1954-01-21

Mr. Diefenbaker:: 1.	Does the Canadian Broadcasting Corporation operate an international service on behalf of the government of Canada?
2.	If so, what has been the cost to the government of such service for the years 1947 to 1952-53, inclusive?
3.	Is the sum paid for such service included in the published report of the Canadian Broadcasting Corporation?
4.	Are the amounts paid the Canadian Broadcasting Corporation for international service, in addition to statutory grant of $6,500,000, shown on page 48 of the annual report, 1952-53, of the Canadian Broadcasting Corporation?
5.	Does the Canadian Broadcasting Corporation have custody of crown assets?
6.	If so, what is the total value of such assets, and are such crown assets included in the assets statement of the corporation as shown on pages 42-43 of its annual statement?


Mr. McCann:: 1.	Yes.
2.
Fiscal
Year Operations Capital	Total
1947-	48. .1,268,073.23	59,326.18	1,327,399.41
1948-	49. .1,441,772.10 2,571,115.34 4,012,887.44
1949-	50. .1,556,157.24 1,103,847.64 2,660,004.88
1950-	51. .1,598,178.26	617,985.83	2,216,164.091951-	52. .1,821,454.96	176,731.08	1,998,186.041952-	53. .1,883,596.24	91,838.66	1,975,434.903.	Yes.4.	Yes. The statutory grant is $6,250,000.5.	Yes.6.	$5,833,433.84 as shown on pages 42-43 of the annual report of the corporation for the fiscal year ended March 31, 1953.
PRISONER OP WAR ALLOWANCES Mr. Dinsdale:
1.	Will payment of P.O.W. allowances be extended to Canadian Korean P.O.W.?
2.	How many Canadian Korean P.O.W. would be eligible for the allowance were payment extended to them?
3. What percentage of world war II P.O.W. eligible for these payments have applied to date?
4.	What was the total number of Canadian P O W. during world war II, and how many of these are eligible to receive P.O.W. allowances?


Mr. Pickersgill:: I should like to answer this question orally. The first part inquires
whether allowances will be paid to prisoners of war taken in Korea. This would normally be a question of policy which it is not usual to answer in response to questions. I think I should perhaps point out that the awards that are paid to prisoners of war taken in European or Far Eastern theatres in the late war are paid out of funds under the control of the custodian, and not out of the treasury. I feel quite sure the hon, member for Brandon-Souris would not feel that there would be any moral justification whatsoever for using any part of these funds to make any kind of awards to prisoners of war taken in the Korean conflict.
I think the second part of the question is answered by the answer I have given to the first. As to the third part, I am informed by the secretary of the commission dealing with this matter that it is of course impossible to tell what percentage of prisoners of war would be eligible for payment until each case has been examined, but possibly the hon. member really wanted to find out what percentage of prisoners of war had made application to the commission. I am informed that it was about 65 per cent by the 31st of December, and it was on account of the fact that 35 per cent of possible applicants had not made application that the governor in council had the time extended for making these applications until the 31st of March.
As for the fourth part of the question, I am advised that the number of prisoners taken in the European theatre, which includes of course North Africa, was about 9,055.


DEBTS OWING CANADA
Mr. Thalcher:: 1.	What steps, if any, has the government recently taken to obtain payments from China. Czechoslovakia, Roumania and Greece, on their outstanding debt to Canada?
2.	Have these nations neglected to maintain payments on their debt to Canada? If so, for what reason?
3.	Has any nation mentioned in (1) indicated an intention of recommencing payments on their debt in the future?


Mr. Benidickson:: 1 understand that the hon. member for Moose Jaw-Lake Centre is going to reword this question and probably advance it at a later date.


Mr. Speaker:: Dropped.

Inquiries of the Ministry


QUESTION PASSED AS ORDER FOR RETURN
VEGETABLES AND EGGS
Mr. McCullough (Moose Mountain):: 1.	What kind of vegetables and what quantities of these were imported into Canada, during each month of 1953?
2.	What quantities of eggs were imported to Canada, and from where, during 1953?


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: I have a question for the Minister of Transport, but since he is absent today perhaps his parliamentary assistant would take note of it and arrange for an answer. I should like to have the minister tell the house whether system-wide lay-offs by the Canadian National Railways are to take place on or about January 26. If so, would he also tell us whether there is not some way by which such lay-offs can be avoided?


Mr. L. Langlois (Parliamentary Assistant to the Minister of Transport):: I will take the question as notice.


WOMEN CLEANERS, WINNIPEG    INQUIRY AS TO INCREASE IN WAGES
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: I should like to ask a question of the Minister of Public Works. Has the minister as yet received a report from the Department of Labour with respect to the survey of prevailing wages in the Winnipeg area in relation to the matter of wages paid to women cleaners working for the minister's department? If so, is consideration being given to increasing those wages?


Hon. Robert H. Winters (Minister of Public Works):: I have received an interim report, and I am expecting the final report in the near future.


DISABLED PERSONS
[Stage Direction]
On the orders of the day:
Mr. H. P. Cavers (Lincoln):: In the absence of the Minister of National Health and Welfare, I should like to direct a question to his parliamentary assistant. On Tuesday, November 24, in reply to a question concerning the rehabilitation of disabled persons,
[Mr. Speaker.)
the minister informed the house that he had requested a meeting with representatives of all provinces to deal with the institution of a nation-wide scheme for allowances for totally disabled persons. Can the parliamentary assistant tell us whether this meeting can be convened, and when?


Mr. F. G. Robertson (Parliamentary Assistant to the Minister of National Health and Welfare):: I am pleased to inform the hon. member for Lincoln that the provincial-federal conference to which he refers will be held on Monday and Tuesday of next week.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
Hon. Brooke Claxton (Minister of National Defence):: In view of the very general interest in the subject, I should like to make a brief statement on small arms. The Prime Minister of the United Kingdom has announced in the House of Commons that Britain will soon adopt a Belgian designed .30 calibre selfloading rifle as the standard infantry weapon for British forces.
Since the second world war Canada, together with other countries, initially the United Kingdom and the United States, has given consideration to the development and adoption of a standard small arm round and rifle. Over several years we conducted trials of several rifles, including the Belgian FN-2, to which Sir Winston Churchill referred. This is a fully automatic rifle capable of meeting the requirements desired in a weapon of this type and of using the standard .30 calibre round which I announced in Paris had been adopted by Belgium, Canada, France, the United Kingdom and the United States and approved as the standard NATO round.
I should inform the house that we have ordered 2,000 of these rifles for extensive user trials to further test the capacity of the rifle in all conditions found in Canada, particularly winter and arctic conditions. We have an understanding that if the rifle is accepted by this country we will produce it under licence from the Fabrique Nationale, which is one of the arsenals of the Belgian government. The Department of Defence Production will instruct Canadian Arsenals Limited to begin work on the engineering and industrial lay-outs for the production of this weapon, so that no time will be lost in anticipation of its acceptance.
It may be remembered that in April, 1951, it was announced in the United Kingdom that that country was going into production

of a new British type. The co-operative and constructive course now taken by the United Kingdom is very much in the interest of unity of action among the North Atlantic treaty nations.
I expect that we will take the same course, and I hope that other countries will do the same, thereby bringing about this greatly to be desired step on which so much time and effort has been spent in the interest of standardized practice and united action.


TRANS-CANADA HIGHWAY REPORTS OF ALLEGED FRAUD    INQUIRY AS TO ACTION
[Stage Direction]
On the orders of the day:
Mr. C. E. Johnston (Bow River):: I should like to direct a question to the Minister of Public Works, of which I have given him notice. Has the minister been informed regarding the highway swindle in the Fort William sector of Ontario? Since contracts in the division in question involve trans-Canada highway contracts in which the federal government is interested, is the minister prepared to make a statement to the house regarding the matter?


Robert Henry Winters: I thank the hon. member for having given me notice of this question. It is similar to one asked on Tuesday by the hon. member for Moose Jaw-Lake Centre (Mr. Thatcher), so perhaps anything I say now might be considered as an answer to his question as well.
In reply to the question as to whether or not I have been informed, the answer is yes.
In reply to the second question in each case, I might say that we are informed charges have been laid against several employees of the Ontario department of highways. I understand action is being taken which will give the courts an opportunity of hearing the information relative to the charges, so perhaps I should not discuss them too fully.
I might say, however, that in the district of Fort William some 14 contracts have been lei under the terms of the Trans-Canada Highway Act since it was implemented in December 1949, and the agreement signed subsequent thereto in the following year. The total amount involved in these contracts is about $10-5 million. There is no evidence that all these contracts are under suspicion. This will be determined by the investigation which is still being made. Under the terms of the Trans-Canada Highway Act the federal government is obliged to pay half the cost of
Inquiries of the Ministry construction, which would normally require us to pay about $5-25 million in respect of those contracts. So far we have actually paid about $3,210,000, which means that there is a holdback of over $2 million.
I have given instructions that no further moneys are to be paid until we are satisfied that they will be paid actually in respect of work going into the highway construction.


Mr. Daniel Mclvor (Fori William):: I should like to ask a supplementary question, because in Fort William we are interested in this matter. What responsibility has the dominion government for administration?


Robert Henry Winters: I know the hon. member is familiar with the terms of the Trans-Canada Highway Act, which make it clear that the administration of the trans-Canada highway program rests with the provincial governments. We have made that clear to them and they understand the position.


VETERANS AFFAIRS
[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Can the Minister of Veterans Affairs say whether the government has yet reached a decision concerning the recommendations recently made by the Canadian Legion asking for amendments to the War Veterans Allowance Act? Will there be such amendments at this session?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: The matter is still under considera tion by the government.


REFERENCE TO PRESS REPORT OF PROPOSED SURVEY BY THERMO EXPERT
[Stage Direction]
On the orders of the day:
Hon. George Prudham (Minister of Mines and Technical Surveys):: On Monday last the hon. member for Cape Breton South (Mr. Gillis) drew my attention to a certain newspaper dispatch referring to a proposed survey of the thermal power possibilities of the maritime provinces. At that time I promised a statement at a later date.
The dominion coal board has for some time given consideration to the possibility of increasing markets for the coal of the maritime provinces, through its increased use in the production of power. Such a development would provide a more stable basis for industry and would lessen the need for

Inquiries of the Ministry financial help in the form of freight subventions for the movement of coal out of the area where it is produced.
Use of electric power in the maritime provinces is less than in Ontario and Quebec, and it is considerably below the average per person for all of Canada. It is only reasonable to assume that any steps taken to increase the efficiency and lower the cost of power in that area would increase the demand for power and consequently the demand for fuel. Nova Scotia has almost exhausted hydro power sources; and while New Brunswick still has a potential on the Saint John river, the coal board is convinced that large scale production of power from coal would serve a twofold purpose of producing cheap power and maintaining employment in the coal industry.
As a first step in this matter the board has been in touch with the premiers of the maritime provinces and has suggested to them that a thorough and comprehensive survey of the existing and potential power production and distribution facilities would be of value in their appraisal of the power supply and needs of their respective provinces, and it would also be of value to the board and to the coal industry in their efforts to find wider markets for coal. The premiers of the maritime provinces concerned have expressed their interest and approval and are offering fullest co-operation in such a survey.
The board has been successful in engaging the services of Professor A. G. Christie, who is an outstanding expert on thermal power of international reputation, and he will be undertaking the survey. The results of this survey will be available to the provincial governments concerned.
The dominion coal board hopes that the report of the survey will disclose means whereby the price of power can be reduced with a consequent greater demand for coal in the local market.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: I
should like to direct a question to the Secretary of State for External Affairs. In order to permit hon. members to make their plans, is the minister in a position to say now whether a day will be set aside for discussion of international external affairs, and when will that date be fixed?
[Mr. Prudham.l


Hon. L. B. Pearson (Secretary of State for External Affairs):: It is hoped to set aside a
day toward the end of next week; Thursday or Friday.



NATIONAL HOUSING ACT


Robert Henry Winters: the second reading of Bill No. 102, to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions.
He said: Mr. Speaker, the purpose of this bill is to re-enact the National Housing Act and to make substantial changes in its application. Since it is broad in its scope, covering as it does virtually all phases of housing, perhaps I should at the outset make a few remarks about the housing situation generally.
When speaking in the house last April I mentioned that new residential construction was at a high level. At that time I had available new residential starts for the first quarter of 1953. This trend, supported by existing legislation, has continued. I still cannot tell hon. members the exact number of new residential starts in Canada in 1953 because full statistics are not yet available, but we do know that at the end of November the starts numbered 98,000 for the first eleven months of the year. It would appear that about 105,000 units were started in 1953.
Hon. members will appreciate that these are starts of all kinds, in all parts of the country. Starts of about 40,000 units were made in 1953 under the terms of the National Housing Act and other housing measures taken by Central Mortgage and Housing Corporation. These figures represent a record level of house building in Canada. As compared with a low of 20,000 starts in 1933 and
45.000	starts in 1945, the accomplishment of
105.000	starts last year is a tribute to all who helped make them possible.
As might be expected, completions in 1953 will be about 10,000 units less than the number of starts. There will be a corresponding increase in the number of houses under construction at the end of 1953 as against a year ago. This is a condition which always obtains in a period of expanding residential construction. In periods of decline the reverse is the case. Hon. members will recall that in 1951 the number of completions, by reason of a heavy carryover, was greater than the number of starts.

Although none of us can be complacent about the need for housing, I think it will be agreed that considerable progress has been made since the end of the war. Although by no means a complete criterion of measurement, it is to be noted that the 1941 census showed an average of 4-5 persons per occupied dwelling, whereas the 1951 census shows average occupancy to be 4-1 persons. The census also revealed a reduction of about 50 per cent in the amount of housing which in the view of the census taker is substandard.
There has been a reduction in the amount of doubling-up or multiple occupancy since 1946. Not as an accurate yardstick of the amount of new housing we need, but rather as a rough indicator, I might point out to hon. members that total net family formation in Canada, after allowance for immigration and emigration, is presently at the rate of about 90,000 families a year. I hasten to add, however, that this figure cannot be directly related to the current production of new housing units at over 100,000 per annum. Nor should it be believed that all families that are not maintaining their own household represent a housing shortage of an equivalent number of units, much less effective demand for new housing.
However, the figures I have mentioned indicate that considerable progress is being made. The number of new housing units built in any one year must be related not only to our need for housing, but also to the effective demand by the Canadian people for housing. Both these figures are ever-changing and for that reason I do not believe it is possible to establish a target figure, other than one of a fairly wide range. But having said this, I would hope that it would be possible to maintain house building at a high rate, and indeed this is the main purpose of the legislation which we are now considering.
Hon. members will recall that up to the end of 1949 the number of housing starts and completions in Canada depended in large measure upon the available supply of construction workers and materials. During the years 1945 to 1949 there was no problem of a shortage of mortgage funds under the joint lending provisions of the National Housing Act or the conventional lending operations of institutional mortgage lenders. In fact the reverse was the case, and the period might well have been described as a borrower's market. During this period the construction industry rapidly increased its output and housing starts increased from year to year until in 1950 they reached the level of 93,000 units.
National Housing Act
Housing measures introduced by the government during this early post-war period were designed to meet such conditions. In 1947 Central Mortgage was empowered to make direct loans to home owners in areas where lending institutions did not carry on a lending business. This measure has been successful. Hon. members who were in the house at that time recall the difficulties in this respect. As matters stand today, I think it is a fair statement that credit-worthy borrowers in all parts of the country are able to take advantage of the National Housing Act, either through a lending institution or directly through Central Mortgage.
In 1947 rental insurance provisions were introduced to establish incentives to rental entrepreneurs. This provision in the act has proven both popular and effective. In 1949 the federal-provincial rental housing and land assembly measures came into force. Also in that year the additional one-sixth loan was introduced to lower the down payment requirements under the National Housing Act, because at that time it was considered that the capacity of the construction industry had reached a point where the number of prospective purchasers should be increased.
I have reviewed these circumstances briefly to show that during this period there was no great need to take measures to stimulate the flow of mortgage funds for new housing, because generally the supply of mortgage funds did not constitute a limitation on the housing program. With 1950 we faced a changed set of circumstances. The more urgent matters of the Korean war took precedence over the social objectives associated with housing policy. As a means of ensuring an adequate supply of materials for defence and defence supporting construction, the one-sixth additional loan provision was withdrawn in February, 1951, to reduce effective demand and at the same time prevent the prices of houses from rising unduly. This condition prevailed until October, 1951, when it was apparent that an increased level of housing starts could be supported by the economy without prejudice to the defence effort. Higher loan levels were introduced at that time. Housing starts, which had declined during 1951, rose sharply in 1952, from some 69,000 units to 83,000 units. This period of expansion in the housing field since the end of 1951 has been characterized by difficulties not present in the immediate postwar period. Foremost among these has been the shortage of private mortgage funds.

National Housing Act
approved lender and borrower may agree upon. In the case of insured loans to assist in the conversion of existing property into multiple units, amortization periods up to 15 years will be proposed.
The changes in the home ownership field will have the effect of lengthening the period of amortization and reducing the monthly payments of the home owner. Under the new arrangements we expect that 25-year amortization will be the rule rather than the exception. This will result in monthly payments of about 73 cents per $1,000 less than with 20-year amortization. The longer amortization in itself makes it possible for families of lesser income to become home owners. For instance, in the case of a house subject to an $8,000 insured mortgage loan the difference as a result of longer amortization is about $5.86 a month, thereby making it possible for a family to become a home owner with about $300 less annual income than would be required if the insured loan were on a 20-year basis.


Mr. Fleming:: Would the minister permit a question? Upon what rate of interest is that calculation based?


Robert Henry Winters: At the same rate of interest obtaining now, 5i per cent.
The bill contemplates that Central Mortgage will insure mortgages that are in accordance with the statutory requirements and regulations made under the new legislation. The insurance will provide that in the event of default and after title has been acquired by the holder of the mortgage, the corporation will pay in cash to the holder of the mortgage, upon receiving clear title to the property from the holder,
(a)	98 per cent of the amount of principal outstanding on the mortgage loan account and interest at the mortgage rate, if owing, up to six months.
(b)	Interest at the mortgage rate less 2 per cent for amounts owing in excess of six months but not exceeding twelve additional months.
(c)	Borrower's charges-such as fire insurance and taxes advanced by the lender.
(d)	An acquisition fee of $125, plus approved taxable legal disbursements.
Provision is made that if the holder of the mortgage is to claim for interest arrears in excess of six months, then the approved lender administering the loan shall have satisfied the corporation at the end of three months that adequate steps were being taken in respect to the defaulted account.

Hon. members will notice that this provision for loss settlement carries elements of co-insurance. In other words, in the event of loss being suffered by an approved mortgage lender under an insured loan, recovery is on the basis of somewhat less than 100 cents on the dollar.
Under the proposals the corporation will charge an insurance fee which shall be 2 per cent of the amount of a home ownership loan and 2J per cent of a rental housing loan. The fee is payable by the borrower but shall be collected and remitted to the corporation by the lender. This fee differs from the one payable to the F.H.A. in the United States under their insured mortgage plan in that ours is in the form of a single premium capitalized into the mortgage account and repayable in monthly instalments as part of the mortgage, rather than an insurance fee of one-half of one per cent on the annual reducing balances of the mortgage loan outstanding. It also differs in that ours is about 40 per cent of that charged to the borrower in the United States.
It is proposed that these fees will be accumulated in a mortgage insurance reserve fund on the books of Central Mortgage guaranteed by the government of Canada. The assets of this fund may be invested in securities of or guaranteed by the government of Canada. The fund of course will also have among its assets properties which may be transferred to the corporation by the approved lenders, for which the approved lenders have received a loss settlement.
In the matter of liquidity, as I mentioned earlier, it is proposed to make insured mortgages eligible security for Bank of Canada advances to banks in the same way as government bonds. In addition, it is proposed that Central Mortgage will have the right to purchase insured mortgages from approved lenders.
Provision is also being made for ready transferability of insured mortgages not only between approved lenders but also to holders who are not approved lenders. In this latter case it will be required that the insured mortgage loan shall at all times be administered by an approved' lender.
These are important provisions in that they meet the main objections often expressed to the banks being in the mortgage business. The insurance protects the banks and other lenders against substantial losses on their mortgage account and there are provisions for liquidity and marketability.

The bill proposes, as a change from the National Housing Act, 1944, that the appraisal establishing the lending value shall be made by Central Mortgage rather than the lending value being the lesser of the appraisals by the lender and by Central Mortgage. This change is necessary by reason of the fact that for the moment at least the banks have not the facilities to provide this second appraisal. Moreover the government considers this to be necessary so as to ensure that a uniform level of loan, authorized by parliament, is made available in all cases.
Likewise, in ensuring that the house under construction complies with minimum standards as may be established by Central Mortgage, compliance inspections previously done by lending institutions will now be done by Central Mortgage, chiefly because the chartered banks are at this point unable to undertake this work. We hope too that it will result in improved and more uniform inspection procedures.
The governor in council will by regulation determine the maximum interest rate which may be charged by an approved lender for an insured mortgage loan. It will be noticed that in the bill itself, as in the present National Housing Act, there is an upper limit, using long-term government rates as a base, within which the governor in council may set this interest rate. When the discussion took place on the resolution which preceded this bill, it was suggested by some hon. members that it would be well for the interest rate to be contained in the bill itself rather than to be set by the governor in council. This used to be the practice in the earlier acts but experience has shown that a statutory interest rate which can be changed only when parliament is in session is too inflexible to meet operational needs. Already we have experienced times when a statutory interest rate was too high or too low in relation to a change in the general interest rate structure. In fact, it was our experience in this latter respect that occasioned the provision for the setting of the interest rate by the governor in council. Were we, in this bill, to set an interest rate which seemed reasonable in light of the present general interest rate structure, and if general interest rates were to move one way or the other, we would be faced with either a lack of mortgage money, or mortgages being made but at an interest rate higher than necessary.
I am still in the same position as I was when I answered questions about the interest rate during the debate on the resolution. Although I cannot tell hon. members what
National Housing Act
the rate will be in the original instance or throughout the operations of the new insured mortgage arrangements, it might be helpful if I made some comments on this point.
When we come to set the interest rate we will have in mind that parliament would wish to keep it as low as possible for the benefit of borrowers and yet high enough to attract a sufficient flow of mortgage funds. After all, the bill would accomplish little if it contained or had set by the governor in council an interest rate which did not attract mortgage funds.	;
The rate upon the lending institution's share of present National Housing Act loans is 5f per cent. Under the new arrangement the approved lenders will be advancing the full amount of the loan and for that reason there should be a saving in their expense ratio, perhaps one-quarter of one per cent. On the other hand, there has been a general upward trend in the mortgage interest rate structure during 1953. In my opinion a maximum interest rate for insured loans of, say, 5 per cent, although desirable from the borrower's point of view, would make the legislation completely inoperative because no mortgage money would be forthcoming. On the other hand, I believe that in light of the guarantees provided by the legislation a rate of 6 per cent would be too high.
I may say, Mr. Speaker, that mortgage money on prime residential mortgages at the present time is anywhere from 6 to 6J per cent and sometimes higher depending on the areas and conditions.
Under the present joint loan arrangements an individual, borrowing $8,600 on a 20-year basis, makes a monthly payment of $57.68. A corresponding loan under the insured mortgage pattern, on a 25-year basis, which will also include an insurance premium of $172, making a total loan of $8,772, would have monthly payments of $51.03, $52.28, $53.54, $54.83 and $56.13 at 5 per cent, 5J per cent, 5| per cent, 5j per cent and 6 per cent respectively. This will give hon. members an idea of the general range of monthly payments which may be required in the new arrangement. I think hon. members may be assured that the government will give careful consideration to all the factors involved before establishing a maximum interest rate under this legislation.
The bill makes provision that the aggregate of all loans on which insurance policies have been issued shall not exceed $2 billion.
Up to this point my remarks have been related to the first 13 sections of the bill

National Housing Act
which deal with the change from joint lending to insured mortgage loans. This part of the legislation is new and it is important because it provides facilities to those able to buy or rent accommodation on an economic basis. But there are families who are not in this position. To meet their needs loans to limited dividend companies are available. Or where a municipality and a province feel there is need for rental accommodation with subsidized rentals for families of low income, the federal government will participate to the extent of 75 per cent of the capital investment and subsequent operating losses. Where slum clearance and housing redevelopment are desirable, federal participation is available for 50 per cent of the cost of the slum clearance. These and other important provisions, contained in the present act, are submitted for re-enactment to round out authority for a comprehensive housing program. Hon. members are familiar with these provisions, but I will review them briefly and indicate any changes which are proposed.
The rental insurance plan, which must be distinguished from mortgage insurance, will be retained under the new legislation. It will be recalled that Central Mortgage has power to insure rentals and the re-enactment of this power makes it clear that where rental insurance is arranged, mortgage insurance is not necessary and therefore will not be available for the mortgage that finances the rental insurance project. Limited dividend provisions of the National Housing Act will be re-enacted. During the last year there has been substantially increased activity in this field. The present provisions contained under section 17 of the National Housing Act relating to loans by Central Mortgage to primary producers will be retained. The bill also re-enacts provisions to guarantee housing projects and land assembly projects undertaken by life insurance companies. A modification is introduced in that the allowed earnings of the life insurance company are increased from 6 per cent to 7 per cent, and the amount of the guarantee by Central Mortgage is raised from 2\ per cent to 3 per cent.
The authority contained in part IV of the present act relating to Central Mortgage guaranteeing the home improvement loans and home extension loans is to be continued. The insurance principle will be introduced by establishing an insurance fee of 1 per cent. The guarantee fund, however, will be as at present in the National Housing Act. The interest rate provisions have been removed and will be established by the governor in council.

It is contemplated that the housing research and community planning provisions of part V of the present statute will be continued. It is proposed, however, that the provisions of section 25 of the present act relating to the experimental manufacture of component parts of a house, be embodied into the new part V and enlarged to permit the construction of houses for experimental purposes.
The provisions of the present section 45, authorizing the corporation to acquire land, instal services and construct housing projects will be continued.
The present partnership arrangements of the federal-provincial housing projects and land assembly are to be re-enacted without change, as are the provisions for federal participation in the slum clearance and redevelopment.
In these remarks I have tried to review all the main points involved in the bill, but there are a number of other matters, minor though important, that I have not touched upon. When the resolution was being considered I stated that I proposed moving that the bill be referred to the standing committee on banking and commerce. There will be opportunity in that committee for all parts and sections of the bill to be reviewed and studied. Again, when the bill returns to this house and is in the committee of the whole, I will be glad if hon. members so request to deal with any matters which I have not touched upon today.
I feel that the various proposals contained in the bill, widening the source of mortgage funds, and the geographical coverage by mortgage lenders; facilitating more private lending by the insurance of mortgages; encouraging the extension of terms of loans and the reduction in down payment requirements, particularly in lower priced dwellings, should produce a great improvement in the financing of housing and at a time which would appear to be most opportune.
I have no desire to hurry the deliberation which should take place upon this important legislation. I think it deserves the most careful study. However, I would be remiss if I did not remind this house that the time element in connection with this bill is of great importance. Even if we proceed very quickly with this legislation there may well be an uncomfortable and unfortunate hiatus or delay in lending activities. The arrangement is new and will take some time to introduce. Every effort must be put forward to ensure that the new arrangements are in operation by early in the spring of this year.
Therefore, without any element of unseemly haste, the government will do everything in

its power to see that this bill progresses through its regular stages with dispatch, and I am sure that we can count upon the co-operation of hon. members to this end.


Donald Methuen Fleming: Mr. Speaker, housing is a subject of first importance in this house at any time, not least of all at the present time. The bill we now have before us is unquestionably a major piece of legislation. I should like to indicate at once the concern of members of the opposition both for the subject and for the bill.
I was glad to hear what the minister had to say about his wish to see the bill make all possible progress. May I say at once that we are disappointed that the bill was not called for second reading prior to today. There was an indication from the government on December 16, when the house rose for the Christmas recess, that the bill would be one of the items on the order paper for immediate consideration on our return on January 12. Yet, for reasons which have not been explained, the government chose to prefer other legislation over this bill for the consideration of the house. Many of us fully expected, in the light of what was said on December 16, that this measure would be put before the house on our return on January 12, and for the delay of nine days which has followed the government must accept responsibility.
The house-building capacity of this country is a matter which we must have in our minds in approaching the provisions and effect of the bill. I take the words of the minister himself speaking in this house on April 28, 1953, when at page 4496 of Hansard, he said:
I have no doubt that if all the factors were favourable, if there were adequate serviced lands, mortgage money and so on, the Canadian construction industry could easily build 135,000 units per year.
Now, sir, I take due note of the qualifications put by the minister on that estimate, but I think we may accept that as an estimate of the house-building capacity of the Canadian construction industry, given the favourable considerations enumerated by the minister. Yet, even in the light of the figures and estimates given by the minister today, it would appear that a figure in the neighbourhood of 100,000 units is the greatest number of houses produced by this country in any year so far. Materials are in ample supply. Labour likewise is in ample supply. Yet we have in Canada a shortage of houses, and we have a shortage of funds available for financing home construction.
This house, not only during the present parliament but in preceding parliaments, has always shown that it is ready to give to the
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government whatever powers might be required to help to meet the housing problem of the country, and also to make funds available, in whatever form was thought best, for this purpose. Indeed, sir, it may be said that throughout this important post-war period the house has been on all occasions, I think, unanimous in supporting such proposals as the government has put before it. It is equally true to say that the house has frequently demanded of the government other measures which it has not been prepared to sponsor and which, under the rules of the house and the constitution, it was not within the power of any private member of the house to sponsor. Therefore I am sure I need say nothing more about the desire of those of us who are members of the official opposition to support whatever sound legislation may assist in meeting the housing problem. We are eager to see put into effect whatever will be sound and contribute to that purpose.
Let us go back for a moment. The Dominion Housing Act was enacted by parliament in 1935. The National Housing Act was enacted in 1944 and has been amended in almost every succeeding year. In 1946 it was given something of a major overhaul. The trend of the amendments has been in all cases to widen the scope of provisions of the act and give added powers to assist in meeting situations not theretofore fully provided for by the legislation.
The present bill, in the light of that brief review of the history of our housing legislation, is undoubtedly the most important piece of such legislation to come before the house since 1944. The importance of the bill is not to be measured in terms of size alone. It is a bill of 45 pages and some 20,000 words. Unfortunately the draftsmanship is involved, and I may say from my point of view that is regrettable in a statute like this which is not going to be construed in the main by solicitors.
But this bill owes its importance not so much to its size as to its provisions and the importance of the subject with which it deals. It does re-enact in fact the bulk of the present housing act, and I find the consideration of the changes that it introduces in our present housing legislation can very well take us into the field of economics.
Sir, it is not easy in approaching a bill of this kind to isolate the principle of the bill. We must of course have housing legislation. The house has supported in the past the kind of legislation that constitutes the bulk of the present bill, the provisions which are being carried forward.

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The effect of higher wage rates on building costs was offset somewhat by a reduction in the average number of months under construction. This average dropped from 8*4 months in the first half of 1952 to 7-2 months in the first six months of 1953.
There are, in the light of figures I have just referred to, some encouraging aspects, indicating that there had been a measure of stabilization in house construction costs in the year 1953. That measure of stabilization, I think, gives one hope for expanded house construction. As long as the costs of construction were advancing at the rapid rate of the several years preceding 1953, undoubtedly those rising costs had a retarding effect upon the volume of house construction in Canada.
Given continuing stabilization of costs, there is some hope, I think, for an expanded volume of construction. But, sir, let us bear in mind-and we have had many authoritative warnings on the subject in recent days-that in Canada today we are in a high-cost economy marked by rigidity in costs. And it is quite possible that in this, as in other fields, if there should be further substantial advances in the costs of construction in Canada we shall virtually price ourselves, or those engaged in the industry, out of the market.
Sir, I think it is the duty of all of us to encourage in every way that lies within our power the utmost productivity on the part of all engaged in the construction industry in Canada, because in that way we can do much to meet the problem in the aspect to which I have referred. It can be met by increased productivity. I think it is the duty of all of us to do everything that may lie within our power to point that lesson home.
The third aspect of the problem is in relation to the down payment required. This flows in part from the aspect to which I have just referred. Under the legislation which has been in effect a 20 per cent down payment has been required in the case of all, with the exception of defence workers. It is the policy of the existing legislation to encourage home ownership. That indeed has been one of the foundations of the National Housing Act. It is a goal and a principle that is desirable both from its social and its economic aspects and, I think, has the support of all members in the house.
But this gap between the available mortgage loan on the one hand and the cost of construction on the other has been widened. The effect has been to prevent more persons from taking advantage of the opportunity of owning homes constructed for them under the provisions of the act. This was an acute factor even prior to 1949. In the province

of Ontario, my own province, the legislature passed legislation which was introduced by the government headed by my esteemed leader, the Leader of the Opposition (Mr. Drew). The purpose of the legislation was to break that gap in half by providing funds by way of second mortgage money to a maximum of $1,250, or one-half of the difference between the first mortgage loan and the cost of construction, whichever of the two was the lesser.
Thousands of homes were constructed in Ontario through the assistance of those second mortgages, provided under provincial legislation. Then this parliament in the fall of 1949 decided to meet on a national basis the need which had been met in Ontario by the legislation to which I have referred. In the fall of that year this House of Commons amended the housing act to make provision for what was called the one-sixth additional loan, the effect of which was to add one-sixth to the amount of the loan then provided for under the National Housing Act. Then, as the house is well aware, that legislation, while received enthusiastically by the house, was nullified by the government by its own decision, without reference to the house, at the beginning of 1951.
Let us look at the way in which the gap between the cost of construction on the one hand and available mortgage loans on the other has widened. According to figures of Central Mortgage and Housing Corporation, in 1950 the average down payment on a new house constructed in Canada was $1,928. In 1951-and this figure relates to the end of 1951-that figure had advanced to $3,188. In other words, in a space of less than two years the average down payment in Canada had jumped by 65 per cent. That, sir, I suggest is as effective a way of measuring the problem existing in this country as one can find. It is a problem which arises out of the fact that the number of people in Canada today who have the ready and liquid funds available to make these increasing down payments is limited. And unless something is done in this respect, or unless there are changes made in other directions, then undoubtedly there is a band of those who do not own houses today but who would like to own them, people who in other respects are credit-worthy and whose incomes may be adequate to meet the standard prescribed by Central Mortgage and Housing Corporation and the government, who are not able to enter the field.
Sir, the fourth of these aspects of the existing housing problem is the question of available mortgage funds. Here we must

recognize the fact that there has been a tremendous demand applied to the existing supply of mortgage funds in Canada. We must not forget that there are still conventional loans to be provided for in Canada on both new and old construction; but the joint loans provided for under part I of the present National Housing Act have absorbed the lending capacities of the present approved lending institutions virtually to their limit.
Now, let all hon. members be fair and recognize that the government and this legislation have received on the part of those approved lending institutions the utmost cooperation. I am sure the minister will agree with that. He did not mention it, but I think it is a fact he will readily endorse. The present approved lending institutions have undoubtedly gone the limit. They have greatly increased the percentage of their investment portfolios devoted to mortgages. Let us also recognize the fact that if there have not been as many individual loans available, it is due to the fact that the average loan has increased in amount with the rising cost of construction. Even with a continuing stable supply of mortgage funds from this source, there is bound to be a reduction in the number of loans possible, in view of the present continuing high demand, and the supply of mortgage money from this source is not unlimited.
I have heard discussion in this house and in the committee on banking and commerce two years ago which seemed to suggest that there is an unlimited supply of mortgage money in Canada. Well, there is not; and those who are acquainted with this situation realize that the present approved lending institutions have gone to the limit of their lending resources under part I of the National Housing Act.
Sir, not many days ago Mr. George L. Holmes, the president of the Canadian Life Insurance Officers' Association, said that the housing investments of the Canadian life insurance companies in Canada for 1953 were in the neighbourhood of $350 million. The amount of money the companies now have invested in mortgages, he is quoted as saying, represents nearly 25 per cent of their assets in Canada. He also said that an 18 per cent increase over 1952 in the amount of money invested in housing is reported by the Canadian life insurance companies.
It has been calculated that the present available supply of mortgage money in Canada from present sources will provide for the construction at present prices of approximately 80,000 houses. Expenditures on new residential construction in Canada today
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are running in the neighbourhood of $1 billion per annum and that, sir, is between 18 and 19 per cent of our total capital investment in Canada of $5-8 billion.
It is also inevitable in these circumstances that, because of the cost of servicing loans on the part of the approved lending institutions, smaller centres of this country are losing out in competition with the larger centres. Let us not forget that in the case of most of these lending institutions some 46 pieces of paper have had to be handled in connection with every one of these joint loans under part I of the National Housing Act. The house accordingly approved in 1947 the enactment of section 31A, which made provision for direct lending by Central Mortgage and Housing Corporation in communities up to 5,000. A further change in 1952 extended the benefit of direct loans to communities up to 50,000, where the facilities provided by the approved lending institutions were not adequate to provide for mortgage requirements.
Now, sir, to sustain the financial requirements of a program of 100,000 housing units in Canada today at present prices there would have to be, it seems to me, either an extension of direct government loans, or some scheme devised to attract mortgage funds from other sources.
The fifth of these aspects of the existing problem is the income limitation on borrowers. It is provided by regulation that the amount of the periodical payment required from mortgagors for a loan under part I of the act shall not exceed 23 per cent of his gross income, and with very slight exceptions gross income does not include the income of the family; it is the income of the head of the family, the borrower only. Consequently one has only to look at the figures given by the minister himself when he spoke on April 28, as recorded at page 4490 of Hansard, to see that taking the average estimated cost of a house in Canada at $11,358, to qualify for a maximum loan adequate to service the construction of a house at that cost a person will have to have a gross income amounting to $3,696 per annum. Consider the number of those who have that kind of income in Canada today to meet the periodical payments on that basis-and that is after providing for the down payment, of course. As we have met, through the existing legislation, the case of those with the larger incomes, the number of those who cannot meet the existing requirements is necessarily bound to increase in proportion.
Now, sir, the sixth aspect is the period of amortization, or the period of time over which


Robert Henry Winters: I know my hon. friend knows this just as well as I do, but just to keep the record correct may I say that the ratio is 25 and 75 per cent rather than 20 and 80.


Donald Methuen Fleming: I do not think the minister waited for my full sentence. I was speaking of the 80 per cent loan in relation to the lending value. The interest on the first 20 per cent of the 80 per cent as contributed by the government is at the rate of 3J per cent, and the lending institution puts up the other 60 per cent at a rate of 5J per cent, making a net rate on the 80 per cent, which is the total loan, of 5J per cent to the borrower.
Having reviewed these aspects of the present situation I think it is fair to apply to this bill this test: How does this bill propose

to meet the problem from these various aspects? Then let us examine the bill particularly in relation to these seven aspects I have mentioned. On examination I find that these are the features of the bill:
First, the bill continues practically all of the provisions of the present act except those under part I in relation to the construction of housing on joint loan for owner occupancy. The provisions in relation to land assembly, limited dividend housing corporations, housing for rental, rural housing, home improvement loans, home extension loans, subsidized housing, research and community planning, are all continued in substantially their present form although the insurance scheme is applied to some of them.
Second, part I in relation to joint loans for construction of houses for owner occupancy is abolished.
Third, the chartered banks of Canada and the Quebec savings banks are now admitted to the category of approved lending institutions under the act.
Fourth, a new scheme of insurance is introduced in relation to loans under the act and some other forms of housing under the act, on which latter I shall not dwell.
Fifth, the amount of the mortgage loan is increased; instead of being 80 per cent, except in the case of defence workers, it now becomes 90 per cent on the first $8,000 of the approved lending value and 70 per cent on the balance.
Sixth, the period of repayment of principal of an approved loan is increased from 20 years to 25 to 30 years in the case of owner-occupied housing.
Seventh, we have a change in the provision for the interest rate. It is now to be prescribed by the governor in council by regulation and is not to exceed-this is the change- the interest rate on long-term government bonds by more than 2j per cent per annum.
The eighth feature is that the aggregate amount of all loans in respect of which insurance policies shall be issued under the act is not to exceed $2,000 million.
With that brief review of the features of this bill I propose now to appraise it, to submit it to the test of whether it will contribute toward meeting the housing problem in the various aspects which I have enumerated. I think it is our duty as members of the house, regardless of party, to give to this bill, in the light of its high importance, the most searching study.
Let us not be influenced by any exaggeration that has attended the announcements of the purpose or effect of the legislation. There

has been the usual fanfare in the government's announcements of this legislation and the benefits that it may hold forth. The first announcement of this legislation came not from the minister but from the Prime Minister (Mr. St. Laurent) on October 1 last. There has been created throughout sections of the country, partly by reason of exaggeration on the part of the government and partly as a result of innocent misunderstanding, the impression that this bill is going to create something of a new heaven and new earth overnight. Great expectations have been built up in relation to this bill and the scheme it contains. I submit that it would be cruel to disappoint expectations of this kind.
Let us see how this bill will attempt to meet the problem of our housing needs in Canada in relation to the various aspects I have mentioned. First, what does it do in relation to the shortage of serviced land or to meet the needs of municipalities? It does nothing new. The provisions of this bill offer no change whatever over those existing in the present act, and what is undoubtedly still the principal bottleneck in solving our housing problem today will continue. There is no provision in this bill in relation to it. This bill offers no help to the municipalities beyond such help as was offered to them under the existing legislation.
Second, in relation to the cost of construction, there is of course nothing in this bill dealing with that subject. It is quite possible-and the government laid stress on this in the light of the action they took in 1951 to eliminate the one-sixth loan-that the additional funds being made available for lending on mortgage security could result in inflationary pressures. My understanding is that Central Mortgage and Housing Corporation intends to continue to impose a limit on the prices builders may charge for houses built with approved loans. There has been no statement on that from the minister, but the minister nods his head and I understand he confirms the statement I have just made.
I do not think parliament has any wish to put up substantial funds of the people of Canada in order to assist any but the people of Canada who need housing. I think that is a fact which should be made perfectly clear in relation to the cost of construction. The people whom parliament is seeking to help are the people who need housing.
The third aspect is this matter of the down payment. The scheme proposed by the act does offer some assistance in this regard through a reduction in the down payment. Let me give two examples. Take a house
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costing $10,000. Of course there is no such thing today in any of the areas where shortages exist, but let us take this hypothetical case as a sad reminder of what we used to be able to do with our money when we wanted to build a house. On a $10,000 house, under the existing act it would be possible for the builder to obtain under part I a mortgage of $8,000. He would have to make a down payment of $2,000 cash. Under the scheme outlined in the present bill he would be able to obtain a loan of $8,400 and would have to make a down payment of $1,600.


Robert Henry Winters: Should that not be $8,600?


Donald Methuen Fleming: I am sorry; it should be $8,600, with a down payment of $1,400. But to that he would have to add 2 per cent as his premium on the insurance, and 2 per cent premium on $8,000 would be $160 which would be added to the down payment. His down payment will thus become $1,560. In other words he pays $440 less than under the existing legislation. Let us take the net cost of a house today at $12,000. Under existing legislation the mortgage would be $9,600 and the down payment would be $2,400. Under the new legislation the mortgage will be $10,700 and the down payment will have to be $1,300 plus 2 per cent on $10,700 which is $214. He will have to find $1,514-


Robert Henry Winters: No.


Donald Methuen Fleming: Is my mental arithmetic
slightly too fast?


Robert Henry Winters: It is not a question of speed but of accuracy.


Donald Methuen Fleming: They are related. We are agreed $10,700 is the amount of mortgage?


Robert Henry Winters: $10,700 is the mortgage loan on a lending value of $13,000. On a $12,000 lending value the mortgage loan is $10,000.


Donald Methuen Fleming: And we add 2 per cent of the $10,000, which is $200, to his loan of $10,560. His down payment is $2,440 plus the 2 per cent, which makes a total of $2,640. Undoubtedly any reduction in the down payment is going to increase the number of those who will qualify for the loans.
Now, sir, let us come to the next item in this aspect of the housing shortage, which is income limitation, another test of eligibility. There is no indication in the bill that any change is contemplated in the 23 per cent relationship between gross income and the monthly payment. It is evident, of course, that by stretching out the repayment of principal the periodical payment is thereby somewhat reduced, not greatly but certainly to some extent, by relating the 23 per cent

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to a slightly smaller payment. In that way the gross income required of an eligible mortgagor will be slightly reduced.
But again, subject to the accuracy of the figures of the amateur mathematician now speaking, and assuming a rate of 5J per cent on a loan of $12,500, under the act at present the gross income required of the mortgagor would be $4,600 per annum. Under the new act, with the 25-year period of repayment, the gross income required would be $4,360. In other words there is just $240 difference in the gross income required in that case under the present bill as compared with the existing act. Of course this is assuming that under the new act there will be the same effective rate of interest to the mortgagor as obtains at present, namely 5| per cent, though that is an assumption which the minister, in the light of his statement today, is not yet prepared to make.
The extension of the period for repayment of the principal will undoubtedly make it easier for some people to become eligible. But the question then arises, what about those who wish to increase the rate of repayment? We find, sir, that prepayments, as compared with the rate of periodical payment provided under the mortgage, will go to reduce the number of periodic instalments but not the amount of each.
Sixth aspect is the interest rate. This is a matter that I believe is bound to engage the attention of the house because of the importance of the interest rate in relation to the whole question of bringing into effective demand a number who are not now eligible for loans under the existing act, and obviously it concerns others outside the house as well as at least one member in the house. I have a dispatch here from the Toronto Globe and Mail, dated November 5, 1953, reporting a meeting of the young Liberals of the Toronto and York ridings. I shall read the text, though first I remind hon. members that this was after the proposed bill was announced by the Prime Minister on October 1. The report reads as follows:
In the face of suggestions yesterday that N.H.A. rates of interest would soon be increased, the young Liberals of the Toronto and York ridings last night urged the federal government instead to reduce the rates.
A resolution passed unanimously by the annual meeting of the Toronto and York association said a reduction in the interest rates of National Housing Act loans would encourage construction and enable easier purchase of homes.
The dispatch continues:
Paul Hellyer, M.P. for Davenport, told the sixty young party members that he hoped N.H.A. interest rates would not go up.
That is his hope. The minister has been frank today in his approach to this question. IMr. Fleming.]
He has, it will be noticed, carefully refrained from any suggestion that the interest rate will not go up. Now, sir, this is a matter of extreme importance. The bill provides that the interest rate permissible under the new insurance scheme shall not exceed by more than 2\ per cent per annum the effective rate on long-term Dominion of Canada bonds. Long-term could mean 20 years, but I understand that today the maximum maturities run to about 15 years and that the effective market rate on bonds of that maturity is about 3-65 per cent. Admitting that 2J per cent is the maximum additional rate under the legislation we are now called upon to enact, this new bill will provide a possible rate of 5-9 per cent on mortgages as compared with the existing rate of 5j per cent on loans under part I of the present housing act.
It is expected, of course, that by insuring the loan and thereby reducing the element of risk the lending institutions may be willing to accept a somewhat lower rate of interest than the 5J per cent they are now receiving on their share of the joint loans under part I of the act. But that remains to be seen. There is in this act a provision that no hon. member should overlook, because it is of very great importance to the whole appearance that has been given to this bill as one that will reduce down payments and reduce the periodical instalments.
Let us recall, sir, that even if you do extend the period of repayment of principal, if that mortgage should be accompanied by an increase of one-half of one per cent in the interest rate from, say, 5j per cent to 5f per cent, you immediately wipe out all the benefit the borrower receives by reason of the extension of the period of repayment, because his periodical repayments are going to be just as large as they are at the present time. That in turn relates to the provisions of the act in regard to down payments. Now, we have not heard anything of-


Robert Henry Winters: On the question of the down payment, and just to make one other correction of what might be left as an impression, the insurance premium will not go towards increasing the down payment, as the impression was perhaps given just now.


Donald Methuen Fleming: I did not intend to leave that impression.


Robert Henry Winters: If, for example, there is a lending value of $12,000 and the amount of the loan is $10,000, the insurance premium in that case would be $200. That premium will be an increase in the amount of the mortgage loan rather than an increase in the amount of the down payment.


Donald Methuen Fleming: I understand the point the minister is making. I must say that is one provision of this act that I think will have to have some clarifying amendments when the bill is under study in the committee because, whatever the intention may be, I am satisfied that the language of the bill is open to another interpretation on that point. I am quite prepared to accept the minister's statement of the intention of the bill. I simply say at this point that it is going to be necessary, I think, in order to carry that intention into legislative effect to insert clearer words in the bill than are used there now for that purpose.
I was speaking about the effect that would ensue from an increase in the interest rate to the borrower. In this respect we have not been told what the intentions of the Bank of Canada may be with relation to the borrowing market. It would be interesting to know. There have been vague suggestions in some quarters that the Bank of Canada intends to go into the financial market with a view, by its operations there, to making money available at lower interest rates than would otherwise be the case. I think before this debate has run its course the house should have an authoritative statement from the government as to its intention with respect to the operations of the Bank of Canada in that regard.
I come to the major question as to what effect this bill is going to have in increasing the supply of funds available for mortgage lending under the act. Here, sir, I think there are three aspects of this matter that must command the consideration of the house. The first is the elimination of joint loans under the present part I of the housing act. The second is the admission of banks to the circle of approved lending institutions, and the third is the insurance scheme.
The reasons given by the government for the bill, as stated by the Prime Minister in his statement on October 1, were to the effect that "the government is taking steps at this time because it feels that the present sources for mortgage money are insufficient to keep pace with housing needs." Therefore I take it that the principal purpose that the government has in mind in introducing this legislation is to increase the supply of mortgage funds. This must, from a reading of that statement, be the principal object of the bill. Will the bill have that effect? The minister was frank enough in his statement on December 16 to say in effect that he could not tell, and I am sure if he cannot tell nobody else can. These were the minister's words as recorded at page 1009
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of Hansard, and I open with a quotation from my question to the minister in this respect:
Will the minister tell us what is the expected extent of participation on the part of banks under the new scheme? Also will he tell us what is the anticipated augmentation from that source of mortgage funds, and how it may he expected that that augmentation will be made available for distribution in smaller communities?


Robert Henry Winters: Mr. Chairman, it is difficult to answer those questions in detail. We do not know, for instance, to what extent the lending institutions will divert money they formerly put into conventional loans into the lending operations under the insurance mortgage technique. We would hope, however, that this would result in a great increase in the flow of mortgage money under the National Housing Act.
You will note, sir, that the minister, speaking, I take it, with reference to the existing approved lending institutions, is saying in effect: Well, we do not know whether they will be able to put any more money into their mortgage lending under the act. Then the minister proceeds:
With respect to the last part of the question, perhaps it can be answered more specifically than the other parts.
Then he goes on to deal with something to which I shall return later, but he does not answer my question as to what might be expected to be the over-all result of this legislation with respect to the supply of available mortgage funds. The minister was not prepared to estimate the amount of mortgage funds that might have been expected from the banks as a new source.
With that background let us look at these three aspects, and first of all the abolition of part I of the National Housing Act. Those of us who have tried to keep ourselves close to the housing problem will, I am sure, view the proposed departure of part I of the act with very great regret. Part I of the National Housing Act has been in force since 1944 and it has been, I think, as fruitful a piece of legislation as this parliament is likely to enact in the ordinary course of events. It has created an individual pool for each lending institution under which the government and the lending institutions have, in approved proportions, shared the risk. Seventy per cent of the lending for new one-family residential construction today comes from that source. In the first eleven months of 1953 we saw that joint lending under part I of the act provided for the construction of some 30,500 units. Conventional loans, on the other hand, as an investment for the funds of the approved lending institutions, attracted just $92 million by comparison in the same eleven months' period for 17,500 units.
The results, I think, are also to be measured in relation to the sound social

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purpose of encouraging the ownership by Canadians of their own homes. Let us look for a moment at the results that have been achieved in that period. The daily bulletin issued by the dominion bureau of statistics of March 17, 1953, had this to say about the trend of home ownership in Canada in the ten-year period up to 1951:
Home ownership made a big advance in Canada during the ten years from 1941 to 1951, according to a census bulletin on housing by tenure and type of dwelling published by the dominion bureau of statistics. Of the 3,409,295 occupied dwellings in Canada's ten provinces in 1951 2,236,955, or 65-6 per cent, were occupied by owners and the remaining 1,172,340, or 34-4 per cent, by tenants. This represents a substantial jump in both the number and percentage of owner-occupied dwellings over 1941.
Sir, for that jump, the greater part of which occurred in the seven-year period from 1944 to 1951 rather than in the three-year period from 1941 to 1944, part I of the National Housing Act deserves the bulk of the credit for the substantial increase there recorded in the proportion of owner-occupied homes in Canada. What of the period since 1951? In the daily bulletin of the dominion bureau of statistics of January 8, 1954, we find the following:
Total number of households or occupied dwellings in Canada's ten provinces increased by 232,000, from 3,409,000 to 3,641,000 in the period of approximately twenty-seven months from the time of the 1951 census to September, last year, according to results of a special survey of housing characteristics and household equipment in private homes by the bureau.
Then it adds:
About 73 per cent of the increased number of dwellings was in single detached houses which rose by 172,000 to 2,448,000 units. Of the ten-province total, 2,451,000 or slightly over two-thirds were owned by the occupants.
Again, Mr. Speaker, I say that in accomplishing this result, so desirable both from the economic and social point of view, the provisions of part I of the National Housing Act are entitled to a measure of high praise. The government, of course, has participated and for the first eleven months of 1953 has earmarked approximately $106 million under the National Housing Act. In round figures there is $60 million for its share of the joint loans under part I of the act and $50 million on account of direct loans.
Let us remember again the credit that is due the approved lending institutions for putting up the other three-quarters of the total for all joint loans under these provisions. In the first eleven months of 1953 these approved lending institutions have accounted for an increase in new residential construction over the same period in 1952 of no less than 22 per cent. This is a tribute

both to the effectiveness of the provisions of part I and to the co-operation that has been enjoyed by the government from the approved lending institutions in administering these provisions.
In his statement on December 16 from which I quoted, the minister was wary in his comments as to what might be expected from the existing approved lending institutions in relation to the augmentation of existing sources of mortgage funds. From the same newspaper report of the statement issued on January 2 by Mr. George Holmes, president of the Canadian Life Insurance Officers' Association, I read this:
Commenting on the new housing legislation now before the House of Commons, Mr. Holmes said:
"It is too early to foresee the effect of the government's new insured mortgage legislation. The companies desire to co-operate with the federal government as they have done in past years to provide additional housing, but the volume of funds available for this purpose will depend to some extent on whether the interest return on the insured mortgages, having regard to safety and administration costs, is competitive with other avenues of investment."
I suppose we come back to this position, Mr. Speaker, that no one can say with certainty what will be the amount of mortgage money available under the new scheme.
I come now to the second aspect, the matter of admitting the banks to the category of approved lending institutions. In this respect the bill approves a fundamental departure from all Canadian banking practice and banking legislation of the past. The Canadian banking system is, as all members are aware, unique in the world. It has been a strong system. One has only to recall the strength exhibited by the Canadian banking system in the depression years as compared with the results in the United States, to recall gratefully the strength of the Canadian banking system. Unquestionably part of that strength has been due to the presence in the Bank Act of section 75, subsection 2 (c), which provides as follows:
Except as authorized by this act, the bank shall not either directly or indirectly
(c) Lend money or make advances upon the security, mortgage or hypothecation of any lands, tenements or immovable property . . .
To maintain the strength of the Canadian banking system, we must have regard to two features which I believe are of the highest importance, namely, security and liquidity. It is because there have been security and liquidity in our banking system and in the range of investments available to the banks that our banking system has been strong. The strength of the system also owes much to the quality of leadership we have had in the Canadian banks. Unquestionably we

have at the head of our banks some of the leading business executives and some of the most competent men in Canada.
The money in the banks belongs to the depositors. I am sure it will alarm not a few persons to learn that this far-reaching legislation was introduced, involving a fundamental departure from the principle of Canadian banking legislation as it has existed from confederation, without the banks being consulted by the government before the decision was taken and announced. Let us then understand that the banks have not asked for any widening of their powers in relation to investments of this kind.
Even if this legislation goes into effect quickly, it will still be necessary for the banks, in order to follow wise and prudent investment policies, to diversify their investments and to meet the traditional obligation of Canadian banks to finance the development of Canadian resources. Today bank funds are substantially employed. I do not believe the government is going to suggest there is any volume of idle funds in the vaults of the banks. It does not pay the banks to have idle funds. They make their profits from lending money prudently. On a recent occasion when the minister was speaking in the city of Toronto, he did hold out the hope that, without trespassing upon their existing volume of loans and investments for other purposes, the banks would have available a volume of funds arising from new deposits as the population increased. If the population increases, then certainly the demands upon the banks to finance increasing and expanding development of Canadian resources are likewise going to increase.
No one can fully answer this question, but in asking ourselves whether the banks are going to lend extensively under the provisions of this act let us face up to the fact that to find funds for its purpose the banks may be obliged either to sell government bonds, to call in existing loans or to expand credit. It is one thing, sir, to expand credit on commercial loans for a period, we will say, of nine months, but it is another thing to expand credit on mortgages having a lifetime of 25 or 30 years. In other words, it is an entirely new field so far as the banks are concerned.
If you will examine the December, 1953, issue of the statistical summary of the Bank of Canada, you will see that the 1953 gross national product at today's market prices is adjusted at $24,176 million. Out of that total Canada is devoting to housing a gross domestic investment of $1,032 million. That is a very high proportion going into investment in housing today.
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I say these things with a view to trying to put this measure in its true proportions before the house. It is so easy for people to draw the impression that because you are going to allow the banks to lend money on mortgage security, and that because the banks have billions of dollars in their balance sheets, suddenly you will have a gigantic infusion of new mortgage money available for mortgage investment.
Sir, it would be a bold man, one indulging in a good deal of speculation on the subject, who would be prepared to say with any degree of confidence exactly what amount the banks are prepared to devote to investment under this bill, by way of mortgages. I know we can assume that the banks will co-operate; but I hope we are not going to contemplate any pressures being exerted upon the Canadian banks to put depositors' money into long-term investments on mortgages under this act, when the course of bank experience and the necessities of preserving liquidity would dictate to those responsible for the banks' investments that they should not go too deeply into investments of this new kind.
Sir, the banks must continue to have regard to both liquidity and security in all their investments. Both are of the highest importance with them; but they are not the same thing. It may well be that the problem of preserving security with bank investments is going to be met substantially by the insurance provisions, under the scheme of this act. But let us recall, sir, that even though security is provided in that way, that in itself does not provide liquidity, because after all you can have a bank mortgage guaranteed against default, but if the mortgage goes on without default on the part of the mortgagor the bank's funds are tied up. And they are tied up for periods up to 30 years under the provisions of the new scheme.
Therefore the provision for insurance by Central Mortgage and Housing Corporation is no guarantee whatever of liquidity for these bank investments. What is proposed by the government in relation to liquidity, as the minister stated in his speech this afternoon, is that the Bank of Canada Act is to be amended to provide that the mortgage portfolio of chartered banks is to be eligible for loans from the Bank of Canada.
That will have to be considered a feature of high importance in assessing the provisions of this present bill in regard to the needed preservation of liquidity on the part of bank investments. I make only one further
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comment on the matter of bank investment, and I do it by way of trying to bring this matter into its true proportions, and eliminating wishful thinking- which undoubtedly all of us have been tempted to do in this respect, not excluding the minister himself.
Speaking on the measure on December 16 last, as reported at page 1009 of Hansard, the minister made some comment in reply to a question of mine to which I referred earlier this afternoon-and I am now taking up the minister's answer at the point I broke off when reading earlier. I was asking him with respect to anticipated augmentation from banks of the available supply of mortgage funds. The minister's answer proceeded as follows:
With respect to the last part of the question, perhaps it can be answered more specifically than the other parts. I understand there are about 4,000 branches of the chartered banks in Canada. Each branch will now become a lending institution. That in itself will increase the number of lending agencies under the National Housing Act from some 150 odd, as there are at the present time-that is, branches of authorized lending institutions-to over 4,000.
I am afraid the minister has been indulging in wishful thinking in picturing every branch of the chartered banks in Canada as a local lending agency. It may be that the banks will in time use their branches extensively in relation to whatever mortgage business they choose to embark upon; but there has been no statement from the banks to that effect. And I just throw out a word of caution at this point.
To assume that the banks are going to pump vast resources into mortgage investments on the one hand, and also that 4,000 bank branches in Canada are all suddenly going to become local lending agencies, is to make an assumption that is not warranted by any authoritative knowledge that exists at the present time.
The third feature is this insurance scheme. This is designed, of course, to make the lending on the new terms palatable to the banks, and to encourage the present lending institutions to enlarge their mortgages. Because while previously approved lending institutions have been providing 60 per cent of the 80 per cent of approved lending value, from this point forward, on an increased lending value, they are expected to put up the full 100 per cent of the loan.
Let us remember this: all members in the house with legal training know that the law in relation to guarantees is a very technical branch of the law, and that it is necessary for a person who enjoys the benefit of a


guarantee to comply strictly with the letter of his contract, if he hopes to hold the guarantor to his guarantee.
While this insurance scheme has some precedent in the United States, our situation in Canada is rather different; and I do not think precedent in that respect can be pressed too far. Let us also recall that the loan is limited to 98 per cent of the mortgage risk. I am referring to the principal and the arrears up to six months. A 2 per cent premium is paid for it by the mortgagor. The limit of $125 may not be adequate to cover the expenses to the mortgagor; and for that reason I caution the house against assuming that the guarantee will be worth 98 per cent of the face value of the mortgage.
I make these further observations on this matter of guarantee. First, it is not open to individuals as mortgagors; it is confined to institutions. However, it will become open to individuals to purchase insured loans from approved lending institutions. Secondly-and this is a factor I ask the house to consider carefully-the limit of a loan which can be insured is a minimum of 70 per cent.
In other words, no approved lending institution which lends only 69 per cent of the approved lending value becomes eligible for insurance. It must be 70 per cent or more. I suppose that any of the approved lending institutions is prepared, under proper circumstances, to lend up to 60 per cent of approved lending value, without any form of guarantee or insurance. So we do not need to worry about loans up to 60 per cent of approved lending value.
But, sir, the effect of this bill will be that, in the case of loans in excess of 60 per cent and less than 69 per cent of the approved lending value, there is open to them no loan under existing practice from an approved lending institution on the one hand, and no insurance on the other hand. So that we should realize that in some cases at any rate we are insisting that the intending mortgagor, even if he can get along with 61 per cent of the approved lending value by way of loan, must take 70 per cent if the mortgage is to qualify for insurance.
The third feature that I should like to comment on is the necessity, the statutory requirement, that possession and title be given by the holder of the mortgage, the approved lending institution, to Central Mortgage and Housing Corporation in order to qualify for the payment under the guarantee. Is this such a simple matter that it can be just hustled over, Mr. Speaker, as has been done

by the minister today? Sir, this could be one of the major problems arising under the provisions of this bill.
It is a requirement of this bill that before the mortgagee can call upon the Central Mortgage and Housing Corporation to pay 98 per cent of the principal of the loan, plus the six months' arrears, the mortgagee first of all shall have obtained possession and title to the property in order to deliver title and possession to the Central Mortgage and Housing Corporation. There is only one very slight exception to this rule in the bill. Sir, that means that the mortgagee must foreclose the mortgage. Indeed, under this bill, if a mortgagee permits the arrears of interest on the mortgage to accumulate beyond six months he is running the risk of losing the benefit of the guarantee with respect to any additional arrears. What does that mean? Well, I am quite sure that the mortgagees in this case are not going to risk forfeiting the benefit of the guarantee. They are going to be required to take such steps as will put them in a position to deliver possession to Central Mortgage and Housing Corporation. What does that mean? It means foreclosure. It means dispossession of the owner of the equity. There is no escape from that fact under the provisions of this bill, except one very slight saving provision which will be available under the bill in very few cases.
Anybody who has had any experience with the mortgage business, especially in the depression days, knows perfectly well that in the vast majority of cases the mortgagee does not wish to take over the property. He looks on his mortgage as an investment, not as an avenue by which he can obtain title to the property. In most cases he is not interested in becoming a property owner. He wants his money back, and therefore he will nurse the mortgagor, the owner of the equity, along as long as there is a chance of the owner of the equity making good.
Under this bill, sir, a holder of an insured mortgage dare not give additional time to a mortgagor, once his mortgage is in arrears six months, without jeopardizing his guarantee. Let the house, if it will, weigh that fact carefully. And if in time to come recession should occur, with a drop in real estate values, and the owners of equity are unable to maintain their payments, if that situation should arise then this bill would drive the holders of these mortgages to insist upon the letter of the law in their mortgages and to take steps in the event of six months' default to acquire title to the property and dispossess the owner of the equity.
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Now, sir, we are thinking about this in terms of what this legislation may contribute to sound social as well as economic purposes, the kind that parliament would approve. Is that a sound social objective? The owners of houses with insured loans upon them, in the light of this provision, are going to have a much more difficult lot than those whose properties are not subject to insured loans. It is going to demand of the holder of the mortgage that he insist upon prompt payment, and that he should not allow the mortgage to run into arrears, because he must be in a position to give possession to the Central Mortgage and Housing Corporation.
Take this situation also, Mr. Speaker. We have had experience in this country in depressions of moratorium legislation being introduced by provincial legislatures. Suppose there should be a recession in this country. Suppose the recession should reach such a point that provincial legislatures again should decide to intervene as between mortgagors and mortgagees and impose a moratorium in such cases, preventing the mortgagee from qualifying to give possession to the Central Mortgage and Housing Corporation in order to get the benefit of that corporation's guarantee. Here is the situation, surely, that the guarantee is intended to provide for when a mortgage goes into default. And yet in that case provincial legislation can prevent the mortgagee from obtaining possession of the property so as to put him in a position to call upon Central Mortgage and Housing Corporation to make good its guarantee, because he would not be in a position to give that corporation possession. That is not the only possibility, Mr. Speaker. Suppose some provinces, in the event of a recession, decided to enact debt adjustment legislation, decided somehow or other to intervene in this field for the purpose of adjusting debts. If legislation of any kind is introduced in this respect the beneficiary is going to be the Central Mortgage and Housing Corporation, and a guarantee to that extent is going to be worth less than I am sure many hon. members now think or have been led to think it is worth.
I am not prepared to speculate today on the possibility of that recession coming. I do know that there are some very eminent people in this country who do say that they think there is evidence of the possibility of a recession. I notice that on October 14 last Mr. A. R. Mosher, the president of the Canadian Congress of Labour, was quoted in his speech at Vancouver as saying:
I do not want to be pessimistic, but I think there are some signs that a recession is coming.

National Housing Act That remark comes from a very prominent labour leader in this country.
I am not prepared to speculate on the question of a recession coming, but I do say that every hon. member must take into account the possibility. In addressing himself to this bill he must take account of the situation that would arise in the event of a recession occurring in this country, and a different situation arising from any that we have been facing in recent years.
Our housing legislation, you see, Mr. Speaker-and this goes for part I of the present act-has had the benefit, in those post-war years, of good times, rising real estate values and rare defaults on the part of mortgagors. What occasion has there been for any mortgagor to default on a mortgage, Mr. Speaker, when in most cases, unless he made a very improvident purchase, as the market rose he could sell for more than he paid? If that situation is ended, the factors that I have mentioned may come to be factors of high importance. In any event, I am quite sure they are going to be matters of importance for the approved lending institutions in weighing the value that they are prepared to attach to the guarantee provided under this bill and deciding to what extent they are prepared to reduce the return that they ask for the risks they take in connection with such loans.
There are two other matters that I should like to mention, Mr. Speaker. The first relates to the position and power of Central Mortgage and Housing Corporation under this bill. If this bill is enacted in its present form or anything approaching its present form, Central Mortgage and Housing Corporation will derive under its terms gigantic powers. Under the terms of this bill that corporation will become the sole arbiter of at least three things, each of which is of cardinal importance in connection with parliament's expectations from this bill.
First, Central Mortgage and Housing Corporation becomes the sole arbiter under this bill of lending value. The bill provides: "lending value" means the value for lending purposes of the house or housing project determined by the corporation.
Indeed, not only must every mortgage under this bill, in order to be eligible for insurance, be approved by the corporation, but Central Mortgage and Housing Corporation will itself make the appraisal. The minister told us this afternoon that the banks have not qualified staffs or personnel for that purpose. There is a very great power.
Second, Central Mortgage and Housing Corporation with respect to every mortgage under this bill will be the sole arbiter of 
the standards and quality of construction. There are those who may take some satisfaction from the safeguards that Central Mortgage and Housing Corporation will insist upon in relation to standards of construction, but let no hon. member lose sight of the implications of the inescapable fact that under this bill Central Mortgage and Housing Corporation becomes the sole arbiter with respect to every loan made under the provisions of this bill for all Canada of the standards and quality of construction.
Third, Central Mortgage and Housing Corporation under this bill becomes the sole arbiter of the speed of construction with respect to every loan insured before construction is undertaken, because if the approved lending institution wants the benefit of insurance with respect to instalments made under a building loan it must accept the fact that Central Mortgage and Housing Corporation controls the progress of construction. It must approve every single advance or instalment.
Speed is essential in holding down the cost of construction. In the report by Central Mortgage and Housing Corporation which I mentioned earlier attention was drawn to the fact that housing costs in Canada were stabilized last year only by reason of the fact that the average period of house construction, the average period it took for a house to be constructed from the time construction was started until it was finished, had dropped from 8 [DOT] 4 months in the first half of 1952 to 7-2 months in the first six months of 1953. Already builders in this country 'have indicated very serious apprehension about delays in construction with reference to provisions of this kind. I simply content myself at this time with drawing attention to it and seeking to impress upon the house that Central Mortgage and Housing Corporation under this bill becomes the sole arbiter of the speed of construction with respect to every loan approved before advances are made under it.
That is why I say that under this bill Central Mortgage and Housing Corporation and its officials derive gigantic powers. Let us use the proper expression, whatever may be the implications read into it on occasions; it means the vesting of vast powers in a giant government bureaucracy.
One could use the illustration of the camel putting his head in the tent and working his way in by degrees. By this bill we see Central Mortgage and Housing Corporation growing from its modest participation originally assigned to it in the housing scheme and now stepping in and assuming the sweeping powers provided by this bill. For that reason builders are realizing how

vast are the powers the corporation will hold under this bill and are therefore taking a second look at the bill.
Before I leave that subject I desire to express just one further thought in relation to the possibility of defaults in the event of recession. When speaking on housing on April 28, 1953, the minister quite properly said, as reported on page 4491 of Hansard of that date:
I think it is important as a matter of policy that the federal government should neither be the landlord of too many Canadians nor should it hold the mortgages for too many Canadian homes.
That being the view of the government as expressed last April, let us remember that in the event of widespread defaults in the event of a continuing recession, if it makes good its guarantees the government will acquire possession and title to a great number of homes in Canada under this bill. Very quickly it will become the country's greatest landlord.
Next, the bill vests in the governor in council very sweeping powers to enact virtual legislation in the form of regulations. There are pages of provisions in the bill which vest in the government the powers to enact provisions in the form of regulations. This wide power to legislate by regulation could be applied, on the one hand, if the government so choose, virtually to nullify the legislation enacted by parliament. On the other hand, if used by the government for this purpose it could be made the occasion of rampant inflation in Canada. I express the hope that if this measure becomes law it will not be allowed to become bogged down under its own weight by reason of a multiplicity of troublesome regulations and that the government is not going to heap upon those who are going to have to work under it such a mass of paper work that it is going to make loans under its provisions distasteful to them.
The powers are so vast that those of us who do not trust power in the hands of the government will not feel that powers of this nature, powers which are so wide, so sweeping and so inclusive are needed.
The Bank of Canada is going to have an important part to play in the whole scheme, as was made apparent to us today. The liquidity of bank investments in this respect will depend upon action on the part of the Bank of Canada. Let us not lose sight of the fact that there is lurking danger of inflation here. This bill can go far beyond the present housing situation in Canada in its effect.
I have spent more time on this than I intended to in looking into the possibilities
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that could arise under this bill. As I say, in its effect it is going to extend far beyond the immediate situation. It is evident that in introducing a bill with powers as sweeping as this one the government is looking beyond the housing situation that exists. On the face of it, it looks as though the government is girding itself with another weapon to deal with the possibilities of recession, and is resorting to the Keynesian theory of economics.
It would appear as though the government was looking to this bill as a means of stimulating house construction, not simply with the view of improving the existing shortage but with the view of stimulating house construction in future as a source of labour and the encouragement of other consumer spending as well as having regard to the social effects which come from owner-occupied houses.
I apologize for the length of time I have spent in this review of the bill and its implications. 1 have done it because of the admittedly vast importance of the bill. It is extremely important that the opposition, in discussing a piece of legislation of this kind, should fulfil its duty to the house and to the Canadian people and give the most searching scrutiny to the bill so that if parliament chooses to adopt it and it should go into effect both parliament and the Canadian people will fully understand the possibilities that can arise under the terms of the bill.
It is government legislation. For that reason it will undoubtedly in due course be enacted by parliament. I have tried to point out today the fact that in the majority of its provisions this bill simply re-enacts the existing law. There are some of its other provisions which will help to mitigate our housing problem today. There are provisions in this bill which, if not wisely and prudently used, could be a source of danger to the Canadian economy. It is therefore necessary that both in this house and in the banking and commerce committee all hon. members should apply to this bill the closest and most diligent scrutiny.
When and if this bill becomes the law of this country, members of parliament should regard it as one of their highest duties to insist upon vigilant supervision over the administration of this measure and over the vast powers it confers upon the Central Mortgage and Housing Corporation and the government. There must be searching study; there must be, it seems to me, an annual parliamentary review of all operations under this measure.


Mr. J. W. Noseworthy (York South):: Mr. Speaker, I am sure the house will And relief

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in recalling the fact that I have only forty minutes to devote to this bill and that I shall not be able to spend two. hours on it as did the preceding speaker.
This bill now before us is, as we are told on the title page, a bill that, when enacted, will become known as the National Housing Act (1954); and we are also told that it is an act to promote the construction of new housing, the repair and modernization of existing houses, and the improvement of housing and living conditions.
Notwithstanding the rosy picture painted for us by the minister when he introduced this bill, I am sure we are all satisfied that there is still ample room for improvement in housing and living conditions in Canada. Even the figures which the minister gave us, and which he summed up by saying we were making considerable progress, do not reveal the true picture of housing conditions in this country. I think the government is to be congratulated on the fact that in 1953 they completed 90,000 houses and started on around 100,000. I think they are also to be congratulated on the fact that at long last they have succeeded in completing in one year enough houses to keep pace with the newly created housing demand. This is about the first year since the housing act was put into effect, and I believe since the end of the war, that the government has in any one year succeeded in building more houses than the newly created demand in any one year.
The fact that from 1941 to 1951 we have reduced the number of persons per occupied dwelling from 4-5 to 4-1 does not convey the true picture as far as overcrowding is concerned. I shall point out later the extent to which I believe this bill fails to meet the need, and I shall have something to say in regard to that need.
This bill introduces certain new principles into the housing act and I presume it is hoped by the introduction of these new principles to solve the housing problem, at least to some extent. Among other things the government intends to terminate the system of joint lending, to insure loans that are made to assist in the financing of housing, and to bring the banks into the mortgage lending field.
The bill represents, I believe, a logical evolution of the present government's housing policy. The government apparently believes and persists in believing that private enterprise can meet our housing needs. The government is determined not to become landlord to any number of Canadians, at least not through the process of building homes fMr. Noseworthy.J
for them. It may, however, become landlord to a great many Canadians through the process of mortgage foreclosure. The government is reluctant to become a landlord and apparently is still reluctant to get very deep into the housing business. The government still believes that private enterprise can provide enough houses and provide them at a profit. Private enterprise will provide houses on no other terms. They believe that private enterprise can provide at a profit houses in sufficient numbers and at prices that will meet the housing needs of the Canadian people.
Every change that has been made in the National Housing Act over the years and the changes made in the regulations for the administration of that act have followed that general line of policy. I believe we have that policy carried almost to the nth degree in the bill now before us. Year after year the government has clung persistently to the idea that if we could only make terms with the lending institutions, if we could only grant them terms sufficiently attractive and they could be induced to put sufficient money into the mortgage pool, our housing problem could be solved.
Year after year we have had one concession after another by this government to these lending institutions in the effort to induce them to put sufficient mortgage money in that pool. Year after year every move made by the government in the matter of housing has given first consideration to the lending institutions while the basic need of the Canadian people for houses and the disastrous social effects of the housing shortage have received secondary consideration. Yet, notwithstanding all the concessions the government has made, the government has failed to induce the lending institutions to provide sufficient funds to make any appreciable reduction in the backlog of needed houses. The best that the government has been able to do is shown in this year's report which indicates that the government is barely able to keep abreast with the newly created demand for houses.
It is true that one of the bottlenecks that have created the housing shortage is the shortage of mortgage funds, and apparently the sole purpose of the changes introduced into the National Housing Act by this bill is to try to overcome that shortage with the distinct understanding, I presume, on the part of the government, that if only that difficulty can be met, if only money can be made available for mortgage funds, our housing problem will be solved. Many other factors enter into the solution of the housing problem than the amount of mortgage funds available.

I shall try to deal with some of the principles of the bill. I shall try to present my criticism of them and make what I hope the government will consider constructive suggestions for improvement, although on that latter point I must say that I have not very much hope. First let us look at the proposal to insure mortgages. The principle underlying mortgage insurance is that the lending institutions can receive an insurance payment, in reality a debenture guaranteed by the government, upon the transfer of the mortgaged property to Central Mortgage and Housing Corporation. The corporation is to be empowered to buy insured mortgages from approved investment institutions, and when the Bank Act and the Bank of Canada Act come up for revision insurance mortgages will be made acceptable security for Bank of Canada advances to chartered banks in the same way as government bonds are today.
When lending agencies are insured by the government against investment risk, and incidentally they will be insured by the borrowers who will pay the additional insurance premium, investment companies will no longer have to worry about any loss likely to be sustained through the business of lending money on houses. They can then content themselves entirely with the business of making profits out of the housing problem. Should a loan fall into default the approved lender is then expected to secure title to the mortgaged property and to convey such title to Central Mortgage and Housing Corporation. The approved lender will then be paid in cash 98 per cent of the sum of the principal outstanding at the date of conveyance plus interest up to six months at the mortgage interest rate, or in certain cases possibly up to twelve months, plus the borrower's charges, whatever they may amount to, plus a maximum of $125 for the transfer fee, plus whatever legal expenses may be incurred.
On the whole one of these insured mortgages presents fairly good security to the lending institution. What in effect happens is that the borrower is subsidizing the lending institution against almost the total risk despite the fact that the same institutions will be charging an interest rate which should in itself be a sufficient reward for the risk that these companies take. If the fundamental principle of the free enterprise system, which is so proudly acclaimed in this house by supporters of that system, lies in the expectation of profits as a reward for risk in investment, then this insurance feature which removes the risk seems to create somewhat of an ironical situation for the private enterprise system.
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Here we have a government which believes in the free enterprise system and believes that housing should be left as a preserve for free enterprise, which supports the theory that free enterprisers put their money into an enterprise and assume the risk on the basis of some profits, at the same time calling upon the borrower or home purchaser, through an added insurance premium, to secure such private enterprises against risk and loss. Mortgage insurance is unquestionably provided solely for the protection of the lending institutions against loss in the event that a purchaser should default in his payments or in the event of a recession taking place during which recession any considerable number of purchasers may be forced to default in their payments.
There is not the slightest indication in the bill that the government has given one moment's consideration to any protection for the original purchaser of a property. There is no protection whatever for the equity that a purchaser may have in a property when circumstances force him to default and Central Mortgage and Housing Corporation obtains possession of the property. Moreover, I think that the protection provided under these insurance policies is entirely unnecessary. It is unnecessary protection for the lender and it creates an additional cost to the purchaser.
I notice that the government does not want to assume directly the unpopular responsibility of foreclosing mortgages in default. It leaves that unpopular responsibility to the original lenders. Nevertheless, the government becomes, indirectly, a party to these foreclosures. The only possible good that I can see resulting from the protection afforded by the mortgage insurance principle is, as I said before, the unnecessary protection for lending institutions.
Since I presume some such measure as this is necessary if the banks are to be induced to depart from their ordinary practice and put money into mortgages, possibly some new mortgage money will be made available. Whether or not the amount of money the banks can be induced, under this legislation, to put into the general mortgage pool will be more than the government withdraws from the pool by terminating its joint lending policy, or whether it will be enough to make any appreciable difference in the number of houses that will be built, remains to be seen. I notice that the bankers are a bit cagey about going into this business. In this morning's Globe and Mail, the president of the Bank of Toronto is reported to have said that it is only to a moderate extent

National Housing Act that it would be prudent tor a bank to tie up the funds of Canadian depositors in longterm fixed investments. The president of the Bank of Toronto has a good deal more along the same lines in that speech.
We may possibly get a little more mortgage money. Even if we do succeed in getting more mortgage money into the mortgage pool from the banks, that in itself is not going to solve the housing problem. I do not think it is necessary to introduce this insurance principle into our housing legislation in order to insure the liquidity of the small proportion that the banks are likely to put into the mortgage pool. It has been estimated by responsible authorities that the banks are not likely, in any case, to put more than 5 per cent of their available money into mortgages. I doubt if it is necessary to charge the purchaser of every home an additional insurance premium in order to safeguard that small proportion of mortgage money.
So far as the life insurance companies and trust companies are concerned, they have not been doing too badly in the past so far as mortgage loans are concerned. The fact that this legislation may induce banks to go into the mortgage pool, and even though we may get an abundance of mortgage money, that is not going to make it possible for those in the lower income groups to procure homes. We must take other measures. Even if we extend the amortization period to 40 or even 50 years, and thereby reduce the monthly payment on houses, there will still remain a large sector of the Canadian people who will not be able to secure homes. It is true that by some such measure as that we may be able to make it possible for those in the $3,000 bracket or those in the $2,500 bracket to purchase homes, whereas now they are excluded from that possibility. Even under those circumstances we shall still have well over 50 per cent of the wage earners of Canada unable to purchase homes.
I suggest that instead of terminating the joint lending principle under which the government has been operating in the past the government should, as we in this group have suggested many times, issue loans directly to borrowers through the Central Mortgage and Housing Corporation and set up a special revolving fund for that purpose. I fail to see the need for this government adding to the cost of houses through this mortgage insurance principle, and depending for mortgage money on private institutions. So far as I am concerned, housing is just as great a social need in this country as schools and


many other public services. If the government is to meet this need to any extent that will be satisfactory to the people of this country, then I say that instead of getting out of the mortgage business the government should get back into it directly by means of a revolving fund.
In a recent editorial the Globe and Mail took members of this house to task for always talking about the housing situation but never really doing anything about it or suggesting anything constructive. According to the Globe and Mail one factor in housing that we seem to overlook is the high cost of houses. So far as that newspaper is concerned, the way to reduce the high cost of houses is to reduce wages. Apparently the Globe and Mail feels that members of parliament should advocate drastic reductions in wages in the building trades and in other trades in order to bring down the price of houses to within reach of people in the lower income brackets. We in the C.C.F. have suggested before one means of reducing the cost of houses to purchasers, and that is a reduction in the interest rate.
I have pointed out a number of times in this house that a reduction of 50 per cent in the interest rate will do more to reduce the carrying charges on a house than a 50 per cent reduction in the cost of labour and materials.
Again, we criticize this bill because no fixed interest rate is stated. The interest rate may vary, and apparently it may go as high as 5} per cent or even 6 per cent. Again I suggest that the government should make money available for housing at not more than 2 per cent. That, in itself, will do more to reduce carrying charges on houses, and to make houses available to those in the lower income groups, than any other measure we could take.
If the government wants to maintain the present interest rate, then I suggest that it should subsidize the interest rate on housing, as a social service to the country, or at least that it should subsidize the interest rate on housing below a certain cost, in order that, through that means, we may make houses available to more people in the lower income groups. If the government does not want to subsidize the interest rate on housing, then I suggest that it use the facilities of the Bank of Canada to provide money for housing at the rate of 2 per cent.
I see no reason why the limitation of $8,000 should be placed in the bill before 90 per cent of the lending value can be secured. I suggest that instead of limiting the 90 per cent lending value to $8,000, that figure should

be raised to $12,000. Today it is practically impossible to purchase a bungalow in the Toronto district for much less than $12,000. I suggest the act should permit a loan of 90 per cent on houses with a lending value up to $12,000. If the government would agree to a lower interest rate, then I would be all in favour of a longer amortization period than is provided in the bill.
There is no new change in the legislation, so far as low-rental housing is concerned. Low-rental housing presents one of the great needs of our time. There are and there will be a great many people who just cannot afford to buy or to build homes, even under the most favourable conditions. There are and will continue to be many people who will have recourse to renting homes, if they are to have homes at all. And for that lower income group who cannot afford to buy or to build homes, I suggest that the government should establish a rental subsidy fund.
The present legislation provides means whereby the government may enter into partnership with a provincial government or a municipality in sharing the cost of building and the cost of maintenance. However, I can find nothing in the legislation whereby the federal government undertakes to make any provision for a reduction in the rent below the economic level.
If those houses are to be available, then they must be available to the people on the basis of their income, and not on the basis of an economic rental. Somebody must then be able to make up the difference between the rent charged and what would constitute an economic rental. I suggest that if the government is to meet the low-rental housing problem, it should set up a low-rental subsidy fund for that purpose.
One of the drawbacks in connection with housing, as the hon. member for Eglinton (Mr. Fleming) pointed out, is the difficulty that municipalities have in providing serviced land and schools for new subdivisions. I suggest that any legislation which attempts to meet the present housing need should make some provision whereby the federal government could come to the assistance of the municipalities, through the provincial governments, for the building of schools and the provision of serviced land.
So long as we fail to face up to this problem, the municipalities will remain very reluctant to participate in the provisions of the act which are made available for that purpose. I have no particular objection to Central Mortgage and Housing Corporation undertaking to fix the appraisal value of the loan. As a matter of fact I think it is likely 83276-85
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to work out much fairer than the present arrangement. I have heard builders say that they find, by experience, it is much more satisfactory to deal with Central Mortgage than to deal with the private lending institutions. In spite of all that has been said about government red tape, as applied to Central Mortgage and Housing Corporation, experienced builders have told me that there is far more red tape in getting a loan through private lending institutions than when dealing with Central Mortgage.
Mr. Speaker, may I call it six o'clock?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Joseph William Noseworthy: Mr. Speaker, before the house rose at six o'clock I had attempted to show features of Bill No. 102 to which I objected, to give reasons for my objection, and to put forward certain constructive suggestions which in my opinion would serve to meet the needs of Canadian people with regard to housing.
I shall now take the few minutes remaining to give a summary of these suggestions. My first suggestion was that the principle of mortgage insurance be rejected on the ground that it imposes an unnecessary burden on prospective Canadian home owners and unnecessary protection to finance institutions. I have no particular objection to the banks going into the mortgage business if they find it profitable to do so.
My second suggestion is that instead of withdrawing completely from the lending field in favour of private enterprise the government, through Central Mortgage and Housing Corporation, should issue loans directly to the borrower and should set up a special revolving fund for that purpose.
My third suggestion was that such loans should bear a fixed interest rate, and not be tied to a varying factor as is the case in the bill.
My fourth suggestion was that that fixed interest rate should be 2 per cent, a rate which we in the C.C.F. have advocated in this house and which we advocated on the hustings during the election campaign. I suggested that in order to achieve that 2 per cent interest rate the government might either use the facilities of the Bank of Canada or subsidize interest rates for houses, particularly for the lower priced houses.
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My fifth suggestion was that the amount of the loan should be 90 per cent of the lending value up to $12,000, instead of the $8,000 imposed by the present bill.
My sixth suggestion was that, provided that the interest rate is lowered, the amortization period be increased to 30 years instead of 25 as is proposed in the new legislation.
My seventh suggestion was that in order to provide for those Canadians in the lower income brackets who cannot afford to buy or build houses, even under the most favourable conditions, the government should set up a rental subsidy fund which would assist in establishing a sharp reduction in the present rate of rent for those particular Canadians.
My last suggestion was that the federal government, in order to assist municipalities to take advantage of the provisions of this bill, should make grants to the provinces to be turned over to the municipalities for the purpose of constructing schools and other public facilities which are a heavy expense at the present time on the municipality wherever a new housing project is undertaken.
I might add that I have no particular objection-as a matter of fact I welcome it -to the change by reason of which Central Mortgage and Housing Corporation undertakes to carry out inspection of houses built with the aid of loans under the National Housing Act. Much of the criticism which I have heard about the houses built under the National Housing Act originated from the improper or inadequate system of inspection which is carried on at the present time. I have met numerous purchasers of houses who have complained of the fact that the houses which they bought were not built up to Central Mortgage and Housing Corporation standards. I have raised that question with Central Mortgage and Housing only to be assured that this inspection is left to the lending institution. I am quite confident that under Central Mortgage and Housing inspection we shall have a more satisfactory and a better system of inspection that will be in the interest of the buyers.
These are the constructive suggestions, Mr. Speaker, which I submit as alternatives to the measures contained in the present housing bill.


Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, frequently of recent date we have been accused by government members of not congratulating them on things that they have done. It was possibly an oversight on our part. We were so used to hearing them


congratulating themselves that we did not think it was completely necessary. However, at this time, I do congratulate the minister on bringing in such a fine piece of legislation; that is, in recognizing the need of reform in this particular legislation, and on dealing with it so well and so completely, and, if I may say so, so briefly.
I should also like to congratulate the hon. member for Eglinton (Mr. Fleming) on doing such an excellent job of providing a summary of what the minister gave us, but at some great length, and in such a way as to show the pitfalls into which we may find ourselves were we to adopt this particular scheme.
I would also congratulate the hon. member for York South (Mr. Noseworthy), who, in his particular case, recognizing the fallacy of the socialistic way of doing things, apparently is even willing to allow our borrowing money from banks at 2 per cent interest.
On three vital points that interest me I think the minister is to be commended. First, the government recognizes the vital need for housing. Second, the government recognizes the need of improving older homes. Third, the government is trying to provide means of financing those homes. I think those are three most important essentials.
However, the object of an opposition is, first, to be critical because we have to protect the taxpayer; and, second, to suggest alternatives to what is proposed.
I am led to believe from the bill that the government probably has read certain press clippings in which frequent mention was made that incomes and savings are up. We know that incomes are up. There is no doubt that the wage earner in Canada earns more money today than ever before. But we are told also that 83-4 per cent of the population of Canada earns less than $3,000 a year.
However, the purchasing power of the dollar is down to less than 50 per cent. Savings may be up, but it is not the little man, it is not the millworker, it is not the clerk, it is not the dock worker who has the money; it is the fellow who had a little extra money beforehand that has some today. But he has not enough to invest in a home and the minister recognizes that fact by lowering the down payment.
I submit that the down payment proposed in the bill is still too high. The down payment of 10 per cent on the first $8,000 is quite equitable, but when you start adding 30 per cent above that it results in just too much money for the ordinary individual. The need for housing is quite apparent. For instance, I have a clipping from the Ottawa Journal of January 14 which tells of a family of four

in Brockville who were nearly frozen because they had to live in a tent. Hon. members probably saw that article. Then to go to the Pacific coast, I find the following in the British Columbian of Tuesday, January 12, 1954:
Family offered basement
The plight of a Dutch immigrant family of eight threatened with eviction from their small Surrey home has been answered by a Burnaby resident.
I am happy that the hon. member for Burnaby-Richmond (Mr. Goode) and the hon. member for Burnaby-Coquitlam (Mr. Regier) are both here to help in providing a residence for this family.


Mr. Regier:: I am very kindhearted.


Frederick George Hahn: The municipality will have to pay for the social services provided to this family. The article continues:
The family of Martin Hienan, 42, of 1974 Baldwin road, his wife and six small children, were due to be evicted from their home Monday, because they could net keep up the payments on their tiny dwelling. Because of Mr. Hienan's illness eviction has been stayed a week.
Mr. Hienan, a qualified accountant, has been unable to find permanent employment since arriving here with his family two years ago.
It will be noted that the eviction was stayed because of illness, which in turn was probably caused by lack of employment. Those two factors should play an important part in any housing bill and I hope the proposal which I will have to make later will be of some value.
I received, as I think most British Columbia members did, a letter from the acting mayor of the city of Vancouver enclosing a brief which had been sent to the Minister of National Health and Welfare (Mr. Martin), and which I think was formally sent on to the Minister of Transport (Mr. Chevrier). That stated:
There are a number of senior citizens whose means do not permit them to pay an economic rent for housing or accommodation suitable to give them adequate comfort in their declining years. Of these there are some 8,000 in the city of Vancouver alone.
I think we all realize that there is a tremendous need for housing. These three illustrations, all of recent date, indicate, as the minister suggested earlier, that we should get this bill into committee as quickly as possible so that we can deal with it more completely. I contend that housing conditions such as these should not prevail in a country like ours.
If I may digress for a moment I should like to indicate the growth of housing in the area which I represent, and when I refer to housing I do not mean under the National Housing Act. I want to tell of what has been done by the little fellow, the man with whom 8327&-85J	[DOT]' v:-JL-aia*
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I am so familiar. Following the war many of these men wanted a home; they needed accommodation but they could not afford to buy a home under the National Housing Act. Many times the man in this category found that his wages were too low. He did not have job security. He did not have enough money to make a down payment. As the result of those factors he built a cheap domicile of some kind. But by so doing he depreciated the value of the surrounding; properties, and that is an important factor-The values of those homes are still being, depreciated on the resale market. If this; man had built in a shack region he would simply be helping to build up a slum area.
That man's present needs are enhanced because his house has deteriorated. Most likely he was a married man, and in all probability his family has increased and he requires more space. At this point I should like to give credit to the builders of British Columbia, particularly the supply houses, who foresaw this difficulty and took it upon themselves to try to help those people by offering service loans up to $2,000.
However, the rates of interest were exorbitant, and the time of repayment being a matter of two years, it was impractical and it is impractical today so far as these people are concerned. They are not wealthy and what they receive from their work is not sufficient to permit them to repay such a loan, as well as taxes and other expenses they may have.
As I read the bill, it contains an arrangement whereby a man building a home may do some work on it and can apply that to the loan. The bill is not too clear, but I wonder whether or not the man who was constructing a home could work on that home himself and have. that apply on the down payment, or at least a certain portion of it. I think that might be worthy of consideration.
As I said earlier, the down payment is still too high. The Vancouver Province of January 5, 1954, carried the results of a questionnaire which had been sent out by a fact-finding committee. The purpose was to find out what the people on the Pacific coast were willing to pay for homes. Here are some pertinent facts with regard to the rate of interest. An article in the Vancouver Province, dated January 5, 1954, states:
It is quite evident that one cannot get much of a house for even $10,000 plus the lot at today's building costs, which, again, is inflated owing to lack of serviced land.
Earlier the article states:
The present proposal "is not the answer for those in the lower income brackets because our building by-laws do not permit semi-detached or row housing here."

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It goes on:
. . . the act should be based on a straight 10 per cent down on $12,000 to be of use to the average citizen.
In a questionnaire published the same day in the same newspaper certain suggestions were made and members of the public were invited to answer this questionnaire. For example, the first question is:
In your opinion should the municipalities and the federal government jointly finance clearing and servicing of land making reasonably priced building lots available under the terms already provided for in the National Housing Act?
The answer given on an average was: Yes.
The final tabulation of these facts and figures on this question has not yet been completed but the trend is shown and that trend is "yes". There is one feature we must definitely consider and that is the matter of exploitation. Exploitation must be stopped. The workingman, or any man for that matter, intent on building a home should not have to pay an exorbitant price for a piece of property, nor should he have to pay more than the lumber and building materials were worth to start with. That does not mean that a businessman should not get his proper rate of profit. No man can live without profit. The workingman would not have a job unless the businessman had his profit. But we must see to it that the buyer is not exploited.
The second question was:
Has the high down payment barred you from home ownership?
The answer is "Yes".
As I said earlier, the minister is to be congratulated on reducing the down payment, although I do not believe he has reduced it far enough. The third question is:
If a lower down payment results from the changes in the National Housing Act do you intend to build?
The answer again was "Yes". I would therefore expect, Mr. Speaker, that the act will be used to full advantage in the city of Vancouver. The fourth question was:
What is the largest amount you can afford for a down payment?
The figure arrived at was $1,200. I do not know how many hon. members are in business but I left my business to come to Ottawa to help look after the nation's business. I was in the credit business and I always found that if a man asked for a loan of $50 he could only afford to repay $40. Most people overstep the mark and if they say they can afford a $1,200 down payment, then it is almost certain they can afford only $1,000. Their imagination runs away with them and they overlook the fact they have other things to consider besides the down payment.
	J . j
The next question was:
What monthly repayment could you afford?
The answer in this case was $55 to $60.
In this instance the same comparison applies. If they cannot afford $1,200 as a down payment, they cannot afford $55 or $60 a month either. It is true many people are paying that amount but they cannot afford it. Their homes are suffering. The average wage earner does not get enough per month to be able to afford a repayment of from $55 to $60 per month, and it is quite certain that most of these people have not allowed for such incidentals as roofing repairs, painting that may have to be done, or even income tax and medical expenses.
As regards a question of inflation, there is one factor here we should note, particularly in regard to the down payment mentioned earlier, and that is that the Americans provide homes for a down payment as low as $500. I do not know whether the minister and his colleagues have studied the United States housing plan, but I imagine they will have done so and I hope that as a result of their investigations we can expect lower down payments than are proposed under this act.
One of the most important things in life so far as owning a home is concerned is the fact that we must have security in tenancy. By that I mean that an owner must feel assured when he buys that he is going to be able to hold on to his home. He does not want to be constantly haunted by the fear that he is going to lose it at any time. I am very pleased to see that the amortization period may be extended from 25 to 30 years because that is one of the factors that will decrease monthly payments.
One other factor to consider is the rate of interest. It was dealt with in some degree by the hon. member for York South (Mr. Noseworthy). The rate he suggests is 2 per cent. I imagine in this particular instance he was referring to something that is true only of the Social Credit province of Alberta where they have a 2 per cent revolving fund which is used to make community projects self-liquidating. I do not believe that is necessarily true in this instance for the simple reason that under the housing scheme now proposed the banks, which are privately owned institutions, must have some degree of profit. They exist on profit.
Under the proposal as it now stands we have an insurance scheme which will guard them against any loss; but if we are going to allow them something I think it will have

to be a little more than 2 per cent, because 2 per cent will probably not pay for the cost of handling the funds.
I do not know where the hon. member got the 2 per cent figure from, but I do know that in all likelihood the facts will prove that the 2 per cent charge is not sufficient to cover the cost of handling the large sums of money to be used.
However, let us suppose we give the banks a profit of 1J per cent plus the other 2 per cent which would give them 3J per cent. One hundred thousand units built, not at an average cost of $10,700, but at $10,000, would give the banks a net profit of $15 million. I know $15 million is not a good return on an investment of $1 billion as far as the businessman is concerned, but the banks owe something to the Canadian people. They must recognize that fact. As a grocer I would be expected to have a certain range of loss leader goods and if I did not have them people would walk down to the nearest chain store to get them. As a garage man I am expected to give free air. In the same way the banker is expected to do something more for the people than just to take a profit. Opposed to this 3J, per cent we have the suggestion that the interest may be as high as 6 per cent. That would mean something like $60 million profit for the banks on an average $10,000 home, 100,000-unit project. That would be the regular rate of interest. Mind you, I do not think the rate will be that high. I think it was mentioned that was considered too high a figure and therefore should not be the one to be used.
I think all hon. members are conversant with the saying of that famous statesman who said, some years ago, "Give us the tools and we will finish the job." We have the tools and we have the job. Apparently all we lack at the present moment is the initiative to put the two together with a few millions or billions of dollars to complete the job. There are statements by certain individuals of national stature which we must refute. I would refer to one, R. E. G. Davis, director of the Canadian Welfare Council, who said, as reported in the Financial Times of November 26, 1953:
The shape and composition of our towns and cities at present, and of our new neighbourhoods springing up overnight in the suburbs are being determined not by any rational consideration of how to provide the best living conditions for people, but almost solely by what will bring the largest profit to the building and shopping interests that have the development in hand. We shall never make progress so long as this situation continues and one of our first objectives must be to see it is quickly brought to an end.
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Hon. members will notice these words- "almost solely by what will bring the largest profits to the building and shopping interests that have the development in hand." It is very important that we should protect ourselves against anything like that, and statements of this type must be challenged. It is a simple matter to tear things to pieces but it is quite a different thing to try to improve them. Therefore in this particular case I have a suggestion that I should like to pass on to our good friend, the minister. It is one that was adopted by another country, and undoubtedly the minister has studied it. He may even have a complete answer to the reason it has not been considered at greater length.
I speak of the experience of Brazil. Between 1933 and 1940 Brazil had a nation-wide depression similar to ours, and private enterprise Brazilian builders carried out this plan. They formulated a housing project that has resulted in between 70 and 75 per cent of the people of Brazil owning their own homes today compared with the figure of 65 per cent quoted for Canada. This result was achieved during the time when Brazilian banks were paying 7 per cent on demand savings. At that time I believe our Canadian banks were paying 3 per cent. I am not sure, but I believe that is the figure. All the bankers, builders and everyone else concerned in the project in Brazil made money. That is a very important feature; everyone concerned made money. There is a distinction to be made between the lending of money already in existence and the creation of new money. The minister knows that in Canada new money is created practically at will. Every time we have a large wheat crop we get an additional crop of new money with which to purchase the surplus immediately. Mind you, that is not true today because we cannot sell all of the surplus to ourselves. But during the years when we had elevator space available new money was created to help business along and look after it properly.
The secret of the success of the Brazilian scheme lies with the Brazilian government itself. Instead of waiting for the people of Brazil to borrow money from private interests, the Brazilian treasury issued certificates which we might compare to deposit certificates. These certificates were equal to the value of the materials and labour involved in the particular housing project. We must first remember that the purpose of the whole scheme was to take care of the unemployment then prevalent in Brazil, and there was

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also the factor that they had such a large surplus of goods on hand which they wanted to get rid of.
These deposit certificates were handed to the chartered banks and the chartered banks loaned them to accredited contractors at a rate of 2 per cent. At the same time the savings banks were paying 7 per cent the chartered banks were lending this money to builders at the rate of 2 per cent. The builders constructed the buildings and in turn sold them to the prospective buyers who repaid the chartered banks the actual cost of the homes on a monthly basis plus a 2 per cent carrying charge. This plan put people in Brazil back to work, as it was supposed to do. It also solved the housing problem. Houses are the means whereby we stabilize the economy of the country, and if the depression that some people seem to expect should become a reality we might well consider having such a project.
In a matter of ten to fifteen years prospective Brazilian home owners had become home owners. There was no down payment involved in the scheme. It might be asked what the banks did when the loans were repaid. They sent the certificates back to the treasury which destroyed them. We find that in that instance the people of Brazil used their labour and surplus materials to excellent advantage without its costing them an exorbitant rate of interest such as the 5i per cent rate we have today, or 6 per cent, as the case may be. I am reminded of a statement made earlier that the interest rate is not a fixed rate. I believe it should be fixed because the prospective home owner entering into negotiations should know what he is going to have to pay.
Under the Brazilian scheme 2 per cent was the cost of handling the certificates, and perhaps our banks should do the same thing in an identical fashion. We have the institutions already in existence. We need homes, and we have the materials. H. R. MacMillan, the lumber magnate of the Pacific coast, said the other day that we have no market for our lumber. I do not know whether or not everyone realizes it, but the British Columbia export business is built on a basis whereby no country takes more than 10 per cent of our export surplus for its home market. Such an amount would mean nothing as far as the market requirements of any foreign nation are concerned, and we could very easily lose such markets completely if these countries chose to reduce their imports from Canada by 10 per cent.
Now, Mr. Speaker, I believe I have put the case very clearly in so far as the proposal I have in mind is concerned. I would go on

to summarize my ideas in this way. First and foremost, we must curb inflation in building costs. It is necessary that the price of homes stops rising, and that we keep that price at a level which everyone can afford. I should like to impress upon the minister also the need for allowing the value of the labour used in the construction of these homes to be construed as a down payment. It is necessary, too, to ascertain whether or not it is possible to reduce the interest rate from the 5 per cent or 6 per cent that is suggested to a nominal figure such as 3-5 per cent.
I know that under the insurance scheme, which I have not discussed, it is going to require 2 per cent to carry the insurance premiums, and there would be an additional 2 per cent to cover the cost of operation of the banks, so that might mean a total of 4 per cent. I believe, however, it is the purpose of the banks to look after the community and to help in the building of Canada which is so essential at this time. I would ask in all seriousness that not only the minister but everyone in this house study very closely the Brazilian method of building homes from 1933 to 1940, when they actually kept their unemployed busy and got rid of their surplus goods by monetizing the wealth of the nation.


Mr. J. E. Brown (Brantford):: Mr. Speaker, I should like to say a few words in support of this bill, the purpose of which is to promote the construction of new homes and improve the living conditions in this country. During the last election campaign I promised my own constituents of Brantford that I would press for new legislation of the kind that is now before us. I note that the government, in its appeal to the people for support, did not make any promises whatever along those lines but I felt a keen personal interest in the whole matter and allowed myself to go on record in favour of a new housing act.
I believe that the government is to be congratulated on bringing forward this bill so early in the session after the last election. The legislation which is before us, and which will replace the National Housing Act now in force, is breaking new ground in Canada so far as progressive legislation is concerned. In my view what we are embarking upon is a forward step, and it ought to have far-reaching and beneficial consequences. We are all agreed on one thing-at least I do not believe any member in this house doubts it- that there is still a need for more and better housing in this great country of ours. The question is, does this legislation meet our needs; and, more important still, is it sound?
Some hon. members might feel quite sincerely that the bill does not go far enough,

and in particular that a flat 10 per cent down payment should have been provided on every house constructed under the act costing up to $12,000 to $15,000. Upon first consideration, I might have been of this view, but on sober second thought, Mr. Speaker, I sincerely believe that the provisions contained in the bill are sound; that the legislation is wise and ought to be supported. We are engaged in a new venture. The government is striving to place some of the available credit of the country behind the man who is embarking on that greatest endeavour of all, the founding of a home of his own. Most of us in the house, I am sure, believe that the great majority of Canadians ought to own their own homes. In my view this is of necessity a basic feature of our society.
If Canada is going to be great and strong, strong at home and abroad; if we are going to make a contribution to the world of today; then this nation of ours must be a nation of home owners. If a man can own real estate, part of the soil of Canada, and construct a house thereon under the provisions of this act, he thereupon has a genuine stake in the welfare and future of our country. This is one of the reasons this bill is so important, and why its effects may be far-reaching.
Most of the young men and women of our land need the assistance of some form of credit in order to establish themselves in life. That is what this bill provides. I do not think the majority of young men and women in Canada want handouts from the government. They need assistance in the form of loans which they can pay off. They want to own a home of their own, and to pay for that home. In this way they hope to acquire a little independence of that type which has been enjoyed by our fathers and forefathers in this country since the beginning. For this reason, Mr. Speaker, I am going to support this bill. I believe it to be a move genuinely designed to promote home ownership from one end of the country to the other.
Does this legislation go far enough? In the election campaign I suggested a 10 per cent down payment be made available. Now, that has been done in this act. If a man desires to construct a $12,000 home or a $16,000 home, would it be wise for him to borrow up to 90 per cent of that large sum? Could he afford to keep up the resultant heavy monthly payments under such a scheme? Should this government give him encouragement by providing in this bill for his doing so? I do not think so. Would it be wise for any man to assume an obligation that would take a period of more than 25 years to amortize under normal repayment
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terms? Should the government have encouraged him to do that? Again, I say I do not think so.
What concerns me in connection with this bill is not reducing the amount of the down payment below what is provided or extending the term of tenure of the mortgage. What is concerning me is this: will the bill result in loans becoming more available to the average citizen? That is the question which is paramount; that is the question on which this bill should stand or fall.
The trouble in the past has been, at least in my view and in my experiences from day to day in a law practice, that satisfactory loans have been too difficult to attain. The provision in this legislation to make available insured loans, through the banks, in my opinion should open the door to much greater credit facilities for the average man and woman in Canada.
I do not think the bill should be opposed simply because some of its terms do not satisfy some hon. members. Let us give the legislation before us a fair trial for, say, two years, thus giving at least an opportunity to ascertain if in practice it will have the effect we want it to have, and that we hope it will have.
If housing loans become more available to the general public than they have been in the past, then this bill will have amply fulfilled its purpose and will have justified the basic idea which prompted the government to bring in the legislation at the present time.
Like many other hon. members on this side of the house I was very much puzzled and, indeed, shocked by the speech of the hon. member for Eglinton (Mr. Fleming), who spoke on behalf of Her Majesty's loyal opposition. I am sorry he is not in the house tonight. It is not for me to comment upon the speech of one who holds the esteem of all parties in the house, and who is a very powerful figure in the Conservative opposition. But it was impossible for me to ascertain whether he and his party were for the bill or were against it.
At any rate, it may be that he and his party have not quite made up their minds. He did utter some valuable warnings as to the possible results which might ensue from the passage of the bill, but he offered no substitute and brought forward no other proposal on behalf of his party to take the place of this legislation.
Returning to the bill, I am glad that it will make possible a better service than has ever been available before to the residents of small centres and remote communities across Canada. It is a great forward step.
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Instead of having to deal by correspondence with lending companies, the people will be in a position to consult the nearest branch bank manager, and to talk over their problems with him. This will be a great convenience.
The hon. member for Eglinton thought that the banks would not co-operate; I think they will. I believe that it will be of the greatest convenience to the people who live in the remote communities and smaller centres in our country. I have in mind, in particular, my own good city of Brantford, which I am proud to represent in the House of Commons. Then, we also have people in the township of Burford, a truly splendid community in my constituency, who, I believe, will be vitally affected by the passage of this legislation. In spite of what the hon. member for Eglinton has said, it could be that they will be able to go to those two historic little villages of Burford and Scotland, and there discuss with their bank managers the vital problem of housing, which concerns all those people.
The people in these communities are in my view the very backbone of Canada. They are sure to derive lasting benefits from this legislation. I hope that when the measure reaches the committee stage the individual sections will receive careful and thorough study, particularly with respect to the provisions relating to interest rates.
I repeat that the government ought to be congratulated upon bringing forward legislation of the kind proposed in this bill. In my view it deserves and eventually will have the support of a large majority of members in the house, of whatever party, who are sincerely desirous of promoting the well-being of our country in a substantial and material way.
(Translation) :
I want to conclude my remarks in the beautiful tongue of my French-Canadian colleagues, whom I have been so happy to know since my arrival in Ottawa.
In my opinion the bill now before the house should obtain the support of the majority of hon. members. I see in it a sincere effort on the part of the government to help the man who would like to start on the most important undertaking of his life, that of acquiring his own house and establishing a family.
I am confident that this measure will contribute toward increasing the possibilities open to Canadian citizens and widening their horizons.
(Text):


Mr. R. H. Small (Danforfh):: Mr. Speaker, when I first read the outline of the bill I was


under the impression that its purpose was to promote the construction of homes as well as to improve housing and living conditions. I had been led to believe that within its framework we would find the means whereby the government would place the purchase of homes within the reach of low income families, and make it possible for them to grasp this offer of help.
This bill, heralded as a boon to ameliorate the plight of the family in the low income group, that vast host of our population in which the heads of families are receiving incomes less than $3,500 per year, does not measure up to what we had expected. Because of its many financial gyrations, the results of the bill must remain elusive.
After listening to the minister's comprehensive explanation of the proposals contained in the bill, it now becomes obvious that its paramount object and intent is to procure a greater reservoir of money to be made available for loans. It would seem that the chief concern in framing the bill has been to persuade those with funds-in this instance the banks-to enter an arena of financing from which heretofore they had been barred.
It now becomes evident that the banks were reluctant to take this step, and we now see that they are being catapulted into this service. They have been lured into an acceptance cf the situation through a process of making the major proposal attractive to them through the introduction of the new feature of insuring loans on terms of a 2 per cent payment, single premium. This is payable by the purchaser and is to be included in the monthly payments, thus making the attraction more effective.
Let us now pay some attention to the individual for whom the bill was devised. I refer to the purchaser in the low income group. We see at once how he has been manoeuvred into the position where, unless the government can be induced to re-admit him to the benefits involved, he cannot enjoy the provisions planned for him.
Under the present act-and I have been unable to find anything in the new proposals that removes the frustrations that the purchaser, who is in the income group earning below $3,500 a year, has encountered-the situation is this. Take the figure the minister has given, $10,000, as the price of a house, with the down payment of 14 per cent or $1,420, with the balance of $8,580 to be borrowed and the loan processed at 51 per cent, amortized in 25 years. The amortization schedule for this loan is $5.96 a month per thousand, amounting to a monthy payment of

$51. The rate on the same loan amortized at 30 years is $5.49 a month per thousand, or $46.70 a month.
The same figures for a $12,000 loan, which is the lowest price of a home today, works out, with the down payment of 14 per cent, at $1,680, with a balance of $10,320 at 5J per cent to be amortized in 25 years at $5.96 a month per thousand, or a monthly payment of $60.38. When amortized in 30 years at $5.49 a month per thousand, there is a payment of $56.50 a month. To these payments of $51 and $46.70 a month, amortized at 25 and 30 years respectively on a $10,000 home and payments of $60.38 and $56.50 a month amortized at 25 and 30 years respectively on a $12,000 home must be added the insurance charge to secure the lender's loan. There must also be added the taxes, say $180 a year, or $15 a month extra.
The house will note that these payments range from $46.70, $51, $56.50 to $60.38 per month, with $15 for taxes and 60 cents for loan insurance to be added, and are to be paid from an income below $3,500 a year or a maximum of $70 a week. This is where the frustration is brought about.
The lenders will not lend unless the purchaser has an assured income of over $4,200 a year, or $80 a week. Therefore, unless the present impediment is removed and the salary requirements are made favourable to the low income purchaser, this much-heralded bill becomes futile so far as it affects those for whom it was supposed to be designed. I will go one step further and predict that if you put a favourable salary requirement into effect for the low income group the price of the resale house will automatically come down.
Now, while I am on this phase of it I may say that I cannot see why the purchaser should be called upon to pay the single premium to insure and secure the loan advanced by the lender. I think the lending organizations would be willing to pay for the added protection. However, the amount is insignificant when spread over 25 or 30 years. Nevertheless, if you can set up a provision such as this for the lender, then the mechanics of the operation can be set up in favour of the purchaser for the same 2 per cent payment of a single premium, to be paid in the same way by the purchaser as he does for the insurance on the lender's loan. It will give a break to the one who has to carry the burden of the quarter of a century ahead in establishing a home, and it will give peace of mind to his family, keep a roof over their heads, and give added security should misfortune overtake the breadwinner.
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I say this because the burden on the purchaser seems to be given the least consideration in this bill. All the other considerations are given to those who are going to benefit the most from the profit that is to be obtained from it. The man who seems to be forgotten in this bill is the one that I should like to draw to the attention of the minister, to see if something can be done to permit him to purchase a home.
As I say, the bill was originally designed to help the purchaser; but when these restrictions are placed upon him, it means that when a man goes to purchase a home he is confronted with a situation of such magnitude that he cannot possibly get loans from the lending companies. When I asked the minister questions when he first introduced this bill that was the thought that I had in mind. I was thinking of the individual who is in the low income bracket and who I hoped would secure the benefits of this bill, which have been denied to him. I should like the minister to study this matter further to see if he cannot find some way of reducing the salary requirements insisted upon by the lenders and give a prospective purchaser the advantages intended.


Erhart Regier: regret that when I spoke in the house last fall I was unable to do as many other hon. members did, namely, to spend a few minutes speaking of the beauties of the area that I represent. One of the reasons why I was unable to speak in that vein was the policies of the government in regard to housing. My riding consists partly of hundreds and hundreds of tar paper shacks, and I lay the blame -I think fairly-on the shoulders of this government. The suburban ridings have been most harshly discriminated against in the matter of housing legislation. The housing legislation where it has helped has helped the larger centres of population.
I feel that the old policies of the government were not sufficiently aggressive, and I notice that not only do we in British Columbia feel this way but so does Quebec. I noticed in the report of the Quebec board of trade to the royal commission of inquiry into constitutional problems the following on housing:
The home building policy of the federal government is not sufficiently aggressive and the shortage of housing units is still being felt.
We had another admission this afternoon from the minister that out of 105,000 houses that he thinks were built last year, only 40,000 used the facilities of the National Housing Act. In other words, more than one-half of the new housing units that were built in Canada were built without using the facilities of the National Housing Act.

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The National Housing Act was designed to make it easier for people to build houses. If it really were fulfilling this function I maintain that the percentage of houses and of housebuilders using these facilities should have been much larger.
The statement was made that for the first time we have been able to build as many new houses as new family units have been formed. That statement ignores the fact that in large areas of Canada we have now reached the stage where thousands of old houses are no longer fit for human use. That statement is subject to many qualifications. I hold in my hand an article which appeared in the January 16 issue of the British Columbian, a daily newspaper. The article says:
While there is slightly less substandard housing in the greater Vancouver area than there was at the end of the war, the total building program has not kept pace with new family formation and the influx of new families to the area: twenty thousand units short in 1945, housing accommodation falls even farther behind local needs today, particularly for low income families.
That is the consensus of opinion of the Vancouver Housing Association, which is a Red Feather agency. There is an admission in the Vancouver Sun of January 9 that in the Vancouver area housing has reached its second lowest point since 1947. It was stated that, in the Vancouver area, of the $50 million odd that went into new construction last year only $11 million or some 23 per cent went into housing. That percentage is far too low at a time when housing is of such paramount importance. To think that upwards of $39 million should go into other building while only $11 million went into housing!
I notice that the pinch is being felt not just in the larger urban centres. Right after the war every urban centre was faced with a serious housing shortage, but now from one end of Canada to the other every little hamlet, community and village has a housing shortage. The situation has not improved, it is getting worse. This is what has happened at a time when there is such a growing social need, at a time when we need to consume more in our dominion, at a time when we have surpluses of all primary materials, of inventories; at a time when there has been a slow-down in exports and when our national production is up. We are faced with a situation where housing difficulties are becoming worse. Every policy of this government should be aimed at using up more consumer goods by filling the need for homes.
I note the statement that the old National Housing Act was successful, but I cannot agree with that. It was not successful either in the joint lending set-up or in the other

sections. There was an arrangement for direct loans by Central Mortgage and Housing Corporation which has been referred to in glowing terms. However, I found throughout rural British Columbia that the common complaint about these direct loans was the long delay in servicing the loans. People had to wait half a year or more before a man even came out to look at their lots. That is hardly good enough.
If the hon. member for Brantford (Mr. Brown) thinks that by using the banks the people in the smaller communities will be helped he had better have another look at the bill. This bill will make loans even more subject to the approval of Central Mortgage and Housing Corporation.
The old act contained several provisions with regard to low rental housing and there was a section devoted to research. I maintain that on the whole those sections have been miserable failures. They have not been utilized to anywhere near the extent envisaged at the time the act was introduced.
A plea has been made that there should be a two-year trial of the new legislation. I submit that if we are going to have a breakdown in housing for two years, that is two years more than the Canadian people would like to see.
Reference has been made to the effective demand for housing and considerable weight seemed to be attached to that. I hope that before this bill passes there will be a clearer definition of what is meant by effective demand. Does effective demand refer only to those people who do not need the help of the government in connection with building homes or does it refer to those who really need homes?
The contention has been made that the housing scheme worked shortly after the end of world war II and then the Korean war came along and the rate of new house construction declined. It is admitted by those who are in the housing field that there has not been the upsurge since that there should be in this industry.
I am not one of those who like to be branded as irresponsible, who are ready to advocate anything. I realize that if we are going to build the 200,000 homes per year, which we must have as a minimum, the money must be found. I maintain that the only source of money is the increased purchasing power of the Canadian people. You can talk all you like 'of monetizing the nation's wealth, but the only thing you can monetize is that which has been obtained after labour has been applied to raw materials and the resulting product has not been

consumed. That is delayed purchasing power and it is the only money that I have any faith in.
Irrespective of the conditions that have been laid down, I feel that the government is attempting to pull out of this housing dilemma in a very odd way. They are hoping that Canadians do not know enough of this business of money to be able to lay the blame where it rightly belongs. I think they are hoping to use the chartered banks of Canada several years hence as a scapegoat and lay the blame on them for their unwillingness to do their share.
The hon. member for New Westminster (Mr. Hahn) outlined the plan for finding money that was exercised in Brazil. I was glad to note that he did not use Venezuela as an example, which at one time was held up as a model of Socred monetary theories. We now find that that is one of the worst authoritarian regimes in existence and they have now turned to one of the neighbouring nations and are using Brazil as an example. I noted the statement that if we have a depression this government might well consider a similar method of financing housebuilding in Canada.
The C.C.F. has always maintained that, in times of depression when those who have money are refusing to invest it, it is necessary for the government to take remedial action, and we would go along with the hon. member for New Westminster in saying "if we have a depression". But I think we must admit that that time has not arrived as yet. I note that he says also that first and foremost we must curb inflation. I am very pleased to hear that said by one of the members in their ranks. I am looking forward to the time when he will be moved up to one of the front seats in that organization, nearer the centre of the house. The people in my native province are looking forward to the day when those who say that they are first and foremost in favour of curbing inflation will be recognized.
The money must be found, and that is where the responsibility of the government enters in. I maintain that our insurance, mortgage and trust companies went on a strike against meeting our housing needs some seven months ago. They have been holding a gun to the head of the government year after year; they have persuaded or influenced the government to raise the interest rates. Last year they found that they could invest their money more safely elsewhere and receive a much higher rate of return. After all, the safety of money invested in a house is contingent upon the 83276-86i
National Housing Act
owner of the house being steadily employed at a favourable wage rate, and so forth. Money invested in oil lines is much more secure and the rate of return, sometimes guaranteed, is very much higher, so I cannot really blame those who are administering the insurance funds for seeking other and far more profitable lines of investment.
Ever since 1935, when they did it to win an election, the government has exercised a very strict control in Canada over the issuance of currency and credit throughout the nation. The time has now arrived when this government must assume its responsibilities in directing the investment funds of the nation. They are failing to assume that responsibility and are hoping the banks will help them out. We have had the most amazing admission that the available supply of money is tending to fall short, but the truth is that it is tending to fall short only in so far as the government is unwilling to direct the flow of investment money in the nation. The supply of money is more adequate than it ever was in Canadian history. One has only to look at the figures to substantiate that. Now we have the shift of responsibility to the banks. The insurance companies are going out of the business and so other fields are being looked for.
The banks, Mr. Speaker, if they are going to be of any real help to the nation in meeting the nation's housing needs, will have to curtail credit for the ordinary commercial needs of the nation. The only alternative is the liquidation by the banks of their government securities.
That in turn will have the effect of raising still higher the rate of interest the government will have to pay on future bond issues. I repeat, the only way in which the banks can adequately help is by curtailing the ordinary commercial needs of the nation.
There has been a lot said about the ability of the banks to help out. This statement has been made not in the house but in newspapers, and it is worth having a look at. The assets of the chartered banks of Canada as given on September 30 last were $10,398 million. Two hundred thousand homes would take $2 billion worth of mortgage money. Even if the banks were able to supply this money this year, next year they would receive a refund by way of repayment of only 3 or 4 per cent. If they harmed the commercial needs of the nation to the extent of $2 billion this year where would next year's $2 billion come from? There is only one logical source of housing money and that is the investment savings of the Canadian people.


Mr. B. R. Leboe (Cariboo):: Mr. Speaker, in rising to take part in this debate, I am not going to dwell on a lot of political theories nor take up the time of the house in that way. It seems we sometimes find that people think that the press gallery is fertile ground for the dissemination of political speeches. I believe the place for that is out on the hustings.
I am going to speak to you tonight for only a few minutes. I am not going to bring in a lot of figures which go in one ear and out the other and that do not mean too much. I know that the minister has access to far more statistics than most of us. It just depends upon the willingness of the government to use these statistics, so I feel there is no point in putting forth a lot of figures at this time.

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There is one point I should like to bring to the attention of hon. members, and I imagine there are quite a few who will agree with me. I believe that in considering this housing bill we should pay more attention to the man with a large family. It is a well recognized fact that the larger the family the larger the house, and the larger the house the more expensive it is to build. The man who has a large family naturally has greater responsibilities in rearing those children, and I believe therefore some consideration should be given to providing these large families with an opportunity to obtain a house equal to that given to the smaller family.
The thought I have in mind is that the down payment should never exceed 10 per cent because it is going to work a hardship on the individual who has a large family. Naturally, the individual with a larger family has something else to contend with that is greater than a person with a small family. I mean that the dining room table needs more plates around it; there need to be more beds in the house and there need to be more facilities all the way through. Speaking seriously, it is easily seen that a hardship is being worked on the individual who has the greatest responsibilities. I do not think the principle is right. Before I am through someone is going to realize that I have a large family.
I was a little bit concerned, Mr. Speaker, [DOT]over a press report appearing in the Montreal Gazette. I have not a copy of it with me, but I do not intend to quote from it. The press report dealt with the centralization of housing in the city of Montreal. I would certainly be disturbed if I thought our housing policy were going to have that effect. I feel that facing the possibility of a war, and we cannot say that we are not when we think of the budget that is going to be brought down, if we are going to bring our families together in centralized places we are only going to make them that much more vulnerable to attack. Coming from a rural area as I do, I would say that much consideration should be given to the possibility of allowing lumbering and mining concerns to borrow money to supply the housing needs of their employees.
One of the previous speakers mentioned these shack towns. It is those towns that I am thinking about now. We should encourage better housing in such places. Such mortgages would not cause us concern because these people are working in primary industries. It is in the primary industries that the individual is closest to the payroll. I
[Mr. Leboe.l
say again, let us decentralize our housing and get more development out in the rural areas.
In closing I should like to leave this thought with you. There has been a lot of stress put on the fear of the individual who has a house with a mortgage. If the individual is able to get into the house, his only fear then should be about meeting the payments. I should like to see a provision in the bill that would make it possible for a married man with one child who moved into a small house to be able to enlarge or extend that house at a later date. If the individual happened to have a larger family and be unable to meet the payments, he should be allowed to recapitalize and bring down the payments within his reach. I should like to emphasize the fact that the rural areas have not had proper consideration in connection with housing, and coming from a rural area I can speak authoritatively on that subject.


Mr. W. B. Nesbitt (Oxford):: It is my understanding, Mr. Speaker, that the principle behind this bill is to facilitate the construction of many badly needed homes throughout the Dominion of Canada. Bearing this principle in mind, it is to be hoped that there are no inherent snags in the legislation or any extraneous factors outside the legislation which may in any way frustrate the purpose of the bill. It is my submission that there are such extraneous factors, and also certain inherent snags which may very well frustrate the purpose of the bill.
It is to be hoped if there are many new homes constructed throughout the country as a result of this legislation, those houses which are built, and which I understand are to be under the auspices of Central Mortgage and Housing Corporation, are different in one respect at least from the houses that have been built in the last few years under the blessing of the Central Mortgage and Housing Corporation and the Veterans Land Act. The reason I say that is that the houses that have been built have had a monotonous regularity to them. One can go down row upon row of identical houses in these housing developments, identical even to the last daub of paint. I believe these houses will remain a blight on the landscape of our country for many years to come. We shall not get rid of them very easily.
We rather hope that if this legislation is enacted this situation will not occur again. These boxes which go under the name of houses are of such bad design and architecture that no one would really want them except in case of dire necessity or if they were

offered so cheaply that a person would be foolish not to take them. I should like to draw to the attention of hon. members that most of the houses which have been built under the guidance of Central Mortgage and Housing Corporation or the Veterans Land Act are exceedingly expensive. In fact they are far too expensive for people in the low and medium income brackets for whom they are designed.
In addition to that, the designs of these houses, both interior and exterior, leave very much to be desired. There is little doubt but that the reason for the construction of these rows of identical houses has been the result of several factors. Houses of this type allow no room for individuality, which is something most of us look for in this country of ours. This sameness of the houses cannot help but have a levelling down effect on the people who live in them. There is a danger that the new legislation may be frustrated for the following reasons, which are outside the legislation itself. The first of these would be restrictions placed on local building codes. Local building codes have been built up over the years, and are the result of experience. They have been growing up, and they are full of old-fashioned methods and old-fashioned standards. They take into consideration not at all the fact that new types of building materials, new methods of building and new types of architecture, which have been the result of the advancement of modern science, are now available.
As hon. members know, many of these building codes grew up in the thirties, in the depression days. A great many of the restrictions were put in municipal building codes in order to create jobs. These have not been removed and they do not help to improve the housing situation at the present time.
In addition I think it might be safe to say that a great many of these Central Mortgage and Housing Corporation regulations are based on these local building codes, and suffer from some of the same deficiencies. Insufficient attention has been paid to modern advances. The younger people are making attempts to remedy this. I think the present minister should look into the possibility of making arrangements with many of the provincial governments with a view to seeing that these local building codes are altered so that new types of design in housing can be used.
So much for local building codes which may help to frustrate this bill, and so much for the Central Mortgage and Housing Corporation regulations which, I submit, are not helpful, either. But is it necessary to build
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row upon row of identical houses at a high cost? Is that an excuse for the present situation? We know that people have to have places in which to live, whether they are attractive or unattractive. But I cannot see any reason why buildings should be built in this way. I believe, indeed, that houses could be built at costs lower than the present ones, and in addition to being built at a lower cost they would have several advantages over the present row-on-row boxes. First of all the houses could be individual in style. Then, they could be of better construction and, third, the interior design could be of much greater utility and beauty than the existing houses being constructed today under Central Mortgage and Housing Corporation.
These advantages, in addition to lower costs, could be effected by means of modern design and the use of modern materials which, while apparently the Central Mortgage and Housing Corporation will not approve, all sorts of private industry and individuals, both here and in other countries, including the United States and the United Kingdom, have been constructing for some years.
I have some information in this regard from Grant Whatmough who, for the information of hon. members, is a young Canadian in his thirties and spent some years in England. He has the following qualifications: He was the chief experimental designer for the British admiralty between 1946 and 1948. He was a member of the council for industrial design in Great Britain in 1948. He was assistant chief consultant to the Hydro Electric Power Commission of Ontario in 1948 and 1949. He has designed over $100 million worth of construction in the United Kingdom, and in the last 19 months in this country designed and supervised the erection of $15 million worth of buildings in the Toronto area. These buildings include the new factory of the International Business Machines Company, as well as those of the Lennox Furnace Company, the Allanson Armature company, and many others.
I think hon. members and the house would agree that Mr. Whatmough's qualifications are very considerable, and that he has obviously some idea of what he is talking about. Mr. Whatmough has designed a number of homes which are very individual and very attractive. They contain four bedrooms, a bathroom, a large living room, a dining room, a utility room and a garage.
These houses, all containing this number of rooms, are of different designs and are not the identical box-like structures one sees

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today. They are the type of design and construction that Mr. Whatmough has utilized in the building of the many factories and other buildings he has designed, and the construction of which he has supervised. These houses can be built for $10,000-that is $8,000 for the house and $2,000 for the land. That price has been laid down by the J. R. Page company which, I understand, is one of the largest contractors in the city of Toronto. The Page company has given a specific contract price on these houses of this design.
Houses of similar area, but of much inferior quality and with a box-like appearance, sell at present for $15,500 to $16,500, and houses of design similar to the ones designed by Mr. Whatmough are of a custom-built nature and cost around $25,000.
I believe it is worth pointing out at this juncture that houses now being built with the approval of Central Mortgage and Housing Corporation are of such an unattractive design that at the end of five years it has been estimated by many reliable authorities that they would probably sell in the open market for about 20 per cent less than the amount of the mortgage still existing on each house. This can hardly be described as a satisfactory or economic state of affairs.
These suggestions put forward by Mr. Whatmough sound truly incredible; and I understand that a great many of the government agencies and private concerns that have employed him thought his ideas were incredible, too. Those were their thoughts, at least, until they tried them out, and found they were not incredible.
Mr. Whatmough's designs for houses have been examined by Central Mortgage and Housing Corporation which, I understand, will have to pass upon any plans for homes which will be built under this proposed legislation; and it is to be hoped that those who have the authority of approving such plans will at least consider the possibility of homes of different and new designs, so that new types of construction can be used.
It is my information that in Ontario plans for any houses constructed under the auspices of Central Mortgage and Housing Corporation have to be approved by one Raymond Card, who is the chief architect for the Ontario division of Central Mortgage and Housing
Corporation. This gentleman has absolute 
authority, which is not appealable, to pass on all designs and plans submitted.
I am informed that Mr. Card came to Canada from England in 1907 and originally set up as an architect. After a brief career in this field he entered the firm of the T. Eaton Company, for which, I am told, he worked as floor manager for some 17 years.* Subsequently Mr. Card became employed by the civil service, and he is now in the position of having the absolute word on the majority of new houses built in Ontario by Central Mortgage and Housing Corporation.
In commenting upon Mr. Whatmough's proposed plans and designs for new homes, Mr. Card indicated that he was not familiar with this type of planning, because it was new to him; and in addition suggested that if houses were too attractive for working people they might develop a taste for an expensive form of living which was not good for them.
It may very well be that Mr. Whatmough's plans and designs for homes to be built at such a low cost are not practicable, although the evidence would indicate that his suggestions were indeed most practicable. But even if they are not, it is a very unfortunate situation that any one person in a large government agency, such as Central Mortgage and Housing Corporation, is placed in the position of either approving or disapproving absolutely, without any opportunity of appeal by those who are affected.
What we need in this country is attractive, individual, low-cost houses, and we certainly will never get them if this bill is put forward, and is to be frustrated by local building codes and the bureaucracy of Central Mortgage and Housing Corporation.
All through history we have seen examples of people who have followed this line of thinking: "If it was good enough for grandfather, it is good enough for me." In this young and growing country, with the great changes brought about by modern science, I would hope that this attitude might be put aside, at least so far as this bill is concerned. Because we certainly do need more houses, cheap ones and individual ones.
In conclusion, if the government would enter into some arrangement with the provinces to help modernize local building codes, and could alter the regulations under which Central Mortgage and Housing Corporation
* See also page 1399.

houses are built, and could broaden the regulations under which designs are approved, this bill would be a very material help.
On motion of Mr. Nesbitt the debate was adjourned.



BUSINESS OF THE HOUSE

Mr. Harris:: Mr. Speaker, tomorrow we shall take third reading of the bill with respect to the Northwest Territories acts; then a con-
Business of the House
tinuation of this debate; then the bill standing in the name of the Minister of Mines and Technical Surveys, having to do with the boundary between Ontario and Manitoba, and the Explosives Act; then the bill standing in the name of the Minister of Northern Affairs and National Resources, having to do with the national battlefields at Quebec.


[Stage Direction]
It being four minutes aften ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday. January 22, 1954