1954-06-22

Hon. J. W. Pickersgill (Secretary of State):: Mr. Speaker, with your permission I should like to table a copy, in each of the official languages, of the order in council passed yesterday amending the war claims regulations. Perhaps I might be permitted to say, by way of explanation, that it does two things. It changes priority for payment of claims so that small property claims under $2,500 can be paid as soon as they have been properly processed. Nearly all the personal claims, except those that are difficult to adjudicate, have already been paid, and the government is now satisfied there will be funds available to pay the small property claims, without jeopardizing any of the personal claims.
There is another section which extends the time for making a claim to September 30 of this year. I found on checking the other day that there were 15 or so of these claims that had come in too late. Some of them had come early in January, although the deadline was December 31. It seemed to be rather unfair, when some of these claims were for small amounts, and were really compassionate cases, that they should not have their claims adjudicated. I do not expect there will be any further extension. It is intended that this will be the final date for receiving these claims.



PIPE LINES


[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to ask the Minister of Trade and Commerce about a report appearing in this morning's paper to the effect that West-coast Transmission has decided to appeal the recent decision of the federal power commission. Is the minister in a position to inform the house as to what are the rights of appeal-what further stages of appeal there are available-or, in other words, when we might expect some finality to the matter?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: I, too, read the report in the newspaper. I understand that a finding of the federal power commission can be appealed; but I have no idea what the grounds of appeal are-whether on questions of law, as might be the case were it our board of transport commissioners, or whether on grounds of fact. In any event, I have no knowledge of the process in the United States. I can only say that I read the report.


Edmund Davie Fulton: You do not know whether it can go to another court, or whether this is to be the final one?


Clarence Decatur Howe: No, I do not know that.



POSSIBLE CONTINUATION OF SEVEN-BUSHEL QUOTA

[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: Mr. Speaker, I should like to ask a question of the Minister of Trade and Commerce. Would the minister say whether the seven-bushel quota will be continued for a short period beyond July 31 at any delivery points where space has not been available by that date?


Clarence Decatur Howe: I do not care to comment on the situation that will face us on July 31. It is the intention to see that everyone can deliver his wheat on the basis of the seven-bushel quota; but what mechanics will be necessary to make that possible, I cannot say.



STORAGE OF ONTARIO WINTER WHEAT

[Stage Direction]
On the orders of the day:
Mr. E. B. Huffman (Kent, Onl.):: Mr. Speaker, I should like to ask a question of the Minister of Trade and Commerce. Can the minister assure the house that normal storage facilities will be available for the Ontario winter wheat crop?


Clarence Decatur Howe: My hon. friend was good enough to give me notice of his question. I telephoned Winnipeg and I was assured both by the transport controller and by the board of grain commissioners that every effort would be made to see that storage for the Ontario crop is provided.
6438	HOUSE OF
Supply-Defence Production SUPPLY


Hon. Douglas Abbott (Minister of Finance) moved: that the house go into committee of supply.
Motion agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.



DEPARTMENT OF DEFENCE PRODUCTION

The Chairman:: Resolution No. 78. Hon. members will find the vote at page 12 of the blue book, and the details commencing at page 152.
78. Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production, $6,446,812.


Mr. Fleming:: Is it the minister's intention to make a statement reviewing the operations of this department?


Clarence Decatur Howe: Yes, it is. A good deal of information concerning our defence production program was made available during the recent debate on the estimates of the Department of National Defence. In addition, hon. members have been provided with an excellent white paper tabled by my colleague, the Minister of National Defence, as well as the annual report of the Department of Defence Production, which was tabled in March.
However, I believe that I might usefully say a few words about our major procurement programs in order to indicate the scope and nature of our industrial potential, and to outline the activity of the Department of Defence Production.
As nearly one-half of the purchases of defence equipment are made on behalf of the R.C.A.F., it is appropriate that I start with our aircraft program. Without going into detail on the program itself, I would like to make a few general comments regarding our development and production policy in the aircraft field.
Hon. members have stressed the viewpoint that we should make every effort to correlate our research and development activities with those of our allies, particularly the United States and the United Kingdom. With this, the government has always concurred and much is being done along these lines. As a matter of fact, when the Right Hon. Duncan Sandys, minister of supply in the United Kingdom government, was in Canada a few weeks ago, this subject was given a great deal of attention. Because of the nature of our aircraft industry, we are in a good position to pool our industrial knowledge with our allies. Nearly every one of our important


aircraft or component companies is affiliated with an outstanding American or British firm and therefore is in a position to draw on the information available to the parent company. This is true of Canadair, a subsidiary of General Dynamics; A. V. Roe and Canadian Steel Improvement, members of the Hawker-Siddeley group; Fairey Aviation, de Havilland, Sperry Gyroscope, Lucas-Rotax, and so on.
Our aircraft program is a good example of how we utilize all available know-how and developments. After the R.C.A.F. establishes an operational requirement, a survey is made of planes either in production or at the development stage, both in the United States and in the United Kingdom, as well as in Canada. If, as a result of this survey, undertaken jointly by D.D.P. and D.N.D., the R.C.A.F. is able to find a plane that suits their needs, we are asked to take the necessary procurement action. Normally, we have two alternatives-either to purchase from another country or produce in Canada.
Naturally, we prefer to manufacture in Canada, for reasons that I need not go into at this time. However, if Canadian production would not be economical because of the limited requirements, we do not hesitate to import. This latter policy has been followed in the case of the Banshees, the Neptunes, and the helicopters which we have ordered from the United States.
Where Canadian production appears feasible, such production may be based either on a licensing agreement, from another manufacturer or design and development by a Canadian company. In the first instance, the department secures a licence agreement, and a Canadian manufacturer is given a production order. This was done for the F-86 Sabre, for the T-33, and now for the Bristol Britannia. It is true that by following this practice we eliminate development costs. On the other 'band, we are faced with licence fees that are in reality a payment in support of the development staff of an aircraft industry in another country. There is no question that aircraft design and development is expensive. However, if we are to attain any degree of industrial maturity, we must encourage a certain amount of this type of development in Canada. This we have done, with a good measure of success in the case of the Canuck fighter and the Orenda engine, but we are limiting our activities to those areas in which we have a special interest and where Canadian requirements indicate the desirability of an independent approach.
On the subject of Canadian aircraft production, there is one statement which I believe will be of interest to the committee and that is that every firm with which we are

doing business is producing according to schedule. These schedules are drawn up by the department with a number of factors in mind. First, of course, come the requirements of the armed services; second, the availability of components, particularly imported components; third, the question of plant loadings in order to avoid peak employment followed by heavy laying-off of help, and finally and of the utmost importance, the level of economic production.
During the first two years of the aircraft program, our major concern was to get production started. This entailed the selection and, in several instances, the creation of facilities. It meant securing complicated machine tools and a number of key materials which were in short supply throughout the free world. Finally, good management teams and skilled labour forces had to be developed. Having completed the build-up of a sizeable aircraft industry in Canada, it has been possible during the last year to place even more emphasis on economy of production. Recent studies show that on any basis of comparison, our major airframe and aeroengine producers compare favourably with the best on this continent from the point of view of efficiency and economy. This is not only a credit to the producers of the aircraft and engines-it applies equally well to our component manufacturers. Today, we have virtually no airframe, aero-engine or component production in Canada on a cost-plus basis. In most cases, we have incentive type contracts, and, as a result, costs to the government are steadily decreasing.
Other characteristics of our aircraft industry today are its diversification and its dispersal across Canada. Apart from airframes, we are producing both jet and reciprocating engines. Components in production include engine blades, precision bearings, aircraft fittings, fuel systems, and a fair range of aircraft instruments. Considerable work is also being done on materials required to meet the exacting requirements of high speeds and temperatures. Titanium in particular is receiving a good deal of attention.
As far as dispersal is concerned, we have tried to ensure that our aircraft facilities are located in such a way as to service aircraft no matter where they are located in Canada. As a result we have important plants in Halifax and Amherst, Nova Scotia; St. Jean, Quebec; Montreal, Ottawa, Toronto, Fort Erie, Fort William, Winnipeg, Calgary, Edmonton and Vancouver.
Now I would like to turn to our shipbuilding program. Without going into detail, this program may be divided into four parts, that is, frigate conversion, the Arctic patrol
Supply-Defence Production vessel, the minesweepers, and the destroyer escort vessels. What may not be realized is that these four parts of the program actually represent four major and complex development projects. The basis on which we decided to embark on this development and production program is the same as the one we used for the aircraft program when we found no one else producing a plane to meet our requirements. After looking around, we found that no one else was working on the type of ship that we needed to perform our anti-submarine role, and so we had to do our own development. Furthermore, we decided that production in Canada, including the major components, was desirable in order to maintain a nucleus of a naval shipbuilding industry which would be available in time of emergency.
Considerable progress has been made. The original conversion program will be completed this year, and from a design and construction point of view this has been practically equivalent to producing new ships. The Arctic patrol vessel will be commissioned next month. Of the original fourteen minesweepers, all have been launched, ten have been delivered, and the remainder will be completed by this fall. As some of these ships are being made available to our NATO partners under the mutual aid program, replacement orders have been placed with the shipyards. These will be of an improved design and able to cope with the latest developments in magnetic and acoustic mines.
We now have some cost experience in the production of this type of ship, and we are therefore anxious to place incentive type rather than cost-plus contracts for these additional minesweepers, thus ensuring the greatest possible economy of production.
On the other hand, it must be recognized that it is more difficult to establish a satisfactory target price for a ship, when only one or two are built in any one shipyard, than for a production line item, such as aircraft or ammunition, where it is reasonably easy to establish basic costs, learning curves, and so forth.
Some hon. members have commented on the apparent delays in the escort vessel program. This has been a very challenging undertaking. This ship is new, it is amazingly complex, and it embodies the latest developments of both the United States and the United Kingdom. It is designed to fulfil an anti-submarine role and during the last few years there has been a great deal of development in the field of submarines and torpedoes. Hence, the design of our anti-submarine vessel has been subject to constant change in order to keep pace.

Supply-Defence Production
When one considers the small number of qualified people we had in Canada in 1950 to cope with essentially four separate naval design projects, it is interesting to compare our performance with other countries that have had a great deal of experience in this field. Both the United States and the United Kingdom have recently commissioned new ships which, from a design and construction point of view, may be considered comparable to our escort vessels. The United States experience was that six years elapsed from the commencement of design to the delivery of the prototype. A similar program in the United Kingdom took six and one-half years. The design work on our escort vessel began in 1949 and the first delivery is expected next year-in other words, just under seven years. I believe that any discrepancies between actual and forecast performance are due not so much to abnormal production difficulties as to unrealistic forecasts.
Turning to guns and ammunition, there is one point that I would like to make clear. It will be recalled that approximately three years ago a decision was taken to standardize to a large extent on United States army equipment rather than the United Kingdom type which we had previously used. From a production point of view, this created a number of special problems in the guns and ammunition field.
In the United States, the requirements of Korea sparked an intensive drive to update and improve their basic weapons and ammunition. Consequently, instead of adopting equipment that was of a fixed design and in current production, we found ourselves trying to reproduce guns and ammunition that were undergoing rapid and radical development. As a result, there were inordinate delays in securing complete manufacturing drawings. This situation has now improved greatly. However, it has also been necessary to acquire detailed manufacturing data. This is being accomplished by our Canadian producers visiting production sites in the United States, and in this connection we have had the very best co-operation.
I do not want to leave the impression that we are not actually producing in these fields. Several natures of ammunition are being supplied from Canadian production to our own services, to the United States, and to our NATO allies as part of our mutual aid program. Production at the small arms plant of Canadian Arsenals at Long Branch is going very well. Sorel Industries have completed a large order of 120 millimeter guns for the United States army and are producing three-inch 50 calibre guns both for


the Canadian and United States navies in advance of agreed schedules. However, in some instances, progress has been slow, but I hope that I have given the committee some idea of the special problems that we have encountered.
The final important segment of our production program is in the field of electronics. Canadian industry has continued to expand its facilities for the manufacture of electronic defence equipment during the past year. This expansion has paralleled an unprecedented increase of commercial facilities for the manufacture of home television sets, with an estimated output of 450,000 units for the current year, as compared with approximately one-tenth of this output three years ago. These additional facilities for both defence and commercial work have broadened the available sources of supply for the department, and it has been possible to obtain competitive tenders on much of the equipment required by the services, with resultant economies.
Naturally, a great deal of our activity in this field is in connection with our aircraft, ship, and gun programs. However, with the additional emphasis being placed on continental defence and interception in the north, there are heavier requirements for Canadian radar and communications equipment. In all discussions with the United States authorities regarding joint plans for northern defence we have insisted that the Canadian electronics, communications, and construction industries be given full opportunity to participate in the program, irrespective of the basis of cost sharing between the two countries.
Apart from the production aspects of the program, there are two other main facets: construction and general purchasing. Defence Construction Limited, as hon. members will recall, has been responsible for defence construction, but in the past it has to a large extent utilized the services of Central Mortgage and Housing Corporation to supervise the actual projects. Although this arrangement proved eminently satisfactory, the recent amendments to the National Housing Act placed an additional work load on Central Mortgage and Housing Corporation and, consequently, it was deemed advisable for Defence Construction Limited to take full responsibility for defence construction with the exception of the married quarters and school program, which will remain with C.M.H.C. The Department of National Defence estimates indicate that a large portion of our defence construction now either is completed or will be completed this year. However, there are a number of projects just getting under way, Gagetown being the most important.

Hon. members who have properly stressed the importance of getting the best return for our defence dollar will be glad to know that in the last few months we have noted increasing competition for defence construction contracts, a condition that will inevitably bring about lower costs.
We have made excellent progress in the field of mechanical transport. By the end of the last fiscal year, that branch had placed orders covering most of the armed services' requirements for military and special purpose vehicles and, as a result, its major function became the procurement of commercial type vehicles. Inasmuch as this is the type of procurement normally carried out by our general purchasing branch, it was decided, in the interests of economy, to merge the two branches into an augmented general purchasing branch.
In the first two years of the program the major work of this branch was in connection with the initial outfitting of the troops and the building up of clothing and equipment stockpiles. This has now been largely completed and current purchases are mainly to satisfy maintenance requirements. On the other hand, as additional vehicles, ships, and aircraft are brought into service, requirements for fuel and maintenance equipment have increased. Another important phase of the work of the general purchasing branch is the procurement carried out through its district offices. As service establishments are developed across Canada, the local purchasing activities of the 14 district offices located across Canada from St. John's, Newfoundland, to Victoria, British Columbia, have increased. In the first three months of 1954, these district offices have issued nearly 35,000 purchase documents, covering contracts totalling in excess of $14,500,000.
By far the greatest change in the defence production scene during the last two years has been in the field of strategic materials. It will be recalled that when the accelerated defence program was launched three years ago, strategic materials were generally in short supply and, through the agency of the international materials conference, international allocations were established for a number of commodities. This, of course, necessitated controls over production and distribution in Canada and in order to administer these programs we had at one time a materials branch, consisting of six divisions covering steel, non-ferrous metals, chemicals, petroleum, newsprint and priorities. Gradually, as circumstances permitted, we relaxed controls and decreased the personnel of the
Supply-Defence Production branch until, by the end of the last calendar year, we were able to abolish all controls and the materials branch itself.
This brings us to the organization of the Department of Defence Production. After its establishment on April 1, 1951, it reached a peak strength of 1,762 on June 30, 1952. On May 31 of this year, the number was 1,539. This reduction was largely due to the abolition of the materials branch to which I have already made reference. For the information of the committee, charts indicating the organization of the department as of June 1 have been distributed to all hon. members.
When the Minister of National Defence was discussing his estimates, he spoke of the long-range planning of the NATO alliance, which has been described as the "long haul" approach. He also indicated that, although modest reductions in defence budgets were possible during the next few years, current commitments and the need to maintain our position of active and effective preparedness would require substantial defence expenditures for a number of years.
This obviously means that there will be a continuing requirement for an efficient procurement organization. In the early stages of the department's history, we secured the loan of a number of experienced men from industry, who either directed our various production and material branches or provided valuable assistance in other capacities. At one time, we had as many as 99 so-called "dollar a year" men in the department. Today, only two of our branches are being directed by other than career civil servants, and the total number of industry men on loan has been reduced to 10. These men from industry, who have given generously of their time and experience, have made a very real contribution to the defence effort. But it is obvious that, in the long run, we must depend on career civil servants to staff a government department.
We have been making every effort to develop a sound organization on this basis. However, we find that, because the life of the department is limited to five years under the terms of the Defence Production Act, there is a tendency for some members of the staff to seek other employment that apparently provides more security. Furthermore, we have found that the temporary nature of the department is often a deterrent to well qualified men who have considered joining us.
Under these circumstances, I believe that it is appropriate to announce now that it is

Supply-Defence Production the government's intention to seek, during the next session of parliament, an amendment to the Defence Production Act which will put the life of the department on a more permanent basis.


Donald Methuen Fleming: Mr. Chairman, I am sure the committee has listened with interest to the review which the minister has just read concerning the operations of the Department of Defence Production and some rather significant changes that have appeared in the program of that department and the conditions with which it has to deal in Canadian industry. I am sure that the committee was glad also to hear what the minister read to us concerning deliveries and also concerning the emergence now of increased competition. I think no one will be surprised at that situation having regard to the fact that competition now is so much keener throughout Canadian industry in general. So far as the government purchasing program is concerned, it is a factor that will undoubtedly react to the advantage of the taxpayer. As I proceed I hope to make a comment concerning the announcement in the final paragraph of the minister's statement, which, it seems to me, is of no little importance.
The estimates of this department this year call for an expenditure of $40 million as against appropriations for the year ended March 31, 1954, of $73 million. On the surface this represents in the appropriations of the department a reduction of $33 million which parallels a simplification of the task of the department and an advance in the government's purchasing program on account of defence.
The task of the department is indeed an important one. This department came into existence on April 1, 1951. It has therefore now been in existence for approximately three years and three months and the expenditures on account of defence which have been made through this department in that period are now approaching the $5 billion mark.
The minister has made a comment upon the reduction in the staff of the department this year. There has, of course, been a notable reduction in the tasks, functions and difficulties of the department as a result of the developments within the past year or fifteen months. The minister has made reference to the marked improvement in the supply of strategic materials, which improvement made it possible on December 31, 1953, to discontinue the remaining controls and indeed the materials division of the department.
The temporary nature of the department, to which the minister made reference, has


unquestionably been a factor in the minds of some of the senior men in the department. No one needs to have many contacts with men holding responsible senior positions in the department in order to realize that what the minister has called the temporary nature of the department has had an unsettling effect on the minds of many of those senior officials with regard to their continuation in the service of the department. I am not going to attempt to pass judgment upon the amendment which the minister indicates the government will introduce at the next session of parliament. However, 1 say this. It is a most interesting announcement and the problem with which, I take it, the amendment is intended to deal is a significant one to which attention must be directed.
Our thoughts in relation to our task as a committee of supply this morning are, I think, related not simply to the matters of supply of materials to which the minister has made reference or to improving deliveries. In addition we are concerned about the policy followed within the department. The minister has not made any extended comment on the policy within the department. I propose to speak briefly concerning various phases of that policy as we have known it in the past and to ask the minister, at the appropriate time, for an adequate statement as to policy and as to whether in this and other respects there has been any change or development in the policy of the department.
My first question is in relation to policy as it affects the Department of National Defence. Recently we have spent several days reviewing the estimates of the Department of National Defence. Yesterday we spent an extremely long day, completing that review only at a late hour last night. It is not my intention to go over any of that ground, but as to the relationship between these two departments there is much that the committee yet needs to be told.
Is the relationship between the two departments what it was when the estimates of this department were before the House of Commons for review a year ago? That is my first question in this regard. We were told by the minister himself a year ago on a similar occasion that in effect the Department of Defence Production has nothing to do with and takes no responsibility in relation to quantities or, indeed, the nature of purchases, and that it simply accepts requisitions from the Department of National Defence and then proceeds to fill those requirements by purchase or by contract. The relationship between the Department of National Defence and the Department of Defence Production

was significantly stated by the minister on May 7, 1953, at page 4923 of Hansard, in these words:
It would upset the relations between the two departments if we questioned the requirements of the services, and it is not our business to do so. If the services say they need a gold-plated piano, it is our duty to buy it.
I ask the minister if the relationship between the two departments is today as it was on May 7, 1953. Is it still the function of the Department of Defence Production simply to receive requests from the Department of National Defence and to fill them willy-nilly without question? Indeed, Mr. Chairman, with all apologies to Tennyson and "The Charge of the Light Brigade", one can say that the function of the Department of Defence Production, as indicated by the minister in this passage last year, might be put in this way:
Theirs not to reason why.
Theirs but to build and buy.
When expenditures of some $5 billion are made in a period of three years and three months I think the house is entitled to expect scrutiny of these purchases, not simply the terms on which the minister's department is purchasing them but as to the necessity for these vast purchases that have been made. In no other way is there going to be any pretence of protecting the interests of the taxpayers.
The next question I wish to ask in relation to the policy of the department as to where they are making their purchases and as to what direction, if any, they are seeking to give to their purchasing policy. Last year the minister declared the policy of the department in this respect to be, first, to purchase in Canada where possible, that is to say, where goods are available on the same or, I take it, approximately the same terms as they can be purchased from abroad; second, to direct purchases to the United Kingdom, and in the third place to the United States. I ask if that is still the policy of the department. I do not think there will be any quarrel with that as a statement of policy, but we will wish to know a good deal more than we have been told either in the statement read by the minister this morning or in the annual report of the department for the calendar year 1953 as to what has been done in fulfilment of such a policy.
The report of the department for the calendar year 1953 contains at pages 45 to 51 some statistical information concerning purchases by the department either by way of defence orders or defence procurement expenses as well as approved projects for capital assistance. As to purchases in the United Kingdom, I think I do not need to labour the point
Supply-Defence Production that here is one place where we can at the same time purchase wisely and assist our export policy. Purchases from the United Kingdom have this double advantage under present conditions.
I referred a few days ago to the statement made on April 14 by Mr. James S. Duncan, chairman of the dollar-sterling trade council, in which he drew attention to the advantages that would flow to Canada in seeking to increase her export trade if we could transfer even a modest percentage of our present huge purchases in the United States to the United Kingdom. These were his words:
Based on last year's trade pattern, if we could transfer only 7 per cent of our imports from the United States to the United Kingdom, it would eliminate Britain's trade deficit with us and put her in a much better position to buy our products.
Mr. Duncan went on to state that the purpose of the dollar-sterling trade council is to assist in this 7 per cent transfer of Canadian imports from the United States to the United Kingdom. It was graphically put by Mr. Peter Thorneycroft, president of the British board of trade, in his recent visit to Canada when, indicating Britain's wish to increase her purchases from Canada and also her capital investments in Canada, he said in a picturesque phrase, "You cannot invest a deficit". It is hardly to be expected that Britain, looking at our trade relationships in the past, is going to arrive at the point where she sells to Canada more than she buys from Canada. Historically Canada has had a substantial export surplus in her trade relationships with the United Kingdom just as in her trade relationships with the United States historically she has had an import surplus. But much could be done to the advantage of Canada to reduce the extent of Canada's export surplus with Great Britain by transferring much of our purchases abroad from the United States to the United Kingdom. Here in the matter of defence procurement we have an opportunity to help to rectify that balance. To the extent to which purchases are not possible in Canada, then certainly every opportunity should be given to make those purchases in the United Kingdom rather than elsewhere. Looking at the figures contained in the report of the Department of Defence Production for the calendar year 1953, we can only conclude that the purchases made by this department and the orders placed in the United Kingdom are disappointingly small.
Looking at the tables beginning at page 46 of the report in relationship to total Canadian defence orders, we see that in the year 1952 Canada's total defence orders amounted to $1,409 million. I will give simply round
6444	HOUSE OF
Supply-Defence Production figures. Of that total 90 per cent were placed in Canada, a total of $1,262 million. Orders placed in the United States come next, $78 million, or 5| per cent. Orders placed in the United Kingdom were just $63 million, or only 4i- per cent of the total. If we look at the 1953 figures we will see that the total of defence orders was substantially reduced last year. The total dropped from $1,409 million in 1952 to $811 million in 1953. That of course is to be explained by the fact that these are defence orders placed and the bulk of the placement program of course was accelerated in the year 1952.
Of these orders in 1953 we see that $716 million worth were placed in Canada, or 88| per cent, in the United States $61 million or 71 per cent of the total, and in the United Kingdom just $33 million, or only 4 per cent of the total. The total of defence orders placed in the United Kingdom compared with the United States was indeed small enough in 1952, $63 million; in 1953, out of a smaller total, that figure had dropped to $33 million or just one half of the total of orders placed in the previous year.
If we look at the expenditures on defence procurement, for which figures are also contained in the tables on the pages I have mentioned in this report, we will see that in 1952 the expenditure totalled $1,095 million, of which, according to my arithmetic, 86 per cent were placed in Canada, 12 per cent or $132 million were expended in the United States, and only 2 per cent or $22 million were placed in the United Kingdom. In the year 1953 the total of expenditures on defence procurement had increased to $1,174 million, of which 85 per cent was placed in Canada; $130 million or 11 per cent were placed in the United States and $49 million or 4 per cent were placed in the United Kingdom. It is to be seen that while the actual expenditures on defence procurement in the United Kingdom were doubled in 1953 over 1952, nevertheless the total figure in 1953 of $49 million of expenditure on defence procurement in the United Kingdom is still a very small fraction of the total, being only 4 per cent.


Clarence Decatur Howe: Will my hon.
friend tell me where he is getting his figures, Mr. Chairman. My figures show that in 1953 $33 million was expended in the United Kingdom and $61 million in the United States.


Donald Methuen Fleming: The minister is away behind me. I had already dealt with Canadian defence orders. He is reading the figures on pages 46 and 47 of the departmental report.
I went on from there to deal with the figures for defence procurement which are to be


found on pages 49 and 50 of the report. He will see the figures I have been dealing with latterly are the figures for defence procurement.


Clarence Decatur Howe: Oh, I see.


Donald Methuen Fleming: There has not been any
unwillingness on the part of the United Kingdom to extend its sales of defence materials or equipment to Canada. On the contrary there has been evidence of the appreciation in the United Kingdom of the opportunity that exists and the desirability, in the interests of the United Kingdom as well as of Canada, of taking every advantage of the opportunity that exists through this vast spending program.
I have in my hand a Canadian Press dispatch, dated May 20, 1953, from Ottawa, and it reads in part as follows:
The British government today announced it is taking new action to step up Canada's defence orders with Britain, the United Kingdom information office here said. First of a number of measures will be the assignment of two officials to Canada to deal with requirements of the Canadian armed forces that could be supplied by Britain.
And so the dispatch proceeds. One can find other dispatches emanating from United Kingdom sources of high authority, indicating the wish of the United Kingdom government and of United Kingdom manufacturers to meet the needs existing in Canada wherever there is an opportunity given to them of doing so. Here is a golden opportunity where we are making the purchases anyway, and it does not mean any further drain upon the resources of the Canadian taxpayer, either by way of loans, gifts or preferences, in aiding Britain. In the case of goods or equipment that cannot be found in Canada, let us direct those purchases to the United Kingdom, and in that way furnish the United Kingdom with the needed dollars with which she may increase her purchases from Canada of wheat and other goods which we have here in such surplus supply.
To the extent to which this large spending program has progressed wherever purchases have been made in the United States that could have been made in the United Kingdom, we had lost what I think, and perhaps all members will agree, is a valuable opportunity to help Britain increase her purchases from Canada. The minister made an interesting speech in Montreal last week indicating a degree of concern which we have not always found present in the minister's speeches, about the desirability of closer trading relations with the United Kingdom. Here is an opportunity, without putting any additional burden upon the Canadian taxpayer, in cases where purchases cannot be

made within our own borders, to help ourselves by making these purchases from United Kingdom sources rather than from the United States and elsewhere.
I point out at the same time, Mr. Chairman, that it is evident from the report of the department that our expenditures in the United States are very great, whether by way of defence orders placed or procurement expenditures and orders. The total orders and expenditures in the United States in 1953 have held up more than the orders and expenditures made either in Canada or in the United Kingdom.
I am next led to ask about the position and policy with respect to the purchase of machine tools. We had some discussion a year ago in connection with the estimates of this department as to the progress in connection with the acquisition of machine tools and the policy in reference to the place of the purchase of those important factors in our defence program. If one looks at page 21 of the report, one will see that in 1953 "the United States remained the largest single source of supply for machine tools". Page DD-16 of the public accounts for the fiscal year ended March 31, 1953, seems to bear this out. It would be interesting to know in this connection to what extent the department has been acquiring small machine tools from German sources and whether those purchases could have been made from United Kingdom sources.
I next turn to the subject of capital assistance. Capital assistance has played an important role in the defence program. The minister had, I believe, nothing to say in his statement this morning concerning capital assistance. We had questions to ask and something to say on this subject last year. The estimates of the department indicate that the program of capital assistance faces quite a substantial curtailment this year. The amount asked in this connection this year is $25 million as compared with $60 million for the fiscal year ended March 31, 1954. Last year we sought to ascertain how the program of capital assistance, under the government's administration, was dovetailing with what appeared to us in the official opposition to be a necessary policy with respect to our defence program in this regard.
I have indicated how, in our view, purchases which we must make abroad could, with great advantage to Canada, be made in the United Kingdom.
I should like now to say that, as to purchases within Canada, there is great advantage to be derived from the widest possible dissemination of those purchases
Supply-Defence Production throughout Canada with a view to distributing the advantages that come from a program of this kind. No one is suggesting any serious departure from the rules of economics or of sound buying; but, Mr. Chairman, the minister has never yet convinced us that within the scope of purchases being made within Canada he is taking advantage of the opportunity that is placed in his hands of bringing advantage to provinces other than the central provinces in the distribution of these defence orders.
Here was an opportunity, perhaps the opportunity of a lifetime-an opportunity at any rate which has not existed at any time in Canada's history, with the exception of the period of world war II-to assist in strengthening the economies of the other provinces by placing defence orders there. Think what it would mean to the economy of the maritime provinces, the economy of Manitoba and the economy of other provinces, by way of strengthening secondary industry in those provinces and providing a broader foundation for economic life in those provinces, if to a great extent this program of defence purchasing were distributed with advantage to those provinces, rather than having it concentrated in central Canada.
The information on the subject is deplorably scant. Last year one turned to the public accounts, for lack of any other authentic source of information. I pointed out last year that, if one is to judge by the head offices of the corporations with which these defence orders were placed, the program was largely confined to the central provinces. The minister took issue with that basis of determining where the orders were being filled. He said, "You cannot tell, entirely, from the location of the head offices of companies, where orders are being filled or where subcontracts let by those contractors are being placed". That may be so. But if the minister has a better or a more reliable way of determining where the advantages of this defence purchasing program are being distributed, then I wish he would tell the house about it.
This morning he said something very brief and very vague about the distribution of purchases. Let us have more information on the subject. We have had enough discussion and enough consideration of the subject in times past to want some detailed information about it. Indeed when from time to time we have asked for information of this kind we have been put off with vague generalities to the effect that the department does not keep records in that way.
On what sound statistical information has the minister made this vague statement this morning about the distribution of the benefits of the purchasing program within Canada?
6446	HOUSE OF
Supply-Defence Production Until he does give some proper information in this respect, I can only refer to the public accounts in relation to his department, and note from that source that for the fiscal year ended March 31, 1953, we find at pages DD-3, 4 and 5, looking at the provision for "capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board", that, out of a total of allotments of $110 million, and expenditures of roughly $78 million, the number of companies or contractors receiving capital assistance was 84. The information discloses that the head offices of 73 of these 84 companies were located in the two central provinces, with only three in Nova Scotia, one in New Brunswick, three in Alberta, two in British Columbia and two in Manitoba.
That does not contain very eloquent testimony either to the success or, indeed, to the effort of the government in seeking to distribute those purchases more widely throughout Canada. I live in one of the central provinces. I know there are advantages in the matter of the fulfilment of orders from the fact that there is a concentration in those central provinces of industrial capacity. But, Mr. Chairman, speaking not as a central Canadian, but as a Canadian, I say that here is a great and extraordinary opportunity given to the government to strengthen the economy, particularly the secondary industry, in the other provinces, and I am thinking particularly of provinces such as the maritimes, Manitoba and others. I am afraid that, in the light of available information, it looks as though the government is allowing this opportunity to slip away without advantage to these other provinces whose economies could be strengthened in the course of a program of this kind, without putting the slightest additional burden upon any Canadian taxpayer.
In this program upon which we are embarked we wish to see, so far as possible, that purchases are made within Canada, when the supply is available here. If that is our position, then why can we not, to a far greater extent than is indicated by these figures, direct those purchases so that they will be of general advantage to all of Canada?
In conclusion I come to several matters of a more specific nature. Those of us in this part of the house have always been concerned about the provisions of section 17 of the Defence Production Act, as it is set out in chapter 4 of the statutes of 1951, second


session. This is the statute that established this department, and from which it derives its wide powers. Under section 17 (1) (e) of this statute, we see that-
(e) a contract may be entered into by the minister without the approval of the governor in council if
(i)	in the opinion of the minister, the contract must be entered into immediately in the interests of defence,
(ii)	the estimated expenditure, loan or guarantee does not exceed twenty-five thousand dollars, or
(iii)	competitive tenders have been obtained and the lowest tender, involving an estimated expenditure not exceeding fifty thousand dollars, is accepted.
This section, of course, covers more than purchases without tender. But the provisions of the section have always been so broad that each year we have made it our business to look for an extended and detailed report on the subject. What is the extent to which the department is making purchases now without calling for tenders? Now that the early feverish haste in launching this program of defence procurement may be said to have passed, is it not possible to proceed by more orthodox and established methods in making purchases or awarding contracts?
In this regard one listened with interest to the statement of the minister this morning that the department is now departing from its previous practice of awarding contracts on a cost-plus basis. That was welcome news, particularly to those of us including yourself, Mr. Chairman, who during the 1953 session served on the special committee on defence expenditure. We were not the least bit happy about the wide extent to which contracts were being awarded through this department and its corporate creations on a cost-plus basis. To the extent to which the department is now awarding what the minister has this morning called "incentive contracts", in place of cost-plus contracts, we shall acclaim that as a step forward. We wish to know more about it; we wish to know how far this trend has gone. We do not make any attempt to disguise our dislike for the kind of contracts that have been awarded by the department in the past.
In the next place, Mr. Chairman, we want more information about the operations of the revolving fund within this department. Section 16 of the Defence Production Act makes provision for "a defence production revolving fund". In that fund there is a working capital of $150 million turning over in the department today. The annual report of the department on this point is very sketchy indeed. We ask for more information on that point.
We next ask for more information concerning the policy of the department in relation

to disposal or retention of crown assets. I am thinking in this respect in the first place, but not entirely, of crown-owned plants.
Within the past year a very large plant has been disposed of by the government. Last September an announcement was made that the government-owned Orenda jet engine plant at Malton had been sold to the A. V. Roe Canada Limited at a sale price of somewhere, according to newspaper reports, between $17 million and $17,500,000. According to the newspaper reports the original cost of the plant was $35 million, and the government-


Clarence Decatur Howe: No, Mr. Chairman.


Donald Methuen Fleming: -retains ownership of about $17 million worth of equipment in the plant.


Clarence Decatur Howe: The cost the hon. member gave included the equipment. The equipment was not sold.


Donald Methuen Fleming: Yes. That is what I was saying. That is the burden of the report which I have just been reading. The plant was sold for a price, as mentioned here, of between $17 million and $17,500,000. The total cost of the plant and equipment was $35 million and the government is retaining ownership of about $17 million worth of equipment in the plant. That is a very substantial sale, Mr. Chairman, and it naturally leads one to ask questions as to the policy of the government in this respect. Is it policy to dispose of crown-owned plants? If so, what are the terms or objectives which guide the government in relation to sales? In this case the sale was made to the corporation which was managing the plant on a management-fee basis. One can see that if the government did decide to dispose of the plant, that corporation was the natural purchaser if terms were reasonable and every effort had been made to assure that the taxpayers' interests were adequately protected in the sale.
I ask the government as to policy in this respect. Are other purchases in contemplation? What steps are being taken to assure that in the case of disposals of plants the full value of those plants is being realized in the sale price?
I ask generally about policy in regard to sale of crown assets. I have referred particularly to crown-owned plants. In conclusion I turn to crown-owned assets of another nature. We have a corporation which functions under this department known as the Crown Assets Disposal Corporation. Its function, as it has been described in times past, is to dispose of crown assets that are surplus to the crown requirements. We have
Supply-Defence Production been assured in the past that before any steps are taken through that corporation to dispose of crown assets every proper inquiry is made to determine whether those assets are required not simply in this department but in other departments of government.
Here is a department that is expending billions of dollars of the Canadian taxpayers' money, because this money has all come out of the taxpayer; none of it has been borrowed; none of it is to be paid for by future generations; all of it is being paid for by the taxpayers of 1951, 1952, 1953 and now 1954.
What is the policy in this respect? How is the policy being administered by the department? Well, I hope the case to which I am about to refer, Mr. Chairman, is not an example of the way in which the government is discharging its responsibilities in this respect. I hold in my hand an invitation to tender, issued by the Department of Defence Production, and dated March 30, 1954, inviting the submission of tenders for certain "automotive spares (bearings) ", the tenders to be addressed to the secretary of the department at Ottawa and to be received by him not later than four o'clock p.m. on April 27, 1954. Attached to this invitation to tender are three sheets setting forth a considerable number of bearings, all identified by certain well-recognized trade designations. In most cases the bearings specified are either SKF or Timken bearings. In some cases they are either Timkens, Hyatts, New Progress, or Bantam and some other bearings, but many of them are Timken bearings, each of which bears a number designation which refers to and identifies a standard form of bearing produced by the Timken Roller Bearing Company. They are completely standardized, as all hon. members will appreciate. Every one of them has a trade number identifying it. The quantities required vary greatly. I have not counted them but I presume there are about sixty different types of roller bearings that were to be purchased in accordance with this tender. The quantities purchased of each kind of bearing rise from 3 of a minimum to, I think, a maximum of 28,365. Therefore in the total number of bearings on which those in the trade are being invited to tender we have some scores and scores of thousands of bearings. In other words, this is not a small matter.
I also hold in my hand, Mr. Chairman, an advertisement put out by a Toronto firm which is engaged in the sale of used automobile parts as well as new ones. This firm put out a letter to the trade dated March 30, 1954, advertising for sale "bearings Timken, SKF, Hyatt" and many others.
6448	HOUSE OF
Supply-Defence Production
They are said to be available at a special discount which is described as 75 per cent off the current Canadian price list as shown, and even less if they are to be used in manufacture, and you give your sales tax licence number. Then this paragraph follows:
AH bearings are genuine, brand-new, government surplus in absolutely first-class condition and are unconditionally guaranteed. Many are still in their original packing, while others have been carefully and expertly repackaged where necessary.
I have not seen these bearings, Mr. Chairman, but I do know that the firm which has put out this statement to the trade, this printed sheet to the trade, is a reputable firm.


Mr. Dickey:: Can the hon. member supply the name of the firm?


Donald Methuen Fleming: Do you wish me to give it
or shall I send it over?


John Horace Dickey: Whichever you like.


Donald Methuen Fleming: I will send it over to the
minister. When this firm refers to a government surplus of bearings I am quite sure they are making a truthful statement as to the source of their purchases. To that statement from that company there is attached a list of bearings, and I have been comparing the two lists and I find there are many of the same kind of bearings quoted in both lists.


Clarence Decatur Howe: In what year did that transaction take place?


Donald Methuen Fleming: I gave the date of the invitation to tender, Mr. Chairman, and it was March 30, 1954, and the time for the submission of tenders was to close at four p.m. on April 27, 1954. The letter to the trade put out by this firm is dated March 30, 1954. In other words, it was put out at the same time as the government through the minister's department was inviting the trade to tender on the very same kind of roller bearings. I will just run through a few of them, Mr. Chairman, and I shall be glad to send these papers over to the minister for examination. The following are the numbers given of the standard Timken roller bearings: 2793; 2924; 23100; 23256; 28682; 31593; 41286; 53176; 59187; and 59200. These numbers appear on both lists, Mr. Chairman, and therefore it is evident that on the very day the Department of Defence Production was inviting the trade to tender on large quantities of new roller bearings a firm in Toronto was issuing to the trade a printed list of the bearings that it had available, including a number of the very same kind as those for which the government was inviting


tenders and on which this firm is offering a 75 per cent trade discount and stating that these bearings are:
. . . genuine, brand-new, government surplus in absolutely first-class condition, and are unconditionally guaranteed. Many are still in their original packing, while others have been carefully and expertly repackaged where necessary.
No one, Mr. Chairman, expects the minister to be a superman or the department he heads to have superman wisdom or efficiency. But I think we are entitled, as a House of Commons being invited to vote billions of dollars of the Canadian taxpayers' money, and hard-earned money in practically every case, to expect a higher degree of efficiency than is displayed here, particularly when the government is disposing of surplus and then turning around and purchasing the very same thing by public tender and, as we well know in such a case, at a substantially higher cost.
I repeat what I said in introducing my review of the information in reference to this case, namely, that one hopes this is not an example of the way in which the operations of the Crown Assets Disposal Corporation and the purchasing activities of the Department of Defence Production are correlated, because there is no evidence here of any correlation whatever. So, Mr. Chairman, we will expect something much stricter, much tighter, and much more efficient in the way of the administration of the department than that case indicates is the situation.


John Horace Dickey: Would the hon. member be
good enough to send over the documents?


Donald Methuen Fleming: Yes. I am sending over to
the minister, Mr. Chairman, the entire papers to which I have referred. There are some seven or eight pages.
Let me say in conclusion, Mr. Chairman, that the powers wielded by the Department of Defence Production are very great. When you place it within the power of a government department in peacetime to make purchases in a matter of three years aggregating a figure approaching $5 billion, I do not need to tell any hon. member of this house that you are placing in the hands of the government, and particularly in the hands of the minister who heads that department, vast powers over the economy of this country.
It is an unhappy circumstance that the world being the kind of uneasy, turbulent, and unsafe place in which we find ourselves, Mr. Chairman, it is necessary to undertake a defence program as vast and costly as this one is. But the very least that the House of Commons ought to do in these matters is to

insist upon the observance of sound and fair policies in these matters, and that the vast economic power which is placed in the hands of the government under this program shall not be arbitrarily wielded to the disadvantage of individuals in Canada. Where there are advantages they should be widely distributed, and where orders are to be placed they should be placed on a fair and equal basis. The last thing in the world that could be justified is any form of discrimination or the wielding over the heads of manufacturers, and through them their workmen, of powers of this kind in an unfair manner.
And so, Mr. Chairman, while we have indicated the importance we attach to the functions of this department, we do call for a strict scrutiny. It is perhaps unfortunate that this year there has not been a committee charged with the responsibility of reviewing the transactions of this department. The fact is that we have had many committees this year, they have been discharging a heavy responsibility, and there is a limit to the number of committees that can operate efficiently in a single session. But apart from that, Mr. Chairman, I shall not need to remind you, as a member of the defence expenditure committee in 1953, that we had some very disappointing and frustrating experiences on that committee. The committee was not permitted to extend its review back beyond April 1, 1950, and the committee was never permitted to review the estimates of the department for the current year. It was permitted to review nothing but expenditures made in the past.
As a means of testing the propriety and fitness of the estimates of expenditures for the current year it had no competence whatever, for it lacked all power. The kind of committee that is needed, Mr. Chairman, to review the type of expenditure that is being made through this department on behalf of the Department of National Defence, expenditures that amount to very close to half of the national budget, is the type of committee which has an opportunity to review the estimates of expenditure for the current year and the proposed expenditure, not simply the expenditure made in the past. In that way and in that way alone will parliament really be in a position to discharge its duty to review the operations of this department effectively.


Mr. Cameron (Nanaimo):: Mr. Chairman, I was interested to hear the minister tell us that the policy of granting cost-plus contracts has now yielded place to the granting of another type of contract which I believe he referred to as an incentive contract. Not
Supply-Defence Production only would I be interested but I would be relieved by that statement were it not that I remember hearing of other types of contracts that have been let by this and other governments which, in my simple-minded manner, I had imagined were in effect cost-plus contracts but as to which I was told I was quite mistaken and that they were, on the other hand, what were known at that time as target contracts.
They were an extremely interesting instrument of agreement, Mr. Chairman. Apparently a target contract was something like this. There was a certain figure at which it was presumed a contractor was supposed to aim; and when, as inevitably happened, he aimed at this price and hit not the bull's-eye but a point away out on the outer part of the target, then the procedure was to move the bull's-eye out to where he had hit. For instance, I recall asking earlier in the session-a question about certain naval vessels that we had been constructing. I was interested in them because last year I was working in the yard that was producing these vessels and we saw them. They were these quite small wooden minesweepers. We had discovered that the target price had been $925,000. Later we heard rumours that it had been increased to $1,600,000. Hence I put a question on the order paper when I became a member-


Clarence Decatur Howe: I do not think my hon. friend wants to mislead the committee. There was never a target-price contract placed for a minesweeper until these last three months. My hon. friend is talking about estimates of costs. He is not talking about contract price, and I wish he would not call them that.


Colin Cameron: All right, Mr. Chairman; we will call them estimates of cost. The estimate of cost was so far out that, instead of costing $925,000, they were to cost $1,600,000, according to the answer I received in reply to the question I put on the order paper.
I recall also that in that same year there was another naval vessel for which a contract had been let, namely the Algonquin. I was greatly interested in that vessel because it was tied up on the other side of the dock from the vessel on which I was working. It had been there for many months-for many years, as a matter of fact-undergoing reconstruction or reconversion. I recall that in the little house organ of the company for which I was working, and which had the contract for the Algonquin, there appeared last year a little article on the completion of H.M.C.S. Algonquin. In this little house organ it was
6450	HOUSE OF
Supply-Defence Production pointed out that owing to the increase in the costs of production and, of course, the cost of labour, it had been necessary to spend on the completion of the Algonquin more than had been the original estimate. But the company patted itself on the back that in spite of those greatly increased costs, the Algonquin reconversion was going to cost only $4 million. That might have been all right, Mr. Chairman, except that my friend the hon. member for Esquimalt-Saanich-he at that time was my predecessor as the hon. member for Nanaimo-had an attack of curiosity at that time and he put on the order paper a question asking how much the reconversion of the Algonquin had cost. Most unhappily for the editors of this little house organ, a few days after their statement that the Algonquin reconversion unfortunately was costing more than had been expected, and that it was going to cost $4 million, there appeared in the press the answer to my hon. friend's question indicating that the cost had been $5,275,000. Therefore, as I say, Mr. Chairman, I would have been happier at the minister's statement were it not for these little doubts I have in my mind as to whether there is any real distinction-or whether it is not, after all, a distinction without a difference- between these two types of contracts to which there has been reference.
Then there is another question that is in my mind when I read the report of the Department of Defence Production and when I find on page 14 that up to the end of 1953 -I hope the minister will correct me if I am wrong; I am assuming that is the period from the establishment of the department to the end of 1953-certificates had been issued covering some $665 million worth of capital investment in facilities for the production of both basic materials and defence supplies, thereby allowing additional benefits by way of income tax write-offs amounting to some $277 million. This is a reference, Mr. Chairman, to what is commonly known as accelerated depreciation. Of course it may be that that has been necessary in order to ensure the production of defence materials. However, when I read that I was reminded of another instance in which the taxpayers of Canada were asked by this government to forgo some of their legitimate income in order to aid another struggling company to produce materials for Canada's war effort. I refer to the Aluminum Company of Canada.
On that occasion we afforded them these additional benefits-as they are referred to in the report of the Department of Defence Production-to the tune of $177,359,956.06. Mr. Chairman, it may perhaps have been


necessary to do that. Perhaps it was necessary because we were asking the Aluminum Company of Canada to expand their facilities to an extent that would be far greater than anything for which they could find use after the war. In fact, as I recall it, that was the idea that was presented to the people of Canada. That is why they were asked to forgo approximately $177,000,000 of income in order that this company might be enabled to meet our wartime needs.
Mr. Chairman, somebody again made an estimate that was very wide of the mark. Hardly had the war ended than this same struggling company brought their approximately $177 million plus several hundred million dollars more up into British Columbia to expand still further their facilities in a period that we have been given to believe would not provide any market for the expanded facilities at Arvida. Therefore, as I say, I have some doubts as to the possible necessity for this relinquishment of $277 million worth of income to the federal treasury.
Then in the next paragraph we are told of the $48 million that is being granted by way of capital assistance to private industry. Again, it may perhaps be necessary to grant this assistance to firms in order to get them to produce the materials that we require for our defence expenditures. But, Mr. Chairman, surely there is a reasonable case to be made out for this government's retaining, on behalf of the people of Canada, an equity in those industrial facilities for which we are providing the capital. Surely that is not an unreasonable proposition.


Clarence Decatur Howe: We own the
facilities.


Colin Cameron: I beg your
pardon?


Clarence Decatur Howe: We own the
facilities.


Colin Cameron: The major portion of this type of assistance was granted in 1952. If you own the facilities, to whom were you giving the assistance?


Clarence Decatur Howe: We were giving it to ourselves. Any money that is advanced as capital assistance is advanced for the purpose of providing a facility to be owned by the crown. If it is a building, the building is owned by the crown. If it is a machine, the machine is owned by the crown.


Colin Cameron: I certainly withdraw everything I have said. I am extremely glad to hear that. I was afraid that this was the same sort of assistance we had given

to the aluminum company. Now, Mr. Chairman, I am not, however, so particularly interested in these aspects of our defence production program. I do not think, for instance, there is anyone in this chamber, including the minister himself, who can tell us with any assurance that our $2 billion that is going to defence expenditures is being spent in the wisest manner possible. I think that is entirely a matter of opinion. I think the opinions may be based on very little information, and it may not be possible to get the information. Let us agree that they are doing the best they can in that regard; but let us, on the other hand, proceed to get some incidental benefits out of these wasteful and misguided expenditures, if there are any such in this department.
To that end I should like to direct the attention of the government to the policy that is now being pursued by the government of the United States. I have in my hand defence manpower policy No. 4 as revised on November 5, 1953. This defence manpower policy directive from the office of the President of the United States is designed to ensure that defence expenditures in the United States are placed with certain objectives in mind, one of them being the objective of maintaining, as they say here, "management and employee skills necessary to the fulfilment of government contracts and purchases", the idea being that there should be a consideration of the needs of industrial development and industrial employment in various parts of the United States in the placing of departmental orders. Paragraph 2 of this directive has this to say under the heading "purpose":
It is the purpose of this defence manpower policy No. 4 to direct attention to the potentialities of areas of substantial labour surplus, hereafter referred to as labour surplus areas, for the placement of procurement contracts or the location of new plants or facilities, and to assign responsibilities to specify departments and agencies of the government to carry out the policy stated below.
I may say that the definition of a labour surplus area for the purpose of this directive is an area in which the labour surplus is 6 per cent or over and an area in which there appears to be no immediate sign of improvement. With respect to the purposes the directive goes on to say that they are:
(b)	To maintain productive facilities;
(c)	To improve utilization of the nation's total manpower potential by making use of the manpower resources of each area;
(d)	To help assure timely delivery of required goods and services and to promote readiness for expanded effort by locating procurement where the needed manpower and facilities are fully available; and
(e)	To reduce the vulnerability of defence related and essential civilian industries to air attack in the event of war.
Supply-Defence Production
That last point is, I think, a very important consideration. It is only about a week or two ago that one of the military correspondents, I think it was Hanson Baldwin of the New York Times, pointed out this rather ominous fact, that one of the ways in which the Soviet union is gaining superiority over the United States and North America is that it is providing fewer effective aerial targets than we are on this continent, that they have been pursuing a deliberate and conscious policy of dispersal of industry all across the Eurasian continent. Here on this continent, unfortunately, we pursue a rather haphazard policy of allowing industrial development to take place wherever immediate existing economic circumstances cause it to arise, with the result that we have located in the lower Ontario area, as the hon. member for Eglinton pointed out, a concentration of industry which provides an ideal target for aerial attack.
I believe that here we have an opportunity not merely to disperse our industry or to develop industry across the country but an opportunity to do something that our American friends have not done hitherto and that they are now apparently trying to do, a rational reorganization of their industrial potential. I think we have an opportunity that we perhaps could have in no other way of really developing the productive capacities of this country in relation to population, resources and climate in a way in which no nation has hitherto had. I would urge very strongly on the minister and the government that they make this consideration one of their major considerations in the placement of defence production orders, and particularly in the decision as to areas in which there shall be investment in new productive facilities.
The history of the United States shows quite plainly that its modern industrial potential was developed in two major periods, that period comprised in the first world war and the period of the second world war, when enormous expansions and developments of American industry took place under the stimulus of defence production expenditures. It may be of course that informally our government is doing that type of thing, but the Department of Defence Production has received no direction from this parliament to follow out precisely the sort of program that is now being pursued in the United States of America.
Since the session began we have had a series of visits from representatives of the unemployed, who are now such a source of anxiety to us. We have had, moreover, appeals from members from different parts

Supply-Defence Production of the country with regard to the necessity for economic rehabilitation. I have no doubt that the hon. member for Cape Breton South will be dinning the necessities of his part of Canada into the minister's ears before this debate is over. I can think of no better way in which the government could combine the carrying out of its responsibilities for defence production with its more basic responsibility for the material welfare of the whole Dominion of Canada than by giving consideration to the deliberate development of industrial potential in those parts of Canada which are now either declining industrially or have not hitherto had any important industrial development.


Mr. Hahn:: Mr. Chairman, in taking part in this debate on the defence production estimates I wish to address my remarks to three matters particularly, the first of which is a question of policy. I should like to know how government policy in the matter of purchases differs today from what it was during the war years. I contend that industry has a right to know this. During the war, when we were very hard pressed for materials, goods and production, there was a definite policy of assistance. That certainly saw us through the war and was an excellent measure. The same minister is in charge of the department today. He did such a good job at that time that I was hoping that I could say that he had been able to continue to do so.
Today, however, it seems to be a matter of looking for the cheapest market. I am thinking particularly of an answer I received to a question I put in the house one day respecting the use of British Columbia plywood in the building of keels for six minesweepers that were built at Bellingham, Washington.
I finally received the answer. It indicated that an eastern firm had been given the contract, that it had been sublet to a Bellingham, Washington, firm, and that was all there was to it. I am not too happy about such a situation, especially in view of the fact that I understand a New Westminster firm submitted a tender which must have been refused. If it is going to be the policy of this government to buy wherever the market is cheapest, I believe that those men who are particularly interested in building up industry in our country should know about that.
The second factor also concerns policy, but is a matter of a more localized nature. There are very few west coast firms that receive contracts from the defence department. I am given to understand the reason is that our prices are too high. I wonder why that is the case? Is it the cost of labour 
or are there some particular factors that are involved? I should like to remind the minister that British Columbia dollars are poured into this particular government in some volume. While our bids might be high, on occasion they must be close enough to warrant spending more dollars in British Columbia for defence production than have been spent in the past.
There is one important factor in which I am rather interested in this respect, and that is to what degree have studies been made with a view to manufacturing an article on the western coast instead of manufacturing it in the eastern part of Canada and sending it to the west coast. We know that a good portion of this material must be sent to the west from time to time, and therefore it might just as well be produced at that point. What thought has been given to sending raw materials to the west or to the far eastern coast for that matter, and manufacturing the finished product that might be needed at that point rather than building it in various parts of the country and sending it to either the eastern or western coast. In the explosive world in which we live it could prove most unfortunate, and would be most unrealistic, to put all our eggs in one basket.
The third point I wish to mention is a major one in the minds of members from British Columbia and Alberta. It concerns the construction of a pipe line from the Peace river area in Alberta and British Columbia into the Vancouver district. I noted with some concern, as did most of the British Columbia members, I am sure, the decision of the federal power commission that they would not accept Westcoast Transmission Company's offer to build a line into the Pacific northwest. I was happy to note, though, that there is a 30-day waiting period for reconsideration of this decision. I would urge the minister to give consideration to our request and try to do something as quickly as possible, before this 30-day period is up, to enable this line to be built.
I do not believe that it is proper that the provinces of British Columbia and Alberta should be made to suffer because the West-coast Transmission people probably did not make as good a case as might have been made in trying to persuade the United States authorities to permit them to supply gas. On June 19, I believe, the hon. member for Macleod sent the minister a question in respect of this problem, and later the hon. member for Vancouver-Quadra raised the question on the floor of the house. I am sure none of us are too happy about the responses we have received. I should like the minister to ask the United States authorities to review

the whole situation with a view to either changing their decision and accepting this Alberta-British Columbia gas or else permitting us to build an auxiliary line into that area to augment the supply from New Mexico. If this attempt fails, then a conference should be called of the provincial governments concerned and the federal government, as well as the authorities who are in charge of investing large sums of money with a view to building the gas line from the Peace river country into the lower mainland of British Columbia.
I have considerable information on this project. I might point out to the minister that as late as April 12 or 13, 1954, a three-day conference was held at Portland by the Pacific northwest trade association. All delegates attending that conference were very anxious to have the gas line run from the Peace river country into the lower regions of British Columbia and on into the states of Washington, Oregon, and down into northern California. If the minister is not aware of it, and I am quite sure he must be, the membership of this particular group reads like who's who in the business world. There were 32 members from trade or gas companies, the British Columbia electric, and so on, from Vancouver; 23 members from Portland, Oregon; 50 members from the city of Seattle; 20 members from the city of Spokane; and there was a supplementary list of upwards of 150 or 200 delegates, all of whom are industrialists in the Pacific northwest.


The Deputy Chairman:: Order. Perhaps this would be a convenient time to interrupt the hon. member and call it one o'clock.
At one o'clock the committee took recess.
The committee resumed at 2.30 p.m.


Frederick George Hahn: Mr. Chairman, before the lunch hour I had suggested three alternatives with respect to the proposals connected with the building of this gas pipe line, and I had begun to review particularly what the Pacific northwest trade association had to say respecting the building of this line. Their resolution No. 11 had to do with the extension of the line, and reads as follows:
Whereas, S.1287 has been introduced in the Senate of the United States and reads as follows: That section 3 of the Natural Gas Act is amended by inserting between the second and third sentences thereof a new sentence as follows:	It shall not
be deemed to be consistent with the public interest to authorize the exportation or importation of natural gas in any case where the commission finds that such exportation or importation will result in economic dislocation, unemployment, or injury to competing fuel industries in the United States; and
Supply-Defence Production
Whereas, this type of legislation would seem to be against the aims and objectives of the Pacific Northwest Trade Association and would set up regulations which would tend to restrict the normal interchange of goods and services between the United States and Canada, and;
Whereas, British Columbia and Alberta may prove to be "the most economic sources from which Oregon, Washington. Montana and Idaho can obtain a supply of natural gas;
Be it therefore resolved, that the Pacific Northwest Trade Association go on record as opposing this bill and notify the congressional delegations of Oregon, Washington. Montana and Idaho of this action along with the committee of interstate and foreign commerce of the Senate to whom this bill has been referred.
I consider that a very important resolution in view of the fact that it was passed at that meeting. The resolution, which was passed practically unanimously, was endorsed by the Northwest Pipe Coating Corporation, the Seattle Gas Company, Puget Power Company, Boeing Aeroplane Company, Pacific Power and Light Company, Portland Chamber of Commerce, Portland Gas and Coke Company and the Eugene Water and Electric Board.
You will note that practically all the firms having to do with power in the Pacific northwest, including our own from British Columbia, were very interested in having this gas legislation passed as proposed.
Now, I would not go as far as the Vancouver Sun has gone in its editorial of June 19 of this year, in suggesting reprisal action; but I think that sometimes it is necessary to suggest what action we might take to reciprocate in respect of their thoughtless treatment of our request that gas be piped into the northwestern United States. On the point the Sun has this to say:
Ottawa must demand immediate reconsideration by top U.S. administrators of the perverse ban clamped on B.C. natural gas entering Washington and Oregon by the U.S. federal power commission. Our government should bluntly remind Washington, D.C., that Canada could, play at economic nationalism to great U.S. disadvantage.
Ottawa could point out that B.C. is in no mood to harness its Columbia river water to supply desperately needed hydroelectric power to the U.S. northwest when FPC can't trust us to serve gas consumers fairly in the same area.
I would like to remind this government, particularly the minister now before the committee-because he was minister at that time-that when the Anaconda mine required a large supply of natural gas there was no question of the fact that Alberta could supply the gas in the quantities required. Nor was there any suggestion at any time that the supplier might be unreliable. At the time the request was made to supply the Anaconda mine in the United States with gas, that line was built and the export permit was given.
6454	HOUSE OF
Supply-Defence Production There has been no difficulty in so far as the shipments of gas are concerned into that part of the United States.
The transportation of gas is so important in the defence set-up of the Pacific northwest that, if we are going to try to keep our industries in operation, it is important that this exchange be continued. As I said earlier, I would not go so far as to suggest that what the Vancouver Sun suggests by way of reprisal should be endorsed by parliament. However, I think it should be drawn to the attention of the United States authorities that the two of us can very handily play at the same game.
The following is a press report which has since been substantiated by the fact that we could not send our gas into the United States. The following appears in the Vancouver Province of June 19, and refers to one of the larger consumers of the product in Portland. The press article says:
Charles Gueffroy, president of Portland Gas and Coke Company, Portland, Oregon, biggest potential customer, said his company will not sign anything but a "pay as we use at an agreed price" contract with Pacific Northwest, the winning pipeline. "Without our contract I doubt if Pacific can get financial backing," he said.
Mr. Gueffroy said the decision "injected unfortunate international aspects and I predict that even the White House will take note of it."
It can be seen from this one large consumer just how essential it is that a gas line should be built. I know our minister is well aware of the situation. He is aware of the fact that it is very necessary to the people of British Columbia, if we are to carry on the industrial development we have been expecting to carry on. I believe he knows of the development that is taking place in my own riding, where some $70 million is being invested by a British syndicate looking after the estate of the Duke of Westminster. That site alone will probably account for some 80,000 families in that riding in the not too distant future, when the ultimate goal of complete industrialization is reached.
The matter, of course, has to do entirely with policy. And I come back to that, because I feel that to a certain degree our government has been neglectful of letting our policy be made known to the Americans, particularly when they expect us to help them. When they expect that, then naturally we expect that they will give some help to us. This matter of trade, whether in connection with gas for defence purposes, or for any other purpose, is a very far-reaching one. A policy whereby we allow Texas gas to enter the Niagara peninsula for only five years might well have its effect upon the


Pacific Northwest decision made by the commission, because we have given our approval to bringing gas into that area.
By the same token I think we should expect further consideration from the proper authorities in the United States, when we bring to their attention the far-reaching effects on our defence production alone, if for no other reason. The same is true of the United States. We should bring to their attention the far-reaching consequences of this matter on our defence production alone if for no other reason than that the safety of the United States and of Canada might well depend upon this gas.
The hon. member for one of the Kootenay ridings mentioned the other day the steel industry that he hoped would be built in his riding. Certainly, anyone who knows the worth of steel and the fact that coke and coal are found in the region, together with gas, which could be supplied to that region, knows that it would be a tremendous boon to that area. It is more essential to bring this about now than ever before. I request the minister to try to get in touch with the proper authorities in the United States with a view to getting them to change their decision in respect of bringing gas into the northwestern United States. Let us build our line. If that is impossible, then give us the assurance that the United States people will use our gas to supplement their own. If that is not done, then the third proposal should be undertaken. We should go ahead and build a gas line from the Peace river country into the Vancouver market with the help of Canadian industrialists and investments by the public, as well as the help of the government of British Columbia.


Mr. Green:: On Saturday last I asked the Minister of Defence Production a question with regard to this decision which has been made by the United States federal power commission, and he gave a satisfactory reply. I realize the minister is just as much concerned about overcoming this difficulty as are those of us who represent constituencies in British Columbia.
Since Saturday I have had an opportunity to read the west coast press and I think I can say without exaggeration that there is great concern, great worry there over this situation. In any event, I have never seen the press upset so quickly as they have been over this particular decision. As the minister knows, the opening up of the Peace river district of British Columbia and Alberta is dependent to a very large extent on the possibility of exporting the gas. If no way is

found by which that gas can be got to market, then the development of that northern portion of Canada will be delayed for a generation. That will be particularly tragic, because much of our danger comes from the north. If there ever were an attack on this country it would come from Siberia or over the pole, and that northern country is of the utmost importance from a strategic point of view as well as in many other ways.
As far as British Columbia is concerned, there has been a great deal of publicity about natural gas being available. That publicity has been going on for several years, and to a remarkable degree the people have the idea that the economic development of the province depends to quite a large extent on getting gas from the Peace river. It is felt there that every part of the province would benefit; of course the central part of the province would, including such centres as Prince George and Kamloops. Then, there is the Okanagan valley and the Kootenay country where the Consolidated Mining and Smelting Company is located at Trail. That company would be as large a consumer of natural gas as greater Vancouver. Down in the lower mainland of the province the British Columbia Electric Railway Company has been planning to use this gas, and many schemes have been on the drawing board which are based on the use of Peace river gas.
I believe it would also be possible to pipe the gas over to Vancouver island, and there it would be a fine source of power. They have not too much electric power there, and the natural gas would be of great benefit.
I notice in the press that the former premier of British Columbia, the Hon. Byron Johnson, said that he had in mind the provincial government taking part financially in the construction of this natural gas pipe line from the Peace river, in the event of the decision of the United States federal power commission being unfavourable.
I had not realized that before, but I think that he had planned to provide over half the capital for the construction of such a line. The present provincial government is very deeply committed to the project. I fancy that it too would be willing to help in the construction of a line.
I believe that if a line were built now it would not be very long before the Americans would be scrambling to get the gas. It could be finished before the line from the San Juan basin comes through, and apparently the reserves in that area of the United States are not very extensive. I was given that impression by a statement made by one of the 83276-408
Supply-Defence Production directors of the Westcoast Transmission Company as reported in the Vancouver Province of June 18. I refer to Norman Whittall. He had this to say:
If Canada "goes it alone" on the natural gas pipeline from the Peace river, the United States will ask to come in, said Norman R. Whittall, one of the chief figures in Westcoast Transmission Company's battle for the line.
"We should build a 24-inch gas line to Vancouver, irrespective of anything else," he commented when informed of today's turndown by the United States federal power commission.
I believe the original plan was to put in a 24-inch line. The article continues:
The citizens of British Columbia should support the project and the government should guarantee the bonds. It is only a matter of time until there will be so much pressure from an educated American public that federal power commission will be forced to upset its ruling. Gas reserves of the Pacific Northwest Pipeline Corporation are not sufficient to supply the potential market in the Pacific northwest area of the United States."
I believe the main objective now is to see that the construction of a pipe line is not unduly delayed. It would be vital for defence production on the west coast as well as being vital for the development of the north country and of the province as a whole. I realize that on Saturday the minister said he would do everything he could to help get this situation remedied, but I have been wondering whether a project of this kind would qualify for capital assistance under the minister's department. It may be that such would not be the case, but I ask the minister whether he would be willing to have a complete investigation made of the situation just as soon as possible after the house rises. I know I do not need to ask for his assurance that he will do everything within his power to see that this project goes ahead.
We have lost the first battle, but we have not lost the war. I believe this scheme is so important to the future of Canada that some means should be found of bringing about the construction of the line through co-operation of the people interested and of the provincial government; and whatever help can be given by the dominion government should be made available. Could the minister say whether this would be a project which could be made eligible for capital assistance under the vote in his department?


Clarence Decatur Howe: Mr. Chairman, it does not come under any of the rules governing capital assistance about which I know.
I might say that the policy for the sale of western gas is made in the west and not,
I am sorry to say, in Ottawa, because I think we might do a little better. There has always been a theory advanced that the best market
6456	HOUSE OF
Supply-Defence Production for western gas is in the United States, and a great exponent of that theory is the hon. member for Calgary South. I believe his views are shared by the premier of Alberta. That theory is that all we have to do is to deliver the gas across the international boundary and it would be snapped up immediately. I have thought for a long time that the sponsors of this project were taking rather a long shot in attempting to serve that particular market by gas from the Peace river area. I felt that the other applicants who proposed to take the gas from southern Alberta should have received more consideration than they were given in this house. I remember that my hon. friend himself led a filibuster during two sessions of parliament to prevent those proposals receiving consideration in this house. I felt that a supply from southern Alberta would have had a much better chance of entering that market rather than a pipe line from northern Alberta. All I can say for this government is that we have done everything we possibly could to see that western gas was made available and done all we could to help the marketing of that gas. I believe in doing everything to develop our economy and the use of our natural resources to the best advantage. I have long maintained that the best market for Alberta's gas is in Canada, and that the greatest contribution that gas could make to the economy of any part of the country is to find markets for it in Canada. That is what we are attempting to do.
I would point out that we had to wait two years after the first application for export to the United States was granted before we could get permission to export gas to eastern Canada. We obtained that permit during the last two or three months and that is a project to which I think the government can give some assistance. As both projects were started by others and controlled by others, and for which the permits are given by others it has been very difficult for this government to get a toehold to an extent that we could be really useful.
I think I am as interested as anyone else in making sure that Canada develops to the fullest extent possible using all her natural resources, and I am very sorry indeed that that gas in the Peace river area is going to be tied up for some time at least. However, I think the decision to bring in gas from the San Juan basin is only a temporary hold-up because I believe there is not enough gas in that area to supply the domestic users and there is nothing available for industry. I presume there will in time be a demand for northern gas if it is then available, but the difference is that the franchise for the area has been given to the United States company


and I presume the Canadian company will be required to deal with that company rather than deal directly with the consumers, which I think will be unfortunate.


Howard Charles Green: Is it a fact that the bulk of the gas in the Peace river district is in British Columbia and not in Alberta?


Clarence Decatur Howe: I think the larger quantity of the gas as committed to this particular project lies in Alberta, but a good part of it lies in British Columbia, and I dare say more drilling would disclose more gas in British Columbia. I therefore think it would be correct to say that the supply is in both provinces.


Edmund Davie Fulton: When we asked the minister about this matter the other day he said that there would be no obstacle at this end in the way of making arrangements between west gas and the Pacific Northwest company. I just wish to briefly support what has been said here by the previous speakers as to the importance to the development of our province of finding an outlet for this gas, and I should like to ask the minister whether I am correct in my understanding that up to the present time it has always been considered that the logical outlet for Peace river gas was the Pacific northwest. Can he tell me if that is still the case? While I know we cannot say whether a private company will make a deal with another private company, and certainly there is no way in which we can or should compel them to do so, is it not obvious and logical, when you have gas bursting the wells-I do not want to exaggerate it-and we are told the Pacific northwest area of the United States has a growth potential considerably in excess of that which can be supplied from the San Juan fields, that such an arrangement would be a practical and desirable one, and that the two companies should get together and work out an arrangement for a supply fitting into the grid for which the United States company now has the franchise to put in available Peace river gas so that the demands of that area would be met and the gas come down through our province? It seems to me the interest of both countries would then be met, and the potential shortage of gas in the Pacific northwest would be supplemented by gas from the Peace river area. The interests of British Columbia as an entity would also be served. I do not want to ask the minister to be a prophet, but I would be interested in knowing whether that strikes him as a logical and desirable plan.


Clarence Decatur Howe: I do not think I should comment as to what would be logical and desirable. The Westcoast Transmission Company has an export permit for a certain quantity of gas from that area and certainly this government will take no action to interfere in any arrangement that may be found possible to provide for the disposal of that gas in the United States. But I might add that I am not sufficiently familiar with all the facts and therefore I do not like to comment.


Mr. Gillis:: Supply-Defence Production "that time was done on behalf of the government by dollar-a-year men. They were men who were taken in from the large industries across Canada. It is only natural-it is only human nature-that, if an official is in a position of spending the taxpayers' money for the purpose of expanding an industry, creating an industry or selling a commodity, he is going to think of his own plant or firm. I think that was the main reason why you had during the war in the centre of the country a lop-sided development in our industrial creations.
In the spending of the $2 billion that is indicated in these estimates for the creation of industry and for defence purchasing these officers or men in positions of direction at this time-in every field, from the legal fraternity down to the economist, the consultant and the contract expert-are all on loan from some industry, I presume, from the centre of Canada. Before consideration of his estimates is concluded, the minister can tell us who make up that personnel and where they come from. In my judgment it is personnel of that kind who are not particular as to how the economy is protected or what kind of development takes place as long as the firm or plant for which they work is looked after. They are not in here for nothing. They do not live for nothing. Someone is paying their salaries. The someone they are thinking of and working for is the someone who is paying their salaries. I am reasonably sure that not many of these directors, consultants, legal advisers and contract experts came in here from Nova Scotia-


Clarence Decatur Howe: Many of them came from Nova Scotia.


Clarence Gillis: -with the exception, of course, of the minister's parliamentary assistant; and of course he is only one man and it is rather difficult for him to watch the whole crowd. As I say, in my judgment that is why we did not get a balanced economy in the country. This is one matter that might be given consideration if the minister's department is going to continue as it is. I hope it will continue because, as I said previously, this could be a good nucleus of a planning commission that could take under consideration many of the problems that are created today because sufficient thinking has not been done about them.
Again, at page 38 of the minister's report there is another item that provokes my thought and supports exactly what I was saying a few moments ago. At page 38 of the minister's report there is a section with
IMr. Gillis.]

the caption "Small Industries Division" and at the bottom of the page there is this paragraph:
Much of the educational and liaison work of the division was completed during the year, as most companies interested in securing defence orders had made their facilities known and understood the policies and procedures followed by the department. As a result, the district offices were closed down at the end of the year and the Ottawa staff was reduced to two industry relations officers.
That suggests to me that the dollar a year men of the big industries, or those fellows who were working for nothing, were quite satisfied in planning the work of the department that there was no need of small industries in this country, that the big ones could take care of everything and if they were not big enough they could be expanded. There are many parts of this country where small industry is not only needed but the economy is in desperate straits because industries are dying. The report of the department says that they have been turning out all kinds of guns, machine tools and other equipment for the NATO countries. That equipment goes to Europe. The shortest route to Europe is from Sydney, Nova Scotia. There is a huge steel plant there. I have never been able to understand why, under such a set-up as that of the minister's department, some of the materials for the NATO countries are not manufactured in that part of the country where the raw steel, iron ore and labour are available.
It is right at tidewater. I never could understand why these things are manufactured in central Canada and dragged all the way across the country to be shipped instead of being manufactured in that part of the country and shipped from there. As I said when I began, with a little bit of selfishness and the geographical difficulties and the difficulties created by the British North America Act, you have got a pretty tough combination. I think it is that little bit of selfishness that keeps everything centralized in Ontario and Quebec because logically and economically the place to manufacture and ship equipment for the NATO countries is in the maritime provinces.
I can understand risk capital not going in there, but I cannot understand a department like the minister's, which is investing the taxpayers' money, placing industry that is going to turn out that kind of equipment in the most illogical part of the country where the products have to be dragged across the country to the sea to be shipped. In many cases the raw material is taken from that part of the country, processed in the central provinces and the finished products are then transported to Halifax, Montreal or Sydney

to be shipped. I am pretty sure that if the minister were doing that kind of planning for himself it would not be done that way.
But I am afraid that much of the planning, as I said before, is done by people who are interested in maintaining the kind of set-up we have in Canada today, with centralization of everything in the two central provinces. Let me give the minister two examples of the attitude: "We are not particular what happens in other parts of the country as long as we are selling our own commodity". I asked the Minister of National Defence a question yesterday with respect to the large naval base at Sydney, Nova Scotia. There is a steel plant within half a mile of the base, and at that steel plant there is a large wire and nail mill. At the present time at least 50 per cent of the people usually employed in that nail mill are unemployed. Why are nails dragged from Hamilton, Ontario, for use on that naval base at Sydney, Nova Scotia? Why could they not have been bought half a mile away? They could have been purchased more cheaply because you would not have the freight rate to pay for the long haul from Hamilton to Sydney.
That is merely an example but it is a very pertinent one; because, if that is what goes on with respect to a small purchase like that what takes place when the contract runs into millions of dollars?
The second example I wish to bring to the minister's attention has to do with the heating of national defence buildings. I have a couple of their requisition forms in my hand. The armouries at Sackville, New Brunswick, are located within a few miles of the coal mines at Springhill, Nova Scotia. Up until 1953 these armouries were heated by coal purchased from the Springhill area at a cost of $16.50 a ton.
When the contract was sent out in 1953 the dealer in Moncton, New Brunswick, who supplied the coal was told that in the future he had to supply anthracite coal from the United States. He wrote and said that it was rather difficult, that he would have to bring it in in small lots and it would be difficult to handle it in that way. Do not forget that the use of anthracite coal increased the cost of heating the building over 100 per cent. It cost $35 a ton while the other cost $16.50 a ton. But that switch was made. I should like to ask the minister if the person who prepared that form and sent it out was not more interested in promoting the sale of United States coal than he was in maintaining some market for an industry that was in very serious economic difficulties at the time.
These are only two examples, nails and coal, and these things took place in a section
Supply-Defence Production of the country where, as the minister knows, unemployment is perhaps more serious than in any other part of Canada. Both the provincial government and the people of the province have pointed out that they face a crisis that is beyond their control, but even with respect to such small items that part of the country was ignored and forgotten. In the light of these two small examples, I am; reasonably sure that the same thinking runs through all the planning of the purchasing of defence requirements, the letting of contracts and so forth.	,
I am not saying this by way of criticism. I am bringing it to the minister's attention now because there is a lot of money still to be spent on national defence, and national defence is going to last as long as we last. One of the best means of civil defence that I know of today is to try to get those who are planning our defence production requirements to think in terms of not putting all our eggs in one basket and concentrating practically all our production in eastern Ontario where it can be knocked out with one bomb. What I have suggested is in my opinion one of the best means of civil defence that I can think of at the present time. In addition, it would at least mean a livelihood to people in sections of Canada which are at the crossroads today unless something is done.
I am not going to say any more. I want the minister to do some thinking about this matter because I am convinced that men do not enter the service of the government from Canada Packers, National Steel or any of. these other industries for nothing. There is remuneration somewhere. They are working for somebody who is paying their salaries, and their planning will be done in accordance with the best interests of the people who are paying their wages.


Clarence Decatur Howe: I think I should reply to this immediately. I am disappointed in my hon. friend. I have heard him make some very able and fair-minded speeches in the nineteen years we have sat in the House of Commons. I can hardly believe that he thinks that people offer their services and their services are being accepted with the sole thought that they will promote the interests of their own particular business. That is the statement he has just made. In the first place people do not offer their services. We have to go out and find them, make arrangements with their companies and beg them to come here. In the second place, never in all my experience with men borrowed from industry have I known these men to help their own industries deliberately. In fact they usually lean backward. If there

Supply-Defence Production is not enough business to go around in the industry, they usually say: Fill the others up and our people will do the best they can. That has been the attitude in my experience. My hon. friend has suggested the only reason the maritime provinces are not full of defence plants is that we have selfish people in Ottawa who prevented the plants going there.
Let us analyse that statement. When we find something to be manufactured, we first look to existing industry to carry out that operation. The only reason that we sponsor new building at all is that existing industry has not sufficient capacity to produce what is required. You say, if the industry has not enough productive capacity, why not move a plant to Nova Scotia and build there? The difficulty is that it requires some specialized skill to be able to produce most things that are in short supply. In the first place, someone must know the kind of plant that is required, the kind of equipment that is required, and must have the nucleus of an organization. At least, they must have skilled and experienced engineers, operators skilled in management of that particular enterprise, then they must draw on a nucleus of skilled labour in the area. You cannot attract that kind of labour from one area to an area where the workers have every reason to believe the plant cannot exist under highly competitive conditions.
You have those factors to consider. I suggest we have not neglected the maritimes, and have taken there all the industries we could take. I will tell the hon. member one of the worst mistakes I ever made in planning industry was to put up $5 million to help in the construction of a plate mill at Sydney. This plate mill operated for two or three months, and when the war was over it was broken up and dispersed; that was the last of the plate mill and the last of the government's $5 million. It is quite useless to establish industries to do a war job that cannot exist under normal conditions. It does not do the district any good. True, it provides employment for a short time, and spreads around some money for a short time. But the fact the plant is standing there idle does more harm to the area than if the project had never been started.
What have we been able to do for the maritimes? I am rather proud of the fact I persuaded an English aircraft manufacturer to establish himself in Halifax. Our Canadian manufacturers were not willing to do that. We had tried to get several of them to consider establishing an aircraft plant at Halifax. However, when the Fairey Aviation Company came out, I happened to see


them before anyone else did. I particularly asked them to take a good look at Halifax, because I thought they could do very well there. They did that, and as my hon. friend knows, that company has established a very substantial industry in Nova Scotia.
We had an opportunity to help establish an electronics industry in the maritimes, too, but that is not doing so well. It has created considerable employment, and I am very hopeful that it can survive during normal times. The hon. member has talked about a shipyard in Cape Breton. I do not remember any shipyard in Cape Breton before the Department of Defence Production started to function.


Clarence Gillis: It is a naval base.


Clarence Decatur Howe: A naval base; nevertheless it was built by the Department of Defence Production. I hope it will be a substantial industry. The Ferguson shipyards are there, but that is a small operation except for the contracts from the Department of Defence Production. Amherst has a substantial industry. We kept that industry busy when the department of munitions and supply was functioning, but when the department went out of business, the industry closed down. When the Department of Defence Production started to function, the industry opened up and is now a substantial employer of men. I think if the hon. member will look around Nova Scotia, he will find that the department has supported existing industry and has brought in any industry willing to go to the maritimes and capable of surviving after military requirements had been provided for.
When it is suggested that the men in the department here tried to locate those industries somewhere else, I assure the hon. member that if they had not worked to establish industry in the maritimes, none of these industries would have been in Nova Scotia today. It has taken the loyal cooperation of every man in the Department of Defence Production to see that those industries were located there and to see that they have been brought to the state of prosperity they are enjoying today.
The hon. member has spoken of two examples of malfeasance, if you like, on the part of the department. One concerns these nails. I should like to know how many nails? Did the hon. member count the kegs? The fact of the matter is that nails are sold everywhere. We have a nail plant in Sydney, Cape Breton; we have a nail plant in Hamilton and we have a nail plant in Vancouver. I can assure him that Sydney nails are sold in Vancouver, and

I have every reason to believe that Sydney nails are sold in Hamilton. I am certain the Steel Company of Canada offer nails for sale in Sydney and in Vancouver as well. I do not believe the Vancouver plant reaches down that far because it is a small operation, not associated with a primary producer.
These nails are undoubtedly on sale in hardware stores. A man might have needed a keg of nails, and while waiting for a shipment may have gone into a hardware store and bought a keg of nails without paying too much attention to the label on the barrel. They might have been shipped out of naval stores and routed in there incorrectly. It is the policy of the department not only to pay slightly more for products coming from the maritime areas or provinces not having substantial industry, but to go to some trouble to try to build up those areas. It is our policy, on an even break, to always buy from the operation nearest to the consuming plant. I should like to know more about those nails. I have asked our general purchasing department, but they can find no trace of any order of Hamilton nails for Sydney.


Clarence Gillis: I saw them.


Clarence Decatur Howe: How many did you see?


Clarence Gillis: I have seen ten or fifteen kegs.


Clarence Decatur Howe: That may be a lot
of nails in that particular operation, but it is not a great many nails. I suppose they are worth about $5 a keg, something like that, and that would be $75 worth of nails.
Then the hon. member spoke about coal at Sackville. He has been told about that. We get the specifications from the Department of National Defence. It is the privilege of that department to write the specifications for what they require, and our department purchases as requested. The specifications came over calling for anthracite coal for that particular armoury. They were processed through the department. I think these specifications should have been called to someone's attention. The complaints came in, and it was called to the attention of the Department of National Defence. They admitted the mistake, and the next coal that is ordered there will, of course, be local coal. I presume when you are buying a billion dollars worth of supplies a year, mistakes will happen. I have been rather happy they have not been great in number, but that was undoubtedly a mistake which is being corrected.


Clarence Gillis: I am glad that I deliberately made my talk provocative.
Supply-Defence Production


Clarence Decatur Howe: You should not accuse people of being dishonest. Not dishonest, human.


Clarence Gillis: I wanted the minister to say something about these things, and he would not have paid any attention to me if I had not made the talk provocative.
There is one thing I want to tell the minister. You can find skilled personnel in that area for any plant you wish to establish. You can find electricians, mechanics, machinists, machine tool makers, and you will find a lot of them in the Cape Breton area who are not working. In so far as the plate mill is concerned, that mill was built twice. I am not blaming the federal government for all the disabilities of Nova Scotia, because in my judgment the provincial government is about 50 per cent responsible. The other 50 per cent could be shared between the federal government and Dominion Steel and Coal company.
That mill was built twice, you know. It was built in the first war at a cost of $11 million, and never produced a thing. Then, all the machinery from the mill disappeared. I think if anyone looked around he would find it over at Ojibway falls in Ontario. I know the story very well, and I know the minister does, too. Because it was I who urged him to get some guts into the mill when the second war started. And he did. He equipped it as a modern, up-to-date mill, employing 600 people, and all were trained personnel. It was doing a good job while the federal government was in the shipbuilding business. But as soon as the war was over and the federal government went out of the shipbuilding business there was no further market for that plate.
At that time we were importing 90 per cent of our steel plate from the United States. Why Dosco did not maintain that mill is not hard to understand. They have a mill somewhere else; and you subsidize the raw material coming up.


Clarence Decatur Howe: Dosco has no
other plate mill.


Clarence Gillis: Well, it may be raw material. I just do not know why they did not maintain that mill. The question may be one of raw material. They may be supplying their own fabricating plant up here with the raw material they are turning out. Nevertheless there was a market in Canada for steel plate.
I questioned the minister in the House of Commons, and asked him if he would be willing to hand that mill over to the provincial government to operate as a crown company. The minister was fair about it; he said that he would be; but the provincial
6462	HOUSE OF
Supply-Defence Production government did not have any intention of going into the business. So that 600 men were laid off from that mill, and it went out of production. The equipment that was in the mill is now over behind the iron curtain. That mill as a matter of fact was sold to Czechoslovakia.
I suggest that is not a very good example. It was a case of complete neglect and stupidity. I am not blaming the minister for it, because he did try to get someone to use it. However, that is the story about that mill. Before the minister's estimates are completed I wish he would tell us about these advisers, consultants and experts-some 16 of them.
I do not want their names, but I would like to know where they came from and what companies they represented, just to see how many of them are from Nova Scotia.


Clarence Decatur Howe: I think that has been filed with the Clerk. If my hon. friend will look up the records of the House of Commons, I believe he will find that information.
While we are discussing scandals, perhaps I might clear up this other scandal. I will not name the firm these documents refer to, except to say we have made no sale of bearings to this firm during 1953 or 1954. I think perhaps if we go farther back we will find we never made a sale to the company. But there was a sale of bearings to a Quebec company in November of 1953, out of London, Ontario, and included in a long list of spare parts were a few bearings-not many. And that is the only sale of bearings we can find- and it had nothing to do with this Ontario company. I might say-


Donald Methuen Fleming: I suppose it is possible they might have acquired them from the person who purchased them from Crown Assets?


Clarence Decatur Howe: No, they get them from all over the world. That is one of the largest parts companies in the empire. We had a case not long ago, where they were doing business abroad, and we said that they could not take the business because they were exporting United States parts through Canada. They showed they bought the parts in Europe, and brought us invoices from all over Europe to show where they had collected them. But they have never bought bearings, so far as we can find, from Crown Assets Disposal Corporation. We called for tenders for certain bearings, as my hon. friend said, and this firm turned up 42nd in the list of offers. There were 41 firms quoting lower prices on that particular list than did the firm he mentioned. So I suggest that perhaps the scandal he scented there is not present.


Donald Methuen Fleming: Well, the quotation by this firm in question has nothing to do with the point. The point I made is that at the time when the government was purchasing these bearings-and there is no trouble about identifying them, because the designating number of each is given-this company apparently was selling bearings of the same kind. While it may not be certain that these latter bearings had come from Crown Assets Disposal Corporation, obviously they had come through either Crown Assets Disposal Corporation or its predecessor, War Assets Corporation.


Clarence Decatur Howe: No; they probably obtained them from the disposal corporation in the United States, which is a quite separate operation from anything we run. They certainly did not buy those bearings recently either from Crown Assets Disposal or from its predecessor, War Assets Corporation. I can assure my hon. friend of that. But I think the probable explanation is that they bought them in the United States and imported them.


Donald Methuen Fleming: I gather the minister is indicating that his inquiry has gone back over 1953 and 1954. What about-


Clarence Decatur Howe: These particular bearings were a late model.


Donald Methuen Fleming: I beg your pardon.


Clarence Decatur Howe: The particular bearings we are talking about were a late model. Bearings become obsolete.


Donald Methuen Fleming: Has an inquiry been made prior to 1953?


Clarence Decatur Howe: We are told there is no recent record in Crown Assets Disposal Corporation of the contractor having bought roller bearings at any stage.


Donald Methuen Fleming: I accept the minister's statement, of course; but what I am concerned about is that someone else made a purchase, and then delivered over to this dealer. I expect that some of these purchasers who were doing business with Crown Assets Disposal Corporation did their business through agents, and were not necessarily making purchases in their own names.


Clarence Decatur Howe: We can find only one sale of bearings, and that was a cleanout operation at London. Naturally when we clear up a plant, instead of going shopping with three or four bearings individually and finding a market, we offer job lots. And there are people who buy in job lots. This particular job lot is the only one we have

been able to find that had bearings in it. And, as I say, it went to a Quebec firm.


Donald Methuen Fleming: What is the date of it?


Clarence Decatur Howe: November 1953. There were only a few bearings.


Mr. Hansell:: I wonder if I might ask the minister a very simple question. The answer may not be quite as simple as the question. I am wondering where the minister's department, the Department of Defence suggest this has nothing to do with the Department of National Defence in the location and building of various defence projects.
My question is based upon a telegram received this morning from the hon. member for Cariboo. This telegram was sent to the hon. member for Peace River, the leader of this group, and is as follows:
Could you ask ministry in view of prospective transfer of R.C.A.F. western headquarters from Vancouver and strategic importance of Prince George in northern defences, will ministry say whether consideration will be given to transferring headquarters to Prince George. Is ministry aware of advantages of Prince George airport?


Clarence Decatur Howe: That of course is a matter entirely for the Department of National Defence, as to where it has its headquarters. As far as procurement goes, it is the function of the Department of National Defence to say what it wants, furnish the specification, determine the place of delivery and the time of delivery, and to make the money available by a financial encumbrance. After that it is the function of the Department of Defence Production to determine how the material will be procured and where it will be procured, and all factors of that kind.


Ernest George Hansell: The proper procedure then is to call this matter to the attention of the Minister of National Defence.


Clarence Decatur Howe: That is right.


Mr. Dinsdale:: I was interested this morning to hear the minister announce that it is his intention to place the Department of Defence Production on a more permanent basis. Its activities have assumed such proportions now that this development is very important and necessary. I know it will bring much satisfaction to the aircraft industry especially which has been uncertain as to its future in the economy of this country. At the same time I was disappointed a few months ago to learn that the small defence industries branch of the department was winding up its affairs. It is this particular aspect of the departmental activities that I wish to say something about this afternoon.
Supply-Defence Production
Is this branch of the department winding up its affairs because it is felt that its program has been completed, or does the reason arise from the fact that the Department of Defence Production has found it is impossible to work out the original purpose of the small defence industries branch? I have the feeling that the latter reason must be the one because, as I said, the small defence industries branch was initiated to assist in the work of decentralization of defence industries. We have had several dissertations on this theme during the discussion today and no doubt there will be more before we wind up our discussion this afternoon. As I see the effects of the operation of the small defence industries branch, I cannot come to the conclusion that it has had the desired effect, at least in my part of the country, that was originally intended. I would appreciate very much if the minister could indicate why it has been decided to discontinue the work of this important branch.
I sometimes wonder if the minister has come under the influence of the myth that so far as industrial development is concerned the west is catching up with the east. That is an idea that is very frequently put forward even in well-informed circles of this country. In fact I have even heard it from some of my fellow members from the province of Manitoba.
During the budget debate I referred to some statistics which indicated that the reverse was the fact. That is, that rather than catching up, the western provinces are actually going farther behind. The boom that they are enjoying, in comparison to the economic boom in Ontario and Quebec, is a relatively minor one. On June 18 I received a parliamentary return which brings these figures up to 1953, and I note the same trends are continued. I asked for the statistics of total new investment in manufacturing, the number of new post-war manufacturing plants and the employment resulting from the establishment of those plants as well as the total production figures, and I see that in each case the trends are strongly in favour of the large central provinces of Ontario and Quebec.
In view of the fact that I have had several members ask to see these statistics, I am wondering whether I can get the permission of the committee to have them placed on the record.


Clarence Decatur Howe: What are they?


William Alfred Robinson: Has the hon. member permission to place them on Hansard?
6464	HOUSE OF
Supply-Defence Production


Clarence Decatur Howe: What exactly are these statistics? Read a few until we see what they are.


Walter Gilbert Dinsdale: All right. I will give some examples. I did not want to take up the time of the committee to read these statistics. In regard to the first question, the total new investment in manufacturing is presented for the years 1947 through to 1953 inclusive. It covers each of the provinces. I will give as an example the figures for 1953. In Newfoundland the new investment was-


Clarence Decatur Howe: Mr. Chairman, I suggest this has nothing to do with the Department of Defence Production. That is overall new investment.


Walter Gilbert Dinsdale: Yes, it is the total.


Clarence Decatur Howe: We are not
responsible for all investment, just defence investment. I do not see why my hon. friend should be permitted to put that on Hansard in a debate on the estimates of defence production.


Walter Gilbert Dinsdale: I believe the figures are included in the statistics.


Clarence Decatur Howe: They may be buried there. If the hon. member wishes to select those-


Mr. McCann:: Is it an answer or an order for return?


Walter Gilbert Dinsdale: It is an order for return. May I read them?


Clarence Decatur Howe: Mr. Chairman, if you are interested in hearing all about other kinds of investment in Canada you may permit him to put them on Hansard, but it has nothing to do with the estimates we are discussing. I do not think my hon. friend should clutter up Hansard or take up the time of the committee with something that is irrelevant.


William Alfred Robinson: The hon. member apparently has not unanimous consent to place the statistics on Hansard. Therefore, he may not do so. I will allow him to read only those statistics which have to do with the Department of Defence Production.


Walter Gilbert Dinsdale: Just by way of illustration, actually I am bringing forward the statistics, Mr. Chairman, to back up the point I am making that there is a myth abroad in the country that industrial development in the west is keeping pace with or moving ahead of the new industrial development in the central provinces. I am merely bringing forth these statistics to point out that the facts
[The Chairman.]

are contrary to that contention. Because I have not received permission to place these figures on the record, may I be permitted to read the statistics for each of the years I have outlined, or for the year 1953? I think they will amply demonstrate the point I am endeavouring to make.


Clarence Decatur Howe: Once again may I ask my hon. friend whether he is reading the statistics of the Department of Defence Production? What is he reading?


Walter Gilbert Dinsdale: I am reading the statistics of the total new investment in manufacturing industries in Canada, as broken down on a provincial basis.


Clarence Decatur Howe: I can assure you, Mr. Chairman, that there is no provision in these estimates for funds to cover the total investment in Canada, and I object to the hon. member taking up the time of the committee for that purpose.


William Alfred Robinson: Order. Perhaps the point taken by the Minister of Defence Production is valid.


Donald Methuen Fleming: May I say a word on that point, Mr. Chairman?


William Alfred Robinson: Do you wish to speak to the point of order?


Donald Methuen Fleming: Yes, Mr. Chairman. What the hon. member for Brandon-Souris is doing, as I understand it, is bringing forward information with respect to industrial development in the province of Manitoba as bearing directly on his contention that in the distribution of contracts awarded by the Department of Defence Production Manitoba should have received more of these contracts than have been awarded to it, and these figures are designed to indicate the industrial capacity of that province to meet any burden that may be involved in accepting defence contracts.


Clarence Decatur Howe: If that is the purpose, Mr. Chairman, he can proceed, but I do not think that is what the hon. member has in mind.


William Alfred Robinson: Order. Further than that I do not think that the reading of statistics with regard to general investment would serve the purpose which the hon. member for Eglinton has mentioned. If the hon. member for Brandon-Souris wishes to read statistics having to do with defence contracts, or the Department of Defence Production, that is an entirely different matter.


Walter Gilbert Dinsdale: Well, Mr. Chairman, permit me to quote briefly the statistics for Manitoba, Quebec and Ontario which I think will

perhaps solve the difficulty. Manitoba's total investment for 1953 amounted to $10-5 million, for Ontario the figure was $486-3 million and for Quebec $171-8 million. On a percentage basis that is 1-1 per cent for Manitoba, 51-8 per cent for Ontario, and 18-3 per cent for Quebec. If I continued to quote these statistics dealing with the number of plants and the total production involved it would be shown that they are on a similar percentage. Some hon. members have requested permission to -see these statistics, but in view of the decision of the committee I am afraid they will have to be passed around on a hand to hand basis.
The point I was making, and I think perhaps the hon. member for Eglinton outlined it quite succinctly, is that there is no basis of truth at all in the idea that the western provinces as well as the maritime provinces are catching up or even keeping pace with the industrial development in the central provinces. The reason why I bring this matter into a discussion on the defence production estimates is that I think the minister has succumbed to the myth himself. Speaking in Winnipeg last spring before the chamber of commerce the minister took issue with members of parliament from the west who were constantly decrying the industrial development situation in Canada and pointing out that there was a continuing imbalance. By that statement he implied, I believe, that things were not as bad as they had been in the west, and that any western member who took that attitude was promoting bad public relations for the district he represented.
The same opinion has been expressed by Dr. Firestone, of the Department of Trade and Commerce, when he said in an address before the trade and industry officials of the ten provincial governments that there were no longer any "have-not" provinces in Canada, and that every one of them was a "have". He added, and I quote him directly:
True, some provinces have more of one thing than another, but every province has found that it has *a good deal of natural resources that can be put to good use with hard work, drive, vision and the proverbial good luck. In other words, the opportunities are there-it is a question of grasping them.
I agree broadly with his idea, but the truth is that, so far as the actual situation in Canada is concerned, those words are still in the realm of prophecy. The very fact that this house clings so tenaciously to tax rental agreements indicates that we recognize the principle that there are certain areas in this country that need additional support because they occupy an unfavourable economic and financial position. Nevertheless, 83276-409J
Supply-Defence Production I agree with the broad general principle outlined by Dr. Firestone. It is true that in terms of potential the prairies as well as the maritimes are not to be classified as "have-not" provinces. We have all sorts of potential, but at the moment we are underdeveloped, underpopulated. I do not need those detailed statistics to bring forth sufficient evidence to prove that point.
Every time redistribution comes up for discussion in this house it is the west which suffers in terms of representation here, and that representation is on a-


William Alfred Robinson: Order. I can think of two or three departments on which I could allow this speech to be made, but I do not see how I can possibly allow it on the estimates of the Department of Defence Production, and I must ask the hon. member to co-operate by directing his remarks to the estimates of this department.


Walter Gilbert Dinsdale: The whole basis for my remarks, Mr. Chairman, is the discontinuance of the small industries branch of this defence department. As I said in my opening remarks, I cannot imagine that this branch of the department has been discontinued because it has completed its work. I feel it has been discontinued because it has been found impossible, due to overwhelming economic and political pressure from the central provinces, for the small defence industries branch to carry out the original purpose for which it was established. In supporting that contention I have pointed out that a situation still exists in these underdeveloped areas of Canada, if I may use that phrase, which demands the continued operation of the work of this department. I cannot imagine anything which could be more closely related to the subject matter now under discussion.
We in the western provinces, and certainly in Manitoba, are not interested in handouts. That has tended to be the policy of the central government for years when we get into economic difficulties during a depression or as indicated by the tax rental agreements. We want an expression of confidence in our future from this government here at Ottawa. I believe that the tremendous sums involved in expenditures by the Department of Defence Production have provided a golden opportunity for the dominion government to assist in overcoming some of these historical trends, the pressure from the central provinces, which produce such an uneven development in other parts of the country.
Our provincial government in Manitoba is beginning to cope with the problem on the local level. Our minister of resources and
6466	HOUSE OF
Supply-Defence Production development has been making contacts in the United States and in the United Kingdom in order to help to overcome the problem so far as possible on the provincial level. However, I say that if we are going to compete successfully with the tremendous social power that is generated by the concentration of population in this central part of Canada, the federal government should seize every possible opportunity for a more equitable distribution of industry.
In concluding, Mr. Chairman, I should like to ask the minister why the small defence industry activity has been discontinued.


Clarence Decatur Howe: If my hon. friend will refer to the report of the Department of Defence Production for the year 1953 he will find the answer. Under the heading "Small Industries Division", the report sets out the function of the division and the section finishes with this paragraph:
Much of the educational and liaison work of the division was completed during the year, as most companies interested in securing defence orders had made their facilities known and understood the policies and procedures followed by the department. As a result, the district offices were closed down at the end of the year and the Ottawa staff was reduced to two industry relations officers.
In other words, the work is being done; but in an effort to promote economy we did hot believe it was worth while to carry ten branch offices in the provinces when the work left to be done was not sufficient to keep them busy. We have therefore concentrated the work in Ottawa in the person of two industry relations officers. I think that nowhere is there to be found a better example of the work of the small industries division than is to be found in the work in the Winnipeg area. If you will talk to the small manufacturers there, I think they will tell you that they are doing government work because they were introduced to the work by the small industries division. They know their way around now and they do not need anyone to hold their hands. That is the situation all across Canada. The small manufacturer as well as the large manufacturer understands the work or the function of the department.
I might point out to my hon. friend that since this department was formed in 1951, it has placed orders in the number of 386,585. If he thinks that all those orders have been placed with big business, he could not be more wrong. I think that far more of them have been placed with businesses with a capitalization under $100,000 than have been placed with businesses with a capitalization of more than that.


Walter Gilbert Dinsdale: Mr. Chairman, I just wish to speak briefly again. The fact that the minister mentioned the Winnipeg area does not deal with the problem I was raising because Winnipeg is a large metropolitan community with a very healthy economic base. In fact most of the industrial development that has taken place in the province of Manitoba since the war has taken place in that area which has almost half of our population resources. In Manitoba we are cursed with double centralization, namely centralization in the east and this centralization in one large urban area. The latest statistics I have indicate that 85 per cent of new industries have developed within the greater Winnipeg area.
Let me carry this matter just one stage further. One of the reasons why I emphasize the role of the defence production department in this matter of decentralization is that the work is directly connected with defence and, as the hon. member for Cape Breton South pointed out, it is only good defence planning to carry out as comprehensive as possible dispersal of defence potential. I listened carefully to the minister when he made his statement this morning dealing with the aircraft industry. He referred to the widespread dispersal of the aircraft industry, particularly that part of the industry dealing with the manufacturing of component parts, and he mentioned mostly large urban areas. I did not hear one small centre mentioned. There was Halifax, Toronto, Montreal, Winnipeg, Calgary, Vancouver and so on.


Clarence Decatur Howe: And Amherst, Nova Scotia.


Walter Gilbert Dinsdale: Yes; and Amherst.


John Horace Dickey: St. Jean, Quebec and
Edmonton.


Walter Gilbert Dinsdale: Let us look at the Russian program in contrast to our own. They have 360 factories engaged in the manufacturing of aircraft and the component parts thereof. I have obtained that information from Jane's "All the World's Aircraft" which is supposed to be a very reliable document on these matters. Of these 360 factories, 35 are airframe factories, 30 are aero-engine factories and 265 are producing the other smaller components. They are dispersed just as widely as possible throughout the expansive geographic area of the U.S.S.R. In addition to general dispersal they are concentrating on northern development with regard to their industrial activity and they have above the 53rd parallel 50 cities which have been established on an industrial base. We have just

one city north of the 53rd parallel. The point I wish to make is that we should not contribute to bigness and the overdevelopment of these metropolitan areas but try to support in every way possible the development of small industries in smaller communities. That is real decentralization. The small industry in the small community is able to cope successfully with the larger industrial plants in most circumstances, but certainly it cannot do so when it comes to manufacturing activities that are closely integrated with our whole defence program.
If it was not for private activities in this regard, there would be little industrial development at all in Manitoba at the present time because the degree of prosperity and progress that we have, particularly in the western section of the province, is based on the oil activity that has emerged during the past three years. As the minister well knows, that activity is largely in the hands of private operators. Again I would emphasize not concentration in Winnipeg or in the larger urban areas but support wherever possible in the small communities. It seems to me that is the main purpose for the establishment of this small industries division.


Colin Cameron: In the course of my remarks on the first item this morning the minister took exception to my referring to the original estimate of the cost of minesweepers as a target price. He insisted that it was merely an estimate and objected to my use of the term "target price". I should like to see if we can get some information with regard to the cost of these vessels since I understand that one of them has now been completed on the west coast. I would refer the minister to page 539 of Hansard of December 2, 1953, when I attempted last to elicit some information from the government on the cost of these projects. At that time I asked this question of the government:
1.	What were the prices originally set for the construction of minesweepers which were under construction in shipyards in eastern Canada and British Columbia in the years 1951, 1952 and 1953?
2.	Were these prices increased?
3.	If so, when, and by how much?
4.	What were the reasons for the increases?
5.	What is the contract price for the most recent contracts let for the construction of minesweepers?
You will observe that the minister placed an answer on Hansard to the effect that all that had been done at that time was to make an estimate of probable costs. A certain sum of money was provided to start construction on four of these vessels and later the sum of $9,750,000 was provided to enable the construction of ten additional ones to be started. He tells us that contracts were awarded providing for payment to the contractors of up
Supply-Defence Production to $925,000 per vessel and that additional sums have been authorized from time to time against which payments have been made' to the contractors. The rest of my question he dismisses as not applicable.
If we grant that it was not possible for the government to get a closer estimate at that time, I think now is the time that we should have some more figures. I have reason to1 believe, and I trust that the minister will correct me if I am wrong, that about twelve months after the original estimate of $925,000 was set it was revised and it was discovered to be some 83 per cent out, not a very good estimate. It was decided that it had to be revised upwards to $1,600,000 applicable, if I am correct, to all the hulls then under construction in Canadian shipyards with the exception of one that was being constructed in the Yarrows shipyard in Victoria where the price was raised to $1,300,000 due to the fact that their wholly-owned subsidiary, Bur-rard Dry Dock of Vancouver, had already had $300,000 of work on the particular vessel. On the basis of the minister's statement on the 2nd of December when he said that we would have to wait until the vessels were completed before knowing what the costs were going to be, and considering that one has now been completed on the west coast, L should like to ask the minister-and he; should be able to tell us-what has been the total cost of that vessel. What are the author-; izations for further payments on these minesweepers that are still under construction?. I should also like to know on what basis these' increases in estimates have been made and whether now there has been set a final, definite price at which we can expect to get minesweepers completed, with due regard of course to any further increases in costs in the immediate future.


Clarence Decatur Howe: I am sorry to say that I have not with me the exact cost of the ten minesweepers that have been completed, but it is slightly under $4 million per minesweeper. It varies for the different yards. I think the lowest cost yard happens to be at Port Arthur, Ontario, with which I am very pleased, and some of the higher costs are found in one or two of the yards the hon. member has mentioned. However, I think they are all being bought for slightly under $4 million. That is exclusive of armament, fire control equipment and stores.
When a requisition comes from the Department of National Defence for a new type of ship, it is accompanied by an estimate. The estimate is made by the man who proposes to design the ship. We have no way of knowing what the ship is going to look like when it is designed. The design is perhaps
6468	HOUSE OF
Supply-Defence Production finished a year or so later. We accept the estimate. As the designs go forward we try to estimate what the position is from time to time, but design changes are made almost up until the date of commissioning. The work is carried out on a basis of cost plus a fee. The cost is just what the yard finds it necessary under supervision to spend on the building of the ship. We believe we now know sufficient about the cost of a minesweeper to set up a target price. In fixing a target price say we find that the lowest cost ship built is $31 million. We consider that with their past experience they should do a bit better in the future and we set the target at $3J million. If the final price is less than that, the shipyard gets a bonus. If it costs more than the target, the shipyard fee is cut accordingly. That is a target price contract, and it is fixed on a price that is sufficiently well known to be established and agreed upon as fair by the crown and the contractor.


Mr. Montgomery:: I should like to say a few words on the problem of decentralization and good planning for the future. I find myself in agreement to quite an extent with the hon. member for Eglinton and the hon. member for Cape Breton South. When the minister answered the hon. member for Cape Breton South he gave a lot of information about what had been done in Nova Scotia. I listened to see if anything was being done for New Brunswick because the maritimes in general were being discussed. Since I did not hear the minister say anything about New Brunswick, would he be good enough to put on record what has been done by way of assisting industry there and having production carried out by existing industries in New Brunswick? If nothing has been done, which I would not be too surprised to learn, possibly he might give us a reason for it. It might be a different reason from what I suspect he may say, namely, that there is a shortage of power there.
I think this department will have a great deal to do in the future with the over-all picture of planning for the defence of this country and in my opinion the department should expand their thinking and plan to assist these areas. If they do not have existing industries today it might be good business to help industries to get started thereby assisting in the development of natural resources such as power. As time goes on, it is going to be more important for defence industries to be scattered throughout the country. I think that is becoming the generally accepted view. That being so, has the minister any information about New Brunswick?


Clarence Decatur Howe: I am surprised that the hon. member for Yictoria-Carleton has not noticed the fairly substantial industry being built there at the present time. At least $30 million is being spent on the army camp at Gagetown which will be a continuing industry for that part of the country and one that will absorb local products in a way that no other industry I can think of would equal. He must also know that we have been supporting a very substantial industry in Saint John, the Saint John Dry Dock and Shipbuilding Company. If he will look around the province, I think he will find other industries that are playing a very substantial part. I know that there is one on the north shore at Bathurst that is doing an excellent job for the department. In order to help someone you must find the person to help, and the person who wants help must indicate he wants help. He must indicate what he is capable of doing. Wherever we find that type of person or that type of industry in New Brunswick or anywhere else, we give them help. I suggest that Mr. Hesler of Sackville might be able to tell my hon. friend about the help he has had from the crown in developing industry there and in Nova Scotia.
I do not believe I could give a catalogue of all the industries that have been developed in New Brunswick. I suggest the hon. member will find the government has really spent, in proportion, about as much there as in any part of Canada. If he does not believe it, let him look into the Gagetown area.


Clarence Gillis: The minister's estimates are not so easy to discuss. For example, we are only voting in the estimates before us about $40,328,813, but in the national defence estimates there is also an item for $1,902,822,500 that the minister is going to spend, or at least a large percentage of it. The report of the Department of Defence Production for January 1 to December 31, 1953, is the only guide one can get as to what happens to the money that was voted for national defence in that year. I should like to ask the minister this question. On page 47 of that report, table 3, Canadian defence orders placed in Canada from April 1, 1951, to December 31, 1953, there is a total of $2,894,481, and then again on page 49, Canadian government expenditures on defence procurement, table 7, you will find a total there from April 1, 1951, to December 31, 1953, of $2,783,306. I should like to find out from the minister, just to see how unreasonable I was when I made my statement, the amount or percentage of that money that was spent in the maritime provinces?


Clarence Decatur Howe: In order to do that we would have to analyse how much Dosco steel went into our construction and how much the basic industries down there supplied to us. It is quite impossible to get these statistics in a form that means anything. Dosco has been working at full capacity, and I presume at least 50 per cent of the production went into some form of defence construction. I suppose the production would be $50 million or $60 million a year, so we will say we have been spending half of that there. What we have been spending with Fairey in Nova Scotia or Dominion Coal Company to support defence installations, I cannot say. I do not believe anyone could ever analyse that.


Clarence Gillis: I agree, but I did see figures on it in the press some time ago, and that is what made me ask the question. The percentage was very small. Let us leave that and go to procurement. The minister had to step up or expand existing industry for the purpose of manufacturing munitions, gun apparatus, machine tools and so forth that were to be supplied to the NATO countries under our commitments to NATO. Can the minister give me any idea whether or not there was any new industry established in the maritimes or the expansion of any existing industry to take care of the manufacture of equipment necessary to supply NATO under our agreement?


Clarence Decatur Howe: No special facilities are set up to supply NATO. NATO is supplied by the facilities that supply our own defence needs. I know that we installed one of the biggest presses ever installed in the British empire in the plant of Nova Scotia Steel in Trenton to make ship shafts and heavy shafting. This was for ships that went to NATO and ships that stayed in Canada, and various purposes. I recall no special equipment ever set up anywhere to make material exclusively for NATO.


Clarence Gillis: All the minister's department has done so far, then, is to make use of existing industry to produce equipment needed by national defence?


Clarence Decatur Howe: That is not true, either.


Clarence Gillis: There has not been any investment at all in new industry or plant expansion?


Clarence Decatur Howe: Oh, yes. There was an investment in Dosco for the new press I mentioned that was installed there; that must have run into several million dollars. The Fairey aircraft industry was
Supply-Defence Production not there before the Korean episode. It is a reasonably new industry. We have Cossor, and that was not there before Korea. Certainly Amherst was not working before Korea, and now this plant is very busy, that is the enamel and heating plant. You could go through the maritimes and find a good many plants that have been expanded. I noticed that the accelerated depreciation for New Brunswick alone runs into $6 million, and that is only one item.
The trouble with making any analysis of these things is that you can never make it complete. Someone can come along and say you should have included this or that, and so you should. You would have to break the thing down to find out what the total production of maritime industry is, and then you would have to estimate how much of that went into defence production.


Clarence Gillis: I am not trying to embarrass the minister, but I will have to go home very soon and answer all these questions.


Clarence Decatur Howe: I am sure the hon. member will be congratulated on the job he has done.


Mr. Pearkes:: I should like some information regarding the contract to supply naval fuel oil for Esquimalt. On June 14 of this year, I was given answers to some questions I had asked regarding the supply of this fuel oil. I was informed that the contract had been let to White Petroleums, who were agents for the Union Oil Company of California. I was informed also that this fuel was derived from foreign crude oil, and that it was being delivered to Esquimalt by the company tankers.
I was rather surprised that we should have been purchasing foreign oil for our naval vessels, in view of the announced policy of the department that, so far as possible, they would obtain the supplies from Canadian sources, and particularly in view of the fact that only recently some $93 million has been spent on the construction of a pipe line from northern Alberta to Vancouver, and that large sums of money have been expended in the construction of refineries. In addition to that, about a million dollars has been spent by Imperial Oil Company to develop a wharf for the oil tankers in Vancouver.
Furthermore, I believe that in the past the fuel oil for the navy had been delivered to Vancouver and it had been conveyed from Vancouver to Esquimalt naval fuel base by the Canadian naval tanker H.M.C.S. Dundurn. So far as I know, that procedure was carried out satisfactorily. I would therefore like to be informed as to the total amount of fuel oil for this year's contract, both bunker and
6470	HOUSE OF
Supply-Defence Production diesel oil, the price which has been paid, and also an explanation as to why it has become necessary to obtain fuel oil from foreign crude, when, it seems to me, at the present time there is an abundance of Alberta oil available on the west coast. In fact we heard only within the last few days of a statement by the president of the Imperial Oil Company, and supported by the executives of other companies out on the west coast, that they expect rather difficult times in being able to find markets for Canadian oil.


Clarence Decatur Howe: I believe I am in an excellent position to answer the question, because when I saw the requisition coming through I thought there must be something wrong with it when they were buying oil in California. I sent it back for a complete explanation. I was not too happy about the explanation I received, so I had an expert in to discuss it.
The cold fact is that west coast consumption-and it must be kept in mind that this is residual oil-the consumption of residual oil is about 17,000 barrels a day, and refinery production in that area is about 7,000 barrels a day. So that about 10,000 barrels of residual oil are being brought into the area every day.
We could have placed the order at a slightly higher cost with Canadian refineries, and taken their residual oil for the navy, which would simply have meant that the ordinary consumer would have been using California oil to that additional extent. The only difference would have been that the crown would have paid the local price, which is somewhat higher than the landed price of California crude, and the difference between the two would have gone to the trade, instead of to the crown.
By buying California residual oil and taking advantage of the lower price and the discount on California crude there was considerable saving in dollars. As I say, the local supply of residual oil is fully utilized. My hon. friend will understand that gasoline is cracked in the Vancouver area. The quantity of residual oil depends wholly upon the demand for gasoline. If that demand is small, then the residual oil produced by the refineries is small. With the "cat-crackers" used there now, we get less and less residual oil as a proportion of the total crude which comes into the refinery.


George Randolph Pearkes: We were short of the type of fuel oil required, and it was not available at Vancouver. Is that correct?


Clarence Decatur Howe: Yes.


Mr. Michener:: There has been a considerable reduction in the expenditures of this department. The department is a big spending agency and, while it is proper to recognize its accomplishments-and the right hon. gentleman is frequently recognized in glowing terms for his accomplishments

it is also relevant to call attention to the shortcomings of the department in the discharge of its duties. I have no doubt the minister will expect the opposition to call these matters to his attention and to that of hon. members in the committee.
I wish to refer to two items with which the Auditor General was dissatisfied. These are reported at page 20 of the Auditor General's report for 1953. The two items there relate to contracts which, under section 17 of the Defence Production Act, require to be approved by the governor in council. The complaint of the Auditor General is that although the contracts were originally approved by the governor in council subsequent alterations to the advantage of the contractor were made as routine departmental procedure.
The Auditor General has taken the view, and quite properly, that where a contract has initially to follow a certain procedure, any change or alteration should be made only after following the same procedure, that is with the sanction of the governor in council.
In the first instance there was a discount of two per cent which a contractor had agreed to take for payment within thirty days. After the governor in council had dealt with the contract there was an amendment made by which that discount was removed.
In the second instance an allowance was made after a contract had been formally approved.
Then, there is a third item at page 21 about which I should like to ask the minister. In this case it appears that an allowance was made to a firm which had undertaken to make overcoats from cloth supplied by the department. The allowance was necessary because the cloth was found not to be up to specifications. It had shrunk in the course of manufacture, and caused the contractor considerable loss. So far as the contractor was concerned, apparently the department quite properly recognized that it was not the fault of the tailoring firm, and allowed $62,762 as compensation for extra loss by reason of the faulty cloth.
The important point is this: Did the department, which had purchased this cloth and supplied it to the contractor, then follow up

to recover from its supplier the value of the amount it had paid out as damages? It seems to me this could have been recovered properly as damages payable by the supplier of the faulty cloth, which had not been properly shrunk.


Clarence Decatur Howe: My hon. friend is quite correct in saying that the reason for that payment was that the cloth supplied by the department was defective, in that it shrank. It was not the fault of the contractor. An adjustment was made so that the contractor would escape unharmed. The cloth was drawn from government stores. At that stage it was impossible to trace its origin. The adjustment was debited to the cloth account. My hon. friend will realize we buy our cloth in long runs so as to get the full mill discount. We have perhaps $20 million worth of cloth in store at all times, and that cloth is supplied to contractors for uniforms and for government clothing generally.
_ Apparently there was a mistake in the inspection of the cloth. It was called to everyone's attention, but it was impossible at that stage to trace where the error was made, or even where the cloth came from.


Daniel Roland Michener: I appreciate that if it was impossible to identify the supplier of the cloth it would be difficult to claim back, as I have suggested. I would like to have the minister's assurance on this point. If the department follows ordinary business practice, such as prevails in private business, then certainly a claim would be made back against the supplier of the cloth.


Clarence Decatur Howe: And it certainly would have been, if we had been able to identify the supplier at that stage. But it did lead to a tightening up in our inspections. I think all we can say is that we are pretty sure it will not happen again.


Colin Cameron: With reference to minesweepers, I notice in the answer given by the minister on December 2 he gave a figure of $3,900,000 to enable starts on four vessels. Also there was authority to pay to the contractors up to $925,000 per vessel. When one does a little arithmetic he sees the idea was that $50,000 was to be the fee of the contracting firms, we will say, for the construction of those vessels. Can the minister now tell us what proportion of $4 million which he now states these vessels are actually going to cost, rather than the $925,000 which was estimated, is to be in the form of a fee for the contracting firms? What is the percentage?


Clarence Decatur Howe: They now have the cost of the first minesweeper at Yarrows
Supply-Defence Production at $3,767,000. The second ship of the lead yard is $3,475,000. The cost is coming down as the yards gains experience. The fee for the contractor is 5 per cent according to the Department of Defence Production formula, which includes only certain costs. It is considerably less than the apparent 5 per cent, but it is based on 5 per cent of the cost.


Mr. Castleden:: In that regard, section 17 of the Defence Production Act requires an order in council to authorize such a contract. How is the authorization made? Does the minister go back and get a new order in council for each increase in the price? May I have the number of the order in council which was passed?


Clarence Decatur Howe: There must be a dozen of them for every minesweeper, I should think. We go to council and have certain funds made available for building a minesweeper, we will say, and the work would stop when these funds are exhausted, unless in the meantime we have had a supplementary order in council. But every order in council is filed with the Clerk. I do not know how I can get the hon. member a list. I should think that if he dipped into the pile anywhere he would find one.


Colin Cameron: A separate order in council?


Clarence Decatur Howe: Yes, absolutely separate.


George Hugh Castleden: Does the minister arrange for bids on account of the increase, or is the original bid given out and then you give this to Yarrows? The figure of $927,000 is for the original tender, I presume.


Clarence Decatur Howe: The work is allocated to the various yards following a recommendation of the maritime commission, which studies the skills and also the need for work in the particular yard. At the time the work is placed, we are free of any plans for the ships. The plans are developed as a ship is built, and with this new type of construction we are pretty well helpless as far as costs of the first ship are concerned. When the second ship comes along we have plans fully developed, and at that time we attempt to work out an incentive price contract based on the target.


Colin Cameron: I regret very much the minister cannot tell us the number of one of these orders in council, because I have tried to get hold of them and I have been informed that they are now with the treasury board.
6472	HOUSE OF
Supply-Defence Production


Clarence Decatur Howe: Yes, I should have said treasury board minutes. They are all tabled.


Donald Methuen Fleming: I put some questions to the minister this morning with which he has not dealt. Perhaps we could run over them briefly now.


Clarence Decatur Howe: I shall be glad to deal with them, if you like. I was just waiting for the opportunity. The first one I think dealt with the relationship of D.D.P. and Department of National Defence.


Donald Methuen Fleming: Is it the same as it was a year ago?


Clarence Decatur Howe: Exactly, yes. In other words, the Department of National Defence indicates what is required, writes a specification for the article, determines the place and time of delivery, and from that point the Department of Defence Production takes over and carries out the work at its discretion, subject to inspection and acceptance by the Department of National Defence.


Donald Methuen Fleming: The Department of Defence Production takes no responsibility in regard to quantity or necessity?


Clarence Decatur Howe: No. That of course has first to be approved by the responsible committee of the Department of National Defence. Then it goes to treasury board and is approved there as being reasonable and in accordance with the appropriations of the department. The treasury board authorizes an allotment or financial encumbrance. In other words, at the proper stage we get from the treasury board a financial encumbrance which indicates that certain funds have been encumbered to pay for the material requisitioned. At that stage we take over. We may decide to build a plant to manufacture the article or we may decide to buy it from an existing Canadian plant, or we may decide that the circumstances are such that we should import from outside the country. That is a decision of the Department of Defence Production.
Then, my hon. friend discussed the purchasing policy, as to whether goods should be manufactured in Canada, or, if purchased outside of Canada, whether from the United Kingdom or from the United States; and he indicated it is the free choice of the department. That is hardly the case. Unless there is a substantial saving, the policy is to purchase in Canada, and if the volume is sufficient we will even set up facilities to manufacture in Canada. The strategic situation intervenes there to a point. In other words, if we are building a naval ship, should we manufacture all components in Canada? The


view has been, if we are undertaking to build naval ships in Canada, we should also build the components in Canada so that, in the event of war, we are self-contained in that particular field. But if the situation is that we had been purchasing too much in the United States and too little in the United Kingdom, I would point out that probably more than 50 per cent of our purchases outside of Canada have been in the field of aircraft. In the early stages we have purchased aircraft engines in the United States. It is said that we should have purchased in Britain. Britain herself was buying aircraft and aircraft engines from the United States. I suppose even today Britain's armament includes more F-86's, some manufactured in Canada and some in the United States, and all powered with engines made in North America, than planes of British manufacture with British engines. It would therefore be necessary that aircraft expenditure be largely directed towards the United States. We did undertake to manufacture one training plane, the T-33, and there we were able to buy Rolls-Royce engines in England. There happened to be a line of engines of which they had a small surplus that could be devoted to this purpose; but generally speaking it was not possible, within the last year at least, to buy any substantial aircraft or aircraft parts in the United Kingdom.
Another factor that must be taken into consideration is that the army has adopted United States standards for most of its weapons. We were able to buy our tanks in the United Kingdom. The United States came to the same conclusion, as we did, that the Centurion tank was the best heavy tank being produced anywhere, and we both bought our tanks in the United Kingdom. We also bought an aircraft carrier in the United Kingdom and we are having it modernized in the United Kingdom. Where it has been possible to buy in the United Kingdom we have done so. That has been our policy and as a matter of fact we never lose an opportunity to buy in the United Kingdom rather than in the United States. The nature of our armament is such that we have been forced to buy very heavily in the United States.
I might point out that the United States has also bought armament from Canada. The accounts are not in balance, but they are not far out. In the year 1953 the United States bought more in Canada than we bought in the United States. That is a factor we must keep in mind in connection with purchases in the United States. Capital assistance is provided only when a certain product is needed and no other avenue is open except by paying capital assistance

either to equip the plant with specialized machinery or to build an addition to the existing plant.


Donald Methuen Fleming: May I interrupt the minister there? Did I understand him to say that last year the United States government spent more on defence procurement in Canada than Canada spent in the United States?


Clarence Decatur Howe: That is my recollection, although I can check.


Donald Methuen Fleming: I think the minister is wrong. If he will look at the table in his report at page 50, appendix F, it will be seen that the United States government's expenditures on defence procurement in Canada during 1953 amounted to $127 million, whereas table 8, page 49, shows that the Canadian government expenditures on defence procurement in the United States for 1953 amounted to $129,724,000. In addition to that we find that, according to page 47, Canadian defence orders placed in the United States in 1953 amounted to $61 million.


Clarence Decatur Howe: I had in mind the procurement figures, which are a little different.


Donald Methuen Fleming: Even there we bought a little more from them than they from us during 1953.


Clarence Decatur Howe: In the fiscal year 1953-54 we paid them $107 million and they paid us $126 million. The orders placed go the other way. I am talking about the actual payments, not the deliveries.


Donald Methuen Fleming: Can the minister say what expenditures the Department of Defence Production made in purchases for civil defence, which would presumably be for the Department of National Health and Welfare?


Clarence Decatur Howe: We have bought articles on requisition for the civil defence organization. We bought pumpers and blankets. They are not obliged to buy through the department but they frequently do so. I do not know what they buy outside the department.


Donald Methuen Fleming: I take it the same situation does not obtain as between the Department of Defence Production and the Department of National Health and Welfare, on the one hand, as exists between the Department of Defence Production and the Department of National Defence, on the other. In other words, the Department of National Health and Welfare makes only a limited use of the purchasing facilities of the Department of Defence Production in matters pertaining to civil defence?
Supply-Defence Production


Clarence Decatur Howe: The minister has told me that we buy everything he buys, so I would say that the situation is exactly the same as exists with respect to the Department of National Defence.


Donald Methuen Fleming: On page 21 of the report we have the statement:
The United States, however, remained the largest single source of supply for machine tools.
This matter of machine tools is one of some importance and I wonder if the minister can hold out some hope that we are not going to continue to be so dependent on the United States for that important commodity.


Clarence Decatur Howe: That situation arose because of availability. At the beginning of the Korean war there was a great rush to buy machine tools. We bought all we could in England, the United States, and a few from the continent because work was being held up owing to the lack of machine tools. Of course, that is not the situation today. I doubt if the department has bought many machine tools in the United States for some months. In the early days of Korea it was a question of availability, and the situation was exactly the same at the beginning of the second world war.


Donald Methuen Fleming: Could the minister tell us what proportion of the expenditure made through his department last year was made on purchases without calling tenders?


Clarence Decatur Howe: These figures go back to the beginning. Of all orders placed on behalf of the Department of National Defence, 4-4 per cent were negotiated contracts. Of orders placed in Canada on behalf of the Department of National Defence, excluding foreign contracts, negotiated contracts amounted to 2-3 per cent. Of orders over $10,000 placed in Canada, negotiated orders amounted to 4-4 per cent. Very little is left in the way of negotiated cost-plus orders today for we are able to establish the price of everything either on a fixed price basis or an incentive basis.


Donald Methuen Fleming: Would the minister say more about that? There is quite a lot of concern in regard to the matter of purchasing without tenders and also in relation to cost-plus contracts. I think we would like to hear a fuller explanation in regard to the matter of purchases without tender under present conditions, because it is quite apparent that the market conditions under which the department is now purchasing are very different from those under which the department was purchasing a year or two ago. We would be glad to hear about the extent to which the department has been able to abandon the
6474	HOUSE OF
Supply-Defence Production cost-plus contract in favour of what the minister has called the "incentive contract".


Mr.   Kowe@Port Arthur: If we get a requisition for, say, CF-lOO's there is only one place we can buy them and that is from the manufacturer. You could hardly call for tenders on CF-lOO's, and in that case the best we can do is to negotiate a basis for production. It may not be a cost-plus contract but it certainly is a negotiated contract. In addition, if we want to buy General Motors transmissions, and we do buy a considerable quantity because they are standard in our larger motor transports, then we have to go to General Motors to buy them. In other words, we cannot call for competitive tenders when there is only one source of supply. It might easily be a firm price, but in most cases it is a negotiated price and must necessarily be so. There are certain things in which we have a choice and for which we call for tenders.


Donald Methuen Fleming: May we take it that in the case of anything in the nature of a product that is to some extent a standardized and not a custom product the department is firmly adhering to the policy of purchasing by tender?


Clarence Decatur Howe: Invariably.


Donald Methuen Fleming: Will the minister then make some further comment about the extent to which the department is abandoning the cost-plus contract in favour of the incentive contract?


Clarence Decatur Howe: I think it has been months since we have placed a cost-plus contract on construction. We had a case where we were doing secret radar work and using plans furnished by the United States. We were not allowed to distribute these plans generally and therefore we had no option but to place a cost-plus contract. That, however, was an unusual case and I know of no similar case since that occasion. At certain remote spots where it would obviously be too expensive to send in two contractors to estimate a job we sometimes place a cost-plus contract. I think Churchill is a case in point, though later contracts there have not been issued on a cost-plus basis. I am told that over the last year or so we have been getting excellent competition on almost every type of construction regardless of where located.


Donald Methuen Fleming: What is the nature of this incentive contract to which the minister referred?


Clarence Decatur Howe: This type of contract is normally used in manufacturing. The contractor and the government agree that a


certain price is a reasonable price at a certain stage of production. If by extra skill the contractor is then able to produce for less than that price, he gets a bonus on his fee. If on the other hand his production costs more than the target price, he gets a smaller fee than the contract would otherwise call for.


Donald Methuen Fleming: You are not applying that procedure under any construction contracts? It is only on manufacturing contracts that you apply that incentive?


Clarence Decatur Howe: Yes. That is not the type of contract that applies very well to construction.


[Stage Direction]
Item agreed to.
William Alfred Robinson: It being five o'clock, the house will proceed to the consideration of public and private bills.
At five o'clock the Deputy Speaker resumed the chair.



PRIVATE BILLS

Mr. Deputy Speaker:: There are a number of divorce bills on the order paper. Shall these be entertained in one motion?


Mr. Knowles:: As I indicated last time, Mr. Speaker, we have no objection to the house going into committee on these bills on one motion provided it is understood that, when we get into committee of the whole, we shall take them one at a time.


Mr. Deputy Speaker:: These bills may be referred together under standing order 110. Of course the hon. member will have his usual privileges when we reach the committee stage.


Mr. John Hunter (Parkdale) moved: that the house go into committee to consider Bills Nos. 449 to 458 inclusive and Bill No. 434.
Motion agreed to and the house went into committee, Mr. Applewhaite in the chair.



FRANCIS WALSH

[Stage Direction]
The house in committee on Bill No. 449, for the relief of Francis Walsh-Mr. Hunter -Mr. Applewhaite in the chair.
On clause L-Marriage dissolved.
Stanley Howard Knowles: Mr. Chairman, when we were last at this business a week ago today, I had something to say about this Bill No. 449. I do not think I need to add anything more to what I said a week ago when I gave a few of the details and pointed out that in my view the particulars of this case underline the fact that this type of thing is hardly the business of members of parliament.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.

Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 450, for the relief of Hilda Anne Darke Marshall -Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: Mr. Chairman, this is
another case which, like the one we have just dealt with, is an extremely unhappy one. It does not look as though there is much we can do about it. I suppose it can be said that if we pass this bill we are in a legal sense dissolving the marriage of the two people whose names appear on the front page of the book of evidence which I hold in my hand. Actually it would appear that that marriage, for all practical purposes, has already been dissolved by the fact that the husband in this case appears to have deserted his wife. Evidence from a coal dealer and a carpenter was introduced in the other place to suggest that the respondent in this case is now living with someone else in the city of Toronto, and that they are living together as man and wife. The evidence is not direct; it is circumstantial, but it seems to be fairly strong.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Edward Turney Applewhaite: Shall the bill carry?


Some hon. Members:: On division.
Bill reported, read the third time on division and passed.



CLAUDE RAPHAEL SACCHITELLE

[Stage Direction]
The house in committee on Bill No. 451, for the relief of Claude Raphael Sacchitelle -Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
George Hugh Castleden: Mr. Chairman, this bill asks us to dissolve the marriage, in this case, of an unfortunate chap who is at present on active service in Korea. He is the one who is making the application. Having regard to most of the evidence, I think one would come to the conclusion that a divorce perhaps should be granted, on the evidence that we have. But unfortunately, in recent months in the House of Commons-at this session at any rate-we have come to question some of
Private Bills-Divorce
the evidence and some of the recommendations with regard to these divorce bills.
It has been our custom to pass these divorce bills in large numbers. The procedure is to have the evidence heard in a committee of the other place. They make their recommendations on them. A House of Commons committee deals with them. The members of that committee then recommend them to this house. Under these circumstances it has been customary for the House of Commons to pass these bills in what is a sort of production-line procedure or a steam roller proposition. However, recently a case came to our attention here and, on going through the evidence, a number of us questioned it. Our questioning resulted in the case being sent back.


Mr. Harris:: Just pay attention to this particular one and not to the other one.


George Hugh Castleden: That was an outstanding exception. I should like to say that it is quite in order, since the evidence in that case turned out to be so bad that we turned the case back. The evidence was so bad that the applicant withdrew his case entirely. I think that is a basic reason why we in the House of Commons should question this evidence very closely.


John Whitney Pickersgill: I rise on a point of order, Mr. Chairman. Did the hon. member go to the committee where this sort of thing is done? Does this procedure have to be inflicted on the whole house?


An hon. Member:: I hope not.


Stanley Howard Knowles: A brilliant contribution.


Edward Turney Applewhaite: Order. I am not proceeding to rule on the question of order, if any, raised by the Secretary of State. But I should like to say now to the hon. member for Yorkton and to the committee as a whole that I think perhaps the remarks he has just made have amply demonstrated the value, when we are in committee on a bill, of restricting our discussion to the bill which we are discussing. I have no knowledge of the merits of either case. But to discuss the demerits of one case during consideration of another case where perhaps those demerits would not apply is, I think, one of the things that the rules of the House of Commons are trying to get away from when they say that discussion shall be restricted to the subject before the committee. It is not my intention to endeavour to be very strict in imposing rules on this committee at this time, for reasons which will appear obvious to everybody. However, when the hon. member is discussing specifically a case as distinguished
6476	HOUSE OF
Private Bills-Divorce from general remarks, I would ask him to discuss specifically only the case which we have before us.


George Hugh Castleden: Thank you, Mr. Chairman. From what you have said I presume that it would not be correct to discuss even the procedure on these bills when they come before this house. Certainly after what happened in the other place and after what was said, on a question of privilege, by certain members here where motives were imputed, I think we should at least have an opportunity to reply. For that reason I think every one of these cases should be carefully examined. I suggest this one might be carefully examined. Perhaps at a later time it would be well for me to rise on a question of privilege and ask to be given the opportunity at least to reply to those who impute motives to us when in the interests of justice we ask that a case be sent back to have it reviewed. I think that is about all I have to say. I will have more to say on the other cases.


Stanley Howard Knowles: Mr. Chairman, I am interested in this case because of a particular point that is raised by it. It is a matter I have taken the trouble to do some reading about, and I think it should be of interest to members of the house who are members of the medical profession and also to those who are members of the legal profession. My reading on the subject which is raised by this case led me in particular to examine a very excellent paper entitled "Medical Privilege" which was given by Mr. Justice Samuel Freedman of the court of queen's bench, Winnipeg, Manitoba, at a recent meeting of the Manitoba medico-legal society at Winnipeg. Mr. Justice Freedman was dealing in this article with the question as to whether or not there should be extended to medical practitioners throughout Canada the protection in courts which is enjoyed by members of the legal profession. The reason I read the article and the reason I want to make some references to it is because that question arose in connection with this case.
I do not wish to put any names on Hansard so I will use letters where I wish to delete names. But with that qualification I should like to read an extract from page 12 of the evidence in the case now before us under Bill No. 451. One of the examiners who was asking questions before the committee in the other place said:
Q. Mrs. X, Dr. Y cannot be required to reveal any information he may have received by examining or treating you in his professional capacity, but you have the right if you wish to permit him to do so-to consent that he do so and give him that authority. You do not have to give him that authority if you do not want to.
[The Deputy Chairman.]

By the Chairman: You understand that, that you may give him permission to tell us what was the result of his findings?
A. Yes.
Q. You are willing to do that?
A. Yes, I am.
I will not bother to read the next part of the proceedings which is the evidence given by the physician whom I have characterized as Dr. Y and which became rather important evidence in connection with this application for divorce. In fact, after this doctor had given his evidence the chairman of the committee, Senator Roebuck, said:
That is very good evidence. Thank you, very much.
There is no question about it that the evidence was the kind of evidence that was useful in a case such as this. I wish to make it clear that the woman in question did give her consent to this medical man giving evidence before the Senate committee which he had gained in his professional capacity as an attending physician. The point I raise is to me a very interesting one. Was it appropriate for it to be suggested in a hearing in a committee of the parliament of Canada, on the soil of the province of Ontario, if you will, that a doctor could not be required to give evidence obtained in his professional capacity? It is in that connection that I find this lecture by my friend, Mr. Justice Samuel Freedman, very interesting. He tells us that the basis of the law regarding medical privilege so far as the United Kingdom is concerned and so far as Canada is concerned, except for the province of Quebec, goes away back to 1776. He says:
It is the year 1776. The scene is Westminster Hall, and the occasion is the trial before the Right Hon. the House of Peers of Elizabeth, Duchess of Kingston, for bigamy. The noble lady is charged with having gone through a form of marriage with the Duke of Kingston while her first husband, Augustus John Hervey, later Earl of Bristol, was still-


John William Gordon Hunter: On a point of order, I should like to point out to the hon. member that, while this doubtless may be a most fascinating legal point for him to discuss, it has no relevancy whatsoever to the decision in the case before us. The decision in the case was that that this woman committed adultery and therefore the divorce was granted. I would point out, purely on the grounds of relevancy, that what the hon. member is discussing has nothing to do with the decision of this house.


Stanley Howard Knowles: Mr. Chairman, I am thoroughly in agreement with the ruling you have made from time to time, even if that ruling sometimes impinges upon what I would like to say myself, that in discussing these bills we should discuss the particular case that is before us at any one time. I have

accepted your stricture that we must not wander off into a discussion as to what happened with respect to other bills. But I submit that when we have before us a bill, the major portion of the evidence of which is based on what was stated by a doctor, I have the right to raise the question as to the propriety of it being said in the committee of the other house that there was such a thing as medical privilege on which that doctor and that patient could rely. My purpose in referring to the paper given by Mr. Justice Freedman is to prove my point that medical privilege does not obtain in the courts of Canada outside of the province of Quebec. If it is uninteresting or distasteful for me to read at length from Mr. Justice Freedman's article, I am prepared to curtail my quotations from this article, but I think there is no question but that I should be permitted to quote sufficiently from this article to prove my point that medical privilege in the courts of this country, with the exception of those in the province of Quebec, does not apply. It is that that I want to establish from Mr. Justice Freedman's article. If Your Honour wishes to make a ruling on that point, I will sit down until the ruling is made.


Walter Edward Harris: May I ask a question, Mr. Chairman? If my hon. friend satisfies himself that in fact there is no such privilege, do I take it that he then feels that the evidence was not sufficient and he is going to oppose this particular bill?


Stanley Howard Knowles: I think it is fair to say that without the evidence given by this doctor the decision might have been different, even in the other place.


Walter Edward Harris: My question was not a hypothetical one and need not have been answered by the use of "might". We are trying to decide this case, or my hon. friend is trying to decide it himself, and either one of two results follows. Either he decides that the evidence was sufficient or that it was not. We could very well save the time of parliament by allowing him to be satisfied that there is no such thing as medical privilege and let him come to his own conclusion with that in mind.


Stanley Howard Knowles: I do not think it is up to
me to make a decision for the Minister of Citizenship and Immigration.


Walter Edward Harris: I would not rely on your judgment.


Stanley Howard Knowles: I am glad the minister said that he would not rely on my judgment. That is exactly the point of debate in this house,
Private Bills-Divorce
so that all the arguments can be brought out on the basis of which every member can make up his own mind.
The Depuiy Chairman: I think I can satisfy the hon. member for Winnipeg North Centre at least for the moment by saying that for the moment the question before the committee is whether or not clause 1 of this bill will be adopted. I cannot come to the conclusion that the hon. member is out of order in discussing the methods whereby evidence was or was not admitted upon which clause 1 was recommended to us. The hon. member for Winnipeg North Centre has the floor.


Stanley Howard Knowles: By way of compromise, I shall certainly reduce what I had intended to do by way of quoting from the article by Mr. Justice Freedman. He gives a very interesting history of this question, but ends up by saying:
Were this paper concerned merely with a declaration of the law on whether a doctor is entitled to professional privilege it could end at this point. Our law is clear. He has no such right.
Later in the article or in the footnotes, Mr. Justice Freedman makes it clear that in Quebec there is such a privilege. Indeed, in the Quebec civil code it is provided that a witness cannot be compelled to declare what has been revealed to him confidentially in his professional character as a religious or legal adviser, or as an officer of state where public policy is concerned. This provision covers religious and legal people, but then in the Quebec medical act, section 60, subsection 2, there is the following provision:
No physician may be compelled to declare what has been revealed to him in his professional character.
Mr. Justice Freedman points out that that privilege applies in Quebec, and that is the only place in Canada where it applies. That being the case, I submit it does not apply in Ontario, and in this instance the hearing was held within the territorial limits of the province of Ontario. The doctor in question was an Ontario doctor residing in Kingston. The patient whom he had examined had been examined at Kingston, and yet it was suggested to him that he had a privilege which does not obtain.
Now, one of the problems involved in all of this and the difficulty in dealing with cases like this, where at least one of the parties is a resident in a province where they do not want divorce courts, is that in this case the law of that province was imported into the proceedings held here at Ottawa. I feel it was quite wrong for the senators to take that position. Perhaps there is a case for changing the law with regard to medical
6478	HOUSE OF
Private Bills-Divorce
privilege. Mr. Justice Freedman does not come to that conclusion. He feels the law should not be changed.
As I say, I rose not to discuss the details of the case itself, except with respect to this one point. Whether or not the Minister of Citizenship and Immigration accepts my judgment, I submit with due respect for his judgment that Their Honours were wrong when they imported into a hearing on Ontario soil a provision that applies in Quebec but does not apply anywhere else in Canada.


Walter Edward Harris: I hope there is no feeling that I would not accept my hon. friend's judgment on occasion, but I have really not the time to come to a conclusion about the law of medical privilege. I have looked at it off and on for something approaching 30 years, but I do not feel I could discuss it learnedly in 40 minutes like my hon. friend. For that reason,
I do not know how he could come to the conclusion he has stated in that regard in such a short time.


Stanley Howard Knowles: I was prepared to give the Minister of Citizenship and Immigration the conclusion of my esteemed and learned friend, Mr. Justice Freedman of Winnipeg.


Mr. Crestohl:: I feel the hon. member for Winnipeg North Centre has missed the point entirely. I do not believe this is a question of medical privilege. I believe it is a question of whether or not the law of the province of Quebec can be pleaded in Ontario. Perhaps the hon. member is not aware of the fact that the law of a person's domicile will follow him into any other province in Canada. If the province of Quebec is this man's domicile, he can plead that law in the province of Ontario as it affects the person.


Stanley Howard Knowles: I am glad the hon. member for Cartier has raised that point. I thought I had answered it. The doctor and the patient are both residents of the province of Ontario, and the hearing took place in Ontario. The point the hon. member has made would have been valid had it been a Quebec doctor or evidence on behalf of a Quebec patient, but it was an Ontario doctor who had examined an Ontario patient in the province of Ontario.


John William Gordon Hunter: I am convinced, Mr. Chairman, this discussion is entirely out of order. After all, the Senate divorce committee is not bound by the rules of evidence of any province of Canada. It is bound by the rules under which it operates. A discussion here of whether or not they have the right to do this or that has no relevancy whatever. The hon. member for Winnipeg North Centre


must realize that the committee is not bound by those rules, and the discussion is entirely out of order.


George Hugh Castleden: Surely it is proper for this committee to look into the evidence, and if there is something wrong with the evidence, something with which they disagree, it would be proper to draw the attention of this house to that and, perhaps as in the other case, have it referred back to the private bills committee.


John William Gordon Hunter: I would think that would be a most improper thing. If the hon. member wishes to reform the rules of the Senate committee, I would suggest he move over there and do what he can.


Mr. Nicholson:: This case is typical of the problems that come to us when we read the evidence. As mentioned by my colleague, the hon. member for Yorkton, the petitioner is a soldier on active service in Korea. Apparently there were some domestic troubles shortly after the couple were married, but I feel it is unfortunate that the petitioner was not given a chance to come back from Korea to appear in person and to state whether or not he was prepared to try again.
The evidence that appears in connection with Bill No. 451 would indicate that the petitioner's wife has not been loyal to him during his absence. In view of the fact he is the one seeking the divorce, I feel he might have been called. I noticed that the question of collusion is raised in connection with this case. I am sure that the hon. member for Victoria, on reading this evidence along with the evidence in many more cases, will certainly consider there is every indication there is collusion in connection with these cases.
Apparently the soldier in Korea has information concerning the misconduct of his wife, and also has information concerning the man who has come into the home to break up the home. As a matter of fact, apparently the man who has come into the picture was here in Ottawa. When the solicitor for the petitioner mentioned that the man was here in attendance but did not think it necessary to call him, the chairman said, "I do not think so; I think we will recommend the case." The case was recommended.
I would say that it was unfortunate the soldier was not given a chance to come home from Korea. If there was a big hurry to get this through, if an injustice had been done to him during the time he was away, I think the least that could have been done was to have him brought back and given a chance to appear in person. As I said, it is difficult to assess these cases when members of the house do not have an opportunity to hear the people

involved. Even after one does hear the people involved, as was the case with one other petition, it would appear that a committee of this house is not able to deal with the matter properly. I hope that we will be relieved of the responsibility of deciding whether or not the recommendation made by the other house should be accepted in cases of this sort.


Edward Turney Applewhaite: Shall clause 1
carry?


George Hugh Castleden: On a point of privilege, Mr. Chairman; the hon. member suggested that perhaps I should go to the other place in an attempt to help bring justice in these cases. I want it made abundantly clear that we are not blaming the other place. They have their nasty duty to perform. Unfortunately, because of the nature of this case, and the large number of cases considered, they have a very difficult job to perform; and I am sorry some of the results have been what they were. I think there is evidence here of what has happened, and that these cases should not be dealt with by parliament at all. One Toronto paper remarks that this procedure made a mockery out of justice and a farce out of the law.


Edward Turney Applewhaite: Order. I was
going to meet the hon. member in the spirit in which he had risen, and state that I am not too sure whether he could rise to a question of privilege or not. That is, the point is whether you should rise to a question of privilege if the remark about which complaint is made could be construed as a compliment.
I would point out however that no matter where the editorial was published, it is not permissible in this chamber to quote publications which are critical of what goes on in parliament. That, I think, is a well accepted rule.
Now that I am on my feet I would ask the committee to co-operate with the chair in a matter which is causing me considerable worry. As we sit here we have the right to review what has been done by a committee of the Senate, and we have the right to come to a contrary conclusion, if we see fit. By so doing we therefore come to the conclusion that the decision reached by the committee of the other place was a wrong one. So far as that is concerned, there can be no question at all as to the right of this committee. It is perhaps somewhat difficult for us to discuss that conclusion without being somewhat critical of the methods adopted in the other place.
Private Bills-Divorce
I am afraid that one of the duties I have, so long as I sit here, is to see that this committee shall not give expression to views which could be regarded as offensive by those who have this duty in the other place. Hon. members will understand that I am not trying to bridle this committee in any way. But I am asking hon. members, when they are critical of the result of what has been done by the committee of the other place, that they express their criticism in the least offensive terms possible. I believe it is a well known principle that members of neither house shall use expressions which might be offensive to members of the other.
I am sure hon. members will realize the difficulties of the situation, and will appreciate the responsibilities which, in the long run, are mine. I am asking the assistance of hon. members.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 452, for the relief of Isabel Mary Peebles Brown Macartney-Filgate-Mr. Hunter-Mr. Apple-whaite in the chair.
On clause 1-Marriage dissolved.
Mr. Knight:: Mr. Chairman, first of all
may I echo the sentiments of the Secretary of State when he says that he hopes we will not much longer have to go through this very nasty procedure which, I am sure, is distasteful to all of us. So far as I am concerned, I would say, "How long, O Lord, how long?" But so long as I am a member of the miscellaneous private bills committee and a member of the House of Commons I intend to see that at least some of these cases shall have thorough consideration. That is as I see my duty in the matter.
I am a member of the miscellaneous private bills committee, and I was in the room when these ten bills, of which this is one, were considered. I have noticed that my hon. friend, the hon. member for Parkdale, the chairman of that committee, and a gentleman for whom I have the greatest respect, has



S480 HOUSE OF

[Stage Direction]
Private Bills-Divorce interjected remarks on two or three occasions. I had not intended to say anything of what I shall now say but under the circumstances perhaps I had better do so, because it is not only the committee in the other place that can make mistakes.
There is always of course the question as to whether these bills should be considered en bloc or considered one at a time. And by the way, before I forget what I wish to say, let me give notice here and now to the members of the miscellaneous private bills committee, and to the various counsel who appear in divorce cases, that so long as I am on that committee and there is before it a contested divorce, whether others take this procedure or not I will do my part to see that such a case is thoroughly reviewed by that committee.
As usual, in the committee I made my little protest, in which I said that I was in favour of considering these bills one by one. I appealed to the chairman and he replied, "Mr. Knight must know that that is not in my hands, and it is not in the hands of the committee." I am not criticizing the chairman, because I suppose he is only human. There was nothing I could do about it. So one of the members of the committee who supports the government offered a motion that the bills be considered en bloc. Hon. members will know of course what the result was. Hon. members in this group who were protesting were defeated by a vote. I may say I asked for a recorded vote on that particular occasion. He who runs may read, because the vote is recorded, and the names of those who asked that the bills be considered en bloc are on record with the clerk of one of the committees of the house.
I do not want to go into that phase of the matter at too great length. We continued to consider the contested case, for which counsel appeared and witnesses were called on both sides. Apparently everyone was in a hurry, and the ten bills were passed- 1,2,3,4,5,6-like that. No, I should not say, "1,2,3,4,5,6"-I should say simply 1 to 10. And so we were ready for the next case, about which I shall have something to say when it comes up on the next occasion, which I presume will be Friday of this week, if the house is still sitting.
However, the result of the whole thing was that the committee had to be called back next morning and the procedure had to be repeated painfully again because, as every hon. member knows-and I certainly did know-a committee, whether it be a private bills committee, or something else, is simply an extension of the committee of the whole house. And, as is stated in
[Stage Direction]

Beauchesne, what rules the House of Commons rules the conduct of that committee. The procedure is laid down, and is not in the hands of the committee.
That was the story of those ten bills and we did pass them at the next sitting of the committee. The result is that they are now back in the House of Commons. I should like now for a moment to talk about the particular bill before us.
The hon. member for Wellington South and I had some argument in committee about collusion, and I referred him to his Latin dictionary. This is a case where I certainly suspect collusion. It is a peculiar case. Like my hon. friend from Winnipeg North Centre, I am not going to mention names, but this case refers to an Englishman who came out to this country and settled in the city of Montreal. He married an English lady and after a space of time the lady went back to Great Britain and is now living there. She did not appear at all before the Senate committee.
My learned friends will know the term-I do not-but the fact is that counsel backed up her petition with some kind of sworn statement over there. That was the way the petition was presented to the Senate committee. And then the most amazing thing happened. This respondent, this man who was accused of adultery-and one would almost think he was proud of the fact- became the principal witness for the petitioner. My hon. friend and I had a disagreement. He said it did not involve collusion. Well, if it is not collusion, then I do not know the meaning of the word.
Let me read from the evidence-and my hon. friend will not expect me, I know, to mention names, because I have no taste for this sort of thing. I do not like to see these names dragged out before the public and recorded in Hansard. But here is part of the evidence. This question was asked:
Has there been any collusion or agreement between you and your wife in order to obtain this divorce?
The respondent said: "No." Then, Mr. Lapin, who I presume was the counsel, warned the witness. He said:
The witness does not have to answer questions as to adultery.
If the respondent had not answered questions as to the adultery and implicated himself in doing so, then the divorce would not have been granted. Then we come down to the further question. In this instance again Mr. Lapin asked:
In your wife's petition your wife complains that between the 25th of March and some time in April you committed adultery with

.Is that true?

I can almost see him clapping his chest and saying: Yes, that is me; I am the man. Well, that is it. That was the evidence on which the divorce was granted.
An hon. Member:: He was bragging.


Robert Ross (Roy) Knight: He was bragging, but I do not know what about. It is not something that a man should brag about. The chairman of the committee in the other place seemed to be rather surprised and said: If you have another witness you may call him.
Apparently he was surprised that any other witness was needed. Then this respondent who was so willing to confess before the committee that he was an adulterer said that he had another fellow there, a personal friend. He produced the friend who said, yes, my friend has told me many times, and so on. He said a few things that are flavourable but not favourable, and on that basis this divorce was simply granted. I suggest that if there was not collusion, then I for one do not know what collusion is. My hon. friend says he knows the meaning of the word but I do not, if this is not a case of collusion.


Stanley Howard Knowles: I just wish to point out that so far since five o'clock we have dealt with four cases. In three of them we have had the situation to which the hon. member for Saskatoon has just referred, namely, that the chief witness against the guilty party has been the guilty party himself.
Like the hon. member for Saskatoon, I feel that that certainly raises very seriously the question as to whether or not some collusion is involved.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 453, for the relief of Wilfrid Lavoie-Mr. Hunter- Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: This is a disappointing case, too. I find these people were married away back in 1913. They lived together until 1935. They have a son who is now 34 years of age and a daughter 32 years of age. It does seem most unfortunate that this marriage went on the rocks. Apparently the woman in the case is living at the present time in the home of another man. The evidence, a bit flimsy I must say, was such that even a lady senator
Private Bills-Divorce who was a member of the committee wondered-at least so I judge from her question, which I need not put on the record in its exact terms-whether it might not be the case that this woman was living there just as a housekeeper. In my view the evidence does not seem to be strong in any other direction. However, Mr. Chairman, Their Honours seemed satisfied. That being the case, most members here seem to feel that we have nothing to do but to go along with them. I do express my regret that this elderly couple have had this happen to their marriage.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 454, for the relief of Joseph Edgar Emilien Landry-Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: I rise to point out that in this case likewise the couple had lived together quite a few years before they fell apart. They were married in 1936 and lived happily together for nearly fifteen years. According to the husband, a friend of his came along and spoiled it all. The evidence does not make very choice reading.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 455, for the relief of Joseph Victor Gerard Fontaine-Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: We seem to have a number of these cases today where the marriage had lasted long enough that one might expect it to have gone on. In this instance the couple were married in 1943 and lived together until 1952. It would appear that one of the

Private Bills-Divorce factors in the situation, whether it was cause or effect, was a little too much drink.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 456, for the relief of Jeanne Robert Hotte-Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: Mr. Chairman, here again we have the case of a marriage that lasted for 10 years. This couple were married in 1941 and they did not go their separate ways until 1951. As with quite a few of the cases that we have today, no children are involved. Like the last case, it appears that a factor in the situation, either cause or effect, was too much drink.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 457, for the relief of Heneault Champagne-Mr. Hunter-Mr. Applewhaite in the chair.
On clause 1-Marriage dissolved.
Stanley Howard Knowles: I think we should have the Secretary of State for External Affairs or at least his parliamentary assistant in on this case because there do seem to be certain international complications. The evidence in connection with this case was not collected in Canada. It was obtained partly in Italy and partly at a fiesta in Spain. It is not a very happy case.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 458, for the relief of Leopold Ruel-Mr. Hunter-Mr. Applewhaite in the chair.
[Stage Direction]

On clause 1-Marriage dissolved.
Stanley Howard Knowles: This is another unhappy case. There are three children who are not yet grown up.


Alexander Malcolm Nicholson: On page 10 of the evidence the question was asked when the boy was giving evidence, as follows:
Shortly after your father and mother separated, let us say when you were about eight and a half or nine years of age, do you remember anything happening around the house where your mother was living?
Particularly where young children are involved in these cases, we should give careful consideration regarding what it is going to do to the children. As the hon. member for Winnipeg North Centre has said, in so many of these cases the introduction of alcohol into the home during the early days of the marriage seems to have been a major factor in putting things out of kilter. The evidence in this case would indicate that Their Honours in the other place were quite justified in recommending the divorce. I think we should note that there were three young children involved during the time when the trouble was developing.


Mr. Maltais:: After listening to all these complaints about these bills and listening to all this talk I am just wondering whether these hon. members who are complaining about these bills find their conscience bothered enough to rise and vote against the bills.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time on division and passed.

[Stage Direction]
The house in committee on Bill No. 434, for the relief of Joseph Delphis Guillaume Delorme-Mr. Hunter-Mr. Applewhaite in the chair.
On section 1-Marriage dissolved.
Robert Ross (Roy) Knight: Mr. Chairman, this is one of 462 bills which have been presented to the Senate committee at this session. It is true that 63 of these bills were not proceeded with, the reason being that they were presented too late and I suppose in the normal course of events they will come before us next year. However, of this total 382 were recommended by the Senate, and three were rejected by the Senate. It will therefore be seen that in most of these cases the evidence must have been pretty good or at least satisfying

to the Senate committee. Fourteen were withdrawn, one of which turned out to be the rather notorious case which I shall not mention here.
In regard to this particular bill I think it would be a good thing if we looked into its history as it passed through its various stages. In the first place, this bill was presented to the Senate committee which passed it and a divorce was recommended. It then came into this house for first reading and as is usual in the case of most bills it did not receive very detailed consideration on that first reading. It then came up for second reading and was passed, again without consideration. It then came into committee and it was only by sheerest accident that one of my colleagues noticed it was a contested case and by the bulk of the evidence it appeared as though there had been considerable argument. He took the case up and read it through. In committee of the whole he spoke on the bill and then the hon. member for Winnipeg North Centre at the end of that day's debate moved that the bill be not now read a third time but that it be sent back to the miscellaneous private bills committee for further consideration.
The vote on that motion in this house is now past history. The house voted by 66 to 63, presumably upon the reading of the evidence or upon the validity of the arguments advanced by my colleague, to send it back, and the bill which had already passed the infallible committee in the other place, and passed its first and second readings in this house was recommended to be sent back to the miscellaneous private bills committee for further consideration.
I want to point out that we who are members of that committee are sometimes placed in an unfortunate position. There was one famous case which was before the committee last year and it was discovered that a minor technical mistake had been made. The committee was called back the next morning so that the chairman could put in the words: "Shall I report the bill?" The next day there were three times as many members attending that committee and I think it is fair to say that most of them came from the government side of the house. The case was re-opened and the decision reversed.


John Whitney Pickersgill: Mr. Chairman, how does the hon. gentleman relate that to the bill now before the committee?


Robert Ross (Roy) Knight: I am just coming to the bill. I know the Secretary of State is wondering why we should have to put up with this kind of stuff and I agree with him, but I am now going to relate this to the bill now before us.
Private Bills-Divorce
I will now come to some facts which I will present to the committee and which I hope my hon. friend the Secretary of State will think over. In that other case of last session it was unfortunate that one of the members in this house happened to be a partner in the law firm which brought that petition and I am going to say now that I have complete sympathy with the hon. member in this house who was somewhat similarly affected in the case of today. There is a member in this house today, and he is sitting in this house now, who found it necessary to resign from this particular committee because his son happened to be the counsel for the petitioner in this case. May I say that the hon. gentleman acted up to his name in being honourable. He came to me and told me the circumstances and explained why he was resigning from the committee and having nothing to do with the case. I expect he explained to other members of the committee also his son's connection with the case. My sympathy goes out to him in the awkward situation in which he was placed. His decision, of course, meant that he took no part in this case and he was a mere spectator. One can readily understand the awkwardness of the situation because in and about that committee he would naturally meet his son and his son's client, and that is not a very nice situation. Incidentally, when the hon. member resigned his resignation was put through this house, no doubt by the Liberal whip, though I do not remember the occasion. However, another gentleman was put on in his place and that particular gentleman happened to be one of those recorded as voting for this particular divorce. Incidentally, may I point out that I asked for a recorded vote on that committee and the names of those who voted for and against can easily be found on the records.
I have only another minute at my disposal, Mr. Chairman, and I want to say in regard to this case that I am going to go thoroughly into the evidence and deal with the matter in this house. I shall not mention any names but I am going to see to it if I can that this divorce bill does not pass for the reason that I think it should not pass, and when the third reading stage arrives I shall ask one of my colleagues to move that this bill be not now read a third time, but be read six months hence. May I call it six o'clock?


Edward Turney Applewhaite: Shall I report
progress and ask leave to sit again?


Some hon. Members:: Agreed.
Progress reported.

Supply-Defence Production The Acting Speaker (Mr. Applewhaile): At
seven o'clock the house will resume the business interrupted at five o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at seven o'clock.
[Stage Direction]
The house resumed in committee of supply, Mr. Applewhaite in the chair.

[Stage Direction]
79. To provide capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board, $25,000,000.
Colin Cameron: I should like to ask the minister which of the crown plants or the crown companies mentioned in this particular item are engaged in the production of aircraft or components of aircraft.


Clarence Decatur Howe: I think every plant engaged in the production of aircraft or components of aircraft are included in this item to some extent. Avro of Canada has been the largest. There is Canadair, Lucas-Rotax, Pratt and Whitney, and Sperry. I think if the hon. member will name the plant, I can tell him whether or not it is included.


Colin Cameron: None of these are crown corporations?


Clarence Decatur Howe: The crown owns the physical property. No; none of them is a crown corporation.


Colin Cameron: The physical
properties are owned by the crown?


Clarence Decatur Howe: Yes; the physical properties are owned by the crown.
Mr. Pallet!: Can the minister tell the committee how much was given to A. V. Roe this last year? At the same time would he mind advising the committee whether, together with these grants, there was any form of control over the operation of the company? Also would he advise the committee in connection with those plants whether any agreements which the companies have entered into are ever assigned to the crown or directly to the department?
[The Deputy Chairman.]


Clarence Decatur Howe: Mr. Chairman, I have been explaining that, where capital assistance is given, the crown retains the title to the asset created by the capital assistance. For example, we own the Avro engine plant, or did so until recently. We sold it back to the company some time ago. In some places capital assistance may extend only to machinery. If that is the case, we own the machinery that is purchased with the capital assistance. It is painted a distinctive colour, the number of the machine is registered in our central registry, and we are free to go in and recapture the machine whenever we like.


Colin Cameron: The operators pay no rent for this machinery?


Clarence Decatur Howe: Not if they are working on government work. However, if they are working on private work they pay a rental.


Mr. Pallelt:: Will the minister tell me whether any agreements entered into by A. V. Roe have been assigned to the crown? I refer specifically to a water agreement with the township of Toronto which was originally entered into when this was a crown company, and then the assets were sold to the A. V. Roe company as a private company. I wonder whether the minister would say what disposition was made of that particular water agreement?


Clarence Decatur Howe: That agreement is rather complicated in that the final negotiation is just in progress at the moment. The original arrangement has been revamped. The original arrangement was that we would put up the money through Avro. I think it was an amount of $450,000. The water supply plant was built using those funds. The arrangement was that the money was to be returned to Avro and as Avro recovered the money, the money was to be returned to us. I understand that a new arrangement is being negotiated which is a little bit more clean-cut than the other one and which will be more satisfactory to all concerned.


John Cameron Pallett: I have another question. Is the crown a party to this new agreement or is it between A. V. Roe as a private company and the municipality?


Clarence Decatur Howe: 
Clarence Decatur Howe: The actual expenditure in 1953-54 as of May 31, 1954 was $6,526,525. Is that the figure my hon. friend wanted?


John Cameron Pallett: Yes.


Donald Methuen Fleming: That brings me back to the questions which I asked the minister this morning and which arise out of this sale of the A. Y. Roe plant at Malton to A. V. Roe Canada Limited. May I ask what policy is involved here or what led to the purchase? Is it the government's policy to dispose of these plants? I understood that the price was designed to recoup the government for the actual money it put into the plant, namely, some $17 million. I come back to the questions I asked this morning. What is the policy of the government with respect to plants of this kind in which the government has had a proprietary interest?


Clarence Decatur Howe: The government builds a plant for a particular function. For example, in order to produce the CF-100 and the Orenda engine at the rate required it was necessary to build additional facilities for Avro Canada. They were not available elsewhere. The facilities were built by the crown and were owned by the crown. We received an offer from Avro to pay for the facilities; that is, we received an offer to pay for the building, the crown to retain the machinery. The arrangement entered into was that the payment would be the actual amount expended less normal depreciation on the building for the period of its productive use. I think I could give my hon. friend the figures if he wants them.


Donald Methuen Fleming: I think probably the figures I gave this morning are approximately correct.


Clarence Decatur Howe: Yes.


Donald Methuen Fleming: In other words, the crown had invested some $35 million in the plant and had sold the building for between $17 million and $17,500,000, retaining the equipment in which there is an investment of about $17 million. But I am rather seeking the policy involved. Is it the policy of the government to dispose of crown-owned plants, where it is possible to do so, on the basis of recoupment of the crown's investment in them?


Clarence Decatur Howe: 
Donald Methuen Fleming: I take it that it is the policy of the government to dispose of other plants on similar terms.


Clarence Decatur Howe: That is right.


Donald Methuen Fleming: One final question about equipment. With such protection as is afforded by the clause the minister has just read, was there some reason for retaining the ownership of the equipment or was it that the A. V. Roe company was not prepared to purchase the equipment?


Clarence Decatur Howe: The company was not prepared to make an investment in special purpose equipment of that magnitude. My hon. friend is somewhat underestimating the value of the equipment. The total cost of the plant is $53 million, and the difference between the $53 million and the $17 million represents the cost of the equipment. The equipment is specially procured to manufacture a certain type of jet engine. That equipment is owned by the crown and ownership will be retained by the crown unless it is decided to dispose of the equipment at a later date.


[Stage Direction]
Item agreed to.
SO. To provide for payment of grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors. $400,000.
John Cameron Pallett: I have some comments to make on this item. While these plants are crown-owned, the people who are operating them are operating various types of businesses in competition with people who own their own plants and who are paying the local municipal levy at the regular assessment rate. I suggest to the committee that preferential treatment is given to people who are operating manufacturing concerns in crown-owned buildings. My other point is that the services required for crown-owned buildings are no less than those required for other types of buildings in a municipality. I suggest that
6486	HOUSE OF
Supply-Defence Production a proper form of paying these taxes be adopted and that taxes be paid on each building on the basis of the assessment as determined by the municipality rather than adopting a rule of thumb method by which one municipality gets $10,000 and another one gets a different amount without any proper basis being established to give these grants in accordance with the needs of the municipality and the assessment determined by the municipality. It would seem to me that an amount of $400,000 for 1953-54 and the same amount for 1954-55 is not consistent with the fact that municipal taxes are rising because of increased costs. If your assets have remained approximately the same over the two years and you are still paying the same amount you have not taken into account any increase in the municipal burden in the last year.
I strongly suggest to the committee that this figure must have been picked out of the hat somewhere along the line and that it cannot be based on any factual foundation. I suggest that consideration should be given to paying the municipalities the actual taxes that are determined by them on the basis of the assessed value of the properties rather than to give a grant that to my mind has no sound basis.


Clarence Decatur Howe: If I may clear up the first point with respect to these plants being in competition with privately-owned industries, that is not the case. If privately-owned industries were able to do the job we would not have built the plants. These plants are built for special purposes. It sounds quite logical to my hon. friend to say that we should pay whatever the municipality assesses, but there are several factors that interfere with that. One is that we often furnish services that other plants would expect to receive from the municipality. That is one factor. Another factor is that under the British North America Act the crown is not liable for taxes. Therefore instead of paying taxes we make a grant in lieu of taxes, but the grant is generally comparable to the taxes that a privately-owned plant would pay under exactly the same circumstances. Often it is a bit more than the privately-owned plant is paying. Usually privately-owned plants have tax deals going back many years which protect them today. If my hon. friend will suggest a township that thinks it should do better I will be glad to discuss that particular problem. It is difficult to discuss the problem in general.


John Cameron Pallett: The minister suggests that these plants provide services that other plants do not provide. What does he have in mind?


Clarence Decatur Howe: Often water and light.


John Cameron Pallett: Water and light.


Clarence Decatur Howe: And their own fire protection as a rule.


John Cameron Pallett: The minister also referred to tax deals. Does the minister know of any particular tax deals entered into by private firms that are prevailing at the present time in the province of Ontario?


Clarence Decatur Howe: I know of a lot of private tax deals. I helped to negotiate them in my days of private practice as a consulting engineer.


John Cameron Pallett: That prevails at the present time in the province of Ontario? There are none in the province of Ontario.


Clarence Decatur Howe: No, no.


John Cameron Pallett: I think that is a misunderstanding that should be clarified at this point.


Clarence Decatur Howe: If my hon. friend knows of any complaint about our tax arrangement perhaps he would tell us about it. We settle these matters by negotiation with the reeve of the municipality. To date we have been quite successful in working out a result reasonably satisfactory to both parties, and I think if we are allowed to work out our own salvation we will continue to do so.


[Stage Direction]
Item agreed to.
Canadian Arsenals Limited-
83. Construction, improvements and new equipment, $4,777,000.
Colin Cameron: Can the minister give us any information on this item? I notice that we are going to spend almost two and a half times what we spent last year, and yet on page 12 of the report of the department I find these words:
Most of the key defence facilities needed for the present defence program had been established by the end of the year and, with the major expansion of plant and equipment completed, the need for capital assistance decreased.
There may not be any conflict here, but it seems strange to find an indication in this report that the major construction is through and then to see an item almost two and a half times as large as last year.


Clarence Decatur Howe: That expenditure is largely for Canadian Arsenals, to be expended at their explosives plant at Valley-field. The nature of ammunition is constantly changing, and we find that we must provide for the manufacture of a new type

of explosive, particularly for rockets. That expenditure is for that particular purpose. It is a crown-owned plant.


[Stage Direction]
Item agreed to.

[Stage Direction]
Civil defence-
288. To provide for the civil defence program, $6,498,253.
George Randolph Pearkes: Does the minister wish to say anything on this important subject at the present time?


Mr. Martin:: Not at this time.


George Randolph Pearkes: I feel, Mr. Chairman, that this subject is of great importance to the life of this country and even though the session may be far advanced and we are all hoping to return to our homes in the near future, I do believe that some words should be said on this matter. I should like to offer a few observations. During the past day, and previous to that during the month of May, we were discussing the estimates of the Department of National Defence. We have passed in the estimates for that department the sum of approximately $2 billion, but I must call attention to the fact that the armed forces would be quite useless, no matter how strong they might be, if the civilian base of this country were knocked out and if the will of the civilian population were destroyed.
So far as the defence of this continent is concerned, the responsibility of the armed forces, of course, would be to keep the attacking enemy as far away as possible from our Canadian cities. It would also be the responsibility of the armed forces, I should think, to provide the civil defence organization and the peoples of the land with as early warning as possible. Having discharged those duties, it would seem to me that the responsibility for limiting the damage which might be caused, taking care of the casualties and mitigating the general suffering which would be inherent with that attack, would be the responsibility of the civil organization. I do not believe we can be so optimistic as to think we can stop every bomber from getting through. Some will get through to their target, but we trust that the numbers will be extremely few.
If any bombers do get through, many of the essential services will be destroyed. It will be the responsibility, therefore, of the civil organization to restore those essential services and ensure that there is as little disruption as possible to the general life of the country. I think, in broad general terms, that might be considered as an indication of the sort of tasks, the sort of objectives, of any civil defence organization which exists.
Supply-Health and Welfare
Some four or five years ago in this house I suggested that the responsibility for civil defence be removed from the Department of National Defence to some other department. Shortly after I had made that suggestion- no doubt other people had made it before- the Prime Minister removed the responsibility for civil defence from national defence to national health and welfare, thereby, rightly in my opinion, emphasizing the essentially civilian nature of civil defence. After all, civil defence really boils down to a scheme, in the main voluntary, in which one neighbour prepares himself to help another neighbour in the event of the dire results of a war and an attack upon this country.
I believe that the neighbourly nature of civil defence should be emphasized. I, for one, do not regard civil defence as a sort of fourth arm of the fighting services. Some people do. Since that day when civil defence was placed under the Minister of National Health and Welfare there have been considerable strides made in the development of our civil defence organization. Only those who fail to appreciate the difficulties that confront any department which tries to build up an organization which is essentially voluntary, the objects of which are rather nebulous, would dare say that the scheme for civil defence to date has been a failure. I do not believe that, and I should like to go on record as paying tribute to all those people who have taken part in building up the organization, from the minister and his staff here in Ottawa to the permanently employed officials in the various provinces and municipalities and the thousands of voluntary workers who have come forward and given of their time to try and create this great scheme for civil defence.
If the development and progress can be recorded, at the same time I do not think we can sit back and say that the progress is entirely satisfactory and that we do not feel that further endeavours should be made. The amount of progress which can be achieved will, to a certain extent, depend upon the funds which are voted by this parliament. I notice that when the present minister took over this department he had to get through as best he could with what I described as a very meagre amount, some $2 million. I notice that in more recent times the amount has advanced to somewhere in the neighbourhood of $6-5 million. I do not think that amount of money has been spent during the last year. There may be reasons why the sums voted by parliament for civil defence have not been spent. At the same time I feel it is highly desirable that the department should take full

Supply

Health and Welfare advantage of the funds which are made available by this parliament for the purposes for which they are allocated.
The general system, so far as I know, for the allocation of funds is that the federal government contributes dollar for dollar with each province. Each province has to be prepared and willing to enter into that dominion-provincial scheme. I regret to say that all the provinces have not agreed to go into that scheme and therefore we find that progress throughout the country is varied. In some provinces where they are keenly alive to the necessity of civil defence, and where the provincial contributions have been generous and have been matched by the dominion grants, there can be seen definite progress.
But as there are still some provinces I believe which have not entered into the scheme, such information as I have would indicate that the progress has not been as satisfactory in those provinces. In spite of the lack of any provincial grant, some municipalities in those provinces have made very considerable grants out of their civil funds, and I think a great deal of credit is due to those cities and urban centres where they have made contributions out of their very limited resources which, unfortunately, cannot be matched by the federal grants because those federal grants are allocated only for the help of the provinces. However some assistance can be given in the way of equipment.
Until there is a uniform system throughout the country, and a recognition on the part of all levels of government as to their own responsibility, and until those responsibilities are clearly defined, we shall never have a uniform system of civil defence across the whole of our land. It seems to me we are now threatened with what amounts to a new look, so far as civil defence is concerned; because the original civil defence plan was designed, first of all, to take care of the casualties and the damage caused by the ordinary high explosive bombs. From there they moved forward to the Hiroshima type of attack, by the A-bomb. Now we have reached the position where there is a far more deadly bomb, sometimes referred to as the H-bomb, and which is known to be in the possession of many powers.
Therefore it would be foolish for civil defence merely to base its plans for organization on the assumption that we might be attacked only with high explosive or even with A-bombs. The devastating effect of an H-bomb is, shall we say-and I do not think I am exaggerating-ten times as great as might have been experienced from an A-bomb of the type used at the end of the war.


Instead of only partially destroying a limited area in a city we must fact the fact that it is possible now for whole cities to be destroyed.
And so I say we have to take a new look at our civil defence. And if we are going to do that, then it seems to me now is the time when we have to invest real authority in the hands of the minister responsible for the department, and when we have to give him a constitutional position backed by an act of parliament. I think the time has now come for the government to give serious consideration to the introduction of a civil defence act. This is not a new or original idea. There are civil defence acts in existence in the United Kingdom, in the United States and in several of our provinces. But in this country where we have a federation, and where a great deal of autonomy is vested in the various provincial governments, I feel that in a matter which transcends boundaries between provinces and where co-ordination is required from the Atlantic to the Pacific now is the time for the government to introduce a civil defence act.
I make that suggestion to the minister because I know that all matters dealing with civil defence are the concern of many different departments. Obviously one realizes at once the interdependence of civil defence with the Department of National Defence. But then one need only stop for a moment to realize that civil defence is very closely related to other departments. Obviously, if there is going to be a destruction of public services, then the Department of Public Works would be very closely related with the work of civil defence. It would be closely related, not only after a bomb had fallen but in the preparatory stages before an attack.
For instance one of the major threats in civil defence matters today is the necessity of evacuating many of the larger cities. Exercises were carried out in a northwestern state recently in which large cities were evacuated, and most important lessons were drawn from that plan for mass evacuation. In a country where so many of our cities are located on rivers, and where our highways are limited, it can easily be seen that in the preparation for the evacuation of any of our large cities it might be necessary to have an extensive public works program. Perhaps one might have to provide additional bridges or tunnels, or to make new highways leading out of cities. All those things are very closely related to civil defence planning. Transport enters into the question. Of course the railways have to be kept running and the mails must be delivered. There must be protection against the possibility of sabotage.

The Department of Justice enters into the picture because there would be all kinds of legal matters. And so, without enlarging on the point, I feel some sort of committee of ministers may have to be set up; and certainly the various departments will have to have persons allocated as secretaries for civil defence matters in those particular departments.
I think the time has now come when not only should we have an act governing civil defence regulations, but that there should be an official at the level of a deputy minister who would be in charge of civil defence, who would be able to confer with senior officials in other departments, and who would have to have seniority sufficient to permit him to attend meetings of chiefs of staff.
Then you say: What subjects would a civil defence act be expected to cover? Well, I can only outline these. My ideas are drawn from existing civil defence acts. For instance, the responsibility of the civil defence minister would be defined in relation to any civil defence services which exist. There are a limited number of regularly employed civil defence personnel. At the present time they are in the main restricted to instructors in the various provinces. I am not certain that an expansion is not required in that respect.
In other countries there is the idea of flying columns or very mobile columns of civil defence workers who are always ready and available. One can see in the thickly-settled portions of our country in eastern Canada the value which would accrue from having a number of flying columns located outside of the principal cities so that they could move in, in case of a disaster. Those flying columns, at least some of them, should be permanently enrolled, and those that are permanently enrolled during the time when there is no threat could be used, it seems to me, as administrators and instructors.
Then of course the majority of the corps of civil defence workers would be those who are not permanently employed in civil defence work, and there are that great mass of men and women who are voluntarily giving their services at this time. But surely responsibility rests on the shoulders of the minister in so far as those voluntary workers are concerned, and obviously the definition of those responsibilities would be laid out in any act.
Furthermore, there is the whole question of the storage of essential equipment. If one is going to work on the assumption that evacuation may be necessary in certain areas, provision has to be made for the caring of the people who have been moved out of some 83276-410i
Supply-Health and Welfare city, and who will at least for the time being" have to sojourn in the rural districts surrounding that city that may be the target. Whether the bombs have fallen in that city or not, anyway, for the time being the care of those people will have to be looked after.
There are bound to be questions regarding the acquisition of land for the building of shelters, report centres and that sort of thing. There will be much that will be required along these lines. Therefore, I feel there are many responsibilities which have to be clearly defined, and can only be clearly defined and can only be given a legal status if they are incorporated in an act of parliament.
Then comes the question of the financial responsibility between the various provinces. We cannot go on any longer in this haphazard way of saying that if a province wishes to make a contribution for civil defence, then the federal government will match its contribution. We have got past the day when it is purely a local responsibility.
Earlier I indicated that there may be some major construction works which would be required if we are working on the thought of possible evacuation of certain areas, or even if we are providing some sort of shelters for essential plants, industrial work, or organizational headquarters. It seems to me that the construction of those major projects should and must be undertaken by the federal government. I do not think that you can place the responsibility of developing a major constructional project upon some local organization. I suggest that it will be essential that we have drawn up in this act a very clear definition as to responsibility as it exists between the various levels of government. I do feel that if the time has not come when the federal government is prepared to take over the full responsibility for civil defence, certainly the time has arrived when the federal government must take over responsibility for the major constructional projects which are required under what I have referred to as the "new look" which must be given to civil defence.
If there is a sudden emergency we may expect that the army is in training or in the process of mobilization in Canada and will be able to take over some of the duties of civil defence in the early stages of any war; but if the army is called upon to do that you are delaying the important tasks which confront the army because in those early days of mobilization any distraction from the process of organizing units and training men only delays and may very easily be disastrous with respect to the army's entry into the war. Therefore I feel that one has to have

Supply-Health and Welfare the civil defence organization in existence in peacetime. You do not want the full organization, but there must be a nucleus around which you can build up very rapidly the required services.
I have mentioned the question of the importance of having mobile columns outside of the cities. I go one step further. I am not satisfied that the mobile columns should be more and more equipped with motor vehicles, but I think you have to have them airborne and possibly using helicopters so that they can enter into a devastated area. They are the key people who would be able to take charge at once, who will be able to restore the broken services and will be able to supervise the voluntary workers who will be partially trained.
I feel there is a danger in relying too much upon the armed forces to provide that essential work, and in fact I have from the very beginning stressed what I consider to be the civilian nature of civil defence. I see great need for skilled traffic control personnel provided by men who have had experience in organizing great parades or supervising spectators going to some large sporting event.
I hope the minister, before these estimates are put through, will be able to outline what progress has been made. I should feel happy if he would say that he is prepared to introduce at the next session of parliament a civil defence act, because I do not believe we are going to make any progress until we get an act of that nature. In addition, before the estimates are concluded I hope the minister will be able to tell us something about the financial responsibilities as between the different layers of government. I do not think this haphazard take it or leave it attitude is satisfactory, and it does not assure the sort of co-ordinated scheme covering Canada that we need at the present time.


Mr. Cavers:: Mr. Chairman, I should like to take advantage of this occasion to say a few words on this important matter of civil defence. It is a subject which should be of utmost concern to every citizen because it comes so close to the very life of every person in Canada. Great progress has been made by the department of national welfare in the past few years and I am glad the Minister of National Health and Welfare is in the house at this time because he has shown an intensive interest in the organization of this branch of his department. The best evidence of his determination to do something about civil defence is the fact that no less than 650 Canadian community civil defence organizations are now in existence.


In more than 200 communities, of which St. Catharines and Lincoln county is an outstanding example, these services are organized and personnel are being trained. The remainder are now in various stages of organization, training, and development. To man these organizations throughout the country more than 163,000 people have been enrolled for various important duties. It is hoped that this total, which includes civil government employees and citizen volunteers, will be substantially increased over the next 12 months.
I have made mention of the extent of local organization across the country because it is local effort and individual initiative that is of importance in the problem of civil defence. I agree with the hon. member for Esquimalt-Saanich when he says that civil defence should not be the fourth arm of the army. I think civil defence is a task which should be assumed by the citizens in our country in a neighbourly fashion so that neighbours are working together for their self-preservation. Most localities have tackled the problem in a realistic manner, but in some municipalities the effort has fallen far short of what is required if we are to give adequate protection to our citizens.
We have a great need for civil defence in Canada. While Canada, with other freedom-loving nations, is making every effort to secure world peace by mediation and diplomatic negotiation at the United Nations, and by building up a bulwark against aggression through the instrument of NATO, we must recognize that the threat of war is ever present. It is well for us to make reasonable preparation for the protection of our civilian population and of essential public services now existing within our communities.
At one time in our history, wars were fought on distant battlefields, far distant from the civilian community. But today, with the evolution of guided missiles and atomic warfare, war has been brought to our very doorsteps. We cannot enjoy a sense of security even in our own homes. Should a major conflagration take place in this country then civil defence will be our first requirement. It has been said, and said quite rightly, that civil defence has added a third dimension to citizenship, namely, the obligation to protect ourselves and our homes from direct enemy attack.
The targets for any possible future enemy attack would be our heavy industrial installations; our hydroelectric developments; and our transportation systems on the land, in the air and on the water. Within the past week I read, as no doubt did other hon. members, a pamphlet known as The

Bulletin published by the Canadian Industrial Preparedness Association and in the course of an article on management in civil defence it is asserted that it is the individual responsibility of management to take care of civil defence in their own line of business. The article continues:
To assist plant management, the federal civil defence co-ordinator has in process of publication a revised "Civil Defence Manual No. 6" which deals with industrial plant protection. It should soon be available in quantity, either directly or through provincial co-ordinators. This manual in itself is able to give only an outline, but it does lay down the principles involved and suggests steps to be taken.
I am sure that industrialists throughout our country will avail themselves of the opportunity to develop a civil defence organization within their own plants. It is probable that these key locations I have mentioned would be the centres of strategic importance most likely to be attacked.
Steps have been taken by the federal government to provide a system of advance warning so that provincial and local organizations can be alerted to the danger of enemy air attack. The armed forces have established a radar system across the northern part of this country to detect and identify unknown aircraft which might come within our borders. But once the warning has been given the local civil defence organization comes into operation.
The aims of civil defence are to reduce loss of life; to avoid confusion among the local citizens; to provide medical and nursing assistance; to restore public utilities that might be blown up; to minimize property damage, and to ensure the continuation of essential industries. Those are the problems that concern our civil defence organizations if we should be attacked.
I have emphasized already what I believe are the essential steps to be followed in the successful establishment of civil defence groups. In order to establish a strong local committee it is necessary to supply strong, aggressive, and courageous leadership. We, in the county of Lincoln, have been fortunate in finding an individual with such qualities in the person of Brigadier General R. Gordon Whitelaw. Brigadier Whitelaw distinguished himself by his outstanding service in two world wars.
He has thrown himself into the work of civil defence organization in an enthusiastic and vigorous manner. His hours are long; his effort is tremendous and he serves without remuneration of any kind. I wish to express publicly my thanks to Brigadier General Gordon Whitelaw for his unselfish
Supply-Health and Welfare devotion to duty in this field of endeavour. Brigadier Whitelaw has gathered about him a corps of outstanding people with a spirit of community interest, including merchants, industrialists, factory employees, professional people, and agriculturists who are giving of their time and effort providing a strong organization in our community.
Brigadier Whitelaw tells me he feels that a reasonable start can be made only by educating the general public to the dangers that are around us and the need for the protection of our citizens. Three series of articles were published by the local group in the St. Catharines Standard, the local press. Two panel discussions have been broadcast over radio station CKTB and over 8,000 pamphlets on personal survival have been distributed in the local area. A civil defence week was observed last October when two special programs were staged in all local theatres. The John Labatt civil defence disaster convoy was brought in for demonstration in Thorold, Merritton and St. Catharines. Civil defence literature has been handed out by I.O.D.E. volunteers in several larger stores in the district. The director himself has addressed 56 meetings of service clubs, veterans clubs, home and school associations, church groups and parent-teachers groups.
Great care must be taken in the selection of suitable personnel for key positions. As an example, Mr. Joseph Bishop, who had had considerable experience in demolition clearance in England during the war, was given complete charge of this branch of the work. A medical man was given charge of the emergency and ambulance branch, and so on. The organization is set up on a control system. It provides for a central committee made up of representatives from all the councils of the municipalities concerned. The director, of course, is the head of the organization and he has under his jurisdiction three deputy directors:	deputy director G
in charge of intelligence, deputy director A in charge of personnel and administration, and deputy director Q in charge of supply, equipment, transport and buildings. These men, in co-operation with the fire-fighting group, the police group and the rescue group are able to provide a nucleus for a great service in our community.
A bimonthly civil defence newsletter is sent out to all civil defence personnel. Those newsletters are well worth reading. There are approximately 2,200 in the organization who are receiving weekly training. It is difficult to obtain trained instructors and suitable accommodation. Several of our outstanding citizens have taken advantage of

Supply-Health and Welfare the excellent courses provided by the Department of National Health and Welfare both here and at the new school in Arnprior. I am informed by these people who have become prominent and efficient leaders that the courses which they have received have provided them with excellent experience in this type of work.
The city of St. Catharines has turned over one of the unused city schools as a headquarters for civil defence activities. In this building equipment is stored and classes of instruction are carried out each week. The director has held 198 conferences for local civil defence key personnel in order to explain their responsibilities and duties and to discuss methods of procedure.
It is interesting to note that the federal and provincial governments have agreed to pay compensation to enrolled members of civil defence organizations who might be injured or maimed during their course of instruction or training.
Excellent progress has been made in organizing civil defence in St. Catharines and district schools. A co-ordinator and two deputies have been appointed. They work in conjunction with the principals aDd teachers in the schools, both public and separate, and they are providing each day drills for the children of the city in order that they might be made aware of what they ought to do should an attack come.
Each year the St. Catharines civil defence organization enters into a joint scheme with Niagara Falls, Ontario; Niagara Falls, New York; and other border communities in order that they may carry on a joint evacuation in the whole Niagara frontier. The effort last year held in October was most successful. It is anticipated that better results will be achieved when the Niagara Falls, N.Y., exercise is held this coming October.
What is the cost of this program? I believe it is important that I should say something about the cost to local municipalities. The total budget for the areas engaged in this work amounts to $6,291.11. It is distributed among their local municipalities as follows: Distribution of Civil Defence Budget
Municipality	Per cent	Total CostCity of St. Catharines 	.. 55-502	$3,330.12Township of Grantham ...	. 24-053	1,443.18Town of Thorold 	.. 9-636	578.16Town of Merritton 	.. 7-055	423.30Town of Port Dalhousie ..	.. 3-754	225.24100-00	$6,000.00Carried over from 1953

This is the effort that is being made by the municipalities throughout the county of Lincoln. I think it is a good record. I think it is probably a better record than that of some other parts of Canada. I am hopeful that some scheme may yet be devised between the province of Ontario and the federal government in order that the municipalities in our community may avail themselves of the opportunity to obtain from the federal government some grant to assist them in this type of work.
Why is it so difficult to organize civil defence in Ontario and throughout Canada? The first reason is that none of our cities have ever suffered a really serious actual disaster. The second reason is that Ontario, being far removed from both seacoasts, has not been seriously threatened by war for nearly 150 years. These reasons must be blamed for much of the public apathy that exists at the present time. However, I believe that I have pointed out tonight that given the proper leadership, maintained by adequate municipal support and the encouragement and assistance of the Department of National Health and Welfare, any community can build for itself an adequate measure of protection for its citizens who may be under severe stress and heavy attack.


Mr. Herridge:: Mr. Chairman, I listened with great interest to the constructive and interesting remarks of the hon. member for Esquimalt-Saanich. I think he made a most interesting contribution to this debate. I listened with interest to the speaker who has just resumed his seat, particularly because he emphasized one aspect of civil defence that has been very much in my mind in recent years. I have taken an interest in the subject ever since civil defence was organized. I have kept in close contact with the officials of the various municipalities in my riding, the civil defence co-ordinators, the fire chiefs and other interested people in local groups, and I have had an opportunity to discuss the varying and changing problems with these people.
I must say I represent a constituency that, relatively speaking, is very well organized for civil defence. As a matter of fact the province of British Columbia is, relatively speaking, well organized for civil defence, particularly when you realize that 2-5 per cent of the total population of the province is enrolled in the civil defence organization at this time. But we have even beaten that in Kootenay West. I have one community, Kinnaird, in which 10 per cent of the total population are enrolled in the civil defence organization.

I think the hon. member for Esquimalt-Saanich hit the nail on the head when he said that this is the result of neighbourly co-operation. In fairness to those who live in larger centres, I think I should say that I have found from experience in all types of community activity that it is much easier to get neighbourly community co-operation in a small community than in a large city because in a small community each person who is a member of the organization or unit feels that they are wanted, that they are someone important and are doing an effective job.
I quite realize that city conditions present a greater problem to the organization of civil defence than small communities. As far as Kootenay West is concerned, the whole idea of organizing civil defence has been to organize it to meet any form of disaster. We recognize the necessity for civil defence to meet the possibility of disaster from attack. We have dealt with the question of floods on the Columbia and Kootenay rivers, the possibility of having to deal with large fires and with forest fires. Only within the last month or two it was anticipated for some two or three weeks that the Columbia river might rise and seriously flood a portion of the city of Trail and other communities. I may say that the whole civil defence organization was ready to go into action at a moment's notice to build dikes and provide the things required to protect the city of Trail and other communities against the possible flooding of the Columbia and other rivers.
I must repeat again that for civil defence to be successful the first necessity is that it must be based on local interest, local organization and local co-operation. In my district in all the municipalities the great majority of local organizations such as the Red Cross, the Legion, trade unions, fire brigades and so on, the Consolidated Mining and Smelting Company, the West Kootenay Power and Light Company, all the large logging companies and their employees have worked together through elected representatives to build a foundation for a very successful civil defence organization under excellent local leadership. I have definitely come to the conclusion that no federal or provincial action with respect to civil defence can be successful unless you have that sort of co-operation at the local or rank and file level. That is the reason for the measure of success that has been attained in the district I represent.
Before passing on, I want to pay particular tribute to Major Matheson, who was the co-ordinator in the Nelson area covering the greater part of Kootenay West and the small
Supply-Health and Welfare communities, and to Mr. Marcolin, of Trail, who is the co-ordinator for, you might say, the target area of my constituency. They have both done excellent work in dealing with the questions of evacuation, rescue, medical attention, transportation, communication, organization of food supplies and reception areas. Every outlying village in my district has been visited. There are local committees. Every house, every hall, every building capable of receiving people has been listed. Even my own little log shack is going to be used in case of necessity. All the local fire brigades are taking an active part in this organization.
Earlier in the debate I heard some reference to hose standardization. Hose standardization has been in effect in British Columbia and Alberta as a result of the provincial governments concerned accepting their responsibility in that respect. So far as the question of hose standardization in British Columbia is concerned, it was the fire chief of the city of Nelson who first emphasized that at the first meetings held in Vancouver when the civil defence organization was formed. A number of our active workers in civil defence have attended the civil defence school in Ottawa. They have come down here over a period of two or three years and all of them tell me that they were very pleased with the training and experience and that they thought the training, experience and information they received were most useful and beneficial.
But now we meet a new situation. As the hon. member for Esquimalt-Saanich said, we need to take a new look at civil defence, and that is recognized by all these lo.cal groups that are doing such good work. I think recent developments require a reexamination of the whole civil defence organization and the measures taken to defend and protect the civil population. In that respect I have seen editorials in many newspapers, and I should like to quote a paragraph from one that appeared in the Citizen of April 12 headed "Civil Defence in the H-Bomb Age". It reads in part as follows:
Civil defence plans are everywhere undergoing a re-examination as a result of the H-bomb explosions in the Pacific. Although discouragement was the first reaction, second thoughts confirm the importance of continued efforts to prepare for disaster. Plans must, of course, be adapted to the possibility of destruction more terrible than the atomic bomb could produce.
I think that reaction to recent developments must be met by the federal government and those responsible at senior levels by some guidance, some instruction and, shall I say, some new leadership. I was particularly interested in the remarks of the

Supply-Health and Welfare hon. member for Esquimalt-Saanich with respect to this suggestion that we should have a civil defence act. I had not considered the question before but it seems to have a great deal of merit. Having thought it over since the hon. member spoke, it is my opinion that federal civil defence legislation will dissipate the amorphous situation that exists to some extent at the present time in the administration of civil defence throughout the country.
I hope the minister will give close attention to that suggestion. I also think, in view of the differing financial capabilities of the various governments, that the federal government should reassess the capacity of certain provincial governments to undertake civil defence satisfactorily. Like the hon. member for Esquimalt-Saanich, I do not think it is sufficient to say: If you wish to go into civil defence, we will go along with you and share some of the expense. I think the provincial governments have got to accept their responsibility. That is why I think civil defence legislation would remove somewhat the lack of cohesion that exists today, would define exactly the responsibility of federal, provincial and municipal governments and the people themselves, would provide an opportunity for a definition of the financial responsibilities of all levels of government, and would in general provide the cohesion through legislation that I think is necessary to bring civil defence to the peak of efficiency necessary in Canada at this time.


Mr. Holowach:: I should like to say a few
words with respect to the subject under discussion at the present time. I do so because I believe that civil defence is a matter of immediate urgency and grave concern to the people of Canada. Fundamentally civil defence involves the safeguarding of Canadian lives. Since there will be no time, in the event that hostilities and all-out fighting begins, to make preparations, advance preparations are necessary.


Paul Joseph James Martin: Will the hon. member excuse me if I leave the chamber for a few moments?
I shall be right back and I have asked that the hon. member's remarks be followed closely.


Ambrose A. Holowach: Certainly. Advance preparations may well mean the difference between some semblance of morale and ultimate victory and chaos and defeat.
No sane person in the country wants blood spilling. We certainly hope that civil defence will never become a reality in Canada. In the light of what is happening in the world today we have no other recourse except to


take every precaution we possibly can. For those reasons and many more it is regrettable that this important subject, and many of the other controversial matters which are on the agenda at the present time, were not brought up sooner because they certainly justify the full force of debate and the views of every single member in this house.
We notice in the estimates for 1954-55 the vote for civil defence is listed as $6,498,253, which implies a decrease of $8,034 as compared to the amount in the estimates for 1953-54. In comparison with the amounts that are being spent on military defence, I feel that this is but a scratch on the surface of the problem. We read every day in the newspapers of the precarious state of affairs in the world. I personally look upon civil defence measures as being equally as important as military defence. These two precautions certainly cannot be divorced from one another. The urgency of building up our civil defence program is clearly illustrated by statements that appear in our daily newspapers. Here is one that appeared in the Montreal Gazette of June 19, 1954. The heading reads, "Ottawa favours nuclear weapons in any war". It is written by Dave McIntosh, and the article goes on to say:
Canada's defence officials favour-out of necessity-use of nuclear weapons in the event of war.
Further on the article states:
Canada's defence chiefs do not hold any false hopes that the North Atlantic alliance forces in Europe could beat Russia on the ground. NATO forces are considered the barest minimum to hold off a Russian attack long enough for the United States air force and the R.A.F. to swing into action with nuclear weapons and destroy Russia's ability to wage war.
We know that such action could bring counter-strikes upon our own country. In reviewing the present military situation Field Marshal Viscount Montgomery speaking in Paris on May 24 emphasized the urgency of civil defence. The statement appeared in the New York Times of Tuesday, May 25, and reads as follows:
A successful western defence against this threat requires up-to-strength, combat-ready regular army divisions, well-organized reserves, trained and ready to fight, a supply system built in peacetime and ready to roll in war, and sound civil defence and home-front morale.
It seems to me, Mr. Chairman, that the urgency of civil defence might best be understood by illustration. There are two facts which I believe are proper to recall at this time. The first fact is that those forces opposed to our way of life are on the offensive. We are on the defensive. They certainly have as their ultimate aim world conquest for communism. Flush with various

diplomatic victories at Geneva and elsewhere, armed with propaganda and great military strength, they now control an area from the river Elbe to the borders of Alaska, an area inhabited by over 800 million people or one out of every three human beings who inhabit this planet.
With some of the south Asian countries unable to defend themselves, perhaps even before we meet again another 500 million human beings may be subjugated. I feel these facts emphasize the urgency of our own military and civil defence preparations. At this rate fragments of Europe and this continent may soon be the only places that are not under communist rule.
The second point I should like to make is that we are still free and unfettered and wish to remain that way. We insist that every precaution be taken, both from a military and civil defence point of view, to safeguard this nation. In order to be effective I believe that civil defence should be conducted on a municipal or community level with as little interference as possible from the central agencies. The matters of co-ordination of defence planning, standardization of defence equipment, guidance and financial cost should be federal responsibilities. This follows the precept that the first responsibility of the federal government is to safeguard the lives and interests of the people. I say this because it seems to me that much of our defence planning has been hampered by argument as to where the financial responsibility lies.
It seems to me we are wasting a great deal of time fiddling on the theme as to who is financially responsible when there is so much to be done and so little time in which to do it. We in the province of Alberta have from the very outset realized the responsibilities which we have in the matter of civil defence. I believe the minister will bear me out when I say that the government of Alberta has given full co-operation in the matter. However, simply because the government of Alberta gives full co-operation in the matter of civil defence should not mean discriminating against our province in the matter of financial assistance or that greater financial inducements be given to those who are less prone to assume their responsibility. A statement of policy from the minister at an early date clarifying the federal government's financial responsibility in this matter will, I believe, clear the decks for quick action and enable the various provinces to expedite those steps which will ensure some degree of safety for their people.
Supply-Health and Welfare


Mr. Noseworlhy:: Mr. Chairman, the position of this group was set forth capably on Saturday by my seatmate, the hon. member for Cape Breton South. He pointed out that we are opposed to any suggestion that control of civil defence should be vested in the military authorities or in the Department of National Defence. Rather, we think it should remain where it is, in the civilian department. We urge that the minister be given more authority either by legislation or by agreement with the provinces in order that he may be in a better position to seek co-operation and to assist in the co-ordination of the efforts of provincial and municipal groups in this matter.
In the third place we believe that the minister should have a much larger budget for civil defence than the one presented to us tonight. Yesterday we voted close to $2 billion for national defence; this afternoon we voted $40 million for defence production, and tonight we are asked to vote about $6,500,000 for civil defence. The contrast between these figures is, I think, some indication of the fact that the government itself does not take this matter of civil defence very seriously. Certain it is that it is not taken seriously in the part of Ontario from which I come. The metropolitan areas of this province just do not take civil defence seriously.
There is a great dearth of enthusiasm in the subject, I think partly because our people just cannot grasp the fact that an invasion and destruction of our country or our metropolitan areas is now possible. I do not think the serious threat to our country and indeed to civilization is realized by our people.
In the second place there is very little confidence that much can be done by way of civil defence to protect us from destruction by the hydrogen bomb. There is a dearth of information regarding just what is being done or what can be done. And there is I think a lack of confidence in the present civil defence program to meet the kind of emergency that we would be called upon to meet in case of invasion.
We continue to debate our constitutional rights; whether the federal government, the provinces or municipal bodies should accept the responsibility. We continue to quarrel about the division of costs, as to who should pay this and who should pay that. Meantime I think that we should either take this question seriously or forget about it altogether.
If we are to take it seriously, then I think it is necessary that agreement be reached with the provincial authorities whereby more power can be vested in the federal minister

Supply-Health and Welfare in charge of this department, in order that we may really get on with the job of building up a civil defence organization across this country. And certainly the government should consider spending more money than is asked in this vote for that purpose. The amount of almost $6,500,000 we are asked to vote tonight is to be spent in this way: $2 million for administration, $2 million for grants in aid to the provinces, and $2,400,000 for materials and supplies.
As has been indicated already, a successful civil defence organization depends upon the co-operation of community groups and of provincial governments. But certainly the leadership for the development of a national civil defence organization must of necessity come from the federal department in charge. I think the provinces have some reason to disagree with the terms under which grants in aid are made. After all, in the event of invasion, and of our having to avail ourselves of our civil defence organization, of necessity most of the services and of the personnel will be supplied by the municipalities. In their personnel, in their local organization, in their hospitals and in their police forces as well as their fire departments, the provinces and municipalities have the nucleus of what eventually must become the main part of the local civil defence organization.
In the light of the provisions already made by local and provincial authorities, if the federal government is to take the matter of civil defence seriously and is anxious to see a strong organization built up across this country, then the federal government should reconsider the terms on which this paltry $2 million in grants in aid to the provinces is made. The federal government must come to realize that this is a much more serious business than it seems to realize. It demands of that government a much larger share of the cost of organizing such a defence.
If we can build and organize a system of national civil defence, even though we may never be called upon to use that system, the very fact that in building such an organization we have been able to bring local communities together in a co-operative effort, and to co-operate in a common purpose to have facilities for the benefit of the community itself, means that we shall have achieved a purpose that in my opinion will be well worth the expenditure of money and effort put into it. Even though we are never called upon to use the organization for the purpose for which it was intended, an organization of that kind will, by the very fact that it is brought into the various communities and has enlisted the services in

that community into co-operative enterprise, have made a big contribution to our democratic way of life.
In concluding these remarks, Mr. Chairman, I say that we shall oppose any suggestion that the Department of National Defence should take over civil defence. We shall support any move made to secure cooperation and agreement with the provinces by which more authority can be vested in the minister for the purpose of co-ordinating the efforts of the communities and the provinces across this country in the matter of civil defence. We urge that the federal government take this entire matter of civil defence much more closely into consideration and that a larger budget than the present be provided.


Mr. Harkness:: Mr. Chairman, the statement has frequently been made that military spending and preparations for a coming war were always made for the war just past; that is, that they were one war behind. However true that may have been as far as military planning is concerned-I do not think it was true to any great extent in many instances-it is certainly true so far as civil defence is concerned in Canada at the present time. In other words, the activities which have been carried on in civil defence in Canada have been ones really based on experience secured in Great Britain during the last war, and based to a large extent on the concept of the ordinary type of bombs and the problems attendant upon bombing of that kind.
To a large extent the responsibility for civil defence has been passed on to the provinces and to the municipal authorities, and the hope has been that they, with voluntary assistance from the general population, would get an organization set up which would be adequate to look after civil defence matters. That is all very well in its way, but in the atomic age I do not think it is anything like sufficient.
It has been indicated by several of the speakers who preceded me that something much more definite and much more dynamic needs to be done, much better leadership needs to be given and more finances provided by the dominion government in order to provide anything in the way of an effective civil defence. I have nothing against what has been done up to date. The emphasis so far has been on fire fighting, the provision of fire fighting equipment, the standardization of hose couplings and things along that line, rescue work and organization in cities for that rescue work, first aid and the provision of first aid classes for voluntary workers and

so on. That is all good. That is all still necessary; it will all be needed and it can all be made use of. But a great deal more is necessary if we are to have anything in the nature of an effective civil defence organization set up in Canada to meet an atomic bomb attack.
If we are in earnest about this thing, if we believe at all that we are likely to have need of the civil defence organizations; in other words, if we believe there is going to be an attack on Canada, we must predicate our thinking on the basis that it is likely to be an atomic attack so far as certain big concentrations of population and industry are concerned.
To have any sort of realistic civil defence organization, it must be based on that predication; otherwise we might just as well do practically nothing about it. If we accept that premise which is, as far as I can see, the only one we can accept, then I think we have got to accept the fact that much more important than this fire fighting, this rescue work and the first aid is going to be the evacuation of those large centres of population and the finding of places for the people that have to be sheltered, fed and so forth. In other words the whole concept of civil defence really has to be sighted in that direction rather than sighted in the direction of fire fighting in a particular locality, rescue work there and the taking of people from houses that have been bombed to a neighbouring house, and so forth.
If you have an atomic bomb attack on Toronto, for example, you are going to have the entire city of Toronto unfit for human habitation as a result of radioactivity, because most of the buildings will be destroyed or badly damaged, and they are not going to be fit for occupancy. There you will have on your hands the problem of evacuating, if possible. If you have warning you are going to evacuate as many people from those areas as possible before the attack takes place. We would hope that a large number would be evacuated before the attack takes place, but after it does take place the people who have survived would have to be evacuated from that area.
Any realistic civil defence planning must have in mind places where these people can go; therefore it seems to me there are four things in particular which are the essential needs in civil defence planning at the present time and in civil defence plants. The first is the evacuation of people of the larger centres of population, the ones that are likely targets. An evacuation plan of course involves 83276-411J
Supply-Health and Welfare the matter of the use of all available transportation, traffic control and so on, and of course places to which these people can go.
In certain provinces, for example, such as the province of New Brunswick, I do not think there would be any problem if you had to evacuate the only two cities that would perhaps ever have to be evacuated there, namely, Saint John and Moncton. There would be no problem in finding sufficient places for the people from those cities in towns and villages and on the farms in the province of New Brunswick. You have not much of a problem there; it is just a matter of making the plans and then seeing that a sufficient number of people know about them so that they can be carried out.
But when you come to the central provinces of Quebec and Ontario, and particularly Montreal and Toronto, you have a terrific problem on your hands. After you succeeded in evacuating all the population from these two cities where would you put them? There is just not enough room in the form of houses, summer cottages and everything else to put that large number of people. There would not be enough room to accommodate the people who were not destroyed in the blast, if that took place. Therefore, some provision has to be made for these people to go to if an evacuation ever becomes necessary.
A great deal of course can be done in the utilization of farm buildings, summer cottages and things of that sort as temporary shelters, but it seems to me another essential at the present time is the provision of a considerable amount of tentage, places as storehouses or whatever you wish to call it in strategic areas around the country. Fortunately in this country we have provinces which have a large number of lakes that have summer cottages around them and quite a lot of amenities. The provision of water is already there, and so on. This would be the sort of place, I would think, where there should be dumps of tents that could be made use of to make what in wartime we called an emergency town around what is at the present time a comparatively small summer resort. As far as I know nothing along that line has been done. I think that is one of the essentials in any civil defence plan at the present time.
It is no good of course to put these people out in these various areas north of Toronto, Montreal and so forth, unless there is something to eat when they get there. Therefore, in addition to the provision of tentage, we need to have dumps or storehouses of food, food, of course, which can be kept for long periods, such as flour, canned meats, concentrated foods of various sorts, necessities

Supply-Health and Welfare at least, so that the necessities of life can be provided for the people that would evacuate to those areas. I refer to something that would correspond to some extent to the iron rations, as they were called, that were carried by every soldier during the last war and the war before, only of course on a much bigger scale.
The fourth essential is the provision of medical supplies for the treatment of numerous casualties likely to require treatment in these evacuation areas. This is one thing on which I know something has already been done. Provision has been made for a certain number of medical kits and a start has been made in that direction, but as far as I know it is just a start and it is not even close to approaching the needs or necessities of the situation. I understand these medical kits consist of surgical operating instruments, but to my mind what is even more necessary is the provision of drugs, particularly those types necessary in the treatment of burns, radiation, and that sort of thing.
I do not want to take up a great deal of the time of the committee in going into these various points in detail. One could make a ten or fifteen minute speech on each of the four points I have mentioned, namely, evacuation plans, the provision of tenting, the provision of food in dumps, and the provision of medical supplies in dumps. However, for the moment I have touched on what I consider to be the crux of the matter as far as civil defence is concerned, and I would like to hear from the minister as to what progress, if any, has been made along the lines I have mentioned. In other words, what steps have been taken to meet a likely atomic attack rather than the type of planning we have had up to date which was adopted really to meet an ordinary bomb attack?


Mr. Macdonnell:: Mr. Chairman, before the minister answers I would like to make one or two brief comments. I would like to say in the first place that the speech to which we have just listened strikes me as much the most practical approach to this question I have ever heard. What I want to do is merely to underline one or two of the things which have been said and which really are, as it were, background material to this problem. In the first place I must say I agree fully with what the hon. member for York South said, namely that either we should take this very seriously or forget about it altogether. Secondly, I should like to underline what the hon. member for Edmonton East said to the effect that the


matter was one of immediate urgency and great concern to the people of Canada. If he had said it should be a matter of great urgency and immediate concern I would agree with him fully, but I would like to question whether in fact it is a matter of great urgency and immediate concern to one out of a hundred people in Canada. That seems to be the trouble.
I listened with great interest and some amazement to the speech made by the hon. member for Lincoln and if the situation in Lincoln is as he described it then I think we should congratulate him. I was surprised when he mentioned that 163,000 people had been enrolled in the civil defence organizations and I hope the minister when he comes to speak will tell us more about that. It seems to me the job the government has to do is a very difficult one and it has not even been scratched as yet nor have the people of Canada yet been made conscious of this problem. If I am terribly ignorant of the facts and if the people in the part of Canada in which I live are the only ones who are asleep and doing nothing to look after themselves I will be ready to be set right on it, but at the moment it seems to me, as the hon. member for York South pointed out, that we are doing neither one thing or the other. We seem to be like the city fathers of Coventry who decided it was not worth doing anything about civil defence. I believe Sir Winston Churchill answered them, though I do not know how effectively.
I think the problem is one of tremendous difficulty and in spite of the figures mentioned by the hon. member for Lincoln the problem has not even been scratched as yet because the ordinary citizen of Canada is not prepared to do anything about it. It is something about which he does not like to think, and will not think about, and I hope that when the minister comes to answer he will give us a good deal of information. I hope the minister will be utterly realistic about it and tell us the true situation, however unpalatable the truth may be. The minister has a job to do. In his spare time he is supposed to deal with these matters which are of tremendous importance. If we had a bombing attack tomorrow the minister would be grievously and very unfairly blamed for what would be the fault of us all, and I suggest therefore that we be given a very realistic appreciation of this situation as it is and not as we would like it to be.


Paul Joseph James Martin: Mr. Chairman, I think all of the
speeches given tonight have been very helpful and I will begin by dealing with the

speech made by the hon. member for Cape Breton South last week and that made tonight by the hon. member for Esquimalt-Saanich. I cannot find much to quarrel with in most of the speeches given tonight. As the hon. member for Greenwood has just stated, this is a very difficult matter and anyone who is charged with this particular responsibility has indeed a thankless and very difficult task.
I was interested and encouraged by the observations of the hon. member for Esquimalt-Saanich, particularly when he said that since our debate last year he had noted that very considerable progress had been made in the matter of civil defence in Canada. The credit for that does not rest with any particular group but is the result I think of the large measure of co-operation that exists throughout the country and which is greater than is generally appreciated.
Having noted some progress, I fully agree with the hon. member for Esquimalt-Saanich that the nature of the problem, apart altogether from the assessment of its immediacy, is precisely as he stated. We cannot sit back and say the progress is entirely satisfactory, because it is not satisfactory. It is not satisfactory here nor is it satisfactory in any country in the world. The British home secretary, Sir David Maxwell Fyfe, in the British House of Commons found himself faced with the same kind of questions that have attended the debate here tonight, and the remark which the British Prime Minister, Sir Winston Churchill, made with regard to the attitude taken by some citizens of Coventry is a valid response which we can all make I think to anyone in Canada who claims that civil defence has now been made obsolete as a result of thermonuclear developments. I know of no responsible group in Canada that has taken that position.
The hon. member for Calgary North, in his constructive speech, outlined the steps he thought should be taken in the light of the development of the hydrogen bomb and the four new phases which might be given consideration at this time. He mentioned evacuation and I might associate with that what is evacuation in principle but what is called tactical dispersal of population. The hydrogen bomb has forced us to give consideration to evacuation and tactical dispersal of population.
The hon. member urged that a committee be set up to consider plans with respect to this matter. I would point out that that has been done. We not only have a departmental committee but we have a committee on which the
Supply-Health and Welfare United States and Great Britain share membership with our Canadian representatives. That matter is being carefully studied but it would not be accurate to say that we have yet formulated the kind of plans originally projected as necessary following the first hydrogen detonation. As soon as the first, hydrogen bomb was exploded we were told there were detailed plans already worked out for the evacuation of cities such as New York, but I can say that that is not the case. However, in the United States, Great Britain and in Canada these matters are being given consideration. We hope in Canada in the fall to be able to test out the evacuation plan of one Canadian community yet to be announced.
With regard to medical supplies, my hon. friend referred to surgical kits. Of course our stockpiling program is much more extensive than that. To date we have spent almost $2,500,000 on medical supplies which include drugs, instruments and the sort of thing my hon. friend mentioned; blankets and much else besides, and these are being placed in strategic areas in the country. The matter of tents, and other emergency shelter accommodation, of course is one that is closely related to the question of evacuation and comes within the responsibility of mutual aid and reception areas, as was so helpfully outlined by the hon. member for Esquimalt-Saanich. For 3J years now we have had an expert committee studying the question of food supplies and emergency feeding arrangements in the event of the kind of disaster occurring which we all hope will not take place.
One of the encouraging things in this debate tonight, it seems to me, has been the recognition of the fact that civil defence, in order to be effective-apart altogether from what the central and provincial governments must do-depends in the final analysis for its success on the voluntary effort of the Canadian citizen in his or her community. We started civil defence in Canada, as was done in the United States, on the basis of the experience of Great Britain. We have consistently used the services of their officers and notably those of Sir John Hodsoll who had charge of civil defence in Britain during the war and who kept emphasizing the importance, notwithstanding the difficulty, of bringing home so far as possible the necessity for local community organization and of recognizing that there in the main rested the secret of the

6SC0
Supply-Health and Welfare success of an adequate civil defence organization. This fact was recognized also in the United States when President Eisenhower in February of this year said:
Civil defence responsibilities primarily belong to the state and local governments-recruiting, training and organizing volunteers to meet any emergency. The immediate job of the federal government ... is to supply technical guidance, and to continue to strengthen its civil defence stockpile of medical, engineering and related supplies and equipment.
Again, in his budget statement a few months ago-and this is an important statement-he said this:
Much planning, organization, and training remains to be done, however, to make this strategy of civil defence fully effective at all levels of government. It will be the federal responsibility, as reflected in this budget, to provide warning of impending attacks, and to stockpile medical supplies. The federal government will not assume the responsibilities which belong to local governments and volunteer forces, but will supplement state and local resources, provide necessary information on weapons' effects, and advise and assist states and localities . . .
This great problem is really outside the realm of money and material preparation. Its solution is in conviction and belief, in readiness and discipline- in those things that need to be done by the population to save itself.
That represents our view and that is equally the view of Her Majesty's government in the United Kingdom.
Before I announce our financial arrangements pursuant to a recent dominion-provincial conference I should like to say this in view of what was said here tonight by one or two members. There has been the fullest co-operation between the two senior levels of government. I do not say that every province has agreed with the decision we have taken. One province, namely the province of Quebec, has co-operated by coming to the meetings and has taken its part in our planning at the centre. It has acted as the distributing agency for much educational material which we have provided. But it has taken the position that it does not propose to spend any of its own money in assisting municipalities in the matter of civil defence.
In the province of Ontario, the provincial government there took the position that the new formula which I am going to refer to in a few moments was one to which they could not accede. They did not propose to make any grants themselves to any municipalities. By way of parentheses I should explain that under the present financial arrangement we are not able to make any grants direct to the municipalities unless the province also makes a grant. The result is that certain municipalities who have their own budget and who have been carrying on without provincial help have for that reason not been receiving any direct assistance from the federal government.

In the case of the provinces of Quebec and Ontario, they have not been receiving any money from the provincial governments. Nevertheless, in the province of Ontario no one should conclude that that province is not concerning itself seriously with civil defence. We may have our differences of opinion. That is natural with any group. We may have our differences of opinion as to whether a particular effort is more desirable than another. But in the province of Ontario there are over 200 communities which have a civil defence organization in various stages of development.
The hon. member for Lincoln tonight referred to his own city of St. Catharines. He was perfectly justified in doing so because it is a most outstanding example. In that community there are 2,200 civil defence workers. The community provides its own budget. Their civil defence director, who works at the job day and night, is doing so on a voluntary basis. The result of his efforts is seen in the picture which the hon. member for Lincoln so ably outlined tonight.
In Ontario the provincial government has taken the position that at this time it does not propose to make grants to the municipalities directly. I am sure however that it would be prepared to accept moneys from the federal government to assist the municipalities. Incidentally about $250,000 is now being spent in the province of Ontario. Most of that money is being spent in a program of standardization of hose couplings-a program costing over $1 million-to which the federal government has contributed roughly one-third. A program of standardization of hose couplings is, of course, an extremely important item in the development of a civil defence program. In addition to that, they have an administrative budget which provides for the services of their administrator who said the other day in Sudbury that just as soon as Ontario's standardization of hose couplings program has been completed, it is the hope that Ontario will give consideration to further provincial funds being made available in support of civil defence.
I should like to say that within the past ten days I have had a chat with the premier of the province of Ontario. From my conversation with him I am satisfied that we shall be able to work out, within the formula to which I shall later refer, a satisfactory arrangement supplemental to that now being carried on in the province of Ontario. It is wrong to assume that the only kind of assistance the federal government has given to the provinces with regard to civil defence is in the matter of matching grants.

The only matching grants that exist thus far represent a sum of about $1,400,000. The rest of the expenditures last year, provision for sirens, provision for certain civil defence equipment, civil defence clothing and all that sort of thing, represents not a grant to the municipalities or provinces on a matching basis but an outright grant paid entirely by the federal government. For instance, there is no matching provision with respect to our civil defence school at Arnprior. We have trained over 4,000 individuals there who have come from all over Canada at federal expense and have been maintained in the college at federal expense. The 4,000 people trained in that college, now under the direction of General Penhale, have provided among others the civil defence co-ordinators throughout the country. These in turn have trained another 40,000 people.
That represents a very substantial contribution entirely by the federal government. Then there is the matter of films, pamphlets and folders. All that sort of thing is done entirely by the federal government, and these things are given to the provinces as the distributing agencies. When civil defence was established in Canada it was done on the basis that this was a federal state and that we had to work with the provinces. That was what the provinces wanted; that is what the provinces want today. In each province there is a civil defence minister. He is the agent through whom we address ourselves to the municipalities, and it seems to me, having in mind the character of civil defence in Canada, that is the kind of pattern we should follow.
In the fiscal year 1954-55 we propose, in addition to the things the federal government does for which it pays 100 per cent and which represent more than two-thirds of the federal expenditure, to make available $2 million which will be available to the provinces and the municipalities under the matching grant program for approved civil defence projects. To indicate the distribution of these grants to the provinces perhaps I might be allowed to put on Hansard, a statement showing what this will mean to each province compared with the moneys made available to them in 1953-54. May I have the permission of the committee to have these figures put on Hansard?


William Alfred Robinson: Has the minister leave?


Some hon. Members:: Agreed.
1954	6501
Supply-Health and Welfare Mr. Marlin: The table is as follows:
1954-55	1953-54
Newfoundland	$ 45,863.17	$ 32,978Prince Edward Island	
10,827.18	7,874Nova Scotia	
92,128.19	65,696New Brunswick	
63,777.00	45,956Quebec	
603,375.16	433,081Ontario	
692,035.92	492,008Manitoba	
117,285.72	83,367Saskatchewan	
91,490.08	66,538Alberta	
118,921.86	85,545British Columbia	
187,271.78	132,616From this table it will be seen that in the province of Quebec, for instance, the province could receive this year $603,000 odd for the purpose of carrying out projects on a matching basis. Last year they could have received $433,000 odd.	Last year	Ontariocould have received $492,000 and under the new arrangement	this	year will	receive$692,000. I will not deal with the figures for each province because it would take too much time. I have taken the two larger provinces. Perhaps	I might take	Alberta
because in Alberta I think they have done, as have other provinces, an outstanding job. Last year we made available to the province of Alberta $85,000 under this matching arrangement. This year they will get $118,000.
In order to ensure the most effective utilization of these funds, an entirely new formula has been worked out in co-operation with the provinces, and as the result of a dominion-provincial conference held in this building about two weeks ago. This formula will permit federal aid to municipalities undertaking civil defence projects, regardless of whether or not provincial assistance is available. The federal grant to municipalities, however, can be increased up to double the basic amount for any project for which provincial aid is also available.
Under the revised formula of civil defence expenditures will be broken down into the following six classifications;
1.	Organization and administration.
2.	Training, equipment and operations.
3.	Warning communications and other civil defence equipment for which there is no peacetime use.
4.	Construction for civil defence purposes such as control centres.
5.	Civil defence operational equipment having a peacetime use.
6.	Purchase of clothing, including uniforms, for civil defence workers.
As a matter of policy, not more than one-quarter of the total provincial quota will normally be allocated to any one of the six

Supply-Health and Welfare main divisions of civil defence expenditure. This, we hope, will have the effect of developing a well advanced and well balanced program. For projects falling within the first four expenditure groups, which include civil defence services having no direct peacetime application, the federal government will contribute a minimum of 25 per cent of the cost of any approved project regardless of whether a provincial grant is made. In addition, the federal government will also match any provincial contribution to the same project up to an over-all maximum of 50 per cent of the total cost. Thus, for projects supported by all three governments, the costs will be shared as follows: 50 per cent by the federal government, 25 per cent by the provincial government and 25 per cent by the municipal government.
That, basically, is the pattern of assistance given civil defence operations by the central government in Great Britain to the municipal bodies in the United Kingdom. For expenditures falling within the last two classifications, those having a peacetime value, the arrangements will be the same as in the past. The federal government in that case will match dollar for dollar any provincial contributions.
The hon. member for Esquimalt-Saanich noted progress over last year and I am sure he would want me to supplement that by noting that our 1954-55 budget for civil defence, $6,500,000, is more than five times the combined budgets of the provincial governments which total $848,000 and the twenty-two municipal corporate target areas which represent a total of $386,000. Total provincial and municipal expenses to date represent a figure of about $1,234,000.
The hon. member for Greenwood said to me that I should tell the house the situation exactly as we see it, and that is what I am seeking to do. Before I take my seat, I wish to state that within the past month we have asked the provincial authorities to give us their latest figures on the extent of civil defence organization throughout the country. All of them have reported to us, and the figure totals some 163,000 individuals in 600 different communities, in varying phases of organization, undoubtedly some good, some not as good and some that cannot be commended at all.
I think I can say in fairness, because I am close to the situation in the United States through being a member of the United States-Canadian committee, and because of what Sir John Hodsoll has said, that this is comparable to the United Kingdom and is better than the United States. In terms of contributions, our financial contributions represent roughly 47 cents per

capita whereas those of the United States represent roughly 29 cents per capita. Therefore I think I can say in all honesty that we are building what the hon. member for Esquimalt-Saanich said was our role now, a nuclear organization in as many areas of the country as we think that should be done. We are providing the basic organization. I am sure that at this time we could get more people to enrol. We could have more excitement, more agitation. We could do what they do in some other places, have signs in hotels and all that sort of thing indicating extraordinary activity.
We have decided that the course that we are taking is the wisest course. It is based upon our assessment of the likelihood of the danger. We could be wrong and, as the hon. member for Greenwood said, if we were wrong I would certainly be the individual who would feel the consequences of that error more than anyone else. I can only say that I feel we are proceeding on the right basis. I feel that what has been said here tonight will help us greatly in the continued difficult task which is ours in co-operation with all provinces and municipalities, the task of building up a practical, sensible organization which will be capable of effective operation when needed.


Mr. Drew:: 
Paul Joseph James Martin: I am sure my hon. friend would agree it is very important to try to have as much co-operation as one can?


George Alexander Drew: I agree, and I agree also that it is wise to have accurate information. The minister will recall that just after he told us Ontario had accepted the proposals of this government in April last, on April 29 the minister responsible for civil defence in Ontario said that no such arrangements existed. These are the words he is reported to have used:
Ontario and Quebec definitely did not agree to the proposal. We told the federal officials we were not interested in the scheme. We do not intend to saddle our municipalities with all kinds of new expenditures.
There, Mr. Chairman, is the crux of the whole problem. By a steady process of centralization this government has left the municipalities without any flexibility of taxing powers. Yet by this course of action they have been imposing upon the municipalities the main responsibility for the burden of preparing for civil defence. Whatever may be said in any other country, let us deal with Canada. There is not an hon. member in this house who is in any way intimately associated with municipal affairs today who does not know that the municipalities have not the flexibility of resources, and have not now the financial power to meet the demands that would be imposed upon them.
There is another reason why they should not be asked to do this, and why this should be dealt with in this parliament under a civil defence act which would actually recognize the problem. We know quite well that Montreal and Toronto are the largest centres, and with their concentration of industrial production would require the greatest measure of organization. And yet according to the words of the minister himself, the city of Toronto is devoting less to that purpose than many of the smaller municipalities. Here in the city of Ottawa there might be some of us who might have

Supply-Health and Welfare a personal interest in the effectiveness of a civil defence organization. And my impression is that there is no substantial measure of a civil defence organization within the present framework of what is being done.


Paul Joseph James Martin: If I might interrupt the Leader of the Opposition, I would say that that is true in the city of Ottawa as such. But in the federal service in 37 buildings there are civil servants to the number of 4,200 who are engaged in civil defence work, and of that 4,200 I can say that 1,900 have been fully trained.


George Alexander Drew: Then the minister has just answered the proposition or explained the soundness of my argument. Here in Ottawa they have found it necessary to improvise an organization because of the ineffectiveness of his general plan. And he has himself supported that argument by pointing out that they have under their control civil servants in the government who have set up something which he believes is in the nature of an effective organization, and which is only possible because of that control, and which is in spite of, not because of, the general plan laid down by the government. That is exactly the situation which exists across the country.


Mr. Marlin:: I still have hopes of Charlotte.


George Alexander Drew: I would imagine that in the
city of Ottawa there has been considerable evidence of the reason why the mayor of Ottawa does not display the same confidence in the government, or even the same hope as has been expressed by the minister and, I should say, with considerable justification, in view of the abundance of justification in other respects in connection with the Municipal Grants Act.
But, to come back to the problem before us, let us just see how completely unreal this plan is. We all know that seaports are in a peculiarly hazardous position. We all know that the most likely manner in which seaports would be likely to be attacked would be by bombs carried in ships, not by air. We know that a seaport is a primary target. Why should a seaport of, let us say,
100,000	population, be shouldered with very special defence requirements and expenditure, and another city of 100,000, which may be far better able to spend the money, not be called upon, or not be in the strategic position that suggests any comparable form of civil defence?
No one surely would suggest that there is any similarity or that there is not a great difference between the nature of the civil


defence program that might be regarded as desirable in some of the cities such as No-randa, Sudbury, Niagara Falls, Trail, Kitimat and Arvida, as compared with other cities of the same size, perhaps, but without any similarly so far as a target would be concerned. Why should those municipalities be shouldered with a very special responsibility of organizing their civil defence and paying for it; or why should the province whose finances are also limited be called upon to pay for those special arrangements?
No, this situation has no reality; and it is not comparable most certainly in any way to the situation in the United Kingdom under their civil defence act which lays down plans for the period of what we hope will be continuing peace, but which also lays down detailed plans to meet the eventuality for which the act is designed if, unhappily, civil defence should have to be used.
The minister is well aware that neither the government of Ontario nor the government of Quebec nor the governments of the other provinces agree with the proposals that have been put forward. And there have been positive proposals put before this government; and I would like to indicate what they are. I suggest they are worthy of consideration by this House of Commons, and that something should be incorporated in a civil defence act passed by the House of Commons and the parliament of Canada which would deal effectively with them.
One of the important things is of course the recruitment of personnel. The recruitment of personnel involves expense. The more vulnerable targets such as an aluminum centre, a power centre, a nickel centre or automobile centres such as Oshawa and Windsor, or any other centre that has a high war potential or defence potential, would be called upon to make more than ordinary preparations. Specially high recruitment calls for intense organization.
One of the suggestions made was that for every registered member of a local civil defence organization there should be a specific grant by the federal government that would relate directly to the number of registered and trained civil defence workers. It would have a sense of reality in relation to the needs of the particular communities, depending upon their strategic significance.
Another point that was greatly emphasized was the importance of abandoning large defence buildings, or large defence centres. In fact the contention has been made-and I believe it is sound-that it is unwise to spend money on civil defence headquarters located right in the centre of communities,

because when those communities become targets the whole civil defence structure would be paralysed right away. Emphasis has been placed upon the desirability of having the organization apart from the perimeter of target areas.
In fact the argument has been put forward that there be fire-fighting equipment with flexible mobile units also operating from the perimeter of threatened areas, so that in the event of threatened areas becoming targets in an area they could be served by such mobile units. This would follow the plan in operation in the United Kingdom at this time.
Also there is the tremendous need emphasized by the hon. member for Esquimalt-Saanich for those who are trained in the handling of crowds, who are trained in organized plans for evacuation, and for the handling of traffic under pressure. Those who have seen from the air the crowds which attend the running of the Queen's Plate, or similar events in other parts of Canada, will realize that there are those who are called upon to specialize in that particular type of traffic organization.
Then, fire and panic are two of the most serious considerations. Panic is not the least of these, as is so tragically portrayed with such terrible realism in this book to which I have referred.
Surveys of roads should be made under the authority of the federal government. Such a survey of roads should not be a superficial matter; it should be a definite, positive and complete survey, with pickets allotted and stationed at key points along those roads to deal with the results of fire and the possibility of panic or overcrowding on the highway.
Then, there is not merely evacuation, in the sense of moving people, there is also the very real problem of the evacuation of older people, people who are not able to move around themselves.
All this calls for something of a much more central measure of authority than now exists.
I submit that, in their order, fire fighting, traffic control and welfare are the things that need to be brought under some over-all federal plan; by all means with the co-operation of the provinces, by all means with the co-operation of the municipalities, but under an act of parliament that recognizes that this is a national problem.
Again I come back to the question of finances. To do these things the municipalities are simply incapable at this time of shouldering the burdens that would be imposed upon them; so also are the provincial governments.
Supply-Health and Welfare As was said by the Hon. Arthur Welsh, the minister in the Ontario government who is responsible for this matter: Ontario and Quebec are not going to saddle their municipalities with all kinds of new expenditures.
It does not mean a lack of co-operation; it means that they are facing the realities of the problems before them. No one questions the earnestness with which those associated with this work have been carrying on their work. Those who know him personally, as well as those who know him merely by reputation, would have no hesitation in expressing their admiration of the work by General Worthington under extremely difficult circumstances, and under extremely frustrating conditions. I may say that those who know General Penhale will be sure of his ability to perform the tasks that he has been called upon to carry out.


Douglas Charles Abbott: Hear, hear.


George Alexander Drew: These childish interruptions that do not find their way on to the pages of Hansard such as I just heard from the minister opposite, are not in keeping with the seriousness of this subject. The interjection was not made by the Minister of National Health and Welfare. I want to make that clear. The minister who made the interjection is the one who has a habit of doing so under all circumstances when he is in the house.


Douglas Charles Abbott: I cannot resist it.


George Alexander Drew: The Minister of Finance cannot resist being childish in regard to an important subject such as this. But, Mr. Chairman, as was put forward very simply before, this is either a serious subject or it is not. If it is a serious subject, as has been emphasized by the Minister of National Health and Welfare, then let us have a civil defence act that will operate throughout the whole of Canada. There will be no hesitation about the acceptance of the proposition that effective civil defence is a national problem.
Let this government encourage enlistment by an adequate contribution for each registered and trained member of the local civil defence organization. Let there be a coordination of activities with the utmost cooperation by the provincial governments and the municipalities, with finances adequate for the purpose.
Let us be quite sure about one thing in suggesting that the federal government accept this responsibility. If the task has to be done, it is not going to cost any more if the burden is shouldered by this government than if it is carried by the other governments which by this government have been deprived

Supply-Veterans Affairs of their taxing powers. If it is going to be done at all, it is going to cost the same amount whoever does it. Therefore the government which is the only government that can co-ordinate these activities can do so on a national basis. We agree with the proposition put forward by the hon. member for Nanaimo-Saanich.


Douglas Charles Abbott: Wrong again.


George Alexander Drew: Esquimalt-Saanich; this is a subject that should be kept on a civil basis, because it is, as the name implies, civil defence. The fact that it is civil defence and that the voluntary co-operation of civilians should be sought in no way deprives this problem of its national character; and even though at this stage new legislation might not be possible, we would at least be dealing with this subject now. If we had the assurance of the minister that at the next session there would be a civil defence act introduced I assure the minister that he would find general support throughout the house for that proposal.


[Stage Direction]
Item agreed to.

William Alfred Robinson: When the committee considered this department last we were discussing resolution 515. Shall the resolution carry?


[Stage Direction]
Item agreed to.
War veterans allowances and other benefits-
517. War veterans allowances, $27,365,500.
Howard Charles Green: Mr. Chairman, this item provides for the payment of war veterans allowances. When the minister dealt with this subject on June 17 he had this to say, as found at page 6195 of Hansard:
I could not see how a major change could be made in this legislation-
He was of course dealing with the war veterans allowance legislation. I continue:
-which would break the ties that have existed between war veterans allowances and old age pensions, a relationship which has always existed between those two pieces of legislation.
That statement by the minister is inaccurate in view of the changes that have been made in the old age pension legislation. I would ask him to clarify how he justifies making the statement that there are those strong ties that have existed between war veterans allowances and old age pensions.
As the committee knows, some years ago the old age pension was changed to old age security, and it is payable automatically without any means test to everyone who reaches the age of 70 years. There is no ceiling


whatever on the earnings or income that a recipient of old age security may have. In view of these changes I wish the minister would explain just what connection there now is between the war veterans allowance and old age security.
I point out to him that in addition to the payment of $40 a month which is made automatically by the dominion government, some of the provincial governments add a supplement. I believe British Columbia and Alberta pay an additional $15 which of course brings the payment to a larger amount than the war veterans allowance recipient gets.
In view of the emphasis the minister places on this fact that there is this very strong tie between the war veterans allowance and the old age pension, I believe that in justice to the veterans of this country he should explain just how he reaches the conclusion that there is such a tie.
Then, with regard to the old age assistance, as distinct from old age security, that assistance is on a means test basis and it is paid at the age of 65. If there is to be any parallel between that type of payment and the war veterans allowance then the latter allowance should be made at the age of 55 instead of 60. Then, the old age assistance is quite unlike old age security for in the former case one-half is paid by the dominion and the other half by the provinces. There is provision for additional payment by some of the provinces. I believe the two provinces I have mentioned, British Columbia and Alberta, bring the old age assistance payment up to $55 a month, subject of course to a means test.
But I have instanced those two types of old age pension, first, the old age security and then the old age assistance, and I wish the minister would explain just what he means when he says that the war veterans allowance must remain tied to the old age pension. In view of the facts I have outlined I think there is very little connection left between payments to the front-line troops and either one of these old age payments.


Mr. Lapointe:: Mr. Chairman, I believe there is very little I can add to what I have already said on this particular matter regarding the relationship between the war veterans allowance, and what used to be known as the old age pension, now known as old age assistance, and the old age security payments. In my remarks the other day I mentioned that the history of this relation had been made very clear by the hon. member for Acadia, and I know that the hon. member for Van-couver-Quadra is as familiar as I am, if not more so, with the history of war veterans allowance.

I explained the other day, as I have on other occasions, that the war veterans allowance was instituted in an attempt to make available to those who could qualify under the terms of the act the same kind of benefits as a citizen could draw under the Old Age Pensions Act and that ever since the act was instituted in 1930, there has always been a relation between the payments made under the two separate acts. When the amount of the old age pension was raised from $20 to $30 and then $40 the same increases were made in the war veterans allowance, and the ceilings which were incorporated in the acts as regards permissible income have always borne a relation with each other. I think if the hon. member will look up the debate which took place when this act was first brought before parliament he will find I am justified in making this assertion.


Howard Charles Green: This point is of the utmost importance because the minister based his whole case for refusing to give any further consideration to war veterans allowance on the fact that the war veterans allowance must be tied to the old age pension. That is the basis for the government's refusal to do anything about the War Veterans Allowance Act. Now, I have no intention of pursuing the matter further tonight beyond pointing out that when the old age pension was put on an automatic basis it was made payable without a means test to everyone in Canada who reached the age of 70. When that was done that pension no longer had any connection with the war veterans allowance.
Veterans should be treated on an entirely different basis. The claim of those fighting men to war veterans allowance should not be tied down to any old age security payment or old age assistance payment and the whole war veterans allowance picture should be treated on its own merits rather than there being an attempt made to tie it up with the old age pension because it is no longer connected with that; furthermore, as I pointed out the other night, the claim of these men to consideration on the part of the Canadian government rests on far stronger ground than the claim of the civilian because it is based on their willingness to give their lives for their country.


Mr. Shaw:: Mr. Chairman, there is no intention on my part to delay the passage of the minister's estimates by repeating arguments already advanced by several of my colleagues. I concur wholly in their observations with respect to the inadequacy of the amount paid. Moreover, I concur in their argument that the income ceilings are altogether too low. I also concur wholly in
Supply-Veterans Affairs the observation made by my colleague the hon. member for Acadia, namely, that when a veteran in receipt of war veterans allowance reaches the age of 60 the means test should be abolished. After all, it is nothing more than a recognition of the principle that the veteran has a prior right at the age of 60.
There are two other matters to which I would like to refer briefly. The first relates to the widows of imperial veterans. Under the regulations as they stand today an imperial veteran resident in Canada for a period of 20 years becomes eligible for the war veterans allowance. Should he die subsequent to the receipt of the war veterans allowance his widow is entitled to an allowance. However, the situation which has come to my attention in my own constituency is that there are a number of imperial veterans, or possibly I should say there were, who died after having resided in Canada for a period of 19 years or 19 years 6 months. Because of the death of that imperial veteran before he established his residential qualification his wife is entirely without benefit. I consider that to be wholly unfair. Had the imperial veteran lived an additional six months or one year he would have qualified and upon his death his wife would have qualified for that benefit. Surely it is only fair and proper that we should recognize the existence of the imperial veteran's widow once she has herself established a 20-year residence in Canada. I urge the minister and the government to give favourable consideration to that particular problem. The mere fact that such cases have come to my attention in my own constituency does not mean that the only widows so affected are in my constituency. There must be a number of them all across Canada.
Secondly, with respect to the amount paid to the recipient of war veterans allowance and the allowable maximum income, I would point out to the minister that there are two types of veterans who are in receipt of this allowance. One is the person who, not being eligible for a pension, should be made eligible for a pension but has not been able to convince the commission that his disability was attributable to war service or aggravated thereby. He may be wholly incapacitated with the result that, if he is a single man, his income is limited to $600 a year. If he is a married man his income is limited to $1,080 a year. But if he is a recipient of war veterans allowance and is not wholly incapacitated, being single he receives $600 a year plus whatever he is able to earn over and above the $600, of course providing that
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Supply-Veterans Affairs the maximum does not exceed the allowable maximum. I think the government would be justified in establishing a sliding scale of benefits.
Ordinarily I would be hesitant about suggesting that you take recipients of war veterans allowance and put them in two categories. But certainly you are justified in taking the recipient of war veterans allowance who is wholly incapacitated and allowing him more by way of basic allowance than you would allow a man who suffers a 50 per cent or a 25 per cent disability and is able to earn sufficient to bring him up to the total maximum allowable income under the act. I say to the minister that I think the government would be completely justified in establishing a sliding scale of benefits taking into consideration the physical condition of the recipient and also taking into consideration, in the light of his disability, his earning power.
I therefore make this suggestion to the minister. I could take my full 40 minutes in relation to this matter, but I do not intend to do so. Before another session of parliament rolls around I hope the minister and his department and the government will give favourable consideration to the widow of the imperial veteran and to the recipient of war veterans allowance.


Stanley Howard Knowles: Mr. Chairman, my support, like that of all the private members of this house, for an increase in the war veterans allowance and for the other changes proposed by the Canadian Legion, is well known and I do not need to take any further time tonight to spell it out. There is, however, just one thing I should like to say.
Inevitably we in this house follow the newspapers, particularly the articles that are written as to what is happening in the House of Commons and what may yet happen. It seems to me that of late our friends in the press gallery have all indulged in a good deal of prophecy, each of them trying to see if he could ring the bell. There is one member of the press gallery who received recognition a short while ago for his accuracy in forecasting the results of the federal election of last August. I notice that that member of the press gallery-I refer to Mr. Alex Hume -wrote a story just a few days ago. I believe it appeared in the Ottawa Citizen of Saturday. In it he said that there are already 17 items of business on the list for the next session of parliament. Knowing Mr. Hume's record and his reputation for being a fairly good prophet,
I looked through that list with keen interest.
I dared to hope that amongst those 17 items there would be included something indicating his belief that action would be taken to amend 

the War Veterans Allowance Act at the next session. The other night the Minister of Veterans Affairs, as reported at page 6197 of Hansard of June 17, 1954, said this:
I can assure hon. members that the recommendations made by the veterans affairs committee to the effect that this matter should be considered with sympathy by the government will receive the attention of my colleagues and myself.
Despite that assurance that this recommendation would be given consideration, Mr. Hume did not find it possible to include in his forecast of items already on the list for the next session the possibility of something being done about the War Veterans Allowance Act. I could hope that that was an oversight on his part. I hope it is not because of his knowing what is going on. If it is, I hope the government will change its mind. If it is not going to do something about this matter at this session I hope it will do something about it in the very early stages of the next session of parliament.


[Stage Direction]
Item agreed to.
Miscellaneous payments-
521. To provide for payments to the Last Post fund; for the payment under regulations of funeral and cemetery charges; for the cost and erection of headstones in Canada; for the maintenance of departmental cemeteries; for the maintenance of Canadian battlefields memorials in France and Belgium and for Canada's share of the expenditures of the imperial war graves commission, $1,503,400.
Alexander Malcolm Nicholson: I have been waiting for some months to express my thanks to the minister for the courtesy that was extended to me by his officers when I was in Europe last year. Colonel Alan Chambers who was in charge of the D.V.A. office in London was kind enough to make arrangements so that I could visit the Vimy memorial and some of the other cemeteries in France. Those who have not seen the Vimy memorial have missed visiting one of the finest memorials anywhere. It was designed by Walter S. Allward, of Toronto. Those who go to Vimy from all parts of the world have been very kind in the references they have made in the guest book there.
I think a special word of appreciation should be paid to Mr. Paul Piroson and Madame Piroson for the outstanding work they have done in looking after the memorial. I am sure that the relatives of soldiers who were buried in France and in Europe during the first or the second world war would receive a good deal of comfort from visiting any of these cemeteries. I do not know of any cemeteries in Canada that are kept in as good condition as are the cemeteries that I visited last fall. I merely want to thank the minister for the courtesy extended to me

by his officers and to express appreciation tor the outstanding work that is being done there by those who are looking after the cemeteries.


Herbert Wilfred Herridge: Mr. Chairman, I just want to bring to the minister's attention the fact that I do not think the regulations concerning payments from the Last Post fund are sufficiently publicized. I am repeatedly running into people in the Legion and veterans and their dependents who are not aware of the regulations under which payments are made. I would suggest that something be done to bring again to the attention of Legion branches and people interested the regulations in connection with the Last Post fund and under what conditions payment is made for the burial of the dead.


Walter Gilbert Dinsdale: On May 4 I asked the Minister of Veterans Affairs a question concerning the record of the burial plot for Canadian servicemen buried in war graves overseas. At that time the particular point I raised was that $1.25 was being charged for a copy of the entry in the cemetery and memorial registers which gave details of the plot. The minister indicated that this charge of $1.25 was in payment for pamphlets, books and other printed material issued by the imperial war graves commission to each of the cemeteries in which commonwealth forces are buried. At the time I did not pursue the matter further because I wanted to be sure of the facts.
I have discovered that the charge is not for descriptive pamphlets, books, et cetera, but is for the specific registration of the individual serviceman involved. A prepared form is sent out to the family of the deceased veteran asking them if they would like to pay $1.25 for this specific individual registry which describes the plot record of their member of the family. I am sure the minister has inquiries from time to time concerning the graves overseas.
I know that as a private member of the house I have had several anxious inquiries from constituents who have a loved one buried in one of these war cemeteries overseas. The suggestion has been put forward that some assistance might be given to make it possible for mothers of deceased personnel to make a pilgrimage to the graves of their sons. I do not know whether that suggestion has ever been considered seriously by the department, but it comes to me frequently enough to make me wonder if it is feasible at all. I would suggest that the charge of $1.25 for the individual record is perhaps going a little too far. Members of the families of deceased personnel would like to have the information, and they resent
Supply-Veterans Affairs very much having to pay $1.25 for that record. Has the minister any further comment?


Hugues Lapointe: As I mentioned at the time the hon. member brought this question before the house, these books to which the hon. member refers contain not only the names of all ex-servicemen of the commonwealth who may be buried in a particular cemetery. There is also a histoy of the cemetery and the campaigns that took place in that particular region which brought about the setting up of the cemetery. They include the names of every man buried there. But I should like to remind the hon. member that every next-of-kin is advised and receives an official notice which is the official registration-I do not know whether I am using the right word-of the plot in the cemetery where the particular ex-serviceman is buried together with a photograph of the grave. That of course is provided free of charge and every next-of-kin has received this except of course in the cases of ex-servicemen who have no known graves, who were lost.
However, the other publication is in the nature of a historical document which is published by the imperial war graves commission. At the present time all cemeteries have not been so covered, but I understand it is their plan to do so and I also understand that the same practice was followed after the first war. The same practice is followed in connection with all imperial war graves cemeteries all over the world.


Walter Gilbert Dinsdale: My reason for rising is that I have discovered that it is not a booklet but an individual record of the individual grave. I have checked with the war graves commission and I have checked with the parties who first complained to me. It is not a book of historical facts concerning the grave. It is a prepared form sent out to the next-of-kin asking if they would like this individual registration and is not a book of history.


Hugues Lapointe: If my hon. friend will permit me, it is quite true that a form is sent to every next-of-kin. I have only seen one of these cemetery registers because up to now only one has been received by the Canadian secretary of the imperial war graves commission. It was passed on to me, and the description I have given my hon. friend of that publication is exactly as I have said. I am sorry I have not a copy with me because I could show it to him. It is a booklet about 8 inches by 6 inches containing about fifty pages. It gives the history of the cemetery, the campaigns in that area, and finally the name of every man
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Supply-Veterans Affairs buried there together with pictures of the cemetery and the surrounding district. I will be very glad to pass it on to my hon. friend so that he may judge for himself.


Walter Gilbert Dinsdale: I have a copy of the form which refers to the specific index. I have not got it with me now, but I think perhaps we had better have an exchange of forms. If the minister will send me his I will send him mine and I think he will find it is not a booklet. It identifies one specific grave with the name, location of the cemetery and so on.


Gage Workman Montgomery: With respect to this
point, the other day I received a letter in response to which I wrote for further information. I thought I would have it before these estimates were discussed. How soon does the mother or wife receive a photograph of the grave as was mentioned by the minister a moment ago? The minister mentioned that the next-of-kin receives a photograph of the grave or tombstone. How long is it before that is received?


Hugues Lapointe: I am afraid I could not say exactly. As my hon. friend undoubtedly knows, when the cemeteries were first established they were provided with wooden crosses. These are now being replaced by headstones, and my understanding is that the photograph is sent only after the headstone has been installed. Furthermore, when the headstones were first placed in Canadian cemeteries the designations of the individual units to which the ex-servicemen belonged were not inscribed. In other words, someone who had been killed while serving with an infantry regiment would have his name and the initials "C.I.C.", Canadian Infantry Corps. Representations were made to the imperial war graves commission that the Canadian regiments and the Canadian public generally felt that they would like to see the designation of the unit to which the men belonged placed on the headstones in these cemeteries. In many cases the headstones had to be taken away and are being replaced with new headstones on which appears the designation of the unit of the ex-serviceman. There again you have a reason for the delay in sending these photographs. But a definite program is being followed that each next-of-kin will receive a photograph of the grave of the buried ex-serviceman.


Gage Workman Montgomery: That answers my question partly. It may be that the information I received was not quite correct. This person had received a letter asking for $2, and the information was not given me whether the letter came from Ottawa or overseas. They


were asked for $2 for a picture of the grave and tombstone, and I had the idea that they were to get them free. I understand from the minister now that that is true, that when the grave is completed and the tombstone is finally in place they will get them free.


Hugues Lapointe: Yes.


Mr. Lennard:: What kind of racket is going
on?


Hugues Lapointe: That is my understanding, and I have never heard of a change being made. If my hon. friend has a specific case I wish he would bring it to my personal attention and I will look into it.


Gage Workman Montgomery: If I get further information, I will.


[Stage Direction]
Item agreed to.
Canadian pension commission-[DOT]
523.	Administration expenses, $2,202,908.
Mr. Churchill:: This item concerns the pension commission. In reading the report of the Department of Veterans Affairs I was endeavouring to examine the statistics concerning the number of cases that came before the Canadian pension commission, and I found that I had to look at pages 40 and 41, where the veterans bureau reported, and then on pages 69 and 70 where the report of the Canadian pension commission is given. One finds that the figures do not correspond. Might I suggest that these two bodies co-operate in publishing their findings so that there is some relationship between those figures submitted by the two groups. They are both undertaking the same work, and it makes it a little easier for the purpose of one who is investigating if the figures are the same.
I shall give one example. On page 41 appeal board hearings are listed as 1,823, and the Canadian pension commission gives that figure as 1,754. I do not propose to speak at length on this problem, but I should like to repeat what I said earlier this session that I believe the work of the pension commission needs to be reviewed. We have been going on now for years accepting the work of the pension commission without much in the way of criticism. I am not offering any serious criticism at the moment. I believe the work of the commission has been good. I believe the very fact it has been good means that it could stand a detailed review as well as any other department.
The reason I suggest that the work of the Canadian pension commission should be reviewed, and I hope it will be eventually by a standing committee on veterans affairs,

is that I feel some of their work is hindered by limitations in the act. It may be hindered by limitations within the pension commission itself, but I do not know. I prefer to think it is because of the act. The reason I put that forward is that I am rather unfavourably impressed by the number of cases which come before the pension commission and end by being rejected. It seems to me there is a weakness here when cases can be heard on many different occasions. There is the matter of hope deferred for the applicant, then the case finally ends in failure. Of course, that is not always the case. There is a survival rate in these cases that come up for several hearings.
Under the pension commission arrangements first war cases may have a first hearing, then a second hearing, followed by the appeal board. Then, world war II cases may have an initial hearing and then several renewals as follows: first renewal, second renewal, third renewal, further renewal and then appeal. Checking the figures on page 41 of the report, I find that on further renewal-this would be second war cases- eight were allowed by the Canadian pension commission, which means that those eight cases were heard on five different occasions. I am rather surprised that in this sifting process a case that is granted on the fifth hearing should not be granted much earlier.
Then the report shows those that were allowed by the Canadian pension commission, having gone through five hearings, and we find 18 of them were allowed. This does not take into account those which, having passed through three, four or five hearings, are subsequently allowed on appeal. It is for that reason I suggest the work of the pension commission might very well be reviewed. Something might be done to enlarge its function in some way so that the applicants would not be put through all this trouble of hearing after hearing before their cases are finally determined.
One thing that might be investigated in reviewing the work of the pension commission is the length of time that is spent in some of these cases. They must consider them for a very long period indeed. I suggest another reason for reviewing the work of the pension commission and that is to discover in what circumstances the benefit of the doubt clause is used. I have been told it enters into every case but I take that with a grain of salt. I know of instances where, in my opinion, the benefit of the doubt clause should have been invoked and was not. This clause was put into the act for the express purpose, as I understand it, of permitting the pension commission to decide
Supply-Veterans Affairs marginal cases and allowing the benefit of the doubt where the weight of evidence did not seem to be entirely in favour of the applicant. In many cases the weight of the evidence is not in favour of the applicant, and for many reasons, one being that further evidence could not be brought forward. Why could not the work of the pension commission be reviewed with regard to that and if the act needs to be altered, then let it be altered?
I am finishing my remarks now, but I should like the minister to let me know the qualifications for the appointment of a member of the pension commission.


Mr. Lapoinie:: My hon. friend asks what are the qualifications for appointment to the pension commission. As he well knows, there is nothing in the act setting out those qualifications. Generally speaking one requires some experience in dealing with veterans affairs, with veterans legislation, with veterans themselves. In other cases professional experience and qualifications have been essential. That at times has been the case since I have been Minister of Veterans Affairs because it has been necessary to appoint commissioners with medical qualifications, coupled with a knowledge of service conditions and experience in dealing with servicemen. Those were the qualifications upon which these commissioners were appointed. Outside of that, I would say it is left entirely to the judgment of the governor general in council, as specified under the act.


Gordon Minto Churchill: I was wondering, Mr. Chairman, whether in appointing the commissioners there was a balance as between the three services? Is the question of active service considered when it comes to the appointment of a commissioner, as well as the branch of the service with which he served? Does the question of the rank a man has occupied during service enter into consideration at all?


Hugues Lapointe: I know that the three services are represented on the commission. I also know that every one of the commissioners has seen active service in a theatre of war.


Gordon Minto Churchill: I hope the minister will take into consideration some of the things I have already said. Then, I would like to add this, that the pension commission has its own internal appeal board. It may look different from what the facts actually are. I would point out that a person may be turned down by the pension commission and then is permitted an appeal. He discovers that the appeal board consists of three of the commissioners who were not originally on his case.
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Supply-Veterans Affairs
I think what happens from that arrangement is this, that the commissioners are interchanging their cases. For instance three of them may sit on a case and find against it. Then when it comes up for appeal, three of their colleagues would have to hear that appeal while the first three, in their turn, may be hearing an appeal from the three who are now listening to the case the first three originally tried.
There is this danger within a commission, of a group of colleagues passing cases back and forth among themselves. It might well be worthy of consideration to have an appeal board separate and apart from those who are handling these other cases. Has the minister given consideration to that matter at any time?


[Stage Direction]
Item agreed to.
524.	Pensions for disability and death, including pensions granted under the authority of the civilian government employees (war) compensation order, P.C. 45/8848 of November 22, 1944, which shall be subject to the Pension Act; and including Newfoundland special awards, $128,030,500.
Howard Charles Green: Mr. Chairman, this is the item for the payment of pensions. During the discussion in committee one weakness came to light which I think could be remedied by a regulation. Some years ago a provision was made under which a veteran who had been wounded could have his pension increased automatically by a certain percentage as he reached different ages. But that did not apply to a pensioner who was getting a pension of 80 per cent or over.
In the committee it was explained that the reason the increases stopped with the veteran who was getting an 80 per cent pension or more was that at that time an 80 per cent pension carried with it an automatic pension for the widow, whether the veteran died of his pensionable disability or not.
In order that the widows of those men who had suffered gunshot wounds should not lose out in case a man died from something different, let us say from a disease of one kind or another, this regulation was brought into effect. As the minister knows, a few years ago that 80 per cent line was reduced to 50 per cent, so that the widow of every 50 per cent pensioner would automatically get a pension on his death, no matter what the cause of death might be.
I do suggest that now it would be fair to make this automatic increase apply to the men who have 80 per cent disability or over.
I know for example if a man has his arm off right at the shoulder he cannot get more than 80 per cent, under the present system of assessment, although actually that man as he becomes older is completely disabled. I think


a veteran with a wound of that type should be able to qualify for an automatic increase, just as his comrades could do who started out with a 60 per cent instead of an 80 per cent disability.
I think there has been an oversight in this instance in not having the regulation changed at the time that the automatic protection for the widow was reduced in the case of 80 per cent disability to that of 50 per cent disability. I wonder if the minister would give some thought to that situation during the recess, so that it could be remedied by a regulation or by a change in the method of assessment. As I understand it there is no need to have amending legislation.


Hugues Lapointe: I shall be glad most certainly to look into the matter. Of course one would have to consider the purpose of the original regulation. My understanding is that it was given originally for the benefit of the amputees. All these men suffering from gunshot wounds had fixed assessments. A man who had lost his arm at the elbow had a fixed assessment. One who lost his whole arm, or his leg, had a fixed assessment. And as he grew older, although his pensionable disability showed no sign of aggravation- in other words his arm cut off at the elbow was still in the same condition

his general condition, particularly in the case of leg amputees, did deteriorate.
Various conditions were thought to result from an amputation. As he had a fixed assessment of, let us say 60 per cent for the loss of a leg at a certain level, the commission could not increase the disability pension simply in regard to that. To compensate for general deterioration an automatic disability increase was put through in the regulations.
In the case of another sort of disability pensioner, one for instance who might have suffered from a heart condition which was assessed at 30 per cent at the time he was discharged, as the years go by and as his heart condition deteriorates, he returns to the commission and gets a new assessment, which the other man could not obtain. I understand that was the principle which brought about this regulation. However I will be glad to study the point my hon. friend has brought forward.


Howard Charles Green: The difficulty is that a man who had his arm off at the elbow does get an automatic increase.


Hugues Lapointe: Yes.


Howard Charles Green: But the man who had it off
at the shoulder does not get that automatic increase, because he was getting an 80 per cent pension at the start. And there was no

provision made for increasing anyone with an 80 per cent pension. But he deserves it just as much as the other chap.
The difficulty was, of course, that the widow of the man who only had his arm off at the elbow could not qualify for pension unless he was getting an 80 per cent pension. Therefore the increases were graduated so that when he got to the top stage he would be getting 80 per cent and his widow would become eligible. But so far as the two men themselves were concerned, the man who had his arm off right at the shoulder does not get any increase at all; he receives no automatic increase.
I do not think that is fair; I think he should receive it. I know of cases where men have that disability and they cannot get more than 80 per cent.


[Stage Direction]
Item agreed to.
Soldier Settlement and Veterans' Land Act-
526. To provide for the cost of administration of Veterans' Land Act; soldier settlement and British family settlement, $4,907,146.
Frederick Davis Shaw: Mr. Chairman, although I was not a member of the special committee on veterans affairs I did make it a point to read every word of evidence taken before that committee. While perusing the minutes of the proceedings and evidence for Tuesday, May 25, 1954, I came across this rather interesting exchange of questions and answers. I refer to page 138 of the proceedings, where the hon. member for Acadia asked this question:
I would like to ask Mr. Rutherford one question. Can you tell us how the veterans who were settled on government land in the special areas in the so-called "drought area" are getting on? I am especially interested in that because I know you were a little leery in the first instance about settling any veterans in there but finally under pressure from the veterans themselves you did allow a few to settle in there and I understand they are doing very well.
A. I cannot answer that very definitely, Mr. Quelch. There were a few who did not succeed but those who are there now are getting along very well.
Q. About the same percentage of arrears as the rest of Canada?
A. We have more arrears in the Red Deer region.
Naturally that drew my attention very quickly. I continue:
There are only two other regions which have more arrears than Red Deer. I think this report indicates that Dauphin and Grande Prairie have more than Red Deer. It should not be as bad as it is. I believe Mr. Allam has one at Drumheller.
A person seeing and reading that might well come to a wholly erroneous impression. As hon. members know, I represent the Red Deer constituency and have represented that constituency for more than fourteen years.
Supply-Veterans Affairs I have lived in that section of Alberta for a period of twenty-five years. I say without fear of successful contradiction that the Red Deer area is one of the finest mixed farming areas in the whole Dominion of Canada. Settled between Olds and Lacombe are as many if not more veterans settled under V.L.A. than in any comparable area in the Dominion of Canada. I wish to compliment the officials of V.L.A., first for having permitted so many veterans to settle in that area. Second, I wish to compliment them upon exercising a good deal of care in satisfying themselves that the land upon which those veterans were all settled was reasonably good land. Of course I may interject by saying that most of it is, unless you get too far out. But this is a very important thing. We are subjected to natural hazards in that area. We have had some very bad hail years in the Red Deer area. In 1952 many of the farm crops were devastated as a consequence of hail.
I have said in this house before that owing to the regulations under which P.F.A. operates it is extremely difficult for many of the farmers in that area to qualify for P.F.A. benefits. To farm in an area like the Red Deer area is costly, as it is costly in most mixed farming areas. When hail comes along crops are devastated. The individual is faced with the costs involved in the planting of that crop. He is also faced with costs involved in feeding livestock and in procuring seed for the following year.
I know from personal experience two things. The men who are settled under V.L.A. in the Red Deer area are in the main fine types of individuals, anxious to succeed in their chosen occupation. I also pay tribute at this time to the men of V.L.A. in that area who are administering the V.L.A. I know most of those men. I have discussed these matters with them and as one said to me one day, it does seem that for some reason or other the forces of nature pick out these veterans when a hail storm comes through.
I mention that for this reason. I appreciate first the desire of V.L.A. to collect during good years, and we have had some good years. But in assessing good and bad years, for goodness' sake let them not overlook the fact that there may be a bad year in a particular area. In the particular area of Alberta that I represent they have been most unfortunate in the fact that they have had some very bad experiences from the standpoint of hail. I trust that the officials of V.L.A. in Ottawa will pay considerable heed to the advice given to them by the local officials of V.L.A. Do not just simply pick out a sheet and say: Well, here is Red Deer; it is bad

Supply

Veterans Affairs compared with the rest of Canada. I am not using that word myself; it is in the evidence. It makes it seem as though it is bad. Do not just simply say: Well, times are good in the country. The picture is reasonably good as far as V.L.A. settlers are concerned, but there is this dark spot in the Red Deer area.
I suggest to V.L.A. here that they make a very close examination of the things that happen in a local area before undertaking, as part of their general over-all policy, to put on the pressure during so-called good years.
Let it not be thought, Mr. Chairman, that I am offering one word of defence for the fellow who can pay and will not. I dare say there are some of those even in my own area, but I also dare say that they constitute a very small percentage of the total. I am not standing in defence of those persons. My associations with the V.L.A. boys in the Red Deer area have been what could be described as excellent. They have good men in there. They know conditions. They are trying to do their job well. I only hope that Ottawa, as I said before, will not just simply pick out one sheet after another and say the situation out there is bad; we have to get these boys in Red Deer to put the pressure on. Let them find out why there should be substantial arrears in that area.
I do not believe it is any criticism of V.L.A. at all. I come forth in defence actually in defence of my own area which, as I said at the beginning, is one of the finest mixed farming sections in the Dominion of Canada.
I thought probably that anyone reading this evidence might carry away an improper impression and certainly I feel it is my duty, knowing the facts, to make sure that no such incorrect impression is carried away by anyone.


[Stage Direction]
Item agreed to.
52S.	To provide for the payment of grants to veterans settled on provincial lands in accordance with agreements with provincial governments under section 38 of the Veterans' Land Act and payment of grants to veterans settled on dominion lands, in accordance with an agreement with the Minister of Northern Affairs and National Resources under section 38 of the Veterans' Land Act, $375,000.
Herbert Wilfred Herridge: This item provides for the payment of grants to veterans settled on provincial lands in accordance with agreements with provincial governments, and is reduced from $575,000 to $375,000, a reduction of $200,000. In view of the explanation given by the director to the committee that there had not been as many veterans taking advantage of this legislation as was expected,
I can understand the reduction; but I do hope the administration of the Veterans


Land Act does not throw up the sponge in this respect, because I am quite sure that as the years go by there will be more and more veterans settling under these terms. Up to recent years industrial conditions, wages and things of that sort have probably been against it. In addition to that, I do suggest that, particularly in the western provinces, that while we are supposed to have a great deal of land available for settlement it is remarkable how the land available for settlement close to roads and transportation is growing less and less each year. I do hope that the administration makes every effort to co-operate with any provincial government that has land available to try to get them to reserve suitable locations that may be used within the next few years.


[Stage Direction]
Item agreed to.
530. To provide for the reduction of indebtedness to the director of soldier settlement of a settler in respect of a property in his possession, the title of which is held by the director, or such soldier settler loans which are administered by the Indian affairs branch of the Department of Citizenship and Immigration, by an amount which will reduce his indebtedness to an amount in keeping with the productive capacity of the property or his ability to repay his indebtedness under regulations approved by the governor in council, $25,000.
Mr. Quslch:: This is the item that the hon. member for Battle River always took an intense interest in. It will be recalled that every year he had his annual resolution calling for free title for veterans. I am a little bit concerned to notice this year that the amount of the vote has been reduced from $150,000 to $25,000. I hope that means that now all those soldier settlers have had their outstanding liabilities reduced to an amount which is easily manageable on their part. I hate to hold the committee up, but I should like the assurance from the minister that now all those veterans still settled under the old Soldier Settlement Act have had their liabilities reduced. How many are left?


Hugues Lapointe: Without going into great detail in this matter, I might recall that the last time I made a statement on this question of reduction on soldier settlement debts was on January 27 of this year. At that time, following the speech of the hon. member for Battle River-Camrose, I brought down the number of cases remaining to 134 and that figure has now been reduced to 51, details of which are as follows. Twenty-two eligible contract holders wish to pay off their loan in accordance with their contract; 17 eligible contract holders do not qualify under the provisions of the order in council, that is their circumstances are such that a reduction is not warranted; 12

Supply
settlers are eligible and qualify for the reduction but notwithstanding repeated efforts on our part to have them make an acceptable offer they have for various reasons failed to do so. That makes 29 cases remaining to be dealt with. At that time I stated to the hon. member for Battle River -Camrose that I would personally go through the number of remaining files and I would be willing to discuss them with him. I have done so and after studying the record of these 29 cases I cannot help but think the director is right in his decision not to grant these 17 any reduction in debt in view of the circumstances in which they are now living.


Victor Quelch: Would $25,000 be adequate to reduce the debt?


Hugues Lapointe: Quite adequate.


[Stage Direction]
Item agreed to.
Edward Turney Applewhaite: Legislation.


Howard Charles Green: I am afraid I will have to call it ten o'clock, Mr. Chairman. We have got the Department of Veterans Affairs through and we are not prepared to go on with legislation.


Walter Edward Harris: Mr. Chairman, we have succeeded in doing one-half of the work which I outlined for today in my statement on Saturday. Is there any other department the committee is prepared to dispose of if it is not prepared to dispose of legislation?


Howard Charles Green: I think we should call it ten o'clock, Mr. Chairman.
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we shall change slightly the program I laid out on Saturday. We will take privy council first and then legislation. Otherwise we will follow the agenda set out on Saturday with this exception that when the Minister of Finance (Mr. Abbott) completes his estimates he would like to take the supplementary estimates on northern affairs.


[Stage Direction]
It being eleven o'clock the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply]:

[Stage Direction]
A-Department-
78.	Departmental administration and payments to Canadian Commercial Corporation and other corporate agencies for services provided in connection with defence purchasing and production. $6,446,812.
79.	To provide capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to approval of treasury board, $25,000,000.
80.	To provide for payment of grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors, $400,000.
B-Crown companies-
81.	To provide for expenses incurred by Defence Construction (1951) Limited in procuring the construction of defence projects on behalf of the Department of National Defence, $3,693,000.
Canadian Arsenals Limited-
82.	Administration and operation, $1.
83.	Construction, improvements and new equipment, $4,777,000.

[Stage Direction]
B-Civil defence-
238. To provide for the civil defence program, $6,498,253.

[Stage Direction]
515.	War veterans allowance board-administration, $145,860.
516.	Veterans insurance, $79,406.
War veterans allowances and other benefits-
517.	V/ar veterans allowances, $27,365,500.
518.	Assistance fund (war veterans allowances), $350,000.
519.	Unemployment assistance, $15,000.
520.	Hospital and other allowances, $3,200,000. Miscellaneous payments-
521.	To provide for payments to the Last Post
fund:	for the payment under regulations of
funeral and cemetery charges; for the cost and erection of headstones in Canada; for the maintenance of departmental cemeteries; for the maintenance of Canadian battlefields memorials in France and Belgium and for Canada's share of the expenditures of the imperial war graves commission, $1,503,400.
522.	Grant to Canadian Legion, $9,000.
Canadian pension commission-
523.	Administration expenses, $2,202,908.
524.	Pensions for disability and death, including pensions granted under the authority of the civilian government employees (war) compensation order, P.C. 45/8848 of November 22, 1944, which shall be subject to the Pension Act; and including Newfoundland special awards, $128,030,500.
525.	Gallantry awards- world war II and special force, $19,000.
Soldier Settlement and Veterans' Land Act-
526.	To provide for the cost of administration of Veterans' Land Act; soldier settlement and British family settlement, $4,907,146.
527.	To provide for the upkeep of property. Veterans' Land Act, including engineering and other investigational planning expenses that do not add tangible value to real property; taxes, insurance and maintenance of public utilities, $73,500.
528.	To provide for the payment of grants to veterans settled on provincial lands in accordance
[Stage Direction]
Supply-Veterans Affairs
with agreements with provincial governments under section 38 of the Veterans' Land Act and payment of grants to veterans settled on dominion lands, in accordance with an agreement with the Minister of Northern Affairs and National Resources under section 38 of the Veterans' Land Act, $375,000.
529.	To provide for the payment of grants to Indian veterans settled on Indian reserve lands under section 39 of the Veterans' Land Act, $175,000.
530.	To provide for the reduction of indebtedness to the director of soldier settlement of a settler in respect of a property in his possession, the title of which is held by the director, or such soldier settler loans which are administered by the Indian affairs branch of the Department of Citizenship and Immigration, by an amount which will reduce his indebtedness to an amount in keeping with the productive capacity of the property or his ability to repay his indebtedness under regulations approved by the governor in council, $25,000.
531.	To authorize and provide, subject to the approval of the governor in council, for necessary remedial work on properties constructed under individual firm price contracts and sold under the Veterans' Land Act to correct defects for which neither the veteran nor the contractor can be held financially responsible and for such other work on other properties as may be required to protect the interest of the director therein, $5,000.
Terminable services-
532.	Rehabilitation benefits, including the training of certain pensioners, under regulations approved by the governor in council, $1,856,000.
Loans, investments and advances-
Soldier Settlement and Veterans' Land Act-
545.	To provide for protection of security- soldier settlement, and refunds of surplus to veterans, $15,000.
546.	To provide for purchase of land and permanent improvements; cost of permanent improvements to be effected; removal of encumbrances; stock and equipment; and for protection of security under the Veterans' Land Act, $21,300,000.
Treatment services-
757.	Operation of hospitals and administration- further amount required, $100,000.
758.	Prosthetic services-supply, manufacture and administration-further amount required, $42,000.
War veterans allowances and other benefits-
759.	Assistance fund (war veterans allowances)- further amount required, $100,000.
Terminable services-
760.	Rehabilitation benefits, including the training of certain pensioners, under regulations approved by the governor in council-further amount required, $670,000.
Loans, investments and advances-
Soldier Settlement and Veterans' Land Act-
768, To provide for purchase of land and permanent improvements; cost of permanent improvements to be effected; removal of encumbrances; stock and equipment; and for protection of security under the Veterans' Land Act-further amount required, $5,150,000.
[Stage Direction]
Wednesday, June 23, 1954