1953-05-07

Mr. David A. Croll (Spadina):: Mr. Speaker, I rise on a question of privilege. The Globe and Mail this morning quotes a speech made by the member for Lake Centre (Mr. Diefenbaker) who is reported to have said:
He said the defence committee, which reported Tuesday with a revised Currie report, wasted its time in sitting for seven weeks. The report was written by a minister and could have been drawn up before the committee even sat.
Mr. Speaker, I wrote the report. In fact, I drafted and redrafted the report and no minister had any part in it. A draft report was first presented to the agenda committee on Monday, May 4, where changes were suggested and incorporated. It was then presented to the whole committee on Tuesday May 5, and tabled that day. In the whole committee the report underwent three important changes and two corrections in detail.



MR. SINNOTT    REFERENCE TO PRESS REPORT OF STATEMENT BY MEMBER FOR LAKE CENTRE

Mr. J. S. Sinnoll (Springfield):: Mr. Speaker, I also rise on a question of personal privilege. It has to do with an article in this morning's Globe and Mail, appearing on page 2. This is a statement by the hon. member for Lake Centre (Mr. Diefenbaker):
"The cabinet treats parliament as it would treat puppets." . . . He revealed that one member of the Liberal party (Sinnott of Springfield) had not been renominated in his riding because he followed the government line without fail, no matter how he felt personally. That member had revealed Mr. Howe told him if he did not toe the line he (Mr. Howe) would not play ball with him.
Mr. Speaker, I-


Mr. Fraser:: Two strikes and you are out.


Mr. Harkness:: Broomball.


John Sylvester Aloysius Sinnott: I want to make it plain to
the house and to the country that this statement is absolutely untrue. There is not a word of truth in it.
As usual, the hon. member for Lake Centre is not in his seat-


Mr. Speaker:: Order.


John Sylvester Aloysius Sinnott: -and, instead of staying here and attending to his parliamentary duties he is running around the country making false accusations.


Mr. George A. Drew (Leader of the Opposition):: Mr. Speaker, I do not intend to intervene beyond saying that the latter part of the hon. member's remarks has no relationship to a question of privilege and should not have been placed on the record.


An hon. Member:: And no relation to the
facts.


Mr. Speaker:: Order.


John Sylvester Aloysius Sinnott: That is what has been going on the last two years.


Mr. Graydon:: Johnny has got you all on
the run, that is all.

(Translation):



MR. BALCER    PROTEST AGAINST MR. HUMPHRYS' ATTITUDE  REQUEST FOR DISMISSAL

Mr. Leon Balcer (Three Rivers):: Mr. Chairman, I rise on a question of privilege. Le Droit of May 6, 1953, reports the following facts in an article entitled:
Mr. Humphrys' attitude shocks many people
"You can see the minister, and your Pope if you want to". That is what Mr. F. A. Humphrys, chief of the taxation division at the income tax district office and creator of the notorious form bearing his name, replied to a French-speaking taxpayer who went to see him to obtain additional information about her income tax return.
Le Droit has made a thorough investigation among people who obtained interviews with Mr. Humphrys and others who were not able to see him. In each case Mr. Humphrys' words show his aversion to everything Catholic and French-Canadian.
"You can see the minister, and your Pope if you want to." Those are Mr. Humphrys' exact words to a female civil servant who went to see him in his office.
Mr. Chairman, in the name of all French-Canadian taxpayers in this country I wish to protest personally against the anti-national and shameful conduct of a civil servant and I ask that the government dismiss this official of the income tax division.

Questions
(Text):



CONGRATULATIONS TO LEADER OF OPPOSITION ON ANNIVERSARY OF BIRTHDAY

[Stage Direction]
Right Hon. C. D. Howe (Acting Prime
Minister): Mr. Speaker, I am sure all members of the House of Commons would wish to extend congratulations to the Leader of the Opposition (Mr. Drew) on his anniversary, and to wish him many more happy occasions of the same kind.
George Alexander Drew: Mr. Speaker, may I say how very much I appreciate the spirit and the manner in which these good wishes have been extended, and also express the pleasure we all feel that, in spite of the political differences we may have, we are able on occasions of this kind to join in this manner.



LUNAM CONSTRUCTION COMPANY


[Stage Direction]
Hon. Alphonse Fournier (Minister of Public
Works): I desire to table parliamentary return, reference No. 214, mover Mr. Coldwell, subject: "Final or complete statement regarding payments to other contractors in connection with the contract awarded to the Lunam Construction Company." I may tell the house that this is an incomplete report, but it is all my officials could prepare to date. So that I may not be charged with delaying the tabling of the information that we have, I am tabling it right now.


Mr. H. W. Winkler (Lisgar):: Mr. Speaker, I move:
That the report of the civil service commission respecting the position of librarian, grade 4, library of parliament, laid on the table on Wednesday, May 6, 1953, be now approved.


[Stage Direction]
Motion agreed to.


Mr. Browne (St. John's West):: What has been the cost, in detail, of the fisheries development committee in Newfoundland to date?


Mr. MacNaughl:: The assistance given by the federal government to the committee is difficult to assess on a dollar value basis. It has been given by departmental officers at Ottawa headquarters and in the field in conjunction with their other
[Mr. Balcer.l
duties. Similar assistance has been given by officers of the fisheries research board from its headquarters' staff and from its Atlantic coast field stations. A number of other departments of government have also contributed in an important measure to the work of the committee. While it is not feasible to segregate all costs, the following is a statement of expenditure where separation has been
possible.
Salaries	  $19,459.45
Travelling and living expenses ....	12,679.94
Operation costs of M.V. Marvita on loan from the Department of
National Revenue	 6,863.56
Printing of report (federal portion
-estimated)	 2,000.00


$41,002.95 CENTRAL MORTGAGE AND HOUSING-HARVEY LUNAM
Mr. Diefenbaker:: 1.	Has Harvey Lunam or the Lunam Construction Company Limited had any contracts for or with Central Mortgage and Housing Corporation, since the first day of January, 1947 to date?
2.	If so, what was the nature of the said contract or contracts, and what was the total amount of the contract price?
3.	Did the said Lunam or the said company complete the said contract or contracts?


Mr. Winters:: 1, 2 and 3. The Lunam Construction Company undertook to build 37 houses in Regina in 1947 with mortgage advances by the Great-West Life Assurance Company. Under the terms of the integrated plan (section 4B of the National Housing Act) Central Mortgage and Housing Corporation entered into an agreement with the said construction company to purchase any house in the project that the construction company was unable to sell, provided that the houses were built according to approved plans and specifications and were offered for sale at of below a price specified in the contract.
The Lunam Construction Company, with the assistance of the lending institution, completed and sold 28 of the houses. Construction of the remainder of the houses was not proceeded with.
Central Mortgage and Housing Corporation was not called upon to purchase any of the said houses under its repurchase covenant.


ROYAL CANADIAN AIR FORCE
Mr. Green:: 1.	Have tenders been called recently in Vancouver for 150 easels for the Royal Canadian Air Force?
2.	If so, by whom were tenders submitted .and at what prices respectively?

3.	What firm received the order and for what amount?


Mr. Dickey:: 1. No.
2 and 3. See answer to No. 1.


POST OFFICE, OTTAWA  MAIL OPENED
Mr. Hodgson:: 1.	Has any first-class mail originating in Canada and directed to a person or persons residing in Ottawa been opened by any official of the Post Office Department, during the past twelve months?
2.	If so, were photostat copies of such mail secured?
3.	Was such mail then resealed and returned to the post office for delivery to the addressee without comment or other notification to the said addressee?
4.	In how many instances did such action take place?
5.	On whose authority was such action taken?


Mr. Langlois (Gaspe):: There is no record
in the department of any first class mail being opened by any official within the scope of his regular duties and responsibilities, except in cases where the letter was non-transmissible or was improperly or inadequately addressed and was diverted to the dead letter office for the purpose of facilitating delivery to the addressee or the return to the sender.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Fulion:: 1.	What is the total spent for all purposes on defence and defence production from June 30, 1950 to December 31, 1952?
2.	What is the total paid out on all defence and defence production contracts, agreements, or arrangements for services in that period?
3.	What is the total paid out on the fixed or percentage fee portion of all defence and defence production contracts, agreements, or arrangements for services let or entered into on a cost plus fixed or percentage fee basis in that period?
4.	If no definite figure can be fixed for part 3 above, what is the estimated percentage of the totals of (a) part 1; and (b) part 2 above, represented by the portion referred to in part 3?



ARMED FORCES


Mr. Hodgson:: 1.	What was the total number of (a) men; (b) women, in each branch of the armed forces on March 1st, in each of the years 1949, 1950, 1951, 1952 and 1953?
2.	What was the total number of civilian employees in the Department of National Defence and its purchasing agencies on each of the above dates?
3.	What was the total cost of the armed forces, the Department of National Defence and its purchasing agencies, in the years ending on the above dates?
Inquiries of the Ministry NATIONAL DEFENCE



ARTICLE IN &quot;CANADA AIR PILOT&quot;


[Stage Direction]
On the orders of the day:
Mr. G. R. Pearkes (Nanaimo):: May I
direct a question to the Minister of National Defence? Were security regulations cleared with the Department of National Defence before the publication by mines and technical surveys in the Canada Air Pilot, of information relating to R.C.A.F. stations in northern Canada?


Hon. Brooke Claxton (Minister of National Defence):: Mr. Speaker, the hon. member for Cape Breton South (Mr. Gillis) also gave me notice of a similar question. I shall try to answer his question also, although it was couched a little differently from that of the hon. member for Nanaimo.
You cannot keep air strips secret, and there is no effort made to do so. The report which gives rise to this question was headed "secret air charts on sale in Ottawa", and that is not correct. There are no secret air charts on sale in Ottawa. The department of government concerned with civil aviation prepares charts of all airfields, service and civilian, for the use of civilian and service pilots. This is done in every free country, subject to a very few exceptions, none of which comes to my mind.
What is classified and what we endeavour to keep secret is the purpose for which certain airfields may be used, and the fact that they fit into a system. Now, both of these factors are disclosed and dealt with in the article in the Gazette, which gives rise to these questions. We try to keep that information confidential. We try to avoid giving the information which would disclose a system or the purpose of an airfield. Obviously, the location of all air strips is well known, and their location and characteristics should be knowr to facilitate civil aviation, emergency landings and the like. There has been no breach of security whatever.


George Randolph Pearkes: May I ask a supplementary question? In view of the information which is contained in Canada Air Pilot concerning the length of these runways, would the minister consider either restricting the sale of the publication or taking some other step to prevent that information from falling into unauthorized hands? According to the minister's own statement regarding these air strips, they could be used by the enemy as steppingstones from which to leapfrog towards settled areas.
4904	HOUSE OF
Supply-Defence Production


Brooke Claxton: No, sir, I would not do that.
It is the practice, under the international civil aviation agreement, that charts are made up giving a list of specified information. These charts are available to air pilots, and we follow the same practice as the United States, the United Kingdom, France and all the other countries in the agreement. We could not make an exception.


William Joseph Browne: Mr. Speaker, arising out of the questions asked the Minister of National Defence (Mr. Claxton), I should like to ask him one supplementary question. Does the U.S.S.R. allow the maps of her air strips and airfields to be published in the same way and are they available to us?


Brooke Claxton: I would have to look into that matter. I greatly doubt it.


Mr. Gillis:: May I ask a supplementary question? Am I to assume from the minister's answer that the publication of information upon which that article is based was made with the knowledge and consent of the Department of National Defence?


Brooke Claxton: Oh, yes.



PROHIBITION OF SHIPMENTS OF REFINED SUGAR FROM CUBA

[Stage Direction]
On the orders of the day:
Mr. E. B. Huffman (Kent, Ont.):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce (Mr. Howe). Can the minister state whether any recent communication has been received from Cuba relating to refined sugar?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, a few days ago I received a dispatch from our ambassador in Cuba who advised me that the sugar institute of Cuba has published a new decree extending the prohibition of shipments of refined sugar to Canada until the end of 1953.

The house in committee of supply, Mr. Beaudoin in the chair.



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
79. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production, $6,710,933.
Mr. Fulton:: Mr. Chairman, yesterday
evening we heard an extremely interesting statement from the minister regarding the
[Mr. Pearkes.l

care which the department and the government takes to see that the people of Canada receive full value for their money. Just by way perhaps of an aside, I should like to refer to an interjection made by the minister in the course of the speech of my friend the hon. member for Melfort at the time when he was discussing the army camp at Penhold. It appears that perhaps our strictures of the government for its extravagance and wasteful habits have borne some fruit because in Hansard we find this most interesting statement by the minister recorded at page 4887 wherein he says:
I did my best to get the committee to go to Penhold. I offered to provide a government plane and pay for the entertainment out of my own pocket.
First, I think we should express appreciation of that generous gesture from the minister; and second, I think we should say that we are glad to see that he was trying to save the government some money. However, I also want to point this out to him since he appears to have been a little bit hurt by the fact that his invitation was not accepted. He says:
It seems to me that the committee ought to have done me the courtesy of going and looking at this so-called monstrosity . . .
I can tell him that as far as I am concerned-and this applies to all the members of the committee to whom I have been able to speak between last night and this morning-no notification was received of any such invitation. Had we received notification, I can assure the minister that we certainly would have done him the courtesy of a reply, although I doubt greatly whether we would have accepted it. With the feeling of cordiality and so on which this provision of entertainment no doubt would engender, I do not know whether any one of us would feel free, after having accepted the minister's hospitality, to continue criticizing the camp; and since we undoubtedly would have found subjects for criticism there, we would have been placed in a most embarrassing situation.


Clarence Decatur Howe: My hon. friend has not sense
enough to be embarrassed.


Edmund Davie Fulton: The minister is prone to judge others by himself. I suggest that it is a practice from which he should desist.
It is a fact, of course, that at Penhold- as was pointed out by the hon. member for Melfort and the hon. member for Wetaskiwin last night-there is a great deal to criticize. But before coming to specific subjects of criticism, I should like to deal with some of the more general statements which the minister made in the course of his remarks

here last night and in the course of his previous statements both inside and outside of the house as to the fact-according to him-that the government is not guilty of waste, extravagance or inefficiency in so far as-and I will confine it in this case-his own department is concerned.
The minister has on other occasions drawn attention to the fact that he has spent more of the taxpayers' money than has any other minister and that he therefore is a man highly qualified to talk about the subject of spending. With that statement no one would disagree. But the question arises whether the minister knows as much about saving. He has told us they exercised great care in this program of stockpiling. Not long ago, in a broadcast on "The Nation's Business", on Tuesday, April 7, the minister told us that the government exercises great care in eliminating all expenditures that are not essential. Then toward the close of his broadcast he said:
Furthermore, no one has proven waste or extravagance or inefficiency related to a single expenditure made during that long period.
I wonder whether the minister can give us an adequate explanation of some of the activities of his own department in that connection, when we find this situation, for instance. When attention was called to the fact that the department has purchased over one million neckties at a cost of over $300,000 and attention was drawn to that matter in the house, the Prime Minister, as reported at page 39 of Hansard of November 24, 1952, made the statement:
I do not know why over a million neckties were required: it may very well be that that was a mistake.
It seems to me, Mr. Chairman, that that is hardly consonant with the assertion by the Minister of Defence Production that the greatest care is exercised in the course of his stockpiling program to ensure that there is no waste or extravagance. Many other examples could be given.
I want to give an example dealing with a different type of expenditure, namely the expenditure connected with aircraft production. I should make it clear that my question here-and I will put it in the form of a question-is based on an article appearing in Maclean's magazine of February 1, 1953, which was prefaced with this opening paragraph found at page 7 of that issue:
Maclean's was well along with an investigation of its own into the broad field of defence expenditures when the Currie report cast a new and foreboding shadow across an already turbid scene . . . Maclean's doesn't profess to have anything approaching a complete and final answer to the question: are we getting our money's worth in
Supply-Defence Production
defence? But during its own inquiries this magazine has amassed a great deal of evidence, some of it reassuring, some of it dismaying.
Then, dealing with a specific subject about which I have made inquiries, the magazine at page 50 also refers to neckties, about which, as I have just said, the Prime Minister admits that they have no adequate explanation and that it may very well have been a mistake.
Then it goes on to deal with the situation with respect to the CF-100 as follows:
Defence production ordered a supply of United States electronic apparatus to be installed in the CF-lOO's nose for all weather fighting. The CF-100's airframe was designed especially for this apparatus when only the electronic equipment's weight and dimensions were known. For the CF-lOO's speed, the electronic gear has to have an effective range of two miles.
After Avro's aero dynamicists had worked for months on the CF-lOO's design an R.C.A.F. pilot was sent to the southern United States to test the electronic equipment on order there and found that it had a reliable range of about a quarter of a mile. When another satisfactory electronic aimer and range finder was obtained, it was either a different weight or different size which threw all the earlier aerodynamic calculations into a muddle. The CF-100 airframe had to be largely redesigned.
Whatever happened, R.C.A.F. men are said to have commented privately that the CF-100 program is at least a year behind what they had hoped for when the first prototype was delivered.
I have pointed out, Mr. Chairman, that this is a statement contained in a magazine article, but a responsible magazine, prefaced by the introductory paragraph that the magazine had done a good deal of independent research and inquiry before the author wrote and the magazine put out the article. I have no personal knowledge of whether the facts are correct, but in the absence of an explanation or a denial we are entitled to rely upon the accuracy of these statements. If they are correct, then it certainly seems to me there is evidence of gross carelessness in the spending of the people's money.
While everyone must be prepared to make allowances for engineering and design difficulties between the drawing board and eventual production, and particularly perhaps to make allowances for modifications or improvements in design of electronic equipment on which no charge of inefficiency could be based, yet if delays or increased expenditure resulted from these factors, that is, in any one of these examples it then appears to me to be an example of great carelessness that a particular type of equipment was ordered, the weight was known, the airframe was designed to accommodate that particular type of equipment, and all this was done without any test of the equipment which would have established whether or not it was suitable for the purpose for
4906	HOUSE OF
Supply-Defence Production which it was to be installed in the machine. And when the test was finally made, after the design had been perfected to accommodate that particular piece of equipment, it was found that it was not suitable for the purpose for which it was to be installed.


Clarence Decatur Howe: Just to straighten my hon.
friend out, I may say there was no electronic equipment of that kind in existence in February of this year. It is not fully developed as yet. The statement is entirely erroneous. I may say that the research done by Maclean's magazine was done largely in the office of defence production.


Edmund Davie Fulton: If the research was done largely in the office of defence production, then it seems strange to me. What the minister is saying either does not reflect what they found there, or they did find these things.


Clarence Decatur Howe: I will admit that I would rather take the views of a cub reporter than my hon. friend's, but they are both wrong in that particular.


Edmund Davie Fulton: The minister in his usual manner has dismissed this statement in Maclean's as completely erroneous. If the minister says it is erroneous, with all the knowledge of his experts that he has behind him, we have to accept that explanation. In the course of questioning in the committee this is a matter which should be followed up, because it seems to me, in the answers to the questions which I have received earlier, reference has certainly been made to electronic gun aimers and apparatus of that type. Therefore we do not know whether the minister's answer is a complete and effective rebuttal of the statements which are contained in the magazine.


Gordon Knapman Fraser: He has been wrong before.


Edmund Davie Fulton: Another general subject which I should like to deal with is the delays which we have encountered in the obtaining of information which it is desirable to obtain, firstly, as an adequate and complete knowledge of all aspects of the Department of Defence Production; and secondly, in order to discuss certain matters on the items of the department now before us.
I could give many examples, Mr. Chairman, of these delays, but I have only to refer you and the committee to the first two questions on today's order paper. Question number 1 in my name has been on the order paper since February 25. It asks:
What are the particulars of the item for machine tools, equipment and installation, et cetera, sold to George T. Davie & Sons Limited, for $116,000, as surplus crown assets as shown at page 20 of the


Crown Assets Disposal Corporation report for 1950-51?
2.	What was the original cost of acquisition and installation of these items and when were they acquired and installed?
3.	Were tenders invited for the purchase of these items?
This question has been on the order paper for two and a half months without being answered. I can see no satisfactory reason why it should be left that long without being answered. It is not a minor matter, Mr. Chairman. You will recall that the firm of George T. Davie & Sons Limited is the firm which built ships for the Ming Sung company on which the people of Canada are still paying under the guarantee given to the banks, and to which firm $450,000 of an advance was written off, and to which firm subsequently $449,000 has been paid by way of the fixed fee portion of their subsequent shipbuilding contracts with the government. It is the firm which has received $1 million by way of gift through write-off or by way of fixed fee payments on contracts.
According to the information contained in the Crown Assets Disposal Corporation's report, that firm has apparently purchased certain machine tools, equipment and installations for the sum of $116,000. These machine tools, and so on, were formerly the property of the government. It is most essential that the committee and the country should have the information asked for in that question; that is:
What was the original cost of acquisition and installation of these items and when were they acquired and installed?
What was the cost of these items which the company has subsequently been allowed to purchase for the sum of $116,000? It is essential that we should know whether or not tenders were invited for the purchase of these items.
This is another example of delays in providing necessary information. I refer you to question number 2 on today's order paper which has been there since March 3, which was today passed as an order for return. Mr. Chairman, we have had so many unfortunate experiences with orders for returns in this house that I think I can predict now what will be the fate of this particular order, and I think I can predict now that that order will not be brought down during this session. If it is, I shall be glad to apologize for having suggested that it might not be down during this session. But it is not within my understanding as to why a question which has been on the order paper for two months and four days-from March 3 to May 7-should now, within four or five days probably of the end of the session, be passed as an order

for return. If it was necessary to have it made an order for return, why was that not made an order for return within a week or ten days of the day it appeared on the order paper?
I would point out that the information asked for in this question is important to the house and country, because it is information as to the total paid out on the fixed or percentage fee portion of all defence and defence production contracts since the outbreak of war in Korea. I suggest this is a subject of importance, and that it would be most opportune to have that information before us at a time when we are discussing the estimates of the Department of Defence Production, which lets the contracts.
In addition to these examples of delay and refusal of information, there are many others. There are cases when there have not merely been delays in action, but there have been definite refusals by ministers concerned. They consort very ill with the other statements made by the Minister of Defence Production in an attempt to persuade the people of Canada that the government, and his department, give all the information they are ever asked for.


Clarence Decatur Howe: On a point of order, Mr. Chairman, does my hon. friend say that answers to questions have been refused by the minister?


Edmund Davie Fulton: I said that information
requested has been refused by ministers in this house, by several ministers.


Clarence Decatur Howe: On what occasion did I ever refuse any information?


Edmund Davie Fulton: Well, I am speaking particularly-


Clarence Decatur Howe: I have answered nine hundred separate inquiries in the house; I venture to say something like an equivalent number have been asked in the committee on defence expenditure, and I cannot remember ever having refused any information. I wish my hon. friend would not say so, without giving examples.


Edmund Davie Fulton: I am thinking, for instance, of the MacNab report, and I am thinking also of the instance when the hon. member for Brandon asked for information which he was denied.


Clarence Decatur Howe: But you were talking about me.


Edmund Davie Fulton: I did not say it was the minister; I said "ministers of the government"; and I said it in that way for the very reason that I, personally, do not recall a time when this minister has specifically 68108-310
Supply-Defence Production refused me any information. But I certainly know very well that I am not going to get the information asked for in the question on the. order paper.


Clarence Decatur Howe: Let us thresh out this question. Let us see what the question is. The hon. member asks for the total amount spent and several other particulars, and he says he is not going to get that information. He may get it, if this house sits long enough.


Edmund Davie Fulton: The minister-[DOT]


Clarence Decatur Howe: This babbling is all right, but
it is put down in print and has to be answered.


Edmund Davie Fulton: The minister can sometimes
be a profoundly irritating man. He may lose his temper, but I will do my best not to lose mine. This question has been the subject of comment on at least one other occasion in the house, and has been on the order paper since February 25. If there are explanations as to why it should not be answered or cannot be answered, then I do not understand why they have not been given by this time. And I suggest that if the minister has an adequate explanation he should make it, when I have finished, but that he should not interrupt me while I am speaking.


Clarence Decatur Howe: If my friend would be careful to keep his facts straight-


Mr. Fleming:: There you go, interrupting
again.


Edmund Davie Fulton: I can understand that the
minister would be a bit touchy about the matter, in view of the statement he has made, and the proven inaccuracy of that statement, when he said:
Any member of parliament can obtain full information-
And this was made in the course of a radio speech in which can be found a number of other equally amazing statements.
Any member of parliament can obtain full information about any expenditure of public moneys simply by asking for that information.


Mr. McCann:: And that is true.


Edmund Davie Fulton: Well, Mr. Chairman, that last remark by the Minister of National Revenue is a joke. It is one of the most amazing things I have ever heard in this House of Commons for a long time.
Of course there are various ways of making sure that members do not get information. In addition to the examples to which I have referred, namely the MacNab report, and the information sought by the hon. member for Brandon concerning recommendations regarding auxiliary services, there is a method,

Supply-Defence Production which has been followed in the past on other occasions, of letting a question remain on the order paper until the end of the session, when it dies, or letting it stand over for two months and then passing it as an order for return.
I recall another occasion when early in the session of 1950 I asked for information with respect to government contracts. My question was passed as an order for return, and was finally brought down in November of 1951. There are ways of making sure that members do not get information. And I have given only a few of the many examples to which reference might be made.
Then, I should like to come to some specific criticism of the activities of the department, with special reference to what I regard as a tendency toward unsound methods of contracting. We heard last night from the hon. member for Wetaskiwin a very forceful and clear statement of the sort of thing that went on at Penhold, where the contractor who made the lowest tender and was awarded the contract, subsequently by way of additional orders and variations in the contract was awarded a considerable increase in the amount he received. Yet at the same time he was unable to live up to the terms of his tender. While he was in arrears in the matter of construction and of delivery dates he was awarded another large government contract for another job not many miles away from the site at Penhold.


Clarence Decatur Howe: For which he was also the low tenderer.


Edmund Davie Fulton: Yes, for which he was also the low tenderer. But we are told by one minister that when contractors have records of inability to meet delivery dates, and the like, the department sometimes makes pretty rigid and careful inquiries as to whether such a contractor is in fact qualified as a contractor, even though he may submit the lowest tender.
But I am not going to base too much criticism on that point, because I believe in the tender system. I believe it is a sound system, provided it is adequately-


Clarence Decatur Howe: Wonderful.


Edmund Davie Fulton: Well, the minister says "wonderful". It is a pity he does not follow it. It is a pity his department does not show more affection for the tender system, instead of showing such an inclination to award contracts without tenders and on a fixed or percentage fee basis. We saw several examples of this in the committee on defence expenditure. I am thinking particularly of the cases at Churchill and Goose

Bay where the attitude of the officials in the minister's department, which I suppose would reflect his own attitude, was in complete defence of the cost-plus system of contracting.
In the case of Goose Bay there was a contract involving several millions of dollars awarded to one firm, without tender, and on a cost-plus-fee basis. And the defence given was, "Well, that contractor had a certain amount of equipment up there. It is a long way and involves a long haul. The construction season is short and we felt therefore that it was most economical to award him the contract without tender, and on a cost plus fixed fee basis."
The same holds true of Churchill where the Foundation Company of Canada has contracts which, according to the public accounts for 1952 at pages N-29 and N-30, totalled $12,755,460.82, and all of them on a cost plus fixed fee basis. The fee element in the contracts for that one company, Foundation Company of Canada Limited, amount to $516,634 for the one year covered in this public accounts report. I suggest to you, Mr. Chairman, that that is not small potatoes. Over half a million dollars in fees in connection with contracts awarded to the one company in one year's public accounts.
The defence of that method of awarding contracts is that Churchill is a remote region and that this company is up there doing work and when more work is required to be done it is logical to award the contract to that company without asking for tenders, without asking any other company whether it would be interested in doing the work and would accept a lower fee portion for its work, whether it would be able to do it cheaper; without any investigation as to whether any other company could do it cheaper. That is the evidence given by the officials of the department in connection with contracts at Goose Bay.
If that principle is applied you can see the situation you get into. These are permanent installations, particularly at Churchill. It is conceivable that it may be necessary to spend upwards of $50 million there before we are through. Does that mean that the Foundation Company of Canada, just because it did the first work, is going to get all the contracts there? That surely is not a sound system. That is absurd. But that is the principle which was laid down and outlined to us in the defence expenditure committee.
I suggest to you that that is a complete negation of the system under which contracts should be awarded, that is on the basis that the most work will be produced for the least money. According to the

testimony given, there were no consultations even with other companies as to whether they could do it for less, as to whether they would be interested in doing the work, as to whether they would accept a lower percentage fee for doing it. No; the company that was already on the spot was to be awarded the contract without any further investigation or consultation, merely because it happened to be in there first.
That is not very reassuring in the face of a statement made to the Canadian industrial preparedness association on October 26, 1952-and this is the association which was praised by the minister last night. In its bulletin of November 1 this appears:
A. O. Matthews, financial adviser of the Department of Defence Production, replied to the effect that the cost-plus type of contract was regarded as the least desirable sort.


Clarence Decatur Howe: Read it all.


Edmund Davie Fulton: All right, I will read it all.
There are some cases where, without any basis of previous cost experience, the cost-plus contract is the only alternative. The current thinking in the department runs first toward the competitive type of contract by tender. Secondly, an attempt is made to work out a contract for first types by negotiation. Where cost-plus is the initial basis for a contract, every endeavour is made to think in terms of target prices. Here is an incentive for management to save funds and, at the same time, to make some profit. The principle of ''cost-plus" is looked on as an invitation to extravagance, and the thinking today is very much in terms of target prices.
Yet we are told that in connection with that contract at Goose Bay there were no consultations with other companies, that the company on the spot was awarded the contract on a cost-plus basis. They did not call for tenders. They did not consider calling for tenders. The same situation appears to have prevailed at Churchill where one company now has over $12 million worth of contracts on which it has earned percentage fees of over $516,000 in the one year under review in the last public accounts report.
If the principle laid down by the department and the minister is to foe followed in connection with construction which may eventually cost $50 million, this same company will get all the contracts on the same cost-plus basis. I would point out that this principle of awarding contracts without tenders and on a cost-plus basis is not new to this department; it is not something which has developed just after Korea. It has been part of their thinking for at least three years.
In sessional paper 169A of November 16, 1951, it is shown that Canadian Commercial Corporation, the predecessor of one of the agencies under the present department, 68108-310i
Supply-Defence Production awarded the following contracts for the Department of National Defence without calling for tenders:	In 1947, 7 contracts without
tenders and 2 on a fixed fee basis; in 1948, 18 contracts without tenders and 7 on a fee basis; in 1949, 22 contracts without tenders and 17 on a fee basis. The totals for the three years were 47 contracts without tenders and 26 on a fee basis. The total value for the three years was $25,949,684.21 and the total fees earned were $830,151. Therefore it is apparent that this principle of cost-plus contracts, to the rejection of the tender system, is not new with the Department of Defence Production.
There are other objections which can be taken to this method of contracting or doing business by the department, and I refer to the disposal of government assets. I have one example in mind, but there are others, concerning the sale of firearms. A question was asked regarding the proceeds from the sale of revolvers and whether tenders had been called for their purchase. The information given was that bids were solicited from the trade, but I am advised that there were firms in the firearms and sporting goods business, other than the one to which they were eventually sold, who were not asked to bid on this particular lot of revolvers.
I am told by them that the price which they would have been prepared to pay for this equipment was about 75 per cent higher, according to their best estimate, than the unit price at which they were eventually sold. It appears that not only in connection with the awarding of contracts for construction and the payment out of public funds does this department follow principles and systems which do not get the best value for our money, but also that in the disposal of crown assets, in at least one case and I should judge in numbers of cases, systems and principles are followed which do not result in the receipt by the people of Canada of the maximum amount they should get for the items disposed of.


Mr. Dickey:: If the hon. member would
care to give us the name of the firm to which he is referring I shall be glad to look into it. The question of the disposal of firearms and that sort of thing is covered by certain regulations which have to be adhered to. It may be that this particular firm did not meet those requirements. I shall be pleased to look into it and let the hon. member know, if he will give us the name.


Edmund Davie Fulton: I am told that I am free to
use the name, but I do not propose to give it in the house. I shall let the hon. member know so that inquiries can be made. I am
4910	HOUSE OF
Supply-Defence Production informed that in this case the firearms were to be disposed of in the United States and that when this company made inquiry they were told that that was the reason they were not invited to tender. I am told that this firm has outlets in the United States and would have been perfectly prepared to tender on that basis, that is, that the firearms would be disposed of in the United States.


Clarence Decatur Howe: Mr. Chairman, the hon. member answered his own question. We have reciprocal agreements with the disposal agency in the United States that neither will sell goods for disposal in the other country without prior agreement. If he intended to sell his goods in the United States he would be automatically barred from buying them from our disposal agency under usual circumstances.


Edmund Davie Fulton: The minister has not got the point. These goods were disposed of to a Canadian company which resold them in the United States. That is the situation. When inquiries were made by the company which objected to not having been asked to tender they were told that there was only a limited number of tenders called because the department only called from firms which had outlets or contacts in the United States. My information was that the contractor of whom I speak was perfectly prepared to dispose of the goods on the same basis-he could have disposed of them in the United States-but he was not given an opportunity to tender.
Mr. Chairman, those are the sort of examples which I have in mind and which, I suggest, raise very serious doubts about whether or not the people of Canada are getting value in connection with money which is spent for purchases, on their behalf, of new equipment and items or with respect to disposal of items for which they have previously paid through their tax money. Those matters, I suggest to you, sir, very definitely refute the passage in the majority report of the committee on defence expenditure where they say:
The construction program in the face of a number of difficulties has been- well conceived and carefully supervised and the public has received good value for its money.
Those words, so unjustified on the basis of the evidence we received before the committee, reflect the wishful thinking of the government majority in the house. I can assure you, sir, and the minister, and the chairman of the defence expenditure committee, that they will not for one moment hoodwink the public.
[Mr. Fulton.)


Mr. Low:: Mr. Chairman, I was not a
member of the defence expenditure committee but I did keep in very close touch with what was going on in the committee by frequent conferences with the member who represented our group in the committee, and also by way of the daily reports of the evidence which was taken. I have read the committee's report which was brought into this house and I want to say now, Mr. Chairman, that I am convinced that the committee's report is a complete whitewash of a host of what can only be described as amazing and pretty bleak facts that were brought out in the course of the examination of witnesses before the committee.
The committee's work was in some respects valuable; one has to admit that. I am glad that it was. But it was far from complete work and in no way can it be said to have been thorough work. I am perfectly sure that the government knew beforehand that work in that committee could not possibly be thorough, and I am quite sure they knew the report that would be brought down would in no way reflect on the government's department-regardless of what was brought out in the committee. We all knew that it could not be such a reflection and that is why we, in this corner of the house, proposed a full judicial inquiry into the whole of the activities of the Department of National Defence with particular emphasis on the defence construction end. We got little support for that idea so we went along with the demand that Mr. Currie be commissioned to finish the job that he had started and, of course, to extend it over the whole of Canada.
Well, here we are now with the report brought to us in the final days of the session, a report of the Liberal majority on its own departmental activities. That report completely suppresses the sordid facts and details of the evidence which one reads, and which I have read, in the daily reports of the committee's investigation. There are many pieces, I would say, of unfinished business which in the public interest ought to have been finished by the committee before this session ended. Of course, there was neither opportunity nor, I would think, inclination to finish it as it should have been finished. As a consequence, the taxpayers of Canada are taking what I am going to call an artistic shellacking. That is putting it in common terms. If we do not devise some different means and ways of protecting the taxpayers' interests they are going to continue to take a shellacking.

Last evening my colleague from Wetaski-win revealed to the house some astounding facts concerning defence construction in my own province particularly, and I would like to review briefly and to marshal together some of the more important things that he brought out-to carry the picture just a little further because I think the public will want to read it and see for themselves. 1 do so, Mr. Chairman-and I want to emphasize this-only because I feel that it is a public duty since I know those facts.
Immediately after the outbreak of war in Korea the Department of National Defence decided to renovate two of the wartime airforce stations in central and northern Alberta. Those were at Penhold and Namao. They also decided to build a new bombing range at Cold Lake with the station and airport proper at Beaver Crossing, not far from Cold Lake, in northeastern Alberta.
Here are some of the facts about the projects as they were brought out in the record of the committee's investigation:
1.	The program for renovating and expanding the Penhold base was to cost $6,340,664.
2.	The largest single contract at Penhold went to Alexander Construction company of Edmonton. That contract was awarded in May of 1951 and was for the construction of twelve buildings; but it was later extended to include some additional buildings, particularly a barracks block, supply and installation of kitchen equipment in the mess, supply of pallets and bins for the unit supply building, and the installation of the electrical distribution system.
3.	The original bid put in by Alexander Construction company was $2,640,597 but later change orders brought this amount up by $594,270

making the total $3,234,867.
4.	The contract of the Alexander Construction company required that the work be finished in nine months-that would be by February of 1952. The time was later extended to May, 1952.
5.	In the fall of 1951 the Royal Canadian Air Force requested a speed-up of the work in order to have the buildings completed by February of 1952. As a consequence, arrangements were made with the contractor for a speed-up of operations for which Alexander Construction company was paid $28,254.67 in addition to his other contractual costs. After going that far, someone representing the government cancelled the speed-up program on December 11, 1951, when it became quite clear that Alexander could not finish the job before July, 1953, at the very earliest.
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6. In spite of the speed-up and of the $28,000 extra cost that the speed-up involved, at this late date, two years after the first contracts were let, the Alexander Construction company has completed and turned over to the R.C.A.F. only five of the original twelve buildings that the company contracted to build. Four are almost completed and the other eight are to be completed in April.
I have not been able to learn as yet whether or not that was done.


John Horace Dickey: I might clear that up for the
hon. member. As of April 8, ten of the twelve buildings were turned over completed and occupied by the R.C.A.F.


Solon Earl Low: I am glad to get that information. It seems that 25 months after the granting of the contract ten of the twelve originally planned buildings have been completed and turned over. They were supposed to have been finished within nine months. No penalty clause was to be found in the contract as an inducement to get the job done, and although protests were made that it would be in the best interests of the contractor to get the job done as quickly as possible, I want to point out that practically 25 months have passed and the buildings are not completed as yet.
7.	Shortly after the cancellation of the speed-up operation at Penhold, and during the very period when the Royal Canadian Air Force was pressing for all-out speed in getting Penhold ready for their occupancy, Alexander was given another big contract at Cold Lake for 21 buildings plus a water and sewer project, totalling $4,939,673. Now, the first contract for this project to Alexander was dated March 1, 1952. Let me emphasize once again, Mr. Chairman, that this is at the very time when Alexander was stumbling along totally unable to fulfil the contracts at Penhold within twice the time he had agreed to complete them. I ask you, could the people be blamed for thinking that Alexander was enjoying preferred treatment over other contractors, and that the possible reason for it might be that he had friends at court? I just ask that question and leave it with the people themselves to find the answer.
These feelings are intensified when you examine the evidence that was brought out in the committee by the member for Wetas-kiwin. Let us look at some of the details in connection with Penhold especially. I have already stated that after Alexander was in under the wire with a contract amounting to $2,640,597 at Penhold, that contract was jacked up to $3,234,867 by change orders amounting to $594,270.
4912	HOUSE OF
Supply-Defence Production


Clarence Decatur Howe: Will the hon. member explain
what a change order is? It is an order for additional work.


Solon Earl Low: Yes, I understand that.


Clarence Decatur Howe: You do not want to suggest a change of the amount of money in the contract; the change order calls for additional work that is done at a price.


Solon Earl Low: Yes, I understand that.


Clarence Decatur Howe: You understand, but you are not making it clear to the committee.


Solon Earl Low: I shall make it clear. But may I ask the minister, if there were a desire on the part of someone to help a contractor get in under the wire, would it not be possible to withhold some of these things from the contract or the requests for tenders, and then let the contractor tender on them a little later on or give them as change orders?


Clarence Decatur Howe: The hon. member is casting doubt on the integrity of the departmental engineers who are handling that work. As for me, I do not know Mr. Alexander, nor have I met the gentleman. So far as I know he has not been helped through my department or otherwise. I do not know how the method he suggests could be arranged, but I can assure my hon. friend that the professional engineers who handle this work are not of the type he mentions or the type he apparently associates with. They are professional men who live up to the high ethics of their profession.


Solon Earl Low: I am happy to be able to say that I do not associate with any of them. I should like to say that I am not imputing any motives or crookedness on the part of the minister. I want him to know this, that during the years I have known him I have admired him. I have never said one thing against him. I think he is a great man. He has done great things for Canada. I am going to say this, that he is tired and they have piled a lot of work on him.


Clarence Decatur Howe: Don't worry about the old man.
I want to say this, that every man in my department has just as high a standard as I have. If he does not, he is not in the department long. I think my own standards are pretty good.


Solon Earl Low: I gladly accept that. I am not going to argue the point with the minister at all. I am simply saying that he has had so much to do that he would not possibly be able to know all the details. I think he wants to see that everything is done on the up and up, but let me just finish the story


and we shall let the people judge for themselves. All I am stating are the facts.
Let us take a quick look at some of these change orders that the minister was telling us about. One of them was involved in the contract for water and sewer distribution at Penhold. The original contract was for $61,981, but change orders increased it by $59,788 or by almost 100 per cent of the original contract. Well, granted that was a call for extra material and so on, I was very much interested in reading just what some of these things called "ground services" were. When I looked at some of them-well, I am no judge of the cost of installing such things as shut-off valves and so on, but the prices seem pretty lush. I shall read one or two, reference to which is found on page 527 of the evidence taken by the committee.
In answer to a question asked by the hon. member for Wetaskiwin, here is what change order No. 3 involved, and it covers the ground services to buildings. There was a provision for installing 21 additional six-inch valves and boxes at $117.54 each. This sounds like a very good price to me. Here is another item: Five four-inch valves and boxes at $86.85 each; six-inch fire hydrants, nine of them, at $343.35 each. This is the cost of the hydrant and the installation, and that is in addition to the original contract which included digging the trenches. Then there is an item for one and a half inch shutoff valves at $44.85 each. Those are just some samples of the prices. They may be all right, I do not know, but they sound fairly substantial to me.
Now, here is another change order involving the drilling of two new wells as well as the repairing already there. Now, Alexander was given a firm price contract for the two new wells at $13,257.66 each, which price included six and a quarter inch pipe and a small 8 foot by 8 foot frame pump house. According to the evidence the No. 3 well produced a satisfactory flow of water at 105 feet, yet the price paid was $13,257.66. Well No. 4 was drilled to a depth of 329 feet, and for each one of those wells Alexander got $13,257.66. Knowing something about what is involved in drilling water wells in that area, Alberta taxpayers could never be blamed for believing they had really been "rooked" when they look at this price.


Edmund Davie Fulton: Not only Alberta taxpayers; Canadian taxpayers.


Solon Earl Low: I am speaking of those in that area who saw it and who complained about it. I suppose you could find ample illustrations all over Canada of similar things.


Mr. Brooks:: Is this all rock?


Solon Earl Low: No. It is not all rock. It could not have been, as my hon. friend will see. This will answer my hon. friend's question. Then they see that Alexander was also given a contract to clean out the sand from another well that had been drilled on the base some years ago. It is easy drilling in that area. There is a great deal of sand and loam. This contract for cleaning out this well was supposed to be on a cost-plus basis but the final bill on it was $1,191.55, which is about what most farmers would have to pay for the drilling of a new well and providing their own water supply there and in many other areas in that country that I know about.
Change order No. 4 referred to the installation of the electrical distribution system at Penhold. It called for an amount of $141,000. When he was questioned about this item, the president of Defence Construction Limited said that the government did not ask for tenders on this item. Instead, they left the details in the hands of Alexander Construction company and they called for tenders. Of course they were paid a little fee of $6,285 for it. Sunley Electric Limited got the job of installation for $134,751. It is an amazing situation when the government, with its own facilities for calling for tenders and placing contracts and its own inspectors right on the job, takes Alexander Construction company into partnership and gives them the authority to let contracts for the government at a nice fat fee of $6,285 for their trouble. Again I ask: Is it any wonder that people ask what friends Alexander Construction company have at court?
I will not take the time, Mr. Chairman, to speak of the cement slabs which my colleague mentioned last night, nor any one of the great many other sordid and amazing details that were recorded in the minutes of the committee's proceedings. I think the facts which I have reviewed-and they alone without anything else-prove conclusively enough that there have been waste, loose handling of contracts and favouritism in defence construction, and that the report of the defence expenditure committee was a complete whitewash job.
There is every good reason, in my judgment, why it would be in the public interest to have yet a complete judicial-type inquiry into the whole defence department and the business particularly of defence construction everywhere in Canada. It would be most revealing, I assure you, Mr. Chairman, and
Supply-Defence Production useful to the people as a whole in this country if such firms as Alexander Construction Limited could be examined under oath on the witness stand as they should be.


Mr. Prudham:: Mr. Chairman, last night the hon. member for Wetaskiwin made certain statements just as I was coming into the chamber. I did not hear what he said at the time. After reading Hansard, however, I think I should just say a word or two. As reported at page 4895 of Hansard the hon. member said:
The thing that makes me feel rather strongly about this contract Is that until a few months prior to the calling for tenders the Alexander Construction Company was known as the Prudham Construction Company. It would appear from the position this company was put in that there still might be some connection.
I made a statement last night. I should like to elaborate on it at this time. I have lived in Edmonton for about 23 years. During that period I was able to build up a successful business. That was done on the basis of honesty, good public service and hard work.
I greatly resent the attempt that is being made, now that I am in public life, to discredit that reputation; and I know that a great many people in my part of the country also resent it.
As I said last night, when I was elected a member of the House of Commons I was the proprietor of a construction and building supplies company. When I was given the honour of being appointed parliamentary assistant to the Minister of Resources and Development, I realized that I no longer would be able to carry the responsibility of a heavy business and the demands of that office. I immediately made arrangements to sell my interest in the construction company. I sold my interest completely for cash. I have no interest whatever in it now. The arrangements made at that time were that the Prudham name would be dropped as soon as the affairs of the company could be wound up. That was before Korea. At that time there was no thought of any defence construction or any government contracts. The company was not engaged in government contracting. It had a very nice commercial business in the city of Edmonton and was building several large schools at the time.
Perhaps I made a mistake. Had I known that Korea was coming up, I might have thought of making a restriction-in the sale of that company-to the effect that the succeeding company should not tender on government contracts. However, that is afterthought.

Supply-Defence Production I do not know how the shares of the Alexander Construction company are held. I have never made inquiries. I have never been in the office of the Alexander Construction company except once and that was a week after I had completed the sale, when I went in to wish them well. Since that time I have kept strictly away from the company and the operations of the company.
In so far as the Alexander Construction company are concerned, here in Ottawa they had been at a disadvantage. Every member of the House of Commons, on occasion, does a certain amount of chores for his constituents, including companies. Neither I nor my office have done anything for the Alexander Construction company. They have been at a disadvantage. They have come here and have run their own errands. To the best of my knowledge and memory, Mr. Alexander has never been in my office in Ottawa. I do not know the details of the tenders. I never inquired to see how Alexander Construction company stood in relation to other contractors.
Having had a long experience in the construction business, I know something of the problems the Alexander Construction company and the other construction companies have had in this defence construction period. It is all very well to say that the contracts were let with a deadline for finishing them, but it was another thing to get the steel. I have been told that on many of these contracts the steel was not available until after the expiry date of the contract. You cannot blame the contractors for that situation nor can you blame the government. It was caused by the shortage of steel, and nobody could do anything about it but make the best of it.
I have never been at Penhold airport and I have never been at Cold Lake. I know nothing about what is going on there except what I have heard. At no time have I ever spoken to my colleague the Minister of Defence Production on behalf of Alexander Construction company and at no time has anyone on my staff interceded on their behalf.
I hope that what I have said puts some of the apparent misconceptions straight, Mr. Chairman. I think that my friends in the Social Credit party are pushing this matter just a little too far.


John Horace Dickey: Mr. Chairman, in view of the fact that some rather extended references have been made in this debate to the work of the committee on defence expenditure, particularly in relation to the evidence that 
was given before that Committee about the construction program, I might deal very briefly with the work of that committee in that field and with some of the assertions that have been made by various members who have preceded me. It is only fair to say that the speeches that have been made so far in this debate by members of the opposition, particularly of the official opposition and the Social Credit party, have amounted to attacks on the committee on defence expenditure and the work it did, and in fact on the whole system of examining matters of public interest by committees of parliament. That seems to be extraordinary when we recall the insistence with which certain members, particularly of the official opposition, request the government to set up committees of parliament for every conceivable reason and device.
When they get the committees, they then come back to parliament and complain that the committees have not done their work properly and that the members of the committees are not competent to deal with the matters that have been placed before them. That was said in the committee on defence expenditure. Several members said that; they said that they themselves were not competent to deal with these things, and they requested expert assistance.


Mr. Macdonnell (Greenwood):: They said they were not engineers.


John Horace Dickey: We hear a lot of talk from the opposition about the government having contempt for parliament. In my experience here I have not seen anything to equal the contempt of parliament that is shown by the members of the opposition in their approach to this question of committees dealing with public business.
What I shall have to say in dealing with the facts of the evidence brought out in the committee in relation to statements which have been made in this debate will indicate not only to the committee but to the public who read the records of this house that the committee on defence expenditure did excellent work, and that it made findings which will fully justify the public in coming to the conclusion that is stated in the report, that in the field of defence construction public money has been well spent and the public has received full value for the money that has been expended, and the very large sums that have been expended, in this way.
Members of the opposition groups in the committee and by the so-called amendment to the report of the committee moved by the official opposition have made very definite and pointed insinuations that the civil servants and the members of the armed forces

who appeared to give evidence before the committee cannot be trusted and that their evidence should not be accepted. That is something to which I drew attention in the committee and protested against, and I protest against it again in this house with the utmost vehemence.
The men who appeared before the committee were sincere and honest public servants. They gave their evidence with the same care and regard for the truth and the absolute truth as if they had been under oath and appearing in a court of law. These innuendoes and suggestions, that in order to get at the facts we require some sort of independent and expert advice, are not borne out by the record of the committee. As a matter of fact, what we require, Mr. Chairman, is for the members, both of the committee and those who did not sit on the committee, to read the record of evidence and to understand it, and not to completely ignore it when they discuss the proceedings of the committee in the house, because that is what has been going on in this debate.
Some complaint was made because the committee dealt only with construction. There was the suggestion that the committee had been derelict in its duty in that regard. The fact is that in the previous session the committee on defence expenditure had gone in great detail into the question of programs of various types of armament, aircraft, and supplies of all kinds. It was the request of the opposition members that on this occasion this year we go into the very important and extensive construction program, which had been touched on only lightly in the previous committee. It was to meet the criticisms which had been made of this construction program that arrangements were made, very gladly made, by this department and the Department of National Defence, to facilitate the examination of the construction program by the committee in the most thorough way that would be possible. There were signs that members of the opposition regarded the construction program as a very fertile field for examination. They had high hopes that they would uncover waste, extravagance and scandals.
The fact is that, as the proceedings of the committee went forward, it was clear from the evidence that they were not going to find and could not find what did not exist, namely, waste, extravagance, and scandals in that program. And for that reason we began to be met with the suggestion that perhaps this examination of construction was not quite as valuable as it had looked at first, and we should get on to a variety of other subjects.
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The committee was absolutely right, in the time at its disposal, in trying to deal as completely as it possibly could with the construction program. The method adopted by the steering committee was to invite the members of the opposition to select the particular construction projects that they wished to have examined, and the list that was drawn up was one of nominations by the members of the opposition of the projects that they believed were the very ones that should be examined and would disclose the kind of waste and extravagance that they wished to establish against the program. We were very glad to meet the members of the opposition in that regard and to deal with the very subjects that they requested. We have heard again today the hon. member for Kamloops complaining about the lack of information, and yet yesterday and at other times in this house we have heard the hon. member for York West and other hon. members complaining because they have been inundated with information; they got so much information they could not handle it.
The hon. member for York West is more correct than the hon. member for Kamloops. If there is any criticism of what was done by these departments in putting the evidence into the committee it would be that the evidence was too voluminous and gave too much detail. Some hon. members were inclined to throw up their hands and decide they could not examine all this great mass of detail.
I think I should now refer to just a few of the specific matters that have been brought out in this debate and to show that far from presenting facts, as the hon. member for Peace River has said, they have not been presenting the facts as disclosed by the evidence in the committee, but they have been actually presenting the complaints and the arguments that were made previously, and have been completely ignoring the evidence that was given to explain exactly what had happened and to show what the situations were. And it is only by completely ignoring what was placed before the committee by way of evidence that hon. members have been able to make any fist at all of making the kind of arguments they have placed before the committee in this debate.
The hon. member for Peace River, the hon. member for Wetaskiwin, the hon. member for Melfort and the hon. member for Kamloops all dealt at some length with matters relating to contracts for the construction of buildings and other works at the air station at Penhold. One of the particular points raised by the hon. member for Peace River, following the hon. member for Wetaskiwin,

Supply-Defence Production was the innuendo that some preference had been extended to Alexander Construction Limited in connection with these contracts; and coupled with that was an innuendo against the Minister of Mines and Technical Surveys, with which he has dealt.


Solon Earl Low: May I say that there was no innuendo with respect to the first thing mentioned by the parliamentary assistant. But I am not taking any responsibility for any innuendoes other than what I actually said. I said that definitely, in my opinion, preference had been given. There was no innuendo; it was a straight statement.


John Horace Dickey: Well, if the hon. member for Peace River had examined the record of the evidence before the committee on defence expenditure-


Solon Earl Low: I did.


John Horace Dickey: -and if he had understood what is in that evidence, he would not have risen in his place in this debate and made that definite statement, or even the innuendo to that effect. Because he based his arguments, first of all, on the fact that the original Alexander contract had been extended by almost $600,000. He made the suggestion that there had been something that was planned by somebody as a way of making this contract more remunerative to Alexander Construction Limited.
The fact of the matter is that these contracts are let on competitive tenders, and the defence expenditure committee was informed of the number of tenders that were received in each of these cases, and the range of the bids. And there has been no suggestion that there was anything improper about that. These tenders are on the basis of a firm price, with firm prices for units of work. And it is clearly understood by everybody who tenders that, if any additional work is required under a particular contract, he will be required to do that work at the unit prices contained in his tender. That is one of the considerations, which shows that the tender of the lowest tenderer is really the lowest tender, and one which should be accepted.
The substantial increases in this main contract, as shown at pages 516 and 517 of the minutes of proceedings and evidence of the committee, are quite interesting. For instance change order number 2 was for erection of a 72-man extension to one of these buildings. In other words it had been found necessary by the Department of National Defence to extend the accommodation required, and that created a change order to provide the accommodation for 72 more men. Is the suggestion made that that change was known at the


time the tenders were called, and was held back in order to assist Mr. Alexander? I think that is the suggestion the hon. member has made.


Solon Earl Low: May I answer the parliamentary assistant, although I do not wish to interrupt. Could he say at this time whether the people who were in charge of construction at Pen-hold did not know what they were building for, right from the beginning?


John Horace Dickey: Not at all; they knew exactly what they were 'building for.


Solon Earl Low: Then why did they not know that they had to have space for 72 more men?


John Horace Dickey: Changes in plans do come up. And I am quite interested to see it is clear that the hon. member is trying to imply that some official of the Department of National Defence held this back in order to assist and to favour Alexander Construction Limited.


Solon Earl Low: No, I deny that emphatically.


James MacKerras Macdonnell: Utterly
unfair.


Solon Earl Low: I deny it emphatically; and I wish the parliamentary assistant would not descend into that realm. We are trying to keep this discussion on a high level, and I think he should withdraw that statement.


James MacKerras Macdonnell: Make him take that back.


The Chairman:: I think perhaps the parliamentary assistant did not understand exactly what the hon. member meant when he spoke earlier. However, I wish to tell the hon. member that at a certain moment I had thought there was in his remarks an implication to the effect that someone, somewhere, had held certain changes to be made later in order to favour the company to which he was referring. And if I understood it that way, it is possible that other hon. members did. If it is not what the hon. member for Peace River intended to say, and if he wishes to make it clear now, then the parliamentary assistant must accept his statement.


John Horace Dickey: I would certainly withdraw any statement that was unfair; but I had the clear impression, as you did, Mr. Chairman, that that was what the hon. member had said; and I must say I cannot understand his argument, unless that is what he was saying. However, if he was saying something else, then I certainly accept that explanation.
Another increase in connection with this contract was concerning the installation of an electrical distribution system. That was a matter to which he referred with some special emphasis. I should tell the hon.

member that it is very normal practice in construction work to have a prime contractor call for firm price tenders for subcontracting work, and to require that the prime contractor be responsible for the manner in which the subcontractor carries out the work.
This is normal procedure, and it was the procedure followed in this instance. The prime contractor, Alexander Construction Limited, was required to call for firm price tenders. They awarded it to the lowest bidder, and they were required to oversee the way the work was done, and be themselves responsible for its proper completion. They were required to service that contract and to pay the subcontractor, and then, themselves, put in progress claims for payment from Defence Construction Limited. And it was for that kind of responsible work that they got a very modest fee for the servicing of the contract. That was done because it has been found to be the most economical and the best way to do this kind of work. Many of these subtrades have to correlate their work with the work of the prime contractor; and unless the prime contractor has some direct responsibility and authority over the subcontractor, difficulties and delays are inclined to arise. And it was for that reason that this procedure was followed in the present instance.


Solon Earl Low: Does the parliamentary assistant admit that at the same time Defence Construction Limited could have had its own inspectors on the job, and could easily have done the job?


John Horace Dickey: No. The system is that the prime contractor is held responsible to Defence Construction Limited for the proper performance of the work by the subcontractor. Defence Production Limited have their own inspectors on the job to oversee the whole thing and to inspect that part of it just the same as any other part.


Solon Earl Low: My question was not whether it was the normal practice; what I wanted to know was whether Defence Construction Limited did not have their own inspectors on the job who should have done the same service.


John Horace Dickey: They had their own inspectors on the job who inspected this part of it just the same as any other part. The interests of economy and the proper performance of the work dictated that it should be done in this way.


Mr.   Johnsion@: Does the hon. member mean to imply that when a prime contract is let it is the general practice to exclude such things as electrical wiring, plumbing and 68108-311J
Supply-Defence Production things of that nature, and then later on let them out as subcontracts?


John Horace Dickey: I do not think that that question can be answered as to whether or not it is the general practice.


Mr.   Johnsion@: Mr. Chairman-


John Horace Dickey: Will the hon. member permit me to answer. The evidence before the committee was that at the time the prime contract was let the proper information for the installation of electrical services was not available and they could not be included in the tenders of those who bid on the prime contract. For that reason they had to be let out to tender later.


Mr.   Johnsion@: That is a very peculiar situation in itself.


John Horace Dickey: I am just assuring the hon. member that that was the situation. He may regard it as peculiar, but that is the fact. Another matter raised by the hon. member in connection with the Alexander Construction company was the delays that had been experienced and the fact that there was no penalty clause in the contract. The situation is that we are having considerable difficulty getting bids on firm price jobs, particularly in Alberta, without making it more difficult by having penalty clauses. I am informed that it is impossible to get a firm price bid on a substantial job anywhere in Canada with a penalty clause for the completion date.
The reason for that is that the many causes for delay on any job are outside the control of the contractor and they cannot foresee what might come up. With respect to the Penhold job, the evidence before the committee indicated that the causes of delay were largely outside the hands of the contractor. First of all, there was difficulty in getting labour. The fact is, as the hon. member probably knows, that contractors in Alberta have to bid against employers of labour who are engaged on large cost-plus contracts for private industry. There is a very competitive market for labour. In addition, the weather in Alberta in 1951 was exceptionally bad. I understand that it was only in August that no snow fell in the province.
Then there was a problem created by deliveries of structural and reinforcing steel over which the contractor had no control. This general problem became so serious that Defence Construction Limited had to set up a special branch to expedite deliveries of steel to various important construction projects.

Supply-Defence Production Then in connection with this particular job there were problems with respect to the location of buildings and soil conditions which involved delay. There was also the question of extra work required, and which was covered by the various change orders. That all took extra time and put forward the date of completion of the various buildings. These change orders are carefully checked and were issued only for work that was required.
The hon. member went on to say that while Alexander was having this difficulty at Pen-hold he was awarded another contract at Cold Lake. The fact is that once again firm price tenders were called for and the Alexander Construction company was the lowest tenderer.


Solon Earl Low: Right there, Mr. Chairman-


John Horace Dickey: I think I have been as accommodating as I could be and I think what I am going to say will answer the interjection the hon. member was going to make. If Defence Construction Limited, having received a low bid from Alexander Construction company, which is a recognized operator in the construction field in Alberta, had refused to accept it and had accepted a higher bid because of the delays at Penhold, then the Alexander Construction company, the hon. member and perhaps many other hon. members of the opposition could have come here and complained bitterly because they could have shown that the delays at Penhold were beyond the control of the Alexander Construction company. It would have been contended that it was grossly unfair to penalize them with respect to another contract because of those delays. That is the situation and if the hon. member will carefully read the evidence given before the committee he will see that that is correct.
Another matter raised by the hon. member was in connection with the water supply and the cost of drilling wells. The fact is that tenders were called for the drilling of these wells and the work was done under a subcontract by what I am informed is one of the leading firms doing this sort of work in Canada, the International Water Supply Company. Doubtless the hon. member knows that company and its reputation.
It is completely fantastic to compare the job of supplying water to this camp to the job of supplying water to a farm. The evidence before the committee was that the needs of a town of 3,000, service personnel and dependents, had to be met and the requirement was that there should be a flow of 200 gallons per minute. I am quite sure that


the hon. member cannot stand up in his place and tell me of any town in Alberta with a population of 3,000 that is obtaining its water supply from deep wells at that rate of flow at a lower cost than was paid at Penhold.
At one o'clock the committee took recess.
The committee resumed at 2.30 o'clock.


John Horace Dickey: Mr. Chairman, when the committee rose at one o'clock I was dealing with matters that had been raised in this debate particularly with regard to projects at Pen-hold and Cold Lake. In continuing with those remarks I should like to recall to the committee the speech made last evening in this debate by the hon. member for Melfort. The hon. member dealt in some detail with points similar to those with which I have been concerned regarding Penhold. He also raised the question of construction work at Churchill and the extremely high costs of construction operations at that location. As I understood the hon. member, he stated that he could understand and appreciate that construction costs at a location like Churchill might be something of the order of twice what normal construction costs would be at more normal localities. He made a comparison between a ten-room school built at Churchill costing about $500,000 and some school to which he referred as being built at Summerside.
It is not possible for anyone to deal with that comparison without knowing full details of the school to which he referred at Summerside, whether it was comparable construction, when it was built, and matters of that kind. However, Mr. Chairman, the interesting fact is that the hon. member did say that he could appreciate costs being something in the vicinity of twice as high in Churchill as in any other place.
If the hon. member will look at pages 700 and 701 of the proceedings of the defence expenditure committee he will read from the evidence of the president of Defence Construction Limited, who placed them on the record and explained them to the committee, the various reasons why residential and other construction at Churchill was more expensive. For instance, there was the necessity to provide additional insulation; expenditures to provide water, sewer and electrical service through covered passages rather than by underground services; and things of that kind. The evidence of Mr. Johnson on that point was that costs at Churchill were running approximately about twice what they would be expected to be for similar construction in say Montreal or Toronto.

That, Mr. Chairman, I think, is just about the clearest indication that the committee did worth-while work. If the hon. member for Melfort had consulted the evidence, his concern about high costs at Churchill would have been very, very substantially met; because, after all, he admitted that it should cost about twice what it would normally. The evidence is that construction at Churchill is running just about twice what the cost of normal construction would be.
The hon. member for Kamloops also dealt at some length with the operations at Pen-hold. I think he indicated that other firms were not asked to tender on the additional work being given to Alexander Construction company at that point.


Edmund Davie Fulton: No.


John Horace Dickey: Well, the hon. member says he did not imply that, and he is quite correct if he did not. All those additional items were subject to tender calls, as I think the svidence clearly indicates. He did, however, criticize us for what he referred to as unsound methods of contracting, and he spoke particularly of cost-plus contracts at Goose Bay, at Churchill and at other locations. He quoted the statement made by a former financial adviser to the Department of Defence Production, and if hon. members will read the statement carefully they will see that it expressed very clearly the policy of the Department of Defence Production.
It is true that Mr. Matthews' statement was directed particularly to procurement contracts and not construction contracts. While there are substantial differences in some cases between procurement and construction contracts, I think the general principle is clear and it is the same throughout the whole field. Our main principle is to secure competitive firm price bids for every bit of work we do if it is at all possible to proceed in that manner. The success that has been achieved in following that procedure is indicated by the figures that were given in the committee and which were also given in this house prior to that time. They show that of all our construction contracts last year 2 per cent are on a cost plus fixed fee basis and that the total value of those contracts, that is outside the special security program, is only 8 per cent.
Hon. members of the opposition quite often hold up to us the example of the United Kingdom parliament and say that we should try to follow their way of doing things. It may be interesting to the committee to hear this exchange which appears in the United Kingdom Hansard for February 9, 1953, column 7, which is headed "Ministry of supply; contracts".
Supply-Defence Production
Sir W. Smithers asked the minister of supply if, in the interests of the taxpayer, he will discontinue contracts on a cost-plus basis and put all contracts out to competitive tender.


Mr.   Sandys@: The overwhelming majority of our production contracts are placed on the basis of competitive tenders or fixed prices. Only in cases where costs cannot be reliably estimated in advance, as in research and development work, is payment made on a cost basis.
That is a statement that could equally well have been made in this house to describe the contracting methods and procedures which we have followed. I submit to the hon. member and to the committee that he is not in accordance with the facts when he says that we are following unsound methods of contracting. We are following the soundest possible method. We are getting good firm prices for the vast majority of our work, and we are doing that work with the protection of these firm prices.
Now, the hon. member also, in dealing with Churchill, stated that the public accounts disclose that one of the contractors at that location, the Foundation Company, had been paid, in the fiscal year 1952, as I understood him, fees of $500,000 for $12 million worth of work. The hon. member must be under some misapprehension as to the facts. The facts are that for work done from 1948, and in every fiscal year up to that time, the total amount of work performed by the Foundation Company amounted to $12 million. Over that whole period of time the company has been paid $500,000. This shows that the fees that they have received amount to something in the vicinity of 4 per cent for that very large volume of work. As has already been explained, the fees are based on a sliding scale and are fixed at the time the contract is signed.
The hon. member also said, as I understood him, that this work at places like Churchill was all being given to one company, and that no one else had an opportunity to participate. If the hon. member and members of the committee will look at page 671 of the proceedings of the defence committee, they will see there a summary of defence construction contracts at Fort Churchill. This table shows a total amount for work prior to November 22, 1950, and then it lists the contracts from November 22, 1950, as follows:
(a)	Foundation Company of Canada:
Contract C
Contract E
(b)	Cotter Brothers Limited
(e) Partridge-Halliday Limited
(d)	Kummen-Shipman Limited
(e)	Western Asbestos Limited
Then, the new contracts placed by Defence Construction Limited are as follows:
(a)	Foundation Company of Canada Limited
(b)	Tower Construction Limited
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Supply-Defence Production
(c)	Harris Construction Limited
(d)	Canadian National Railways Limited
(e)	Canadian Fairbanks-Morse Limited
(f)	Manitoba Bridge and Engineering Works
(g)	Consultants' Services
That list indicates that the main contractor at Churchill is the Foundation Company. They work there on a cost plus fixed fee basis, subject to the controls, checks, audits and inspection which were fully disclosed to the committee and which I think satisfied the members of the committee that the greatest possible care was taken in the administration of these contracts. It shows also that portions of the work are being given to the other contractors who are able to perform work in that area.
The hon. member complained about Goose Bay. The facts as disclosed to the committee were that there was an excellent, well-equipped contractor on the site. In work of that kind, if a contractor has to move in equipment, if he has to set up his living accommodation, bring in his workers and set up his administration, all of those costs are chargeable to the work. The evidence of the president of Defence Construction Limited was that in considering the whole circumstances it was found to be much less costly to give the contract to the company that was already there and established for some years.
Now, Mr. Chairman, there are a number of other individual matters to which I could refer but I do not wish to detain the committee any longer than is absolutely necessary. In general I should simply like to say that, when the committee was in its early stages, there were a number of members of the committee belonging to the opposition groups who made allegations about complaints and made references to numerous letters that had been received complaining about improper activities on defence construction projects. It was stated that those were going to be carefully inquired into. Well, the committee sat for many weeks and not one letter or charge was brought before it, not one charge of any wrongdoing or anything improper was proven or even attempted to be proven.
Take, for example, the matters brought up in this house earlier in the session concerning the construction at Namao. The undertaking was solemnly made in this house that, so far as we were concerned, Namao could be examined into and we would be delighted to have it examined into. The president of Central Mortgage and Housing Corporation came before the committee and gave evidence of a general nature. He was prepared to answer any questions that might have been put to him with respect to the particular contracts at Namao, which were largely housing contracts that were in question. Not one


question was put to him with regard to that matter. I think the only conclusion that can be drawn from the facts as disclosed by the evidence before the committee is that the finding of the committee, that the construction program has been well conceived, has been properly carried out in all the circumstances, and that the public has received good value for its money, is the only proper conclusion that could have been arrived at. I think the committee can be pleased with the work that it did, in spite of the fact that the hon. gentlemen who, in its early stages, seemed to think that they had some serious matters to bring before it, did not see fit to bring them forward.


Mr. Fair:: Mr. Chairman, on March 30 I put on the order paper four questions which read as follows:
1.	During the years 1950, 1951, 1952 and 1953 to date, who supplied milk to Camp Wainwright?
2.	At what price per quart was the milk supplied?
3.	Were tenders called?
4.	If so, who submitted bids and what were the prices quoted?
I may say that I tried to get information in connection with this matter when the estimates of the Department of National Defence were before the house, but on that occasion the minister referred me to the Department of Defence Production as they were the ones that let the contract. I am raising this question at this time because I understand that some of the dairymen at Wainwright have gone to considerable expense in equipping their farms and buying new stock in order to be able to supply the camp with milk. I understand that they supplied the camp for some time and that recently a contract has been awarded to an outsider at a price that is considerably higher than that at which Wainwright residents are prepared to supply it.
I placed these questions on the order paper in 'order to get the department's side of the matter before asking questions in committee. I wonder whether 1 can have that information today or sometime soon. I may say that I am asking for the information now because at three o'clock I am supposed to be in another committee, and it is rather hard to be in two places at one time.


John Horace Dickey: Yes, Mr. Chairman; we can get that information. It required an inquiry being sent out to the district purchasing office in Alberta; but I think we can bring down the return shortly, as I saw the preliminary preparation of the return just the other day.
Briefly, to assure my hon. friend may I say that, with respect to purchases of milk, we are required to call for tenders, but the tender call is submitted only to dairies that are

approved1 by the Department of National Defence from the point of view of health standards. In connection with the Wainwright contracts, there have been two or three cases where the bacteriological count has been found to be high and the contract has had to be changed to another dairy which met the specifications.
There is also the difficulty of the supply of milk in the kind of containers that the Department of National Defence requires. Up until a few years ago the Department of National Defence took all their supplies in bulk; that is in ordinary milk cans; but they have found that it is much more economical in the use of milk to get it in the modern cardboard container. We are required to ask for tenders on that basis. While the original cost of the milk in containers is somewhat higher than is the cost of milk in bulk, the actual over-all cost, they find, is less.


Robert Fair: Mr. Chairman, I was aware of the fact that some alleged difficulty had arisen in connection with the pasteurization of milk; but I understand that in Wainwright there is an up-to-date pasteurization plant. That is my information.
In connection with the sample that was sent to Edmonton, I am informed that it was allowed to lie around the camp for some time before being sent up there. That fact would naturally have some effect upon the test when made at Edmonton. If there were some defects, I believe that, in view of the fact that there is a good pasteurization plant in the Wainwright territory, any alleged faults can be corrected. As there is a difference of 8 cents a quart, according to my information, I think it would be well worth while to investigate the matter and to keep the trade in the local territory as far as possible. I would ask of the minister that the matter be considered again and that it be given every possible favourable consideration.


John Horace Dickey: Certainly, Mr. Chairman. If they are in a position to compete in the future, they will certainly get a chance for the business.


Robert Fair: Will that opportunity be offered in the near future?


John Horace Dickey: Oh, yes. These matters are continually under review. I know that tenders are called quite often.


Mr. Green:: Mr. Chairman, there are three different matters which I should like to place before the Minister of Defence Production, and I would appreciate having his comments on them. Yesterday, when the minister was
Supply-Defence Production introducing his estimates, as reported at page 4876 he said:
The situation the government faces in the immediate future is, however, one of preparing for either of two eventualities-all-out war or an extended period of peace.
I greatly doubt whether the minister's remark there was all-inclusive because I think the real situation we face is a prolonged period of being prepared to defend ourselves rather than a period of peace, if the minister meant it as an actual peace.


Clarence Decatur Howe: I meant war or no war.


Howard Charles Green: Yes. I think that we should face the fact that we will either be in an all-out war-which all of us pray fervently can be avoided-or we will have to be in a state of preparation; and that is something entirely new for Canada as it is for the other freedom-loving nations.
I have been greatly impressed by a report tabled in the United States and known as the Vance report, with which no doubt the minister is familiar. As a matter of fact, the only copy I could get was obtained by the parliamentary library from the Department of Trade and Commerce. The report is entitled "Production Capacity: A Military Reserve. A Report to the Director of Defence Mobilization by the Advisory Committee on Production Equipment." In that report Mr. Vance and his associates point out clearly this new condition we are facing in these words, and I think the words apply to Canada as well as to the United States:
But now that forces in-being and production of weapons have been brought up to substantial levels, the emphasis should be shifted to completing the production capacity needed as a base for full mobilization.
The basic assumption we have accepted is that the nation must maintain a high level of military preparedness over a period of years-a wholly new concept in our history. To make acceptable and supportable a mobilization program based on this assumption, military preparedness must be attained with maximum economy and with a minimum drain on the nation's resources.
As the minister knows, the report goes on to point out the weaknesses in stockpiling; that is, in acquiring large stocks particularly of war materials. Mr. Vance points out that even the United States is not in a position to supply all the materials that would be needed for stockpiling, if that system is to be used rather than one of building up production capacity. He also points out that the system of stockpiling would entail great losses from obsolescence and-that the costs are much higher than they are in merely having production capacity. For example, he explains the difference with regard to tanks. He says:
When an Inventory of 5,000 tanks becomes totally obsolete, it means a loss of at least $1 billion, but
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Supply-Defence Production
the cost of keeping the tank plant facilities up to date would be a small fraction of that amount.
I would hope that the minister would adopt a policy similar to that advocated in this report. Mr. Vance summed up his views in one paragraph where he said that the best interests of the nation would be served by substituting, to the greatest extent practicable, additional production facilities for stockpiles of military end items.
The minister in his statement yesterday said

he did not indicate that this was the plan being followed by Canada in full-that we were, as I understood him, and I may have been -wrong in interpreting his remarks, to go on manufacturing these articles and to hand them over to our associates in the North Atlantic treaty under a mutual aid program. I doubt very much whether the Canadian people should be faced with the cost of a plan of that kind, especially as it seems to be a good deal more expensive than merely having the productive capacity ready.
As I understand the Vance report, it is recommended that the government see to it that machine tools are acquired and that the plants themselves are ready or in such condition that they -can be set up quickly, rather than setting up plants and continuing to manufacture materials. The Canadian plan seems to involve the manufacture of materials and then giving these materials to others. That of course will put a strain on Canada's raw materials, and it will mean that the Canadian taxpayer will have to pay for all these materials which are turned over.
I ask the minister to clarify the situation in his department on that point. In connection therewith, and really ancillary to this point is-


Clarence Decatur Howe: Perhaps I might deal with that point for the moment.


Howard Charles Green: All right.


Clarence Decatur Howe: My statement was:
The maintenance of these specialized facilities, which have been set up to meet potential requirements of the armed forces, presents difficult problems. Canada is not, of course, alone in facing these difficulties. In the United States, too, the authorities are greatly concerned. As a partial solution we are studying the possibility of maintaining certain of our production lines operating at minimum economic rates by offering the end items to our NATO allies-
The situation varies with different production lines. For example, automotive vehicles; the difficulty of shutting down a line of automotive vehicles and starting it up again when required is not great because the skills


remain in the plant. But we have one source of explosives, the government arsenal. It would be impossible to shut that plant down, disperse the skills and expect to start it up again when the war came. In the first place, the physical equipment would not be usable without extensive rehabilitation, and the skills would have to be collected from wherever they might have gone were the plant shut down. An explosive plant is a good example of the type of plant where it is better to keep its lines operating at minimum capacity, even if we have to give away the product, rather than close the plant down and disperse the skills. The raw materials that go into explosives are not expensive. The cost of making explosives is largely in the cost of the plant and the workmen to operate the plant; represented by labour and overhead. These are the chief costs, and they are costly.
There are various items-I do not know that I can give other examples of plants that could be kept going just about as cheaply as shutting them down with any idea that they must be rehabilitated and put back into operation on short notice. For instance, pic-rite; we are the sole producers of picrite in the British empire, in fact on the North American continent. We kept the picrite line going at minimum capacity for two or three years after the war and stored the material. Then there came a terrific demand for picrite, and now both Britain and the United States are pressing us to enlarge the picrite facility. Had we shut that facility down completely we would have been out of the picrite business, and someone else would have had to start from scratch. That I think explains the general problem if not in all its details.
You must take one particular type of production, then we can discuss whether it is cheaper in the long run to shut the plant down and disperse the skills or to keep the plant operating at minimum capacity.


Howard Charles Green: I notice in the Vance report there is no example of end items on which production should be kept under way and the end items supplied to the other NATO nations. That seems to be a Canadian policy exclusively and different from the recommendations of the Vance report. I realize you cannot lay down any general policy that would cover every type of manufacture, but does the minister not think that basically our policy in this new type of period we are passing through should be one merely of preparing our productive capacity rather than of actually manufacturing the goods and

either stockpiling them here or sending them over to the other NATO nations?


Clarence Decatur Howe: I do not think you can answer that question categorically. In my opinion one of the strongest links in the defence of Canada is the capacity to produce on short notice. There is a limit, of course, to stockpiling. For instance, during the second world war, I think about 1943, we had an interruption to ocean transportation, and we filled the railroad right of way on both sides of the tracks from Windsor to Montreal with automotive vehicles and ammunition. That experience gives an idea of the problem of continuing stockpiling of production for any considerable time. As a matter of fact the stockpiling of end items beyond the immediate need for mobilization is of doubtful value anyway. Ammunition gets old and has to be destroyed, and other items lose their usefulness through obsolescence.
There is some misconception about stockpiling. The Department of Defence Production stockpiles raw materials such as tin or natural rubber or manganese, items that are not available if things in the Far East go wrong, but we do not store any manufactured item, at least no more than required to level out production. We do buy cloth in quantity, store it and distribute it for uniforms. We find that we can buy cloth much more cheaply if we can give our mills a good run on the type of cloth that is required for uniforms. But the mobilization stores carried by the services represent the equipment that is needed to permit immediate mobilization, and to provide for mobilization during the first six months. The time varies according to the item.


Howard Charles Green: Have we not reached that stage already?


Clarence Decatur Howe: I rather think we have. That is not my business to know. I cannot say categorically that we have reached that stage, but I will assume that is the case. We all remember the early days of world war II- at least I have reason to do so-1939 and 1940, when we had troops going around without uniforms and with old shoes, or at least civilian shoes, and using something other than rifles to drill with. Well, no one wants that to happen again. And if immediate mobilization involves a division, we must have mobilization stocks to take care of that number of troops. The problem of stockpiling for that type of equipment is that of the army. The Department of Defence Production has a policy which involves the lowest stocks that can be carried to enable the department to function.
Supply-Defence Production


Howard Charles Green: Why is there any need to buy large quantities of ordinary goods used by the civilian population?


Clarence Decatur Howe: That is a problem for the Department of National Defence. I do not think it is possible for me to discuss it. I do not make that policy. Someone has asked why we need neckties. I have great confidence that men of experience are represented in the department of the quartermaster general in the army, and if they requisition neckties we do not question the need. It would upset the relations between the two departments if we questioned the requirements of the services, and it is not our business to do so. If the services say they need a gold-plated piano, it is our duty to buy it.


Gordon Knapman Fraser: Surely not.


Howard Charles Green: I have more confidence than that in the Minister of Defence Production. I would hate to be the person who sent in an order for a gold-plated piano. Is there any supervision exercised over this policy of piling up huge amounts of stores? For instance, I had a return showing the quantities of shaving brushes purchased since January 1 last year. I find that the minister's department since January 1, 1952, spent $128,849 on 138,748 brushes. Surely there is some authority which can decide whether the quartermaster general or the Department of National Defence is wasteful in ordering such huge quantities of these ordinary goods.


Clarence Decatur Howe: In the first place, the requirements are screened in the Department of National Defence. Then every order is screened by treasury board; and there are special officers on treasury board whose duty it is to watch such requirements. If a question is raised the requisition is discussed with the Department of National Defence. My hon. friend will appreciate that our function as the procurement agency for the defence forces would not be consistent if we were to proceed to censor orders coming from the services. We have no specialists as to quantities needed by the services and we do not know what their requirements are. That is another line of business completely.
The rule is laid down in our department that if a requisition comes forward properly signed by the proper officers of the Department of National Defence, procurement is based upon that order. If treasury board believes the requisition is excessive, it will be stopped at treasury board level.


Howard Charles Green: Then the responsibility for purchasing too large a quantity of these articles rests with treasury board. Is that correct?
4924	HOUSE OF
Supply-Defence Production


Clarence Decatur Howe: It rests primarily with the Department of National Defence. As I say, treasury board has the ability to stop a purchase if it feels the expenditure is not made wisely.


Howard Charles Green: I do not know whether the Minister of Defence Production is on treasury board or not,-


Clarence Decatur Howe: In my 18 years as a member of the government I have never been on treasury board.


Howard Charles Green: -but I do urge that he impress upon treasury board the need for cutting out such foolish purchases as 139,000 shaving brushes in a period of 15 months.
My next question has to do with steel. In the report of the department we find at page 16 a paragraph dealing with this subject. It explains that steel is in easier supply now than formerly. Then follows this paragraph:
However, in spite of this increase in Canadian production, the department anticipates that the demand for steel will continue to grow and that the level of imports from the United States, the United Kingdom and other countries will be maintained.
The minister's department is primarily responsible for the supply of steel obtained in Canada. Will he tell the committee what increase there will be during the present calendar year in Canadian steel producing capacity?


Clarence Decatur Howe: The production potential for 1955 is forecast at 4,800,000 tons of steel ingots.


Howard Charles Green: That is for the year 1955?


Clarence Decatur Howe: Yes. Production today is hovering around 4,500,000 tons.


Howard Charles Green: And what is it to be in 1955?


Clarence Decatur Howe: It is to be 4,800,000 tons. At the present time consumption is about 5,500,000 tons. But there are certain types of steel Canada would never set out to produce. I have in mind, for instance, very heavy structural members. We have never supplied our full requirements, and I do not know that it is advisable to do so. It is just as well to have a margin of tonnage that we import in good times, and do not require to import in poor times-just a little cushion for our steel industry, which has a rather restricted market.


Howard Charles Green: Do I understand there is to be an increase of only 300,000 tons in steel making capacity between 1953 and 1955?


Clarence Decatur Howe: That is all we know at the present time.


Howard Charles Green: Is there not some way in which that production can be increased? Surely, whether we are preparing for war or whether


all our international troubles are settled and we have reached an ordinary peacetime atmosphere, we would require far more than an increase of 300,000 tons in that period of years.


Clarence Decatur Howe: My hon. friend will appreciate that we have just finished an increased production capacity of about 1,500,000 tons, which increased our former capacity by 50 per cent. That was a very large increase in one jump.
I understand why the steel mills would want to absorb -that new capacity before they move on to another general increase.


Howard Charles Green: What is the situation now in connection with the establishment of a steel industry on the west coast? The provincial mines minister in British Columbia announced on May 2 that Frobisher Limited were going to establish a steel smelter on the west coast. Can the minister give any information on that?


Clarence Decatur Howe: I cannot; I have not heard anything about it.


Howard Charles Green: Is there any possibility of Canada establishing plants to turn our iron ore from the Quebec-Labrador area into the meta-l form? When Dr. George S. Hume, director of scientific services for the Department of Mines and Technical Surveys, made a speech on March 9, 1953, to the prospectors and developers association and the geological association of Canada, he said this:
It is suggested as not beyond the possibilities of our research scientists to find ways and means in Canada to utilize electric power and iron ore occurring together in the same area to at least effect a partial processing which would be of immense benefit to this country. The Ontario research foundation has been doing excellent work on the study of iron and our mines branch at Ottawa has a number of scientists well versed in the technology of treatment of all kinds of ores. Thus well directed efforts might accomplish much toward reducing our iron ore to the metal before shipment outside Canada just as we produce metal from our copper, nickel, lead and zinc ores for the most part in this country.
Has the government any such plan in mind at the present time?


Clarence Decatur Howe: The government of Canada has never been in the primary steel business and I would hope that it never will be. The production of steel is definitely a matter for private enterprise.


Howard Charles Green: Apparently it involves research. Is research of this type being carried on?


Clarence Decatur Howe: Research of the type my hon. friend mentions is well advanced. It is now possible to smelt steel by electricity using a minimum of coke. That process has been considered in plans for the recent expansion in Canada but for this country at least, it has been found to be not as economical as the old

method. I believe it is in use in Norway. I do not think the metallurgical process is particularly difficult. As a matter of fact, at Trail they have been working on the metallurgical process of smelting their ores by electricity for some time.


Howard Charles Green: My final question has to do with the matter of spreading contracts across the country. As the minister knows, for many years we have been complaining about the concentration of industries in the two central provinces. 1 have an example here of a situation which I think could be remedied by the minister. Within the last week or two tenders have been called for what are known as pallets and picture frames, the tender number being R.20-K-1727.
These pallets are for army use in Montreal, and London, Ontario. Apparently they are used to store goods on in the stockrooms. Goods are piled on these wooden pallets and they are thus more easily moved from place to place.
The specifications call for the use of hardwood, which means that firms, not only in British Columbia but on the prairies, cannot compete because they would have to buy their hardwood in Ontario, bring it across the country, process it and then send it back for army use at Montreal and London. The companies on the west coast contend that softwood could be used just as well as hardwood for these pallets and would be just as serviceable. I understand that both the air force and the navy use softwood pallets, but for some reason the army insists upon hardwood. The result is that these western firms are put in an impossible position to compete, and the amounts involved are quite substantial, being I beli'eve in the neighbourhood of $500,000.
This is one type of article that could be made on the west coast. Could the minister have the situation looked into and, I would hope, make a change so that softwood would be considered acceptable for these pallets for use by the army, just as it is for use by the other services?


Clarence Decatur Howe: The question of pallets came to my attention two years ago when we had an order to be delivered on the west coast. To my horror I found that they were being made in Toronto and the price delivered on the west coast was about one-half what it would be for the same article made in Vancouver. I inquired into it and the reason given was the same as that given by my hon. friend, that the army insisted upon hardwood pallets. Hardwood is not indigenous to the west coast.
Since then we have taken up the matter with the army every time an order for pallets was received, but they still insist that their pallets should be made of hardwood. They
Supply-Defence Production contend that softwood splinters too easily and will not stand up to service. As I explained to my hon. friend, we do not argue with the army about quantities. We sometimes argue about specifications, but the decision of the user is final. Unless the army can be persuaded to change its mind about pallets we must buy according to the specifications that are submitted to us.


Howard Charles Green: I have a complaint against the navy as well.


Clarence Decatur Howe: Perhaps the hon. member had better wait until the Minister of National Defence is here.


Howard Charles Green: I received an answer from the Minister of Defence Production in reply to a question I had asked about Kindorf fittings for the navy. Orders were placed for these fittings in Montreal by what is called the lead yard. Apparently the Vickers people were the lead yard and they placed an order for these fittings which were to be placed in vessels on the west coast. The agents for Kindorf fittings in Vancouver were done out of this business because the order went through Montreal. The price to the government would have been exactly the same if ordered from the Vancouver agents. What procedure is followed in a case like that? Could there not be some system worked out whereby goods of that kind could be purchased from business people on the west coast?


Clarence Decatur Howe: I am told that in this particular case the Kindorf people themselves did not wish to use their agents who handled civilian work. They have representatives in Montreal who handle naval work exclusively and they insisted that the business be put through those representatives. We did not care what agent handled the business as long as the price was the same, but the manufacturers insisted that we deal through the Montreal agent.


Howard Charles Green: What is the policy of the department with regard to having goods of that type purchased where the ships are to be built?


Clarence Decatur Howe: We try to do that. Our policy is to buy as cheaply as possible. While there may be some hope of persuading the army to use softwood pallets, I do not think there is much hope of persuading the navy to use anything that is not according to naval tradition.


Mr. Herridge:: Mr. Chairman, as a member of the committee on defence expenditure I want to make a few brief remarks before this item is passed. I want to say that the hon. member for Melfort, who was my colleague on this committee, and I attempted in
4926	HOUSE OF
Supply-Defence Production every conceivable way to be as objective as possible in our approach to this question, which is the usual position of the party to which I belong. Our appeal to the electors has always been based on a basic political philosophy and program. We do not appeal to the electorate with a string of political negations that are often reshuffled to suit the necessities occasioned by a changing political climate and circumstance.
On that account we try to be as fair as we can. Before I proceed I do want to say that I think the chairman of the committee was quite fair. He gave us every opportunity to ask questions and there was a full discussion of each item. There was an unusually high attendance in the committee by members of all parties. Hon. members did the best they could to nibble away at the mountain of paper and information that was brought before them, but the committee had a mammoth and impossible task as far as completing its work was concerned. I do think we did the best we could in the time we had.
Last night I heard one of my Progressive Conservative friends to my right say that when the committee concluded its sittings he was frustrated. If the hon. gentleman would not mind taking a bit of advice from a backwoodsman and an unsophisticated backbencher, I would suggest that no one ever becomes frustrated if he is fully conversant with his own limitations and with the limitations of time and circumstance.
Before proceeding, Mr. Chairman, I must say that while we have had many sound criticisms from this side of the house, I cannot agree with some of the criticisms that have come from the Progressive Conservatives to my right. I think that in some cases they have been somewhat unfair and, as I look at the massive and immobile physique of the Minister of Defence Production, after listening to some of these minor and trifling criticisms, I am reminded of a story I read about a small boy throwing peanuts at the rock of Gibraltar in an effort to demolish it.
Mr. Chairman, I think the committee had an impossible task but it did the best it could. Look at the agenda which the committee had before it:	1. Acquisition and leases-land
and buildings at Esquimalt, Rocky Point and Gagetown, by the Department of National Defence; 2. A general statement with particular reference to Penhold, Namao, Churchill, Cold Lake, Esquimalt, Rocky Point and Gagetown, by the president of Defence Construction Limited; 3. Married quarters program, by president, Central Mortgage and Housing Corporation.


The following topics were also suggested:
1. Armaments, tanks, ammunition, guns and small arms; 2. Naval vessels; 3. Operation Pine Tree; 4. Training costs-all services; 5. Recruiting costs; 6. Soft goods; 7. Military travelling costs.
Well, Mr. Chairman, of all those we were only able to deal with the Currie report and the question of defence construction. As far as the departmental officials are concerned, we in this group recognize that they were willing to answer all questions. There were a lot of questions answered and a great deal of material was provided. In answering written questions and verbal questions by members of the committee, in my opinion the officials demonstrated that they had a very complete grasp of the department they were administering.
As I said in a previous debate, these increased costs-and we do think there were increased costs, that there was waste and that there was some inefficiency, and I think members of the committee should be frank and admit it, because there is no use trying to say there was not-were caused by factors beyond the control of these very capable and hard-working officials. They had no control over shortages which caused delays and obviously increased costs. No one can deny that. There were many changes in plans on the part of the army which increased costs, and weather conditions caused losses. Attempts to work overtime and attempts to overcome the weather and that sort of thing caused some extra expense. There was a shortage of satisfactory supervisory staff. Everyone in this country knows how difficult it is to get experienced and competent architects and experienced and competent engineers, and qualified staff of that type. Labour difficulties often arose. Above all there were repeated changes of plans by the Department of National Defence and an overriding sense of urgency which permeated the whole building program. I think we must fairly recognize those factors. The officials had little or no control over them and we must recognize that those factors were the cause of certain increased costs, certain inefficiency and certain waste.
Therefore, Mr. Chairman, the members of this group cannot support the report presented by the majority of the committee because we recognize those facts and we think they are not fully or sufficiently recognized in the report by the majority. No more can we support the report-shall I say the unofficial minority report-presented by the Progressive Conservatives, because theirs was a political approach to the question from the

opposite side. As I say, we have tried to look at this question fairly and objectively.
My further remarks are going to be brief, but I do want to make this point. We can do very little at this time to correct errors, inefficiency and waste of the past, but these expenditures are going to continue. I think that something will have been accomplished as a result of the discussions in this house and during the sittings of the committee if the government takes further steps to protect the taxpayers' interests in these expenditures. Therefore, Mr. Chairman, my colleague the member for Melfort last night put on the record a constructive suggestion which he moved as a resolution in the committee. We tried to get majority support for that resolution in the committee but we were unsuccessful. I will read the resolution which my colleague moved in the committee and then make some comments about it. He moved:
Your committee recommends that parliament should ask the Auditor General to establish three teams of auditors, one for each branch of the services, navy, army and air force, to make such check audits of military establishments as are necessary to determine that proper stocktaking is being carried out and that proper records are being kept, also to determine the physical conditions of all stores and whether proper storage and maintenance methods are being followed, and that the Auditor General report the findings of these teams to parliament at regular intervals of not less than six months.
My colleague repeated that plea in his remarks last evening, but I thought there was not a very favourable response from the Minister of Defence Production. I think that was because he possibly did not quite understand what we were proposing in this connection.


Clarence Decatur Howe: I think my hon. friend misunderstood my reference. Someone said there should be an independent check by parliament and I pointed out that it is the duty of the Auditor General, who is an officer of parliament, to make that check. I think I made no derogatory reference to the proposal that the Auditor General set up teams to do so. That would not have been my business.
I would like to see the Auditor General make the most accurate check that can be made of the army stores, and if your method is the one he considers best, then I am all for it.


Herbert Wilfred Herridge: We are delighted to notice the open mind which the minister has in this connection.
We believe that one of the very necessary things and one of the most important things is that these stockpiles of goods come more
Supply-Defence Production directly under the control of parliament. In that connection and in support of our proposal I wish to quote briefly from the Auditor General's report for 1952, page 24, paragraphs 57 and 58. He there is dealing with this very situation on which we based our resolution or recommendation. I read:
57.	In order that any sudden international emergency will not find the country unprepared, Canada, for the first time in peacetime, has large permanent service forces and a declared public policy to accumulate holdings of supplies of all kinds, to establish permanent depots, etc. Consequently, a large investment is represented by stores for (a) current needs, and (b) an emergency.
58.	Once procurement has been completed, it is the practice in some commonwealth countries to regard issues for immediate requirements of the services as outside parliament's concern; all other holdings are regarded as still of parliamentary interest. The reasoning is aptly stated in Colonel Durell's book, "Parliamentary Grants," which he wrote when chief paymaster of the war office. He states: "Parliament in granting the money to purchase stores does so on the understanding that the stores shall be used for the purposes for which they are intended when the grant is asked for. Any other application of them is as much a misappropriation as if the grant itself were applied to another purpose than the purchase of stores.
Should this view be regarded as suited to Canadian requirements, attention is drawn to the need for the establishing of a dividing line between service and departmental accounting responsibilities.
Now, Mr. Chairman, we in this group believe that is a very sound recommendation. Once again we urge the government to consider it. We are concerned about these large stockpiles, over which we believe parliament should have more effective and more direct control.
That is about all I am going to say at this time. We urge the consideration of our proposal by the house and the minister. It is intended as a step towards the development of a system of supervision that will make as certain as humanly possible that the taxpayer gets full value for his money in the large spending of this department.


David Arnold Croll: I wish to thank the hon. member for Kootenay West for his kind references and his objective analysis. If in the course of my few remarks I make some caustic comments, they are not applicable to him or his party.
The committee on defence expenditure was first appointed on January 22, and it held 26 meetings. It is fair for me to say to the house that, under the present circumstances, human ingenuity could not have devised a unanimous report. What troubles me particularly is the reference made by my impetuous friend, the hon. member for Eglin-ton, to the fact that the committee's report was a whitewash. This comment was later
4928	HOUSE OF
Supply-Defence Production echoed by the leader of the Social Credit party. There can be no denial that I am a party man, but I have never been a party hack. In my 25 years of political life I have had some small reputation for independence. I am not easily taken in. I would not be party to a whitewash. I am not now, and that is the reason I rise to make these few remarks.
The committee was set up for the purpose of seeking out, and if necessary ferreting out the facts without endangering national security. In the committee information was easily obtainable. All one had to do was ask for it. We have a thousand pages of evidence in the committee reports. The information was produced quickly and accurately. If I recall correctly, the hon. member for Calgary East last year said that we gave too much information. He got lost in it. I think some of us got lost in it, too. Last night the hon. member for York West said we had given too much information. As a matter of fact he stated that there was an avalanche of paper and a Niagara of information; colourful, but true. The hon. member who just sat down said there was a mountain of paper information. My point is that if a member of the committee asked a question, he got an answer.
On the other hand we have the very able hon. member for Greenwood who, in speaking last night, had a different slant on it. He said that the defence expenditure committee turned down everything asked for. Surely you cannot have it both ways. Either you got information or you did not get information. We must be clear about it. Nothing was concealed and nothing was denied which it was within the competence of this committee to deliver.
Perhaps it would be interesting for this house to learn that no defence committee in Great Britain or the United States received as much information publicly as did this committee on defence expenditure. It has never been the practice at Westminster or in this House of Commons to produce the records of courts of inquiry. They have been denied on the floor of this house time and again, yet we produced them for the defence expenditure committee. It has never been the practice at Westminster or in this house to produce the records of courts martial, but we produced them in the defence expenditure committee. It has never been the practice at Westminster or in this house to produce auditors' reports, but we produced excerpts from auditors' reports for the defence expenditure committee.
You may ask, why, and under what authority, was this done? I am not so sure of the authority, but we felt it was in the
[Mr. Croll.l

public interest that the information be produced and it was produced. It was a precedent, a historic precedent, and I think it is worth while for this house to know about it.
At the sessions of the committee last year we covered a great deal of the subject matter that was covered in yesterday's discussions. Yesterday the hon. member for Eglinton placed on the record a list of goods, quantities and costs, as appears on page 4878 of Hansard for May 6, 1953. Well, the scale of issue and the scale of distribution is not new. We did not go into it again this year because our program in the committee this year was dictated not by the great Liberal majority on the committee, but by the opposition. At the first meeting of the agenda committee we asked the members what matters they wanted particularly, and it was at the suggestion of the opposition that construction was to head the list. Then there would be armament, tanks, ammunition, guns, small arms, naval vessels and then "Operation Pine Tree". I asked them what "Operation Pine Tree" was, because I am frank to admit I did not know. The next items were to be training costs and recruiting costs.
Finally the very influential chairman was able to get an item on the list of matters to be considered, and I thought we should discuss soft goods. The hon. member for Skeena was then able to get military travel costs on the agenda. We spelled it out even a little better than that. You can recognize, from what we decided to investigate, who particularly asked that these matters be investigated. The first thing we were to do was deal with Esquimalt, Rocky Point and Gagetown. Then we were to deal with Penhold, Namao, Churchill, Cold Lake, Esquimalt, Rocky Point and Gagetown in more precise fashion.
Quite a number of speeches have been made in the House of Commons by the hon. member for Red Deer and the hon. member for Greenwood with respect to construction. If there is one criticism I have of the committee, and I do not criticize the members as such because I have not had the experience of sitting in opposition, it is that I find-


Mr. Ferguson:: You will have.


David Arnold Croll: Not for a long time, my friend. I find that the last thing my friends want is the facts. They attend for the purpose of affirming the things they are talking about, and if they do not get that information they immediately shift ground and want to devote their attention to something else entirely. There can be no denial that we investigated the spending of a great deal of money. We spent that money on the boys and girls in our

services. We spent it in order to attract them to the services and in order that they might have conditions comparable to those which they would have in civilian life. That is the least they are entitled to get, and they will get that from this government. We intend to continue to feed them, to clothe them and provide security for them. If there is anyone in this country who has any other way of dealing with the problem, we should like to hear about it.
Hon. members have expressed some disappointment over the method of parliamentary inquiry. I know only two methods of parliamentary inquiry. For the moment I will not discuss what happens to the opposition behind the iron curtain; I do not think it is applicable. But we have the parliamentary system that the Americans use, and the British and Canadian parliamentary system of inquiry. I am told that if you conduct a proper inquiry in the United States, the chairman must wear a coon cap and must be televised. Then you must have these breathless announcements by radio commentators, with appropriate commercials about lazy laxatives. Statements are made by committee members and sometimes they even permit a witness to speak, although I am not sure about that.
I appreciate the fact that the chairman of this committee disappointed some hon. members in that he did not make headlines, and up to this moment he does not know whether he is "telegenic". However, there was one thing we did. We had a normal inquiry under British and Canadian parliamentary practices. The evidence was given; the evidence was assessed, and it is now before this committee. When I hear the word "whitewash" it surprises me no little. If on the part of the majority there had been any desire to whitewash, we would have presented to that committee a report as phony as the one that was presented by the Conservative group.


Some hon. Members:: Oh, oh.


Gordon Knapman Fraser: Go easy.


David Arnold Croll: The report that was presented was factual, with one conclusion which was fully warranted. In the report we did not spare the government. In our report we said that Mr. Currie-and we dealt with the Currie aspects of it first-had made certain recommendations in parts 2, 3 and 4 and that those recommendations had been accepted by the government. There was endorsation of the recommendations for improving the Department of National Defence. We said there had been some irregularities in the accounting methods but that no dishonesty was involved, and that the omission resulted largely from
Supply-Defence Production the urgency of requirements, following the outbreak of hostilities in Korea.
There was no denial that methods might well be improved. But one of the things that we were particularly anxious to incorporate into the report was the fact that Mr. Currie did not see Petawawa alone but saw nine of the largest camps in Canada, and that only at Petawawa did he find what he set out in what became part of his report, but which was not as the result of research by himself or his staff but as the result of information which came to him and which later proved to be untrue. You could find proof of that in the evidence half a dozen times.
In so far as the construction aspect of it was concerned, it is interesting to see how much work we actually did. We had before us 894 construction contracts involving $375-8 million. They involved 172 sites and 1,270 buildings. On top of that we had 533 contracts with consulting engineers, architects, surveyors and what-not involving $13-7 million. That made almost $400 million in all. That is the amount of work that was before the committee at the present sittings.
I think one of the things that should be brought to the attention of the committee is the method of operation of the Department of Defence Production. Here is what they had to say. In the matter of publicly advertised tenders, they were opened in the presence of a committee composed of the regional engineer, regional superintendent and regional secretary of the regional office of the Central Mortgage and Housing Corporation in the region concerned, and after the awarding of the contracts each tenderer was advised by letter of the order of his bidding. That is a practice that is not usually followed, but certainly anyone who does business under those circumstances is not attempting to hide anything.
We heard the hon. member for Wetaskiwin deal yesterday with the matter of excessive costs. If you take the trouble to read the amendment of the Conservative members of the committee-and it will be trouble- you will find that in that report there is also a reference to the same item of $28,254.67. We dealt with $400 million in contracts, and we kept saying to them, "Where is this waste, this extravagance and this inefficiency?" Finally they both hit upon the same idea. Both came to the same conclusion. The Tories first mentioned the fact that there was a $28,000 item. Then my friend from the Social Credit party did the same thing.
In the light of the amount of money that was spent, surely there is ample justification for saying that the Canadian people received

Supply-Defence Production value for their money it all they can point to is the item of $28,254, which is made up in this fashion. In the fall of 1951 the R.C.A.F. requested a speed-up operation at Penhold involving extra work shifts, in order to complete certain buildings by February, 1952. This operation was cancelled on December 11 when it became obvious that the desired results could not be achieved. Extra cost involved was $28,254.67. Evidence was brought out that good judgment was used in incurring this expenditure and also in cancelling the arrangement when it become apparent that the full hopes for the benefit could not be obtained. What happened was that when it was found they were not obtaining the results they thought they might, they cancelled the arrangement.
This talk about a Liberal majority, and imposing upon the house and the committee and giving the impression that this is a most unusual method of conducting business, is not unusual. Every committee in every parliament reflects the house. May I tell my hon. friends that in Ontario they will find that the committee will have a majority of Conservatives; and in Saskatchewan, as my friends already know, the premier of that province keeps a majority of C.C.F. members on committees there.


Mr. Knowles:: The people keep them there.


David Arnold Croll: Tucker does not enjoy having them there. The people keep us here, as my hon. friend well knows. The same thing applies. The same situation is reflected in Great Britain and in the United States.


Donald Methuen Fleming: There is some sense of independence there on the part of members.


David Arnold Croll: There was a sense of independence on our part, as my hon. friend well knows.


Donald Methuen Fleming: No, I do not know that.


David Arnold Croll: My hon. friend knows full well that the final report was attractive to some of the members of the committee; they were not Conservative members, but the report was certainly attractive and it was factual. There was only one conclusion that could be put in the report, and the conclusion was justified. What my hon. friends wanted us to do was walk into the defence department and use a meat axe on them, and in that way we would have crippled the department and crippled the armament program of this country.


Donald Methuen Fleming: Can we get back to facts?


David Arnold Croll: We have been on facts, my friend. It is hard for you to recognize them; that is the only thing. Let me just say that


when we deal with facts this Liberal government makes no claim to perfection in its record. Infallibility and perfection belong to the Tories and with that 18 years of opposition and more to come. We do not claim that we have spent millions of dollars of public funds without loss due to human frailty. We have made some errors in judgment. There have been errors in the expenditure of public money. There has been some criminality, and the people responsible have been punished.


Douglas Scott Harkness: Who?


David Arnold Croll: Well, they are in jail. I do not know their names. There has been nothing to support the charge of waste, extravagance and inefficiency. It is now becoming not only a slogan without meaning, but it is becoming self-destructive.


Gordon Knapman Fraser: It is beginning to hurt you.


David Arnold Croll: Not a bit.


Gordon Knapman Fraser: Oh, is it not?


David Arnold Croll: Listen to what I have to say. We had a committee on defence expenditure in 1951; we had a committee again in 1952 and we had a committee in 1953. In these three years the committee dealt with nearly all of five or six billion dollars, or the best part of it. In all that time, with a full, complete and open hearing and with people on the other side looking for trouble, none was found. The Leader of the Opposition spent some time on that committee in the early stages, but he could find nothing there at all. Unlike the situation in the United States, there are no minks and no pinks; there are no deep freezes; there are no five percenters; no influence peddlers; no double dealing. There were honest mistakes and we admitted them, and they will not be repeated. It is regrettable that the Department of National Defence is turned into a playing field for purely political campaigns, with the Currie report as the football.
I am not speaking about honest criticism. Goodness knows, the Department of National Defence can take it, and some of the other departments can take it. I am talking about these irresponsible attacks, wilfully misleading statements, whose sole purpose is to convert our defence program into a playground for party politics. We have heard a great deal of the Currie report; we shall hear more about it in the months ahead. I wonder if it would not be interesting for the committee to have the second section of the Currie report which some hon. members have not seen. I am reading from the Toronto Star of May 4.


An hon. Member:: Oh, oh.


David Arnold Croll: It appeared in all the papers.


Mr. Hodgson:: This must be the second Currie report; the first one disappeared.


David Arnold Croll: This is the item:
George S. Currie, author of the Currie report on the army works service of the Department of National Defence, paid an outstanding tribute to Hon. Brooke Claxton, Minister of National Defence, here Saturday.
I quote:
I would also like at this time to thank the member of parliament in whose constituency we are now standing and who represents us at Ottawa with such competence, such industry and such integrity.
Hon. Brooke Claxton has grown up amongst us and thus we are all most conscious of the magnificent way in which he has represented us, not only as regards our own affairs, but as a Canadian giving outstanding service to our country.
What concerns the Canadian people-and you will find it out when you get to the hustings-


Clayton Wesley Hodgson: You will find it out, too.


David Arnold Croll: We are very anxious to go. You are the ones who are complaining.


Mr. Stuart (Charlotte):: And worrying about the date.


David Arnold Croll: What concerns the Canadian people is that this government is not dodging responsibilities, and is not looking for scapegoats. Every one of us here is prepared to take his responsibility.


Some hon. Members:: Oh, oh.


David Arnold Croll: I did not hear what was said, so I cannot reply. Whatever situation was found that needed correction was not only localized but corrected and cleaned up. They have the undertaking of this government that it will not occur again.


Julian Harcourt Ferguson: Glossed it all over.


Donald Methuen Fleming: Put the lid on.


Julian Harcourt Ferguson: That is all.


Mr. Higgins:: Closed the door.


David Arnold Croll: We closed the door to horses and to people like yourself.


Gordon Knapman Fraser: Did you see the cartoon of yourself in the Globe and Mail?


David Arnold Croll: I enjoyed it. I thought they did pretty well. It was not too handsome, but that is not their fault; they are doing the best they can. I am not going to say very much more except to indicate that yesterday an hon. member of the Social Credit party raised the question of the Alexander Construction company. He did not raise it in the committee. He asked a few questions, and when the answer was not what he expected, when the name of the Alexander
Supply-Defence Production Construction company did not come to the fore, he lost all interest.
What surprised me was that the hon. mefn-ber for York West yesterday rose in the house and in a very loud voice chastised us for not dealing with aircraft production. He sat through 19 meetings-I had to count them today in order to make sure-and never once did he say a word about aircraft production during the course of those meetings.


Mr. Adamson:: On a point of order, Mr. Chairman, the question of the production of aircraft never came before the committee. It was on the agenda, but we were dealing with construction items such as the building of barracks blocks and all that sort of thing, and we never got to it. We never did deal with the whole problem of aircraft production. And it was in my opinion deliberately done; it was a deliberate avoidance by the committee, in that we did not deal with the whole question of arms production.


Donald Methuen Fleming: And also on a question of privilege-


Some hon. Members:: Order.


David Arnold Croll: Mr. Speaker, I have the floor.


Donald Methuen Fleming: On a point of order.


The Deputy Chairman:: The hon. member for Eglinton I understand is raising a point of order.


Donald Methuen Fleming: Yes, on a matter of privilege.


An hon. Member:: There is a difference.


Donald Methuen Fleming: The record shows-


Mr. Martin:: That is not privilege; you are out of order.


Donald Methuen Fleming: There seems to be a great deal of prophecy on the other side of the house. I had only two words out of my mouth and the Minister of National Health and Welfare is prepared to rule.


Paul Joseph James Martin: I have known you for a quarter of a century.


Donald Methuen Fleming: With respect to this matter of aircraft production, the fact is that when we closed off on construction, the record shows-and I think the hon. member will admit it-that I pled-


Mr. Abbott:: Pleaded.


Donald Methuen Fleming: -with the chairman and the committee to have, even at the expense of a night sitting, an opportunity to deal with aircraft production. We pleaded with him to have meetings to consider it.


David Arnold Croll: What the hon. member says is correct. The hon. member for Eglinton did not plead, but he did ask, he did suggest that

Supply-Defence Production we hold a few meetings on aircraft production. Quite right. I am not talking about the hon. member for Eglinton; I shall deal with him later.
I am talking about the hon. member for York West. I am speaking for myself and for the committee. He spoke last night-you heard him-


James MacKerras Macdonnell: And spoke very well.


David Arnold Croll: Referring to the hon. member for York West, we had a meeting on January 27; he was a member of the committee, but he was not present. At that time we did bring in a report, and the second item of the report was aircraft production. Whether he knew about it or not, he certainly must have read the minutes. But he never once raised that point until he rose in the House of Commons and brought it out, when he thought he would not be corrected.
In so far as the hon. member for Eglinton is concerned, he did suggest that we deal with the matter of aircraft production. I pointed out to him that we had not completed the construction program. I do not think we had touched or that we had finished with Esquimau. It seemed that if we continued on construction it would be endless. There was item after item we ought to have dealt with, but there seemed to be no purpose in opening up something new when we could not follow it up. I suggested that it be brought up on the minister's estimates; that the minister's estimates had not yet been passed, and he could obtain the information here.
The hon. member is quite right, and I have no quarrel with him at all about it. My quarrel is this, that on the one hand we have the hon. member for York West, the hon. member for Calgary East, the hon. member for Kootenay West and other hon. members who say, "We could not get anything done on the committee. We were just flooded with information." They do not suggest it was by design. Then on the other hand the hon. member for Greenwood in his own bailiwick says, "We could not get information out of that committee." We have, on still the other hand, the hon. member for Eglinton who says, "I wanted aircraft production discussed", and I do not deny that. But the hon. member for York West, on the other hand, never once mentioned it. You cannot have it both ways all the time.


Agar Rodney Adamson: On a point of order, the agenda committee set out what items we were going to deal with, and they set them out in chronological order. Aircraft production was not reached. Had it been reached we could
(Mr. Croll.]
have dealt more usefully with the questions of the main expenditures on defence.
I was not on the agenda committee, but this is what happened. We pleaded with the committee to hold night sittings and to hold extra sittings so we could get on with the job and get through the work of the committee. But that was denied us. And if there is any reason that we did not get to aircraft production and the production of arms, the government members of the committee must accept the entire and complete blame for it.


David Arnold Croll: The hon. member for Eglinton spoke to me about holding sittings, but I never heard the expression "night sittings". The one reason we did not hold further sittings at that time was that the broadcasting committee was sitting, the Criminal Code committee was sitting and the committee on industrial relations was sitting, and members were jumping from committee to committee. You just could not divide yourself up into enough pieces to sit on all the committees. I never heard the suggestion about a night committee, because the house was sitting all the time.


Donald Methuen Fleming: Let me say this, because the hon. member for Spadina has referred to the agenda committee. I was one of the two Progressive Conservative members on that committee on the agenda, and it was I who asked that agenda committee, at an early date, that aircraft production be one item we should consider. I did so, I may say, at the request of the hon. member for York West. There was a list of nine subjects altogether and, in the time at our disposal, although we met twice a week regularly, we covered just the first two of those nine. Aircraft production was third, and we fell short of it.


David Arnold Croll: It appears that the Flemings talk only to the Crolls, and the Adamsons don't talk to either of them. There is nothing we can do about it.


Agar Rodney Adamson: Had we brought it up we would have been ruled out of order anyway by the hon. member who is speaking to the committee at this time.


David Arnold Croll: The hon. member for York West does a fairly good job of speaking for himself, but he has never been very successful in speaking for the hon. member for Spadina. Let me assure the hon. member that the only time he was ruled out of order was when he wanted to be ruled out of order, and he did it deliberately. That is why he was ruled out of order. I have said all I wish to say, and-


Agar Rodney Adamson: On a point of order. I was never ruled out of order in the committee.

The party was ruled out of order, and every motion we made to go into these things was ruled out of order.


David Arnold Croll: Well, if you were not ruled out of order, what are you complaining about?


Agar Rodney Adamson: Merely to keep the record straight.


David Arnold Croll: Let us see if the record speaks for itself or not. If the hon. member has taken the time to read the report made by the committee of which he was a member-


Agar Rodney Adamson: The majority report.


David Arnold Croll: -he will have seen what I shall now read. He can read it, if he wants to.
In one case your committee voted not to call for reports ruled outside its terms of reference by the chairman and in another case voted not to call for certain reports of the chief auditor of the Department of National Defence. Summaries of these auditor's reports were tabled and the chief auditor gave evidence that they constituted a fair summary.
That was the only time anyone was ever ruled out of order in that committee, and it was stated in the report because it was a factual matter.


An hon. Member:: It was by the majority of the committee.


James MacKerras Macdonnell: Come to the point.


David Arnold Croll: I have said all I wish to say, or at least almost all I wish to say. Let me say in closing that I believe, all in all, the committee worked as hard as it possibly could and did as much work as it could have been expected to do. We did have a great deal of information. The difficulty with the committee is that we did not really appreciate what $400 million means. When we got into it we found that there was far more work than we anticipated. With all the good will in the world there is just so much you can do. Members did ask questions and as a result they got answers. As a result of that there were more questions and more answers. It was a big task. I read the record and I am sure no one else did, but as chairman I had to do it. It took hours and hours after the committee was over just to go through the record of the evidence and glance at the various appendices and exhibits. That entailed a great deal of work. I think the committee did good work in 1951; it did good work in 1952, and it did good work in 1953.
The committee hearings have been disappointing to some opposition members. What they were looking for was not there. It never was. Nobody hid it. Nobody took it away.
I can assure hon. members of the committee that we who sit on the government side have no idea what evidence will be presented
Supply-Defence Production from day to day. The first time we hear these matters is when they are presented to the committee. We deal with the evidence in the same fashion that other hon. members have to. Some of it is surprising; some of it is puzzling; some of it we question. I believe the members of the committee, no matter to what party they belonged, were trying to be as helpful as they possibly could and endeavoured in every way they could to indicate in some fashion how to reduce the costs of the defence department without impairing its efforts.
I think this committee has had a good effect. I think the committee sitting has had a salutary effect upon the Department of National Defence. We shall reap the benefits of it in days to come. I would ask my hon. friends in the days ahead when they are talking about the Department of National Defence to talk from information rather than imagination.


Andrew Wesley Stuart: Would the hon. member tell me if the number of Liberals on the committee was out of proportion to the number here in the house?


David Arnold Croll: I understand it was the same proportion that is normal on every committee.


Douglas Scott Harkness: Mr. Chairman, a few
minutes ago there was quite a lot of talk about keeping the record straight, but I fear that after the speech just made by the hon. member for Spadina the record will be so tangled up that it will never be straightened out again. However, I shall do my best to untangle a few knots.
I do not intend at this date in the session to take up time by going into the details of the evidence given before the defence expenditure committee this year, nor do I intend to go over the report submitted to the house by that committee clause by clause in order to show why I consider that in many respects it is a whitewash. I do not think it is necessary to go over it in detail in that way, because the members of the official opposition who were members of the committee moved an amendment to the report which is now public property and which sets forth our views as to what kind of report should have been presented.
The hon. member for Spadina seemed to take considerable objection to the fact that the hon. member for Eglinton and one or two others said this report constituted a whitewash. I do not know why he should have taken such objection. As I said, I am not going to go over the report clause by clause, but as it was read I marked certain sentences and statements to which I think

Supply-Defence Production that word would apply and to which at least I took violent exception. There were some ten of them that I marked as illustrations of what I mean. The first sentence to which I should like to refer appears on page 2 of the report and reads:
All information requested by your committee was made available by the Department of National Defence, defence production and appropriate crown companies.
The information asked for by the committee was not made available. We asked for auditor's reports. We did not get them; all we got were excerpts. The hon. member for Kamloops-


John Horace Dickey: If the hon. member will permit me, just to keep the record straight, certain members of the committee asked for it, but the committee itself did not ask for that information from the department.


Douglas Scott Harkness: That is exactly the whole tone of this report. That is mere verbal quibbling.


John Horace Dickey: Not at all.


Douglas Scott Harkness: That is exactly the sort of thing I object to. There are statements in this report which from the strictly legalistic point of view might be said to indicate what happened, but they give an absolutely false impression.


John Horace Dickey: On a point of order, it is not fair to impute that the Department of National Defence, the Department of Defence Production or crown companies refused any information, because that is literally and actually not true. Information that was requested officially by the committee was given.


Douglas Scott Harkness: I did not say that the defence department or defence production or crown companies had refused information. What happened was that the chairman and the Liberal majority on the committee refused to have information produced because they thought it might do them some harm.


Edmund Davie Fulton: Over and over again.


Douglas Scott Harkness: This sentence I think gives a false impression and I object to it. I object to it particularly because of the grounds on which the parliamentary assistant has just defended it. The second sentence on the next page reads as follows:
The total losses due to the thefts at Camp Petawawa after recoveries amounted to less than $36,000.
Again a completely false impression. In his report Mr. Currie said it was impossible to determine the amount of the losses, and as an example he indicated how he had tried over a considerable period to find the facts


in connection with the bags of cement. He said that although he had had a number of men trying to track down the 18,000 odd bags of cement which it was estimated were missing or were concerned, it was impossible to determine that even after a most painstaking investigation. He gave other instances. He said it was impossible to determine the monetary loss. He went on further to say that apart from the monetary loss, the losses as a result of bad administration and so on were considerably greater than any direct monetary loss which might have been suffered.
The effect of putting a statement of this sort in the report is to try to persuade this house and the people of Canada that the only loss suffered at Petawawa was the small amount of $36,000. That is not what Mr. Currie said. That is not the fact. It is a complete misrepresentation of the Currie report and of the facts in the case.
As I say, I do not want to take up the time of the committee by going into the other eight instances, but they are all along the same lines. It is in view of that fact that I say the report was a whitewash as far as these ten instances are concerned. I think perhaps more than that might be found.
As I say, the hon. member for Spadina took considerable objection to the statement that it was a whitewash, and he made a great point of the fact that the report that we concurred in was a political document while the report put in by himself was not a political document. I think the speech he made would convince anyone who listened to it or who reads it that the hon. member for Spadina does not frequently speak in a non-political way. If that was a non-political speech then I do not know what a political speech would sound like. I am not condemning the hon. member for making a political speech.


An hon. Member:: It was a good one.


Douglas Scott Harkness: I do not blame him for doing it, but I do blame him for trying to pretend that his report was a non-political report. It was just about as political as he could get it. He said that if they had wanted to turn in a political report it would have been very different. I would ask the question: How political can you get? It might have been a little different, but it could not have been very much different. I think he just about plumbed the depths as far as political reports are concerned in the one he turned in.


Douglas Charles Abbott: The laughter sounds very hollow.


Donald Methuen Fleming: You cannot even laugh now.


Douglas Charles Abbott: Be careful.


Douglas Scott Harkness: I do not know why the hon. member for Spadina should have wrought himself up into such an appearance of indignation over the fact that politics have entered into this matter, particularly in view of his own speech and his own report. I leave the matter at that point.
The hon. member for Spadina said great quantities of information were supplied to the committee. That is correct; I agree with that. Vast quantities of information were supplied to the committee. As a matter of fact the same thing was true last year and I said so then. The point I complained about last year and about which I complain again, in so far as information supplied to the committee is concerned, is that a great deal of the information supplied covered minor details and was in fact a waste of time to the committee. As a matter of fact, I think that a great amount of paper was deliberately shot at us last year and this year so it would not be possible for us to carry on the investigation which we should have been able to carry on.


An hon. Member:: You asked for it.


Douglas Scott Harkness: In other words, there was a deliberate policy of smothering us with innumerable small details. The hon. member for Spadina in his speech quoted what I said last year about too much information having been given to the committee; but it was the form in which it was given. He did not go on to say what I had said, that what I was complaining about was the fact that a great deal of this information was not of particular value and served in fact to smother us just as we might be smothered under an avalanche of snow. In this case the avalanche was of paper.
The hon. member for Spadina then went on to say that the work of the committee was not dictated by the Liberal majority on the committee, and that the agenda was drawn up on the basis of suggestions made by the opposition about what should be investigated. Well, the agenda was drawn up all right, but I would point out that at least half of the time of the committee this year was taken up with the Currie report and its appendix. That work was forced on the committee by the vote of the Liberal majority in the house. The Minister of National Defence moved that the first matter to be considered by the committee should be the Currie report. We opposed that just as strongly as we could. We pointed out that if that was done a great deal of the time of the committee would be wasted. We predicted that a major portion of the committee's time would be taken up in threshing
Supply-Defence Production old straw and investigating the investigator whom the government had appointed; that it would be a complete waste of time.
Well, to a large extent our predictions came true. All of the time of the committee was not taken up with it but about one-third of the time was taken up. It was because so much time of the committee was taken up by completely valueless threshing over of the Currie report that we did not have time to go on with very much more important matters dealing with very much larger sums of money. The hon. member for York West and others have complained that we did not get to those matters at all.
I would just like to say a word about what the parliamentary assistant to the Minister of Defence Production has had to say about Namao. I do not know whether he actually meant Namao or whether he meant Penhold when he was speaking. He said that charges had been made in connection with the construction at Namao, and I presume he referred to the speech made by the hon. member for Red Deer. That was the only speech to my knowledge in which anything was said by anybody about Namao-before we got into this committee, at any rate.
When the matter came up in the committee the parliamentary assistant said that members could have asked all the questions they wanted about the situation at Namao and could have obtained all the answers, but that not one question was asked. Well, that is a complete misrepresentation of the facts, Mr. Chairman. Nobody on the committee had time to ask many questions about Namao. When Namao first came up we were given some information about why the site was selected and about the type of camp that was to be built there. That information was given by an official of the Department of National Defence, but he had none of the details with regard to the construction which took place, what the member was referring to. He merely gave us information about acquisition of land, the type of camp it was to be, and so on. When questions were asked about construction we were, as usual, referred to the witness from Defence Construction Limited when he should appear or to Mr. Mansur, the president of Central Mortgage and Housing.
Well, Mr. Mansur appeared before the committee for one day, as I remember it. He may have been there a second day when I was not present, but I do not think so. He was just there for one day, and during the day he was there he read a report and answered questions which had been asked at different times previously. There was
4936	HOUSE OF
Supply-Defence Production really no opportunity to question Mr. Mansur to any great extent on any particular project, particularly one such as Namao. The way the agenda was drawn up, when we had Defence Construction Limited before the committee on the last day, the very last day on which we held a full day's session, we had to consider Rocky Point, Esquimalt, one other place and Namao. Questioning went on about Rocky Point and Esquimalt first. About ten minutes before our closing time I began to ask some questions about Namao.
The parliamentary assistant has said that no questions were asked, but that is not correct. I asked what questions I could in the ten minutes available, and that was all the time that was available for asking questions on Namao. As I say, I cite this as just another example of how actual facts in regard to the conduct of the committee are sought to be twisted about and the record snarled by the parliamentary assistant and by the hon. member for Spadina.


John Horace Dickey: Perhaps I should clear that up.
I meant no offence to the hon. member, and my reference was to the appearance before the committee of the president of Central Mortgage and Housing Corporation. As a matter of fact I was not present that day, but I looked at the record later and I was very surprised to find that there had been no questions asked of him with respect to the Namao project. I was also surprised that he had not been asked to come back before the committee a second day, because I certainly expected there would be such a volume of questions that he would be required to come back.


Douglas Scott Harkness: The hon. member knows that Mr. Mansur's appearance was immediately before the end of our sitting. We knew we had only one more meeting after that and these various other questions about Rocky Point and other places had already been asked and had to be answered first. In other words, as the agenda was drawn there was no opportunity to bring Mr. Mansur back. It had been decided that he would appear for just the one day.


John Horace Dickey: That was never decided at all.


Donald Methuen Fleming: It was.


Douglas Scott Harkness: In the agenda committee, which was the only meeting of the agenda committee I ever attended, that decision was taken. Well, so much for that particular matter. As I say, I cite it only as an example of how statements are made by representatives of government in this house which give the wrong impression and misrepresent really


what took place. I think the parliamentary assistant has done it through lack of information. He said himself that he was not present at one of those meetings.
I want to say something now about the matter which the hon. member for York West brought up yesterday, the matter of arms production. We spent all of the time this year on the Currie report and the appendix to it, and on construction. The total construction program and everything involved so far as the matter covered by the Currie report was concerned I would say at the most would not involve more than 15 per cent of the total expenditure of some $6 billion on our armament program. I think you could say that, at the best, this year the defence expenditure committee dealt with something in the neighbourhood of 15 per cent or less of the expenditures. We did not deal with the really large expenditures in connection with aircraft production, armaments of all kinds, the training program and other matters along those lines. In my opinion we would have been much better occupied in dealing with those items than in going over some minor accounting irregularities concerning matters scatttered about the country which involved anything from $2.50 up.
This morning I believe the parliamentary assistant said that we had covered those things in great detail last year. We did not cover them in great detail last year, Mr. Chairman, and that is another misrepresentation. We covered this matter of armaments in a very minor way last year. We had a very limited number of meetings on armaments, and as I have pointed out before, we were not allowed to investigate the biggest single item, $680 million. We did get two or three answers, but of an extremely vague nature. We were told that the item involved aircraft which were under security, and therefore no questions concerning that item could be answered. As I say, we covered the other armaments in a very sketchy manner. We went over the details rapidly, and did not get a great deal of information.
In addition to that, the information which was supplied to us in that loose-leaf gray book was not accurate. On practically every item we discussed in order to ascertain the exact cost per tank or per man, whatever it was, we discovered the figure was wrong. Various reasons were given for the fact that the figure was incorrect. In nearly every case it was the development price or an estimated price and was not the final price. The information we did get served only to confuse rather than enlighten. In view of the fact that we got such a small amount of information in regard to arms production last year,

and in view of the fact that we got no information this year, I should like to ask the minister a few questions about arms. I think perhaps he should tell us something about what our gun production is at the present time; what we have actually produced during the past year, we will say, in 3-inch, 50 calibre, 105 millimeter and 155 millimeter guns.
I asked the Minister of National Defence a few questions in connection with this matter, and all that he said was that the program was well under way; that does not mean very much. Later I asked him some questions, and he indicated that no deliveries of those guns had been made as yet. If the program is well under way but no deliveries have been made, we are left pretty well up in the air. We do not know where we are. I think the minister should make a statement as to the position of the gun production program and when deliveries may be expected.
I should like also to have him tell us whether or not this gun production is being carried on by private companies, and under what terms the contracts are drawn. Are they on a cost-plus basis or on a fixed price basis or a cost plus fee basis? If the guns are not being produced by private companies under those terms, could the minister tell us under what conditions they are produced in Canadian Arsenals?
The same set of facts apply to the small arms manufacturers. I should like to know whether we have any small arms orders under manufacture at the present time, what might be called pilot orders for United States equipment. I think this is particularly important because the arms manufacturers must have some orders, as the minister said in connection with other matters, to keep them in operation and to keep the skills of the people there up to the proper point, so that in the event of need these plants could be rapidly expanded. The same conditions apply to ammunition. What is our ammunition program? The hon. member for Churchill has brought up this question on many occasions. It is one which bothers a good many people.
I think the minister should tell us what the ammunition production program is in this country, and what production we are getting at the present time. What production could we get in fairly short order if the need arose, particularly if we are producing the ammunition which is being required by our forces fighting in Korea?
I have some other questions here which deal with capital assistance to various plants and things of that nature, but I shall leave those until we get to the second item, which I think deals with that in particular.
Supply-Defence Production


Mr. Applewhaite:: If the Minister of Defence Production and the Department of Defence Production had wanted to come to this house to get a vote of confidence, I do not think they could have had a better indication of a vote of confidence than they have received from this house during the past two days. The pettiness of the accusations brought against the department, the lack-it is not surprising-of accusations brought against the minister, the complete inability of the opposition to bring any factual material at all to bear to the criticism of the department has given that indication to an extent that could never have been done by any eulogistic speeches made on this side of the house. The discussion has sort of flowed back and forth between the Department of Defence Production and the committee on defence expenditure.
It would be wrong to say that yesterday the attack was led by anybody. The criticism was led by the hon. member for Eglinton. I should like to say, and I am glad the hon. member is in the house to hear me, that on the defence expenditure committee there was no more hard-working, sincere, digging member than the member for Eglinton. I think perhaps of all those from his party, he was the only member who consistently appeared in the committee with a knowledge of what had gone on the day before and with a comprehension of what to expect for the day's sitting. His ability to work is well known, yet-


Donald Methuen Fleming: Now comes the "but".


Edward Turney Applewhaite: I am still not going to say anything injurious to the hon. member. I am going to point out that, despite his ability, despite his industry, all his labours did not enable him to bring anything in the nature of a major criticism against the minister or against the department. He did make one or two lesser criticisms to which, naturally, one over here would take exception. He did make one or two concrete suggestions, and there again he differs from the majority on the other side.
One of those concrete suggestions which he made, though he made it in the form of a criticism, was that the government might have used the defence expenditures program for the purpose of building up the economy in parts of Canada other than that in which the hon. member himself flourishes.
His words, as reported at page 4882 of Hansard were:
-the government was offered a great opportunity to use the placing of defence orders-I do not say entirely, but nevertheless to a substantial degree- to assist in developing the economy of this country.

Supply-Defence Production
I do not suppose anybody would have been in a position to benefit politically more than I had the government followed that line of action, except perhaps the hon. member for Eglinton, who would then have been in a position, which I am sure he would have taken advantage of, to stand up in the house and point out that, by building up industry where it did not exist, the government had added to the cost of the defence program in a manner which I am sure he would have described as indefensible.
The hon. member also referred-and again I agree with him in principle-to the desirability of purchasing from the United Kingdom wherever possible, where the goods are not obtainable in Canada. I do not think anyone can argue against the desirability of that practice. But I would point out that when he brings that suggestion forward critically he does not point out and has not pointed out what goods are available in the United Kingdom which we might have purchased there at a saving to the Canadian taxpayer as against purchasing them from wherever they were purchased.
The hon. member, of course-and this was to have been expected-was the first of several who came out with the cry that they were safe in predicting months ago that the final report of the committee would be a whitewash of the government. Mr. Chairman, I have great respect for the ability and the imagination of the hon. member for Eglinton, and I am bitterly disappointed that he has such little respect for the ability and the imagination of the Liberals who sat on that committee; because if he thinks we had desired to bring in a report that would whitewash the government, does he really believe this is the best we could do? Mr. Chairman, had one wished to produce a report which was a whitewash, one would not have produced a factual document such as the one that is before the house at the present time. In this discussion in connection with the report I think the hon. member for Eglinton gave himself away, and I think he gave his party away. I do not know a great deal about parliamentary practice-


An hon. Member:: Hear, hear.


Edward Turney Applewhaite: -in committee or out. I note that at least on one occasion I have some agreement opposite. But the hon. member for Eglinton referred to an amendment which was introduced in the committee, and he referred to it in these words "Progressive Conservative amendment". The sentence he used was, "I wish to read the five final paragraphs of the Progressive Conservative amendment". There, if anywhere,

you can find the reason for whatever failures there might have been on the part of the defence expenditure committee. I thought the committee was a committee of individual members. I thought members on that committee were supposed to have some independence of action. Somebody used that expression here this afternoon; but apparently our friends opposite, even in the committee, were not there as individuals. They were there as Progressive Conservatives.
An amendment, which was voted down, was moved by the hon. member for Melfort. I do not remember his referring to it as a C.C.F. amendment. There were amendments which were not formally moved but which 'were put forward by the hon. member for Kootenay West, and which were debated. I do not think he brought those forward as C.C.F. amendments. I think those two gentlemen, with whom I seldom agree, both were endeavouring as individual members of a committee to lend their individual ability to producing something in the nature of a report which could be supported in the house and which might be acceptable at least to some. But in the one case we have a Progressive Conservative amendment; and that frankly sets the whole tone of the committee in so far as our friends from that group are concerned.
The amendment which the hon. member moved was not accepted. As an example of fiction, it would have done credit to Hans Christian Andersen or to the author of Grimm's fairy tales. The reason it was not accepted in that committee was not primarily that it was, quite frankly, a Progressive Conservative amendment. It was not accepted because it was not-nor was it even approximately-a report or a substantial statement of the facts dealing with the meetings which that committee had held.
It was turned down, as the hon. member says quite truly, by a Liberal majority of which he complained. I have every sympathy with these members who continually complain about the Liberal majority. But after all, sometimes it is not only the Liberals who are responsible for the fact that there is a Liberal majority here. As long as we are here and as long as the country continues-as it will continue-to send us here, we cannot help it if you have to pick Liberals mainly in order to fill a committee of the house and give the committee the same balance as that which prevails in the house.
Then once again taking the lead, the hon. member for Eglinton closes his interesting

speech-because his speeches are always interesting-with the usual chorus which we have heard so often. His actual words are "of profligate expenditure, of waste, of extravagance and of shocking inefficiency." That is a chorus which they sing so often that sooner or later they are likely to fool themselves, if they do not fool anybody else, into believing that there is a modicum of truth in it. The most extraordinary thing about these repeated claims is that they are always made without the slightest particle of supporting evidence. As a matter of fact, Mr. Chairman-and the country knows this and the opposition knows it-the most outstanding example of extravagance in connection with this country's defence expenditure is the extravagant statements made by the opposition with reference to it.
My good friend the hon. member for Greenwood also had something to say on this item. The hon. member for Greenwood, unless Hansard has him wrong, started his remarks by saying something which even he could not possibly believe. He introduced his criticism of the Department of Defence Production, in the first paragraph, with these words, as reported at page 4890 of Hansard:
-it does not seem to me that this matter of the business of the people of Canada has been conducted with common sense.
I am not going to do anything more with that statement than just ask the hon. member for Greenwood if he could possibly expect that sentence to apply to anything headed by the present Minister of Defence Production.
Then the hon. member for Greenwood also reflected upon the defence expenditure committee, as did most of the opposition members; not all but most of those opposition members who sat upon it did so. He referred to it in not very eulogistic terms as one of the committees conducted as they are now. Just what he meant by committees being conducted as they are now, I do not know, except that the whole tenor of that part of his remarks was a reflection on the committee and a criticism of the uselessness of & committee on defence expenditure set up by this parliament. It is my impression that they were the people who were asking for it, session after session, until this government finally set up just exactly what they asked for. Then he says, "Everything we asked for was turned down". At the same time or shortly thereafter the hon. member for York West claimed that they were buried under an avalanche of paper.


Douglas Scott Harkness: They are two quite different things.
Supply-Defence Production


Edward Turney Applewhaite: I would ask the hon.
member for Greenwood whether he has ever sat on, visited or heard of a parliamentary committee which got more information and fewer requests turned down than the one which made its report here yesterday. It is perfectly clear what he said. He said that things were not well. That is another bald statement, not backed up. "It is perfectly clear that things were not well." He will find that it is clear only to people who look on the affairs of this country through vision badly distorted by party political leanings.
The hon. member for York West and others have said, if not in so many words at least by inference, that too much of the committee's time was taken up with consideration of the Currie report. Let us have the facts on it. The hon. member for Calgary East said the majority of the time of the committee was taken up by the Currie report.


Douglas Scott Harkness: I said about half.


Edward Turney Applewhaite: Well, let us take his arithmetic. The committee held twenty-six meetings; six of them were devoted to the Currie report, and on the seventh we started on other matters, and we never came back to the Currie report. Six is a very good part of twenty-six-


Douglas Scott Harkness: We were on the appendix for a long time, though.


Edward Turney Applewhaite: The record is there; I have checked it. At the end of the sixth meeting we started on the acquisition of real estate. The hon. member for Calgary East will have to use exactly that type of figuring, six is the half of twenty-six, if he is going to produce a majority in August, or whenever the election is held.
The hon. member for York West, the hon. member for Calgary East and others have attacked the committee in a manner which I find a little difficult to understand for this reason. They did not make that type of attack-and I missed only two meetings- at any of the meetings. They did not make these complaints, unless they went to the chairman around and over the heads of the agenda committee. I do not know when they came to the conclusion that the committee was wasting its time, because the committee was doing the things that they wanted done. I grant you it did not do one-tenth of the things they wanted done.
If that committee wasted any time I myself must take some of the blame, because I spent quite a lot of time asking questions and speaking in that committee, but I did not spend nearly the amount of time asking questions and making arguments in that committee that several of my friends of the opposition did.

Supply-Defence Production If they had been anxious to get back to material for written answers and questions and proceed to the next subject, they could have done so, but they did not. And I think they were right. I think that we as a committee did a much better job, if we made a thorough investigation into construction and did not do anything else, than if we had made a cursory examination into eight or ten major categories and did not get any basic information on any of them. Those members of the committee who attended and took an active interest in it now have a far wider knowledge at least of the activities of defence construction than they had any idea of before.
It is unfortunate that the house sits for only six months and the committee can meet for only about four hours a week. We could not carry on with all the other lines of activity which we would have liked. However, even in defence construction we failed to establish what the opposition hoped we would establish. The hon. member for Peace River said the other day, and I think intentionally, that the report suppressed the avidence that was produced before the committee. Of course the report cannot suppress the evidence because the evidence is part and parcel of the report, and is referred to in it. The hon. member for Peace River does not suppress the evidence; he ignores it.
We were dealing with the matter of Penhold and the witness was the president and general manager of Defence Construction Limited. I asked him this question:
Q. Defining the term "waste" to mean money spent for which there has been no return or not a reasonable return, how much money has been wasted at Penhold?
A. I would say that there has been no money wasted, sir. The fact is that all of the money that has been spent over and above the original contract price as awarded, as I have endeavoured to explain, has been necessitated largely through additions to the work such as the extension of barrack blocks and extra material required for laying of sewers and water mains and items of that kind. Those are the principal items that have gone into the cost over and above the original award. I feel very strongly that the costs as outlined in the table which has been presented to the committee were costs that were necessarily incurred and for which there has been a return to the crown in the expenditure.
That is a summary of the operation at Pen-hold by the president and general manager of Defence Construction Limited, and I presume we shall hear not much more about defence construction.
The hon. member for Calgary East, who spoke just before me-I do not know what branch of the army he was in-should have been a skirmisher, because as a skirmisher he is tops. He is here one minute and over there the next, and when you try to put a finger on him he is just somewhere else. I


shall indicate to the committee just what I mean in a minute. Before I do I should just like to say that, if I heard him correctly, he queried the authority or authenticity of the $36,000 figure as the loss at Petawawa. The figure is taken, I believe, from page 25 of the minutes of proceedings and evidence of the committee. The witness was the judge advocate general, and he gave the following evidence:
Total losses, $54,143.75; total recoveries, $18,394.32; and estimated net loss of $35,749.43.
Where my hon. friend is such an excellent skirmisher is that he is such an outstanding example, but not the only one, of the way in which the opposition, on this whole matter of criticism of the government in respect of expenditures, shifts from one to another. Construction was the main item under attack, and the fact is that the committee at the request of opposition members put it at the top of the list. Construction has had a pretty thorough going over. We now find that they are shifting their ground. Since they failed to prove anything wrong in construction they now shift or switch to what should have been investigated, namely aircraft production and ammunition, or something of that kind.
I will admit that aircraft production is a subject which has to a large extent been surrounded by security provisions. I have no idea whether the committee would have received full information on it or not, but aircraft production, ammunition and other things were discussed last year and large and voluminous reports of evidence and answers to questions were given. And so we come up with another shift from the too much information to the not enough information.
For the life of me at the moment I do not know whether the main complaint on the other side is that we have not given them enough information, as the hon. member for Greenwood says that everything asked for has been refused, or whether we have given them too much information, as the hon. member for York West says, so they are snowed under an avalanche and Niagara of papers and facts. What we can do, I guess, is let them pay their money and take their choice, being assured that whichever one we give them, the other one is the horse that they would be riding.


Agar Rodney Adamson: Horses, oh, oh.


Edward Turney Applewhaite: I would like to say just this-


Agar Rodney Adamson: Expunge horses.


Edward Turney Applewhaite: It is not going to be necessary to expunge horses, because horses are going to go down in this country as an

example of another case in which our friends in the opposition, gleefully thinking something had been handed to them on a platter to make up for their lack of ability to produce something for themselves, will find that the whole thing has collapsed and blown up in their faces.
Now I should like to say a word about the department we are supposed to be discussing-and if I have spoken more about the committee than about the department perhaps I can be forgiven, because I was a member of the committee. But the Department of Defence Production is just a little more than two years old. During those two years this department has given to Canada that outstanding and efficient service which everyone knew it was going to give as soon as they knew what minister was going to be at the head of it. That fact is known to all Canada; and it is known, and known only too well, to members of the opposition. And that is why my hon. friend from Nanaimo, and others, refer so often and so plaintively to the fact that they feel frustrated.
I am not surprised. I have considerable sympathy with them. They are opposition members; and as opposition members they have a duty to perform. It must be the height of frustration for anyone in opposition to endeavour to bring forward anything in the nature of a major criticism of the Department of Defence Production and the minister now heading it.


George Randolph Pearkes: Even the minister is blushing.


Edward Turney Applewhaite: Even the hollow laughter of the hon. member for Eglinton shows that he, too, is suffering from butting his head against a brick wall.
Now, I do not deny, and the report of the defence expenditure committee does not deny, that there have been cases where the money spent by those administering the defence program could have been spent to better advantage, had we been able to see the future before it occurred. No one knows exactly. We do not have seers on this side of the house. The only people who see into the future with unerring certainty are those who do not have responsibility and who are fortunate enough to sit in opposition, where they can say what they think without any possibility whatever of their remarks or suggestions being brought to the point where they have to be put into effect.
We do not deny that there was a varying from time to time in the emphasis of the various parts of the military program in this country. We do not deny that changes in requirements made necessary changes in orders issued to contractors; and the report 68108-312i
Supply-Defence Production says so. It says so with frankness that it would never have used if I had been permitted to write a whitewash of this government.
The department still has the necessity of protecting Canada against as many different eventualities as possible. I am reminded of an incident, and I shall take only a moment to place it before the committee. In my district there is a large hospital which was built during the second world war. That hospital was built to house casualties expected from the expedition to Kiska. There were no casualties from the expedition to Kiska. From the point of view of national defence, every cent spent on that hospital was wasted, because it was not used. But at the same time could we wait to build a hospital until the casualties were beginning to come in?
The department has to prepare for eventualities which may or may not come about. Fortunately that money was not wasted, because it is now an Indian health services hospital. But that is a very fair example of what must be taken into consideration. You must prepare for a large number of eventualities, and they cannot all happen. Those' for which you prepare, but which do not happen, leave you holding the bag so far as expenditures are concerned. But if you do not make those expenditures you can be pretty sure that eventualities will happen, and in such event the opposition would have a legitimate right to complain.
Just one other reference before I sit down. The hon. member for Eglinton-and I believe he was supported in this by the hon. member for Vancouver-Quadra-was somewhat critical of the quantities in which certain goods have been purchased. I think references were made to shaving brushes, ties, underwear and smaller personal items of that kind. Mr. Chairman, if there is one type of mentality for which I have no sympathy in this country it is that type of mentality which, when a ship sails from a wharf with a load of Canadian soldiers aboard, will say to them, "You are going out possibly to die for your country; nothing is too good for you", and then will say to those same fellows, while they are training and learning how to die for their country, "You just get along with whatever you can, because the least possible is good enough for you."


Donald Methuen Fleming: Mr. Chairman-


An hon. Member:: Not again.


Donald Methuen Fleming: -I think I should begin by expressing to the hon. member for Skeena my profound appreciation of the very kind remarks he made concerning myself. I would not of course attribute to him the motive of
4942	HOUSE OF
Supply-Defence Production softening me up intentionally. But, Mr. Chairman, if in my remarks this afternoon I sound somewhat delicate, then I hope the house will understand that I feel very much softened up indeed by the remarks of my hon. friend from Skeena. And if, therefore,
I err on the side of understatement in reviewing some of the things said this afternoon, it will be understood that the technique of the hon. member for Skeena has had its effect.
I am sure that if anyone who has not been following the course of public events had dropped into this chamber this afternoon, after listening to the hon. member for Spadina and the hon. member for Skeena, he would have been able to tell at once, without any further consideration of the subject, that we are fast approaching an election; because those were indeed election speeches. They were the old tub-thumping, campaign, stump speeches. Of their kind they were very good and, I might say, very entertaining. It is the sort of thing that can happen in this house only in the last session before an election.
I say to my hon. friends, in very good part, That it was extremely entertaining to be able to sit over here this afternoon and listen to their speeches. I can well expect that the electors in Spadina and the electors in Skeena will have a most entertaining time .ahead of them during the next few weeks.
I do not propose to review the ground covered so ably and effectively by my colleague the hon. member for Calgary East in his speech this afternoon, following the speech of the hon. member for Spadina. However, I shall touch upon some matters which I think need to be brought into focus and into relationship with the facts. I find this necessary after listening to the speeches of the hon. members for Spadina and Skeena.
First let me put the record straight on this matter of the agenda of the committee. The committee did set up a steering committee, and the steering committee did ponder over all the matters it might take up. At page 7 of the proceedings of the committee a list is set out of the subjects that the steering committee reviewed in that light. Here were the suggested topics:
1.	Construction;
2.	Aircraft production;
3.	Armaments, tanks, ammunition, guns and small arms;
4.	Naval vessels;
5.	Operation Pine Tree;
6.	Training costs-all services;
7.	Recruiting costs;


8.	Soft goods;
9.	Military travelling costs.
It is quite true, as the hon. member for Spadina said, that most of these were suggested by opposition members. I recall suggesting the subject of aircraft production, because the hon. member for York West had very definitely expressed the hope that we would go into that subject. Therefore I put it forward at his request. And the committee had to make some selection, with a view to arranging its work. It had no choice as to the first item, because the house had given it the direction that first it must review the Currie report.
A serious error was made this afternoon by the hon. member for Skeena in his appraisal of the time spent by the committee on the Currie report and matters associated with it. He took issue with the statement of the hon. member for Calgary East that about half the meetings had been spent on the Currie report and related matters. I wish to put him right on that. Of the 27 meetings, 13 were spent on the Currie report and matters referred to therein which included appendix B to that report. It was only when we began the 14th meeting that we launched into the subject of the acquisition of real estate which led eventually to the subject of construction. If my hon. friend has any doubt about that he can look at page 303 of the evidence, where he will see that the 14th meeting on March 10 was the first one at which we launched into the subject of the acquisition of real estate.


Douglas Scott Harkness: Just another example of distorting the facts.


Donald Methuen Fleming: Having corrected the hon. member for Skeena on that subject, let me now proceed to say that I was not a little surprised to hear what the hon. member for Spadina had to say about this matter of aircraft construction. He sought to belabour the hon. member for York West in connection with this matter. It is just as clear as can be and completely incontrovertible, because it is there on the record, that we asked for this at the beginning.
We were compelled by the order of the house to review first the Currie report, which did not need any review. The facts were there in the report. Time was occupied in that way because a majority of this house on a government amendment to a government motion decreed that the committee should spend time in that very unnecessary way.
The fact is that after spending some time on this subject of construction we did not have the time to take up this very important

question of aircraft production. The record shows on page 798 of April 23 that when the chairman announced that we had come to the end of construction and would go into executive session at the next meeting to write the report, I pleaded with him to call more meetings. I was just as conscious as any member of the committee of the load hon. members were carrying with so many committees sitting at that time. I do not think any member of the committee was serving on any more committees than I was, but I felt it was important that we should make some inquiry into this vast subject, this so-important subject of aircraft construction. I urged that we should spend several meetings, at whatever cost it might entail in the way of personal exhaustion or pressure of time, in dealing with that subject. But I was overborne. Let it not be said that there was no desire and plea from the opposition members on that committee that we go into that subject, because it is clearly a matter of record.
As to what happened before the committee, again I must put the record clear in the light of the speeches of hon. members opposite. This afternoon the hon. member for Spadina surprised me again by saying that we had been given the auditor's reports.


David Arnold Croll: Extracts.


Donald Methuen Fleming: I certainly did not hear the hon. member say "extracts", because that was the whole point. We were not given the reports of the chief auditor of this department; we were given extracts. What relationship did those extracts bear to the lengthy and important reports? We do not know. Members of the committee had no way of relating those extracts to the reports. They were given meagre, little one-sentence summaries of those reports. We were told that those reports reviewed 153 irregularities. There were 17 reports written by the chief auditor of the Department of National Defence in 1950, 1951 and 1952.
You would have thought that a committee set up by this house to review defence expenditures would have been given those reports at once when it had the statement in Mr. Currie's report that there were 153 irregularities shown in those reports and that much importance was to be attached to the fact that the chief auditor had written them. It was such an obvious thing. But the committee was refused those reports.
Here again is a matter on which I must correct the hon. member for Halifax, because he said this afternoon that only some members of the committee asked for the auditor's reports. This matter was pressed to the
Supply-Defence Production point of a motion, as will be found on page 133 of the record of the committee. There you will see that I moved that the committee should request the production of all these reports of the chief auditor referred to in appendix B to the report of Mr. Currie. If you will follow down the page you will see how the committee lined up. All opposition members who were present voted in support of my motion calling for the production of these reports of the chief auditor. How did the Liberals vote? The 13 who were present all voted against the production of these reports of the chief auditor. There is the fact, if it is necessary to refer to it, to correct the statement of the hon. member for Halifax.
The hon. member for Spadina said it was the first time in history that any committee had been given the records of courts martial. It was not given the records of courts martial; it was given summaries. We were told of certain action that had been taken; we were told of criminal proceedings in the courts and we were told of disciplinary action taken by the army. Let no one come away with the impression that we were given access to the proceedings of courts martial. I only mention that, since no one asked for the production of the detailed proceedings, because I wish to correct any impression that may have been created by the remarks of the hon. member for Spadina, which rather surprised me in the form in which they were uttered this afternoon.
Then we are told that a political football is being made of the Currie report. The government is not going to escape the full weight of the disclosures in that report by throwing up smokescreens or trying to draw red herrings across the trail by calling this a political football. It is in truth a political issue of the highest importance because it will soon bring before the electorate What in the last analysis they alone can decide, whether they want this sort of thing to be going on in the Department of National Defence, whether they condone it.
Let us remember that only a fraction of one per cent of the expenditures of the Department of National Defence were reviewed by Mr. Currie in his report. When the opposition in this house asked for a continuation of that inquiry throughout the whole department that reasonable request was voted down and defeated by the solid Liberal phalanx in this house.
We are not going to be fooled by the names the Liberals are calling this matter. It is a political issue and it will rest with the electorate in the last analysis whether the profligacy, mismanagement and inefficiency

Supply-Defence Production which were revealed in that report are going to be condoned by the taxpayers at whose expense these irregularities flourished. The horses are not locked up. I can tell the hon. member for Spadina that he has not taken the horses out of the Currie report. What Mr. Currie had to say in that report concerning horses on the payroll stands unchallenged, it stands uncontroverted, and the responsibility rests with the department and with the government.
The hon. member for Spadina and the hon. member for Skeena said: Don't underrate us; if we had wanted to write a political report we could have written a dandy. Well, Mr. *Chairman, I do not know to what greater [DOT]extent we should expect them to strain their ingenuity in that regard. It is true there are some facts stated in the report to support them. They did quote the motion in the house to set up the committee. They correctly quoted the motion in the house that enumerates the relevant powers of the committee, and the list of members who sat on the agenda committee; and of course that is factual. We must concede at once, if that is what the committee chairman was talking about, that those are facts in the report. We do not challenge those facts. But when you come down to the meat of the report, the real content of the report, that is the part that does not stand up. That is the part which I called last night, which I continue to call, and which I call now "whitewash".
Here is just one slight example of the sort of thing the Liberal majority have sought to smuggle into this report. On page 4 is the statement:
The total losses due to the thefts at Camp Petawawa . . . amounted to less than $36,000.
The hon. member for Skeena turns up page 25 of the proceedings of the committee and there he finds the whole mathematical calculation neatly worked out. The only thing wrong is that it is not even half of the truth, because Mr. Currie has effectively dealt with that subject in a way that cannot be disputed even by the masterly sophistries of the hon. members for Skeena and Spadina.


Clarence Decatur Howe: The Currie report refers to no theft from this department, and I wonder why we have to waste all afternoon talking about something entirely irrelevant to the estimates we are discussing.


Donald Methuen Fleming: Whatever might have been said on that subject, in relation to the point raised by the minister, should have been said at least two hours ago when the hon. member for Spadina started to speak. He discussed the Currie report, and the hon. member for Skeena discussed the Currie
IMr. Fleming.]

report. I am only dealing with some of the points they raised in order that I may put the record straight. I did not start the discussion of the Currie report.
At page 714 of Hansard Mr. Currie in his report deals with the subject of this interesting and strange statement that has been made about the report of the committee.
These, then, represent the ascertained cases of irregularity at Petawawa.
Those are the ones that are referred to in the estimate given at page 25 of the proceedings of the committee.
How many more there may have been will never be known. It was apparent from the beginning of the investigation that the accounting records were in a chaotic condition and would be of little use in determining the nature and extent of irregularities. It is impractical, and perhaps impossible, regardless of the time which might be spent on examining records, to try and determine by this means the amount and value of the deficiencies.


Clarence Decatur Howe: So you had better call it $36,000.


Donald Methuen Fleming: In the following column he says:
My view would be, however, that the generally lax administrative situation would give rise to waste and inefficiency far more costly in loss than that covered by actual dishonesty.
Now, Mr. Chairman, we have put the record right in that respect, in the light of the necessity of correcting the record because of the statements made by my two hon. friends opposite.
The hon. member for Spadina pleads in the most innocent and naive way that no one should suspect him of attempting to introduce politics into this report. "Fie upon the idea"-so ran his thinking. It was so far removed from his experience. Well, Mr. Chairman, one will have to weigh the statement of the hon. member for Spadina against the kind of speech he made on the subject this afternoon. I am quite prepared to leave it there; because, if there was ever a real old party tub-thumping oration it was given by the hon. member for Spadina this afternoon, and I think it was a good one of the kind.
The chairman of the committee in writing this report says there is really only one conclusion in it. If there is only one conclusion then perhaps we may spend just a moment examining it. Here is the conclusion:
The construction program in the face of a number of difficulties has been well conceived and carefully supervised and the public has received good value for its money.
If that is not a political statement, if that is not whitewash, if that is not a complete camouflage of the facts of the case, then, Mr. Chairman, I hope I will never have to be

called upon to examine anything more of the kind. If there was ever a piece of whitewash, whitewash applied generously, liberally, with a great big brush and lots of wash, it is that conclusion to which the hon. member for Spadina built up his report.


Solon Earl Low: And plaster.


Donald Methuen Fleming: Yes; one could say other things too. I think, Mr. Chairman, that the public is not going to be so easily misled by a conclusion put in such general terms. The brevity of the conclusion will not be permitted to mislead the public to overlook its gross inaccuracy.
Finally, Mr. Chairman, I was interested indeed to hear from the lips of the hon. member for Spadina that the committee sittings had a salutary effect on the defence department. I wish the hon. member had elaborated on that point. It was an interesting and curious thought introduced into a speech which was designed to build up to these claims and to this great conclusion I have read, that everything was beautiful in connection with construction; perfect. Why, then, introduce this jarring note that the committee sittings have had a salutary effect on the defence department? What was the need of introducing a salutary effect on the defence department? What was wrong with the prevailing note in the defence department on which the sittings of the committee, with some members of the committee trying to bring out some of the facts, had a salutary effect?
Well, the hon. member did not elaborate on the thought, perhaps for reasons best known to himself. It may have been an example of masterly discretion that the hon. member stopped just there in his remarks. He just sketched the subject, oh so delicately; just struck a note, oh, very, very faintly, Mr. Chairman; then with masterly discretion he stopped right there and went on to this other conclusion-the one in the report-because that is politics.


James MacKerras Macdonnell: It was an
indiscretion.


Donald Methuen Fleming: There was one other very interesting little slip in the speech made by the hon. member for Spadina this afternoon that again I thought was not in keeping with the rosy tone of things within the department, or which he ascribed to the department in his speech and in his report. He said this as a confession, Mr. Chairman, on behalf of the department or the government or the party of which he is a member-and a distinguished member-and it may be characterized by caution but it is interesting. He said, "We may have made some errors in the
Supply-Defence Production expenditure of public money"; and then he used an expression which seemed to be out of place in his speech "human frailty". Note that: "human frailty." He was speaking of the Department of National Defence but he had been telling us all afternoon, Mr. Chairman, that there was no such thing as error in the Department of National Defence; that everything was wonderful. Why, was not the construction program, in the face of a number of difficulties, well conceived, carefully supervised, and had not the public received good value for its money? Then why is it that he makes this reference to human frailty? Why is it that he said "we made some errors in the expenditure of public money"?
Well, Mr. Chairman, the only way in which any weight can be attached to this cautious but extremely interesting admission, after all the hon. member said, is to conclude that what the Progressive Conservatives said in that committee was right, and it has been proved to the hilt.
Mr. Chairman, before anyone takes too seriously what the hon. member for Spadina said this afternoon in calling the Progressive Conservative amendment a "phony report", I think he had better examine a little more closely the evidence, the report and that amendment which he has so designated. I make no apology to the hon. member for Skeena for the language in which reference is made in this amendment to the amendments introduced by Progressive Conservative members in the committee. When they were introduced that was done in several cases by the member for Eglinton. I do not think it is necessary to put the motion simply under that designation, as introduced by myself. They were, in fact, Progressive Conservative amendments and they were supported by the Progressive Conservative members, so why not call them that? I think it would be much better if hon. members on the other side proceeded to follow the example of members on this side and called a spade a spade. I draw attention to it so hon. members will know what report it is that the hon. member for Spadina has so designated.
I wish to put on the record now that portion of the report which I did not read last night. I shall read it, Mr. Chairman, and then the people of this country, whenever they have an opportunity, can say which of these documents, the whitewash report of the Liberal majority or the Progressive Conservative amendment, really agrees with the facts. This is the amendment, and this is the opening paragraph that I did not read last night:
In its order of reference dated January 22, 1953, your committee was instructed "initially to give

Supply-Defence Production priority in their examination to the expenditures and commitments of the Canadian army works services as dealt with in the report of G. S. Currie Esquire, chartered accountant, tabled in the House of Commons December 15, 1952". In accordance with this order of reference your committee as its first business called Mr. Currie before the committee as a witness. He substantiated his report in every particular. In no single detail was the accuracy of his report challenged before the committee. The Currie report must, therefore, be accepted as accurate in every detail.
Merely by way of example of the kind of waste, extravagance and inefficiency found by him in the one camp at Petawawa, Mr. Currie in his report cited the following:
Then there follows a series of quotations:
"550 tons (of scrap) were shipped out of the camp area, and the proceeds from the bulk of the sale were pocketed by army personnel. Some of the metal thus shipped was not scrap at all. It consisted of serviceable material, such as kitchen ranges, cannon heaters, shower stalls, sinks, and the like."
"A large quantity of rails belonging to the C.P.R. was removed."
"Horses were hired by army personnel"-


Clarence Decatur Howe: There is no right of this committee to discuss matters that have nothing to do with the item before the house or with the department which is being discussed. There must be a limit to this thing. I did not want to refer to this subject because that is all the Tories have to take into the election, and of course they have to talk about it. After all, we are here to discuss the estimates of the Department of Defence Production, and the Currie report did not touch on that department in any way, shape or manner. Let us not carry this thing to ridiculous lengths.


Mr, Flaming:: May I remind the committee and the minister again that it was not I who began the discussion of the Currie report. I refrained from it.


Clarence Decatur Howe: I did not discuss it.


Donald Methuen Fleming: No, but the minister's supporters did, and they went into this subject at some length. They referred in detail to the Currie report. They are the ones whom the minister should have sought to stop.


Clarence Decatur Howe: We have to get down to the rules here at some time.


Donald Methuen Fleming: X am discussing the point of order raised by the minister, and I have the floor. I propose to conclude my remarks on the point of order. I said that I did not start this discussion, but the hon. member for Spadina chose not only to discuss the Currie report but to discuss references to it in the report of the defence expenditure committee and in the Progressive Conservative amendment to that report. He went on to say, with reference to that amendment, that it was a phony document.


All I am saying, and all I propose to do, because I do not intend to go into a discussion of the contents, is to put on the record the balance of this document which has been so described by the hon. member for Spadina this afternoon. The hon. member also made a detailed reference to the Currie report. Now, that is all I am doing. I would have been very glad indeed to have seen the discussion continue in direct relationship to the estimates of the minister. I was prepared to do that this afternoon but Liberal members opposite have chosen to go far afield, and I am simply keeping the record straight by replying to statements they have made. I am doing no more than that.


Clarence Decatur Howe: On the point of order, Mr. Chairman, the Currie report was brought up last night by the hon. member for Greenwood. Well, it seemed hardly worth objecting to at that time. I am not a stickler for the rules; in fact I do not know the rules too well. I think there is a rule, however, that after a debate has been held it cannot be reopened during the same session. We debated the Currie report in full in this session, and it has nothing to do with the department with which the committee is dealing. I object very much indeed to having this further discussion on the estimates of the Department of Defence Production. I ask for your ruling, Mr. Chairman.


Donald Methuen Fleming: In reply to what the minister has just said, may I say that it is quite true that there was a debate earlier, but I was not reviving the debate on the Currie report.


Clarence Decatur Howe: Certainly you were.


Donald Methuen Fleming: No, I was not. If I wanted to revive that debate I would go about it in a different way. I was not making any reference to anything that was said in the debate on the Currie report. I was simply dealing with the treatment of the Currie report this afternoon, and as that report was treated by this defence expenditure committee of the house, which committee has reported back and of which the report has been referred to at length. The Progressive Conservative amendment to that report has been referred to at length this afternoon by two Liberal members, the hon. member for Spadina and the hon. member for Skeena. I am not proposing to debate the Currie report; I am simply putting on the record now what was said about that report by this committee in its report, and the amendment which was castigated by the member for Spadina. That is all I am trying to do, to put on the record what was said in that amendment. I was

not going to go on and debate the Currie report.


William Alfred Robinson: The minister has raised the point of order with regard to the remarks made by the hon. member for Eglin-ton. It has been my feeling for some time during the course of this debate that entirely too much attention has been paid by the various members who have spoken to the proceedings in the committee, and too little attention to the actual item which we are discussing, namely item 79, the first item of the Department of Defence Production. But I do not think I could rule the reference to the Currie report out of order at this time.
The Currie report was referred to the committee on defence expenditure, and that report is now back before the house. I do not think it would be possible for me to rule that references to it are out of order. At the same time, hon. members will realize that we are dealing with the Department of Defence Production, and the remarks the hon. member for Eglinton was making when the point of order was raised actually have more to do with the Department of National Defence.
In view of the debate which has already taken place, I cannot rule that the hon. member is out of order. I would ask him, however, if he wishes to make reference to the Currie report, to make his reference as briefly as possible, in view of the fact that we are discussing the first item of the estimates of the Department of Defence Production and that our discussion should be more particularly directed to the affairs of that department.


Donald Methuen Fleming: Thank you, Mr. Chairman. I am simply reading this amendment, which is the Progressive Conservative amendment to the report of the defence expenditure committee. That is all I was doing, and that is all I propose to do.


Clarence Decatur Howe: Does it touch on the Department of Defence Production?


Donald Methuen Fleming: I think the minister should have directed that question to the members on his side who spoke earlier this afternoon. I did not intend to go into all this, but let us not revive that subject again. I started earlier to quote from the Progressive Conservative amendment to the defence expenditure committee report, and I believe I had reached this point:
Horses were hired by army personnel and placed on the payroll . . .
"A boat and several washing machines were obtained by putting through a false order for 1,000 bags of cement."
"Two freight carloads of pulpwood appear to have been stolen during the cutting of a power line."
Supply-Defence Production "Private and improper sales of gravel were made."
"As a result of the inquiry, it appeared that one loan of 3,400 bags of cement had not been returned. The over-all shortage appeared to be 18,000 bags, much of which had gone into unauthorized projects of one kind or another, or wasted, or pilfered in small quantities."
"No reliable estimate of the total loss can be prepared."
"My view would be, however, that the generally lax administrative situation would given rise to waste and inefficiency far more costly in loss than that covered by actual dishonesty."
The report makes it clear that warnings of irregularities had been given to the officials of the department. These warnings and the consequent responsibility for lack of action on the part of the department of National Defence are thus described by Mr. Currie:
"While there has been a general breakdown in the system of administration, supervision and accounting, it was only at Petawawa that extensive irregularities, over a prolonged period, took place because of the existence there of a combination of factors, lax control, poor discipline, and the presence of dishonest personnel."
"Internal warnings had not been lacking in the Department of National Defence. The chief auditor of the department had performed his functions conscientiously. Time and again, he had reported unsatisfactory conditions. The deputy minister, in each case, had directed the quartermaster general to investigate and report. Lack of adequate action at this point had, however, caused a progressive deterioration in the situation.


Clarence Decatur Howe: Mr. Chairman, I submit that this discussion is completely out of order. It has nothing to do with the item under discussion.	It has nothing to do with the
department whose estimates are being considered. It is all very well to spread on Hansard the Conservative party election campaign. I do not mind that. It is the only thing the Conservatives have to talk about. They have been talking about it on every platform, but they should at least spare the House of Commons for this one evening.


Douglas Scott Harkness: The minister was too anxious to have his own party members put propaganda on the record.


Donald Methuen Fleming: I am simply reading from the Progressive Conservative amendment to the report of the defence expenditure committee. I continue:
"Aside from reports being delayed for considerable periods of time, the record shows the next audit revealing conditions similar to those previously reported and, in some cases, worse. The process is then again repeated."
"The Department of National Defence (including the army works service) is largely staffed and manned by men whose military training had been received in war time. Its establishment and administrative policies reflected more clearly the urgent needs and exigencies of war when speed is everything, and costs count not at all. The carryforward of this war psychology must be coupled with inadequate training and resultant ignorance on the part of personnel of their administrative duties and responsibilities. There was, in addition, indifference and reluctance on the part of military personnel to concentrate on administration to the

Supply-Defence Production
degree required . . . But if this spirit permeated the lower echelons of the army, it is more difficult to condone the same attitude higher up. There a greater degree, both of intelligence and responsibility, is essential. It was not always present in the degree required."
"There was in addition a serious collapse in security. There was little to prevent or to detect the organized plundering of military stores on a systematic scale, though apparently comparatively little of it took place. If there is excuse for inefficient accounting, there is none for the failure of security which is, after all, a prime military consideration. I take a serious view of this breakdown. If it is easy to pilfer military stores, then, by the same token, it is easy to sabotage military equipment."
"What is needed now is the creation of a system designed to fit the economic and efficient administration of a large and long-sustained preparedness program inside a national economy operating at full blast. This involves the abandonment, by all administrators of the program, of the war psychology with its emphasis on speed with resultant wastefulness and extravagance, and with the substitution of an alert economic and efficient operation, flexibly designed, to be sure, to meet emergencies, but designed also to become a more or less permanent part of Canadian life and government." The origin of the investigation which resulted in all these exposures did not lie within the Department of National Defence.


Clarence Decatur Howe: My hon. friend is reading from a speech he made yesterday at a political meeting. No serious document was ever presented to parliament in that manner.


Douglas Scott Harkness: This is our report.


Donald Methuen Fleming: The minister's memory is extremely short. Not more than two or three minutes ago I said that I was reading from the Progressive Conservative amendment to the report of the defence expenditure committee. I wish he would not interrupt and delay proceedings. We wish to get on with the estimates of this department. To continue:
It is to be recalled that Mr. Currie in his report says on this point:
"It is an unhappy circumstance that the beginning of this investigation lies not inside the Department of National Defence and its full complement of regulations and supervising personnel, but with the receipt of an anonymous letter ..."
2.	At its meeting on February 12, the government majority on the committee defeated the following Progressive Conservative motion:
This is the one that was referred to by the hon. member for Skeena.
"That this committee do forthwith submit to the house the following as its second report:
In accordance with its order of reference from the house, your committee has considered the expenditures and commitments of the Canadian army works services as dealt with in the report of G. S. Currie, Esq., chartered accountant, tabled In the House of Commons on December 15, 1952, has devoted two meetings to hearing the testimony of Mr. Currie with reference thereto, and finds that the said report has been fully supported in all respects by Mr. Currie in his testimony.
Your committee recommends that Mr. Currie be authorized to continue his inquiries and conduct 
an investigation, similar to that already undertaken, into all aspects of organization, accounting and administration of the Department of National Defence."


Clarence Decatur Howe: Six o'clock, Mr. Chairman.


Donald Methuen Fleming: Then paragraph 3-


Clarence Decatur Howe: Six o'clock


Some hon. Members:: Steamroller.


Donald Methuen Fleming: Apparently the minister's reading even of the clock is as inaccurate as is his reading of most other things. I continue:
3.	It is to be remembered that Mr. Currie's investigation was confined to certain of the army works services. In terms of expenditure these involve less than one per cent of the total present annual expenditure on national defence. Considering the magnitude and importance of the expenditures involved, and the duty parliament owes to the people to ensure adequate value for every dollar spent and the scandals revealed in Mr. Currie's report, your committee recommends that a complete, impartial and unrestricted inquiry into all aspects of the organization, accounting, and administration of the Department of National Defence be instituted immediately. Only by such an investigation can the occurrence of similar irregularities in other camps and in other branches of all services be prevented. The inquiry should be of such a nature that it can proceed without interruption during the time when parliament stands recessed. In view of the enormous expenditures of public money on defence and the vital importance to Canada of the efficiency of our defence activities, no duty of parliament requires more immediate action than the establishment of such an inquiry. It will on the one hand assure more efficient organization of our defence effort and at the same time eliminate the waste, extravagance, and inefficiency which have been disclosed.


Stanley Howard Knowles: Six o'clock.


William Alfred Robinson: I must advise the hon. member that his time just expired. It being six o'clock I do now leave the chair.


Donald Methuen Fleming: I have just three more paragraphs, Mr. Chairman.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Clarence Decatur Howe: Mr. Chairman, on a point of order, for the last fifteen minutes before the dinner recess one of the members of the opposition was reading from the Currie report, a document that has absolutely no relation to the estimates before us. That subject has been debated in this house and the debate was closed. I submit that debate in this form is entirely out of order, and that hon. members should be directed to refer to the estimates before the committee.


Donald Methuen Fleming: Mr. Chairman, the minister is simply raising a question that he raised several times while the deputy chairman was in

the chair this afternoon. The point is just the same as that ruled upon by the deputy chairman. What I was reading from was not the Currie report but the Progressive Conservative amendment to the report of the committee on defence expenditure. Since this report and the amendment had been debated at some length this afternoon by two members on the other side, the hon. member for Spadina and the hon. member for Skeena, the deputy chairman, who was in the chair all afternoon, decided against the point raised by the minister and permitted me to continue. I had almost completed the reading of that portion of the amendment which had been under discussion, and I can finish very quickly.


Louis-René Beaudoin: I did not hear the speeches which were delivered this afternoon, especially the one delivered by the hon. member for Skeena. I heard part of the speech of the hon. member for Spadina. I know he made reference to the fact that the committee had on its agenda as the first item the study of that part of the Currie report which was referred to it by this house. But his speech apparently was in answer to speeches delivered by members of the opposition who were complaining about not having obtained sufficient information in regard to the contracts which are under the jurisdiction of the Department of Defence Production, which is the department whose estimates we are now discussing.
I know the hon. member understands that if he is making a rebuttal to that part of the argument put forward by the hon. member for Spadina I will let him continue if he makes slight reference not to the substance of the Currie report, which was fully debated in this house earlier, but to the manner in which that part of it which was referred to the committee was studied by them-


Donald Methuen Fleming: That is it, exactly. I was not debating the Currie report. As a matter of fact, in the discussion before six o'clock I had expressly disclaimed any intention of debating the Currie report. I was simply reading the Progressive Conservative amendment to the report of the committee on defence expenditure, which was under discussion this afternoon at some length, and I have nearly finished with it.


Clarence Decatur Howe: Let us keep the record straight and continue my point of order. My hon. friend was reading directly from the Currie report. The language is exactly the same. Either we have rules in the house or we have not. If we have rules, I should like to see them enforced on this occasion, regardless 68108-313J
Supply-Defence Production of anything that happened in the past. I have a right to ask that the rules be enforced.


Donald Methuen Fleming: I have to correct the minister. I was not reading from the Currie report.


Louis-René Beaudoin: Perhaps I should rule on the point of order raised by the minister. If the hon. member for Eglinton is reviving a debate which has already been concluded, of course he is out of order. Hon. members will realize that I took the chair at eight o'clock.
I left it at four o'clock.


John Horace Dickey: Why not start afresh from there?


Louis-René Beaudoin: Therefore I should like to have a chance to know exactly the basis of the point upon which I am called to rule at the moment. All I can do is tell the hon. member that if he is reviving a debate already concluded he is not in order; but if he is not doing that, then he may carry on.


Donald Methuen Fleming: I certainly was not doing that. As I said before, I was not debating the Currie report. I was simply reading the Progressive Conservative amendment. I am not reading directly from the Currie report. This amendment contains reference to certain extracts from the Currie report, but I have passed them. I am at the end of the third paragraph.


Louis-René Beaudoin: In any event, I understand the hon. member began to speak a long time before six o'clock, and he is now just about ready to conclude. He may continue his speech.


Donald Methuen Fleming: Thank you. I had read to the end of paragraph 3. Now I begin with paragraph 4 as follows:
4.	Appendix B to the report of Mr. Currie is based upon reports of the chief auditor of the Department of National Defence of 153 specific irregularities drawn to the attention of the senior officials of the Department of National Defence by the chief auditor in the years 1950, 1951, and 1952. Your committee was denied any opportunity of seeing these reports of the chief auditor. Its investigation was thus stultified and frustrated.
5.	At its meeting on February 12, the government majority on the committee defeated the following Progressive Conservative motion:
"That the second report of the subcommittee on agenda be amended by adding thereto the following:
That the committee requests the production of all reports of the chief auditor of the Department of National Defence upon which appendix B to the report of Mr. Currie, dated November 26, 1952 is based, i.e., containing reports of accounting irregularities found by the said chief auditor in the Canadian army works services, and that the committee do proceed to examine the same."
6.	Your committee considers that such limited evidence as it was permitted to receive concerning the chief auditor's reports of accounting irregularities showed utter looseness in relation to the making of expenditures and gross inefficiency. Scores
4950	HOUSE OF
Supply-Defence Production of cases of unauthorized expenditures were found. Your committee was impressed by the lack of sufficient effort on the part of the officials of the Department of National Defence to determine responsibility for such irregularities and to follow them up with appropriate action. In the case of Wallis House in Ottawa, for example, where an expenditure of $35,000 was authorized on an old building, an additional $135,000 was expended without any authorization whatever under circumstances of which senior officials of the department ought to have been aware. This and many other examples demonstrate inexcusable lack of a sense of responsibility in relation to the expenditure of public funds-a lack which, unfortunately, appears to have been all too extensive.
Mr. Chairman, that completes the reading of the first six paragraphs of that report. It will be recalled that last night I read the other part of the report, beginning with paragraph 7, which is to be found at page 4886 of Hansard. I invite all who read that report to weigh it against the accusation made this afternoon by the hon. member for Spadina, and I will affirm that this amendment is an amendment that corresponds with the facts before the committee, an amendment which, in my submission, ought to have been carried by the committee and ought to have been brought to the house as the report of the committee, containing its findings upon the evidence brought before the committee.
This is my last observation. This afternoon the hon. member for Spadina tried to hold up, as if in contradiction to each other, statements by Progressive Conservative members in this debate, on the one hand that the committee was subjected to an avalanche of paper, and on the other hand that they were denied information. I have this observation to make. Both statements are correct. As to those matters upon which the committee was permitted to conduct an inquiry, namely into the construction carried on by Defence Construction Limited and the Department of Defence Production, the committee was furnished with an endless quantity of paper reports and statements. But on the other hand, by the chairman's ruling, backed up by the majority in the committee, it was denied access to essential information. That is the substance and spirit of the reference that appears in the report, part of which was read last night and part of which has been read today.
The chairman ruled that the committee could not have access to any report made prior to April 1, 1950, even though it might throw light on events occurring after April 1, 1950, and the conditions and irregularities discovered within the Department of National Defence after that date. In that respect I submit the ruling was wrong, and that the committee was prevented from conducting the 

kind of inquiry the house expected, the kind of inquiry the country expected.


Mr. Fournier (Hull):: Mr. Chairman, if I might have the attention of the committee for just a few moments I would say this, that through custom and usage the practice has grown up to permit wide latitude in the discussion on the administration item of each department. Hon. members are permitted to speak generally concerning all activities of that department. That is admitted; and all hon. members have seemed agreeable to that procedure.
Yesterday afternoon, more than 24 hours ago, we began discussion on the first item of this department. The debate has ranged over many subjects, from neckties to rugs and a great number of other things. No one has objected. The same day this debate was begun a report was tabled in the house, the report of the committee on defence expenditure. Discussion on the report of a committee, to be in order in the house, is on the motion of the chairman or a member of the committee, who moves concurrence in that report.
Seeing that we had hoped to conclude this session by the end of the week-perhaps we have lost part of that hope now-we thought this discussion on the report should be given some time. We have heard the remarks of hon. members in the house since yesterday concerning that report. I think, however, that the whole discussion on the report has been out of order. It was just because the chairman of the committee has been lenient and has wanted to permit free discussion in the matter that it has gone on.
It will be recalled that the Currie report was discussed in the house for about 13 days during this session. Anyone who will look into the record will see that the Currie report, in all its implications, was discussed- well, I was going to say ad nauseam, but perhaps hon. members would not like that expression, so I shall not use it. However, I will say it reached the stage that even in the House of Commons a member who speaks on it does not listen to himself, and he is listened to even less by the public in the galleries or even the newspapers. Actually it has fallen away down to the last page.


Donald Methuen Fleming: That is your hope.


Alphonse Fournier: I suggest to hon. members of the committee and to the chairman that after 24 hours of this debate-


Donald Methuen Fleming: Twenty-four hours?


Alphonse Fournier: -because people continue to speak about it even when we are

not sitting-we should put an end to the debate and try to discuss the item under discussion, namely that of departmental administration.
I think the progress in the committee would be helped if this suggestion were followed- that is, unless hon. members have in their minds to cause obstruction. That, of course, would be another matter. But I wish to mention this, that from this moment on any repetition of what we have heard would, in my view, be obstruction.


Donald Methuen Fleming: What about the minister this afternoon?


Alphonse Fournier: I know hon. members on the other side would not have any intention of doing that. I would ask you to apply the rule, Mr. Chairman.


James MacKerras Macdonnell: This sounds like a threat.


Louis-René Beaudoin: I think the point raised by the Minister of Public Works is well taken. It is quite true that the report of the standing committee may be discussed on a motion for concurrence. But what led me astray somewhat this* afternoon was the fact that the parliamentary assistant made a speech in rebuttal to certain remarks that had been made from the opposition side concerning the extent to which certain matters under the jurisdiction of the department had been debated in committee. I thought perhaps he should be allowed to continue. Then hon. members on the opposition side carried on the argument concerning some of the points raised, stating that what had happened was not exactly as the parliamentary assistant had stated it. His speech was in reply to what had been said by the hon. member for Peace River and others who had spoken earlier.
Later in the afternoon the hon. member for Spadina, who had been chairman of the committee on defence expenditure, carried on the argument as to what had gone on in the committee. I quite agree that this discussion has some relationship to the affairs of the department, because the contracts that were studied by the defence expenditure committee are contracts under the supervision of that department.
So long as no hon. member rises on a point of order, the chairman has greater latitude in allowing discussion which may be somewhat out of order. But when a point of order is raised the chairman is called upon to make a ruling. Since some discussion has taken place on both sides of the house, I feel sure that hon. members, imbued with a
Supply-Defence Production spirit of co-operation, might content themselves from now on to refrain from any further discussion of matters dealt with in the defence expenditure committee, and confine themselves strictly to the items in the estimates for the department.
From the various questions asked this afternoon by the hon. member for Vancouver-Quadra, questions which appeared to me to be quite relevant and in order, I thought the general discussion was dying down and that we were reaching a point where we might conclude the general discussion on the first item. The debate was revived, however, when there was a discussion later on having to do with proceedings before the special committee.


Donald Methuen Fleming: By the hon. member for Spadina; he started it.


Louis-René Beaudoin: It is difficult to say exactly who did start it.


Donald Methuen Fleming: Not at all.


Edmund Davie Fulton: Not in the least,


Louis-René Beaudoin: I would be in a very difficult position if I were to attempt to say who began the discussion concerning the proceedings before the committee on defence expenditure. However, I would ask hon. members from now on to confine their remarks to the item before us. I suggest it offers wide enough latitude for a general discussion on the activities of the department. I should think that would be enough scope for hon. members at this time.


Mr. Wright:: Mr. Chairman, I can assure you, and through you the Minister of Public Works, that I am not going to discuss the Currie report. Neither am I going to discuss the document just read into the record, the report of the official opposition, which was moved as an amendment to the report of the government members on the committee. I agree that it is pretty much a political document; but I would point this out, that it was moved as an amendment to another document which was even more political. Certainly the official opposition cannot be blamed. With those remarks I have finished, so far as those documents are concerned.
The reason I want to raise the matter I have in mind is a statement made by the parliamentary assistant to the Minister of Defence Production, who said this morning that during the early days of the discussion on the Currie report there was a lot of talk about letters containing accusations against the department but that none of those letters had been submitted to the committee. We from this group submitted four of those

Supply-Defence Production letters to the minister. These matters deal directly with construction. Three of the cases had to do with classified projects, and therefore they were not brought before the defence expenditure committee.


Alphonse Fournier: On a point of order, actually what is before the house is item 79 which reads:
Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production.
The details are itemized beginning on page 155. First there is the salary of the deputy minister and other officials of the department and employees, which carry over to page 157. Then we reach the special items such as living allowance, professional and special services, reimbursement to the Department of National Defence for military personnel on loan, and so on. Then if you turn to page 158 you have an item of capital assistance. If the chairman's ruling is to be followed, discussion should take place on matters relating to these different items. We have had a general discussion and in my opinion have now reached the question period. I hope that with the good will of hon. members, and especially their desire to curb their right to speak, we will be able to study this item.


Percy Ellis Wright: The reason I am speaking on the administration item rather than a later Item, which might be No. 82, is that I am .;a member of the agriculture committee which Us now meeting. Important witnesses are before it, and I should like to get to that .committee.


Clarence Decatur Howe: I am also a member, so let us ishorten this up.


Mr, Wright:: I can assure you that what I have to say will be said concisely and in as short a time as possible. If I cannot say it under this item, certainly I can say it under item No. 82. I do not think it will take any more time to say it now rather than later. However, I am leaving that to your judgment.


Alphonse Fournier: If we could carry item No. 79 now I do not think it would take very long to reach item No. 82, when the hon. member would be able to discuss what he wishes to discuss.


Edmund Davie Fulton: I have some questions to ask under item No. 79 relating to the activities of Crown Assets Disposal Corporation, and I cannot see any other item under which I could bring up these matters. I do not want to hold up the hon. member for Melfort, but
[Mr. Wright.l

if it is ruled that discussion must be confined to specific items he is going to have to wait.


Alphonse Fournier: I do not want to displease anyone, but I have listened to a lot of things; and if Crown Assets Disposal Corporation does not come under this item I believe we will insist on the chairman's ruling being carried out and just discuss this item.


Edmund Davie Fulton: That is absolutely absurd, because Crown Assets Disposal Corporation is the responsibility of the Minister of Defence Production and there is no item here making an appropriation for Crown Assets Disposal Corporation. That is the reason there has been a general discussion permitted under the item for departmental administration.


Louis-René Beaudoin: I think item No. 80 is apparently the one under which crown companies could be discussed.


Clarence Decatur Howe: There is a whole list of crown companies here.


Louis-René Beaudoin: Any questions relating to crown companies would come under item No. 82. If the hon. member would look at the details of that item, which is the fourth one, he will see that.


Edmund Davie Fulton: I have looked at the details of item No. 80 on page 158 and all it says is:
Capital assistance, $60,000,000.
Crown Assets Disposal Corporation does not get any capital assistance. It sells items previously owned by various departments, particularly the Department of National Defence. It is the responsibility of and reports to the Minister of Defence Production.


Louis-René Beaudoin: Let us try to save time. The hon. member for Melfort has said that he wishes to attend the agriculture committee, and has left it to my judgment to decide whether he could speak now. It is not a matter of judgment as far as I am concerned; it would be more a matter of courtesy. If hon. members are ready to permit the hon. member for Melfort to discuss what he wants to discuss at this time so he may go to the agriculture committee, I would submit that that be done and then we could proceed with the other questions that remain to be asked under item 79.


Some hon. Members:: Agreed.


Alphonse Fournier: I would rather we passed item 79, and then we come to the items under which hon. gentlemen can discuss the questions they want to discuss. But I think under item No. 79 questions should be limited to the details.


Percy Ellis Wright: The matter which I wish to discuss has to do with Defence Construction Limited, which I think would be one of the corporations included under item No. 79.


Clarence Decatur Howe: Item 82.


John Horace Dickey: The estimates of this department are broken up into two sections, A, department and B, crown companies. The matters that both hon. members want to discuss would come under the section having to do with crown companies. Why not pass this item and get along?


Donald Methuen Fleming: Because there are other matters to be brought up.


Edmund Davie Fulton: Can the hon. member show me where Crown Assets Disposal Corporation would come under items 82, 83 or 84? The parliamentary assistant is reading something into those items which is not there. Item 82 reads:
To provide for expenses incurred by Defence Construction (1951) Limited in procuring the construction of defence projects on behalf of the Department of National Defence, $4,242,000.
The next is:
Canadian Arsenals Limited-
83. Administration and operation.


Louis-René Beaudoin: The hon. member does not have to read the items.


An hon. Member:: He wants to take time.


John Horace Dickey: Surely it must be clear to you, Mr. Chairman, and to most members of the committee that when there is a section of the estimates relating to crown companies, and it is clearly indicated, then questions relating to crown companies should be asked under those items.


Edmund Davie Fulton: I raise the question as to whether actually Crown Assets Disposal Corporation is a crown company in the sense of one that would come under section B.


Clarence Decatur Howe: It is.


Edmund Davie Fulton: If the minister will assure me that I will have an opportunity to discuss these matters under item 82, I have no objection whatsoever.


Clarence Decatur Howe: Sit down.


Donald Methuen Fleming: Don't give orders.


Edmund Davie Fulton: In view of the attitude which has been taken by the Minister of Public Works, that from now on the* discussion on particular items is going to be particularly restricted to the terms of the item, I wanted that assurance before I gave up my right to speak under the general item.
Supply-Defence Production


Clarence Decatur Howe: As far as the position of the hon. member for Melfort is concerned, I am in exactly the same position. A discussion is going on now in the agriculture committee affecting a department for which I am responsible, and I am just as anxious to get there as is the hon. member. If we could make a little progress we could both get there.


Stanley Howard Knowles: Neither of you will get there now.


Percy Ellis Wright: I was not even insisting; I was leaving it to the chairman. If the minister wants to challenge me, I am prepared to stay and see that he stays here as well.


Some hon. Members:: Carried, carried.


George Randolph Pearkes: There is an old adage which says that a little fellow spirit makes us wondrous kind. I feel very kindly toward the leader of the government and the minister at the present time, because during the debates of the committee considering defence expenditure, I sat through hours and hours and hours of questioning which I thought was as aimless as the speech made this afternoon by the hon. member for Skeena.
I am not at all surprised that the minister is rather anxious to get on with the estimates. I was anxious to get on with the discussion of some of the important matters in connection with defence expenditure; but I am loath to let this item pass until I receive a reply to the questions I asked the minister yesterday regarding the production of naval vessels and the reason there is a delay in the production of those naval vessels. I also asked particularly about the distribution of some of the contracts to the Pacific coast. I do not want to have hon. members say "carried, carried" until I get a reply to those questions. They are very definitely connected with this item and I feel I am entitled to have them answered, and I do not want any of this "carried, carried" business.


Clarence Decatur Howe: Mr. Chairman, I have been trying to break through the smokescreen to answer the hon. member's questions for the last 24 hours, but the smoke has been too dense.


George Randolph Pearkes: And I have been patiently waiting for the answers.


Clarence Decatur Howe: With respect to subsidies for shipyards, there are no subsidies for any shipyards in Canada. Certain capital assistance has been given for equipment required for the naval program and not reasonably required for the ordinary work of a shipyard. That assistance, however, has been in small

Supply-Defence Production amounts and pretty well distributed among major shipyards.
The distribution of ship construction or repair work has been worked out by the maritime commission to a large extent. It is the policy of the commission to keep the principal shipyards active and have them in a position where they could undertake an expanded program of naval construction without undue delay. There is an attempt to have in every shipyard trained men who could handle that class of work. The principal program has been escort vessels and that work has been assigned to the west coast rather out of proportion to the distribution to the eastern yards. It was thought that the program could be very well carried on out west. Five of the fourteen escort vessels have been assigned to the west coast, and the conversion of two destroyers into escort vessels has also been scheduled for that area.
We accept the direction of the maritime commission with respect to distribution. It was established some years ago that naval work not subject to tender would be allocated by the maritime commission, and that policy has been followed.
With respect to castings, the lead yard has been responsible for securing items common to all escort vessels or vessels of a certain type. Procurement is worked out by the lead yard in consultation with our own director of shipbuilding and a representative of the navy. How much of that lead yard work has been carried out on the west coast I do not know. Some rather important equipment installations have been carried out on the west coast. One rather important segment was placed with Vivian Engines, but I do not remember just what item of naval equipment it was. I think other items have been placed on the west coast, but there again the needs of the program must have prior importance to the geographical distribution. It is just impossible to distribute highly specialized naval work across Canada in a way that disregards cost and disregards equipment available in plants.
Have I answered the question?


George Randolph Pearkes: Yes, but perhaps I might ask a supplementary question. You referred to the lead yard in respect of castings. Where would that lead yard be?


Clarence Decatur Howe: The lead yard for the escort program is Canadian Vickers in Montreal. The lead yard draws on the designing talent of all yards for the particular program, and it was felt that the situation in Montreal was more convenient than in any other yard associated with that program. I believe that Davie

is the lead yard for another type of vessel, minesweepers. Just who the other lead yards are for other types of vessels, I am not sure.


George Randolph Pearkes: I do not want to prolong the discussion, but would it not be possible to have these castings made in foundries on the west coast where ships are being constructed, and where there has been delay in the completion of ships because castings have to be sent from eastern Canada? Delay has been caused and, very often, there have been lay-offs of key personnel. I am informed, and I believe correctly, that some of these key personnel have left the country and gone to United States shipyards because of the greater certainty of being steadily employed there. It seems to me that the production of *castings for certain of this equipment, where the facilities do exist on the west coast, might have been possible in the past, and it may still be possible to allocate that work to the west coast yards to ensure continuance of work there and retention of the key mechanics who are so essential for our shipbuilding industry on the west coast.


Clarence Decatur Howe: Mr. Chairman, the theory behind having the lead yard do the purchasing of castings for all fourteen escort ships is that there are so few pieces produced that it does not pay to duplicate the moulds. These are rather intricate castings. That is the theory behind it, anyway; whether it is sound in the case of the castings referred to by my hon. friend I do not know. Apparently, in the judgment of those responsible, it was the wise thing to have the castings made in the one foundry. It brings about the elimination of duplicate moulds for the one casting.


George Randolph Pearkes: All I ask is that the situation be reviewed; because it seems to me there are other arguments which could be advanced for having particular work carried out on the west coast.


James MacKerras Macdonnell: I have a few questions with regard to Canadian Commercial Corporation, which is specifically mentioned in item 79. I take it that this is the proper place to discuss that corporation. I want to ask the minister to bring us up to date with regard to the Canadian Commercial Corporation. I want to refer very briefly to its inception, io the change which has taken place in its functions over the years, and then to ask the minister where we stand now.
I want to recall to the committee that we have five organizations: the Department of National Defence, the Department of Defence Production, Defence Construction Limited,

Canadian Commercial Corporation and Central Mortgage and Housing Corporation. I want to recall that Canadian Commercial Corporation was set up in 1946. Apparently it had three chief functions at that time, and I am reading from page 3191 of Hansard for July 5, 1946, where the minister of trade and commerce of those days, Mr. MacKinnon, said:
-the Canadian Commercial Corporation will be called upon to discharge . . . the work hitherto performed by the Canadian export board which made purchases in Canada for foreign governments . . .
Then on the next page he said:
The corporation will not encroach upon the activities of private business; in fact one of its primary objectives will be to assist it directly in many important ways. For example, in the import field, it will aid Canadian traders in obtaining essential supplies from ex-enemy territories under military occupation.
On the next page he said:
The Canadian Commercial Corporation also will provide a means which, if desirable, can be used, in the future, for purchasing commodities under international allocation or foreign government control such as sugar, tea-*
And so on. At that time Mr. MacKinnon said it was contemplated the corporation would just last for what he called the transitional period. When he was asked what that might be, he said two or three years. I appreciate fully that the situation changed after that.
I am going to read a sentence from a speech by the Minister of Trade and Commerce in 1951, at the time the defence production department was set up. By that time I understand the functions of the Canadian Commercial Corporation were considerably changed; they had also changed in the interval. I read a sentence from what the minister said to show what the nature of the change was, and what the Canadian Commercial Corporation was doing in 1951, at the time the defence production department was set up. I read from page 838 of Hansard for March 2, 1951, where the minister said:
The Canadian Commercial Corporation now acts as an agent of the minister in carrying out procurement of the requirements of the three services.
Then he went on:
With a separate department of defence production, the general purchasing would be carried out as a direct function of the department-
That is the Department of Defence Production.
-and the great majority of the staff of the Canadian Commercial Corporation would be transferred to the department for that purpose.
Then the minister went on to say, on the same page:
It is not proposed, however, to wind up the corporation as such, but rather to retain it as a
Supply-Defence Production special agency to handle transactions with other governments or to engage in the bulk purchasing or stockpiling of any defence supplies or strategic materials which may be necessary.
Then the minister added:
The corporation, with such terms of reference, would probably fulfil a role not dissimilar to that filled by War Supplies Limited during the last war.
In that connection I want to read just one sentence describing the function of War Supplies Limited, which I am reading from the "History of the Department of Munitions and Supply" at page 478, the last paragraph:
War Supplies Limited fulfilled the very important function of co-ordinating the fiscal system of Canada and the United States, and also was an important factor in enabling Canada to maintain control of materials, industry and labour during the war years.
I imagine when the minister made that statement it was a general reference, and I am not pursuing it. I want now to come to this:	I am not quite clear on the importance of the functions now being carried out by the Canadian Commercial Corporation. I think I understand what Defence Construction does, and its separate function. I understand what Central Mortgage and Housing does, and its separate function. But it is not clear to me what important separate function the Canadian Commercial Corporation discharges.
Before I take my seat, and before the minister answers that, I want to ask this question, too. I have here a report of the Canadian Commercial Corporation for the period April 1, 1951 to March 31, 1952; that is more than a year old. I hope the minister will be able to bring us up to date on that so we will know the nature of the operations of the Canadian Commercial Corporation within the last year. In particular, I should like to know the nature of its operations in connection with the acquisition of materials, and what there is on hand at the present time. I observe that under the general account, as it is called in this statement of April, 1951, the inventory of commodities on hand is only $413,000. Now, I realize that a good many of the commodities on hand may be carried in corporations other than the Canadian Commercial Corporation which, I take it, acts as agent. I should be glad if the minister would answer those questions.


Clarence Decatur Howe: Perhaps we had better start at the beginning, since the hon. member has covered a good deal of territory. In the early days of the second world war we were doing a good deal of business with Washington, and Washington wanted to deal with the Canadian government through a corporate entity located in the city of Washington. At that time we formed a crown company,

Supply-Defence Production War Supplies Limited, with a head office in Washington, D.C., which accepted all orders placed by the government of the United States and forwarded them to Ottawa. This organization was responsible for their execution, so far as the United States government was concerned, and it was the one point of contact for any procurement on behalf of the United States government or on behalf of any other foreign governments. There were several foreign governments operating from Washington or New York at the time, and all foreign business was placed through War Supplies Limited.
After the war ended and after the outstanding contracts had been completed, there seemed to be no further purpose in continuing War Supplies Limited, so the company was wound up. However, the then minister of trade and commerce, the Hon. Mr. MacKinnon, felt the need for an organization in his department to handle foreign business. He was bringing in a good deal of material from countries that could not trade directly with Canada, and he formed the Canadian Commercial Corporation to carry out the foreign business, both buying for Canadian account and selling Canadian goods to foreign governments. It was used largely for the latter purpose. Governments abroad that wished to buy in Canada bought through the Canadian Commercial Corporation.
During this period, it was thought advisable to wind up the department of munitions and supply. It was felt that the department, which was represented in every city from coast to coast, had an overhead greater than the volume of the purchasing it was called upon to do would warrant. The department was, therefore, wound up and the functions of the department were transferred to the Canadian Commercial Corporation under the Minister of Trade and Commerce. For a period the Canadian Commercial Corporation handled the principal functions now being administered by the Department of Defence Production.
When the preparedness program was undertaken, it was found that the corporation was getting too unwieldy and that the corporate set-up was no longer suitable, so the Department of Defence Production was organized. This department has taken over all the responsibilities for Department of National Defence procurement from the Canadian Commercial Corporation. Today the Canadian Commercial Corporation is doing exactly what War Supplies Limited did in the last war. It accepts orders from foreign governments and places them through this department in Canada. It has placed


something over $300 million worth of orders from the government of the United States. It has handled business from other governments that wished to place orders in Canada through the Department of Defence Production. It also handles purchasing for the Colombo plan and the shipment of goods to Colombo plan destinations.


James MacKerras Macdonnell: I want to have an idea of the magnitude of the operation. I observe from, this report that the total supply of Canadian goods and commodities of governments and international organizations handled through the corporation during the fiscal year, that is the fiscal year ended March 31, 1952, was $206 million. Could the minister give me a roughly corresponding figure for the last year?


Clarence Decatur Howe: I should think the total today is something over $400 million. I am sorry that the report corresponding to the one my hon. friend has read from is not yet prepared, but we have not been able to get the services of the Auditor General to audit the books. Therefore we have not been able to table it in the house. I think probably during the past year the Canadian Commercial Corporation placed orders for another $200 million.
As to the stockpiling of strategic materials, I might say that the purchasing is handled through the Canadian Commercial Corporation but the actual stockpiling is financed through the revolving fund of which my hon. friend has such great knowledge.


James MacKerras Macdonnell: I remember the revolving fund. That is to say, the stuff in the stockpile is carried by defence production?


Clarence Decatur Howe: The stockpiling of strategic materials such as tin, quartz crystals and one or two other metals is carried by the department through the revolving fund.


James MacKerras Macdonnell: I have one other question. I observe here in the general account some $19 million of advances to suppliers which I understand are for progress payments. I am recalling the unfortunate advances we made to the Davie company in 1949, when we sustained a bit of a loss. What is the practice in making advances to suppliers? What I mean is this. Are these all substantial people of ascertained position? Have we made any losses other than the George T. Davie loss?


Clarence Decatur Howe: No. A good deal has been said about the George T. Davie loss. My hon. friend will recall that all the details of the transaction were explained to parliament at the time, and at least the tacit approval of

parliament was obtained before the transaction was completed.


George Randolph Pearkes: The information the minister gave me a few minutes ago is not the complete answer to the question I asked last night. I had asked him to bring us up to date with regard to the progress of the shipbuilding program and the reasons for the delays or the lag in the program. I understand that there is a considerable lag behind the anticipated production. It is stated in the report:
The launching of a bare hull represents only some 3 per cent of the total man hours required to complete a destroyer escort for sea duty.
I realize that, but I should like to know how near we are to commissioning these various vessels which are now being constructed or being completed.


Clarence Decatur Howe: The conversions are coming along well. I think all the conversions of frigates and Bangors will be completed during the current year. We were too optimistic about the time required from the drafting board to completion of the escort vessels. We are wiser now. Britain has been carrying on a somewhat similar program, and it has taken over six years from the time the drafting work was first undertaken to completion of the first escort vessel. In the United States it has taken a little over five years for a similar program. In Canada it will be about five and a half years before the program is completed.


George Randolph Pearkes: Five and a half years from now?


Clarence Decatur Howe: Five and a half years; yes.


George Randolph Pearkes: From now?


Clarence Decatur Howe: No. From the time the work was first put on the drafting board.


George Randolph Pearkes: That was 1951?


Clarence Decatur Howe: 1951. It will be 1956 before the program is completed. No, it was put on the drafting board before that. It was undertaken in 1949. The first destroyers will be delivered to the navy complete during 1954. Whether they will all be delivered in 1954 is not so certain. Some of them may go over into 1955.


George Randolph Pearkes: Is there any truth in the story that men and materials have been diverted to work on freighters for foreign countries?


Clarence Decatur Howe: No. That is not true. The difficulty has been in getting sufficient designers and draftsmen to keep the design work ahead of production. We have taken quite extraordinary steps in that connection. We have brought men from the United States and we have brought a number of men from England. Of course each country's naval program is at its peak now, and it is extremely difficult to
Supply-Defence Production get men. But that problem is fairly well over. Our design work is now well up to date. Subcontracts are going well. Today it is simply a matter of putting on maximum manpower and getting the work finished.


George Randolph Pearkes: This is the last question I have. What about the minesweeper program? There have been delays.


Clarence Decatur Howe: Minesweepers?


George Randolph Pearkes: Yes, minesweepers. There has not been the same technical detail there.


Clarence Decatur Howe: No.


George Randolph Pearkes: There seem to have been delays.


Clarence Decatur Howe: We hoped to get some of those last year. Ten of them will be delivered during the current fiscal year.


George Randolph Pearkes: None have been delivered yet?


Clarence Decatur Howe: No. The first goes on trial very shortly.


Julian Harcourt Ferguson: I should like to ask the minister a question. I come from a town which is known as a great shipyard town, namely Collingwood, Ontario. We have been extremely fortunate there in the past six years in making vessels for private enterprise. At the present time, owing to the extension of the pipe line, 400 men have been laid off at the shipyard that is noted across Canada for its efficiency and its capability. Does the minister believe some naval vessels may be constructed on the great lakes, or that there are some it is possible to construct on the great lakes, in order to make them of value to this country? I should like to know that.


Clarence Decatur Howe: Of course the situation at Collingwood is the result of a little bit of bad luck.


Julian Harcourt Ferguson: I know that.


Clarence Decatur Howe: Work was suspended on the vessel that is under way. Arrangements have now been made to complete the vessel as a grain carrier. I believe some delay was caused through revising the design. Whether there will be other work for that yard we are not certain. I understand that there is some further naval work in contemplation. If that is the case, I am sure the maritime commission will keep in mind the Collingwood yard.


Julian Harcourt Ferguson: I greatly appreciate what the minister has said. I am sure he knows, from the speech he made in Collingwood prior to the 1949 election-


Clarence Decatur Howe: They didn't believe me.
4958	HOUSE OF
Supply-Defence Production


Julian Harcourt Ferguson: -that they are extremely capable people. He assured the people of my community at that time that he would not neglect Collingwood. I hope he lives up to his promise.


Stanley Howard Knowles: They did not vote right.


Clarence Decatur Howe: The Collingwood yard has been an extra busy yard. No one believed me before. They will not believe me if I go back.


Julian Harcourt Ferguson: They will take you for what you are worth this time, I am sure, the same as they did the last time.


James MacKerras Macdonnell: I am coming back to the question I asked before and which I hope will be more convenient under this item. I refer to the amount of strategic materials which have been purchased and which are on hand.


Clarence Decatur Howe: I do not think we should give that information. The United States has consistently refused to give the size of their strategic stockpile. I should be glad to give it to my hon. friend privately, but I am sure he would not want me to put it on the record.


James MacKerras Macdonnell: I shall not press that question. My final question is this. I think I can understand why Defence Construction Limited was necessary as an adjunct or an agent of defence production; because of its technical nature, it needs technical men. I can quite see that defence production did not want to staff itself in that way. But it is not clear to me why defence production needs in addition Canadian Commercial Corporation, which seems to me now to have been altered so completely. Indeed, it has been twice altered in its nature. It began, as was mentioned in Mr. MacKinnon's speech, six years ago. It then became agent for procurement for the services. Now it is changed again. It is not yet clear to me why we need able men-I am referring now to the civil servants-doing this job, and I am wondering whether it could not be done equally well by defence production itself.


Clarence Decatur Howe: The reason is that foreign governments like to be able to deal with a corporate entity. It is much easier for a corporation to sign the documentation necessary to complete a purchase by a foreign government than it is for the government of Canada to do so. The government of Canada would require special order in council authority and a good deal of extra documentation, thus it would take much more time.


The Canadian Commercial Corporation has gone the full cycle; it is doing exactly the work that its predecessor, War Supplies Limited, did in the last war. Just as War Supplies Limited was a very necessary tool in that war, so I believe the Canadian Commercial Corporation is a very necessary tool in the present defence program. To date it has entered into contracts totalling $456 million.


James MacKerras Macdonnell: Is that
cumulative?


Clarence Decatur Howe: Yes, that is since April 1, 1951. It has a staff of about 40 people, an office in Washington and headquarters in Ottawa.


James MacKerras Macdonnell: The minister's reference to an order in council has called up one other question to my mind. What is the authority for the order in council mentioned on page 11 in the minister's report?


Clarence Decatur Howe: It is a regulation under the Financial Administration Act. The Financial Administration Act was passed by this house within the last twelve months. It provided for regulations, and the order in council in question was passed under that act.


Gordon Francis Higgins: I have two questions only to put to the minister. I have been very patient, sitting here all day, and I hope the minister will be patient with me. I have a return from the Department of Defence Production in reply to the following questions:
1.	What defence projects are presently being undertaken in Newfoundland by the Department of National Defence?
2.	Where are they located?
3.	What is the estimated cost of each project?
I received details showing that in St. John's, Newfoundland, there was one of $680,600; one in Goose Bay, Labrador, $6,622,078, and another one in Goose Bay, Labrador, $174,500. If I am still able to add correctly, that makes a total of $7,477,178. The question I am asking is this. In the budget speech of the minister of finance of Newfoundland, delivered on April 29, he estimated the moneys that would be going into the pockets of the people of Newfoundland in 1953, and he set forth a table in which he gave the amounts for defence in 1951, 1952 and what they would earn in 1953. In 1951 he said the total was $16 million; in 1952, $21,989,000 and in 1953, $24,533,000.
If we take the $24,533,000 the provincial minister says is to be earned this year in Newfoundland and subtract from it the $7,477,178 that the return given me today shows, it leaves a balance of $17,055,822, if my subtraction is correct.

I want to ask the minister this question. Does the return I hold in my hand represent all that is being spent for defence in Newfoundland, or is the balance of $17 million odd being spent entirely by the United States?


Mr, Howe:: The $7 million odd represents the amount being spent by our department in Newfoundland, pay and allowances of the troops and expenditures by other departments of government. However, I have discussed this matter with the members of the government of Newfoundland. The whole point is that they are so busy looking after the work that is closer at home that they are not very anxious to get our work. They admit it quite frankly. In fact the premier told me only a few days ago that to carry out the work in sight for this summer, men would have to be brought in from outside the province. Therefore I suggest that the department can hardly be blamed if the province finds itself in that position.


Gordon Francis Higgins: That is not quite the answer, Mr. Chairman, with all due respect. I am not in any way disputing the minister's answer, but the question I am putting is this: Is the total amount of work he would have done this year, no matter who does it, $7,477,000 as I got it in the return today? That is correct, I presume.


Clarence Decatur Howe: By our department, yes.


Gordon Francis Higgins: No other department is doing work there that I know of.


Clarence Decatur Howe: The Department of Transport is doing work there, and the Department of National Defence is certainly making very considerable expenditures through the Department of Defence Production as indicated by the amount given in the return, but those are by no means all the expenditures of this government in Newfoundland.


Gordon Francis Higgins: I certainly do not want to take the minister to task in any way, but the questions I put and to which I have a return are these. There were five questions. The first was:
What defence projects are presently being undertaken in Newfoundland by the Department of National Defence?
They give me all the projects, setting them forth by departments, and after that they tell me the amounts, and then the grand total. Remember, this includes not only the profits on contracts, but all the people who are supplying the contracts are mentioned, and this includes the money that the ordinary labourer is making. The minister of finance of Newfoundland said that the take-home pay of the people working on these contracts was going to be $24,533,000. I merely ask
Supply-Defence Production if there is more work going on down there than we know or the minister knows, or is this work being done by the United States forces?


Clarence Decatur Howe: It is United States contracts.


Gordon Francis Higgins: That is fine. My second question is in connection with the defence orders that I have been asking about for some time now at the new machinery plant, and I am certainly not going to be nasty about this. Last November I asked the parliamentary assistant to tell the minister that I was going to ask a question as to the prospects of orders for that plant. That went on for a matter of two months, and ultimately the parliamentary assistant suggested that I should put the question on the order paper. I put the question on the order paper on December 12, 1952. I am going to read the question and answer. They are not very long. They are as follows:
1.	Have any orders for the supply of defence materials been given the new machinery plant at Topsail Road, Newfoundland?
2.	If so, what orders have been given, and what has been the value of such orders?
3.	If not, is it intended that any orders will be given and when may the same be expected?
On January 14, 1953 they were answered as follows:
1.	No defence orders have as yet been placed with Canadian Machinery and Industry Construction Limited, by the Department of Defence Production.
2.	Answered by No. 1.
3.	Their facilities are well known to officials of the Department of Defence Production. The company is receiving all appropriate invitations to tender and the department is also examining the possibility of placing a specialized contract in this plant.
On March 6 I placed these questions on the order paper:
1.	Has the Department of Defence Production placed any orders with the new machinery plant at Topsail Road, Newfoundland, for the supply of defence material?
2.	Has the placing of a specialized contract for this plant been considered, and, if so, what is the result of such consideration?
These questions were answered as follows:
1.	No.
2.	Yes. No orders materialized.
I now have a question on the order paper asking if there are any possibilities of orders. All I ask the minister is this: Is there any future outlook for defence orders for that plant? I think the minister knows I am not trying to bulldoze him, but we are getting anxious about the future of that plant.


Clarence Decatur Howe: I do not know that my hon. friend need be so anxious. The plant is doing well. In respect to the prospects of future orders, I may say we were trying to work out a military order for it, but we found

Supply-Defence Production that the plant did not have the capacity to take it, without a new building. The cost of that addition would have put the overhead on the order we were trying to place with the company at a prohibitive level.
However, I am told that the plant is doing well. It is getting all the work on the island of Newfoundland; and if we have any work there satisfactory for the plant, we will place it with them. If the company cares to tender on work on the mainland we shall be glad to consider their tender. I think my hon. friend is distressing himself unduly in the matter.


Gordon Francis Higgins: I thought the minister said the plant was getting all the orders on the island of Newfoundland. Well, that may be so; but there are not many orders there. The plant is practically idle. I have looked through the public accounts and I find that a tremendous number of small machinery plants are getting orders. All I am asking is whether there is going to be an order for that plant.


Some hon. Members:: Carried.


Agar Rodney Adamson: No. I have something further to say; perhaps it would almost amount to a point of order. This afternoon the chairman of the defence expenditure committee brought up the point that in the committee because I had not asked specific questions dealing with aircraft production, therefore I had not brought that matter before the committee.
In that connection I would draw the attention of hon. members to the report appearing in Hansard of January 16 where, as reported at page 1076, on the occasion of setting up the committee, I said:
I feel that no parliament can divest itself of the responsibility for national defence. The old days of the professional soldier are over. Today every citizen is part of the defence of his country, and the better he is informed the more effective he can be. These basic problems therefore must be discussed and studied.
I suggest that men like Air Marshal Douglas Smith, the air member for technical services, with his engine and airplane specialists, and Dr. J. J. Green, as well as Dr. Solandt, could most profitably come before the committee.
And subsequently that day:
I earnestly hope that when the committee is set up the terms of reference will be broadened so we will know not only that the money being expended is adequately and properly expended, but that it results in fighting material which will be useful and effective. If we do not do that we are not only negligent in our duty, but it may almost be said that we are traitors to our cause.
Well, the chairman of the committee, in discussing aircraft production, the subject to which I referred last night-


Louis-René Beaudoin: Order. This afternoon when the chairman of the defence expenditure

committee, the hon. member for Spadina, was making the point that the hon. member for York West had not asked questions in the committee about aircraft production, I understood the hon. member for York West to rise and clarify the position. I allowed him this evening to make the quotation in order to support the point he made this afternoon. But I would suggest to him that certainly we are not going back to what took place this afternoon, or earlier this morning.


Agar Rodney Adamson: It is not my intention to go back to what was done this afternoon. It is merely my intention to clarify what was said about aircraft production. And in view of the minister's statement on February 16 with regard to the production of jet aircraft, in which he specifically referred to the hon. memher for Kamloops and myself as being two of the reasons for making the statement,
I would say that this was a most important problem with which the minister had dealt, but that certain doubts were left in our minds in connection with the production of modern aircraft.
The minister said, I believe it was on February 16, that he could not proceed to discuss the matter because of the question of security. Well, subsequent to that a considerable amount of what people who seem to know tell me amounts to breaches of security, appeared in the government press. Perhaps it was just a case of zealous reporting, perhaps it was not. I happen to know a certain amount about what went on.
However, I feel most sincerely that it was the duty of the defence expenditure committee to go into these matters and hear from the experts who knew the meaning of security, who could say, "Thus far we can go; beyond that would be a breach of security." We could have heard from men who knew the subject, not from members of a political party. We could have heard from men who have the job of fighting, and of defending the country.
That was my point last night. That is my point tonight. And, with respect, that is the point which has been completely distorted by the chairman of the defence committee. I think it would have been extremely helpful to hon. members and to the country to have had before the committee persons such as I have suggested.


Louis-René Beaudoin: I would ask the hon. member to come to those matters which really fall under the jurisdiction of the Department of Defence Production, and I would ask him not to refer again to what took place in the committee on defence expenditure. There has

been some discussion on that point. I thought it had been concluded.


Agar Rodney Adamson: I have only one sentence more-and may I say I agree entirely with you, Mr. Chairman. The question has been debated.


Louis-René Beaudoin: May I point out to the hon. member that he also agreed with me when I rose earlier.


Agar Rodney Adamson: Yes, I did; but I qualified my agreement by stating that we have to have the complete data straightened out in the house, and that the whole question of aircraft production is one which is definitely a problem of the Department of Defence Production. It is almost a primary problem in defence production, I suggest, and it is one which should not be dealt with in the heat of political debate, in the heat of controversy. I do not include you in that, Mr. Chairman, but refer to debate across the floor of the house. The information should come from an expert level. That, it seems to me, summarizes the failure, and indicates what we have not done at this session in reviewing defence production.


Louis-René Beaudoin: Shall the item carry?


Douglas Scott Harkness: This afternoon I asked the minister several questions regarding arms production, particularly in respect of the production of cannon, small arms and ammunition. Can he answer those questions now?


Clarence Decatur Howe: Yes. My hon. friend would not expect me, of course, to give the numbers and deliveries of guns. He knows that is classified material. However, I would be pleased to give a general outline.
Prime contracts for guns are almost completely placed with Canadian Arsenals, who operate on a straight cost basis, without profit. In placing subcontracts, Canadian Arsenals attempt to get fixed prices as a result of competitive tenders. The one important exception to the above is Sorel Industries Limited which has been chosen by both the Canadian and United States governments as a producer of larger calibre weapons. In these contracts we are working toward target price contracts as we secure cost information.
The principal weapons include the 3-inch 50 calibre now being delivered to the United States in accordance with their requirement schedule. The 120 mm. gun for the United States army is now coming into production and deliveries will commence within a few weeks. Sorel Industries will also manufacture the 105 mm. recoilless rifle. No production has yet started because the weapon is being redesigned in the United States. This plant will also produce the 40 mm.
Supply-Defence Production Bofors for the Canadian navy. Deliveries on this item are to begin early in 1954.
The Arsenals are now producing the -5" Browning machine gun for the CF-100 and the F-86 Sabre. 60 mm. and 81 mm. mortars will be produced by the Turnbull Elevator Company, Toronto, and Vivian Engine Works, Vancouver. Deliveries of the 3-5" rocket launcher are now practically completed by the Firestone Tire and Rubber Company and Canadian Arsenals. Apart from secret experimental work there is no production of small arms for Canadian account at this time.
Information was wanted about ammunition. For all gun ammunition, cartridge cases are being produced by Canadian Arsenals at Quebec city. The ammunition is filled at the arsenal filling plant at St. Paul l'Ermite. It is not appropriate to discuss details of ammunition production schedules due to security implications. It should be noted that our troops in Korea are receiving their ammunition through United States supply channels and not directly from Canada. However, we are making some contribution from our production facilities, both to the United States and United Kingdom forces.
Among the important types of ammunition now being delivered or coming into production are the following:
155 mm. shell; forging and machining by Canadian Car and Foundry; some deliveries already made.
105 mm. shell; forging by National Steel Car, Hamilton, Ontario; deliveries to begin in about a month.
90 mm. shell; forging and machining by Trenton Steel Company, Trenton, Nova Scotia; deliveries are being made at the present time.
3" 50 calibre rounds; order for forgings by Dominion Forge and Stamping completed. '
40 mm. Bofors rounds; machining by Arsenals; deliveries under way .
60 mm. mortar bombs; forging and machining by Thompson Products Limited; deliveries to begin in a few months.
81 mm. mortar bombs; forging and machining by Massey-Harris; deliveries of the body only have begun.
[DOT]50 machine gun rounds; Canadian Arsenals; deliveries under way.
Bombs, practice, 100 pounds; by Modern Moulding and Metal Craft; order almost completed.
Bombs, practice, 25 pounds; Sorel Industries Limited; deliveries under way.
Hand grenades No. 83; T. W. Hand Fireworks Company Limited; order almost completed.
4962	HOUSE OF
Supply-Defence Production
Rocket, 3-5" head, by Orillia Sheet Metal; motor body assembly by Moffatt's Limited, and fuse by Wallaceburg Brass; deliveries have begun.
Rockets, aircraft, 2-25"; metal parts by Firestone Tire and Rubber Company, Hamilton; deliveries almost completed.


Douglas Scott Harkness: I did not notice any 25-
pounder gun ammunition being manufactured. The 25-pounder is the gun used by our forces in Korea. Are we supplying any of that ammunition or are we depending on British sources?


Clarence Decatur Howe: We sent substantial quantities of 25-pounder ammunition to the United Kingdom, but our artillery there is on the British supply line and the replacements are coming from the United Kingdom. We explored the desirability of manufacturing more 25-pounder ammunition, but the joint decision was against our doing so.


Agar Rodney Adamson: Did the minister mention anything about the production of guided missiles?


Clarence Decatur Howe: No.


Agar Rodney Adamson: That is completely classified at the present time?


Clarence Decatur Howe: Yes. It might be interesting to note the point of view taken in the British parliament, and I quote the following:
D. P. T. Jay asked the minister of supply the total ot public money spent by his department on aircraft research and development undertaken by aircraft companies since April, 1945. The minister replied: "It would not be in the public interest to give information about government expenditure on aeronautical research and development, the overwhelming majority of which is for military types".


Mr. While (Middlesex Easl):: Are the snowmobiles purchased by the department proving satisfactory and practical under northern Canadian conditions?


Clarence Decatur Howe: The trials have been entirely satisfactory. I understand that in the northern exercises the Canadian snowmobile stood up whereas the snowmobile furnished from south of the line did not.


George Stanley White: Are they all produced by the one company?


Clarence Decatur Howe: I am not sure. I was under the impression that there were two suppliers, but I do not know who the other one is.


George Stanley White: Are the items in stock now all serviceable and in working order?


Clarence Decatur Howe: Serviceability is a matter for the Department of National Defence. We would not know that; we just buy them.


Gordon Knapman Fraser: How many hundreds of thousands of navy hat bands have been bought-


Some hon. Members:: Oh, oh.


Gordon Knapman Fraser: Oh, oh. You can "oh, oh" all you like. The "oh, oh's" are from the Liberal benches. I want to know how many were bought from agents in Canada who in turn bought them from western Germany.


An hon. Member:: None.


Gordon Knapman Fraser: Now you are wrong.


Clarence Decatur Howe: How many times does my hon. friend require an answer to that question. We answered it in writing. I cannot remember the answer.


Gordon Knapman Fraser: I have not had it in writing.


Clarence Decatur Howe: We certainly have had it in the house. It was either a written return or it is on Hansard. I wish I could remember figures like that as long as they are required, but I cannot.


Gordon Knapman Fraser: I want to know how many that were bought were made in Germany.


Clarence Decatur Howe: I could not tell you.


Gordon Knapman Fraser: I know there were at least 200,000, and I just wondered how many more.


Clarence Decatur Howe: That is the difference; my hon. friend knows the answer and I do not.


Gordon Knapman Fraser: I want to know how many more than that.


Mr. Rowe:: Funny if it has been answered several times and you do not know the answer.


Gordon Knapman Fraser: Cannot the minister state how many hundreds of thousands were bought from Germany?


Louis-René Beaudoin: The minister has said he does not know. Perhaps the answer is being looked up. In the meantime we could carry on the discussion.


Donald Methuen Fleming: There are several individual points on which I should like to have information or explanation. The first has to do with the last question asked by the hon. member for Greenwood in connection with order in council P.C. 3209 of May 30, 1952, which is referred to at the bottom of page 11 of the annual report of the department. The effect of that order in council, which was passed under section 39 of the Financial Administration Act, requires, as is indicated in the report, reference to and approval by the treasury board in the case of orders for amounts between $25,000 and $50,000. I should like to ask the minister if that approval of treasury board has been treated as a substitute for approval by the governor in council?


Clarence Decatur Howe: Yes, it has. Provision for that was made in the act which was passed by this parliament. Orders in council of that type were formerly passed by a committee of the privy council. The Financial Administration Act made provision for the work to be carried out in future by the treasury board, which is also a committee of the privy council with pretty much the same membership. It is not an important change. There is a larger and better staff for vetting orders than the privy council had.


Donald Methuen Fleming: What has been the practice of the department with respect to placing orders within that price range without tender? I asked the minister last night if he would make a statement concerning the practice of the department with respect to calling for tenders in the case of orders, first of all, in the category up to $25,000 and, second, in the category from $25,000 to $50,000.


Clarence Decatur Howe: The practice universally is to call for tenders except, for example, if we are buying parts for a Ford car. We would not call for tenders there, but we would go to the manufacturer and buy them under a contract with the manufacturer. I would say that except for purchases of that type, where there is proprietary interest involved and where tenders would not be productive of any saving, everything bought by the department under $50,000 is bought by tender.


Donald Methuen Fleming: The next point I have to raise is one I brought up when the estimates of the Minister of Trade and Commerce were before us, and he asked that it be deferred until the estimates of this department were before the committee. It relates to a report which appears in a press dispatch of August 14 last purporting to contain.a statement by the minister that this country was making a gift of arms to the value of $150 million to the United Kingdom in 1952. In the Canadian Press dispatch from London the following day it was indicated that the authorities over there were consulting in regard to the matter. The dispatch indicates that a treasury spokesman said:
[DOT]-the figure of $150 million announced by Howe was "a new figure here hut we believe Mr. Howe was misreported in saying that it would all be spendable this year."
Then the dispatch proceeds to indicate that the talk must have been in relation to the commitments undertaken at the Lisbon conference of the NATO organization, but they were not too clear about how the amount was arrived at. I wonder if the minister would make a full statement to the committee.
Supply-Defence Production


Clarence Decatur Howe: That report was unfortunate. The figure of $150 million was right, but I did not say that it would be expended in one year. I was just going into the building when a reporter asked me to comment on a dispatch published in the Manchester Guardian, to the effect that Canada was indifferent. Actually the expression was "Olympian detachment". I said I did not know that Canada was so detached because we were providing Britain with some $150 million worth of aid. That was all I said, and I walked into the building. The reporter built a full column around that remark, and it caused some repercussions.
The fact was that in the fiscal year which he put in the story, but which I did not, we provided the United Kingdom with about $130 million worth of mutual aid. During that fiscal year the items were largely F-86 airframes, mark IV No. 6 radar sets, picrite and other explosives. Since then we have sent very much more, so the $150 million was quite safe at that time. The figure also includes the air training program.


Donald Methuen Fleming: May I ask what period of time the $150 million covers?


Clarence Decatur Howe: I do not know the cut-off date exactly, but I know that we are sending military aid to Britain. We send military aid to NATO and it is allocated by NATO to Britain; but we are sending direct allocations to Britain in the form of material and expenditures for air training well in excess of $150 million at the present time. Perhaps the figure is nearer $200 million now.


Donald Methuen Fleming: Then I take it that the $150 million does not relate to any specified period.


Clarence Decatur Howe: No, although the dispatch
referred to one year.


Donald Methuen Fleming: It said "this year", apparently indicating 1952.


Clarence Decatur Howe: Our expenditures were about $130 million for the year, but for the full period they are considerably more than that.


Donald Methuen Fleming: The other question I have relates to the purchase of gloves. If the minister has not the information now perhaps he could have one of his officials communicate it to me. I gave the figures last night on the purchase of gloves and mitts, based on a return from the department, to December 31, 1952. They appear in Hansard on page 4878. What purchases of gloves or mitts have been made since January 1, 1953, or have been ordered since that date?


Clarence Decatur Howe: I would be glad to look into that.


Mr. Catherwood:: I have a question I would like to ask the minister. Perhaps he made

Supply-Defence Production reference to it this afternoon, but as I was in committee I did not have a chance to hear whether he made any comment on it at all. I refer to restrictions on steel, and I would like to ask if there are any limitations in effect on the distribution of certain types of steel. If there are limitations, is it possible that they may be completely removed in the near future?


Clarence Decatur Howe: There are practically no restrictions on steel. We reserve the right to call for end user certificates. In other words, if a large order is being placed we get a certificate indicating the end use to which the steel is allocated. We keep that measure in force so that if another steel shortage develops we will have machinery to allocate or direct steel to defence projects. Today steel is not difficult to buy and there are practically no restrictions on its purchase by anyone. We do, however, keep tighter control of steel scrap.


Edmund Davie Fulton: I would like to ask a question about Sorel Industries Limited, but if we are still giving capital assistance to that company I could ask it under the next item. Would the minister say whether we are still providing capital assistance to that company?


Clarence Decatur Howe: Yes, there is still capital assistance being provided there. We have several contracts with them, and the capital assistance is being carried on.


[Stage Direction]
Item agreed to.
80. To provide capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board, $60,000,000.
Alfred Johnson Brooks: I notice that this item is to provide capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors. Of course we are all vitally interested in this, and I would like to ask the minister just what capital assistance is being given in the different provinces in Canada. I am particularly interested in my own province of New Brunswick.
I might say we are very proud indeed to have the minister as a summer resident of our province, and he is very much interested in the development down there. However, I would like to ask the minister just what capital assistance has been given under this item to concerns in the province of New Brunswick and in other provinces. I notice that the amount was $110 million last year and it has


been reduced to $60 million this year, a reduction of $50 million. Could the minister give a breakdown of the amounts?


Clarence Decatur Howe: We have no breakdown by provinces. We are not interested in a provincial breakdown; we are interested in buying material. We are not running a political shop, and we do not divide the figures into political entities.


Alfred Johnson Brooks: I am not asking this from a political point of view, but I am interested in my province and I should think the minister would be interested in developing industry in the province of New Brunswick. For instance, one reads every few weeks a list of the purchases that are made throughout Canada. One sees that so much oil was purchased, or so much was purchased from the Swift Company in our province, and so on. However, I had not read anything which said that very much had been given to industry in that province.
We talk about decentralization, and so on. If we are going to decentralize industry, it does seem to me the minister should be interested in giving assistance to the development of industry in the province. I do not see why his officials who are sitting in front of him cannot tell us what assistance has been given in the different provinces so far as this item is concerned. They must have a breakdown of it, and I should like the minister to give us that breakdown.


Clarence Decatur Howe: We have no breakdown by provinces. If the hon. member will ask me whether or not any particular firm in the province has received capital assistance, I shall be able to tell him. We are buying from industry where there is industry. For instance, I live in the -town of St. Andrews, New Brunswick, and I should like very much to buy war materials from that place but they do not make them. On the other hand, in Saint John we do buy a good deal from the Saint John Dry Dock Company and one or two other firms there. We have extended capital assistance in Saint John, and I wish I could tell him that the same was true in every town in New Brunswick, but I cannot. I do not carry those things in my head, and there is no purpose in the department attempting to break the thing down by provinces, by constituencies, or by towns and villages.


Alfred Johnson Brooks: I do not see why the minister cannot give us a list of the industries in New Brunswick which are receiving assistance from his department. We have heard a lot in this house about decentralization of

industry. It does seem to me that the minister is very much interested in the decentralization of industry. If we are decentralizing industry, surely he must know something about the different industries in the different provinces that have received assistance from his department. If he cannot give me the information now, I should like to receive the information later.


Clarence Decatur Howe: I can say this, that we have not refused capital assistance to any industry in New Brunswick which has applied for it and where it was justified. I do not think I can go farther than that, but my officers confirm that fact.


Alfred Johnson Brooks: Possibly we might know what percentage of industry in the maritimes has received assistance.


Clarence Decatur Howe: I have not the faintest idea.


Alfred Johnson Brooks: I am satisfied that it is very small.


Douglas Scott Harkness: I have several questions concerning capital assistance. I received a return on March 2, 1953 which showed that capital assistance had been received by the A. V. Roe Company for the development of the Orenda engine in the amount of $52 million, and for the CF-100 airframe in the amount of $11 million. I am leaving off the hundreds of thousands. Another return also received on March 2 showed that the Lucas factory in Toronto was manufacturing parts for the Orenda engine, fuel systems as a matter of fact, and that they had received capital assistance in the amount of $5,794,000, of which $2,630,000 was for construction and $3,163,000 was for equipment and installations. I wonder if the minister can tell us what other companies as well as this Lucas company have received capital assistance grants so far as the production of the Orenda engine and the CF-100 are concerned, and what that capital assistance was?


Clarence Decatur Howe: Mr. Chairman, I should point out that while capital assistance is given to certain plants to make parts for the Orenda engines, these plants also make other defence items. For instance, the Lucas factory makes fuel systems and certain other parts.


Douglas Scott Harkness: The fuel systems are for the Orenda engine?


Clarence Decatur Howe: There are other products there which are probably also for the Orenda
Supply-Defence Production engine. The list of firms requested by the hon. member and the amounts is as follows:
Chatco Steel Products Limited ..	$ 221,414
Aluminum Company of Canada
Limited	 69,357
J. H. Connor and Son	 855
Light Alloys Limited	 3,603
Canadian Acme Screw and Gear
Company Limited	 2,447,429
Cockshutt Aircraft Limited ....	742,742
Frigidaire Products of Canada
Limited	 6,026,328
McDonald Brothers Aircraft
Limited	 888,527
Sunshine Waterloo Company
Limited	 683
To that list should be added Canadian Steel Improvements Limited in the amount of $3,419,939.


Douglas Scott Harkness: I take it from that list, Mr. Chairman, the total capital assistance is in the neighbourhood of another, roughly, $12 million or $15 million above the figure of $52 million which I was given before?


Clarence Decatur Howe: No, they are all included in the over-all figure, except for Canadian Steel Improvements. The capital assistance for the Orenda program is put out through A. Y. Roe. This company is charged with the money, and it is passed on by them to their subcontractors.


Douglas Scott Harkness: Then the total amount of capital assistance for the CF-100 and the Orenda would be somewhere between $75 million and $80 million, adding those items to the $63 million.


Clarence Decatur Howe: The items I have recently given are included in the capital assistance which is given to A. V. Roe and passed on to the subs that they use.


Douglas Scott Harkness: That is included in the figure of $63 million?


Clarence Decatur Howe: That is right.


Douglas Scott Harkness: So the total capital assistance is $63 million?


Clarence Decatur Howe: That is right.


Douglas Scott Harkness: If these moneys are issued by the A.V. Roe Company to the other companies, is the control of that capital assistance in the hands of A. V. Roe or is it in the hands of defence production? Who authorizes that capital assistance?


Clarence Decatur Howe: Title to all the equipment is in the crown. We authorize each item of equipment separately. If the equipment is moved from one of the plants to another, it must be done through permission obtained from the department. Every item of expenditure under the capital assistance fund is registered
4966	HOUSE OF
Supply-Defence Production on the central registry. If there is a transfer, the transfer is made on the central registry and someone is responsible to the crown for delivering back the capital assistance item or payment.


Douglas Scott Harkness: Then if I understand the minister correctly, grants of capital assistance are made by his department on the recommendation of A. V. Roe, in this particular case.


Clarence Decatur Howe: A. V. Roe would express the need, and it would be vetted by experts from the department. It would have to be approved by the committee of the department which passes on financial problems of this kind, the financial adviser's branch, and then approved by the governor in council.


Douglas Scott Harkness: What check does the minister's department keep on the cost of construction so far as the capital assistance grants are concerned? For example, in connection with this Lucas plant there is $2,630,000 for construction. How does the department control that expenditure, as to whether or not it is properly planned, whether overly expensive construction is being undertaken with that money?


Clarence Decatur Howe: Plans are submitted to the department and they are vetted by the appropriate branch of the department. The expenditure is supervised by Defence Construction Limited.


Douglas Scott Harkness: Does that mean that Defence Construction does actually say to these people, "No; we figure that you are putting in far too expensive a type of floor here"- or whatever it may be-"and you have to cut the cost of this down to 75 per cent of what you are planning"?


Clarence Decatur Howe: Yes.


Douglas Scott Harkness: Or anything else along that line?


Clarence Decatur Howe: Yes.


Douglas Scott Harkness: In connection with this factory, what was the cost per square foot?


Clarence Decatur Howe: I do not know. It is an extremely intricate mechanism that they are making. The factory is air-conditioned. I do not remember the dimensions. I think I could get them quite easily, but not tonight. If this item goes over, I shall try to have them for the hon. member tomorrow.


Douglas Scott Harkness: Perhaps I had better say that I asked some of these questions about this particular factory because I have had two or three letters from people complaining that the type of construction, the cost


of landscaping that was being done, and things of that sort were excessive and that if the dominion government were paying for this, as my correspondents understood they were, they thought there was something wrong in connection with the matter and that the question should be raised. That is why I asked particularly what was the cost per square foot of this factory, so that we might perhaps compare it with the cost of some other factories. If the minister is going to bring in any further information on this matter, I should like to know the cost of what you might call the amenities, particularly in the way of landscaping and things of that sort, in connection with this particular factory.


Clarence Decatur Howe: While we are on the subject, I might say I am told that the furniture, which is noted by visitors there-I have heard more about the furniture than I have about the building-is rather gaudy; but that is furnished entirely at the expense of the company, as was the landscaping.


Douglas Scott Harkness: I have heard chiefly about the construction of the factory and the landscaping, as it happens, not about the furniture in connection with this matter. I obtained another return on May 6 in connection with the cost of the Canadian Arsenals plant in Toronto. It shows that the total amount of space there was 194,571 square feet and the construction cost-which was, I take it, a government expenditure- was $2,161,000. That worked out at a cost per square foot of $11.1. Another return in connection with the John Inglis Company, a plant which is also in Scarboro, not far away from the Canadian Arsenals plant, shows that this plant had a construction cost of $4,332,000 and that the total space constructed was 186,695 square feet, which works out at a cost per square foot of $23.2. I understand from contractors that $23.2 per square foot is an excessive cost. There may be reasons for that. , I wonder whether the minister could explain why this particular plant should have been such a costly affair?


Clarence Decatur Howe: The reason is quite simple, Mr. Chairman. It is a special plant for extremely large and heavy items of propulsion equipment. There was no existing plant that could manufacture propulsion equipment of that kind, on account of the weight and size of the equipment. It is a high-ceiling building with heavy cranes and, of course, an extremely heavy floor. I might say that all the buildings my hon. friend has mentioned are the property of the crown and will remain the property of the crown. If the contractor did not do his job properly, we paid too much for it.

But if the contractor did a good job, we got value for the money.


Louis-René Beaudoin: Shall the item carry?


Douglas Scott Harkness: Does the minister mean that this Lucas factory is the property of the crown and will remain the property of the crown?


Clarence Decatur Howe: Yes.


Douglas Scott Harkness: Or is that on a repayment basis?


Clarence Decatur Howe: No.
Mr. Harknessj That remains the property of the crown? '


Clarence Decatur Howe: Yes.


Douglas Scott Harkness: I wonder whether the minister can tell us the total number of companies -I do not want all the names, the particular amounts and so forth-which have received capital assistance, in addition to the ones he has already given, and the total amount of that capital assistance?


Clarence Decatur Howe: It is in the public accounts, schedule B, page DD-20.


Douglas Scott Harkness: That is for the year 1952. But that does not include anything since 1952.


Donald Methuen Fleming: Since March 31, 1952.


Douglas Scott Harkness: Since March 31, 1952 is what I should say.


Clarence Decatur Howe: At March 31, 1953 the total investment in crown facilities-that is buildings, machinery and any physical equipment furnished under capital assistance- was $233,571,281.78, all the property of the crown.


Douglas Scott Harkness: That would include all this A. V. Roe business in addition to the others, would it?


Clarence Decatur Howe: That is right.


Douglas Scott Harkness: How many companies are there, all told, or how many does that involve? If the minister has that information I shall be glad to have it; if not, I will not worry about it. How many different properties does that involve?


Clarence Decatur Howe: I am told there are 29 in addition to those shown in schedule B.


Douglas Scott Harkness: There are 29 in addition to the ones shown in the public accounts for 1952?


Clarence Decatur Howe: That is right.


Louis-René Beaudoin: Shall the item carry?


Donald Methuen Fleming: This is an extremely large item. I wonder whether the minister will indicate to the committee the steps the
Supply-Defence Production department takes with respect to applications for capital assistance? Just what information do they require and what tests do they submit these applications to before expending these sums of money?


Clarence Decatur Howe: The test is whether the item can be produced in Canada from existing facilities. If the department is satisfied that the item cannot be furnished from existing facilities, it then becomes necessary to provide the facilities. They are provided to the firms who seem best equipped to do the work, from the point of view of management and auxiliary facilities. An agreement is reached between the respective firms and the government as to what is needed in the way of both floor space and equipment, and plans are drawn to provide that. The work is carried out under the supervision of Defence Construction Limited for the account of the government. If the hon. member looks at page 14 of the department's annual report, he will find that procedure spelled out there.


Louis-René Beaudoin: Shall this item carry?


Edmund Davie Fulton: No, Mr. Chairman. I have certain questions about Sorel which I indicated I should like to ask. Perhaps we could call it ten o'clock.


Louis-René Beaudoin: If hon. members are agreeable, perhaps we could finish this item tonight.


Donald Methuen Fleming: I can tell you, Mr. Chairman, that I have another question following up the one I just asked the minister. The information I wanted is not to be found at page 14 of the annual report. Will the minister indicate the financial terms of this capital assistance program as between the government and the companies? Are the terms uniform in all cases or does the department arrange terms to meet the immediate situation of the individual company?


Clarence Decatur Howe: Mr. Chairman, there are no terms. All facilities are built for the account of the government, are paid for by the government and are owned by the government, to carry out a government contract. The only case where terms would come in would be if there were not sufficient government work remaining. We have a lease arrangement under which we can lease floor space and machinery for private work, which means a payment to the government. But the facility is owned by the government. It is built on land which is deeded to the government, and it remains the property of the government unless the government at some future date decides to sell it. I may say that of the capital assistance items built during the last war there has been a recovery of about

Supply-Defence Production $650 million. There will be a substantial recovery of the facilities built under the present emergency. I think the recovery was something over 40 per cent of the capital cost.


James MacKerras Macdonnell: Will the minister answer this question? Would the general practice be to acquire the freehold-in other words, to hold everything-or would it be to put machinery into already existing premises?


Clarence Decatur Howe: If a plant can carry out a government order simply by the addition of machinery, the machinery is placed in existing buildings; it is stamped with the government number and painted a particular colour. It remains the property of the crown in a privately-owned building. I thought we were discussing a situation where the government had to provide the building as well as the machinery.


Louis-René Beaudoin: Since it is ten o'clock, shall I report progress?
Item stands.
Progress reported.


Howard Waldemar Winkler: May we revert to routine proceedings so that I can present a report.


Mr. Deputy Speaker:: Has the hon. member leave to revert to routine proceedings at this time?


Some hon. Members:: Agreed.



MISCELLANEOUS PRIVATE BILLS

[Stage Direction]
Eighth report of standing committee on miscellaneous private bills.-Mr. Winkler.

Alphonse Fournier: Tomorrow we shall follow the order of business which was announced last night.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[The following item was passed in committee of supply]:

[Stage Direction]
A-Department-
79. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production. $6,710,933.
[Stage Direction]
Friday, May 8, 1953