1953-03-31

Mr. Speaker:: This morning, as hon. members know, the funeral service of our late dearly beloved Queen Mary was conducted at Windsor by the Archbishop of Canterbury. The Prime Minister and the Leader of the Opposition have suggested to me that it would be fitting if, before the business of the day is entered upon, hon. members would rise for a few minutes of silence.
Whereupon the house rose in silence.



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
Government House.
Ottawa, March 30, 1953
Sir:
I have the honour to inform you that the Right Honourable Thibaudeau Rinfret, Chief Justice of Canada, acting as deputy of His Excellency the Governor General, will proceed to the Senate chamber on Tuesday, the 31st March, at 5.45 p.m., for the purpose of giving the royal assent to certain bills.
I have the honour to be, sir,
Your obedient servant,
J. F. Delaute,
Secretary to the Governor General.
(Administrative)



RAILWAYS, CANALS AND TELEGRAPH LINES

[Stage Direction]
Seventh report of standing committee on railways, canals and telegraph lines.-Mr. McCulloch.


Right Hon. L. S. Si. Laurent (Prime Minister):: Hon. members, I believe, will be interested in a report on the progress made since I announced on February 5 that it is the intention of the government to recommend the erection of a statue to mark the services to Canada of the late Sir Robert Borden.
Since that time the matter has been carefully considered by the board of trustees of the National Gallery of Canada and I now have their recommendation, which has been concurred in by the government.
It is proposed to have the design selected as the result of a competition which will be open to sculptors normally resident in Canada. The base is to be of stone or granite and the figure, which is to be standing, is to be of bronze. The dimensions of the statue will toe similar to those of the statue to the late Sir Wilfrid Laurier on the grounds of the parliament buildings. The announcement of the competition is being made immediately and it is hoped that the closing date for designs may be set early in the summer so that the statue may be completed in time for unveiling next year on the 100th anniversary of Sir Robert Borden's birth. The cost is estimated at between $40,000 and $50,000.
The winner of the competition, of course, will be awarded the contract for the statue, but in order to promote interest among sculptors and also so that not all but one will spend time on producing a design at a loss to themselves, it is proposed to make six additional cash awards of $300 to the six sculptors whose designs are considered most meritorious following the winning design.
Steps will be taken to announce the competition widely through Canada and I am hopeful that the designs which will be produced will be of high quality and in keeping with the service rendered to Canada by the man who was prime minister during the difficult days of world war I.


EXTERNAL AFFAIRS
Louis Stephen St-Laurent: Mr. Speaker, on Friday last the
hon. member for Peel (Mr. Graydon) inquired about a report that had been published in the newspapers attributing to the Canadian ambassador to Colombia a statement that Canada might eventually join the PanAmerican Union if the union tendered such an invitation, and he inquired whether there had been any change in the government's policy. The answer will be found in Hansard of Friday, March 27, at page 3341. He then

Newfoundland
asked whether the department would inquire of the ambassador whether this report of the statement attributed to him was correct or not, and I told him that an inquiry had already been sent to the ambassador. The department received on Saturday the answer which I would have communicated yesterday had the hon. member been in his seat. It is as follows:
Bid not say Canada would accept invitation if tendered but question of pressmen was whether partnership in commonwealth was obstacle to joining because of link to crown and reply was that there existed no constitutional or juridical impediment since Canada as independent nation is free to determine own policy regarding membership in any international or regional organization as shown by membership in many such. Definitely did not, repeat not, say that Canada might eventually join if invited. Local press correctly interpreted sense of my words as clippings to be airmailed shortly will bear out and I cannot understand how different meaning was conveyed to Canadian newspapers unless press news agency misunderstood, because whole press conference in Spanish without interpreters. Incidentally press conference was great success eliciting in all papers testimony of most gratifying liking and admiration for Canada. Colombians all wonderfully friendly.



NEWFOUNDLAND


Mr. G. F. Higgins (Si. John's East):: Mr. Speaker, may I have your indulgence for a moment. As it is March 31, 1954, I believe possibly-


Some hon. Members:: 1953.


Gordon Francis Higgins: 1953 is right. I thought I might say 1954 and then it might be remembered. As it is quite possible that the snow will fly before the next parliament meets and that this is the last parliament that some of us from Newfoundland may be in, I should like to say on behalf of the Newfoundland members of parliament, on this fourth anniversary, how happy we have been in this parliament and to convey to you, sir, our sincere thanks for your kindness to all of us.


Mr. W. J. Browne (St. John's West):: Mr. Speaker, I wonder whether I might make a few remarks in addition to those which have been made by my colleague the hon. member for St. John's East (Mr. Higgins).


Some hon. Members:: Oh, oh.


William Joseph Browne: As I have not been here on any other occasion when this anniversary came around, I think I may also claim the indulgence of the house. If I may be permitted to do so, I should like to make a personal reference. As some hon. members may know, 1 was in the party opposed to confederation. Although I was

not free and in politics at the time but was in the government service, I did not wish to see confederation. Four years ago today I was in the city of London, England, and I bought all the morning newspapers to see what they had to say about what was taking place. Most of them had nothing to say whatever; there were two or three references to the act of union that was being consummated, and one expressed regret and said that it was too bad to see an old dominion going out of existence.
I felt extremely sad at that time, and there were many others in Newfoundland who felt as I did. Since that time I have come to regard the situation' in a different light. After having been proud of our almost continuous association with England since 1497, and having been boastful of the fact that we were England's oldest colony, to be cut adrift like that without a word hurt a great many of us. But now we see that England had her own problems and that probably what she was doing then was being cruel in order to be kind. On this side of the water there was rejoicing and I personally received, from friends I had made here when I was for four years at the University of Toronto, an extremely cordial welcome into the union which I did not appreciate then as much as I have appreciated it since. Time has dissipated to a great extent the sadness which I then felt, and I am inclined to think that the majority of people who felt as I did in 1949 feel much as I do now. We were inclined to think then that it was a forced union, and I am not inclined to differ from that opinion yet; but still I believe it was to our mutual advantage.
I have heard here many nice references to our country, and I appreciate them greatly. It is extremely interesting and nice to hear the glowing accounts which visitors to Newfoundland bring back as a result of their visits. The latest one I heard was that of the Minister of Transport (Mr. Chevrier); and I am glad to know that in the city of St. John's, where the majority of members are of a political persuasion different from his own-


Mr. Chevrier:: I doubt that.


William Joseph Browne: -he was
accorded a cordial welcome, and that he enjoyed his visit there. After four years I think that the feeling has changed a great deal towards union with Canada. I think we can appreciate the great benefits which union has brought to us and I think we can look forward with hope to taking greater advantage of it in the future. I believe that

this union will work out to our mutual advantage.



PRIVATE BILLS


[Stage Direction]
Bill No. 294, for the relief of Clara Doris Jacobovitch Shepherd.-Mr. Winkler.
Bill No. 295, for the relief of Doris Esther Kimel Schwartz.-Mr. Winkler.
Bill No. 296, for the relief of Hans (Johann) Mueller.-Mr. Winkler.
Bill No. 297, for the relief of Joseph Henri Jacques Gaston Lareault.-Mr. Winkler.
Bill No. 298, for the relief of Joseph Nagy.-Mr. Winkler.
Bill No. 299, for the relief of Aime Arthur Roy.-Mr. Winkler.
Bill No. 300, for the relief of Sarah Juliet Montgomery Scott.-Mr. Winkler.
Bill No. 301, for the relief of Mary Ethel Flood Harding.-Mr. Winkler.
Bill No. 302, for the relief of Carrie Ruth Morbey Chenoy.-Mr. Winkler.
Bill No. 303, for the relief of Beatrice Sylvia Aston Sutton.-Mr. Winkler.
Bill No. 304, for the relief of Irene Toth Nagy.-Mr. Winkler.
Bill No. 305, for the relief of Henryka Ziernicka Bogdan.-Mr. Winkler.
Bill No. 306, for the relief of Mildred Ermine Bradshaw Moore.-Mr. Winkler.
Bill	No.	307,	for	the	relief	of	Shirley
William Bales.-Mr. Winkler.
Bill No. 308, for the relief of Marjorie Joy Hartley Tanner.-Mr. Winkler.
Bill No. 309, for the relief of Thomasine Elaine Mansfield Black.-Mr. Winkler.
Bill No. 310, for the relief of Patricia Mary Kearney Hollett.-Mr. Winkler.
Bill	No.	311,	for	the	relief	of	Margot
Fairbanks Duff Pratt.-Mr. Winkler.
Bill No. 312, for the relief of Marguerite Rita Stevenson LaFerme.-Mr. Winkler.
Bill	No.	313,	for	the	relief	of	James
Alexander Dougherty.-Mr. Winkler.
Bill	No.	314,	for	the	relief	of	Morris
Fishman.-Mr. Winkler.
Bill No. 315, for the relief of Yvon Perras.-Mr. Winkler.


[Stage Direction]
On the orders of the day:
Mr. J. A. Byrne (Koolenay East):: I should like to direct a question to the Minister of Trade and Commerce. In view of recent press statements indicating higher United States tariffs on imported lead and zinc, would the minister care to comment on the
Inquiries of the Ministry situation disclosed by an article in the New York Times, a copy of which I have sent to him?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, I know of no
move toward higher duties against Canadian metals. I read the article in the New York Times but such information as I have received does not indicate that any move of the kind is contemplated.
Prices for metals are still satisfactory, except for marginal producers. Lead and zinc have been much higher in price, but today I think the price can be considered to be normal, having in mind costs of production. The price of copper, of course, is extremely high. While Canada would protest any legislation which would tend to bar our metals from the United States market, I do not think that any such action can be expected.



IRRIGATION


[Stage Direction]
On the orders of the day:
Mr. P. C. Black (Cumberland):: Mr. Speaker, in the absence of the hon. member for Lake Centre (Mr. Diefenbaker) a request has been placed in my hands which in turn I should like to place before the Prime Minister. I am sorry I have not been able to advise him of this. Will the Prime Minister be in position to receive in Ottawa a delegation in connection with the South Saskatchewan river project? It is pointed out that this matter is of some urgency owing to the fact that many farmers will be commencing seeding in two or three weeks and thus would not be free to make the trip.


Louis Stephen St-Laurent: Mr. Speaker, there has been correspondence with a group about a delegation coming to Ottawa to discuss the South Saskatchewan project. The government has been giving consideration to the reports and information available in connection with this project and is not yet in a position to fix a date on which to receive this delegation, although it intends to receive it.



POST OFFICE ACT


Hon. Alcide Cote (Postmaster General) moved: the third reading of Bill No. 107, to amend the Post Office Act.


Percy Chapman Black: Mr. Speaker, I shall not delay the house very long but

Post Office Act
this is an important bill which affects many people all over Canada. I had some remarks to make on the second reading of the bill and I asked that it not be rushed to the extent it was being rushed at the end of the last sitting. I give my support to this bill to amend the Post Office Act. As I stated on the second reading, I was not a member of the special committee and I have not full information as to the evidence submitted. I am disappointed that there was no representative of the mail couriers asked to be present. I certainly expected that there would be someone representing the mail couriers of Nova Scotia.
I am in agreement with the viewpoint that has been expressed, that many of these couriers have been underpaid for their services and the cost of their equipment. This condition has prevailed over many years, but nevertheless on the whole excellent service has been rendered. Some increase was granted in the war years, but many of the couriers were not advised and had no opportunity of applying for the increase. Only favoured persons received an increase on their contracts at that time.
This bill puts extensive authority in the hands of the minister, the deputy minister and the officials of the department. I am satisfied that the officials are capable, want to do their best in giving good service and will not allow partisan interference to undermine their efforts if they can prevent it. We have the personal assurance of the minister, and I assume that this will apply to his successors, that he will not allow partisanship to dominate the department. It is on this assurance that I give support to the bill.
I do not want the house to think that I believe that this has always been the case, that there has been no partisanship even in recent years. Couriers and the staff are entitled to their political opinions provided the service is not interfered with. To show that I am not gullible I am going to recount the details of one instance in my county during the last two years.
The contract for the mail service on Oxford K. R. No. 2 was for $700 per annum and expired on December 31, 1952. It was held by Mr. George E. Wood. This contractor was not satisfied and he gave three months' notice of the termination of his contract. New tenders were called but only one offer was received from the same contractor, Mr. George E. Wood, for $1,200. The Post Office Department considered this to be too high and refused to renew at that price.
The Post Office Department obtained a revised offer from Mr. Wood of $1,100, but 
considered that price too great also. A tender was then obtained from Leigh L. Smith at $80 per month or $960 per year. Mr. Smith had previously held the contract and had never missed a trip during this entire period. Instructions were issued on December 10, 1951, that the department was awarding the contract for one year to Leigh L. Smith at $960 per year. Mr. Smith was advised accordingly by an official of the Post Office Department.
I asked for the file which the minister sent to me. This file contained a copy of a letter dated December 3, 1951, signed by G. Herring, director of communications and addressed to C. E. Bragg, Collingwood, Nova Scotia. This reads:
In connection with the invitation of tenders for the conveyance of mails over Oxford rural route No. 2, I wish to inform you that the department intends to award a one-year contract to Mr. Leigh L. Smith, Box 128, Oxford, who submitted the lowest offer at the rate of $960 per annum.
Everything was in order up to that point and was most creditable to the minister, to the deputy minister and to the officials of the department. But partisanship, discrimination and interference then took charge. There was another letter on this file from the Department of Resources and Development. I am not going to accuse the minister of anything, but this letter was on the file; and it reads as follows:
Minister of Resources and Development
Ottawa, February 11, 1952
Mr. George Herring,
Director of Communications,
Post Office Department,
Langevin Block,
Ottawa.
Re: Oxford Rural Route No. 2,
Mr. George Wood, Oxford, N.S.
Dear Mr. Herring:
In accordance with our telephone conversation of this afternoon with respect to the recommendation of a carrier for the above-mentioned route, I would like on behalf of Mr. Elmer Bragg, of Amherst, to recommend that the contract for this service be continued by Mr. Wood of Oxford, who has had 12 years experience on the route. I am informed that Mr. Wood is prepared to carry on the service at $960 per annum.
It would be appreciated if the necessary action could be taken to have Mr. Wood maintain the service at this price.
Yours very truly,
Robbins L. Elliott,
Private Secretary.
Mr. Smith was then notified that the department would not proceed with the signing of the contract. I am supposed to believe that there was no political interference. I know that the officials of the Post Office Department were just as incensed as Mr. Smith and I. I tell the minister now

that if there is to be political jobbery carried on under this bill, which we of the opposition are now supporting, we will hold him responsible. He and his department will not be keeping faith with us, with the staff or with the public with respect to the passing of this bill.


Mr.  W. Chester S. McLure@Queens: Mr. Speaker, I should like to make a few remarks on the bill before it receives third reading. Last Friday night, March 27, the bill received second reading and was considered in committee. At that time the chairman of the committee of the whole pointed out that the bill had been carefully considered by a special committee appointed to consider it and had been reported to the house without amendment. However, considerable discussion took place, and it seemed that nobody in the committee that evening could find any report that had been made by the special committee that had been established to deal with this most important matter.
I want to say at the very beginning that I am not opposed to the bill except for one reason. There seemed to be a great hurry to get it passed the other night, and in my dealings with the Post Office Department, especially with respect to the building of post offices, I have never found them in a hurry in my life. It took seven years of talking before they showed any signs of taking action, and I could not understand why they wanted to rush this measure through so rapidly the other night. As a matter of fact, under the rules of the house it should not have been reported from the committee. At ten o'clock we were still discussing the bill, and the committee should have risen, reported progress and asked leave to sit again. In spite of the fact that a great number of members objected to what was being done, the bill was reported from the committee and it is now before the house for third reading. I think that is contrary to the rules of the house.
I believe the bill should still stand over until the special committee has had another meeting or two. We looked to this committee to deal with the problems of the rural mail couriers throughout Canada, but after the bill has received third reading they will not have the authority to do so any more and the whole matter will be whitewashed. I doubt if they will have any more meetings. Looking at the reports of the proceedings of the two or three meetings they did hold- I think there have been two printed so far- there is nothing in them except the statements of the Postmaster General and his
Post Office Act
deputy. As I have said before, this legislation simply gives them more power. It does not take any power from them but adds to their powers so that they can be almost as dictatorial as they wish to be. We are back in the old days of patronage so far as the letting of contracts is concerned.
The special committee should make recommendations before the bill passes. They were appointed for the purpose of making recommendations with respect to the mail couriers and their problems. We even find that no representatives of the mail couriers were heard. That should not be. I think at least some of the mail couriers have a right to be called before the committee and heard, and if they were in any other walk of life they would be. If it should be decided that it is not necessary to hear them, then there are members on the committee representing every province in Canada and they should bring forward recommendations on behalf of the mail couriers in their provinces.
I have discussed the question of the rural mail couriers year after year when the post office estimates have been before us. We have no opportunity to discuss the pros and cons of this bill which is being pushed through so rapidly and we are no better off than we were. The only opportunity we will have will be when the estimates of the department are being considered, and we will have to spend a great deal of time then to get the information we desire. I have referred many times to the great discrimination that exists in the letting of contracts to mail couriers. I cited two or three instances recently and I should like to cite a couple now.
I have in mind a mail courier whose contract ends in 1955 and another one whose contract ends in 1956. The man whose contract ends in 1955 has to drive a distance of 61 miles. In the summer he can use a car. In the fall, winter and spring he must use a horse and cutter or horse and wagon. All these factors should have a bearing on what he is paid under his contract. As I said a moment ago, he has to drive 61 miles every day to complete his route. For that distance he gets the princely sum of $1,440 a year, a very small wage even if it were all profit. It takes him most of the day to complete the route. We all know that if he uses a car it will take at least three gallons of gas. He has 136 stops where he has boxes to attend to, and that means that he must use more gas. Taking into account the gas and oil that he uses, and without allowing anything for repairs to his car, we find that it

Post Office Act
would cost him $1.65 tor that one item which, taken from his $4.80, leaves him with a very small wage for himself, to say nothing of other expenses he might have.
We find that the man driving only 31 miles compared with the other man's 61 received $125 more. If that is not discrimination, then I do not know what discrimination is. That has been going on, and the Post Office Department now says that it wants more authority so that it can remedy such situations. If they were going to be able to remedy them under the bill, then I would vote for it a dozen times if I had a dozen votes. But they are only taking more authority into their hands without giving any assurance. The only assurance I know of was that mentioned the other night in the committee by the Postmaster General. When he was being questioned about the bill he said, as found at page 3387 of Hansard for March 27:
We always look at all the angles.
I suppose "we" means his associates in the Post Office Department.
Public interest was mentioned. That is one way of expressing what we are looking for. We want to see that the taxpayers of this country receive good service . . .
I can stop right there and say that there is no arm of the service, nothing in federal appointments and federal work done, to compare with the rural mail couriers who are doing an almost perfect job of work. I do not believe that there is a member in this house who will have very much complaint to the effect that people are not getting a thorough service from the mail couriers.
The Postmaster General goes on and says:
-and we want the man who is giving the service to be paid adequately.
I agree with that.
To achieve that we are looking at the security, the solvency of the men and the equipment, and a comparison of the routes, the number of boxes, the length of the routes: and all these considerations will be looked into and taken into consideration in the decision we are going to make.
Well, there is a recommendation that should come from the special committee, but they have not brought in any report as yet- any more than the evidence that was laid before them. They have made no recommendations.
When this bill passes, Mr. Speaker, the special committee will have no more power because the bill is already recorded as passed. I think that some action should be taken and that this should be passed over for a week or so. There is no great rush at the present time; they are not going to solve all of these cases; so let this committee bring in some recommendations that will be of benefit.

Again, I want to say that I am in favour of anything that will give more security and more wages to the mail couriers. Many of them today are not making 25 cents an hour. Yesterday I received a letter from one man who drives 56 miles. At this time of year it takes him 9| hours to complete that 56 miles, as he cannot use a car. He stated that he had to turn out the other morning at seven o'clock to start his route and he did not get through until half-past five. Of course, he might have had a half hour rest while getting his dinner somewhere on the route. However, when that man adds up what it costs him to feed his horse during the day I do not think he would be receiving any more than 15 cents or perhaps 16 cents an hour for the 9J hours he put in.
This is a most serious matter and yet we are rushing this bill through as though it were just another bill passing. I believe, Mr. Speaker, that this bill should be given further consideration, not only in the special committee but also in the committee of the house.


Mr. G. A. Cruickshank (Fraser Valley):: Mr. Speaker, I would like to say a word in this connection as a member of that committee. I think that the hon. member for Queens (Mr. McLure) has either been misinformed or possibly does not understand-and that is the kindest way I can put it. It is the first time since I have been in the house that it has been said that no member of a committee knew what they were doing. I want to point out, Mr. Speaker, that it may be all very well for home consumption in Hansard, but the previous speaker never made one suggestion as to how we could improve conditions for the rural mail couriers. He suggests that the special committee did not consider the matter; but I want to assure him, as a member of that committee, that we did consider it. We asked for suggestions as to how we could best improve the plight of the rural mail couriers. We did not have any better suggestions. We do not say and have never said that this bill is perfect. We knew of nothing better to bring in at this time to assist the mail courier-the very man whom he has read about today-and he must be an exceptional man to drive 56 miles in the snow with a horse in one day. That man is a very good man and certainly he must have an imported horse to do it.


Mr. McWilliam:: From the Fraser valley.


George Alexander Cruickshank: No, we do not have any horses like that, and we do not abuse any kind of animal. It is wrong to say that the committee did not endeavour to do anything. The member for Peel (Mr. Graydon), a very

superior member in any party, let alone where he sits, realized that we were trying to do something. The opposition had as good members on that committee as there were from other parties. They were just as sincere as any members of the committee and they would have liked to bring down something that would have solved the problem. However, they also realized, as the hon. member for Queens apparently does not, that conditions vary in each riding within a province, and that in each province of Canada climatic and other conditions also vary.
I would like the hon. member for Queens to take an hour and a half or five hours of the time of this house-well, not of this house because we have business to do-and come up to my office or, if he likes, up to the committee room, and make one concrete suggestion about how he would solve this problem in all provinces of Canada.
The new bill, I think, is discretionary and it is an endeavour to assist the very men he has been mentioning who are underpaid but who work on a voluntary bid. Nobody told them to bid the rate they did on their particular contracts. They had a right to bid as they saw fit and possibly they bid too low. The minister now has at least discretionary powers to assist in that particular route and in other routes. So, Mr. Speaker, I very much resent the insinuation that this committee, composed of members of all parties, did nothing. They made a sincere effort and we discussed the matter among ourselves. If the hon. member for Queens will read the evidence he will see where we asked whether anyone had anything better to offer in the interests of the rural mail couriers. We received nothing more concrete. We considered, as I am sure the hon. member has too, the possibility of establishing a mileage basis, or a set salary and a gasoline allowance, as well as whether these should be civil service appointments. In our judgment we know of no better system at the present time to assist the couriers-and above all to assist the man to whom he has just referred-not next year, not ten years from now, but as soon as this bill is passed.


Mr. H. A. MacKenzie (Lambion-Kenl):: Mr. Speaker, I think I should make a few comments on this at this time as I was a member of the committee. Bill 107, which was presented to amend the Post Office Act, was a very simple bill. Two years ago a bill was introduced to amend the Post Office Act which gave the postal authorities jurisdiction or authority to adjust salaries where necessary on any contract up to $1,000 but not beyond that. To me that was quite an unfair piece of legislation. If it was fair to
Post Office Act
adjust salaries up to $1,000 it should also have applied to contracts for $1,100 or $1,200 or any other amount. This bill merely extends the legislation of 1951, to embrace a contract of any size so that the authorities after inquiry may make adjustments.
I can quite readily see that it was not very fair to try to renew contracts on the same basis as applied four years ago because the couriers have a lot more work to do in suburban areas. They have literally hundreds more of boxes. If I understand the bill, and if I understand the Postmaster General, each case will be gone into individually and adjustments will be made or will be provided for to take care of any situation in any rural route regardless of where it may be situated.
I believe that this amending bill is at least a step in the right direction and that it was pretty well considered. The member for Queens, who has just spoken, has said that there were no recommendations. However, at the time we probably could have made some recommendations but they would not affect this bill. The post office committee will make suggestions to the government and I hope that they will be unanimous in an effort to put this whole policy on a much higher level than it is today.
Unfortunately I was not able to attend the last committee meeting on the 19th when the bill was adopted, but I do feel that the matter of the tender system should have been given more consideration. Probably the system could not have been changed, but I think it should have been discussed a little further.
I have said many time in this house, and I still say, that there are no other employees in the postal service carrying Her Majesty's mail who have to obtain employment through the tender system except the rural mail carriers. There is something to be said along that line. So far as the bill itself is concerned, it is certainly a step in the right direction and I believe all members approve of it.
Once more I want to clarify the fact that the committee is not defunct in any sense of the word. We are going to meet and we are going to make recommendations which we hope the Post Office Department will accept, and which we hope will bring about some improvement in the rural mail carrier service.


Mr. Speaker:: At this time may I remind the house that this bill does not deal with rural mail contracts generally. May I read the explanatory note.
The purpose of this bill is to amend the Post Office Act to provide that the Postmaster General may, in certain cases, enter into contracts for conveying mail involving an annual expenditure of one thousand dollars or less, and may also, under

Post Office Act
certain conditions, while a contract is still in force, increase the amount payable thereunder during the unexpired term thereof.
I would ask hon. members to confine their remarks to the principle of this bill and not discuss rural mail contracts generally.


Mr. A. Earl Catherwood (Haldimand):: I do
not altogether agree with the hon. member for Fraser Valley (Mr. Cruickshank), when he directs his criticism against the hon. member for Queens (Mr. McLure). I think that in this house we should be prepared at all times to accept different views and though I was also a member of the committee I accept the criticism of the hon. member for Queens because I feel it is part of the duties of a member of parliament to criticize legislation which is not in line with his own thinking on a particular measure.
Before this bill is given third reading, I should like to make some brief comment. I was appointed a member of the committee to consider this bill just the day before the bill was studied clause by clause. I did not have time to study it in the manner in which I would have liked. However, I feel that the bill itself is very good, and I am going to support it. I realize that this is just the first of a series of successive steps in legislation which I hope will be advantageous to our rural mail carriers. I believe that the main feature of the bill is the opportunity it will provide the rural mail carriers for negotiating with the department, provided, of course, the contract is under $1,000, for an increase in the tender.
If a carrier feels that the payment is not on an equitable basis for a comparable service in that area, then this legislation provides an opportunity for negotiation. However, I feel that there is room for improvement, and I trust the minister will give consideration to that phase of the matter. Since the bill received second reading I have received six or seven letters from the rural mail carriers in my constituency. They all feel that something should be done concerning the tender system. On a number of occasions in this house it has been my privilege to advocate that after a term of satisfactory service some consideration should be given to a change in this method. After a carrier has proven that he can fill the position of carrying the Queen's mail in a satisfactory manner, I think we should have some system whereby his reengagement can be arranged without having to re-tender.
There are many other matters which this committee could continue to study. I feel that this bill is definitely a step in the right direction if we are to ultimately achieve the end for which it was set up. The committee is still in existence and can continue studying
iMr. Speaker.]
the matter. From the indications the minister has already given, I know that it will endeavour to continue to do everything it can for the betterment of the position of the rural mail carriers of Canada.


Mr. H. O. White (Middlesex East):: When this legislation was first introduced I made a few remarks concerning it. I have noted what you had to say, Mr. Speaker, with regard to remarks being relevant to the bill.
I cannot see how we can discuss the problem that is closest to us unless we say something about rural mail at this time.


Mr. Speaker:: Doubtless there will be other occasions upon which the hon. member can discuss the problems of the rural mail carriers. I think hon. members want to discuss the bill in accordance with the rules of the house, and one of the rules is that on. third reading discussion must be relevant to the bill and not to the Post Office Act generally.


Harry Oliver White: I shall be very brief. I am afraid there is going to be considerable disappointment throughout the country over the results of the labours of this committee. I have noted what the hon. member for Haldimand (Mr. Catherwood) has said, so I am led to believe that there is some means of reviewing the contracts which now exist. I think a good many of the postal employees serving rural areas are going to be very disappointed. I have noted also what the hon. member for Lambton-Kent (Mr. MacKenzie) had to say. It seems rather strange that only those who are rural mail carriers are expected to submit tenders in order to obtain their job. Surely some system for the delivery of rural mail can be worked out which would be somewhat comparable to the systems employed by other government departments.


Mr. Speaker:: I am sure the house agrees with me that members should discuss the principle of this bill. I do not like to interrupt an hon. member, but the business of the house must be carried on according to our standing orders and rules. I think I must insist that the discussion of this bill be relevant to this bill, which relates to the increasing of the amount payable under certain contracts. Hon. members may reserve their remarks concerning mail contracts generally to some other time.


Mr. C. W. Hodgson (Victoria, Onl.):: I have not very much to say about the bill which is before us. When it was before us on Friday night, I was probably one of the members who were anxious to get the bill through the house, and for that I have to accept

responsibility. Since Friday night, however, I have received many letters from rural mail carriers. There is one feature of this bill which gives the Postmaster General (Mr. Cote) and his officials a great deal more authority, but at the same time they have to accept a greater degree of responsibility. As I see it, this measure will have a tendency to do away with tendering for mail contracts. The Postmaster General under this legislation has the right-


Mr. Speaker:: Order. This bill has nothing to do with the doing away with tenders and contracts. I cannot allow discussion on it at this time.


Clayton Wesley Hodgson: All right; I shall try to keep right to the point. However, it does give him authority to raise the price of a courier's mail contract, provided that he sees fit to do so and he considers the-


Alcide Côté: No. May I interject, Mr. Speaker? Not if I see fit to do so in an arbitrary manner but if, after having compared the services given by the contractor, with comparable services outside and within the postal organization, we consider fair and just to make a readjustment of the contract.


Clayton Wesley Hodgson: I do not say the minister will see fit unless he considers it, and when he considers it he will probably do something about it. At least this legislation gives him more responsibility and gives the couriers a better break. There is no doubt about that. This legislation does give our couriers a better break. I may say that there are more rural mail couriers in my riding than in any other riding in the province of Ontario. It is a rural riding of a large area.
We have received courteous treatment from the Post Office Department before. I hope that this bill will get the approval of the house immediately, and be implemented so that some of my couriers can go to the Postmaster General or to his department when they feel that they are entitled to an increase, and that they can talk the situation over and probably come to a conclusion satisfactory to both parties concerned.


Mr. L. E. Cardiff (Huron North):: I was a
member of the committee and I attended all meetings that took place this year. At the last meeting that was held I understood we were to have another meeting before this bill was passed. Apparently it went through on Friday night, and I was not here. The committee as a whole did the very best it could. Perhaps this bill will help to improve the lot of the mail couriers. I am not 68108-219J
Post Office Act
exactly satisfied with it. I do not think anybody else was entirely satisfied either, but perhaps it will be an improvement.
I would suggest-as a matter of fact I will move-that the bill be referred back to the committee so that if there is anything that anybody has to say it can be brought before the committee before the bill gets third reading. I think that is logical and it should be granted. A lot of letters have come in within the past few days, and if there is anything that we can do to help I am sure the Postmaster General would be one of the first to accept the suggestion. He was one of the first to accept all the suggestions made in the committee. There was no friction whatever in the committee; we were all trying to do our best to improve the situation. I think the bill should be sent back to the committee so that we could have at least one more meeting before it receives third reading.


Mr. J. W. Noseworfhy (York South):: On a
number of former occasions I have been one of those who have been rather critical of the Post Office Department. I want to take this opportunity to say that I am, as a member of the committee, supporting the bill. We should place on record the fact that the mail carriers' association, the representative of mail carriers across Canada, informed us that they were so pleased with this bill that they did not want to appear in person or to send a delegation to the committee. It was on the strength of the correspondence from that association that I, as one member of that committee, decided that this bill merited our support. I do not think the association feels that this is by any means the final answer to their difficulties, but they made it clear that it was certainly a step in the right direction, which they approved. I trust that similar committees may continue the work which this committee has begun until other difficulties may in that way be ironed out.


Mr. G. W. Montgomery (Victoria-Carleton):: I should like to say a word or two on this bill because I was a member of the committee from New Brunswick. In my constituency there are a lot of people who are interested in the outcome of this legislation. In fairness to them I think I should take part in this debate for a few minutes. We were all interested in seeing that our rural mail carriers received more remuneration for the services which they performed.
The Post Office Act was placed before us and the amendments, it seemed to me, improved the situation that existed. It is true
345G

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that it puts power in the hands of the department of the Postmaster General, but having heard the evidence in the committee and having received a statement from the Postmaster General, it seemed to me that I personally had no better alternative to suggest and no member of the committee and no association and no one else came forward with a better solution.
As has been said by other hon. members, we apparently heard all those who wished to be heard, and I feel that this bill will go a long way to improve the conditions under which the rural mail couriers work, which these amendments were drafted to do. That being so, I would not want hon. members to feel that I had refused, or did not wish, to take part in this debate because I was not satisfied with the bill. I feel that it would go a long way toward improving the very things which our rural couriers, at least the ones in my constituency, were asking to have improved.
At the last meeting it was pretty well agreed that there was not very much more we could do about this bill. I was given to understand that there would be another meeting at which further matters in connection with rural mail couriers would be considered, and I am looking forward to seeing the committee meet again, at which time other matters will be considered. I hope an opportunity will be given to consider them. As far as this legislation is concerned, I do not think that we can do anything but support it on the assurance of the minister, which he gave us, that the rural mail couriers will be treated fairly in the review of their cases when they come up for increased remuneration.


Mr. Speaker:: The hon. member for Huron North suggested an amendment, but there was no formal motion.


Lewis Elston Cardiff: I do not want to delay the bill. I am wholly in accord with the bill. If it lacks anything it lacks a provision that states sufficiently the compensation that the rural mail couriers should receive. That is the only objection I have to it. We were to have another meeting before the bill passed; I have no objection to the bill passing at the present time.
Motion agreed to and bill read the third time and passed. .



EXCISE TAX ACT

Hon. Douglas Abbott (Minister of Finance) moved: the second reading of Bill No. 225, to amend the Excise Tax Act.


Mr. George A. Drew (Leader of the Opposition):: Mr. Speaker, this is an appropriate time to discuss a subject that has been

mentioned on different occasions in this house before. Now, however, is the opportunity to relate the discussion directly to the proposal that is before us.
In this legislation we are dealing with an amendment to the Excise Tax Act which makes changes in our general excise taxation structure. Hence, this is an appropriate occasion on which to consider suggestions that should be made in connection with changes of that kind. The proposal before us represents the suggestions which the government now wishes to make. I wish to discuss another matter which I believe should be dealt with. I think this is the appropriate time to raise it. By presenting it at this time the opportunity is then afforded the government to see the proposal and to indicate its willingness or otherwise to accept the suggestion which has been made.
From the municipalities throughout the whole of Canada there has been an increasing demand that consideration be given to the fact that they are called upon to pay excise taxes including the 10 per cent sales tax on those things they buy for their own service of the people in their own communities. This applies also to purchases made by boards of education for the equipment that goes into the schools where education is given to the children of this country. It does seem to be an anomaly that the dominion government should recognize the fact that it is not appropriate to apply the excise taxes including the 10 per cent sales tax in the case of purchases made by provincial governments but that it should insist that municipal councils and school boards pay those taxes. The thing even goes further than the payment of taxes in the ordinary way. If municipalities within their own boundaries manufacture goods for their own requirements, these taxes still apply, although the goods are going to be used within the very municipal boundaries within which they have been made.
This is a matter of great importance at this time. Certain steps that have been taken by this government have imposed still heavier burdens upon the municipalities. This is not the occasion to argue the wisdom or otherwise of the course which has been followed. It should be pointed out, however, that there are in Canada many people who believe that civil defence is part of the general defence requirements of Canada. If that is so, then it does seem doubly onerous that those municipalities which are called upon to purchase special equipment for civil defence should find themselves not only bound to buy equipment which they do not think they should pay for in the first place, but on top of that they are called upon to pay sales tax and

other excise taxes to the senior government which imposes that necessity upon them.
This aggravates a situation which already is a source of great concern to many municipalities. Some municipalities, situated in what are obviously danger zones, have heavier obligations in this respect than have municipalities which would not be likely targets of air attack. Therefore they not only are called upon to meet a feature of defence which is part of our general problem of national defence, but are called upon to pay excise taxes including sales tax on the equipment they must buy as well.
This subject has been further aggravated in many communities by the fact that, with the extension of the acquisition of land for various purposes by the government of Canada, more and more land is exempted from taxation within some communities, a fact which throws a still greater burden back upon those municipal taxpayers who in turn must pay those special taxes imposed by the dominion government.
There are many anomalies in connection with this situation. Let us think of some of the highways that go through various provinces. Those highways may follow a route which carries them through large urban municipalities. Up to the boundary of that municipality the road-building equipment or road-repairing equipment acquired by the provincial government pays none of the special excise taxes including sales tax, but the municipality supporting the continuation of that highway through the urban area, with its own equipment, is called upon to pay these excise taxes upon that equipment serving exactly the same purpose up to the two boundary lines of the municipality. Surely that is utterly inconsistent with the fact that in this case the provincial government and the municipal governments-which is what the municipal councils in fact really are-are performing similar duties on behalf of those taxpayers whom they serve. Surely if it is appropriate that this exemption apply to provincial authorities performing the same task, the exemption should apply to those who continue that responsibility through the intervening segment of the same undertaking.
This illustration could be carried forward into a great many other activities but I shall leave it there because it seems to me that the illustration X have offered does indicate the anomaly that presents itself.
The municipalities of Canada for a number of years have been emphasizing their difficulties in this respect, and X think I should place on record the resolution which was adopted by the mayors association and which was presented to the government of Canada. It
Excise Tax Act
deals directly with this point. It reads as follows:
Whereas municipalities are required to pay the federal 10 per cent sales tax on all items purchased as well as on equipment and articles manufactured by municipalities for their own use and not for resale; and
Whereas the provincial governments, their boards and commissions, do not pay the federal sales tax nor is the tax exigible on certain items purchased for use by hospitals and electrical utilities; and
Whereas municipal governments, under the British North America Act, derive their being from the provincial governments and, as such, represent the delegated power of provincial governments; and
Whereas therefore the continued imposition of the federal sales tax on the purchases of and equipment produced by municipalities would appear to be discriminatory; and
Whereas municipal governments are hard-pressed to hold the rising costs of local government within the narrow limits of their sources of revenue, a situation over which the federal government has expressed its solicitous concern; and
Whereas municipal governments, while desirous of co-operating fully with the organization and provision of adequate local civil defence, are nevertheless finding that the local costs of civil defence are adding an additional and onerous burden on their already severely restricted revenues:
Therefore be it resolved that the Canadian Federation of Mayors and Municipalities strongly urge the federal government to exempt the municipal governments from payment of the federal sales tax on all municipal purchases; including articles manufactured by municipalities for their own use and not for resale.
I submit that this resolution should commend itself to the government and that this is the appropriate time to draw to the attention of the government the fact that an amendment should be included in this present bill now before us which would meet this most reasonable request made by the representatives of many municipalities throughout Canada. In very moderate and conciliatory language this resolution points out that the rising costs of municipalities necessitate taxation within the narrow limits of municipal sources of revenue, which limits are more seriously curtailed by the extent of the tax dollar which is being taken from the Canadian taxpayer by the Canadian government at this time. It is all very well to say that the municipalities still have their flexible sources of revenue. They have only the sources of revenue which are left open to them after the dollars have been drained off in very large measure by the government of Canada.
If the taxpayers in these municipalities- after all, the taxpayers in the municipalities of Canada are the same taxpayers who pay provincial taxes as well as taxes to this government-were freed from the heavy burdens that are imposed by the central taxing authorities, they would be in a much better position to contribute to local requirements. Therefore the extent to which taxation by

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the central government constantly encroaches upon the tax dollar is a matter of real and direct concern to the municipal authorities responsible for local taxation.
We have seen the percentage of the tax dollar go up day by day until it appears that last year 78 cents out of every tax dollar was absorbed by this government, leaving only 22 cents available for both the provincial and the municipal authorities. Within that limit the municipalities must seek their opportunity to obtain the money that is required for the vitally important duties which they must carry on on behalf of the people living in those communities.
If we will only think for a moment of the duties performed by the municipal authorities it will become apparent that in the daily lives of our people it is those duties which are most directly related to the needs of our people. Water supply, light, sewage, roads, other services including fire and police protection; all these things are provided by the local governments. It is to the local government that the Canadian in most oases looks for the security and comfort and amenities of his daily life. Therefore, we must recognize the vital necessity of giving to these municipal authorities an adequate measure of independent authority over their own affairs which will assure the most effective services within this country of ours.
When we talk about building up Canadian society, let us remember the extent to which this society of ours rests upon the municipal structure.


Percy Chapman Black: Including education.


George Alexander Drew: That of course is most important of all in the field of education. The whole character of our people in the years ahead, the whole future of our country as a civilized society, is going to depend upon the kind of education that we give our children. In very large measure today the burden imposed upon the municipal taxpayer for taxation is seriously aggravated by these excise and sales taxes which are incorporated in the purchases made necessary by the expanding needs of education. Surely if there is one place where exemption in regard to excise and sales tax should apply, it is in the educational requirements upon which to a very great degree the whole future of our society is going to rest.
There is no miracle by which we can carry out the duties of government in the provinces or in the municipalities without taxation. Nevertheless there must be some places where the justice of the application of taxes must be given full consideration. I recognize that

there is a difference between the status of provincial governments, municipal councils and the school boards; nevertheless when we speak of the municipalities as creatures of the provinces I would recall the fact that they are fairly lusty and vigorous creatures. They are not creatures to be disposed of by the whim of any government, either the government in Ottawa or any provincial government responsible for the administration of municipal laws within the province. These are real and vital communities within our combined social structure.
I do suggest therefore, as has been pointed out by the federation of mayors and municipalities, that since municipal councils and school boards exist under laws passed by the provincial legislatures, and are to that extent local emanations of the provincial legislative bodies, it would be consistent to apply to those municipal authorities the same exemptions as are applied to the provincial governments.
I would point out that there might be created an invitation to follow a course which might present some difficulty. I would think that if taxes of this kind are to be continued there will be another invitation to centralize authority. After all, one way in which the municipalities could be relieved from this would be for them to turn over certain of their responsibilities to the provincial governments in return for payment and then the provincial governments could buy this machinery and equipment without paying any excise or sales taxes. Thus you would have centralization into provincial hands and still further centralization into the hands of the government at Ottawa. I realize that that appeals to the centralist party from which this government is formed. It believes in centralization for the sake of centralization.


Douglas Charles Abbott: Oh, nonsense.


George Alexander Drew: Let us be under no illusion about that.


Douglas Charles Abbott: Oh, nonsense. This has nothing to do with the Excise Tax Act.


George Alexander Drew: Every act they have taken for several years has been that of centralists who believe that, by their little less than divine wisdom, the control they exercise in this way will be for the benefit of the people of Canada and will relieve them from the unfortunate consequences of having their affairs dealt with by those more closely associated with their daily needs. By every device within the power of this legislative body payments of that kind should be held within the control of municipal authorities because that is where the most direct supervision is exercised. I heard the Minister

Excise Tax Act
of Finance interject the word "nonsense". May I remind him that it is most unlikely that you will find horses on the payroll under any municipal government.


Douglas Charles Abbott: Like the hon. member for Simcoe North (Mr. Ferguson), my friend can think of nothing but horses, and I am not sure which part.


George Alexander Drew: Mr. Speaker, this is merely an illustration, as was pointed out in the report which brought it to the attention of the government, of the complete breakdown in the supervision of the business of government, of which that was an example.


Mr. Speaker:: Order. I think I only need to say "order".


Mr. Knowles:: Just say "Whoa".


Douglas Charles Abbott: Fair enough, Stanley.


George Alexander Drew: Mr. Speaker, I would emphasize the fact-


Mr. Lesage:: That is the only language he understands.


George Alexander Drew: -that municipal councils are under a constant measure of supervision which makes it most unlikely that any of those fantastic irregularities which have occurred within the knowledge of every hon. member of this house would be likely to happen. Therefore the more we can encourage the retention of the authority of municipal councils over their own affairs, the better it will be for the taxpayers of Canada, who are the same group of taxpayers whether they pay taxes to the municipal, provincial or central authorities.
Then, Mr. Speaker, there is another reason why this should be given consideration. In the early days, when the thought first arose of exempting property belonging to the government of Canada from municipal taxation, the amount of property affected was relatively little in any municipality. With the increasing intervention of government in many fields of activity, even in competitive industrial enterprise as well as the ordinary services of government, it has expanded to the point where in many municipalities it has become a very serious problem to the municipalities themselves. In no municipality is that more clearly shown than in the capital of Canada itself.
The present method provided for dealing with this subject is one that does not meet the requirements of the municipalities. The legislation described as an act respecting grants to municipalities has satisfied no municipality in this country. In the first place the procedure is involved. Why it should only
apply to municipalities in which 4 per cent or more-


Douglas Charles Abbott: I do not like to interrupt my hon. friend, but on the second reading of an act to amend the Excise Tax Act are we going to debate the adequacy or otherwise of the provisions of the Municipal Grants Act? If we are, I do not know what the rules of the house are made for.


Mr. Speaker:: I doubt if it would be in order. In fact, I am inclined to think that the discussion thus far has been beyond the principle of the bill before the house. The bill before the house is an act to amend the Excise Tax Act, and discussion should be relevant to the bill and not to the Excise Tax Act generally. I merely mention that to the Leader of the Opposition.


George Alexander Drew: Mr. Speaker, I would refer you to Beauchesne's third edition, page 228, paragraph 657, which reads as follows:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill, or expressing opinions as to any circumstances connected with its introduction, or prosecution; or otherwise opposed to its progress; or seeking further information in relation to the bill by committees, commissioners, the production of papers or other evidence or the opinion of judges.
Under that rule it is my intention to move an amendment that the bill be not now read a second time but that consideration be given to the subject matter which I have been discussing, and I shall so move at the appropriate point.


Mr. Speaker:: The point arises whether that would be relevant to the bill. The law of relativity must always prevail. I would have to be satisfied that there is some reference in the present bill to the question which the Leader of the Opposition has raised. It will be necessary to show that the subject matter which has been discussed is relevant to the bill before I could allow the amendment.


Douglas Charles Abbott: Mr. Speaker, I do not want to take any technical position particularly, but there happens to be nothing in the bill to amend the Excise Tax Act which relates to exemptions from sales tax on municipal purchases. I had intended, as I undertook to do, to make a brief statement on that matter. A number of members have spoken on it, including the hon. member for Vancouver-Quadra. I am sure the Leader of the Opposition will forgive me if I say that he has shed no new light on the subject so far this afternoon. I do intend to say something about it when he completes his

Excise Tax Act
remarks, as I undertook to do when the matter was discussed at some length in the general budget debate.


George Alexander Drew: I submit that it is directly relevant because schedule III of the bill now before us includes the exemptions which are proposed, and I am under the impression that exemption of municipal councils and school boards is as important as yogurt, yeast, and one or two others which I see on first glancing at the list of exemptions included in the schedule. I would point out that it is within the power of the government at this time, under the bill and under a schedule to be introduced by the government, to deal with an exemption such as that which I propose. Therefore I move:
That Bill No. 225 be not now read the second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of excise taxes, including the 10 per cent sales tax, on all their purchases of machinery and other equipment, which taxes impose a particularly heavy burden on municipal taxpayers because of the government's continuing failure to introduce legislation providing for taxation of all government properties in municipalities on the same basis as that of ordinary municipal taxpayers.


Douglas Charles Abbott: That is a nice propaganda resolution.


Jean Lesage: Learning from Vishinsky.


Douglas Charles Abbott: Mr. Speaker, I am quite prepared to leave the question of whether or not this amendment is in order to the good judgment of Your Honour. I must say, on the first reading, that it seems to me that at any rate the latter part of the resolution has nothing whatever to do with the proposed amendment to the Excise Tax Act which is before the house. If Your Honour cares to take some time to consider the question of whether or not the motion is in order, I should like to state briefly, as I undertook to do, the reasons why the government felt it could not this year recommend any change in the law respecting sales tax paid by municipalities.


Mr. Speaker:: If the minister does so, he will close the debate.


Stanley Howard Knowles: Not if he speaks to the amendment.


Mr. Speaker:: That is correct.


Douglas Charles Abbott: I will be prepared to speak to the amendment under the reservation of my objection that it is out of order.


Mr. Speaker:: I can give the question of whether or not the amendment is in order some consideration and I will not make my ruling at this time.
[Mr. Abbott.l


Douglas Charles Abbott: I would appreciate being able to make my brief statement on this question now, because I have a treasury board meeting which I am anxious to attend and I anticipate I will be able to do so. If I could make my statement it would be some help to me.
During the last year in particular I received a great many requests from literally hundreds of municipalities asking that they be granted an exemption from sales tax on their purchases, and I received the resolution of the federation of mayors and municipalities which was read into the record by my hon. friend the Leader of the Opposition (Mr. Drew). A number of speakers in the course of the budget debate raised this question, as I think they did on the budget resolutions as well.
As I said a moment ago, and perhaps my hon. friend will forgive me if I say it now, he has thrown no new light on this very important and difficult question. I do not feel I can recommend the exemption that was asked for and I would like now to give to the house the reasons for taking the position which I have-a position which, I may say, I found it necessary to take in previous years.
In the first place, I want to assure the various municipal officials that I am not lacking in sympathy for the problems which they face in raising the necessary moneys to finance local government services. It is not a pleasant business to tax people to find moneys to provide things they want and are asking for, as I have every reason to know, since I have to do it myself. However, I am sure that these municipal officials will realize that I must be something less than enthusiastic if by relieving their burdens I add to my own problems. The municipalities, to use the words of my hon. friend the Leader of the Opposition, are legal emanations of the provinces. As I said to the hon. member for Greenwood (Mr. Macdonnell) the other day, I think it would be highly inappropriate for the federal government to assume any direct responsibility for the financial problems of municipalities. Clearly the federal government should follow the line which it has been following of dealing directly with the provincial governments themselves in financial matters, rather than attempting to assist municipalities directly by tax relief measures.
Now, as to the matter of sales tax on materials purchased by the municipalities, and coming down to the first principle, if articles are subject to sales tax in the hands of individuals I find it a little difficult to see why they should be exempt from tax if they are purchased by a corporation for use by individuals. I think it is reasonable to say that perhaps in their very understandable

request for tax relief in this appeal the municipalities have not a great deal of logic on their side. It is true that the provinces are exempt from sales tax on articles purchased by them for provincial use; and a similar provision, I understand, applies to provincial boards. But, in addition to the substantial losses of revenue, which would be involved if municipal purchases were exempt from sales tax, and which would have to be made up from somewhere else, there is a very real practical problem involved in complying with this request. As the house is aware, the sales tax is put on at the manufacturer's level and the ordinary manufacturer has no way of knowing who the eventual purchaser of his product is going to be-whether it will be a municipality or an individual businessman. Accordingly, if an exemption of this kind were granted it would be necessary to fall back on the device of taking either a certificate as to use or the adoption of a system of refunding. Either method is fairly cumbersome and involves a great deal of paper work. When we stop to realize that there are over 4,000 municipalities in Canada, and that the range of articles that can be purchased is an extremely wide range, I do not think I need to emphasize the difficulties of attempting to administer any such exemption. In saying that, I feel sure it will be appreciated that I am not in any way reflecting on the integrity and good will of the municipal officials.
Taking all of these factors into consideration, I have come to the conclusion this year, as I have in past years, that an exemption of this kind cannot and should not be recommended. That is the reason why it is not contained in the amendment before the house.


Stanley Howard Knowles: Mr. Speaker, while not agreeing with all of the arguments which the Leader of the Opposition (Mr. Drew) put forth in support of this proposition, I wish to say that we thoroughly agree with the contention put forward by the federation of mayors and municipalities, that municipalities be exempted from the requirement to pay excise or sales tax on their purchases.
I have listened to the defence just made by the Minister of Finance (Mr. Abbott) for his failure to accede to this request and I must say that I, for one, am not convinced that he has made any case for his failure to recommend this change.
Not only have we had the position stated by the Minister of Finance here today, and on other occasions, but he has also favoured some of us with excerpts from letters which he has written to some of the cities and municipalities which have made representations to him. I have in my hand a copy of 68108-220
Excise Tax Act
a letter which the Minister of Finance wrote to me on March 18 of this year in reply to my representations in support of a resolution on this matter submitted to the government by the council of the city of Winnipeg. In this letter to me the Minister of Finance has given me excerpts from the letter which he wrote to Mr. Gardner, the Winnipeg city clerk; and one of these arguments which has already been given us but which is spelled out here seems to me to be quite unconvincing. I am quoting from the minister's own letter to the city of Winnipeg.
An exemption from sales tax for materials and supplies purchased by municipal governments would result in lower costs to the municipalities and therefore should bring some net reduction in municipal taxes but municipal taxpayers are usually also federal taxpayers as well, and tax savings gained at the municipal level might have to be given up in their payment of federal taxes.
It is that point to which I should like to make answer. The Minister of Finance (Mr. Abbott), and indeed others who have spoken on this matter thus far in today's debate, seem to ignore the fact that municipal taxation is levied on a different basis from that of federal taxation. There is a good deal that is wrong with the basis of federal taxation, but at least it comes nearer to the ability to pay basis than any other jurisdiction in this country is able to come. If this policy did work out as the Minister of Finance suggests, that there would be a slight reduction in cost to citizens as municipal taxpayers which they would have to make up in their capacity as federal taxpayers, I suggest that is all to the good. It would mean that that difference would be transferred from a basis which is predicated upon ownership of real estate to an ability to pay basis, at least in so far as that principle is involved in federal taxation. I submit therefore, Mr. Speaker, that the main argument in terms of principle that the Minister of Finance has used in his letter to the city of Winnipeg really does not hold water.
Of course, it is the same people who must pay taxes, whether they pay them to municipalities, provinces or to the federal government. Our whole concern in respect to the question of taxation is that it should be put, as nearly as possible, on an ability to pay basis. The two forms of taxation which come closest to that are the personal income tax and the corporation income tax. We feel, therefore, that it would be better that municipal taxpayers as such should enjoy some relief from municipalities not having to pay the sales tax, even if they do have to turn around and make up for that by paying it in federal taxation.

Excise Tax Act
Now, Mr. Speaker, the other argument which the Minister of Finance used today, and he used it in this letter which he wrote to the Winnipeg city clerk to which I have already referred, is the question of administration. Again I must confess that we are not convinced that that is an insurmountable obstacle. After all, the minister admits that the administration of this tax is already a complicated procedure, with many exemptions as to commodities and many exemptions as to purchasers already involved in the legislation. I, for one, cannot see how it is possible to draw a line between provincial governments and hospitals on the one hand, and municipalities and school boards on the other. I feel that the federation of mayors and municipalities is quite correct in pressing the government for an exemption from the payment of the sales tax.
Actually of course, Mr. Speaker, this raises the whole question as to the fairness of the sales tax. If it is unfair, as we are contending, to impose it upon municipal taxpayers in their capacity as municipal taxpayers, we take that position because we feel that it is unfair to impose it upon them as individuals. Our opposition to the sales tax goes much further than just our opposition to municipalities being required to pay it. We oppose the sales tax in principle. We realize that a great many attempts have been made, particularly in recent years in this house and in some of the committees that have dealt with this matter, to build up the sales tax as a socially desirable method of obtaining revenue. In my opinion it is still a bad form of taxation.
In the course of this session we have heard a great deal said about secret orders in council-at least about one secret order in council which is in existence in this country today. I do not like secret orders in council, not even one of them. But I submit, Mr. Speaker, that hidden taxation is even more sinister and more harmful to the average Canadian than is a secret order in council. That is what we have in the sales tax. Maybe you cannot call it a secret tax because it is there on the books. Anyone who wants to read about it can learn about it. However, it is a hidden form of taxation. It hits all of those people who are not in income brackets sufficiently high to be paying personal income taxes. As a matter of fact, I feel that the Minister of Finance admitted that the sales tax is that kind of hidden tax that gets at everybody, whether or not they have sufficient income, in this same letter from which I have already quoted and which

he wrote to Mr. Gardner, the city clerk in Winnipeg. He said this:
It is naturally the desire of the federal government to keep the sales tax base as broad as possible.
He was stating that as an argument for imposing these taxes on municipalities and school boards. I suggest he has let the cat out of the bag. What he likes about the sales tax is that he catches all those poor people to whom he is giving the impression, by his income tax exemption levels, that they are not being taxed. The plain fact of the matter is that every single man who has an income of less than $1,000, every married man whose income is less than $2,000, and every married man with two children whose income is less than $2,300, though he may not be paying the personal income tax, is certainly caught in the taxation net through this hidden tax which we know as the sales tax. We agree, therefore, with the stand taken by the federation of mayors and municipalities. We agree with the stand taken by the city council of my home city of Winnipeg, that municipalities and school boards should be exempted from paying this tax. We go much further and say that the whole basis of taxation should be pulled away from this taxation on the basis of what one has to purchase and moved in the direction of taxation on the basis of ability to pay.
I give the government little credit-very little; that is all they are entitled to-for moving a little bit in that direction. In looking at the figures which were given to us on February 19, we discovered that the total revenue from excise taxes in the year ended March 31, 1952 amounted to 22 per cent of the total revenue of the federal government. In the year ended March 31, 1952 the estimate was that excise taxes would account for only 19'5 per cent of the total revenue; that, of course, is just one form of indirect taxation. If you add all the forms of indirect taxation together, you find that they accounted for 36-6 per cent in the fiscal year 1952 and 34-3 per cent in the fiscal year ended March 31, 1953. As I say, I am prepared to give the government what little credit is coming to it for having adjusted things so that that percentage is shifting slightly. But our contention is that for 34-3 per cent of the government's revenue still to be coming from what I will call secret or hidden taxes, is unfair to those in the lower income brackets, those little people whom the Minister of Finance would have us believe are not paying income taxes but who are caught in this legislation. This Excise Tax Act is indeed, Mr. Speaker, an income tax act for the little fellow with very little income.


Jean Lesage: It is 34 per cent.


Stanley Howard Knowles: That is what I said. Not only do we, as I have indicated, oppose the sales tax in principle, on the basis of which we are opposed to municipalities and school boards being required to pay them, but likewise we give our support to the representations that have been made to the Minister of Finance by the Canadian welfare council. These representations were included in a letter addressed to the Minister of Finance on September 23, 1952, over the signature of Mr. Lawrence Freiman, who was chairman of the committee on sales tax and vicepresident of the Canadian welfare council. In that letter Mr. Freiman pointed out to the Minister of Finance that there are a number of welfare agencies but that only a few of them, mainly on the basis of their operating institutions, are exempted from the payment of the sales tax. But it was pointed out by Mr. Freiman that-perhaps I can best do it by reading one paragraph from his letter, which is as follows:
The social welfare agencies in Canada not now covered by the sales tax exemption are an important group with programs designed to prevent individual and family breakdown and to reduce expensive public care. Indeed, the excluded group could with accuracy ba called the main source of voluntary welfare in this country. It included such agencies as children's aid societies, family welfare bureaus, visiting nurse associations and community chests and welfare councils, and all the organizations are easily identifiable because of their right to issue receipts for contributions which give exemption from income tax.
It is those groups, Mr. Speaker, on behalf of whom the Canadian welfare council made representations to the Minister of Finance. Here again you have a group of people who are rendering a service to the community. They are doing it on a non-profit voluntary basis, and our community is certainly better for the activities of all these individual groups which are represented by the Canadian welfare council. They made very precise suggestions as to how this might be handled; they gave the conditions that might be required before the exemption could be granted, and in my view the letter which Mr. Freiman wrote dealt adequately with any administrative problems that might arise in the minister's thinking about this matter. All told, it seems to me that here is a group which is as deserving as the other institutions that are granted exemptions now, and equally deserving as the school boards and municipalities on behalf of whom representations are being made at the present time.
68108-220i
Excise Tax Act
The Minister of Finance replied to Mr. Freiman's letter under date of October 10, 1952, as follows:
Dear Mr. Freiman:
I am sorry that my reply to your letter of September 23 has been delayed.
I have noted the council's suggestion that the sales tax refund benefit which is available to certain charitable organizations of an institutional nature should be extended to other social welfare agencies which are organized and operated exclusively as charitable organizations but are not providing institutional care.
I will be pleased to consider this recommendation when I am studying sales tax proposals during preparation of the next budget.
Your very truly,
D. C. Abbott.
I cannot help but note that sentence which the minister writes so frequently. His stenographer must have some special little symbol for that whole sentence, because he uses it so often:
I will be pleased to consider this recommendation when I am studying sales tax proposals during preparation of the next budget.
If that consideration was given we see no evidence of it in the legislation now before us. That is the position we take, Mr. Speaker. We are opposed to the sales tax in principle. We point out that the little man who has really inadequate income is, through the medium of the sales tax, called upon to pay what is a hidden or secret tax, and at the present time hidden taxes all told amount to 34 per cent of the total revenue of this government. Because we are opposed to it for the little man in his own right, we are also opposed to having him pay it indirectly through the expenses of municipalities and through the costs of these various welfare agencies; and we hope, despite the fact that the minister has taken a negative position today, and has had to leave the house to attend a meeting of the treasury board, that consideration will yet be given to the unfairness of the sales tax as a whole and to the unfairness of its application to these two groups.
I anticipate, Mr. Speaker, indeed I sense it, that before this debate goes much farther there will probably be some discussion on a point of order. I will not get into that until it is raised, but I do hope that even if Your Honour feels it necessary to suggest to the Leader of the Opposition (Mr. Drew) that he make some slight change in his amendment, such as the dropping of the last phrase of it, nevertheless a way will be found for this house to be permitted to vote on the question which has been presented to us this afternoon, involving as it does our opposition to the sales tax.

Excise Tax Act


Mr. Solon E. Low (Peace River):: Mr. Speaker, I am not at all sure that I can throw any more light on the question than has already been thrown on it, but I do feel that those of us who have been speaking in this house for quite a number of years on the sales tax, and advocating its removal, showing thereby that we are opposed to the sales tax in principle, ought to indicate our support of the principle of the amendment which was introduced by the Leader of the Opposition this afternoon and say something by way of reply to the reasons which were given by the Minister of Finance for the position he has taken in respect to this appeal by the federation of mayors and municipalities.
At the outset I want to indicate my support of the brief that was presented by the federation of mayors and municipalities to the Minister of Finance. Contrary to what the Minister of Finance said, I think there was much logic in their position and in their case. The Minister of Finance said there was not. I hope I shall be able to show that there was at least a little logic, perhaps as much as the Minister of Finance has shown in the position that he has taken.
For a good many years I have been working with a view to getting this job done, and lending what little help I could to Anally convince the Minister of Finance that he should grant exemption from sales tax to the municipalities and school boards across Canada on the equipment that had been purchased by them. They are entitled to it. They have been asking for it for a good many years, and they have been showing excellent reasons why the Minister of Finance should grant it.
Having said that, I should like to turn for just a moment to some of the things the Minister of Finance said in his statement this afternoon. He said he was not lacking in sympathy for the case of the municipalities. Perhaps not, but the municipalities in the country are likely to judge more by deeds than by words in a case of this kind.


Stanley Howard Knowles: Not only the municipalities.


Solon Earl Low: Not only the municipalities, of course, but also a very large number of individuals who are directly or indirectly affected by the position taken by the minister. He says that it is a mistake for the federal government to assume any direct responsibility for the municipalities that are legal emanations of the provinces. I admit that the municipalities are legal emanations; they are the children of the provincial governments. That is quite true. But there would be considerably more logic in what the minister said if the federal government had not already laid

down a precedent. I am going to mention only one; there are probably many that could be mentioned.
A number of years ago, during the depression years, the municipalities of Canada were in a bad position financially as a consequence of extremely low prices for farm products and the heavy burden of relief costs. The federal government was induced at that time to put through this very house a bill called the Municipal Improvements Assistance Act by which the then minister of finance was able to extend directly to the municipalities loans at a rate of interest of 2 per cent on self-liquidating projects. The provincial governments were drawn into it indirectly to give what they called a continuing guarantee, but the assistance was granted directly to the municipalities.
I therefore contend that the government thereby laid down a precedent for taking other action that might be considered as direct assistance to the municipalities. The minister therefore cannot just shrug it off like that and say, "It is none of our affair" because these are the legal children of the provincial governments. I do not think his reason in that respect holds any water.
The second thing he said was that if he granted the request by the federation of mayors and municipalities his department would lose a substantial amount of revenue. I think that is perhaps the best reason he gave today, namely that he would lose some substantial revenue. But, Mr. Speaker, if the Minister of Finance should comply with the request of the municipalities, school districts and others in the country for the removal of the sales tax on equipment they have to purchase, he could make up that revenue in some other way and, as the hon. member for Winnipeg North Centre (Mr. Knowles) has so well said, in a way that would be more fair and equitable. Certainly the principle of taxation according to ability to pay is much to be preferred to taxation where you can grab it easiest. The principle that seems to be followed today is to get the taxes just as easily as you can and to make others the collectors of taxes, not go out and do it yourself; make other people do it for you.
I suggest there is much reason in what my friend the hon. member for Winnipeg North Centre said. Certainly an income tax or some such thing based on ability to pay is to be preferred to a tax like the sales tax which does have the effect of pyramiding consumer prices, a situation which throws an unjustifiable burden upon those people least able to bear it. I have always opposed the sales tax in principle for the reason that it was applied

at the manufacturer's level and had the effect of pyramiding prices; and in this house on a good many occasions I have given my reasons for being opposed to it in principle.
The Minister of Finance said there was a practical difficulty in the way of granting the request of the federation of mayors and municipalities. He said that the excise tax is imposed at the manufacturer's level and that therefore to comply with their request would involve a system of refunds and a good deal of paper work. I think perhaps that is true, Mr. Speaker; I must say that in all fairness to the minister. I can quite well visualize what a complication of paper work would be involved in trying to deal with purchases made by 4,000 different municipal governments in this country if the exemption were to be granted on all their purchases. I can quite well understand that, because it would perhaps involve everything from mops, mop sticks, soap and things of that kind up to machinery that costs a great deal of money.


An hon. Member:: Horses?


Solon Earl Low: I do not know whether they use horses out in the municipalities or not, but I think we have already said too much about horses. Let us therefore leave them out for the time being. If there is a practical difficulty, however, I suggest that nobody created that difficulty but the government itself that devised the kind of tax that is imposed at the manufacturer's level and that would require the kind of complicated paper work the minister suggested would be involved if exemptions were to be granted.
But let me just make this suggestion to him. If he would make a start now and grant the exemptions requested by the mayors and municipalities and school boards on heavy machinery and equipment that is required for their road-building programs; on equipment, costing a good deal of money, used for the purpose of conveying children to school, such as vans and that sort of thing; and on that costly equipment that is used in civil defence -if the minister would begin by exempting those items only I think he would find that the paper work would not be too extensive.
Certainly the government does not shrink today from exemptions to various sections of Canadian society such as the farmers, with respect to customs duty and such things as that on equipment used exclusively in farming. That process of exemption does involve making refunds. The refunds have to be applied for. Paper work is necessary. While it is perfectly true, Mr. Speaker, that it becomes complicated and in many instances the applicant for the refund has to wait many weeks or months for his money-and that fact has been drawn to the attention of
Excise Tax Act
the Minister of National Revenue (Mr. McCann) on several occasions during these past few weeks-in spite of those things I feel perfectly satisfied that if the Minister of Finance would now begin to accede to the request of the federation of mayors and municipalities by granting exemption from sales tax on heavy equipment that is essential for civil defence and for the transport of children to schools, he would be showing his good faith and perhaps would be taking a step toward eventual complete exemption that might be arranged, with little complication, later on.
I just want to conclude by saying this. I do not think for one moment that there is any good and sound reason why the Minister of Finance could not at least begin to take the action that has been requested by the mayors and municipalities. May I say this. I think he owes it to the municipalities of Canada to help them in these extremely trying times. The municipalities are carrying terrific loads. Many of them are growing rapidly. They are bursting at the seams. In their efforts to look after the people who are coming into the municipalities as Canada grows and expands, they are hard put to it to find the revenues with which to provide the extension of services. The unusual demands for education place another burden upon the municipalities and upon the taxpayers in those municipalities.
When one considers that many municipalities in this country are servicing federal property and are not receiving one cent of taxes from the federal government for so doing, unless they come in the class that has been provided for in this municipal arrangement that takes into consideration, I think, only the larger cities where there is a concentration of government offices and buildings, and government property, I think under those circumstances one could very truthfully say that the Minister of Finance (Mr. Abbott) owes it to the municipalities of the country to grant their request. I want it known that I support the brief that was sent in by the federation of mayors and municipalities.
As to the amendment moved by the Leader of the Opposition (Mr. Drew), whether it is found to be out of order or in order I want to say now that I will support it if it comes to a vote.


Mr. David A. Croll (Spadina):: Mr. Speaker, I rise for the purpose of saying that I support that portion of the speech of the hon. member for Winnipeg North Centre (Mr. Knowles) which dealt with the request of the Canadian welfare council. I think he pointed out, and I want to reiterate what he said, that on behalf of some 51 community organizations the Canadian welfare council are asking and

Excise Tax Act
have asked for sales tax exemption on purchases made by social welfare agencies. They are asking for the same exemption that has been given to hospitals since 1930.
They are not unaware of the fact that by legislation in 1950 the government gave relief in the way of refunds to a limited number of clearly defined institutions. That is, they would pay the tax and later make application for refund if they were able to establish eligibility. This worked out in a satisfactory manner and has not been subject to any abuses. That legislation gave recognition to the principle of exempting from sales tax the purchases of genuine social welfare agencies operating in the public interest.
We have now had a little more than two years' experience in dealing with genuine agencies under the refund method. I understand that the government were disposed to grant this exemption to genuine welfare agencies, but they were not sure that they could define a genuine welfare agency. In the brief referred to by the hon. member for Winnipeg North Centre dated September 23, 1952, which was forwarded to the Minister of Finance (Mr. Abbott), the following qualifications were suggested which I think should be placed on the record as indicating the criteria for a genuine social welfare agency:
We would suggest for your consideration that an agency should be eligible for the refund privilege on sales tax only if it meets all of the following conditions:
(a)	is certified by the Department of National Health and Welfare as a bona fide social welfare agency, organized and operated exclusively for charitable purposes, the proceeds of which are used in the public interest and not for the benefit of any special individual or group:
(b)	qualifies (through Form T-511) as a charitable organization permitted to issue receipts for donations which exempt them from income tax;
(c)	is incorporated as a non-profit organization for charitable purposes;
I appreciate that it is rather late in the day to raise this question to which the minister said he had already given consideration, and which he undoubtedly did. But I just wanted to let the minister and the parliamentary assistant know that I intend to pursue this vital matter on behalf of the social welfare agencies at the next sitting of parliament. I am serving notice now so the minister can place this matter at the top of his priority list when he brings down his next budget.
(Translation):


Mr. Leon Balcer (Three Rivers):: Mr. Speaker, the matter now under discussion has of course been brought up on several previous occasions in the house, especially during the debate on the budget. Nevertheless, I would
(Mr. Croll.l
like to say a few words on the amendment moved by the Leader of the Opposition (Mr. Drew). I do so, first because I come from the province of Quebec and, secondly, because my province has the largest number of towns and is therefore more seriously affected than any other by the federal government's stubbornness in imposing excise and sales taxes on purchases made by municipalities.
The various municipal councils and the associations of mayors and municipalities were undoubtedly greatly disappointed to find that the budget did not contain any exemption in that connection. The government perhaps tried to sweeten the pill a little by granting an exemption to certain members of our municipal councils with regard to their expense accounts. But I sincerely believe that, in their hearts, our mayors, councillors and school trustees would' have gladly done without that exemption and would rather have obtained an increase in revenue in order to be able to administer their budgets, which are getting more and more complicated.
The needs of the municipalities increase every day and the expenses also increase steadily, while, unfortunately, municipal revenues have practically reached the limit. As a matter of fact in 1930, for instance, the municipalities were getting a total of $307 million, while the federal government was getting only $301 million; however, in 1948, the federal government was getting $2,484 million, while municipalities had barely succeeded in raising their own revenues to $469 million, which means, in fact, that real estate in Canada is taxed to the saturation point and that municipalities will have to find other sources of revenue or at least relief from taxes as absurd as those imposed upon them at the present time.
In short, the problem boils down to the limitation of federal-provincial rights, to the delimitation of taxation fields. Therefore, I believe that it is still most urgent to convene a new federal-provincial conference in order to revise our taxation fields and enable the federal and provincial governments, as well as the municipal councils, to levy taxes in a reasonable and logical way according to their needs. For, actually, this tax which is imposed on municipal corporations, is more or less a federal tax levied on a property tax. Take, for instance, the case of a school tax based on the value of a certain property. This tax is levied by the municipality and under the B.N.A. Act the federal government takes a part of it-


Mr. Deputy Speaker:: I regret to interrupt the hon. member, but since it is now five o'clock, we must take up private bills.
( Text):



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. 189, to incorporate Mid-Continent Pipelines Limited -Mr. Larson-Mr. Beaudoin in the chair.
Louis-René Beaudoin: I might point out that this bill has been considered by the standing committee on railways, canals and telegraph lines and was reported to the house with one amendment with respect to clause 6 of the bill.
On section Incorporation.


Mr. Nickle:: Mr. Chairman, due to my absence from the house for several weeks, while I was in hospital and recuperating, I was unable to participate in certain rather interesting debates in the house, including that dealing with Mid-Continent Pipelines Limited. However, I have read with considerable interest the speeches made on the bill, and I might say that they were notable on several counts. First of all, the Minister of Trade and Commerce, for the first time during my period in the house, outlined that thing which was something of a mystery for a long time, government policy on natural gas. He coupled with that comments on oil policy.
On some points, notably oil, he and I agree. On others, including the basic policy on gas for eastern Canada, there is unfortunately sharp disagreement. In some degree this also applies to some of the opinions expressed by certain of my colleagues in the Progressive Conservative party. Even in a happy family, such as our group in the house, there cannot and should not always be uniformity of opinion. From that statement I trust it will be clear that I am speaking as an individual member and not as a spokesman for my party. The opinion with respect to our gas pipe-line policy eastward from Alberta which was closest to my own views was that of the hon. member for Peace River. Since there is not always such a measure of agreement in our respective views on other matters, I hasten to congratulate him on his gas policy speech.
I believe his speech certainly gave greater weight to economic realities than that of the minister who spoke for the government, although there have been other occasions when the reverse would apply. I am sure all in this house share a common view on our Canada. We place our country first in
3L 1953
Mid-Continent Pipelines Limited our hearts and actions, ahead of considerations for any other nation. "Canada first" and "Canada always" are neither empty phrases nor the private property of any one party or any one man. We all place Canada first for always, but how each of us does so in reaching our objective in each problem facing Canada may vary widely.
On the general proposition of greater markets for Alberta and other western gas and the securing of a gas supply for the eastern prairies and eastern Canada, there are different approaches to a solution, each with the objective "Canada first". To me the term "Canada first" applied to our natural gas means a careful weighing of all the factors involved in order that our country will derive the maximum possible benefit from this resource, including gas already discovered and awaiting a market plus the much vaster quantity still hidden below the western provinces and requiring both dollars and incentive to uncover. This weighing of all factors is a far broader and, I believe, more beneficial definition than any interpretation of "Canada first" as meaning only that all gas pipe lines much be laid over Canadian territory only regardless of economics, and that all Canadian markets must be served with Canadian gas regardless of economics.
The setting up of such prerequisites to approval by Ottawa of gas pipe lines can be far more costly than generally realized, costly to Canadian consumers, producers, producing provinces and the Canadian economy as a whole. The over-all cost to Canada's economy could amount to hundreds of millions of dollars. I believe the price is far too high to allow nationalist emotions to override common sense. Since last May, when I outlined to the house a proposed national gas policy, there have been some important developments. Planning for gas markets on a larger scale than before is now required because of the continuing rapid expansion of proved gas reserves in the west and also because of the increasing wastage of gas in the Alberta oil fields where gas must be produced whether or not it has a market.
In other words, we have entered an era of gas plenty rather than shortage that will likely continue for many years provided the incentive is continued for large-scale exploration. Maximum value with minimum waste can only be achieved in my opinion by pipeline route planning designed to capture maximum markets on both sides of the border on a sound basis with the least possible delay. To do so we must carefully consider more than the three alternative pipe-line projects east that were before us last year. Let me emphasize that I am neither supporting nor opposing any particular would-be builder of

Mid-Continent Pipelines Limited a pipe line. I am not concerned with what one of several pipe-line proposers, or what combination of proposers, actually builds what I trust will be only the first of several major pipe lines eastward from Alberta.
I am very much concerned, however, with the selection of a route because that decision will be vital in its long-term effect upon the west and upon all of Canada. The mating of gas reserves to markets should be, as has largely been the case with our crude oil, on the soundest possible economic basis, meaning simply to ensure the best possible price for gas producers and the lowest possible cost to gas consumers. Let me emphasize that our gas, like our oil, is a long cost-distance removed from the major markets beyond the prairies. Even with the most economic mating of reserves to markets, our wellhead worth of gas and oil is and will continue to be substantially lower than the wellhead value of the same quality products in major United States producing states, which are better located in relation to major markets.
Despite that handicap we can continue to attract hundreds of millions of exploration dollars, which are essential if the underground treasures of the west are to be fully uncovered. We can reduce the handicap of long cost-distance by keeping the economic climate healthy. Part of that climate involves, in my view, the application of sound economics and common sense, not emotionalism and nationalism, to the linking of reserves to markets. In the routing of the Interprovincial oil pipe line from Alberta to the east, sound economics won out over what I believe to be the emotional appeal of construction confined solely to Canadian territory. With further savings in oil transport costs to be achieved in a few months by the extension of the pipe line 600 odd miles from Superior to Sarnia, the wellhead worth of western Canadian oil will be further increased a few cents to about 15 cents per barrel above the price that would apply if an all-Canadian route had been followed.
That represents, on our current proved oil reserves alone, about a $300 million saving for the Canadian economy. The Canadian government through corporation taxes, and the governments of oil provinces through royalties, will collect over half that increased value as the oil is produced. Indeed, they and Canada will benefit even more, for the balance of the added value will go to those who risked capital in oil and gas development-


Louis-René Beaudoin: Order. May I ask the hon. member to discuss the bill. We had a discussion on policy on the occasion of the debate
[Mr. Nickle.l

on second reading. It would seem to me that the general discussion that is allowed on the first clause of a bill must relate to the various clauses of the bill. If we open the gate again to a discussion of policy, I am afraid that we will be renewing the debate which took place on second reading and which is already concluded. I will ask the hon. member to bear that in mind.


Carl Olof Nickle: Mr. Chairman, my remarks are all primarily directed to the bill under discussion. As I said earlier, dealing with oil and gas pipe lines brought into discussion on second reading-


Louis-René Beaudoin: The remarks of the hon. member are directed to all pipe-line bills, including this one.


Carl Olof Nickle: They will direct themselves to this particular bill.
I would like to complete my comments in relation to the oil line because it has a very direct bearing on the particular pipe line before us. I mentioned that there would be a huge saving to the Canadian economy, about $300 million, because of the routing of this pipe line by way of the United States to Sarnia. I might say that big saving to Canada is not at the expense of the eastern Canadian consumer. The consumer in the east pays no more and no less than he would if his petroleum supply were from outside Canada, for Alberta oil must be laid down in Ontario refineries at no more than the laid-down price of United States oil. The western producer and his government partners get that competitive price less the transport cost; and the lower the transport cost-in other words the more economical the pipe line-the higher is the wellhead return.
The pricing of natural gas to the producer and consumer is also based upon competition not only from gas from other fields but also from the other principal fuels of home and industry, namely fuel oil and coal. In some markets, those close to gas fields like many Alberta communities, and others close to some pipe lines, the cost of gas is or may be lower than that of other fuels. In other markets such as the vast fuel market of eastern Canada our western gas at best can only approach or meet the cost of fuel oil or coal.
At worst, by which I mean through use of the most expensive rather than the lowest cost pipe-line route, western gas would not be able to meet competition of other fuels without one or more forms of assistance. First, there might be some major form of either direct or indirect subsidy paid by the Canadian consumers as a whole or by the

eastern consuming provinces. Second, there might have to be a substantial degree of equalizing of costs to consumers along the entire pipe-line route, designed to bring costs down in markets most distant from the gas fields, and raise costs in markets along the route. This would have the effect of prairie province consumers along the route being forced to help subsidize gas in eastern Canada. Third, there might be a cutting down of wellhead values for gas in the fields serving the pipe line, thus forcing the producer and all who share in the proceeds of his gas production to help subsidize gas for eastern Canada; or we might have a combination of the various forms of subsidy I have already mentioned.
Certainly the Minister of Trade and Commerce is not unaware of most of the points I have made in regard to oil and gas pricing and related matters.


Mr. Mcllraiih:: Mr. Chairman, on a point of order, we are having a debate that would be proper on second reading of the bill. As I understand it this bill received second reading and, having been dealt with by the appropriate committee of the house, it is back in committee of the whole for detailed discussion of the sections. The whole speech of the hon. member is related to the general principle and is one that should have been given on second reading. I am just wondering how far afield we are going to go at this point.


An hon. Member:: He is reading the speech, too.


Mr, Mcllraiih:: It is just a point as to the propriety of the speech at this time.


George Alexander Drew: Mr. Chairman, may I submit for your consideration a fact which I think will perhaps commend itself to hon. members on both sides of the house. The member for Calgary West has been greatly interested in the subject under consideration.


An hon. Member:: We all are.


George Alexander Drew: As I think many hon. members are aware, he was seriously ill for a short time and, unfortunately, for that reason was unable to take part in this debate at an earlier date. I would concede immediately that the rules are not designed to meet such a situation. Nevertheless in view of the length of the debate which has ranged on this bill, I feel that it would be appropriate if the courtesy were extended to the hon. member of presenting views which are related to the general problem before us.


George James McIlraith: I did not understand that the hon. member was asking indulgence to
Mid-Continent Pipelines Limited make the speech under those circumstances. If he is, I am very glad to withdraw my objection. I raised it purely as a point of procedure, but in view of the circumstances I am quite prepared to grant the indulgence.


Louis-René Beaudoin: Has the hon. member for Calgary West unanimous consent to carry on?


Some hon. Members:: Agreed.


Carl Olof Nickle: May I express my appreciation through you, sir, to the Leader of the Opposition and to the hon. member for Ottawa West. I must say, however, that some or all of the points I am dealing with might quite properly be brought up during the consideration of section 6 of this particular bill dealing with the restriction of pipe-line construction by this particular company to routes within Canada.
I had mentioned that the Minister of Trade and Commerce was certainly not unaware of most of the points I dealt with concerning oil and gas pricing. He spoke on March 13 in this debate dealing with the Interprovincial pipe line, and referred to suggestions that the pipe line should have gone from Alberta to Port Arthur, and then around the north and east side of the great lakes to Sarnia, rather than enter the United States and thence cross Michigan to Sarnia. At that time the minister made this statement and I quote from page 2928 of Hansard:
It is worth noting that the distance from Gretna. Manitoba, to Sarnia by the present route is 939 miles, while the distance by the route advocated ... is 1,341 miles.


George James McIlraith: "-advocated by the Leader of the Opposition."


Carl Olof Nickle: "-advocated by the Leader of the Opposition."
The cost increase involved in building the pipe line following the latter route would result in an additional expenditure estimated at $67 million. Such a line would touch no important refining centre and thus would be of no important value to the area it would traverse. Remembering that the cost of the line must eventually be paid either by the producers or by the users of gasoline and other petroleum products, or by both, the government is not disposed to exercise its authority to saddle these consumers with an additional and unnecessary $67 million of expenditure, nor would the national interest be served by so doing.
In that basic conclusion I fully concur. It supports the case I have presented many times since the pipe line was first proposed in 1949. However, the minister is not quite correct on one point. The consumer of oil moved over the line would not have to pay the extra S67 million, for the cost to him has a ceiling set by competition with foreign oil. The extra cost would be recovered by a higher transport charge passed back to the producer, and would thus be a burden upon the oil producer,
3470	HOUSE OF
Mid-Continent Pipelines Limited the provincial governments and other royalty owners, and the federal treasury through loss of taxable income.
The minister showed his basic awareness of the economic weakness of a gas pipe line from Alberta to eastern Canada over the Canadian north-great lakes route when he commented unfavourably upon an oil pipe line over the same route. He also showed his realization of the economic unsoundness of this line or the weakness of the line when he wrote Premier Manning of Alberta concerning gas pipe lines last January 3. The minister quoted his letter during his speech on March 13. After advising the Alberta premier that before any export permit for gas to the United States would be authorized under the Electricity and Fluid Exportation Act, Ontario, Quebec and prairie markets must have Alberta gas made available, the minister then went on to say:
I am aware that, for the period when natural gas is first made available in Ontario and Quebec, and until the load can be built up, such a pipeline project is unlikely to be profitable, either for the producers of gas or for the owners of the pipe line. Nevertheless, there is evidence that a pipeline project for Ontario and Quebec can be worked out and that the project will be profitable over a period of years.
During his speech the minister made reasonably clear the particular route about which he was thinking. On page 2930 of Hansard for March 13, 1953, the minister said:
I am convinced, after thorough study of the matter, that the only reliable supply of natural gas for the provinces of Ontario and Quebec must be from western Canada by means of an allCanadian pipe line.
I am glad to see that the minister has just entered the chamber. The minister's statements might be summarized as follows. An oil pipe line from Alberta to eastern Canada, by an all-Canadian route in preference to the route chosen, would be plain silly because it would be 400 miles longer and would cost $67 million extra. It would be an extra drain on the Canadian economy, and would serve no useful purpose. A gas pipe line over the same costly all-Canadian route would also lose money for the producers and in addition for the owners of the pipe line for some time-the number of years he did not indicate-but that is the only gas line my government will approve because that is the only reliable way of getting gas to eastern Canada. I am paraphrasing the statement by the minister.
Like my chief, the Leader of the Opposition, like the Minister of Trade and Commerce, and like all others who have spoken in this debate from all parties in this house, I strongly support putting the west's gas to
[Mr. Nickle.l

use for Canada and getting natural gas to as many Canadians as possible. I submit, however, that there are several alternatives to an Alberta to Quebec gas pipe line built entirely on Canadian soil, each of which would be more economically sound, would provide a better deal for Canadian producers and consumers as well as for the backers of the pipe line, and would better serve the interests of the gas provinces and Canada as a whole.
These alternatives are: (1) A gas exchange treaty with the United States; (2) a pipe line from Alberta to eastern Canada dedicated to serving only Canadian consumers and following one of the two shortest cost-distance routes. Such a line would cross the prairie provinces, serving this market, then parallel the Interprovincial oil pipe line along the south side of Lake Superior and then reenter Canada either at Sault Ste. Marie or near Sarnia; (3) a comparable route from Alberta to eastern Canada, with Canadian consumers having first priority on gas throughout, but with no barrier being placed on sales to United States consumers of gas available in excess of Canadian needs.
The first alternative would involve a sincere top-level effort by Canadian and United States governments to try to work out a long term, firm treaty for exchange of gas between the two countries. The purpose of such a treaty would be the matching of gas fields to gas markets in the two nations on the most economic basis; that is in a pattern designed to give producers in both countries the highest possible wellhead value, and consumers in both nations gas at lowest possible cost. Over the past year the leader of my party and others, including myself, have advocated that the government initiate negotiations with the United States to determine the feasibility of gas exchange. There is no evidence that any such negotiations have been initiated. The Minister of Trade and Commerce, in fact, confirmed this last May when he answered "no" to a direct question by me on the matter. He appears to further confirm it by his comment in this house on March 13, which appears at page 2930 of Hansard:
I am convinced that the rulings of the federal power commission which recognize the great and growing demand for natural gas in the United States debar any possibility of such an exchange.
How can the minister, or anyone else, actually know that a common sense gas exchange treaty is impossible of achievement until a real effort to get one has been made? Certainly at present the restrictions as to outside delivery of Canadian gas under the Electricity and Fluid Exportation Act, and the restrictions on United States gas under

the United States federal power commission, may prove more costly to producers and consumers in both countries than their replacement by an exchange treaty based on the most economic matching of gas fields to markets.
It is a fact that a number of Pacific northwest and middle western states in the United Slates could be supplied with lower cost gas from Canada than from the United States fields. This would at the same time ensure that British Columbia, which is too small a market to support a pipe line unless that line also serves the United States northwest, could be supplied with Canadian gas. It would ensure, too, that Canadian gas producers, and their government partners in the proceeds of production, could get the best possible return from this resource. It is also a fact that United States gas from Texas and Louisiana could be piped into Ontario and Quebec at a cost to Canadian consumers from 10 to 20 per cent lower than the cost of Alberta gas delivered by even the most economic route.
The doubts of the Minister of Trade and Commerce concerning gas exchange, and the fears of others both in this house and elsewhere in Canada that dependence upon a foreign source of gas would mean insecurity, both as to supply and price, are shared by the United States in the Pacific northwest and Washington. There is the fear that dependence on Canadian gas could mean insecurity of supply and price. Such fears might, in fact, result in rejection by the United States of the Westcoast Transmission Company's proposal for a gas line from the Peace river fields of northern Alberta and British Columbia down to Vancouver, Seattle, Portland and other communities. At this stage of the federal power commission hearings on the Westcoast application, and the alternative proposal for dedication of the Pacific northwest to gas from more distant [DOT] United States fields, the odds are probably no better than even money that Westcoast can win out.
If this government is strongly desirous of Peace river gas reaching the Pacific it will likely have to give-despite the restrictions of the Electricity and Fluid Exportation Act-the federal power commission a guarantee that the act would not be used to cut off gas supply to the United States northwest for at least twenty times the duration *of the present one-year export permit, and further guarantee that gas costs would not be raised to prohibitive levels by application [DOT]of the act's power to impose an export tax of up to ten cents per thousand cubic feet. When and if the government presents that
Mid-Continent Pipelines Limited guarantee-without which British Columbia might not get a gas pipe line-this government might logically raise in Washington the broad question of a large scale gas exchange treaty.
If we cannot get an exchange of gas, our own self-interest dictates that we try to secure certain United States gas markets in order to ensure gas for our Pacific coast and economic outlets for certain of our gas reserves. Since this would be of obvious value to the United States, too, gas supply to specified United States markets could at least be used as a lever to secure (1) concessions on United States markets for such items as the Canadian petrochemicals, which will be a vast by-product of gas export from Alberta; and (2) United States guarantees of precedence for Canadian consumers on gas pipe lines passing over United States territory between Canadian fields and markets.
If exchange of gas is proved impossible, let us consider the alternative routes for a pipe line between Alberta and eastern Canada. But first there are certain misconceptions in the east and in this house as to what a gas pipe line might achieve. The first misconception is the view that Alberta gas would be cheap gas in the east. That is not so. Gas delivered at the Alberta end of a pipe line would likely cost in the range of seven to ten cents per thousand cubic feet. The eastern home owner served by the line would likely pay 15 to 20 times that wellhead cost. The eastern industrial consumer would likely have to pay 4 to 8 times the wellhead cost.
Of necessity I use a broad range of estimated costs, for these would vary with the *pipe-line route chosen; the nature of direct or indirect subsidies, if such should be provided, the degree of success in building up markets through the years in competition with other fuels, especially industrial markets which would be expected to absorb 70 per cent or more of the pipe line throughout. Every potential consumer, householder or industry, would have to make his own decision to use or not to use gas, based upon its cost in comparison to other fuels, the cost of changeover from one fuel to another, and the comparative convenience of fuels. By any pipe-line route, Alberta gas will not be cheap gas in the east; but it could be cheaper by one route in preference to another.
The second misconception in the east is the view that a pipe line would make gas available to all Ontario and Quebec. Actually a transport pipe line serves only the markets along its route; and supplies of gas to other towns or cities or industries 25, 50, 100 or several hundreds of miles distant

Mid-Continent Pipelines Limited from the main pipe line are dependent upon the economics of the particular branch or lateral lines that would have to be built to serve markets off the main line. For example, markets far larger than any now indicated would have to be available in northern Ontario to justify any branch lines from a main line north of lake Superior. Just as many smaller Alberta communities, some within 25 miles of gas fields or pipe lines, are too distant cost-wise to get natural gas, a far greater number of Ontario and Quebec communities cannot hope to be served with natural gas when a pipe line is built from the west.
The most costly section of a pipe line from Alberta to the east via Canadian territory would be the more than 800 miles in northern Ontario between the Manitoba border and the Sudbury area. The difficult terrain in that range would raise the mileage cost of construction by from 100 to 150 per cent above the cost of construction along the rest of the route. That 800-mile section would be a major contributing factor in making cost of a line over that route far higher than the cost of a line to eastern Canada via the United States. That big extra cost the producer, the consumer and the Canadian economy would have to pay.
What would be the benefit of an allCanadian pipe line north of the great lakes? The market survey made for Trans-Canada Pipe Lines Limited, the first proposer of a line over the all-Canadian route, anticipates that the total requirements of the communities to be served between Saskatchewan and Quebec inclusive would be 86 billion cubic feet the first year of pipe-line operation, building up to 105 billion the fifth year. Of that fifth year total, the survey indicates that only 4-6 billion cubic feet, or just 4-4 per cent of the total, would be the requirement along the costly 800-mile stretch including Port Arthur and Fort William and eight smaller communities between Manitoba and Sudbury which are the only markets contemplated to be served between Manitoba and Sudbury. The population represented is about 2 per cent of the total who could be served by an Alberta to Montreal pipe line.
Unless the government has information not available to the market surveyor or this house concerning very large additional markets for gas north of lake Superior, this question must be raised:	Does the serving
of less than 4-J per cent of the potential market and 2 per cent of the potential consumers justify the expanding of two score or more extra millions of dollars? Such extra cost, we must remember, would have


to be borne by gas producers and their provincial government partners through lower wellhead values; by consumers with particular emphasis on the householder consumer; and probably also by the taxpayers generally through some form of subsidy.
Would not one of the following routes better serve Canada as a whole in view of their lower cost and sounder economies? One, from Alberta across Saskatchewan and Manitoba, swinging south of lake Superior across northern Michigan, re-entering Canada at Sault Ste. Marie, thence to Sudbury and south to Toronto, then branching east to Montreal and Ottawa and west into southern Ontario, serving all communities along the route; or in lieu of that, the same route across western Canada and north Michigan, but branching at Mackinac strait, with a branch swinging east to serve the Sault Ste. Marie and Sudbury areas and the main line swinging south across Michigan to re-enter Canada near Sarnia, thence moving east through southern Ontario to Toronto, Ottawa Montreal and other communities. Or, three, either of these two routes to eastern Canada, coupled with a branch-off to Minneapolis-St. Paul, where a market for 35 to 50 billion cubic feet yearly would be immediately available with an existing utility company, to absorb surplus gas from Alberta during the five years or more that would be required to build up markets in eastern Canada.
Each of these alternatives offers benefits to Canadian consumers greater than would be obtained from a line north of the lakes. This is particularly true for consumers on the prairies and, if the Sarnia route is used, the consumers in southern Ontario, who would be brought nearer, in cost-distance, to the west's gas.
The supply provinces, Alberta and Saskatchewan, would reap the benefits of better wellhead gas prices, aiding their economies directly through improved government revenue from gas sales, and increased incentive for continued large-scale exploration for more oil and gas in the west.
I am not unmindful of the lakehead cities. I trust their potential market would prove sufficient to justify construction of a branch pipe line from any main line that might be built to eastern Canada.
In conclusion, the Alberta conservation board will commence hearings May 11 on applications to move gas westward from that province. It is likely that the hearings will include much evidence on the economic and engineering aspects of all proposed pipe-line routes and markets. The studies by that board will be in line with the policy recently

stated by Premier Manning, a policy with which as an Albertan I fully agree. He said:
In approving the export of surplus gas, the government will adhere to its policy of giving first priority to other Canadian markets if, in the opinion of the conservation board, the economic factors involved are not incompatible with the interests of Alberta producers and the province as a whole.
I trust that this Ottawa government will make it possible for the board of transport commissioners to make a full and complete study of all possible routes for gas, by not binding that board to consideration only of applications for pipe-line construction along routes entirely on Canadian territory.
Between Alberta's conservation board and Canada's transport board our nation has the opportunity to obtain from impartial studies the answers to the vital questions concerning natural gas supply for eastern Canadians and utilization of the west's gas resources in the manner best calculated to serve Canada's interests.
I trust that opportunity will not be lost because of emotional appeals or mere political considerations that could prevent full impartial studies, by tying in advance the hands of the investigators, the board of transport commissioners.


George Alexander Drew: Mr. Chairman, the measure before us now contains an amendment which calls for consideration by the members of the committee at this time. That is the recommendation:
That sub-clause (a) of clause 6 of this bill be amended by deleting the words "or outside" in line 14; by deleting the words "and/or international" in line 19; by deleting the words "the main" and "line or" in line 26, and by inserting after the word "that" in line 26 thereof the word "all".
The effect of this amendment, on being adopted and forwarded, was that the bill now before us would provide for a pipe line entirely within Canada to the east. That is what we were actually considering. I believe it is appropriate that we should bear in mind that this amendment has a considerable effect and that we should have due regard to what is actually before us in that respect.
The question as to whether the company which will be incorporated by this bill, if the bill is passed by the house, or any other corporation would obtain a licence from the board of transport commissioners when the time comes for them to make their application and have it considered, is not actually in issue before us at this time. I think, however, it is appropriate that certain comments be made in regard to this subject when we bear in mind the fact that the bill now before us relates only to a line entirely within Canada.
31, 1953
Mid-Continent Pipelines Limited
The question before us is not whether it is wise for the province of Alberta to permit the export of gas from that province. That is something which is under the control of the government of the province of Alberta. It has been stated by the premier of that province that the Alberta government has decided that it is their intention to permit the export of gas. We are therefore not called upon to argue the merits or otherwise of such a proposal from the point of view of the residents of Alberta. There are those who think that the people of Alberta would be wise to insist that the natural gas produced in that province be entirely used for the residents of that province. Again I emphasize the fact that this subject does not come before us for consideration. The government of Alberta has taken its position in this respect.
The question before us is as to what happens after the gas leaves Alberta. That question does fall within the authority of a tribunal which has been set up for the purpose of considering applications for permission to handle natural gas. As far as we are concerned at the moment, we are dealing with an application for incorporation which contains the provision that the pipe line shall run east from Alberta entirely within the boundaries of Canada.
I realize that in considering this subject it is natural that the point of view should be shaped in some measure by the part of Canada in which we live and also by the experience any of us may have had with regard to matters of this kind. However I think there has been one clearly expressed purpose-and may I say that the purpose has been expressed from both sides of the house-namely that it is the best interests of Canadians which should be considered in dealing with a question of this kind.
Our party has put on record consistently its belief that in the use of natural gas, as in the case of other resources, the legitimate self-interest of Canadians should be the first consideration of the representatives of the people of Canada who meet in the House of Commons. At no time has the assertion of that simple but understandable policy been intended to convey-nor, I suggest, could it properly have conveyed-any demand that there should be no export to the United States of either natural gas or other resources where it was consistent with our legitimate self-interest that this should be done.
I agree that economic factors must be given consideration. It would be folly to deny that cost and the other economic factors related to any operation of this kind should be carefully examined in deciding whether

The Royal Assent
it is wise to have a pipe line of this kind entirely within Canada.
The history of dealings betweeen Canada and the United States is one of friendly exchange of resources where that exchange is to the common advantage of both countries. We have had unhappy experiences; and I have no doubt there have been occasions when the people of the United States as well thought we might have done something more favourable to them. Nevertheless, on the whole the relationship between these two countries has been one that may be regarded with admiration by everyone living here or elsewhere.
Section stands.
Progress reported.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Right Honourable the Deputy Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
And being returned:
Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
An act for the relief of Marguerite Irene Bastien Taschereau.
An act for the relief of William Gordon Quinn.
An act for the relief of Joseph Brennan.
An act for the relief of Henry Collingwood.
An act for the relief of Douglas Malcolm Stephen.
An act for the relief of Mary Lane Taylor.
An act for the relief of Stanley Gordon Fowler.
An act for the relief of Ethel Florence Flack Towne.
An act for the relief of Mary Katherine Randell Clarke.
An act for the relief of Ralph Wellington Goodyear.
An act for the relief of Donalda Gagnon Fontaine.
An act for the relief of Marie Sylvaine Alain Dahlstrom.
An act for the relief of Ruth Schwartz Cohen.
An act for the relief of Annie Mislovitch Cohen.
An act for the relief of Minnie Miki Simon Werkzeig, otherwise known as Minnie Miki Simon Werk.
An act for the relief of Antonio Proietti.
An act for the relief of Ida Hier Blant.
An act for the relief of Hilda Irene Roddis Galbraith.
An act for the relief of Ivy Helen Jean Morton Starke.
An act for the relief of Barney Flegal.
An act for the relief of Marie Rene Emond Walker.
An act for the relief of Edwin George Chafe.
An act for the relief of Phyllis Violet Perlson Wright.
An act for the relief of Margaret Eadie Kerr Britton.

An act for the relief of George Robert Stirling Henry.
An act for the relief of Margaret Elizabeth Thelma Webb Crothers.
An act for the relief of Pauline Liliane Baron Brumby.
An act for the relief of Madeleine Blain Cousineau.
An act for the relief of Angelina Maria Di Battista Gill.
An act for the relief of Charles Snoade Hilder.
An act for the relief of Rolph Julian La France.
An act for the relief of Jack Gold.
An act for the relief of Hazel Margaret MacRury Jordan.
An act for the relief of Anne Agnes Costigan Entwistle.
An act for the relief of Rachel Sturman Spierer.
An act for the relief of Agnes Kathleen Small Finlayson.
An act for the relief of Pearl Irene Balogh Katona.
An act for the relief of Zoe Audrey Birch Butler.
An act for the relief of Bessie Mewhirter Mitchell Cameron.
An act for the relief of Elsie Smith Gray.
An act for the relief of Rita Lowsky Blatt.
An act Heymann.	for	the	relief	of	Anna	ShulemsonAn act Rheaume.	for	the	relief	of	Cecile	Lea Sauve
An act for the relief of George Frederick Shaw.
An act for the relief of John Arthur Dorsay.
An act for the relief of Dorothy Green Wainer.
An act for the relief of Mildred Isabel Lunan Aspell.
An act for the relief of Minnie Martz Kurtzman.
An act for the relief of Elizabeth Smaga Melnitzky.
An act for the relief of Alexander Hillcoat.
An act for the relief of Georgina Gibbons Bastien.
An act for the relief of Alice Martha Sharkey Maclnnes.
An act for the relief of Gittel Gershonowitch Hammer.
An act for the relief of Frances Louise Devenish.
An act for the relief of Marguerite Evelyn Lucy Watts Paterson.
An act for the relief of Joseph Edouard Charles Pichette.
An act for the relief of Cecilia Rachel Baird.
An act for the relief of Verna Kirstine Dam Credico.
An act for the relief of Diane Parent Leblanc.
An act for the relief of Blima Blossom Wendy Weitzman Thompson.
An act for the relief of Joseph Edgar Roger Roland Bisaillon.
An act for the relief of Catherine Lois MacLeod McPhee.
An act for the relief of Dessie Fowler Taylor.
An act for the relief of Florence Trudy Nugent Barnett.
An act for the relief of Gordon Dampierre Ross.
An act for the relief of Mary Rose Anne Rihel Kowalski.
An act for the relief of Walter Critch.
An act for the relief of Edwin George Godden.
An act for the relief of Lottie Mendelman Brand.
An act for the relief of Jacob Titsch.
An act for the relief of Andrew Percy Bell.
An act for the relief of Eileen Doris Martin Martin.
An act for the relief of Annie Moulard Cumming Wright.
An act for the relief of William James Dunn.
An act for the relief of Jean Marion Oickle Joudrey.

An act for the relief of Alena Estella Welch Ball.
An act for the relief of Elizabeth Rogers Guerin.
An act for the relief of Richard Alfred Sutton.
An act for the relief of Doris Edgar Choquette.
An act for the relief of Jessie Hazel Kerr Coolon.
An act for the relief of Laurence Christopher Bell.
An act for the relief of Valorie Leslie Hylda Carson Wallis.
An act for the relief of Jessie Allan Purdie McCulloch.
An act for the relief of Alice Mary Barakett Zion.
An act for the relief of Marcel Clark.
An act for the relief of Sender Mines.
An act for the relief of Robert Joseph Albert Pratte.
An act for the relief of Leonard James Chadwick.
An act for the relief of Merle Minnie Esther Hoffman Nevard.
An act for the relief of Doris Ethel Taylor.
An act for the relief of Gordon Earl Page.
An act for the relief of Yaroslava Glucka Levandosky.
An act for the relief of Edelard Gilbert.
An act for the relief of Celia Tarnofsky Edgar.
An act for the relief of William Plookes.
An act for the relief of Kathleen Ada Styles Labonte.
An act to incorporate The Mercantile Bank of Canada.
An act to amend The Canadian Vessel Construction Assistance Act.
An act respecting The Saint John Bridge and Railway Extension Company.
An act to amend The Canadian Overseas Telecommunication Corporation Act.
An act to incorporate The Apostolic Trustees of the Friars Minor or Franciscans of Western Canada.
An act to incorporate The Evangelical Lutheran Synod of Western Canada.
An act respecting The Detroit and Windsor Subway Company.
An act to incorporate Canadian Reinsurance Company.
An act respecting The Apostolic Trustees of the Friars Minor or Franciscans.
An act to incorporate The Callow Veterans' and Invalids' Welfare League.
An act respecting a certain patent and patent application of Florence F. Loudon.
An act to amend The Merchant Seamen Compensation Act.
An act to protect the Coastal Fisheries.
An act to amend The Statistics Act.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1954.
An act for granting to Her Majesty certain sums of money for the public service of the financial year ending the 31st March, 1953.
Mr. Speaker:: At eight o'clock the house will resume the business which was interrupted at five o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock. EXCISE TAX ACT
The house resumed consideration of the motion of Mr. Abbott for the second reading
Excise Tax Act
of Bill No. 225, to amend the Excise Tax Act, and the amendment thereto of Mr. Drew.
(Translation):
Léon Balcer: Mr. Speaker, I wish to conclude the remarks I was making this afternoon on this very important matter of the sales tax imposed on municipalities.
Our municipalities are faced with enormous problems. In most cities and towns municipalities are requested to increase the various services and I think it is absolutely illogical for the federal government to impose that tax on purchases paid for out of funds derived from property owners.
All of which means that our taxation system in Canada should be revised, so as to put an end to the discussion that has been going on for several years regarding the delimitation of the various taxation powers and give back to our three levels of government the sources of revenue they need for their administration. In my opinion the time is ripe, more than ever before, for the federal government to abandon its centralizing policy and convene, as soon as possible, a federal-provincial conference where the whole taxation problem could be settled once and for all from the federal, provincial and municipal aspects, so as to alleviate the burden of small property owners and encourage Canadians, and more particularly our young people, to become home owners and thus ensure the prosperity of Canada, a country where real estate is one of the mainstays.


Jean Lesage: Mr. Speaker, I want to say a few words only on a particular point. The hon. member for Three Rivers (Mr. Balcer) stated this afternoon that the municipalities of the province of Quebec are the most seriously affected by the federal sales tax on their purchases.
The hon. member for Three Rivers gave no reason to justify such a statement. However, Mr. Speaker, I wish to point out to this house one reason that I found myself, and it is that, in the province of Quebec, both municipalities and school boards must pay the provincial sales tax.
As all the hon. members know, I am sure, the people of Quebec pay a provincial sales tax. Well then, neither the municipalities nor the school boards of the province of Quebec are exempted from this provincial sales tax on their purchases. If the hon. member for Three Rivers is right when he says that it is not logical for the federal government to

Excise Tax Act
impose a sales tax on purchases made bymunicipalities, it is much more illogical for a mother to impose a sales tax on her own children.
(Text):


Mr. Speaker:: Before putting the question I will hear any hon. members who would like to speak to the point of order.
I might say that this afternoon I raised the point of order because, in the first place, I questioned whether the amendment was relevant to the bill. There is also another point that strikes me, and that is whether the amendment does not attach conditions to the passing of second reading of the bill.
The amendment reads:
That Bill No. 225 be not now read the second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of excise taxes . . .
et cetera. It occurs to me that either the amendment is a negative of the motion for second reading and sets forth a different proposal not contemplated in the bill or it attaches conditions to the second reading of the bill. I am prepared to make my ruling or to hear hon. members if they would like to speak to the question of whether or not the motion is in order.
In my opinion the amendment is out of order for the reason that it is either a negative of the motion for the second reading of the bill and sets forth a different proposal not contemplated in the bill, or it approves the second reading of the bill with certain conditions attached. The latter part is without doubt irregular and, for the reasons which I have mentioned, I rule the amendment out of order.


Mr. Macdonnell (Greenwood):: Mr. Speaker, as I understand it one of your reasons, if not the chief reason, for ruling the amendment out of order is the last part of the amendment. I propose now to move an amendment which will be free from that difficulty and which I hope Your Honour will find satisfactory. I move, seconded by the hon. member for Vancouver-Quadra (Mr. Green):
That Bill No. 225 be not now read the second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of excise taxes, including the 10 per cent sales tax. on all their purchases of machinery and other equipment.
I want to make a few brief comments, Mr. Speaker. I noted particularly that the Minister of Finance (Mr. Abbott) said he did not think it was desirable for the federal treasury
[Mr. Lesage.l
to take direct action in respect of the financial position of the municipalities. I think I understand the point he has in mind. But the point he is discussing there is the taking of action in the sense of meddling or interfering with the finances of the municipality. This seems to me to be an entirely different matter. This proposal is merely to relieve them. It is not a question of interfering, except the kind of interference that we all like very much when it happens.
One thing the Leader of the Opposition (Mr. Drew) said this afternoon which I think it relevant to repeat, and which I should like to stress for a moment, is the position with regard to education. The federal government has dealt generously with education at the top level, and has given great relief to many of the universities who are in great need of it. But at the lower end of the scale we all know the accumulating difficulties which are facing school boards, and the tremendous rise in the cost of education.
Whether or not we should make education such an expensive thing I shall not pause to discuss now. We have done it. It is a tremendous problem for the municipalities, and I am thinking particularly of the school boards. For that reason it seems to me that the relief which is here proposed is something which would be of great benefit to the community. We, of course, in this party have advocated a general lowering of the sales tax for reasons which I do not need to repeat. I suggest that this is a particular area in which relief might be given which would pay off thirty, sixty or one hundredfold in respect of the assistance which would be given to hard-pressed municipalities and perhaps to still harder-pressed school boards.


Mr. Green:: When I spoke on the budget
debate, Mr. Speaker, I pointed out to the minister and the house that in the building of the Granville street bridge the city of Vancouver is paying to the dominion government between $500,000 and $600,000 by way of sales tax on the materials going into that bridge. One has only to compare that fact with the fact that if an individual were building a $16-5 million office building in Vancouver most of the material going into that building would be free of sales tax. That is because of the exemption contained in that portion of schedule III to the act which concerns the group of materials which are described as "certain building materials". One of those items is structural steel to be used exclusively for the framework and support of buildings. This exemption would apply, therefore, in the case of a building but does not apply in the case of structural steel used for a bridge.

I do not know how that situation can best be remedied, whether it should be done by a change in the schedule to the act or whether there should be some exemption for municipalities written into the body of the Excise Tax Act. However, I wish to point out to the minister that that is a very unfair situation.
The money which is being paid by the city in sales tax on the materials used in the bridge is raised largely by levies on the homes of the residents in that city. It is sufficiently onerous for them to have to build the bridge without adding another $500,000 or $600,000 by way of sales tax.
I realize that the situation is a difficult one. It is not as simple as it looks on the surface, but I do urge upon the minister that some steps be taken at this session to relieve the municipalities from the need of paying sales tax on such expenditures as for the materials for a bridge or public works within their own boundaries. I do not think a very good case could be made out for making home owners pay a sales tax under those conditions.


Mr. Speaker:: The amendment which has been moved by the hon. member for Greenwood (Mr. Macdonnell) is, as he has said, in one respect different from the amendment which was previously moved. I ruled that the previous amendment was out of order, and one of the reasons for so doing was that the latter part of the amendment which has been omitted from the present amendment was not in accordance with our rules. In making my ruling I mentioned other reasons which also apply to this amendment. The amendment is either a negative of the motion for second reading and the substitution of a proposal not contemplated in the bill or it attaches a condition to the second reading of the bill. The condition is that further consideration be given to another matter which would have to come into the house by way of legislation. If it could come into the house by way of amendment to the bill in committee, then obviously the amendment should take place in committee and not in the house.
At page 498 of Beauchesne's third edition there is a ruling by Mr. Speaker Black with respect to a similar motion. At that time a bill was before the house for second reading, and the amendment was that all the words after "that" in the main motion be struck out and the following substituted therefor, that in the opinion of this house further consideration should be given to a certain matter referred to in the amendment. Mr. Speaker Black ruled the amendment out of order for
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several reasons, one of which was that the amendment attached conditions to the second reading of the bill in that it called for further consideration of the matter set forth in the amendment before the bill could be given second reading.
Toward the end of citation 662 of Beauchesne's third edition, I find that such an amendment must not attach a condition to the second reading of the bill.
For the reasons I have given I must rule that this amendment also is out of order.


George Alexander Drew: Are you not prepared to hear any comment on this before making a ruling?


Mr. Speaker:: I did not know that any hon. members wanted to comment upon the question of whether or not the amendment was in order. I asked for views on the previous amendment and no one responded, but I shall be glad to hear the Leader of the Opposition if he desires to speak.


George Alexander Drew: My point, Mr. Speaker, relates to the fact that there was a discussion in regard to the original amendment which was proposed. The present amendment is different in the fact that there is no extraneous comment other than the direct request that the bill be not now read a second time, but that consideration be given to legislation which would add to those exemptions already included the exemption in regard to excise taxes, including the sales tax.
That is the effect of the amendment as now proposed. I would point out that this is in fact the only form and the only time that presents itself to make a proposal of this nature. We now have before us the Excise Tax Act. Undoubtedly to achieve the result that is desired it would be necessary for the government to consider the form in which the amendments would be made. The intention of such a motion as this is to give the government the opportunity to consider a proposal that certain changes be made in the act to widen the exemptions which are provided.
As I mentioned in discussing the earlier amendment before us, this act does set out in schedule III a number of exemptions. Our contention is that these exemptions should be widened to include the exemptions I have mentioned. This cannot be achieved simply by moving that these particular exemptions be added to the exemptions included in schedule III, because it would in fact require a reconsideration of the form of the act and additional provisions which would deal with this additional form of exemption. Nevertheless the principle is precisely the same as that now contained in the act.

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Mr. Speaker:: Could the amendment not be made in committee?


George Alexander Drew: I am glad the minister recognizes that.


George Alexander Drew: I do not believe that it is possible to deal with an amendment of this kind satisfactorily in committee. Perhaps Your Honour will recall this very subject came up for discussion on March 27, 1950, at a time when a motion was moved in connection with the Agricultural Prices Support Act, and the following motion was presented by way of amendment:
That Bill No. 16 be not now read a second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of a permanent agricultural products export act which would provide for the setting up of an export board, to fill present contracts, negotiate future contracts, and develop new markets abroad for surplus agricultural products.
On that occasion the very same question was raised as to whether this could not be dealt with in committee, but it was considered at that time that the more satisfactory way was to have a reconsideration of the measure as a whole; because while the principle was similar to that already contained in the bill before the house, it would require a general reconsideration in order to produce a satisfactory result. On that occasion Your Honour upheld the contention that the motion should stand, and the amendment was in fact then put to a vote in the house in the form in which I have just read it.
I could read a number of other motions of a similar kind and in similar form which have recognized that it is essential that there be reconsideration of an act where the principle is similar, but where undoubtedly there would be a number of amendments in which obviously the government's discretion must guide the form those amendments would take.


Douglas Charles Abbott: Mr. Speaker, if I may add a word; as my hon. friend has pointed out, the purpose of his amendment is that the government should give consideration to amending this act to provide that exemption should be given to municipalities from sales tax imposed on them. I indicated this afternoon that the government had given careful consideration to that question and had decided that it could not make such a recommendation to the house.
As my hon. friend has quite properly pointed out, such a recommendation could only be made by a member of the government, since it affects the revenue. The hon. gentleman and his supporters have had the opportunity to demonstrate that they are the champions of the municipalities at any rate for-


Douglas Charles Abbott: -at any rate for the purpose of this debate, and I suggest for the reasons that Your Honour has already given that the motion is out of order.


Mr. Speaker:: The Header of the Opposition has referred to a previous ruling that I made. I think at that time, as he stated, it was proposed to introduce a new bill rather than an amendment to the present act. The present amendment does not propose that the bill before the house should take the form of a new act; it proposes that the bill be not now read a second time, but that the government should give consideration to another matter set forth in the amendment. In my opinion that is equivalent to a negative or to attaching a condition to the second reading of the bill, and for that reason and for the reasons I stated previously I cannot allow the amendment to stand, but must rule it out of order.


George Alexander Drew: Mr. Speaker, in view of the previous ruling, and in view of my understanding of what that ruling was, with deference I feel I cannot agree to accept this ruling and I therefore appeal from it.


Mr. Speaker:: Those in favour of sustaining the Speaker's ruling will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those against it will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.
And more than five members having risen:


Mr. Speaker:: Call in the members.
And the members having been called in:
Mr. Speaker put the question as follows:
On the motion tor second reading of the bill respecting the excise tax, Mr. Macdonnell (Greenwood) moved an amendment which X ruled out of order on the grounds that it was a negative with an alternative proposal or that the amendment attached conditions to the motion for second reading or that it anticipated the committee stage.
From my ruling Mr. Drew and others appealed.


Harry Oliver White: Mr. Speaker, I was paired with the hon. member for Middlesex West (Mr. McCubbin). Had I voted, I would have voted against your ruling.


Mr. Gardiner:: Mr. Speaker, I was paired with the hon. member for Souris (Mr. Ross). Had I voted, I would have voted in favour of your ruling.


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


Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, we have been considering this afternoon the toll taken of the hard-pressed municipalities by the federal government in the form of sales and excise taxes. We have been considering the extent to which these exactions impose upon the municipalities burdens which it is grossly unfair that the federal government should impose. We have been considering the heavy and growing burdens that the municipalities have been called upon to bear. Indeed the weight of responsibility that has been cast upon the municipalities has been literally growing by leaps and bounds as social services have multiplied, as educational facilities have been extended, as housing burdens have been passed on to an increasingly greater degree to municipal governments.
The total incidence of these burdens has resulted in a situation where the municipalities are today literally overwhelmed. At the same time they have been called upon, apart from such assistance as has been afforded to them by the provincial governments, to function with the same limited tax base that was given to them 85 years ago, when their burdens were infinitely less than they are today. The time has long passed when there should be a fundamental review of the whole question of tax burdens and administrative responsibilities as between the different levels of government in this country.
We of the opposition have today properly pointed out how unfair it is for the federal government, when virtually asserting that with only one slight modification it shall have full exemption from taxation by the provinces and the municipalities on federal property, to impose burdens upon the municipalities in the form of taxation. If this taxation were imposed upon the municipalities by means of a direct levy, open and visible, then many people in this country, who may not be as fully aware of this problem as are those who bear responsibilities

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for municipal government, would indeed be shocked. Yet just as onerous a burden is being cast upon the municipalities by the federal government today in this indirect and hidden form.
This form of indirect imposition is all the more onerous because it is levied not on the end consumer but upon the manufacturer or producer. In previous debates we have been shown how this tax levied at the manufacturing or producing level goes on attracting to itself mark-ups, and mark-ups on mark-ups, and mark-ups on mark-ups on mark-ups, as it passes from the hands of the manufacturer to the wholesaler, to the jobber, to the retailer, and finally to the consumer.
This 10 per cent sales tax levy is costing the municipalities not 10 per cent but about 20 per cent on an average. The federal government derives a benefit of 10 per cent and the rest is distributed along the line among those through whose hands the goods have passed before they eventually reach the hands of the municipalities. This form of taxation upon the municipalities is in that respect much more burdensome and more reprehensible than would be a direct tax levied upon the municipalities by the federal government.
Among all the anomalies, among all the injustices in the federal tax structure today that are simply crying out for reform there is none more pressing than the one we have been discussing here today of this iniquitous imposition by the federal government upon the municipalities.
There is one other form of imposition by way of excise and sales taxes that the federal government is levying today which I think ought to be commented upon at this stage of the proceedings. I refer to the extent to which social welfare agencies, which are doing such admirable work in all parts of this country, are being taxed by the federal government through these sales and excise taxes. This has been the subject matter of representations to the federal government, but apparently they have not been effective in winning support from the Minister of Finance (Mr. Abbott) or his associates.
Three years ago you will recall that this house did legislate limited relief for certain types of institutions of a charitable nature. By. chapter 15, section 6 of the statutes of 1950 a new section 105A was added to the Excise Tax Act. The effect of that useful and commendable amendment is that institutions of the nature described in the section were permitted, where they purchased goods for their own use and not for resale, to make

application to the minister for the refund of an amount equal to the tax paid. The class of institution which was permitted to enjoy this right was described in the following words:
(a)	a bona fide public institution whose principal purpose is to provide permanent or semi-permanent shelter and care for children or aged, infirm or incapacitated persons who reside in the institution; and
(b)	in receipt annually of aid from the government of Canada or a province for the maintenance of persons specified in paragraph (a).
It will be seen that in the amendment of 1950 parliament gave recognition, although limited, to the principle that institutions engaged in social welfare work coming within certain definitions should not be subject to the payment of federal excise or sales taxes, and that where they purchased goods subject to those taxes and paid the tax, they should be entitled to make application to the minister for a refund of an amount equivalent to the tax paid. In my submission that limited recognition of principle should be extended.
There are many welfare agencies in this country whose work on behalf of the people is simply invaluable but which do not qualify within this definition of institutions. They do not give institutional care of the kind mentioned in section 105A. Indeed, many of the social welfare agencies which are members of community chests in all our cities and larger communities in Canada are without any status under this section and are being subjected to federal taxation. It would shock the conscience of many people, Mr. Speaker, were they aware of this fact, to know that the federal government is taxing charitable organizations engaged in social welfare work. You go to the average citizen in the street and tell him that the federal government is imposing federal taxes upon social welfare agencies engaged in purely altruistic work and you will, in my belief, shock his conscience. The fact of the matter is that this is going on year after year right under our noses; and notwithstanding that representations based upon very solid considerations have been submitted to the government, the government so far has turned a deaf ear.
May I remind the house that these groups which do not enjoy any of this benefit today are very large and important ones. Take all the welfare agencies, for instance, that are engaged in the prevention of individual and family breakdowns, that are engaged in work that saves the public treasury at all levels of government a great deal of money. Among the various classes of welfare agencies that do not qualify under the definition are

many children's aid societies, family welfare bureaux, visiting nurse associations, community chests and welfare councils.
How extensive is the problem, Mr. Speaker? The Canadian welfare council recently conducted an inquiry, and they obtained returns from community chest and welfare associations throughout the country. Based upon that investigation they came to the conclusion that in the year past these welfare agencies purchased goods which were subject to sales tax-I am eliminating entirely all goods that were purchased free of sales tax-to the value of $2,149,000. They also estimated that the sales tax cost them approximately $506,000; and here we have to take account of the fact that mark-ups were included on many of these goods as they passed from hand to hand before they eventually reached the consumer, in this case the welfare agencies.
Perhaps it is just a little unfortunate that this tax does not take the form of a direct, open, visible levy by the federal government on these welfare agencies. Then the public would become aware of the iniquity of the federal imposition of taxes upon social welfare agencies. But again the problem is in the same position entirely as the federal imposition of tax upon municipalities. It is hidden, it is indirect, and the public is not aware of the extent or nature, or indeed of the fact, of these impositions.
I appreciate that there are administrative difficulties involved. I am not saying the problem can be reduced to such simple proportions that, by the mere changing of a word or two in the act, the end result which is so desirable can be brought about. But I am satisfied that if the intelligence and ingenuity of the government and its advisers were applied to the problem, with a recognition of the fact that it is fundamentally wrong that the federal government should tax welfare agencies, the problem could be resolved in a very short space of time. I appeal to the Minister of Finance (Mr. Abbott). I know the problem is not new to him. I know that mine is by no means the first appeal that has been made to him.


Douglas Charles Abbott: It was being made back in Mr. Bennett's day.


Donald Methuen Fleming: I do not recall when the first appeal was made in the house, but I urge the minister to undertake a study of the problem with a much more favourable approach to it than, he has demonstrated in the past. I am informed that he has had extensive briefs on the subject, and I have no doubt that he has studied them. I have no doubt also that he has been concerned about what
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may be regarded as certain administrative problems that this question involves.


Douglas Charles Abbott: That is a euphemistic way of putting it-yes.


Donald Methuen Fleming: But I am satisfied that if the minister will apply to this problem the same ingenuity that he has applied to some other questions, and will follow the methods by which he has endeavoured to treat certain other problems, this problem is by no means impossible of solution. We have had a recognition of the principle in section 105A. To that extent the federal government and parliament have recognized that it is fundamentally wrong-I go further and say that it is iniquitous-that the federal government should be taxing social welfare agencies engaged in purely philanthropic work. I urge with all the earnestness at my command that the government take this problem in hand, and that without further delay the Minister of Finance undertake the redress of a situation which, in my humble opinion, if brought home to the man in the street would shock his conscience to its foundations.


Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, I should like to say a word with respect to this matter because, while the hon. member for Winnipeg North Centre (Mr. Knowles) expressed our view very well and very forcibly and made a plea to the minister for the removal of this tax from municipalities and social welfare agencies, I want to say something about the tax itself. As has already been said, when the 10 per cent tax, 2 per cent of which we of course understand now goes for social security, reaches the ultimate consumer it has been pyramided to 15 per cent, 16 per cent or even-


Douglas Charles Abbott: I do not think experience justifies that, but it is a matter of assertion on both sides. My information is that is not the case.


Major James William Coldwell: Suppose we leave it that the tax is pyramided, without mentioning any figures.


Douglas Charles Abbott: I am not even prepared to concede that, but my hon. friend can make his argument.


Major James William Coldwell: The minister will not disagree with that, so we will leave out the figures. In that sense it is a tax imposed by the federal government which, when it is finally paid, involves an imposition greater than the tax, whatever the extent may be; and I am not going to argue about that.


Douglas Charles Abbott: In a highly competitive business it is pretty modest.


Major James William Coldwell: To that extent I say the tax is bad in any event.

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Douglas Charles Abbott: That is true of corporate income tax, too; any indirect tax; customs duties.


Donald Methuen Fleming: If levied at the manufacturer's level.


Douglas Charles Abbott: That is where the corporation tax is levied in most cases.


Major James William Coldwell: As a rule an indirect tax of this description is pyramided. If it is the corporation tax and the corporation levies it upon the public then by the time the public pays it, it is probably more than the tax imposed by the government. There is no disagreement between the minister and ourselves that a tax of this description, when paid by the consumer, is usually higher than the amount imposed by the government.


Douglas Charles Abbott: Not necessarily.


Major James William Coldwell: I said "usually". I qualified it. I said "usually" and the minister says "not necessarily". I think we mean the same thing in that respect. What I say is that when this was first imposed the public of Canada regarded it as a tax that was not a good tax. Indeed, when my hon. friends in the Liberal party left office in 1930, as I remember it there was a 1 per cent sales tax. Then the Progressive Conservatives came into power.


Stanley Howard Knowles: The Liberal Conservatives.


Major James William Coldwell: Well, the Conservatives came into power and they increased the tax to 4 per cent.


James MacKerras Macdonnell: Oh?


Major James William Coldwell: And what did the Liberal opposition say of it at that time?


Mr. Fraser:: They raised Cain.


Major James William Coldwell: I did not say that, but I think that is a very adequate way of putting it.


Donald Methuen Fleming: Mr. King said it was
"iniquitous".


Major James William Coldwell: The great Canadian who subsequently became minister of finance, Hon. J. L. Ralston, opposed it strenuously. On June 4, 1931, speaking in this house and protesting the increase from 1 per cent to 4 per cent, Mr. Ralston said this:
It is the ordinary, everyday consumers, the men and women who are hard put to make ends meet-
That was at that time, of course.

men who are out of work, who are now called upon to pay the extra amount in connection with the sales tax.
They are the ones who are the hardest hit. There were many out of work at that time and, of course, there are some people out of work now. There are people living on old age pensions and there are people who are

maintaining homes on small wages and incomes. The sales tax reaches right into the homes of our people. It applies on articles of clothing, furniture, and a long list that I am not going to put on the record because it has been put on the record before; but there is a long list of essential commodities of life which are subject to this sales tax. As I say, there was never a truer indictment of this tax than was made on June 4, 1931, by the Hon. J. L. Ralston when he was speaking on behalf of the Liberal party in this house.
Then I remember the election of 1935; I was a candidate, and I was elected at that time. I remember that the Liberal candidates across the country paid particular attention to the sales tax. I remember too a broadcast made by the leader of the opposition of the day in which he criticized the sales tax. We thought, although we were never quite sure what the then leader of the Liberal party meant when he spoke, that if they were elected they were going to do away with that sales tax. Instead of that they raised it to 6 per cent; and then it was raised to 8 per cent.


Douglas Charles Abbott: It was raised to 6 per cent by the Tories.


Major James William Coldwell: Yes, shortly before they went out of office; and raised to 8 per cent by the Liberals.


Douglas Charles Abbott: And it stood there for 15 years


Major James William Coldwell: It stood there for years until you increased it to 10 per cent.


Douglas Charles Abbott: For social security.


Major James William Coldwell: Of course 2 per cent is taken now for social security.


Douglas Charles Abbott: That is right.


Major James William Coldwell: For whatever purpose the tax is used, it is not a good tax. It is a regressive tax.
I personally believe that the sales tax is one of the poorest forms of taxation that we have. It is a hidden tax which people do not know they are paying; and a tax which is levied on many of the essential commodities of life at a time when the cost of living is high. It is oppressive on many families and on pensioners with small incomes. This tax takes from them a very great deal in their contributions to Canada.
It might be said that everyone should pay taxes. Well, I will not disagree with that statement except to say that if people pay taxes they should at least know they are paying them and know what they are paying in the form of taxation. Therefore I want to-

support what my hon. friend from Winnipeg North Centre (Mr. Knowles) had to say on our behalf this afternoon, and to appeal to the minister to consider the representations that have been made (a) to remove the tax from municipalities and (b) to remove the tax from these social and welfare organizations.
As far as municipalities are concerned today their burdens are heavy, and one of the great burdens, of course, is the burden of education. The government refuses to make grants to the provinces for the purpose of education, and I think an attempt at least should be made to relieve the burden on municipalities in connection with this tax.
Mr. Speaker, I just want to make that appeal to the minister for a reconsideration of the proposals he has made to this house in this regard.


Joseph William Noseworthy: Mr. Speaker, I want to support those who have been urging the exemption of municipalities from the sales tax on municipal purchases. I am not as sure as some of the members are that the minister will not listen to this appeal. In his budget the minister has shown some interest in the municipalities. In his revision of the income tax he has at least brought the municipalities in line with provincial governments and with the federal government in the matter of elected representatives and has made provision whereby their expenses may be deducted for income tax purposes. That would seem to indicate that the minister is showing some concern for the municipalities, and I think it is not an impossibility that even at this hour the minister may consider the justness of the appeal that has been made at the present time.
The minister has been quite concerned over the question of double taxation for corporations. I wonder if he has taken into consideration the extent to which this sales tax, levied upon municipal purchases, is a double tax in so far as property taxpayers within the municipality are concerned. The sales tax is collected on municipal purchases, and the home owners are the people who pay municipal taxes. They are also the people who pay these indirect taxes, just as every other Canadian pays them.
In addition to the sales tax which the ordinary home owner in the city pays together with every other Canadian citizen, he pays an extra sales tax when he has to support the municipal government, because the municipal government has to raise money with which to reimburse the federal government for the sales tax. There is a phase of double taxation.
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Douglas Charles Abbott: It is not double taxation at all; it is just the opposite.


Joseph William Noseworthy: It is just as clear a case of double taxation as it is in the case of corporations, with which the minister is very much concerned. I know the minister does not see it that way; but the home owner in the city, who bears municipal taxes, pays his ordinary sales taxes to the federal government the same as the rest of us do. In addition he pays, through his real estate tax and through taxes on his home, an additional sales tax to the government because the municipality has to pay taxes on its municipal purchases.
There is another point I would like to call to the minister's attention. While our municipalities are creatures of the province, and while the minister may say that it is the business of the provincial governments to bring relief to the municipalities, the cost of municipal government today is in no small measure due to federal government policies. Municipal taxes have increased within recent years because of inflation, and inflation is the direct result of the policy pursued by this government. The government could, had it desired, have checked inflation after the war just as it checked inflation during the war years. It chose to let inflation run, probably not wild but wild to some extent at least. It was the government's deliberate policy to take off all controls, so the government must bear some responsibility for inflation which has brought an extra burden to bear upon the home owners who pay taxes within the municipalities.
Then the increased industrialization, from which the federal government has obtained great benefit and for which the federal government takes credit, has affected the urban municipalities, and particularly the urban population. Within the ten years since the previous census was taken the urban population increased about 24 per cent. This influx is due directly to industrialization, for which as I said the government takes great credit and from which the government derives great benefit by way of taxes. This industrialization has thrown an extra burden upon the municipalities. As a result also of the government's immigration policy there has been a further influx of population into our urban centres. The government brings thousands of people into this country, presumably as agricultural workers, and they are supposed to stay on the farms. Before they are in this country more than a few months we find them back in the cities. I say that on each of these counts the federal government should, in my opinion, assume some responsibility for the extra

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burden which in recent years has been thrust upon the municipalities.
It is true that the exemption of purchases by municipalities from the sales tax will reduce federal revenues. It should be much easier, though, for the federal government to make up the difference than it is for the municipalities to bear the extra burden which inflation, and in the case of urban centres immigration, has thrown upon them.
Today we have a serious housing situation in the urban centres. One of the greatest difficulties confronted in the building of homes is that people cannot afford to build even moderately priced homes because of the increased taxation which education by itself will throw upon the municipality. This government is unwilling to bear any share of the cost of education at the elementary or secondary school level. Here is an opportunity, by following the precedent the minister set in the matter of elected employees of the municipalities and their income, for the government to bring some relief to the municipalities by exempting them from these taxes.
I am quite sure that the Canadian people as a whole, even though they might be called upon to bear the same amount of over-all taxes were such exemptions granted, would rather see the federal government grant those exemptions and make up the resultant loss in revenue by other means at the disposal of the federal government. They do not wish to continue to impose this burden upon the home owners of this country.


Mr. F. D. Shaw (Red Deer):: Mr. Speaker, my colleagues and I have, upon many occasions, registered our opposition to hidden taxes. We have had very definite reasons for doing that, and I need not take very long in order to recount some of those reasons.
In the first place we have condemned hidden taxes, the sales tax and excise tax, inasmuch as they do not in any sense bear a relationship to ability to pay. The poorest person in the land finds the cost of many of his essentials inflated purely as a consequence of hidden taxes. We have condemned these taxes because of what was so well stated by the hon. member for Rosetown-Biggar (Mr. Coldwell), namely that you find yourself paying taxes upon taxes-in my opinion a bad principle, a dangerous procedure. We have condemned these taxes because of the fact that they are an extremely important factor in causing inflation, in causing prices even today to remain at extremely high levels. Because of 
these hidden taxes, many of the things which should properly be in the category of necessities have now become luxuries. In fact it .was only a short while ago that I read this. The question was asked, what is a luxury? The answer was, a luxury is a necessity plus Abbott's taxes. I think that in some respects there is a lot of truth to that assertion.
I was rather astounded to read only today that in 1952 the wages paid in the automobile industry approximated $131 million, but that sales and excise taxes exceeded that amount by almost $6 [DOT] 5 million. To me that was a most astonishing revelation, provided, of course, that the figures are correct; and I have no reason for assuming that they are not. In other words when people talk so glibly about high wages being such an important part of the high cost of motor vehicles, they should bear in mind that approximately $137 million in taxes was taken out of that industry or charged to the purchasers of motor vehicles in the year 1952. There is one matter about which I desire further information. I understand it is customary for the motor manufacturers to have suppliers of parts for these vehicles. Are sales and excise taxes paid on the parts that go into the automobile, and then is sales tax imposed upon the final product? In that case it would mean the imposition of a double sales tax.
I think I know, Mr. Speaker, why certain governments cling so tenaciously to that hidden tax. They are less likely to be blamed for what they are actually doing. All too frequently a purchaser will blame the retailer for the high price which is made up in a substantial part of hidden taxes, or he will blame the wholesaler or the manufacturer and say that they are responsible for the higher prices. Governments resist removing these hidden taxes.
For these and other reasons we again take very strong exception to these hidden taxes. When speaking in the house on March 2, I believe it was, I raised the question of the taxes which are imposed upon municipal purchases. It is rather an interesting thing, Mr. Speaker. There was a time when the opposition of the Minister of Finance to making this concession was the necessity for revenue. That argument was laboured, and possibly at the time it was laboured it was a rather difficult one to counter by one's argument then. Of course that argument has lost much of its validity and we are now faced with the argument that it would be extremely difficult to administer. It has been pointed out, for example, that in the United States it is being done. Concessions are made to the states by the national government as far as state purchases are concerned. There

has been no insurmountable obstacle facing them as far as administration is concerned.
Now that argument has become less valid, so the minister labours the fact that he does not believe we should reach down and deal with creatures of the provincial governments. They may be creatures of the provincial governments but they are also definitely victims of the federal government, because after all federal government policy has its repercussions even in the municipalities.
One need not labour the problems with which the municipalities are confronted. We recognize fully that right across this country the provincial governments have been going farther and farther in their attempts to relieve the burden borne by the municipalities, and they have been doing a good deal in many instances in helping to remove that burden. But certainly one of the most effective ways of helping them through their difficulties would be by the federal government foing for the municipal governments what they now do for the provincial governments. As I pointed out before, the municipal government is a legislative body exercising authority granted to it under the municipal act, and n its sphere carrying on a public service n the same way that the provincial government carries it on in the wider sphere, and n the same way that the federal government carries on its responsibilities within its iphere of jurisdiction.
One could take more time, but my purpose s not just to take time. On behalf of my colleagues I again wish to register strenuous Ejection to these hidden taxes. Certain >f them should be removed completely md others should be reduced. We also go >n record as urging the federal government o give careful consideration to these requests if the municipal governments that the sales md excise taxes be removed on the commodities they purchase.


Mr, Angus Maclnnis (Vancouver East):: vill not detain the house very long, and I im not going to attack the minister, either.
rarely speak on taxation in this house; but irst of all I do not feel that people in my lartioular circumstances are overtaxed, and have never felt that they were. I also ealize that a taxation policy that will satisfy very one is a pretty difficult thing to achieve.
did say something on this subject when I poke in the budget debate. On that occasion made a slight mistake because I said I hought that in the aggregate this tax was iot a very large factor in the total financial et-up of the municipalities. Since then I ave had evidence put before me from my wn city of Vancouver to indicate that I was ot quite right when I said that. All I wish 68108-221
Excise Tax Act
to say is that to me it does not seem right that one level of government should impose taxes that bear heavily upon another level of government.
If there are any of our governments, municipal, provincial or federal, that are having difficulties in financing the needs of the particular areas they govern it is the municipal governments. The proof of that fact is that while the federal government for the past eight or nine years has reduced our national debt every year, hardly a municipal government in Canada has not gone still further in debt during that same period. They cannot continue going into debt. There will come a time when they will not be able to meet their obligations, and then nothing will be left to be done but for the provinces to set up commissions, as they did in many municipalities during the depression, and try to carry on in that way.
Therefore without blaming the minister at all for many of the things that have happened, for inflation and all that sort of thing, over which this government may have some control but which in some respects at least is a part of the world-wide condition over which no government has complete control, I suggest to the minister that he reconsider this matter. I would be one of the first to agree that there are many things this government -could have done but did not do, but I do not think this is the time to mention them. However, I do tell the Minister of Finance that at the present time the municipal governments need some sort of relief, and anything the federal government can do-and this is on-e thing they -could do, even though it may be a little difficult to administer-would be of considerable help.
Every new settler that moves into a municipal area -creates a burden on that area far greater than the amount of taxes that family contributes to the municipal exchequer, and the cities and municipalities have been growing exceedingly rapidly during the last few years. It is one of the results of our prosperity, but that prosperity does not extend to the finances of the municipalities. I repeat, if anyone wa-nts to know which of ou-r governments is finding difficulty in financing all he has to do is to note that during the past eight or nine years the federal government has been able to reduce its debt while at the same time the municipal -governments in Canada have had their debts increased. Something will have to be done and done -quickly for these municipalities.
Some things -could be done for them here, and I urge the Minister of Finance not to be too definite in his refusal to do something,

Excise Tax Act
because sooner or later he will have to change his mind.


Douglas Charles Abbott: 


Mr.   Speaker-Mr. Deputy Speaker@: If the minister speaks now he will close the debate.


Douglas Charles Abbott: Mr. Speaker, I want to take only a very few minutes. This afternoon I gave, rather too briefly perhaps, the reasons which actuated the government in feeling that it could not recommend for the municipalities an exemption from the imposition of the sales tax. My friend the hon. member for York South (Mr. Noseworthy) suggested this evening that this was in fact imposing a double tax. Of course that is not the case.
I tried to point out this afternoon that I could see no reason why, in a tax which is payable by individuals on the purchase of commodities, they should be relieved of that tax because they are purchased through a corporation, in this case a municipal corporation. In fact, if municipalities were exempt from the payment of this sales tax it would be necessary to make up the revenue somewhere else, and it would have to be done by increasing some tax or increasing the rate of tax and imposing it on people who are in fact the same people because everybody resides in a municipality. I say that because, of course, it is not in fact a double tax.
I know there has been a great deal of talk about the sales tax. This debate this evening has almost developed into our annual debate on the evils of the sales tax. I have dealt with that matter before. I have endeavoured to show that, with the wide list of exemptions-in the case of the small income man nearly two-thirds of his purchases being exempt from the sales tax- this is not a regressive tax. We get from the tax, or I estimate that we shall get from the sales tax this year, about $590 million. If that revenue is to be forgone, we must get it somewhere else. We could get it by increasing the personal income tax on the average by about 50 per cent; and I know that would be an extremely popular method with my friend the hon. member for Peterborough West (Mr. Fraser) who is a strong opponent of the sales tax. We could get it perhaps by increasing the corporation tax further. But let me hasten to say here, to those who oppose hidden taxes, that the corporation tax is today our greatest hidden tax and produces substantially more than the sales tax produces.
I know that it is the job of people in the opposition to oppose taxes. My friend the hon. member for Rosetown-Biggar (Mr. Cold-well) cited Mr. Ralston's denunciation of the
[Mr. Maclnnis.l
sales tax in 1931. I venture to say that if he were sitting on your right hand, Mr. Speaker, or if my friend the hon. member for Greenwood (Mr. Macdonnell) were sitting on your right hand, he would be defending the sales tax just exactly as I am doing this evening. In my opinion-and I have said this before -with the steeply progressive personal income tax that we have and with the heavy corporation taxes that we have, the general sales tax with the list of exemptions which we have now developed is a perfectly fair and equitable tax.
Reference was made to 1935. My recollection is that in 1935 we obtained 23 per cent of our revenues from direct taxes and 77 per cent from indirect taxes and in other ways. This year we estimate that we shall obtain 57-5 per cent or thereabouts of our revenues from direct taxes and about 33 or 34 per cent from indirect taxes. I therefore think it is fair to say that there has been a recasting of our tax structure which has made it, in my judgment, much more equitable than was the tax structure which existed ten or fifteen years ago.
We have much heavier obligations. Nearly 25 per cent of our total budget goes in the form of social security payments of one sort and another to our people. Those are transfer payments, and the moneys have to be raised by taxation. As I say, anyone who occupies the position that I occupy and who forgoes revenue from the sales tax must get that revenue from somewhere else. I have heard no suggestions made in this house that the rate of personal income tax was too low, or that the rate of corporation tax was too low, or that the special excise tax rate was too low, or that the rate of tax on cigarettes was too low, or even that the rate of tax on liquor was too low. So let us face the fact that if we are going to remove some of these taxes we have to be prepared to put them on somewhere else.
I do not like to do unpleasant things any more than anybody else. I should be exceedingly happy personally to accede to this widespread demand and request that the municipalities should be exempt from the sales tax. But as I pointed out this afternoon, that would involve a very substantial loss of revenue which would have to be made up somewhere else. It would involve serious administrative difficulties, and I am using a euphemism when I say that. It would involve serious administrative difficulties to see that it was fully and fairly administered over the approximately four thousand municipalities in Canada. In my judgment one of the tests of a good tax is that it should be fully, thoroughly and efficiently administered. Sc

far as I am concerned I came to the conclusion, after most careful consideration, that it would not be appropriate that this exemption should be made.


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


George Alexander Drew: Mr. Speaker, may I simply say-


Douglas Charles Abbott: The debate is closed. I closed
the debate.


Mr. Deputy Speaker:: May I point out-


George Alexander Drew: I was simply going to explain why we were not going to divide the house.


Douglas Charles Abbott: I beg the pardon of the Leader of the Opposition (Mr. Drew). I am sorry to have interrupted.


George Alexander Drew: I was going to explain that rather than divide the house, in view of the fact that a motion had already been presented, we were going to permit this motion to pass on division and would deal with the sections in committee.


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


George Alexander Drew: On division.


Mr. Deputy Speaker:: On division.
Motion agreed to on division, bill read the second time and the house went into committee thereon, Mr. Beaudoin in the chair.


Louis-René Beaudoin: Before we start the study of this bill, may I draw to the attention of hon. members the fact that this bill, like all others this session, is divided into two parts and that the second part is merely a duplication of the first part. If hon. members look at page 5 of the bill and the explanatory notes with regard to part II, they will see this language:
This part makes corresponding amendments to the new revised statutes.
I should like to point out to hon. members that, as they know, duplication of debate is not in accordance with our rules and that this bill in effect consists only of clauses 1 to
14	inclusive. Therefore when we reach clause
15	we should be in a position to carry it and the clauses following it more quickly. As a matter of fact I would ask hon. members to agree to a certain procedure. When we reach part II, which is merely to bring the amendments in accordance with the new revised statutes, I would suggest that at that moment I stand up and say: "I take it that hon. members, having approved the original sections, approve the duplicates."
I should like to have agreement on this matter. Some hon. members, because they 68108-221J
Excise Tax Act
have seen clauses passed quickly, have said that the chairman had rushed certain clauses through when, as a matter of fact, those clauses were only duplicates of the originals which were carried only after there was opportunity for a debate. I should like agreement at this time so that it will be clear for all bills still to come and to be studied in committee. When we reach the duplicate sections, let us impose upon ourselves some selfrestraint, and let us avoid duplication of debate. If that procedure is agreed upon, that is the one I will follow from now on.
On section 1-"Net premiums''.


Mr. Robichaud:: Mr. Chairman, I should like to make a few remarks. On March 5, when I was speaking on the budget, I expressed regret that the government had not considered the time opportune to abolish the 10 per cent sales tax on wire rope or cable and on all kinds of rope or cordage of manila-


Jean Lesage: Mr. Chairman, I rise on a point of order. The hon. member is now referring to matters which should come under section 13. As a matter of fact, following recommendations made by the fisheries council of Canada and by my hon. friend, it is intended to have an amendment moved when we reach that section. We are now dealing with section 1, which has to do with insurance.


Louis-René Beaudoin: Is that agreeable to the hon. member?


Albany M. Robichaud: As long as I have an opportunity to say something on the section.


Jean Lesage: I am giving the hon. member what he asked for.


[Stage Direction]
Section agreed to.
Sections 2 to 8 inclusive agreed to.
On section 9-Refunds.
Howard Charles Green: This section has to do with refunds. When the resolution was under discussion I brought to the attention of the parliamentary assistant the difficulty that seems to have arisen with regard to refunds of the sales tax on furnaces. Has there been any clarification of that situation since that time? Some press dispatches indicate that firms are paying back the money and then making application to the Department of National Revenue for refund, while other firms are saying they are not to pay anything back.
It would seem to me that in most of these cases the consumer will have paid the tax. Why should there not be some provision whereby the consumer could make application

Excise Tax Act
for the refund? Certainly the manufacturer must have passed on the tax to the consumer. If that money is paid back to the manufacturer without any obligation upon him to pass it on to the consumer it will merely mean that the department is subsidizing the manufacturer. I should think if anybody is entitled to a refund it is the consumer.


Jean Lesage: I agree with the hon. member for Vancouver-Quadra, but I cannot add anything to what I said on March 19 when he raised this question. The matter of the refund of tax from the manufacturer to the wholesaler and then to the retailer and then to the consumer is something to be settled by the parties themselves. Frankly I do not believe the officers of the department can devise machinery which would work in such a way that we would be sure the refund would go to the consumer in each case.
One of the arguments in favour of this amendment was that in many instances it might be impossible for a manufacturer or wholesaler or retailer to know to whom a sale had been made. It is possible that a sale might be made on a cash basis to a passerby, and how could you reimburse him? In that case the retailer would profit.
Under this amendment the refunds will be made only to those who have paid the tax and who have applied for a refund. Under the old section it was possible for a manufacturer to claim the refund of taxes he had paid during the twelve months preceding the application of a third person who had appealed to the tariff board, in spite of the fact that the said manufacturer had never made any application to the board. Now refunds will be made following a decision of the tariff board only for the twelve months preceding the application made by each individual payer of the tax.


Howard Charles Green: Is there any obligation on the manufacturer to pass on the refund?


Jean Lesage: That could be an ordinary civil obligation. I know my hon. friend is a lawyer; the consumer might claim it from the retailer, the retailer from the wholesaler, and the wholesaler from the manufacturer if the manufacturer had been reimbursed. I do not know whether there is the same rule in the common law, but under our civil code in Quebec we have a rule which is called that of "l'enrichissement sans cause". I do not know how that would be translated into English, but in effect it means that no one can enrich himself upon the rights of someone else.


Howard Charles Green: Has there been any procedure set up under which a consumer could apply
JMr, Green.]
to the department for a refund? If not, why should there not be some such procedure?


Jean Lesage: I have not been administering the department, but I can imagine the administrative difficulties there would be if following the decision of the tariff board a consumer could make application for the refund of the tax. He would not have paid the tax in the first place.


Howard Charles Green: Oh, yes.


Jean Lesage: It would have been included in the price he paid. This is not a direct tax, it is an indirect tax.


Howard Charles Green: That is the whole trouble.


Donald Methuen Fleming: I should like to discuss a matter I should have dealt with under section 7. I note that the amendment involved in section 7 relates to the packaging of certain types of goods and the levying of the sales tax upon the goods and the package when they are packed by someone who has purchased them from the manufacturer in bulk to be repackaged for sale by himself. I believe this principle will have quite a limited application. It will become part of part XI of the Excise Tax Act which relates in general to automobiles, toilet articles, clocks, watches, jewelry, cigarettes and tobacco products. This section will not even cover that field fully.
This question of a tax on packaging has a wider aspect. I am told that representations have been made to the government in relation to larger articles for domestic use, such as electrical goods. I understand that it has also an important aspect in relation to competition between importers of United States manufactures, on the one hand, and Canadian manufacturers on the other.
This whole question turns on the method by which excise and sales taxes, and customs duties also for that matter, have been calculated with respect to packaging. The packaging itself has attracted a lower rate than the goods, and in the cases that have been brought to my attention I understand that the assessments have been levied separately in the case of importations, with the result that the Canadian manufacturer, who has to pay the sales tax on his article fully packaged, has been at a disadvantage.
Perhaps the parliamentary assistant could make a clarifying statement on this matter. I believe that it has been actively before the department since 1950, when an administrative ruling was introduced which changed the basis of calculation of the excise on the packaging, which ruling had been in effect,

I am told, as far as administrative practices were concerned right back to 1906.


Jean Lesage: Is the hon. member talking about customs duties or excise tax?


Donald Methuen Fleming: It applies to all. I am told that the ruling itself related to excise and customs combined but the problem that is presented, as I am informed, does touch on all aspects of the question of how packaging is to be treated, whether for customs or excise or .sales tax purposes.


Jean Lesage: I do not believe I can add much to the answer I gave the hon. member on that very point on March 19 when we were at the resolution stage. It is to be found at page 3114 of Hansard. The hon. member raised exactly the same question at that time.


Donald Methuen Fleming: Not exactly the same question.


Jean Lesage: At that time I said:
-when a wholesaler or distributor bought these products in bulk quantities from the manufacturer, the 15 per cent tax and the sales tax have been levied on the manufacturer's price for the bulk candy. The wholesaler could then package the merchandise for retail sale. On the other hand, if the manufacturer had packaged the goods and sold direct to the retailer, the sales tax and the 15 per cent excise tax would be based on a price which would include all the costs of packaging plus the trade mark-up.
The amendment is made so that this discrimination will not exist any more.


Donald Methuen Fleming: I quite follow my hon. friend. I am trying to be brief about this, but as I understand it here we have the recognition of a principle that the man who purchases goods in bulk from the manufacturer and then does his own repackaging should be assimilated to the position of the manufacturer for sales tax purposes.


Jean Lesage: That is it.


Donald Methuen Fleming: I do not think anybody is
quarrelling with the principle. I am wondering, though, about the recognition of this principle in the case I have put, which is of wider import. I am not trying to take this discussion afield. I am trying for the moment to see how recognition of the principle with respect to the packaging of candy and confectionery stacks up against the principle to which I have referred, and which has important consequences for Canadian manufacturers in relation, to competition on the part of manufacturers of United States products. Take the case of refrigerators. That is a specific case in point.


Jean Lesage: I am informed with respect to the case in point, refrigerators, that there is no excise tax. There is a sales tax which applies to refrigerators, and it is based on
Excise Tax Act
the duty paid value of the refrigerator when it is imported, including boxes.


Donald Methuen Fleming: Do the wrappings not attract a different rate from the refrigerator?


Jean Lesage: No, it is the same rate.


[Stage Direction]
Section agreed to.
Section 10 agreed to.
On section 11.
James MacKerras Macdonnell: In the first place I call attention to the note with respect to clause 11. My understanding is that clause 11 really does extend the scope of the tax to some considerable extent, but I will come back to that in a moment.


Jean Lesage: No, it does not extend it. It just divides it. There is merely a division and a clarification, in order that we may know exactly what proportion of the tax comes from radio and what proportion comes from television, and that is for the purpose of statistics.


James MacKerras Macdonnell: The parliamentary assistant is repeating what is in the note on the right hand side of the page, but I think the note perhaps does not take the opposition fully into the government's confidence. What I want to point out is that so far as I can see there is an extension of the tax. The matter is well set out in a dispatch from the Winnipeg Free Press which confirms information that I myself got elsewhere, and I shall read this extract.


Louis-René Beaudoin: Order. As the hon. member knows, in committee remarks must be strictly relevant to the clause, and it is not in order to read long extracts from newspapers.


James MacKerras Macdonnell: Mr. Chairman, this extract sets out the argument which I wish to make. If you wish me to do it in my own words-


Douglas Charles Abbott: It would be much better.


Louis-René Beaudoin: I cannot allow the hon. member to read such extracts.


James MacKerras Macdonnell: All right, Mr. Chairman. My understanding is that the section as now written covers certain things, wired music operations, community antenna operations and piped operations such as used by a company called Rediffusion Incorporated in Montreal, which operation has been before the tariff board. The company argued that it was not included under the words "telecast receiving units" and on February 17 the tariff board upheld their appeal. I submit we now have an act which, by reason of the extension of the wording, is going to make quite sure that the appeal board does not go astray and confirm the

Excise Tax Act
ruling already given, which is that these particular articles are not taxable. That is what I mean by saying that I think the scope of the section is widened, and that is what I mean by saying that I think the last sentence of the explanation is, to use an admirable word which the Minister of Finance has used twice already, a euphemism.


Douglas Charles Abbott: It is a very polite word.


James MacKerras Macdonnell: The last
sentence in the descriptive note reads as follows:
The item has been further clarified by using more descriptive terms.
That is a very euphemistic way of saying that the effect of the section has been considerably extended. I think the minister will agree with that. Even he could not be more euphemistic than that. Mr. Chairman, it is ten o'clock. Perhaps I might be given the opportunity to put what I have to say in better shape for tomorrow.


Jean Lesage: May I say one word. I agree with what my hon. friend means even if I do not agree with all the words he used, but I cannot agree with him when he says that it extends the meaning of the section. As a matter of fact it clarifies the section to make it certain that the tax applies to all television equipment for programs distributed by any means whatsoever. May I also say that, according to my information, the decision of the tariff board is being appealed from.


James MacKerras Macdonnell: If the parliamentary assistant means by clarification that it puts into words what the Department of National Revenue thinks should be the law, if that is his definition of clarification then that is a definition which I do not fully accept.


Jean Lesage: We believe it was the intention of the legislators.


Donald Methuen Fleming: May I ask one question. This section, as we followed the statement made by the Minister of Finance in his budget speech, is designed to provide revenue for the Canadian Broadcasting Corporation. May
I ask in what form provision is to be made to devote to the use of the corporation revenue acquired through the tax imposed by this section?


Louis-René Beaudoin: Is it the wish of hon. members to carry the section this evening?


James MacKerras Macdonnell: No.


Louis-René Beaudoin: If not, why not report progress?


Donald Methuen Fleming: Can I have an answer to my question?


Louis-René Beaudoin: It is ten o'clock, and hon. members are not ready to pass the section. Why not report progress and ask leave to sit again?


Donald Methuen Fleming: He has the answer all ready, Mr. Chairman.


Jean Lesage: There will be a special provision in the Canadian Broadcasting Act.


Donald Methuen Fleming: There will be amendments to that act introduced later this session?


Jean Lesage: That is right.
Section stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Fournier (Hull):: Wednesday, April 1, 1953