 14, 1952 and which said that the planes to which the minister is obviously referring are being produced- that is the airframes are being produced- in Canada as part of a three-way joint program under the NATO agreement. The announcement was made simultaneously in Ottawa, London and Washington. The announcement made on February 14 appeared in a Canadian Press dispatch, and I shall quote the first paragraph:
Canada is joining in a three-way arrangement with the United States and Britain to build, equip and man squadrons of F-86 Sabre jet fighters for the North Atlantic treaty defence force.
Then the air force secretary in the United States, Thomas K. Finletter, was quoted in an Associated Press dispatch of the same date as saying:
The partnership of the North Atlantic treaty nations was exemplified in a signal way today with the simultaneous announcement at Ottawa, Washington and London of an arrangement whereby the three countries will combine to equip and man squadrons of Sabre fighters.
Again reading from the Canadian Press dispatch, I quote the following:
A spokesman, enlarging on the announcement, said Canada would supply the airframes for the Sabres, with all other parts, including engines, coming from the United States.
That, Mr. Speaker, does not seem to be a gift in the ordinary sense of the word. If the statement issued by the spokesman for the Department of National Defence on February 14 is correct, this is one of the arrangements growing out of the Lisbon conference about which perhaps we might have had more information in this discussion because the same spokesman informed the Canadian Press that this would amount to some hundreds of planes. I think all hon. members would have been very glad to have more of the details, and it does seem to me that this is certainly not a gift to Britain of planes. It is a three-way arrangement for the benefit of the general forces under NATO, and in fact it is said that it will be for the purpose of strengthening the North Atlantic treaty forces commanded by General Eisenhower.


Brooke Claxton: I am glad the leader of the opposition (Mr. Drew) raised this point, because I do not want to leave any incorrect
National Defence
impression. The statements from which he has just quoted were made by me, and of course I have no reason to correct them. The arrangement came about in this way. The air minister for the United Kingdom in the Labour government, the Right Hon. Arthur Henderson, on several occasions asked me if we could make some F-86E aircraft for them so as to fill the gap. After a good deal of discussion we agreed to do that on condition that the United States would supply what is called the government found property, which we are not ourselves in a position to provide. This includes engines, instruments and in the earlier aircraft, the armament.
Negotiations were carried out on a tripartite basis, and they resulted in an agreement being made before Lisbon, early in February, under which the United States would provide the government found property without which we cannot make the aircraft. We would build the aircraft and deliver them to Britain. The value of the government found property is approximately thirty per cent of the whole cost of the aircraft.
Motion agreed to and the house went into committee, Mr. Beaudoin in the chair.
DEPARTMENT OF TRADE AND COMMERCE 441. General administration, $617,795.
Item stands.
DEPARTMENT OF RESOURCES AND DEVELOPMENT 374. Departmental administration, $415,389.
Item stands.
DEPARTMENT OF NATIONAL HEALTH AND WELFARE 257. Departmental administration, $970,160.
Item stands.
DEPARTMENT OF LABOUR IS7. Departmental administration, $598,070.
Item stands.
Progress reported.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Hon. Douglas Abbott (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Yesterday, Mr. Speaker, I made a slight departure from usual practice by
1244	HOUSE OF
The Budget-Mr. Abbott tabling the budget white paper which hitherto it has been customary to table during the course of the budget speech; and I would hope that the house would give me unanimous consent to have it printed as part of today's Hansard.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.
I did: this for two reasons. The first was to give all hon. members an opportunity to examine the basic facts and figures, more carefully and in a more leisurely fashion, and to do so in an atmosphere free from the distractions that perhaps accompany the annual statement of proposed tax changes. My second reason was that by transferring to the white paper the greater part of the general economic review, which is an essential introduction to the budgetary proposals, it will not be necessary for me to take up so much of the time of the house traversing this ground orally. In these general matters I shall limit myself this evening to drawing some of the implications and indicating the probable trend of events in the year ahead of us, in so far as they impinge upon budgetary problems.
We can look back upon the past year with a considerable degree of satisfaction. It has not been an easy year, but it has been a year of solid achievement. We have passed through one critical period, but equally serious dangers still lie ahead. Although we and our friends of the free world are now somewhat better prepared to meet them, there is no room for complacency. We still have the more costly part of our defence program immediately ahead of us. However, if we are equally resolute, energetic and fortunate during this year and the next, there is good prospect of achieving in the not too distant future, perhaps not a world of genuine peace and good will, but at least a position of reasonable confidence and security that can be maintained at a somewhat lower cost than we are now compelled to carry.
Our major difficulties are international in their origin. We are playing a full and constructive part in all worth-while endeavours to build the foundations of a safe and peaceful world. We are co-operating in those aspects of the work of the United Nations where useful progress is possible. We are participating effectively in the Colombo plan, and our role in building up the strength and the health of the north Atlantic community is commensurate with our interests and capacity. On the broad principles of these policies we are a united country, and I am sure I am expressing the thoughts of all groups and parties in this house when I pay tribute to the work of our Prime Minister (Mr. St.


Laurent) whose leadership, moderation and good sense have played an important part in world affairs during the past three or four years.
For the Canadian economy 1951 was a good year. Its first half was dominated by strong inflationary pressures, but as the year progressed these pressures became less severe, and by the end of the year they had been brought under control.
Gross national output in 1951 was 17 per cent higher than in 1950. About two-thirds of this increase was due to higher prices and about one-third to increased real output.
Capital investment in 1951 once again reached record levels, and was probably at or close to the limits of our present physical capacity to expand plant and equipment without materially reducing our production of consumer goods. Government policy has played its part in guiding or steering an increased proportion of this new investment into lines which made the best contribution to our defence potential and to the enlargement of the foundations of our future progress.
Like my colleague the Minister of Trade and Commerce (Mr. Howe) I am satisfied that the deferred depreciation regulations have played an important part in restraining a good deal of capital investment that would have been of a less essential character in our present context, and in directing investment toward currently more essential ends. No changes in the principle of these regulations are presently contemplated, but I can assure the house that we do not like regulations of this sort and that we shall be most happy to modify or withdraw them when the proper time comes.
A year ago I stressed the importance of greater savings if we were to carry through our essential investment programs for defence and for resource development without increased inflationary pressures. In 1950 personal savings had fallen to about $700 million or less than 6 per cent of disposable personal incomes. In 1951 I am glad to report that despite higher income taxes and higher prices personal savings nearly doubled, reaching a total of almost $1,400 million, or more than 9 per cent of disposable personal incomes. To some extent the high rate of savings in 1951 was the counterpart of the low rate in 1950. The rate of saving was low in 1950 because of the heavy wave of consumer buying after Korea, and was high in 1951 because many purchases had been anticipated and quite a few consumers had to save more in 1951 to complete payments on goods purchased the year before. Higher interest rates and the more attractive terms of the sixth Canada

savings bond series undoubtedly had some influence toward increased savings. I should also like to thank the National Council of Women and their affiliates in all parts of Canada for the excellent thrift campaigns they have been sponsoring during the past six months. Thrift and saving are still virtues, and I urge Canadians to keep up in 1952 the good record they made in 1951.
The restraints placed on consumer credit have also played an important part in reducing inflationary pressures and in improving the current savings ratio. These regulations were admittedly severe, but the inflationary pressures were such that strong measures were needed. As these pressures eased we were able to relax the regulations to some extent. I keep these matters under frequent review, and as soon as it seems sensible to do so we shall relax them again.
Preliminary estimates of net farm income in 1951 indicate a record level of more than $2,100 million, an increase of nearly 40 per cent over 1950. Excellent crops in all parts of Canada and higher prices for most farm products combined to produce this result. Due to unseasonable weather on the prairies not all this income was realized in cash, but the cash will flow in as the harvesting is completed this spring. Farmers are continuing to invest heavily in efficient modern labour-saving machinery. Farm implement purchases to the value of $137 million were financed under the Farm Improvement Loans Act, an increase of 35 per cent over 1950. These increasing investments in machinery and equipment are largely offsetting the decline in the numbers of farm workers, and given normal growing conditions I would expect farm crops and farm incomes to be well maintained in 1952.
The outbreak of foot-and-mouth disease in a small area of Saskatchewan has been an unfortunate event, and has temporarily upset the movement of livestock and meats to their normal markets. Prompt and vigorous measures have been taken to eradicate the disease, and so far these have been successful in confining the outbreak within a very small area. To ensure that the disease is completely eradicated quarantine and other control measures will have to be continued for some time.
The government is compensating those whose animals or other property have to be destroyed and is prepared to use the Agricultural Prices Support Act to assist the livestock industry in this difficult period. It is expected that normal movements of meats and freer movements of livestock within Canada will be resumed very soon, except in the areas directly affected. The resumption
The Budget-Mr. Abbott of normal export business is still uncertain but it is hoped that it will be not too long delayed.
When I brought the budget down a year ago we were in the midst of a strong inflationary movement. At that time I described at some length the measures we were taking to bring this inflation under control. I referred to the economies in the government's non-defence spending, the reductions in the numbers of employees in the civil service and the increase in the civil service hours of work. I told the house we were determined to follow a fully pay-as-we-go fiscal policy. I referred to the actions taken to restrain credit expansion, both consumer credit and bank credit. I announced new regulations relating to deferred depreciation, and I made a special plea to all Canadians to raise their productive efficiency and to increase the volume of savings. I pointed out that while we could not wholly insulate ourselves from price increases in the outside world, we could and should control the inflationary forces generated within our own borders. I concluded by saying that the measures we proposed went to the root of the matter, but that in their nature they would take time to operate and could not produce dramatic results overnight.
I feel justified this evening in saying that our policies have proved to be wise and right. Events showed that the inflationary virus in our economic bloodstream had taken a stronger hold than I had anticipated, and that the price increases that occurred before our measures took full effect were about 5 per cent greater than the forecast on which the budget was based. Looking back now we can see that the rapid rise in wholesale prices began to moderate in April-May, the peak point was reached in July, and since then each month has shown a small but steady decline. The February, 1952, index was nearly 5 per cent below the July peak and 2\ per cent below the February, 1951, level.
The cost of living index normally parallels the wholesale index, but moves more gradually and lags a few months behind. The rapid rise in the cost of living index began to ease off in the late summer, though the highest point was touched just at the end of the year. In three of the last four months the index has declined. It is now back to the August, 1951, level, and is about 1J per cent below the peak.
Inflationary pressures have also waned in the United States, but they remain uncomfortably strong in most of the rest of the world. As I have told the house on many past occasions we can hardly expect to have much less inflation than exists in the

The Budget-Mr. Abbott United States-our economies are too closely-intermingled and theirs is so much larger- but unless we manage our affairs well we could have a great deal more. The return of our dollar by normal market forces to parity with the American dollar-at present indeed to better than parity-has also had its moderating effect on Canadian prices.
In 1951, Canada's foreign trade reached the highest level in our history, both in quantity and value. Our total exports during the past year rose by 9 per cent in quantity and by 25 per cent in value over 1950. There was a large increase in exports to overseas markets, with sales to the sterling area one-third greater than in the previous year. Imports from all countries also were sharply higher, and for the year as a whole exceeded exports by $120 million. However, during the past six months imports have tended to fall from the previous peak while exports have continued at a high level so that we have had a trading surplus in each of these months.
In the past year there was a sharp deterioration in the balance of payments of the sterling area. The United Kingdom and other sterling area countries have taken strenuous measures to right the situation. I am hopeful that these measures will bring about a fundamental improvement in the position of this great trading area. These developments are inevitably affecting our trade, and the markets for some of our products have been reduced. However, as my colleague the Minister of Trade and Commerce indicated, there is good reason to believe that our exports as a whole to the United Kingdom during 1952 will be larger than in the previous year.
While our balance on international current account showed an excess of payments over receipts amounting to well over $500 million, nevertheless there was a small increase during 1951 in our exchange reserves resulting from a continued heavy inflow of foreign capital into Canada, chiefly from the United States. Our net capital inflow in 1951 was about $560 million, as compared with over $900 million in 1950. About one-half of this inflow may be said to have been initiated in Canada, in the sense that the funds were borrowed by Canadians, chiefly provinces and municipalities. Most of the rest was an inflow initiated from abroad in the form of investment in new developments or the expansion of established projects previously financed from abroad. I am not one of those who view with alarm a considerable amount of foreign investment, but I welcome the fact that such a high proportion of our new investment was financed by our own people. Of our tremendous new capital investment

program in 1951, the highest in volume ever reached, about nine-tenths was financed out of the savings of the Canadian people.
During the past three months our official holdings of gold and United States dollars have shown little change. On March 31 they stood at $1,787 million, or $8 million more than on December 31, and $134 million more than a year ago. Between January and August last year our reserves declined about $180 million. In the remaining four months of the year they went up by more than $200 million, and since then they have shown little variation from week to week.
I may say, in passing, that I expect that the 1951 report of the foreign exchange control board will be ready for distribution immediately after the Easter recess. Since foreign exchange control terminated on December 14 last, this will be the final report of the board.
Employment and earnings have reflected both the impact of the defence program and the hesitations in the civilian sector of the economy. Taken as a whole employment and labour income have never been higher. Industrial employment averaged 220,000 above 1950, and unemployment averaged 60,000 below 1950. Total labour income was up by 17 per cent. Average weekly earnings in December 1951 were 12 per cent above 1950, and hourly earnings were 15 per cent higher. The average number of hours worked per week during the year declined by 1 per cent, from 42-3 to 41-8. During the past six months pockets of unemployment have developed, and during the past winter total unemployment was somewhat higher than a year ago, though lower than two years ago. As in the United States and elsewhere unemployment of greater than seasonal magnitude has occurred in textiles and in consumer durables, in both cases largely due to heavy anticipatory buying twelve to eighteen months ago and to consumer reluctance to pay higher prices. Price reductions in both these fields have resulted in some pick-up in buying during the past two months and X would hope that this trend will continue.
I have already described the past year as one of solid achievement. We have made substantial progress in our defence program, and the inflationary spiral has been brought to a halt. There remains, however, a strong inflationary potential, and any series of events that sharply increased either international or industrial tensions could revive these direct inflationary pressures and put our economic defences to a renewed test.
The present prospects for 1952 are for continued high levels of employment and business activity, but with some unevenness

in their distribution. Some lines and some regions may experience demands that will fully or more than fully tax their available resources. Other lines and other regions may find their resources less than fully employed.
I expect 1952 to show further increases in total output. Last year our gross national output reached $21-2 billion. For budget purposes I am assuming that output in real terms will advance another 4 or possibly 5 per cent and that prices will lie somewhere between no change from 1951 and 2 per cent higher. If one takes the lower of both these assumptions, that is a 4 per cent increase in output and no change in prices, gross national product in 1952 will reach $22 billion. If one takes the higher of both, that is a 5 per cent increase in output and a 2 per cent increase in price, our gross national product will be about $22! billion. All these estimates assume good average crops, continued increase in general productive efficiency and no serious or prolonged industrial work stoppages. In the light of presently observable trends, I am basing my budget on an expected gross rational product that will closely approach $22| billion.



GOVERNMENT ACCOUNTS, 1951-52

[Stage Direction]
In reporting on the results of the past year I should point out that although the fiscal year ended a week ago it will be some time before the final figures will be available, and the figures I shall use tonight are necessarily preliminary and subject to revision. A great deal of detail is given in the white paper I tabled yesterday, and this evening I shall touch only on the main trends and highlights. But before I do so, may I first say something about the general problem of forecasting revenue and expenditure, and explain how these forecasts are compiled.
We have heard a good deal from some quarters in recent months about bad budgeting. Year by year my Conservative friends opposite have charged me with being too optimistic. The hon. member for Greenwood (Mr. Macdonnell) not so long ago, when I was budgeting for a $20 million surplus, gravely rebuked me for being reckless. Only a moderate worsening of conditions, he warned me, would plunge the national treasury into a deficit. But year after year as we approach the end of our fiscal period these same hon. members join in quite a different chorus-we have overtaxed the Canadian people! Let me say quite plainly, Mr. Speaker, that so long as we have such years of rising prosperity as we have experienced while I have been Minister of Finance
The Budget-Mr. Abbott I am not going to apologize for having a surplus and making some reductions in the deadweight of our huge national debt.
I shall not repeat the figures which I have given and which my parliamentary assistant has given to the house on several occasions; but I will say, with all due modesty, that no minister of finance, provincial treasurer or any head of a national treasury with anything like comparable tasks has made as consistently good a record of forecasting of revenue and expenditure as has the Canadian minister of finance in the past five years.
How are forecasts made? First, take expenditures. Estimates have to be compiled by the departments in the autumn, six to eighteen months before the expenditures are to be made. Some of our operations are standardized and can be readily forecast from year to year. Such are family allowances or the interest on the national debt. In other cases, for example, compensation for the slaughter of diseased animals, payments on construction projects, or the deficit of the C.N.R., the disbursements to be made twelve or eighteen months hence are very difficult to forecast. However, experience has shown that it is usually possible to forecast total expenditures within 2 or 3 per cent. An exception, of course, is large scale defence procurement such as we are now undertaking. Last year we planned, and parliament authorized, defence expenditures in the total amount of $1,725 million. Actually we have spent about $1,441 million, or a shortfall of $284 million. How could this come about? Let me give an example. We had planned and expected to spend about $210 million on major defence construction projects; but because of difficulties of design and construction, and shortages of labour and materials we have found it possible to spend only about $165 million on these projects before the end of the year. The acquisition of machine tools, and of military equipment and its components in the United States poses exceptionally difficult problems of estimation as to final cost, delivery dates and dates of payment. In the year just ended the story has been one of unavoidable delays and postponements. This year it may be that deliveries will come forward much more rapidly than we now expect.
Considering all the difficulties, no one can be surprised that our total expenditures for the year just closed should turn out to be about li per cent below what I forecast a year ago.
On the revenue side the problems of forecasting are closely tied to general economic trends which are not easy to predict. Practically all our revenues are from taxes which
1248	HOUSE OF
The Budget-Mr. Abbott are in terms of percentages of incomes, of imports or of sales. To forecast the yield of the personal income tax we have to look ahead over the next twelve months and estimate how many people will be employed month by month, whether and to what extent wages and salaries will go up, the prevalence of much overtime or much short-time, the dividend policies of corporations, and the aggregate profits or losses of half a million farmers, tradesmen and professional men who are selfemployed. A year ago I thought that there would be an increase of possibly 12 per cent in salaries and wages during the year and consequently I budgeted for an increase of $218 million in revenue. In fact, wages and salaries increased by 17 per cent, and personal income tax collections went up $328 million, or $110 million more than I had forecast.
Corporation income tax yields are still more difficult to estimate because, as is well known, corporation profits fluctuate much more widely, up and down, than do personal incomes. Last April I had expected to take in an additional $177 million under this head during the year. In fact our receipts increased by $335 million or $158 million above expectations. There is a special technical difficulty in forecasting corporate income tax yields. Each year the forecast has to be made on such facts as are available by the middle of March, at a time when most Canadian companies have not yet published their annual statements. Last year the preliminary March estimates of total profits in 1950, based on the limited evidence then available, turned out to be 12 per cent below the revised figures published by the dominion bureau of statistics many months later. The fact that I was forecasting from a base 12 per cent too low accounts for a considerable part of what proved to be a 16 per cent underestimate in this tax.
The yield of the customs tariff depends on the volume, the prices, the nature and the source of our imports. Our excise tax yields depend upon the ups and downs of prices and upon how much and in what form people will decide to smoke during the coming year, or how much they are going to spend on cars, radios, or a hundred and one other things. In the whole field of commodity taxes my forecasts a year ago have proved to be 12 per cent too low in the case of customs duties and 6 per cent too high for excise taxes and duties. On the sales tax I was almost exactly right. Grouping together all commodity taxes and non-tax revenues our receipts were just about 1J per cent above the forecast. That, I should say, was a very close estimate.
All our tax yields, both income and commodity taxes, are directly affected by
[Stage Direction]

changes in the price level. If prices go up, our tax yields rise; if they go down, our tax yields fall. To show how sensitive revenues are to even small price changes let me give the following illustrative figures. Our present federal tax structure produced a revenue last year equal to about 19 per cent of the gross national product; but a general increase in incomes would yield more than 19 per cent of added revenue because our tax structure as a whole is progressive. In the year just ended gross national product was $1-2 billion greater than my forecast, and total revenue was $273 million more than I had originally expected. In other words, with an increase of 6 per cent in national product we took in 7J per cent more revenue.
Every hon. member will agree, I hope, that it is not possible to predict with certainty the level of prices during any future twelve months to within one per cent. Yet on a GNP of $20 billion the difference between a one per cent rise and a one per cent fall in prices during the year is a difference of $400 million in GNP. Under our present tax structure, such a slight change in price could produce a difference of $80 to $85 million in our revenues.
Coming back now to our accounts for the year just ended, the over-all results are that our total revenues have been $4,003 million which, as the result of conditions I have just explained, is $273 million, or 7J per cent higher than I forecast a year ago. Our total expenditures were $3,647 million, that is, $53 million or 1J per cent lower than I had estimated. Our actual budget surplus for the year is, therefore, $356 million instead of the $30 million estimated last April.
There is little that I need add to what I have already said about revenues, but I should like to speak briefly about our policy in regard to expenditures-'about economy.
An hon. Member:: Hear, hear.


Douglas Charles Abbott: I am glad to hear my hon. friend say "hear, hear" because I shall have something to say to him in a moment.


An hon. Member:: It is a long time coming.


Douglas Charles Abbott: Since the outbreak of hostilities in Korea the government has felt a special obligation to restrict severely its demands on labour and materials for non-defence purposes, and to make more than usual efforts to secure economy in its operations and expenditures. We have been striving to apply this policy during a period of buoyant prosperity in the nation as a whole, when businesses and consumers alike were spending on a scale never equalled before. During this time the Ganadian people, and nearly all of us here representing them in parliament, have demanded expanded services and functions

from the government, just as expanded services have been demanded of business. These demands have brought about expansion in our services and our expenditures, ranging from such simple businesslike matters as postal operations to such major developments of national policy as the new old age security pensions. We have had further expansions in scientific research, in our immigration program, in our diplomatic service, in the work for the education and improved health of our Indians, in the surveying and development of resources-to name some of the outstanding cases where it has been the wish of parliament to expand. In other cases we have had to grow, along with the country and the volume of its business.
It has been against this trend, and in the face of rising levels of prices and wages, that we have had to seek economy and retrenchment, to make room for expansion in our defence effort. The results of our efforts are to be found in the details of our programs and expenditures and of the estimates for next year. Members who examine the tables of expenditure in the budget white paper will find many instances of reductions as compared with the previous year, notwithstanding an increase of about 10 per cent in the level of salaries and other costs. Allowance for this price factor will reveal more cases where the real content of expenditure is reduced. In other cases we have arrested an upward trend or natural growth. The results of these efforts, and of the more efficient carrying out of our continuing operations, have been overshadowed in the total expenditure figures by the increase in the levels of costs, and by those major decisions to which I have referred above.
The main problem in controlling our total expenditures lies with us right here in this house-and on both sides of it-in exercising restraint upon the constant demands for additional government services. It is much more a matter of broad issues of policy than of administration, important as that is. The scale of our defence budget is determined by policy developed in the light of the international situation. In its application there are of course real problems in securing economy and efficiency, especially when we must compete for men and for administrative ability with prosperous private industry. Apart from direct defence costs, our direct operating budget for this year is approximately $580 million, and our expenditures of a capital nature on government construction and equipment, including replacement of many buildings, ships and works worn out or outgrown, are only $157 million. Perhaps parliament can find items in these two categories
The Budget-Mr. Abbott where further economies can be made-and we shall seek them in day to day administration even after parliament votes the funds. But above and beyond these direct costs of government operations and facilities, we have now about $900 million in social security payments, $180 million for subsidies and tax rental payments to provinces, $440 million for interest, and over $100 million in contributions, grants and subsidies, including those to international agencies and programs. Any major reductions in expenditures can come only in some of these areas, or in defence. I believe that most Canadians want the government to do these things and are willing to pay what they cost. I wish to emphasize, however, that we cannot have all these and reduced budgets too. Canada is now a highly productive country and can afford these things we are doing-but only at the cost of forgoing expansion or improvement somewhere else. Just now there are more good, sensible things to be done in this country- by business, by governments and by individuals-than can be done all at once while the defence program goes on. Trying to do them all will only result in inflation. We must all hold some of our projects and programs in reserve, even though they are sensible or indeed profitable. For the government to share properly in this policy of self-restraint, it needs forbearance on the part of all those who have demands to make on the government for service, assistance, or public projects.
Because our budget surplus for the year was $356 million our net debt has been reduced by that amount. This is the sixth successive year in which we have had a surplus, and it brings to the very large and gratifying total of $2,344 million the amount by which we have been able to reduce the net debt of Canada since April 1, 1947. Applying the current average interest rate of 2-65 per cent on our outstanding debt, this represents interest savings of more than $62 million a year.
After adjusting the budgetary surplus for non-cash items and taking into account cash receipts from non-budgetary sources, we had sufficient cash available to meet essential nonbudgetary cash outlays and provide for some reduction in funded debt. The non-budgetary cash outlays, all of which are of course authorized by parliament, totalled $653 million, and included such items as the following: advances of about $70 million to Central Mortgage and Housing Corporation for house construction and housing loans; loans of $139 million to the Canadian National Railways for necessary capital expenditures, including the refunding of securities; advances of $200
1250	HOUSE OF
The Budget-Mr. Abbott million to the exchange fund to finance the increase in our foreign exchange reserves consequent upon the flow of investment capital into Canada from abroad; and $95 million used to acquire materials essential to- our defence program and held as current assets until charged as expenditures when embodied in finished goods.
After making these cash disbursements and drawing down our cash balances by $66 million, which left us only about $20 million cash on hand at the fiscal year end, we were able to retire outstanding funded debt to a total amount of $300 million as well as to acquire and withdraw from the market $156 million of our own securities, mainly for the unemployment insurance fund and the securities investment account.
The public debt operations of the government during the past year again included the redemption or refinancing of a large volume of matured or called bond issues in addition to the usual refunding of short-term securities. Funded debt payable in Canada amounting to $2,762 million matured during the year. Of this, $2,100 million was refinanced by refunding or conversion into new issues, and $362 million was covered by new money obtained from the very gratifying response to the Canada savings bonds campaign last fall. The remaining cash required-$300 million-came from our cash surplus. After taking into account certain minor non-cash transactions, the funded debt was reduced by a total of $324 million during the fiscal year.



FORECAST OF REVENUE AND EXPENDITURE,

[Stage Direction]
I turn now to a survey of our revenue and expenditure prospects for the new fiscal year. On March 19 I laid before the house the main estimates for 1952-53 providing for expenditures of $4,336 million, of which $2,106 million was for defence, $1,908 million for non-defence, and $322 million for old age security pension payments. These pensions, of course, are paid out of the old age security fund and consequently lie outside the scope of the budget proper, but they have been included in the estimates for purposes of record. The estimate of $2,106 million for defence is $665 million or 45 per cent more than our actual expenditures for that purpose last year. The estimates for our non-defence budgetary requirements are not comparable with last year's figures for they do not include provision for payments under the new tax rental agreements with the provinces which have not yet been concluded. If the eight provinces which came into the previous
[Stage Direction]

agreements all enter into the new agreements, as now appears probable, total payments under this head will amount to about $150 million in addition to the amounts shown in the estimates.
On the other hand, the estimates do include a number of items, such as the grant for assistance under the Colombo plan, which in the previous year were covered by supplementary estimates. Nevertheless, as in the past, some supplementary estimates must be expected, including provision for some items the nature of which is known but for which firm amounts are not yet available or final policy decisions have not been taken-the deficit of the Canadian National Railways, the grants to universities, and the subsidy on the movement of feed grains after the end of the current crop year, are examples of what I have in mind. I should also expect to make some further provision in our accounts for such items as the reserve against our active assets and the deficiency in the civil service superannuation account.
In line with past experience I expect there will be a shortfall of expenditures below the amounts provided by parliament in the appropriation votes. The amount of savings is difficult to estimate, particularly with respect to a defence program of the magnitude we are now engaged in. I should remind hon. members that the defence program necessarily involves very large long-term commitments, and the rates of expenditure under such contracts may be more or less rapid than we are presently estimating. My judgment, however, is that we are likely to have some shortfall rather than overrun, and I am budgeting on that basis.
All in all, I have concluded that I must expect total budgetary expenditures of $4,270 million, which excludes payments to be made from the old age security fund.
On the revenue side, forecasting is, as usual, difficult and subject to many uncertainties. However, on the premise that our gross national product for 1952 will approach $22J billion and assuming no tax changes, I should expect that our total revenue, including old age security tax receipts, would be $4,630 million. The old age security receipts which I estimate at $235 million are, of course, earmarked for the old age security fund, leaving me about $4,395 million to cover our purely budgetary expenditures. I have had prepared the usual table showing a comparison of the revenue forecast for 1952-53 with the preliminary figures for 1951-52 for the convenience of hon. members. I would ask the consent of the house to have this incorporated in the record without my taking time to read it.
Some hon. Members:: Agreed.


Douglas Charles Abbott: 

TAX POLICY

[Stage Direction]
From the figures I have given as the best estimates that can be made at this time of expenditure and revenue for the coming year it is clear that there is not much room for tax abatement. That this would be the case has been evident to me for many months, and I have done my best on every occasion to warn the public against undue optimism and against irresponsible and misleading interpretations placed upon the interim monthly surpluses reported during the course of the year. In this house and elsewhere hon. members opposite have used these monthly figures to criticize the government's tax policy without apparently making the slightest effort to check the reasonableness of their inferences. For example, they have repeatedly quoted the fact-and it is a fact- that the monthly statement showed an interim surplus on December 31 of $722 million. They have implied that on this basis the final surplus was likely to be almost $1 billion. My hon. friends knew, or should have known, that such an inference was wholly unwarranted. Almost at the beginning of our annual public accounts there are three pages of tables and charts explaining in detail the seasonal nature of our revenues and expenditures. Hon. gentlemen opposite are in the habit of expressing great interest in the public accounts, but apparently in their study of them they have not got through the first six or eight pages. If they had they would have
1252	HOUSE OF
The Budget-Mr. Abbott learned that the final surplus is normally about half the interim surplus as of December 31.
Mr. Nowlan:: Civil service superannuation.


Mr. Rowe:: Just a million out.


Douglas Charles Abbott: I am sure we shall have a very enlightening speech from the hon. member for Kamloops (Mr. Fulton) in due course. I can hardly wait for it.


Edmund Davie Fulton: We shall do our best.


Douglas Charles Abbott: A year ago, in the face of an extremely uncertain situation, I put forward what I described as a provisional tax program. This was done in the expectation that the outlook at home and abroad would become clearer. While the future is not free of uncertainty, the prospects are now sufficiently clear to justify moving toward a more stable pattern in our tax structure. The main essentials in a tax structure necessary to carry the civilian and the defence programs are that it should be adequate, efficient, fair and reasonably stable. To be adequate it is clear that I cannot offer any large net reductions in taxes this year. To be efficient and to be as fair as possible I shall be proposing quite a number of modifications, which on balance will provide some net reduction in tax revenues, though in certain instances adjustments in consumption may partly offset the adjustments in the tax rates. These modifications in tax rates, and some rearrangements in the grouping of tax commodities, will I believe put our tax structure into an orderly balance and, in the absence of substantial changes in the pattern of expenditure, provide some promise of reasonable stability in our tax structure for the immediate future.
Our total program of expenditure now consists, in round figures, of just over $2 billion for defence, nearly $1 billion for social security and pensions of various kinds, about $650 million for interest on the debt and payments to the provinces, and about $650 million for general administration and all the other varied activities of government. To this broad pattern of expenditures all parties in the house have subscribed in principle. While we will continue to press for maximum economies the only reasonable expectation we can have of real reductions in tax load must lie either in a lesser need for defence expenditure or in the steady increase in the wealth and incomes of our people, so that the present actual weight of taxation becomes a relatively lighter burden.



INCOME TAX CHANGES

[Stage Direction]
Coming now to specific proposals I shall deal first with the corporate income tax. At present corporations pay, under the federal income tax law, 15 per cent on the first $10,000 of profits and 33 per cent plus 20 per cent of 38 per cent (the defence surcharge) on profits in excess of $10,000. This results in an effective rate of 45-6 per cent on profits over $10,000. In addition, corporations have been paying five per cent in the eight provinces with which we have had tax agreements, and seven per cent in Ontario and Quebec. Some time ago it was announced that the eight provinces would be asked to drop these five per cent corporate income taxes. They will be replaced by a five per cent increase in the federal rate. Concurrently provision will be made for a five per cent tax credit against the federal tax in respect of profits earned in Ontario and Quebec where provincial corporate taxes presumably will still be in force. This change will be essentially one of form rather than substance, and is designed to simplify administrative procedures. There will be no net increases in the taxes paid by corporations since the additional amount paid to the federal government will be only what they would have paid to the provinces. Our tax receipts will go up by $35 million on a full year basis, but our payments to the provinces will go up by an equivalent amount.
After this consolidation the federal rate on the first $10,000 will be 20 per cent with 50-6 per cent as the rate on the remainder. In the process of re-arrangement which will be effective as from January 1, 1952, the 50-6 per cent will be rounded off to an even 50 per cent. The revenue loss from this minor adjustment will be about $12 million in this fiscal year.
In considering the over-all tax position of corporations under this new structure it should be remembered that there is an additional two per cent tax on all corporate income imposed under the old age security act. To sum up then, the top corporate tax rate in Canada will be 52 per cent in eight provinces and 54 per cent in Ontario and Quebec.
Quite frankly, I am concerned that conditions make it necessary to maintain in our tax structure rates as high as this on business profits. My main concern is not with the current year or even possibly with next year. The ill effects of too high taxes can perhaps be endured for a year or two. But as I said last year, excessive rates of tax on corporate incomes if long maintained can do grave damage to the economy as a whole, and I say quite candidly that if I had more leeway

for tax abatement it is to income taxes, both corporate and personal, that I would give first consideration.
The house will recall that in my budget speech a year ago, I expressed special concern over the effect of our present high corporate tax rate on certain public utility companies which are forced by the nature of their business and their franchises to raise large amounts of capital to finance expansion of services required to be performed for the public, and which because of public control of rates are allowed to earn only a modest return on their capital. At that time I had in mind that we would be able to work out the details of a formula which would give such companies substantial relief from the 20 per cent surcharge I was then proposing. After a great deal of investigation we found it impossible to devise a practicable formula of the type I had in mind and so the whole idea had to be dropped.
During the past year much further study has been given to the problem and 1 have now decided to recommend a change in our law which I believe can be administered and which will grant a measure of relief to certain of these companies as long as the present very high corporate tax rate continues to apply. This relief will apply to companies whose main business is the distribution to, or generation for distribution to, the public of electrical energy, gas or steam, and will take the form of a deduction from the tax otherwise payable of an amount sufficient to reduce to 43 per cent the tax payable under the Income Tax Act on that part of a corporation's taxable income that is derived from such distribution or generation. This, it will be recalled, is the group of companies in respect of which the government of Canada now turns over to the appropriate provincial governments half of its collections of tax on the specified income, after deduction of certain types of tax paid directly by the same corporations to provincial governments. It is also, generally speaking, the group of companies which for a variety of reasons finds the greatest difficulty in securing adequate income to attract the heavy volume of capital required to keep pace with public demand.
I am well aware that the degree of relief which I find it justifiable to grant may prove disappointing to those concerned but I do hope that it will make a real contribution to a solution of a problem we all recognize. It was only with the greatest reluctance that I reached a decision to apply a reduced rate of tax to a named class of companies and I decided it should be done only as a temporary
The Budget-Mr. Abbott expedient. Hon. members will have noted from the explanation I have given that as the corporate tax rate drops from its present 50 per cent level (that is, excluding the old age security tax) the formula I am proposing will result in a lessening measure of relief to this special class of companies and when the rate falls to 43 per cent, the formula will cease to operate.
There will be some revenue loss from this proposal but the net effect will be relatively small, as an amount equal to half of the tax abatement would otherwise, under present arrangements, have been turned over to the provincial governments.
An interesting change I am proposing under the corporation income tax is that those crown corporations of the federal government which are designated as proprietary corporations, and hitherto have been exempt from tax, will in future pay corporate income tax to the federal government in the same manner as any privately-owned corporation. "Proprietary corporations" are those so designated under the Financial Administration Act, and generally speaking are companies which are carrying on business operations similar to and in competition with private business. One desirable result of this proposed action will be to make the financial statements of these crown companies more comparable with private industry, and make it easier to assess the relative efficiency of their operations. I do not expect this change to have appreciable net revenue effects. It will increase our tax receipts and reduce our non-tax revenue. All crown company profits eventually find their way into the treasury, and many of them already remit all or the greater part of their profits year by year.
Other proposals under the corporation income tax include the extension for an additional year of the allowances now granted for mineral and petroleum exploration expenses, including the so-called "deep-test" well allowance, the addition of another year to the period during which new mines may qualify for the three-year exemption, and various technical amendments of lesser importance which will be covered in the bill to amend the Income Tax Act.
In the personal income tax field a new rate schedule will be introduced. Into this new schedule I propose to incorporate most of the weight of the present 20 per cent surcharge. There will be some over-all abatement although in saying this I should remind the house that the two per cent income tax imposed by parliament last session under the Old Age Security Act will be coming into force on July 1 of this year.
[Stage Direction]
The Budget-Mr. Abbott The house will recall that one of the criticisms quite properly directed at the 20 per cent surcharge method of increasing the personal income tax was that it increased in a distorted manner the rate of progression in the income tax schedule. For example, it resulted in levying a tax of more than 100 per cent in certain circumstances. Everyone would agree that such a result is quite wrong, and in modifying the rate structure this anomaly has been removed and a more reasonable scale of progression has been established. I expect the revenue loss as a result of these changes to be about six 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 six per cent less than he would otherwise have done under the income tax law as it now stands. With the consent of the house I should like to insert in Hansard at this point tables showing the effect of the new taxes on taxpayers at various levels of income.
Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


Douglas Charles Abbott: The tables are as follows:
Present and Proposed Income Tax Single Taxpayer
Tax in 1952 Percentage (6 months Tax Reduction at present
Tax for 1952	in Full	from	ratesat Present	Year at	Present	6 months atIncome	Rates New Rates	Rates	new rates)$	$	$	%	$1,000	1,200	36	34	6	351,500	90	85	6	881,800	144	136	6	1402,000	180	170	6	1752,250	231	218	6	2252,500	282	265	6	2742,750	333	313	6	3233,000	384	360	6	3723,500	498	470	6	4844,000	612	580	5	5965,000	840	800	5	8207,500	1,524	1,450	5	1,48710,000	2,352	2,250	4	2,30120,000	7,152	6,750	6	6,95130,000	12,792	11,950	7	12,37150,000	26,177	24,354	7	25,19575,000	44,717	41,554	7	42,965100,000	64,457	60,004	7	61,960200,000	151,697	141,404	7	145,880400,000	339,737	318,344	6	327,570
Note: (1) In calculating the above taxes it has been assumed1 that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.

(2) The Old Age Security tax of 1 per cent on taxable income (maximum tax $30) in 1952 and 2 per cent of taxable income (maximum tax $60) thereafter is not included in the above amounts.
Present and Proposed Income Tax Married Taxpayer-No Children
Tax in 1952 Percentage (6 months
Income	Tax Reduction at present Tax for 1952 in Full from rates at Present Year at Present 6 months at Rates New Rates Rates new rates)			
$	$	$	%	$
2,000				
2,250	45	43	*4	"442,500	90	85	6	882,750	135	128	5	1323,000	180	170	6	1753,500	282	265	6	2744,000	384	360	6	3725,000	612	580	5	5967,500	1,236	1,175	5	1,20610,000	1,992	1,900	5	1,94620,000	6,612	6,250	5	6,43130,000	12.192	11,400	6	11,79650,000	25,517	23,754	7	24,56575,000	43,997	40,904	7	42,280100,000	63,677	59,304	7	61,220200,000	150,857	140,604	7	145,060400,000	338,837	317,484	6	326,690Note:	(1) In calculating the above	taxes it hasbeen assumed that	all incomes up to	$30,000 are
entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.
(2) The old age security tax of 1 per cent taxable income (maximum tax $30) in 1952 and 2 per cent of taxable income (maximum tax $60) thereafter is not included1 in the above amounts.
Present and Proposed Income Tax
Married Taxpayer-With Two Children Eligible for Family Allowances
Tax in 1952 Percentage (6 months
		Tax	Reduction at present	
Tax for 1952	in Full	from	ratesat Present	Year at	Present	6 months atIncome	Rates New Rates	i Rates	new rates)$	$	$	%	$2,300	2,400	18	17	6	182,500	36	34	6	352,750	81	77	5	793,000	126	119	6	1233,500	221	208	6	2154,000	323	303	6	3135,000	544	514	6	5297,500	1,157	1,100	5	1,12910,000	1,898	1,810	5	1,85420,000	6,450	6,100	5	6.27530,000	12,012	11,235	6	11,62450,000	25,319	23,574	7	24,37675,000	43,781	40,709	7	42,075100,000	63,443	59,034	7	60,998200,000	150,605	140,364	7	144.814400,000	338,567	317,226	6	326.426Note:	(1) The above figures show the actual
income tax liability of a taxpayer with family

allowance children but in order to arrive at his true net position the amount of family allowances received for his children must be offset against his tax liability.
(2)	In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include earned income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.
(3)	The old age security tax of 1 per cent taxable income (maximum tax $30) in 1952 and 2 per cent taxable income (maximum tax $60) thereafter is not included in the above amounts.
As I mentioned earlier, no change has been made in the levy on personal incomes already enacted as a contribution toward the cost of old age security. This charge will apply at an effective rate of 1 per cent on taxable income for 1952 and at a 2 per cent rate thereafter, and will be in addition to the ordinary income tax. I am proposing that tax deductions under the new schedule will commence on July 1, concurrently with the commencement of deduction of the old age security tax. The tax liability for the full year 1952 will be determined in accordance with a special schedule of rates which will in effect represent the average of the rates now in force and the rates under the new schedule.
I think I should make clear that the reductions in income tax which I have announced will not be sufficient, for most taxpayers, to offset the effect of the old age security tax.
As a result of this change I anticipate that in the fiscal year which has just commenced revenue from personal income tax will be reduced by some $40 million from the amount of $1,240 million I estimated earlier that I would receive from this source.
I am proposing several other amendments of lesser importance affecting the personal income tax.
The existing maximum limits on the amount of medical expenses that may be deducted were established some time ago and there is evidence that these limits are imposing undue hardship in many instances of prolonged or serious illness, especially in cases where certain new and more expensive kinds of treatment are required. 1 am, therefore, proposing that these limits now be doubled. The effect of this change will be to raise from $750 to $1,500 and from $1,000 to $2,000 the amount which may be deducted in a year for persons having single and married status respectively,
The Budget-Mr. Abbott with corresponding increases in the allowance granted where there are dependents. The law also now requires that medical expenses be both incurred and paid in the same twelve month period to be eligible. I am proposing in the future to recognize expenses paid in the period no matter when incurred.
I gave most careful consideration to the suggestion contained in the resolution passed by this house that the provisions of the law limiting the deductible medical expenses to those in excess of 4 per cent of income should be removed. However, I feel strongly that the normal personal and living expenses of a taxpayer should never be deductible from income for taxation purposes. The requirement that only medical expenses in excess of 4 per cent of income are deductible will be retained, therefore,-


Stanley Howard Knowles: Shame!


Douglas Charles Abbott: -as a means of limiting, and I think properly so,-


Stanley Howard Knowles: Shame!


Douglas Charles Abbott: -the application of this provision to medical expenses of an unusual degree in accordance with the original purpose.


Stanley Howard Knowles: Despite the unanimous vote of this house the other day.


Douglas Charles Abbott: Some further technical changes will be made in the special tax system introduced for the armed forces last year. Experience with this new system has revealed certain problems which can be overcome by modifying its details in some minor respects. These will be discussed in detail when the amendments to the Income Tax Act are before the house.
The legislation governing pension plans will be amended to allow a deduction for payments under so-called terminal funding plans, and to introduce greater flexibility into the provisions governing the deductibility of employer's contributions in respect of employee's past services. Other minor technical amendments affecting the personal income tax will also be proposed in the amending legislation,
A word might be said here about the Succession Duty Act. Our law needs overhauling and I had hoped before now to have been

The Budget-Mr. Abbott able to bring forward a revision of the law for the consideration of the house. The fact is, however, that pressure of other matters has made this impossible. There are a few amendments of a technical nature that need immediate attention. They are not matters of policy and the effect will be merely to clarify certain provisions and remove anomalies. These will be found in the amending bill which will subsequently be introduced.



CUSTOMS TARIFF CHANGES

[Stage Direction]
The budget resolutions relating to the customs tariff which I am tabling contain proposals to carry out certain recommendations of the tariff board and to provide for reductions which have been requested in certain duties to achieve economies in costs of productions. In a number of cases I am proposing changes in wording and classification which would remove anomalies and administrative difficulties which have arisen. I am also proposing to bring into the customs tariff a number of items which have been accorded reduced rates of duty for some time by order in council.
I am tabling with the budget resolutions four reports I have received from the tariff board. These reports are the result of references which I sent to the board during the past several years on plastics, glass, architects' and engineers' plans, and iron or steel shot and grit. In each of these cases I thought it desirable to have a thorough inquiry by the board, under the terms of the Tariff Board Act, before recommending any action.
In 1937, when the board last reported on the tariff schedule covering synthetic resins and plastics, it recommended that these schedules be reviewed from time to time in order to keep the classifications and rates of duty up to date. During the past decade the Canadian plastics industry has undergone a striking development both in the magnitude and range of its operations. As a result the classification, wording and rates of duty pertaining to the plastic items in the tariff have become obsolete. After an exhaustive inquiry into this highly complex and technical subject the board has proposed a revised classification and has recommended adjustments in rates of duty in order to bring the tariff items in line with the present position of the industry.
[Stage Direction]

Last year the board presented certain interim recommendations on the plastic items which I tabled with my budget a year ago. The report which I am now tabling contains the final results of the board's inquiry and incorporates the interim recommendations which were implemented by parliament last year. The board's recommendations, which are now complete, regarding the structure of rates for the plastic items involve some increases and some decreases from existing rates of duty. The reasons which led the board to recommend these readjustments are fully set out in its report.
The second tariff board report which I am tabling relates to the tariff items covering glass in its various forms. The board has recommended reduced rates of duty on such widely used items as window glass, plate glass, certain forms of safety glass, and mirrors. The board has come to the conclusion, also, that if the recommended reductions are implemented, the drawback provisions granted to the mirror and safety glass industries are no longer necessary.
In 1946 parliament, upon the recommendation of the Minister of Finance, established a tariff item which provided for the duty free entry of certain engineers' plans, drawings or blueprints. Subsequently I received a number of representations asking for the restoration of the former rates of duty. I referred the matter to the tariff board for inquiry and report. The board heard extensive evidence from the interested parties and after careful study 'has recommended that duty free entry under the item in its present form should be continued.
The remaining report of the tariff board
deals with the customs duty on iron or steel shot and grit. The item is now duty free. The board has recommended the imposition of a duty of five per cent on one classification of this item.
The first budget resolution relating to the customs tariff which I am submitting includes proposals to carry out all the tariff board recommendations respecting plastics and glass. I wish to consider further the recommendation for the imposition of a new duty on iron or steel shot and grit.
The second customs tariff resolution contains proposals for lower rates of duty on a list of items that enter into the costs of pro-

duction of certain manufacturing and primary industries. A number of reductions are proposed in rates of duty on certain specialized equipment used in the mining industry. In respect of items used in agriculture there are several proposals for lower rates of duty, including some items of equipment used in the dairy industry, propane gas for use in tractors, clarification of the position of tractor tires and certain tractor accessories to ensure continued free entry, and ball and roller bearings for the repair of agricultural implements and machinery. I am also proposing that provision be made for the free entry of complete aircraft and engines of types and sizes not made in Canada. This is designed to be of particular assistance to the considerable number of smaller air transport companies which are anxious to re-equip with more modern aircraft. I am also proposing to widen the limit allowed from five dollars to ten dollars for the free entry of casual donations sent by persons abroad to friends in Canada.
In addition, the resolution contains a considerable number of proposals for improvements in wording and classification to remove anomalies and to keep the items in line with recent developments. The schedule pertaining to automobile parts has been extensively rewritten to bring it up to date with the present position of the automobile industry. The rates of duty proposed for automobile parts have generally been in effect for some time as a result of trade agreements negotiated under the general agreement on tariffs and trade. On the whole these rates are appreciably lower than the existing statutory rates.
Under the third customs tariff resolution I am tabling it is proposed to bring into the permanent tariff a number of items on which reduced rates of duty have been granted temporarily by order in council on materials used in Canadian manufactures. Authority for such temporary reductions is granted in section 284 of the Customs Act. Many of the items have been in effect for several years and experience has shown that it is desirable to place them in the permanent tariff.
I would expect no net change in our customs revenue as a result of all these amendments.

[Stage Direction]
Turning to commodity taxes, my purpose here as elsewhere is to make a number of
55704-SO1
The Budget-Mr. Abbott adjustments and regroupings which will have the effect of reducing some tax rates, without seriously reducing our total revenues. They will also enable us to get back to the three broad groups of domestic commodity taxes which have become our accepted objective of a well-balanced, relatively simple, yet highly productive revenue system in this field.
Hon. members will recall that our commodity taxes fall into three main categories: first, there is the so-called general sales tax, of which the rate is 8 per cent with an additional 2 per cent levied for old age security; second, there are the special excise taxes, in general applicable in addition to the sales tax, which are now levied on a wide range of consumer goods at a rate which, with a few exceptions, is presently 25 per cent; third, there are the taxes and duties on liquor and tobacco products, both traditional and productive sources of revenue in the federal tax system.
Except for minor additions to the list of exempt goods, details of which will be found in the resolutions, I am not proposing to touch the sales tax. For reasons which I have discussed fully in the past I am satisfied that in its present form, with the numerous and extensive exemptions granted under it, the sales tax is a fair levy. We are constantly striving to make it even more so, and vdll continue to do so in the future.
The second broad group of taxes, the special excises, apply to a range of goods most of which are in the class of consumers' durables and are less essential in the sense that in most cases their purchase and enjoyment may be postponed without serious sacrifice. In 1949 we revised our rate structure so that on most goods the rate was 10 per cent. In the fall of 1950, after the invasion of Korea, we raised the general level to 15 per cent, and a year ago, when it appeared that our defence effort would make still heavier demands upon us, we raised the rate of broadest application to 25 per cent and brought three types of household appliances under tax at a 15 per cent rate. An exceptional instance in this group was soft drinks, which we raised to 30 per cent in the fall of 1950 and have retained at that rate since.
One reason for attempting a year ago to reduce the current purchases of most of
[Stage Direction]
The Budget-Mr. Abbott the items in this tax group was that we were facing the prospects of acute shortages in steel and other essential materials which go in large volume into these articles. Due in part to reduced production of these consumer durables, but even more to the rapid increase in steel producing capacity and improved supplies of other critical materials, we no longer face these difficulties to the same acute degree, although I should add that that statement would have to be qualified if we had prolonged work stoppages in the steel industry either in this country or in the United States.
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 rate of tax will now meet our requirements, and I am proposing that effective from midnight tonight, the tax on all goods now bearing the 25 per cent rate under the Excise Tax Act will be reduced to 15 per cent, that the household appliances now taxed at 15 per cent will be exempted from this special excise, and that the 30 per cent rate on soft drinks be reduced to 15 per cent. In this connection the tax on carbonic acid gas will also be reduced, and products competitive with soft drinks, known as dry-powder drinks, will be made taxable at a 15 per cent rate. The tax on candies, which was reduced last year to 15 per cent, will continue to be taxed at that rate.
The details of the goods affected by these changes are given in the resolution, but for the information of the house I mention that included in the group on which the rate is reduced from 25 per cent to 15 per cent are automobiles, the smaller electrical household appliances, firearms, motor cycles, radios and phonographs, tires and tubes, golf clubs and balls and fishing rods and reels, cameras and supplies, lighters, cigars, luggage, pens and pencils, jewelry, ornaments, toilet articles, clocks and watches, and furs. The household appliances taxed at 15 per cent, and now to be exempted, are stoves, washing machines and refrigerators.
The net reduction in revenue from the changes just proposed is estimated at $78 million in the fiscal year.
Turning to the third main group of commodity taxes-those on alcoholic beverages and tobacco-the principal problem I have
had to deal with has been the cigarette tax, and there is no subject upon which I have received more free advice. Hon. members will recall that a year ago taxes were increased on both cigarettes and cut tobacco, and the tax on cigarette papers and tubes was repealed. I had then expected that there would be a net increase in revenue of $28 million as a result of all these changes. Actually the increased revenue has turned out to be only $5 million, made up of a decrease of $1 million on cigarettes and an increase of $13 million on cut tobacco offset by the $7 million of taxes abolished on cigarette papers and tubes.
An hon. Member:: Smuggling.


Douglas Charles Abbott: I am coming to that.
In the case of cigarettes only I had forecast an increase of $21 million and I experienced a decline of $1 million. There are of course a number of reasons for this decline. I had expected that the higher prices resulting from the higher tax would affect consumption to some extent, but when they were combined with additional price increases announced by the manufacturers a little later, the effect on consumption was much more pronounced.


Gordon Knapman Fraser: Do not blame the manufacturers.


Douglas Charles Abbott: I am not blaming anything. I know my hon. friend knows something about the tobacco manufacturing industry. Then our tobacco taxes are paid when the products are shipped from the factory and there were heavy but quite legitimate shipments from the factories in the several weeks preceding the budget. Further there was a prolonged strike during the summer in the plant of one large manufacturer. There has also been a considerable increase in the importation of American cigarettes, both legal and illegal, though in my opinion the volume of smuggling has been greatly exaggerated in much of the public discussion.
After saying all this, the real situation is that when the various provincial taxes on cigarettes and the manufacturers' price increases are added to the federal taxes we seem to have reached a point of diminishing returns. I therefore propose, effective immediately, to move the cigarette tax back to where it was a year ago, that is, a reduction of $1.50 per thousand, or three cents on the standard package of 20. As a result of this change and the consequential price reductions I would expect some recovery in cigarette sales, and I estimate the net reduction in revenue at $10 million.

The tax on raw leaf tobacco will be reduced by the amount of last year's increase. In recent years the use of tobacco in this form has been decreasing, and I have been impressed by the evidence that the present tax is unduly burdensome to the growers.
A minor technical change that will be made in the case of manufactured and raw leaf tobacco will be to modify the charges now imposed to vary with the exact amount of tobacco in a package rather than to apply at a flat amount per ounce or fraction of an ounce.
In the case of alcoholic beverages no changes of any consequence are proposed. Minor adjustments under the Excise Act will include the repeal of the duty on spirits used in fortifying wines or in any product that is subject to a special excise tax. It is proposed to change the duty on beer made from substances other than malt from 45 cents to 42 cents per gallon in order to give the two forms of product equality of treatment. The revenue effects of these latter changes will be unimportant.
As usual I give public notice that no claims for refund arising out of tax reductions in respect of goods on which tax has been paid will be entertained by my colleague, the Minister of National Revenue.



SUMMARY OF TAX CHANGES

[Stage Direction]
I am now in a position to summarize the effects of all the proposed tax changes, and
The Budget-Mr. Abbott in doing so I ask leave of the house to insert in the record the two usual tables, one showing the effect of the proposed tax changes on revenue, and the other giving a revised forecast of total revenue after giving effect to the tax changes.
Effect on Revenue of Proposed Tax Changes
Reduction Reduction in fiscal in a full year	year
(In millions of dollars)
Personal income tax-
Incorporation of 20 per cent surtax into rate structure ..	40	65
Corporation income tax-
Reduction due to -6 per cent adjustment in tax rate ....	12	18Increase due to incorporation of 5 per cent provincial corporation income tax into federal tax structure	+25	+35
Excise taxes-
Reduction of 25 per cent rate
to 15 per cent	 58	64
Reduction in tax on soft drinks from 30 per cent to 15
per cent	 10	11
Repeal of 15 per cent tax on refrigerators, stoves and
washing machines	 10	11
Reduction in cigarette tax _____ 10	11
Other miscellaneous changes	..	1	1Total	
116	146
Revised Forecast of Revenues for Fiscal Year 1952-53 Taking Account of Tax Changes
Forecast of	Increase or	Revisedrevenue	Decrease (-)	Forecastfrom	in Revenue	of RevenueExisting	From Budget	for :Taxes	Proposals	1952-53Personal income tax 	
1,240-0	(In millions of dollars) -400	1,200-0Non-resident income tax 	600Corporation income tax 	
1,257 0	130	1,270-0Succession duties 	43-0Customs import duties 	370-0Excise duties 	240-0Sales tax (net) 	
540 0	-1-0	539 0Other excise taxes 	
340-0	-880	252-0Miscellaneous taxes 	
5-0	5-0Total tax revenues 	
4,095-0	-116-0	3,979-0Non-tax revenues 	275-0Total ordinary revenues 	
4,370-0	-116-0	4,254-0Special receipts and credits 	
25-0	25-0Total budgetary revenues 	
4,395-0	-116-0	4,279-0Old Age Security taxes	2 per cent sales tax 	135-02 per cent individual income tax 	
52-0	52-02 per cent corporation income tax 	
480	48-04,630-0	-1160	4,514-0
55704-80*
[Stage Direction]
The Budget-Resolutions The tables show that the net reductions in taxation during this fiscal year will amount to $116 million. Hon. members will recall that earlier in my speech I estimated the prospective surplus before tax changes, at $125 million. After giving effect to my proposed tax changes budgetary revenues are estimated at $4,279 million, expenditures at $4,270 million, and consequently an estimated surplus of $9 million. What I am really doing, of course, is budgeting for a balanced budget, since the $9 million surplus is less [DOT]than one-quarter of one per cent of revenues, and less than the normal mathematical margin of error in the estimates themselves.
A year ago, Mr. Speaker, I concluded my budget speech by saying that it would be too bold to hope that by this time circumstances would permit any reductions in tax rates, and the best hope I could hold out would be for no further increases in tax rates. I am glad that conditions have so turned out that I have been able to do a little better than I expected. I have not proposed any increases in tax rates, and I have been able to propose some downward adjustments.
Unless conditions at home exceed even my generous expectations, and unless the clouds that overhang the international scene lift more rapidly than we now have a right to expect, my hope for next year is the same as that I expressed a year ago-an expectation of no increases in tax rates, but not much likelihood of substantially lower rates. If we can do as well next year in bettering these expectations as we have this year, I for one would be content, and I am sure that the house and the country, knowing full well the great and serious responsibilities that we in Canada carry in partnership with others, would fully share that sense of satisfaction.
Mr. Speaker, I shall now table the resolutions which I shall move when the house is in committee.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That for the 1953 and subsequent taxation years there be substituted for the graduated rates of tax and the defence surtax that are at present applicable to the income of individuals, the following graduated rates of tax:
(a)	17 per cent of the amount taxable if the amount taxable does not exceed $1,000,
[Mr. Abbott.l
(b)	$170 plus 19 per cent of the amount by which the amount taxable exceeds $1,000 if the amount taxable exceeds $1,000 and does not exceed $2,000,
(c)	$360 plus 22 per cent of the amount by which the amount taxable exceeds $2,000 if the amount taxable exceeds $2,000 and does not exceed $4,000,
(d)	$800 plus 25 per cent of the amount by which the amount taxable exceeds $4,000 if the amount taxable exceeds $4,000 and does not exceed $6,000,
(e)	$1,300 plus 30 per cent of the amount by which the amount taxable exceeds $6,000 if the amount taxable exceeds $6,000 and does not exceed $8,000,
(f)	$1,900 plus 35 per cent of the amount by which the amount taxable exceeds $8,000 if the amount taxable exceeds $8,000 and does not exceed $10,000,
(g)	$2,600 plus 40 per cent of the amount by
which the amount taxable exceeds $10,000 if the amount	taxable	exceeds	$10,000	and	does	not
exceed $12,000,
(h)	$3,400 plus 45 per cent of the amount by
which the amount taxable exceeds $12,000 if the amount	taxable	exceeds	$12,000	and	does	not
exceed $15,000,
(i)	$4,750 plus 50 per cent of the amount by which the amount taxable exceeds $15,000 if the amount taxable exceeds $15,000 and does not exceed $25,000,
(j)	$9,750 plus 55 per cent of the amount by which the amount taxable exceeds $25,000 if the amount taxable exceeds $25,000 and does not exceed $35,000,
(k)	$15,250 plus 60 per cent of the amount by which the amount taxable exceeds $35,000 if the amount taxable exceeds $35,000 and does not exceed $50,000,
(l)	$24,250 plus 65 per cent of the amount by
which the amount taxable exceeds $50,000 if the amount	taxable	exceeds	$50,000	and	does	not
exceed $75,000,
(m)	$40,500 plus 70 per cent of the amount by which the amount taxable exceeds $75,000 if the amount taxable exceeds $75,000 and does not exceed $100,000,
(n)	$58,000 plus 75 per cent of the amount by
which the amount taxable exceeds $100,000 if the amount	taxable	exceeds	$100,000	and	does	not
exceed $150,000,
(o)	$95,500 plus 80 per cent of the amount by
which the amount taxable exceeds $150,000 if the amount	taxable	exceeds	$150,000	and	does	not
exceed $250,000,
(p)	$175,500 plus 86 per cent of the amount by which the amount taxable exceeds $250,000 if the amount taxable exceeds $250,000.
2.	That for the 1952 taxation year the graduated rates of tax applicable to income of individuals

be the average of the present rates (including defence surtax) and the rates set out in paragraph 1.
3.	That with respect to income of corporations earned on and after January 1, 1952, the present rate of tax shall be increased from 15 per cent to 20 per cent on the first $10,000 of taxable income and from 38 per cent to 50 per cent on taxable income in excess of $10,000, and that the defence surtax be repealed.
4.	That there may be deducted from the amount of income tax otherwise payable by a corporation for a taxation year in respect of income earned on and after January 1, 1952,
(a)	the amount of income tax payable to the government of a province for that taxation year in respect of income earned on and after January 1, 1952, as a result of its operations in that province, or
(b)	5 per cent of the taxable income of the corporation of that taxation year under the Income Tax Act that is earned on and after January 1, 1952, as a result of its operations in that province, whichever is less.
5.	That for the 1952 and subsequent taxation years the maximum amount in respect of medical expenses that may be deducted in computing taxable income be increased
(a)	to $2,000 in the case of a person who may at present deduct a maximum of $1,000,
(b)	to $1,500 in the case of a person who may at present deduct a maximum of $750, and
(c)	to $500 for each dependent in respect of whom a maximum of $250 may at present be deducted, subject to a maximum deduction of $2,000 by a husband and wife between them or by a person in respect of all his dependents; and that there be included in the medical expenses that may be deducted in computing taxable income those medical expenses that at present are not included by reason only that they were not incurred in the appropriate twelve-month period in which they were paid.
6.	That crown corporations that are classed as proprietary corporations in the Financial Administration Act shall pay tax on income earned on and after January 1, 1952.
7.	That the special deduction from income to a taxpayer whose principal business is the production, refining or marketing of petroleum or petroleum products or the exploring or drilling for oil or natural gas or mining or exploring for minerals, be allowed for expenses incurred in the 1955 operations on the same basis as for expenses incurred in the operations in the years 1951 to 1954.
8.	That the special deduction from income and taxes of a taxpayer whose principal business is production, refining or marketing of petroleum or drilling for petroleum be allowed for expenses incurred in respect of deep-test oil wells in 1953 operations on the same basis as for similar expenses in operations of the years 1950 to 1952.
9.	That the exemption of the income from a metalliferous or industrial mineral mine for the
The Budget-Resolutions first three years of production now applicable to mines coming into production during the years 1946 to 1954 be extended to mines coming into production during the year 1955.
10.	That a corporation resident in Canada whose gross revenue for a taxation year ending on or after January 1, 1952 derived from the distribution to or generation for distribution to the public of electrical energy, gas or steam is more than one-half its total gross revenue for the same period shall be entitled to a deduction from the tax otherwise payable by it under the Income Tax Act to the extent necessary to reduce to 43 per cent the rate of tax payable by the corporation under that act on that part of its taxable income for that taxation year that is derived on and after January 1, 1952, from such distribution or generation.
EXCISE TAX ACT	.
Resolved that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:-
1.	That the excise tax on goods enumerated in schedule I of the act that are at present subject to the rate of twenty-five per cent be reduced to fifteen per cent.
2.	That the excise tax on furs and articles manufactured of fur be reduced from twenty-five per cent to fifteen per cent.
3.	That the excise tax on soft drinks be reduced from thirty per cent to fifteen per cent and that there be assessed, levied and collected an excise tax of fifteen per cent on preparations for household use in making soft drinks.
4.	That the excise tax on stoves, washing machines and refrigerators be repealed.
5.	That the excise tax on carbonic acid gas be reduced from fifty cents to twenty-five cents per pound.
6.	That the excise tax on cigarettes be reduced from two and three-quarter cents to two cents for each five or fraction of five cigarettes contained in each package.
7.	That the excise tax on manufactured tobacco be changed from five cents per ounce or fraction of an ounce to eighty cents per pound.
8.	That the excise tax on Canadian raw leaf tobacco be reduced from one and one-quarter cents per ounce or fraction of an ounce to eight cents per pound.
9.	That the sales tax on the following goods be repealed:
(a)	drinks prepared from milk or eggs;
(b)	preserved fruits;
(c)	cooking oils and salad oils but not including mayonnaise or salad dressing;
(d)	baling wire for baling farm produce;
(e)	steel pens for farm animals;
(f)	preservatives for use exclusively in treating nets, ropes and lines used in the fishing industry;
(g)	clays and earth for use exclusively as filtering materials in the refining of petroleum oils;
(h)	goods enumerated in Customs Tariff items 411a, 437, 476b.
[Stage Direction]
The Budget-Resolutions
10.	That any enactment founded upon this resolution be deemed to have come into force on the ninth day of April nineteen hundred and fifty-two.
excise act, 1934
Resolved that it is expedient to introduce a measure to amend the Excise Act, 1934 and to provide:-
1.	That the duty of excise on spirits distilled from wine produced from native fruits and used In the treatment of domestic wine be repealed.
2.	That the duty of excise on spirits used directly in the manufacture of goods subject to excise tax under schedule I of the Excise Tax Act be repealed.
3.	That the duty of excise on beer or malt liquor brewed in whole or in part from any substance other than malt be reduced from forty-five cents to forty-two cents per gallon.
4.	That any enactment founded upon this resolution be deemed to have come into force on the ninth day of April nineteen hundred and fifty-two.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Dominion Succession Duty Act to correct certain anomalies, to clarify the application of certain provisions and to make certain technical amendments.

[Stage Direction]
1. Resolved, that schedule A to the Customs Tariff be amended by striking thereout tariff items 216d, 216e, 216f, 231d, 231e, 237(a), 237(b), 237(c), 237(d),	238(1),	238(2),	238(3) (i),	238(3) (ii),
238(4) (i), 238(4) (ii), 238(5) (i), 238(5) (ii), 238(6) (i). 238(6) (ii), 238a, 238b, 238c, 238d, 238e, 238f, 238g, 318, 319, 320, 321, 322, 322a, 323 and 324, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:-
Tariff
Item
Sheet glass, transparent, not further processed than cut into rectangles	
British
Preferential
Tariff
Most-
F avoured-	General
Nation	Tariff
Tariff
Free
7$ p.c.
17$ p.c.
Plate glass, ground and polished on both surfaces, not further processed than cut into rectangles	
Free
5 p.c.	15 p.c.
Rates in Effect Prior to Rates Proposed in this Budget Resolution
British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	10 p.c.	15 p.c.(a ) Free	(a) 20 p.c.	(a) 25 p.c.(a) Subject to 50 p.c. drawback under Item No. 1014 of Schedule "B"	(b) Free	(b) 10 p.c.	(b) 25 p.c.(b ) Free	(b) 20 p.c.	(b) 25 p.c.(b) 17$ p.c.	(b) 25 p.c.	(b) 35 p.c.Glass, rolled or cast, not further processed than cut into rectangles	
Free
5 p.c.	15 p.c.
Sheet glass, plate glass, cast glass, and rolled glass, n.o.p	
Free
7$ p.c.
17$ p.c.
Laminated glass, of sheet glass or plate glass, or both:-
(a)	Not further processed than cut into rectangles..
(b)	N. o. p	
5 p.c. 17$ p.c.
12$ p.c.	22$ p.c.
25 p.c.	35 p.c.
(b)	Subject to 50 p.c. drawback under Item No. 1014 of Schedule "B" and 99 p.c. drawback under Item No. 1067 of Schedule "B".
(c) Free	j (c) 20 p.c. | (c)25 p.c.
(c) Subject to 50 p.c. drawback under Item No. 1014 of Schedule "B" and 99 p.c. drawback under Item No. 1067 of Schedule "B".
(d) Free
(d) 20 p.c.
(d) 25 p.c.
(d) Subject to 50 p.c. drawback under Item No. 1014 of Schedule "B".
(e) 17$ p.c.
(e) 25 p.c.	(e)Z5 p.c.
(e) Subject to 50 p.c. drawback under Item No. 1014 of Schedule "B" and 99 p.c. drawback under Item No. 1067 of Schedule "B".
17$ p.c.	25 p.c.
17$ p.c.	25 p.c.
35 p.c. 35 p.c.
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The Budget-Customs Tariff
Tariff Item	-	British Preferential Tariff323	Manufactures of laminated glass, n.o.p	17j p.c.323a	Mirrors of glass, bevelled or not, and framed or not,	323b	Stained or ornamental glass windows	7* p.c. Free Free 5 p.c. Free 7J p.c. 5 p.c. Free Free901	(a) Synthetic resins without admixture, including scrap or waste:- 1. Phenol-aldehyde type	2. Amino-aldehyde type	3. Alkyd type	4. Polyamide type	5. Polystyrene type	6. Vinyl type, except vinylidene	7. Resins derived from natural resins or tall oil, n.o.p	8. Other type	(b) Synthetic resins in the form of aqueous emulsions, aqueous dispersions or aqueous solutions, without admixture:- 1. Phenol-aldehyde type	2. Amino-aldehyde type	3. Alkyd type	5 p.c.4. Polyamide type	5. Polystyrene type	7£ p.c. 5 p.c. Free Free6. Vinyl type, except vinylidene	7. Resins derived from natural resins or tall oil. n.o.p	8. Other type	
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[Stage Direction]
		Rates in Effect Prior to Rates Proposed in this Budget Resolution		
Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff25 p.c.	35 p.c.	17$ p.c.	25 p.c.	35 p.c.20 p.c.	30 p.c.	20 p.c.	22$ p.c.	35 p.c.7$ p.c.	17$ p.c.	7$ p.c.	7$ p.c.	30 p.c.Free Free 5 p.c. Free 7i p.c. 5 p.c.	10 p.c. 10 p.c. 15 p.c. 10 p.c. 17£ p.c. 15 p.c.	Free	Free	FreeFree Free	10 p.c. 10 p.c.	Free Free 5 p.c. Free 7$ p.c. 5 p.c.	10 p.c. 10 p.c. 15 p.c. 10 p.c. 17$ p.c. 15 p.c.	Free 15 p.c.	Free 20 p.c.	Free 25 p.c.Free Free	10 p.c. 10 p.c.	
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The Budget-Customs Tariff
(c) Synthetic resins in organic solvents where the solvent is not more than 60 per cent by weight, without other admixtures:-
1.	Phenol-aldehyde type	
2.	Amino-aldehyde type	
3.	Alkyd type	 [DOT][DOT][DOT]
4.	Resins derived from natural resins or tall oil,
n.o.p	
5.	Other type	
(d) Synthetic resins, in powder or granular form, containing an ingredient to prevent caking in shipment, not in excess of 3 per cent by weight, but without further admixture:-
1.	Amino-aldehyde type	
2.	Other type	
Synthetic resins, compounded with other materials, in any form, including scrap or waste, for moulding, casting, extruding, calendering, pressing, (moulding compositions or materials for processing into moulding compositions); synthetic resins compounded with other materials in the form of not fully cured preforms or not fully cured blanks for compression moulding:-
(a)	Phenol-aldehyde type	
(b)	Alkyd type	
(c)	Polystyrene typo	
(d)	Vinyl type, except vinylidene
(e)	Other type	
903	Synthetic resin glues or adhesives, composed of synthetic resins compounded with other materials....
904	Synthetic resin compositions, n.o.p	
12i p.c. 12j p.c. 12$ p.c.
12£ p.c. 10 p.c.
Free 10 p.c.
10 p.c. 5 p.c. 10 p.c. 10 p.c. Free
15 p.c. 15 p.c.
12J p.c.	22$ p.c.	Free	Free	Free12J p.c.	22$ p.c.	15 p.c.	20 p.c.	25 p.c.12$ p.c.	22$ p.c.	25 p.c.	25 p.c.	30 p.c.or	or	or12$ p.c.	22$ p.c.	20 p.c. and	20 p.c. and	30 p.c. and10 p.c.	20 p.c.	$2 per gal.	$2 per gal.	$3 per gal.15 p.c.	17$ p.c.	25 p.c.75 eta. per gal.	85 cts. per gal.	$1.25 per gal15 eta. per gal.	15 eta. per gal.	20 eta. per galand 5 p.c.	and 15 p.c.	and 30 p.c.$ ct. per gal.	$ ct. per gal.	1 ct. per gal.Free	10 p.c.	\ 15 p.c.	17$ p.c.	25 p.c.10 p.c.	20 p.c.	/	15 p.c.	25 p.c.	10 p.c.	20 p.c.	20 p.c.5 p.c.	15 p.c.	Free	Free	Free10 p.c.	20 p.c.	15 p.c.	20 p.c.	25 p.c.10 p.c.	20 p.c.	25 p.c.	25 p.c.	30 p.c.Free	10 p.c.	or	or	or20 p.c. and	20 p.c. and	30 p.c. and$2 per gal.	$2 per gal.	$3 per gal.15 p.c.	20 p.c.	25 p.c.Free	Free	Free17$ p.c.	27$ p.c.	15 p.c.	17$ p.c.	25 p.c.15 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.25 p.c.	25 p.c.	30 p.c.or	or	or20 p.c. and	20 p.c. and	30 p.c. and$2 per gal.	$2 per gal.	$3 per gal.
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The Budget-Customs Tariff
Tariff
Item
Synthetic resin plates, sheets, film, sheeting or strips, not less than 6 inches in width, n.o.p.; synthetic resin lay-flat tubing, not less than 6 inches in circumference, n.o.p. :-
fa)	Phenol-aldehyde type, not further manufactured than cast	
fb)	Acrylic type, not further manufactured than
moulded or cast	
(c)	Polyethylene type:
1.	Plain, uncoated, undecorated	
2.	Other	
(d)	Vinyl type, except vinylidene:
1.	Plain, uncoated, undecorated	
2.	Other	
(e)	Vinyl type, vinylidene:
1.	Plain, uncoated, undecorated	
2.	Other	
I'/) Other type:
1.	Plain, uncoated, undecorated	
2.	Other	
British
Preferential
Tariff
Most-
Favoured-
Nation
Tariff
Free
Free
Free
Free
10 p.c. 15 p.c.
15 p.c. 15 p.c.
Free
Free
10 p.c. 15 p.c.
15 p.c. 20 p.c.
Free
Free
Free	Free
10 p.c.	10 p.c.
Synthetic resin plates, sheets, film, sheeting or strips, less than 6 inches in width, lay-flat tubing less than 6 inches in circumference, other tubing, blocks, bars, rods, non-textile monofilament; synthetic resin profile shapes produced in uniform cross-section and imported in lengths: not further manufactured than moulded, cast, calendered, extruded or pressed, n.o.p.:-
(a)	Phenol-aldehyde type, cast	
(b)	Acrylic type	
fc) Vinyl type, except vinylidene	
(d)	Vinyl type, vinylidene	
(e)	Other type	
Free Free 15 p.c. Free 15 p.c.
Free Free 15 p.c. Free 15 p.c.
Foamed and expanded synthetic resins, in logs, blocks or boards, or in flakes, granules or powder...
Free
Free
908 Manufactures of synthetic resins, n.o.p.
15 p.c.
20 p.c.
[Stage Direction]
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General
Tariff
10 p.c.
10 p.c.
20 p.c. 25 p.c.
25 p.c. 30 p.c.
10 p.c. 10 p.c.
10 p.c. 20 p.c.
10 p.c. 10 p.c. 25 p.c. 10 p.c. 25 p.c.
10 p.c.
30 p.c.
Rates in Effect Prior to Rates Proposed in this Budget Resolution
British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	Free	Free15 p.c.	20 p.c.	25 p.c.Free	Free	Free15 p.c.	20 p.c.	25 p.c./ Free	Free	Freel 15 p.c.	20 p.c.	25 p.c.15 p.c.	20 p.c.	25 p.c.
a
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The Budget-Customs Tariff
909
911
(a) Esters or ethers, or combinations thereof, of	
cellulose (but not including water soluble cellulose	
esters or ethers), without admixture:-	
1. Cellulose nitrate containing not more than 12-2	
per cent by weight of nitrogen		Free
2. Cellulose acetate		Free
3. Cellulose acetate butyrate		Free
4. Cellulose propionate		Free
5. Ethyl cellulose		Free
6. Methyl cellulose, water insoluble		Free
	
(b) Cellulose nitrate containing not more than	
12 - 2 per cent by weight of nitrogen, when wet	
with not more than 35 per cent by weight of	
	
(c) Esters or ethers, or combinations thereof, of	
cellulose, in organic solvents, where the solvent	
is not more than 60 per cent by weight, without	
other admixture:-	
1. Cellulose nitrate containing not more than 12-2	
per cent by weight of nitrogen, except as pro-	
vided for under (b) above		10 p.c.
2. Cellulose acetate		10 p.c.
3. Cellulose acetate butyrate		10 p.c.
4. Cellulose propionate		10 p.c.
5. Ethyl cellulose		10 p.c.
6. Methyl cellulose		10 p.c.
	10 p.c.
Esters or ethers, or combinations thereof, of cellulose	
compounded with other materials, in any form,	
including scrap or waste, for moulding, casting,	
extruding, calendering, pressing, (moulding com-	
positions or materials for processing into moulding	
	
Compositions of esters or ethers of cellulose (except	
water soluble esters or ethers of cellulose) with	
other materials, n.o.p		10 p.c.
Free
Free
Free
Free
Free
Free
Free
Free
10 p.c. 10 p.c. 10 p.o. 10 p.c. 10 p.c. 10 p.c. 10 p.c.
Free
10 p.c.
10 p.c.			
10 p.c.			
10 p.c.	If cts.	2f cts.	2^ cts.10 p.c.	per lb.	per lb.	per lb.10 p.c.	Free	Free	Free10 p.c.	10 p.c.	10 p.c.	If cts.	2f cts.	2\ cts.per lb.	per lb.	per lb.20 p.c.	15 p.c.	20 p.c.	25 p.c.20 p.c.	25 p.c.	25 p.c.	30 p.c.20 p.c.	or	or	or20 p.c.	20 p.c. and	20 p.c. and	30 p.c. and20 p.c.	$2 per gal.	$2 per gal.	$3 per gal.20 p.c.	75 cts.	85 cts.	SI. 2520 p.c.	per gal.	per gal.	per gal.15 cts. per	15 cts. per	20 cts. pergal. and	gal. and	gal. and5 p.c.	15 p.c.	30 p.c.10 p.c.	Free	Free	Free20 p.c.	15 p.c.	20 p.c.	25 p.c.25 p.c.	25 p.c.	30 p.c.or	or	or20 p.c. and	20 p.c. and	30 p.c. and$2 per gal.	$2 per gal.	S3 per gal.
The Budget-Customs Tariff
Tariff Item	-	British Preferential Tariff	Most-F avoured-Nation Tariff912	Cellulose plastics plates, sheets, film, sheeting or strips, not less than 6 inches in width, n.o.p.; cellulose plastics lay-flat tubing, not less than 6 inches in circumference, n.o.p	Free	Free913	Cellulose plastics plates, sheets, film, sheeting or strips, less than 6 inches in width, lay-flat tubing less than 6 inches in circumference, other tubing, blocks, bars, rods, non-textile monofilament; cellulose plastics profile shapes produced in uniform cross-section and imported in lengths: not further manufactured than moulded, cast, calendered, extruded or pressed, n.o.p.:- (a) Cellulose nitrate	Free	Free(b) Other	15 p.c.	15 p.c.914	Foamed and expanded cellulose plastics in blocks or boards, granules or powder	Free	Free915	Manufactures of cellulose plastics, n.o.p.:- (a) Cellulose nitrate	10 p.c.	20 p.c.(b) Cellulose nitrate cinematograph and moving picture films, negatives, n.o.p	10 p.c.	10 p.c.(c) Other	15 p.c.	20 p.c.916	Laminated moulded plastics products, n.o.p., having synthetic resins or cellulose plastics as the chief bonding (impregnating) agents	15 p.c.	15 p.c.917	Reinforced or supported synthetic resins or cellulose plastics plates, sheets, sheeting, strips, tubing, blocks, bars, rods, in which is incorporated a layer of paper, fibreboard, or textile fabric, or a core of fibres whether matted or otherwise arranged, n.o.p.:- (a) Interlined sheet stock, composed of sheets of cellulose plasics cemented to cotton fabric	10 p.c.	15 p.c.(b) Other	15 p.c.	15 p.c.
General
Tariff
10 p.c.
10 p.c.
25 p.c.
10 p.c.
30 p.c.
20 p.c. 30 p.c.
25 p.c.
25 p.c. 25 p.c.
Rates in Effect Prior to Rates Proposed in this Budget Resolution		
British	Most- Favoured-	GeneralPreferential	Nation	TariffTariff	Tariff	Free	Free	Free10 p.c.	25 p.c.	40 p.c.20 p.c.	25 p.c.	35 p.c.15 p.c.	20 p.c.	25 p.c.f Free	Free	FreeI 10 p.c.	25 p.c.	40 p.c.] 20 p.c.	25 p.c.	35 p.c.[ 15 p.c.	20 p.c.	25 p.c.Free	Free	Free20 p.c.	25 p.c.	35 p.c.25 p.c.	40 p.c.10 p.c.	10 p.c.	40 p.c.20 p.c.	25 p.c.	35 p.c.15 p.c.	20 p.c.	25 p.c.15 p.c.	20 p.c.	25 p.c.20 p.c.	25 p.c.	30 p.c.17} p.c.	25 p.c.	35 p.c.17! p.c.	17} p.c.	25 p.c.10 p.c.	15 p.c.	17} p.c.15 p.c.	20 p.c.	25 p.c.
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918	(a) Regenerated cellulose, in sheets or strips	15 p.c.	20 p.c.	30'p.c.	20 p.c.	25 p.c.(b) Regenerated cellulose sponges	15 p.c.	20 p.c.	30 p.c.	17J p.e.	22^ p.c.(c) Manufactures of regenerated cellulose, n.o.p	15 p.c.	20 p.c.	30 p.c.	20 p.c.	25 p.c.919	Protein plastics sheets, strips, tubing, blocks, bars, rods; other protein plastics profile shapes produced in uniform cross-section and imported in lengths; not further manufactured than moulded, extruded or pressed	Free	Free	10 p.c.	Free	Free920	Manufactures of protein plastics, n.o.p	15 p.c.	20 p.c.	30 p.c.	15 p.c. 15 p.c.	20 p.c. 20 p.c.921	Materials of a kind not produced in Canada for use only in the manufacture of goods enumerated in tariff items 901, 902, 903, 904, 905, 906, 907, 909, 910, 911, 912, 913, 914, 916, 917, 918(aj, 918(5; and 919, but not including goods themselves enumerated in tariff items 901 to 920, inclusive	Free	Free	10 p.c.	Free	Free922	Phenol for use only in the manufacture of synthetic resin glues	Free	Free	10 p.c.	Free	Free923	Phthalic anhydride, adipic, abietic, maleic and succinic acids, hexamethylene diammonium adipate, hexamethylene diammonium sebecate, hexamethylene diamine, caprolactam, and ethylene glycol, when imported by manufacturers of synthetic resins, for use exclusively in the manufacture of synthetic resins, in their own factories	Free	Free	10 p.c.	Free	Free
35 p.c. 35 p.c. 35 p.c.
Free 25 p.c.
25 p.c.
Free
Free
Free
2. Resolved, that Schedule A to the Customs Tariff be amended by striking thereout tariff items 98, 105c, 156(a), (b), (c), (d), (e) and (/), 203a, 203b, 206a (1), 206c, 211b, 225, 236b, 263b, 270, 275, 409m, 409r, 410a (iii), 410f, 410n, 427b, 428g, 436, 438b, 433c, 438d, 438e (1) (a) and (b), (2), (3) and (4), 438h, 438i, 4401, 440n, 442, 442d, 443a, 445m (i) and (ii), 445o (ii), 461, 4G2a, 462b, 468, 478, 479, 482, 499a, 522e, 563 , 618b, 657, 690a, 696 and 848, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by. inserting the following items, enumerations and rates of duty in said Schedule A:-
79f	Pollen	Free	Free	Free	15 p.c.	20 p.c.90g	Dried herbs in a crude state, not advanced in value or condition by grinding or refining or by any other process of manufacture, viz.:-Basil, bay laurel (larus nobilis), marjoram, mint, oregano, rosemary, sage, savory, terragon and thyme	Free	5 p.c.	25 p.c.	Free	15 p.c.98	Bananas	per one hundred pounds	Free	50 cts.	$1.00	(mainly) Free	(mainly) 50 cts.105c	Olives, sulphured or in brine, not bottled	Free	Free	30 p.c.	On and after July 1, 1953	10 p.c.	174 P-c.	30 p.c.	10 p.c.	174 P-c.
25 p.c.
25 p.c. (mainly)
$1.00 per stem or bunch
30 p.c.
The Budget-Customs Tariff
British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	Tariff Item	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff156	(a ) Whiskey	per gallon of the strength of proof	$4.50	$5.00	$10.00	$4.50	$5.00	$10.00(b) Gin, n.o.p	per gallon of the strength of proof	$4.50	$5.00	$10.00	$4.50	$5.00	$10.00(c) Rum, n.o.p., .per gallon of the strength of proof	$4.50	$6.00	$10.00	$4.50	$6.00	$10.00(d) Brandy	per gallon of the strength of proof	$4.00	$4.00	$10.00	$4.00	$4.00	$10.00(e) Liqueurs	per gallon of the strength of proof	$4.50	$4.50	$10.00	$4.50	$4.50	$10.00(f) Ethyl alcohol, or the substance commonly known as alcohol, hydrated oxide of ethyl or spirits of wine, n.o.p.; spirituous or alcoholic liquors, n.o.p.; absinthe, arrack or palm spirit, artificial brandy and imitations of brandy, n.o.p.; cordials of all kinds, n.o.p.; mescal, pulque, rum shrub, schiedam and other schnapps; tafia, and alcoholic bitters or beverages, n.o.p.; and wines, n.o.p., containing more than forty per cent of proof spirit 	per gallon of the strength of proof	$5.00	$10.00	$10.00	$5.00	$10.00	$10.00Provided, (1) that when the goods specified in item 156 are of greater or less strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased or decreased in proportion for any greater or less strength than the strength of proof.	Provided, (2) that bottles and flasks and packages of gin, rum, whiskey and brandy of all kinds, and imitations thereof, shall be held to contain the following quantities (subject to the provisions for addition or deduction in respect of the degree of strength) viz.;-	
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Bottles, flasks and packages, containing not more than one-eighth of a gallon per dozen, as one-eighth of a gallon per dozen;
Bottles, flasks and packages, containing more than one-eighth of a gallon but not more than one-fourth of a gallon per dozen, as one-fourth of a gallon per dozen;
Bottles, flasks and packages, containing more than one-fourth of a gallon but not more than one-half of a gallon per dozen, as one-half of a gallon per dozen;
Bottles, flasks and packages, containing more than one-half of a gallon per dozen but not more than three-fourths of a gallon per dozen, as three-fourths of a gallon per dozen;
Bottles, flasks and packages, containing more than three-fourths of a gallon but not more than one gallon per dozen, as one gallon per dozen;
Bottles, flasks and packages, containing more than one gallon but not more than one and one-half gallons per dozen, as one and one-half gallons per dozen;
Bottles, flasks and packages, containing more than one and one-half gallons but not more than two gallons per dozen, as two gallons per dozen;
Bottles, flasks and packages, containing more than two gallons but not more than two and four-fifths gallons per dozen, as two and four-fifths gallons per dozen;
Bottles, flasks and packages, containing more than two and four-fifths gallons but not more than three gallons per dozen, as three gallons per dozen:
Bottles, flasks and packages, containing more than three gallons but not more than three and one-fifth gallons per dozen, as three and one-fifth gallons per dozen.
Provided, (3) that bottles or phials of liquors for special purposes, such as samples not for sale to the trade, may be entered for duty according to actual measurement, under regulations prescribed by the Minister.
197f
Carbon tissue paper for use in the manufacture of carbon paper	
Free
199h
Pots, boxes, bands, collars or protectors, of flexible paper or fibreboard, for use exclusively in growing plants for transplanting purposes, or for protecting plants while growing	
Free
7i p.c.
Free
25 p.c.
10 p.c.
15 p.c.
17$ P-e.
22$ p.c.
25 p.c.
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35 p.c.
The Budget-Customs Tariff
Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff203a	Chemical compounds composed of two or more acids or salts soluble in water, adapted for dyeing or tanning	Free	Free203b	Aniline and coal tar dyes, adapted for dyeing, in bulk, or in packages of not less than one pound weight	Free	Free206a	(1) Sera and antisera, toxoids, viruses, toxins and antitoxins; virus and bacterial vaccines, bacteriophage and bacterial lysates; allergenics, liver extracts, pituitary extracts, epinephrine and its solutions, insulin, with or without zinc, globin or protamine; all of the foregoing when imported for parenteral administration in the diagnosis or treatment of diseases of man	Free	Free(3) Blood plasma or serum of human origin, or fractions thereof, extenders or substitutes therefor; all of the foregoing when imported for parenteral administration	Free	Free206c	Bottles, tubes, bail bands, labels, corks, stoppers or other closures, for use with bottles, whether or not assembled into units partially filled with anticoagulating solutions or not; filters, drop counters, clamps; all of the foregoing, when imported to be used exclusively for the collection, preparation, storage, transportation or administration of human blood (whether whole or in the form of liquid or dry serum or plasma) and extenders or substitutes therefor; component materials to be used exclusively in making the foregoing articles, anticoagulating solutions and extenders or substitutes...	Free	Free
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General Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution		
British Preferential Tariff	Most Favoured- Nation Tariff	General Tariff10 p.c.	Free	10 p.c.	10 p.c.10 p.c.	Free	10 p.c.	10 p.c.Free	Free	Free	FreeFree	Free	FreeFree	17* p.c.	20 p.c.	25 p.c.Free	Free	Free	Free15 p.c.	20 p.c.	27* p.c.
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211b	(1) Andalusite, kyanite, sillimanite, crude or	
	calcined, but not further processed than ground...	Free
	(2) Mullite, not further processed than ground..	Free
220d	Chemical preparations, dry, compounded of more	
	than one substance, when imported by manu-	
	facturers of fluorescent lamps or electronic tubes	
	for use exclusively in coating the inside of fluorescent	
	lamps or electronic tubes, in their own factories		Free
225	Wax, vegetable, and mineral (not isolated from	
	petroleum) and mixtures thereof		5 p.c.
263b	Methyl ethyl ketone, diethyl ketone, furfural, methyl	
	normal propyl ketone and methyl isobutyl ketone,	
	for use only in the refining of oils		Free
269c	Reclaiming agents or plasticizers of petroleum origin,	
	for the reclaiming or plasticizing of rubber		Free
270	Oil for use in the concentration of ores		Free
275	Liquefied petroleum gases when imported in con-	
	tainers:-	
	(a) for heating, cooking or illuminating purposes....	10 p.c.
		10 p.c.
295d	Cast shapes of melted basalt rock compounded with	
	other materials or not		Free
388g	Rails (track), of iron or steel, other than railway rails,	
	further manufactured than hot rolled, with other	
	sections, arched or not, welded thereto or not		Free
409 m	(1) Internal combustion tractors and accessories	
	therefor; parts of all the foregoing		Free
	(2) Traction attachments designed to be combined	
	with automobiles in Canada for use as traction	
	engines and parts thereof		Free
Free
Free
5 p.c.
7} p.c.
Free
Free
Free
12} p.c 12} p.c
5 p.c. 12} p.c Free
Free
25 p.c.	Free	Free
	15 p.c.	20 p.c.
25'p.c.	Free	Free
	15 p.c.	20 p.c.
25j>.c.	Free	5 p.c.
	15 p.c.	20 p.c.
10>c.	5 p.c.	7}'p.c.25}p.c.	Free	FreeFree	15 p.c.Free	Free	10 p.c.} ct.	} ct.per gal.	per gal.Free	Free	Free(various)	(various)25 p.c.	10 p.c.	12} p.c.25 p.c.	15 p.c.	20 p.c.25 p.c.	15 p.c.	20 p.c.35 p.c.	10 p.c.	22} p.c.17} p.c.	25 p.c.Free	Free	Free15 p.c.	22} p.c.(various)	(variousFree	Free	Free
25 p.c. 25 p.c.
25 p.c. 25 p.c.
25 p.c. 25 p.c.
10 p.c.
25 p.c.
25 p.c.
10 p.c.
1 ct. per gal.
Free
(various)
25 p.c. 25 p.c.
25 p.c.
35 p.c. 40 p.c.
Free 35 p.c. (various)
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The Budget-Customs Tariff

Tariff
Item
409r
Milk evaporators and milk driers for dairying purposes and parts thereof	
410a (iii) Diesel-powered self-propelled trucks, mounted on rubber-tired wheels or on rubber-tired wheels and half-tracks, side or rear dump, having a rated capacity, by struck volume, of not less than 9$ cubic yards and, by payload weight, of not less than 15 tons, and complete parts thereof, for off-highway use in carrying minerals, ores, rock, stone, sand, gravel and other excavated materials at mines, quarries, gravel and sand pits or at construction sites	
410f	(1) Machinery and appliances of iron or steel, of a
class or kind not made in Canada, and elevators, and machinery of floating dredges, for use exclusively in alluvial gold mining	
(2) Dredges and parts thereof for the development of mineral deposits	
410n Diamond drills and core drills, not including motive power, electrically operated rotary coal drills, and coal cutting machines, n.o.p., and parts of the foregoing, for use exclusively in mining operations..
427b Ball and roller bearings, and complete parts thereof
(1) For the repair of agricultural implements and agricultural machinery specified in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409h, 409j, 409k, 4091, 409m, 409n, 409o and 409q	
(2) N.o.p.
British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	7$ p.c.	25 p.c.	Free	10 p.c.	25 p.c.10 p.c.	22$ p.c.	35 p.c.Free	7$ p.c.	35 p.c.10 p.c.	22$ p.c.	35 p.c.Free	7$ p.c.	27$ p.c.	Free	7$ p.c.	27$ p.c.Free	17$ p.c.	27$ p.c.Free	Free	Free	Free	Free	FreeFree	Free	25 p.c.	15 p.c.	25 p.c.	25 p.c.(various)	(various)	(various)Free	10 p.c.	10 p.c.	Fiee	10 p.c.	10 p.c.Free	Free	Free	Free	Free	FreeFree	17$ p.c.	35 p.c.Free	17$ p.c.	35 p.c.	Free	17$ p.c.	35 p.c.
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427j
Machinery, apparatus, equipment and parts thereof for the manufacture of biologicals and baeteriologi-cals for parenteral use and for the manufacture of antibiotics, hormones and steroids	
Free
428g
Fuel injection pumps and nozzles, and parts thereof, for diesel and semi-diesel engines	
Free
431 j
Photogrammetric instruments and equipment for use in the interpretation of photographs and in the preparation of maps and plans from photographs, including the following: stereoscopes, binoculars for use with stereoscopes, parallax bars, height finders, contour finders, sketchmasters, slotted template equipment and accessories for use with any of the foregoing; stereoscopic plotting instruments and equipment of either optical-mechanical or projector type, including such accessories as plotting and tracing tables whether electrically, mechanically or remotely operated, optical instruments for preparing diapositive plates, voltage regulators and electrical transformers, cooling systems, lamps, spectacles, filters, height gauges, principal point selectors and other components for use with the foregoing equipment; all the foregoing of a class or kind not made in Canada and parts and fitted carrying cases for any of the foregoing...
Free
Locomotives and railway passenger, baggage and freight cars, being the property or under the control of railway companies in the United States, running upon any line or road crossing the frontier, so long as Canadian locomotives and cars are admitted free under similar circumstances into the United States,
under regulations prescribed by the Minister	
Provided, however, that if such locomotives and railway rolling stock are used temporarily in the transportation of goods from a place in Canada to another place in Canada they shall not be entitled to free entry but shall be subject to duty on the rental value or charge made by the United States owner for their use in Canada, under regulations prescribed by the Minister.
Free
Free
5 p.c. Free
Free	10 p.c.	22§p.c.
	Free	7J p.c.
Free	Free	Free
	Free	20 p.c.
20 p.c.	15 p.c.	20 p.c.
Free		Free
35 p.c. 35 p.c.
Free 30 p.c.
25 p.c.
Free
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The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff
438b	Bearings, ball and roller; Bearings, clutch release; Bearings, graphite; Bearings, steel or bronze backed, with non-ferrous metal lining, parts and materials therefor; Bearings, steering knuckle thrust; Bushings, graphited or oil impregnated; Ceramic insulator spark plug cores not further manufactured than burned and glazed, printed or decorated or not; without fittings; Collars, crankshaft thrust; Compressors and parts thereof, air; Commutator copper segments, Commutator insulating end rings; Tapered discs of hot rolled steel, with or without centre hole, for disc wheels; Diaphragms for fuel and vacuum pumps; Distributor rotors and cam assemblies; Door bumper shoes; Electric wiring terminals, sockets, fittings and connectors and parts and combinations thereof, including brackets and fittings permanently attached thereto, but not to include battery terminals; Gaskets of any material except cork or felt, composite or not, parts and materials therefor; Ignition- contact points; Keys for shafting; Auxiliary driving control kits, designed for attachment to motor vehicles to facilitate their operation by physically disabled persons, and parts thereof; Lenses of glass for motor vehicle lamps and for light reflectors; Lock washers; Magnetic plugs;	
Mosfc- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff
438c
Piston ring castings in the rough, with or without gates and fins removed;
Propeller shaft tubes of steel bonded by rubber;
Rails of lock seam section, corners, locks and catches, unplated ventilators and parts thereof, the foregoing being of metal other than aluminum, for the manufacture of window sashes for bus bodies;
Steel bolts, studs, plugs, rivets or nuts, capped with stainless steel, and parts thereof;
Switches, relays, circuit breakers and solenoids and combinations and parts thereof, including starter switch assemblies;
Shift control, electric, for two speed rear axles;
Vacuum, hydraulic or air control assemblies and parts thereof;
Vulcanized fibre in sheets, rods, strips and tubings;
Parts of all the foregoing;
All of the foregoing for use in the manufacture or repair of the goods enumerated in tariff items 424 and 438a, or for use in the manufacture of parts therefor:-
1.	When of a class or kind not made in Canada..
2.	When of a class or kind made in Canada	
Ammeters;
Arm rests and wheel housing lining of indurated fibre, pressed to shape;
Axle housings, one piece welded, machined or not, including parts welded thereto;
Carburetors;
Chassis frames and steel shapes for the manufacture thereof;
Cigar and cigarette lighters, whether in combination with a cigarette holder or not, including base;
Control ventilator gear box;
Cylinder lock barrels, with or without sleeves and keys thereof;
Dash heat indicators;
Engine speed governor units;
External ornaments unplated, not including finish or decorative mouldings;
Fluid couplings with or without drive plate assemblies;
Gauges, gasoline, oil or air;
Grilles not plated, polished or not before assembly, and parts thereof not plated or polished, not to include added finish or decorative mouldings;
Hinges, finished or not, for bodies;
Horns;
Instrument bezel assemblies: Instrument board lamps; Instrument panel, glove compartment, luggage compartment, hood compartment and door step lamps and wire assemblies;
Free
Free
Free 17J p.c.
30 p.e. 30 p.o.
Free
Free
Free 17b P-c.
30 p.c. 30 p.c.
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British
Preferential
Tariff
Tariff
Item
Locks, electric ignition, steering gear, transmission, or combinations of such locks;
Mouldings of metal, with nails set in position, lead filled or not;
Oil filter parts, viz.:-perforated filter refill oil board bodies, refill and discs, and roll-seam perforated tubes;
Ornaments and identification plates of metal unplated, not including finished or decorative mouldings;
Pipe lines of tubing, rigid, covered or not, with or without fittings, and tubing therefor;
Purifiers for gasoline, including brackets and fittings therefor;
Radiator shutter assemblies, automatic;
Radiator water gauges;
Radiator shells not plated nor metal finished in any degree;
Shackles, bearing spring;
Speedometers;
Spring covers of metal and closing strips or shapes therefor;
Steering wheels, rims and spiders therefor;
Sun visor blanks of gypsum weatherboard;
Tachometers, with or without tachographs, both electric and gear driven;
Thermostatic controls;
Throttle, spark, choke, and hood lock release assemblies, including buttons therefor;
Torque convertors;
Auxiliary transmission overdrive units and controls therefor;
Universal joint ball assemblies;
Windshield and window wipers;
Parts of all the foregoing, including brackets, fittings and connections therefor;
Stampings, body, cowl, fender, front end, hood, instrument board, shields and baffles, of metal in the rough, trimmed or not, whether or not welded in any manner before final forming or piercing, but not metal finished in any degree;
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Most-
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Tariff
Rates in Effect Prior to Rates Proposed in this Budget Resolution
General
Tariff
British
Preferential
Tariff
Most-
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Nation
Tariff
General
Tariff
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All of the foregoing when for use in the manufacture or repair of the goods enumerated in tariff items 410a (iii), 424 and 438a, or for use in the manufacture of parts therefor	
(1)	Provided, that if the above articles, when of
a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity of not more than ten persons each) enumerated in tariff item 438a, whose total factory output during the year in which importation is sought, does not exceed ten thousand such complete passenger automobiles, and provided that not less than forty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	
(2)	Provided, that if the above articles, when of
a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity for not more than ten persons each) enumerated in tariff item 438a, whose total factory output, during the year in which importation is sought, exceeds ten thousand, but does not exceed twenty thousand such complete passenger automobiles, and provided that not less than fifty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	
(3)	Provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of passenger automobiles (having a seating capacity for not more than ten persons each) enumerated in tariff item 438a, whose total factory output, during the year in which importation is sought, exceeds twenty thousand such complete passenger automobiles, and provided that not less than sixty per cent of the factory cost of production of such automobiles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be	
30 p.c.
25 p.c.
25 p.c.
25 p c.
17J p.c.
Free
Free
Free
The Budget-Customs Tariff

British Preferential Tariff	Most-F avoured-Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	Tariff Item	-	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff(4) Provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, motor ambulances, and hearses, or chassis for same, as enumerated in tariff items 410a (iii), 438a and 424, whose total factory output of such vehicles during the year in which importation is sought, does not exceed ten thousand such vehicles, and provided not less than forty per cent of the factory cost of production of such vehicles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty	Free	Free	25 p.c.	Free	Free	25 p.c.(5) Provided, that if the above articles, when of a class or kind not made in Canada, are for use as original equipment by a manufacturer of motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, motor ambulances and hearses, or chassis for same, as enumerated in tariff items 410a (iii), 438a and 424, whose total factory output of such vehicles during the year in which importation is sought, exceeds ten thousand units, and provided not less than fifty per cent of the factory cost of production of such vehicles, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this	Free	Free	25 p.c.	Free	Free	25 p.c.(6) Provided, that if the above articles are of a class or kind not made in Canada and are for use in the repair of the goods enumerated in tariff items 410a (iii), 424 and 438a, or are for use in the manufacture of repair parts therefor, the rates of duty	Free	Free	25 p.c.	Free	Free	25 p.c.(7) Provided, that the Governor in Council may make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.	1280	HOUSE OF COMMONS
The Budget-Customs Tariff
438d
Front and rear axles;
Brakes;
Brake drums;
Clutches;
Fuel pumps for engines of 260 cubic inches and over in displacement;
Hubs;
Internal combustion engines;
Steering gears;
Magnetos;
Rims for pneumatic tires;
Tandem axle suspensions, not to include springs; Transmission assemblies;
Hydraulic or fluid couplings;
Drive shafts;
Universal joint;
Steel road wheels;
Power dividers or transfer cases;
Parts of the foregoing;
All of the foregoing when of a class or kind not made in Canada, and when imported only for the manufacture of motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, ambulances, hearses, and the chassis for same. Free
(1)	Provided, that if the above articles are imported for use as original equipment for motor trucks, motor buses, electric trackless trolley buses, fire fighting vehicles, ambulances, hearses, or for chassis for same, by a manufacturer of the goods enumerated in tariff items 410a(iii), 424 and 438a, and provided also that during the year in which importation is sought, not less than forty per cent of the factory cost of production of such vehicles and chassis therefor, not to include duties and taxes, is incurred in the British Commonwealth, the rates of duty under this item shall be.. Free
(2)	Provided, that if the above articles when of a class or kind not made in Canada are for use in the repair of motor trucks, motor buses, fire fighting vehicles, ambulances, hearses and electric trackless trolley buses, or for chassis for same or for use in the manufacture of repair parts therefor, the rates of duty under this item shall be	
Free
(3)	Provided, that the Governor in Council may
I make such regulations, if any, as are deemed necessary for carrying out the provisions of this item.
17£ p.c.
7J p.c
p.c.
27i p.c.
27J p.c.
27\ p.c.
Free
17i p.c.
27J p.c.
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7i p.c.
274 p.c.
The Budget-Customs Tariff

Tariff
Item
438e
438i
British
Preferential
Tariff
Most-
Favoured-	General
Nation	Tariff
Tariff
(1) Parts, n.o.p., electro-plated or not, whether finished or not, for automobiles, motor vehicles, electric trackless trolley buses, fire fighting vehicles, ambulances and hearses, or chassis enumerated in tariff items 438a and 424, including engines, but not to include wireless receiving sets, die castings of zinc, electric storage batteries, parts of wood, tires and tubes or parts of which the component material of chief value is rubber	
Free
25 p.c.
35 p.c.
Rates in Effect Prior to Rates Proposed in this Budget Resolution
British	Most- Favoured-	GeneralPreferential	Nation	TariffTariff	Tariff	
Free
25 p.c.
35 p.c.
(2) Brake linings, and clutch facings whether or not including metallic wires or threads:-
(a) When made from crude asbestos of British
Commonwealth origin	 Free
(5) When made from crude asbestos, n.o.p....	15 p.c.
25 p.c.	35 p.c.
25 p.c.	35 p.c.
Free 15 p.c.
25 p.c. 25 p.c.
35 p.c. 35 p.c.
Body bottom cross members and steel shapes for the manufacture thereof;
Bumpers, front and rear, including spring steel bumper plates;
Casket tables or platforms for hearses;
Destination and route sign assemblies, illuminated or not;
Direction signals, illuminated or not;
Door and step mechanism, hand, vacuum or air operated;
Door locks and catches;
Electric switches, buzzers, bells, push buttons, fuse assemblies;
Forward drive control conversion assemblies;
Lamps of all kinds, illuminating and indicating, including sockets, flanges, terminals, glassware, lenses and gaskets therefor, assembled or not, but not to include lamp bulbs, sealed beam units, and electric head lamps;
Metal stampings, oiled and primed or not, and assemblies thereof;
Rubber fenders;
Seat operating mechanisms;
Ventilators, including motor driven fan type, and grilles;
Window operating mechanisms;
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440n
442d
443a
443c
Parts of all the foregoing;
All of the foregoing when imported to be used only in the manufacture or repair of motor truck bodies, motor bus bodies, electric trackless trolley bus bodies, fire fighting vehicles, ambulances and hearses	
Aircraft and complete parts thereof, n.o.p. not including engines, under such regulations as the Minister may prescribe:-
1.	When of types and sizes not made in Canada .
on and after July 1, 1955
2.	When of types and sizes made in Canada....
Engines, when imported for use only in the equipment of aircraft:-
1.	When of types and sizes not made in Canada..
on and after July 1, 1955
2.	When of types and sizes made in Canada...
Articles and materials which enter into the cost of manufacture of the goods enumerated in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 4091, 409m, 409n, 409o, 409q and 439c, when imported for use in the manufacture of the goods enumerated in the aforesaid tariff items, or in the manufacture of parts therefor, under regulations prescribed by the Minister	
Materials, including all parts, wholly or in chief part of metal, of a class or kind not made in Canada, when imported by manufacturers of goods entitled to entry under tariff items 410g, 4101, 410n, 410o, 410p, 410q, 410s, 410u, 410v, 410w, 410x, 410z, 411, 411a, 411b, 427b, 427c, 427f, 428c, 428e, 440k and 447a, for use in the manufacture of such goods in their own factories, under such regulations as the Minister may prescribe	
Ovens, of a class or kind not made in Canada, for use in commercial bakeries; complete parts of the foregoing	
Automatic pilots, thermostatic controls, thermostatically-operated controls, hydrostatically-operated controls, and parts of the foregoing, of a class or kind not made in Canada, for use in the manufacture of gas water heaters	
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
20 p.c.
20 p.c.	Free	FreeFree	Free	15 p.c.27$ p.c. 27$ p.c.	Free	15 p.c.Free	Free	15 p.c.27$ p.c. 27$ p.c.	Free	15 p.c.Free	Free	Free10 p.c.	Free	5 p.c.(various)	(various)30 p.c.	Free	10 p.c.30 p.c.	15 p.c.	p.c.
27$ p.c. 27$ p.c.
27$ p.c. 27$ p.c.
Free
10 p.c.
(various)
30 p.c.
30 p.c.
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The Budget-Customs Tariff

Tariff Item	-	British Preferential Tariff	Most-F avoured-Nation Tariff	General Tariff445m	(1) Flameproof electric switchgear, for use in mines in which inflammable gases exist, and complete parts thereof	Free	20 p.c.	30 p.c.(2) Flameproof electric transformers, rectifiers, cable-connecting devices, trailing cable extensions with couplers moulded on, junction boxes, and complete parts of the foregoing, when of a class or kind not made in Canada and for use in mines in which inflammable gases exist	Free	10 p.c.	371 p.c.445o	(ii) Metal powders; etched aluminum foil; textile fabrics, coated with aluminum; alloy resistance wire having a diameter of less than -005 inch; spring-drive motors for record turntables; automatic record-centering mechanisms with tone arm, not including motors or turntables; metal cabinet escutcheons with crystals, plain or finished; when of a class or kind not made in Canada and for use in the manufacture or the repair of the goods enumerated in tariff items 445d, 597a, and other apparatus using radio tubes, or for use in the manufacture of parts therefor	Free	Free	30 p.c.445r	Apparatus for the receiving and transmitting ol photographs by wire	Free	Free	30 p.c.447c	Steel rolls, filled or surfaced with paper or cotton, for use exclusively in the manufacture of paper	Free	Free	35 p.c.461	(1) Safes including doors; doors and door frames for vaults; scales, balances, weighing beams and strength-testing machines of all kinds, n.o.p	10 p.c.	20 p.c.	35 p c.(2) Parts of scales, finished or unfinished	Free	10 p.c.	35 p.c.
Rates in Effect Prior to Rates Proposed in this Budget Resolution
British Preferential Tariff	Most- Favoured- Nation Tariff	General TariffFree	20 p.c.	30 p.c.15 p.c.	224 p.c.	30 p.c.Free	10 p.c.	371 p.c.15 p.c.	221 p.c.	37| p.c.15 p.c.	22J p.c.	30 p.c.Free	Free	30 p.c.20 p.c.	25 p.c.	35 p.c. and 4 cts. lb.Free	Free	20 p.c.Free	20 p.c.	30 p.c.10 p.c.	22J p.c.	35 p.c.10 p.c.	20 p.c.	35 p.c.Free	121 p.c.	35 p.c.1284	HOUSE OF COMMONS
The Budget-Customs Tariff
462a	Photographic cameras and equipment, viz.:-* (1) Cameras and parts thereof for making negatives or positives inches by 4£ inches or larger, including carrying cases therefor	Free	Free(2) Accessories for cameras:-Exposure meters, range finders, lens hoods, lantern slide attachments, camera stands, camera tripods and tripod tops, vignetters, diffusion discs and holders, colour filters and holders, polarizing screens and holders, backgrounds, flash tubes for high-speed flash apparatus, flash guns; parts of the foregoing	Free	Free(3) Contact printers, projection printers commonly known as enlargers for negatives or positives 4 inches by 5 inches and larger, temperature controls or heaters for photographic solutions, film and print driers, mounting presses, print washers, negative or sheet-film hangers, ferro-type plates, film and paper processors for strip photo-finishing, print straighteners, photographic timing devices, densitometers, tanks or trays for negative and positive processing; parts of the foregoing	Free	Free462b	Cinematograph and motion picture cameras for use by professional motion picture producers having studios in Canada equipped for motion picture production; parts of the foregoing	Free	9 p.c.468	Animal cages of wire and metal parts thereof	10 p.c.	22| P-c.471b	Wood split pulleys for power transmission, including interchangeable bushings	Free	7! p.c.478	Artificial limbs; spinal and other orthopedic braces; parts of the foregoing	Free	Free479	Materials and articles for the manufacture of the goods enumerated in tariff item 478	Free	Free10 p.c.	Free	Free	Free10 p.c.	2$ p.c.	15 p.c.	30 p.c.5 p.c.	171 P-c.	30 p.c.71 p.c.	20 p.c.	30 p.c.Free	15 p.c.	30 p.c.15 p.c.	221 P-c.	30 p.c.20 p.c.	25 p.c.	30 p.c.10 p.c.	15 p.c.	Free	9 p.c.	15 p.c.5 p.c.	171 P-c.	30 p.c.35 p.c.	15 p.c.	25 p.c.	30 p.c.10 p.c.	221 P-c.	35 p.c.271 P-c.	15 p.c.	221 P-c.	271 P-c-Free	Free	Free	Free15 p.c.	221 p-c.	45 p.c.Free	Free	Free	Free(various)	(various)	(various)
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Tariff Item	-	British Preferential Tariff	Mosfc- Favoured- Nation Tariff482	Ear-telephone sets and similar appliances, including batteries, battery chargers and battery testers therefor, for use by deaf persons; electronic ear-training apparatus, including microphones, headsets, record-turning devices and tone arms, specially designed for use by, or for the training of, the deaf; parts of the foregoing; under regulations prescribed by the Minister	Free	Free490a	Vanadium preparations for use as catalysts	Free	Free499a	Nut shells; nut shell flour, wood flour, bark flour, and mixtures thereof	Free	Free522e	Cotton sewing thread yarn and crochet, knitting, darning and embroidery yarn, in hanks, or on dyeing or bleaching cores, when imported by manufacturers for use exclusively in their own factories in the manufacturing or spooling of cotton sewing thread and crochet, knitting, darning and embroidery cottons	5 p.c.	10 p.c.563	Fabrics of a class or kind not made in Canada, of any textile fibre, not made up, imported for use only for bolting or sifting materials or for the manufacture of screens for printing	Free	Free618b	Tires and tubes, wholly or in part of rubber:- (1) Specially designed and adapted for use only on internal combustion tractors	Free	Free(2) N.o.p	20 p.c.	22§ p.c.General Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British Preferential Tariff	Most-Fa voured-Nation Tariff	General TariffFree	Free	Free	Free15 p.c.	22\ p.c.	30 p.c.Free	15 p.c.	30 p.c.Free	20 p.c.	30 p.c.Free	Free	Free	Free15 p.c.	20 p.c.	25 p.c.20 p.c.	Free	5 p.c.	20 p.c.15 p.c.	20 p.c.	25 p.c.20 p.c.	5 p.c.	10 p.c.	20 p.c.15 p.c.	17| p.c.	25 p.c.and 3 cents	and 4 cts.per pound.	per pound.Free	Free	Free	Free17i p.c.	25 p.c. and 5 cts.	45 p.c. and 10 ctsper lineal yd.	per lineal yd.22J p.c.	25 p.c. and	45 p.c.30 cts. lb.	40 cts. lb.Free	Free	Free	Free35 p.c.	20 p.c.	22J p.c.	35 p.c.1286	HOUSE OF COMMONS
The Budget-Customs Tariff

660
660a
Mouthpieces in the rough, screws, aluminum fitments, pipe bowls moulded from briarwood dust, bowls of wood not further processed than frazed, corn cobs and corn cob bowls not further processed than shaped, when imported by manufacturers of tobacco pipes or cigarette holders for use in the manufacture of such articles in their own factories..
Moulding material consisting of a mixture of synthetic rubber and wax with a backing of aluminum not exceeding -006 inch in thickness, for use by electrotypers in the manufacture of electrotypes...
Cellulose nitrate sheets with turned edges, for the production of engravings for use by printers	
Free
Free
Free
681b
Residue, revert, or waste from chemical or metallurgical processes, containing aluminum oxide or other aluminum compounds mixed with other materials, imported by Canadian smelters or refiners for recovery of aluminum oxide and attendant by-products	
Free
690a
Casual donations sent by persons abroad to friends in Canada, or brought into Canada personally by non-residents as gifts to friends, and not being advertising matter, tobacco or alcoholic beverages, when the value thereof does not exceed ten dollars in any one case, under such regulations as may be prescribed by the Minister	
Free
Philosophical and scientific apparatus, utensils, instruments, and preparations, including boxes and bottles containing the same; maps, charts, photographic reproductions and other pictorial illustrations, casts as models, animals as research or experimental subjects; living plants, seeds, cuttings, buds, scions, tubers, bulbs and root-stock; mechanical equipment of a class or kind not made in Canada. All articles in this item, when for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any public hospital, college, academy, school, or seminary of learning in Canada, and not for sale, under regulations prescribed by the Minister	
Free
Free
7$ p.e.
7j p.c.
Free
Free
Free
25 p.c.	Free	Free	25 p.c.15 p.e.	22$ p.e.	30 p.c.15 p.c.	20 p.c.	27* p.c.30 p.c.	15 p.e.	22$ p.c.	30 p.c.30 p.c.	10 p.c.	25 p.c.	40 p.c.10 p.c.	15 p.c.	20 p.c.	25 p.c.Free	Free	Free	Free(various)	(various)	(various)Free	Free	Free	Free(various)	(various)	(various)
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Tariff
Item
708a
British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	-	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff(1) Publications of the United Nations or any of its specialized agencies	Free	Free	Free	Free	Free	Free(2) Publications of the North Atlantic Treaty Organization or any of its specialized agencies	Free	Free	Free	Free	Free	Free(1)	All machinery and apparatus and parts thereof (including motive power) and drilling mud, for use exclusively in exploratory or discovery work in connection with, and development, depletion and production of petroleum or natural gas wells; seamless, lapwelded and electric welded iron or steel casing, tubing and drill pipe for use in connection with natural gas or oil wells	
(2)	Materials for use in the manufacture of the goods enumerated in tariff item 848(1)	Free Free	Free Free	Free Free	Free Various	Free Various	Free Various
3. Resolved, that Schedule A to the Customs Tariff be amended by striking thereout tariff items 54, 192a, 208w, 216g, 280, 326c, 326d, 379 (71, 383 foj, 498, 569c, 626, 658 and 664, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inseiting the following items, enumerations and rates of duty in said Schedule A:-
54	Hominy grits, hominy feeds and brewers' corn grits..	10 p.c.	10 p.c.	25 p.c.	10 p.c.	10 p.c.54a	Corn grits for use in the manufacture of corn flour 	per one hundred pounds	Free	Free	30 cts.	Free	Free54b	Corn grits, n.o.p	71 p.c.	71 P-c.	25 p.c.	71 p.c.	71 p.c.90h	Okra, sliced and salted	Free	5 p.c.	35 p.c.	Free	5 p.c.115a	Herring, fresh	Free	Free	Free	Free	Free158b	Mixtures of methyl alcohol and other ingredients, when imported by tanners for use exclusively as a solvent for dyes for the dyeing of leather in their own factories	per proof gallon	5 cts.	5 cts.	20 cts.	5 cts.	5 cts.
25 p.c.
30 cts. 25 p.c. 35 p.c. Free
20 cts.
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192a
194a
202a
202b
208w
216g
216i
219f
254b
(1)	Pulp board in rolls not less than nine onethousands of an inch in thickness for use in'wrappinu rolls of paper	"
(2)	Pulp board in rolls for use in the manufacture
of wallboard	
Wholly or partially lithographed or printed sheets when imported by manufacturers of playing cards for use exclusively in the manufacture of playing cards in their own factories	
Twine or yarn of paper	
Paper matting	
(1)	Theobromine, crude	
(2)	Crude bromides for the production of bromine	
(3)	Dimethyl sulphate	
Compounds or sheets, of which the chief organic component is shellac, imported for use exclusively in the manufacture of phonograph records	
Nicotinic acid when imported for use in the manufacture of nicotinic acid amide and when imported for use in the manufacture of diethylamide of nicotinic acid	
Riboflavin (also known as Vitamin Bj, Vitamin G, Lactoflavin) without admixture or mixed only with any necessary carrier or dilutent when imported for use only in the manufacture of feeds for livestock, poultry or fur-bearing animals	
Lac, crude, seed or stick when imported by manufacturers of bleached shellac for use exclusively in the manufacture of bleached shellac in their own factories	
(1)	Foots, being the refuse of cotton seed or olives
after the oil has been pressed out	
(2)	Grease, rough, the refuse of animal fat, for
the manufacture of soap and oils only	
(3)	Inedible oils, without admixture, obtained
from animal fat, for use in the manufacture of soap or oils	
5 p.c. Free
15 p.c. Free 17i p.c. Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
7* p.c.	10 p.c.	5 p.c.	7J'p.c.	10 p.c.5 p.c.	5 p.c.	Free	5 p.c.	5 p.c.20 p.c.	35 p.c.	15 p.c.	20 p.c.	35 p.c.Free	Free	Free	Free	Free22* p.c.	25 p.c.	17* p.c.	22* p.c.	25 p.c.Free	Free	Free	Free	FreeFree	Free	Free	Free	FreeFree	Free	Free	Free	Free5 p.c.	25 p.c.	Free	5 p.c.	25 p.c.Free	25 p.c.	Free	Free	25 p.c.Free	Free	Free	Free	FreeFree	Free	Free	Free	FreeFree	Free	Free	Free	FreeFree	Free	Free	Free	FreeFree	Free	Free	Free	Free
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British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	Tariff Item	-	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff282c	Grog, produced by calcining fire clay, or in the form of calcined dobbies, fire brick, or other refractory shapes, which have been broken, crushed, or ground, screened to size or not, but not further manufactured, when imported for use exclusively by manufacturers of refractory materials in the manufacture of such materials	Per ton	60 cts.	$1.00	$1.15	60 cts.	$1.00	$1.15Provided, that in no case shall the duty exceed....	121 p.c.	20 p.c.	221 P-c.	121 P-c-	20 p.c.	221 P-c.287a	Articles of chinaware when imported to be mounted by manufacturers of silverware in their own fac-	121 p.c.	17^ P-c.	221 P-c.	121 P-c.	171 P-c.	221 p.c.291	White Portland cement clinker for use in the manu-facture of white Portland cement	per	2 cts.	31 cts.	6 cts.	2 cts.	31 cts.	6 cts.2961	Limestone, not further processed than crushed or	Free	Free	25 p.c.	Free	Free 20 p.c.	25 p.c. 25 p.c.15 p.c.	316b	Metallic elements and tungstic acid when imported by manufacturers for use only in their own factories in the manufacture of metal filaments for electric	Free	Free	Free	Free	Free	Free326c	(1) Blanks of uncoloured clear glass, when imported by manufacturers to be used exclusively in the manufacture of silvered mirror reflectors or acid-etched reflectors or refractors, for lighting	Free	9 p.c.	10 p.c.	Free	9 p.c.	10 p.c.(2) Blanks or shapes of uncoloured clear glass when imported for use in the manufacture of silvered, coloured or decorated Christmas tree ornaments	Free	Free	22£ p.c.	Free	Free	221 P-o.(3) Single wall hollow shapes of glass, not silvered, when imported by manufacturers of vacuum insulated containers for use exclusively in the manu-facture of such articles in their own factories	Free	5 p.c.	321 p.c.	Free	5 p.c.	321 p.c.
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55704-82i
326d
326j
346o
352d
(4) Glass plates or discs, rough cut or unwrought, for use in the manufacture of optical instruments, when imported by manufacturers of such optical instruments	
Beads, drops or other shapes of glass or cellulose acetate, when imported by manufacturers of imitation pearls, for use exclusively in the manufacture of such articles in their own factories....
Glass balls or marbles when imported by manufacturers of glass fibres or glass yarn, for use exclusively in the manufacture of such fibres or yarn in their own factories	
386
388f
Zinc sheets, not planished, ground or polished, coated on one side with acid-resisting material, imported by plamshers, grinders or polishers of zinc sheets to be used exclusively in the planishing, grinding, polishing or other processing of such sheets, ready for use by photo engravers	
Friction material of metal powders, compressed, sintered and welded or fastened to a solid metal or other backing for support, in strips, sheets, discs, rings, slabs, blocks, bars, rods, tubes and other primary shapes	
Sheets, plates, hoop, band or strip, of iron or steel :-(g) Corrugated or pebbled, coated or not	
398c
(u) Hoop, band or strip, of steel of Bessemer quality, when imported by manufacturers of hinges, for use exclusively in the manufacture of hinges, in their own factories	per ton
Sash, casement or frame sections of iron or steel, hot or cold rolled, coated or not, not punched, drilled nor further manufactured, and similar material formed from hot or cold rolled iron or steel strip, coated or not. when imported by manufacturers of metal window sash, casements or frames for use in the manufacture of such articles, in their own factorlea	per ton
Seamless steel tubing, valued at not less than five cents per pound, when imported by manufacturers of roller bearings for use exclusively in the manufacture of such bearings in their own factories..
Free
Free
Free
Free
Free
10 p.c.
Free
Free
Free
Free	Free	Free	FreeFree	Free	Free	FreeFree	Free	Free	Free25 p.c.	Free	Free	25 p.c.10 p.c.	Free	10 p.c.	10 p.c.25 p.c.	10 p.c.	20 p.c.	25 p.c.$8.00	Free	$4.00	$8.00$7.00	Free	$7.00	$7.0030 p.c.	Free	Free	30 p.c.
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		British Preferential Tariff			Rates in Effect Prior to Rates Proposed in this Budget Resolution		
Tariff Item	-	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff402e	Speedometer flexible shafting, consisting of a steel centre wire around which two or more layers of steel wire are helically wound consecutively in opposite directions, in coils of not less than 1,000 feet, when imported by manufacturers of speedometers or speedometer parts, for use in the manu-	Free	Free	35 p.c.	Free	Free	35 p.c.434d	Rolled steel wheels in one piece in the rough, not drilled or machined in any manner, for railway vehicles, including locomotives and tenders, when imported for use in the manufacture of steel wheels	Free	20 p.c.	30 p.c.	Free	20 p.c.	30 p.c.438m	Composite frame and floor structure of metal in the rough for use in the manufacture of automobiles and	Free	Free	25 p.c.	Free	Free	25 p.c.446n	Articles of iron, steel or nickel, or of which iron, steel or nickel are the component materials of chief value, of a class or kind not made in Canada, when imported by manufacturers of electric storage batteries for use exclusively in the manufacture of such	10 p.c.	10 p.c.	20 p.c.	10 p.c.	10 p.c.	20 p.c.454a	Materials, including all parts, imported for use only in	Free	Free	25 p.c.	Free	Free	25 p.c.498	(1) Cane, reed or rattan, not further manufac-	Free	Free	Free	Free	Free	Free(2) Twine "or yarn of grass when imported by manufacturers of furniture for use only in their own	Free	Free	Free	Free	Free	Free506c	Staves and heading of wood, finished or unfinished for use in the manufacture of tight barrels or kegs..	Free	Free	Free	Free	Free	Free506g	(1) Wood handles, when imported by manufacturers of D shovel handles, for use only in the manufacture of such D shovel handles in their own factories	10 p.c.	10 p.c.	15 p.c.	10 p.c.	10 p.c.	1 15 p c.
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(2) Ten pin blocks of wood in the rough, when imported by the manufacturers of ten pi as for use only in the manufacture of such articles in their own	5 p.c.
(3) Wood shafts for handles of golf clubs not further	
manufactured than rough turned and wood golf heads not further manufactured than rough turned, when imported by the manufacturers of golf clubs and golf sticks for use only in the manufacture oi golf clubs and golf sticks in their own factories		5 p.c.
Complete parts of cash registers, when imported by manufacturers of cash registers for use exclusively in the manufacture of such registers in their own	15 p.c.
(1) Yarns and warps, wholly of cotton, number eighty and finer, two-ply, gassed, of a class or kind not made in Canada, imported by manufacturers of woven fabrics for use exclusively in their own factories in the production of woven fabrics		
	Free
(2) Yarns, wholly of cotton, number forty and finer, not more advanced than singles, when imported by manufacturers for use exclusively in their own factories in the manufacturing of cotton sewing thread		Free
Waste portions of unused fabrics or used garments, imported to be used exclusively for disintegrating, or for manufacture into wiping rags, under regulations prescribed by the Minister		Free
Sliver strands in wrap form, wholly or in part of wool or hair, imported by_ manufacturers of braided mats and rugs, for use in the manufacture of such articles in their own factories		Free
	and, per pound (1) Hat braids, of a class or kind not made in Canada, whether woven, knitted or plaited, not exceeding six inches in width, imported for use exclusively in the manufacture of hat bodies or shapes, but not for use in the ornamentation or trimming of such bodies or shapes, under regulations prescribed by the Minister		Free
(2) Materials, of a class or kind not made in Canada, imported by manufacturers of hat braids, to be manufactured in their own factories into woven, knitted or plaited hat braids only		Free
7i p.c.
5 p.c.
15 p.c.
10 p.c.
10 p.c.
Free
Free
Free
Free
10 p.c.	5 p.c.	7J p.c.10 p.c.	5 p.c.	5 p.c.25 p.c.	15 p.c.	15 p.c.15 p.c.	Free	10 p.c.15 p.c.	Free	10 p.c.Free	Free	Free20 p.c. 17£ cts.	Free	FreeFree	Free	FreeFree	Free	Free
10 p.c.
10 p.c.
25 p.c.
15 p.c.
15 p.c.
Free
20 p.c. 175 cts.
Free
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British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	Tariff Item	General Tariff	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff587a	Ground coke, when imported by manufacturers of electric batteries for use only in their own factories in the manufacture of such batteries	Free	Free	Free	Free	Free	Free588c	Bituminous coal which enters into the cost of manufacture of synthetic rubber, when imported for use exclusively in the production of synthetic rubber..	Free	Free	Free	Free	Free	Free588d	Coal, including screenings and coal dust of all kinds, imported to be converted into coke	per ton	Free	Free	75 cts.	Free	Free	75 cts.608a	East India kip leather, not further finished than tanned	Free	10 p.c.	20 p.c.	Free	10 p.c.	20 p.c.608b	Sheepskin and goatskin leather, not further finished than tanned, when imported by tanners for processing in their own factories	Free	10 p.c.	20 p.c.	Free	10 p.c.	20 p.c.658	Motion picture film, of 16 millimetre wridth and over, when imported by recognized processors of motion picture film having duly equipped laboratories for processing motion picture film in Canada, for the sole purpose of having reproductions made therefrom, and provided that the original is re-exported within six months from the date of importation, under such regulations as the Minister may prescribe	per linear foot	Free	Free	3 cts.	Free	Free	3 cts.663i	Phosphate rock, defluorinated, imported for use in the manufacture of animal or poultry feeds	Free	Free	Free	Free	Free	Free664	(1) Crude glycerine, when imported by manufacturers for use only in their own factories in the manufacture of refined glycerine	Free	Free	Free	Free	Free	Free(2) Glycerine, when imported by manufacturers of explosives, for use exclusively in the manufacture of such articles in their own factories	Free	Free	Free	Free	Free	Free681a	Smelter refinery or rolling mill residue or revert (not being scrap metal) imported by Canadian refiners or smelters for recovery of the metal content	Free	Free	Free	Free	Free	Free
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The Budget-Mr. J. M. Macdonnell
4.	Resolved, that Schedule B to the Customs Tariff be amended by striking thereout tariff items 1014 and 1067, the enumerations of goods and the rates of drawback of customs duties set opposite each of the said items.
5.	Resolved, that any enactment founded upon the foregoing resolutions to amend Schedules A and B to the Customs Tariff shall be deemed to have come into force on the ninth day of April, one thousand nine hundred and fifty-two, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(See also Budget Papers, pages 1307 to 1391.)
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, as is customary I wish to thank the Minister of Finance (Mr. Abbott) for the clear and interesting picture he has given of our affairs. I not only wish to thank him;
I wish to say that I welcome seeing in what he has said certain signs of repentance. That give me great satisfaction. I know the minister will not expect me to go further than he went himself in praising him. In fact I do not know that there is anything I can add to that except to say I should like to hear the minister when he is not in a modest mood. Certainly I can say this to the minister, that if I ever have an unpleasant and nasty pill which I wish gilded I would hope I might have his assistance in doing it. I was particularly interested in the joy registered by those who have applauded the minister. Their constituents must be very different from mine.


Some hon. Members:: They are.


James MacKerras Macdonnell: They evidently live in constituencies where people love high prices but in Greenwood as a matter of fact the people do not love high prices. I would ask these members if they have a formula to make the people in their constituencies like high prices will they disclose it to me, or still better, will they come and help me in Greenwood?


Mr. Sinnoit:: They like balanced budgets too.


James MacKerras Macdonnell: As the minister was speaking of millions, hundreds of millions and billions I was thinking of a different kind of people, people who do not deal in billions or hundreds of millions and who, as a matter of fact, in spite of the success story we have heard tonight, in spite of the glowing figures we have heard tonight, do not find they are sharing very greatly in this prosperity. They feel that it is passing them by. They are unhappy and perplexed. It is about them I wish to talk tonight. They hear a lot about the glories of our currency. They hear much said about our dollar being at par with the United States dollar, but they know that our dollar is not at par with the things they have to buy, with bread, meat, milk and clothes. They know it is at a 50 per cent
discount with relation to those things, and that bothers them. As I say, they are bothered by high taxes and high prices, and recently they have begun to be bothered by unemployment too.
I should like to refer to certain things that are said by friends of the government in commenting on this situation but first I should like to say that so far as I can see the chickens are beginning to come home to roost, and they are not a very pleasant brood when you look at them. I think the people of Canada are going to look at them closely because one thing the minister has done-and in this he has had shining success-is that he has made the people of Canada tax conscious, tax puzzled and tax angry in a way that in my memory they have never been before. I think they will indeed welcome the suggestion of the mayor of Ottawa that in addition to a cost of living index there should be a cost of taxes index. All the soothing things that the minister says are not going to take their minds away from these things.
I come now to the amount that we are being asked to raise, and I should like to read a brief statement from the Winnipeg Free Press which, in spite of occasional qualms, supports this government through thick and thin. What has it got to say about the figure of $4,335 million plus, plus, plus, about which I will say something in a moment? The Free Press of March 22, 1952, has this to say:
These figures will enable the public, all of whom in one or other form are taxpayers, to realize the disturbing and, indeed, appalling way in which federal expenditures have risen in recent years.
The Free Press later refers to government profligacy, and I shall refer to it too. The Free Press is right. These figures are appalling. The minister has explained to us how he is going to deal with them this year, and if we continue on the crest of a rising boom he will deal with them this year and undoubtedly even have another surplus. Maybe we will find it tucked away somewhere. Nevertheless it is an appalling thing because to begin with we have $4,335 million. Then you can add $100 million right away to cover the dominion-provincial tax agreements. Then there was $441 million in supplementary estimates this year. On that basis

The Budget-Mr. J. M. Macdonnell you would have $4,876 million, or say $4,800 million. Now, Mr. Speaker, that is $13,150,000 a day. It is $547,000 an hour and it is nearly $10,000 a minute. In other words, since I began to speak five minutes ago the minister has taken $50,000 out of our pockets.
Putting it differently, it comes to something like $343 for every man, woman and child on the average. I know that average figure is criticized but nevertheless it is a rough and ready guide. If you take a family of five it is $1,715 and that would come to about $30 a week in taxation. I admit that figure needs adjustment but it is a figure that people might just as well have in their minds. The minister takes it lightly and buoyantly. He speaks about buoyant revenues, and they are buoyant, although we must remind ourselves that they are produced very substantially by inflated prices. Sometimes I think the minister almost feels that taxes come like manna from heaven.
Last year we pointed out to the minister exactly what was going to happen if these extra taxes were imposed. On April 16, 1951, as found at page 2051 of Hansard I said:
This budget, which is purporting to cure inflation, will cause as its inescapable first result a substantial increase in the cost of living.
We told the minister that, and it was true. We told him it would produce a surplus beyond what he expected, and that was true. Notwithstanding the formidable words used by the minister, I propose to say a little about the mystery of the surplus. In the beginning I would say to the minister that if it were not so serious this matter of the surplus would be rather amusing. Indeed, in certain quarters they are dealing with it as if it had become a kind of joke, not a very good joke. The Montreal Gazette had an editorial this morning beginning, "Button, button, who's has got the button".
That is partly because of a broadcast the minister made on February 19 in which he referred to the then surplus of $722 million and went out of his way to say what a good thing it was that this unexpected surplus had arisen. In his radio address he had this to say:
Supposing we had not had this large budgetary surplus, where would we have got the money for all these necessary loans, advances and Investments?
I thought that was an odd thing because after all the minister had these requirements in his mind in April when he budgeted, but nevertheless that is what the minister said. As I say, he explained that these moneys had been spent, and indeed he rather gloried in it. I want to point out that these moneys were used for loans and investments without any warning to the people who paid the taxes that that was going to be done. I think there


is no question whatever that the people who paid the taxes would be in the highest degree surprised to find that their money had been used in this way. There is no other conclusion they could reach but that hundreds of millions of dollars were taken from them unnecessarily.
The situation in the public mind is well pictured by a cartoon I have here from the St. Catharines Standard. It depicts the minister-


Douglas Charles Abbott: Put it on Hansard.


James MacKerras Macdonnell: Unfortunately I have got to return it. On the whole it is not uncomplimentary at all. The minister looks firm and rather aggressive, but on the other hand he is depicted in this fashion. He is a conjuror on a platform. One can see a very interested spectator just below-there seems to be only one-and in his left hand the minister is holding up a rabbit which is inscribed "That embarrassing surplus." The minister is saying, "Now, watch this vanish." The caption at the top is "But they usually multiply." My own suggestion to the minister is that he should have this called "Abbott's rabbit", and have it set up in his room.
This surplus, this bad budgeting, was a joint effort. The Minister of Finance (Mr. Abbott) got more money than he expected, and the Minister of Defence Production (Mr. Howe) did not spend as much as he expected. I think they had better get together and see whether they cannot do a better job this time. I always thought the Minister of Defence Production (Mr. Howe) could spend an unlimited amount of money, but apparently he did not quite come through this time.
Now I want to come back for a moment to taxes, which are really our greatest national industry. The minister is in this fortunate position, that whereas other creditors may have to wait for their money the tax collector goes and gets his. The minister is going to get, let us say, $4,800 million. I would like to compare that for a moment with some other interesting figures in our national economy. In 1950-I could not get the 1951 figures-the manufacturing industry of this country produced goods to the value of $4,378 million. In other words the minister is going to spend more than the product of our entire manufacturing industry. In 1950 the industry of agriculture produced goods to the value of $1,792 million, only about one-third of what the minister is going to get. The people of this country should register in their minds the amount the minister is going to spend, for it raises this question which we should all keep before us. When we talk

about the gross national product, it will be found that a very large part of that results from government expenditure. We are coming back to something like the war conditions, when we all remember that the government spent so much.
Now I want to say just a word about the cost of living. The minister did not say as much about that as I thought he would. Perhaps he was being modest, or perhaps the small drop in the cost of living calls up unpleasant memories of the foot-and-mouth disease scandal which has cut off our meat producers from the United States. It may even call up memories of unemployment, which now is rampant to some extent and which undoubtedly has had something to do with the drop. But I want to be fair; there has been a drop of 2| points in food prices in the last month or two. I have tried to get the best figures possible from those who understand these matters, to show what that would mean to an average family. As far as I can make out it would mean .46 cent a meal saved, or just under half a cent a meal. So I want to bring that to the attention of the house.
The next question I want to ask is, do we need all this money? On that point I should like to read a few words, again from the Winnipeg Free Press of March 22, where they say:
But the weak spot in the federal government's policy (and it now assumes a most aggravated form) is that it does not obey its own rules. It gives good advice and sets a thoroughly bad example. In this allowing expenditures to get out of hand Ottawa has failed to measure up to its own standard of what is required in these times.
And this also:
When the figures are searched for an explanation of this profligacy, none is to be found.
The word "profligacy" as I understand it means wasteful extravagance, and that is the word used by the Free Press.
Now let us see what sign of economy there is. I observe one thing of interest. We sometimes complain that the government does not share responsibility with us, but this is one place where the minister is very anxious to share responsibility, and to evade it himself. He evades responsibility by saying that really this is our fault, and that we should be helping him. That is true enough: nevertheless this is a government responsibility.
Do we need all this money, this $4,800 million? The government tries to create the impression that it is all in defence and social security, and a great deal of it is; but as the Free Press is careful to point out, that is not a complete answer. When we come back to defence one or two things should 55704-83
The Budget-Mr. J. M. Macdonnell be said there, too. I am sure everyone in this house wishes to spend for defence what is necessary to secure our safety; but that is not to say this figure of $2,100 million which is waved in our faces is necessarily a rock-bottom figure. During the defence debate in this house searching criticisms have been made which would suggest that this two billion dollar figure may be greatly exaggerated, and that is where some saving may be made. Presumably this gentle improvement in the tax situation which we have seen tonight may be taken as a preliminary to what is going to happen next year, when of course it will be very necessary to have some sweetener available.
I want to draw attention to just two or three of the items one finds in the estimates for next year. In the first place there is a figure of $46 million for travel and removal. I should be quick to say that includes moving troops to Korea and Germany; nevertheless $46 million is a lot of money and it is not possible for me to believe that something could not be done there. The next item I wish to refer to is $17 million for publicity. We all know what publicity is, of various kinds. It includes press hand-outs, films and all sorts of things; and I should point out that this amount does not include the salaries of that noble army who work in the various departments on publicity duties. This is merely what you might call out of pocket expenses.
A further figure, though it is not so large, which staggered me perhaps more than any other is an item of $4,891,000 in the defence department for telegraphs, telephones and other communications. I had a little illustration the other day which perhaps helps to explain that. A man who had been in the department years ago went in to obtain some information from an officer there. The officer said, "I don't know, but I will get it for you very quickly," and/ he reached for the telephone and telephoned to Vancouver. He did get the information very quickly. In these days of air mail I wonder if it is really so that there are urgent communications passing between the various officials of the government which require an expenditure of $4,891,000.
Now, Mr. Speaker, I come to comment briefly on the tax changes announced tonight. I welcome, as others will, the change in the corporation tax, though I regret very much it is still over 50 per cent which the minister has already stated more than once in this house he thinks too high. The relief is very little. It is rather like the hangman who, before the execution, offers you a cigarette. Still it is better than nothing, though not very

The Budget-Mr. J. M. Macdonnell much. We also welcome the minister's intention to try to help the utility companies, and I appreciate the fact that crown corporations are now going to pay their shot. On the personal income tax side, the correction of the inequity of having taxes running over 100 per cent was clearly called for. I think the minister's adjustments there will merit consideration, and presumably they will be a relief.
In connection with the sales tax it seems to me we find the minister not at his best. We find him here unrepentant and what I can only term perverse. It seems to me his pride is involved. He made statements last year with regard to the sales tax which we told him were wrong and which I submit in this last year have been abundantly proved wrong; nevertheless the minister persists. In connection with the excise tax I have already read to the house what we said last year; and I am glad to see that in this instance the minister has repented and that there is to be an adjustment. As to cigarettes, of course everyone knew that situation was impossible, but it is a pity that it had to be left to smugglers and bootleggers to correct it rather than those of us who regard ourselves as more respectable.


An hon. Member:: Why?


James MacKerras Macdonnell: I am sure that the Minister of National Revenue (Mr. McCann) will agree with that anyway.
The minister has talked in billions to taxpayers who have to think in small amounts of five's and ten's. I believe he overlooked the fact that there are hundreds of thousands of voters in this country to whom his tax burden is a grievous one. They will feel again that, with this flood of expenditure, quite possibly, in spite of the check at the moment, prices may go up again if the spending develops in a big way, and that they may again be the victims of an unexpected surplus. They will certainly be on the lookout to see whether the situation arises in the coming year which they feel has arisen in the past year when they have been taxed) to an amount far beyond what was necessary.
On motion of Mr. Macdonnell (Greenwood) the debate was adjourned.



JAPANESE PEACE TREATY


Hon. L. B. Pearson (Secretary of State for External Affairs) moved:: That it is expedient that the houses of parliament approve the treaty of peace with Japan, declarations (2) of Japan and Protocol, all as signed at San Francisco on the eighth day of September, 1951, and that this house do approve the same.
[Mr. Macdonnell (Greenwood) .1

He said: This motion which I have the honour to move gives to the house an opportunity to express its views on the Japanese peace treaty which was signed last autumn. The adoption of this resolution, which I think will commend itself to all sections of the house, will make it possible to bring the state of war with Japan to an end. I devoted some attention to this treaty, Mr. Speaker, in my remarks in the house on October 22 last, and at this time I do not want to repeat what I said then.
Since the signature of the treaty, it has been ratified by the Japanese Diet with the resounding vote of 307 to 47 recorded in the Japanese house of representatives. The United Kingdom government has also ratified the treaty-and deposited its instrument of ratification-as has the United States government. Parliamentary action has also been completed in Australia, New Zealand, Pakistan and Ceylon. The treaty will come into effect when a majority of eleven states, mentioned specifically in the treaty-a group which includes Canada-have ratified it. It seems likely, therefore, from the action which has been taken up to this moment, that the treaty will come into effect in the near future. This could happen whether or not Canada ratifies the treaty. I believe that no useful purpose would be served by this house delaying action in regard to the treaty at this time.
The treaty is a generous one. It has been represented by one of its main architects as a treaty of reconciliation, and that, I think, is what it is. Last October, when we were discussing this matter I referred to it as a good treaty, and I still believe it is a good treaty. It is, of course, not a perfect one, but I doubt if we had had months of discussion at San Francisco that we would have made it a better one. It restores Japanese sovereignty, but that sovereignty will be confined to the four main islands of the Japanese empire. It places no restrictions on Japan's economy or on Japan's ability to defend itself. Most important of all, the treaty sets Japan free to pursue a peaceful destiny, as we all must hope, and gives her an opportunity to contribute to the security and stability of the whole Pacific area.
The treaty was negotiated, as I explained last October, through diplomatic channels rather than through the more normal conference procedure. That was unusual procedure admittedly, but it was one which was made necessary by the circumstances. As early as 1947, the United States government had proposed to its allies a conference for the feigning of the Japanese peace treaty in the usual way. This procedure was impossible because of the attitude taken at that time

and subsequently by the Soviet union, which insisted that any such treaty should be negotiated not by a conference where all those who participated in the war against Japan would be present, but in the presence of the council of foreign ministers which would have given the U.S.S.R. and other members of the council a veto.
To avoid this procedure and the use of the veto in this connection, in September 1950 I believe it was the President of the United States initiated diplomatic discussions with the other countries represented on the Far Eastern commission with a view to negotiation by such discussion of a treaty, the final text of which we have before us today. The Canadian government participated in those discussions and was given ample opportunity to express its opinions on the various drafts as they were presented. These opinions of ours were not always accepted, Mr. Speaker, but the text which we have before us now does not represent the complete views of any one country which participated in those discussions, and is essentially a compromise document.
The Soviet union was kept fully informed of these discussions while they took place, but contributed little to them except abuse. When the conference was called in San Francisco to put the finishing touches on this process, not to negotiate a treaty but to sign one and go over the text of the draft which we have before us, the Soviet union and its satellite states were represented. As hon. members know, they refused, as indeed some other countries refused, to sign the draft.
The territorial adjustments are outlined in the treaty. The Potsdam proclamation of the treaty of peace Japan undertook to- surrender of Japan, provided that Japanese sovereignty would be limited to the four major islands and such minor islands as the allied powers would determine. Chapter II of the peace treaty carries out those surrender terms. Japan renounces all rights, title and claim to Korea, Formosa, the Pescadores, the Kurile Islands and South Sakhalin. In addition, she renounces any rights she had with respect to the islands which she held under the terms of a league of nations mandate. Under article 3 of the treaty Japan retains residual sovereignty in the Ryukyu islands and other islands to the south and southeast of Japan which were after the surrender of Japan under United States administration. Japan has agreed to concur in any proposal to place those islands under United Nations trusteeship, with the United States as the administering authority.
55704-83J
Japanese Peace Treaty
It might have been better, and it certainly would have been neater, if the final disposition of the former Japanese territories had been defined precisely in the treaty, but it was not possible for the allied powers to reach agreement on this score. It was decided, therefore, in order that the peace treaty should not be further delayed, to have Japan simply renounce her rights in these territories, as she was required to do, and to leave to future international agreement the final disposition of the territories in question-including, incidentally, Formosa.
In addition to our general Canadian interest in a peace settlement which would return Japan to normal and friendly relations with the free world, Canada had certain special concerns which were made known at every stage of the negotiations and indeed at San Francisco itself. My colleague the Minister of Fisheries (Mr. Mayhew), who was with me at the San Francisco conference, gave the house a full account on March 11 last of the-as we think it to be-successful agreement on North Pacific fisheries which was reached with Japan and the United States in December of last year. Under article 9 of the treaty of peace Japan undertook to- . . . enter promptly into negotiations with the Allied Powers so desiring for the conclusion of bilateral and multilateral agreements providing for the regulation or limitation of fishing and the conservation and development of fisheries on the high seas.
The promptness with which Japan entered into these negotiations is, I think, an encouraging evidence of Japan's interest in living up to the trust which has been placed in her by this treaty of peace. I think it is also a good sign for future Canadian-Japanese relations which will be entering a new chapter when this treaty is ratified.
I do not intend to go into the substance of this convention since the house has already been given the details concerning it by my colleague the Minister of Fisheries. I would remind the house, however, that until the peace treaty comes into effect Japan will not be in a position to sign the fisheries convention. We can, therefore, by ratifying the peace treaty, assist in enabling Japan to sign and ratify this important convention.
A further question in which Canada was especially interested was that of Japan's undertaking with respect to commercial practices and agreements. I made clear the views of the Canadian government on this important matter in my statement in San Francisco. Possibly it would be desirable if

Japanese Peace Treaty
I now put on the record what I then said. At the San Francisco conference I said:
Japan agrees in the treaty to conform to internationally accepted fair trade practices. It is the confident hope of my government that Japan, in the future conduct of its commercial relations with other countries, will avoid certain pre-war practices which were widely condemned at that time by other trading nations. Canada has no wish to see any discrimination against or any unnecessary obstacles to normal Japanese trade. On the contrary, as a trading nation ourselves we wish to see Japan develop its full trading possibilities. It is only common sense for us to wish for a prosperous rather than a poor Japan. Such prosperity, however, can never, in the long run, be established or even assisted by trading practices considered unfair by other countries and against which those countries have no alternative but to protect themselves if unhappily they should be adopted.
The peace treaty itself, as hon. members no doubt know, is not designed to settle questions of commercial policy but leaves this policy to be decided by the individual signatories of the treaty and Japan. Canadian attitudes and Canadian policy with respect to future commercial relations with Japan will, to a large extent, be influenced by whether or not Japan adheres to the declaration made in the preamble to the treaty of her intention, and I quote from that preamble:
... in public and private trade and commerce to conform to internationally accepted fair practices.
Another important section of the treaty deals with reparations. Critics of the treaty of peace in some countries have concentrated their attentions on the reparations clauses which represent an attempt to make this treaty an important step toward breaking the vicious cycle of "war-victory-peace-war". The allied powers recognize in the treaty that Japan should in principle pay reparations for the devastation and suffering she caused during the war. They recognize in addition, however, that Japan lacks the physical capacity to recompense her former victims if at the same time she is to achieve a viable economy and contribute to the economic health of the Pacific area. For certain nations represented at San Francisco who had not only lost property valued in billions of dollars but also countless lives, as a result of Japan's military activities, the very limited reparations clauses could not but appear unsatisfactory. For others it was easier to understand that the exaction of even just reparations might impose such an economic burden on the defeated state as to vitiate the objectives of the treaty as a whole.
In the treaty Japan undertook to compensate those allied powers whose territories she had occupied, and I quote from article 14 of the treaty:
... by making available the services of the Japanese people in production, salvaging and other work.

Negotiations are already under way at the present time on this matter between Japan and Indonesia and Japan and the Philippines. Japan further agreed in the treaty to make available certain of her assets to indemnify members of the allied forces who had suffered undue hardships while prisoners of war of Japan. This matter is covered in article 16. The details of this scheme are at the present time being worked out between the allied governments concerned and the international committee of the Red Cross which is to be responsible for the distribution of the funds in question.
Finally, the treaty provides that Japan shall return all allied property which she held during the war years upon application to be made within nine months of the coming into force of the treaty.
A highly important section of the treaty deals with security. Under article 5 of the treaty Japan undertakes to settle its international disputes by peaceful means, to refrain in its international relations from the threat or the use of force and to give the United Nations every assistance in action taken in accordance with the charter. In return, the allied powers recognize Japan's sovereign right of individual or collective self-defence.
Article 6 provides for the termination of the occupation not later than 90 days after the treaty comes into force. However, it is stated explicitly in the treaty that there is nothing in this provision to prevent the stationing or retention of foreign armed forces in Japan under the terms of any agreement made between Japan and one or more of the allied powers. The peace treaty simply recognizes for Japan the principle which article 51 of the charter of the United Nations recognizes for all sovereign states. Hence, on the very day of the signature of the peace treaty, a security treaty between the United States and Japan was signed under the terms of which Japan granted to the United States the right, upon the coming into force of the treaty of peace, to dispose United States land, air and sea forces in and about Japan. That is an exceedingly important provision. These forces are to be utilized to contribute to the maintenance of international peace and security in the Far East and indeed to the security of Japan itself against an armed attack. A United States-Japan administrative agreement implementing this security treaty was signed last month in Tokyo.
I believe the Japanese people are now aware of the tragic folly of aggressive war and that they would resist any attempt on the part of their leaders to follow the paths of conquest which they travelled in the thirties and in the early forties. In addition,

Japan is not now physically capable of following such a course; she has lost much of her former empire with all the raw materials it provided, her armed forces were completely demobilized during the occupation and her stockpiles of munitions were destroyed.
The way for the revival of aggressive militarism in Japan is not now, nor I hope will it be in the future, easy or open. It must be our hope that Japan will see the advantages to be gained from association with the free world and will co-operate in the collective defence arrangements already in being so as to contribute to the stability of that important area of the world.
Nevertheless, just as is the case with Germany in Europe, so we must at times worry about the emergence again in the Pacific of this great and powerful people, whose capacity for good can be great but whose capacity for harm, in the past, has also been great.
I have dealt only briefly with the most important provisions of the treaty, and I have not even attempted to consider some of its articles. Many of these articles provide for the necessary legal termination of the state of war which existed between Japan and the allied powers. I again commend the treaty and its attached documents to the approval of the house as a good treaty, and as an attempt to mark the end of the method of peace-making which has imposed rigid controls and galling restrictions, only to court evasion and eventual disregard.
The Japanese have, I think, in almost seven years of undisturbed occupation earned the right to have their freedom. The allied powers can at least hope by generosity to exchange a former enemy for a friend, in an area torn by strife and aggression at the present time, a friend with a proven ability which can be turned to the benefit of the Pacific area as a whole.


Mr. Gordon Graydon (Peel):: Mr. Speaker, in following the Secretary of State for External Affairs (Mr. Pearson) perhaps I shall be somewhat more expansive. However, at the beginning may I indicate to the house that the official opposition, for which at the moment I am spokesman in the debate, endorses and approves the resolution moved by the minister.
This peace treaty is perhaps the most unique of its kind in the whole of diplomatic history. It is unique, so far as its methods, procedures and negotiations are concerned. In addition to that it is unique in its constructiveness and in its lack of severe penalties inflicted upon a vanquished nation.
Japanese Peace Treaty
I was struck by the. closing observations at the San Francisco meeting by the presidential representative, who had so much to do with the negotiation of the treaty itself. I refer to Mr. John Foster Dulles. I think his words, as reported from the conference, deserve to be placed on the records of this House of Commons. He indicated that this was a question of a good peace now or a better peace never, and went on to say this:
It contains no doubt imperfections. No one is completely satisfied. But it is a good treaty. It does not contain the seeds of another war. It is truly a treaty of peace.
And at another point in his address he said this:	i
This treaty is good to the point where it cannot be made better without its becoming worse. Better words might theoretically be found; but to seek these is to let escape what is now within our grasp. There come times when to seek the perfect is to lose the good. This is such a time.
It was our common hope that out of the fiery purge of war there would rise a new Japan. That was no foolish hope. Japan has a great culture and tradition which are capable of producing distinctively. but no less authentically, those virtues which all nations and peoples must possess if there is to be a world-wide commonwealth of peace.
In order, however, that that potentiality shall become actuality, Japan needs free political institutions in a climate conducive to their vigorous growth; social progress; an equal administration of justice; an awareness of human dignity; a sense of self-respect, of respect for others. Above all Japan needs the will to live at peace with others as good neighbours.
All this is possible, if we make peace now. It becomes impossible, or at best improbable, if Japan's long deferred hopes are now blasted.
There are, in Japan, new-born institutions of freedom. They will not flourish if military rule continues indefinitely to be supreme.
The United States, which since the surrender has directed occupation on behalf of all the allies, says solemnly to each of the allies: unless you now give Japan peace and freedom on such honourable terms as have been negotiated, the situation will rapidly deteriorate.
It is time to end the subjection of the Japanese government to allied command. It is time to end the occupation and to recognize that, henceforth, it is the Japanese people who exercise complete sovereignty in Japan. It is time to welcome Japan as an equal and honourable member of the family of nations. That is what the pending treaty will do.
It is on that general basis that this parliament may be expected to support the resolution now moved by the minister. When I am developing that point I should like to pay tribute to the work done by the presidential representative on that occasion, Mr. John Foster Dulles. It was a painstaking, it was a tedious, and I have no doubt at times it was a disappointing task. But his perseverance, his resolution and his determination to see that there was a peace treaty for Japan never ended, with the result that one of the newspapers in another country said that his success in connection with the Japanese peace

Japanese Peace Treaty
treaty was a feather in the somewhat battered cap of American diplomacy and American leadership during these years.
That is not necessarily in all its terms a reflection of my thought with respect to American diplomacy and leadership. But I wish to indicate at least that Mr. Dulles' position is, I believe, appreciated by the free world on this occasion..
I wish if I may to mention another personality, and I hope that in doing so I shad not be accused of entering into the general election campaign in the United States. Our own campaigns are difficult enough without taking on the task in another land. But I do want to mention General MacArthur. Whatever one may think of his military or political judgment in fields other than the occupation of Japan, I think we must admit, and freely admit, that General MacArthur did a statesmanlike job with respect to his occupation duties in Japan from the end of the war until he was released from his duties. One of the most orderly and normal transitions from war to peace occurred during that period. It was I think an indication of where we could properly apply and did apply reason instead of revenge in our dealings with those who were the losers in- a world war.
I think some of the things which he instituted have had a great deal to do perhaps with the present success of our friendly relations with Japan so far as the free powers of the world go. I need only to mention one or two in order to indicate what was done. There was the destruction of the power of the war lords and those politicians in Japan who had been responsible for the war itself; there was the breaking up of the family cartel system; a measure of land reform was introduced; female suffrage was granted for the first time; and in addition there was the breaking up of the insidious relationship between the government and shintoism. It was a sound bit of statesmanship and I think whatever may be said about General MacArthur in other fields he deserves credit for the kind of leadership that he gave in a very difficult and critical time in the relations of other free nations with the nation known as Japan.
I want to make reference if I may to what I think is our outmoded system of dealing with treaties such as this. I think our system borders on being a relic of yesterday. I do not think we should be handling a treaty like this one in the way we are, to have it appear simply as a government notice of motion on the order paper without the opportunity to discuss it fully even in committee of the whole house and the minister being able to answer questions only when he finishes the debate. I do not think that is
IMr. Graydon.]
good enough so far as our parliamentary procedure is concerned.
I am not critical in any way of the minister because after all he is simply following the dictates of our parliamentary procedure. We have in this treaty twenty-one pages of fairly closely written clauses, dozens of documents are cited and there are nine complicated protocols and conventions in the declaration alone which none of us have so far seen. In addition to that, several departments of government are involved.
When we have no machinery for dealing with it in committee of the whole I would be quite satisfied to have it dealt with in the standing committee on external affairs. I am supported in that by the fact that in our own Senate they have endorsed the principle of the resolution, as I am endorsing the principle this evening, and when they return somewhere around the end of April or the first of May they will proceed to deal with the treaty clause by clause in their foreign relations committee.
I notice that in Great Britain they deal with these things differently from what we do. I am not so sure that we should not follow Great Britain in dealing with treaties of this kind. There the treaty is brought forward in the form of a bill which is given first reading, second reading, considered in committee and then given third reading. It then goes on to the House of Lords. I read with a good deal of interest what was said on this treaty both on the second reading stage and during the committee stage. It received careful examination and I felt that those who took part in the debate had an exceptional knowledge of the situation as it existed.


Lester Bowles Pearson: May I interrupt the hon. gentleman to inform him that a bill will be introduced in this house to give the government power to carry out the provisions of this treaty after it is ratified, just as was done with the Italian peace treaty.


Gordon Graydon: I am glad to have the minister's explanation on that. My point is that this resolution ought to go to the external affairs committee. It seems to me that before we endorse a treaty of this kind the fullest information ought to be available to the members and to the house. I do not think there is any desire on the part of anyone to place any obstacles in the way of the passage of this commendable treaty, but I do urge that this matter be sent to the external affairs committee before the bill is introduced.
I was interested in reading the debates which took place in the foreign relations committee of the Senate of the United States and also in the Senate itself. Perhaps this is a most appropriate time to mention this

as we have just had a budget speech and there are signs of fatigue on every side of the house. When the Senate of the United States dealt with the Japanese treaty it was found that they did not have a quorum of senators. I think that indicates that so far as our national boundaries are concerned there is not such a great difference. The minister has hinted at some urgency in connection with this matter. I would point out that the sixth nation out of the eleven which is necessary to give a majority to provide for the implementation of the treaty was Pakistan. I understand that just a couple of days ago Pakistan approved and ratified the treaty with Japan. I should be glad to go further in my argument to have this referred to the standing committee on external affairs, but perhaps that will not be necessary.
As I see it, there are many questions in the public mind in connection with this treaty that will have to be answered. There is the question of trade, the question of commercial practices, the question of fishery rights, the question of reparations, the question of maritime enterprise, the question of immigration and other questions affecting the social and economic as well as the diplomatic side of the treaty. Some of these matters are extremely delicate in their complexion and design. I am going to leave that suggestion with the minister as it stands in the hope he will accept it. I think he will find there is no delay of a dangerous character involved because the Senate does not come back until the first of May anyway and they will only start to deal with the question at that time.
Following the minister's remarks with respect to the treaty itself in which he said that it did mark the formal conclusion of the state of war, it is also, if I may say so, a step in the right direction of rebuilding the stability and security of the Pacific area. If there is any area at the moment outside of Europe itself that needs attention with respect to rebuilding and security it is that very area. It was pointed out in the British house by Kenneth Younger, M.P., formerly minister of state in the Attlee government, that Japan was in the very nest of problems because there was great communist China on one side, Soviet Russia on the other, and Japan herself, all three at the one time major powers. In addition to that there is the legitimate interest of Britain and the United States and other powers in that very locality. Japan is in a sense sitting on almost the powder keg of the world. I have no doubt that is one of the reasons why this treaty is so unique in its provisions so far as leniency to the Japanese government and Japanese people is concerned.
Japanese Peace Treaty
1 think one of the things one gathers from a reading of the treaty is that in a sense it serves as a base from which to approach the wider area of issues because we must not make the mistake of thinking that the treaty by any means settles all the issues either surrounding Japan or in Japan itself. It only takes a step towards solution of them, and Japan's relations with the free world on many fronts remain unsettled and undefined. But it does point the way to such settlement, and half a loaf of course is sometimes better than none. Giving Japan her sovereignty and admitting her into what we think is respectable international society has involved risks. Those risks of course belong to the military, economic and other fields, but on the other hand we had to take some calculated risks in connection with this matter.
One of the things that struck me most was the attitude of the Australian government. The Australian government has interests in that area that perhaps we do not have in quite the same measure. I do not mean to convey that our interests are not of a very important character too but Australia came within an ace of being occupied by the Japanese forces. In reviewing the Japanese treaty the prime minister of Australia, Mr. Menzies, says something which I think is significant. He has this to say:
... it is simple to understand that the instinctive reaction of Australia to any proposal for a Japanese peace settlement is, "Keep them down! Don't let them rearm! Don't trust them!" It is true that history proves that such reactions are ephemeral and sometimes dangerous. But we are not living in a world of historians; we are living in a world of men and women, of widowed wives and bereaved mothers; a world tenaciously attached to a justice which precedes mercy, though it may be tempered by it . . . The United States and the United Kingdom, the two principal free nations, made it clear that they were not prepared to prohibit a substantial measure of Japanese rearmament. And if these great powers were not willing to prohibit, and to enforce that prohibition by supervision and occupation if necessary, how could Australia by herself make a prohibition effective? To that question there was, and is, no real answer.
Then he goes on to say:
Japan is destined once more, and very rapidly to be a great industrial power. To prohibit this successfully would be to condemn the most virile people in East Asia to poverty, misery and revolution. No greater threat to Asiatic peace could be imagined. To prohibit it unsuccessfully would be to make the worst of both worlds, for power and hatred would be renewed together. Japan will again become a great industrial power more rapidly than she can become a military power; in her case the one depends so much upon the other. But during the intervening period an undefended Japan would be a constant temptation and an easy prey for the territorial imperialism of the communists. We must not forget that one of the checks upon aggression today is the fact that, with western Germany and Japan outside the Soviet orbit, the balance of heavy industrial production weighs down heavily in favour of the free world. Japan must therefore be defended. By whom? Putting aside the question of how far and

Japanese Peace Treaty
how long any democracy will be prepared to maintain an army of occupation in a defeated country, a question full of not only economic but psychological and moral considerations, let me look once more at the pure sentiment of it. Armies of occupation in Japan must, having regard to the communist threat, have two functions. One is to keep the peace in Japan against the Japanese. So far our feelings are satisfied. But the other function must be to defend Japan against an external attacker. It would come as a shock to most Australians to be told that as a punishment for the Japanese, Australian troops were in future to defend Japan while the Japanese themselves went smiling and bowing about their affairs of production and commerce. . . The case for a measure of Japanese rearmament is thus complete unless the great powers, that is, the United States and the United Kingdom, are able and willing to do on the grand scale what I am sure Australia would not want to do for any length of time on the small scale.
Then he goes on further to say:
. . . we should be foolish to force a hard and bitter peace upon Japan because we feared that in fifteen or twenty years' time Japan might once more become an aggressor, when the real and deadly and present question is whether, inside the next two years, we shall between us be strong enough to resist, and therefore deter, a vast communist aggression against one manifestation of which we are actually now fighting in Korea. If the United States, with its tremendous world responsibility and its magnificent and unprecedented preparation to discharge it, chooses to see Japan not as a possible future danger but as a present and important factor in world defensive strategy against communism, who can with confidence gamble upon the future course of history and say that it is wrong? And in any case, the United States is taking its risk prudently. Pursuant to article 6 of the treaty the United States is entering into a defensive pact with Japan. Thus, by a double stroke, Japan is made a co-operator in the short-range defence problem and a potential friend in the long run. There are, of course, many people who feel that the Japanese people have, by the joint effects of defeat and occupation, "suffered a sea change" into democracy. I do not believe this for a moment. Democracy is a growth from the soil; it is never imposed from without. Witness the easy and swift collapse of parliamentary selfgovernment in Germany and Italy. It needs a tree with deep roots in a deep soil to withstand the winter gales of tyranny. The real question is not whether Japan has already become democratic (a notion which I frankly do not believe), but whether, to quote the recent words of my colleague, Mr. R. G. Casey, "to permit the Japanese people to recover their self-respect and some measure of economic independence offers the best means of promoting the growth of a workable democracy in Japan."
Then Mr. Menzies goes on:
It is my own deep belief that, though slavery is the breeding ground of revolution, only freedom and free men can bring forth democracy.
Coming from the head of the state which perhaps has more reason to be nervous because of the resurgence of Japan as a great power than almost any other country in the free world, I think that at least gives some indication how far nations are prepared to go in endorsing this plan for dealing with Japan.

I suggest to you, Mr. Speaker, that the question to be asked concerning this treaty, which is sometimes described as the softest in the diplomatic history of the world, is simple; and we are giving it a simple answer. The question is, do we want and do we need 83 million Japanese people with us in our efforts to keep the world free and at peace? The answer we are giving is shown by our approval of the resolution now before the house. That answer is yes, as far as the people of Canada are concerned. This treaty will give Japan a chance, by entering into an alliance with the free nations of the world, to link her power in the Orient with that of the United Kingdom, the United States and other countries. I am satisfied, as I am sure the Japanese people are satisfied, that her future is better with us than it would be if she were absorbed into the net of Russian imperialism. If Japan behaves herself in the free world society she has an opportunity to again become a great leader in the Orient. With the soviet it would be a different proposition. Many reasons could be advanced as to why Japan would throw in her lot with us rather than with the soviet regime, to be interlocked and interwoven with that extensive international mechanism known as imperial communism. There she would lose not only her identity and her opportunity to become a great power again; she would also lose her internal relationship with her emperor, which to the Japanese people is still a very important consideration.
As the minister indicated a few moments ago, many of the United States forces will be remaining in Japan, not as occupation forces but under the terms of the security treaty which has been entered into between the United States and Japan. I,think this has a bearing on one of the things some of us on this side of the house have been arguing for, without very much effect as yet though I am hoping the day will come when we will be able to tell the minister we are glad he has accepted our suggestion. I refer to the question of a Pacific pact. I am sure the minister must be thinking, "I have answered that fellow so often, surely he must be convinced by now that we cannot do anything about it at this stage." Nevertheless I mention the matter again because I think we have a further argument now by virtue of entering into the Japanese treaty. We cannot go on forever in the Pacific having all these pacts and alliances, without having some kind of master pact to combine them all. We now have a pact between the United States and Australia and New Zealand. We have a pact between United States and Japan, and we have a pact between the United States and the Philippines. These all being mutual

security pacts, it seems to me the time is coming when we must have an over-all plan. I think I may interpret the words of Mr. Dean Acheson, Secretary of State for the United States, in that way when he appeared before the senate foreign relations committee during the debate two months ago. This was the only statement made by Mr. Acheson, I think, which has any relation to the problem I am discussing. This is what he said:
The ratification of these treaties would give courage and hope to millions of people in the Pacific area, whose primary desire is to live at peace with their neighbours. It is our hope that these treaties will serve as a point of departure for the development of an effective system of regional security in the Pacific.
You will note the words "serve as a point of departure"; and with that I rest my case again. I am sure if the minister moves from his present rather static position with respect to the Pacific pact, he will find himself once more in the company of a man in whose company he finds himself perhaps more often than any other diplomat in the world. I am hoping he will follow some of these men who are more experienced than the parliamentary assistant to the Minister of Finance (Mr. Sinclair) who during a debate in this house some weeks ago chided the party I represent for advocating such expensive things as the Pacific pact. That was the first time anyone on the government side said it was money that was behind our delay, our reluctance, our refusal to join a Pacific pact. So I hope the minister will take to heart what has been said by a man whom I consider to be rather more experienced in foreign affairs than the hon. member for Coast-Capilano.
A glance at the map of this area will show the great problems which arise from a geographical point of view. There are four islands, Hokkaido to the north, Honshu to the south, Shikoku and Kyushu. I hope I am pronouncing them properly. The minister has not corrected me, so perhaps he does not know any more about it than I do. It is interesting to note that between the northern island of Hokkaido and Russian occupied island of Sakhalin there is a strait only some 60 or 75 miles wide. There is only 200 miles between Honshu and Korea, which indicates that Japan is in the very centre of trouble. She is a close neighbour of red China and also a close neighbour of soviet Russia, and all the time needing raw materials and markets. Those of us who have watched the progress of the Moscow trade conference during the last day or so will recognize, of course, that on the trade front the soviet are again attempting to make a dent in our flank. No doubt they are not overlooking in that meeting the problems which face Japan economically. Not only are they attempting to call a bluff on Japan so far as trade is
Japanese Peace Treaty concerned, but also to sabotage by a movement through the northern island of Hokkaido, which has its origin in Sakhalin to the north. In addition to that, at the moment Japan faces a need for food, for iron, for coking coal and for raw materials for the textile industry. As one member in the British house said, Japan is the only oriental country that has actually measured up to the western world in so far as both technology and production are concerned.
In the past one of Japan's problems has been to try to find the raw materials for 83 million people who are engaged in such extensive and intensive production. This problem got her into trouble before. During the depression Japan's trade practices were largely criticized from one end of the world to the other. She found herself in a very tight corner with respect to these markets and raw materials. One of the problems we shall have to face I think is this. If Japan gets into a tight corner economically, the soviets will take advantage of the situation at every turn. Already the soviets have offered coal to Japan for a third of the price at which it can be delivered from the United States. I believe that is an indication of what Japan, and incidentally this country, have before us by way of problems in the Far East.
In addition to that, of course, the pressure to recognize and deal with red China is great. Some time ago Premier Yoshida of Japan indicated his close attraction for the government on Formosa in contrast to that of red China. Nevertheless, it was not long ago, perhaps a year ago, that the same premier made a statement which I think is evidence of the danger that faces us in that area. He said:
Red or white, China remains our next door neighbour-economical law will, I believe, prevail in the long run over ideological differences.
I had intended going somewhat further afield in connection with my argument concerning the treaty, but the time is getting late. I am going to close by leaving out the matter of Japan's problem with communism in that area. It is an interesting story, but it is a story that perhaps can be told on another occasion. One of the things we ought to consider very carefully is that Japan is going to need help, and she is going to need understanding from the other sections of the free world in order to restore her position and to permanently retain it. Whatever we may do by way of this treaty of peace, it still remains an uneasy peace for Japan. It is our obligation, it is our duty to do our best to make that peace as firm a peace for the Japanese people as we can.
The admission of Japan into free world circles poses hard-cored problems for Canada.

Japanese Peace Treaty
The minister mentioned two of them. Apparently the problem of fisheries has been reasonably well solved, according to the minister, but naturally one would like to examine more closely what that convention actually includes. I intended to put on the record tonight the story of the imports and exports so far as Japan and Canada were concerned both in 1938-39 and since the war. I believe it would show that the balance generally has been in our favour, which indicates I think that in most instances trade with Japan on a normal, proper and fair basis cannot do this country any harm and will do the Japanese economy a great deal of good. I believe our job will be to find a solution to the problem of preventing Japan from being thrown, economically and commercially, into the hands of communists. At the same time we must maintain our position with respect to trade so that our standard of living and the working people of Canada are protected. I am satisfied a solution of that problem can be arrived at without attempting in any way to throttle the economy of Japan. I believe that we can get together and, without harm to our own industries here, find a large field of trade upon which to draw in order to keep Japan free, even in that disturbed area.
One of the main problems is, of course, in connection with the arbitrary clause in our Customs Act respecting dumping. If Japan becomes a member of the Geneva agreement on trade and tariffs, that section may be put in jeopardy again. I am satisfied these are matters that can be solved, and I am not raising them except to indicate the serious problems that are ahead of us. For many long years the United Kingdom and Japan were faithful allies. Prior to the early twenties their friendship and ours was almost traditional. Today we are witnessing the restoration of that international bond of mutual understanding between the free world and Japan. All I can say, Mr. Speaker, is: May it usher in a new and more constructively peaceful era in our Pacific relations.
On motion of Mr. Coldwell the debate was adjourned.



APPOINTMENT OF COMMITTEE TO STUDY PROCEDURE

Hon. Alphonse Fournier (Minister of Public Works):: Mr. Speaker, I have spoken to the leaders of the other parties and by leave of the house I move:
That the select committee to consider with Mr. Speaker the procedure of this house, provided by resolution of April 7, consist of: Messrs. Bradette, Brooks, Fleming, Fournier (Hull), Fulton, Harris (Grey-Bruce), Knowles, MacNaught, Pouliot, Quelch and Weir.


[Stage Direction]
Motion agreed to.

Alphonse Fournier: Tomorrow we shall continue this debate, and I understand there are not many speakers. Then, if the house would agree, we would take up the resolution which the Prime Minister put on Votes and Proceedings today concerning the readjustment of representation in the House of Commons. If that did not meet the wishes of the members, though I spoke to the whip of the opposition and he had no objection to that procedure, we could listen to speeches for a certain time and if a member wanted to adjourn the debate we would not object. Then, we would take up a small bill, the appointment of the auditors for the national railways, and resolutions Nos. 7 and 13 on today's order paper. Those would just lead up to the bills. If we had more time, we would find some non-contentious matters.


Mr. Coldwell:: I do not think there is any objection to going on with redistribution, provided it is adjourned. There are so many members who are interested in this subject from various parts of the country who have left to go long distances home that I feel if the resolution is explained and, without further debate, is adjourned it would meet the desires and convenience of those members. We can proceed that way.


George Alexander Drew: I would not want to give any undertaking that the debate would be immediately adjourned. I agree with the procedure outlined by the Minister of Public Works, but I think we can deal with that when we come to it.


Major James William Coldwell: I do not think we should
attempt in any way to conclude it.


George Alexander Drew: I agree with that.


Mr. Speaker:: Do I understand that there is unanimous consent to proceeding tomorrow with the notice of motion of the Prime Minister (Mr. St. Laurent), which will be in Votes and Proceedings but will not appear on the orders of the day. Is that the unanimous wish of the house?


Some hon. Members:: Agreed.


Alphonse Fournier: That order of business would come after this actual debate. The debate on the Japanese treaty would have priority.


Major James William Coldwell: Yes.


Mr. Speaker:: Is that agreed?


Some hon. Members:: Agreed.


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

The Budget-Appendix

[Stage Direction]
presented by
the Honourable D. C. Abbott, M.P., for the information of Parliament in connection with the Budget of 1952-53

The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1951, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government accounts for the
fiscal year ending March 31, 1952.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Page
1.	General Review	 1311
2.	National Accounts-
National Income, Product and Expenditure	 1314
Personal Income and its Disposition	 1317
Source and Disposition of Saving	 1319
Investment and Capital	Expenditure	   1322
Revenue and Expenditure of All Governments	 1325
3.	Balance of International Payments	
13304.	Employment and Earnings	
13335.	Trend of Prices	
1335
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics and other Government Departments. Some of the figures appear for the first time; others have been published elsewhere. All 1951 estimates are preliminary and subject to revision.
Figures for Canada include Newfoundland for 1949, 1950 and 1951.

The Budget-Appendix

[Stage Direction]
The first part of 1951 was dominated by strong inflationary pressures, but as the year progressed these became somewhat less severe. The underlying inflationary potential is still high but for the time being, at least, it appears to be under control.
A brief review of the post-war years will put our present problems in perspective. The years 1946 to 1948 were a period of transition from war to peace. This transition was achieved more smoothly and with rather less disturbance than many Canadians had feared. In Canada, as in other countries, we experienced in this period a greater rise in prices than had been expected, but the redeployment of labour from the armed services and the war industries to the tasks of peace was accomplished with far less unemployment and industrial dislocation than most people had dared to hope.
By mid-1948 the reconversion of industry and the redeployment of labour had been largely completed, and for nearly two years, from the summer of 1948 to the late spring of 1950 Canada enjoyed a period of relative economic equilibrium at high levels of employment and income. Price levels remained stable and employment remained high, and not even the sharp United States recession of 1949 nor the devaluation crisis in September of that year seriously disturbed the balance of the Canadian economy.
The spring of 1950 saw the beginning of what seemed to be a new sustained upswing in Canadian economic activity, sparked by a rapid acceleration in the discovery and development of natural resources and re-enforced by the quick rebound in the United States from its recession of the previous summer. Even before the outbreak of hostilities in Korea, 1950 showed signs of developing a situation in which our resources would be fully extended in meeting the programmes of peaceful economic expansion which the Canadian people had set for themselves.
The Korean aggression, with the grave threats it exposed and the serious alarms it engendered, initiated a scramble for inventories all over the world. The world market prices of many staple raw materials-wool, tin, rubber, copper, lead, zinc, oils and fats, hides, cotton and chemicals-rose sharply, and within six months had gone up as much as 50, 100 and even 200 per cent.
The first phase of this new inflationary cycle was largely psychological, stemming as it did from a fear of shortages and higher prices and a consequent scramble for inventories and replacements. Consumers participated in this scramble, particularly in the field of cars and household equipment and appliances. But the real inflationary force created by Korea flowed fundamentally from the necessity and determination throughout the Western world to carry through a speedy and a heavy defensive rearmament programme. The magnitude of the defence programme adopted was clearly one that could not be inserted into an already fully extended economy. To accomplish this defence programme in the time allotted it was necessary simultaneously to restrain consumption, encourage savings, increase productive efficiency and capacity, forego less essential forms of capital expansion, and divert labour and materials to defence and to defence supporting industries.
In a free democratic country governments do not dictate the course of economic affairs, but governments can and should follow policies which guide or steer the economy in the right direction. The general import of government policies should contribute toward restraint where restraint is needed and toward expansion where expansion is needed.
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The Budget-Appendix
Federal financial and economic policies have been designed to these ends. Consumer spending has been restrained by means of higher personal taxes and higher commodity taxes, especially on commodities that make heavy demands upon critical materials or other critical resources. Monetary policy has been such as to discourage the expansion of credit generally and consumer spending has also been restrained by the Consumer Credit Regulations. Greater savings have been encouraged directly through the more attractive terms of the sixth series of Canada Savings Bonds, as well as by the restraints on spending and by the increase in interest rates generally which has resulted from the rising demand for loan funds in the face of a limited supply.
Capital expansion in the form of new plant and equipment has been restricted in the case of projects which are less essential in the context of present conditions and encouraged in the case of projects related to the broad needs of defence. This selective approach has been made both through the priorities and allocations policies administered by the Department of Defence Production and through the operations of the "deferred depreciation" regulations administered by the Department of Trade and Commerce. In a limited number of cases essential expansion in defence industries has been facilitated by the granting of accelerated depreciation on specialized new plant and equipment, or by direct capital assistance with government funds.
The greater difficulty of borrowing and the higher level of interest rates generally have had a moderating influence on investment in new capital projects, particularly marginal projects, and on investment in inventories.
The following table summarizes some of the more significant monetary and credit statistics in recent years:
-	Money Supply (Currency outside banks plus active bank deposits)	Bank Loans plus banks' investments in non-gov't securities	Consumer Credit Outstanding	Long term interest rate (Theoretical yield of a gov't 15 year bond)(millions)	(millions)	(millions)	(per cent)1948 December	$4,335	$3,341	$ 748	2-931949 December	4,422	3,419	892	2-751950 March	4,446	3,437	859	2-73June	4,525	3,559	959	2-73September	4,919	3,618	1,042	2-71December	4,851	3,950	1,135	2-991951 March	4,669	4,101	1,097	3-25June	4,750	4,133	1,107	3-25September	4,765	4,112	1,068	3-24December	4,843	4,085	1,090	3-501952 January	4,697	3,984	3-54February	4,730	3,930	3-55
It will be observed that total money supply and bank loans, after a sharp rise in 1950, have levelled off or declined slightly during 1951, and this trend has been continued into the opening months of 1952. Consumer credit outstanding, which had increased by nearly 30 per cent in 1950, declined by about 4 per cent during 1951. Long term interest rates during the past 18 months have advanced about three-quarters of one per cent.
The following table relating to capital investment in business illustrates the degree to which less essential investment has been restrained and the more essential encouraged.

The Budget-Appendix
-	1950	1951	1952 Intentions	Percentage change from 1950	
				1951	1952
	(millions of dollars)				
Primary and construction industries	$ 697	$ 853	$ 859	+22	+23Manufacturing	511	755	929	+48	+82Utilities	720	916	1,130	+27	+57Trade, finance and commercial	397	396	309	-	-22Total	$2,325	$2,920	$3,227	+26	+39
The Department of Trade and Commerce has further estimated that investment intentions for 1952 in the case of industries fully subject to "deferred depreciation" are 17 per cent below 1951, while in the case of industries eligible for normal depreciation they are 15 per cent higher.
The general economic position in the opening months of 1952 is that the inflationary pressures have been brought under control, but that at many points in the economy a strong inflationary potential still exists. Any series of adverse events which sharply raised the present international tensions could bring about a renewal of direct inflationary pressures that might seriously test our economic defences. But at the moment the prospects for 1952 indicate continued high levels of employment and general business activity, without any renewal of overt inflation, and with most of the increased output occurring in the defence and defence supporting sections of the economy.
The inflationary pressures that persist are not evenly distributed through the economy. At some points and in some regions the economy is likely to be fully or more than fully extended. At other points and in other regions the available resources are likely to fall short of full utilization. While these contrasting situations will not persist indefinitely, it may take time to adjust them since resources both in labour and in plant and equipment are not fully or easily transferable, either technically or geographically.
In the pages that follow the usual detailed tables and explanations are given showing the trends from 1948 to 1951 in the gross national product, personal incomes, saving and investment, the balance of international payments, employment and earnings, and the trend of prices.
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The Budget-Appendix
THE NATIONAL ACCOUNTS National Income, Product and Expenditure
National Income is the total of the annual earnings of Canadian residents from the production of goods and services. As such it includes salaries, wages and other forms of employee earnings in cash or in kind, as well as military pay and allowances. It includes corporation profits, interest, net rent, and the net income of farmers and others who are in business on their own account.
Gross National Product is the value at market prices of all the goods and services produced in a year by the labour, capital, and enterprise of Canadian residents. It is measured by adding together the costs of production. Part of these costs of production are the factor costs or, more simply, the earnings of the factors of production, labour, capital and enterprise; and the total of these factor costs is National Income. Indirect taxes and other costs such as depreciation allowances also enter into the cost of goods and services although they do not form part of the income of Canadians. They are, therefore, added to National Income to obtain Gross National Product. Subsidies on the other hand may be regarded as offsets to costs of production and are therefore deducted.
Gross National Expenditure measures the same aggregate as Gross National Product but in a different way. The goods and services produced in a year are either sold at home or abroad or added to inventories. Thus Gross National Expenditure is obtained by adding together all sales and adjusting them for imports and changes in inventories. While Canadian expenditure on imported goods and services is included in the total sales to consumers, to governments, and to business for capital account, it is not part of the disposition of Canadian production and is therefore deducted. But since foreign expenditures on Canadian goods and services, i.e., exports, form part of the earnings of Canadians in the Gross National Product, they are included in Gross National Expenditure.
GROSS NATIONAL^ EXPENDITURE IN CURRENT AND CONSTANT(1935-39) DOLLARS
BILLIONS OF DOLLARS	1926-1951	BILLIONS OF DOLLARS

The Budget-Appendix
National Income and Product
Gross National Product reached $21,241 million in 1951, an increase of 17 per cent over 1950. After allowing for the upward movement of prices which amounted to 11 per cent, it is estimated that the real increase in product was rather more than 5 per cent.
Since the present estimates of change in real product are only approximate, they must be used with some caution in assessing the importance of the gain for a given year or in comparing it with other years. However, it appears that the percentage gain in real product for 1951 was greater than the increase during 1950 and comparable to the combined increases of the two years 1948 and
1949.	A significant factor in the increase in product, and one which did not operate in 1950 was the growth in the employed labour force of about 2\ per cent. This was partly offset, however, by a decline of 1 per cent in average weekly hours worked.
A substantial part of the estimated 5 per cent increase in real product, perhaps one-quarter, was due to increased agricultural production, particularly the western grain crop. Because of poor weather, part of this crop remained unharvested in 1951 and thus constituted an involuntary addition to inventories. It is an increase in real product which remains to some extent in doubt, and one which had no positive impact on the economy in 1951. Elsewhere in the economy, although output was higher for the year as a whole, some significant changes occurred during the course of the year in both the pace and pattern of production. Thus while the index of industrial production averaged 212-0 for 1951, or 6-9 per cent above the average for 1950, it rose to a peak of 223-4 in May from which it declined to 200-3 in December. A very significant factor in this rise and decline was the change in demand for consumer goods, particularly durables and textiles which weakened greatly after the first four months of the year, and resulted in a sharp curtailment of production. The increase in expenditures for defence and resource development, which became more important as the year advanced, was not sufficient to offset the effects of reduced demand for consumer goods, so that the index fell at year end below the levels reached late

[Stage Direction]
-	1948*	1949	1950	Prelim. 1951
		(Millions of Dollars)		
1. Wages, salaries and supplementary labour income.	7,170	7,761	8,271	9,6402. Military pay and allowances	82	115	137	2013. Investment income	2,464	2,445	3,088	3,6554. Net income of unincorporated business-	(a) farm operators from farm production2....	1,518	1,504	1,547	2,138(b) non-farm unincorporated business	1,326	1,369	1,512	1,5955. National Income (1+2+3+4)	12,560	13,194	14,555	17,2296. Indirect taxes less subsidies	1,772	1,830	2,005	2,3867. Depreciation allowances and similar business costs	1,276	1,437	1,607	1,7638. Residual error of estimate	5	1	-45	-1379. Gross National Product at Market Prices (5+6+7+8)	
10. Index of G.N.P. in Constant Dollars	15,613 100	16,462 103	18,122 108	21,241 1141	Excludes Newfoundland for which the Gross National Product in 1948 was about $175 million.2	Includes undistributed Wheat Board trading profits, and inventory revaluation adjustment on a calendar year basis for grain held by Wheat Board.
The Budget-Appendix
in 1950. Real product for the year as a whole showed an increase over 1950 because of the steady advances in production for defence and resource development, and because the very heavy production of consumer goods in the first part of the year offset the declines in the last half.
Farm income showed a very large increase of 38 per cent. This was due to higher prices, particularly for livestock and to an increase in the volume of agricultural production. A very large factor in the increased production was the western grain crop, estimated at 30 per cent above 1950 and 35 per cent above the ten year average. A substantial part of this crop is still not harvested.
The earnings of wage and salary workers rose by 17 per cent during 1951, largely as the result of higher wage rates, although the number of paid workers was on the average about 6 per cent above 1950 levels. This gain in labour income is much larger than the increase of 7 per cent recorded between 1949 and 1950. Military pay and allowances increased by $64 million or approximately 50 per cent.
Investment income increased by 18 per cent over 1950 compared with an increase of 26 per cent between 1949 and 1950. This somewhat more modest advance was due to the less rapid increase in corporate profits which constitute the bulk of investment income. In 1950, for example, corporate profits before tax rose by 28 per cent compared with an estimated increase of 16 per cent in 1951. In contrast to labour income, corporate profits were more responsive to the upsurge of inflationary pressure after the outbreak of war in Korea and rather more sensitive to the lessening of that pressure in the latter part of 1951.
National Expenditure
In addition to the estimated increase of more than 5 per cent in Canadian real product, imports of goods and services exceeded exports by $534 million in 1951 compared with an excess of $329 million in 1950. Taking both these factors into account, therefore, Canadians used about 6 per cent more goods and services in 1951 than in 1950.
This increased product went for defence and capital purposes, many of which were defence supporting, rather than for consumer expenditure. It is estimated that personal expenditure on consumer goods and services rose by 10 per cent during 1951 but that all of this increase was accounted for by rising prices.

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-	19481	1949	1950	Prelim. 1951
		(Millions of Dollars)		
1. Personal expenditure on consumer goods and services	10,112	10,963	11,862	13,0622. Government expenditure on goods and services. . ..	1,798	2,128	2,323	3,1203. Gross domestic investment-	(a) plant, equipment and housing	2,685	2,968	3,216	3,807(b) change in inventories	605	231	1,005	1,6504. Exports of goods and services 2	4,054	4,011	4,185	5,0995. Imports of goods and services 1	-3,636	-3,837	-4,514	-5,6336. Residual error of estimate	-5	-2	+45	+1367.	Gross National Expenditure at Market Prices (1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	15,613 100	16,462 103	18,122 108	21,241 1141	Excludes Newfoundland.2	Minor adjustments have been made to the figures of current receipts and payments shown in Table 12 and in "The Canadian Balance of International Payments, 1926 to 1950", Dominion Bureau of Statistics, to achieve consistency with the other component series.
The Budget-Appendix
Of all expenditures, those made by the federal government for defence showed the largest percentage increase rising from $493 million in the calendar year 1950 to $1,160 million in the calendar year 1951. This increase claimed about one-half of the nation's total gain in real output for 1951.
While federal government defence spending showed the largest percentage increase, the increase in expenditure for gross domestic investment was equally significant in absolute terms. Investment in plant, equipment and housing increased by $591 million, an increase of 18 per cent in value or about 7 per cent in volume terms. Investment for these purposes thus absorbed 18 per cent of the nation's total output in 1951, a proportion relatively unchanged from that of the previous year. In addition, inventory accumulation is shown at the record level of $1,650 million or $645 million higher than in 1950; but this figure needs qualification. Approximately $370 million of the total change in inventories represents the value of the physical change in farm inventories. Of the balance, however, a very considerable part reflects an increase in the prices at which year-end inventories are valued rather than an increase in the volume of inventories held. In volume terms business inventories increased by 12 per cent in 1951 compared with 10 per cent in 1950.
Personal Income and Its Disposition
For the purpose of showing the relationship between the incomes, spending and saving of Canadians, Personal Income is a more useful concept than National Income.
Personal Income differs from National Income in a number of ways. It is defined as the sum of current receipts of income regardless of whether these receipts are earnings from production. Thus it includes only that part of corporation profits which is actually received by Canadian persons as dividends. Similarly deductions must also be made from employees' total earnings for unemployment insurance contributions or pension contributions which, although forming part of the compensation for services performed, are not actually received by the employee within the year. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, are part of personal income although they are not payments for services and, therefore, do not form part of National Income.

[Stage Direction]
-	1948'	1949	1950	Prelim. 19511. Wages, salaries and supplementary labour income..	7,170	(Millions c 7,761	f Dollars) 8,271	9,640Deduct: Employer and employee contributions to	social insurance and government pension funds	-224	-239	-259	-3162. Military pay and allowances	82	115	137	2013. Net income received by farm operators from farm	production 2	1,627	1,600	1,446	2,1914. Net income of non-farm unincorporated business...	1,326	1,369	1,512	1,5955. Interest, dividends and net rental income of per-	sons 3	1,058	1,157	1,290	1,4546. Transfer payments to persons (excluding interest)-	(a) from government	863	950	1,012	1,001(b) charitable contributions made by corpora-	tions	22	23	25	27(c) net bad debt losses of corporations	19	21	23	257. Personal Income (1+2+3+4+5+6)	11,943	12,757	13,457	15,8181	Excludes Newfoundland.2	Excludes undistributed profits of the Wheat Board and an inventory revaluation adjustment on a calendar year basis for grain held by the Wheat Board.
1 Includes all government debt interest paid to persons.
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A special adjustment is necessary for farm income since the farmer does not receive full payment for his grain at the time it is delivered to the Wheat Board. An initial payment is made upon delivery and subsequent payments adjust for the full price realized by the Board. Thus for a time a part of the farmer's income accumulates with the Wheat Board. For purposes of national income, net farm income is shown in table 1 on an accrued basis and includes income accumulated with the Wheat Board on behalf of farmers. For purposes of personal income, however, an adjustment is necessary to exclude such accumulated income and to include only the disbursements of the Wheat Board whether in respect of current or prior years' deliveries.
Personal Income rose by $2,361 million or 18 per cent during 1951. The largest part of this increase was due to the gain of $1,312 million in salaries and wages net of employer and employee contributions to social insurance and government pension funds. Net income received by farmers rose very sharply by 52 per cent, while net incomes from other unincorporated business increased by only 5 per cent. The rise in farm receipts was accentuated by larger Wheat Board disbursements. Dividends paid out by corporations increased by 2 ner cent. Transfer payments were the only source of personal income which fell below 1950 levels and the decline in these was slight. The gain in personal income on a per capita basis appears to have been greater than the rise in prices of consumer goods and services.
On the expenditure side, some significant changes took place during 1951. Personal direct taxes increased by $281 million or 38 per cent owing to the combined effect of rising incomes and higher income tax rates.
In spite of higher taxes, however, disposable income, or personal income after payment of taxes increased by $2,080 million or 16 per cent in 1951. Excluding the portion of this increase which is accounted for by the rise of $370 million in farm inventories, the balance of $1,710 million might have gone to swell the total of personal expenditure on consumer goods and services. In fact however, $641 million or 38 per cent of it went to increase the volume of personal saving. Thus personal saving, excluding change in farm inventories, increased from 5-7 per cent of disposable income in 1950 to 9-3 per cent in 1951, a ratio approximating those of 1948 and 1949. It appears that the rise in expenditure on consumer durables in 1950, which contributed substantially to the lower level


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1926	1930	1934	1938	1942	1946	1951

The Budget-Appendix

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-	1948>
1949	1950	Prelim. 1951
		(Millions of Dollars)		
1. Personal direct taxes-				
(a) income taxes	717	677	612	890(b) succession duties	58	55	63	63(c) miscellaneous taxes	47	57	60	63Total direct taxes	822	789	735	1,0162. Personal expenditure on consumer goods and services- Goods-	7,864(a) non-durable	6,461	6,799	7,115	(b) durable	914	1,084	1,320	1,318Services	2,737	3,080	3,427	3,880Total consumer expenditure	10,112	10,963	11,862	13,0623. Personal saving-	1,077	729	1,370(a) personal saving excluding farm inventories. ..	1,074	(b) change in farm inventories	-65	-72	131	370Total personal saving	1,009	1,005	860	1,7404. Personal Income (1+2+3)	11,943	12,757	13,457	15,818
1 Excludes Newfoundland.
of saving in that year, was accompanied by a sharp increase in consumer debt; and that repayment of this debt in 1951 was an important factor in restoring the savings ratio to 1948-1949 levels.
The extraordinarily high level of consumer durable goods purchases in the first quarter of 1951 gave way during the rest of the year to greatly reduced spending so that expenditures on these commodities were for the year as a whole unchanged from 1950 in value and significantly below in volume. A combination of several factors appears to have been responsible for this trend. In some fields the backlog of post-war demand had been met and in others the market had been narrowed by advance buying in anticipation of shortages or higher prices. Heavier excise taxes and restrictions on consumer credit were further deterrents. In the non-durable group clothing purchases were reduced, but food consumption remained close to 1950 levels. Only in the case of services was there a greater volume of purchases and this increase was on a moderate scale. After adjusting for price changes, the level of total consumer expenditure seems to have remained unchanged in 1951. In per capita terms the preliminary estimates indicate a decline of about 2 per cent.
Source and Disposition of Saving
Saving may be regarded as the source from which investment expenditure is financed. Income arising out of production may either be spent or saved. At the same time production will be absorbed either by consumption expenditure, or by investment expenditure at home for new plant, equipment, housing, or additions to inventory, or by investment abroad. Saving must therefore equal investment. It is, therefore, possible to construct tables which show, on the one hand, the sources of saving and, on the other, the use of these savings to finance gross investment at home or investment abroad.
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In addition to personal saving which was mentioned there can be government saving and business saving. If, for example, governments have a surplus of revenue over expenditure, this surplus constitutes part of the nation's saving. If there are government deficits they are an offset to the total of private saving by individuals and businesses.
During 1951 the composition of saving changed substantially. Personal saving increased by $880 million, government saving by $371 million while business saying, including undistributed Wheat Board trading profits, declined by $37 million. As a result business saving in 1951 was relatively less important as a source of funds for the rapidly growing investment demand at home. Less than 45 per cent of gross domestic investment was financed from business saving during 1951, compared with almost 60 per cent in 1950.

[Stage Direction]
* -	1948>	1949	1950	Prelim. 1951Personal saving	1,009	(Millions 1,005	>f Dollars) 860	1,740Gross business saving-total	1,943	1,995	t,429	S,$9i(a) Undistributed corporation profits	788	607	746	710(b) Depreciation allowances	1,276	1,437	1,607	1,763(c) Net bad debt losses of corporations	-19	-21	-23	-25(d) Undistributed Wheat Board trading profits and inventory revaluation adjustment on grain held by Wheat Board	-109	-96	101	-53(e) Inventory revaluation adjustment2	7	-2	-2	-3Adjusted government surplus (+) or deficit (-)3	746	440	693	1,064Residual error of estimate4	5	1	-45	-137Total	3,703	3,371	3,937	5,0591	Excludes Newfoundland.2	The adjustment has been made only to grain held in commercial channels. ! See Table 10, footnote 2.
4 See Tables 1 and 2.
Personal saving of $1,740 million in 1951 was equal to 12 per cent of personal income after payment of direct taxes. It constituted slightly less than 35 per cent of the nation's saving from all sources in 1951 compared with approximately 22 per cent in 1950, 30 per cent in 1949, and 27 per cent in 1948. Even excluding the large saving of $370 million in the form of farm inventories, which was to some extent involuntary, personal saving showed a marked recovery from the low level of 1950. While a good part of the increase in saving took the form of a reduction in consumer debt, there was also some increase in liquid saving.
In 1951 more than 21 per cent of the nation's saving was made up of the combined surplus of federal, provincial and municipal governments, compared with less than 18 per cent in 1950. This government saving was largely the result of the federal surplus, since little more than 3 per cent of it was due to the surpluses of all provincial and municipal governments combined.
In 1951, as in 1950, there was an increase in net foreign indebtedness since imports of goods and services again exceeded exports. The deficit on current account was financed by a net inflow of capital, largely from the United States,

The Budget-Appendix
rather than by a reduction in Canada's reserves of foreign exchange. A good part of the capital inflow was the result of Canadian borrowing abroad. But to some extent the movement was initiated outside the country; and capital flowed into Canada in response to opportunities for direct investment, thus contributing to the deficit on current account while furnishing the funds to finance it. Looking at Canadian investment as a whole, the increase in net foreign indebtedness constituted a substantial offset to gross domestic investment in 1951.

[Stage Direction]
-	19481	1949	1950	Prelim. 19513,290 418 -5	(Millions 3,199 174 -2	>f Dollars) 4,221 -329 +45	5,457 -534 +136Net increase in foreign assets (including foreign	
3,703	3,371	3,937	5,059
				
1	Excludes Newfoundland.
2	Minor adjustments have been made to the figures appearing in Table 12.
3	See Tables 1 and 2
Business saving consists for the most part of amounts set aside for depreciation and undistributed profits. In 1951 an increase of $400 million in corporation profits before taxes brought the total to $2,850 million. The rate of increase was much below the 28 per cent increase shown for 1950. While corporate profits increased by $400 million during 1951 the liability for corporation taxes is estimated to have increased by $421 million so that there was a reduction of 1 per cent in corporation profits after taxes. This, together with the increase of 2 per cent or $15 million in dividends paid out during 1951, brought about a reduction of $36 million or approximately 5 per cent in undistributed corporation profits.

[Stage Direction]
-	19481	1949	1950	Prelim. 19511,955 -685	(Millions ol 1,906 -731	Dollars) 2,450 -1,023	2,850 -1,444
1,270 -482	1,175 -568	1,427 -681	1,406 -696
				
				
	788	607	746	710
				
1	Excludes Newfoundland.
2	Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
3	Taxes paid or payable in respect of the calendar year's income. (See Table 10).
4	Includes charitable contributions made by corporations. (See Table 3 Item 6 (b)).
6 See Table 5.
1322
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Investment and Capital Expenditure
Investment in plant, equipment and housing continued to increase and formed a slightly larger share of gross national expenditure in 1951. In construction, a shift to non-residential uses took place during 1951, leaving residential building at a physical level about 16 per cent below 1950. The value of new machinery and equipment showed a very great increase, rising about 30 per cent above 1950 levels. The increase in investment in inventories constituted an even larger amount in dollar terms. Apart from changes in farm inventories however, a very large part of the dollar figure shown represents a change in the prices at which year-end inventories are valued, rather than the value of the physical change. As indicated above the volume increase in business inventories is estimated at 12 per cent for 1951 compared with 10 per cent for
1950.	The very heavy demand for inventory which characterized the early part of 1951 gave way in the third and fourth quarters to a more cautious policy. Consequently most of the inventory accumulation took place in the first and second quarters and the record holdings at year-end appear to have been to some extent, involuntary.
table 8

[Stage Direction]
-	1948*	1949	1950	Prelim. 1951
		(Millions of Dollars)		
Housing, plant, and equipment-total2	2,685	2,968	3,216	3,807New residential construction	637	742	801	778Other new construction	818	903	1,026	1,215New machinery and equipment	1,230	1,323	1,389	1,814Change in inventories-total	605	231	1,005	1,650Grain in commercial channels2	51	-16	60	Farm grain and livestock3	-65	-72	131	370All other inventories4	619	319	814	1,280Gross Domestic Investment6. 	3,290	3,199	4,221	5,457Percentage of Gross National Expenditure	211	19-4	23-3	25-71	Excludes Newfoundland.2	Includes private businesses and institutions, and publicly owned public utilities.*	Value of physical change.*	Change in value. Includes privately financed industrial and trade inventories. 6 See Table 2, Item 3.
Table 9 gives an industrial distribution of business capital expenditures and brings them together with public capital outlays included under government expenditure in Table 2. The total of public and private capital expenditure increased by $766 million or 20 per cent during 1951. In real terms the increase is estimated at 9 per cent. The increase in both value and volume of capital expenditure during 1951 was more than double the increase experienced in 1950.

The Budget-Appendix

[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
The pattern of investment during 1951 underwent a change in emphasis and was increasingly directed towards defence and defence-supporting industries. Well over two-thirds of the increase in total capital expenditure of $766 million was undertaken by three groups: manufacturing, utilities and government departments. The outlay in manufacturing showed an increase for the first time since 1948, expanding by 50 per cent over 1950. Major contributions were made to this increase by heavy industries, particularly steel, aircraft and shipbuilding as well as the chemical group. Expenditures made by utilities including transportation and communications advanced by about $200 million to a total of over $900 million and accounted for almost 20 per cent of all capital investment. Capital expenditure by government departments was up by $138 million or 31 per cent. About 70 per cent of this increase was accounted for by federal government outlays and went for defence purposes and capital assistance. Investment in the primary industries remained high in 1951, increasing by $142 million or 23 per cent. The expansion in the development of oil and base metal resources and in woods operations was particularly noteworthy. The service sector underwent practically no change from the previous year, while the outlay for institutions increased moderately.
55704-84J
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-	19481	1949	1950	Prelim. 1951
		(Millions of Dollars)		
Agriculture and fishing	351	419	473	537Forestry	28	26	34	65Mining, quarrying and oil wells	105	122	119	166Manufacturing	579	536	502	755Electric power, gas and water works	
Transportation, storage and communications	248	338	369	485318	341	351	431Construction industry	59	55	71	85Trade, finance and commercial services	281	293	397	396Institutions	145	190	208	237Housing	668	776	845	840Government departments	393	406	446	584Total Capital Expenditure2	3,175	3,502	3,815	4,581Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars	20-3	21-3	211	21-6100	104	107	1171	Excludes Newfoundland.2	For reconciliation with Gross Domestic Investment in Table 8, see below1950	1951Public and Private Capital Expenditure-Table 9	
3,815	4,581
Deduct:
Provincial hospitals and schools, and municipal schools	
-107	-126Government housing exc. C.M.H.C. rental housing	
-44	-62Direct government department outlays	
-446	-584Other	
-2	-2
Add:
Change in Inventories	
1,005	1,650Total Gross Domestic investment-Table 8	
4,221	5,457
The Budget-Appendix
Revenue and Expenditure of All Governments
In Table 10 "Government Transactions Related to the National Accounts" an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here do not agree with those shown in the various public accounts. It has been necessary to adjust the conventional accounting statements of fiscal year revenue and expenditure to exclude purely bookkeeping transactions such as those relating to reserves, write-offs, amortization, and other non-cash items, as well as the purchase and sale of existing capital assets; and to include the transactions of extra-budgetary funds such as unemployment insurance, workmen's compensation and government pension funds. Government loans and investments, and debt retirement, are not included in government expenditure.
In the federal accounts, some of the more substantial adjustments are as follows: elimination of reserve for possible losses on active assets, elimination of reserve for veterans' conditional benefits, elimination of expenditures charged with respect to the assumption of Newfoundland debt in 1949, elimination of expenditures charged with respect to shipment of World War II military equipment to N.A.T.O. countries, addition of expenditures out of Defence Equipment Replacement Account, elimination of write-down of active assets to non-active account, adjustment of corporation taxes to an accrual basis, inclusion of the change in inventories of government commodity agencies and the Defence Production Revolving Fund, and elimination of sales of war assets. In addition, the federal figures are adjusted to a calendar year basis by using the monthly figures published by the Comptroller of the Treasury.
Municipalities are for the most part on a calendar year basis but the provincial figures are based on the provincial fiscal years. Because of the lack of current information the 1951 figures for provincial and municipal governments involve a considerable element of estimation.
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The Budget-Appendix

[Stage Direction]
-	1948*	1949	1950	Prelim. 1951
		(Millions of Dollars)		
Government Revenue-				1,016
Direct Taxes-Persons		822	789	735	
Income and Excess Profits-				
Federal	717	674	612	890Provincial and Municipal	-	3	-	-Succession Duties-	Federal	29	26	34	35Provincial	29	29	29	28Miscellaneous-	Federal	6	7	7	6Provincial and Municipal	41	50	53	57Direct Taxes-Corporations	685	731	1,023	1,444Income and Excess Profits-	Federal	566	601	878	1,251Provincial	119	130	145	193Other Direct Taxes-	Withholding taxes-Federal	41	47	54	56Indirect Taxes	1,847	1,907	2,069	2,519Federal	1,086	1,048	1,115	1,494Provincial and Municipal	761	859	954	1,025Investment Income	327	357	394	414Federal	89	110	137	151Provincial and Municipal	238	247	257	263Employer and Employee Contributions to Social	Insurance and Government Pension Funds	224	239	259	316Federal	129	141	158	206Provincial and Municipal	95	98	101	110Transfers from Other Governments-	Provincial and Municipal	150	182	256	260Total Revenue	4,096	4,252	4,790	6,025Federal	2,663	2,654	2,995	4,089Provincial and Municipal	1,433	1,598	1,795	1,936Deficit (or surplus-)	-746	-440	-693	-1,064Federal2	-762	-497	-686	-1,031Provincial and Municipal	16	57	-7	-33Total Revenue plus Deficit (or minus Surplus)...	3,350	3,812	4,097	4,961Federal	1,901	2,157	2,309	3,058Provincial and Municipal	1,449	1,655	1,788	1,903
1 Excludes Newfoundland.
8 For reconciliation with Public Accounts Surplus, see page 21.

The Budget-Appendix
TABLE 10-Concluded

[Stage Direction]
-	19481	1949	1950	Prelim. 1951
		(Millions of Dollars)		
Government Expenditure-				
Goods and Services		1,798	2,128	2,323	3,120
Federal-				
Defence	255	361	493	1,160Non-defence	424	519	478	521Provincial and Municipal	1,119	1,248	1,352	1,439Transfer Payments	1,327	1,425	1,454	1,448Federal	1,001	1,022	1,022	988Provincial and Municipal	326	403	432	460Subsidies	75	77	64	133Federal	71	73	60	129Provincial and Municipal	4	4	4	4Transfers to Other Governments-	Federal	150	182	256	260Total Expenditure	3,350	3,812	4,097	4,961Federal	1,901	2,157	2,309	3,058Provincial and Municipal	1,449	1,655	1,788	1,903
1 Excludes Newfoundland.
Reconciliation with Public Accounts Surplus:
Federal Government calendar year surplus for national accounts purposes	
Adjustments:
Difference between calendar and fiscal year..
Difference between corporation tax accruals and
government receipts	
Revenue items omitted	
Reserves, write-offs and non-cash items omitted
from expenditure	
Change in inventories of government commodity
agencies	
Shipment of military equipment to N.A.T.O.
countries, less replacement	
Extra-budgetary funds for pensions and social
insurance (net)	
Other adjustments	
Federal surplus for fiscal year as per public
accounts	
1948	1949	1950	1951
	(Millions of Dollars)		
762	497	686	,031+36	+311	-122	-300-35	-34	-183	-171+154	+62	+73	+67-92	-154	-130	-167-18	+32	-19	-16-	-	-57	-69-78	-68	-56	-134-53	-50	-61	-30676	596	131	21(1947-$)	(1948-49)	(1949-50)	(1950-51)
The Budget-Appendix
Federal government expenditure on goods and services increased by $710 million or 73 per cent in 1951. More than 90 per cent of this increase was due to accelerated defence spending. Although the increase in defence spending was not as great as had been planned, it absorbed about one-half of the nation's increased product for 1951. This increase does not reflect the full impact of the defence program on the economy since the larger part of the increase in private capital investment during 1951 was also directed to defence and defence supporting industries. Federal non-defence spending on goods and services, on the other hand, increased by less than 10 per cent and when account is taken of price increases, the use of the nation's product for these purposes was approximately unchanged. The increase in provincial and municipal expenditure on goods and services for 1951 is estimated at 6 per cent. Here too no increase in real terms is indicated when account is taken of prices.
The combined total of transfer payments for all levels of government remained approximately unchanged from the calendar year 1950, with decreases at the federal level more or less offset by increases in provincial and municipal transfers. The major declines were in payments to veterans and in unemployment insurance benefits while increases occurred in family allowances, old age pensions and provincial and municipal grants to hospitals.


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1939 1940 1941	1942	1943	1944	1945	1946	1947	1948	1949	1950	195


[Stage Direction]
Although federal government expenditures were markedly higher because of the defence program, revenues rose even more sharply. This was due to a combination of higher rates and higher levels of prices and incomes with the influence of the latter factors predominating. Total federal revenues for the calendar year 1951 were $1,094 million or 36 per cent higher than in 1950. The largest increase was in direct taxes on persons and corporations which were $653 million or 41 per cent higher. The accrued liability for corporation taxes increased markedly because of higher corporation profits and the imposition of the defence surcharge of 20 per cent for the full year. It should be emphasized however that direct taxes on corporations are shown for purposes of the National

The Budget-Appendix
Accounts on an accrued basis to correspond with estimates of corporation income and hence are considerably higher for 1951 than actual receipts of revenue by the government.
For all levels of government, indirect taxes exceeded direct taxes by 19 per cent in 1948, 22 per cent in 1949 and 14 per cent in 1950; but in 1951 the two were approximately equal. This change was brought about by the heavier liability for federal direct taxes in 1951.
As calculated for National Accounts purposes, federal government revenues increased a great deal more rapidly during the calendar year 1951 than did expenditures. Consequently, the surplus increased from $686 million in the calendar year 1950 to $1,031 million in the calendar year 1951. This federal surplus constituted 20 per cent of the nation's total saving and was, therefore, a very substantial anti-inflationary factor. Combined provincial and municipal government revenue and expenditure on the other hand were more nearly in balance.
The federal surplus shown for National Accounts purposes differs substantially from the public accounts surplus, not only because of the difference between the calendar and the fiscal year, but because of other adjustments made to both revenues and expenditures to make the presentation consistent with figures shown for other sectors of the economy. A reconciliation table has, therefore, been appended to the government table which summarizes the major adjustments.

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Direct taxes include taxes on personal and corporate income,succession duties and personal fees. Indirect toxes include taxes on commodities, services,real property and business fees.
1330
[Stage Direction]
The Budget-Appendix

[Stage Direction]
When goods are exported, unless they are given away, they give rise to payments or debts in favour of Canada. Similarly, when goods are imported they give rise to payments or debts in favour of the rest of the world. Other transactions such as interest and dividend payments, the tourist trade, freight and shipping charges, also give rise to similar payments or debts in either direction. The difference between the debits and credits arising from these current transactions is referred to as the net balance of international payments on current account. When total debits exceed total credits within a year, as was the case in 1950 and 1951, Canada goes into debt to the rest of the world or the rest of the world pays off some of its debt to Canada. When total credits exceed total debits as was the case for many years previous to 1950, the net position is, of course, reversed.

[Stage Direction]
BALANCE OF INTERNATIONAL PAYMENTS Estimated Current Account Between Canada and all Countries
(Millions of Canadian Dollars)
-	1948	1949	1950	1951
Current Credits-				
Merchandise exports (adjusted)1	3,030	2,989	3,139	3,950Non-monetary gold	119	139	163	150Travel expenditures	279	286	275	271Interest and dividends	70	83	91	115Freight and shipping	336	303	284	337Inheritances and immigrants' funds	84	66	58	77Other current receipts	229	211	233	276Total Credits	4,147	4,077	4,243	5,176Current Debits-	Merchandise imports (adjusted)	2,598	2,696	3,129	4,103Travel expenditures	133	192	226	280Interest and dividends	325	390	474	447Freight and shipping	279	253	301	347Inheritances and emigrants' funds	50	53	58	67Other current payments	310	306	384	456Total Debits	3,695	3,890	4,572	5,700Net Balance on Current Account	+452	+187	-329	-524
1 Aid to N.A.T.O. countries under Defence Appropriation Act has been excluded.
Estimated Geographical Distribution of the Net Balance on Current Account
(Millions of Canadian Dollars)
-	1948	1949	1950	1951Between Canada and- United States	-393 +486 +129 +227 +3	-589 +439 + 135 + 187 + 15	-403 +28 -23 +109 -40	-955 +220 -29 +220 +20United Kingdom	Rest of the Sterling Area	Other OEEC Countries	Other Countries	All Countries	+452	+187	-329	-524
The Budget-Appendix
During 1951, Canada's transactions on international account expanded greatly; exports of goods and services increased by 26 per cent and imports by 31 per cent over 1950. Largely because of the rapid rise of import prices in the first half of 1951, the annual index of import prices showed a slightly greater increase over 1950 than did the index of export prices. This is another way of saying that our imports were on the average a little more costly in terms of exports than they had been in 1950. However, the terms of trade, or the prices which we pay for imported goods and services in terms of our exports, moved very much in our favour during the latter part of the year. This is indicated by the fact that the index of export prices advanced more or less steadily throughout the year from 115-9 in January to 125-8 in December, while the index of import prices which rose rapidly from 119-9 in January to 129-9 in June, had declined by December to 121-6.
In volume terms exports advanced by 9 per cent and imports by 11 per cent. The growth in the excess of imports over exports in 1951 added about one-half of 1 per cent to the supply of goods and services available for Canadians. A large part of the increase in imports took the form of increased purchases of defence items and capital goods.	_	. .
The deficit on current account for 1951 was $524 million, or $195 million more than the year before. Most of the change is accounted for in merchandise trade where the small favourable balance of 1950 was replaced in 1951 by a deficit of $153 million. The deficit on merchandise account arose in the first six months of the year when imports were exceptionally heavy. In the last half of the year a decline in the value of imports coupled with a sharp rise in the value of exports produced a substantial merchandise surplus and this change in the situation appears to have carried forward into 1952. The change in the terms of trade in the last half of 1951 was an important factor contributing to this surplus. All other current account items gave rise to a net deficit of $371 million in 1951 compared to $339 million in 1950. The most important changes within these figures were a decline in our adverse balance on interest and dividend account of $51 million and a reversal of our tourist account balance from +$49 million to - $9 million.

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The Budget-Appendix
The geographical distribution of the net balance on current account changed substantially during 1951 and showed a reversal of the movement towards a closer balance with the principal trading areas which had occurred in the previous year. The increase in imports from the United States far outstripped the increase in exports and the deficit on current account increased from $403 million in 1950 to $955 million in 1951. In contrast with the large deficit with the United States, Canada's overall export surplus with overseas countries rose by $357 million to a total of $431 million. Of particular importance was the sharp advance of $228 million in exports of goods and services to the United Kingdom and of $183 million to other O.E.E. C. countries. Transactions with the rest of the sterling area, although on a higher level compared to the previous year, resulted in little change in the net balance while a small credit vis-a-vis all other countries developed during 1951.
Despite the current account deficit, Canada's official reserves of gold and U.S. dollars rose by $37 million. The capital inflow, largely from the United States, although considerably smaller than the capital inflow of 1950, was thus more than sufficient to offset the current account deficit. The available details of transactions on capital account in 1951 are compared in the following table with similar transactions in 1950:
(Millions of Canadian dollars)
1950	1951
Loans to United Kingdom and other governments (gross)-
Drawings	
-50	-Repayments	
-(-74	+68
Net reduction in the U.S. dollar debt of the Government of Canada
(expressed in U.S. dollars)	 -50	-
Increase (-) in official reserves of gold and United States dollars
(expressed in U.S. dollars)	
-624	-37Other capital, including	exchange adjustments, errors and omissions... +979	+493Total*	
+329	+524
* Equal in size but opposite in sign to net balance on current account.

The Budget-Appendix

[Stage Direction]
(millions of U.S. dollars)
-	Exchange Fund Account and Bank of Canada	Other Government of Canada Accounts	Private2	TotalGold	U.S. dollars	U.S. dollars	U.S. dollars	Gold and U.S. dollarsSept. 15, 1939	204-9	33-8	22-4	132	393-1Dec. 31, 1939	218-0	54-8	33-4	98	404-2Dec. 31, 1940	136-5	172-8	20-8	2	332-1Dec. 31, 1941	135-9	28-2	23-5	187-6Dec. 31, 1942	154-9	88-0	75-6	318-5Dec. 31, 1943	224-4	348-8	76-4	649-6Dec. Si, 1944	293-9	506-2	102-1	902-2Dec. Si, 1945	353-9	922-0	232-1	1,508-0Dec. Si, 1946	536-0	686-3	22-6	1,244-9Dec. 31, 1947	286-6	171-8	43-3	501-7Dec. 31, 1948	401-3	574-5	22-0	997-8Dec. Si, 1949	486-4	594-1	1 36-6	1,117-1I ec. Si, 1950	580-0	1,144-9	16-6	1,741-5Dec. 3D 1951	841-7	'899-5	37-4	1,778-6;
1	Not including $18-2 million in United States dollars borrowed by tho Government of Canada fir August, 1949, and set aside for the retirement on February 1, 1950, of a security issue guaranteed by it and payable at the holder's option in United States dollars.
2	Exclusive of working balances.

[Stage Direction]
Labour income during 1951 was estimated at $9,640 million, 17 per cent above 1950. The annual average earned income per paid worker rose from $2,316 in 1950 to $2,551 in 1951.
Average weekly earnings in nine leading non-agricultural industries averaged $49.61 in 1951 compared to $44.84 in 1950. The December figure was $52.41 for 1951 and $46.63 in 1950. Hourly earnings in manufacturing were $1.24 at the end of 1951 compared with $1.08 a year earlier. These gains appear to have been sufficient to maintain the real value of weekly earnings.
Part of the increase in total labour income is accounted for by the higher level of employment reached during 1951. The number of people employed throughout the year averaged 5,175,000, an increase of 129,000, or 2-6 per cent over 1950. The increase was more pronounced during the first half than during the second half of the year. In manufacturing, for instance, between January and June, 1951, employment was 8-8 per cent higher than during the same period of 1950; between July and December, it was 5-4 per cent higher.
[Stage Direction]
The Budget-Appendix


[Stage Direction]
THE CIVILIAN LABOUR FORCE Annual Averages (Thousands of Persons)
-	1948*	1949*	1950	19514,982	5,090	5,217 5,108	5,284 5,176
3,919 1,063	4,002 1,088	4,099 1,118	4,134 1,150
Female					
	3,882 1,100	3,996 1,094	4,178 1,039	4,324 960
				
				
	103 4,879	133 4,957	171 5,046	109 5,175
				
				
	3,783 3,238 545	3,869 3,325 544	4,013 3,459 554	4,218 3,678 540
				
Employers, own account workers and unpaid				
				
	1,096	1,088	1,033	957
				
1 Excludes Newfoundland.

The Budget-Appendix
The easing in the demand for labour during 1951 was especially marked in certain consumer goods industries where it resulted in non-seasonal lay-offs and a shorter working week. In manufacturing, the average number of hours worked per week fell to 41-8 from 42-3. The percentage of the employed labour force working 35 or more hours per week declined slightly.
Short-time and non-seasonal lay-offs are reflected in the increase in the number of persons registered at National Employment Service offices. During January and February, 1952, unplaced applicants averaged 332,000 and 369,000 respectively. The comparable figures for January and February, 1951, were 273,000 and 302,000. This is the period of highest seasonal unemployment.
Persons without jobs and seeking work averaged 109,000, or 2-1 per cent of the labour force during 1951, compared to 171,000, or 3-3 per cent during the preceding year.
The civilian labour force, which includes both the employed and unemployed, averaged 5,284,000, 67,000 more than during 1950. The rate of participation in the labour force was the same in both years: 53-7 per cent of the noninstitutional civilian population over 14 years of age. The number of persons in the agricultural labour force continued to fall during 1951. The loss of 79,000 persons, however, was more than offset by an increase of 146,000 in the size of the non-agricultural labour force. The sex composition of the labour force was substantially unchanged. During 1951, 218 out of every 1,000 workers were women; in 1950, 214 were women.
In addition to the civilian labour force there were 85,000 in the armed forces at the end of 1951 compared with 60,000 at the end of 1950.

[Stage Direction]
After the outbreak of war in Korea the period of relative price stability which had prevailed for more than 18 months, gave way to rapidly rising prices. This was particularly true for the latter half of 1950 and the early months of
1951.	In the whole period from the outbreak of war in Korea to the present time the wholesale price index rose by slightly less than 11 per cent and the cost-of-living index by almost 13 per cent.
For the year 1951 as a whole, wholesale prices averaged 13-7 per cent above 1950. The larger part of this rise, however, was confined to the first quarter. Subsequent small increases carried it to a peak in July from where it steadily declined. Thus, in December 1951, wholesale prices were only 2-3 per cent above those prevailing at the beginning of the year. This decline has persisted into 1952 with the wholesale price index for February a further 2-1 per cent below December 1951, and a full 2-5 per cent below February 1951. Prices of fully and chiefly manufactured goods followed exactly the trend of the total index. The index of Canadian farm products, however, showed a more rapid increase during the first quarter of 1951 and, in spite of some decline in the spring, reached a peak in July at a point more than 10 per cent above the beginning of the year. By February, 1952, it had once more declined to the level of January, 1951.
Except for a slight decline of 0-1 points during December, the cost-of-living index rose in each month of 1951. For the year as a whole the increase amounted to 11 per cent but most of the rise was confined to the first two quarters in which there was an increase of 9 per cent compared with an increase of 2 per cent in the last two quarters. The increase in the cost-of-living index during the last six months of 1951 was offset by declines in February and March of 1952 so that the index at March 1 again approximated the level of August, 1951.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
WHOLESALE PRICE INDEXES (1935-39=100)
Monthly Averages
Total	Canadian Farm Products	Fully and Chiefly Manufactured Goods99-2	92-6	101-9108-0	96-1	109-9116-4	106-8	188-8123-0	127-1	123-7127-9	145-4	126-9130-6	155-3	129-1132-1	166-4	129-8138-9	179-5	138-0163-3	192-2	162-4193-4	232-1	192-4198-3	228-7	199-2211-2	236-7	211-0240-1	265-1	242-5232-3	251-0	233-6238-5	262-5	240-0241-8	273-0	244-1242-2	265-4	244-9241-9	265-3	244-4242-7	272-6	243-7244-2	277-1	246-6241-5	263-3	245-1240-1	200-5	243-7239-6	259-3	242-7239-1	264-9	241-4237-6	266-8	239-7236-8	263-1	239-7232-6	251-2	236-21939	1940	1941	1942	1943	1944	1945	1946	1947	1948	1949	1950	1951	1951-	January___
February..
March	
April	
May	
June	
July	
August....
September
October___
November
December.
1952-	January___
February..
Note:-1951 and 1952 indexes are preliminary.

[Stage Direction]
1926 - 1952

The Budget-Appendix

[Stage Direction]
(1935-39=100)
	Canada		United States	
Total	Food	Total	Food1939	101-5	100-6	99-4	95-21940	105-6	105-6	100-2	96-61941	111-7	116-1	105-2	105-51942	117-0	127-2	116-5	123-91943	118-4	130-7	123-6	138-01944	118-9	131-3	125-5	136-1119-5	133-0	128-4	139-11946	123-6	140-4	139-3	159-61947	135-5	159-5	159-2	193-81948	155-0	195-5	171-2	210-21949	160-8	203-0	169-1	201-91950	166-5	210-9	171-91	204-5'1951	184-5	241-1	185-6	227-41951-January	172-5	220-2	181-5	221-9February	175-2	224-4	183-8	226-0March	179-7	233-9	184-5	226-2April	181-8	238-4	184-6	225-7May	182-0	235-4	185-4	227-4June	184-1	239-8	185-2	226-9July	187-6	249-7	185-5	227-7August	188-9	251-4	185-5	227-0September	189-8	251-1	186-6	227-3October	190-4	249-7	187-4	229-2November	191-2	250-2	188-6	231-3December	191-1	249-3	189-1	232-21952-January	191-5	250-0	189-1	232-4February	190-8	248-1	187-9	227-5
1 Adjusted series United States Consumers' Price Index from January, 1950, forward. Source: Bureau of Labour Statistics.

[Stage Direction]
1935 -39 = 100


[Stage Direction]
160
80
160
80
1939	1940	1941	1942	J943	1944 1945 1946 1947	1948	1949 1950	1951	1952
0

The Budget-Appendix
Part II

[Stage Direction]
Table of Contents
Page
1.	Introduction	
13412.	Highlights of Governmental	Financial Operations during 1951-52	
13413.	Budgetary Accounts	
1342A.	Revenues	
1344B.	Expenditures	
13544.	The Cash Accounts	
13645.	Estimated Balance Sheet Position at March 31, 1952	
1368A.	Changes in Principal Liability Classifications during 1951-52	
1369B.	Changes in Principal Active Asset Classifications during 1951-52... 1372C.	Decrease in Net Debt	
13766.	The Public Debt	
13767.	Supplementary Detailed Tables	
13831340	HOUSE OF COMMONS
The Budget-Appendix

[Stage Direction]
1938 - 39	1948-49	1949-50	1950-51	1951-52*
IH CROSS NATIONAL PROOUCT AS Or CALENDAR YEAR ENOINC DECEMBER 31 WITHIN FISCAL YEAR * ESTIMATES
55704-85£

The Budget-Appendix
Part II

[Stage Direction]
1.	INTRODUCTION
1.	Although the Government's fiscal year ended on March 31st, the books must remain open for several weeks after that date in order to record various adjusting entries and to take into account all payments up to and including April 30th made on account of expenditures originating in, and properly chargeable to, the fiscal year 1951-52. Consequently, as it will be some considerable time before final figures for the year will be available, the figures appearing in this Part must be regarded as preliminary and subject to revision.
2.	HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

[Stage Direction]
2.	The revenues of the Government for the fiscal year ended March 31, 1952, which are now estimated at $4,003 million, were the largest total on record, and approximately $890 million or 28 per cent more than the total for the preceding year. Expenditures are estimated at $3,647 million, a total which was exceeded only in the four war years 1942-43 to 1945-46 inclusive. On the basis of these figures it would appear that the surplus is probably something in the neighbourhood of $356 million, compared with $211 million for the year ended March 31, 1951. The fiscal year 1951-52 is therefore the sixth consecutive year in which the financial operations of the Government resulted in a budgetary surplus. As a result, the Government's net debt (the excess of total liabilities over total active assets) has been reduced by an equivalent amount. This brings to a total of $2,344 million the amount by which the Government has reduced its net debt during those six years, a reduction approximately equivalent to the amount by which the net debt increased during the first three and one-half years after the outbreak of war in 1939.
3.	Although the budgetary surplus for 1951-52 is estimated at $356 million, the Government made loans, advances and other non-budgetary disbursements of about $653 million, and, at the same time, purchased or retired outstanding funded debt in the hands of the public to the extent of some $456 million. The manner in which this has been achieved can only be understood by taking an over-all view of the Government's cash transactions for the fiscal year. As explained in greater detail in the section on "The Cash Accounts", all the Government's cash receipts and disbursements are not reflected in the budgetary accounts, nor do all budgetary transactions result in the inflow or outgo of cash. Substantial amounts are received and paid out for extra-budgetary purposes (such as the loans and advances which the Government is required to make and the transactions in connection with the many superannuation, insurance, pension, annuity and deposit and trust accounts which it has undertaken to hold or administer). On the other hand, a substantial part of the budgetary revenues and expenditures are merely of an accounting or bookkeeping nature and do not result in the receipt or disbursement of cash.
[Stage Direction]
The Budget-Appendix
4.	As would appear from, the foregoing, the Government's estimated budgetary surplus for the fiscal year of $356 million does not reflect the full impact of Government operations upon the Canadian economy. After adjusting the budgetary surplus for non-cash transactions, it is estimated that an amount of $809 million remains. This sum, together with $234 million received from repayments of loans, investments and working capital advances, net insurance, pension and annuity contributions, and other non-budgetary cash receipts, made $1,043 million cash available for making necessary loans, investments and other extra-budgetary outlay. These non-budgetary disbursements are estimated at $653 million and include $200 million advanced to the Minister of Finance Exchange Fund to finance the increase in our foreign exchange reserves consequent upon the flow of investment capital into Canada from abroad; some $95 million used to acquire materials essential to our defence program; approximately $70 million advanced to the Central Mortgage and Housing Corporation for house construction and for housing loans; $139 million loaned to the C.N.R. for capital expenditures on additions and betterments and the acquisition of new rolling stock and equipment, etc.; about $51 million to replace equipment furnished to North Atlantic Treaty countries under section 3 of The Defence Appropriation Act, 1950, and net pension payments of $55 million out of the Old Age Security Fund.
5.	After taking into account all these transactions it is now estimated that the cash surplus for the fiscal year amounted to approximately $390 million. By using this amount and by allowing the Government's cash balances to be reduced by $66 million, funded debt amounting to $300 million was retired and securities amounting to $156 million were acquired by the Government (mainly for the Unemployment Insurance Fund and the Securities Investment Account).
3.	THE BUDGETARY ACCOUNTS
6.	The table which follows gives a summarized statement of estimated revenues and expenditures and surplus for the fiscal year ended March 31, 1952. with the comparable figures for the four preceding fiscal years:
	Fiscal Years Ended March 31				
	1948	1949	1950	1951 | (Estimated)	
		(In millions of dollars)			
Revenues	2,871-7	2,771-4	2,580-1	3,112-5	4,003-1Expenditures	2,195-6	2,175-9	2,448-6	2,901-2	3,647-4Surplus	676-1	595-5	131-5	211-3	355-77.	Total revenues, estimated at $4,003-1 million for 1951-52, are expected to show an increase of $890-6 million over the total for the previous fiscal year. Total expenditures are estimated at $3,647-4 million or $746-2 million more than he corresponding total for 1950-51.
The Budget-Appendix


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The Budget-Appendix
A. Revenues
8.	The estimated budgetary revenues for the fiscal year 1951-52, classified according to major categories, are shown in the following table with corresponding figures for the previous fiscal year.

[Stage Direction]
(In millions of dollars)
Source	Fiscal Year Ended March 31	Increase or Decrease (-)	1952 (Estimated)	1951	Amount	PercentAmount	Percent	Amount	Percent	Ordinary revenues- Direct taxes-	980-0 55-5 1,134-0 2-2 38-0	24-5 1-4 28-3 0-1 0-9	652-3 61-6 799-2 10-1 33-6	20-9 2-0 25-7 0-	3 1-	1	327-7 -6-1 334-8 -7-9 4-4	50-2 -9-9 42-0 -78-2 13-1
Succession duties							
	2,209-7	55-2	1,556-9	50-0	652-8	41-9
Indirect taxes-						
	353-0 222-0 899-0 5-3	8-8 5-5 22-5 0-1	295-7 241-0 686-8 4-9	9-5 7-7 22-1 0-2	57-3 -19-0 212-2 0-4	19-4 -7-9 30-9 8-2
						
						
Other taxes									
	1,479-3	36-9	1,228-5	39-5	250-8	20-4
						
	3,689-0	92-1	2,785-3	89-5	903-7	32-4
Non-tax revenues-						
	105-0 117-5 54-4	2-6 2-9 1-4	90-4 89-5 53-4	2-9 2-9 1-7	14-6 28-0 1-0	16-2 31-3 1-9
						
						
Total non-tax revenues	 Total ordinary revenues....						
276-9	6-9	233-3	7-5	43-6	18-73,965-9	99-0	3,018-7	97-0	947-2	31-437-2	1-0	93-8	3-0	-56-6	-60-3
4,003-1	100-0	3,112-5	100-0	890-6	28-6
						
Note -Due to rounding off, columns may not add exactly to totals shown.
9.	It is estimated that of the total revenues for the year, $2,209 * 7 million or 55-2 per cent was derived from direct taxes; $1,479-3 million or 36-9 per cent was obtained from indirect taxes, and the remaining $314-1 million or 7-9 per cent was attributable to non-tax revenues and special receipts and credits.
(1)	Direct Taxes
Tax on Personal Incomes
10.	The personal income tax yielded an estimated total of $980 million, an increase of $327 [DOT] 7 million or 50 [DOT] 2 per cent over the previous year. This increase is due to higher levels of employment, the substantial increase in incomes that occurred in the year and also to the 20 per cent defence surtax which applied to deductions of tax at the source from July 1, 1951. Tax deduction tables now in use also provide for the current collection of a greater proportion of the tax than previous tables.

The Budget-Appendix
Non-resident Income Taxes
11.	Revenues under this heading are derived from withholding taxes on payments of interest, dividends, rents and royalties made to non-residents. The estimated total of $55-5 million collected in 1951-52 is $6-1 million less than in the previous year, a decrease largely due to a lower level of dividend payments to the United States during 1951.
Corporation Income Tax
12.	Corporation income tax was again the largest single source of governmental revenue in 1951-52. Collections from this tax are expected to amount to $1,134 million, an increase of $334-8 million or 42 per cent over the corresponding total for the previous year. This increase is attributable to markedly higher profits earned by companies in 1951 and also to the defence surtax which increased the tax payable on 1951 profits in excess of $10,000 by 20 per cent. The 15 per cent tax which companies may pay on their undistributed surplus yielded revenue of about $14 million during the year compared with $87-6 million in the previous fiscal year. (In addition the 2 per cent tax levied under the Old Age Security Act on corporation profits earned after January 1, 1952 yielded an estimated amount of $2 million during 1951-52).
Excess Profits Tax
13.	The excess profits tax ceased to be levied on profits earned after December 31, 1947, but clean-up payments received during the year exceeded refunds and adjustments and produced a net revenue of $2-2 million.
Succession Duties
14.	Revenue from succession duties is estimated at $38 million for 1951-52, an increase of $4-4 million over the previous year.


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SALES & OTHER EXCISE TAXES

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1000
1948	1949	1950	1951	1952*


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The Budget-Appendix

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MILLIONS OF DOLLARS	FISCAL YEARS

The Budget-Appendix


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immi i
rm 1111 mini
1939 40 41 42 43 44 45 46 47 48 49 50 51 52*
400
1939 40 41 42 43 44 45 46 47 48 49 50 51	52*
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The Budget-Appendix
(2)	Indirect Taxes
Customs Import Duties
15.	Net revenue from customs import duties for the year is estimated at $353 million, an increase of $57-3 million over the total for 1950-51. This increase reflects the increased level of imports at higher prices during the year.
Excise Duties
16.	Excise duties are levied exclusively on alcoholic beverages and tobacco products. (Additional taxes are levied on tobacco products under the Excise Tax Act). The estimated total revenue from this source for the year is $222 million. This is a decrease of $19 million from 1950-51 due mainly to reduced sales of spirits and cigarettes. Gross receipts from excise duties, before deducting refunds, are divided as follows: $123 million from alcoholic beverages ($129-4 million in 1950-51) and $102 million from tobacco products ($114-5 million in 1950-51).
Excise Taxes
17.	Excise taxes are levied on a variety of items under the Excise Tax Act. Total net collections for the year are estimated at $899 million, an increase of $212-2 million or 30-9 per cent over 1950-51. This increase is due in part to higher levels of production and increased prices during the year and in part to tax changes introduced in April, 1951. At that time the rate of tax on all those items which had previously been subject to tax at 15 per cent was raised to 25 per cent and refrigerators, washing machines and stoves using other than solid fuels, which were not previously taxed, were made taxable at 15 per cent. At the same time, the rate of tax on cigarettes was increased three-quarters of one cent for each five cigarettes; the rate on each ounce of manufactured tobacco was increased three cents; and the rate on each ounce of Canadian raw leaf tobacco when sold for consumption was increased three-quarters of one cent. The most important change was undoubtedly the increase in the rate of sales tax from 8 per cent to 10 per cent.
18.	These increases in tax were offset to a small extent by the repeal of the tax on cigarette papers and tubes, and the reduction of the tax on candy and chewing gum from 30 per cent to 15 per cent. In addition, the rate of sales tax levied under the Excise Tax Act was reduced from 10 per cent to 8 per cent from January 1, 1952, when the sales tax of 2 per cent levied under the Old Age Security Act came into effect.
19.	The most important tax under the Excise Tax Act from the point of view of revenue is the sales tax which yielded an estimated gross revenue of $596 million, an increase of $125.4 million over the previous year. (In addition, an estimated amount of $19 million was received from the 2 per cent sales tax levied under the Old Age Security Act).
20.	The second largest revenue source among the excise taxes is the tax on tobacco products which yielded approximately $110 million. The increase of $24-8 million over the total for the previous year is due to the increased rates of tax introduced in 1951. (If the revenues from excise taxes and excise duties, including the tax on cigarette papers and tubes now withdrawn, are combined, the total revenue from tobacco products was $212-4 million in 1951-52 compared with $207-4 million in the previous year).
21.	Almost all tax sources showed an increase in revenue over the previous year. The tax on automobiles and rubber tires and tubes, which yielded an estimated total of $99-6 million during the year, showed the largest increase, amounting to $28 [DOT] 8 million over the previous year. The increase in revenue of $11-8 million from the tax on soft drinks occurs because this tax was in effect for all of 1951-52 but for less than eight months in 1950-51.

The Budget-Appendix
.	22. The tax sources showing the largest increases, and the amount of the
increase in each case, are given below.
-	Estimated increase over 1950-51
Automobiles, rubber tires and tubes		1 28,800,000 24.800.000 11.800.000 3.800.000 3.500.000 3.200.000
Cigars, cigarettes and tobacco		
Beverages (soft drinks)		
Toilet preparations and soaps		
Jewellery, ornaments, etc		
Phonographs, radios and tubes		
	
Other Indirect Taxes	
23.	Small amounts of tax revenue were derived from the tax on the net premium income of insurance companies ($4 [DOT] 5 million); from a tax on the export of electric energy from Canada ($0-7 million); and from a tax on the export of furs from the Northwest Territories ($0-1 million). Total revenue from all these sources in 1951-52 is estimated at $5-3 million, an increase of $0-4 million over the previous year.
(3)	Non-Tax Revenues
24.	Non-tax revenues for 1951-52 are estimated at $276 -9 million, an increase of $43-6 million over the 1950-51 total. The following table presents a comparative summary of revenues under this heading for the past two years:
	Fiscal year ended March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
			
Post Office	
Return on investments	
Premium, discount and exchange	
Bullion and coinage	
Privileges, licences and permits	
Proceeds from sales	
Services and service fees	
Refunds of previous years' expenditures Miscellaneous	
Total non-tax revenue	
25.	Gross Post Office receipts for 1951-52 are expected to amount to $124 million. After making authorized disbursements from revenue of $19 million for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., net post office receipts credited to budgetary revenues are estimated at $105 million. This would represent an increase of $14-6 million
(In millions of dollars)
105 0	90-4	14-6117-5	89-5	28-012-0	17-6	-5-64-5	4-7	-0-210-5	10-1	0-44-7	4-1	0-615-5	12-6	2-95-2	2-1	3-120	2-2	-0-2276-9	233-3	43-6
The Budget-Appendix
over the corresponding amount for 1950-51, due primarily to the new postal rates which came into effect on July 1, 1951. As costs of operating the Post Office during 1951-52 (excluding the $19 million charged to revenue) are expected to total $98-1 million, net revenue will exceed net costs by approximately $6.9 million. However, in making this comparison it is to be noted that the total shown for Post Office revenues does not reflect the value of services rendered free of charge to other departments, nor does the total shown for operating expenses reflect any charges for premises owned by the Government and occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
26.	Return on investments is expecte to yield $117-5 million, compared with the total of $89-5 million received in 1950-51. This increase of $28 million is due principally to the first payment of interest on the loan to the United Kingdom under the United Kingdom Financial Agreement Act, 1946, amounting to $23-7 million, and to increases of $4-3 million in the profits of the Bank of Canada for the calendar year, $2-5 million in interest on Central Mortgage and Housing Corporation debentures, and $1-7 million in interest on advances to the Canadian National Railways. These were offset in part by decreases of $2-2 million in the revenues from the Foreign Exchange Control Board and $2-2 million in interest on loans to foreign governments under Part II of The Export Credits Insurance Act.
27. A comparative summary of estimated receipts during 1951-52 with actual receipts during 1950-51 under this heading is given in the following table:
Interest or dividends on	Fiscal year ended March 31	Increase or1952 (Estimated)	1951	Decrease (-)(In millions of dollars)	Loans to, and investments in, Crown agencies-	24-2	19-9	4-312-6	14-8	-2-223-5	21-8	1-77-1	4-6	2-54-5	4-3	0-21-2	2-2	-1073'1	67-6	6-6Other loans and investments-	23-7	23-713-3	15-9	-2-61-1	1-3	-0-2Soldier and General Land Settlement Loans and Veterans Land	4-4	3-8	0-60-9	0-1	0-81-0	0-8	0-2U-i	SI-9	22-5117-5	89-5	28-028.	The amount credited as premium, discount and exchange in 1951-52 is estimated at $12 million compared with a credit of $17-6 million in 1950-51.29.	This revenue item was due mainly to bookkeeping adjustments in asset and liability accounts reflecting a reduction in U.S. dollar and sterling exchange rates from those operative in the fiscal year 1950-51.
The Budget-Appendix
30.	The Canadian dollar equivalent of outstanding debt payable in sterling and in United States dollars was reduced in consequence of this revaluation by $20 [DOT] 4 million offset by $2-1 million reduction in assets payable in the same currencies. The result was a net credit in the premium, discount and exchange account of $18-3 million. Net differences in rates on gold and foreign exchange transactions further reduced the credit of $18-3 million by $6-3 million resulting in a net revenue item of $12 million.
(4)	Special Receipts and Credits
31.	The total of special receipts and credits for the fiscal year 1951-52 is estimated at $37 [DOT] 2 million as compared with total receipts of $93 * 8 million for the preceding year. The following table presents a comparative summary of the principal sources of special receipts and other credits for the last two years:
	Fiscal year ended March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
	(In millions of dollars)		
Sale of surplus Crown assets		13-8	19-6	-5-8
Refundable portion of excess profits tax-transfer to revenue of			
excess reserve set up in previous years		5-8	25-0	-19-2
Central Mortgage and Housing Corporation-surplus and proceeds			
from the sale of Wartime Housing properties		12-5	7-3	5-2
Balance of Canadian Sugar Stabilization Corporation's price			
stabilization contingency reserve transferred to revenue	-	18-7	-18-7Military relief and currency credits arising from war settlements...	2-7	9-3	-6-6Amount received in connection with operation of Park Steamships	Limited	1-0	1-8	Refunds in connection with cost audits and re-negotiation of war	contracts	0-7	3-6	Sundry other special receipts and credits	0-7	8-5	-7-837-2	93-8	-56-632.	The amount of $13 [DOT] 8 million realized from the disposal of surplus Crown assets represents the estimated receipts during the fiscal year from Crown Assets Disposal Corporation after allowing for transfers to active assets of amounts applicable to "Balances receivable under agreements of sale of Crown assets". It does not include the residual cash balances or the value of accounts receivable carried by the Corporation as at March 31, 1952.33.	The amount of $5-8 million represents a transfer to revenue of the amount now estimated to be in excess of requirements in respect of the final refundable portion of excess profits tax which was set up as a reserve in previous years.34.	The estimated amount of $12-5 million received from Central Mortgage and Housing Corporation represents surplus funds in excess of the $5 million reserve established by the Corporation and the proceeds of the sale of Wartime Housing properties.
The Budget-Appendix
(5)	Comparison of Actual Revenue with Budget Forecast
35.	Total revenues as now estimated for the year 1951-52 will be about $292 million more than the forecast made in the budget speech of April 10, 1951. This represents an excess over the amount forecast of less than 8 per cent. Revenues from excise duties, excise taxes (other than sales tax), non-resident income taxes, succession duties and special receipts and credits were below the amounts forecast but the revenues from personal income tax, corporation income tax, customs duties and non-tax revenue exceeded expectations by a considerable margin. In making this comparison the revenue from the 2 per cent sales tax levied under the Old Age Security Act after January 1, 1952, is included with the estimate of revenue actually collected because the budget forecast was based on the assumption that the sales tax would remain at 10 per cent throughout 1951-52. The revenue collected from the 2 per cent Old Age Security Tax on corporation profits after January 1, 1952, is excluded because it was not part of the budget forecast. The following table shows in detail the extent to which actual revenues were different from the budget forecast.
DETAILED statement of budget forecast compared with

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(In milliona of dollars)
Source of Revenue
Personal Income Tax	
Non-resident Income Taxes	
Corporation Income Tax	
Excess Profits Tax	
Succession Duties	
Customs Import Duties	
Excise Duties	
Sales Tax (net)	
Other Excise Taxes	
Miscellaneous	
Total Tax Revenue	
Non-Tax Revenue	
Total Ordinary Revenue
Special Receipts	
Grand Total Revenue...
Budget Forecast of Revenue	Actual Revenue (Estimated)	Increase or Decrease (-) in Revenue as compared with Budget Forecast$	$	$870-0	980-0	110-060-0	55-5	-4-5976-0	1,134-0(a)	158-0-	2-2	2-240-0	38-0	-2-0315-0	353-0	38-0245-0	222-0	-23-0600-0	602-0(5)	2-0327-0	316-0	- 1105-0	5-3	0-33,438-0	3,708-0(a)(6)	270-0242-0	276-9	34-93,680-0	3,984-9(a)(6)	304-950-0	37-2	-12-83,730-0	4,022-1(a)(6)	292-1(а)	Excluding $2 million revenue from Old Age Security 2 per cent tax on corporation profits.(б)	Including $19 million revenue from Old Age Security 2 per cent sales tax.36.	In the Budget Speech of April 10, 1951, it was stated that on the revenue side the forecast of $3,730 million was based on the expectation that the Gross National Product would reach $20 billion, but it was indicated that should production and incomes rise beyond that level, as well they might, the forecast would be more than realized, but should they go not quite that high the revenues could fall short of the estimates then submitted. In fact, as it turned out, profits, incomes and imports were all at levels higher than expected and the Gross National Product reached a total of $21-2 billion in 1951, exceeding by 6 per cent the estimate of $20 billion on which the budget forecasts were based.
The Budget-Appendix
37.	The forecast of revenue from personal income tax was based on an anticipated increase of about 12 per cent in salary and wages during the year. Salaries and wages increased by approximately 17 per cent and this in conjunction with the higher level of Gross National Product resulted in the deductions of income tax from salaries and wages exceeding the forecast by a substantial amount.
38.	The actual receipts from taxes on interest, dividends, rents, and royalties going to non-residents fell short of the budget forecast which was based on receipts in the previous year.
39.	Revised estimates of 1950 corporate profits now indicate that preliminary estimates available at the time of the Budget last year were about 12 per cent too low. Despite difficulties encountered in some secondary industries, disturbances in output arising during the year from the shift to defence production and curtailment of essential materials were not generally serious and for the majority of corporations production continued at full, or nearly full, capacity. These factors plus the higher than expected level of Gross National Product and the coming into operation of new plant and equipment as a result of the large capital investment in recent years resulted in corporation profits for 1951 exceeding the amount expected at the time of the forecast by about 15 per cent.
40.	Revenue from succession duties did not quite reach the amount forecast. Rising property values and higher stock market prices had been expected to raise the value of estates to a greater extent than actually occurred.
41.	In forecasting revenue from customs duties it was expected that the value of imports into Canada would increase about 10 per cent in 1951-52. Stimulated by the high level of purchasing power in Canada, the large capital investment programme, and the increasing value of the Canadian dollar abroad, the value of imports into Canada increased by nearly 20 per cent in the year. This resulted in the revenue from customs duties exceeding the forecast and reaching a total far in excess of any previous year in Canada's history.
42.	The actual revenue from excise duties in 1951-52 fell well below the budget forecast because of a short fall of 24 per cent in the revenue from matured spirits and of 14 per cent in the revenue from the tax on cigarettes. (See paragraph 20 for the total yield of excise taxes and excise duties on tobacco products).
43.	The estimate of revenue from the sales tax proved to be very accurate with the actual receipts being practically the same as the amount forecast.
44.	The revenue from other excise taxes fell short of the amount forecast by about $11 million. This was more than accounted for by the fact that the additional revenue from the increased tax on tobacco products was about $10 million less than expected, and that the revenue from the new tax on stoves, washing machines and refrigerators was also about $5 million short of the $16 million expected at the time of the Budget.
45.	The excess of non-tax revenue receipts over the budget forecast is partly due to the amount of $12 million for premium, discount and exchange arising chiefly from a revaluation of the Government's sterling and United States dollar assets and liabilities from exchange rates used in operations in the previous year. Receipts under the heading "Return on In\estments" were also higher than expected mainly because of increased profits of the Bank of Canada for the calendar year 1951.
46.	It is never possible to estimate revenue from special receipts and credits in advance with any degree of accuracy and the arbitrary budget forecast of $50 million for 1951-52 proved to be too large.
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B. Expenditures
47.	In previous years it has been customary to present a comparison by major categories of the expenditures for the current fiscal year with those of the previous year. In the accounts and estimates for the year under review the categories "capital expenditures", "special expenditures", "Government-owned enterprises" and "other charges" have been eliminated, and the items formerly appearing under these headings have been included under the headings of the appropriate departments. Consequently, to compare satisfactorily the expenditures of the two years, the expenditures for 1950-51 have also been adjusted to this basis.
48.	The table which follows presents a comparative summary of estimated expenditures for 1951-52 with actual expenditures for the preceding fiscal year classified by departments and principal purposes.

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(In millions of dollars)
Fiscal Year Ended March 31
National Defence	
Defence Production	
Public Debt Charges- Interest on Public Debt. Other Debt Charges...,
Provincial Subsidies and Tax Rental Payments (including Transitional
Grant to Newfoundland)	
Government contributions to Superannuation Account	
Provision for reserve for possible losses on ultimate realization of active assets.
Family Allowances	
Old Age Pensions and Pensions to Blind
Persons	
Deficit-Old Age Security Fund	
Unemployment Insurance Act- Administration and Government Contribution	
Agriculture	
Citizenship and Immigration	
External Affairs	
Finance	
Mines and Technical Surveys	
National Health and Welfare	
National Research Council and Atomic
Energy Control Board	
National Revenue	
Post Office	
Public Works	
Resources and Development	
Royal Canadian Mounted Police	
Trade and Commerce	
Transport	
Veterans Affairs	
Other Departments	
Grand Total	
				Increase or Decrease (-)	
1952 (Estimated)		1951			
Amount	Per cent	Amount	Per cent	Amount	Per cent1,401-0	38-4	782-4	27-0	618-6	79-039-7	1-1	39-7	430-7	11-8	425-2	14-6	5-5	1-311-1	0-3	13-8	0-5	-2-7	-19-6Ul-8	Ml	1)39-0	15-1	2-8	0-6127-2	3-5	123-9	4-3	3-3	2-7'110-9	3-0	81-8	2-8	29-1	35-675-0	2-1	75-0	2-6	320-5	8-8	309-5	10-7	11-0	3-683-5	2-3	103-2	3-6	-19-7	-19-155-0	1*5	55-0	54-2	1-5	52-9	1-8	1-3	2-566-9	1-8	142-8	4-9	-75-9	-53-223-4	0-6	20-7	0-7	2-7	13-038-1	1-0	22-1	0-8	16-0	72-429-1	0-S	32-8	1-2	-3-7	- 11-327-5	0-8	21-1	0-7	C-4	30-34G-0	1-3	36-2	1-2	9-8	27-125-1	0-7	18-0	0-6	7-1	39-4- 45-8	1-3	46-1	1-6	-0-3	-0-698-1	2-7	91-8	3-2	6-3	6-976-G	2-1	73-6	2-5	3-0	4-131-9	0-9	28-9	1-0	3-0	10-427-5	0-8	19-8	0-7	7*7	38-922-1	0-6	27-3	0-9	-5-2	-19-0102-1	2-8	85-1	2-9	17-0	20-0216-0	5-9	216-4	7-5	-0-4	-0-262-4	1-7	50-8	1-8	11-6	22-83,647-4	100-0	2,901-2	100-0	746-2	25-7
The Budget-Appendix
National Defence and Defence Production
49.	A more complete picture of Canada's expenditures for defence can be seen by considering together the expenditures of the Departments of National Defence and Defence Production. By adding to the estimated expenditures of $1,401 million for the Department of National Defence the sum of $39-7 million being the estimated outlay for the Department of Defence Production, there results a total of $1,440-7 million for defence, an increase of $658-3 million over the previous year. This constitutes approximately 40 per cent of all government expenditures for the fiscal year, making defence by a considerable margin, the largest class of government expenditure.
50.	The following table shows a comparative summary of expenditures for the two departments for the last two fiscal years:
Fiscal Year Ended March 31
(Estimated)
Increase
or
Decrease (-
Department of National Defence-
Army, Navy and Air Services	
Defence Research and Development	
Pensions-Defence Services Pension Act	
Government contribution to Permanent Services Pension
Account	
Defence Appropriation Act 1950, Sec. 3	
General	
Department of Defence Production-
Capital Assistance	
Administration and General	
(In millions of dollars)
1,205-8
5-1
545-7	660-1
23-4	10-6
5-0	0-1
125-1
1,1,01-0
195-4
782-4
-70-3
618-S
9-8
9-8
Total National Defence and Defence Production....
1,440-7
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MILLIONS or DOLLARS
4000
2000
NATIONAL OCrCNCE

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1946	1947	1946	1949	I960	1951	1952*


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1000:

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The Budget-Appendix
51.	The estimated expenditures of $1,205-8 million for the Army, Navy and Air Services represent an increase of $660 [DOT] 1 million over the total of $545 [DOT] 7 million for 1950-51, reflecting the gathering momentum of the defence programme. Expenditures for Defence Research and Development are expected to amount to $34 million for 1951-52 compared with $23-4 million for 1950-51, an increase of $10-6 million.
52.	The Government's contribution to the Permanent Services Pension Account for 1951-52 is estimated at $30-7 million or $18-7 million more than the corresponding amount for the previous year. Of the total, $16-7 million represents a government contribution equivalent to one and two-thirds times the current contributions by permanent services personnel, while $14 million relates to contributions for arrears.
53.	Expenditures under the authority of the Defence Appropriation Act, 1950, section 3, are expected to amount to $125-1 million, or $70-3 million less than the total of $195-4 million for 1950-51. In 1950-51 under the provisions of this section of the Act, existing defence equipment and supplies were transferred to parties to the North Atlantic Treaty. The value of the equipment and supplies transferred was charged to this appropriation on the basis of the estimated present value, and an equivalent amount was credited to a special Defence Equipment Replacement Account from which payment might be made when replacements for such transfers were obtained for the Canadian Forces. The estimated expenditure of $125-1 million for 1951-52 consists of approximately $73 million for existing equipment and supplies transferred to North Atlantic Treaty countries and $52 million for direct cash outlays for mutual aid by the Government of Canada, representing costs incurred in the training in Canada of air crews from allied countries and for acquiring and supplying new military equipment to parties to the North Atlantic Treaty.
54.	The Department of Defence Production was established at the beginning of the fiscal year 1951-52 under the authority of The Defence Production Act, to buy or acquire defence supplies and construct defence projects required by the Department of National Defence. The Department's major expenditures were for the provision of capital assistance to private contractors or Crown corporations undertaking contracts essential to the defence programme. While the table would appear to indicate that there were no comparable expenditures prior to 1951-52, it should be observed that the Department of Trade and Commerce was responsible for, and incurred expenditures relating to, activities similar to those which the Department of Defence Production now administers. For example, in 1950-51, expenditures of $1-3 million were made for research and development of jet engines and aircraft; $2-9 million for administration and operation of Canadian Arsenals Limited; $1-4 million for expenses incurred in purchasing materials, supplies and equipment for the Department of National Defence and $0-5 million for expenses incurred in procuring the construction of defence projects for that department.
55.	It should also be pointed out that in addition to the foregoing budgetary expenditures, further substantial cash outlays were required in connection with the defence programme. It is estimated that net cash payments of $95 million in 1951-52 were made from the Defence Production Revolving Fund for the acquisition of materials for use in the manufacture of defence equipment. For purposes of accounting and control materials so purchased are treated as assets in the books of the government until such time as they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. Also an estimated amount of $50-6 million cash was disbursed for the replacement of equipment and supplies transferred to parties to the North Atlantic Treaty. This also involved a cash outlay during 1951-52

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which was not reflected in the budgetary expenditures for the year under review. Instead it was charged to the special Defence Equipment Replacement Account which was credited with the estimated value of the original equipment and supplies when these were transferred to the recipient governments.
Public Debt Charges
56.	Public debt charges again constituted the second largest single item of government expense. The estimated total for 1951-52 is $441-8 million or 12-1 per cent of all expenditures compared to $439 million or 15-1 per cent for 1950-51, an increase of $2-8 million.
57.	Interest on public debt, estimated at $430-7 million, is $5-5 million greater than the previous year. Interest on deposit and trust accounts increased by only $0-2 million during the year but insurance, pension and guaranty accounts continued to increase substantially and as a result interest allowed on these accounts in 1951-52 was $6-4 million more than in 1950-51. Of this increase $2-4 million was for interest on the government annuities account, $0 * 6 million on the Permanent Services Pension Account, and $3 [DOT] 3 million on the Civil Service Superannuation Account.
58.	Interest on funded debt payable in Canada showed a slight increase of $0-5 million, largely attributable to increased rates on short-term issues, while interest on debt payable in New York, amounting to $10-8 million, was $1 -5 million less than during the previous year. This decrease was due mainly to the redemption of the $100 million 4 per cent 1930-60 New York loan which was called as of October 1, 1950, and replaced by the $50 million 2f per cent 1950-75 loan.
59.	Other public debt charges including the annual amortization of bond discounts and commissions, the cost of issuing new loans (not amortized) and other miscellaneous expenses incurred in servicing the public debt are estimated at $11-1 million for 1951-52 as compared to $13-8 million for 1950-51, a decrease of $2-7 million.
60. The following table presents a summary of public debt charges for 1951-52 and the corresponding figures for the previous year:
	Fiscal Year Ended March 31		Increase
	1952 (Estimated)	1951	Decrease(-)
	(In millions of dollars)		
Interest on Public Debt- Funded Debt and Treasury Bills- Payable in Canada	376-5	376-0	0-5Payable in London	1*7	1 *8	-0*1 -1-5Payable in New York	10-8	12-3	S89-0	S90-1	-i-iDeposit and Trust Accounts	3-0	2-8	0-2Insurance, Pension and Guaranty Accounts	38-7	32-3	6*4Total Interest on Public Debt	430-7	425-2	5-5Annual amortization of bond discounts and commissions... .	9-7	12-5	-2-8Servicing of Public Debt	0-3	0-4	-0*1Cost of issuing New Loans	1*1	0-9	0*2Total Public Debt Charges	441-8	439-0	2-8
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Subsidies and Tax Rental Payments to Provinces
61.	Payments to provinces during 1951-52 for statutory subsidies, the transitional grant to Newfoundland, rentals under the Tax Rental Agreements, and the transfer of certain public utility tax receipts, amounted to $127-2 million as compared with $123-9 million in 1950-51. A comparative summary of the payments for the two years is given in the following table:
	Fiscal Year Ended March 31		Increase
	1952 (Estimated)	1951	Decrease (-)
	(In millions of dollars)		
Statutory subsidies	20-1	18-7	1-4Transitional grant to Newfoundland	6-5	6-5	Rentals under Tax Rental Agreements	96-9	94-1	2-8Transfer of certain public utility tax receipts (sec. 7, Chap. 58, Statutes of Canada, 1947)	3-7	4-6	-0-9127-2	123-9	3-362.	Statutory subsidy payments in 1951-52 were based on the 1951 census totals of population, while in 1950-51 payments were calculated on the basis of population according to the 1941 census or in the case of the three prairie provinces, the 1949 estimates. The increase in subsidy payments of $1-4 million reflects the increase in population as recorded in the 1951 census.63.	Payments under the tax rental agreements increased by a net amount of $2-8 million, reflecting the appropriate adjustment in the relevant ratios of population and estimates of gross national product on which the payments are based. Under the provisions of the Dominion-Provincial Tax Rental Agreements Act the Government of Canada collects provincial 5 per cent corporation taxes for the seven provinces participating in the 1947 agreements. Although levied by the provinces, these taxes are administered and collected by the Government of Canada and the proceeds thereof, when finally assessed, are paid to the provinces in lieu of an equivalent (or approximately equivalent) portion of the stipulated tax rental. Gross payments required under the tax agreements increased by $10-5 million, but as the payments to the provinces out of the provincial 5 per cent corporation tax suspense account amounted to $7-7 million more than similar payments made in 1950-51, the net increase was reduced to $2-8 million.64.	Ihere was a decrease of $0-9 million in payments of public utility tax receipts. Section 7 of the Dominion-Provincial Tax Rental Agreements Act, 1947, authorized the payment to the provinces, whether participating in the agreements or not, of a portion of the taxes collected from corporations, whose main business was the distribution to, or the generation for the distribution to, the public of electrical energy, gas or steam.﻿APRIL 8. 1952
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65. A summary of payments, by provinces, during 1951-52 is given in the following table:
-	Statutory Subsidies	Rentals under Tax Rental Agreements	Transfer of certain public utility tax receipts	Transi- tional Grant	Total
		(In	millions of dollars)		
1-6	7-7	0-1	6-5	15-92-1	12-6	0-1	-	14-8 2*90-7	2-2	(')	-	1-7	9-4	0-2	-	11-3 3-83-3	-	0-5	-	3-6	-	0-6	-	4-2 16-6 18-5 17-7 21-41-7	14-6	0-3	-	2-0	16-5	(')	-	2-1	14-8	0-8	-	British Columbia	1-3	19-1	1-0	-	20-1	96-9	3-7	6-5	127-2
0) Less than $50,000.
Government Contributions to the Civil Service Superannuation Account
66.	Amounts totalling $110-9 million were transferred to the civil service superannuation account in 1951-52, an increase of $29-1 million over the Government's total contributions in 1950-51.
67.	In 1951-52, as in the previous fiscal year, an amount of $75 million was credited to the account as a special government contribution of a portion of the amount by which the liabilities as estimated by the actuaries exceeded the balance in the account. In addition, $23 million, being the additional liability due to the upward revision of civil service salaries effective December 1, 1951, has been transferred to the account.
68.	The remaining $12-9 million represents a government contribution of an amount equal to the estimated payments by individual contributors in the previous year on account of current and prior service. 1 his increase of $6-1 million over the contribution of $6-8 million in 1950-51 is due, mainly to the fact that m previous years the Government has matched only the current contributions of individual contributors.
69.	For a more complete explanation of transactions affecting this account, see the comments on "Insurance, Pension and Guaranty Accounts" in the section on the "Estimated Balance Sheet Position at March 31, 1952.
Provision for reserve for possible losses on ultimate realization of active assets
70.	An amount of $75 million was again transferred to the general reserve for possible losses on the ultimate realization of active assets with a corresponding amount being shown as an expenditure in the Government s accounts. 1 here was no charge or write-off to the reserve during the fiscal year. 1 he balance at March 31, 1952 was $470-9 million which is equivalent to approximately 7 per cent of the aggregate active assets.
Family Allowances, Old Age Pensions and Pensions to Blind Persons
71.	Payments for family allowances are estimated at $320-5 million for 1951-52 representing approximately 8-8 per cent of the total expenditures for the fiscal year. The estimated increase of $11 million over the previous year is attributable to the natural increase in population in the eligible age groups.
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72.	Payments in respect of old age and blind pensions for 1951-52 (excluding pensions paid from the Old Age Security Fund) are estimated at $83-5 million l^ulting in a decrease of $19-7 million from the total of $103-2 million for 1950-51. The Old Age Pension Act provided for the payment by the federal
^	^ Per cen^ the lesser of $40 monthly or the amount of pension
paid by the province monthly up to December 31, 1951, to eligible persons in "" w"° were 70 years and over or 21 years and over if blind. On January 1, 1952, the Old Age Assistance Act became effective under which the federal government paid the provinces 50 per cent of $40 monthly or of the amount of assistance paid by the province monthly, whichever was the lesser, to eligible persons in need who were 65 years and over. After January 1, 1952, the blind continued to receive pensions as before but under the new Blind Persons Act Under the Old Age Security Act which also came into effect on January 1 1952
n r -u? government Paid S4° monthly out of the Old Age Security Fund to all eligible persons of 70 years and over irrespective of need commencing in t^nf/to952' Consequently, payments to the provinces for the last quarter of 1951-52 were substantially reduced, but the full effect of this change will not be apparent until the conclusion of 1952-53.
73.	A comparative summary of the estimated payments for 1951-52 and the actual outlay for the preceding year is given in the following tables:
FAMILY ALLOWANCE PAYMENTS AND FEDERAL CONTRIBUTIONS to nm app PENSIONS OLD AGE ASSISTANCE AND PENSIONS TO BLIND PERKINS TOR THE E FISCAL \EARS ENDED MARCH 31, 1952 AND MARCH 31, 1951
-	Fiscal Ye Mar 1952 (Estimated)	-ar Ended nh 31 1951	Increase or Decrease (-)Family Allowances	(In 320-5 77-2 2-	5 3-	8	millions of doll 309-5 99-3 3-9	ars) 11-0 -22-1 2-5 -0-1Federal contributions to Old Age Pensions 0)	Old Age Assistance	Pensions to the blind	
404-0	412-7	-8-7
(>) Not including pension payments estimated at $76 million from the Old Age Security Fund.
in
,,74; The estimated distribution of these payments, by provinces, is shown the following table:

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-	1952 (Estimated)	1951	IncreaseNewfoundland	(In	millions of dot	ars)Nova Scotia	0*4Prince Edward Island .	15'7	0-2 0-1 0-1New Brunswick	Quebec	Ontario	3*3Manitoba	vo [DOT] z	4-2 0-	5 0-2 0-8 1-	1Saskatchewan	Alberta	British Columbia...	23-1 0-6	Northwest and Yukon Territories	
320-5	309-5	11-0

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-	Old Age Pension Act	Pensions to the Blind(In millior 30 5-0 0-7 4-2 19-1 23-2 4-6 4-6 4-6 8-1 01	s of dollars) 0-1 0-3 (l) 0-	4 1-	3 0-8 0-3 0-1 0-2 0-3 (l)
77-2(*)	3-8
(') Less than $50,000.
(*) In addition to these payments under the Old Age Pension Act there were Federal contributions to the provinces under the Old Age Assistance Act, 1951, estimated at $2-5 million. A breakdown of this total by provinces and a comparison with 1950-51 would be meaningless because of differences in provincial legislation and consequent varying application of this Act from province to province.
Deficit-Old Age Security Fund
75.	Payments of pensions of $40 per month under the Old Age Security Act to all eligible persons seventy years of age or over without a means test commenced in January 1952. Expenditures during the three months of the fiscal year in which the Act has been in operation are estimated at $76 million. Payments are made from the Old Age Security Fund which was established by the Act and into which are paid the proceeds of a 2 per cent sales tax, a 2 per cent personal income tax and a 2 per cent tax on corporate profits levied under the Old Age Security Act. Revenues from these taxes during 1951-52 are estimated at $19 million for sales tax and $2 million for corporation income tax. Owing to the fact that revenue from the corporation income tax is slow in coming in during the first months of the year, the yield is disproportionately low. The deficiency of $55 million representing the amount by which the pension payments of $76 million exceed tax collections of $21 million was covered by funds voted by Parliament.
Unemployment Insurance Act Administration and Government's Contribution
76.	Estimated expenditures relating to the Unemployment Insurance Act (excluding the Government's payment as employer) are estimated at $54-2 million for 1951-52, an increase of $1-3 million over the total of $52-9 million for 1950-51.
77.	Unemployment insurance benefit payments are not charged directly to budgetary expenditures, but to the Unemployment Insurance Fund which is financed by contributions from employers and employees, by interest earned on investments, and by the Government's contribution of an amount equal to one-fifth of the combined employer-employee payments.
78.	In addition, the Government assumes the cost of administration and, pursuant to the Terms of Union with Newfoundland, the cost of unemployment benefits to certain residents of that Province. Qualification for benefit under the Terms of Union terminated as of April 1, 1951, but expenditures estimated at $0-3 million were made during 1951-52, representing the payment of claims pending on April 1, 1951. Corresponding expenditures in 1950-51 were $3 million. The Government also reimburses the Fund for certain sup-
1362
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plementary benefits under section 87 F of the Act. Supplementary benefits were $1-8 million in 1950-51, but as persons in the class in respect of whom the greater portion of the claims arise now qualify under the general provisions of the Act, corresponding expenditures for 1951-52 are estimated at only $40,000.
79.	The Government's contribution to the Fund for 1951-52 is estimated at $30-1 million compared with $26-1 million in 1950-51. Administration costs for 1951-52 are expected to amount to $24-1 million, a decrease of $2-7 million from the total of $26-8 million in the previous year.
Agriculture
80.	Expenditures for the Department of Agriculture are estimated at $66-9 million for 1951-52 compared with $142-8 million for the previous year. The decrease of $75-9 million is mainly accounted for by the absence of any payment in the accounts for the fiscal year under review comparable to the payment of $65 million in 1950-51 to the Canadian Wheat Board to be added to the amouni available for distribution to holders of participation certificates in settlement of the 1945-50 wheat pool. In addition, there was a decrease of $4-3 million in advances to the Prairie Farm Emergency Fund.
81.	The following table presents a comparative summary of the expenditures of the department for the last two years:
	Fiscal year ended March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
	(In millions of dollars)		
Freight assistance on western feed grains	15-0	15-6	-0-6Rehabilitation and reclamation projects	11-8	13-2	-1-4Advances to Prairie Farm Emergency Fund	-	4-3	-4-3Payment to Canadian Wheat Board for distribution to producers	65-0	-65-0Premium on hog carcasses	5-4	5-1	0-3Experimental Farms Service	7-8	7-1	0-7Science Service	7-1	7-1	-Production Service	8-7	8-8	-0-1Marketing Service	4-1	4-9	-0-8Assistance to apple growers- Nova Scotia and British Columbia	1-6	2-5	-1-0Net operating loss- Agricultural Prices Support Board	1-7	3-5	-1-8Departmental administration and sundrv	3-8	5-6	-1-866-9	142-8	-75-9
External Affairs
82.	Expenditures of the Department of External Affairs are estimated at $38-1 million for 1951-52, as compared with $22-1 million for the previous year. The increase of $16 million is attributable mainly to an increase of $14-1 million in assistance to other countries and to international organizations from $11-5 million in 1950-51 to an estimated total of $25-6 million in 1951-52. In 1951-52 this assistance consisted chiefly of grants to the governments of India and Pakistan under the Colombo Plan, to assist these countries in their economic development programmes. During the fiscal year it is estimated that a total of $25 million was made available to these governments.
Mines and Technical Surveys
83.	Expenditures of the Department of Mines and Technical Surveys are estimated at $27-5 million for 1951-52, compared with the total of $21 [DOT] 1 million for the previous fiscal year. The increase of $6-4 million is attributable chiefly

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to increases of $4-3 million in the Emergency Gold Mining Assistance Act payments and of $1-7 million in expenditures of the Dominion Coal Board.
National Health and Welfare
84.	The major items of expenditure for this department during 1051-52 have already been dealt with under the headings "Family Allowances, Old Age Pensions and Pensions to Blind Persons" and "Deficit-Old Age Security Fund". It is estimated that $46 million was spent for the remaining services including administration of the department compared with $36-2 million for the previous year. This represents an increase of $9-8 million, of which slightly over $6 million is accounted for by increases in general health grants to assist the provinces in hospital construction, strengthening of general public health services and the control of disease.
Transport
85.	Expenditures of the Department of Transport are estimated at $102-1 million for 1951-52, an increase of $17 million over the corresponding total of $85-1 million for 1950-51, as shown in the following table:
-	Fiscal ye Mar 1952 (Estimated)	ar ended ?h 31 1951	Increase or Decrease (-)Air Services	(In 37-0 18-2 11-9 7-8 4-5 18-2 4-5	millions ol doll 3.3-5 17-2 10-4 8-3 5-9 7-3 2-5	ars) 3-5 1-0 1-	5 -0-5 -1-4 10-9 2-	0Marine Services	Railway Services (including Maritime Freight Rates Act).. Canals Services	Steamships Subventions, including Canadian Maritime Commission	Deficits and non-active advances- Govcrnrnent.-owned enterprises	
Departmental administration and sundry	102-1	85-1	17-086.	The net increase of $17 million is attributable mainly to increases of $10-9 million in payments for deficits of, and non-active advances to, certain wholly owned governmental enterprises and of $3-5 million in expenditures for air services which are estimated at $37 million for 1951-52 as compared with $33-5 million for 1950-51.87.	The following table presents a comparative summary of expenditures for deficits of, and non-active advances to, government owned enterprises for 1951-52 and 1950-51:Fiscal year ended March 31	Increase1952 (Estimated)	1951	Decrease (-)Net Income Deficits-	(In	millions of dollars)	Canadian National Railways	15-0	3-3	11-7Canadian National (West Indies) Steamships, Ltd	0-5	1-0	-0-5Prince Edward Island Car Ferry and Terminals	1-4	1-3	0-1National Harbours Board	0-1	0-2	-0-117-0	5-S	11-2Loans and Advances, Non-Active-National Harbours Board	1-2	1-5	-0-318-2	7-3	10-9
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88.	The deficit of the Canadian National Railways was $15 million for the calendar year 1951 compared with $3-3 million in the preceding year, an increase of $11-7 million. However, it should be noted that the over-all C.N.R. deficit includes all interest charges paid on government advances, and an amount of $23-5 million received from the Railways for interest on advances is included in the government's revenue under the classification "Return on Investments."
Veterans Affairs
89.	Total expenditures for the Department of Veterans Affairs are estimated at $216 million for 1951-52, a decrease of 10-4 million compared with the total of $216-4 million for 1950-51. The table which follows presents a comparative summary of the expenditures for the last two fiscal years:
	Fiscal Year Ended March 31		Increase	
	1952 (Estimated)	1951	Decrease (-)	
	(In millions of dollars)			
Pensions (World Wars I and II and Northwest Rebellion				
1885)	103-8	95-6	8-2Treatment and after-care of returned soldiers and allowances to veterans and dependents	76-5	71-6	4-9War service gratuities and re-establishment credits	9-7	16-9	-7-2Post-discharge rehabilitation benefits	6-7	13-5	-6-8Soldier Settlement and Veterans' Land Acts	5-6	6-3	-0-7Hospital accommodation and facilities	3-5	3-0	0-5Provision for reserve for conditional benefits under Veterans' Land Act	7-6	7-1	0-5Departmental administration and sundry	2-5	2-4	0-12160	216-4	-0-490.	An increase of approximately $15 million in payments of pensions, expenditures for hospital accommodation and treatment and after-care of returned soldiers and allowances to veterans and dependents was offset by an equivalent amount in post-discharge rehabilitation benefits, war service gratuities and Soldier Settlement and Veterans' Land Acts expenditures.91.	The provision for the reserve for conditional benefits under the Veterans' Land Act is estimated at $7-6 million, an increase of $0-5 million over the previous fiscal year. Sales of land and chattels are made to veterans at less than cost, conditional upon the terms of the agreement of sale being fulfilled for a period of ten years. The amount charged to expenditures during the fiscal year under this heading covers one-tenth of the conditional benefits included in sales to veterans prior to April 1, 1952.4.	THE CASH ACCOUNTS92.	In the preceding sections of this Part the budgetary accounts of the Government for the fiscal year 1951-52 have been described in some detail and the estimated budgetary revenues and expenditures and surplus have been analyzed and compared with the actual figures for the preceding fiscal year. However, the budgetary accounts do not reflect the full scope of the Government's financial operations: cash receipts from and cash payments to the public
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and the consequent cash surplus or deficit, or increase or decrease in available cash, are more significant factors in determining the Government's borrowing requirements and in assessing the impact of the Government's transactions upon the other sectors of the Canadian economy. However, before proceeding to analyze the cash transactions, two preliminary comments should be made.
93.	In the first place, it should be noted that some of the revenues and expenditures, that are taken into account in determining the Government's budgetary surplus or deficit, consist of current provisions to meet liabilities for future payments and other items that are merely bookkeeping or accounting entries not requiring the current receipt or outlay of cash. In the second place, it should be pointed out that the financial operations of the Government are not confined to the collection of revenues or the making of expenditures in the strict or narrow accounting or budgetary meaning of those terms. While a substantial part of all governmental activities are directly reflected in the budgetary accounts, large amounts of cash are received and disbursed in connection with extra-budgetary transactions and these receipts and disbursements must be taken into account when measuring the impact of the Government's financial operations upon the economy or analyzing the implications of Government spending and the methods by which that spending is financed.
94.	Examples of non-cash budgetary expenditures are the annual provision for the reserve for possible losses on the ultimate realization of active assets; the write-off of a loan or advance where the debt has been cancelled or is no longer collectible; government contributions and interest transferred to the Government Annuities and the Civil Service Superannuation Accounts and other insurance, pension, guaranty and deposit and trust accounts; interest accruals on War Savings Certificates, and the amortization of cash outlays made in one year applicable to subsequent years (such as payments for premiums, discounts and commissions on loans). Examples of non-cash budgetary revenues are interest accruals added to principal on the consolidation of loans, and the transfer to revenue of balances held in deferred credits, deposit or reserve accounts, such as the excess provision for the refundable portion of the excess profits tax.
95.	The extra-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the Government's assets and liabilities. They do not appear in the Government's income account nor do they enter into the calculation of the annual budgetary surplus or deficit. On the assets side, they consist, for the most part, of advances to and repayments of loans by Crown corporations and other government agencies, foreign, provincial and municipal governments and other borrowers; investments in government securities and of outlays for the acquisition of inventories of materials which will be used in the future, and for sex-vices rendered in one year but applicable to the accounts of subsequent years. On the liabilities side, the transactions relate primarily to the issue and l-edemption of secui-ities representing the funded debt of Canada, and to receipts and payments in connection with the numerous deposit and trust, and annuity, insurance and pension funds held or administered by the Government.
96.	The following comparative summary shows the nature and extent of the adjustments to the budgetary accounts for these non-cash and extra-budgetary transactions and their effect upon the government's net cash position for the last two years.
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	Fiscal year ended March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
(it	lillions of dolla	[DOT]s)Budgetary Revenues	4,003-1	3,112-5	890-6Deduct: Non-cash revenues	18 9	43-9	-25-0Net cash budgetary revenues	3,984-2	3,068-6	915-6Add: Non-budgetary cash receipts-	Net annuity, insurance and liability account receipts..	163-4	81-1	82-3Repayment of loans and investments	70-3	62-7	7-6238-7	143-8	S9-9Cash Receipts (excluding debt transactions)	4,217-9	3,212-4	1,005-5Budgetary Expenditures	3,647-4	2,901 2	746-2Deduct: Non-cash expenditures	472-7	464-1	8-6Net cash budgetary expenditures	3,174-7	2,437-1	737-6Add: Non-budgetary disbursements- Loans, investments and working capital advances- Advances to Minister of Finance Exchange Fund.. .	200-0	475 0	-275-0Advances to Defence Production Revolving Fund	95-0	950Loans to Central Mortgage and Housing Corpora-	tion	69-7	79-4	-9-7Loans to Canadian National Railways	138-6	19 9	118-7Loans under Soldier Settlement and Veterans' Land	Acts	9-4	14-6	-5-2Other loans, investments and working capital	advances	29-3	40	25-3543-0	592-9	-60-9Other non-budgetary disbursements- Disbursements from Defence Equipment Replace-	50-6	50-6 550Net disbursements from Old Age Security Fund..	55-0	Cost of loan flotations (portion to be amortized),. .	4-0	10-0	-6-0Net disbursements from sundry accounts	1-2	1-9	-0-7110-8	It-9	98-9Cash Disbursements (excluding debt transactions)	3,827-5	3,041-9	785-0Cash Surplus Available for Debt Reduction	390-4	170-5	219-997.	The figures indicate that after adjusting the budgetary revenues for non-cash credits and non-budgetary receipts, a total of $4,217-9 million cash was available to the Government during 1951-52, an increase of $1,005-5 million as compared with the total of $3,212-4 million in the previous year. Out of this, budgetary cash expenditures of $3,174-7 million and non-budgetary disbursements of $652-8 million were made, a net increase of $785-6 million, leaving a cash surplus of $390-4 million available for debt reduction or increase in cash balances as compared with $170-5 million in 1950-51.98.	The total of non-budgetary receipts is estimated at $233-7 million, made up of $163-4 million from net annuity, insurance and liability account receipts and $70-3 million for repayments of sundry loans and investments, of which $66-1 million was from the United Kingdom and other governments.99.	Non-budgetary disbursements, which amounted to $652-8 million, consisted of $200 million for advances to the Minister of Finance Exchange Fund, $95 million for advances to the Defence Production Revolving Fund used in part in the stockpiling of defence materials, $69-7 million to Central Mortgage and Housing Corporation for housing construction and housing loans, $138-6 million for advances to the Canadian National Railways, $38-7 million for miscellaneous loans or investments and working capital advances (including
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$9-4 million for loans to veterans), $4 million for discounts and commissions on loan flotations, $50-6 million in purchases of equipment through the Defence Equipment Replacement Account, $55 million in net disbursements from the Old Age Security Fund representing the excess of pension payments over tax receipts, and $1 -2 million in disbursements from sundry accounts.

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(MILLIONS Or DOLLARS)
100.	As a result of total cash receipts exceeding total cash disbursements by . $390-4 million and by letting cash balances run down by $66 million, the Government was able to retire or acquire funded debt outstanding in the hands of the public to a net amount of $456-4 million. A reconciliation of the cash surplus of $390-4 million, the reduction in outstanding funded debt, and the net change in the Government's cash position, together with the corresponding figures for the previous fiscal year, is shown below:
	Fiscal year ended March 31		Increase
	1952 (Estimated)	1951	Decrease ( -)
	(l!l	millions of dollars)	
Cash Surplus-or excess of total receipts over disbursements	390-4	170-5	219-9299-S	119-0	180-8Net purchase of securities-	49-6	0 1	49-54-4	6-2	-1-8102-6	87-7	14-9156-6	94-0	62-6Net cash applied to the purchase or retirement of outstanding funded debt in the hands of the public	456-4	213-0	243-4Net Decrease In Cash Balances	66-0	42-5	23 5
The Budget-Appendix
5.	ESTIMATED BALANCE SHEET POSITION AT MARCH 31, 1952
101 The following table presents, in summary form, the Government's estimated balance sheet position at March 31, 1952, with the comparable figures for March 31, 1951.	e

[Stage Direction]
fin million? of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
Liabilities Floating debt		548-9 120-1 1,412-8 17 5 301-9 11-9 34-5 14,703-0	486-4 122-0 979-3 11-6 258-4 11-9 26 9 15,026-8	62-5 4-	1 433-5 5-	9 43-5
Deposit and trust accounts				
Insurance, pension and guaranty accounts				
Deferred credits				
Sundry suspense accounts				
Province debt accounts				
Reserve for certain contingent liabilities .			
			7-6 -323-8
Funded debt unmatured				
Active Assets Cash and other current assets...			
17,156-6	16,923-3	233-32,033-5 1,467-0 2,625-8 26-0 2-3 268-3 127-0	1,820-2 1,257 3 2,678-0 22-7 2-3 60-0 45-4	213-3 209-7 -52-2 3-3I.oans to, and investments in, Crown agencies	Other loans and investments	Sinking fund and other investments held for retirement of unmatured funded debt	Province debt accounts	Deferred charges	
Sundry suspense accounts	208-3 81-6Total Active Assets	6,549-9 470-9	5,885-9 395-9	664-0 75 0Less: Reserve for possible losses on ultimate realization of active assets	Net Active Assets	6,079-0	5,490-0	589-0Net Debt (Excess of liabilities over net active assets)	11,077-6	11,433-3	-355-7102.	The aggregate liabilities of the Government as at March 31, 1952, are estimated at $17,156-6 million, an increase of $233-3 million over the corresponding total at the end of the previous year. Unmatured funded debt outs tan ding, including bonds, treasury bills and deposit certificates accounts for $14,703 million or approximately 86 per cent of all liabilities. Of the total unmatured funded debt now outstanding, only $401 [DOT] 6 million or approximately 2-7 per cent is payable in foreign currencies-$348 million payable in United States dollars and $53 [DOT] 6 million in pounds sterling. A complete statement in tabular form of the Government's unmatured funded debt at March 31, 1952, with details of interest rates, dates of maturity, annual interest charges, and amounts of principal outstanding for each loan may be found at the end of this Part.103.	Floating debt, consisting of outstanding cheques and interest, matured funded debt outstanding and similar obligations payable on demand, is estimated at $548-9 million. Amounts at the credit of annuity, insurance, pension and guaranty accounts are expected to total $1,412-8 million.
The Budget-Appendix
104.	Ihe other items on the liabilities side of the balance sheet are: sundry suspense accounts (where some uncertainty as to disposition exists), $301-9 million; deposit and trust accounts (consisting of moneys deposited with or held in trust by the Receiver General for various purposes), $126-1 million; reserve for conditional benefits under the Veterans' Land Act, $34-5 million; province debt accounts (representing settlements arising out of agreements at the time of confederation), $11-9 million; and deferred credits (consisting of balances whose ultimate accounting treatment is known, but which are held until certain conditions are fulfilled), $17-5 million.
105.	Offsetting these liabilities, and in a measure explaining their existence- as a substantial portion of the total debt is attributable to them-are the Government's active assets. For the most part, these consist of assets that yield interest, profits, or dividends, very liquid assets such as cash and departmental working capital funds, and certain prepaid expenditures and sundry suspense accounts.
106.	Although some of the items are very difficult to forecast, it is expected that the active assets will aggregate $6,549-9 million at March 31, 1952. The totals of the principal active asset categories at that date are estimated at: cash and other current assets, $2,033-5 million; loans to, and investments in, Crovvn agencies, $1,467 million; other loans and investments (including loans to provincial, municipal, United Kingdom and other governments, subscriptions to international organizations, and a number of miscellaneous advances to veterans and others), $2,625-8 million; deferred charges, $268-3 million; province debt accounts, $2-3 million; and sundry suspense accounts, $127 million.
107.	The reserve for possible losses on the ultimate realization of active assets which now stands on the books at $470-9 million is shown on the balance sheet as a deduction from the total of the active assets, bringing the net active asset total to $6,079 million.
A.	Changes in Principal Liability Classifications during 1951-52
108.	It is estimated that there was an increase of $233-3 million in the gross liabilities of the Government during the fiscal year. The three most important increases were $433 * 5 million in the insurance, pension and guaranty accounts (attributable principally to increases of $330-9 million in the Civil Service Superannuation Account, $57-2 million in the Government Annuities Account and $43-9 million in the Permanent Services Pension Account), $43-5 million in sundry suspense accounts and $62-5 million in floating debt.
109.	The most significant reduction in the liabilities was the substantial decrease in the outstanding unmatured funded debt of the Government from $15,026-8 million at March 31, 1951 to an estimated amount of $14,703 million at March 31, 1952. ffhis net reduction of $323-8 million compares with similar reductions of $161-4 million in 1950-51, $396-9 million in 1949-50, $372-3 million in 1948-49, and $584-5 million in 1947-48.
Floating Debt
110.	Floating debt shows an estimated increase of $62-5 million in 1951-52. Increases of $84-3 million in outstanding cheques, $0-9 million in interest due and outstanding and $0-9 million in Post Office account are offset partially by decreases of $16 million in matured funded debt and $7-6 million in the nonnegotiable non-interest bearing demand notes issued to the International Bank for Reconstruction and Development as part of Canada's subscription to the Bank. The changes in floating debt during the fiscal year are summarized in the following table:
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The Budget-Appendix

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(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
	26-8 289-4 77-2 144-1 11-4	42-8 297-0 76-3 59-8 10-5	-16-0 -7-6 0-9 84-3 0-9
			
			
			
Post Office (net liability for money orders, etc.)				
	548-9	486-4	62-5
Deposit and. Trust Accounts
111.	It is estimated that there was an increase of $4-1 million in deposit and trust accounts. Increases of $7 million in contractors' security cash deposits, $3-5 million in the Prairie Farm Emergency Fund and $1-8 million in the National Capital Fund are offset, in part, by a decrease of $8-3 million in Province of Newfoundland Financial Surplus account.
Insurance, Pension and Guaranty Accounts
112.	Insurance, pension and guaranty accounts show an estimated increase of $433-5 million during the year. The changes in various accounts in this category are shown in the following table:

[Stage Direction]
(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
Government Annuities	677-6	620-4	57-2Permanent Services Pension Account	110-4	66-5	43-9Civil Service Superannuation Account	520-0	189-1	330-9104-8	103-3	1*51,412-8	979-3	433-5113.	The principal increases were $57-2 million in Government Annuities, $43-9 million in Permanent Services Pension Account and $330-9 million in the Civil Service Superannuation Account.114.	Of the increase of $330-9 million in the Civil Service Superannuation account, $312 million represents a transfer to the account of the amount by which the liabilities at December 31, 1951, as estimated by the actuaries, exceeded the balance in the account. Of this sum of $312 million, $98 million is included as a charge to budgetary expenditures in the year's accounts, and $214 million has been set up as a deferred charge, -which will, with Parliamentary approval, be written off to expenditures in future years. The amount of $98 million consists of two items. The first is the Government's second special contribution of $75 million towards making up the substantial deficiency which had accumulated in the account over many years due for the most part to increases in the general
The Budget-Appendix
level of salaries and to the practice formerly followed of not matching employees' prior service contributions with an equal Government contribution. The second is a contribution of $23 million in respect of the additional liabilities of the account consequent upon the salary increases to civil servants effective December 1, 1951.
115.	ihe further $18-9 million increase in the account during the fiscal year represents the amount by which employees' current and prior service contributions, the Government's contribution of an amount equal to the estimated current and prior service payments of individuals in the previous fiscal year, and interest accretions exceeded payments from the account.
Deferred Credits
116.	Deferred credits are expected to show an increase of $5-9 million during the fiscal year, one of the more important factors contributing to this net increase being the balance of the amount due from the Government of France in connection with military relief settlements, an offsetting entry being included under "Loans to the United Kingdom and Other Governments".
Sundry Suspense Accounts
117.	Sundry suspense accounts are expected to record an increase of $43-5 million during the fiscal year. Of this total $22-8 million is due to an increase in the Defence Equipment Replacement Account representing the undisbursed balance of the credits to the account under section 3 of The Defence Appropriation Act, 1950, and Vote 246 of The Appropriation Act, No. 4, 1951. Under the terms of The Defence Appropriation Act, 1950, the value of defence materials and supplies transferred to members of the North Atlantic Treaty Organization may be credited to the account and these credits may be used in subsequent years to purchase equipment or supplies for the naval, army or air services of the Canadian Forces. Ihe net increase in the account during the year represents the amount by which the value of defence materials and supplies transferred exceeded cash disbursements for replacements.
118.	Also recorded under this heading is the Government's liability for collections of provincial 5 per cent corporation income taxes under The Dominion-Provincial Tax Rental Agreements Act. As collections during 1951-52 were higher than during the preceding fiscal year, and assessments and payments to the provinces were somewhat less than collections, the estimated amount of $77-9 million at March 31, 1952 was approximately $14-6 million more than the corresponding amount at March 31, 1951.
Province Debt Accounts
119.	There was no increase or decrease during the fiscal year in the Government s liability in respect of the province debt accounts. These amounts have remained unchanged for many years.
Reserve for Certain Contingent Liabilities
120.	Ihe reserve for certain contingent liabilities is expected to show an increase of $7 -6 million during the fiscal year reflecting an additional provision for conditional benefits which may accrue to veteran borrowers under the Veterans' Land Act.
Funded Debt Unmatured
121.	It is estimated that there was a net decrease in unmatured funded debt from $15,026-8 million at March 31, 1951 to $14,703 million at March 31, 1952. The over-all reduction of $323-8 million reflects decreases of $303-7 million in debt payable in Canada, $17-4 million in debt payable in New York,
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The Budget-Appendix
and $2-7 million in debt payable in London. The details of the various loan redemptions, flotations and adjustments which resulted in this net decrease are described more fully in the section on "The Public Debt".
B.	Changes in Principal Active Asset Classifications During 1951-52
122.	It is estimated that there was an increase of $664 million in the total of the active assets during the fiscal year under review. However, with the provision of an additional $75 million for the reserve for possible losses on the ultimate realization of active assets, active assets are expected to show a net increase of $589 million when the books are closed. Estimated increases of $213-3 million in cash and other current assets, $209-7 million in loans to, and investments in, Crown agencies, $81-6 million in sundry suspense accounts, and $208 [DOT] 3 million in deferred charges were off set by a decrease of $52 [DOT] 2 million in other loans and investments.
Cash and Other Current Assets
123.	Cash and other current assets increased by approximately $213-3 million during the fiscal year as shown in the following table which summarizes the changes in the various accounts in this category:

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(In millions of dollars)
	Balance at March 31		Increase or Decrease (-
	1952 (Estimated)	1951	
Cash in current and special deposits including blocked currency	21-9	88-9	-67-0Other liquid assets- Minister of Finance Exchange Fund Account- Advances represented by cash and securities	1,799-4	1,681-2	118-2Securities investment account	59-2	9-6	49*6Working Capital Advances- Departmental- Defence production revolving fund	
Other	95-0 33-7	22-7	95-0 11-0Crown corporations	24-3	17-8	6-52,033-5	1,820-2	213-3124.	The principal changes were increases of $118-2 million in the Minister of Finance Exchange Fund Account and $49-6 million in the Securities Investment Account and an amount estimated at $95 million in the Defence Production revolving fund. These are offset, in part, by a reduction of $67 million in cash in current and special deposits.125.	The increase in advances to the Exchange Fund represents additional cash advances of $200 million during the year to finance the purchase of gold and foreign exchange, reduced by $81-8 million equivalent to the increase in the Fund's revaluation deficit during 1951 which was deducted from the total advances and carried to sundry suspense accounts. The Fund's revaluation deficit at December 31, 1951, was $125-6 million compared with $43-8 million at the end of the preceding year.
The Budget-Appendix
Loans to, and Investments in, Crown Agencies
126.	Loans to, and investments in. Crown agencies increased by $209-7 million during 1951-52 from $1,257-3 million at March 31, 1951, to an estimated amount of $1,467 million at March 31, 1952. The changes during the fiscal year in this category of assets are summarized in the following table:
	Balance at March 31		Increase or
	1952 (Estimated)	1951	Decrease (-)
	5*9	5-9	
Central Mortgage and Housing Corporation-	25-0	25-0	Loans	331-0	261-4	69-6Canadian Farm Loan Board	27-3	26-0	1-3Railway and Steamship Companies	902-6	764-0	138-6National Harbours Board	106-9	106-7	0-2Polymer Corporation Limited	38-0	41-0	-3-0Other Crown Agencies	30-3	27-3	3-01,467-0	1,257-3	209-7127.	Loans to Central Mortgage and Housing Corporation increased by $69 [DOT] 6 million during the year.128.	Loans to railways and steamship companies represent in the main advances by the Government to the Canadian National Railways for capital expenditures (including the purchase of railway equipment under hire-purchase agreements), for the retirement of maturing debt, and for the temporary financing of current operations. The net increase in advances to C.N.R. during the year is estimated at $138-6 million.129.	The amount of $106-9 million shown for the National Harbours Board represents the net outstanding advances in connection with harbour developments at Montreal and Vancouver. These are the only advances to the National Harbours Board which are classified as active assets in the Government's accounts.130.	The Government's investment in Polymer Corporation Limited, a Crown corporation engaged in the manufacture of synthetic rubber, was reduced by a repayment of $3 million during the fiscal year, the balance at March 31, 1952, being estimated at $38 million.131.	The amount of $30-3 million shown for other Crown agencies, represents subscriptions to the capital stock of, or advances to, sundry government agencies for capital, construction and other purposes. The total includes loans to, or investments in, Canadian Broadcasting Corporation ($9-2 million); Canadian Overseas Telecommunication Corporation ($1-8 million); Eldorado Mining and Refining (1944) Limited ($8-2 million); Export Credits Insurance Corporation ($5 million); and Northwest Territories Power Commission ($6-1 million).
Other Loans and Investments
132.	This group of assets includes loans to the United Kingdom and various foreign governments, the Government's subscriptions to the capital of the International Monetary Fund and the International Bank for Reconstruction and Development, loans to provincial and municipal governments, and a number of miscellaneous loans and investments, the chief of which are the loans to
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veterans under the Soldier Settlement and Veterans' Land Acts. A table summarizing the loans and investments in this category and showing the changes during the fiscal year follows:

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(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1952 (Estimated)	1951	
Loans to United Kingdom and other Governments		1,925-5 322-5 70-9 910 198-7 17-2	1,985-0 322-5 70-7 95-2 189-3 15-3	-59-5
Subscription to Capital of International Monetary Fund...			
Subscription to Capital of International Bank for Reconstruction and Development				0-2 -4-2 9-4 1-9
Loans to Provincial and Municipal Governments				
Advances under Soldier Settlement and Veterans' Land Acts. Miscellaneous Loans and Investments				
			
	2,625-8	2,678-0	-52-2
133.	The loans to the United Kingdom and other governments consist of loans to the Government of the United Kingdom under the authority of The War Appropriation (United Kingdom Financing) Act, 1942, and The United Kingdom Financial Agreement Act, 1946, loans to other countries under Part II of the Exports Credits Insurance Act, and miscellaneous foreign loans. A summary of the changes in each of these categories is shown in the following table:

[Stage Direction]
(In millions of dollars)
	Balance at March 31		Increase or
1952 (Estimated)	1951	Decrease (-)Loans to United Kingdom- The War Appropriation (United Kingdom Financing) Act, 1942	220-4	251-5	-31 * 1The United Kingdom Financial Agreement Act, 1946	1.171-0	1,185-0	-14-01,391-4	1,436-5	-45-1Loans to Foreign Governments-	The Export Credits Insurance Act, Part II	480-9	500-6	-19-7Miscellaneous Advances	53-2	47-9	5-3534-1	548-5	-14-41,925-5	1,985-0	-59-5134.	It is estimated that during 1951-52 the Government of the United Kingdom will have repaid $31-1 million of the $700 million interest-free loan granted under the provisions of The War Appropriation (United Kingdom Financing) Act, 1942, reducing the balance outstanding of this loan to $220-4 million at March 31, 1952. During the year a repayment of $14 million was made by the United Kingdom Government on account of the $1,250 million loan authorized by The United Kingdom Financial Agreement Act of 1946. As the total amount advanced was $1,185 million the amount outstanding at March 31, 1952 was $1,171 million.
The Budget-Appendix
135.	The advances under Part II of the Export Credits Insurance Act represent loans made to certain foreign countries to assist them in purchasing goods and services in Canada. It is estimated that the total of outstanding advances under this Act was $480-9 million at March 31, 1952, representing a net decrease of $19-7 million from the total of $500-6 million outstanding at the end of the previous year. A classification of these advances by recipient governments, showing the repayments during the year, is given in the following table.

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(In millions of dollars)
-	Total Outstanding at March 31, 1951	Repayments during 1951-52	Total Outstanding at March 31, 1952Belgium	60-0	2-3	57-749-4	49-4Czechoslovakia	13-3	3-3	10-0225-9	8-3	217 - GIndonesia	15-5	3-1	12-4Netherlands	115-5	2-7	112-821-0	21-0500-6	19-7	480-9
Sinking Fund and Other Investments held for the Retirement of Unmatured Funded Debt
136.	There was an estimated increase of $3-3 million in these assets which are held for the retirement of the 3 per cent Newfoundland 1943-63 guaranteed stock.
Deferred Charges
137.	Accounting in large measure for the increase of $208-3 million in this category is the amount of $214 million which has been credited to the Civil Service Superannuation Account and set up as a deferred charge to be written off to expenditure in future years, subject to Parliamentary approval.
138.	Discounts and commissions of $4 million paid during the fiscal year on new loans were more than offset by the annual amortization of $9 -6 million applicable to 1951-52 and charged to the year's expenditure.
Sundry Suspense Accounts
139.	The increase of $81 * 6 million in this asset classification is due mainly to the change in the deficit arising from exchange revaluations of the assets and liabilities in the Minister of Finance Exchange Fund Account as at December 31, 1951 which amounted to $125-6 million at that date as compared with $43-8 million at December 30, 1950.
Reserve for Possible Losses on Ultimate Realization of Active Assets
140.	For the fifth successive year $75 million was added to this reserve with a corresponding amount being shown as an expenditure in the Government's accounts. There was no charge or write-off to the reserve during the fiscal year, the balance at March 31, 1952, being $470-9 million.
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C.	Decrease in Net Debt
141.	The estimated surplus of $355-7 million for the fiscal year will result in a corresponding decrease in the net debt of Canada, reducing it from $11,433-3 million at March 31, 1951, to $11,077-6 million at March 31, 1952.
6.	THE PUBLIC DEBT
Gross and Net Debt
142.	The unmatured funded debt of Canada was reduced by $323-8 million during the fiscal year, of which $299.8 million represented cash retirements and $24 million net revaluations and adjustments. However, due to increases of $557 [DOT] 1 million in other liabilities-principally in insurance, pension and guaranty, floating debt and sundry suspense accounts-the gross public debt of Canada increased by $233-3 million from $16,923-3 million at March 31, 1951, to an estimated total of $17,156-6 million at March 31, 1952. During the same period, the net active or realizable or revenue-producing assets increased by $589 million, with the result that the net debt-which is the gross debt less the active assets-was reduced by $355 [DOT] 7 million.
143.	The following table shows the amount of net debt as at March 31, 1939 to March 31, 1952 inclusive, with the amount of annual increase or decrease:

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(In millions of dollars)
Fiscal Year Ended March 31	Balance at end of year	Increase or Decrease (-) during fiscal year
1939		3,152-6 3,271-3 3,648-7 4,045-2 6,182-8 8,740-1 11,298-4 13,421-4 13,047-8 12,371-6 11,776-1 11,644-6 11,433-3 11,077-6	
1940			118-7
1941			377-4
1942			396-5
1943			2,137-6 2.557-	2 2.558-	3 2,123-0 -373-6
1944			
1945			
1946			
1947			
1948			- 676-1
1949			-595-5
1950			-131-5
1951			-211-3
1952 Estimated			-355-7
		
Unmatured Funded Debt
144.	The estimated total unmatured funded debt of Canada outstanding at March 31, 1952 was $14,703 million. This was $323-8 million less than at the end of the previous year and $2,104-2 million less than at March 31, 1946. Notwithstanding this substantial decrease, it was still $11,317-3 million more than, or approximately four times, the total of $3,385-7 million at March 31, 1939, the end of the last pre-war year. However, while interest charges on the funded debt increased by approximately 229 per cent from $118-1 million in 1938-39 to $389 million in 1951-52, the gross national product rose from $5,165 million in 1938 to $21,217 million in 1951, an increase of approximately 310 per cent. Consequently, while the unmatured funded debt, measured as a percentage of the gross national product, rose from 65 per cent in 1938-39 to approximately 70 per cent in 1951-52 the relative burden of the funded debt, measured in terms of interest charges as a percentage of the gross national product, actually decreased from 2-3 per cent in 1938-39 to 1-8 per cent in 1951-52.

The Budget-Appendix

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Summary of Security Issues and Redemptions during the Year
145. During the fiscal year Government obligations excluding Treasury .Dills in the amount of $2,762 million matured. The financing of these retirements which were all payable in Canadian dollars was effected as follows:
By refunding or conversion into new issues	
By sale of Canada Savings Bonds Series VI (net) From available cash	
(In millions of dollars)
. $ 2,100-0 .	362-2
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146. Funded debt payable in Canadian dollars decreased by an estimated amount of $303-7 million during the fiscal year. The retirement of $299-8 million out of available cash and the transfer of $5-8 million to revenue of the excess provision of the reserve for the refundable portion of the excess profits tax less $1-9 million of accrued interest added to principal of War Savings Certificates account for the net reduction achieved during the fiscal year.
447. The Canadian dollar value of the Government's external funded debt decreased by $20-1 million during the fiscal year. Of this amount $17-4 million was in respect of indebtedness payable in United States dollars and $2-7 million in respect of sterling debt. These reductions were consequent upon the revaluation of liabilities payable in those currencies to reflect the change in the exchange rates in effect at March 31, 1952 as compared with March 31, 1951.
.	448; From the foregoing it will be seen that the over-all reduction of $323-8
m! !on m the outstanding funded debt was due to cash payments of $299-8 million, revaluations to reflect changes in the exchange rates of $20 [DOT] 1 million and sundry other non-cash adjustments amounting to $3-9 million net.
a u 449- The average coupon rate of the Government's outstanding funded debt at the close of the fiscal year is estimated at 2-65 per cent compared with 2-60 per cent at the close of the previous fiscal year.
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150.	More complete details of redemptions and new issues of securities during the fiscal year are set out in the following tables:
REDEMPTION OF FUNDED DEBT DURING FISCAL YEAR ENDED MARCH 31. 1952			
Maturity Date	Interest Rate	Where Payable	AmountM«v 1 1Q51 	% i i i u i 31 n h 3 21	Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada	$ 200,000,000 200,000,000 550.000.	000 500.000.	000 200.000.	000 50,492,475 200,000,000 550,000,000 (i) 36,212,461 256,698,100
2,743,403,036 (*) 18,590,596
			
			
			2,761,993,632
			
(!) This is the amount of War Savings Certificates redeemed during the fiscal year. Accrued interest estimated at $1-9 million was added to principal.
(!) Not including $5-8 million excess provision transferred to revenue.

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Payable in Canada Is u d to Chartered Banks-
Deposit Certificates	
Deposit Certificates	
Two Year Loan	
Issued to Bank of Canada-
Six Months Treasury Notes. Six Months Treasury Notes. Six Months Treasury Notes. Six Months Treasury Notes. Two Year Loan	
Issued to General Public-
Canada Savings Bonds Series VI Net..
Grand Total	
Issue
Date
Aug. 29, 1951 Feb. 27, 1952 Nov. 1, 1951
May 1, 1951 Sept. 1, 1951 Nov. 1, 1951 Mar. 1, 1952 Nov. ', 1951
Nov. 1, 1051
Maturity
Date
Feb. 27, 1952 Aug. 27, 1952 Nov. 1, 1953
Nov. 1, 1951 Mar 1, 1952 May 1, 1952 Sept. 1, 1952 Nov. 1, 1953
Aug. 1, 1902
Interest
Rate
%
1J
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1
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31
Price to Government
100-00
100-00
100-00
99-15
Yield at Price to
%
1-	375
2-	44
1-125
1-	375
2-	44
Total Amount Issued	Renewals or Reconversion Included in Amount Issued	Amount Issued for Cash$ 200,0C0,000 io\ 000,000 64,994,000	3 200,000,000 200,000,000 64,994,000	$
464,994,000	464,994,000	
		
200,000,000 550.000.	000 200.000.	000 550,000,000 13',006,000	200,000,000 550.000.	000 200.000.	000 550,000,000 135,006,000	
		
		
		
		
		
1,635,006,000	1,635,006,000	
		
362,200,000		362,200,000
		
2,462,200,000	2,100,000,000	362,200,000
>
[DOT]0
*
r
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Indirect or Contingent Liabilities
151.	It should be noted that the Government has certain indirect or contingent liabilities which are in addition to the direct debt set out in the balance sheet. Included under this heading, for example, are the Government's guarantees of certain securities issued by various Government owned enterprises such as the Canadian National Railways, the Canadian National (West Indies) Steamships Limited, and the Saint John Harbour Commission; the guarantee of deposits maintained by the chartered banks in the Bank of Canada; guarantees of certain loans made by chartered banks to veterans or farmers for certain authorized purposes; guarantees under the Export Credits Insurance Act; and certain commitments under housing legislation.
152.	The following table gives details of the bonds and debenture stocks guaranteed by the Government, and also indicates the nature and approximate extent of the Government's other guarantees and contingent liabilities.

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Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
Aug. 1, 1952..	Saint John Harbour Commissioners	5	667,963July 10, 1953..	Canadian Northern	3	668,990Feb. 1, 1954.. May 1, 1954..	Canadian National	
City of Saint John Debentures assumed by Saint John Har-	5	50,000,000bour Commissioners	5i	3,329Mar. 1, 1955..	Canadian National (West Indies) Steamships Limited	5	9,400,000June 15, 1955..	Canadian National	a	48,496,000Feb. 1, 1956..	Canadian National	4*	67,368,000July 1, 1957..	Canadian National	a	64,136,000July 20, 1958..	Canadian Northern	3f	5,512,814Jan. 15, 1959..	Canadian National	3	35,000,000May 4, I960..	Canadian Northern Alberta	3|	316,856May 19, 1961..	Canadian Northern Ontario	3§	2,069,805Jan. 1, 1962..	Grand Trunk Pacific	3	26,465,130Jan. 1, 1962..	Grand Trunk Pacific	4	7,999,074Jan. 3, 1966..	Canadian National	3	35,000,000Jan. 2, 1967..	Canadian National	n	50,000,000Sept. 15, 1969..	Canadian National	22	70,000,000Jan. 16, 1971 .	Canadian National	22	40,000,000June 15, 1975..	Canadian National	2!	6,000,0005	584,6015	287,5044	3,133,598Perpetual	Northern Railway of Canada Debenture Stock	4	12,998 523,122,652
The Budget-Appendix
Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Deposits maintained by the chartered banks in the
Bank of Canada (March 31, 1952)	 $ 656,529,146
Bank advances, re Province of Manitoba Savings Office
(March 31, 1952)	 3,140,078
Province of Manitoba Treasury Bill (March 31, 1952)..	1,500,000
Loans made by chartered banks under the Farm Improvement Loans Act, 1944 (January 31, 1952)....	22,935,208
Loans made by chartered banks under the Veterans'
Business and Professional Loans Act (December 31,
1951)	 1,989,270
Guaranteed Bank Loans-Acadia Coal Company
(March 13, 1952)	 146,000
Guarantees under Part II of The Export Credits Insurance Act (March 31, 1952)	 11,475,000
Loans made by approved lending institutions under
Dominion and National Housing Acts	 Indeterminate
Guarantees of land assembly projects under National
Housing Act (December 31,	1951)	 277,826
Loans made by chartered banks under The Prairie Grain Producers' Interim Financing Act, 1951 (February 29, 1952)	 367,000
[Stage Direction]


The Budget-Appendix
7.	SUPPLEMENTARY DETAILED TABLES
Revenues
Expenditures
Loans and Advances and Investments Sources and Disposition of Cash Funds Unmatured Funded Debt
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (thousands of dollars)
-	1947-48	1948-49	1949-50	1950-51	Estimated 1951-52S	$	*	$	$Tax Revenue-	Direct Taxes-	Direct Taxes on Incomes-	Individual Income Tax	659,828	762,504	621,982	652,329	980,000Tax on Interest and Dividends....	33,929	40,9651	Taxes on Rents and Rovalties	1,960	2,480/	Corporation Income Tax	364,131	491,990	603,193	799,197	1,136,000Less Old age security tax trans-	-2,000Excess Profits Tax	227,030	44,792	-1,788	10,141	2,200Total Direct Taxes on Incomes.	1,286,878	1,342,791	1,270,862	1,523,277	2,171,700Succession Duties	30,828	25,550	29,920	33,599	38,000Total Direct Taxes	1,317,706	1,368,341	1,300,782	1,556,876	2,209,700Indirect Taxes-	Customs Import Duties	293,012	222,975	225,878	295,722	353,000Excise Duties-	Spirits, malt, etc	97,675	101,105	107,035	129,390	123,000Cigars, cigarettes and tobacco....	102,116	106,241	115,982	114,486	102,000Licences	37	39	38	38	38Less refunds	-3,034	-2,733	-2,490	-2,868	-3,038Total Excise Duties	196,794	204,652	220,565	241,046	222,000Excise Taxes-	Taxes on Commodities-	Sales Tax	383,012	390,174	415,222	470,627	615,000Less old age security tax trans-	-19,000Automobiles, rubber tires and	tubes	31,949	36,943	38,193	70,841	99,600Beverages (soft drinks)	23,767	27,689	1,627	7,212	19,000Candy and chewing gum	18,279	19,888	1,030	10,880	11,800Cigars, cigarettes and tobacco... .	68,606	77,665	83,497	85,199	110,000Cigarette papers and tubes	6,419	6,999	7,223	7,734	4202,824	3,894	2,0S0	5,000F urs	3,139	3,693	2,937	4,509	5,2002,208	Matches and lighters	3| 967	3,412	1,091	1,161	1,800Phonographs, radios and tubes....	5,325	3,562	3,101	5,548	8,7002,113	279	Stoves, washing machines and	10,50010,572	Toilet preparations and soaps	T, 146	7,757	4,316	4,551	8,400Trunks, bags, luggage, etc	4,962	5,565	2,257	2,604	4,000Wines	2,342	2,060	2,126	2,225	2,2504,077	6,459	10,000Sundry	4,716	4,700	2,310	4,327	7,350Taxes on Amusements and Services-	15,369	2,483	2,519	105	Transportation and communication	27;531	29,034	3,967	Stamps, including payment of taxes	on jewellery, chinaware, cabaret	attendance, etc	24,300	22,725	9,898	10,945	11,330Licences, interest and miscellaneous	376	382	370	372	6.50Less refunds (mainly sales tax)....	-10,683	-12,871	-11,785	-10,506	-13,000Total Excise Taxes	640,758	636,13S	571,457	686,768	899,000Othei Taxes-	188	166	121	Insurance premiums	3,004	3,339	3,789	4,228	4,500Mifcellaneous	613	531	525	710	800Total Indirect Taxes	1,134,369	1,067,801	1,022,335	1,228,474	1,479,300Total Revenue from Taxes	2,452,075	2,436,142	2,323,117	2,785,350	3,689,000
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1947-48	1948-49	1949-50	1950-51	Estimated 1951-52Non-Tax Revenue-	$ 77,759	$ 80,604 107,889 3,253	$ 84,512 91,529 4,523	$ 90,443 89,529 4,708 17,562 31,106	% 105,000 117,500 4,500 12,000 37,90075,800 1,731 3,736 18,745	
21,202	25,035		
					
	177,771	212,948	205,599	233,348	276,900
					
	2,629,846	2,649,090	2,528,716	3,018,698	3,965,900
					
Special Receipts and Credits- Refunds of previous years' Special	7	16	156	316	160 17,325 13,824 5,800 2Special Receipts-War and Demobili-	162,376 63,381	91,281 25,840	34,765 16,351	47,213	19,613	Refundable portion of excess profits tax-Transfer to Revenue of excess	25,000	138	69	54	2	Canadian Wheat Board- Surplus in certain special accounts... Investment in Crown plants transferred	16	121	3,704	2,528 82	Capital and Non-active Accounts- Capital Accounts- Refunds of previous years' ex-	61	67	125	100Transfer to Consolidated Deficit	158	2,243	Non-active Accounts- National Harbours Board, reduc-	82	12	119	Canadian Pacific Railway- Repayment of loan made under	1,447	1936 and 1937 Saskatchewan Seed Grain Loans Guarantees- Adjustment pursuant to The Western Provinces Treasury Bills and Natural Resources	9,773 256	Canadian National (West Indies) Steamships, Limited, reduction	80	Write-off to Consolidated Deficit Account- Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment during calendar	1,885	63	45	20	Soldier Settlement Loans-Re-	3	Total Special Receipts and Credits	241,900	122,305	51,425	93,838	37,2112,871,746	2,771,395	2,580,141	3,112,536	4,003,111
1386
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(thousands of dollars)
-	1947-48	1948-49	1949-50	1950-51	Estimated 1951-52$	$	$	S	$Agriculture-	Administration and general	466	538	644	692	715Science Service	3,593	4,358	6,061	7,093	7,125Experimental Farms Service	4,386	5,087	5,810	7,140	7,824Production Service	4,897	6,504	8,394	8,774	8,695Marketing Service	2,969	3,890	4,387	4,936	4,124Rehabilitation and reclamation pro-	jects	3,389	6,285	8,846	13,212	11,830Freight assistance on western feed	grains	20,092	18,154	16,764	15,638	15,000Premium on hog carcasses suitable for	export to United Kingdom	5,474	4,585	4,982	5,100	5,391Advances to Prairie Farm Emergency	10,744	8,640	13,138	4,304	Payment to Canadian Wheat Board	65,000	Subsidies on oats and barley used as	13,963	Other Expenditure	9 >40	3,732	6,021	10,896	6,22779,613	61,773	75,047	142,785	66,931Auditor General's Office	495	533	562	574	603Canadian Broadcasting Corporation	1,317	3,921	2,772	2,405	8,318Office of the Chief Electoral Officer	151	287	4,456	278	205Citizenship and Immigration-	376	531	1,017Immigration Branch	2,742	5,607	4,957	5,578	8,191Indian Affairs Branch	7,370	10,576	12,368	14,564	14,19110,112	16,183	17,701	20,67S	23,399Civil Service Commission	1,271	1,364	1,513	1,580	1,702Defence Production-	9,84929,89639,745External Affairs	5,751	6,655	7,050	7,660	9,758Membership in Commonwealth and	International Organizations	1,449	2,048	2,671	2,962	2,725Assistance to Other Countries and	International Organizations	22,395	5,811	6,959	11,458	25,61929,595	14,514	16,680	22,080	38,102Finance-	Departmental administration and gen-	eral	2,760	4,987	5,448	7,354	8,109Office of the Comptroller of the Treas-	ury	10,635	11,103	11,140	11,345	12,453Interest on public debt	455,455	465,13S	439,816	425,217	430,663Cost of issuing new loans and annual	amortization of bond discounts and	commissions	10,914	9,745	10,546	13,354	10,734Servicing of public debt	356	331	478	449	391Subsidies to Provinces	33,394	17,095	19,170	18,735	20,108Compensation to Provinces-	Tax Rental Agreements	122,497	84,387	76,881	94,123	96,8681,375	4,565	3,7326,500	6,500	6,500Government contribution to the Super-	annuation Account-General	3,488	4,050	5,461	6,831	12,91175,000	98,0006,9941,345(Ming Sung Industrial Co. Ltd.)	111	19,740	Wartime Prices and Trade Board-	Administration	5,794	3,321	2,567	1,599	152Commodity Prices Stabilization Cor-	34,341	14,911	40Advances for payment of drawback	claims to millers and other manu-	17,000	11,000	400	Grant re Red River Valley flood	12,500	
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(thousands of dollars)
-	1947-48	1948-49	1949-50	1950-51	Estimated 1951-52$	$	%	$	$Finance-Concluded	Provision for reserve for possible losses	on ultimate realization of active	assets	75,000	75,000	75,000	75,000	75,000Assumption of part of Newfoundland	62,293	Write-down from Active to Non-Active	Assets-Trading losses in Securities	8,299	126	771,634	701,179	745,240	752,572	784,000Fisheries	4,315	5,423	7,586	8,964	8,740Governor General and Lieutenant Gov-	ernors	239	242	274	244	257Insurance	237	263	311	369	405Justice	3,948	4,025	4,268	4,609	5,244Office of the Commissioner of Peni-	tentiaries	4,564	5,863	6,691	7,798	9,2868,512	9,888	10,959	12,407	14,530Labour	13,506	9,860	9,770	9,030	9,632Government Annuities-Amount re-	quired to maintain reserve	332	11,408	1,256	660	1,000Unemployment Insurance Act, 1940-	Administration and general	17,845	19,056	24,033	26,805	24,105Government contribution	17,500	20,103	21,084	26,133	30,10049,183	60,427	56,143	62,628	64,837Legislation-	House of Commons	3,022	2,629	3,765	3,332	4,365Library of Parliament	103	126	127	137	151Senate	946	736	1,178	976	1,237General	270	272	159	266	2654,341	3,763	5,229	4,711	6,018Mines and Technical Surveys	6,911	9,481	9,839	10,442	10,810Dominion Coal Board	1,143	2,164	4,357	3,561	5,2479,433	13,716	7,114	11,404Write-down from Active to Non-Active	1,802	8,054	21,078	29,714	21,117	27,461National Defence-	General	206	234	383	901	274Defence Forces, Army, Navy and Air	Services	182,047	238,915	348,050	545,738	1,205,805195,417	125,117Defence Research and Development. .	6,024	16,033	22,389	23,415	34,056Pensions-	Payments under Defence Services	Pension Act	5,060	5,756	5,011	5,011	5,073Government contribution to Perma-	nent Services Pension Fund	7,313	7,867	9,046	11,975	30,712200,650	268,805	384,879	782,457	1,401,037National Film Board	2,083	1,958	2,123	2,308	2,679National Health and Welfare	10,922	14,412	16,901	17,344	21,1447,528	15,716	18,875	24 882Family allowances	263,165	270,910	297,514	309,465	320,495Old age pensions including pensions to	blind persons	59,086	66,764	93,189	103,169	83,49455,000333,173	359,614	423,320	448,853	505,015National Research Council and Atomic	Energy Control Board	12,102	13,082	16,170	18,014	25,104National Revenue, including Taxation	Division	33,912	45,402	47,832	46,056	45,830Post Office	67,943	77,643	82,640	91,781	98,129Privy Council, including Prime Minister's	Office	1,394	4,457	4,12S	4,250	4,136Public Archives	157	173	198	206	254Public Printing and Stationery	536	753	866	706	1,190Public Works	36,787	51,067	67,058	73,646	76,650Reconstruction and Supply	62,573	2,822	
1388
[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1947-48	1948-49	1949-50	1950-51	Estimated 1951-52$	$	$	5	$Resources and Development	8,057	12,402	23,266	21,688	19,0337,205	12,8848,857	12, 402	23,266	28,893	si, 917Royal Canadian Mounted Police	12,033	13,717	15,971	19,801	27,531Secretary of State	1,345	1,559	1,600	2,065	2,402Trade and Commerce	12,253	36,755	25,761	23,443	22,071Deficits incurred by the Canadian	Wheat Board covering operations for	31,450	4,454	4,471	2,5'6	1,370	2,933	4,318	1,325	Non-Active Assets-	Write off-St. Malo Shops and Mis-	2,243	4.5,073	46,385	34,550	27,30',	22,071Transport-	Administration and general	2,421	3,525	3,808	2,528	4,497Canals Service	3,638	4,062	6,198	8,290	7,829Marine Service	9,901	12,627	17,537	17,187	18,215Railway Service	4,080	3,838	4,488	1,981	1,758Maritime Freight Rates Act	5,090	6,606	6,982	8,475	10,114Air Services	24,309	28,182	34,115	33,553	36,996Steamship Subventions, including Can-	adian Maritime Commission	2,284	2, ICO	2,277	5,899	4,514Deficits-	Canadian National Rail wavs	15,885	33,533	42,043	3,201	15,032Canadian National (West Indies)	461	1,029	467Prince Edward Island Car Ferry	and Terminals	932	1,220	1,221	1,267	1,366National Harbours Board	137	238	83	18S	55Non-Active Assets-	National Harbours Board	372	1,739	4,236	1,465	1,252Write-off-Canadian National Rail-	ways Securities Trust Stock-	Reduction due to retirement of	1,885	71,534	98,336	123,449	85,123	102,095Veterans Affairs-	Administration and general	1,765	3,028	3,850	2,385	2,540Pensions	77,093	102,951	96,091	95,577	103,801Treatment and after-care of returned	soldiers and allowances to dependents	73,747	69,505	69,507	71,646	76,506Hospital accommodation, additions,	alterations and improvements to....	6,805	5,095	3,811	3,008	3,500Post discharge rehabilitation benefits.	78,323	44,826	25,099	13,502	6,713War service gratuities and re-estab-	lishment credits	84,175	36,148	22,641	16,868	9,717Soldier Settlement and Veterans Land	Acts	8,092	8,035	7,383	6,282	5,622Provision for reserve for conditional	benefits under Veterans Land Act...	4,505	5.631	6,496	7,110	7,622Write-down of Assets-	Soldier Settlement and Veterans	2,100	1,000	11,500	14	336,605	276,879	246,378	216,392	216,021Total Expenditure	2,195,026	2,175,892	2,448,615	2,901,242	3,647,374
Nora-Expenditures for previous fiscal years, under a number of departments and categories, have been transferred to where the items are included in the estimated figures for 1951-52.

The Budget-Appendix

[Stage Direction]
(In thousands of dollars)
Fiscal Year Ended March 31
1949
1951
Estimated
Working Capital Advances to Crown Corporations
Canadian Arsenals, Ltd	
Canadian Commercial Corporation	
Canadian Patents and Development,
Ltd	
Commodity Prices Stabilization Corporation	
Crown Assets Disposal Corporation	
Export Credits Insurance Corporation-Capital Surplus	
2,500
2,500
1,000
2,500
6,500
Cr. 19,341 Cr. 345
2,500
Cr. 14,911 Cr. 108
Cr. 3,000 Cr. 1,183
Cr. 1,500
Cr.
Cr.
45
Cr. 14,686
Cr. 11,519
Cr. 3,887
1,000
6,441
Loans to, and Investments in, Crown Agencies
Central Mortgage and Housing Corporation-
Loans	
Canadian Broadcasting Corporation...
Canadian Farm Loan Board	
National Harbours Board	
Railway and Steamship Companies	
Other Crown Agencies	
22,500
Cr. 26 81,717 2,500
68,000
1,250
1,050
4,067
4,615
Cr.
Cr.
91,460
4,500
1,950
20,382 20,963 1,295
79,389 050 1,900 1,004 20,188 Cr. 840
Cr.
77,651 850 1,300 226 138,584 911
106,790
79,195
96,034
102,291
217,700
Other Loans and Investments
Provincial and Municipal Governments.. United Kingdom and Other Governments-
United Kingdom-Loan under The War Appropriation (U.K. Financing)
Act, 1942	
United Kingdom Financial Agreement
Act, 1946-Loan	
Export Credits Insurance Act	
Other (U.K. and Other Governments) Canada's subscription to Capital of-
International Monetary Fund	
International Bank for Reconstruction
and Development	
Miscellaneous-
Loans to veterans under the Soldier Settlement and Veterans' Land
Acts	
Balances receivable under agreements
of sale of Crown Assets	
Other miscellaneous loans	
Cr. 63,629
Cr. 111,285
368,000 130,934 Cr. 5,712
Cr. 5,376
Cr. 29.4S7
37,000 68,196 2,060
Cr. 4,031
Cr. 3,180
Cr.
4,157
Cr.
Cr.
16,250
Cr.
Cr.
37,522
1,972
1,157
21,901
Cr. 1,230 Cr. 588
Cr.
Cr.
9,936
120,000
10,904
5,541
22,500
5,658
7,292
2,889
Cr.
Cr.
40,567
20,000
22,935
Cr. 31,092
Cr.
Cr.
14,010
19,757
5,345
Cr.
Cr.
14,625
1,043
308,951
92,476
132,359
Cr. 33,010
Cr.
Cr.
9,428
1,587
3,432
52,228
Sinking Fund and Other Investments held for retirement of unmatured funded debt	
5,499
3,299
Net Total of Changes in Loans Investments	
and
461,055
160,152
224,500
75,780
175,212
[Stage Direction]
The Budget-Appendix
SUMMARIZED STATEMENT SHOWING SOURCES AND DISPOSITION OF CASH FUNDS, FOR THE FISCAL YEAR ENDED MARCH 31, 1952 (In millions of dollars)-Estimated
Net cash balance remaining out of current year's revenue	 809*5
Consisting of:
Excess of revenues over expenditures (i.e. budgetary surplus)	 355*7
Add back items included in total expenditures which did not represent cash*	 472*7
828*4
Deduct items included in total revenues which did not represent cash receipts*

	18*9
809*5
Increase in Floating Debt	 62*8
Increases in annuity, pension, insurance and guaranty accounts excluding Unemployment
Insurance Fund	 11*0
Unemployment Insurance Fund-net cash contributions	 67*6
Provincial corporation income tax collections (net)	 14*6
Repayments of loans and investments by-
Provincial and Municipal Governments	 4*2
United Kingdom and Other Governments	 66*1
Increases in miscellaneous suspense accounts	 7*4
Decrease in cash balances during 1951-52
1,043*2
66*0
1,109*2
Disposition of cash funds:-
Increases in loans and investments:-
Advances to Minister of Finance Exchange Fund	 200 [DOT] 0
Advances to Defence Production Revolving Fund	 95*0
Advances for working capital-Departmental	 19*2
Crown corporations	 6*5
Loans to Central Mortgage & Housing Corporation	 69*7
Loans to Canadian National Railways	 138*6
Loans under Soldier Settlement and Veterans' Land Acts	 9*4
Loans to miscellaneous Crown agencies (net)	 1*5
Other loans and investments	 2*1
Increase in securities investment account	 49*6
Unemployment Insurance Fund-purchase of securities	 102*6
Sinking Fund purchases	 4*4
Disbursements from Defence Equipment Replacement Account	 50*6
Old Age Security Fund (net payments)	 55*0
Decrease in deposit and trust accounts	 0*6
Cost of issuing new loans	 4-0
Decrease in Deferred Credits	 0*6
[Stage Direction]
	809*4
Net reduction in Funded Debt	 299*8
1,109*2
* To calculate the amount of cash made available to the Government as a result of the current year's surplus there must be added back to the budgetary surplus figure of §355*7 million, the following items included in total expenditure which did not involve current outlays of cash: provision for reserve for possible losses on ultimate realization of active assets, $75-0 million; provision for reserve for conditional benefits under the Veterans Land Act, $7*6 million; annual amortization of bond discounts and commissions, $9*7 million; transfer of value to a replacement fund of stocks of weapons and equipment provided to allied forces, §73*4 million; amount required to recoup the Agricultural Prices Support Account, $1*7 million; amount required to recoup the Fisheries Prices Support Account, $0*1 million; amount required to recoup the Old Age Security Fund, S55-0 million; the Government's contributions to the following funds: Civil Service Superannuation Account, $110*9 million; permanent services pension account, $30*7 million; Unemployment Insurance Fund, $30*1 million; Government Annuities Fund, $1*0 million and the National Capital Fund, $2*5 million; interest on public debt credited to the following accounts: deposit and trust accounts, $2*3 million; annuity, pension, insurance and guaranty accounts, $38*7 million and unmatured funded debt, war savings certificates, $1*9 million; deductions from salary payments credited to: civil service superannuation account, $12[DOT] 9 million; civil service retirement fund, $7 [DOT] 0 million, and the permanent services pension account, $12*2 million. There must also be deducted from the budgetary surplus the following items included in total revenue which did not involve current receipts of cash: premium, discount and exchange account, $12*0 million; an excess amount of reserve for refundable excess profits tax received in previous years and carried as a liability-funded debt, $5*8 million; and $1*1 million representing portion of an amount held in suspense re Canadian Government Merchant Marine-War Operations.

The Budget-Appendix

[Stage Direction]
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan		Annual Interest Charge
				$ cts.	$ cts.
[Stage Direction]
1952 May 1
[Stage Direction]
n it
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
2,250,000 00
[Stage Direction]
' Aug. 27
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
2,750,000 00
[Stage Direction]
it
[Stage Direction]
Canada
[Stage Direction]
550,000,000 00
[Stage Direction]
7,562,500 00
[Stage Direction]
u
[Stage Direction]
Canada
[Stage Direction]
300,000,000 00
[Stage Direction]
4,500,000 00
[Stage Direction]
Canada
[Stage Direction]
300,000,000 00
[Stage Direction]
5,250,000 00
[Stage Direction]
u 2
[Stage Direction]
Canada
[Stage Direction]
325,000,000 00
[Stage Direction]
4,875,000 00
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
4,000,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
0)
[Stage Direction]
676,355,489 00
[Stage Direction]
20,089,767 00
[Stage Direction]
2
[Stage Direction]
Canada
[Stage Direction]
395,000,000 00
[Stage Direction]
7,900,000 00
[Stage Direction]
1956, July 1
[Stage Direction]
2f
[Stage Direction]
Canada
[Stage Direction]
400,000,000 00
[Stage Direction]
9,000,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
(2)
[Stage Direction]
855,607,410 50
[Stage Direction]
25,414,081 50
[Stage Direction]
2f 3
[Stage Direction]
Canada
[Stage Direction]
*199,900,000 00
[Stage Direction]
5,497,250 00
[Stage Direction]
Canada
[Stage Direction]
1,111,261,650 00
[Stage Direction]
33,337,849 50
[Stage Direction]
2f
[Stage Direction]
Canada
[Stage Direction]
*106,450,000 00
[Stage Direction]
2,927,375 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
88,200,000 00
[Stage Direction]
2,646,000 00
[Stage Direction]
4
[Stage Direction]
London
[Stage Direction]
(3)
[Stage Direction]
1,787,917 58
[Stage Direction]
71,516 70
[Stage Direction]
2! 3
[Stage Direction]
Canada
[Stage Direction]
*101,200,000 00
[Stage Direction]
2,783,000 00
[Stage Direction]
Canada
[Stage Direction]
1,197,324,750 00
[Stage Direction]
35,919,742 50
[Stage Direction]
21
[Stage Direction]
Canada
[Stage Direction]
*146,500,000 00
[Stage Direction]
4,028,750 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,165,300,350 00
[Stage Direction]
34,959,010 50
[Stage Direction]
2f
[Stage Direction]
Canada
[Stage Direction]
*144,550,000 00
[Stage Direction]
3,975,125 00
[Stage Direction]
1961, Jan. 15
[Stage Direction]
3f 3
[Stage Direction]
New York
[Stage Direction]
48,000,000 00
[Stage Direction]
1,560,000 00
[Stage Direction]
1962' Feb. 1
[Stage Direction]
Canada
[Stage Direction]
1,315,639,200 00
[Stage Direction]
39,469,176 00
[Stage Direction]
3f
[Stage Direction]
Canada
[Stage Direction]
*362,200,000 00
[Stage Direction]
12,670,000 00
[Stage Direction]
1963, July 1
[Stage Direction]
3i
[Stage Direction]
London
[Stage Direction]
(3)
[Stage Direction]
1,978,362 38
[Stage Direction]
64,296 78
[Stage Direction]
' July 1
[Stage Direction]
3
[Stage Direction]
London
[Stage Direction]
(3)
[Stage Direction]
49,831,924 41
[Stage Direction]
1,494,957 73
[Stage Direction]
3
[Stage Direction]
New York
[Stage Direction]
150,000,000 00
[Stage Direction]
4,500,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,295,819,350 00
[Stage Direction]
38,874,580 50
[Stage Direction]
3|
[Stage Direction]
Canada
[Stage Direction]
54,703,000 00
[Stage Direction]
1,777,847 50
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
1,691,796,700 00
[Stage Direction]
50,753,901 00
[Stage Direction]
1968, June 15
[Stage Direction]
2f
[Stage Direction]
Canada
[Stage Direction]
350,000,000 00
[Stage Direction]
9,625,000 00
[Stage Direction]
1974] Sept. 1
[Stage Direction]
2f
[Stage Direction]
New York
[Stage Direction]
100,000,000 00
[Stage Direction]
2,750,000 00
[Stage Direction]
1975, Sept. 15
[Stage Direction]
2f
[Stage Direction]
New York
[Stage Direction]
50,000,000 00
[Stage Direction]
1,375,000 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
55,000,000 00
[Stage Direction]
1,650,000 00
[Stage Direction]
[DOT]889
[Stage Direction]
75,000,000 00
[Stage Direction]
165,955 00
[Stage Direction]
[DOT]890
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
166,008 00
[Stage Direction]
*894
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
166,841 00
[Stage Direction]
[DOT]909
[Stage Direction]
Canada
[Stage Direction]
75,000,000 00
[Stage Direction]
169,526 00
[Stage Direction]
[DOT]921
[Stage Direction]
75,000,000 00
[Stage Direction]
171,808 00
[Stage Direction]
[DOT]943
[Stage Direction]
75,000,000 00
[Stage Direction]
176,328 00
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
*63,600,000 00
[Stage Direction]
1,908,000 00
[Stage Direction]
14,703,006,103 87		389,226,193 21
				14,301,407,899 50	97-27%
				53,598,204 37	0-36%
				348,000,000 00	2-37%
					
			14,703,006,103 87		100-00%
(i) Redeemable at 101 per cent. Amount outstanding includes $6,696,589.00 redemption bonus. (=) Redeemable at 101 per cent. Amount outstanding includes $3,471,360.50 redemption bonus. (3) Conversion rate estimated at $2-80 to the £ sterling.
* Estimated.
[Stage Direction]
Wednesday, April 9, 1952