1953-02-19

Mr. A. W. Stuart (Charlotte):: I rise on a question of privilege. During the debate that took place yesterday in this chamber with regard to the Farm Improvement Loans Act, I took issue with a statement which was made by the hon. member for Gloucester (Mr. Robichaud). When I placed on the record what I believed I had heard him say I was interrupted by several members on my left who stated that the interpretation, or the statement I had put on the record, was incorrect. I have yesterday's Hansard, and I should like to read briefly from the remarks that I made, as reported at page 2071 of Hansard:
But there was a statement made a few moments ago by the hon. member for Gloucester-


Mr. Graydon:: Where is the privilege?


Mr. Casselman:: That was in debate.


Mr. Speaker:: Order. The hon. member
for Gloucester also rose on a question of privilege.


Mr. Weir:: They had better go outside
and settle it.


Some hon. Members:: Oh, oh.


Arza Clair Casselman: And the Minister of
National Revenue (Mr. McCann) could be referee.


Mr. McCann:: You are the one who would not come.


Mr. Speaker:: Order.


Gordon Graydon: Big talk.


Mr. Speaker:: Since both the hon. member
from Charlotte and the hon. member for Gloucester would like to settle some question, with the consent of the house they might have this opportunity, if they wish to do it at this time. We cannot go into a long debate.


Arza Clair Casselman: No; this is debate.


Mr. Speaker:: If I do not allow the hon.
member for Charlotte to speak I cannot allow the hon. member for Gloucester.


Andrew Wesley Stuart: May I be permitted to continue, Mr. Speaker?


Mr. Speaker:: From what I have heard it
seems to me that this would appear to be some matter that took place during a debate in the house. Whether it should have been raised at that time or whether the debate should be renewed-


Andrew Wesley Stuart: My question of
privilege had to do with the statement I put on the record. I was informed by hon. members to my left that it was incorrect. I have Hansard of yesterday.


Mr. Speaker:: Order. I do not think I can allow that as a question of privilege.


Mr. A. M. Robichaud (Gloucester):: Yesterday afternoon, Mr. Speaker, during my absence from the house, when I was attending the committee on the revision of the Criminal Code, the hon. member for Charlotte-


Mr. Speaker:: Order.



REPORTS OF COMMITTEES


[Stage Direction]
Mr. J. A. Bradeile (Cochrane) presented the first report of the standing committee on external affairs and moved that it be concurred in.
Motion agreed to.
[Stage Direction]
Second report of the standing committee on standing orders.-Mr. MacLean (Cape Breton North and Victoria).


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, I should like to complete an answer I gave yesterday to a question of the hon. member for Eglinton (Mr. Fleming) about recent orders in council under the Emergency Powers Act'. The order in council to which I referred as having been passed several weeks ago, or perhaps several months ago, was in fact passed on October 30, 1952, and was No. 4410. It was published in the Canada Gazette, part II, of November 12, 1952, and tabled in the house on November 20, 1952.

Questions



CENTRAL MORTGAGE AND HOUSING CORPORATION


Mr. J. G. Diefenbaker (Lake Centre):: Mr. Speaker, I rise to a question of privilege in connection with the answer to a question I received yesterday concerning Central Mortgage and Housing Corporation. The question was as follows:
1.	How many officers and officials of the Central Mortgage and Housing Corporation receive salaries in excess of $7,000 per year, giving names and positions held?
2.	Have any salaries been increased in such categories during the year 1952, and the present year to date? If so, what are the names of such persons and the respective amounts of the increases?
Now, what purports to be an answer was as follows:
1.	(a) There are 27 officers and officials of Central Mortgage and Housing Corporation receiving salaries in excess of $7,000 per year.
(b) It is not the policy of the government to ask Central Mortgage and Housing Corporation to disclose the names of this group, because of the quasicommercial nature of the corporation and its competitive position in securing and retaining staff in the mortgage and construction fields.
My point of privilege is this, that the reply is a travesty of parliament. I understand that these men have raised their salaries recently, in one case up to $20,000 a year; and the Canadian taxpayer has a right to know what expenditures are being made of his money.


Hon. Robert H. Winters (Minister of Resources and Development):: Mr. Speaker, I anticipated that the hon. member would raise a question in the house, so I brought a copy of the Central Mortgage and Housing Corporation Act with me. The question has been asked on a number of occasions by hon. members on both sides of the house, and that is the type of answer that has always been given.
Section 14 (1) of the Central Mortgage and Housing Corporation Act reads as follows:
(1) The corporation may on its own behalf employ such officers and employees for such purposes and on such terms and conditions as may be determined by the executive committee and such officers and employees are not officers or servants of His Majesty.
That should, of course, now be "Her Majesty". That statute, including the subsection I have quoted, was enacted by this parliament. I understand therefore that the answer I tabled yesterday was in accordance with the wishes of parliament when it enacted the legislation.


John George Diefenbaker: That does not answer the Canadian people.



PENITENTIARIES


Hon. Sluarf S. Garson (Minister of Justice):: Mr. Speaker, I beg to lay on the table printed copies in English and in French of the annual report of the commissioner of penitentiaries for the fiscal year ended March 31, 1952, which have now been received from the queen's printer. Hon. members will recall that photostat copies of the material contained in the report were tabled on December 1, 1952, in order to comply with the provisions of section 14 of the Penitentiary Act.



QUESTIONS


Mr. Thatcher:: 1.	Has the attention of the Minister of Justice been drawn to the case of Ronald Power, Toronto, who served 10 months in the Don jail for an armed robbery he did not commit?
2.	If so, will any compensation be paid this man by the federal authorities?


Mr. Garson:: 1.	Yes.
2.	No. The administration of justice, including the enforcement of the criminal law, is, by the terms of the British North America Act, the responsibility of the provincial or local authorities. The prosecution in this case was initiated and conducted accordingly by provincial or local authorities and without reference to the Department of Justice or other department of the government of Canada. Consequently, any claim for redress should not be addressed to the government of Canada.


TWILLINGATE, NFLD.  PUBLIC WHARF
Mr. Browne (St. John's West):: 1.	Who built the public wharf, at Twillingate, Newfoundland?
2.	Were tenders called for?
3.	What was the amount of the successful tender?
4.	When was the wharf completed?
5.	What was the ultimate cost?
6.	Has there been , any inspection by an inspector from the Department of Public Works, since the wharf was completed, and has any report been received with reference to condition of the wharf?
7.	Has any additional work been done on the wharf, since its completion?
8.	Is so, what is the nature and cost of same?


Mr. Fournier (Hull):: 1.	Chester Dawe Ltd.
2.	Yes.
3.	$375,000.
4.	October 27, 1952.
5.	$375,334.75.

Inquiries of the Ministry 6- Yes.	any objection to notifying the Canadian
7 and 8. Some extra rock was placed along- Broadcasting Corporation to reduce from side the east side of the wharf to protect it thrice daily to once daily the broadcast from heavy storms at a cost of $773.49.	instalments of the lethal Rosenberg serial?
I do not ask for an answer, but I expect POST OFFICE DEPARTMENT

POLICY	action.


RESPECTING NEW BUILDINGS
Mr. Robichaud:: 1.	What is the present policy of the Post Office Department with respect to the minimum revenue required to warrant the building of a new post office in any locality?
2.	When was this policy definitely adopted?


Mr. Langlois (Gaspe):: 1.	$10,000 per annum.
2.	In 1945 after the cessation of hostilities, in connection with the post-war building program.


&quot;TWO MINUTES OF EMPLOYMENT FACTS&quot;
Mr. Fraser:: 1.	How many copies of "Two Minutes of Employment Facts" were printed during the year 1952?
2.	How many were printed during the first month of 1953?
3.	What was the cost of printing during 1952?
4.	What was the cost of printing during January, 1953?


Mr. Cole (Verdun-La Salle):: 1.	516,200 copies of "Two Minutes of Employment Facts" were printed during the year 1952. (16 issues).
2.	62,400 copies were printed during January, 1953. (2 issues).
3.	The total cost of printing during 1952 was $8,034.49.
4.	The cost of printing the January 1953
issue was $796.88. This last named figure is approximate since final billings have not yet been received.	.


QUESTION PASSED AS ORDER FOR RETURN
Mr. Fraser:: 1.	Did the government, during the last year, buy 72 chiropody kits, including instruments, etc?
2.	If so, what department of the government ordered these kits, and were they ordered from a United States firm?
3.	Has the government any chiropodists in its employ?
4.	If so, are they registered Canadian chiropodists?


CANADIAN BROADCASTING CORPORATION
[Stage Direction]
On the orders of the day:
Mr. Jean Francois Pouliol (Temiscouata):: Mr. Speaker, would the government have 68108-133


ARRANGEMENTS FOR TELEVISING CORONATION CEREMONIES
[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough West):: Mr. Speaker, I should like to ask a question of the Minister of National Revenue, under whose department the Canadian Broadcasting Corporation is administered.
Has the British Broadcasting Corporation made arrangements with the Canadian Broadcasting Corporation for the broadcasting of the coronation ceremony over television, free of charge, in line with the announcement of the C.B.C. this morning at eight o'clock that the British corporation would give the American broadcasting companies absolutely free television of the coronation, so long as no advertising was used?


James Joseph McCann: Not having had any notice of the question, I shall take it as notice and give an answer at a later date.


Mr. Speaker:: The hon. member's question was rather long. I am not suggesting that it be put on the order paper because there is a great deal of general public interest in the question. But I would ask hon. members to make their questions more brief.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Angus Maclnnis (Vancouver East):: Mr. Speaker, I wish to ask a question of the Secretary of State for External Affairs. In view of Mr. Dulles' statement of yesterday, as reported in the Montreal Gazette of this morning, referring to a possible blockade of the China coast, has the government made known its views to the United States government on this matter? If not, will they do so now?


Hon. L. B. Pearson (Secretary of State for External Affairs):: I think the report to which my hon. friend refers merely indicated that the state department in Washington was intensively studying any action, including naval blockade, which might be effective in stopping the flow of strategic materials to communist China. The attitude of the
2092	HOUSE OF
Emergency Powers Act Canadian government on this question is well known and has been made known to the United States authorities.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Arising out of the reply given by the minister, I would like to ask him who is the representative of Canada at the meeting being convened today by Senator Henry Cabot Lodge and composed of representatives of 16 nations whose troops are in Korea. What is the purpose of that meeting?


Lester Bowles Pearson: There is nothing unusual in the meeting to which reference has been made in the press. When the United Nations general assembly is meeting from time to time, representatives of member states actively participating in the Korean operation meet and discuss developments. I take it that this is one of those meetings in connection with the resumed session of the United Nations general assembly and that it is being called on this occasion by the United States delegate to the United Nations. Our representative at the meeting will be the permanent representative to the United Nations, Mr. Johnson.



POTATOES


[Stage Direction]
On the orders of the day:
Mr. P. E. Wrighl (Melfort):: I should like to direct a question to the Minister of Agriculture and I am sorry that I did not have time to give him notice. Perhaps the minister will accept this as notice. Has the minister received any complaints with regard to the serious drop in the price of potatoes in Prince Edward Island and that United States potatoes from Maine are being dumped on the Montreal market? Can the minister indicate whether the government is taking any action in the matter?


Right Hon. J. G. Gardiner (Minisfer of Agriculture):: I will take that as a notice of the question and reply later.



EMERGENCY POWERS ACT


[Stage Direction]
The house resumed, from Wednesday, February 18, consideration of the motion of Mr. St. Laurent that the house go into committee to consider the following resolution: That it is expedient to introduce a measure to amend the Emergency Powers Act to provide for
[Stage Direction]

the continuation of the act for a further period of one year, that is from the thirty-first day of May, 1953, to the thirty-first day of May, 1954.
Stuart Sinclair Garson: Mr. Speaker, when the house rose last evening at six o'clock I was engaged in pointing out that if our hon. friends opposite, as many of them appear to do, were basing their refusal to extend the Emergency Powers Act upon the fact that the emergency which had called it into existence in 1951 had passed, there really was no basis in fact for their argument. I indicated yesterday afternoon the reasons for suggesting that it would be a great mistake upon their part to think that the world is not a dangerous world at the present time because we on the North American continent occupy an island of some tranquillity and prosperity in the midst of it. I suggest that they should not forget that at the present time we have Canadian troops in Korea and on the Elbe and that events could take place in very short order that might require legislative action, or as an alternative, action by order in council, in a matter of hours.
In addition to any argument which might be brought forward to the effect that the emergency has passed, it has been urged by a number of members of the opposition who have taken part in this present debate that the legislation which we are discussing has not been used by the government to any great extent. That is quite correct, but I would point out that when we sought these powers in the first place we told parliament at that time that we would use them as little as possible. That is what we have done.
Last year, in moving the address in the house leading to the extension of the Emergency Powers Act; the Prime Minister (Mr. St. Laurent) outlined in considerable detail the 19 orders in council which had been passed under this statute during the first year of its existence. Inasmuch as the details of those orders in council are set out in considerable detail on pages 2558 and 2559 of Hansard of May 26, 1952, I do not think there would be any purpose served in my repeating them now. But perhaps I should indicate the orders in council which were passed under this legislation during the past year and which are five in number.
The first was order in council P.C. 389, of January 1, 1952, which did nothing more than revoke a previous order in council P.C. 3415, which had been passed under this legislation in the year previous.
The second was P.C. 3197 of May 30, 1952. This was the last in a series of orders in council relating to the great lakes seamen's securities regulations.

The third was P.C. 4116 of September 24, 1952, which again revoked a previous order in council P.C. 5122 of September 26, 1951, deferring the weigh-over of grain.
The fourth was P.C. 4525 of November 19, 1952, revoking P.C. 1608 passed on April 4, 1951, which latter was covered in the list of orders in council mentioned last year by the Prime Minister.
The fifth order in council which was passed last year is the only one which dealt with an entirely new subject. This was P.C. 4410 of October 30, 1952, which deals with the licensing of pilots under the Aeronautics Act and the issuing of certificates of proficiency for radio operators under the Radio Act, in order to provide in relation to that field additional security along the lines of the orders in council relating to the great lakes seamen's security regulations.
I suggest that if all these orders in council are examined it will be seen that they can be divided into those which were passed for the time being and were later replaced by legislation passed by parliament as soon as it was possible to secure it, into those which have since been revoked by some of these which I have referred to as having been passed during the past year, and that the notable exceptions to these two groups were the great lakes seamen's security regulations and the regulations for airplane pilots. I suggest that the very good reason why we have passed these security regulations pursuant to the Emergency Powers Act is that they are the kind of regulations the need for which rises out of the cold war. I suggest that we have dealt with them as such and have thereby clearly indicated that we regard these regulations as arising out of the cold war and that we did not wish to have them written into the main body of the statute law of the country with the implication of permanency which their being written into the main body of the law would create.
But even so, if my hon. friends will examine these regulations they will see that they do no more than provide reasonable security against communist sabotage in our great lakes shipping and in the operation of our airplanes along the very same lines that we provide the same type of protection in the vulnerable parts of our civil service. If my hon. friends will examine these orders in council they will see that the civil liberties of the subject are amply protected by their terms, that there is provision for appeal against decisions rendered under them, that no one is deprived of a chance to make a living, as has been suggested by the Leader of the Opposition (Mr. Drew), and that it 68108-133i
Emergency Powers Act has only been a very small fraction of the total number of men whose records have been examined who have had records which could not stand up to the tests. In relation to this small fraction all that has happened is that they have been denied access to fields in which they could, if they so desired, carry on espionage and sabotage.
It has been suggested that, because no such similar regulations have been applied to ocean shipping, therefore they should not be applied to great lakes shipping; but I should think it should be very obvious to anyone that the possibility of sabotage upon the part of seamen whose boat is going through the Welland canal or the Sault Ste. Marie canal is much greater than on the part of men who are working upon ships in the ocean itself. I would and do maintain that these regulations in no way prejudice the freedom or civil liberties of the subject, and I am informed that they have worked very satisfactorily indeed in practice.
When hon. members argue that such powers are not necessary because we have not used them to a large extent, after we had undertaken that we would not use them excessively or abuse them in any way, I think they are betraying a complete misconception as to the nature of emergency powers. Anyone who has given the matter any thought at all must realize at an early stage what is comprehended in the essential character of emergency powers. They are powers which are taken in an emergency to deal with matters which must be dealt with more rapidly than parliament can deal with them whether it is in session or prorogued. It is because such matters are more likely to arise during a condition of emergency than during normal times that these powers are taken in the first place. The mere fact that over the past year we have not needed to use these powers extensively is no reason at all, I suggest, that we might not need to use them inside the next twenty-four hours, the next week, the next month or the next six months. A man who has been carrying fire insurance upon his belongings and home, for the period of say twenty-five years, should not cancel his insurance because his house had not burned down during the preceding year. He therefore who argues that we should not have the emergency powers extended because during the past year no occasion for their use by us has arisen is surely taking a position which is an untenable one. If the fact that we have used them so little proves anything, it proves our good faith in the undertaking we gave to parliament that we would use these emergency powers as little as possible. For this.

Emergency Powers Act reason I suggest that those of the opposition who have urged the supremacy of parliament, who have urged that the powers of the executive should be limited as much as possible and that parliament should have as much control as possible over the orders in council which are passed under legislation of this sort, should support the extension of this legislation. They cannot be taken very seriously in their support of these three objectives I have named unless they do support this legislation. The fact is that there is a genuine emergency, which they have admitted, and no sensible man can argue that it does not still continue.
Upon a reasonable interpretation of the War Measures Act that emergency entitles the government to invoke its wide powers which are more extensive than those in the Emergency Powers Act. In the War Measures Act no provision is made for supervision by parliament. Instead of invoking these wide War Measures Act powers the government has come to parliament with a specific list of powers that have been incorporated in the Emergency Powers Act, with a view to vesting in parliament some control over the actions of the government when it invokes these powers. For parliament to refuse extension at the present time will, in practical effect, leave the government in the position of having if necessary to fall back on the very wide powers provided in the War Measures Act by the government of Sir Robert Borden in 1914, which act [DOT]every succeeding government has seen fit to leave upon the statute books. This will leave parliament in relation to the exercise of emergency powers in a very much worse position than it will be if extension of the Emergency Powers Act is now granted.


Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, it may not be amiss to point out that we are debating a resolution introduced by the Prime Minister (Mr. St. Laurent) which contemplates the introduction of a bill to extend the Emergency Powers Act for a period of one year from the 31st of May, 1953, to the 31st of May, 1954.
Several interesting things have occurred during the course of this debate which I think are worthy of comment. I have mentioned that this is a resolution introduced by the Prime Minister. Thus far the Prime Minister has not chosen to speak in the debate. It is also worth while recalling what occurred on February 6, as recorded at page 1712 of Hansard. When my colleague, the hon. member for Kamloops (Mr. Fulton), rose to speak he drew attention to the fact that the ; Prime Minister was at that moment .apparently about to leave the chamber and ^offered the comment that the Prime Minister
[[Mr. Garson.l
apparently thought so little of his own resolution that he was leaving the house at that moment. The Prime Minister is recorded as making this response:
Mr. Speaker, on a question of privilege, the Prime Minister has other things to do than to listen to the hon. gentleman, when he is using that tone.
The tone in question was, I take it, a tone of criticism. The Prime Minister apparently did not like the tone and thereupon left the chamber, giving as his reason for so doing that he disapproved of the tone used by the hon. member for Kamloops in referring to him and his attitude in the debate.


Some hon. Members:: Oh, oh.


An hon. Member:: Cheap.


Donald Methuen Fleming: May I say, Mr. Speaker,
that when the Prime Minister spoke on the question of privilege raised by the hon. member for Kamloops on February 10 he seemed to think that the addition of the words ''when he is using that tone" removed everything invidious from his comment. I think it makes it so much the worse.


Louis Stephen St-Laurent: You are entitled to your opinion.


Donald Methuen Fleming: Nobody expects the Prime Minister to be in this house at all times. We all know that he has important duties to perform. Necessarily the Prime Minister, like the Leader of the Opposition (Mr. Drew), -cannot be in the house all the time. But, Mr. Speaker, I think the house is entitled to a better reason for the Prime Minister leaving the house than that he dislikes the tone in which an hon. member of the opposition is proceeding to criticize a government measure and the failure of the Prime Minister to speak on a measure that he himself has introduced.


An hon. Member:: You are splitting hairs.


Donald Methuen Fleming: Mr. Speaker, suppose those who follow the Prime Minister had chosen to follow his example on that occasion. It would simply have meant that we would have had a house which was largely empty if the members who normally support the Prime Minister had chosen to follow his example on that occasion; and the reason would have been that they disliked the tone of criticism. Let us have due regard, Mr. Speaker, for that fact in addressing ourselves to a measure under which the government is inviting parliament to vest in the government, for another period of a year, extraordinary and sweeping powers. Here we have a government that is so impatient of criticism in this house that the Prime Minister assigns as his sufficient reason for

leaving the house the tact that he dislikes the tone in which an hon. member of the opposition is proceeding to criticize a government measure and the failure of the Prime Minister to speak in the debate. From that statement of the Prime Minister I suppose hon. members of the opposition can take due notice that they had better beware of the tone of their criticism. That seems to be the inference that is intended to be taken. I observed yesterday that the Prime Minister sat in the house, as he did again today, throughout the entire speech of the Minister of Justice.


Mr. SI. Laurent:: He was discussing the matter before the house.


Donald Methuen Fleming: I infer that the tone used by the Minister of Justice met with the approval of the Prime Minister.
I wish to comment on the fact that at this late stage in the debate the Minister of Justice-on whom has fallen the burden of supporting this measure owing to the non-participation of the Prime Minister in this debate-has at last found his tongue. He had an interesting time on February 6 in this house with respect to his obstinate refusal to support the motion then introduced and now under debate, and for his refusal to participate in it or to make any statement to the house as to his reasons for asking the house to approve this resolution designed to open the way for a bill to vest in the government these sweeping and extraordinary powers'. For that obstinate refusal he hid behind the wrenching of a ruling. Even at that late stage last night we are glad that the minister found his tongue and that he has given to the house a statement of reasons-however poor, however inadequate, however far-fetched-for asking the house to approve this resolution. Personally, I am glad he spoke, I am glad the house gave unanimous consent to his speaking again in the debate. It was the first time he had attempted to give any merits for the resolution. I am pleased, Mr. Speaker, that he spoke again. He clarified some matters and he expounded some doctrines which I think are going to be highly interesting to this country.
In the first place the Minister of Justice proceeded to wrench and to distort beyond all recognition the history of this measure as it has been unfolded in this house in two previous sessions. As I recall it, Mr. Speaker, this measure is two years old. It was debated in the 1951 session and in the 1952 session of parliament. The minister,
Emergency Powers Act with full access to the Hansard record available to him, undertook to tell this house something that is a monstrous distortion of the facts.


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: He said that this measure had been passed with the unanimous approval of the house in the two previous years. Nothing could be farther from the fact, Mr. Speaker, as I shall proceed to show. The Minister of Justice is utterly wrong in what he has said.


Stuart Sinclair Garson: Will my hon. friend allow me to ask a question?


Donald Methuen Fleming: With pleasure.


Stuart Sinclair Garson: Did his party or any member of it vote against the bill or against its extension?


Donald Methuen Fleming: I am going to give the
minister the whole story. He is not going to get away today with some of his general references as he did last night. I am going to go over every stage of this measure.


Mr. Sinnoil:: Answer the question.


An hon. Member:: He will.


Stuart Sinclair Garson: Will the hon. member answer my question?


Donald Methuen Fleming: The minister will hear the
whole story. I see that the Prime Minister is leaving the house.


Some hon. Members:: Oh, oh.	,


Donald Methuen Fleming: All I can hope is-


Louis Stephen St-Laurent: It is suggested that "the
whole story" is going to take forty minutes, and I think I can use the forty minutes to better advantage.


Donald Methuen Fleming: I ask nothing further on the part of the Prime Minister than that abject confession of the fact that he is impatient of parliamentary processes.


An hon. Member:: And parliamentary
criticism.


Donald Methuen Fleming: And that he has no time
in which to listen to criticism of government measures in this house. The Prime Minister dislikes the tone of criticism. For the second time in this debate he has chosen to leave the house. He had plenty of time to come into the house and to listen to the forty-minute speech of the Minister of Justice but he has not time to listen to opposition members dealing with his bill. That is a highly interesting commentary, Mr. Speaker, on the attitude of the government which is demanding at the hands of parliament renewal of those sweeping, extraordinary and unwarranted powers.
2096	HOUSE OF
Emergency Powers Act
I had occasion to refer to what the Minister of Justice had to say. I recall that on February 6, as found at page 1701 of Hansard, he undertook to refer to me. Incidentally, this apparently was intended to have reference to some stage in earlier years-I take it in 1951-of the debate on this measure. He says:
I remember that on one particular occasion I conferred with the hon. member for Eglinton (Mr. Fleming) and a wording was adopted. I asked him on the floor of the house if he was satisfied with it and he expressed his complete satisfaction.
That is apparently put forward by the Minister of Justice as proof of the fact that there was not opposition to the bill; but the fact of the matter is otherwise. I would suggest to the Minister of Justice that when he is pretending to the house that I am in agreement with him on anything, he be very sure of his facts. I say that on this occasion the only circumstance under which there could be any truth in the statement which the minister made and from which I have just quoted is if he is referring to two amendments that were made to this bill in committee of the whole in 1951; I refer to amendments introduced by the opposition. I see the minister is nodding his agreement. I am glad to see that he has got straightened out on that matter, because that is the only point at which I recall that we have been in agreement on this measure at any stage. As I have said, Mr. Speaker, those amendments were introduced by the opposition. They had so much reason and cogency behind -them that the government accepted two of them; there were others they did not accept. But that is the only place where I found myself in agreement with the Minister of Justice.
What did happen in 1951? It was quite evident at the time that there was a variety of opinions in the house. It is also evident that opinions have changed in certain quarters very considerably since then. We had evidence on February 6 that the view taken by the C.C.F. members with reference to this measure has changed drastically since the debate in 1951. But I want to recall this fact. The minister will not find, in any of the contributions I made to the debate on this measure in 1951, any support for this measure; and I spoke on it on three occasions.
I have said there were differing opinions in 1951. The Minister of Justice sought to content himself with references to the speech made by the Leader of the Opposition in 1951, at the resolution stage, before the Leader of the Opposition or any of us had seen the text of this measure. Well, the Leader of the Opposition did speak on
[Mr. Fleming.)

the subject of the emergency, and he did agree that it was not proper to invoke powers under the War Measures Act. But, Mr. Speaker, when the Leader of the Opposition saw the text of this bill, he expressed a very different point of view in this house. Let me make this quite clear at once. The Leader of the Opposition was not here during the debate on second reading of the bill.


John Sylvester Aloysius Sinnott: He is not here today, either.


Donald Methuen Fleming: He was not here on that occasion.	.


An hon. Member:: Where is he now?


Donald Methuen Fleming: He is attending a funeral, if the questioner wants to know in his insensible way.
When the Leader of the Opposition was here, and had the opportunity of participating in this debate, it was then that he called for a division on this bill. This bill passed third reading on division, and the record so shows. The minister cannot deny that.


Stuart Sinclair Garson: Will my hon. friend permit a question?


Donald Methuen Fleming: Yes.


Stuart Sinclair Garson: Is he arguing that his party is incapable of forming an opinion on the second reading of the bill in the absence of their leader?


Donald Methuen Fleming: The Minister of Justice (Mr. Garson) has attempted to make a curious suggestion. It is not one that many members of the house would make. I will say to him that I am giving him the reason why he does not find on the record any speech by the Leader of the Opposition during second reading. Had the Leader of the Opposition been here, he would have taken precisely the position on second reading that he took on third reading. The members of the opposition who did speak on this measure on second reading were the hon. member for Kamloops (Mr. Fulton) and myself. We did seek to give the house reasons why the house should not approve a measure of this kind. We did our best to point out flaws in this bill, and the position of the opposition is shown on third reading where it is recorded that the measure was given third reading on division.
Let us go forward now to 1952. Here again the Minister of Justice distorted the facts out of all recognition during his speech last night. What he said was that this measure was unanimously approved in 1952. It was no such thing, Mr. Speaker. What happened was this. The Leader of the Opposition spoke on this measure at some length. He spoke very strongly against this measure, and

pointed out the danger to the supremacy of parliament involved in the extension of such legislation. Nothing could have been more explicit than the reasons for the strong opposition he voiced against this bill. I have to take some personal responsibility for what happened on that occasion. The hon. member for Winnipeg North Centre (Mr. Knowles) followed the Leader of the Opposition, and he had spoken for about twenty-five minutes before the six o'clock adjournment. I had expected to follow him. At six o'clock he indicated that he would be just a few more minutes, but he did not indicate to me that he was going to stop in a matter of five minutes.
The fact of the matter is that when I arrived in this house, at five minutes after eight o'clock after having attended to some business in the Hansard offices on the way down which could not be attended to earlier, I arrived in the house with an armful of books and papers with the intention of speaking. It was our intention also that, if the opportunity presented itself, there would be a division forced. I found that the member for Winnipeg North Centre had finished off his speech in record time, and the house had passed on to the next item of business. I take personal responsibility for the fact that the house was not divided on that occasion, because I had a speech prepared for that occasion, much of which I am going to give today. It is for that reason that there was no formal division on this measure in 1952. The Leader of the Opposition did state, however, in the plainest terms, the position of His Majesty's opposition, which was a position diametrically opposed to the continuation of this measure. No fair-minded member of this house can or dare attempt to read the speech of the Leader of the Opposition to any other effect than that.
Now, it is interesting to note that if the Prime Minister had followed the course of giving time enough to offer the house some information on this measure, one would have liked to know, for instance, why it was that in 1952 what was brought in was simply a resolution in pursuance of section 4 of the bill to extend the first three sections of the act for a period of one year? There was not a resolution, and no statement in advance concerning the approval of the Governor General, so far as I am aware. It' was a motion for an address and there was a one-stage discussion. Had it been the case that we have this year, with a resolution introduced leading up to a bill, you may be sure there would not have been one division but several divisions on the measure at the successive stages. Last year there was only
Emergency Powers Act one stage to this measure. This year there is to be an opportunity to divide this house on all the stages of the measure, and I think that the appetite of the Minister of Justice for divisions will be satisfied before the house has disposed of this measure.
Much has been heard, Mr. Speaker, of the word "emergency" in this debate. If there is one word in the vocabulary of this government that has been worked to death, it is that word "emergency". I have been in this house eight years, beginning with the fall session of 1945. In every session in that period we have had to deal with legislation arising out of what the government has called an emergency. There has been a great succession of emergency measures, the National Emergency Transitional Powers Act, the Continuation of Transitional Measures Act, the Emergency Exchange Conservation Act and the Emergency Powers Act. With each extension of these measures year by year there has been some legislation introduced under the guise of an emergency. I have been looking over the general files I have on the subject of "emergency", and I find that I have already accumulated half a drawer full of files relating to the debates on these measures the government has been introducing year by year on this subject. The result has always been the same. The government has come out of these debates with extraordinary powers; that has been the purpose they had in mind in promoting this legislation.
The house will understand more clearly than ever before that the result of the decision of the privy council in the Nolan case is that once parliament declares that there is in existence an emergency, the courts will not make any inquiry whatever into the truth of that statement. No longer can those who value freedom, no longer can those who respect the constitution of Canada depend upon the courts to inquire into a statement of that kind, no matter how erroneous it may be. No longer do the courts afford any hope whatever of redress in matters of this kind. Such a statement in legislation passed by this parliament is now to be taken as conclusive so far as the courts are concerned.
The Supreme Court of Canada did not go that far, sir, but the Minister of Justice, after having denounced appeals to the privy council as a badge of colonialism, took an appeal to the privy council and has come out of it with such a doctrine as this. In the hands of the majority of parliament they virtually have the right to destroy the constitution of this country and the rights and privileges of Canadians if they choose to do so. In other words, Mr. Speaker, whenever
2098	HOUSE OF
Emergency Powers Act parliament itself declares the existence of an emergency all constitutional power in this country flows to parliament just by reason of that parliamentary ipse dixit. The courts are left in a strait-jacket. It remains for parliament, and parliament alone, to address itself to the propriety of this question.


Stuart Sinclair Garson: Will the hon. member permit a question?


Donald Methuen Fleming: Yes, the third one.


Stuart Sinclair Garson: Does he deny that there is,
in fact, the emergency of apprehended war in Canada?


Donald Methuen Fleming: If the Minister of Justice will possess his soul in patience, he will have my views on that subject. In the meantime, I can assure him that I am going to take up the points he dealt with, and I shall deal with them fully without the necessity for any interruption from the raucous chorus section over there.
Now, Mr. Speaker, in the measure under discussion, in section 2, we have a reference to the existing international emergency which parliament declared in 1951; and when we of the opposition on that occasion, as on previous occasions, urged that the emergency so-called should be described and defined in the legislation, and that only powers commensurate with the emergency should be asked for by the government, we were met with the refusal to spell out in the legislation itself the nature of the emergency. The Minister of Justice has to refer now to the statement made in the house in the debate by the Prime Minister to find his evidence of the existence of this international emergency.
Well, now, on whatever ground the government sought to support the alleged existence of the emergency when the debate on that measure began in 1951 it became quite apparent, before the debate on the measure was concluded, that the ground upon which the majority of the members of this house were supporting such legislation, as I read the debates, was the threat of inflation. Now that may have arisen partly out of government policies following Korea, but partly only. Nevertheless it was inflation that absorbed the attention of most hon. members in this house during the course of that debate. Let us not forget that, Mr. Speaker, in approaching the question whether there was or is now a state of apprehended war.
Last night the Minister of Justice did clarify one thing at least. He did make it quite clear at least that the government now says that the emergency that exists today- not the one referred to in the preamble to
'Mr. Fleming.]

the bill that existed in 1951, although I think his words could be properly applied retroactively to 1951, in view of what he said last night-is a state of apprehended war. His remarks on that are quite clear.
The government has been very squeamish up till now about making any such statement but the minister did come out last night with an interesting doctrine, when he expounded the idea that the War Measures Act could be invoked now. Do we realize fully what that means? No member of the opposition has at any time, with reference to this measure in 1951, 1952 or now, said that the government should invoke the War Measures Act. Nobody has said that; nobody proposes that. But the Minister of Justice has said that a state of apprehended war does exist and it follows as the night the day from that statement that the War Measures Act could in their view be invoked by the government.
I do not share the view that the Minister of Justice has expounded. I do say, Mr. Speaker-


Stuart Sinclair Garson: Your leader did in 1951. He said it in the debate in 1951.


Donald Methuen Fleming: Emergency Powers Act emergency, is there any occasion for a reenactment of this measure? I say there is not; because there are already on the statute books ample powers-yes, more than qmple -to meet any situation the government is likely to be confronted with.
I would like to read in full the provisions of the Essential Materials (Defence) Act, passed at the second session in 1950. It is chapter 6, and I draw attention particularly to sections 3 and 4. You will find there a conferring upon the governor in council of very extensive powers to-
-do and authorize such acts and things and make from time to time such orders and regulations as he deems necessary for the purposes of this act to control and regulate the production, processing, distribution, acquisition, disposition or use of essential materials or the supply or use of essential services.
Mr. Speaker, it is left largely to the government to say what are essential services, and what are essential materials. And the enumeration of the powers that follows shows that the government already has virtually absolute power with respect to what may be considered as essential materials or essential services.
And that is not the only measure of the kind; because if hon. members will refer to the Defence Production Act, which is in the 1951 statutes, chapter 4, they will see in section 15 what are virtually absolute powers given to this government with reference to the whole matter of defence production. I just wish there were time to put on the record the terms of that legislation. And for any government to say, after considering that legislation, that they need more power, is to confess that what this government is interested in is one thing, and one thing only, and that is to possess absolute and untrammelled legislative powers.
Sir, it will be the same thing next year. The Minister of Justice was at pains last night to tell us that this was a continuing emergency, and that it might go on and on. This emergency will go on, you may be sure of it, so long as this government is in office; because if by any chance an election should not be held before May 31, 1954, you may be sure that this government will be back again within that time asking for an extension of these absolute powers. And they will be telling us again that there is an emergency. Certainly, there will continue to be an emergency as long as this government is in office.


An hon. Member:: So long as you are here.


Donald Methuen Fleming: This measure raises directly the whole question of the relationship between parliament and the government. It
[Mr. Fleming.!

raises directly the whole question of the constitution, and the rather tenuous hold that the provinces possess now upon their legislative powers under the British North America Act.
Our position in this official opposition is crystal clear. We say that it is in parliament that legislating should be done, not behind closed doors or by secret methods such as has been the case with orders in council. And as to the relationship between the dominion and the provinces, we point out that the doctrine expounded in this house last night by the Minister of Justice means just this, that the provinces hold their legislative and constitutional powers in this country today simply at the whim of this government; and that the moment this government decides to invoke a particular measure, then all legislative power flows to Ottawa; and under a measure of this kind, it then flows on through parliament into the hands of the government.
There is a vicious combination. That is the extent to which constitutional government in this country is confronted with peril, both in the House of Commons and throughout the country. And we will not forget that along with this filching of legislative power by this government at the expense of the provinces, and in violation of the constitution, they have gone on at the same time changing the constitution by the extent to which they have been absorbing all tax revenues. In 1939 the dominion government took 51 per cent of the tax dollar in Canada. In 1951, just twelve years later, they took 77 per cent.
I wish to sum this matter up in this way: Parliament, historically, is the champion of the rights of the people. Let parliament transfer its powers to a group called the cabinet, who meet in secret, and Mr. Speaker, you have done more to place in jeopardy the rights of Canadian citizens than by any other action I know of. You are paving the way for a situation where the government can destroy the rights of the people.


John George Diefenbaker: A modern star chamber.


Donald Methuen Fleming: A modern star chamber, indeed. We see here once again an expression of that mentality which was so clearly exposed in this chamber two years ago by the Minister of Trade and Commerce (Mr. Howe) when he said, with a jeer, "If we wanted to get away with it, who would stop us?" Well, if this government derives a continuation through this measure of absolute and untrammelled powers, then there will be nothing that can stop this government. This measure presents the whole question of responsible government

as an inescapable issue in this house. Notwithstanding the extent to which the Prime Minister outside the house rhapsodizes about the virtues of our parliamentary system we are faced in this measure with what can be the death knell of our parliamentary system.
In such a measure we have a marrying of three dangerous circumstances under the mischievous doctrine expounded last night by the Minister of Justice: First the doctrine that apprehended war exists and that, therefore, under the constitution, all power flows to Ottawa-from which flows the corollary that the provincial legislatures and the courts are powerless-


Stuart Sinclair Garson: On a point of privilege.


Donald Methuen Fleming: I have only a moment more.


Mr. Speaker:: A point of privilege has been raised.


Stuart Sinclair Garson: Mr. Speaker, the hon. member is quoting me quite falsely. I never said any such thing as that which he has just said. What I said was that, not under the constitution, but under the War Measures Act passed by a Conservative government under Sir Robert Borden, in a condition of apprehended war, these powers go to the government. That is not what the hon. member has said.


Donald Methuen Fleming: When the Minister of Justice talks about apprehending he had better apprehend things better himself, because he has just misapprehended what I said, just as he has misapprehended everything that went on in 1951 and 1952.
What I said was that the Minister of Justice expounded last night the doctrine that a state of apprehended war exists; and therefore I say that under the constitution, and in the light of what he said last night, all power- all legislative power-flows to Ottawa, and that the provincial legislatures and the courts of this country are powerless, in the light of what the privy council has held, to stop or prevent that flow of legislative power to Ottawa-given the circumstances that the minister expounded last night.


Stuart Sinclair Garson: Again on a point of privilege. My hon. friend is incorrect in what he says. What I said was that legislative powers flow there by virtue of the War Measures Act, and for no other reason.


Donald Methuen Fleming: Mr. Speaker, it flows from what the government has said as to the extent of the emergency which now exists; because this government has declared, through the mouth of the Minister of Justice, that this situation does exist today, which gives the governor in council power to invoke the War Measures Act.
68108-134i
Emergency Powers Act
That being the case, then it follows as night follows day that under the Nolan decision of the privy council neither the provincial legislatures nor the courts of this land will have any powers to prevent the flow of absolute power from the provinces to Ottawa.
The second circumstance in this dangerous combination is that parliament is being invited by this bill to transfer virtually all its legislative powers, thus swollen, to the cabinet.
There is still a third circumstance. While it may not exist much longer, we have here a government which loves power and which is determined to hold on to it at all costs, as is evidenced by the conduct of the Prime Minister in this debate and his great impatience over words of criticism.
That is the situation created by this dangerous combination. You have present all the elements that are needed to transform Canadian democracy into a dictatorship and Canadian confederation into a unitary form of government.


Mr. H. R. Argue (Assiniboia):: Mr. Speaker, following the debate on February 6 we in this group are going to oppose the passage of this resolution. We did not make that decision until the debate had gone on for some time. The Minister of Justice (Mr. Garson) did not give us the advantage of speaking on that day and explaining why the government wanted the Emergency Powers Act continued. Even if he had I do not think we would have arrived at any other decision.
The Minister of Justice seems to be very good at interrupting and interjecting when speeches are being made by members of the opposition. It seems to me that he excels in that regard, but when it came to making his case as to why the government should have this measure passed he was not as good.
When we supported the Emergency Powers Act in 1951 we hoped that the government might use it to prevent runaway inflation. We hoped that the government would use it to impose controls and prevent the cost of living from increasing so rapidly. The government did not use it in that regard and we see no reason to believe that the government will use this measure even though a similar inflation recurs. And further at the present time we are not faced with inflation; we seem to be faced with the possibility of a recession.
I listened yesterday to the Minister of Justice and I listened to him today. I do not really know why the government wants this measure. He said, "We are in an emergency; the world is in an emergency." He then went to Morocco, South America and Malaya
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Emergency Powers Act and told us that there were emergencies there and that therefore Canada must have an Emergency Powers Act.
If the government needs the Emergency Powers Act it must be because the ordinary peacetime methods of obtaining legislation are inadequate. I do not think that that is the case at all. This house is now in session for the major part of any given year. It seems to be the practice when a session is finished for the government to adjourn parliament and have the members on call. With modern transportation facilities and means of communication parliament can be called together in a matter of twenty-four or forty-eight hours to pass the kind of legislation for which the Emergency Powers Act is now being used.
I have not gone over all these orders in council, but the minister has placed them in three categories. He said that there were orders in council passed for the time being; that is a certain class. Surely these "time being" orders could be dealt with by parliament. Then he said that other orders revoked orders that had been passed in the past. They would seem to be "time being" orders also. They are temporary measures. If those measures are necessary, surely parliament can deal with them by passing the necessary legislation in the ordinary way.
The minister went on to say that there were two exceptions. I did not hear the one, but the other had to do with great lakes security regulations. He said that he did not want that written into the main body of law because it would suggest permanency. It seems to me that such a condition could have been overcome in ordinary legislation. If the government did not want legislation to be on a permanent basis they could have provided for it to expire after one year. Then if the government felt that power was needed after that given time parliament could be asked to approve an extension.
As has been mentioned a number of times, surely it was no great emergency that caused the government to reduce the nickel content of the Canadian five-cent piece. That would not seem to be a world-shaking emergency which would require the Emergency Powers Act.
Another way in which this act was used was to deal with the weigh-over provided by the Canada Grain Act. I notice that that order in council was passed on Wednesday, September 26, 1951, and two weeks later parliament was in session. This kind of legis-ation would lead any government, composed is it is of human beings, into inefficiency md carelessness. They might say, "Oh, well, we will not have to pass legislation at this CMr. Argue.]

session to deal with something that might happen after the session is over because we have the Emergency Powers Act and if anything comes up we will do it under that act".
Looking over the orders in council to which the government has referred, as far as I can see, with the exception of the secret one about which I know nothing, they all could have been done by legislation brought before parliament in the ordinary way. I do not see any reason why we in this house should allow the government to take over the legislative functions that should be the prerogative of parliament.
It seemed to me that in the argument the minister made last night he was threatening us. He said, "If you do not give us the broad powers we want we will use the War Measures Act". He was holding that threat of using the War Measures Act over the heads of members of parliament. He was saying, "If you do not give us these wide powers under this act we have the other measure that could be used, so you have to support us anyway".


Stuart Sinclair Garson: On a question of privilege, I think my hon. friend will admit on reflection that I conveyed no threats, express or implied, in any remarks that I made. What I said was that if the powers under the Emergency Powers Act were not granted and facts arose which made it necessary to act promptly, we would be forced in the absence of the Emergency Powers Act to use the War Measures Act.


Hazen Robert Argue: I do not think I have wrongly interpreted the minister. If he did say, as he now says he did, that they could use it, if an emergency arose, why then did he say initially in his speech that we are now in the emergency of an apprehended war? I will read what the minister did say, as found in the last paragraph of the first column on page 2082 of Hansard for yesterday. He said:
Now, that being the case, it seems to me-and I offer this suggestion with great respect-that actually those members of the opposition who have said they were in favour of restricting the powers of the executive and of protecting the civil rights of the subject, and of upholding the supremacy of parliament, must support the extension of this bill. If they do not do so, then the position would be that the powers that are now available to the government under the War Measures Act in the present emergency of apprehended war are much more extensive and under less parliamentary control than those which are available under the Emergency Powers Act. We can exercise those War Measures Act powers without coming to parliament at all.
I will let that stand as the minister has stated it; but if it means anything at all it means that if we do not pass this measure, if parliament does not give the government this

legislation, then, because the minister claims we are in a state of apprehended war, the government is going to use the War Measures Act. I think the Minister of Justice should be a little more careful in his terminology when he calls the present emergency an emergency of apprehended war. In introducing this measure in 1951 the Prime Minister (Mr. St. Laurent) said that anything that was said in the house should not lead the Canadian people to believe that we were likely soon to be faced with an all-out war. He said that kind of thing should not be done. 1 suggest to the minister that the type of speech he made yesterday and today implies a far greater emergency than actually exists.
I for one do not believe that we are facing the immediate possibility of a global war. I will not admit that. I am certainly no lawyer but I would think if we are in a state of apprehended war it should be clear to the majority of members in the house that we are likely to be facing a global war very shortly, in a matter of days or in a matter of hours. The minister shakes his head. Perhaps that just proves that I am not a lawyer. In any case, from the point of view of a layman reading the statement of the minister, I think the minister made the present emergency appear to be greater than the actual emergency that exists.
I do not mean by what I have said that we are not facing a substantial emergency throughout the world. I know that, but I do not think it is an emergency of apprehended war at the moment. As I have said, as far as I can see from reading the minister's speech, and from the way the legislation has been used, everything the government wants to do could be done by parliament in the ordinary way by the government bringing down legislation to deal with particular problems, and that is the way parliament should function at the present time.


Mr. E. G. Hansell (Macleod):: Mr. Speaker, I rise at this time to express a personal view with respect to these matters, but I think I can judge fairly well that what I am about to say will represent the attitude that the Social Credit group takes with regard to this measure. Fundamentally and basically we believe in freedom. I think the minister does. Perhaps we would all say that we believe in freedom. Freedom is a principle, and as a principle it is basic to our democratic way of life. If we believe in the principle of freedom as being basic to our democratic way of life, where does the measure before us lead us? Is it not a reversal of that principle of freedom?
Emergency Powers Act
We hear a lot about democracy. We hear a lot about our parliamentary institution and our democratic way of life. I think that sometimes those terms need to be defined, but nevertheless we accept in a general way the fact that we are still a democracy. What is needed in this nation and in many of the free nations is not only the window dressing of democracy but an effective democracy. What we need is legislation that will make democracy effective. I have expressed my views on this matter before in the house. The general conception is that democracy is the expression of the will of the people but in actual practice it appears to me that democracy works about one day every four or five years. It works when the people have the opportunity of putting a little piece of paper in a box we call the ballot box. They walk away and from then on democracy ceases to be democracy in practice.
I agree with what the hon. member for Assiniboia (Mr. Argue) and the hon. member for Eglinton (Mr. Fleming) have said with respect to democracy, but I go a step further. The question I would ask is simply this: Is our parliamentary system today, in its operation side by side with the political party system, as effectively democratic as it should be? I know that technically and legally our parliamentary institution is democratic but in actual practice I doubt very much whether it is effectively democratic. Instead of the minister bringing in a measure asking parliament to grant more powers to the cabinet, I should like to see him bringing in a bill that would give a little more power to parliament than it has and make parliament reflect the true democratic principle upon which our way of life is built.
I believe that the measure now before us takes away from parliament the rights and the dignity that are expected of it. It is a reversal of the rights and the dignity of parliament itself. Dictators rise, plunge and rule and take the free nations into slavery. How can they do that? They can do that only when free nations lose the power of their democracy. This has largely been done in places where democracy has not functioned effectively. Power placed in the hands of governments depreciates and, I would say, nullifies the power of the people. The people themselves have placed the privilege of exercising their power, at least in legislative functions, in the hands of their elected representatives. Might I say this. In reality the people did not elect this government. The people elected this parliament.


Donald Methuen Fleming: This House of Commons.


Ernest George Hansell: What we are asked to do in this measure is to take the power of the
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Emergency Powers Act people and place it in the hands of eighteen or twenty men who were not elected as a government by the people. To my mind that is really a serious thing, particularly when we already have on the statute books what is known as the War Measures Act.
I am not going to enter into any legal exactitudes as to the difference between the War Measures Act and the Emergency Powers Act. That is meat for the lawyers and I am not one. Instead of dealing with the legal aspects of this thing, I like to deal with the philosophic aspects of it. I like to deal with the principle of it rather than the legal technicalities of it. The principle is this. Are we going to have an effective democracy that will reflect the freedom of the people, or are we going to place powers in the hands of a centralized body?
I again deplore the party system which largely renders parliament ineffective. I know that individual members have their arguments; but you do not sit in this parliament very long before you discover that what we really have is democracy in reverse. I am now talking about how it works out in practice. Instead of this parliament having a free hand and passing such legislation as parliament desires to pass and then saying to the government, "This is the people's wish; you are the executive body that should administer it," it works in the very opposite way. The government have the legislation. They have already decided upon it. They bring it down and they say, "We want you to make it legal". That is what is happening.
I must say that, as we sit here year in and year out, we have a tendency to feel that it is a sort of futile proposition. I walk down the corridor and meet a member who says to me, "Who is up?" I feel like saying, "Up where? Up a tree?" Then there is a mental action that takes place in my mind and I say to myself, "Why does he ask who is up? What difference does it make anyway?" That is the situation. Just what difference does it make? We come here and we speak. We talk. But governments have already decided. As a result of our party system it does not make any difference, Mr. Speaker, who wins the argument. We call this debate. Who is to be the judge as to who wins the debate? In our debating societies we have judges, debates are judged on certain points, and a decision is rendered.


Mr. Jeffery:: The people decide that.


Ernest George Hansell: What did somebody say?


Gordon Knapman Fraser: That the people decide that.


Ernest George Hansell: The people decide who wins? I am just going to suggest that almost half


the people in my friend's constituency do not know whether he is in Ottawa or in some other place.


Gordon Knapman Fraser: Timbuctoo.


Ernest George Hansell: Maybe they do not care. The people decide who wins the debate? It is won already. I know how this debate is going to be decided.


Donald Methuen Fleming: The government will crack the whip again.


Ernest George Hansell: It is going to be decided in favour of the bill. I know that now.


An hon. Member:: Do not waste time.


Ernest George Hansell: It does not make any difference what arguments I may put up.


Mr. Fulion:: They may win the vote but they will not win the debate. They are two different things.


Ernest George Hansell: There is a point there. My friend the hon. member for Kamloops (Mr. Fulton) points out that there is a slight difference between the vote and the debate. He says they may win the vote but they will not win the debate. That raises another serious point. What is going to happen is this. There is going to be an overwhelming vote for those who have lost the debate.


Edmund Davie Fulton: That is right. It happens all the time.


Ernest George Hansell: The hon. member says it happens all the time. No one will say that my friend the hon. member for Lake Centre (Mr. Diefenbaker), the hon. member for Eglinton (Mr. Fleming) or the hon. member for Kamloops (Mr. Fulton)-I might go around further but I am not sufficiently acquainted with all their professions-are not able to debate. These men are lawyers. I have heard them speak in debate here. They have clever legal minds. No one will say that they are not able to debate. They certainly are able to do so. We are going to tell them that they are already decided against. We get our names in the paper. Somebody is built up as being a great and mighty force in this parliament. But oh, if people only knew! Now what we are being asked to do is to make the thing a great deal worse.
Mr. Speaker, I like to cast my eyes your way, surrounded as you are with all the dignity of that hand-carved chair and of these walls. The tourists come in and the constables say: "You see that ceiling there? It is made of linen, hand-painted with 22-karat gold leaf. The chair was donated by the British parliament and is all hand-carved." The Speaker walks in here attired as he should be in his robes and little three-cornered hat. There

we have all that dignity. What for? Mr. Speaker, you have a high position. I like to think of it as being analogous to the status of a judge. The only difference is this. The judge administers the law and you preside over that body which makes the law. It is a high office; but in reality, Mr. Speaker, I think all that you are is the chairman of a debating society which in the end never wins the debate by a vote. Be that as it may, what we are asked to do in this measure is to give the government more power. You cannot give them more power without releasing it from yourself. You cannot retain power and give it away at the same time. When they ask parliament to give them more power, then they are asking parliament to retain less power. You cannot have it both ways. There are no legal technicalities involved there; that is just plain common sense. I say, Mr. Speaker, that I cannot support this measure.
I believe that under the War Measures Act there is plenty of power to act in a war emergency or what has been termed as apprehended war. I do long for the day when we can really have an effective democracy in Canada which will, at all times, reflect the will of the people. Furthermore, I am going to say this. Just as long as we continue the way we are, the less interest will the people of the country take in their parliamentary institution.


Mr. Mott:: Like B.C., where private
members cannot speak.


Edmund Davie Fulton: We have not heard from that side.


Donald Methuen Fleming: I should like to hear some of the private members on the government side once in a while if they dare open their mouths.


Ernest George Hansell: Democracy, as an effective instrument in Canada, is not becoming stronger. I am afraid that the people themselves, Mr. Speaker, are losing the consciousness they should have of their parliamentary institution. I am afraid that what we need in Canada is legislation that will strengthen in the minds of our people the appearance of our parliamentary institution in the world as an institution for an effective democracy. How often do we hear people talk about politics being dirty. There should be no reason for that. To some people politics is something to be abhorred; that should not be. The actual meaning of the word "politics" is simply the science of government. It should be a thing in which the people are extremely interested at all times. They will not be interested unless we can reflect from this parliament something that is effective, something that will make the people realize that
Emergency Powers Act when they send a man to parliament he is going to look after their interests when legislation is introduced.
Why do we talk in this house about a free vote? Why do we say that? Why do we occasionally jump up and ask, "Will the minister permit a free vote"? To me, that is a terrible thing. It is an indictment upon this parliament, and the indictment is that we are not free as we should be. I say that what we need is not legislation giving the government more power; what we need is legislation to bring our parliamentary institution to a place where the power is in the hands of the people through their representatives.


Mr. G. R. Pearkes (Nanaimo):: I would not have taken part in this debate, had it not been for the eulogistic remarks made by the Minister of Justice (Mr. Garson) last night concerning the small contribution that I had offered previously. Never in my life had my wildest, dreams led me to believe that the Minister of Justice would have referred to my humble effort as "excellent" and as a classic description of certain affairs. However, I was merely endeavouring to clarify a situation which I found confused, and which I think had been confused very largely by the conflicting statements which have been made by the members of the government at various times.
The Secretary of State for External Affairs (Mr. Pearson) had repeatedly declared that we were not engaged in a war but that, as a member of the United Nations, we were engaged in a police action in Korea. A few days ago, on February 16, the Minister of National Defence (Mr. Claxton) was asked a definite question as to whether or not we were at war. He replied, as recorded at page 1962 of Hansard for that date, as follows:
. . . we have never declared or proclaimed a state of war. We are fighting in Korea and the fighting there certainly is tough.
At other times the Prime Minister (Mr. St. Laurent) has referred to the twilight situation in which we now find ourselves. Then again he has referred to the fact that we do, in fact, agree-the "we" being the government- that war is being waged in Korea. He went on to explain that young Canadians would not volunteer for action in Korea, offering their lives, if they did consider it as an ordinary police action. I did, therefore, endeavour to point out to the house such an emergency as I thought existed at the present time, and that was the reason and origin of the remarks that I offered. I am very much indebted to the Minister of Justice for the rather exaggerated and over-complimentary remarks he made regarding that offer.
2106	HOUSE OF
Emergency Powers Act
I should like to offer a few words regarding this Emergency Powers Act which, so far as I can tell, has the purpose of submitting to the executive powers which are usually retained and exercised by parliament itself. This is not the kind of legislation which, in a country which is operating under a democratic system, a government really enjoys, because as has been said repeatedly this afternoon it provides a way for the cabinet to make decisions behind closed doors where there have not been free discussions amongst the various groups having different shades of opinion. Discussion of this type can be made public through the reports in the press and the reports of Hansard, so that the general public may decide on the merits or demerits of the legislation which is brought forward under these orders in council.
This legislation provides certain powers which, once they have been conceded, very quickly become deep-rooted, which the minister and the cabinet are very disinclined to realize. It confers those powers upon the cabinet to deal with matters, as has been explained during this debate, touching a great many aspects of the life of this nation. The desire to have those powers seems to me to conform with the pattern, to the danger of which I have in the past called attention. The grave danger this country faces is that we are allowing ourselves to drift into a one-party form of government.
A few days ago I called attention to a very remarkable book entitled "The Passing of Parliament" by Professor Keeton. My remarks drew some attention from the Secretary of State for External Affairs (Mr. Pearson), who took advantage of a nationwide broadcast to quote something that I was reported as having said, and what I actually did say, namely that in some respects we have travelled a long way on the road to Moscow. The Secretary of State for External Affairs in commenting over the network of the Canadian Broadcasting Corporation said:
The Canadian people will certainly be interested to learn that that grim despot, our modest and respected Prime Minister, is leading them to the Kremlin.
Well, of course, never in my life did I suggest that anybody in his right mind would think that the Prime Minister was a grim despot. At the same time, modest people can blindly stumble on the wrong road that is not always clear. They do not always know whither they are going, and I do suggest that the road we have stumbled upon now, with many twistings and turnings, will eventually lead us into the kind of government which is


exercised in Russia, if we follow it to the conclusion toward which it seems to me to be heading.
In that book to which I have referred the second chapter is headed "The Road to Moscow". The author points out certain elements which are the first requisites of a dictatorship. He enumerates those basic elements in this way:
1.	A one-party organization in which, although there is wide power of criticism within the party, no external opposition is tolerated.
2.	An all-powerful executive, which can put into effect the program decided upon by the party, without substantial impediment or modification, especially that which might emanate from an independent parliament.
3.	An economy which is moulded within the framework of a comprehensive plan, and in which all the more significant activities are government monopolies subservient only to executive control.
One might specify these three elements as being the growth of despotism, the machinery of dictatorship, and the delegation of administration to public corporations and administrative tribunals. I do suggest that those elements perhaps exist in this country today. I am not going to say that we have entirely a one-party organization as yet, but there is a great desire to see the present government and the party which supports the present government continue forever. The supporters of this party believe their government is infallible, and they do resent, as has been shown quite recently, criticism from the opposition. It is very hard for them to tolerate criticism, even though it is offered in a good-natured and a constructive manner.
Secondly, this very act emphasizes the power of the executive, which was the second requisite mentioned by Professor Keeton before a dictatorship could be introduced. One must also remember that we are fast losing the effectiveness of a second chamber, in that through the natural course of events the opposition in the second chamber is numerically very, very weak.
I do not think it is necessary to comment upon the fast-growing number of government monopolies and administrative tribunals which today are strangling some of our industries. This situation does exist in this country, and it is high time the people realize the danger of following the road which we have easily and inadvertently stumbled upon, the road to Moscow, the road which leads eventually-perhaps it is a long way off-to the form of government which we dislike so intensely, the form of government that is practised in Soviet Russia.
In fact we have taken the first steps on that road. It would be quite easy to follow it along and slip from the present position

into an even keener and more intense dictatorship. Therefore I feel that at the present moment we are living on the edge of a dictatorship, and that the transition from this present stage, if we have many more bills such as this emergency powers bill introduced, will be swift and easy.


Alexander Haley Jeffery: I do not think I would be fair to my constituents, to myself or to my profession, if I did not rise in this debate and say that the indignation of the hon. member for Eglinton (Mr. Fleming) is second only to mine with regard to this type of legislation. I believe any government is inclined to take the easy way of getting things done, and I think it is no excuse to say that no government will abuse the power. However, though I do not approve of this act, nevertheless I would hate to see any government-and believe me I have all the faith in the world in this government-using the War Measures Act at this time.
I will not be voting against this measure for the reason that this bill is to be put into effect between May, 1953 and May, 1954. In my opinion in that period there is bound to be an election. That means there will be 60 days when this parliament will not or cannot be in session.


Stuart Sinclair Garson: Not even in existence.


Alexander Haley Jeffery: Cannot be called; yes. For that reason I feel we should pass this measure, and should not leave it to the War Measures Act. There is too much power there. If there is no apprehended war, as the hon. member for Assiniboia (Mr. Argue) has said, then we cannot use the War Measures Act. I think we must return to the Emergency Powers Act so that, for the 60 or more days during the calling of an election,, the government can carry on with the current emergency, and other emergencies that might arise.


Donald Methuen Fleming: Would the hon. member permit a question, and I ask it seriously. If there should not be an election before May 31, 1954; or if there should be an election and the government of the day should ask for a continuation of this legislation for a further period beyond May 31, 1954, if the hon. member is a member of parliament at that time, will he vote against the continuation of these powers beyond May 31, 1954?


Alexander Haley Jeffery: The hon. member is a lawyer, as I am. I am sure he would not give a definite answer to that question. I will say this, that if there is no more emergency than I see at the present time, and always depending upon circumstances, I would take the stand that I am against this type of legislation.
Emergency Powers Act Mr. Sinclair: May I point out that I agree with the hon. member for Eglinton (Mr. Fleming) in his basic assumption that this government is going to be the government after the next election.


Donald Methuen Fleming: No such assumption.


Edmund Davie Fulton: Perhaps the minister would clear up the point as to whether there is going to be an election, so the hon. member would know how to vote.


Mr. Sinclair:: Mr. Speaker-


Edmund Davie Fulton: Not you; I was speaking to the minister who might know.


Mr. Drew:: Mr. Chairman, I shall wait until hon. members who are not interested in this measure have found their way out of the chamber. I propose to speak at this stage of the proceedings in connection with the measure because I did not have the opportunity to hear any explanation by the government at an earlier stage before I spoke, when the motion was originally put that the Speaker leave the chair. The Minister of Justice, with the consent of the house, decided to present his views as to why it is expedient that the measure be dealt with. We are now
at the second stage in the consideration of the proposal of the government that it is expedient to extend the Emergency Powers Act.
In the committee stage an opportunity will be presented to every member of the house not only to put his opinion before the house with regard to what has already been said, but also to deal with what is really before us for consideration at this time. What we have before us now is a declaration that it is expedient to consider an amendment which will have the effect of extending the Emergency Powers Act. We sought to indicate reasons why members of the house should declare that it is not expedient. The vote that has just been taken was for the purpose of dealing with that declaration. That vote has been taken. We are now in committee. We have the opportunity to ask the government for explanations with regard to the resolution.
Although the Minister of Justice dealt primarily with the measure itself, he did indicate reasons why he thought it was expedient that the act should be extended. Therefore we are called upon to take the vote that has just been counted as a vote by the supporters of the government that in their opinion they wish the Speaker to leave the chair and the house to go into committee to consider the matter. Before we proceed to ask those questions that can be asked in committee, I suggest that it is wise and proper to place before hon. members in committee the reasons why we should not proceed one step further with a course of action which is in direct contravention of every fundamental principle upon which the procedure of this house is founded.
The Minister of Justice has not given one single reason why it is expedient that we should extend the Emergency Powers Act, and he did misinform the house as to what had taken place on earlier occasions. When he says that members of the house unanimously approved of the act he is either in ignorance of what took place or has not been informed as to what the situation actually was. The record is perfectly clear, and I can well remember the impatience of the Minister of Justice upon an earlier occasion at the time some effort was being made to impress upon the government why it was so unwise to proceed with a measure of this kind in the period through which we are now passing..
There is an added reason, however, why the danger of legislation of this kind should be in- the mind of every hon. member of the house. Since the act was originally placed on the statute books the government carried a case to the privy council which produced

a judgment leaving no doubt about the wide and unrestricted powers of the government under emergency legislation of this kind. The trial court and the Supreme Court of Canada did indicate their opinion that there would be certain restrictions upon the government in its actions under emergency legislation of this nature. The government, which had indicated its disbelief in the privy council, nevertheless carried an appeal to it and from that judicial body obtained a decision which in effect means that once such emergency legislation has been placed upon the statute books of the country, the government may declare an emergency at any time and may make such orders as can be made within the broad framework of that act; that it will not be competent for the courts of the country to challenge the declaration of the government that there is an emergency justifying such conduct, and that it would only be in the most extraordinary circumstances that any order of the government would be declared beyond their powers. In fact it would only be if the government dealt with one of the very limited reservations contained in the act.
The Minister of Justice expressed his opinion that the members of the opposition who have been opposing the legislation had apparently not read it. I think what is apparent is that the members of the opposition have read it, and that they are more conscious of the principles of parliament than is the Minister of Justice whose primary responsibility is to be the custodian of both the traditions and the laws of this land.
The Minister of Justice bases his argument upon a complete and utter fallacy. He says that if we did not have an emergency act of this kind it would be necessary to resort to the War Measures Act. Where is there evidence of any kind before the house at this time that anything has occurred which would make it necessary for the government to resort to the War Measures Act? Where is there the slightest suggestion before this house at this time that, under any conceivable circumstance we can now foresee, it would be necessary for the government to resort to the War Measures Act? It is only necessary to look at what the government did during the past year to see how unnecessary it is for them to resort to the War Measures Act. The things they dealt with were things that never should have been dealt with under emergency legislation at any time. They were things that could and should have been dealt with in this House of Commons, where the members have been sitting for most of the year because of the inefficient way the
Emergency Powers Act government has been directing the affairs of parliament throughout the time it has been in office.


Some hon. Members:: Oh, oh.


George Alexander Drew: Yes. The laughter of the members of the other side merely indicates how little they realize how much the business of this house could be expedited by some attempt to bring that business under some orderly procedure which indicated to the members in advance when discussions were going to take place. Instead of that-


Stuart Sinclair Garson: Mr. Chairman-


George Alexander Drew: No, Mr. Chairman; I am on my feet and I am speaking.


Stuart Sinclair Garson: -on a point of order-


George Alexander Drew: I do not propose to have the Minister of Justice making interruptions constantly, as he does.


Stuart Sinclair Garson: On a question of privilege, Mr. Chairman-


The Deputy Chairman:: I understand that the Minister of Justice is rising on a point of order.


George Alexander Drew: He did not say so. What is the minister rising on? Is it a point of order or a question of privilege?


Stuart Sinclair Garson: On a question of privilege. My question of privilege is this. I refer to my hon. friend's statement that the points which he is now discussing have not been dealt with. I dealt with them earlier this afternoon when he was at another place, no doubt on an engagement. He therefore should not now be suggesting that they have not been dealt with by the government.


George Alexander Drew: Mr. Chairman, I regret that I now find it necessary to deal with the implication left by the Prime Minister (Mr. St. Laurent) the night before last, and that now left by the Minister of Justice (Mr. Garson). I dislike doing it, but I am going to tell hon. members that the reason I was out of the house earlier in the week and the reason I was out of the house earlier today was the death of one very dear to the members of my family. I was at a funeral this morning and just got back by air this afternoon in time to come into the house when I did.


Stuart Sinclair Garson: Mr. Chairman, I would not want my hon. friend to think I made any implication that it was improper for him to be absent because, as a matter of fact, it was explained in his absence by one of his colleagues that he was attending a funeral. I am simply making the point that at an earlier stage I dealt with those points which he is
2110	HOUSE OF
Emergency Powers Act now discussing. I do so just for his information, so he will not detain the house by going all over them again.


George Alexander Drew: Mr. Chairman, when I came into the house I ascertained immediately what had occurred. I then took pains to find out what the minister had said; and I would say that he has explained nothing which in any way offers a reason why we should be proceeding with this act at this time.


Stuart Sinclair Garson: My hon. friend would know better if he had been here, but he was not here.


George Alexander Drew: The Minister of Justice is well aware of the fact that there is a simple procedure by which it is possible for members to ascertain what has been said. I have ascertained what the Minister of Justice said earlier this afternoon; and I repeat that he has placed before this chamber no single argument that supports the proposition now before us, namely that it is expedient to proceed with the extension of this Emergency Powers Act.
I want to emphasize another point in connection with this matter. The minister leaves the impression that we are being told what powers the government would have. He said that if the government wanted to avail themselves of the War Measures Act, they could do so. Of course he has put forward no reason why it would be necessary for them to avail themselves of its provisions. As reported at page 2082 of Hansard, the minister said:
Instead, we are going to ask parliament to say, in the Emergency Powers Act, just what powers parliament is prepared to give to the government under these present conditions of apprehended war.
Mr. Chairman, that is exactly what the government do not do. The government do not place before us the powers they will have or the details of the powers which they are going to invoke. They introduce an act which is so wide and so general in its terms that the government are able, by the simple procedure of declaring that an emergency exists within the terms of this act, to suspend for all practical purposes the powers of this parliament; and they are able to do something more which has not been sufficiently emphasized in this discussion. They are able to suspend all real authority of the provincial legislatures in Canada, in spite of the authority those legislatures were given under our constitution. Those are the powers that are conferred by this act. It is not enough to say, as was said by one hon. member this afternoon and as other hon. members have said on other occasions, "We have complete


confidence in the members of this government".


Mr. Mclvor:: Hear, hear.


George Alexander Drew: The hon. member for Fort William says "hear, hear".


Daniel (Dan) McIvor: Surely; and I mean it.


Some hon. Members:: Hear, hear.


George Alexander Drew: Mr. Chairman, we hear a chorus of "hear, hears" from Liberal members who seem to forget that the way in which democracy died in country after country was with the declaration by the people of those countries that they trusted the government and were prepared to give them unlimited and unqualified powers for the efficient operation of the affairs of the country at that time. Today people are in slavery in different parts of the world simply because those who forgot the fundamental principles of the parliamentary system were prepared to accord to governments powers under which those governments declared that parliament was no longer necessary.
We are not discussing the intention of any individual member of this government. We are not discussing the possibility that any member of this government would consciously or willingly dispose of all the powers of parliament and of the provincial legislatures. We are dealing with what this act does. We are dealing with what can happen under this act. We say that parliament has no right to delegate to the executive its authority and its responsibility, with the only reservation that the wide and dangerous powers it delegates are going to be exercised by men in whom they have complete confidence. That is not democracy. That is not our parliamentary system. It is time we refreshed our memories as to what this parliamentary system of ours really is.
This parliamentary system of ours is now threatened by the intrusion of dangers which would destroy it and also by the distant clouds being built up by those who, by threat of force if not by force itself, seek to limit the freedom of people throughout the world. This system is being threatened as it has not been threatened in generations, even in the midst of great wars that have passed. This system rests upon two great fundamental principles, namely the supremacy of parliament and the rule of law. Both those principles are challenged by legislation of this kind at a time when we are seeking to carry forward normal democratic processes in Canada today.
The supremacy of parliament is concerned because under this act the executive would have power to do the things parliament should do, even though parliament were

sitting, and even though parliament were not sitting but could be brought together within 48 hours with the swift transportation now available. The rule of law is challenged by virtue of the fact that under legislation of this kind no one knows from day to day what the laws will be. The laws are made by orders in council passed behind closed doors, and then people are expected to conform with those laws passed by the executive. These laws only find their way to the public a long time afterwards through the provision that orders in council will later be tabled.
What measure of protection is that? What measure of protection is there in the fact that orders in council which can affect the freedom of the individual, and the economy of this country, are going to be tabled at some later time? Within that period things may have been done which challenge our whole concept of freedom here in Canada. Even those five things that were done under this act last year constituted a serious challenge to our system. Not one of them needed to be done under an emergency act.
Let us recall that one of the things done by the government under this emergency act was to deal with what they regarded as the threat of communism on the great lakes. They decided that, by order in council, they would make provision for the screening of those who are working on the ships in our waters. No one has been more persistent in his demands that we deal with the procedure by which communists seek to undermine our democratic system than I have both in this house and outside. I have never suggested, and I repeat, that communism should be outlawed under that name. I recognize that the easiest thing in the world is to adopt another name for communism, just as the Labour-Progressive party has done in this country and as the various false fronts have done which have been set up in this and other countries. I repeat that if it is possible to know what communism is in dealing with the right of individuals to work on the ships in our waters under the procedure set up by the government, then it must be also possible to define communism or define the acts related to communism in a similar way under laws that the people will understand.
I hate communism and all it stands for.
I wish that we could and would define- I believe we can-the traitorous actions which, in support of the Kremlin, seek to undermine our democracy. But I do not believe that if we say here in this house that we cannot define that offence, then the government should be empowered, secretly and behind closed doors, to say that they will
Emergency Powers Act deal with that offence by a police force under orders in council whereby none of the ordinary procedures of justice are available to the individuals affected. I do not believe this government has that prescience, that omnipotence, that they are able to define the indefinable when they have secret powers, and cannot define it when the powers are asked for in the open and under laws that the people can read and respect or disrespect under the rule of law.
We are constantly speaking of the fact that this is a parliamentary system; that we respect and preserve the supremacy of parliament and that the rule of law is part and parcel of the parliamentary system. We sometimes forget that there is a deep and important difference between our parliamentary system and the parliamentary system at Westminster. We sometimes forget something of which all Canadians should be proud, something which is part of our history and part of the genius of our people. We sometimes forget that, in Canada, we had the first parliamentary democracy in the world. Britain is a parliamentary democracy in which there is one parliament. We have a federal parliamentary democracy in which there is a national parliament and there are also ten provincial legislatures. We have a constitution which defines the division of authority between the central government and the governments charged with the vitally important responsibilities they assume within each of the provinces of Canada. The parliament at Westminster can pass any law which does not breach those ancient traditions which they would not at any time attempt to destroy. We all remember the statement that in Britain parliament can do anything except make a man into a woman.
The situation here is different. This parliament has not unlimited powers of legislation. This parliament should respect the limitation on its powers, not only the limitation in respect of members of parliament but also the limitations that are imposed upon it by its position within a federal system. This emergency act now before us not only offends the basic principle of parliamentary responsibility and the principle of the rule of law; it also challenges our federal constitution, and challenges the authority of the provincial legislatures.
It is all very well to say that this government has at no time done anything to limit the responsibility or authority of the provincial legislatures under these emergency powers. Of course it has, on many occasions, under other emergency powers. Under this Emergency Powers Act it could override the authority of the provincial legislatures in many ways. Under this act and the Defence
2112	HOUSE OF
Emergency Powers Act Production Act, which is complementary, it would be possible for this government by the simple device of declaring an emergency to take the operation of all the hydroelectric developments in Canada under its sole and exclusive authority and without asking any provincial government if they thought that was wise or reasonable.
Under this act, if the government so desired, by the declaration of an existing emergency and the appropriate order in council they could take over complete control of the highways in this country. They could take over every transportation system in Canada, and the regulation of those systems. There is not a single phase of the daily life of the people of this country in relation to production or work which could not be taken over by this government under order in council, without a word to parliament or to the provincial legislatures, if the government decided it was wise and proper to do that under the terms of this act. Moreover, it would be possible for this government to decide that, in spite of the reservation to the provincial governments of property and civil rights, it could assume authority, over all those extremely important aspects of public business which are now in the hands of the municipal councils under the provincial acts of this country and under our constitution.
Where in this act is there any reservation of power, any restraint of power which would make it impossible for this government by order in council to declare that it was expedient that some authority be set up to direct the actions of the municipal councils in relation, shall we say, to civil defence, the operation of their own highways, the maintenance of their bridges or various things of that kind? That, conceivably, by some stretch of the imagination, might be regarded under an emergency as part of the combined effort of this country.
Not one word I am saying is to be construed or misconstrued as a suggestion that this country should not do everything humanly possible to build its strength in every possible way to face the threat that confronts us. But, Mr. Chairman, we have been told that this cold war, this twilight war, as it has been described by the government, may go on for 25 or 50 years. Are we for the rest of our lifetime going to live under a system which gives to parliament only such measure of authority and responsibility as they choose to leave it? One hon. member said this afternoon that this is only an extension for a year. We have learned in the past that once an act of this kind becomes embedded in our statute books this


government are strangely reluctant to give up the powers conferred in that way although they have no need to exercise them;


An hon. Member:: Do you hope to change it?


George Alexander Drew: I heard a question asked, "Do you hope to change it?" At the appropriate time the people of Canada will have their chance to say what government they wish to conduct the business of this country.


Mr. Fournier (Maisonneuve-Rosemonl):: And
they will say "no change".


George Alexander Drew: The people of this country will make that decision, not the members of this parliament and not those who make the interjections which we have been hearing at various times this afternoon. As we address ourselves to this measure now before us I hope the members who are giving it consideration will bear in mind that we are not called upon to deal with legislation as though we were going to guess the outcome of any election.
I have no hesitation in saying that if, in the wisdom of the people of this country, we should be called upon to form the government, we would return to the supremacy of parliament, the rule of law and the federal system. There need be no doubt on that score. We will uphold the constitution; we will uphold the supremacy of parliament; we will uphold the rule of law and we will uphold the federal parliamentary democracy which is the special genius of Canada itself, the country which first gave that system to the world.
When we consider what we are going to do in connection with this act, let us remember that it is only by a discussion of this kind that we can clarify in the minds of the members, and in the minds of people beyond parliament itself, what the views of this parliament really are and what it is that this government and the supporters of this government are really seeking to do by the resolution now before us, and by the subsequent introduction of the bill when it comes before the house.
I have no intention of testing the tender sensibilities of those who are so concerned about any hint of lack of independence in their voting on the part of those who so regularly support this government. I only point out that in this particular case it is significant that once again there is that measure of unanimity that we see displayed so consistently whenever a measure of this kind is put forward. On other occasions we have heard member after member on the other side explain that they really believed in the resolution that was before the house, but that

they could not vote for it because in all conscience they could not vote against this government.
We heard that a few days ago; I need not mention the debate, because every hon. member will recall it. But once again this afternoon we had an hon. member seek to clear his own conscience by saying that he disliked this measure as much as anyone in this house, but he was going to vote for it because we were going to have an election inside of a year. It did not make any difference how bad the legislation was, he was going to continue it while this government was in power. That is a strange way of clearing one's conscience in regard to matters of this kind.
Now we are told that they are completely independent, and of course we must accept their statements. But it is interesting the way in which they assert their own belief in the very views we are putting forward, and then find some palatable excuse from their own point of view for deciding that they should not exercise that measure of independence which would certainly refresh so many Canadians at this time and restore their belief that members were voting exactly as they thought, without seeking to find some excuse for not doing so.
Now, Mr. Chairman, it seems to me what is most conspicuous in the views that have been expressed by those who seek to declare that it is expedient that we should extend this legislation is the apparent unconcern they display in regard to this challenge to our parliamentary system. If the regular procedure in parliament cannot operate now, at a time when we are called upon to sit in this house for eight or nine months a year, then when is it likely that we ever will be free again to exercise parliamentary freedom within the lifetime of any member of this house? This is the time for us to say that we believe we can operate our parliamentary system. At such time as there is any disturbance so affecting our systems of communication or transportation that the members of parliament could not be called quickly together, then and then only would it be time for us to pass legislation of this kind.
The Minister of Justice describes this as a twilight war. Mr. Chairman, the passing of legislation of this kind, when we have before us the judgment of the privy council in the Nolan case, which extends so far emergency authority of this kind, is indeed carrying us into the twilight zone; but it is not a twilight war. It is the twilight of democracy.
Emergency Powers Act
The hon. member for Nanaimo has referred to a book which it would be well for every hon. member to read. He has referred to the chapter in the book under the heading "The Road to Moscow". I have seen comments to the effect that it is inappropriate that anyone should draw any comparison here between the statements made in that very carefully written and objective book and the benign gentlemen who now make up this government. I remember the question:	Is it appropriate to speak about
"The Road to Moscow" when we look at the benign gentlemen who are administering our affairs at this time?
Well, you know, the strange part of it is that, so far as I have learned from the textbooks, the people now living in the countries beyond the iron curtain have exactly the same number of bones in their bodies, they have two eyes and two ears, a nose and a mouth and, except for their language or their statements, seem strangely like ourselves. And, in fact, they are strangely like ourselves, because many members in this house trace their ancestry back to the same blood as some of those who are now under communist slavery.
We must not for a moment think it is appropriate to change a system simply because we feel that those temporarily entrusted with the responsibility are benign gentlemen, unlikely to abuse the authority that would be conferred. Let us carry that one stage further, to a point that some may regard as carrying the argument to an absurdity, but which it seems to me does illustrate the point I would like to make. Supposing a government-I do not say this government-came before parliament and said that in view of the continuing emergency it was expedient that we should pass legislation which would suspend this parliament for a period of five years, is it thinkable that a single member in the house would say, "Oh, it is quite all right; let us do that".
To say that these benign gentlemen would not abuse their powers and would exercise the emergency powers given them in the intervening period in a way that would be perfectly satisfactory for the people of Canada, is not a sufficient answer. I can imagine someone saying, "But there is no similarity." Where is the dissimilarity? We are simply a parliament by tolerance under this act, that is all.
It is true that the government does not go so far as to say, as has been said under our system on an earlier occasion, "You can go home; you are no use here." The government does not say that in this case; but they do say by the act-whether they put it into words or not-"We ask you to trust us so
2114	HOUSE OF
Emergency Powers Act completely that we want you to pass an act which, under the judgment in the Nolan case, we can exercise at any time to override the powers of every provincial legislature in this country, to withhold from parliament its ordinary responsibilities, and to deal with any aspect of the economic and personal life of the people of this country, subject only to the minor and relatively meaningless reservations contained in the act".
What is the difference? In one case we continue to meet and to discuss the matter. I agree there are some members who think we should not be discussing this subject. Only this afternoon the hon. member for Macleod (Mr. Hansell) said, "We know what is going to happen. This thing will pass. The resolution will pass at this stage, and then the act will pass." And then a voice on the other side said, "Then what is the use of discussion?"
That is the attitude. They know it will pass, and they say, "What is the use of discussion?" Well, Mr. Chairman, meeting day by day and exchanging ideas as we do in our personal contacts, as well as in the house, it is difficult for many members to see the danger in the course they are being asked to follow.
We are not saying what this government will or will not do. We are simply saying that the government through this measure, under the decision in the Nolan case, is asking for dangerous and unparalleled authority which those who still respect the supremacy of parliament should not confer upon this or any other government in Canada.
If the statement made in the house this afternoon that "this is going to pass; why discuss it" were to be regarded as the views of hon. members generally, then I would recall the words of Cromwell when, upon dismissing parliament, he said there was nothing to be gained by keeping them there any longer, and that they could go home. If members on the other side of the house are simply to be counted as voting dummies, and if members on this side of the house are simply to be counted as those whose opinions should not be expressed because we must know that an overwhelming vote is going to support any proposition put forward by the government, then indeed we have come closer than anyone seems to realize to that day in Britain when for a time democracy was ended and a dictatorship was set up.


An hon. Member:: Oh, oh.


George Alexander Drew: The laughter I hear from the member on the opposite side is the kind of laughter which it would be well for the people of this country to hear. I grant that


the member who laughed is not one of those members we would expect to understand a matter of this kind. In fact the hon. member who laughs has seen the consequences of the failure of those elected by the people to defend the rights of the people through their elected representatives. Nevertheless there are members in the house who have had occasion to study this matter.
That is what is before us here. What we are really being asked now is whether it is expedient that by legislation we should confer upon this government or any other government the right to by-pass the responsibility of the Commons and of parliament, and to override the rights and authority of the provincial legislatures under our constitution by perpetuating this measure for another year, and by that act invite the perpetuation of a system which is so contrary to the genius of our federal parliamentary democracy.
It is not for us to decide whether the Minister of Justice is right when he calls the present a period of twilight war. It is necessary for us to decide whether this is in fact a parliament which can be carried on as a free parliament under conditions which may be carried forward for a great many years.
We hope we do not face the prospects of another world war. We hope so with all our hearts; we hope it above everything else. We hope we will be able to preserve our freedom without another war; we hope we will be able to retain our parliamentary system for long years and keep the strength that comes alone from freedom, and through that strength build the combined power of free nations until at some time in the still distant future those countries now beyond the iron curtain shall assert their desires for their own systems of government, whatever those systems may be.
It will be recalled that there were many times during the great war when the parliament of the United Kingdom, from which we accepted the basic principles of our system, was called upon to meet under actual bombing or in uncomfortable places far removed from the ordinary associations of parliament. When future historians are examining the important events of the last war it may be that they will not point to Dunkirk or to El Alamein or to the invasion of Normandy or to the crossing of the Rhine as the great and outstanding event of the war which decided the course of free men and women throughout the years ahead. It may well be that historians examining what took place during the war will decide that the most important thing that happened was that in Great Britain, the home of our parliamentary system, although the House of Commons had

been bombed out, although for a time they met in an ordinary subway station, although they met under actual bombing, they never chose to abandon the supremacy of parliament or the rule of law.
It may well be that those who examine events from the distant and objective view of history will recall that at a time when London was under the heaviest bombing the British House of Commons sat for two days and discussed the freedom of men then held on the Isle of Man. London could be bombed, buildings could be destroyed, but the rule of law and the supremacy of parliament must be preserved at every expense. That may well be regarded as the most important thing because it stands before us today as an example that we should follow when conditions not only do not justify any argument for the abandonment of the supreme authority of this parliament, but demand an insistence upon the rule of law and respect of our federal system under our constitution.
We are in committee; members can ask questions and can express their views, but once again I urge the government-and I urge them in all earnestness-to reconsider their course, to remember that they have not put before us a single reason why it would be necessary to resort to the War Measures Act if this act were not passed. In fact everything that has been said shows that it would not be necessary to resort to the War Measures Act unless we were under the immediate threat of war and had difficulty in transportation and communication. That would be the only justification.
I also urge the government in all earnestness to recall that they have not shown us any reason why they need these wide powers. They have referred to the fact that last year they used the act so little that we need not be concerned about it. If they needed the act so little last year, why do they need these wide powers today?
Every argument put forward by the Minister of Justice is an argument which should, on reflection, impress upon the government the desirability of coming to this house and saying:	We have listened to
the arguments put forward; we do believe there is reason for the concern expressed; we do not accept these arguments as criticism of individuals now in office, but we have been impressed with the fact that any law now passed may affect those who will be called upon to assume responsibility at some future time, and we do not think we should pass on powers of this kind to another government because we sometimes have not indicated our confidence in others to do things as well as we do them.
The Budget-Mr. Abbott
Those who now argue that they have complete confidence in this government, if they still believe that Canada is a democracy and that the people of Canada are free to decide what government they will have, should be the ones to impress upon the government that consistent with the opinions they have expressed they should not pass on such wide powers because they might not be convinced that another government would be so all-wise, so omniscient as some of them seem to believe this government is.
I know some hon. members do not feel that we should be discussing this legislation at the length at which it has been discussed. That is what members of other parliaments have contended from time to time in the past. Without reflecting upon the motives of a single member of this government or of this house, it should be decided that it is not consistent with our federal parliamentary democratic system that at any time when parliament can easily be called together there should be handed to a government the power to declare by order in council that the rights of parliament or of provincial legislatures can be suspended in the way that can be done under this act.
Progress reported.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.

Hon. Douglas Abbott (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, last year I began the practice of tabling the budget white paper the day before the presentation of the budget speech. I believe that this procedure met with general approval, and I have followed the same policy this year. I hope that the house as in other years will give unanimous consent to having the white paper printed as part of today's Hansard.
With the common consent of all groups in this house the work of this session has been planned so as to begin and conclude our deliberations six or eight weeks ahead of the usual times, so that adjournment can take place well in advance of the date appointed by Her Majesty for her coronation. Consequently it has been necessary to bring down the budget nearly two months before the

The Budget-Mr. Abbott customary date. Hon. members will appreciate that this makes it difficult to obtain complete information for the year under review. Many of the figures given in the white paper are of necessity the best current estimates and will be subject to change as later information becomes available.
I have again transferred to the white paper the greater part of the general economic review which forms an essential introduction to the budget. Accordingly I shall confine myself this evening to a brief summary of the main features of recent economic developments and of the outlook for the future. Before doing so, however, I hope the house will allow me to pay a brief tribute to the late Dr. W. Clifford Clark.
Under our system of parliamentary government deputy ministers occupy a position which is difficult to explain to those who are not familiar with the actual operation of our political and administrative system. They carry heavy administrative responsibilities, but they are charged with no political responsibility. In the Department of Finance, however, it is particularly difficult wholly to separate administration and public policy. The Minister of Finance accepts full responsibility for all decisions of policy, but the deputy minister must concern himself with an extraordinarily wide and varied range of policy questions, because almost all such questions sooner or later involve revenue or expenditure. The deputy minister has a constant duty to advise, suggest, warn and point out the short and the long-run implications of alternative policies. At the same time the final decisions are not in his hands and he must be ready to carry out and administer whatever decisions are reached.
Dr. Clark for more than twenty years was a great deputy minister. He was always forthright and vigorous in his presentation of the relevant considerations and the implications of whatever matter was under discussion. He was always completely loyal in carrying out whatever decisions were reached. His capacity for work and his tireless devotion to duty were extraordinary. At the same time he was a quiet and unassuming man, who shunned all personal publicity. His personal and intellectual integrity was of the highest order, his appreciation of the public interest and his love of Canada were intense. His technical skill in matters of financial administration held the admiration of all who knew him, not least among them those in other countries who had occasion to consult or negotiate with him. His sudden and unexpected death was a great shock to me and has been a severe personal loss to his many friends in this house. The people of Canada


owe him a greater measure of gratitude than they realize. He has left a lasting imprint on the quality of public service in Canada, and his life and work will remain an inspiration to those who follow.



ECONOMIC TRENDS

[Stage Direction]
Turning now to recent economic developments and the outlook for the future, 1952 has been in most respects a successful year in world affairs. The nations of the free world are in a stronger position than they were a year ago to protect themselves against aggression. The North Atlantic community has achieved an important increase in its defensive strength. Our production lines have begun to turn out in substantial quantity the modern military equipment we need. The defence construction program in western Europe and on this continent is well under way. In Korea, Malaya and Indo-China aggressive communist forces are being held in check. While much remains to be done and we cannot relax our efforts the accomplishments of the past year and the continued development of close co-operation among our allies have provided a more enduring basis for peace and security.
In the economic sphere, there has been a noteworthy reduction in inflationary pressures in many parts of the world. Prices over a wide area have stopped rising and the prices of many of the raw materials, which rose so steeply after the outbreak of the war in Korea, have receded to more normal levels.
There has been a growing recognition of the close relationship between internal financial stability and the balance of payments. The success of many countries in damping down excessive demand internally has brought about a significant improvement in the world exchange situation during the past year. At the end of 1951 the central reserves of the sterling area were falling rapidly, and most sterling countries were running substantial deficits. By the last half of 1952 the reserves were again rising, and at the commonwealth economic conference which the Prime Minister and I attended some two months ago, the representatives of the other commonwealth countries were able to report substantial progress toward their objective of a better balance in their external accounts. These improvements make possible a renewed effort to remove the barriers and restrictions which continue to hamper world trade.
While 1952 saw an abatement of world inflationary pressures and brought some improvement in world trade, international economic relations today are far from satisfactory. Since the war tariffs have been reduced by many countries, but quantitative

restrictions, discrimination and inconvertibility of currencies still persist over a wide area.
These continuing difficulties can no longer be ascribed primarily to wartime losses of productive facilities. The efforts of the people of Europe and elsewhere, with the assistance given by North America, have been successful in making good much of the damage caused by the war, and production in most countries is now greater than ever before. By 1950 it appeared that the postwar inflation had about run its course. However, the outbreak of hostilities in Korea caused world prices again to surge upward and brought intensified inflationary pressures and renewed difficulties in trade and payments.
This setback is being overcome but many of the underlying problems remain unsolved. The greater economic stability and the better balance of trade achieved in 1952 now give the nations of the free world a new opportunity to move forward.
The major instruments for international economic co-operation which were drawn up immediately after the war, namely the Bret-ton Woods agreement and the general agreement on tariffs and trade, envisaged that convertibility of currencies and multilateral trade would have been restored over a large part of the world by now. These agreements have constituted a valuable means of international co-operation and we need constantly to examine the manner in which they can best be used to facilitate a more rapid attainment of our objectives. Moreover, the bindings of tariff items under the general agreement on tariffs and trade, which were last extended by negotiations held at Torquay in 1950, will run out at the end of this year and further negotiations on a wide scale will be necessary to continue them in effect on a firm basis. These are some of the major tasks for the coming year. It is clear that the time has come for new initiatives.
The commonwealth economic conference which was held in London in December made a significant beginning. The conference decided-
-that a more positive policy can now be adopted, both by the commonwealth countries themselves and in concert with other friendly countries, to promote expansion of world production and trade.
The commonwealth countries stated that it is their aim-
-to secure international agreement on the adoption of policies by creditor and debtor countries which will restore balance in the world economy on the lines of "trade not aid" and will by progressive stages and within reasonable time, create an effective multilateral trade and payments system covering the widest possible area.
The Budget-Mr. Abbott
If this beginning is to lead to concrete results, there must be close and continuing co-operation between the important trading nations. No lasting solution can be found, of course, without the active and adequate participation of the United States. Early in March the foreign secretary and the chancellor of the exchequer of the United Kingdom will visit Washington to begin exploratory discussions on a collective approach to trade and currency problems. It is to be hoped that this initiative will lead to constructive action. Canada has participated fully in the commonwealth discussions which have led up to this new approach. I need hardly add that we are prepared to play our full part in any common efforts which are designed to achieve a prosperous and expanding world trade.
We here in Canada over the past decade have experienced a period of growth and prosperity unrivalled in our history. As a nation, we have become accustomed annually to breaking new records in production, foreign trade, investment, employment and income. Each year our people set their sights a little higher; we expect almost as a matter of course that we will do better than we did the year before.
Even against such a background of prosperous growth, 1952 stands out as a remarkable year. Last year I based my budget on the expectation that gross national production would rise to $22J billion. Actually our gross national output reached $23 billion, an increase of more than 7 per cent in value over 1951. With prices relatively stable, most of this increase was brought about by a greater volume of production. The record wheat crop was an important factor in this increase, but many other industries also achieved substantial gains.
It is necessary to point out that the aggregates of total production in 1951 and 1952 obscure some rather significant changes during both of these years. Production was at a high level in the first part of 1951 but fell off noticeably towards the end. The year 1952 started out from these lower levels, but business picked up very early in the year and a remarkably steady expansion in production took place during the remainder of the year.
The increased output represents an impressive rise in the productivity of the Canadian economy. While the improvement resulting from the record wheat crop may be regarded as largely fortuitous, our people as a whole are beginning to reap the benefits of the enormous investments in new plant, equipment and development that have been made since the war. I might add that the record grain crop could scarcely have been harvested
2118	HOUSE OF
The Budget-Mr. Abbott had it not been for the heavy post-war investment by our farming community in laboursaving machinery.
The total of salaries and wages earned by Canadian workers during 1952 rose by 12 per cent, an increase which is considerably larger than the rise in gross national output. For example, the average weekly earnings of labour in nine leading industries were $54.13 in 1952, an increase of $4.52 over 1951.
While production, employment and wages rose in 1952 to the highest levels in our history, it is gratifying to note that prices have not followed a similar rising course. The index of wholesale prices fell by nearly 7 per cent during the year; the index of consumer prices declined by 2 per cent. We have been able to expand our production and income without any apparent renewal of inflation. The strength of our dollar in foreign exchange markets, the fall in world prices of many of the commodities which we import and the general restraint in our monetary and fiscal policy have all contributed to this stability in our general price level.
The rise in labour income, combined with the downward trend of prices, meant that in 1952 most Canadians experienced a substantial improvement in real income. We have had periods of rapid growth before, and periods when our production has risen as sharply as in 1952, but it is difficult to recall a time when we have been able to carry out such a degree of expansion and at the same time maintain a stable price level. 1952 can be justly described as a year of prosperity without inflation.
The stability of prices and the abatement of inflationary pressure made it possible to remove during the year some of the more direct anti-inflationary measures which had been introduced after Korea. Last May the consumer credit regulations were lifted. That same month the Bank of Canada expressed the view to the chartered banks that the special restrictions on bank credit which had been in effect for the previous fifteen months could be removed. Towards the end of the year it was also possible to announce that the deferred depreciation provisions in the Income Tax Act would not apply to property acquired after December 31, 1952. It will be recalled that these regulations were adopted in the 1951 budget as a financial deterrent to expenditure on capital expansion of a less essential nature. It was hoped by this to reduce the competitive bidding up of prices of scarce materials which were required for more essential purposes. The improvement
[Stage Direction]

in the supply situation during 1952, particularly in respect of steel, made the regulations no longer necessary.
The containment of inflation and the stability of the general price level in 1952 have been to me a particular source of gratification. Since I became Minister of Finance nearly seven years ago, I have been faced with many economic and financial problems, but none more serious nor more persistent than that of inflation. It would be foolish indeed for me to predict that this problem has been permanently solved. Our experience in 1952 has shown, however, that those who argued in 1950 that we were in for a siege of indefinite inflation have been just as wrong as the pessimists who since the end of the war have been persistently predicting a new depression.
The annual presentation of the budget is a time for national stocktaking, and I think it is desirable before looking at the prospects ahead to examine some of the basic forces which are operating in the economy. We have had high and rising levels of employment, real income has been increasing steadily, the level of production is at an all-time high. The question we have to consider is whether the dynamic forces which have brought this about are likely to continue.
It is difficult to analyse briefly all the factors which affect the level of economic activity. There are four principal forces that provide the basic demand for a country's output of goods and services. These are the expenditures by individual consumers, the investment in new capital goods, the foreign demand for the country's products, and the combined expenditures of governments on goods and services. Needless to say these groups are interdependent; the level of consumers' expenditures, for example, will depend in part upon the level of income, which is in turn related to the over-all demand for goods.
Possibly the most buoyant element on the demand side in 1952 was the sharp rise in consumption expenditures which began in the early spring. Retail sales in the second quarter of the year were more than 25 per cent above those in the first quarter, and nearly 10 per cent above the same period in 1951. This rate of increase was maintained through the remainder of the year. It is evident that the rise in consumer buying was due to a number of favourable circumstances. In part it represented a reaction from the falling off in sales late in 1951 and early in 1952. The decline in prices and the removal of the credit restrictions also contributed to the pick-up in purchases. Probably most

important of all was the steady rise in consumer income throughout the year.
In spite of the very significant rise in consumer spending and retail credit outstanding, there was little apparent change in the pattern of net personal saving as compared with the previous year. In 1951 the net personal saving of Canadians amounted to nearly $1,250 million, or almost 8 per cent of disposable personal incomes. In 1952 it increased to about $1,300 million or 7J per cent of total disposable incomes. It is noteworthy that the rise in consumer expenditures was financed primarily out of the increased incomes. The rate of personal saving has been maintained and compares most favourably with that of any other country and with previous periods in our history.
Investment in new productive facilities continued unabated through 1952. Natural resource development of a long-range character was again a striking feature. The Kitimat aluminum and Quebec-Labrador iron ore projects were brought closer to completion. New oil pipe lines were being constructed and successful exploration for oil and gas continued at a high rate. It is gratifying that the new discoveries of the past year, including the recent promising finds in New Brunswick, have extended developmental activity to an increasingly wider area of our country. New investment in our manufacturing industry was greater than in any previous year.
While investment in capital goods, equipment, and resource development was higher in 1952 than in 1951, the investment in additional inventories was substantially reduced. The rise in inventories in 1951, amounting to more than $1J billion, absorbed a large portion of the total increase in national production for that year. The increase in inventories in 1952, however, is estimated to be under $200 million so that almost all of the increase in national production was available for other purposes, including the increased requirements for defence and higher expenditures by consumers.
The use of productive resources for defence was considerably greater in 1952 than in the previous year due to the fact that the production lines for major items such as aircraft, ammunition and electronics were getting into volume production. Except for defence, and purchases in connection with the support of farm prices, there has been virtually no increase in the physical volume of goods and services devoted to the requirements of the federal government.
In 1952 Canada's foreign trade again broke all previous records both in volume and value. Exports were 10 per cent higher in
The Budget-Mr. Abbott value than in 1951, and about 12 per cent greater in physical volume. Total imports in 1952 were slightly lower in value than in 1951, owing to a fall of about 12 per cent in the average prices of imports, thus offsetting a similar increase in quantity. In fact, during the past year we experienced a significant improvement in our terms of trade, or the ratio between the prices of the goods we export and the prices of the goods we import. While the prices we pay for our imports declined, the prices of our exports were largely maintained. Taking due account of non-merchandise transactions we had a current account deficit in our balance of payments for 1951 amounting to $524 million. In 1952 we had a surplus of $150 million. The improvement in the terms of trade and the strength of the Canadian dollar were factors of considerable importance in the economy during the past year. These two factors contributed materially to the improvement in our balance of payments and also to the general stability of the price level and the rise in real incomes.
A noteworthy feature of our foreign trade in the past year was the attainment of a wider distribution of markets. Exports to the United States were maintained at the 1951 level, in spite of the embargo on our cattle and meat exports which prevailed through most of the year. A somewhat larger proportion of our exports than last year went to the sterling area. Sales to the United Kingdom increased by about $100 million. However, our exports to all other overseas countries, including Latin America and continental Europe, increased by more than $200 million or over 25 per cent during the past year. Our sales to the world outside the United States and the commonwealth made up nearly one-fourth of our total exports, equal to the highest proportion in our history. For example, exports to Latin America, recently visited by my colleague the Minister of Trade and Commerce (Mr. Howe), amounted to $272 million in 1952, more than double our exports to that area in 1949.
The improvement in our balance of payments contributed to the strength shown in the Canadian dollar during the year. From a position of approximate parity with the United States dollar in the first two months of the year, the Canadian dollar rose to a premium of about 4 per cent in September, and then fell off slightly to a premium of about 3 per cent at the end of the year.
The other major factor in the exchange market was the movement of capital across our borders. The inflow of capital for direct investment in oil and mineral development and for the building of new industries was
[Stage Direction]
The Budget-Mr. Abbott maintained. The inflow derived from the placing of new issues of Canadian securities in the United States, less the retirements of existing issues, was also substantial, although somewhat below the 1951 level. At the same time there was a large outflow of other forms of capital from Canada induced in part by the premium on the Canadian dollar. The outflow resulted mainly from the sales by non-residents of outstanding Canadian securities, and from the shifts in commercial accounts and balances. Taking all capital movements together, long-term and shortterm, we were a net exporter of capital in 1952. In effect the total savings inside the country, taken as a whole, were more than equivalent to the expenditures on our entire domestic investment program.
The combined result of our current account surplus and the net outflow of capital is reflected in the movement in our exchange reserves, which rose by $81 million over the year to a level of $1,860 million at December 31, 1952. As I have stated before, our policy has been to allow the exchange rate to be determined by the normal play of economic forces without official intervention, except to ensure orderly conditions in the foreign exchange market. No attempt is made to reverse persistent trends, but only to smooth out excessive short-run fluctuations.
Although the over-all picture of the Canadian economy in 1952 was highly favourable, the past year was not without its problems and difficulties. The outbreak of foot-and-mouth disease and the ensuing embargo on cattle and meat exports to the United States seriously disrupted . the livestock industry. The government took measures to relieve the effects of this disaster by compensation payments and by purchases of meat under the Agricultural Prices Support Act. In addition special arrangements were made for the shipment of Canadian meat to the United Kingdom in exchange for New Zealand meat which was diverted to the United States. The thorough measures which were taken to stamp out the disease have been successful and it is expected that the normal market outlets will shortly be re-established.
In the early part of the year some of our industries were affected by a falling-off in demand for their products, notably textiles and consumers' durable goods. However, the pick-up in domestic business and a more buoyant export demand brought about a significant improvement in the position of most of these industries in the latter half of the year, which has since been maintained.
I now wish to turn to the outlook for 1953. If we look first to the prospective level of
[Stage Direction]

capital investment, present indications are that expenditures on the expansion of industry and the development of resources will continue at a high level. The level of activity in the construction industry generally will be affected favourably by the removal of the regulations regarding deferred depreciation, and by the rise in the number of housing starts which is indicated.
The demand for our exports depends upon business conditions and circumstances in other countries, particularly in the United States. It is, consequently, difficult to forecast, but well-informed opinion seems agreed on a continuing high level of activity in the United States for the near future which should sustain demand for our products in that important market. In respect of overseas countries our main exports consist primarily of essential goods and materials which should continue to be in a favourable competitive position.
The general increase in consumer expenditures which took place during 1952 has been sustained during the early part of this year. This increase appears to have been based primarily on a substantial rise in real personal incomes. With labour and other incomes at present running well above the 1952 average, there is strong ground for expecting a continued high level of consumer demand in 1953.
Translating these prospects into monetary terms, I think that we can look forward with some confidence to a gross national product in 1953 greater than the $23 billion achieved in 1952. I based my last budget on an anticipated increase in physical output of 4 or possibly 5 per cent. The record grain crop pushed the actual increase up to around 6 per cent. This is the third successive year in which the expansion in volume of total production was of the order of 6 per cent. In the three years since the beginning of 1950, the total output of our economy has increased by nearly 20 per cent. In trying to assess the prospective increase in production in 1953 we can get some guide from the index of industrial production which for the last quarter of 1952 was from 5 to 6 per cent above the average for the year as a whole. If industrial activity continues at about this rate through 1953, total non-agricultural production would be substantially higher than in 1952. On the other hand, we cannot assume another record grain crop. If we make the usual assumption of an average crop, total agricultural production would be lower than it was in 1952.
Taking all these factors into account I am basing my budget on the expectation that

gross national product in 1953 will be in the neighbourhood of $24 billion, an increase of about 4 per cent. I expect this increase will consist very largely of an expansion in the physical output of goods and services since prices are now below the average for 1952. My estimate assumes, of course, that we will not experience extensive crop failures nor serious industrial work stoppages.

[Stage Direction]
I turn now to a brief review of the government accounts for the year which will end six weeks hence. These are set out in the usual comprehensive detail in the white paper tabled yesterday. As explained there, it is not possible at this date to estimate our year-end position with the usual degree of accuracy. At the time we had to go to press we had final figures to the end of December only, preliminary figures for January, but only forecasts for February, March and the March supplementaries.
The over-all results can be briefly stated. Our total budgetary revenues are expected to amount to $4,375 million, our expenditures $4,327 million and our surplus $48 million.
Our total tax revenues will be $4,010 million which is $31 million greater than I had forecast a year ago, and this amount, roughly the equivalent of our additional tax receipts this year arising out of the Ontario tax rental agreement, differed from the forecast by only three-quarters of 1 per cent. Non-tax revenues and special receipts and credits were $64 million greater than my forecast. $45 million, or nearly three-quarters of this excess, has arisen by our taking into revenue this year one-half of our balance in the provincial corporation tax suspense account. This suspense account is still subject to considerable adjustments as final tax assessments on corporations are completed during the coming year, but 1 have felt it right to bring half the amount into revenue this year, and bring all or most of the remainder into revenue next year.
Our expenditures this year will be $4,327 million, which is $57 million or about li per cent more than I had forecast. Two large items have come into our expenditures this year for which I could make no provision in the forecast which I made in the budget a year ago. One is the payment of $123 million to Ontario under the tax rental agreement signed in October. The other is the $42 million which is our estimate of losses which should be taken into this year's accounts in connection with our price support policy for beef and pork which in turn was a result of the difficulties ensuing from the outbreak of foot-and-mouth disease last spring. But for
The budget-Mr. Abbott these two items our expenditures would have been about $110 million less than my forecast, which in turn is largely the result of the defence program having been unable to gel delivery of all the equipment and material expected.
The surplus of $48 million represents just about 1 per cent of our total revenues. In other words we came about as close to a virtual balance of revenue and expenditure as is possible in dealing with the magnitudes reflected in our budget. I should, of course, remind the house that neither our revenues nor our expenditures include the payments into and out of the old age security fund.
I am not going into much greater detail of our expenditures and revenues. These, so far as they are available, are fully disclosed in the white paper. The increase in expenditure, compared with the previous year, is $594 million, but if we have regard to the change in the treatment of our interest payments from a cash to an accrual basis, the proper comparable figure is about $680 million. In round figures national defence expenditures increased $490 million, subsidies and tax rental payments to the provinces increased $210 million, the service of the debt $20 million, family allowances and veterans' benefits $40 million, and agricultural prices support expenditures $40 million. These major items total $800 million of increased expenditure.
On the other hand the new old age security system has relieved the budget of $110 million, there is a decrease of $70 million in our special contribution to the civil service superannuation fund, and the disappearance of the deficit for the Canadian National Railways has saved us about $15 million. These major reductions add up to $195 million.
This means that all other government expenditures for all other purposes have increased $75 million during the year. These increases have been due chiefly to higher salary and wage scales and higher costs of materials and construction, some increases in services supplied and further increases in our projects of scientific and resource development.
The government has not relaxed its efforts toward maximum economy and efficiency in all government operations. There is and there always will be room for further improvement, and we shall continue to press our efforts in this direction. We are, for example, this year inaugurating a suggestion awards plan in the civil service which we are confident will, over the course of time, result in many major and minor improvements in efficiency of operation and will contribute
[Stage Direction]
The Budget-Mr. Abbott to still further improvement in the morale and esprit de corps of the public service.
On the revenue side tax receipts are $350 million higher than a year ago and total revenues are up about $400 million. The principal increases, in round figures, are personal income taxes up $210 million, or 22 per cent, corporate income taxes up $100 million, or 9 per cent, commodity taxes up $40 million, and special receipts and credits up $40 million. Of our total revenues 58 per cent have come from direct taxes, 34 per cent from indirect taxes and 8 per cent from nontax sources.
As usual I want to say a word about our over-all cash position. Apart from and outside the budget we have had to find the very large sum of $625 million for a variety of loans, investments and advances. These are all set out in detail in the white paper. The large items are $125 million to the Canadian National Railways, $65 million for agricultural price support inventories, $75 million to Central Mortgage and Housing Corporation, $50 million to the exchange fund, $35 million to the defence production revolving fund and $100 million to the old age security fund.
To meet this cash requirement for $625 million outside the budget we have had available about $450 million from non-budgetary sources. The most significant items are receipts of $65 million from repayment of loans, and of $170 million in accumulations in various pension and annuity accounts. Full details will be found in the white paper.
To sum up, our non-budgetary receipts were $178 million less than our non-budgetary outlays. We have our budget surplus to apply against this, leaving a remaining cash requirement of $130 million. To meet this cash requirement we have increased our funded debt on balance $141 million, which means we will end up the year with $11 million more cash on hand than we had at the beginning.
This leads me to our operations in the field of the public debt. Again I am using round figures; the exact amounts are detailed in the white paper. During the year our gross liabilities increased by $275 million, our net active assets increased by $325 million, which means that our net debt declined by about $50 million which is, of course, the amount of our surplus. During the year we issued new securities in the very large amount of $3,330 million and we paid off old securities in the amount of $3,190 million, or as I said a moment ago we had a net increase of $140 million in our funded debt.
Our net debt still stands at a high figure in absolute terms but thanks to the reductions we have been able to make during the past 7 years and thanks to the rapid increase in our national productivity it now represents a much more tolerable burden than at the close of the war. I should like with the permission of the house to insert here in the record a short table showing our net debt at the end of each year since 1939, and also showing it in per capita terms and as a percentage of our annual gross national product.
Net	Table I debt of Canada,	1939-1953	Net Debt (In	Net	Net Debt as a Percentage of GrossAs at	millions Debt Per	NationalMarch 31	of $)	Capita	Product1939 	
$ 3,153	$ 280	60*2T940 	
3,271	287	57-31941 	
3,649	317	53-11942 	
4,045	347	47-51943 	
6,183	524	58-71944 	
8,740	732	78-21945 	
11,298	936	94-51946 	
13,421	1,092	113-31947 	
13,048	1,040	108-51948 	
12,372	965	89-91949 	
11,776	899	75-41950 	
11,645	849	70-71951 	
11,433	816	62-81952 	
11,185	775	52-11953 	
11,137	752	48-5
I commend this table to the attention of hon. members who will see that while our total net debt has declined by 17 per cent since 1946, the per capita debt has fallen from $1,092 to $752 or 31 per cent. In 1939 our net debt was equal to 60 per cent of our gross national product for that year, in 1946 it was 113 per cent of our gross national product, and it now stands at only 48 per cent. To put it in more realistic terms, our 1939 debt represented 31 weeks of the nation's output, in 1946 it was about 60 weeks, but today's debt could be covered by the product of 25 weeks' work. The real burden of our debt has been considerably more than halved over the past 7 years.
As hon. members know, interest rates have risen over the past two years and that has had its reflection in the average interest rate paid on the total funded debt. Two years ago this average was 2-60 per cent, last year it was 2 [DOT] 67 per cent, and this year it will average 2-76 per cent.

[Stage Direction]
So much for last year. I turn now to my forecast of revenue and expenditure for the year that will begin on April 1 next.
[Stage Direction]
I said earlier this evening that I expect our present level of prosperity to continue throughout this calendar year and I expect a continuation of about the present rate of industrial and general economic expansion. I came to the conclusion that, assuming average crops, we can look forward to a 4 per cent growth in total national output. On these assumptions I expect that our present tax structure would bring in total revenues in the coming year amounting to $4,710 million. I should like to ask, Mr. Speaker, for unanimous consent to insert in Hansard at this point the usual table showing the constituents of this total.
Table XI
Forecast of Tax Revenues (Before tax changes)
Fiscal Year		Fiscal Year 1952-53
	1953-54	(Actual
(Forecast)		Preliminary)
	(millions of dollars)	
Personal income tax 	1,350 [DOT] 0	1,187-7Non-resident income tax	55-0	54-0Corporation income tax ..	1,325-0	1,231-1Succession duties 	40-0	38-0Customs import duties .	395-0	379-0Excise duties 	280-0	257-0Sales tax 	590-0	568-0Other excise taxes 	300-0	284-0Miscellaneous taxes 	10-0	11-5Total tax revenues..	4,345-0	4,010-3Non-tax revenues 	290-0	283-8Total ordinary	revenues 	4,635-0	4,294-1Special receipts and credits	75-0	80-5Total budgetary	revenues 	4,710-0	4,374-6Old Age Security Taxes:	2 per cent sales tax ..	148-0	142-02 per cent individual	income tax 	82-0	45-22 per cent corporation	income tax 	50-0	36-9280-0	224-1
On the expenditure side I have already tabled the main estimates which total $4,405 million of budgetary expenditure. These estimates have been prepared with the greatest possible care, but there will be, as always, the inevitable supplementaries. There are likely to be some further losses in respect of government holdings of beef and pork which will not have been sold before the end of this fiscal year, and I would think it prudent at the end of the year to set aside some further modest reserve against our active assets. On the other hand there is certain to be some lapsing of authorized expenditure, though with the increasing care with which the estimates are compiled and 68108-135
The Budget-Mr. Abbott screened this is not likely to be as great as we have experienced in some earlier years. All in all, I have come to the conclusion that our total expenditure next year will be about $4,450 million.
With prospective revenues of $4,710 million and expenditures of $4,450 million our present tax structure would yield a budget surplus of $260 million in the coming year.
Before going on to discuss our tax policy, I should inform the house of our probable position on non-budgetary account in the coming year. Apart from and outside the budget we shall have to find cash for loans, investments and advances. The largest items here are likely to be loans to the Canadian National Railways and to Central Mortgage and Housing Corporation, and I expect the revenues in the old age security fund will still fall short of payments, although by a smaller amount than this year. On the other hand, there will again be non-budgetary receipts mainly from loan repayments and from the various pension and annuity accounts. It is not feasible to estimate what changes, if any, there may be in the exchange fund and in the year-end amount of cheques outstanding and other float items. Apart from this, it would appear that our net nonbudgetary requirements, excluding funded debt transactions, may be about the same as in the current year, that is of the order of $175 million.

[Stage Direction]
With the economic outlook and the budget prospects as I have just stated them, 1 have had to decide what tax policy for the coming year best fits these circumstances.
Gordon Graydon: Special circumstances.


Douglas Charles Abbott: Two years ago, when it became clear that our own interests required us to assume an important role in a collective program for ensuring international security, we approached the financial problem with vigour and determination. We had to frame a policy, severe though it might be, which would carry us through this difficult period, and it was bound to affect the everyday lives and fortunes of all of us. This has been done. The result is that a large part of the productive resources of the country, instead of being available to turn out goods and services for immediate enjoyment and use, has been used to meet the threat of aggression. I think no one who knows the facts, either in this country or elsewhere, will accuse this government of having shirked the task of imposing the taxes necessary to pay for our major undertakings in the field of defence. We have insisted on balancing our accounts. To have
2124	HOUSE OF
The Budget-Mr. Abbott done less would have been both imprudent and dangerous. The tax measures adopted in the fall of 1950 and in the spring of 1951 were designed to build a revenue structure which would support the added burden of the defence program, and they have done so.
A year ago, upon re-examining this revenue structure it seemed desirable to remove certain anomalies in the income tax structure and to give some relief where needed in the special excise tax structure. In doing this we had to forgo revenue which on a full year basis would have amounted to about $146 million. Fortunately there was leeway enough to enable this to be done and still anticipate a balanced budget. As it turned out the results for the year, as I stated a few minutes ago, were very close to the estimates made a year ago, our tax revenues being within three-quarters of 1 per cent of our forecast.
For the coming year I propose to follow this same policy of budgeting for a balance. This means, from the figures I gave a few moments ago, that something close to $250 million can now be devoted to tax relief. That this can be done in spite of the estimated increase in the coming year of about 3 per cent in total expenditures is, I think, a great tribute to the Canadian people.
In a very real sense this surplus for tax reduction is the direct result of increased production, efficiency and plain hard work on the part of a united Canadian people. Here is a real social dividend, not one that has been conjured up out of thin air, but one that has been well and truly earned by our people. Greater productivity, increased efficiency and a willingness to work hard and vigorously for good wages, salaries and profits -these are the things that power our country today and make possible this surplus for tax relief.



INCOME TAX CHANGES

[Stage Direction]
With about $250 million available for tax relief it seemed desirable that a substantial portion of this should be applied to easing the strain of the personal income tax. Income tax rates if too high can do harm in many directions. Tax laws should avoid placing too great a penalty on successful effort. Every reasonable incentive should be given to people to work hard, move to better-paid jobs, take risks and expand their businesses
[Stage Direction]
without keeping one eye continually on the tax-gatherer. This is particularly important in a growing and expanding country such as ours where there is so much to be accomplished.
Two years ago the house will recall the income tax was increased by means of a 20 per cent surcharge which I stated at that time was a temporary measure. Last year in discarding the surcharge device and in revising the rate structure about two-thirds of the fuH weight of this surcharge was built into the new schedule of rates. It is now proposed to drop this remaining portion of the surcharge entirely. This proposal will be given effect to simply by repealing the present rates and re-enacting the 1950 rate schedule upon which the 20 per cent surcharge was originally imposed. The effect of this change will be that the average taxpayer will have his personal income tax reduced after July 1 by a little more than 11 per cent. This reduction, of course, does not apply to the old age security tax which stands unchanged.
Because we are on the pay-as-you-go system the present rate of the withholding from wages and salaries will have to remain in force for several months before changes can be introduced; accordingly the changeover giving effect to the tax reduction will, as usual, be made in the middle of the year. From July 1 onward the income tax deducted from the wages and salaries will be reduced for the average taxpayer by about 11 per cent.
Since the reduced rates will have been in force for only six months in this calendar year the average individual's tax bill for the year as a whole will reflect, of course, only one-half the full reduction. The full rate of reduction, however, will, as I said, be reflected from July on. It is estimated that on a full year basis this change will cost in revenue about $155 million, and for the coming fiscal year about $87 million.
With the consent of the house I am placing on Hansard the usual tables showing the income tax payable
(1)	for the calendar year 1952;
(2)	for the calendar year 1953 if no changes were made;
(3)	for the calendar year 1953 with the new rates in force;
(4)	for a full twelve month period after the new rates are in force.
[Stage Direction]
The Budget-Mr. Abbott

[Stage Direction]
Effect of Proposed Income Tax Changes Single Taxpayer
Income	Tax paid for 1952	1953 tax at existing rates before proposed change	Tax for 1953 (6 months at present rates and 6 months new rates)	Tax in full year at new rates$	$	$	$	$1,000	1,200	35	34	32	301,500	88	85	80	751,800	140	136	128	1202,000	175	170	160	1502,250	225	218	205	1932,500	274	265	250	2352,750	323	313	295	2783,000	372	360	340	3203,500	484	470	443	4154,000	596	580	545	5105,000	820	800	750	7007,500	1,487	1,450	1,360	1,27010,000	2,301	2,250	2,105	1,96020,000	6,951	6,750	6,355	5,96030,000	12,371	11,950	11,305	10,66050,000	25,195	24,354	23,084	21,81475,000	42,965	41,554	39,409	37,264100,000	61,960	60,004	56,859	53,714200,000	145,880	141,404	133,909	126,414400,000	327,570	318,344	300,729	283,114
Note (1) The old age security tax of 1 per cent of taxable income (maximum tax $30) in 1952 and 2 per cent of taxable income (maximum tax $60) in 1953 is payable in addition to above amounts.
(2) In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
68108-135*
[Stage Direction]
The Budget-Mr. Abbott

[Stage Direction]
Effect of Proposed Income Tax Changes
Married Taxpayer-No Dependents
Income	Tax paid for 1952	1953 tax at existing rates before proposed change	Tax for 1953 (6 months at present rates and 6 months at new rates)	Tax in full year at new rates$	$	$	$	$2 250 	44	43	2^500	
2,750	
3,000	88	85	80	75132	128	120	113175	170	160	1503.500	
4.000	
5.000	
7.500	
10,000	274	265	250	235372	360	340	320596	580	545	5101,206	1,175	1,103	1,0301,946	1,900	1,780	1,66020,000	
30.000	
50.000	
75.000	
100,000	6,431	6,250	5,880	5,51011,796	11,400	10,780	10,16024,565	23,754	22,509	21,26442,280	40,904	38,784	36,66461,220	59,304	56,184	53,064200,000	
400,000	145,060	140,604	133,159	125,714326,690	317,484	299,924	282,364
Note (1) The old age security tax of 1 per cent of taxable income (maximum tax $30) in 1952 and 2 per cent of taxable income (maximum tax $60) in 1953 is payable in addition to above amounts.
(2) In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
[Stage Direction]
The Budget-Mr. Abbott

[Stage Direction]
Effect of Proposed Income Tax Changes Married Taxpayer-with Two Children Eligible for Family Allowances
Income	Tax Paid for 1952	1953 tax at existing rates before proposed change	Tax for 1953 (6 months at present rates and 6 months at new rates)	Tax in full year at new rates$	$	$	$	$2,300	2^400	18	17	16	152,500	35	34	32	302,750	79	77	72	683,000	123	119	112	1053,500	215	208	196	1844,000	313	303	286	2695,000	529	514	484	4537,500	1,129	1,100	1,032	96410,000	1,854	1,810	1,696	1,58220,000	6,275	6,100	5,738	5,37530,000	11,624	11,235	10,623	10,01050,000	24,376	23,574	22,337	21,09975,000	42,075	40,709	38,597	36,484100,000	60,998	59,094	55,982	52,869200,000	144,814	140,364	132,934	125,504400,000	326,426	317,226	299,683	282,139
Note (1) The old age security tax of 1 per cent of taxable income (maximum tax $30) in 1952 and 2 per cent of taxable income (maximum tax $G0) in 1953 is payable in addition to above amounts.
(2)	The above figures show the actual income tax liability of a taxpayer with family allowance children but in order to arrive at his true net position the amount of family allowances received for his children must be offset against his tax liability.
(3)	In calculating the above taxes it has been assumed that where incomes are in excess of $30,000, that part of the income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
2128	HOUSE OF
The Budget-Mr. Abbott
For some years I have expressed concern over the high level of taxes on corporate profits. It seemed appropriate, therefore, that part of the amount available for tax abatement should be applied in this direction. At present the tax, excluding the old age security tax of 2 per cent, takes 20 per cent from the first $10,000 of profit, and 50 per cent from the excess over $10,000. In the first place it is now proposed to increase from $10,000 to $20,000 the bracket to which the low rate applies. This, it seems to me, is a useful way to give relief to relatively small businesses which generally have to do their financing out of their own earnings.
While by far the greater part of our corporation tax revenue comes from large corporations, the small corporations are by far the most numerous. All corporations, of course, both large and small, will be affected by this widening of the low tax bracket. It is estimated that as a result of increasing the $10,000 figure to $20,000 fewer than 30 per cent of our corporate taxpayers will in future be paying the standard rate of tax or, stated another way, about 70 per cent of corporate taxpayers will pay not more than the low rate on all their profits.
My second recommendation in this field is for a moderate reduction in tax rates. I propose reducing the standard rate of corporation tax from the present 50 per cent rate to 47 per cent, and to apply an 18 per cent rate instead of the present 20 per cent rate to the first bracket which, as I have said, will in future be $20,000. As a result of these two changes the new rate structure applying to profits earned on and after January 1, 1953, will be 18 per cent, plus 2 per cent old age security tax, on the first $20,000, and 47 per cent plus 2 per cent on profits in excess of $20,000. It is estimated that as a result of these changes in the corporate tax structure the revenue loss for a full year will be about $120 million, and for the coming fiscal year about $85 million.
In 1949 provision was made in the Income Tax Act for a credit against personal income tax of 10 per cent of the dividends received from Canadian tax-paying corporations. At that time I said this was a first step in dealing with the situation under our present tax structure where, after taxing corporate profits at a very high rate, the individual is required to pay at graduated rates on the dividends paid out of corporate profits. I now propose a second step of the same length and in the same direction. That is to say, for dividends received in the calendar year 1953 and thereafter the tax credit will be increased from 10 per cent to 20 per cent. Canada is fortunate these days in being able to attract enterprising foreign capital. This is desirable and we 
[Stage Direction]
welcome it. At the same time it would seem to be a good thing if Canadians were encouraged, where they can safely do so, to join in a wider participation of equity ownership in the expanding industrial wealth of our country. This dividend credit of 20 per cent should, I think, be of considerable assistance in encouraging our people to increase their stake in Canada's future. On a full year basis this addition to the tax credit is estimated to cost $20 million in revenue, and $12 million for the coming fiscal year.
During the past year or so there has been considerable discussion in this house and elsewhere regarding the income tax deduction for medical expenses. At present the law recognizes unusual medical expenses, that is, expenses in excess of 4 per cent of the taxpayer's income. The government has been urged to consider removing this 4 per cent floor and, in effect, to allow a deduction for usual as well as for unusual medical expenses. As the house knows, I have given very careful consideration to this widely-supported proposal. Quite recently in speaking on the resolution dealing with this subject, sponsored by the hon. member for Winnipeg North Centre (Mr. Knowles), I gave my reasons for not being able to recommend complete removal of the 4 per cent floor. I shall not repeat these reasons now. At that time, however, I promised to look further into the question of the level of the floor and to consider whether some lowering of it might be justified. My colleague, the Minister of National Health and Welfare (Mr. Martin), has also considered this matter and has carefully reviewed the latest statistical data in this field. From this review he concludes that while the broad field of medical expenses as commonly understood may on the average be at least 4 per cent of income-it is 5 per cent in the United States-it would appear that the range of medical expenses which would qualify for inclusion in the deduction under the Income Tax Act would not on the average exceed 3 per cent of income. On the basis of this further consideration of the data it is now proposed that the 4 per cent floor in the present law be lowered to 3 per cent with effect this year. This move is estimated to cost about $10 million on a full year basis.
There are quite a number of other income tax matters which deserve mention. For example, it is proposed in future to allow parents to claim a deduction for dependent children attending university even though the children are over 21 years of age. The figure of $600 now prescribed as the upper limit of income which a dependent may earn and still be regarded as a dependent will be increased

to $750. Expense allowances for elected municipal officials will be made deductible for income tax purposes if they conform with the limits established in respect of the allowances for federal and provincial elected members, that is, they will qualify to the extent that they do not exceed one-half the amount payable by way of salary, indemnity and other remuneration. Special provision will be made to alleviate the tax on refunds paid out as a result of reorganizations of pension plans. This will apply, of course, in the case of the Canadian National Railways pension plan reorganization which has been of interest to many hon. members.
During the past year certain other features of the income tax have given rise to considerable concern. The subjects are quite technical and, accordingly, they are not appropriate for full elaboration in the budget speech but I should like to comment briefly on some of them. For example, the income tax appeal board in a number of cases involving the sale of tickets for goods or services to be. delivered or performed in the future have dismissed appeals against assessments which disallowed claims for certain so-called reserves. In the meantime this general question has been given careful study, and while I cannot here go into all the details I can say that I believe a proper solution has been found for most of the problems of this sort.
The taxation of interest on bonds sold between the dates on which interest is payable has caused some concern in the financial world and various briefs from national organizations have urged consideration of this problem. Amendments will be made which I think will take care of this problem satisfactorily.
Numerous complaints have been received in past months from persons who have incurred considerable tax liability through the acquisition by certain companies of their outstanding preferred shares. Under the law this premium over the par value paid in the purchase price is taxable income to the seller. It has been established that on selling these shares people were not aware of the fact that the issuing company was the actual purchaser of the shares. In order, therefore, to make sure that the law has not operated unfairly in these circumstances it is proposed to repeal, effective January 1, 1949, this provision which places a tax on the shareholder when a company acquires its shares at a premium other than upon redemption after notice. At the same time an amendment will provide that the amount of the premium paid by the company to shareholders upon acquisition during the period covered by the retroactive repeal of this tax on the shareholder
The Budget-Mr. Abbott will not be allowed as a deduction by the company in computing undistributed income on hand. Where notice is given by a company of the redemption of an outstanding issue the shareholders ordinarily can be expected to govern themselves accordingly.
For the future it is proposed also to repeal the tax on premium received upon redemption of preferred shares. I shall be recommending that henceforth any company paying a premium on redemption or acquisition of preferred shares must charge such premium paid against its tax-paid undistributed income on hand or, alternatively, pay a tax of 20 per cent on the amount of premium so paid to shareholders.
Other recommendations in the income tax field will include the extension for an additional year of the allowances now granted for mineral and petroleum expenses, including the special provision for deep-test wells. Also, an additional year will be added to the period within which, upon coming into production, new mines will be given a three-year exemption.
In addition to the renewal of these allowances there are two new provisions which will be recommended and which, I think, deserve mention here. The first of these is that mining companies be allowed a deduction in respect of oil or gas exploration expenses. This, I think, is a sensible proposition having regard to the similarities in these two fields of natural resource development. For the future, therefore, these two groups will be combined for purposes of the allowances in respect of exploration expenses. It is hoped that the result of this amendment will be greater participation by Canadian capital in the oil and gas industry.
The other proposal in this field is to include among deductible expenses the so-called bonus payments for leases which turn out to have been unproductive. The deduction will be allowed in the year of abandonment of the lease in respect of which the bonus was paid. This provision should considerably improve the competitive position among companies bidding for oil leases in our western provinces.
The income tax amending bill will as usual contain numerous technical changes of which mention cannot be made here. To a large extent these changes follow upon representations from responsible organizations and they are important in keeping our law up to date and as fair as possible.
I shall be proposing no amendments this year to the Dominion Succession Duty Act.
2130	HOUSE OF COMMONS
The Budget-Mr. Abbott

[Stage Direction]
I should now like to say something about the general problem of federal-provincial financial relations, because the budget speech has traditionally been the occasion for reviewing broadly the main problems in the field of financing the services of government.
All federal states are inevitably faced with some conflict of jurisdiction between different levels of government. Just as inevitably the problem, in an ever-changing world, is bound to be a recurring one. No solution can ever be more than temporary. In view of the fundamental changes in the situation facing all levels of government in Canada which have taken place over the past few decades it is not surprising that federal-provincial relations should have thrust up new problems. The wonder is that our confederation instead of breaking down under the strains has gained strength and stability from decade to decade.
May I illustrate what I mean by reviewing the situation confronting the federal government today. The budget I am presenting this evening-a peacetime budget mind you-[DOT] calls for the collecting and spending of some $4| billion. Of the main items making up this total, over $2 billion is needed for defence. Interest on the national debt, which can be almost entirely ascribed to past wars, amounts to about $450 million. These two items taken together add up to more than $2J billion. Together they can be regarded as the price for international security.
The general field of what might be called welfare expenditure absorbs about another billion dollars. This amount can be described as the current bill for social security. Thus, out of total federal expenditures of $4J billion, $3J billion, or nearly three-quarters of the total goes towards maintaining either international security or social security. If now we look back to federal budgets of, say, 25 years ago these two items which today absorb $3J billion, or nearly three-quarters of our total expenditure, were scarcely in the picture at all, or were small according to present-day standards.
If the federal budget of today consisted only of the sort of expenditure which, under the prevailing ideas of only a few short years ago, was regarded as all that was necessary or proper for the federal government to undertake, I could come very close to balancing my budget if I had only at my disposal the traditional nineteenth century sources of the federal government revenue which were liquor, tobacco and customs duties. In such a situation I could probably with safety recommend the complete repeal of all federal income taxes on individuals
tMr. Abbott.]
and corporations. The general sales tax of 10 per cent, and the 15 per cent excise taxes, along with succession duties, could all be wiped out. These fields of taxation then could all be left to the provinces. Under these conditions there would, I think, be no very difficult problems in the field of federal-provincial financial relations.
If the federal government did not have to tax to obtain $3J billion for defence, welfare and war debts, the tax fields would certainly not be so crowded. There would, I think, be ample room for the provinces, certainly for the more wealthy ones. I am not so sure, however, that even this would enable all provinces to finance their requirements independently of the federal treasury.
I do not believe the majority of the people in any province of Canada would favour discontinuing the present billion dollar nation-wide program of welfare expenditure. Nor do I believe that in any province the majority of the people would have had the federal government do otherwise than embark, in common with other countries, upon a defence program of the present proportions against communist aggression. If I am right in this belief, then it seems to me that the federal government should scarcely be blamed if the expansion of provincial taxation has become more difficult. Of course the extent of federal taxes does make substantial tax increases by provincial governments more difficult. No royal commission is needed to discover this truth. I have good reason to know the sort of problems which provincial ministers of finance have to face, and I think they know that they have my sympathy.
But no group of men at Ottawa is responsible for this problem. It finds its origin in the will of the majority of the people of the ten provinces which, of course, is Canada. No one in Ottawa has any liking for centralization as a principle or objective. No one wishes to deprive provincial governments of their rights or to take over their responsibilities. No one has any desire to aggravate the already difficult problems facing provincial governments which, in common with the federal government, have to meet the rising demands for government expenditure in a democratic country.
The government at Ottawa over the past 20 years has done its utmost to find fair and reasonable solutions from time to time over this period when, because of desperate conditions or swiftly changing events, the old workable pattern of federal-provincial relations has become so obviously inadequate.
In the late 1930's the federal government appointed the Rowell-Sirois commission to

make an exhaustive study of all aspects of federal-provincial relations. This commission made a very thorough and penetrating study and its recommendations were far-reaching. They were found to be not acceptable to the provinces. Perhaps some on re-examining these proposals today would conclude that they were too drastic and did call for a surrender of some provincial jurisdiction.
The rejection of the Rowell-Sirois recommendations of course left the federal minister of finance, the Right Hon. J. L. Ilsley, under the necessity during the desperate days of the early 1940's of speedily improvising some workable compromise for the war period. The good faith of the provinces and their willingness to co-operate in helping to find a proper solution was reflected in their acceptance of the plan embodying the wartime tax agreements.
After the war the problem was still there and the federal government put forward on its own account a comprehensive plan to take up where the wartime tax agreements left off. This plan was also unacceptable to the provinces. Again, it is possible to argue that this post-war plan attempted too much, too quickly. Undoubtedly it did propose a far-reaching overhaul of the status quo not only in revenue fields but in the expenditure pattern as well.
Again Mr. Ilsley had to devise some temporary workable arrangement for the postwar era.
As the house knows, his proposals took the form of optional agreements relating solely to taxes, known popularly as tax rental agreements. The virtue of this approach was that it was not dependent for success on the unanimous acceptance by all provinces. A cardinal principle in the offer was that no pressure, direct or indirect, should be placed on any province to accept an agreement. This has been a fundamental position in the federal government's attitude ever since.
In the present tax rental agreements, an undertaking is given that upon expiry of the agreement the federal government will allow a credit against its corporate income tax equal to 7 per cent of the profits earned by companies in that province. This, of course, is to enable any province to re-impose its own tax up to this 7 per cent level without penalty to corporations in that province. I now propose to increase the 5 per cent tax credit at present being allowed in our Income Tax Act in respect of profits in any province which has not entered into an agreement to this same level of 7 per cent. The general effect of this will be to place corporations in Quebec, which is without a tax rental agreement, on the same basis as those operating 58108-136
The Budget-Mr. Abbott in other provinces in respect of the burden of corporate income tax. The loss of revenue to the federal treasury in a full year will be approximately $17 million.
The federal government has, I think, demonstrated its desire to avoid, wherever possible, encroaching upon tax fields used by the provinces. After the war, for instance, we abandoned the taxes on gasoline, amusements, parimutuels, and electric power because the provinces were depending upon the use of these taxes. I propose to make a further move of this sort and repeal the federal tax on the transfer of securities, a tax which is also imposed on a parallel basis by the two central provinces.
This will mean a loss of revenue to the federal treasury of some $3 million per annum.
One does not have to study for very long the problem of overlapping tax jurisdictions to realize there is no easy answer. A re-allocation of tax sources between the two levels of government does not seem to be a workable solution. This approach might be helpful if the various tax sources were of equal value to all provinces which, of course, they are not. Accordingly, in giving up tax sources sufficient for the needs of the wealthier provinces, the less well-off provinces would be left without enough to meet their requirements.
Some students of this problem have been attracted by the idea of straight fiscal need subsidies to less well-off provinces as a supplement to some undertakings or arrangements regarding the use of certain tax fields. This double-barrelled system would, I think, imply the unanimous acceptance by all provinces before it could be adopted. This might never be possible. As a matter of fact, I am by no means sure if I were a provincial minister of finance that I would agree to such an arrangement. I am afraid I would find something repugnant in the idea that an outside body-a board, council or commission- would be investigating provincial affairs and determining the size of the fiscal needs for a particular period which amount in turn would be the measure of the federal grant.
In the United States, where they have the same problem to an acute degree, the question of federal-state relations has for many years been the subject of much painstaking study but nothing by way of a general solution has been achieved. In the absence of any over-all plan, the majority of the states levy personal income taxes, corporation taxes and retail sales taxes. It is estimated, for example, that about 60 per cent of the tax revenue of the states is obtained from retail
2132	HOUSE OF
The Budget-Mr. Abbott Sales taxes. Those who are at times critical of the Canadian situation might do well to examine the situation which obtains south of the line.
After reviewing what other countries have accomplished, I must say that I think we have done reasonably well in Canada in working out a common-sense method of accommodating federal-provincial financial relations to the major upheavals of the past few decades.
Certain aspects of the tax rental agreements may, perhaps, cause some mild concern to the purely logical mind. The pattern for these agreements is found in no treatise or text book. No royal commission produced the formulae. The provisions of these agreements have been hammered out on the anvil of hard experience. Our approach has been essentially a pragmatic one and our solution is one which does lend itself to the practical realities of the situation in which it must operate.
Mr. Speaker, I am afraid that I may have imposed on the patience and good nature of the house in commenting at such length on this subject. It is an important one, however. It has deep implications for our existence as a federal state. Our national unity must always be built on a foundation which gives practical effect to the constitutional distribution of sovereign powers and administrative responsibilities between the central and the provincial authorities.
I hope that the statement which I have made will have been of some value in clarifying the issues, establishing the facts and in revealing the sincerity of the federal government's desire to work amicably toward reasonable solutions in this field of our relations with provincial governments.

[Stage Direction]
The budget resolutions relating to the customs tariff which I am tabling contain proposals respecting certain tariff items where reductions in duty are desirable. In a number of cases I am proposing changes in wording and classification which would remove uncertainties, anomalies, and administrative difficulties which have arisen. No increases in duty are proposed.
Reductions in duty are proposed on particular items which enter into the costs of
[Stage Direction]
production of our primary industries. I am proposing to add some additional items to the already extensive list of equipment and materials which enter duty free for use in agriculture. Reductions are proposed on two important categories of equipment used in the fishing industry, namely gasoline engines and wire rope. In the case of the mining industry the proposals include reductions on certain specialized equipment.
I am proposing to widen somewhat the existing classifications under which universities, schools and public hospitals may bring in scientific and medical apparatus free of duty. It is proposed also to extend the existing classification which grants free entry to certain articles used for religious purposes. Finally, the customs tariff resolutions contain a proposal for the establishment of a new item under which personal and household goods acquired abroad by members of the Canadian armed forces may be entered free upon their return to Canada under certain conditions which are specified.

[Stage Direction]
I now turn to the field of commodity taxes. With some regret I have come to the conclusion that I cannot this year recommend any change in either the general sales tax rate or in the special excise tax rate. Broadly speaking I believe we have achieved in this country a pretty sensible balance in our tax structure between direct and indirect taxes. I am aware, of course, how acceptable it would be if substantial tax reductions could be made in the field of commodity taxes, but it is quite clear that the moderate leeway at my disposal this year will not permit this to be done.
While the general rate structure in these fields must be maintained, a few important changes can be accommodated without too great loss of revenue. A further reduction in the levy on cigarettes seems desirable. It is clear that following the reduction made last year there was a quite definite increase in cigarette sales which, from the point of view of the revenue collector, is very encouraging. Smuggling, I regret to say, is still a difficult problem. I have accordingly decided to recommend that the excise duty, and correspondingly the customs duty, on cigarettes be reduced by $2.00 per thousand which, for a package of twenty cigarettes, means four cents off. Not knowing in advance what
[Stage Direction]
effect this further cut will have on the volume of consumption, or the amount of smuggling, it is impossible to estimate what the revenue loss from this move will be. A fair estimate is that it will not be more than $17 million.
It is proposed to repeal the stamp tax on cheques, money orders and other instruments. This tax is definitely of the nuisance variety and I am sure that only the Minister of Finance, who has to forgo about $12 million of revenue, will mourn its passing.
Another amendment, and one in which I am quite happy to join in acclaiming, will repeal the sales tax on books. I have been impressed with the breadth and sincerity of the representations for this action, and I have been convinced that it would be in the public interest to forgo the modest amount of revenue now received from this source. Concurrently with this repeal of the sales tax on books the tax will likewise be withdrawn from materials used in the production of magazines, books and newspapers. This will eliminate the difficult task we have had to wrestle with in recent years of drawing a clear and acceptable line between newspapers and magazines.
Materials used in the manufacture of the list of foods now included in the schedule of exemptions will be freed from sales tax. Similarly a group of items which along with the so-called "consumable materials" are expended in the process of production will be exempt from sales tax.
All these changes in the sales tax will result in a loss of revenue of about $8 million. As usual it will be provided that all the above commodity tax changes will be effective from midnight tonight. In accordance with standard practice my colleague the Minister of National Revenue (Mr. McCann) has asked me to give notice that no claims for refunds arising out of tax reductions in respect of goods on which tax has been paid will be entertained.
There will be a number of other minor amendments included in the bill amending the Excise Tax Act but these need not detain us here.
There is one further subject on which I have important changes to announce. The government has been seeking a fair and effective source of revenue for the national system of television broadcasting being developed by the Canadian Broadcasting Corporation in accordance with the general policy that was announced by the Prime Minister (Mr. St. Laurent). The government's policy is to have the cost of the national television service paid, as far as that is practicable, by those who
The Budget-Mr. Abbott benefit from such service. It also wishes the C.B.C. to have a direct source of revenue, on which it can budget over a period, and not to be dependent upon annual appropriations to finance its operations. We wish to emphasize that it is a separate corporate body, under the general control of parliament but not a part of the government.
Television operations have just recently commenced and their development has been financed by loans specifically authorized in the estimates. It is now expected that, in addition to commercial television revenues, the C.B.C. will require about $6 million in the next fiscal year to meet operating costs of television, including interest on loans. This requirement will increase over the next few years, perhaps to about $10 million. Some part of these needs during the development period may properly be met from loans, and paid from future revenues, but we should start now with a plan to provide adequate revenues over the long run.
It is therefore proposed that the Canadian Broadcasting Act should be amended to provide that the corporation should in future receive from month to month the amount of revenue yielded by the present 15 per cent special excise tax on television sets and the picture tubes for such sets, and on such parts and accessories for television sets as are taxable under the excise act. In this way those who buy sets, or the replacement tubes for them, will be providing the basic revenue necessary for C.B.C. television services. In order to make this plan effective, it will be necessary to revise the regulations to provide that tourists returning to Canada may not include as baggage eligible for free entry television sets or the picture tubes for use in them.
Having decided upon this plan in regard to television, we have now come to the conclusion that a similar transfer of the 15 per cent special excise tax revenue can and should be made to assist in financing radio broadcasting, in place of the present licence fee. Although the continuation of this fee had been recommended by the Massey commission, experience has convinced us that it is uneconomical to collect such a small individual fee from such a high proportion of Canadian families, if any satisfactory alternative is open. We believe that payment to the C.B.C. of the amount of revenue received from the 15 per cent special excise tax on radio sets and the taxable parts and accessories for them does provide a satisfactory alternative, at least for the next few years until the present statutory grant for radio broadcasting is reviewed at the end of its five-year term. Consequently we
08ICS-136J
[Stage Direction]
The Budget-Mr. Abbott are proposing that the broadcasting act should provide for this transfer of revenue, as well as that for television, and that the order in council under the Radio Act setting the present licence fees of $2.50 should be revoked with effect from April 1.
Gordon Knapman Fraser: It should never have been put on.


Douglas Charles Abbott: Don't you like this, Gordon?
I estimate that the amount of revenue to be received by the C.B.C. under these arrangements will be approximately $12 million in the next fiscal year, the amount in respect of radio probably exceeding somewhat that for television. The public will be relieved of paying something over $6 million in radio licence fees, this next fiscal year, and our expenditure in collecting such fees, anticipated at $700,000 in the estimates, will be saved.



SUMMARY OP TAX CHANGES

[Stage Direction]
I am now in a position to summarize the total effect of all these tax changes on the balancing of the budget, and I ask leave of the house, Mr. Speaker, to insert in Hansard at this point the usual summary tables.
Table VI
Effect on Revenue of Proposed Tax Changes
Reduction Reduction in
	in Full	Fiscal Year
	Year	1953-54
Personal income tax: Reduction in rate	(in millions of dollars)	
schedules 	
Reduction in lower limit	155	87for medical expenses ... Increased credit for	10	1dividends 	
Corporation income tax:	20	12Reduction in rates 	
Increased bracket to which the lower rate	84	60applies 	
Increased credit for profits earned in provinces not covered by a tax-rental	35	25agreement 	
Excise duty:	17	12Reduction on cigarettes... Excise taxes: Repeal of stamp tax on	15	15cheques, etc	
Repeal of security transfer	12	12tax 	
Repeal of sales tax on	3	3various items	
Loss of sales tax revenue as result of lowering	8	8excise duty on cigarettes	2	2361	237

[Stage Direction]
Revised Forecast of Revenues for Fiscal Year 1953-54 taking Account of Tax Changes
-	Forecast of revenue from existing taxes	Decrease in revenue from budget proposals	Revised Forecast of revenue for 1953-54
	(in	millions of dollars)	
Personal income tax		1,350	100	1,250
	55		55
Corporation income tax		1,325	97	1,228
	40		40
	395		395
Excise duties	280	15	265590	10	580Other excise taxes	300	15	28510	10Total tax revenues	4,345	237	4,108290	290Total ordinary revenues	4,635	237	4,39875	75Total budgetary revenues	4,710	237	4,473Old Age Security Taxes:	148	1462% sales tax	2	82	8250	50280	2	278
[Stage Direction]
The net reductions in taxes which I have proposed amount to $237 million in this fiscal year, and to $361 million in a full fiscal year. Radio licence fees have never been treated as part of our tax revenue, but including the dropping of this item the full saving to the public in the coming fiscal year will be about $243 million.
Of the tax reductions in the coming year $100 million is on the personal income tax, $97 million is on the corporate income tax and $40 million is on commodities.
In a full year the reduction in the personal income tax will be $185 million, in the corporate income tax $136 million and in th# commodity field $40 million.
My revised forecast shows revenues at $4,473 million. My forecast of expenditures will, however, have to be increased to $4,462 million to take account of the proposed transfer to the C.B.C. On this basis the forecast surplus is $11 million. As was the case last year, this is, of course, budgeting in fact for an even balance.
That, Mr. Speaker, concludes the presentation of my budget. This is the eighth budget which I have had the honour to bring down. The years covered by these budgets have been remarkable years. They have had their difficulties-serious difficulties-yet they have been years of sustained progress unmatched in our previous history. These achievements have been the collective achievements of the Canadian people-rapidly growing in numbers-who have been busy about their own affairs, working, developing and exploring, saving and investing in the future. The task of government in these times has been to promote a healthy climate for sound development, to promote a climate in which both wealth and welfare can flourish, in which we can all enjoy the highest combination of freedom and security in both social and national terms.
The record of this Liberal government in the past four years is one of which we can all be proud. We have expanded and improved our earlier programs of social welfare and we have introduced a sound system of universal old age security. We have provided large financial assistance to improved health services in every province. By our expansion of scientific services and technical surveys we have been steadily rolling back our frontiers. In reply to threats of external aggression we have played a significant role in developing an effective system of regional collective security and we have financed our proper share of its cost. We have balanced our budgets and reduced our public debt. The threatening surge of inflation has been
The Budget-Mr. Abbott halted, and indeed has been reversed. We have enormously improved, even if we have not wholly solved, the complicated relationships of federal-provincial finance, and we have done this in a growing atmosphere of good will and of mutual respect and understanding.
The outbreak of aggression in Korea compelled us for a while to reverse the steady march of tax reductions, but within 18 months we were able to resume our course. A year ago taxes were reduced by $146 million a year. This evening I have proposed further reductions totalling $361 million a year. This makes the very substantial total of $507 million of tax reduction in two years, and means that we have been able to withdraw two-thirds of the additional tax burden imposed in September, 1950, and April, 1951, and still carry our proper share of the costs of collective defence.
This is a record of which I am frankly proud. It is a record of which we can all be proud, but those of us who have consistently supported the policies on which it has been based are perhaps entitled to a special sense of satisfaction.
Mr. Speaker, I shall now table the resolutions which I will move when the house is in committee.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That for the 1954 and subsequent taxation years the graduated rates of tax at present applicable to income of individuals be reduced by substituting therefor the following graduated rates of tax:
(a)	15 per cent of the amount taxable if the amount taxable does not exceed $1,000,
(b)	$150 plus 17 per cent of the amount by which the amount taxable exceeds $1,000 if the amount taxable exceeds $1,000 and does not exceed $2,000,
(c)	$320 plus 19 per cent of the amount by which the amount taxable exceeds $2,000 if the amount taxable exceeds $2,000 and does not exceed $4,000,
(d)	$700 plus 22 per cent of the amount by which the amount taxable exceeds $4,000 if the amount taxable exceeds $4,000 and does not exceed $6,000,
(e)	$1,140 plus 26 per cent of the amount by which the amount taxable exceeds $6,000 if the amount taxable exceeds $6,000 and does not exceed $8,000,
[Stage Direction]
The Budget-Resolutions if) $1,660 plus 30 per cent of the amount by which the amount taxable exceeds $8,000 if the amount taxable exceeds $8,000 and does not exceed $10,000,
(g)	$2,260 plus 35 per cent of the amount by which the amount taxable exceeds $10,000 if the amount taxable exceeds $10,000 and does not exceed $12,000,
(h)	$2,960 plus 40 per cent of the amount by which the amount taxable exceeds $12,000 if the amount taxable exceeds $12,000 and does not exceed $15,000.
Ci) $4,160 plus 45 per cent of the amount by which the amount taxable exceeds $15,000 if the amount taxable exceeds $15,000 and does not exceed $25,000.
(j)	$8,660 plus 50 per cent of the amount by which the amount taxable exceeds $25,000 if the amount taxable exceeds $25,000 and does not exceed $40,000,
(k)	$16,160 plus 55 per cent of the amount by which the amount taxable exceeds $40,000 if the amount taxable exceeds $40,000 and does not exceed $60,000,
(l)	$27,160 plus 60 per cent of the amount by which the amount taxable exceeds $60,000 if the amount taxable exceeds $60,000 and does not exceed $90,000,
(m)	$45,160 plus 65 per cent of the amount by which the amount taxable exceeds $90,000 if the amount taxable exceeds $90,000 and does not exceed $125,000,
(n)	$67,910 plus 70 per cent of the amount
by	which	the	amount	taxable	exceeds
$125,000 if the amount taxable exceeds $125,000 and does not exceed $225,000,
(o)	$137,910 plus 75 per cent of the amount
by	which	the	amount	taxable	exceeds
$225,000 if the amount taxable exceeds $225,000 and does not exceed $400,000,
(p)	$269,160 plus 80 per cent of the amount
by	which	the	amount	taxable	exceeds
$400,000 if the amount taxable exceeds $400,000.
2.	That for the 1953 taxation year the graduated rates of tax applicable to income of individuals be the average of the present graduated rates and the rates set out in paragraph 1.
3.	That with respect to income of corporations earned on and after January 1, 1953, for the present rate of tax of 20 per cent on the first $10,000 of taxable income and 50 per cent on taxable income in excess of

$10,000 there be substituted the rate of 18 per cent on the first $20,000 of taxable income and 47 per cent on taxable income in excess of $20,000.
4.	That for the 1953 and subsequent taxation years the 10 per cent deduction from tax at present allowed in respect of dividends received from a taxable corporation by individuals resident in Canada be increased to 20 per cent.
5.	That the deduction from tax equal to 5 per cent of the taxable income of corporations earned in a prescribed province be increased to 7 per cent of taxable income [DOT]earned in the province on or after January 1, 1953, by corporations that are not subject to certain special provincial taxes.
6.	That for the 1953 and subsequent taxation years the deductions at present allowed in computing taxable income of individuals in respect of medical expenses that exceed 4 per cent of income of the individual be allowed in respect of medical expenses that exceed 3 per cent of income of the individual.
7.	That for the 1953 and subsequent taxation years the deductions in computing taxable income of individuals at present allowed in respect of dependent children under 21 years of age be allowed in respect of dependent children of the taxpayer over 21 years of age if they are attending a university.
8.	That for the 1946 and subsequent taxation years the provision that excludes expense allowances from income of a member of a provincial legislature be made applicable to expense allowances of elected members of the governing bodies of incorporated municipalities.
9.	That the special deduction from income allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of exploring or drilling for oil and natural gas in Canada, be allowed for expenses incurred in the calendar year 1956; and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring for minerals, for expenses of exploring or drilling for oil or natural gas in Canada incurred in the calendar years 1953 to 1956 inclusive.
10.	That the special deduction from income allowed to corporations whose principal business is mining or exploring for minerals, for expenses incurred in searching for minerals in Canada be allowed for expenses incurred in the calendar, year 1956; and that in addition

a similar deduction be allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of searching for minerals in Canada incurred in the calendar years 1953 to 1956 inclusive.
11.	That the special deduction from income and taxes allowed to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum, for expenses incurred in respect of deep-test oil wells be allowed to those taxpayers and to taxpayers whose principal business is mining or exploring for minerals, for expenses incurred in respect of deep-test oil wells in 1953 operations.
12.	That for the 1953 and subsequent taxation years a taxpayer whose principal business is production, refining or marketing of petroleum or petroleum products or exploring or drilling for petroleum or natural gas or mining or exploring for minerals and who, having entered into an agreement on or after January 1, 1953, to pay an amount, other than a rental or royalty, to a government to acquire the right to take oil, gas or minerals from land in Canada, has paid all or part of the amount and before a well or mine comes into production on the land surrenders the right without receiving consideration therefor or repayment of any part of the amount so paid, be allowed to deduct the amount so paid in computing income for the year in which the right is surrendered.
13.	That the exemption of income from metalliferous or industrial mineral mines for the first three years of production be extended to mines coming into production during the calendar year 1956.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, amongst other things:
1.	That the securities transfer tax be repealed.
2.	That the stamp tax on cheques and certain other instruments be repealed.
3.	That the sales tax on the following goods be repealed:
(a)	books, printed and bound, which contain no advertising and which are solely for educational, technical, cultural or literary purposes, and materials used exclusively in the production thereof, but without limiting
The Budget-Resolutions the generality of the foregoing, not including directories, price lists, timetables, rate books, catalogues, periodic reports, fashion books, albums, books for writing or drawing upon, nor any books similar to the foregoing exceptions;
(b)	school and college year books and materials used exclusively in the production thereof;
(c)	materials used exclusively in the production of newspapers;
(d)	materials used exclusively in the production of magazines and literary papers unbound, regularly issued at stated intervals, not less frequently than four times yearly;
(e)	materials for use exclusively in the manufacture of the goods enumerated in schedule III under the heading "foodstuffs";
(f)	materials which are consumed or expended in the manufacture or production of goods;
(g)	friction disc sharpeners;
(h)	goods enumerated in Customs Tariff items 436 and 697.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in whole or in part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
5.	That there be imposed, levied and collected an excise tax of fifteen per cent on camera lenses, except those sold for industrial or professional photographers' use.
6.	That there be imposed, levied and collected a sales tax of ten per cent and an excise tax of fifteen per cent on candy, chocolate and confectionery payable by persons, firms and corporations who package those goods for sale except where they are packaged by a retailer on his retail premises for sale therefrom to consumers.
7.	That any enactment founded upon this Resolution be deemed to have come into force on the twentieth day of February, nineteen hundred and fifty-three.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Act, 1934, and to provide, amongst other things:
1.	That the excise duty on cigarettes weighing not more than two and one-half pounds
2138	HOUSE OF
The Budget-Resolutions per thousand be reduced from six dollars per thousand to four dollars per thousand.
2.	That the excise duty on cigarettes weighing more than two and one-half pounds per thousand be reduced from eleven dollars per thousand to five dollars per thousand.
3.	That any enactment founded upon this resolution be deemed to have come into force on the twentieth day of February, nineteen hundred and fifty-three.

[Stage Direction]
1.	Resolved, that the Customs Tariff be amended to provide
(a)	that "machinery" shall not include motive power which when detached from the machine, will operate, and
(b)	that yarns, textiles and manufactures thereof shall not be regarded as being composed in part of specified materials unless
[Stage Direction]
those materials constitute over five per cent by weight thereof.
2.	Resolved, that schedule A to the Customs Tariff be amended by deleting therefrom the following enumeration of goods and rate of additional duty of customs:
Cigarettes weighing not more than three pounds per thousand-$2.00 per thousand.
3.	Resolved, that schedule A to the Customs Tariff be further amended by striking thereout tariff items 105c, 173, 272b, 272c, 280(2) and (3), 409c, 409e(i), (ii) and (iii), 409g, 409q, 4101, 41 Op, 410q, 412, 412a, 436, 440k(l), 442, 442d, 476a, 478, 479, 538, 538a, 538b, 567b, 657a, 681b, 691 and 696, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
[Stage Direction]
Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff105c	Olives, sulphured or in brine, not bottled	Free	FreeOn and July 1, 1954	10 p.c.	17* p.c.173	(1) Books which are included in the curriculum of any university, college or school in Canada for use as text books or as works of reference, not to include dictionaries	Free	Free(2) Printed books, 'pamphlets and cards for use in intelligence testing and other articles and materials imported with and specially designed for use with such printed books, pamphlets and cards	Free	Free(3) All books for bona fide libraries, and being the property of the organized authorities of such libraries and not in any case the property of individuals or business concerns, under such regulations as the Minister may prescribe	Free	Free(4) Single copies of books when sent to a reviewer of books for bona fide review purposes; single copies of books when sent unsolicited and without charge to faculty members of universities or colleges; under such regulations as the Minister may prescribe	Free	Free(5) Directories for free reference libraries	Free	Free(6) Books received from free lending libraries abroad, subject to return under Customs supervision within sixty days	Free	Free199j	Wire reinforced paper tape, printed or not, imported for use in the packaging of fruit, vegetables and other farm or garden produce	5 p.c.	10 p.c.237	Isotopes, artificially produced	Free	FreeGeneral Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff30 p.c.	Free	Free	30 p.c.30 p.c.	10 p.c.	17£ p.c.	30 p.c.Free	Free	Free	FreeFree	Free	Free	Freevarious	vai ious	variousFree	Free	Free	FreeFree	Free	10 p.c.	10 p.c.Free	Free	Free	FreeFree	Free	Free	Free35 p.c.	17£ p.c.	25 p.c.	35 p.c.25 p.c.	Free	15 p.c.	25 p.c.
td
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Tariff Item	British	Most-F avoured-Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	Preferential Tariff	British Preferential Tariff	Most- F avoured-Nat ion Tariff	General Tariff272b	Petroleum waxes, not including petroleum greases: (1) When imported for use exclusively in the manufacture of candles	Free	Free	25 p.c.	Free	Free	25 p.c.(2) N.o.p	15 p.c.	172 P-C.	25 p.c.	15 p.c. 15 p.c.	20 p.c. 17§ p.c.	25 p.c. 25 p.c.280	(2) Grease and oils, rough, the refuse of animal fat, for the manufacture of soap and oils only	Free	Free	Free	15 p.c. Free	20 p.c. Free	25 p.c. Free403	(g) Wire rope or cable, coated or not, for use exclusively in commercial fishing operations	Free	10 p.e.	25 p.c.	15 p.c.	25 p.c.	25 p.c.409c	(1) Ploughs and parts thereof; plough bolts	Free	Free	Free	Free.	Free	Free(2) Farm or field rollers and parts thereof	Free	Free	Free	7* p.c. Free	17J p.c. and 50 cts. per 100 lbs. Free	25 p.c. and 75 cts. per 100 lbs. F ree(3) Lawn or garden rollers and parts thereof	Free	Free	Free	Free	Free	Free(4) Soil packers and parts thereof	Free	Free	Free	Free	Free	Free409c	(1) Spraying and dusting machines and attachments therefor, including hand sprayers; apparatus for the destruction of predatory animals by the discharge of poisonous cartridges; starter cartridges for diesel engines; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; dehorning instruments; parts of the foregoing	Free	Free	Free	Free	Free	Free(2) Fruit and vegetable grading, grating, washing and wiping machines; combination bagging and weighing machines; machines for topping vegetables; machines for bunching and/or tying cut flowers, vegetables and nursery stock; machines for making or lidding boxes for fruit or vegetables; egg-graders and egg-cleaners; silage caps; parts of the foregoing	Free	Free	Free	10 p.c. 10 p.c. 15 p.c. Free	22^ p.c. 22J p.c. 20 p.c. Free	30 p.c. 35 p.c. 25 p.c. Free15 p.c.	20 p.c.	30 p.c.
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The Budget-Customs Tariff
(3) Binder twine; wire and twine for baling farm produce	i	
Free
409g
Incubators for batching eggs; brooders for rearing young fowl; poultry sex testers; parts of the foregoing.
Free
409q
(1) Auxiliary internal combustion engines incorporated in or attached to, or to be incorporated in or attached to, agricultural implements or agricultural machinery; parts of the foregoing	
Free
(3) Electric motors incorporated in or attached to, or to be incorporated in or attached to, agricultural implements or agricultural machinery; parts of the foregoing	
Free
Coal crushers, ore crushers, rock crushers, stamp mills, grinding mills, rock drills, percussion coal cutters, coal augers, rotary coal drills, n.o.p., and parts of all the foregoing, for use exclusively at mines, at quarries, or in metallurgical operations or in the beneficiation of non-metalliferous ores	
5 p.c.
410p
Sundry articles of metal as follows, for use exclusively in mining and metallurgical operations, viz.: furnaces for the smelting of ores; converting apparatus for metallurgical processes in metals; apparatus for chemical conversion, extraction, reduction or recovery, n.o.p.; machinery for the extraction of precious metals by the chlorination or cyanide processes, not to include pumps, vacuum pumps or compressors; blast furnace blowing engines for the production of pig iron; parts of the foregoing	
Free
410q
Pumps and vacuum pumps, and parts thereof, for use exclusively in the extraction of precious metals by the chlorination or cyanide processes, or in chemical conversion, extraction, reduction or recovery in metallurgical operations	
15 p.c.
Printing presses, of a class or kind not made in Canada for use in the printing of newspapers, telephone directories or periodical publications which, if imported, would qualify for entry under Tariff Item 184a, and parts thereof, not to include saws, knives and motive power; mechanical deliveries or conveyors, and parts thereof, for use with the foregoing printing presses	
Free
Free
Free
Free
Free
15 p.c.
Free
15 p.c.
Free
Free
Free
Free
Free
25 p.c.
Free 20 p.c.
Free
Free
Free
Free
Free 15 p.c.
Free
Free
Free
5 p.c.
Free
various
15 p.c. various
Free
Free
Free
Free
Free
Free 22* p.c.
Free
Free
Free
15 p.c.
Free
various
15 p.c. various
Free 7* p.c.
Free 25 p.c. 20 p.c.
Free 30 p.c.
Free 30 p.c.
37* p.c.
25 p.c.
Free
various
20 p.c. various
Free 35 p.c.
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Tariff
Item
British
Preferential
Tariff
412a
Machinery and apparatus, n.o.p., viz:-
Gun and mould apparatus for making press rollers; Machines and apparatus for making electrotype and stereotypes;
Engraving machines and apparatus, including photoengraving apparatus, and other plate-making * apparatus, used in the manufacture of printing plates of all kinds;
Machines and apparatus for graining metal plates; Machines and apparatus for sensitizing, grinding or polishing metal plates;
Machines and apparatus including cameras and camera equipment, lens, prisms, camera and printing lamps, screens, and vacuum frames for transferring by photographic processes, or direct to plates or rolls for use in lithography, rotogravure and printing;
Shading apparatus;
Machines and apparatus for addressing and/or wrapping newspapers, magazines, periodicals, pamphlets and catalogues;
Machines and apparatus for embossing or stamping or producing embossed or engraved effects, bookbinding, looping, stitching, sewing, gathering, inserting, bronzing, dusting, creasing, scoring, cutting, perforating, drilling, punching, slitting, rewinding, glueing, pasting, gumming, waxing, varnishing, carbon coating, patching, numbering, ruling, jogging, sheet piling, tying, bundling, tube-making, metal mounting, eyeletting, staying or stripping, reinforcing and box-covering; Parts of the foregoing not to include saws, knives and motive power;
All the foregoing, when for use exclusively by, and in their capacities as printers, lithographers, bookbinders, manufacturers of stereotypes, electrotypes and printing plates or rolls, paper or foil converters, or by manufacturers of articles made from paper, cardboard or foil	
Free
Most-
Favoured-
Nation
Tariff
Rates in Effect Prior to Rates Proposed in this Budget Resolution
General
Tariff
British
Preferential
Tariff
Most-
Favoured-Nation Tariff
General Tariff
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10 p.c.
Free 10 p.c.
Free	10 p.c.
22| p.c.	35 p.c.
The Budget-Customs Tariff
415a (iii) Refrigerator parts, of iron or steel or of which iron or steel or both are the component materials of chiej value	 7\ P-c.
436 Locomotives and railway passenger, baggage and freight cars, being the property or under the control of railway companies in the United States, running upon any line or road crossing the frontier, so long as Canadian locomotives and cars are admitted free under similar circumstances into the United States,
under regulations prescribed by the Minister	
Provided, however, that if such locomotives and railway rolling stock are used temporarily in the transportation of goods from a place in Canada to another place in Canada they shall not be entitled to free entry but shall be subject to duty on the rental value or charge made by the United States owner for their use in Canada, or equivalent thereof as determined by regulations prescribed by the Minister.
440k
(1) Engines and complete parts thereof, n.o.p., to be used exclusively in the propulsion of boats or in hoisting nets and lines used in such boats for use exclusively in bona fide commercial fishing operations, under such regulations as the Minister may prescribe	
Free
(3) Materials and articles for the manufacture or repair of the engines provided for in Items 440k( 1) and 440k( 2)
Free
Articles and materials which enter into the cost of manufacture of the goods enumerated in tariff items
409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j 409k, 4091, 409m. 409n, 409o, 409q, 427b (1) and 439c, when imported for use in the manufacture of the goods enumerated in the aforesaid tariff items, or in the manufacture of parts therefor, under such regulations as the Minister may prescribe-
Free
442d
Materials, including all parts, wholly or in chief part of metal, of a class or kind not m^de in Canada, when imported by manufacturers of goods entitled to entry under tariff items 410a (iii), 410g, 410L, 410n, 410o, 410p, 410q, 410s, 410u, 410v, 410w, 410x, 410z, 411, 411a, 411b, 427b, 427c, 427f, 428c, 428e, 440k and 447a. for use in the manufacture of such goods in their own factories, under such regulations as the Minister may prescribe	
Free
36 p.o,
35 p.c.	10 p.c.	22} p.c.
Free		Free
15 p.c.	Free	12} p.c.
	15 p.c.	20 p.c.
15 p.c.	10 p.c.	22} p.c.
	various	various
Free	Free	Free
	various	various
10 p.c.	Free	Free
	various	various
Free
15 p.c. 30 p.c.
35 p.c. various
Free
various
10 p.c. various
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Tariff Item	-	British Preferential Tariff	Most-Fa voured-Nation Tariff443d	Gas control devices of a class or kind not made in Canada, for use on apparatus for heating buildyigs or in the gas line between such apparatus and the meter, for the manufacture or repair of, or for conversion to, gas-fired apparatus for heating buildings; parts thereof	Free	7\ p.c.443e	(1) Timing devices for apparatus for cooking or for heating buildings; parts thereof	15 p.c.	22\ p.c.but not less than	each (2) Timers for radios and parts thereof	15 p.c.	22i p<c.476a	but not less than	each Glassware and other scientific apparatus for laboratory work in public hospitals; chairs and tables for surgical operating purposes and parts thereof; infant incubators and parts thereof; infant identification bead sets including cases, and parts thereof; electrocardiographs and parts thereof, and sensitized film and paper for use therein; electroencepha-lographic paper; apparatus for sterilizing purposes, including bedpan washers and sterilizers but not including washing nor laundry machines; all for the use of any public hospital, under such regulations as the Minister may prescribe	Free	Free478	(1) Artificial limbs; spinal and other orthopedic braces; parts of the foregoing	Free	Free(2) Aural and nasal prostheses; ileostomy, colostomy, and urinary appliances designed to be worn by an individual; materials and articles required therewith for proper application and maintenance	Free	Free(3) Materials and articles for use in the manufacture of the goods enumerated in Tariff Items 478(1) and 478(2)	Free	FreeGeneral Tariff	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff30 p.c.	15 p.c.	22i p.c.	30 p.c.30 p.c.	15 p.c.	30 p.c.	35 p.c.40 cents.	50 cents.30 p.c.	15 p.c.	30 p.c.	35 p.c.40 cents.	50 cents.Free	Free	Free	Free17^ p.c.	25 p.c.	35 p.c.Free	Free	Free	FreeFree	Free	Free	Freevarious	various	variousFree	Free	Free	Freevarious	various	various
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567b
(1)	Church vestments of any material	
(2)	Prayer shawls, prayer shawl fringes, and prayer
shawl bags	
10 p.c. 10 p.c.
(3) Pinseal leather
Free
657a Cinematograph or moving picture films, positives, n.o.p.:
(1)	One and one-eighth of an inch in width and
over	per linear foot
(2)	Tinier one and one-eighth of an inch in width..
per linear foot
680b Calcareous and chitinous exoskeletons of marine animal origin, dyed or otherwise prepared or not, imported solely for decorative purposes	
1J cts. Free
Free
681b
Residue, revert, or waste from chemical, metallurgical or metal working processes, containing aluminum oxide or other aluminum compounds mixed with other materials, imported by Canadian smelters or refiners for recovery of aluminum oxide and attendant by-products	
Free
(1)	Communion sets; oil stocks; crosiers; benitiers;
sprinklers; incensers; incense boats; baptismal shells or fonts; scapulars; chapelets; rosaries; religious statues, statuettes, medals and crosses; Scroll sets; Chanuka candlesticks; Kiddush sets; Mezuzah boxes; Havdalah sets; parts of the foregoing	 Free
(2)	Materials and articles for the manufacture of the goods
enumerated in Item 691 (1)	 Free
(1) Philosophical and scientific apparatus (and ancillary equipment thereto), utensils, instruments, and preparations, including boxes and bottles containing the same; maps, charts, photographic reproductions and other pictorial illustrations, casts as models, animals as research or experimental subjects; living plants, seeds, cuttings, buds, scions, tubers, bulbs and root-stock; mechanical equipment of a class or kind not made in Canada: parts of the foregoing. All articles in this item, when for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any public hospital, college, academy, school, or seminary of learning in Canada, and not for sale, under such regulations as the Minister may prescribe	
Free
10 p.c 10 p.c 10 p.c
U cts 1$ cts
5 p.c.
Free
Free
Free
Free
20 p.o.	10 p.c.	10 p.c.	20 p.c.20 p.c.	20 p.c.	27£ p.c.	50 p.c. and 7 cts. oz.27j p.c.	7\ p.c.	17f p.c.	27^ p.c.3 cts.	1| cents	If cts.	3 cts.3 cts.	Free	20 p.c.	25 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.10 p.c.	Free	Free	10 p.c.15 p.c.	20 p.c.	25 p.c.Free	various	various	variousFree	various	various	variousFree	Free	Free	Freevarious	various	various
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Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff(2) Materials and articles for the manufacture of the goods specified in Tariff Item 696(1)	Free	Free	Free703	(c) Goods valued at not more than $1,000 imported by members of the Canadian Armed Forces after an absence from Canada of not less than one year and acquired by them for personal or household use and actually owned abroad by them for at least six months before their return to Canada, under regulations prescribed by the Minister	Free	Free	FreeProvided that such goods shall not be sold or otherwise disposed of without payment of duty and taxes until after twelve months actual use in Canada, and that the exemption shall not apply to alcoholic beverages, cigars, cigarettes nor manufactured tobacco.	Rates in Effect Prior to Rates Proposed in this Budget Resolution	British	Most-	Preferential	Favoured-N ation	General TariffTariff	Tariff	various	various	variousvarious	various	various
4. Resolved, that Schedule C to the Customs TariS be amended by deleting therefrom Item 1206 and by inserting in said Schedule C the following Item:
120G
Goods manufactured or produced wholly or in part by prison labour, or which have been made within or in connection with any prison, jail or penitentiary; also goods similar in character to those produced in such institutions, when sold or offered for sale by any person, firm or corporation having a contract for the manufacture of such articles in such institutions or by any agent of such person, firm or corporation, or when such goods were originally purchased from or transferred by any such contractor.
Provided that the Governor in Council may by regulation exempt any goods or class of goods to be f urther manufactured in Canada from the provisions of this item.
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5. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the twentieth day of February, one thousand nine hundred and fifty-three, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(See also Budget Papers, pages 2151 to 2237.)
The Budget-Customs Tariff
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, the confident rumours about the change of plans of the Minister of Finance (Mr. Abbott) have made me decide that no doubt there will be another occasion on which I can speak in a personal way, and tonight I propose to stick wholly to business.
It would appear that this budget is popular amongst those who think they are going to benefit from it, but it remains to be seen how far that will go throughout the Canadian people. It looks to me at the moment as though it going to benefit most those who perhaps need it least.
Mr. Speaker, the political cycle has turned full circle, and we are around again to tax reductions which of course, as we know, means an election year. I have tried in this house to speak with moderation, but I confess that when I find this old game worked again it fills me with a great deal of questioning, not to say indignation. It seems to me a pity that it is accepted practice, apparently, that tax reductions are timed, not having regard to the interests of those concerned, namely the taxpayers, but rather having regard to the interests of the government, of the party in office. And I think that this is all wrong. I think we have got to the stage where it seems that the quip of the Minister of Finance (Mr. Abbott) about fooling the public is something that has become a matter of government policy. What kind of people does the government think Canadians are?


An hon. Member:: Good1 Liberals.


James MacKerras Macdonnell: I am talking about the Canadian people, not the people in this House of Commons. Does the government think the Canadian people will forget what happened in 1949? Do they think the taxpayers will forget to ask how much of their money the government is taking, as well the little which they are giving back? Do they think the people of this country will forget to ask whether this money comes from savings or merely from further exactions?
We have been told by the minister that $400 million more was taken this year, and in the coming year there would have been another $300 million. If the minister had added $250 million more he could have given us back $500 million instead of $250 million. So it depends upon how much he took to begin with.
I think the people will remember when they compare this with the effort of four years ago that taxes then were about half what they are today. In 1949-50 they were $2,300 million. Now they are about $4,400 million. No wonder we have angry taxpayers who
The Budget-Mr. J. M. Macdonnell say, "Let the government have the whole thing, and just give us back a little money for ourselves."
It is a sort of cat and mouse game. Every few years the cat-that is, the tax collector- treats the mouse well for a year, and gives him a little cheese-we have plenty of cheese in this country. He gives him a little cheese, and fattens him a bit, so he will be available for further exactions in the year following.
Now, I have asked whether there is any saving, and of course the answer is that there is not. And let no one imagine that it is all in the defence department that there are extra expenditures. It is nothing of the kind. There is plenty of additional expenditure in other departments, as I shall point out briefly. For instance freight, express and cartage in 1949-50 was only $8,800,000; it is now $18 million; telephone and other communications charges are up from $8 million to about $13 million.
I wish also to refer to the tax rebate we have at the moment. This will do precious little for the small man, with the small reduction that he gets. The man with $2,400 will have his tax reduced from $17 in 1953, at the existing rate, to a rate of $16 for the last six months of 1953; and when the full-year rate comes into effect it will be down to $15. In other words he will get, as I figure it roughly, one-thousandth of a cent per meal. And that is all he will get out of it. It seems to me that this method of a flat rate reduction is not fair to those who are receiving small amounts, at the lower end of the scale. Of course it may be comforting to the man with $200,000, who will get a reduction of $15,000, or the man with $100,000 who gets about $7,000. But it will not assist very much the man who has been given one or two dollars.
Those people would have been much better off if the minister had seen his way clear to reduce the sales tax; but the minister has been obdurate about the sales tax. We tried two years ago to get 'him to forgo the increase in the sales tax made at that time, but he would not hear of it. And still he refuses. So those people who are getting practically nothing out of the reduction in the income tax will also get nothing from any sales tax reduction.
But my real concern about all this is that these reductions could have been far more if it were not for the waste and extravagance which pervades the whole government program. Of course we hear about these reductions. The minister and I will not gain from the reduction on tobacco as much as some people, because we do not smoke. But people cannot live on tobacco or on cigarettes. And
2148	HOUSE OF
The Budget-Mr. J. M. Macdonnell that 4 cents a package will not help very much the man who gains only $1 of reduction in his income tax.
Now 1 wish to come to the question of waste and extravagance. We have listened to what the minister had to say. Of course it has been avidly snapped up by those whose business it is to believe in everything the government does. That is their stock in trade. Let us have a look at the waste and extravagance. There is plenty of it about. So that I may be quite fair-and in this party we always want to be fair-


Some hon. Members:: Oh, oh.


James MacKerras Macdonnell: -let me read from that great Liberal stalwart, that great Liberal journal, the Winnipeg Free Press. Let us see the word of condemnation which they have for this government; let us see what they have to say. This is in the issue of January 31, 1953, in case any of you gentlemen wish to educate yourselves by looking it up. They say:
To suggest that large scale economies cannot be made in so huge an outlay is most unhelpful. On every hand, evidence of waste and extravagance accumulates.
And let us see about that accumulation. Again I read from the Winnipeg Free Press. They seem to be indignant because $24,278 was spent on a broadcast from Montreal to South America. They do not seem to think very much of that. And now we come to what I think is the most astounding bit of waste and extravagance I have run across, and this is also confirmed in the Winnipeg Free Press of February 5 where it says:
The excessive costs of the C.B.C. television stations and studios compared to those in the United States. The C.B.C. Toronto and Montreal stations and studios cost $3 million each. But a new and powerful United States television station is now going up at Bellingham, just across the United States border from Vancouver and Victoria, at a cost of some $80,000.
I said at first surely that could not be; it must be that we were not comparing like with like. I made an investigation into the matter. Upon investigation it appears the C.B.C. attempted to explain away these figures. But the C.B.C. explanation will not wash. I think a great part of the explanation was given to me by a man, in very simple words that I believe the people of this country will believe. He said, "It all depends upon the attitude you take toward money." And that, I think, is exactly the truth.
To give a very small illustration, the same man told me that he had seen specifications for a building that was to last for only 90 days for some C.B.C. purpose. In the specifications there was provision for three coats of waterproof paint, and that for only 90 days.


I come now to the Department of National Defence. That I believe is the great sinkhole of government waste and extravagance. The situation there is really fantastic. Apparently the government is taking the position that the people of Canada are not to be allowed to have a look at the state of their business.
I need not detain the house by reminding you of the relevant facts-the anonymous letter with regard to Petawawa, the appointment of Mr. Currie, the appearance of Mr. Currie before the committee-


Some hon. Members:: Order.


James MacKerras Macdonnell: -as reported in the press.


Some hon. Members:: Order.


Mr. Speaker:: I cannot allow reference to the proceedings in a committee.


James MacKerras Macdonnell: Not in the press, Mr. Speaker?


Mr. Speaker:: No.


James MacKerras Macdonnell: Then I will say that there has been no breakdown in this house of anything that Mr. Currie has said. I refer also to the facts in the report of the Auditor General and his reference to eight different systems of accounting. Ask any businessman what that would mean in the conduct of business. The Auditor General in a letter to the department has referred to the posting of the ledgers as inaccurate and in arrears, and that was in the pay department. In the face of that it is almost unbelievable that the government should refuse to permit any kind of independent examination.
There can be no motive at all except fear of the result. What other motive could there be? If Liberal members of this house think it is a joke to suggest that, they have a queer idea of humour. It just shows what we have always been saying, that there is great danger of irresponsibility.
Let me state the facts again which are now on the records of this house. Mr. Currie investigated something like one-tenth of one per cent-


Some hon. Members:: Order.


James MacKerras Macdonnell: That is in the report which is in Hansard; that has nothing to do with the committee. Mr. Currie investigated about one-tenth of one per cent of the expenditures and there is now a refusal in this house to permit the matter to be carried further.
However comforted the minister may be by the ovation he has had tonight; however much the minister may look like the cat that swallowed the canary, I think if we can

get these things to the people of Canada they will say, "We will take this sop which we have been given but we will take it only on account." However, when many of them examine it they are going to find that there is precious little for them in it. When it is digested there will be a large number of people who will say, "Where are those who are getting benefits from this? It is not us." I think they will also say that they are not satisfied and are not going to be fooled.
If we look back just four short years we can see what happened then. In 1949 the minister came along with little reductions here and there on things like candy and chocolate bars. Those were trivial things and did not have much effect upon the economy, but they were things with which he was reaching out for votes here and there. Then they were all repealed shortly after.
Having regard to the large increases in the expenditures of non-defence departments since 1949; having in mind the outrageous waste, and I repeat the words "outrageous waste" in these instances I have brought before the house; having in mind particularly the huge unexplored seas of expenditure in the Department of National Defence; having in mind such carelessness as is reported in the evening papers where reference is made to the expenditure of $135,000 on a house in Ottawa without authority, apparently in the most careless manner; having regard to all these things I consider it is reasonable to say that on the evidence of waste and inefficiency before us any reasonable person would say that the kind of savings that might be made would be not in millions or tens of millions, they could run into scores of millions and perhaps even into hundreds of millions if these things were pursued.
On motion of Mr. Macdonnell (Greenwood) the debate was adjourned.
Business of the House BUSINESS OF THE HOUSE


Alphonse Fournier: Mr. Speaker, tomorrow we shall continue the consideration of the resolution in the name of the Prime Minister concerning the Emergency Powers Act. Then if the Leader of the Opposition is in the house we will take up the resolution to revise the Yukon Act so we may continue to discuss the point of order under standing order 60.


George Alexander Drew: What does the minister mean by "if the Leader of the Opposition is in the house"?


Alphonse Fournier: I am repeating what I announced yesterday, because I was not sure that the Leader of the Opposition would be here.


George Alexander Drew: I rise on a question of privilege. I noticed certain remarks that were made. I have explained already why I was not present. The Speaker was informed why I was not going to be present. I will be here to discuss this matter when it comes up.


Alphonse Fournier: I withdraw that part of what I have said, and the Leader of the Opposition will be here tomorrow. We shall then go on to Bill No. 48, respecting food, drugs, cosmetics and therapeutic devices.


George Alexander Drew: Will you ask the Prime Minister to stay in at the same time?


Alphonse Fournier: I have enough to do to take care of the Leader of the Opposition; I cannot take care of everybody.


Arza Clair Casselman: Better look after yourself.


Alphonse Fournier: If the house wishes to know the business for tomorrow I am ready to give it. We shall then take the resolution in the name of the Minister of Fisheries to approve and confirm the international convention for the high seas fisheries of the north Pacific ocean, signed by Canada, the United States and Japan. I hope we will have time to take up the following bills: Nos. 44, 46, 38 and 39.


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At ten o'clock the house adjourned, without question put, pursuant to standing order.
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The Budget-Appendix

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presented by
the Honourable D. C. Abbott, M.P., for the information of Parliament in connection with the Budget of 1953-54
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The Budget-Appendix

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The purpose of these Papers is twofold:
1.	to present a general economic review of 1952, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics and other Government Agencies, together with brief comments; 2
2.	to present a preliminary review of the Government accounts for the
fiscal year ending March 31, 1953.
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The Budget-Appendix

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Page
1.	National Accounts-
National Income, Product and Expenditure	 39
Personal Income and its Disposition	 42
Source and Disposition of Saving	 45
Investment and Capital Expenditure	 48
Revenue and Expenditure of All Governments	 51
2.	Balance of International Payments	
563.	Employment and Earnings	
594.	Price Trends	
61
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics and other Government Departments. Some of the figures appear for the first time; others have been published elsewhere. All 1952 estimates are preliminary and subject to revision.

The Budget-Appendix
THE NATIONAL ACCOUNTS National Income, Product and Expenditure
National Income is the total of the annual earnings of Canadian residents from the production of goods and services. As such it includes salaries, wages and other forms of employee earnings in cash or in kind, as well as military pay and allowances. It includes corporation profits, interest, net rent, and the net income of farmers and others who are in business on their own account.
Gross National Product is the value at market prices of all the goods and services produced in a year by the labour, capital, and enterprise of Canadian residents. It is measured by adding together the costs of production. Part of these costs of production are the factor costs or, more simply, the earnings of the factors of production, labour, capital and enterprise; and the total of these factor costs or earnings is National Income. Indirect taxes and other costs such as depreciation allowances also enter into the cost of goods and services although they do not form part of the income of Canadians. They are, therefore, added to National Income to obtain Gross National Product. Subsidies on the other hand may be regarded as offsets to costs of production and are therefore deducted.
Gross National Expenditure measures the same aggregate as Gross National Product but in a different way. The goods and services produced in a year are either sold at home or abroad or added to inventories. Thus Gross National Expenditure is obtained by adding together all sales and adjusting them for imports and changes in inventories. While Canadian expenditure on imported goods and services is included in the total sales to consumers, to governments, and to business for capital account, it is not part of the disposition of Canadian production and is therefore deducted. But since foreign expenditures on Canadian goods and services, i.e., exports, form part of the earnings of Canadians in the Gross National Product, they are included in Gross National Expenditure.

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The Budget-Appendix
National Income and Product
Preliminary estimates indicate a gross national product of about $23 billion for 1952. After allowing for the fact that prices averaged somewhat higher in 1952 than in 1951, it is estimated that the increase in terms of volume or real product was about 6 per cent.
While these estimates of change in real product are only approximate, they indicate that 1952 was the third successive year in which the growth in real product was of the order of 5 to 6 per cent. For the three-year period, 1950-1952 inclusive, the total gain has amounted to about 19 per cent, or in per capita terms to a little more than 10 per cent. This rate of gain in real product is more than double that of the preceding three-year period.
As in 1951, a substantial part of the estimated increase in total real product, perhaps a quarter, was the result of increased agricultural production. This increase in agricultural product was almost entirely due to the record western grain crop since other branches of agricultural production did little more than maintain 1951 levels. There were also significant increases in the construction industry, in transportation, communication and storage, in public utilities, in trade and in the service industries which together accounted for more than half of the total increase in real product. Manufacturing production appears to have been about 2 per cent above 1951 levels.
The index of industrial production for the first eleven months of 1952 shows a modest gain of 2 per cent over the comparable period of 1951; and for the year as a whole will probably be 3 per cent above 1951. But it is important to note that these averages obscure significant differences in the pattern of industrial activity in the two years. The year 1951 started off very strongly and the index of industrial production reached a peak of 237-3 in June, from which point it declined steadily to a low of 211-6 in December. In the year 1952, on the other hand, the index of industrial production rose steadily from 212-1 in January to 248-1 in November, or by 17 per cent. In other words, the index of industrial production is estimated to have ended 1952 at about 3 per cent above the year's average of 233, while in 1951 it ended the year about 7 per cent below the year's average of 226 [DOT] 5.

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NATIONAL income and gross national product
-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
i. Wages, salaries and supplementary labour income.	7,761	8,324	9,732	10,855Z. Military pay and allowances	115	137	201	2703. Investment income	2,445	3,148	3,667	3,7464. Net income of unincorporated business-	(a) farm operators from farm production1	1,504	1,507	2,116	1,861(b) non-farm unincorporated business	1,369	1,493	1,568	1,5756. National Income (1+2+3+4)	13,194	14,609	17,284	18,3076. Indirect taxes less subsidies	1,830	2,018	2,461	2,7047. Depreciation allowances and similar business costs	1,437	1,619	1,820	1,9918. Residual error of estimate	+1	-29	-117	-189. Gross National Product at Market Prices	(5+6+7+8)	16,462	18,217	21,448	22,98410. Index of G.N.P. in Constant Dollars	100	106	112	119
1 Includes undistributed Wheat Board trading profits, and inventory valuation adjustment on a calendar year basis for grain held by Wheat Board.

The Budget-Appendix
The increase in labour income, the largest component of national income, is estimated at $1123 million for 1952-$100 million greater than the increase in national income itself. As a percentage of national income, labour income rose from 56 per cent in 1951 to 59 per cent in 1952. For the year as a whole, total salaries and wages increased by 12 per cent over 1951 and the increase was continuous throughout the year. Most of the gain was due to higher earnings but there was also an expansion of about 3 per cent in the number of paid workers.
Despite the record western grain crop, net farm income showed a decline of about 12 per cent from the very high level of 1951, but remained 24 per cent above the levels of 1949 and 1950. This was largely the result of lower prices for livestock. A special factor in the decline in Canadian livestock prices was the loss of the United States cattle market following the outbreak of foot and mouth disease in Western Canada; but even before this outbreak, the downward trend in United States meat prices was reducing the yields to Canadian livestock producers. The impact of this downward movement in market prices was mitigated by federal government price support action.
Investment income is estimated to have increased by 2 per cent in 1952 compared with increases of 16 per cent in 1951, 29 per cent in 1950 and a decrease of 1 per cent in 1949. This slower rate of growth in total investment income during 1952 can be ascribed to the estimated decline in corporation profits. Corporation profits constitute about two-thirds of total investment income and were very buoyant in 1950 and 1951. Such evidence as is available suggests that the trend in corporation profits is again upward from the lower levels reached in the latter part of 1951 and the early part of 1952.
National Expendituke
During 1952 the volume of Canadian production increased by 6 per cent. At the same time, the amount of inventory accumulation was much smaller in 1952 than in 1951. Consequently the volume increase in goods and services used during 1952 for purposes other than additions to inventory was much closer to 9 per cent than to 6 per cent. This increase was distributed across all the broad categories of expenditure, but consumer expenditure and government expenditure together absorbed about 80 per cent of it.

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-	1949	1950	1951	Prelim. 19521.	Personal expenditure on consumer goods and services 2.	Government expenditure on goods and services.... 3.	Gross domestic investment- (a)	plant, equipment and housing	
(b)	change in inventories	
4.	Exports of goods and services1	
5.	Imports of goods and services1	
6.	Residual error of estimate	
7.	Gross National Expenditure at Market Prices (1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	10,963 2,128 2,968 231 4,011 -3,837 -2	(Millions c 11,994 2,326 3,216 980 4,185 -4,514 +30	f Dollars) 13,234 3,201 3,810 1,620 5,099 -5,633 + 117	14,290 4,211 4,138 176 5,650 -5,500 +1916,462 100	18,217 106	21,448 112	22,984 119
1 Minor adjustments have been made to the figures of current receipts and payments shown in Table II and in "The Canadian Balance of International Payments, 1926 to 1951", Dominion Bureau of Statistics, to achieve consistency with the other component series.
68108-137i
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The Budget-Appendix
Consumer expenditure rose from $13,234 million in 1951 to $14,290 million in 1952, an increase of 8 per cent in value and 6 per cent in real terms. This is in sharp contrast with the year 1951 when consumer expenditure in real terms remained almost constant. As noted above, however, there was in 1952 a much smaller drain on production for purposes of increasing inventories than in 1951. The expansion in consumer expenditure, and in defence expenditure, and capital investment as well, may be thought of in part as replacing the demand for inventory accumulation which fell so sharply.
About two-thirds of the $1,010 million increase in government expenditure on goods and services was the result of the increase in defence spending. In real terms the increase in defence and non-defence spending on goods and services was a little larger than the increase in consumer expenditure. Investment in plant, equipment and housing increased by $328 million, an increase of 9 per cent in value and 5 per cent in volume. Inventory accumulation as a whole was lower than at any time since 1949. There were large increases in both the value and volume of farm inventories and grain held in commercial channels but the value of business inventories declined during the year. However, this decrease in the value of business inventories was the result of lower prices rather than a volume reduction.
Personal Income and its Disposition
For the purpose of showing the relationship between the incomes, spending and saving of Canadians, Personal Income is a more useful concept than National Income.
Personal Income differs from National Income in a number of ways. It is defined as the sum of current receipts of income regardless of whether these receipts are earnings from production. Thus it includes only that part of corporation profits which is actually received by Canadian persons as dividends. Similarly deductions must also be made from employees' total earnings for unemployment insurance contributions or pensions contributions which, although forming part of the compensation for services performed, are not actually received by the employee within the year. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, are part of personal income although they are not payments for services and, therefore, do not form part of National Income.
A special adjustment is necessary for farm income since the farmer does not receive full payment for his grain at the time it is delivered to the Wheat Board. An initial payment is made upon delivery and subsequent payments are determined on the basis of the price realized by the Board. Thus for a time a part of the farmer's income accumulates with the Wheat Board. For purposes of national income, net farm income is shown in Table 1 on an accrued basis and includes income accumulated with the Wheat Board on behalf of farmers. For purposes of personal income, however, an adjustment is necessary to exclude such accumulated income and to include only the disbursements of the Wheat Board whether in respect of current or prior years' deliveries.

The Budget-Appendix
Total personal income rose by $1,294 million or 8 per cent during 1952 despite a substantial decline in farm income from its record 1951 level. This increase in personal income was almost wholly a gain in real income since consumer prices as represented by the consumer price index averaged only 2 [DOT] 5 per cent higher than in 1951. The gain in real income was somewhat greater in the latter part of the year as prices continued a gradual downward movement while incomes continued to expand.

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-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
1. Wages, salaries and supplementary labour income..	7,761	8,324	9,732	10,855
Deduct: Employer and employee contributions to				
social insurance and government pension funds.	-239	-256	-302	-3282. Military pay and allowances	115	137	201	2703. Net income received by farm operators from farm	production1	1,600	1,406	2,174	1,8774. Net income of non-farm unincorporated business...	1,369	1,493	1,568	1,5755. Interest, dividends and net rental income of per-	sons2	1,157	1,299	1,403	1,4846. Transfer payments to persons (excluding interest)-	(a) from government	950	1,032	1,022	1,358(b) charitable contributions made by cor-	porations	23	25	29	30(c) net bad debt losses of corporations	21	23	25	257. Personal Income (1+2+3-F4+5+6)	12,757	13,483	15,852	17,1461	Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.2	Includes all government debt interest paid to persons.
The increase in personal income was due in the main to two factors, the steady expansion in salaries and wages and the beginning of the old age security payments. About 85 per cent of the increase in personal income was the result of the 12 per cent rise in labour income net of employer and employee contributions to social insurance and government pension funds. Government transfer payments rose by $336 million, two-thirds of which was accounted for by the increase in old age security payments. Military pay and allowances were $69 million higher, or 34 per cent above the 1951 level.
Net income received by farmers declined by 14 per cent from the record level of 1951 but was about 25 per cent above the average of 1949 and 1950. The decline in farm receipts was mainly the result of lower prices for agricultural products, although lower Wheat Board disbursements were a contributing factor. As mentioned above, the volume of agricultural production was considerably higher than in 1951. Income of unincorporated business other than farming is estimated to have increased slightly. Dividends paid out by corporations decreased somewhat but investment income from other sources was higher.
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The Budget-Appendix

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-	1949	1950	1951	Prelim. 1952
		(Millions c	f Dollars)	
1. Personal direct taxes-				
(a) income taxes	677	612	891	1,177(b) succession duties	55	66	69	69(c) miscellaneous taxes	57	62	67	72Total direct taxes	789	740	1,027	1,3182. Personal expenditure on consumer goods and services- Goods-	(a) non-durable	6,799	7,207	7,904	8,397(b) durable	1,084	1,347	1,399	1,567Services	3,080	3,440	3,931	4,326Total consumer expenditure	10,963	11,994	13,234	14,2903. Personal saving-	(a) personal saving excluding farm inventories....	1,077	618	1,237	1,295(b) change in farm inventories	-72	131	354	243Total personal saving	1,005	749	1,591	1,5384. Personal Income (1+2+3)	12,757	13,483	15,852	17,146
There were also significant differences from 1951 in the disposition of income. Payments for personal direct taxes increased by $291 million or 28 per cent. This was partly because of the fact that it was the first full year for which the higher rates imposed after Korea had been in effect, but most of the increase can be attributed to the rise in incomes.
While disposable income, or personal income after taxes, increased by $1,003 million, personal expenditure rose by $1,056 million. Thus Canadians enjoyed a substantially higher level of consumption in 1952 without materially affecting their rate of savings. In fact, if we deduct saving in the form of farm inventories, which is subject to special influences, the estimated $1,295 million saved in 1952 was higher than the amount saved in 1951. Personal saving, excluding saving in the form of farm inventories, was 8 [DOT] 2 per cent of disposable income in 1952 compared with 8-3 per cent in 1951, 4-8 per cent in 1950 and 9-0 per cent in 1949.
Purchases of durable consumer goods declined rapidly after the first quarter of 1951 and this situation continued until the spring of 1952. At that time a number of factors appear to have combined to cause an increase in retail sales. Consumer credit restrictions were withdrawn and the special excise taxes on certain goods were reduced. In general, the restraint in consumer buying over the preceding months had contributed to lower prices and this, together with

The Budget-Appendix
the rise in money incomes, resulted in a continuous increase in the buying potential. Moreover, the slower pace of spending during the preceding twelve months had probably created a new backlog of demand. At any rate, the increase in durable goods sales was such that for 1952 as a whole they exceeded 1951 by 12 per cent in value and about 10 per cent in volume. There was a sharp increase in consumer debt associated with the pick-up in sales of durables which occurred in the last eight months of the year. In the non-durable group there were also sizeable increases in both food and clothing, and services continued to expand. After allowing for price changes, the volume of total consumer expenditure rose by about 6 per cent or in per capita terms by about 3 per cent.


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16000
6000
0

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1926	1930	1934	1938	1942	1946	1950 '52
Source and Disposition of Saving
Saving is the source from which investment expenditure is financed. Income arising out of production may either be spent or saved. At the same time production will be absorbed either by consumption expenditure, or by investment expenditure at home for new plant, equipment, housing, or additions to inventory, or by investment abroad. It is, therefore, possible to construct tables which show, on the one hand, the sources of saving and, on the other, the use of these savings to finance gross investment at home or investment abroad.
In addition to personal saving which was mentioned above, there can be government saving and business saving. If, for example, governments have a surplus of revenue over expenditure, this surplus constitutes part of the nation's saving, as presented in the national accounts. If there are government deficits they are an offset to the total of private saving by individuals and businesses.
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The Budget-Appendix
During 1952 it is estimated that the nation as a whole saved $530 million less than in 1951, a decline of 11 per cent. This was not due, however, to any decline in the rate of private saving. But the total surplus for all levels of government combined dropped by $733 million or from $1,034 million in calendar year 1951 to $301 million in calendar year 1952. Thus the amount saved during the year by persons and businesses, although substantially unchanged from 1951 in absolute amount, became relatively more important and constituted 94 per cent of total saving in 1952 compared with 82 per cent in the previous year.

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.	1949	1950	1951	Prelim. 1952 :
				
Personal saving	1,005	(Millions c 749	f Dollars) 1,591	1,538Gross business saving-total	1,926	2,486	2,505	i 2,662(a) Undistributed corporation profits	607	791	771	707(b) Depreciation allowances	1,437	1,619	1,820	1,991(c) Net bad debt losses of corporations	-21	-23	-25	-25(d) Undistributed Wheat Board trading profits and inventory valuation adjustment on grain held by Wheat Board	-96	101	-58	-16(e) Inventory valuation adjustment1	-2	-2	-3	5Adjusted government surplus (-f) or deficit (- )2	440	691	1,034	301Residual error of estimate3	1	-29	-117	-18Total	3,371	3,897	5,013	4,4831	The adjustment has been made only to grain held in commercial channels.2	See Table 10.
* See Tables 1 and 2.
Personal saving for 1952 is estimated at $1,538 million or almost 10 per cent of personal disposable income. It constituted 34 per cent of the nation's total saving from all sources compared with 32 per cent in 1951. If saving in the form of farm inventories is excluded, personal saving was somewhat higher than in 1951. This fact, taken in conjunction with the rise in the volume of consumer expenditure, directs attention to the noteworthy improvement in real income which occurred during the year.
In 1952, about 7 per cent of the nation's total saving was made up of the combined surplus of federal, provincial and municipal governments compared with about 21 per cent in 1951. This reduction in government saving was entirely the result of the reduction in the federal surplus as estimated for national accounts purposes.
It is estimated that our total receipts from abroad on current account exceeded our total payments by $150 million in 1952 and there was, therefore, a net increase of like amount in our foreign assets. This was in sharp contrast

The Budget-Appendix
to both 1950 and 1951 when there were substantial net inflows of capital from abroad. Thus the nation's total investment in 1952 comprised not only gross domestic investment in plant, equipment and housing but a modest foreign investment or increase in our net foreign assets. These transactions are treated more fully in the section on the Balance of International Payments.

[Stage Direction]
-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
Gross domestic investment-				
Housing, plant and equipment	2,968	3,216	3,810	4,138Change in inventories	231	980	1,620	176Net increase in foreign assets (including foreign	exchange) adjusted1 * * 4	174	-329	-534	150Residual error of estimate'	-2	+30	+117	+19Total	3,371	3,897	5,013	4,483
1 Minor adjustments have been made to the figures appearing in Table 11. 1 See Tables 1 and 2.
Business saving consists for the most part of amounts set aside for depreciation and of undistributed profits. The preliminary estimate of corporation profits before taxes indicates a reduction tentatively set at $120 million or about 4 per cent below the 1951 total. Since this decrease in corporation profits is larger than the estimated reduction in corporation taxes and dividend payments, some decline in undistributed profits seems probable. However, it is too early in the year to estimate any of these aggregates with confidence.

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-	1949	1950	1951	Prelim. 19521,906 -731	(Millions c 2,490 -1,023	>f Dollars) 2,850 -1,418	2,730 -1,405
1,175 -568	1,467 -676	1,432 -661	1,325 -618
				
				
	607	791	771	707
				
1 Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
s Taxes paid or payable in respect of the calendar year's income. (See Table 10).
* Includes charitable contributions made by corporations. (See Table 3 Item 6 (b)).
4 See Table 5.
6810S-138
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The Budget-Appendix
Investment and Capital Expenditure
It is estimated that investment in plant, equipment and housing amounted to $4,138 million in 1952, an increase of $328 million or 9 per cent over 1951. It was approximately 18 per cent of gross national expenditure in both years. The largest increase was in non-residential construction which was 17 per cent above 1951 in value and 10 per cent in volume. Housing rose by almost 3 per cent in value terms but after allowances are made for price changes the indicated volume was virtually unchanged. However, residential building activity rose markedly in the last half of the year with housing starts running at the annual rate of more than 90,000 compared with 70,000 for 1951. Investment in machinery and equipment was larger than in 1951 by 5 per cent in value and 4 per cent in volume but this increase was much less pronounced than the 27 per cent

[Stage Direction]
-	1949	1950	1951	Prelim. 1952
		(Millions	>f Dollars)	
Housing, plant, and equipment-total1	2,968	3,216	3,810	4,138New residential construction	742	801	781	803Other new construction	903	1,026	1,260	1,476New machinery and equipment	1,323	1,389	1,769	1,859Change in inventories-total	231	980	1,620	176Grain in commercial channels2	-16	60	-	92^arm grain and livestock2	-72	131	354	243All other inventories3	319	789	1,266	-159Gross Domestic Investment4	3,199	4,196	5,430	4,314
1 Includes private businesses and institutions, and publicly owned public utilities. 7 Value of physical change.
*	Change in value. Includes privately financed industrial and trade inventories.
*	See Table 2, Item 3 and footnote to Table 9, p. 16.
value increase of 1951. The most significant change in the pattern of investment during 1952 was the much lower percentage of total production diverted to increasing business inventories. Business inventories are estimated to have increased by 1 per cent in volume compared with the 11 per cent increase of 1951. In 1951 the large inventory build-up together with the increase in defence spending placed a considerable strain on the economy and absorbed about 80 per cent of the increase in output for that year. In 1952, on the other hand, the decline in the rate of inventory accumulation freed production for other purposes and was great enough to make room for not only all of the increase in investment in plant, equipment and housing but more than one-half of the increase in consumer spending as well.
Table 9 gives an industrial distribution of business capital expenditures and brings them together with public capital outlays included under government expenditure in Table 2. The total of public and private capital expenditures increased by $545 million or 12 per cent during 1952. In real terms the increase

The Budget-Appendix
is estimated at 8 per cent. The most noteworthy feature of the 1952 capital programme was the increase in expenditure by those industries contributing directly to the defence effort and those engaged in developing the strategic natural resources of the nation. The increased emphasis on investment in large scale resource development projects became apparent after 1948. The demand generated by Western re-armament after the outbreak of war in Korea provided a further incentive for this type of development. At the same time government measures encouraged the deferment of less essentia! forms of capital investment.

[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
During 1952 the increase in capital outlays in four groups, utilities, man-facturing, mining and government departments was slightly greater than the total increase in capital expenditure. Capital outlays by government departments increased by $183 million or 31 per cent and accounted for one-third of the total increase in capital expenditure during 1952. Almost all of this increase was for federal government defence projects and for capita! assistance to industries filling defence contracts. Capital expenditure in utilities, mining and manufacturing increased by $376 million or 20 per cent. Included in the sectors showing important gains over 1951 were new developments in iron ore mining, asbestos mining and oil well drilling. In manufacturing the largest increases were in chemicals, iron and steel, oil refineries, non-ferrous metals, transportation equipment and in electric apparatus and supplies. In the utilities group the largest single increase was in oil and gas pipe lines. Steam railways, telephones, central electric stations, water works and water transport also showed important gains. These increases were offset to some extent by significant declines in trade, finance and commercial services, and to a lesser extent in some manufacturing industries catering to consumer needs.
68108-138J
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The Budget-Appendix

[Stage Direction]
-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
Agriculture and fishing	419	473	515	566Forestry	26	34	58	35Mining, quarrying and oil wells	122	119	181	211Manufacturing	536	502	793	942Electric power, gas and water works	338	369	440	536Transportation, storage and communications	341	351	460	561Construction industry	55	71	66	71Trade, finance and commercial services	293	397	412	317Institutions	190	208	236	255Housing	776	845	821	850Government departments	406	446	595	778Total Capital Expenditure1	3,502	3,815	4,577	5,122Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars	21-3	20-9	21-3	22-3100	103	111	120
1 For reconciliation with Gross Domestic Investment in Table 8, see below
1950	1951	1952
Public and Private Capital Expenditure-Table 9	 3,815 4,577 5,122
1950	1951	1952Public and Private Capital Expenditure-Table 9	
3,815	4,577	5,122
Deduct:
Provincial hospitals and schools, and municipal schools. -107	-130	-156Government housing excl C.M.H.C. rental housing	
-44	-40	-47Direct government department outlays	
-446	-595	-778Other	
-2	-2	-3
Add:
Change in Inventories	
980	1,620	176Total Ghoss Domestic Investment-Table 8	
4,196	5,430	4,314
The Budget-Appendix
Revenue and Expenditure of All Governments
In Table 10 "Government Transactions Related to the National Accounts" an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here do not agree with those shown in the various public accounts. It has been necessary to adjust the conventional accounting statements of fiscal year revenue and expenditure to exclude certain transactions such as those relating to reserves, write-offs, amortization, and other non-cash items, as well as the purchase and sale of existing capital assets; and to include the transactions of extra-budgetary funds such as unemployment insurance, old age security, workmen's compensation and government pension funds. Government loans and investments, and debt retirement, are not included in government expenditure.
In the federal accounts, some of the more substantial adjustments are as follows: elimination of reserve for possible losses on active assets, elimination of reserve for veterans' conditional benefits, elimination of expenditures charged with respect to the assumption of Newfoundland debt in 1949, elimination of expenditures charged with respect to shipment from stocks of military equipment to N.A.T.O. countries, addition of expenditures out of Defence Equipment Replacement Account, elimination of write-down of active assets to non-active account, adjustment of corporation taxes to an accrual basis, inclusion of the change in inventories of government commodity agencies and the Defence Production Revolving Fund, adjustment of interest on the public debt from an accrual to a due date basis in 1952, and elimination of sales of war assets. In addition, the federal figures are adjusted to a calendar year basis by using the monthly figures published by the Comptroller of the Treasury.
Municipalities are for the most part on a calendar year basis but the provincial figures are based on the provincial fiscal years. Because of the lack of current information the 1952 figures for provincial and municipal governments involve a considerable element of estimation.
Federal government expenditure on goods and services increased by $815 million or 48 per cent in the calendar year 1952. About 84 per cent of this increase was the result of increased defence spending which rose from $1,149 million in 1951 to $1,832 million in 1952. This increase in defence spending absorbed almost one-half of the nation's total increase in real product in 1952. From the standpoint of direct use of resources, the significance of defence spending is also demonstrated by the fact that it constituted almost 75 per cent of the federal government's total expenditure on goods and services in 1952. Excluding the increase in government held inventories, largely associated with price support, federal non-defence spending on goods and services rose by 7 per cent in value and perhaps 1 per cent in volume. The increase in provincial and municipal expenditure on goods and services for 1952 is estimated at a little less than 13 per cent of which about half is estimated to be due to price increases.
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The Budget-Appendix

[Stage Direction]
-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
Government Revenue-				
Direct Taxes-Persons		789	740	1,027	1,318
Income-				
Federal	674	612	891	1,177Provincial and Municipal	3	-	-	-Succession Duties-	Federal	26	35	35	39Provincial	29	31	34	30Miscellaneous-	Federal	7	7	6	7Provincial and Municipal	50	55	61	65Direct Taxes-Corporations	731	1,023	1,418	1,405Income-	Federal	601	877	1,230	1,317Provincial	130	146	188	88Other Direct Taxes-	Withholding taxes-Federal	47	54	56	55Indirect Taxes	1,907	2,081	2,594	2,794Federal	1,048	1,115	1,495	1,595Provincial and Municipal	859	966	1,099	1,199Investment Income	357	400	439	499Federal	110	134	152	195Provincial and Municipal	247	266	287	304Employer and Employee Contributions to Social	Insurance and Government Pension Funds	239	256	302	328Federal	141	159	200	218Provincial and Municipal	98	97	102	110Transfers from Other Governments-	Provincial and Municipal	182	251	260	367Total Revenue	4,252	4,805	6,096	6,766Federal	2,654	2,993	4,065	4,603Provincial and Municipal	1,598	1,812	2,031	2,163Deficit (or surplus-)	-440	-691	-1,034	-301Federal1	-497	-683	-1,006	-273Provincial and Municipal	57	-8	-28	-28Total Revenue plus Deficit (or minus Surplus)...	3,812	4,114	5,062	6,465Federal	2,157	2,310	3,059	4,330Provincial and Municipal	1,655	1,804	2,003	2,135
1 For reconciliation with Public Accounts Surplus, see page 19.

The Budget-Appendix
TABLE 10-Concluded

[Stage Direction]
-	1949	1950	1951	Prelim. 1952
		(Millions of Dollars)		
Government Expenditure-				
Goods and Services		2,128	2,326	3,201	4,211
Federal-				
Defence	361	493	1,149	1,832Non-defence	519	487	534	666Provincial and Municipal	1,248	1,346	1,518	1,713Transfer Payments	1,425	1,474	1,468	1,797Federal	1,022	1,019	987	1,378Provincial and Municipal	403	455	481	419Subsidies	77	63	133	90Federal	73	60	129	87Provincial and Municipal	4	3	4	3Transfers to Other Governments-	Federal	182	251	260	367Total Expenditure	3,812	4,114	5,062	6,465Federal	2,157	2,310	3,059	4,330Provincial and Municipal	1,655	1,804	2,003	2,1351949	1950	1951	1952Reconciliation with Public Accounts Surplus: Federal Government calendar year surplus for	(Millions of Dollars)	national accounts purposes	
Adjustments:	497	683	1,006	273Difference between calendar and fiscal year	
Difference between corporation tax accruals and	+311	-122	-300	+367government receipts	-34	- 183	-150	-93Revenue items omitted	
Reserves, write-offs and non-cash items omitted	+62	+73	+67	+49from expenditure	
Change in inventories of government commodity	-154	-130	-167	-190agencies	
Shipment of military equipment to N.A.T.O.	+32	-19	-16	+77countries, less replacement	
Extra-budgetary funds for pensions and social	-	-57	-70	-94insurance (net)	
Adjustment to place debt interest on a "due date"	-68	-56	-126	+57basis	-	-	-112Other adjustments	-50	-58	-33	-86
Federal surplus for fiscal year as per public
accounts	
596	131	211	218(1948-49)	(1949-50)	(1950-51)	(1951-52)
The Budget-Appendix
Federal transfer payments increased sharply from $987 million in 1951 to $1,378 million in 1952 or by 40 per cent. About two-thirds of this increase is accounted for by the commencement of federal old age security payments of $40 per month to Canadians 70 years of age and over. There were also substantial increases in unemployment insurance benefits and veterans' pensions, and a steady growth in family allowance payments. The combined total of provincial and municipal transfer payments declined because the assumption by the federal government of the cost of old age pensions for those 70 years and over more than offset increases in other items.
Federal government revenues did not increase as rapidly in 1952 as did expenditures. Thus, total federal revenues for the calendar year 1952 are estimated to have increased by $538 million compared with a rise of $1,271 million in expenditures. More than half of the increase in federal revenue came from personal income tax collections which rose by $286 million or 32 per cent. Higher incomes were the major factor in the higher yield of the personal income tax. At the same time, while the higher tax rates effective July 1, 1951 were not substantially changed in 1952, the average reduction of 6 per cent in tax rates being more or less offset by the addition of the old age security levy of 2 per cent on income, they applied in the latter year to a full twelve month period. In contrast to the large increase in personal income tax collections, revenue from corporation taxes was practically unchanged in 1952. There was an estimated increase of $87 million in accrued liability for corporation taxes at the federal level but this was more than offset by the decline in provincial yields. These offsetting changes were largely the result of Ontario's withdrawal from the corporation tax field under the 1952 tax rental agreement and the change in the 1952 tax rental agreements whereby the 5 per cent corporation tax previously levied by the provinces was absorbed into the federal tax structure. During 1952 federal revenues from indirect taxes rose by $100 million or 7 per cent compared to an increase of $100 million or 9 per cent for provincial and municipal

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The Budget-Appendix
governments combined. At the federal level the 10 per cent sales tax applicable for twelve months instead of nine in the previous year and the expansion in consumer spending outweighed the reduction in certain excise tax rates which took effect in April, 1952.
For all levels of government combined, indirect taxes exceeded direct taxes by 22 per cent in 1949, 15 per cent in 1950 and 4 per cent in 1951; but in 1952 they were almost equal.
As indicated above, federal expenditures for the calendar year 1952 increased a great deal more rapidly than did revenues. Consequently the surplus, as calculated for national accounts purposes, fell from $1,006 million in the calendar year 1951 to $273 million in 1952. It constituted 6 per cent of the nation's total saving in 1952 compared with 20 per cent in 1951. The combined surplus of all provincial and municipal governments is estimated at $28 million for 1952, unchanged from 1951.
The federal surplus shown for National Accounts purposes differs substantially from the public accounts surplus, not only because of the difference between the calendar and fiscal year, but because of other adjustments made to both revenues and expenditures to make the presentation consistent with figures shown for other sectors of the economy. A reconciliation table has, therefore, been appended to the government table which summarizes the major adjustments.

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Direct taxes include taxes on personal and corporate income, succession duties and personal fees. Indirect taxes include taxes on commodities, services, real property and business fees.
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The Budget-Appendix

[Stage Direction]
When goods are exported, unless they are given away, they give rise to payments or debts in favour of Canada. Similarly, when goods are imported they give rise to payments or debts in favour of the rest of the world. Other transactions such as interest and dividend payments, the tourist trade, freight and shipping charges, also give rise to similar payments or debts in either direction. The difference between the debits and credits arising from these current transactions is referred to as the net balance of international payments on current account. When total debits exceed total credits within a year, as was the case in 1950 and 1951, Canada goes into debt to the rest of the world or the rest of the world pays off some of its debt to Canada. When total credits exceed total debits as was the case in 1952, the net position is, of course, reversed.

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Estimated Current Account Between Canada and all Countries (Millions of Canadian Dollars)
-	1919	1950	1951	Prelim. 19522
Current Credits-				
Merchandise exports (adjusted)1	2,989	3,139	3,950	4,325Non-monetary gold	139	163	150	150Travel expenditures	286	275	271	Interest and dividends	83	91	115	Freight and shipping	303	284	337	1,175Inheritances and immigrants' funds	66	58	77	Other current receipts	211	233	276	Total Credits	4,077	4,243	5,176	5,650Current Debits-	Merchandise imports (adjusted)	2,696	3,129	4,103	3,825 1Travel expenditures	192	226	280	Interest and dividends	390	474	447	Freight and shipping	253	301	347	) 1,675Inheritances and emigrants' funds	53	58	67	Other current payments	306	384	456	JTotal Debits	3,890	4,572	5,700	5,500Net Balance on Current Account	+187	-329	-524	+150
1 Aid to N.A.T.O. countries under Defence Appropriation Act has been excluded. * Details not yet available.
Estimated Geographical Distribution or the Net Balance on Current Account (Millions of Canadian Dollars)
-	1949	1950	1951	1952Between Canada and-	-589 +439 + 135 + 187 + 15	-403 +28 -23 +109 -40	-955 +220 -29 +220 +20	Not yet Available
+187	-329	-524	+150
				

The Budget-Appendix
During 1952 there was a pronounced improvement in Canada's overall balance of payments position. Exports increased in value by about 10 per cent and imports fell by about 1 per cent. After taking account of adjustments to these merchandise figures and of changes in the service and non-merchandise items, the current surplus for the year is estimated to be about $150 million, in contrast to the deficit of $524 million in 1951.
A significant factor in the improvement of about $674 million in our current position was the change in the terms of trade, the ratio of export prices to import prices. Imports and exports both increased in volume by about 12 per cent in 1952 compared with the previous year. However, 1952 export prices were only slightly below those prevailing in 1951, and the prices of imports declined by more than 12 per cent. Almost all of the change in the terms of trade was concentrated in the last half of 1951 and the first half of 1952. In recent months import and export prices have tended to stabilize, with the terms of trade remaining more or less constant.
The change in the current account between the two years was also affected by the substantial prepayments in 1951 for military equipment for future delivery. In 1952 actual imports of military equipment were larger than payments. Adjustments to the current account arising out of these prepayments tended to increase the size of the deficit in 1951, and improved the net balance in 1952. The deficit for the non-merchandise items in the 1952 current account was somewhat lower than in 1951. Higher net payments on travel account were more than offset by lower net payments for interest and dividends and for other current services.
The sustained level of export prices, at a time when many world prices were declining, reflected the continuing strong demand for Canadian products abroad. Exports of wheat, newsprint and the base metals showed the largest gains during the year, although exports of some manufactures such as automobiles and trucks rose sharply. On the imports side, the main increases were in military equipment, machinery and other manufactures. Imports of some basic primary commodities such as wool and cotton were substantially lower than in 1951.


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The Budget-Appendix
Trade with the United States showed no pronounced changes, with exports to that country slightly higher in spite of the embargo on cattle and meat sales arising out of the foot and mouth outbreak. The outstanding change in the direction of trade was the rise in exports to overseas countries. Exports to the United Kingdom increased by over $100 million, and to other non-sterling markets by nearly $250 million. The net improvement in the current account was largely the result of increased sales to these overseas countries and some decline in the level of Canadian overseas imports.
Direct investment in Canada and sales of new Canadian issues abroad amounted in magnitude to around $500 million, and provided a further element of strength in the balance of payments. However, the outward movement of capital, largely in the form of liquidations by non-residents of holdings of Canadian securities and the change in commercial accounts receivable and payable and in short-term balances, was even larger than the inflow for direct and long-term investment. There was also an increase in the official reserves of gold and U.S. dollars which rose during 1952 by $82 million, and reached a level of $1,860 million by the end of the year. The net outflow of capital which includes the increase in official reserves of gold and U.S. dollars, was of course equal to the current account surplus.
The strength in the overall balance of payments position contributed to the rise in the exchange rate for the Canadian dollar during the year. From a position of approximate parity with the United States dollar in January 1952, the Canadian dollar appreciated to a premium of 4 per cent in September. Subsequently it declined slightly and ended the year at a premium of about 3 per cent. The strong exchange rate tended to reduce the Canadian dollar prices of both exports and imports, and was an important factor contributing to the decline in the domestic price level.
(Millions of Dollars)
Capital Movements	Prelim.
	1950	1951	1952
Loans to United Kingdom and other governments-			
Drawings	-50	-	-Repayments	+74	+68	+56Net reduction in the U.S. dollar debt of the Government of Canada (expressed in U.S. dollars)	-50	-	Increase (-) in official reserves of gold and U.S. dollars (expressed in U.S. dollars)	-624	-37	-82Other capital, including exchange adjustments, errors and omissions	+979	+493	-124Total*	+329	+524	-150
* Equal in size but opposite in sign to net balance on current account.

The Budget-Appendix

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CANADA'S OFFICIAL HOLDINGS OF GOLD AND U.S. DOLLARS (Millions of U.S. Dollars)
Exchange Fund Account and Bank of Canada	Other Government of Canada Accounts	TotalGold	U.S. Dollars	U.S. Dollars	Gold and U.S. DollarsSept. 15, 1939	204-9	33-8	22-4	261-1Dec. 31, 1939	218-0	54-8	33-4	306-2Dec. 31, 1940	136-5	172-8	20-8	330-1Dec. 31, 1941	135-9	28-2	23-5	187-6Dec. 31, 1942	154-9	88-0	75-6	318-5Dec. 31, 1943	224-4	348-8	76-4	649-6Dec. 31, 1944	293-9	506-2	102-1	902-2Dec. 31, 1945	353-9	922-0	232-1	1,508-0 1,244-9 501-7Dec. 31, 1946	536-0	686-3	22-6	Dec. 3i; 1947	286-6	171-8	43-3	Dec. 31, 1948	401-3	574-5	22-0	997-8Dec. 3lj 1949	486-4	594-1	36-61	1,117-1 1,741-5 1,778-6Dec. 31, 1950	580-0	1,144-9 899-5	16-6	Dec. 31, 1951	841-7	37-4	Dec. 31, 1952	885-0	961-8	13-4	1,860-2
1 Not including $18-2 million in United States dollars borrowed by the Government of Canada in August, 1949, and set aside for the retirement on February 1, 1950, of a security issue guaranteed by it and payable at the holder's option in United States dollars.

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Canadian labour income is estimated at $10-9 billion for 1952, an increase of 12 per cent over 1951. Although this rise in money income was considerably smaller than the 17 per cent increase in 1951, it was a more significant gain in terms of purchasing power. This is apparent from the fact that the consumer price index rose by 10-5 per cent from 1950 to 1951 but by only 2-5 per cent from 1951 to 1952.
The gain in labour income was common to all the broad industrial categories. Manufacturing, where about one-third of total labour income originates, showed a gain of slightly more than 10 per cent on the basis of ten months' information. An increase of similar amount occurred in the next most important group, which includes public utilities, transportation, communication, storage and trade. The increase in the service industries was somewhat larger. The primary industries, on the other hand, recorded an increase of a little less than 10 per cent. By far the largest gain occurred in the construction industry which showed an increase of 24 per cent.
To some extent the 12 per cent rise in total labour income during 1952 was due to the expansion in employment. On a per capita basis the gains over 1951 have therefore been somewhat less. The annual average earned income per paid worker rose by $200 from $2,600 in 1951 to $2,800 in 1952. This increase of almost 8 per cent was possible because higher rates of pay more than offset the slight decline in the number of hours worked per week. In manufacturing, for example, the drop in hours worked per week was from 41-8 hours in 1951 to 41-4 hours in 1952. Hourly earnings in manufacturing were $1.32 at the end of 1952 compared with $1.24 a year earlier. Average weekly earnings in nine leading non-agricultural industries were $54.13 in 1952, an increase of $4.52 over 1951.

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The Budget-Appendix

[Stage Direction]
1947	1	IQAQ	IQ/IQ	IOC r\	*	loci	IOCO
rtrtCENT

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THE CIVILIAN LABOUR FORCE Annual Averages (Thousands of Persons)
-	1949"	1950	1951	1952Civilian Labour Force	5,036	5,157	5,231	5,304Male 	3,959	4,053	4,093	4,134Female	1,077	1,104	1,138	1,170Non-Agricultural	3,957	4,134	4,284	4,412Agricultural	1,079	1,023	947	892Persons without jobs and seeking work	131	169	108	130Persons with jobs	4,905	4,988	5,123	5,174In Non-Agricultural Industries	3,831	3,970	4,180	4,286Paid Workers	3,294	3,422	3,645	3,765Employers, own account workers and unpaid family workers	537	548	535	521In Agriculture	1,074	1 018	943	888
1 Excludes Newfoundland.

The Budget-Appendix
The average civilian labour force, which includes both the employed and the unemployed, grew during 1952 to a total of 5,304,000 persons, an increase of
73.000	or 1-4 per cent over 1951. The average number of persons employed during the year was 5,174,000 or 51,000 more than in 1951. The number of persons with jobs in agriculture declined by 55,000. There was an increase of
106.000	in the number of persons employed in the non-agricultural occupations.
Compared with the previous year, there was a decline of 69,000 in the number of people on short-time work. This drop was particularly noticeable during the latter part of 1952 and indicates an improvement in employment conditions.
Persons without jobs and seeking work averaged 130,000 during 1952 or 2-5 per cent of the labour force, compared with 108,000 or 2-1 per cent in 1951. However these figures are not a complete indication of the difference in employment conditions in the two years. In the first place, the comparison of annual averages hides the improvement in the employment situation during the second half of 1952. In the second place, the total of those without jobs and seeking work is only one indicator of employment conditions. As noted above, there was, particularly in the latter part of 1952, a significant reduction in the number of persons working part time.
During 1952, 53-4 per cent of the non-institutional civilian population over 14 years of age were in the civilian labour force compared with 53-7 per cent in 1951. In addition to the civilian labour force, there were 101,000 in the armed forces at the end of 1952 compared with 88,000 at the end of 1951.

[Stage Direction]
The period of rapidly rising prices which followed the outbreak of war in Korea carried prices to new peaks. In the case of the wholesale price index the peak was reached in July, 1951 after a rise of 16-5 per cent from June, 1950. Consumer prices were slower to reflect the renewal of inflationary pressure but continued their advance until January, 1952, at which point they were 16 per cent above the June 1950 level. The price declines of 1952 carried the indexes back some distance from their previous high points. The drop in the wholesale price index during 1952 amounted to 6-6 per cent and in the consumer price index to 2 per cent. But all price movements were not consistent with the downward trend in the indexes nor were all groups affected in the same degree. Most noteworthy were the declines in the prices of certain foods and primary products which had risen sharply in the previous advance. At the same time the rise in the value of the Canadian dollar substantially reduced the cost of imports and thus affected a large part of our price structure. But the prices of services and of many goods in which the domestic labour content is high, tended to advance moderately under the pressure of rising wage costs and real incomes.
The index of wholesale prices fell off by 6-6 per cent during the course of the year and for the year as a whole averaged 5-8 per cent lower than in 1951. The more rapid decline occurred during the first five months of the year and amounted to more than 5 per cent. A slight upturn in June and July was again followed by steady month-to-month decreases for the balance of the year, though at a slower rate than for the early months. The decline of the index from 243-7 in July, 1951 to 221-2 in December, 1952, amounted to 9-2 per cent and brought wholesale prices back to a level lower than that which prevailed in the month of September, 1950.
The index of industrial materials fell more rapidly than any other major price component in the wholesale index.
[Stage Direction]
The Budget-Appendix	,

[Stage Direction]
1926	1930	1935	1940	1945	1950	1952

[Stage Direction]
(1935-39 = 100)
-	Total	Canadian Farm Products	Fully and Chiefly Manufactured Goods1939	99-2	92-6	101-91940	108-0	96-1	109-91941	118-4	106-6	118-81942	123-0	127-1	123-71943	127-9	145-4	126-91944	130-6	155-3	129-11945	132-1	166-4	129-81946	138-9	179-5	138-01947	163-3	192-2	162-41948	193-4	232-1	192-41949	198-3	228-7	199-21950	211-2	236-7	211-01951	240-2	268-6	242-41952	226-2	244-4	230-9236-8	271-5	239-7232-6	259-6	236-2230-8	256-7	234-6226-9	253-8	230-7224-8	252-7	228-1226-5	257-9	230-6225-5	252-8	230-0223-9	236-2	228-8222-1	225-5	228-0221-0	221-3	227-7221-9	222-9	228-8221-2	222-3	228-1
Note:-1952 indexes are preliminary,

The Budget-Appendix
The decline for the year was almost as great as the decline in the index of farm prices. Fully and chiefly manufactured goods followed a moderate downward trend over the twelve-month period with prices at December, 1952 about 5 per cent below the level at the beginning of the year. The comparative price stability of general building materials is an example of resistance to the general trend. This index moved during the course of the year within a narrow range set by a high of 289-6 in February and a low of 286-2 in April.
The commentary on consumer prices is in terms of the new consumer price index (basis 1949 = 100) because it is a more complete and up-to-date index of movements in consumer prices than the cost-of-living index which it will soon replace. However, the charts use the old cost-of-living index because its base period (1935-39 = 100) corresponds fo the base periods of the indexes with which it is compared.
Unlike the wholesale price index, the consumer price index did not average less in 1952 than in 1951, although the trend was downward in the early part of the year. At the year-end the index was 0-6 per cent below the average for the year as a whole and 2 per cent below the level at the beginning of the year. This was the first time since 1944 that the index had ended the year lower than it:had begun. But as indicated above this movement in the total index must be viewed in the light of the exceptional advance of the previous year and the influence of lower import prices.

[Stage Direction]
Canada					
	Consumer Price Index		Cost of Living Index			
Total	Food	Total	Food	Total	Food1949	= 100	1935-39 = 100	1935-39 = 100	1939	63-2	50-2	101-5	100-6	99-4	95-21940	65-7	52-6	105-6	105-6	100-2	96-61941	69-6	57-9	111-7	116-1	105-2	105-51942	72-9	63-4	117-0	127-2	116-6	123-91943	74-2	65-2	118-4	130-7	123-7	138-01944	74-6	65-5	118-9	131-3	125-7	136-11945	75-0	66-3	119-5	133-0	128-6	139-11946	77-5	70-0	123-6	140-4	139-5	159-61947	84-8	79-5	135-5	159-5	159-6	193-81948	97-0	97-5	155-0	195-5	171-9	210-21949	100-0	100-0	160-8	203-0	170-2	201-91950	102-9	102-6	166-5	210-9	171-9'	204-5'1951	113-7	117-0	184-5	241-1	185-6	227-41952	116-5	116-8	187-5	237-4	189-8	231-51952-January	118-2	122-4	191-5	250-0	189-1	232-4February	117-6	120-8	190-8	248-1	187-9	227-5March	116-9	117-6	189-1	241-7	188-0	227-6April	116-8	117-2	188-7	240-2	188-7	230-0May	115-9	115-5	186-7	235-3	189-0	230-8June	116-0	115-7	187-3	237-0	189-6	231-5July	116-1	116-0	188-0	239-5	190-8	234-9August	116-0	115-7	187-6	238-0	191-1	235-5September	116-1	115-8	186-5	234-2	190-8	233-2October	116-0	115-1	185-0	229-3	190-9	232-4November	116-1	115-7	184-8	229-0	191-1	232-3December	115-8	114-1	184-2	226-1	190-7	229-9
1 Adjusted series United States Consumers' Price Index from January, 1950, forward.
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The Budget-Appendix
The greatest reduction in the consumer price index for 1952 occurred in the food group. The index of food prices fell by almost 7 per cent during the year, the drop in meat prices being particularly noticeable. This downward adjustment in food prices has been almost continuous since the peak was reached in November, 1951 but the major decline took place in the first half of 1952. The food group was the only group in which prices averaged less for 1952 than for 1951. There was no comparable drop in United States' food prices during 1952; but the percentage rise during 1951 had been little more than one-third as great as in Canada. Prices for clothing also followed a downward trend during 1952. The largest upward movement took place in rents, while the cost of household operation remained practically unchanged. In general, the price of services was higher while the price of goods was lower.

[Stage Direction]
1935-39 = IOO
INDEX	INDEX

The Budget-Appendix
Part II

[Stage Direction]
Table of Contents
Page
1.	Introduction	
21832.	Highlights of Governmental	Financial Operations during 1952-53	
21833.	Budgetary Accounts	
2184A.	Revenues	
2186B.	Expenditures	
21954.	The Cash Position	
22105.	Estimated Balance Sheet Position at March 31, 1953	
2214A. Changes in Principal Liability Classifications during 1952-53	
2215B. Changes in Principal Active Asset Classifications during 1952-53	
2218C.	Decrease in Net Debt	
22236.	The Public Debt	
22237.	Supplementary Detailed Tables	
2229
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The Budget-Appendix
Part II

[Stage Direction]
Because of the early date at which the budget is being brought down, the figures which are presented in this Part for the fiscal year ending March 31, 1953, must be regarded as preliminary and subject to revision. Moreover, while the government's fiscal year ends on March 31, the books must remain open for several weeks after that date in order to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in, and properly chargeable to, the fiscal year 1952-53.
Final figures for each year's operations are not available before some time in August. Normally the Budget White Paper figures are based upon eleven months actual and one month estimated. This year the figures are based on nine months actual and three months estimated. It may well be that the final figures when they become available next August will show somewhat greater variations than usual from those given in the following pages.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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The revenues of the Government for the fiscal year ending March 31, 1953, are now estimated at $4,375 million. This is approximately $96 million or just over 2 per cent more than the amount of $4,279 million forecast last year at the time of the budget and about $394 million or nearly 10 per cent more than the total collected in the preceding year. Expenditures are estimated at $4,327 million. On the basis of these figures the indicated surplus is $48 million, compared with $248 million for the fiscal year ended March 31, 1952. The fiscal year 1952-53 is therefore the seventh consecutive year in which the financial operations of the Government will result in a budgetary surplus. As a result, the Government's net debt (the excess of total liabilities over total active assets) will be reduced by an equivalent amount, bringing to a total of $2,284 million the amount by which the Government will have reduced its net debt during those seven years. This represents a reduction of more than one-fifth of the total increase in net debt during the entire period of the war and is approximately equivalent to the amount by which the net debt increased during the first three and one-half years after the outbreak of war in 1939.
Although the budgetary surplus for 1952-53 is estimated at $48 million, the Government made loans, advances and other non-budgetary disbursements of about $627 million, while, at the same time, the unmatured funded debt in the hands of the public increased by only $141 million. The manner in which this has been achieved can be understood more readily by taking an over-all view of the Government's cash transactions for the fiscal year.
As explained in greater detail in the section on "The Cash Position", the estimated budgetary surplus of $48 million for the fiscal year does not reflect the full impact of Government operations upon the Canadian economy. Substantial amounts are received and paid out for extra-budgetary purposes (such
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as the loans and advances which the Government is required to make and the transactions in connection with the many superannuation, insurance, pension, annuity and deposit and trust accounts which it has undertaken to hold or administer).
These non-budgetary disbursements are estimated at $627 million and include $125 million to the C.N.R. for capital expenditures on additions and betterments and the acquisition of new rolling stock and equipment, $76 million advanced to the Central Mortgage and Housing Corporation for house construction and for housing loans, $67 million to the Agricultural Prices Support Account, $50 million to the Exchange Fund to finance the increase in our foreign exchange reserves, some $34 million advanced to the Defence Production Revolving Fund to acquire materials essential to Canada's defence programme, about $100 million to finance pension payments out of the Old Age Security Fund which were not covered by old age security tax receipts, $31 million representing the decrease in the Provincial 5 per cent corporation income tax suspense account, and $109 million reflecting a decrease in outstanding cheques and interest and accounts payable. Offsetting these are non-budgetary receipts and credits amounting to $449 million, including $171 million from net annuity, pension and other liability account receipts, $64 million for repayments of sundry loans and investments, the increase of $75 million in the reserve for possible losses on the ultimate realization of active assets and sundry other items amounting in the aggregate to $139 million.
After taking into account the budgetary surplus of $48 million and the net requirements of $178 million for these non-budgetary transactions it is now estimated the amount that had to be financed by net new borrowing will amount to approximately $130 million. As unmatured funded debt in the hands of the public is expected to increase by approximately $141 million during the year, the Government's cash balances will increase by $11 million.
3.	THE BUDGETARY ACCOUNTS
The table which follows gives a summarized statement of estimated revenues and expenditures and surplus for the fiscal year ended March 31, 1953, with the comparable figures for the four preceding fiscal years:
-	Fiscal Years Ended March 31				
1949	1950	1951	1952	1953 (Estimated)2,771-4 2,175-9	(In n 2,580-1 2,448-6	lillions of do 3,112-5 2,901-2	lars) 3,980-9 3,732-9	4,374-6 4,326-8
595-5	131-5	211-3	248-0	47-8
					
Total revenues, estimated at $4,374-6 million for 1952-53, are expected to show an increase of $393-7 million over the total for the previous fiscal year. Total expenditures are estimated at $4,326-8 million or $593-9 million more than the corresponding total for 1951-52.

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MILLIONS OF DOLLARS __________________________________ MILLIONS OF DOLLARS

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3000
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A.	Analysis of Revenues
Estimated budgetary revenues for the year 1952-53, classified according to major categories, are presented in the following table, with the corresponding figures for the previous fiscal year.
STATEMENT OF REVENUES, BY MAJOR CLASSIFICATIONS, FOR THE YEARS ENDED MARCH 31, 1953 AND MARCH 31, 1952 (In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)	
Source	1953 (Estimated)	1952	Amount	PercentAmount	Percent	Amount	Percent	Ordinary revenues- Direct taxes-	1,187-8 54-0	27-2	975-7	24-5	212-1	21-7Non-resident income taxes	1-2	55-0	1-4	-1-0	-1-81,231-1	28-1	1,130-7	28-4	100-4	8-92-4	0-1	-2-4	38-0	0-9	38-2	0-9	-0-2	-0-5
2,510-9	57-4	2,202-0	55-3	308-9	14-0
						
Indirect taxes-	379-0	8-7	346-4	8-7	32-6	9-4257-0	5-9	217-9	5-5	39-1	17-9851-9	19-5	885-9	22-3	-34 0	-3-811-5	0-3	5-6	0-1	5-9	105-4
1,499-4	34-3	1,455-8	36-6	43-6	3-0
						
	4,010-3	91-7	3,657-8	91-9	352-5	9-6
						
Non-tax revenues-	111-8	2-5	104-6	2-6	7-2	6-9116-0	2-7	117-6	3-0	-1-6	-1-456-0	1-3	59-8	1-5	-3-8	-6-4
283-8	6-5	282-0	7-1	1-8	0-6
						
	4,294-1	98-2	3,939-7	99-0	354-4	9-0
						
	80-5	1-8	41-2	1-0	39-3	94-9
						
	4,374-6	100-0	3,980-9	100-0	393-7	9-9
						
Note.-Due to rounding off, columns may not add exactly to totals shown.
It is estimated that of the total revenues for the year, $2,510-9 million or 57-4 per cent will have been derived from direct taxes, $1,499-4 million or 34-3 per cent from indirect taxes, and the remaining $364-3 million or 8-3 per cent from non-tax revenues and special receipts and credits.
(1) Direct Taxes
Tax on Personal Incomes
It is estimated that personal income tax (excluding the old age security tax) will yield a total of $1,188 million in 1952-53, an increase of $212 million, or 21-7 per cent over the previous year. This increase occurred in spite of the fact that deductions of tax at the source from salary and wages since July 1, 1952, have been made at rates averaging about 6 per cent less than during the corresponding period in 1951-52. While that part of income tax revenue which is paid as balances with returns and in quarterly instalments in 1952-53 is determined by somewhat higher rates than in the previous fiscal year, the greater part of the increase in revenue is attributable to a substantial increase in personal incomes during the year.

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CUSTOMS IMPORTS & EXCISE DUTIES


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1000

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OTHER REVENUES TOTAL REVENUE FROM TAXES * (93 °/o)
Taxes on Interest, Dividends, Rents and Royalties Going Abroad
Revenues under this heading are derived from withholding taxes on payments of interest, dividends, rents and royalties made to non-residents. The estimated total of $54 million is $1 million less than in the previous year.
Corporation Income Tax
Collections from this tax (excluding the old age security tax) are expected to amount to approximately $1,231 million, an increase of 9 per cent over the previous year's total of $1,130-7 million. This increase, which occurred despite the fact that corporation profits for 1952 were lower than in 1951, is due to the changes in the federal rates of tax announced in the 1952 Budget and to the fact that the Province of Ontario entered into a tax rental agreement withdrawing from the corporation tax field as from January 1, 1952. The 5 per cent corporation income tax levied by all provinces except Ontario and Quebec under provisions of the tax rental agreements signed in 1947 was not levied by the provinces on profits earned after December 31, 1951. The 1952 Budget announced that this tax would be incorporated into the federal rates of tax commencing January 1, 1952, increasing the federal rates for 1952 from 15 per cent on the first $10,000 of profits and 45-6 per cent on profits in excess of $10,000, to rates of 20 per cent and 50 per cent respectively. In those provinces which did not enter into a tax agreement, corporations were allowed to take a credit against their federal tax equal to 5 per cent of their profits attributable to operations therein. This reduced the effective federal rate on profits earned in Quebec to 15 per cent on the first $10,000 and 45 per cent on profits in excess of $10,000. As a result of the Province of Ontario entering into a tax agreement, corporations paid federal tax at the full rates of 20 per cent and 50 per cent on their 1952 profits earned in that Province.
The total revenue from corporation income tax includes $8 million paid by corporations paying the 15 per cent tax on their undistributed income. This is $6 million less than that collected from this source in 1951-52.
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FISCAL YEARS ENDED MARCH 31	___


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11500
It
900
inirniiii
immiim
42 43 44 45 46 47 48 49 50 51 52 53
n1 0
CUSTOMS DUTIES	
******si inti	1
1939 41 42 43 44 45 46 47 48 49 50 51 52	53 *
EXCISE DUTIES	
-**bbbBIBIIIJ IQ-5Q <i| 42 43 4 4 45 46 4 7 48 49 50 51 52	1 53*
Succession Duties
Revenue from succession duties is estimated at $38 million for 1952-53, as compared with $38-2 million in the previous year.
(2) Indirect Taxes
Customs Import Duties
Net revenue from customs import duties for the year is estimated at $379 million, an increase of $32-6 million over the total for 1951-52. The total value of imports is not expected to show much change from the previous year, but there appears to have been some reduction in the proportionate value of nondurable and low duty goods imported as compared with the quantities and prices of goods subject to higher rates of duty.
Excise Duties
Excise duties are levied exclusively on alcoholic beverages and tobacco products. (Additional taxes are levied on tobacco products under the Excise Tax Act). The revenue from these taxes for the year is estimated at $257 million, an increase of $39-1 million over the previous year's total of $217-9 million. This increase is mainly due to increased sales of cigarettes and beer. Gross receipts from excise duties, before deducting refunds, are divided as follows: $136 million from alcoholic beverages ($120-9 million in 1951-52), and $124 million from tobacco products ($100-7 million in 1951-52).

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Excise Taxes
Net excise tax collections (excluding the 2 per cent old age security sales tax) are estimated at $852 million in 1952-53, a decrease of $34 million from the previous year.
The principal tax levied under the Excise Tax Act from the standpoint of revenue is the sales tax. The gross revenue from sales tax is estimated at $584 million, a decrease of $3-2 million from the previous year. The decrease is due to the fact that in 1952-53 the sales tax rate levied under the Excise Tax Act is 8 per cent, whereas in 1951-52 the rate was 10 per cent for the first nine months of the fiscal year and 8 per cent after January 1, 1952, when the 2 per cent sales tax provided by the Old Age Security Act came into effect. (The 2 per cent old age security sales tax is expected to yield $142 million as compared with $24-3 million in 1951-52).
It is estimated that excise taxes other than sales tax will yield approximately $284 million, as compared with $312 million in 1951-52. The decrease in revenue from these taxes is due to the tax reductions introduced in April, 1952. At that time items which had been taxed at 25 per cent became taxable at 15 per cent, the 15 per cent tax on stoves, washing machines, and refrigerators, was repealed, the 30 per cent tax on soft drinks was reduced to 15 per cent, and the tax on cigarettes was reduced $1.50 per thousand.
Next to the sales tax the largest revenue source among the excise taxes is the tax on tobacco products which will yield an estimated $107-5 million, an increase of $1-2 million over the previous year. The most important item in this group is the revenue from the tax on cigarettes which is expected to be only about $5 million less than in the previous year despite the reduction in the rate of tax introduced in April, 1952. The revenue from the tax on manufactured tobacco will show a sharp increase for the year.
Most of the other excise taxes will show a decrease in revenue in 1952-53 due to the lower rates in effect for the year. The largest decrease will be in the revenue from the tax on automobiles, tires and tubes, which will yield an estimated $87 million, $13-9 million less than in 1951-52. The tax on soft drinks which was reduced from 30 per cent to 15 per cent, will yield an estimated $13 million as compared with $19 [DOT] 2 million in 1951-52.
Other Indirect Taxes
The taxes under this heading are the tax on premium income of insurance companies, the tax on the export of electrical energy from Canada, and the tax on the export of furs from the Northwest Territories. These taxes will yield an estimated total of $11 -5 million, an increase of $5-9 million over 1951-52. The tax on premium income of insurance companies will yield an estimated $10-7 million as compared with $4-8 million in 1951-52. This increase was brought about by the Province of Ontario's repeal of a similar tax which had been deductible from the federal tax.
(3) Non-Tax Revenues
The total of non-tax revenues for 1952-53 is estimated at $283-8 million compared with $281-9 million for 1951-52. The following table presents a comparative summary of revenues under this heading for the past two years: 68108-139J
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Post Office	
Return on investments	
Premium, discount and exchange	
Bullion and coinage	
Privileges, licences and permits	
Proceeds from sales	
Services and service fees	
Refunds of previous years' expenditures. Miscellaneous	
Total non-tax revenue	
Fiscal year ended March 31		Increase or Decrease (-)
1953 (Estimated)	1952	
(In millions of dollars)		
111-7	104-6	7-1116-0	117-6	-1-66-8	17-7	-10-94-2	4-8	-0-612-0	10-4	1-65-0	4-5	0-519-0	16-0	3-07-0	4-2	2-82-0	2-1	-0-1283-8	281-9	1-9
Gross Post Office receipts for 1952-53 are expected to amount to $129-5 million. After making authorized disbursements from revenue of $17-8 million for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., net Post Office receipts credited to budgetary revenues are estimated at $111-7 million. The increase of $7-1 million over the corresponding amount received in 1951-52, is due primarily to the fact that the new postal rates were in effect for nine months in 1951-52 and for twelve months in 1952-53. As costs of operating the Post Office during 1952-53 (excluding the $17-8 million charged to revenue) are expected to total $106-2 million, net revenue will exceed net costs by approximately $5-5 million. However, in making this comparison it is to be noted that the total shown for Post Office revenues does not reflect the value of services rendered free of charge to other departments, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Return on investments is expected to yield $116 million, a decrease of $1-6 million, compared with the total of $117-6 million received in 1951-52. Due to the conversion of fifty per cent of the C.N.R.'s total fixed interest bearing debt into 4 per cent preferred stock under the provisions of the Canadian National Railways Capital Revision Act, 1952, interest on loans received from this Company decreased by $21 [DOT] 1 million. This decrease, however, is offset by increases in the profits of the Bank of Canada and the Exchange Fund during 1952 estimated at $4-7 million and $2-2 million respectively and by an amount of $9-7 million received from Polymer Corporation Limited representing dividends and interest on debentures.
A comparative summary of estimated receipts during 1952-53 with actual receipts during 1951-52 under this heading is given in the following table:

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Fiscal year ended March 31		Increase or
1953 (Estimated)	1952	Decrease (-)Loans to, and investments in, Crown agencies-	(In n 28-9	lillions of do 24-2	lars) 4 714-8	12-6	2-22-3	23-4	-21-19-2	7-2	2-04-7	4-5	0-29-7	9-71-6	1-3	0-371-2	7S-2	-8-0Other loans and investments-	23-4	23-7	-0-312-6	13-3	-0-71-2	1-2	Soldier and General Land Settlement Loans and Veterans'	4-8	4-4	0-41-5	0-7	0-81-3	11	0-244-8	44-4	0-41160	117-6	-1-6
The amount credited to premium, discount and exchange in 1952-53 is estimated at $6-8 million compared with a credit of $17-7 million in 1951-52. This revenue item is due mainly to book-keeping adjustments in asset and liability accounts reflecting a reduction in U.S. dollar and sterling exchange rates from those operative in the fiscal year 1951-52. It is estimated that the Canadian dollar equivalent of outstanding debt payable in sterling and in United States dollars will be reduced in consequence of this revaluation by $6-8 million offset by $0-8 million reduction in assets payable in these currencies. The result is a net credit in the premium, discount and exchange account of $6 million. Net differences in rates on current gold and foreign exchange transactions are expected to account for a further credit of $0-8 million resulting in a net revenue item of $6-8 million.
(4) Special Receipts and Credits
Special receipts and credits are estimated at $80-3 million for the fiscal year 1952-53 as compared with total receipts of $41-2 million in the previous year. The following table presents a comparative summary of the sources of special receipts and other credits for the last two years:
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Fiscal Year Ended March 31
1953	|
(Estimated)!
Increase
or
Decrease
(-)
(In millions of dollars)
Sale of surplus Crown assets	
Central Mortgage and Housing Corporation-
Surplus paid to Receiver General	
Proceeds from the sale of wartime housing properties	
Depreciation reserve on wartime housing properties sold by the Corporation	
Transfer from suspense account of surpluses received from the Canadian Wheat Board in connection with operations conducted under P.C. 1292 of April 3, 1947, with respect to oats and barley
7-8	14-7
2 0	3 1	-1-15-5	9-9	-4-411	
11
6-3
Surplus-Canadian Arsenals Ltd.
5-0	1-2	3-8
Write-up from previous years' expenditure to Loans and Investments-Atomic Energy of Canada, Ltd.-issue of capital stock	4-8
Refundable portion of income tax and excess profits tax-transfer to revenue of excess reserves set up in previous years	
Transfer to revenue of portion of the balance of provincial 5% corporation income tax suspense account pursuant to the 1952 tax rental agreements	
7-3
-7-3 45-0
Military relief and currency credits arising from war settlements
2-6 -2-6
Sundry other special receipts and credits
80-5
41-2
393
The amount of $7-8 million realized from the disposal of surplus Crown assets represents the estimated receipts during the fiscal year from Crown Assets Disposal Corporation after allowing for transfers to active assets of amounts applicable to "Balances receivable under agreements of sale of Crown assets". It does not include the residual cash balances nor the value of accounts receivable carried by the Corporation as at March 31, 1953.
It is estimated that $8-6 million will be received from Central Mortgage and Housing Corporation of which $2 million represents surplus funds in excess of the $5 million reserve established by the Corporation, $5 * 5 million the proceeds of the sale of Wartime Housing properties, and $1 [DOT] 1 million a depreciation reserve built up in previous years on properties that have now been sold by the Corporation. This is in addition to the $9-2 million interest on loans to the Corporation credited to "Return on Investments."
The amount of $45 million represents the transfer to revenue of approximately one-half of the balance of provincial 5 per cent corporation income tax suspense account. For a fuller explanation see sundry suspense (liability) accounts in the section on "Estimated Balance Sheet Position at March 31, 1953".
The other principal items are the transfer to revenue of certain surpluses received in 1948 from The Canadian Wheat Board with respect to oats and barley accounts which had been held in suspense; the estimated surplus of Canadian Arsenals Limited for the year ended March 31, 1952; and a credit consequent upon the issue of 4,800 shares of common stock to the Government

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of Canada by Atomic Energy of Canada, Limited in exchange for assets comprising the Atomic Energy Project at Chalk River, Ontario, which were transferred to the Company as at April 1, 1952. This transaction represents a write-up of previous years' expenditures and consequently appears in the Government's assets under Loans and Investments in Crown Agencies.
(5) Comparison of Actual Revenue with Budget Forecast
Total budgetary revenues, excluding revenue from the old age security taxes, for 1952-53 as now estimated will be about $96 million more than the forecast made in the budget speech of April 8, 1952. This is a difference representing in terms of the total amounts involved an excess over the amount forecast of only slightly more than 2 per cent. It is expected that revenues from personal income tax, corporation income tax, non-resident income taxes, and succession duties, will be less than the amounts forecast, while revenues from customs import duties, excise duties, sales tax and excise taxes (other than sales tax), will be larger than expected. The following table shows in detail the extent to which it is expected that actual revenues will differ from the budget forecast.
comparison of budget forecast with actual revenue
FOR 1952-53 (in millions of dollars)
Source of Revenue	Budget Forecast of Revenue	Actual Revenue (Estimated)	Increase or Decrease (-) Compared with Budget Forecast$	$	$Personal income tax	1,200-0	1,187-7	-12-3Non-resident income taxes	60-0	54-0	-6-0Corporation income tax	1,270-0	1,231-1	-38-9Succession duties	43-0	38-0	-5-0Customs import duties	370-0	379-0	9-0Excise duties	240-0	257-0	17-0Sales tax (net)	539-0	568-0	29-0Other excise taxes	252-0	284-0	32-0Miscellaneous taxes	5-0	11-5	6-5Total tax revenues	3,979-0	4,010-3	31-3Non-tax revenues	275-0	283-8	8-8Total ordinary revenues	4,254-0	4,294-1	40-1Special receipts and credits	25-0	80-5	55-5Total budgetary revenues	4,279-0	4,374-6	95-6
It is estimated that the revenue from personal income tax will be about 1 per cent less than the budget forecast. The short fall is due mainly to the fact that refunds of tax were larger than expected.
The budget forecast of corporation income tax revenue was based on the assumption that corporation profits in 1952 would equal those realized in 1951. However, on the basis of preliminary information, it would appear that 1952 profits did not reach the 1951 level. The adverse effect on corporation income tax revenue arising from the reduction of profits has been to some extent offset by the withdrawal of the Province of Ontario from the corporation tax field but the additional revenue arising from this development has not been sufficient
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to entirely offset the shortfall caused by the reduction in corporation profits, and it is estimated that when the accounts for the year are closed receipts will have fallen short of expectations by about 3 per cent.
Revenue from succession duties will fall considerably short of the amount forecast. It is impossible to forecast revenue from this source with any high degree of accuracy.
Customs duty collections are expected to exceed the budget forecast by about $9 million or less than 3 per cent due mainly to the higher proportion of dutiable goods in total imports.
Revenue from excise duties in 1952-53 is expected to exceed the budget forecast by about 7 per cent mainly because the increase in the revenue from the excise duty on cigarettes has been greater than anticipated.
Revenue from the sales tax is expected to exceed the budget forecast by $29 million or 5 per cent, reflecting some acceleration in consumer spending, and a somewhat greater output of the country's industry than had been expected.
It is expected that revenue from excise taxes other than the sales tax will exceed the amount forecast by about $32 million because of the strong consumer demand for such durable and semi-durable goods as automobiles, furs, radios, and television sets. In addition, the increased consumption of cigarettes has come closer to offsetting the effects of the reduction in the rate of excise tax to a greater extent than had been expected.
The principal item among the miscellaneous taxes is the tax on the premium income of insurance companies. This tax is expected to yield about $6 million more than forecast because on signing the tax rental agreement with the Federal Government the Province of Ontario repealed a similar tax which had been deductible from the premium tax payable to the; Federal Government.

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The excess of estimated non-tax revenue receipts over the budget forecast is due mainly to the amount of $6 [DOT] 8 million for premium, discount and exchange arising for the most part from a revaluation of the government's sterling and United States dollar assets and liabilities from exchange rates used in operations in the previous year. Post Office receipts and return on investments are each expected to be approximately $1 million lower than the forecast while estimated miscellaneous non-tax revenues, are some $4 million higher than forecast.
Special receipts and credits, always impossible to estimate with any high degree of accuracy, are expected to be $55 million higher than the arbitrary budget forecast of $25 million. The greater part of this excess arises because of the amount of $45 million transferred to revenue on account of collections of the Provincial 5% corporation income tax. At the time of the budget forecast it was expected that amounts held by the Federal Government from collections of this Provincial tax would be turned over to the Provinces but the new tax agreements signed during 1952-53 relieved the Federal Government from all further obligation to the Provinces in respect of these collections and these amounts, which under the former agreements would have served to reduce Federal expenditures for tax rental payments, will now come into the accounts as revenue.
B.	Expenditures
The table which follows presents a comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1952-53, with actual expenditures for the preceding fiscal year.

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(In millions of dollars)
Fiscal Year Ended March 31
Increase or
-	1953 (Estimated)	1952	Decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centNational Defence	1,845-2	42-6	1,415-5	37-9	429-7	30-4Defence Production	94-0	2-2	31-0	0-8	63-0	203-21,939-2	U-8	1,446-5	38-7	492-7	34-1Public Debt Charges-	Interest on Public Debt	447-5	10-3	432-4	11-6	15-1	3-5Additional amount required to place	interest on public debt on accrual	87-5	2-3	-87-5	Other Debt Charges	13-4	0-4	11-1	0-3	2-3	20-7460-9	10-7	531-0	14-2	-70-1	-13-2Provincial Subsidies and Tax Rental	Payments (including Transitional	Grant to Newfoundland)	338-0	7-8	127-2	3-4	210-8	165-7Government contributions to Super-	38-8	0-9	110-9	3-0	-72-1	-65-0Provision for reserve for possible losses	on ultimate realization of active assets.	75-0	1-7	75-0	2-0	Family Allowances	334-1	7-7	320-5	8-6	13-6	4-2Old Age Pensions and Pensions to Blind	Persons	22-1	0-5	83-2	2-2	-61-1	-73-449-7	1-3	-49-7	Unemployment Insurance Act-	Administration and Government Con-	trib'Jtion	56-7	1-3	53-8	1-4	2-9	5-4Agriculture	117-3	2-7	67-1	1-8	50-2	74-8Citizenship and Immigration	23-7	0-6	23-2	0-6	0-5	2-2External Affairs	39-1	0-9	37-6	1-0	1-5	4-0Finance	30-8	0-7	29-5	0-S	1-3	4-4Mines and Technical Surveys	29-7	0-7	27-8	0-8	1-9	6-8National Health and Welfare	55-9	1-3	45-4	1-2	10-5	23-1National Research Council and Atomic	Energy Control Board	29-2	0-7	25-1	0-7	4-1	16-3National Revenue	47-7	1-1	45-8	1-2	1-9	4-1Post Office	100-2	2-5	98-0	2-6	8-2	8-4Public Works	81-0	1-9	77-5	2-1	3-5	4-5Resources and Development	35-6	0-S	31 -8	0-9	3-8	11-9Royal Canadian Mounted Police	32-1	0-7	27-3	0-7	4-8	17-6Trade and Commerce	17-1	0-4	21-8	0-6	-4-7	-21-6T ransport	107-6	2-5	99-9	2-7	7-7	7-8Veterans Affairs	242-5	5-7	216-0	5-8	26-5	12-3Other Departments	66-5	1-5	61-3	1-7	5-2	8-5Grand Total	4,326-8	100-0	3,732-9	100-0	593-9	15-9
National Defence and Defence Production
The magnitude of Canada's expenditures for defence is more completely seen when the expenditures of the Department of National Defence and the Department of Defence Production are considered together. Estimated expenditures of the Department of National Defence for the fiscal year 1952-53 are $1,845-2 million as compared with $1,415-5 million for 1951-52, an increase of $429-7 million, while the Department of Defence Production expenditures are estimated at $94 million, an increase of $63 million over the total of $31 million for the previous fiscal year. Consequently the combined expenditures of the two departments amounting to $1,939-2 million for the year under review are $492-7 million greater than the total of $1,446-5 million for 1951-52. Thus, defence expenditures constitute approximately 45% of all government expenditures in 1952-53 again making defence, by a considerable margin, the largest class of government expenditures.	[DOT]

The Budget-Appendix
The following table shows a comparative summary of expenditures for the two departments for the last two fiscal years:

[Stage Direction]
Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Department of National Defence-			
Army, Navy and Air Services	1,516-4	1,217-6	298-8Defence Research and Development	41-7	35-4	6-3Pensions-Defence Services Pension Act...	5-2	5-1	0-1Government contribution to Permanent Services Pension	Account	30-0	30-7	-0-7Mutual Aid to NATO Countries	234-7	126-4	108-3Contribution towards military costs of NATO	16-9	16-9General	0-3 1,845-2	0-3 1,415-5	429-7Department of Defence Production-	Capital assistance	83-9	22-7	61-2Administration and general	10-1	8-3	1-894-0	St-0	6S-0Total National Defence and Defence Production	1,939-2	1,446-5	492-7
Expenditures for the army, navy and air services are estimated at $1,516-4 million for 1952-53 as compared with $1,217-6 million for 1951-52, an increase of $298-8 million. Expenditures for Defence Research and Development are expected to amount to $41-7 million for 1952-53, an increase of $6-3 million as compared with $35-4 million for the preceding year.
The Government's contribution to the Permanent Services Pension Account which is equivalent to one and two thirds times the contributions by permanent services personnel is estimated at $30 million for 1952-53, or $0-7 million less than the amount contributed in 1951-52. Approximately $26-9 million relates to current contributions and $3 [DOT] 1 million to contributions for arrears. In 1951-52 the corresponding amounts were $18-4 million and $12-3 million respectively.
Expenditures under the Mutual Aid programme which are authorized by section 3 of the Defence Appropriation Act, 1950 are expected to amount to $234-7 million in 1952-53. This represents an increase of $108-3 million over the 1951-52 total of $126-4 million. Under the provisions of this section of the Act, defence equipment and supplies are transferred from Canadian stocks to other parties to the North Atlantic Treaty. The value of the equipment and supplies transferred is charged to this appropriation on the basis of the estimated present value, and an equivalent amount is credited to a special Defence Equipment Replacement Account from which payment may be made when replacements are obtained. The estimated expenditure of $234-7 million in 1952-53 consists of approximately $58 million for equipment and supplies transferred from Canadian stocks to North Atlantic Treaty countries and $176-7 million for direct cash outlays for mutual aid by the Government of Canada, representing costs incurred in acquiring and supplying new military equipment to parties to the North Atlantic Treaty and in the training in Canada of air crews from allied countries. In 1951-52 stock transfers amounted to $74-9 million and direct aid to $51-5 million.
2198
[Stage Direction]
The Budget-Appendix
Contributions made by Canada towards the military costs of NATO are charged to the National Defence appropriations. These payments comprise Canada's share of the NATO military budgets and infrastructure costs as well as certain ex-infrastructure costs. The percentage share borne by the particular nations is as suggested by the North Atlantic Council subject to the agreement of the respective governments. The 1952-53 expenditures for this purpose are estimated at $16-9 million.
Expenditures for the Department of Defence Production are estimated at $94 million for 1952-53, an increase of $63 million over the total of $31 million for the previous year. Capital assistance to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme, is estimated at $83-9 million, an increase of $61 -2 million over the total of $22-7 million for the previous fiscal year. Administration and general expenditures of the department are expected to amount to $10-1 million compared with $8-3 million in 1951-52.
In addition to the foregoing budgetary expenditures, the Department of Defence Production has made additional cash outlays out of the Defence Production Revolving Fund for the procurement of materials for use in the manufacture of defence equipment. For purposes of accounting and control, materials so acquired are treated as assets in the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. It is estimated that net cash payments of approximately $34 million will be made in 1952-53 for the acquisition of materials as compared with $82-4 million in 1951-52.
The replacement of equipment and supplies transferred to parties to the North Atlantic Treaty also involved cash outlays which were not reflected as budgetary expenditures in the year under review. It is estimated that an amount of $13 million will be disbursed in 1952-53 for this purpose compared with $49 million in 1951-52. The cost of such replacements is charged to the Defence Equipment Replacement Fund which is credited with the estimated value of the defence equipment and supplies when these are transferred from Canadian stocks to NATO countries.
Public Debt Charges
Public debt charges in 1952-53, as in 1951-52, will constitute the second largest single item of government expense. The total for the year, which is estimated at $460-9 million, represents 10-7 per cent of the aggregate expenditures in 1952-53 compared with a total of $531 million or 14-2 per cent in 1951-52. However, when making this comparison it should be noted that the total for 1951-52 includes a non-recurring charge of $87-5 million representing the additional amount required to place interest on public debt on an accrual basis. If this amount were excluded from the comparison, there would be a net increase of $15 [DOT] 1 million in this expenditure category.
Interest on funded debt payable in Canada, London and New York is expected to show a small decrease of $1-2 million from the previous year.
It is estimated that interest on deposit and trust accounts will increase by $0-2 million, but as insurance, pension and guaranty accounts continued to increase substantially during the year, interest on these accounts is expected to increase by $16-1 million. Of this increase, $13-3 million is for interest on the civil service superannuation account, $2-4 million on the government annuities account, and $1-6 million on the permanent services pension account; offset in part by decreases of $1 million for returned soldiers insurance and $0-3 million for veterans insurance accounts. Interest on these latter accounts was terminated as of April 1, 1952.

The Budget-Appendix
Other public debt charges are estimated at $13-4 million, as compared with $11-1 million in 1951-52. The increase of $2-3 million is due chiefly to the increase of $2 million in the annual charges for amortization of bond discounts and commissions.
The following table presents a summary of public debt charges for 1952-53 and the corresponding figures for the previous year:

[Stage Direction]
Fiscal Year Ended March 31		Increase
	1953 (Estimated)	1952	Decrease (-)
	(In millions of dollars)		
Interest on Public Debt- Funded Debt and Treasury Bills- Payable in Canada	377-9	378-5	-0-6Payable in London	1-6	1-7	-0-1Payable in New York	10-0	10-5	-0-5S89-6	390-7	-1-2Deposit and Trust Accounts	30	2-8	0-2Insurance, Pension and Guaranty Accounts	55-0	38-9	16-1U7-B	4S2-4	15-1Additional amount required to place interest on public debt	87-5	-87-5Total Interest on Public Debt	447-5	519-9	-72-4Annual amortization of bond discounts and commissions....	11-7	9-7	2-0Servicing of Public Debt	0-5	0-3	0-2Cost of Issuing New Loans	1-2	1-1	0-1Total Public Debt Charges	460-9	531-0	-70-1
Subsidies and Tax Rental Payments to Provinces
Payments to the provinces during 1952-53 for statutory subsidies, the transitional grant to Newfoundland, rentals under the 1947 and 1952 tax rental agreements and the transfer of certain public utility tax receipts are estimated at $338 million compared with $127-2 million in 1951-52. A comparative summary of the payments for the two years is given in the following table:
	Fiscal Year Ended March 31		Increase
	1953 (Estimated)	1952	Decrease (-)
	(In millions of dollars)		
	20-1	20-1	
5-6	6-5	-0-923-8	96-9	-73-1284-8	284-8Transfer of certain public utility tax receipts (sec. 7, Chap. 58, Statutes of Canada, 1947, and sec. 6, Chap. 49, Statutes	3-7	3-7	
338-0	127-2	210-8
Statutory subsidy payments in 1952-53, as in 1951-52, were based on the 1951 census totals of population.
[Stage Direction]
The Budget-Appendix
Payments under the tax rental agreements increased by $211-7 million as a result of the new agreements signed in 1952 and the entry of the Province of Ontario into a tax agreement. The new tax rental agreements provide for larger guaranteed minimum payments and the adjusted rental payments are based on the increase in the gross national product per capita and the provincial population in the year preceding the year of payment instead of the average of the three preceding years as under the 1947 agreements. In addition to larger rental payments the new agreements also provide that all the instalments in respect of a year shall be paid within that fiscal year. Thus payments made in 1952-53 include the four instalments payable under the 1952 agreements in respect of 1952-53 as well as the concluding payment made under the 1947 agreements. A further reason for the larger amount shown for tax rental payments in 1952-53 arises from the discontinuance of the provincial 5% corporation income taxes which were levied by the agreeing provinces during the period when the 1947 agreements were in force. These taxes were administered and collected by the federal government and the proceeds thereof, when finally assessed, were turned over to the provinces. The amount turned over to the provinces (less small amounts representing the collection of interest and penalties) was deducted from the stipulated tax rental payments and in 1951-52 this reduced the federal budgetary expenditure shown on this account by $25 million. In keeping with the terms of the new tax agreements, these provincial corporation income taxes were not levied on profits earned after December 31, 1951, and the amount now held by the federal government on account of collections of these taxes is to remain in its hands. Accordingly nothing was turned over to the provinces on account of these taxes in 1952-53 and there were no deductions from the tax rental payments made to the provinces on this account corresponding to the deductions made in previous years.
The amount of the transfer of public utility tax receipts to the provinces is expected to be the same as in the previous year. Section 7 of the Dominion-Provincial Tax Rental Agreements Act, 1947, authorized the payment to the provinces, whether participating in the agreements or not, of a portion of the income tax collected from corporations, whose main business was the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam. Provision for similar payments was also made in the Tax Rental Agreements Act, 1952.
A summary of payments, by provinces during 1952-53 is given in the following table:

[Stage Direction]
-	Statutory Subsidies	Rentals under 1947 Tax Rental Agreements	Rentals under 1952 Tax Rental Argeements	Transi- tional Grant	Total
		(In millions of dollars)			
Newfoundland	1-6	2-1	10-7	5-6	20-0Nova Scotia	2-1	2-2	18-1	22-4Prince Edward Island	0-7	0-7	3-3	4-7New Brunswick	1-7	2-5	15-0	19-2Quebec	3-3	3-3Ontario	3-6	-	123-3	-	126-9Manitoba	1-7	2-9	23-1	-	27-7Saskatchewan	2-0	2-5	23-6	-	28-1Alberta	2-1	5-0	27-3	34-4British Columbia	1-3	5-8	40-4	-	47-520-1	23-8	284-8	5-6	334-3Transfer of certain public utility tax	receipts (Sec. 6, Chap. 49, Statutes	of Canada 1952)	3-7338-0
The Budget-Appendix
Government Contributions to the Civil Service Superannuation Account
It is estimated that $38-8 million will be charged to expenditures in 1952-53 in connection with the Civil Service Superannuation Account as compared with $110-9 million in 1951-52.
The government's contribution of an amount equal to the estimated payments by individual contributors in the previous year on account of current and prior service is estimated at $13-8 million representing an increase of $0-9 million over the total of $12-9 million in the previous fiscal year. In March, 1952, the policy of showing the full estimated actuarial liability in respect of the operation of the Superannuation Account on the government balance sheet was adopted. The amount of $214 million, by which this actuarial liability exceeded the balance of the account at the end of the fiscal year, was set up in 1951-52 as a deferred charge to be written off to budgetary expenditures as special contributions were voted by Parliament in future years. In 1952-53 an amount of $25 million is included in the expenditures for the year as a contribution to be applied to the reduction of this amount.
Provision for reserve for possible losses on ultimate realization of active assets
An amount of $75 million will be transferred during the year to the general reserve for possible losses on the ultimate realization of active assets with a corresponding amount being shown as an expenditure in the government's accounts. This will bring the balance in the reserve at the end of the fiscal year to $545-9 million which is equivalent to approximately 7 per cent of the aggregate active assets. No charge or write-off to the reserve is expected during the fiscal year.
Family Allowances, Old Age Assistance and Pensions to Blind Persons
Payments for family allowances are estimated at $334 [DOT] 1 million for 1952-53 representing approximately 7-7 per cent of the total expenditures as compared with $320-5 million or approximately 8-6 per cent of the total in 1951-52. This *estimated increase of $13 [DOT] 6 million is attributable chiefly to the natural increase in population in the eligible age groups.
Payments in respect of old age assistance and blind pensions (excluding pensions paid from the Old Age Security Fund) are estimated at $22 * 1 million for 1952-53 as compared with $83-2 million in 1951-52.
The present scheme of old age and blind pensions came into force on January 1, 1952, so that 1952-53 was the first full fiscal year of operations thereunder. TJp to that time both of these types of pension were available under the Old Age Pensions Act to those who were 70 years and over, or 21 years and over if blind, who satisfied the means and residence tests. Thereafter under the Old Age Security Act all persons 70 years and over who satisfied the residence requirements could receive pensions of $40 a month from the federal government out of the Old Age Security Fund which was established in accordance with that Act. At the same time the Old Age Assistance Act and the Blind Persons Act came into force. Under the first of these new Acts the federal government reimbursed the provinces by paying 50 per cent of the lesser of $40 monthly or the amount
[Stage Direction]
The Budget-Appendix
of assistance given by the provinces in the form of monthly pensions to eligible persons in need who were in the age group of 65 to 69. The same procedure was followed by the federal government in reimbursing provinces under the terms of the Blind Persons A.ct for pensions paid to eligible blind persons in need over the age of 21.
Payments in respect of old age assistance and blind pensions are estimated at $22-1 million for the full fiscal year 1952-53, whereas in the previous fiscal year only $6 million was expended on the same groups in the form of $3 [DOT] 7 million on blind pensions for the whole year and $2 [DOT] 3 million for old age assistance in the last quarter. During the first nine months of 1951-52, $77-2 million was spent on old age pensions under the old Act.
A comparative summary of the estimated payments for 1952-53 and actual outlays for 1951-52 is given in the following tables:

[Stage Direction]
Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Family Allowances	
Federal contributions to	334-1	320-5	13-6Old Age Pensions	-	77-2	-77-2Old Age Assistance	19-1	2-3	16-8Pensions to the blind	30	3-7	-0-7356-2	403-7	-47-5
The estimated distribution of these payments, by provinces, is shown in the following tables:

[Stage Direction]
Fiscal Year Ended March 31		Increase
	1953 (Estimated)	1952	
	(In millions of dollars)		
Newfoundland	10-9	10-6	0-3Nova Scotia	16-3	15-9	0-4Prince Edward Island	2-5	2-5	New Brunswick	14-2	13-9	0-3Quebec	107-4	102-9	4-5Ontario	98-2	93-2	5-017-3	16-7	0-619-7	19-4	0-3Alberta	22-6	21-6	1-024-4	23-1	1-30-6	0-6	
334-1	320-5	13-6

The Budget-Appendix

[Stage Direction]
-	Old Age Assistance Act	Pensions to the BlindNewfoundland	(In million 0-8 0-9 01 M 7-0 4-6 10 10 0-	9 1-	7 (')	of dollars) 0-1 0-3 C) 0-	3 1-	1 0-6 0-2 0-1 0-1 0-2 O'Nova Scotia	Prince Edward Island	New Brunswick	Quebec	Ontario	Manitoba	Saskatchewan	Alberta	British Columbia	Northwest and Yukon Territories	
19-1	3-0
(') Less than $50,000.
Unemployment Insurance Act Administration and Government's Contribution
Expenditures relating to the Unemployment Insurance Act (excluding the Government's payment as an employer) are estimated at $56-7 million for 1952-53, an increase of $2-9 million over the total of $53- 8 million for 1951-52.
Unemployment insurance benefit payments are not charged directly to budgetary expenditures, but to the Unemployment Insurance Fund which is financed by contributions from employers and employees, by interest earned on investments, and by the Government's contribution of an amount equal to one-fifth of the combined employer-employee payments.
The Government's contribution to the Fund for 1952-53 is estimated at $31-2 million compared with $29-9 million in 1951-52. Administration costs are estimated at $25-4 million or $1-5 million more than the total of $23-9 million for the previous fiscal year.
Agriculture
Expenditures of the Department of Agriculture are estimated at $117-3 million for 1952-53 compared with $67-1 million for 1951-52. The estimated increase of $50 [DOT] 2 million is due chiefly to increases of $40 [DOT] 3 million in the net operating loss of the Agricultural Prices Support Account, $6 million in freight assistance on western feed grains and $2 million in outlays on rehabilitation and reclamation projects. A reduction of $1-7 million in assistance to apple growers is expected to be slightly more than offset by increased costs of the science, production, marketing and experimental farms services and by the premium payments on hog carcasses.
The following table presents a comparative summary of the expenditures of the department for the last two years:
[Stage Direction]
The Budget-Appendix
Freight assistance on western feed grains. Rehabilitation and reclamation projects..
Premium on hog carcasses	
Experimental Farms Service	
Science Service	
Production Service	
Marketing Service	
Assistance to apple growers-
Nova Scotia and British Columbia... Net operating loss-
Agricultural Prices Support Board
[Stage Direction]
Departmental administration and sundry.
Fiscal Year Ended March 31		Increase or Decrease (-)
1953 (Estimated)	1952	
(In millions of dollars)		
210	15-0	6-013-9	11-9	2-06-2	5-4	0-88-5	7-7	0-88-8	7-5	1-39-0	8-8	0-25-0	4-6	0-4-	1-7	-1-742-0	1-7	40-32-9	2-8	01117-3	67-1	50-2
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration are estimated at $23-7 million for 1952-53, an increase of $0-5 million over the total of $23 * 2 million in 1951-52.
The following table presents a comparative summary of the expenditures for the last two fiscal years:
-	Fiscal Ye Marc 1953 (Estimated)	ar Ended .h 31 1952	Increase or Decrease (-)Citizenship and Citizenship Registration	(In 0-8 7-4 15-1 0-4	millions of doll 0-5 8-2 14-0 0-5	ars) 0-3 -0-8 11 -0-1
Administration and general				
	23-7	23-2	0-5
External Affairs
Expenditures of the Department of External Affairs are estimated at $39-1 million for 1952-53 or $1-5 million more than the total outlay of $37-6 million in the previous year. Assistance to other countries directly or through international organizations is estimated at $26 [DOT] 1 million for 1952-53 compared with $26-4 million in 1951-52, the principal item in the category being the amount of $25 million provided under the Colombo Plan for assistance to countries in South and South-East Asia. Outlay for membership in commonwealth and international organizations is estimated at $3-5 million and administrative and general expenditures of the department are expected to amount to $9-5 million. The corresponding expenditures in 1951-52 were $2 * 7 million and $8 [DOT] 5 million respectively.

The Budget-Appendix
Finance
The major items of expenditure for the Department of Finance have already been dealt with, in comparative form, under the headings "Public Debt Charges", "Subsidies and Tax Rental Payments to Provinces", "Provision for reserve for possible losses on the ultimate realization of active assets" and "Government's Contribution to the Civil Service Superannuation Account".
In addition, it is estimated that amounts totalling $30-8 million will be spent in 1952-53 compared with $29-5 million in 1951-52. The following table presents a comparative summary of these expenditures for the past two fiscal years:
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Administration expenses-Office of the Comptroller of The			
Treasury	13-4	12-6	0-8Grants to Universities	7-2	7-0	0-2Grants to Municipalities in lieu of taxes on federal property..	2-7	2-1	0-6Government's contribution as an employer to the Unemploy-	ment Insurance Fund	11	1-1	Federal government's share of claims-Rimouski and	Cabano fires	0-2	1-2	-1-0Implementation of guarantees-Ming Sung Industrial Co.	Ltd	1-7	1-3	0-4Departmental administration and general	4-5	4-2	0-330-8	29-5	1-3
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys are estimated at $29-7 million for 1952-53 compared with $27-8 million for 1951-52. The increase of $1-9 million is due chiefly to increases of $1-4 million in the expenses of the Dominion Coal Board and $1-7 million in general and administration expenditures, offset by a decrease of 81 million in expenditures under the Emergency Gold Mining Assistance programme.
National Health and Welfare
Family Allowances, Old Age Assistance and Pensions to the Blind constitute the major items of expenditure for the Department of National Health and Welfare and because of their importance in relation to the total government expenditures, they have been dealt with separately under their respective headings in preceding paragraphs. It is estimated that the department's expenditures for all other services will amount to $55-9 million in 1952-53 as compared with $45-4 million in 1951-52. General health grants to assist the provinces in hospital construction, the strengthening of general public health services and the control of diseases are estimated at $31 million, an increase of $6-7 million compared with $24-3 million for 1951-52. Administration and general expenses, including Indians' and Eskimos' health services, are estimated at $24-9 million, an increase of $3-8 million over the total of $21-1 million for 1951-52.
National Research Council and Atomic Energy Control Board
The National Research Council expenditures for 1952-53 are estimated at $16-5 million indicating an increase of $3-7 million over the total of $12-8 million for 1951-52. Expenditures of the Atomic Energy Control Board are estimated at $12-7 million for 1952-53 compared with $12-3 million in the previous fiscal year.
[Stage Direction]
The Budget-Appendix
National Revenue
Expenditures for the Department of National Revenue are estimated at $47-7 million for 1952-53 compared with $45-8 million for 1951-52. Of the total increase of $1 -9 million, $1-7 million is for the Customs and Excise Divisions and $0-2 million for the Taxation Division.
The following table presents a comparative summary of the expenditures of the department for the last two fiscal years:
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Customs and Excise Divisions	25-6	23-9	1-7Taxation Division	22-0	21-8	0-20-1	0-1	47-7	45-8	1-9
Post Office
Gross expenditures of the Post Office Department for 1952-53, including payments from revenue, are estimated at $124 million, an increase of $8-3 million over the total of $115-7 million for 1951-52. Remunerations of postmasters, staffs at revenue and semi-staff offices and commissions at sub-offices are paid from revenue. These payments, included in the total of $124 million, are estimated at $17-8 million for 1952-53 compared with similar payments amounting to $17-7 million in the previous fiscal year. Other disbursements which are charged to budgetary expenditures are estimated at $106-2 million for 1952-53 while the corresponding total for the previous fiscal year was $98 million.
The following table presents a comparative summary of the expenditures for 1952-53 and 1951-52:
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
Charged to Expenditures- Operations-including salaries and other expenses of staff post offices, district offices and railway mail services and supplies and equipment and other items for	(In millions of dollars)		
revenue post offices	
Transportation-movement of mail by land, air and	61-0	56-3	4-7water	41-6	38-4	3-2Financial services	2-4	2-3	0-1Departmental administration and general	1-2	1-0	0-2Charged to Revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-	106-2	98-0	8-2offices and other disbursements	17-8	17-7	0-1124-0	115-7	8-3
The Budget-Appendix
Public Works
Expenditures of the Department of Public Works for 1952-53 are estimated at $81 million compared with a total of $77 * 5 million for 1951-52. The following table presents a comparison of expenditures for the last two fiscal years:
-	Fiscal Ye Mar< 1953 (Estimated)	ar Ended ih 31 1952	Increase or Decrease (-)Architectural Branch- Public Buildings-Ottawa	
Public Buildings-Other than Ottawa	(In 12-1 17-8 20-6 28-9 1-6	millions of doll 10-1 15-6 250 25-2 1-6	ars) 2-0 2-2 -4-4 3-7
Administration and general				
	81-0	77-5	3-5
Increases totalling $4-2 million for the operation and maintenance of federal public buildings are more than offset by decreases of $4-4 million in other expenditures of the Architectural Branch. Expenditures of the Engineering Branch are estimated at $28-9 million for 1952-53, an increase of $3-7 million over the total of $25-2 million in 1951-52.
Resources and Development
Estimated expenditures of $35-6 million for the Department of Resources and Development for 1952-53 are $3-8 million greater than the total of $31-8 million for 1951-52. The following table presents a comparative summary of expenditures for the last two fiscal years:
-	Fiscal Ye Mar 1953 (Estimated)	ar Ended ;h 31 1952	Increase or Decrease (-)National Parks Branch	(In 7-3 17-1 3-7 3-7 1-4 1-9 0-5	millions of doll 7-0 15-2 31 3-4 1-4 1-4 0-4	ars) 0-	3 1-	9 0-6 0-3 0-5 0-1Engineering and Water Resources Branch	
Northern Administration and Lands Branch	
Forestry Branch	Canadian Government Travel Bureau	Administration and general	35-6	31-8	3-8
Expenditures of the Engineering and Water Resources Branch are estimated at $17.1 million, of which $13 million represents the Government's contribution to the provinces in connection with the Trans-Canada Highway. In 1951-52 the contribution was $12-8 million.
Royal Canadian Mounted Police
Expenditures for 1952-53 of the Royal Canadian Mounted Police are estimated at $32-1 million compared with a total of $27-3 million for 1951-52. The following table presents a comparison of expenditures for the last two fiscal years:
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-	Fiscal Ye Mar 1953 (Estimated)	ar Ended 3h 31 1952	Increase or Decrease!-)(In 28-2 10 0-4 0-5 20	millions of doll 23-5 0-9 0-2 0-	9 1-	8	ars) 4-7 01 0-2 -0-4 0-2
Government contribution to the Royal Canadian Mounted Police Pension Account	 Administration and general				
	32-1	27-3	4-8
Expenditures for land services are estimated at $28-2 million in 1952-53 compared with $23 [DOT] 5 million in the previous fiscal year. Increases of $0-1 million in marine services, $0-2 million in aviation services and $0-2 million in administration and general are largely offset by a decrease of $0-4 million in the Government's contribution to the Royal Canadian Mounted Police Pension Account.
Trade and Commerce
Expenditures of the Department of Trade and Commerce are estimated at $17-1 million for 1952-53, a decrease of $4-7 million from the total of $21-8 million for 1951-52. The following table presents a comparative summary of expenditures for the last two fiscal years:
-	Fiscal Ye Mar 1953 (Estimated)	ar Ended 3h 31 1952	Increase or Decrease (-)Trade Commissioner Service	(In 2-3 1-	4 5-8 4-8 2-	8	millions of doll 21 1-3 10-6 3-	8 4-	0	ars) 0-2 01 -4-8 10 -1-2Dominion Bureau of Statistics	Administration and General	17-1	21-8	-4-7
The decrease of $4-8 million in expenditures of the Dominion Bureau of Statistics is largely attributable to the absence in 1952-53 of expenditures comparable to those in 1951-52 for the census of population and agriculture and the 1951 census of distribution. Increases of $0-2 million in outlay for the Trade Commissioner Services, $0-1 million for the Standards Division and $1-0 million for expenditures under the Canada Grain Act are largely offset by a decrease of $1-2 million in administration and general expenditures which are estimated at $2-8 million. The decrease in this latter category is due mainly to a non-recurring expenditure in 1951-52 of $1-6 million representing a payment with respect to the Greater Winnipeg Dyking Board.
Transport
Expenditures of the Department of Transport are estimated at $107-6 million for 1952-53, an increase of $7-7 million over the corresponding total of $99-9 million for 1951-52, as shown in the following table:

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	Fiscal Year Ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Air Services-			
Telecommunications Division	13-4	12-0	1-4Meteorological Division	6-8	6-1	0-7Civil Aviation	20-4	17-9	2-540-6	S6-0	4-6Other Services-	Canal Services	10-0	8-0	2-022-6	17-5	5-1Railway Services (including Maritime Freight Rates	Act and maintenance of trackageC.N.R,and C.P.R)	21-9	12-3	9-6Canadian Maritime Commission	40	4-5	-0-5Deficits and non-active advances-	Government-owned enterprises	5-3	18-2	-12-9Departmental administration and sundry	3-3	3-4	-0-1107-6	99-9	7-7
Estimated expenditures for air services reflect increases of $1-4 million for the telecommunications division, $0-7 million for the meteorological division and $2-5 million for civil aviation. Outlays in canal services are expected to total $10 million, an increase of $2 million over the previous year while marine services expenditures are estimated at $22-6 million, or $5-1 million more than in 1951-52. Railway services, at $21-9 million, are expected to be $9-6 million higher than in 1951-52. Of the total increase in the latter category, $3-8 million is due to payments under the Railway Act, Chap. 22, sec. 18, (Statutes 1951) to the Canadian National and Canadian Pacific Railways for the maintenance of trackage on the railways' transcontinental lines in certain areas of Northern Ontario. These increases which reflect increased activity in the airport, vessel and other construction programmes of the department, larger payments under the Maritime Freight Rates Act and general increases in the costs of normal continuing services, are offset in part by estimated reductions of $0-5 million in the expenditures of the Canadian Maritime Commission and $12-9 million in deficits and non-active advances to government-owned enterprises.
The following table presents a comparative summary of expenditures for deficits of, and non-active advances to, government-owned enterprises for 1952-53 and 1951-52.
NET INCOME DEFICITS AND NON-ACTIVE ADVANCES TO GOVERNMENT-OWNED ENTERPRISES FOR THE FISCAL YEARS ENDED MARCH 31, 1953 And MARCH 31, 1952
	Fiscal Year Ended March 31		Increase
	1953 (Estimated)	1952	Decrease (-)
Net Income Deficits-	(In millions of dollars)		
			
Canadian National Railways	150	-15-0Canadian National (West Indies) Steamships, Ltd.	0-5	-0-5North Sydney-Port aux Basques Ferry and Terminals	1-8	1-8Prince Edward Island Car Ferry and Terminals	1-5	1-4	0-1National Harbours Board	0-1	0-1	3-4	17-0	-13-6Loans and Advances, Non-Active-	National Harbours Board	1-9	1-2	0-75-3	18-2	-12-9
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The expected decrease of $12-9 million in this category is due to the fact that the C.N.R. mainly because of the change in its capital structure which reduced interest charges, as authorized by the C.N.R. Capital Revision Act, 1952 did not incur a deficit in the calendar year 1952. In 1951 the Railway's deficit was $15 million.
Veterans Affairs
Total expenditures for the Department of Veterans Affairs are estimated at $242 [DOT] 5 million for 1952-53, an increase of $26 [DOT] 5 million compared with the total of $216 million for 1951-52. The table which follows presents a comparative summary of the expenditures for the two fiscal years:
	Fiscal year ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
	(In millions of dollars)		
Pensions (World Wars I and II and Northwest Rebellion			
1885)	127-1	103-7	23-5Treatment Services	420	39-6	2-4War Veterans' allowances and other benefits	30-9	29-6	1-3War service gratuities and re-establishment credits	11-1	9-8	1-3Post-discharge rehabilitation benefits	4-0	6-6	-2-6Soldier Settlement and Veterans' Land Acts-	Administration and general	5-7	5-9	-0-2Provision for reserve for conditional benefits	8-0	7-6	0-4Departmental, district and pensions administration and	miscellaneous payments	13-7	13-2	0-5242-5	216-0	26-5
The increase of $26-5 million in the department's expenditures for 1952-53 is due mainly to increased rates of pension which became payable in January 1952 as a result of amendments to the Pension Act. Consequently, the revision which was applicable for only three months of 1951-52 was in effect for all of 1952-53.
The provision for the reserves for conditional benefits under the Veterans' Land Act is estimated at $8 million, an increase of $0-4 million over the previous year. Conditional grants are made to veterans who enter into agreements with the director for sales of land and chattels provided they fulfil the terms of the agreements for a period of ten years. The amount charged to expenditures during 1952-53 under this heading covers one-tenth of the conditional benefits included in sales to veterans prior to April, 1953.
4.	THE CASH POSITION
In the preceding sections of this Part the budgetary transactions of the Government for the fiscal year 1952-53 have been described in some detail and the estimated budgetary revenues and expenditures and surplus have been analyzed and compared with the actual figures for the preceding fiscal year. However, the budgetary accounts do not reflect the full scope of the Government's financial operations which extend beyond the collection of revenues or

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the making of expenditures in the strict or narrow accounting or budgetary meaning of those terms. While a substantial part of all governmental activities is directly reflected in the budgetary accounts, large amounts of cash are received and disbursed in connection with extra-budgetary transactions and these receipts and disbursements must be taken into account when measuring the impact of the Government's financial operations upon the economy or analyzing the implications of Government spending and the methods by which that spending is financed.
Consequently in determining the over-all cash surplus or deficit for the fiscal year, the cash available from or required for non-budgetary as well as budgetary transactions must be taken into account.
The non-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the Government's assets and liabilities. They do not appear in the Government's income account nor do they enter into the calculation of the annual budgetary surplus or deficit. On the assets side, they consist, for the most part, of advances to and repayments of loans by Crown corporations and other government agencies, foreign, provincial and municipal governments and other borrowers, investments in government securities and outlays for the acquisition of inventories of materials which will be used in the future, and for services rendered in one year but applicable to the accounts of subsequent years. On the liabilities side, the transactions relate primarily to receipts and payments in connection with the numerous deposit and trust, and annuity, insurance and pension funds held or administered by the Government.
The following summary shows how the non-budgetary transactions and the budgetary surplus affect the Government's funded debt and cash position in 1952-53. For purposes of comparison the corresponding figures for 1951-52 are also shown:
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	Fiscal Year Ended March 31	
	1953 (Estimated)	1952
	(In millions of dollars)	
Non-Budgetary Disbursements (excluding unmatured funded debt transactions)- . Loans, investments and working capital advances-[DOT]	124-8	139-9
Loans to and investments in Canadian National Railways			
Loans to Central Mortgage and Housing Corporation	75-8	73-7Temporary loans to Old Age Security Fund	100-0	-Advances to Agricultural Prices Support Account	66-7	4-8Advances to Exchange Fund	50-0	200-0Advances to Defence Production Revolving Fund	34-4	82-4Loans under Soldier Settlement and Veterans' Land Acts	7-1	9-1Other loans, investments and working capital advances	8-0	18-0(466-8)	(527-9)Other non-budgetary expenditures-	8-7	-5-7Cost of loan flotations (portion to be amortized)	Net decrease in provincial 5 per cent Corporation Income Tax	30-7	-14-4Suspense Account	Net decrease in outstanding cheques, interest due, accounts payable,	108-6	42-3Net decrease in cash balances of Unemployment Insurance Fund..	4-7	1-6Net disbursements from sundry accounts	7-8	-(160-5)	(23-8)Total	627-3	551-7Non-Budgetary Receipts (excluding unmatured funded debt transactions)- . . Repayments of loans, investments and working capital advances-	23-5	31-11942 Loan to United Kingdom	1946 Loan to United Kingdom	14-3	14-0Loans to other foreign Governments	20-7	14-3Loans to Provincial and Municipal Governments	3-8	4-2Other Loans, investments and working capital advances	2-0	-(64-3)	(63-6)Net Government Annuities Account receipts-	30-0Premium receipts less payments to beneficiaries	34-0	Interest paid by Government	' 27-1	24-7Government contribution to maintain reserve	1-0	0-9(62-1)	(55-6)Net insurance and pension account receipts-	12-1	13-5Employee contributions less payments to beneficiaries	Government contributions	44-2	66-6Special Government provision for unamortized portion of Civil	25-0	75-0Service Superannuation Account liability	Interest paid by Government	27-9	14-2(109-2)	(169-3)Net increase in Defence Equipment Replacement Account	66-1	25-9Net increase in interest accrued on the public debt	7-0	87-5Net increase in reserve for possible losses on the ultimate realization	75-0	75-0of active assets	Net increase in reserve for conditional benefits-	7-6Veterans' Land Act	8-1	Net receipts from sundry accounts	57-3	72-3Total	449-1	556-8Net Non-Budgetary Requirements	178-2	-5-1Deduct:	47-8	248-0Overall Cash Deficit (-) Required to be Financed by Borrowing	-130-4	Overall Cash Surplus Available for Debt Reduction	253-1Net Increase or Decrease (-) in Unmatured Funded Debt Out-	*141-7	STANDING IN THE HANDS OF THE PUBLIC	-383-9Net Increase or Decrease (-) in Cash Balances	11-3	-130-8
* Adjusted for changes in Securities Investment Account and Sinking Fund

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As the table shows, non-budgetary disbursements are expected to amount to $627 [DOT] 3 million in 1952-53 and non-budgetary receipts to $449 [DOT] 1 million, resulting in a non-budgetary deficit of $178-2 million compared with a surplus of $5-1 million for 1951-52. Deducting from this sum the budgetary surplus of $47-8 million, a net cash deficit of $130-4 million remains to be financed by additional borrowing from the public. In 1951-52, a cash surplus of $253-1 million was available for debt redemption.
Non-budgetary disbursements, which are estimated at $627-3 million, include $124-8 million to the Canadian National Railways, $75-8 million to Central Mortgage and Housing Corporation for housing construction and housing loans, $100 million in temporary loans to the Old Age Security Fund to cover the excess of pension payments over tax receipts, $66-7 million for advances to the Agricultural Prices Support Account, $50 million for advances to the Exchange Fund, $34-4 million for advances to the Defence Production Revolving Fund for the acquisition and stockpiling of defence materials, $15-1 million for miscellaneous loans, investments and working capital advances (including $7-1 million for loans to veterans), $8-7 million for discounts and commissions on loan flotations, $30-7 million for the decrease in the balance of the Provincial 5 per cent corporation income tax suspense account, $108-6 million for the decrease in outstanding cheques, interest due and accounts payable, $4-7 million representing the decrease in the cash balances of the Unemployment Insurance Fund, and $7-8 million in disbursements from sundry accounts.
Non-budgetary receipts, amounting to an estimated total of $449-1 million, are made up of $62 * 1 million from net Government Annuities Account receipts, $109-2 million from insurance, pension and liability account receipts, $64-3 million from repayments of sundry loans and investments (of which $58-5 million was from the United Kingdom and other foreign governments), $75 million representing the increase in the general reserve for possible losses on the ultimate realization of active assets, $66-1 million the increase in the Defence Equipment Replacement Account, and $72-4 million receipts from sundry accounts.
To finance the over-all cash deficit of $130-4million on budgetary and nonbudgetary account, unmatured funded debt in the hands of the public will increase during 1952-53 by $141-7 million, with the result that the Government's cash balances will be increased by $11-3 million.
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5.	ESTIMATED BALANCE SHEET POSITION AT MARCH 31, 1953.
The following table presents in summary form the Government's estimated balance sheet position at March 31, 1953, with the comparable figures for March 31,1952.
SUMMARY OF THE LIABILITIES AND ASSETS OF THE GOVERNMENT OF CANADA AS AT MARCH 31, 1953 and MARCH 31, 1952
(in millions of dollars)
	Fiscal year ended March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
Liabilities	739-1 185-1 1,557-9 1300 345-5 11-9 14,837-6	847-7 131-8 1,416-3 124-6 304-5 11-9 14,695-4	-108-6 53-3 141-6 5-4 41-0
			
			
			
			
			
			142-2
Active Assets			
17,807-1	17,532-2	274-92,516-7 1,687-9 2,528-2 27-1 2-3 252 0 201-3	2,330-2 1,472-7 2,591-3 25-9 2-3 268-3 127-1	186-5 215-2 -63-1 1-2
Sinking fund and other investments held for retirement of			
			
			-16-3 74-2
			
			
	7,215-5 545-9	6,817-8 470-9	397-7 75-0
Less: Reserve for possible losses on ultimate realization of			
			
	6,669-6	6,346-9	322-7
			
	11,137-5	11,185-3	-47-8
			
The aggregate liabilities of the Government as at March 31, 1953, are estimated at $17,807-1 million, an increase of $274-9 million over the corresponding total at the end of the previous year. Unmatured funded debt outstanding, including bonds, treasury bills and deposit certificates, accounts for $14,837-6 million or approximately 83 per cent of all liabilities. Of the total unmatured funded debt now outstanding, only $389 [DOT] 7 million or approximately 2-6 per cent is payable in foreign currencies-$337-6 million in United States dollars and $52 [DOT] 1 million in pounds sterling. A complete statement in tabular form of the Government's unmatured funded debt as at March 31, 1953 with details of interest rates, dates of maturity, annual interest charges and amounts of principal outstanding for each loan may be found at the end of this Part.
Floating debt, consisting of outstanding cheques and interest, matured funded debt and similar obligations payable on demand and accounts payable (cheques issued in April in payment of accounts relating to 1952-53), is estimated at $739 [DOT] 1 million. Insurance, pension and guaranty accounts are expected to total $1,557-9 million.

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The other liability items are: sundry suspense accounts (where some uncertainty as to disposition exists), $345-5 million; deposit and trust accounts (consisting of moneys deposited with or held by the Receiver General for various purposes), $185-1 million; deferred credits (consisting of balances whose ultimate accounting treatment is known, but which are held until certain conditions are fulfilled), $130 million and province debt accounts (representing settlements arising out of agreements at the time of Confederation), $11-9 million.
Offsetting these liabilities and in a measure explaining their existence- as a substantial portion of the total debt is attributable to them-are the Government's active assets. These, for the most part, consist of assets that yield interest, profits or dividends, very liquid assets such as cash and departmental working capital funds, and certain prepaid expenditures and sundry suspense accounts.
It is expected that the aggregate active assets of the Government as at March 31, 1953 will amount to $7,215-5 million. The totals of the principal active asset categories as at that date are estimated at: cash and other current assets, $2,516-7 million; loans to, and investments in, Crown agencies, $1,687-9 million; other loans and investments (including loans to provincial, municipal, United Kingdom and other governments, subscriptions to international organizations and a number of miscellaneous advances to veterans and others), $2,528-2 million; deferred charges, $252 million; sinking fund and other investments held for retirement of unmatured funded debt, $27 [DOT] 1 million; province debt accounts, $2-3 million and sundry suspense accounts, $201-3 million.
The reserve for possible losses on ultimate realization of active assets which now stands on the books at $545-9 million is shown on the balance sheet as a deduction from the total of active assets, bringing the net active asset total to $6,669 [DOT] 6 million.
A. Changes in Principal Liability Classifications During
The increase in the gross liabilities of the Government during the fiscal year is estimated at $274-9 million. The most important increase is in the outstanding unmatured funded debt of the Government which is expected to increase by $142-2 million from $14,695-4 million at March 31, 1952 to an estimated amount of $14,837-6 million at March 31, 1953. Other increases are $141-6 million in insurance, pension and guaranty accounts, $41 million in sundry suspense accounts, $53 [DOT] 3 million in deposit and trust accounts and $5 [DOT] 4 million in deferred credits. These increases, however, are offset by a decrease of $108-6 million in floating debt.
Floating Debt
It is estimated that floating debt will decrease by $108-6 million during the fiscal year due chiefly to decreases of $63 * 9 million in outstanding cheques and warrants and $32 million in accounts payable. The latter is a new account set up to record cheques issued in April in payment of accounts pertaining to the year ended March 31st, which formerly were shown as outstanding cheques. For purposes of comparison the corresponding liability as at March 31, 1952 is shown on the same basis.
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The changes in floating debt during 1952-53 are shown in the following table:
FLOATING DEBT AS AT MARCH 31, 1953 AND MARCH 31, 1952 (In millions of dollars)
	Balance at March 31		Increase or
1953 (Estimated)	1952	Decrease (-)18-1	24-7	-6-6284-8	289-6	-4-855-2	56-5	-1-3145-0	208-9	*-63-9221-0	253-0	-32-015-0	15-0	
739-1	847-7	-108-6
Deposit and Trust Accounts
It is estimated that there will be an increase of $53-3 million during the fiscal year in deposit and trust accounts. Contractors' holdback accounts are expected to total $24-1 million and the balance of the Colombo Plan Fund which it is proposed to establish and to which will be credited the undisbursed portion of the amount voted by Parliament to provide for assistance to countries in South and South-east Asia is estimated at $17 million. It is also expected that there will be increases of $5-4 million in contractors' security cash deposits and $5-9 million in the Prairie Farm Emergency Fund.
Insurance, Pension and Guaranty Accounts
Insurance, pension and guaranty accounts show an estimated increase of $141-6 million during the fiscal year 1952-53. The following table shows the changes in the various accounts in this category.

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(In millions of dollars)
	Balance at March 31		Increase or
1953 (Estimated)	1952	Decrease (-)738-0	675-9	62-1154-3	111-0	43-3555-0	520-3	34-7110-6	109-1	1-5
1,557-9	1,416-3	141-6
The Government Annuities Account is expected to show an increase of $62-1 million during the year 1952-53. The increase of $34-7 million in the Civil Service Superannuation Account reflects the amount by which the sum of employees' current and prior service contributions, the Government's contribution of an amount equal to the estimated current and prior service payments of individuals in the previous fiscal year, and interest accretions are expected to exceed payments from the account. An estimated increase of $43-3 million

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in the Permanent Services Pension Account represents the amount by which the contributions by permanent services personnel for current service and arrears, the Government's contribution (which is made at the rate of one and two-thirds times the current contributions and contributions for arrears) and interest accretions exceed payments from this account.
Deferred Credits
Deferred credits are expected to show a net increase of $5-4 million during the fiscal year; of this amount $7 million is attributable to the increase in interest accrued on public debt.
Sundry Suspense Accounts
Sundry suspense accounts are expected to show an increase of $41 million during the fiscal year. Of this total, $66 * 1 million is due to transactions relating to the Defence Equipment Replacement Account reflecting an increase in the undisbursed balance of the credits to the account under section 3 of The Defence Appropriation Act, 1950 and subsequent votes of Parliament for the same purpose. Under the terms of The Defence Appropriation Act, 1950, the value of defence materials and supplies transferred to members of the North Atlantic Treaty Organization may be credited to the account and these credits may be used in subsequent years to purchase equipment or supplies for the naval, army or air services of the Canadian Forces. The net increase in the account during the year represents the amount by which the value of defence materials and supplies transferred exceeds cash disbursements for replacements.
Replacement of material, section 11, National Defence Act, account is expected to show an increase of $13-7 million. This increase represents the amount realized from the sale of material that has not been declared surplus to requirements but has been authorized by Governor in Council to be sold to other countries less the amount which has been paid out of the account for the procurement of replacement material.
The interim payment of $6-3 million from the Canadian Wheat Board on account of surplus which had been held in suspense and transferred to revenue in the fiscal year 1952-53 and the transfer of the amount of $2 million in the German Reparations Suspense Account to the War Claims Fund, account for the principal decreases in the sundry suspense accounts.
Also recorded under this heading is the amount held by the Government in respect of collections of the 5 per cent corporation income tax levied by the provinces that were party to a tax agreement with the Federal Government in the period 1947 to 1951. Under terms of collection agreements with the provinces, this tax was collected by the Federal Government and the proceeds thereof, when returns were finally assessed, were turned over to the provinces. The amount turned over to the provinces, (less any small amounts which represented collection of interest and penalties) was deducted from the stipulated tax rental payments and thus reduced the Federal expenditures shown on this account.
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This arrangement was not continued under the new tax agreements signed for a further five years in 1952 and the provincial corporation income tax was not levied on profits earned after Dec. 31, 1951. However, substantial amounts have been collected throughout 1952-53 in respect of tax liability for 1951 and previous years and the account now contains approximately $92 million. The new tax agreements with the Provinces, signed in 1952, contain a provision releasing the Federal Government from all further obligations to the Provinces in respect of amounts it has collected of the provincial corporation income tax. Accordingly nothing has been turned over to the Provinces in 1952-53 from this account. Prior to 1952-53 amounts in this account, when turned over to the Provinces, served to reduce Federal Government expenditures but under the new arrangement the amount in the account will be taken into Federal revenue as assessments for the taxation years 1947 to 1951 are completed and as amounts still owing under the provincial 5 per cent corporation income tax are collected and necessary refunds made. In 1952-53 it is expected that $45 million or approximately one-half of the balance remaining in the account will be transferred to revenue as "Special Receipts and Credits."
Province Debt Accounts
It is expected that there will be no increase or decrease during the fiscal year in the Government's liability in respect of the province debt accounts. These amounts have remained unchanged for many years.
Funded Debt Unmatured
It is estimated that unmatured funded debt will amount to $14,837-6 million at the close of the fiscal year, an increase of $142-2 million over the corresponding total at March 31, 1952. An increase of $149 million in debt payable in Canada is offset by decreases in the Canadian dollar equivalent of debt payable in London and in New York of $1 million and $5-8 million respectively. The details of the various loan redemptions, flotations and adjustments resulting in this net increase are described more fully in the section on "The Public Debt".
B. Changes in Principal Active Asset Classifications During 1952-53
It is estimated that there will be an increase of $397 [DOT] 7 million in the total of active assets during the fiscal year under review. However, with the provision of an additional $75 million for the reserve for possible losses on ultimate realization of active assets, active assets are expected to show a net increase of $322-7 million at the close of the fiscal year 1952-53. It is expected that estimated increases of $186-5 million in cash and other current assets, $215-2 million in loans to, and investments in, Crown agencies, $1 [DOT] 2 million in sinking fund and other investments held for retirement of unmatured funded debt and $74-2 million in sundry suspense accounts will be offset by decreases of $63-1 million in other loans and investments and $16-3 million in deferred charges.
Cash and Other Current Assets
An increase of $186-5 million in cash and other current assets is estimated for the fiscal year as shown in the following table which summarizes changes expected in the various accounts in this category:

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(In millions of dollars)
Cash in current and special deposits including blocked currency	
Year-end adjustment accounts-
Deposits in transit	
Departmental banking accounts	
Accountable advances to individuals	''
Advances to contractors	
Accounts receivable	'' ^
Other liquid assets-
Exchange Fund Account-
Advances represented by cash and securities....
Securities investment account	
Working Capital Advances-
Departmental-
Defence production revolving fund	
Temporary loan to Old Age Security Fund
Other	
Crown corporations	' ' ]
Balance at March 31		Increase or Decrease (-)
1953 (Estimated)	1952	
174-6	163-3	11-383-5	83-0	0-511-3	8-1	3-22-4	0-3	2-110-5	7-8	2-766-5	67-8	-1-31,775-8	1,799-4	-23-658-2	58-9	-0-7116-8	82-4	34-4100-0	100-090-1	35-3	54-827-0	23-9	3-12,516-7	2,330-2	186-5
The principal changes as shown in the table were increases of $11-3 million in cash in current and special deposits, $100 million in temporary loans to the Old Age Security Fund, $34 [DOT] 4 million in the Defence Production Revolving Fund, and $54 [DOT] 8 million in other departmental working capital advances. These are offset in part by a decrease of $23-6 million in the Exchange Fund Account.
The decrease in advances to the Exchange Fund reflects additional cash advances of $50 million required during the year to finance the purchase of gold and foreign exchange offset by $73-6 million equivalent to the increase in the Fund's revaluation deficit during 1952 which is deducted from the total advances and cairied to sundry suspense accounts. The Fund's revaluation deficit at December 31, 1952, was $199-2 million compared with $125-6 million at the end of the preceding year.
Working capital advances are estimated at $333-9 million an increase of $192-3 million over the previous year.
An amount of $100 million is included under this heading for temporary advances to the Old Age Security Fund. Under authority of the Old Age Security Act temporary loans may be made and credited to the fund sufficient to make up the difference between the amount of pensions paid under the act and the amount of Old Age Security tax collected and credited to the fund. As pensions payments from the Fund are estimated at $324 million and tax receipts credited to the Fund at only $224 million, the deficit for 1952-53 is expected to amount
to $100 million which will be covered by temporary advances to the Fund
2220
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The Budget-Appendix
Working capital advances to the Department of Agriculture are expected to show an increase of $56 [DOT] 9 million for the year. This increase is due principally to the expansion of the Agricultural Prices Support program resulting from the effect of the foot and mouth disease in Canada and the subsequent embargo on the export of live stock and live stock products to the United States. The estimated loss of $42 million on operations for 1952-53 is included as a charge in the year's expenditures.
Loans to, and Investments in, Crown Agencies
It is estimated that loans to, and investments in, Crown agencies will increase $215-2 million during the year. The estimated changes during the fiscal year in this category are shown in the following table:
	Balance at March 31		Increase or
	1953 (Estimated)	1952	(->
5-9	5-9	
Central Mortgage and Housing Corporation-	25-0	25-0	410-8	335-0	75-828-9	27-3	1-61,028-7	903-9	124-8106-9	106-9	36-0	38-0	-2-0Other Crown Agencies	45-7	30-7	15-01,687-9	1,472-7	215-2
Loans to Central Mortgage and Housing Corporation for the year are estimated at $80-5 million, of which $66 million is for lending purposes, $7 million for construction and $7-5 million for Federal-Provincial housing projects. Repayments estimated at $4-7 million will bring the net increase in advances for the year to $75 [DOT] 8 million.
It is estimated that in the fiscal year ending March 31, 1953, the Government will have made net advances to the Canadian National Railway Company of $101 million for capital purposes, retirement of funded debt in the hands of the public and to cover the deficit arising in the first three months of 1953. In addition, to assist the company to finance additional capital expenditures, the Government will have purchased an estimated amount of $23 [DOT] 8 million of the Company's 4 per cent Preferred Stock. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to three per cent of the gross revenues of the Company.
No change is expected in the advances to the National Harbours Board, the amount outstanding remaining at $106-9 million. These advances represent outstanding advances in connection with harbour developments at Montreal and Vancouver and are the only advances to the National Harbours Board which are classified as active assets in the Government's accounts.
The Government's investment in Polymer Corporation Limited, a crown corporation engaged in the manufacture of synthetic rubber, is expected to be reduced by $2 million during the year, representing a further payment of $1 million on the debenture issue in addition to the $1 million repayment of the serial debenture due March 31, 1953.
The advances to the Canadian Farm Loan Board are estimated at $28-9 million, an increase of $1-6 million for the fiscal year.

The Budget-Appendix
Loans to, and investments in other Crown agencies are expected to total $45-7 million at the close of the year, an increase of $15 million over the corresponding total at the end of the previous year. The total of $45-7 million includes loans to, or investments in, Canadian Broadcasting Corporation, $11-2 million; North-west Territories Power Commission, $8-4 million; Eldorado Mining and Refining (1944) Limited, $8-2 million; Export Credits Insurance Corporation, $5 million; and Atomic Energy of Canada Limited $9-2 million.
Other Loans and Investments
This group of assets includes loans to the United Kingdom and various foreign governments, the Government's subscriptions to the capital of the International Monetary Fund and the International Bank for Reconstruction and Development, loans to provincial and municipal governments and a number of miscellaneous loans and investments, the chief of which are the loans to veterans under the Soldier Settlement and Veterans' Land Acts. The following table shows the estimated changes in this category during the fiscal year.

[Stage Direction]
(In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
	1953 (Estimated)	1952	
Loans to United Kingdom and other Governments	1,867-2	1,925-7	-58-5Subscription to Capital of International Monetary Fund	
Subscription to Capital of International Bank for Reconstruc-	322-5	322-5	tion and Development	70-9	70-9	Loans to Provincial and Municipal Governments	87-2	91-0	-3-8Net advances-Soldier Settlement and Veterans' Land Acts	162-9	163-9	-1-0Miscellaneous Loans and Investments	17-5	17-3	0-22,528-2	2,591-3	-63-1
The loans to the United Kingdom and other governments consist of loans to the Government of the United Kingdom under the authority of The War Appropriation (United Kingdom Financing) Act, 1942, and the United Kingdom Financial Agreement Act, 1946, and to other countries under Part II of the Export Credits Insurance Act and miscellaneous foreign loans. The changes during the fiscal year in each of these categories are shown in the following table:
LOANS TO UNITED KINGDOM AND OTHER GOVERNMENTS (In millions of dollars)
	Balance at March 31		Increase or
1953 (Estimated)	1952	(-)Loans to United Kingdom- The War Appropriation (United Kingdom Financing) Act, 1942	196-9	220-4	-23-5The United Kingdom Financial Agreement Act, 1946...	1,156-7	1,171-0	-14-31,353-6	1,391-4	-37-8Loans to Foreign Governments-	The Export Credits Insurance Act, Part II	461-9	480-9	-19-0Miscellaneous Advances	51-7	53-4	-1-7513-6	534-3	-W-71,867-2	1,925-7	-58-5
The Budget-Appendix
It is estimated that during 1952-53 the Government of the United Kingdom will have repaid $23-5 million of the $700 million interest-free loan granted under the provisions of The War Appropriation (United Kingdom Financing) Act, 1942, reducing the balance outstanding of this loan to $196-9 million at March 31, 1953. In addition the Government of the United Kingdom will have repaid $14-3 million during the year on account of the $1,185 million loan made under the United Kingdom Financial Agreement Act, 1946, reducing the balance outstanding at March 31, 1953, to $1,156-7 million.
It is estimated that the total of outstanding advances made under the authority of Part II of the Export Credits Insurance Act will be $461-9 million at March 31, 1953, a decrease of $19 million from the balance at the close of the previous year. Advances under this act represent loans made to certain foreign countries to assist them in purchasing goods and services in Canada. A classification of these advances by recipient governments, showing the estimated repayments during the year and the balances outstanding at the year end, is given in the following table:

[Stage Direction]
INSURANCE ACT (In millions of dollars)
-	Total Outstanding at March 31, 1952	Repayments during 1952-53	Total Outstanding at March 31, 1953Belgium	57-7	2-3	55-449-4	49-410-0	10-0217-6	8-4	209-2Indonesia	12-4	3-1	9-3Netherlands	112-8	2-6	110-2Norway	21-0	2-6	18-4480-9	19-0	461-9
Sinking Fund and Other Investments held for the Retirement of Unmatured Funded Debt
It is estimated there will be an increase of $1 [DOT] 2 million in these assets which are held for the retirement of the 3 per cent Newfoundland 1943-63 guaranteed stock, the balance at March 31, 1953, being $27 * 1 million.
Deferred Charges
It is estimated that Deferred Charges will decrease $16-3 million during the year. It is expected that the balance of $214 million which was set up as a deferred charge and credited to the Civil Service Superannuation Account in 1951-52 will be reduced by $25 million and that an equivalent amount will be written off to expenditure during the year. There will, however, be a net increase of $8-7 million in unamortized discounts and commissions on loans, due to the payment of $20-4 million for discounts and commissions on new loans offset by the annual amortization charges of $11-7 million applicable to and included in the expenditures for 1952-53.
Sundry Suspense Accounts
The estimated increase of $74-2 million in this asset classification is due mainly to the change in the deficit arising from exchange revaluations of the assets and liabilities in the Exchange Fund Account as at December 31, 1952, which amounted to $199-2 million at that date as compared with $125-6 million at the end of the previous year.

The Budget-Appendix
Reserve for Possible Losses on Ultimate Realization of Active Assets
The sum of $75 million will be added to the reserve during 1952-53 and a corresponding amount will be shown as an expenditure in the Government's accounts. No charge or write-off to the reserve is expected during the year, the balance at March 31, 1953, being estimated at $545-9 million.
C.	Decrease in Net Debt
The estimated surplus of $47 * 8 million for the fiscal year will result in a corresponding decrease in the net debt of Canada, reducing it from $11,185-3 million at March 31, 1952, to $11,137-5 million at March 31, 1953.
6.	THE PUBLIC DEBT
Gross and Net Debt
The unmatured funded debt of Canada increased by $142 * 2 million during the fiscal year. However, due to increases of $132-7 million in other liabilities- principally in insurance, pension and guaranty, deposit and trust, and sundry suspense accounts-the gross public debt of Canada increased by $274 [DOT] 9 million from $17,532-2 at March 31, 1952, to an estimated total of $17,807-1 million at March 31, 1953. During the same period, the net active assets increased by $322-7 million, with the result that the net debt-which is the gross debt less the active or revenue producing assets-was reduced by $47-8 million.
The following table shows the amount of net debt as at March 31, 1939, to March 31, 1953, inclusive, with the amount of annual increase or decrease.
NET DEBT (In millions of dollars)
Fiscal Year Ended March 31	Balance at end of year	Increase or Decrease (-) during fiscal year
1939		3,152-6 3,271-3	
1940			118-7
1941	3,048-7	377-41942	4,045-2 6,182-8	396-51943	2,137-61944	8,740-1 11,298-4 13,421-4 13,047-8 12,371-6	2,557-21945	2,558-3 2,123-01946	1947	- 373-61948	-676-11949	11,776-1	-595-51950	11,644-6	-131-51951	11,433-3 11,185-3 11,137-5	-211-31952	-248-0- 47-8
Unmatured Funded Debt
The unmatured funded debt of Canada is expected to total $14,837-6 million at March 31, 1953. This is $142-2 million more than at the end of the previous year, but $1,969-6 million less than at March 31, 1946. Notwithstanding this substantial decrease it is still $11,451-9 million more than the total of $3,385-7 million at March 31, 1939, the end of the last pre-war year. Interest charges on the funded debt amounted to $389 [DOT] 5 million in 1952-53, an increase of approximately 230 per cent over the total of $118-1 million in 1938-39. However, as the gross national product rose from $5,233 million in 1938 to $22,984 million in 1952, an increase of approximately 340 per cent, the relative burden 68108-142
[Stage Direction]
The Budget-Appendix

[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
1939	1941	1942	1943	1944	1945	1946	1947	1948	1949	1950	1951	1952	1953*

[Stage Direction]
of the funded debt, measured in terms of interest charges as a percentage of the gross national product, actually decreased from 2-3 per cent in 1938-39 to 1-7 per cent in 1952-53.
Summary of Security Issues and Redemptions in the Year
During the fiscal year it is estimated that the Government will have issued securities payable in Canadian dollars in the principal amount of $3,334 million (excluding the refunding of treasury bills which mature fortnightly) and refunded maturing issues in the amount of $3,186 million. The following is a summary of these transactions:
In millions of
New Issues:	dollars
Canada Savings Bonds Series VII (Net)	 334
Twenty-five year loan	  100
Increase in Treasury Bills	 150
Deposit Certificates	 100
By refunding or conversion into new issues-Deposit Certificates		400
Other	 2,250
3,334
Less redemptions	 3,186
Net increase	 148
The increase of $150 million in Treasury Bills outstanding which is shown in the table, together with a further increase of $50 million which is scheduled to take place in April 1953, will provide funds to enable the Government to retire the $200 million of Deposit Certificates presently outstanding.
The Canadian dollar value of the Government's external funded debt is expected to decrease by $6-8 million during the fiscal year. Of this amount $5-8 million is in respect of indebtedness payable in United States dollars and

The Budget-Appendix
$1 million in respect of sterling debt. These reductions result from the revaluation of liabilities payable in those currencies consequent upon the change in the exchange rates as compared with the previous fiscal year end.
As unmatured funded debt payable in Canada increased by $149 million ($148 million as shown in the preceding table and $1 million accrued interest added to War Savings Certificates outstanding), and as debt payable in sterling and United States dollars decreased by $6 * 8 million, the net increase in the funded debt was $142 [DOT] 2 million.
The average coupon rate of the Government's outstanding funded debt at the close of the fiscal year is estimated at 2-76 per cent compared with 2-67 per cent at the close of the previous fiscal year.


[Stage Direction]
Maturity Date
May 1, 1952	
August 27, Deposit Certificates	
September 1	
November 1	
November 1	
November 1	
November 15, Deposit Certificates	
February 25, 1953, Deposit Certificates	
March 1	
March 1	
War Savings Certificates	
Canada Savings Bonds, Series I, II, III, IV, V and VI
Total Redemption of Debt	
Interest Rate	Where Payable	Amount
%		$
u	Canada	200,000,000u	Canada	200,000,000it	Canada	550,000,000h	Canada	300,000,000u	Canada	300,000,000u	Canada	200,000,000u	Canada	100,000,000it	Canada	200,000,000u	Canada	550,000,000H	Canada	325,000,0003	Canada	27,888,41921-3!	Canada	233,086,3503,185,974,769
68108-142^

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o>
Issue
Date
Maturity
Date
Price
Interest to Rate	Government
Yield at Price to Government
Total Amount Issued
Renewals or Reconversion Included in Amount Issued
Amount Issued for Cash
Payaule in Canada
%
% % $
*
Issued to Chartered Banks- Deposit Certificates... Deposit Certificates... Deposit Certificates...
Aug. 27, 1952 Feb. 25, 1953 July 23, 1952
Feb. 25, 1953 May 15, 1953 Nov. 15, 1952
[Stage Direction]


100-00
1-75
1-50
Issued to Bank of Canada-
Six Months Treasury Notes Six Months Treasury Notes Six Months Treasury Notes Six Months Treasury Notes
May	i,	1952	Nov.	i,	1952Sept.	i,	1952	Mar.	i,	1953Nov.	i,	1952	May	i,	1953Mar.	i,	1953	Sept.	i.	1953If	100-00	1-375If	100-00	1-750If	100-00	1-50
Issued to General Public-
Loan One Year Four Months	
Loan Two Years Four Months	
One Year Loan	
Two Years If Months Loan	
Twenty-Five Year Loan	
Canada Savings Bonds Series VII Net Increase in Treasury Bills	
Mar.	1,	1953Mar.	1,	1953Nov.	1,	1952Nov.	1,	1952Jan.	15,	1953Nov.	1,	1952
Various
July 1, 1954 July 1, 1955 Nov. 1, 1953 Dec. 15, 1954 Jan. 15, 1978 Aug. 1, 1963 Various
21
2
3f
Various
98-	60 97-60
99-	05
97-	75
98-	00 98-9375
Various
3-33
2-	97
3-	10 3-87
Various
Grand Total
200,000,000 200,000,000 100,000,000
200,000,000
200,000,000
100,000,000
500,000,000
400,000,000
100,000,000
200,000,000
550.000.	000
200.000.	000
550.000,000
1,500,000,000
200,000.000
550.000.	000
200.000.	000
550,000,000
1,500,000,000
300,000,000
300,000,000
300.000.	000
150.000.	000
100.000.	000
334.000.	000
150.000.	000
1,334,000,000
3,334,000,000
300.000.	000
150.000.	000
750,000,000
2,650,000,000
100,000,000
334.000.	000
150.000.	000
584,000,000
684,000,000
to
s
a,
to
0>
*3
[Stage Direction]
g.
[Stage Direction]
The Budget-Appendix
Indirect or Contingent Liabilities
It should be noted that the Government has certain indirect or contingent liabilities which are in addition to the direct debt set out in the balance sheet. Included under this heading, for example, are the Government's guarantees of certain securities issued by various Government owned enterprises such as the Canadian National Railways, the Canadian National (West Indies) Steamships, Limited, and the Saint John Harbour Commission; the guarantee of deposits maintained by the chartered banks in the Bank of Canada; guarantees of certain loans made by chartered banks to veterans or farmers for certain authorized purposes; guarantees under the Export Credits Insurance Act; and certain commitments under the housing legislation.
The following table gives details of the bonds and debenture stocks guaranteed by the Government, and also indicates the nature and approximate extent of the Government's other guarantees and contingent liabilities.

[Stage Direction]
Date of Maturity		Issue	Interest Rate	Estimated Amount Outstanding
			%	$
July,10	1953..	Canadian Northern	3	1,162,768Feb. 1,	1954..	Canadian National	5	50,000,000May 1,	1954..	City of Saint John Debentures assumed by Saint John Har-	bour Commissioners	5}	3,329Mar. 1,	1955..	Canadian National (West Indies) Steamships Limited	5	9,400,000June 15,	1955..	Canadian National	4f	48,496,000Feb. 1,	1956..	Canadian National	4J	67,368,000July 1,	1957..	Canadian National	i\	64,136,000July 20,	1958..	Canadian Northern	3i	5,636,506Jan. 15,	1959..	Canadian National	3	35,000,000May 4,	1960..	31	550,727May 19,	1961..	Canadian Northern Ontario	3j	3,597)518Jan. 1,	1962..	Grand Trunk Pacific	3	26,465,130Jan. 1,	1962..	Grand Trunk Pacific	4	7,999,074Jan. 3,	1966..	Canadian National	3	35,000,000Jan. 2,	1967..	Canadian National	2|	50,000,000Sept. 15,	1969..	Canadian National	21	70,000,000Jan. 16,	1971..	Canadian National	21	40,000,000June 15,	1975..	Canadian National	2!	6,000,000Perpetual	5	1,016,092Perpetual	5	499^709Perpetual	4	5,446,783Perpetual	Northern Railway of Canada Debenture Stock	4	22,591527,800,227
The Budget-Appendix
Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Deposits maintained by the chartered banks in the
Bank of Canada (December 31, 1952)	 $ 626,629,981
Bank advances re Province of Manitoba Savings Office
(January 31, 1953)	 3,140,078
Province of Manitoba Treasury Bill (March 31, 1953)..	1,250,000
Loans made by chartered banks under the Farm Improvement Loans Act, 1944 (November 30, 1952)..	34,968,542
Loans made by chartered banks under the Veterans'
Business and Professional Loans Act (September 30,
1952)	 2,075,814
Guarantees under Part II of the Export Credits Insur- -
ance Act (March 31, 1953)	 10,200,000
i
Loans made by approved lending institutions under
Dominion and National Housing Acts	   Indeterminate
Guarantees of land assembly projects under National
Housing Act (December 31, 1952)	 1,437,402
7,410
.	l';|j ;
59,669
Loans made by approved lending institutions under Part IV of the National Housing Act, 1944, for home extensions or improvements (December 31, 1952)	
Loans made by chartered banks under The Prairie Grain Producers' Interim Financing Act, 1951 (January 31,

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Loans and Advances and Investments
Unmatured Funded Debt

The Budget-Appendix

[Stage Direction]
(thousands of dollars)
-	1948-49	1949-50	1950-51	1951-52	Estimated 1952-53$	t	$	$	$Tax Revenue- Direct Taxes- Direct Taxes on Incomes- Individual Income Tax	762,564	621,982	652,329	975,776 - 100	1.233.000 -45,250 54,000 1.268.000 -36,850Less old age security tax transferred to old age security fund..	Tax on Interest and Dividends	
Taxes on Rents and Royalties	
Corporation Income Tax	40,9651 2,480/ 491,990	47,475 603,193	61,610 799,197	55,017 1,132,680 -2,000 2,365	Less old age security tax transferred to old age security fund...	Excess Profits Tax	44,792	-1,788	10,141	
Total Direct Taxes on Incomes.	1,342,791 25,550	1,270,862 29,920	1,523,277 33,599	2,163,738 38,208	2,472,900 38,000
					
	1,368,341	1,300,782	1,556,876	2,201,940	2,510,900
					
Indirect Taxes-	222,975	225,878	295,722	346,365	379,000
					
Excise Duties-	101,105 106,241 39	107,035 115,982 38 -2,490	129,390 114,486 38 -2,868	120,851 100,711 36 -3,658	136.000 124.000 38 -3,038
Cigars, cigarettes and tobacco						
	-2,733				
					
	204,652	220,565	241,046	217,940	257,000
					
Excise Taxes- Taxes on Commodities-	390,174	415,222	470,627	611,492 -24,298 100,904 19,230 11,531 106,354 423	726,000 -142,000 87.000 13.000 13,200 107,500
Less old age security tax transferred to old age security fund...					
Automobiles, rubber tires and	36,943 27,689 19,888 77,665 6,999 3,894 3,693 3,412 3,562 279	38,193 1,627 1,030	70,841 7,212 10,880 85,199 7,734 2,080 4,509 1,161 5,548		
Beverages (soft drinks)						
					
Cigars, cigarettes and tobacco.... Cigarette papers and tubes			83;497 7,223			
Electric and gas appliances					4,893 4,793 1,855 8,252	4,500 5,200 1,700 10,000
		2,937 1,091 3,101			
					
Phonographs, radios and television					
Special excise on importations						
Stoves, washing machines and refrigerators	10,923 8,467 3,969 2,167 9,714 7,173	1,650 8,000 3,800 2,100 8,000 6,300Toilet preparations and soaps	
Trunks, bags, luggage, etc..	7,757 5,565 2,060	4,316 2,257 2,126	4,551 2,604 2,225 6,459 4,327	Wines	4,077 2,310	4,700 2,483 105	Taxes on Amusements and Services-Amusements	Tax on pari-mutuel bets	Transportation and communication	29,034	3,967	Stamps on cheques, money orders,	22,725 382 -12,871	9,898 370 -11,785	10,945 372 -10,506	11,346 463 -13,723	11,500 500 -16,000Licences, interest and miscellaneous Less refunds (mainly sales tax)....	Total Excise Taxes	636,138	571,457	686,768	885,928	851,950
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
Tax Revenue-Concluded Other Taxes-
Chartered bank note circulation.
Insurance premiums	
Miscellaneous	
Total Indirect Taxes	
Total Revenue from Taxes.
Non-Tax Revenue-
Post Office	
Return on Investments	
Bullion and coinage	
Premium, discount and exchange. Other	
Total Non-Tax Revenue.. Total Ordinary Revenue.
Special Receipts and Credits-
Sale of surplus Crown Assets	
Central Mortgage and Housing Corporation-
Profits paid to Receiver General. Proceeds and depreciation reserve with respect to the sale of wartime
housing properties	
Refundable portion of income tax and excess profits tax-Transfer to revenue of excess reserves set up in
previous years	
Transfer to revenue of portion of the balance of provincial 5 per cent corporation income tax suspense account pursuant to the 1952 tax
rental agreements	
Investment in Crown plants trans. ferred to Active Assets	
, Miscellaneous Special Receipts....
Non-Active Accounts-^-Refunds of previous years capital
expenditure	;...
Transfer from capital to Consolidat-:	; ed Deficit Account (Contra)	
Reduction in indebtedness, National
; Harbours Board	
Repayment of loan made under Relief Acts, Canadian Pacific Railway	'

if:-'

...
Reduction in indebtedness, Canadian National (West Indies) Steamships
Limited	
Repayment of Seed Grain and Relief
loans	
Repayment of Soldier Settlement Loans	
Total Special Receipts and Credits.... Total Revenue	
166
3,339
1,067,801
2,436,142
80,604
107,889
3,253
21,202
212,948
2,649,090
121
3,789
1,022,335
2,323,117
84,512
91,529
4,523
25,035
205,599
2,528,716
25,840
2,160
1,104
2,528
88,223
2,243
122,305
2,771,395
16,351
4,241
2,535
28,199 67
[Stage Direction]
51,425
2,580,141
4,228
1,228,474
2,785,350
90,443
89,529
4,708
17,562
31,106
233,348
3,018,698
19,613
2,862
4,351
25,000
40,318
119
1,447
93,838
3,112,536
4,753
1,455,829
3,657,775
104,610
117,622
4,838
17,697
37,205
281,972
Estimated
3,939,747
14,712
3,144
9,843
7,367
6,020
41,162
3,980,909
10,700
1,499,450
4,010,350
111,750
116,000
4,200
6,800
45,025
283,775
4,294,125
7,759
2,016
6,520
45,000
4,794
13,914
80,503
4,374,628

The Budget-Appendix

[Stage Direction]
(thousands of dollars)
1949-50
1951-52
Estimated
Agriculture-
Administration and general	
Science Service	
Experimental Farms Service	
Production Service	
Marketing Service	
Rehabilitation and reclamation projects Freight assistance on western feed
grains	
Premium on hog carcasses suitable for
export to United Kingdom	
Advances to Prairie Farm Emergency
Fund	
Payment to Canadian Wheat Board
for distribution to producers..
Net operating loss-Agricultural prices
support account	
Other Expenditure	
4,358
5,087
6,504
3,890
6,285
18,154
4,585
8,640
6,061
5,810
8,394
4,387
8,846
16,764
4,982
13,138
Auditor General's Office	
Canadian Broadcasting Corporation. Office of the Chief Electoral Officer. Citizenship and Immigration-*
Administration and General	
Immigration Branch	
Indian Affairs Branch	
1,061 2,671 61,77S 533 3,921 287
Civil Service Commission	
Defence Production-
Administration and general	
Capital assistance to defence industry
External Affairs	
Membership in Commonwealth
International Organizations..
Assistance to Other Countries and International Organizations
5,607 10,576 16,18S 1,364
3,473 2,548 75,047 562 2,772 4,456
4,957
12,368
17,701
1,513
and
{ Finance-
Departmental administration and general	
Office of the Comptroller of the Treasury	,	
Interest on public debt	
Additional amount required to place interest on public debt on accrual
basis	,	
Cost of issuing new loans and annual amortization of bond discounts and
commissions...,	
Servicing of public debt	
Subsidies to Provinces	
Compensation to Provinces-
Tax Rental Agreements, 1947 Act. Tax Rental Agreements, 1952 Act. Transfer of certain public utility tax receipts, sec 7, 1947 Tax Rental
Agreements Act	
Transfer of certain public utility tax receipts, sec. 6, 1952 Tax Rental
Agreements Act	
Transitional grant to Newfoundland Government contribution to the Super
annuation Account-General	
-Special	
Grants to Universities	
Implementation of guarantees	
(Ming Sung Industrial Co. Ltd.) Premium Discount, and Exchange	
6,655
2,048
5,811

[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued (thousands of dollars)
F inance-Concluded Wartime Prices and Trade Board-
Administration	
Commodity Prices Stabilization Corporation Limited	
Advances for payment of drawback claims to millers and other manufacturers of wheat products	
Grant re Red River Valley flood	
Provision for reserve for possible losses on ultimate realization of active
assets	
Assumption of part of Newfoundland
debt under Terms of Union	
Write-down from Active to Non-Active Assets-Trading losses in Securities
Investment Account	
Soybean Flour Suspense Account____
Fisheries	
Governor General and Lieutenant Governors	
Insurance	
Justice	
Office of the Commissioner of Penitentiaries	
Labour	
Government Annuities-Amount required to maintain reserve	
Unemployment Insurance Act, 1940-
Administration and general	
Government contribution	
Legislation-
House of Commons	
Library of Parliament	
Senate	
General	
Mines and Technical Surveys	
Dominion Coal Board	
Emergency Gold Mining Assistance.. Write-down from Active to Non-Active Assets-Abasand Oils Limited	
National Defence-
General	
Defense Forces, Army, Navy and Air
Services	
Mutual aid to NATO countries	
Defence Research and Development.. Pensions-
Payments under Defence Services
Pension Act	
Government contribution to Permanent Services Pension Account	
Contribution towards Military Costs of NATO	
National Film Board	
National Health and Welfare	
General health grants	
Family allowances	
Old age pensions including pensions to
blind persons	
Old age assistance and blind persons
allowances	
Deficit-old age security fund	
1948-49	1949-50	1950-51	1951-52	Estimated 1952-53$	$	%	$	t3,321	2,567	1,599	155	14,911	50	3011,000	400	12,500	75,000	75,000	75,000	75,000	75,00062,293	8,299	126	701,179	745,240	752,572	878,618	943,5585,423	7,586	8,964	8,733	11,395242	274	244	275	349263	311	369	403	4634,025	4,268	4,609	5,103	5,7675,863	6,691	7,798	8,936	9,5459,888	10,959	12, 407	14,089	15,8199,860	9,770	9,030	9,503	9,96411,408	1,256	660	940	1,00019,056	24,033	26,805	23,919	25,41020,103	21,084	26,133	29,940	31,25060,497	56,143	69,628	64,802	67,6242,629	3,765	3,332	4,302	4,130126	127	137	153	244736	1,178	976	1,227	1,103272	159	266	263	2908,763	5,229	4,7 a	5,945	5,7679,481	9,839	10,442	10,779	12,4952,164	4,357	3,561	5,132	6,5269,433	13,716	7,114	11,841	10,7001,802	21,078	99', 714	91,117	27,759	99,721234	383	901	277	292238,915	348,050	545,738	1,217,579	1,516,387195,417	126,416	234,68516,033	22,389	23,415	35,394	41,7215,756	5,011	5,011	5,096	5,1727,867	9,046	11,975	30,712	30,00916,900968,805	884,879	782,457	1,415,474	1,845,1661,958	2,123	2,308	2,662	2,92014,412	16,901	17,344	21,098	24,9357,528	15,716	18,875	24,322	31,000270,910	297,514	309,465	320,458	334,12566,764	93,189	103,169	80,206	2,999	22,12249,669	859,614	498,820	448,853	498,759	412,182
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded (thousands of dollars)
-	1848-49	1949-50	1950-51	1951-52	Estimated 1952-53$	$	$	$	%National Research Council and Atomic	Energy Control Board	13,082	16,170	18,014	25,080	29,249National Revenue, including Taxation	Division	45,402 77,643	47,832 82,640	47,665 106,153Post Office	91,781	Privy Council, including Prime Minister's	Office	4,457 173	4,128 198 866 67,058	Public Archives	206 706 73,646	251 1,103	Public Printing and Stationery	753	1,704 81,000Public Works	51,067	Reconstruction and Supply	2,822	Resources and Development	12,402	23,266	21,688 7,205 28,893	18,978 12,792 31,770	22,597Trans-Canada Highway contributions.	12,402	23,266	So, 597 32,077 2,231 17,095Royal Canadian Mounted Police	13,717 1,559 36,755	15,971 1,600 25,761	19,801 2,065 23,443	27i341 2,399 21,817	Secretary of State	Trade and Commerce	Deficits incurred by the Canadian	Wheat Board covering operations for Government account	4,454	4,471	2,536 1,325	Deficit-Trans-Canada Air Lines	2,933	4,318	Non-Active Assets-	Write off-St. Malo Shops and Mis-	cellaneous Property	2,243	Transport-	46,385	34,550	27,304	21,817	17,095Administration and general	3,525 4,662 12,627 3,838 6,606 28,182	3,808 6,198 17,537 4,488 6,982 34,115	2,528	3,179	7,068
Marine Service					17,187 1,981 8,475 33,553		22,604 7,817 10,245 40,641
Railway Service					2,306 10,030	
Maritime Freight Rates Act						
Air Services						
Steamship Subventions, including Can-					
adian Maritime Commission		2,166	2,277	5,899	4,461	4,036
Deficits-					
Canadian National Railways		33,533	42,043	3,261	15,032	
Canadian National (West Indies)					
Steamships Limited			461	1,029	467	
Prince Edward Island Car Ferry					
and Terminals		1,220	1,221	1,267	1,365	1,520
North Sydney-Port aux Basques					
Ferry and Terminals						
National Harbours Board		238	83	188	55	57
Non-Active Assets-					
National Harbours Board		1,739 98,336	4,236 123,449	1,465 85,123	1,252 99,901	1,879 107,644
Veterans Affairs-					
Administration and general		3,628 102,951	3,850 96,091	2,385	2,513 103,703	2,940 127,103
Pensions						
Treatment and after-care of returned					
soldiers and allowances to dependents Hospital accommodation, additions,	69,565	69,507	71,646	76,097	79,444alterations and improvements	5,095	3,811	3,008	3,758	4,247 3,956Post discharge rehabilitation benefits. War service gratuities and re-estab-	44,826	25,099	13,502	6,594	lishment credits	36,148	22,641	16,868	9,826	11,072Soldier Settlement and Veterans Land	Acts	8,035	7,383	5,922	5,667Provision for reserve for conditional	benefits under Veterans Land Act... Write-down of Assets-	5,631	6,496	7,110	7,600	8,050Soldier Settlement and Veterans	Land Acts Loans	1,000 276,879	11,500 246,378	14 216,392	18 242,497216,026	Total Expenditure	2,175,892	2,448,615	2,901,242	4,326,812
2236	HOUSE OF COMMONS
The Budget-Appendix

[Stage Direction]
FIVE FISCAL YEARS (In thousands of dollars)
Working Capital Advances to Crown Corporations
Canadian Arsenals, Ltd	
Canadian Commercial Corporation	
Canadian Patents and Development,
Ltd	
Commodity Prices Stabilization Corporation	
Crown Assets Disposal Corporation	
Defence Construction 1951, Ltd	
Loans to, and Investments in, Crown Agencies
Central Mortgage and Housing Corporation-
Loans	
Canadian Broadcasting Corporation...
Canadian Farm Loan Board	
National Harbours Board	
Railway and Steamship Companies	
Other Crown Agencies	
Other Loans and Investments
Provincial and Municipal Governments.. United Kingdom and Other Governments-
United Kingdom-Loan under The
Act, 1942.
Act, 1946-Loan	
Export Credits Insurance Act	
Other	
Canada's subscription to capital of- International Monetary Fund	
and Development	
Miscellaneous-
Loans to veterans under the ' Settlement and Veterans' Acts	
of sale of Crown Assets.. Other miscellaneous loans..
Fiscal Year Ended March 31
funded debt.
Investments.
1949	1950	1951	1952	Estimated 1953$	$	$	$	$2,500	2,500	1,000	6,500	296	Cr. 296	Cr. 14,911	Cr. 3,000	Cr. 1,500	Cr. 50	Cr. 108	Cr. 1,183	Cr. 45	Cr. 2123,327Cr. 11,519	Cr. 3,887	1,000	6,109	3,11568,000	91,460	79,389	73,624	75,8491,250	4,500	650	850	2,0001,050	1,950	1,900	1,300	1,550213	20,382	1,004	227	Cr. 104,067	Cr. 20,963	20,188	139,848	124,8124,615	Cr. 1,295	Cr. 840	Cr. 392	11,06479,195	96,034	102,291	215,457	215,265Cr. 5,376	Cr. 4,031	Cr. 3,180	Cr. 4,129	Cr. 3,783Cr. 29,487	Cr. 9,936	Cr. 40,567	Cr. 31,092	Cr. 14,29137,000	120,000	20,000	Cr. 14,010	Cr. 23,45768,196	Cr. 10,964	Cr. 22,935	Cr. 20,657	Cr. 19,0542,060	5,541	144	5,461	Cr. 1,72022,500	5,658	170	16,270	796	7,515	1,521	Cr. 1,038Cr. 1,230	Cr. 2,889	Cr. 1,043	Cr. 936	901Cr. 588	Cr. 812	Cr. 54	2,957	Cr. 64886,845	125,863	Cr. 40,120	Cr. 60,715	Cr. 63,0905,499	3,201	1,230154,521	218,010	68,670	164,052	156,520
The Budget-Appendix

[Stage Direction]
Date of Maturity
Rate
Per
Cent
Where
Payable
Amount of Loan
Annual
Interest
Charge
$	cts.	$
cts.
1953,	May 1	
May 15	
September 1	
November 1	
November 1	
1954,	March 1	
December 15	
December 15	
1956,	July 1	
November 1	
November 1	
1957,	May 1	
November 1	
1958,	June 1	
September 1	
November 1	
1959,	January 1	
November 1	
1960,	June 1	
November 1	
1961,	January 15	
1962,	February 1	
August 1	
1963,	July 1	
July 1	
August 1	
August 1	
October 1	
1966, June 1	
September 1	
1968, June 15	
1974,	September 1	
1975,	September 15	
1978, January 15	
Perpetuals	
Various Treasury Bills	
Various War Savings Certificates.
Various	
[Stage Direction]

2
2
2f
2f
2f
4 2f 3
2f
2f
3
31
3
3f
31
2f
2f
2f
3f
Various
Various
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
London
Canada
Canada
Canada
Canada
Canada
New York
Canada
Canada
London
London
New York
Canada
Canada
Canada
Canada
Canada
New York
New York
Canada
Canada
Canada
Canada
Canada
Payable in Canada__
Payable in London__
Payable in New York,
200,000,000	00	3,500,000	00200,000,000	00	3,500,000	00550,000,000	00	9,625,000	00200,000,000	00	4,000,000	00300,000,000	00	6,000,000	00(>)	676,355,489	00	20,089,767	00395,000,000	00	7,900,000	00150,000,000	00	3,000,000	00400,000,000	00	9,000,000	50(* *)	855,607,410	50	25,414,081	00*	171,000,000	00	4,702,500	501,111,261,650	00	33,337,849	0090,000,000	00	2,475,000	0088,200,000	00	2,646,000	00(3)	1,740,026	93	69,601	0885,000,000	00	2,337,500	001,197,324,750	00	35,919,742	50*	124,000,000	00	3,410,000	001,165,300,350	00	34,959,010	50113,000,000	00	3,107,500	00w	46,560,000	00	1,513,200	001,315,639,200	00	39,469,176	00243,000,000	00	8,505,000	00(3)	1,925,370	53	62,574	54<3)	48,497,140	72	1,454,914	22(*)	145,500,000	00	4,365,000	00334,000,000	00	12,525,000	001,295,819,350	00	38,874,580	5054,703,000	00	1,777,847	501,691,796,700	00	50,753,901	00350,000,000	00	9,625,000	00(')	97,000,000	00	2,667,500	00w	48,500,000	00	1,333,750	00100,000,000	00	3,750,000	0055,000,000	00	1,650,000	00600,000,000	00	8,683,500	0035,900,000	00	1,077,000	00300,000,000	00	* 6,375,000	0014,837,630,437	68	409,456,495	8414,447,907,899	50	97-38%	52,162,538	18	0-35%	337,560,000	00	2-27%	14,837,630,437	68	100-00%	
(') Redeemable at 101 per cent. Amount outstanding includes 56,696,589.00 redemption bonus.
(2)	Redeemable at 101 per cent. Amount outstanding includes $8,471,360.50 redemption bonus.
(3)	Conversion rate estimated at $2,725 to the £ sterling.
(4)	Conversion rate estimated at $0.97 U.S. to the dollar Canadian.
(*) Estimated.

[Stage Direction]
.