1954-04-27

[Stage Direction]
On the orders of the day:
Mr. R. R. Knight (Saskatoon):: Mr. Speaker, I notice that the Minister of Transport (Mr. Chevrier) is not in his seat, but if his assistant will take this question as notice I shall be very pleased. In view of the discussions held in Ottawa from April 12 to 14 with representatives of the United Kingdom government on the subject of possible modifications to the Canada-United Kingdom air transport agreement, is the government now in a position to indicate what changes, if any, will be made in this agreement?


Mr. Maurice Bourgel (Parliamentary Assistant to the Minister of Public Works):: Mr. Speaker, in the absence of the Minister of Transport and his assistant (Mr. Langlois, Gaspe) I shall take this question as notice and inform the minister.



TRANS-CANADA HIGHWAY CONSTRUCTION THROUGH BANFF NATIONAL PARK

[Stage Direction]
On the orders of the day:
Mr. C. E. Johnston (Bow River):: Mr. Speaker, I would like to direct a question to the Minister of Public Works. Does the federal government plan to continue the construction of the trans-Canada highway through the Banff national park throughout the year 1954? If so, how many miles will be completed in the year 1954? Secondly, how long will it take to complete the trans-Canada highway through the Banff national park?


Hon. Robert H. Winters (Minister of Public Works):: Mr. Speaker, unfortunately I did not receive notice of this question until this moment, so anything I say will be from memory and subject to correction. We do intend to do some work on the Banff national park trans-Canada highway this year, but hope to do a larger amount of it in the Yoho park at the western end. As to the length of time it will take to complete the trans-Canada highway through the Banff national park, we 83276-262
intend now to complete it by the termination date of the agreement which will be December 9, 1956.



INQUIRY AS TO EXTENSION OF TIME FOR COMPLETION

Mr. M. J. Coldwell (Rosefown-Biggar):: Mr. Speaker, I would like to direct a question to the Minister of Public Works following the question put by the hon. member for Bow River (Mr. Johnston). Has any understanding been arrived at regarding an extension of time in which the provinces may complete the trans-Canada highway? In other words, must they complete their part of the trans-Canada highway by 1956?


Robert Henry Winters: Mr. Speaker, the legislation passed by parliament provides for termination by December 9, 1956, and there is no authority beyond that date. That is the only position I have been able to take in discussing this matter with the provinces.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, in view of the fact that before the Easter recess the Prime Minister indicated that he would inform the house, when we resumed, what new business might be brought before us, I would ask the Prime Minister if he is now ready to tell us what new business the government proposes to introduce.


Right Hon. L. S. St. Laurent (Prime Minister):: No, Mr. Speaker. I am meeting with my colleagues on Thursday and we will be going over the list of matters that are apt to be considered, and I hope shortly afterwards to be able to make a full statement to the house.



SUPERANNUATED CIVIL SERVANTS


[Stage Direction]
On the orders of the day:
Hon. Douglas Abbott (Minister of Finance):: Mr. Speaker, yesterday the hon. member for Notre Dame de Grace (Mr. Hamilton) asked
4150	HOUSE OF
Inquiries of the Ministry a question concerning a questionnaire sent out to some 20,000 superannuated civil servants. I promised I would inform myself on the matter and give an answer today.
The purpose of the questionnaire was to obtain information on three points:	(1)
Whether civil service pension cheques are being sent out in the name of people who are not now alive; (2) whether any civil servants who were pensioned because of disability are now re-employed; and (3) whether any pensioned civil servants have since been re-employed in the public service.
The questionnaire was briefly worded, and apparently some misunderstanding has arisen. The only purpose is to obtain information required for the proper administration of the superannuation act.
As to the first question, some envelopes containing the questionnaire are coming back marked "Address unknown", whereas the envelopes containing the pension cheques are not being returned.
Information on the second point is necessary because, under the act, civil service disability pensions are suspended if the pensioner recovers to the extent that he can resume duties comparable to his former duties.
In the case of the third question, it may be to the advantage of the retired civil servant if his new salary, plus his benefits, exceeds the salary at which he left the public service.



REPORTED HOLDING OF ADULTERATED PRODUCT BY GOVERNMENT

[Stage Direction]
On the orders of the day:
Mr. L. E. Cardiff (Huron):: Mr. Speaker, I would like to direct a question to the Minister of Agriculture, following a report I read in a newspaper yesterday in regard to the government holding several thousand pounds of adulterated butter. Has the minister any comment to make on that report?


Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, I understand that the government is not now holding any adulterated butter.


Mr. Fulton:: What did you do with it? [Later:]


Edmund Davie Fulton: May we ask the Minister of Agriculture what disposition the government made of the adulterated butter, and how much there was of it?


James Garfield Gardiner: The butter which we had and which, according to our information, was adulterated, was taken back by the persons


who delivered it to us; and they paid back to us the money which had been paid to them.


Mr. Knowles:: And what are they doing with it?



RAYMOND ARTHUR DAVIES


[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilion (Noire Dame de Grace):: Mr. Speaker, I wonder whether the Minister of Citizenship and Immigration can tell us whether the government plans to deport Raymond Arthur Davies, recently convicted of passport fraud, at the conclusion of his two-year sentence, and if so, to what country.


Hon. W. E. Harris (Minister of Citizenship and Immigration):: Mr. Speaker, as I understand the case, Mr. Davies indicated that he might or might not appeal. I am not sure what has happened in that respect, but in any event this department would not be officially notified of his conviction until he entered prison. If he does that, we will learn of it and a board of inquiry will be held at that time in order to determine whether or not he should be deported.



RUSSIA-REPORTED OFFER TO PURCHASE BARLEY

[Stage Direction]
On the orders of the day:
Mr. H. A. Bryson (Humboldl-Melforl):: should like to direct to the Minister of Trade and Commerce (Mr. Howe) a question of which I gave him notice. In his absence perhaps his parliamentary assistant could answer it. Would the minister care to comment on a recent press release regarding a Russian offer to buy three million bushels of Canadian barley?


Mr. J. H. Dickey (Parliamentary Assistant to the Minister of Defence Production):: In
the absence of the minister I shall have to take that question as notice. I will draw it to the minister's attention.



THE BUDGET


[Stage Direction]
The house resumed, from Monday, April 26, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell.

(Translation) :
Mr. Raoul Poulin (Beauce):: Mr. Speaker, in the course of my remarks, yesterday, I showed that butter consumption in Canada had considerably declined since margarine was put on the market, and that available butter stocks are now the largest in our history; this jeopardizes to a considerable extent the position of our farmers, and in consequence, that of our working people, because the rural classes are the main consumers of manufactured goods.
I stated moreover that in 1952 and 1953, the farm income decreased by approximately 25 per cent, while the income of wage earners increased by about 13J per cent. I also said that the decline in farm income generally raises the depressing ghost of unemployment. It therefore seems hardly an overstatement to say that the surest means of maintaining employment at a reasonable level would be to bolster the purchasing power of our farming people, even if the workmen had to make certain sacrifices to this end; it would, indeed, be better for a workman to eat butter-even costly butter- and work, than to consume cheaper margarine while unemployed.
Let us not, besides, labour under any delusion. If ever the day comes when margarine producing companies no longer have to fear any competition from butter, we will see the price of their product rise to fantastic heights. I am sure in my own mind that our good working people will have already understood the essential difference between those methods which are used to fix the price of butter and those used to fix that of margarine. In the first case we have 450,000 small producers who will never be in a position to unite closely enough to have any serious influence or any measure of control over the market, whereas in the second case, we have a few large and powerful companies which will always find some way, in spite of anti-combines legislation, of doing away with competition and of selling at exorbitant prices. Workers will then realize, though a little too late, that they have been victimized on two levels at once.
That is why I wish to state quite plainly that in defending the vital interests of the dairy producers, I am at the same time defending the higher interests of the working class. One way, to my mind, of protecting the dairy industry against the flood of margarine would be to levy an excise tax on the sale of the latter product. It is a rare event, 83276-262J
The Budget-Mr. Poulin indeed, to see members of parliament suggesting the imposition of a new tax. But, at the present session, we will have seen and heard everything. I would like to mention in this connection that several agricultural organizations in the county of Beauce have advocated such a measure. I have been the recipient of a number of resolutions adopted at meetings of co-operative unions.
Other groups have sent me delegations of their officers. And here are the names of some parishes whose professional farm groups have deemed it appropriate to take a definite stand on the matter: St. Gedeon, St. Martin, St. Pierre, St. Honore, Ste. Marie, St. Ephrem, St. Victor, St. Benoit, and a few others, the names of which I have not here-
If I add to that the hundreds of representations I have been receiving for some years, concerning that same problem considered from a different angle, I do not hesitate to state that the farming class as a whole, in the riding I represent here, urges the government to rid the market of a product which, as I said, constitutes a serious danger to the welfare not only of the farming class but of the working class as well.
Since I am dealing with the problem of butter and margarine, I would be unfair if I did not pay tribute to the government and to the Minister of Agriculture (Mr. Gardiner) for the general policies they have put forward in the past few years in that respect. I believe that the butter price support program has been an excellent thing. It has protected the dairy producer and enabled him to sell his product at a reasonable price, even if that price is still lower than it should be. The main result however has been to prevent the scandalous state of affairs that prevailed during the winter of 1951-52 when urban workers, for instance, had to pay 80 cents, 90 cents, or even $1 for a pound of butter. I remember very well mentioning the fact in the house and urging the government to take the necessary measures in order to prevent a repetition of such a scandal. Once more I declare I would be unfair if today I did not express my humble thanks to the Minister of Agriculture and to the government. However, it may also be my duty, since I had some congratulations to offer, to take that same government to task in respect to a certain aspect of the problem of margarine, which I raised a few moments ago. During the past few months, on three or four occasions, I have asked the government a few questions in the house in an endeavour to

The Budget-Mr. Poulin establish if the government and its experts really believed that margarine is a product comparable in quality to butter.
Unfortunately, I must say that I did not receive a satisfactory answer. The last question I asked was as follows:
1.	In taking as a basis of comparison butter and margarine sold by dealers in Canada, is the nutrition division of the Department of National Health and Welfare in a position to state which of these two products has the greater food value?
2.	If so, which product?
I thought that my question was clear enough, well enough put, for our offsprings are always dear to us, but I did not receive a satisfactory answer. I have here the answer and I quote from page 4070 of the Hansard of April 14, 1954:
1. No, because sufficient analyses of butter and margarine as sold in Canada are not available in .the files of the nutrition division.
.2. See answer to No. 1 above.
That means-it is at least the conclusion I am drawing-that the government does not hold on this subject a clear, definite opinion. I wonder then how it happened that the nutrition division of the Department of National Health and Welfare published, during 1953, what I would call a book of recipes for cooks having to serve meals to large groups of people.


Mr. Speaker:: Order! I apologize for interrupting the hon. member.
(Text):
May I ask hon. members to converse in more moderate tones. They seem to be competing with the voice of the hon. member who is speaking and it is very difficult for me to hear. 1 always like to listen to speeches by hon. members and I would appreciate it if hon. members would observe silence. (Translation):


Raoul Poulin: I thank you, Mr. Speaker, for coming to my rescue. I admit quite humbly that I had trouble hearing myself.
Well, if one goes through this publication issued under the authority of the Department of National Health and Welfare, one finds that in exactly 122 recipes, it is advised to use either butter or margarine. If the government is not in a position to give us a comparative statement of the food value of butter and margarine, how is it that in this publication, in 122 different places, the use of either butter or margarine is advised; they are on an equal footing, on exactly the same basis.
I do not want to prolong unduly my humble remarks on this matter, because I would now like to say a few words about another problem which is no less interesting.
In the few minutes I have left I would like to make some remarks on a matter tMr. Poulin. 1
about which I spoke here on March 23 last. It is also a matter about which the Minister of Finance (Mr. Abbott) spoke rather at length in his budget speech of April 6 last.
I have in mind the deductibility of the new Quebec provincial tax from the amount of the federal income tax.
Owing to the importance of this matter,
I shall strive to avoid any word or to take a position which might offend those who do not share my humble opinion on this matter.
Speaking in the house yesterday, the hon. member for Bonaventure (Mr. Arsenault) stated textually as follows, and I quote Hansard at page 4120:
-since the money levied by the Canadian government, under its taxation legislation, is its own property, nobody has the right, through a provincial law or otherwise to prescribe that part ol this money which is the Canadian government's own personal property, shall be, without any agreement to this effect, diverted to the benefit of a province, whatever the motives may be.
Mr. Speaker, there has been no attempt made on the part of the province of Quebec, through its bill No. 43, to take any money belonging to the federal government. In my humble opinion such a statement is absolutely contrary to facts. According to the terms of its legislation the province of Quebec is simply requiring its own taxpayers to pay, in a clearly defined fashion, certain sums of money which it will then use for equally well defined provincial purposes.
That, briefly, is the essential meaning of that act. It being so, who could really claim that the province of Quebec wishes to convert to its own purposes moneys rightfully belonging to the Canadian government? The province of Quebec is merely exercising a right in taking what it is entitled to take. I doubt very much if anybody here, in this house, would deny it that right. As a matter of fact we have not heard any member or any minister speak to that effect. The member for Bonaventure himself recognizes that right. He is reported on page 4119 of Hansard as having said:
We of the Canadian parliament are the first to recognize the right of the province of Quebec, and of any other province, to direct taxation.
That quotation flagrantly contradicts the one I mentioned a while ago; and yet the latter is from the same member and appears at the same page of Hansard.

But I will go further. The province of Quebec, under section 92 of the British North America Act, may exclusively-to use the exact term found in the language of the act -make laws in relation to matters coming within the classes of subjects next hereinafter enumerated. And, under subparagraph 2, I quote again:
Direct taxation within the province in order to the raising of a revenue for provincial purposes.
Brilliant lawyers, there are many of them in this chamber and I recognize their talent, will attempt no doubt to demolish my humble arguments. Will they be kind enough to tell me what the word "exclusive" does mean in the aforementioned text, apart from suggesting clearly that, in provincial matters, not only has the province of Quebec equal rights, parallel rights, as the member for Bonaventure put it, but that it has priority over the federal government?
But the province of Quebec is not so exacting, Mr. Speaker. Far from diverting to its own benefit funds belonging to the federal government, it merely asks that government to amend an existing federal statute, under which the central authority comes and collects from provincial taxpayers moneys that are exclusively theirs according to section 92. Neither does the province ask to recover the total funds to which it is rightfully entitled, but only that part it has the unquestioned authority to collect under the terms of that very section 92.
This was answered by the hon. Minister of Finance in his budget speech. I am now quoting what he said as recorded in Hansard of April 6, page 3732:
If a credit up to 15 per cent of the federal tax were accepted, it would appear to be difficult in principle to later deny full credit for, say, a 30 per cent, a 60 per cent or even a 100 per cent provincial tax.
I must admit, Mr. Speaker, that I am not very much impressed by this argument. The hon. minister said that "it would appear to be difficult in principle to later . . ." But, though that principle is now confirmed by the present deduction of 5 per cent, the government does not, in practice, feel bound by the rule recognized in the 5 per cent section. It remains within the limits of its authority-if not its rights-so long as the majority in this house supports its claim. Though deduction was, in principle, introduced by the federal government, this government is now, in practice, able to refuse a deduction of 15 per cent; why should it not be even more able to refuse 30, 60 or even 100 per cent should such action prove advisable?
The Budget-Mr. Poulin
The federal parliament is always free to do as it pleases, and, if it seems now relatively easy for it to refuse a small exemption, how much easier it will be later on for them to turn down requests which might appear even more exorbitant.
They are taking the Quebec government to task for not having consulted the federal government with a view to coming to an agreement before enacting its legislation. When it came to adopting section 33 of the Income Tax Act, with which the provinces are directly concerned, were the provinces consulted? No, unless I am mistaken. Since it is at least recognized that the provinces hold with the federal government equal rights in that field, why is it that one of those two partners having equal rights should not legislate in a field in which the rights of the other are concerned, while the latter could do it with impunity? One law for one's friends and another for one's foes, some might think. Not even that, but rather the deeply rooted conviction in the mind of certain legislators that the provinces are institutions which are inferior to the federal government, that they owe the latter their right to exist and, consequently, come under its sway.
And yet this statement is the exact opposite of the truth. It is the federal government which owes its existence to the provinces. Without them it would never have come into being. It is of course true that it now has well defined rights which the provinces have neither the capacity nor the right to take away from it, but these rights are limited to those which the provinces agreed to hand over when, through mutual consent, they established this compact from whence sprung the federal state. The hon. member for Bonaventure adds, at page 4121 of Hansard:
It is often repeated-many things are said-that Ottawa draws $300 million in personal income tax in the province of Quebec.
It is never said however that Ottawa gives to the province of Quebec, through old age pensions, family allowances, pensions for the blind and subsidies to help the building of hospitals in Quebec, over $200 million per year. It is never said however that the $300 million received by Ottawa from personal income tax in Quebec is not even sufficient to cover the large amounts generously distributed by the federal government in Quebec by way of pensions, allowances, unemployment insurance benefits, public works, grants of all kinds for the maintenance of its various services.
The least that one could do would be to recognize that what Ottawa draws in taxes from Quebec with one hand it gives generously with the other hand to the people of Quebec.
4154	HOUSE OF
The Budget-Mr. Poulin
Mr. Speaker, I am asking, in all sincerity, whether the hon. member for Bona-venture has well weighed his words, has given careful thought to the matter, before uttering them. Does he claim seriously that Quebec receives more money from Ottawa than it gives it? Would he have the house believe that the federal government gives more to Quebec than it receives from it? Has he not perchance forgotten to add to the $300 million paid by Quebec taxpayers the millions the latter pay to Ottawa under other headings? What about the excise tax, the federal sales tax, customs duties, postal fees, trade permits, etc. He repeats, to use his own formula, that Ottawa collects $300 million in Quebec on personal income tax, but he does not repeat enough that it directly or indirectly collects many other taxes under the headings I just mentioned. If Quebec receives from Ottawa at least as much as it gives in return, this province is therefore a poor relation within the Canadian confederation; in this case, the surplus wealth of other provinces should be offered it as a gift.
But as things are, it is the opposite argument that is invoked by the hon. Minister of Finance and the hon. Minister of Northern Affairs and National Resources (Mr. Lesage), when they refuse to admit the deduction claimed by the province of Quebec. These gentlemen pretend that the fiscal agreement policy is based on the recognition of the principle that part of the federal revenue is to be distributed to the poorer provinces. Quebec, they say, is a wealthy province-on this point they are right-and must therefore accept the agreement policy in order to assist the less fortunate provinces. The hon. member for Bonaventure will doubtlessly have to meet the two ministers, whom he commended warmly yesterday-not without ground-and harmonize his views with theirs; otherwise the taxpayers will think-and rightly so-that unity does not yet exist within the great Liberal family, and that all its members are not of one view with regard to an issue of such great importance at the present time.
The hon. member for Bonaventure also claims that the problem is a purely financial one, bearing on the allocation of taxes. Mr. Speaker, I beg to differ completely on that point. That fiscal problem, that question of taxes raises the entire question of provincial autonomy. Since I spoke at length on that particular subject in the house on March 23, I shall not restate my arguments for fear of boring the house. I shall be content to


say that the great majority of the population of Quebec is apprehensive, and reluctant to accept various subsidies which are sometimes given the appearance of a gift. They remember the old saying: He who pays the piper calls the tune.
Need I repeat here, for the third or fourth time within five years, that personally I have no fear whatever-and I say so sincerely and emphatically-that the men who now make up the present government at Ottawa may encroach upon fields that come within the sole jurisdiction of the provinces, nor would I fear such action on the part of a government that may eventually be formed from within the ranks of those who now make up the official opposition. However, I have the right to ask myself what the future may hold for us in that field.
When our children in the province of Quebec have taken our place and formed a new link in the chain that links most of us, through the centuries, to the first settlers who opened our country to civilization, what kind of men will then be at the helm of our country? Nobody knows. In spite of what the hon. member for Bonaventure may think, are we quite sure that the problems pertaining to racial, religious and educational matters will be solved in conformity with the indefeasible rights of the French-speaking people of Canada? Whoever is aware of certain sad happenings in the history of his country, and more particularly of its contemporary history, may wisely entertain some doubts.
Mr. Speaker, the elaborate and very interesting speech made by the hon. member for Bonaventure (Mr. Arsenault) will have had at least one merit, that of calling the attention of the house to a suggestion which it is the duty of the federal government to consider seriously, if that government is sincere in rejecting the request made by the provincial government. For my part, I shall simply declare that its acceptance would deprive a provincial government of its freedom of choice between the various fields of direct taxation which were granted to the provinces by our constitution.
(Text):


Mr. J. E. Brown (Brantford):: Mr. Speaker, I have only a few brief remarks to make in this debate. There is no doubt the Minister of Finance (Mr. Abbott) would have made himself very popular if the personal income tax or the corporation tax, or both, had been reduced substantially this year. Naturally,

all of us would welcome any prospect of reduced taxation. But, so far, no one has indicated where appropriations could be cut. For example, I have not heard any suggestion from anyone that we cut our defence expenditures at this time-expenditures that consume over 40 per cent of our tax dollar. Nor do I believe that any responsible critic of the government would dare suggest that we trim down our defence expenditures at this time.
Neither do I hear any serious suggestion of reducing the amount set out in the budget for social services. Liberal administrations over the past twenty years or more have built up a comprehensive plan of social welfare, establishing a basic national minimum of social security across Canada. It is a plan that is admired throughout the world. Surely no one will suggest that this long-range plan be interfered with, or that it be diminished in either scope or extent.
One thing that has impressed me since coming to Ottawa has been the activity of the Department of National Health and Welfare. The immensity of the measures taken by the federal government to provide hospitalization and health facilities across Canada, even in the most remote centres, has been an inspiration to many of us who are now in the house at this session for the first time. The record of the government and, in particular, of the Department of National Health and Welfare, ought to be a source of pride to every Canadian. There is not a home in Canada that has not benefited, and benefited to a large extent, from the huge grants made by the federal treasury for the construction of hospital and health centres across the country.
I would be very much opposed to any attempt to curtail or to restrict in any way these facilities, or any effort to lower our standards. I feel sure, too, that any such move would be opposed by the great majority of members in the House of Commons.
How, then, are we going to cut taxes? Are we going to begin deficit financing? Would anyone suggest that we move away from the method of financing that has been adhered to by this government over many years? I believe the Minister of Finance holds an invincible record of achievement in balancing budgets over many years, and in having been fortunate at the same time in reducing substantially the national debt. Indeed there are many who express the hope that eventually the national debt may be wiped out altogether.
I am convinced that, with the exception of a few grumblers, in their hearts the people of Canada salute the Minister of Finance and
The Budget-Mr. J. E. Brown this government for the brave, efficient and careful manner in which they have tackled and are now tackling the financial problems of this country. When I was back home during the Easter recess I found the people still talking about the Prime Minister's world tour. They have expressed their deep admiration for his having undertaken this extensive trip abroad, spreading, as he did, the spirit of good will that Canadians have towards the divers peoples whom he visited.
The people of Canada are very much interested in the peoples of India, Pakistan, Ceylon and other nations in that part of the world. In considerable measure this is due to the long and close association between ourselves and these various nations of the British commonwealth. I find that there is widespread satisfaction that the Prime Minister visited some of the great countries in Asia, as an expression of the feeling of brotherhood and mutual understanding that exists and has existed over a long period of years between the people of Canada and the peoples of these lands.
Accordingly I desire to express the hope that the government will give the most careful study and consideration to developing and extending our participation in the Colombo and other plans, to assist in every possible way in raising the living standards of the peoples in these countries. It would seem that there is very much that we can do, and I would urge that every means possible be taken to cement our good relations with these nations of the commonwealth, and with other friendly nations of the East.
I understand that last year we contributed $25 million to the Colombo project. I would be in favour of substantially increasing this technical and material aid, after the government has had time to discuss measures in detail with those who are responsible for implementing the plan. I should imagine that a great deal by way of further technical assistance in the fields of agriculture, transportation and public utilities would be very much welcomed in the East at this time.
For example, could we not furnish a goodly supply of agricultural tools, implements and equipment suitable for use in the East, as well as a further supply of trucks, buses and other vehicles of transport? Probably this was one of the many subjects discussed with the leaders in Pakistan and with Mr. Nehru during the Prime Minister's visit.
Of course, any large-scale assistance would mean heavier taxes here in Canada. It simply could not be done without in some measure increasing the tax burden; but I believe the majority of people would favour doing this, taxes or no taxes. I find that the average intelligent working man or

The Budget-Mr. J. E. Brown woman is quite prepared to pay taxes in return for increased security from unemployment. I believe that an intensive program of technical and material aid to commonwealth and other friendly countries in the East might help substantially to ease the unemployment situation that exists in some centres, including my own historic city of Brantford. I am quite certain-indeed I have no doubt-that I could carry my constituency on a program of expanded aid to eastern nations. I have reason to believe that the labouring people of Brantford as a whole would support it, and also the farmers and a substantial proportion of the remainder of the electorate. They would like to see the Prime Minister's good will visit backed up by a long-range program of assistance in developing countries in areas of the world that have been suffering for generations from a depressed standard of living. If we can, let us be of real assistance to our friends in the East. I am sure they need and would welcome our help just now, and it would be a way in which we could demonstrate our feeling of brotherhood toward the inhabitants of the several great nations that have been grouped together for so many years in our commonwealth.
The Christian heritage alone of this land impels us, Mr. Speaker, to set a real example of sharing some of our material prosperity with those less fortunate in this regard, but who probably are every bit as, if not more, sensitive to spiritual values. In other words, I should like to see the Prime Minister's trip followed up at this time by a plan in which the people of Canada as a whole could participate. The expressions of good will that have been advanced by the Prime Minister in Asia represent, I am sure, what is in the hearts and minds of the men and women whom I represent, and I venture to say that the people of Brantford are typical of the people of Canada.
For a long time my constituents have recognized the merits of the government's long-range domestic program, or else I would not have been elected to this house; but I believe they are now prepared to have Canada give a little leadership in a new field of endeavour, a field worthy of the very best that is in us, of developing the peaceful arts in many friendly nations, particularly those with whom we are united in the commonwealth, and of aid that is consistent with what we should like in our hearts to see accomplished in the vast and intensely interesting continent of Asia.
(Translation):


Mr. J. W. Dufresne (Quebec West):: Mr. Speaker, on April 6 last, the house assembled


to hear the first budget speech of this twenty-second parliament.
The Minister of Finance (Mr. Abbott), having announced with a sigh of relief that he was submitting the last budget of his political career, acted in such a way as to leave with the Canadian people and more particularly with those of the province of Quebec a souvenir that will never fade and which I shall later qualify in the appropriate terms.
The government of the province of Quebec, having taken concrete steps, that is having enacted legislation in order to regain the powers granted it under the British North America Act, the Minister of Finance deemed it advisable to devote an important part of his speech to that firm and energetic attitude of the Quebec government. At the same time the latter requested the right of deducting from the federal personal income tax the amount of the new provincial tax.
That night, all the people of Quebec were listening, and awaiting anxiously the reply of the federal government to the request made on their behalf by the provincial government which enjoys the full confidence of the people under its jurisdiction.
The Minister of Finance, with that arrogance he alone can display, in stating the policy of centralization of a government which has been already too long in power, was evidently pleased and extremely satisfied to announce that the taxpayers of the province of Quebec shall pay from now on a double tax in return for their love of their province and the protection of its autonomy.
That statement of the Minister of Finance and his blunt refusal to grant the legitimate request of the Quebec government, or rather of the people of Quebec, were met by a thunder of applause from the benches of the subservient Liberal members from Quebec. As I was put out of countenance, though little surprised, by the unheroic attitude of the Liberal members from Quebec, I felt ashamed for them, and it is with a heavy heart that I felt myself forced to leave this chamber.
Mr. Speaker, we are faced here with a problem which might have very serious consequences, and we should not deal with it lightly, or in a partisan spirit. This question must not be considered as a political one and treated as such. It is well above that level, for the maintenance of good will between all Canadians and of sound national unity are at stake.
Let there be no mistake about this. Any attempt made to deprecate the true patriotism which marks the Hon. Maurice Duplessis

and to condemn him in the eyes of the other citizens of this country must necessarily mean condemnation of each and every citizen of the province of Quebec who will thus be subjected to this double taxation.
The premier of Quebec is by no means personally concerned in all this business. He is but the representative and the mirror of a whole group of people who remain true to the confederative compact and are jealously on guard to preserve their rights and prerogatives. He is merely protecting the interests of those who, in three successive general elections, have requested him to act as their spokesman and defender in the upholding and recovery of rights which are truly ours and which, as had been promised, would be returned to us in their entirety once the last world conflict had come to an end. In this field he is also continuing to uphold the autonomist policy so often attacked but so brilliantly defended by great Liberal chieftains, such as Messrs. Gouin and Taschereau, to name only those two.
What a striking contrast, Mr. Speaker, between the centralizing Liberal party of today and the one which was led by Sir Wilfrid Laurier, that earnest autonomist whose memory they are about to perpetuate in the very city of Quebec by the erection of a monument.
Sir Wilfrid Laurier as well as Sir John A. Macdonald knew themselves that the Canadian confederation is a sacred pact between the two major groups of Canadians who laid together the foundations of this young country and who both contributed to its expansion and development.
And to the centralizers who think they are indispensable to the management of Canadian affairs, I shall recall that word of a great Canadian, of one of those who largely contributed to the realization of the Canadian constitution, Sir John A. Macdonald, when he declared:
In this country there is no superior race, no vanquished race; there are only Canadians with equal rights.
I shall also quote to the government a statement made one day by Sir Wilfrid Laurier who proved thereby his great comprehension of the confederative pact and showed unequivocally his respect for provincial autonomy.
Sir Wilfrid said:
There are but two minorities in the Canadian confederation, a minority of race and a minority of religion. To give to the central power, where the majority of race and of religion is found, the authority to encroach arbitrarily upon the jurisdiction of the provinces, is to destroy the legislative independence of the provinces and to make it but an illusion and a mockery.
The Budget-Mr. Dufresne
As a matter of fact, the cause of all the unrest that has upset our young confederation at different times has always been one and the same; it has always been the attempt by the central authority to encroach on provincial prerogatives.
These words of Sir Wilfrid Laurier are strikingly true nowadays. And when looking at those who claim to be his political followers, one is inclined to think that they should be ashamed to do so.
If the right hon. Prime Minister (Mr. St. Laurent), the hon. Minister of Finance and all those who now form the government would take their inspiration from the United Nations charter, they would find therein a section providing that any aggression by the strongest government against the weakest must be punished.
When people in Quebec are asked to abandon their rights, to give up their principal sources of revenue, or else to be taxed to the tune of $125 million more than the taxpayers of the other provinces, I say that this is aggression, cold war, or more precisely shameless blackmail.
The federal government states that because of its need for funds, it collects money wherever it may be found. The government thus adopts the principle of "What we need, we take".
In years past, other governments have done so. But they were compelled to abandon, at a certain moment, what they had seized without justification.
History has shown disquieting examples of what happens when the maxim "Might is right" is followed. In 1871, the chancellor of a powerful empire applied that principle. In 1914, the chancellor of the same empire- a great jurist he was, and moreover a professor of Roman law-told the British representatives that the treaty which guaranteed the integrity of the Belgian soil was nothing but a scrap of paper.
Another chancellor of the same empire ordered the conquest of weaker states, such as Czechoslovakia and Poland. I shall not attempt to relate what all that led up to for, alas! we know it but too well.
There are various kinds of aggression against a less powerful state. Whether it be armed aggression for the purpose of invading and dominating that state or whether it be aggression intended to weaken it financially in order to do away with it, it is nonetheless an aggression condemned by the United Nations charter and which should be punished.
In the matter about which we are concerned, Mr. Speaker, impudence and cynicism are carried a little too far. They say to Quebec:	"You can always come here for
4158	HOUSE OF
The Budget-Mr. Dufresne a meeting because the government will always be happy to meet you." On the other hand, they are determined to maintain the position outlined in the budget speech. What tragic jokes this government can invent!
The province of Quebec owes nothing to the central government and should certainly not humiliate herself by making the first steps. The federal government is undoubtedly the aggressor, having little by little and by devious means encroached upon the autonomy of the provinces. I have never seen an assaulted person compelled to make excuses to his attacker. That is however the ridiculous idea of the Minister of Finance and of the government to which he belongs.


Mr. Lesage:: Ridiculous.


J.-Wilfrid Dufresne: All means seem to be good in order to reach an objective which is centralization and to attain eventually at legislative union, the most important step towards a condemnable socialism, from where only one further step would lead us to despicable and inhuman dictatorship. The time has surely come for the federal government to recognize its serious mistake and mend its ways, because the people, who cannot be provoked with impunity, will know, one day, how to punish, as they should be, those who in words and in deeds betrayed their trust.
It is interesting, Mr. Speaker, to listen to some of the speeches of our friends opposite, who, bluntly contradicting themselves, preach centralization to the French-speaking Canadians in the name of national unity. What nonsense!
First of all, I do not believe that anybody, in this house or out of it, has any right to lecture my compatriots in this fashion.


Jean Lesage: You neither.


J.-Wilfrid Dufresne: Let the minister not get discouraged; I will get to him later.


Jean Lesage: That does not surprise me.


J.-Wilfrid Dufresne: To preach national unity means to act in a patriotic fashion. I will allow no one in this country the right to give lessons in patriotism to Canadians of my tongue. No one has a right to give us lessons in this regard, especially not the defenders of centralization.


Jean Lesage: And yet you need some.


J.-Wilfrid Dufresne: Have not French Canadians more than once fought valiantly for the defence of those constitutional rights accorded them by the Constitutional Act of


1791? In 1812, for instance, many of our Quebec ancestors willingly shed their blood for the defence of our Canadian soil against the invasion of American soldiers. They then fought with the utmost energy to preserve for the British crown that important section of our important Canadian territory.
Later on we had two great world wars during which French-Canadian regiments won renown and added to the glorious chapters of our history. And if in the course of those bloody conflicts, the Canadians of my race had refused their co-operation, our army, our navy and our air force would have had been less numerous by one-third and our influence with the other nations would have been weakened to that extent.
If they accepted with enthusiasm to serve for the defence of their country on those various occasions, it was because they had to preserve for themselves and for the coming generations sacred rights that the fathers of confederation had guaranteed to them; those rights ensure their survival and their development in Canada, which belongs to them rightly since they are its pioneers.
The government, Mr. Speaker, is illogical on a vast scale and is becoming ridiculous in the eyes of all good Canadians worthy of the name.
For many years the economic future of a. young country like ours, which needs all its resources, is being jeopardized by considerable, not to say extravagant, spending, for war and our so-called national security. I am not, mark my words, criticizing in any way the expenditures made for our defence and for the re-establishment of a just peace in the world. Yet it is an imperious necessity to practise what is being preached, as much here, in Canada, as abroad.
Why did we consent to take part in wars that, apart from costing us billions of dollars, have bereaved us of the best of our young people, of whom our country had a dire need for the conquest of its own destiny? Why did all Canadians accept so many sacrifices in the dark hours when the free world was in danger?
Why do we keep on giving money and bleeding ourselves white to ensure the protection of our land and defend ourselves against our common enemy, communism?
Also, why do we grant such help-greater help than we can afford, sometimes-to various countries in need of our assistance, for the purpose of maintaining among those populations the peace and freedom so many human beings are seeking?

All those generous measures, we take in the name of individual freedom, in the name of civilization, and in the name of democracy, which is so dear to the hearts of all Canadians.
And so, for a decade at least, we have been working so that other countries might win back their freedom and their sovereignty and live once more according to the great principles of democracy.
At the same time, however, right here in Canada people are endeavouring to undermine and to suppress that democracy which is essential to progress and national unity and so dear to all the nations which are longing for justice, peace and freedom.
The word "democracy" means, in my humble opinion: By the people, for the people, not by the people for its subsequent destruction, by the gradual suppression of their sacred rights for the benefit of centralization, which, as I said before, constitutes the first step towards the surrendering of all liberty.
The federal government finds itself condemned in the attitude it has taken lately toward the province of Quebec, by the loss of prestige and influence it has suffered in the other provinces of Canada. Let us not forget that, by weakening the provinces financially, we are working toward their eventual destruction. And those who are aware of the centralizing ideas in the mind of the members of the Canadian cabinet are in a position to guess their evil objective: the suppression of the provinces in order to achieve legislative union, which is prejudicial to all Canadians, constituting an irreparable encroachment upon their liberty.
No matter what those who advocate centralization may have to say, the province of Quebec is not seeking preferential treatment. It is only trying not to sign her own death warrant, and to keep those indefeasible rights which were granted to it by the constitution to which it was a party.
Mr. Speaker, a contract-and the pact of confederation is a contract-cannot be cancelled or even amended in any way without the consent of the contracting parties. Quebec never agreed to the amendment of the constitution. Therefore, if the federal government has any honour, it should respect such a precious document.
The government of Canada, taking upon itself the right of the more powerful party, availing itself of wartime conditions, negotiated with the provinces to get them to abandon their guaranteed rights or to rent, for a very definite period, certain taxation fields belonging to the provinces. I do not suggest that 83276-2631
The Budget-Mr. Dufresne no one has the right to abandon his rights or to rent privileges that belong to him; however, I contend that those who want to keep unaltered what belongs to them should be free to do so.
Through means that I shall not qualify, but about which most of the signatory provinces are complaining, the government succeeded in violating the constitution. No infringement upon that constitution is permitted without the consent of all the provinces. It was in that spirit that the fathers of confederation drafted the pact. Therefore since the constitution has not been amended because the provinces have not agreed to do so, I contend that the federal government did not have the right of entering into those agreements or of renting certain taxation fields from the provinces.
Therefore, what the federal government has done in the matter has no legal standing and all the agreements signed and renewed up to this date are in themselves illegal.


Jean Lesage: What a great lawyer!


J.-Wilfrid Dufresne: The matter is so simple, Mr. Speaker, mere common sense; one does not need to be a lawyer to understand it.


Mr. Langlois (Gaspe):: The man who does not understand does not know any better.


J.-Wilfrid Dufresne: Well those who understand-


Mr. Gauthier (Portneuf):: It is better not to say anything than to speak like that.


J.-Wilfrid Dufresne: When will the federal government impose a penalty upon itself for having acted, as it has done since 1942, in a manner that is completely illegal. Since it will undoubtedly refuse to apply penalties against itself, the people will look after it themselves at the first opportunity.
The constitutional conflict between the central power and the Quebec government cannot remain unsolved because it is grossly unfair to the citizens of that province.
The leader of the opposition (Mr. Drew), true champion of provincial rights, appealed on two different occasions to the right hon. Prime Minister, asking him to call, with the least possible delay, a federal-provincial conference with a view to bringing about a solution to this distressing problem.
The Prime Minister has turned a deaf ear to these two appeals, which demonstrates in the first place his lack of co-operation and certainly, too, the way in which he seeks to approve and patronize this fatal policy of centralization. And before putting forward my own modest suggestion, may I be allowed,
4160	HOUSE OF
The Budget-Mr. Dujresne as one Quebecker to another, to appeal to him to bring to this serious problem the particular attention it deserves.
Let us forget all this petty politicking. Let us rather act as real Canadians devoted to the preservation of well understood national unity.


Mr. Lesags:: That is the first sensible thing you have said.


J.-Wilfrid Dufresne: That is the first time my good friend is of my opinion. The hon. Minister of Northern Affairs and National Resources -and this is going to please him-in a well prepared speech, but one which echoed the feelings of his centralizing masters, has held that the proposal put forward by the hon. Leader of the Opposition, with a view to the convening of a federal-provincial conference before the end of May, was no immediate solution to this problem.
And yet, instead of playing the mathematician, in order to convince his colleagues of the cabinet that he was fit to manage the portfolio of finance, he could have suggested that which, in his opinion, could have solved the problem immediately and definitely. He did not do so, because he was afraid, no doubt, to spoil his chances with the government of which he is a member and which has no intention to try to solve the constitutional imbroglio.
In my humble opinion, there is but one immediate solution to the problem which requires Quebec taxpayers to pay a double tax:
1.	A return by the federal authorities to logic and common sense which they have lost through too long a reign at the helm of the state.
2.	The immediate and full respect for the Canadian constitution which guarantees unequivocally the rights of the provinces, thereby preventing a centralization nefarious to a sound democracy.
3.	The will, on the part of the federal government, to stop considering Quebec as an illegitimate child within confederation.
Can we still continue to treat with contempt the numerous requests made by every important public body, such as municipal councils, chambers of commerce, as well as countless associations or organizations without any political character, that are asking for fair play for the people of Quebec and are also urging the government to come back to the great principles upon which the Canadian constitution is based. Could anybody remain


indifferent when faced with the legitimate grievances of a whole people? It is up to the right hon. Prime Minister to answer that!
It is unfortunate that we did not hear more speeches on this issue by Liberal members from Quebec.


Jean Lesage: They will come.


J.-Wilfrid Dufresne: Before the Easter recess, they all boasted that they would defend the arrogant and uncompromising attitude of their government. But yesterday, when the session was resumed scarcely a score of French-speaking members were waiting anxiously for the question to be put, so that they might be spared the irksome task of making a speech. I am scarcely surprised by their changed attitude, for I know them well. They were back from their respective constituencies where they had been in a position to realize that the views of their electors did not agree at all with the policy of the government. One must then infer, Mr. Speaker, that the fear of the electorate is the beginning of their wisdom.
The province of Quebec is firmly opposed to centralization on very particular grounds; in the face of the present centralizing thrust, it may well fear the advent of a legislative union.
French-speaking Canadians have traditions to which they are deeply attached. They have customs and traditions of their own which it may be possible for them to safeguard through the guarantee offered to them by the Canadian constitution. They have a past of which they are proud, ancestors whose footsteps they want to follow. They have a deep love for the language of their forefathers and for the religion they have been taught on their mother's knees. They have an educational system adapted to their mentality and a culture which they have not refused to place at their country's disposal. Can such a valiant people as ours be asked or required to give up all this, to play into the hands of those whose only concern is to divide in order to rule? No, Mr. Speaker, and I appeal here to all well-meaning Canadians worthy of that name who constitute the great majority in this country.
Whatever one's language or religion, nobody can help being deeply impregnated with the traditions established by his ancestors. Every citizen wishes to keep his traditions, his language, his faith, his customs, and use them in the service of Canada.
When every Canadian understands that a glorious past cannot be sullied with impunity, the general harmony among all of us will be more complete, that will be all the better for

this wonderful and promising country of ours, which we want to make even greater and more prosperous for future generations.
Let us be guided once more by common sense, let us act always and everywhere as real Canadians. We must respect what is dear to us if we want our country to become greater and to prosper.
In that way, Mr. Speaker, we shall live happy, in the closest harmony, each in his own sphere fulfilling the noble mission we have received from Providence.
When, with the satisfaction derived from the fulfilment of our duties, we shall be called into a better world, leaving to our children a country in which it will be pleasant to live in peace, harmony, justice and freedom, our descendants, with real joy in their hearts and the deepest pride in being Canadians, will be able to sing the first two lines of our national anthem:
0	Canada, terre de nos a'ieux
Ton front est ceint de fleurons glorieux!
(Text):


Hugh Alexander Bryson: Mr. Speaker, yesterday afternoon two hon. members on this side of the house dealt in some detail with the very serious agricultural situation that has developed in Canada. In particular the hon. member for Jasper-Edson (Mr. Yuill) dealt with it at length and placed a great many very interesting figures on Hansard to substantiate the statements he made in that regard. While I am not going to take the time this afternoon to speak about this question in detail, I should like to take some time to deal with the over-all picture as it applies to agriculture and in particular to the condition of the grain farmer in western Canada.
1	am very glad that I was able to visit my constituency during the Easter recess because it gave me an opportunity to speak not only to farmers but also to machine agents, garage men and a great many of the other small business people whom we find in every little town scattered throughout the prairie provinces. I was told in every case that their business had fallen off from 25 to 60 per cent in the last six months, owing of course, to the fact that farmers, because they are not able to market their produce, are not able to buy the things that they need. It only seemed to confirm what I had believed and what a great many more people believe, that a most serious situation has developed in our agricultural industry.
Obviously we are following the very same pattern that was developed prior to 1939 and
The Budget-Mr. Bryson the second world war. At that time we had the same conditions of surpluses, falling prices and lost markets together with an increase in the cost of production. Following the second world war our agricultural economy was cushioned against a very obvious recession in this country by the introduction of the Marshall aid program. Following that the recession was of course cushioned by the Korean conflUct.
As I said a moment ago, we have learned nothing from the events of the last fifteen years and we are right back where we were prior to the outbreak of the second world-war. We have reverted to the status quo>
of the 1930's. Somebody once said that as literal translation of the Latin, "status quo",, is "the mess that we are in". I submit that as far as our agricultural economy is concerned we are back in the same old mess in which we were in the 1930's. I should like to mention briefly the impossible position in which our farmers find themselves in trying to work out plans for their production. I think it is something that is unique and it is something that a great many people do not seem to appreciate. This, we are told, is the age of the specialist. This is the age of the efficiency expert and, while a great many people do not like the sound of the word, this also is the age of planning.
No business can long survive in this country unless it gives a great deal of thought, to planning for the future. The distance that these plans are projected into the future is limited only by the size and the scope of the particular industry coupled with society's need for the product that the industry produces. While that is true of all successful enterprises in this country, both in peacetime and in war, it does not follow that it applies throughout the agricultural industry, because farmers do not plan their production in the light of future prospects or future promises but rather on the basis of past experience. I might add that one of the yardsticks that farmers have come to use in their planning is that whenever the Minister of Agriculture (Mr. Gardiner) suggests a certain approach to a problem, if they do the opposite they find it is a good guide to what they should do in that particular year in which he makes the forecast.
The blame for this state of affairs cannot be placed on the shoulders of our farmers. They have no control over the cost of production, nor have they any control over the prices they will receive either on the domestic market or in the markets of the world. We have a pitifully small population in Canada.

The Budget-Mr. Bryson We can never hope to consume all we produce. Why should we when two-thirds of the world's population is hungry and clamouring for food? Like a great many people, I believe that our whole approach to this problem of distribution is wrong. I believe the government is trying to reconcile its thinking in 1954 with its thinking back in 1934. I do not believe it is possible to do that. It is time we reversed the actions of the proverbial ostrich by pulling our head out of the sand and facing up to reality.
We must revolutionize our thinking concerning this problem of distribution just as drastically as we have revolutionized our production methods in this country. If our agricultural industry is to survive and take its place in our country's economy, we should and must plan for the future. Those plans must be based not only on our domestic needs but upon the needs of mankind everywhere, rather than plan as we now do on hope, mere chance and intuition, with our success dependent in large measure on our happy ability as individual farmers to outguess our neighbour concerning what to produce and in what quantities. The most urgent and important question of the day, so far as agriculture is concerned, would seem to be how long can we, as an agricultural nation, continue, without giving this problem of distribution the serious consideration it deserves.
Throughout the war the farmers were asked to produce in abundance. We did a wonderful job. We were told we had done something that had never been done before. We were told we were the salt of the earth and we had unlimited markets. But now we have an entirely different condition. One of the very significant things, and one that any amateur observer might question, is that in spite of the fact we are still spending in the neighbourhood of $2 billion for defence in the name of peace and world security, we are unable to find markets for the very large food reserves we have in this country. The reason, of course, is that we are spending this tremendous amount of money not for food but upon arms, aeroplanes and guns. We are shipping these things to people who are badly in need of food. In effect, we are saying to these people, accept these things and defend your poverty. When this does not have the desired effect, we throw up our hands in holy horror and in our stupidity say that these people are accepting communism, they are turning to communism.
We should not cut our production. I certainly hope our government will not be influenced by recent press statements attributed to the United States secretary of agriculture, Mr. Ezra Benson, in which he

suggested the United States would like to see Canada cut her agricultural production. I think we can all go along with a statement recently made by our own Secretary of State for External Affairs (Mr. Pearson) when he was speaking at a luncheon held in London, Ontario, on January 27 of this year by the federation of agriculture. He said:
None of us wants to see food production curtailed or surplus food destroyed when there are so many hungry people to be fed. Indeed, as long as these people remain hungry there cannot be such a thing as a surplus, except in the economic sense. All our humanitarian and social instincts rebel at a policy of contrived scarcity and food destruction.
I certainly hope that will continue to be the policy of this government.
I come now to one item about which I am greatly concerned, and one which I investigated thoroughly when I was home over the Easter recess. It is something that we in this party have advocated for a long time. We believe that the government should take ownership of properly stored grain on the farm. We do not ask the government to pay the full initial price for this grain, but they should pay a minimum price for grain properly stored on the farm. We say that because the Canadian people are now being told that the grain that is piled on the farms in western Canada is a wonderful thing. They are told it is just the same as money in the bank. If times get tough or we get into another crisis, we will have this supply to draw upon, and we believe that is true.
However, we do not believe the producer should carry the whole burden of this so-called mountainous prosperity, as someone referred to it. Today the people of Canada are asked to bear the whole burden of defence. We are stockpiling armaments in the name of security and world peace, and the people are quite prepared to pay the shot. We say that food is just as essential to world peace and security as armaments. We believe it is only fair that all the people should help to carry that burden and not leave it to the producer alone.
There is another matter I should like to mention at this time, and I am expressing a personal opinion for what it is worth. From discussions I have had I know that a great many people in western Canada are in favour of the scheme I have outlined, but the farm organizations in western Canada are shying away a little bit from this idea of the government taking ownership of properly stored grain on the farm. I am suspicious of this, that the wheat board is saying to the farm organizations of western Canada, "If you are going to advocate this new idea and if you are going to try to push us into the position of buying this

grain, then we will abandon the wheat board." And that would be a real disaster. But I am suspicious that this is the gun that is being held at the heads of western farm organizations.
I think the government should exercise some control over the cost of production, but I am not going to discuss that matter in detail today. There will be other opportunities for me to do so. However, I shall deal with one item in particular, that of fertilizers. I should like to comment momentarily upon two points discussed in debate on December 2 by the hon. member for Kootenay East (Mr. Byrne) who, I am sorry, is not in his seat.
On that date, replying to a criticism I had made in connection with what I called a monopoly in the sale of fertilizers in this country, the hon, member for Kootenay East said I had left the impression that farmers were being gouged. He intimated he was sorry I had made that statement, because he was afraid it would have an adverse effect on fertilizer sales. I am convinced the hon. member for Kootenay East did not make those statements without giving some thought to them, because I know he is concerned about the situation of the workers in the plant at Kimberley. I know the figures he quoted in the house had been submitted to him by the fertilizer companies concerned-because I have investigated the matter. I do not think the farmers in that part of the country from which I come had to wait until I came to Ottawa for me to tell them that they were being gouged, so far as their purchases of fertilizers were concerned. They knew about that a long time ago.
As a matter of fact, when I was home at Christmastime the farmers in my area were circulating a petition in which they asked their neighbours to pledge that they would not buy any fertilizers this spring. This was done with a view of bringing the high cost of fertilizers to the attention of the proper authorities. Fertilizer distributors in the district of Humboldt-Melfort told me only a day or two ago that they know now that their sales of fertilizer are going to be drastically reduced.
I was not in the house when the hon. member spoke and discussed the fertilizer situation, but I could tell from reading his speech that he has real sympathies for the fertilizer companies, and was not pleased with the nasty things I had said about them. I am not going to deal at length with this subject of fertilizers, but I shall try to correct two statements of the hon. member on that occasion.
First of all he said that in the years 1935 to 1939 it took 90 bushels of wheat to buy
The Budget-Mr. Bryson one ton of fertilizer. He then proceeded to point out that in 1952 it takes only 65 bushels to buy one ton. I would say to him in reply that in the years from 1935 to 1939 we were buying fertilizer for about $60 a ton and wheat was selling at less than a dollar a bushel. To be exact, the price of wheat was -956 cents per bushel.
But what was the picture last year? Farmers who were able to market top grades of wheat found that they had to sell over a hundred bushels to obtain enough money to buy one ton of fertilizer. And, incidentally, these figures are from the dominion bureau of statistics and cannot be denied.
The other point made by the hon. member for Kootenay East was that because the fertilizer industry had sold 100,000 tons of fertilizer in western Canada this had meant an increase of 35 million bushels of wheat. I have made inquiries at the central experimental farm here in Ottawa. They have secured all available information from many experimental stations and from the hundreds of illustration stations scattered across the country, and it is their considered opinion that 15 million bushels would be an outside figure-and not the 35 million mentioned by the hon. member.
This just goes to prove once again that the fertilizer people will go to any length in an effort to becloud or muddle the thinking of people who are buying their product. I do hope that before this session is over this whole industry will be investigated under the authority of the Combines Investigation Act.
I was very happy indeed to hear the hon. member for Brantford (Mr. Brown) make a case for economic aid. I am not going to discuss the subject at length; but it was refreshing to hear the fine address he made this afternoon. In addition to the proposal I have made in connection with outright purchases of grain by the government, I would like to see this country accept sterling. This group has maintained over the months that sterling should be accepted. There are many places throughout the commonwealth where it could be spent; or, as we have suggested over and over again, we could invest it in Great Britain to help them rebuild their industries, so that they might produce more goods to offer in trade for our agricultural products. This would help relieve the great surpluses we find in agriculture today.
I should like to see wholehearted support for a world food bank as outlined by the food and agriculture organization of the United Nations. I believe these two things, coupled with what I have suggested previously, would go a long way toward relieving the stress and help cut down the surpluses we have in our

The Budget-Mr. McLeod agriculture. It would also go a long way toward establishing security and peace throught the would.


Mr. G. W. McLeod (Okanagan-Revelsloke):: Mr. Speaker, in the few remarks I shall make in this debate it is my wish to bring to the attention of the government the need for greater financial assistance to the government of British Columbia in developing and conserving her natural resources. The hon. member for Kamloops (Mr. Fulton) made mention of this a few nights ago, and I should like to commend him for it, because I heartily agree with most of what he said. Of course I could not agree with everything, and particularly the fact that he cannot agree with the political convictions of the premier of British Columbia. However, I would remind the hon. member that it is not so many years ago that he and the premier of British Columbia were very close political buddies. Of course, that was before the time when our premier saw the light and renounced Conservative policy.
There is one problem that is a threat to Canadian unity, and that is the Ottawa tax view. It is interesting to follow the arguments of government members from Quebec who support the Minister of Finance (Mr. Abbott) in the stand he has taken. Apparently the present government at Quebec is not very popular with government supporters in Ottawa. They are not afraid to make their views known, whether right or wrong.
However, I should like to congratulate the hon. member for Outremont-St. Jean (Mr. Bourque) upon the very strong plea for national unity he made when speaking in the house last night. I am sure that is one goal we must never lose sight of, and we as Canadians must at all times be prepared to sink our differences of race, religion and politics in a common desire to work in harmony for the welfare of Canada.
Now, what about this Quebec taxation problem? To my mind it is serious; but, Mr. Speaker, I believe it is strictly a family affair and a problem for the Quebec and Canadian governments to settle. It is a family squabble between these two members of the Canadian family and as such the rest of us would be well advised to keep out.
However, while speaking of this taxation question, there is one matter I must bring up. It concerns the defence department and the Department of Finance. I am thinking of members of the Canadian forces posted to stations in Quebec. These men and women, Mr. Speaker, are not in Quebec by choice- they are there in their line of duty. Yet, because they are in Quebec, they are going to be penalized to the extent of the income


tax levied in that province. They will receive less take-home pay than those stationed elsewhere in Canada. This is an injustice. I trust that the ministers of national defence and finance will get their heads together and bring in a solution. If something is not done, I am sure that harmful and unnecessary dissatisfaction will result. I know of what I am speaking, for it was my privilege to spend a few days with my son and his family on one of our defence stations recently and this matter was brought to my attention.
Of the provinces working with the federal government under the tax rental agreements I am sure the so-called "have-not" provinces-the prairies and maritimes-are not dissatisfied. This leaves Ontario and British Columbia. So far as Ontario is concerned, I am sure there are many members of this house who will be able to speak for her. I am going to confine my remarks to my own province of British Columbia.
Our province, Mr. Speaker, comparatively speaking, is the fastest growing and the wealthiest in Canada; yet, strange to say, these two facts are causing us a lot of trouble. In the first place, our increasing population demands expensive services from the province; and in the second place, the federal government is receiving the major share of the increased revenues derived from our great wealth.
Since 1939 our population has increased by 55-3 per cent. The next highest provincial increase was Quebec with 32 [DOT] 2 per cent, while the increase for Canada was 27 [DOT] 8 per cent. This rapid increase creates a great problem for us. The people must be provided with roads, schools, hospitals and social services. In 1940, Mr. Speaker, it required $29-4 million to provide these services. In 1953 it required $145-4 million. This is a large amount of money for a fast growing province to raise, and many projects that are necessary for our people and that would assist not only British Columbia but Canada as a whole cannot be undertaken for lack of funds. Yet it is interesting to note-and I hope the house will remember these figures-that in 1952-53 the federal government collected the huge sum of $259,708,170 from corporation and personal income taxes and succession duties in our province. Many millions more were collected from sales, excise and other taxes. Mr. Speaker, this is only $21 million less than the total collected from the three prairie provinces-Manitoba, Saskatchewan and Alberta-and almost two and one-half times the amount collected from all the maritime provinces. I trust that the hon. members from these provinces will recall these figures when they are discussing the estimates, and compare their allotment with what British Columbia is receiving.

I want to refer briefly to P.F.R.A., railways, highways and conservation of natural resources. Agriculture in British Columbia is expanding along with our total economy. In 1940 our production from this source was valued at $52 million. In 1951 it was $160 million. The end is not in sight yet. There is room for tremendous development, but expensive irrigation and reclamation projects are required. Irrigation is needed in all except the coastal and northern parts of the province. There are large tracts of land that may be reclaimed in areas subject to flooding, as well as in semi-arid areas.
Here I would like to acknowledge expenditure by the federal government of $2,429,939 for work done under supervision of P.F.R.A. engineers in recent years. These projects included, mainly, reclamation and irrigation of blocks of land for war veteran settlement and have proven very satisfactory for the settlers and are of great benefit to the communities and to the province generally.
I would like to see the federal government extend the full benefit of P.F.R.A. to our province. Many of our areas are short of water for home use and the assistance of P.F.R.A. would be very welcome in constructing dams, dugouts, and other facilities for the provision of water for domestic and farm purposes. Then, too, we have individuals who are spending large sums of money for sprinkler systems where the water is pumped from adjacent lakes and rivers. In the vicinity of Vernon we have possibly the largest privately-owned sprinkler system in British Columbia, if not in Canada. It is used mainly for watering pasture land on one of the largest mixed farming ranches in the interior. It has cost the owner thousands of dollars without any outside assistance. Under P.F.R.A. he would have been entitled to engineering assistance and to grants in aid of purchasing the necessary equipment. It is to promote and encourage further installations such as this that we are so concerned that P.F.R.A. should be extended to British Columbia.
I am going to quote you some of the expenditures made by the federal government in aid of such projects as I have been mentioning. Under the Maritime Marshland Rehabilitation Act, 1945, the sum of $8 million will be spent in reclaiming lands around the bay of Fundy. Up to the end of 1952, Manitoba had received $4,277,688, Saskatchewan $35,276,000, and Alberta $28,049,108, under P.F.R.A. British Columbia has received absolutely nothing. So, Mr. Speaker, when I ask that these benefits be made available to
The Budget-Mr. McLeod our province and that we share in the millions being spent to promote agriculture, I believe you will agree the request is not unreasonable.
We have a railway problem, too. The P.G.E. has no coast outlet, but I am glad to report that the provincial government has instituted steps to complete the line from Squamish to Vancouver. However, there is great need to have the line extended from Prince George to Dawson Creek. This is a distance of 271 miles and is beyond the ability of the province to finance. For years we have heard of the need for a Peace river outlet. Mr. Speaker, this is it. From Dawson Creek to Vancouver via P.G.E. would be 516 miles shorter than between the same two points via Edmonton. This road, if completed, would also give a short rail route from the Peace river bloc to the port of Prince Rupert via Canadian National railway from Prince George.
I am not going to take up the time of the house to enumerate the great developments which would follow in the wake of a rail outlet. At the first opportunity hon. members might obtain a map of the Peace river area and while looking at it think of the press reports they have read concerning gas and oil development, mineral finds, and the thousands of acres of virgin timber in this last great bloc of unsettled farm lands. This great area, truly an inland empire, endowed with natural wealth almost beyond imagination, is waiting for a rail outlet to the seaboard. Such an outlet has been promised for years. The federal government has built railroads and through the C.N.R. are operating roads in almost every province of Canada most of which can never hope to serve Canada, as a whole, to such great advantage as a road from Dawson Creek to the Pacific coast. I might mention a few of these such as the Hudson Bay railroad, the Northern Alberta and Newfoundland railroads. We are not asking for favoured treatment. We are merely asking that the federal government assist us in providing this worth-while railroad which would be a great stride forward in the development of our northland and a necessary artery of defence in time of war.
Coming to highways, we all realize that this primarily is a provincial matter. However, we have conditions which make road building the costliest in Canada. Our settlements are scattered and connecting highways, through sparsely settled districts and for long distances, are necessary. We have a very heavy outlay for bridges.
I was rather amused to learn that the federal government disclaims any responsibility for financial assistance for the construction of
4166	HOUSE OF
The Budget-Mr. McLeod the Marpole bridge at Vancouver. Yet I find that this same government is committed to spending $30 million on a causeway from Cape Breton to Nova Scotia. We need roads to tap our mineral and forest wealth. We need roads into our far north, and we need a trans-provincial highway from Alberta through Yellowhead pass to the coast, as well as the trans-Canada highway through Revel-stoke. All these roads will mean wealth for Canada and greater tax return for the federal government. We think the federal government should share the cost.
As regards conservation, I was greatly interested in the reports of the conference on natural resources held in this city last Wednesday and Thursday. On April 22 the Minister of Northern Affairs and National Resources (Mr. Lesage) stated that resources had put Canada in her position as a top-ranking trading nation and that these resources are vital for defence. He is also quoted as saying:
We must consider as urgent any measures which will improve the status of conservation of our natural resources. With the exception of minerals they are renewable and it must be our aim to keep them renewed. The approach must not be lethargic, but dynamic.
He went on to say:
. . . conservation requires a combined effort at two levels-federal and provincial.
Truer words were never spoken. On April 23 the Minister of Trade and Commerce (Mr. Howe) addressed the same convention. He quite plainly showed that he is alive to the necessity of conservation, and he stressed that the federal government is fully alive to the situation and that such a program had become "not only a matter of protecting future generations but of ensuring progress in the present time." He mentioned several acts sponsored by the federal government in carrying out its role as regards conservation, both independently and in co-operation with the provinces. He stated:
Conservation cannot be taken for granted. It must be pursued constantly and with vigour.
After reading the reports on this conference and noting the keen interest shown by these ministers representing the government of Canada no plea of mine need be added. All I ask, Mr. Speaker, is that this government re-examine the brief presented by the government of British Columbia, especially with regard to forest conservation, and take immediate steps to implement a federal-provincial plan which will be in the best interest of all concerned.
And now, Mr. Speaker, I would like to quote the words of a great Canadian, the


late Right Hon. W. L. Mackenzie King. Speaking before the dominion-provincial conference in 1945 he said:
What then are the alms or the objectives for which we are seeking the best possible dominion-provincial relations? To express them, very briefly, we are asking the provinces to go into partnership with the dominion in a broad program for the development of our national heritage, and the welfare of the Canadian people.
I would like to assure this government, Mr. Speaker, that the people and the government of British Columbia are prepared to do their part in developing the great resources within their borders in partnership with the federal government of Canada.


Mr. S. R. Balcom (Halifax):: The Budget-Mr. Balcom proportion of its revenues to positive development. In the long run that policy will provide more jobs and more security than will overzealous paternalism in respect to individual problems.
The minister has done well to resist the pressures for tariff or customs increases. Canada, as the third largest trading nation, has a very large stake in increased world trade and in the progressive removal of restrictions thereon. For example, with respect to wheat, picture the difficulties there would be were tariffs or embargoes added to the marketing difficultifes resulting from keener competition from other producer countries.
Because of our dependence on United Kingdom markets we in the maritimes are perhaps more familiar than are others with the results of tariff restrictions. Our lumber industry has already suffered because of the lack of effective demand. Our fresh fish industry, which finds its main market outlet in the United States, has so far weathered the gales of competition. But the pressure across the border for higher tariffs hangs like the sword of Damocles. I cite these instances to support my view that in Canada's own interest we must not seek tariff protection to save us from fair competition.
Of particular interest to Nova Scotia and Halifax was the optimistic note in the budget speech with regard to the progress towards freer trade in the United Kingdom, Europe and the commonwealth. There are signs, too, that our great neighbour to the south is lending an ear to the pleas for removal of trade barriers. Foreign trade is vital to our economy and it is the lifeblood of our ports. It is as important, Mr. Speaker, to the dock-worker in Halifax that trade be kept moving as it is for the wheat farmer to sell his wheat abroad.
It is important then for the government to bend every effort-as they are doing, I must say-to expand trade. One factor of great consequence is speed and efficiency in transport. That is one justification for national participation on a very large scale in the St. Lawrence seaway and power project. The development of ports important to international trade meets the same test, namely the involvement of national interest as opposed to purely local or provincial interest. That is why we have pressed for an over-all plan of development of the port of Halifax. We are not satisfied simply with the provision of berths and other facilities as business demands. The long-range plan and its implementation should precede and stimulate business, not just follow after.
This past winter there has been great pressure on available facilities at the port of


Halifax. It is granted that some of it was due to the dock strike in New York, a situation which may arise at any time. But there has been an increase in traffic of such proportions as to justify a new look at the problem and (he addition of many more facilities in the port of Halifax.
It goes without saying that adequate railway facilities are a "must" for balanced port development. I have on other occasions drawn attention to the need for enlargement of the Nova Scotian, the Canadian National hotel in Halifax. We have also pressed for replacement of the outmoded building which houses the baggage, express, mail and other departments of the Canadian National Railways. This building has now been declared a fire hazard, which is serious enough in any circumstances, but when you consider the special role that Halifax plays in our scheme of national defence the urgency for a fireproof modern structure is the more apparent.
In this connection I would also urge early consideration by the Canadian National of the construction of a suitable railway station at Armdale. To those who know the location of the railway tracks encircling the city en route to the waterfront, the logic of such a move will be quite apparent. The population of that area in Halifax city and county has grown very quickly in the past decade. The city itself has increased by 100 per cent while the suburban area has more than doubled its population to easily some 20,000 people.
The location of a suitably equipped station here would in any circumstances be a justifiable service to the residents of the area and would relieve congestion in downtown Halifax. In time of emergency it would be invaluable in facilitating the evacuation of people from the western and northern parts of the city.
I do not wish to be an alarmist, Mr. Speaker, but I do feel that the awful possibilities of the dreadful weapons of war now developed call for a new approach to many problems. The position of Halifax as a target area, with all the attendant dangers, calls for immediate action on the first-class bottleneck at the Fairview underpass. The Canadian National Railways, as the main agency responsible for the situation there, should initiate action on this problem. The city of Halifax and the province have a responsibility too, but I believe that its importance in civil defence warrants that the initiative be taken by the dominion government through Canadian National Railways.
I now have a more pleasant suggestion to make regarding the railways. Canada's

stature in the eyes of other nations has grown considerably in the past. We are made aware of this in the contributions of our Canadian representatives at international meetings, in the attitude of the diplomats and representatives of other countries towards our people and in the general appraisal of Canada's economic strength.
In the United States in particular there has been of late a veritable flood of articles and stories on Canada and its resources and development. In most cases these have emphasized our mines and natural resources; in short, Canada is presented as a land of opportunity. That this view has acceptance in many circles is borne out by the volume of United States money flowing into Canadian development. The almost phenomenal success attending some of this, particularly in oil, has strengthened the current of optimism. But I suggest that there are some dangers inherent in this situation. It is to be hoped that we may some day get out of this era of a semi-war economy. When that day comes it is natural that there will be bad years as well as good. Then we shall need in our neighbours, as well as ourselves, a faith in our country based on a well-informed public opinion.
I am afraid, sir, that some of the information about Canada which is being disseminated, particularly in the United States, is not tempered by a realistic appraisal of our problems, of the difficulties of a country which is in fact a thin line strung across a continent, of a relatively small population which must pay high for an extensive transportation system in order to survive as a nation, and of an economy where a relatively few staples bulk large in our total production.
The effect of the glowing prospectus of Canada as it appears to potential investors in the United States, and not tempered by a realistic appraisal of some of our problems, may make them wonder about Canada's contribution to NATO. In fact, questions have been raised and statements have been made which indicate that we are not regarded so well in all quarters for our contribution to mutual defence. In the light of all this, Mr. Speaker, and in view of its importance to our future development, increasing efforts should be made to present Canada as a whole to our neighbours. This is no counsel of gloom; it is prompted by a desire that our position be on a foundation firm enough to weather any minor storms which sooner or later we must encounter.
One small way in which this might be accomplished is to provide United States congressmen and senators with passes on Canadian railways. It is not suggested that
The Budget-Mr. Girard the railways should bear the expense of this educational project but rather that they should be reimbursed for any small cost involved, and it would not be too large. We might then encourage better understanding on the part of those responsible for defence expenditure and procurement, for tariff and other trade regulations.
This better understanding would surely spread further among the people. It is very important to us that the average American does not feel short-changed on his foreign commitments. An appreciation of what Canada is doing and the removal of the impression that we are not doing our share is more important than the attraction of more investment capital at the expense of realism.



PRIVATE BILLS

[Stage Direction]
On the order:
Second reading of Bill No. 423 (letter J-14 of the Senate), intituled: "An act for the relief of Mary Joy Thomson Asselin".-Mr. Hunter.
The Acting Speaker (Mr. Applewhaite):: Is
anybody acting for the sponsor of these divorce bills?


Stanley Howard Knowles: No.


The Acting Speaker (Mr. Applewhaite):: If
not, the bills will stand. The business for the hour for private and public bills having been exhausted, the house will revert to the consideration of the business interrupted at five o'clock.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell.
(Translation):
Mr. Fernand Girard (Lapointe):: Mr. Speaker, a while ago, the hon. member for Macleod (Mr. Hansell) speaking of the Quebec income tax said that it was a family problem between Quebec and the federal government and that it did not concern the other provinces. However, he recognized that this was greatly unfair to the servicemen stationed in the various camps of the Department of National Defence in the province of Quebec.
Mr. Speaker, that attitude well shows how the government deals with this matter. It is considered unfair that a serviceman from another province should be compelled to pay
4170	HOUSE OF
The Budget-Mr. Girard that tax. Yet they do not seem to realize that it is just as unfair to compel 300,000 taxpayers in the province of Quebec to pay a double tax, although they do not benefit, like the citizens of the other provinces, from the subsidies paid under the fiscal agreements, because the province of Quebec refused to sign them. It was expected that in the budget debate Liberals would try to refute all the arguments advanced in favour of the deduction of the tax and of the prior right of the province regarding that tax. They all took up the gratuitous assertions made by the Minister of Finance (Mr. Abbott) himself. Mr. Abbott's speech was met by thunderous applause from the Liberal members from Quebec, even when he stated that the prior right of the provinces in the field of direct taxation had no legal or concrete basis.
Before stating-yet without attempting to prove it-that the province had no prior right, neither de jure nor de facto, maybe the minister neglected to read the whole of the British North America Act and more particularly sections 91 and 92 which deal with this question. It is true that section 91, subsection 3, states that the federal government shall have the right to raise money by any mode or system of taxation. However, the beginning of that section, and all the government members failed so far to deal with this point, provides that:
It shall be lawful for the Queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order and good government of Canada, in relation to all matters not coming within the classes of subjects by this Act assigned exclusively to the legislatures of the provinces.
And then, in section 92, it is expressly stated that:
In each province the legislature may exclusively make laws in relation to matters coming with the classes of subjects next hereinafter enumerated:
Nobody has attempted to equate "exclusive" with "parallel", as the government supporters who have spoken on this matter have tried to do.
The hon. minister not being in a position to rewrite the British North America Act seizes upon a motive which ill conceals the evident contradictions of his statement. He holds that to admit this principle would put the treasury in an intolerable position. In other words, he says: I cannot hand over his own garden hose to my neighbour; I need it to water my own garden. So he immediately claims that, as a charitable necessity, the poorer provinces must be helped, forgetting too that the 15 per cent we are claiming is less than what would be offered in a fiscal agreement, and that the other provinces


are left with the lion's share, the amounts received by them under these agreements being in no way affected.
The hon. minister made another declaration, with a more serious implication, when he said that the province of Quebec did not exercise its right to direct taxation before 1940. Does that mean that only those prerogatives granted under the British North America Act which are regularly resorted to are applicable and that the provisions of the federative act which have not yet been applied lapse and become inoperative? And yet the arguments used by the Minister of Finance lead to such a conclusion.
The hon. minister claims moreover that should he grant the 15 per cent deductibility of the Quebec tax, it would be tantamount to recognizing in principle the province's right to grab 30, 60, and even 100 per cent of his direct taxes. In the first place the request concerning deductibility covers but 15 per cent and nobody as yet has asked for 30, 60 or 100 per cent. In the opinion of the hon. minister, to grant the deductibility of 15 per cent would provide recognition of the prior right the provinces have in the direct taxation field.
How is it that 5 per cent, which is provided by a federal statute, does not constitute such recognition? Can the hon. minister tell us at what percentage provincial priority begins; is it 6 or 6if per cent, or what is it? It is of course obvious that the government is trying to hedge and veil its centralizing policy. As a matter of fact, the delirious enthusiasm of the socialists, which was only equalled by that of the Liberals at the time of Mr. Abbott's statement, is perfect proof that the centralizing attitude of the government in fiscal matters is at the same time a victory for the socialists, who want an almighty central government.
For the Liberal members from Quebec, this policy had a disadvantage, for it was disagreeable to almost the entire voting public of that province, who had and still have a word to say about their own autonomy. The hon. minister had thought of everything. He had a ready solution, which gave to his colleagues from Quebec the opportunity for numerous speeches on non-pertinent matters. He, indeed, invited the prime minister of Quebec to a conference with the federal government. But his invitation was accompanied by a straight rejection of all deductions.
That was a door, but one that was padlocked by the refusal of any concession. Such a contradictory offer has nothing in common

with preceding statements according to which "no pressure, direct or otherwise, would be applied to obtain the signature of a province". The same minister declared last year that one of the advantages of the fiscal agreements was that their success did not depend on the unanimous approval of the provinces. Twelve months later, he says that if one province refuses to participate, the treasury will be placed in an intolerable position. Completely unmindful of any contradiction, he is ready to see the taxpayers of Quebec carry the burden of an additional $25 million in taxes, as a punishment for their refusal to sign. He even says that the federal treasury could not tolerate our exercising our freedom of choice.
Everybody is talking of a federal-provincial conference. I am not against any sincere wish to understand each other, and every possible means to achieve such an end must be taken. Has any thought been given to the real alternative which faces a province which has refused to be a party to a fiscal agreement? There is only one: exercise her own right to tax. The province had to choose between $115 million under a fiscal set-up or $15 million, which is roughly the equivalent of 5 per cent. Such is the freedom of choice which is offered!
Much more, the charitable duty of helping the poorer provinces has been invoked, even though to do so a province would have to accept double taxation, although in fact, the said province never requested 100 per cent of its direct taxes, but only 15 per cent, which is less than was offered under the fiscal agreements.
Not one hon. member has taken upon himself to refute the arguments advanced in this house by several hon. members about the prior rights of the province to direct taxation. All have adopted the rather easy way of resorting to gratuitous assertions and advocating a federal-provincial conference, while stating that they would adopt an uncompromising attitude.
The Minister of Northern Affairs and National Resources (Mr. Lesage) summed up all those arguments, which he repeated after the Minister of Finance, by using a charming comparison, quoting as an example a child who refuses to obey his father's order to stop pulling the cat's tail. The child replies that it is the cat that is pulling. Using the same comparison, I must say that it applies even better to the other side of the argument. The child is well entitled to pull the tail of a cat that drinks his plate of milk. I easily see the federal government in the role of the father
The Budget-Mr. Girard who scolds his child because he is pulling the cat's tail, without stopping to ask himself to whom the plate of milk belongs.
The passing-of-the-buck policy will not succeed in diverting attention from the real problem which consists in determining to whom the plate of milk belongs or whether the province has a prior right in the field of direct taxation. It is therefore useless to find in that attitude and in the dollar and cents consideration of a centralizing government reasons for decentralization and then pretend to have fulfilled the intentions of the fathers of confederation, who cannot have set up a central state at the expense of the autonomy of the provinces which united to make up that state.
When one reads the numerous speeches made before confederation, one is astonished to see that the fathers of confederation were unanimous in their desire to protect the autonomy of the provinces. Since our contemporaries do not seem to agree on the constitution or on its interpretation, I took the liberty of making a pilgrimage, as I say, among the fathers of confederation, a few years before the pact was signed, to see what they really had in mind. When they drafted the British North America Act, they evidently intended to grant to each legislative body the necessary prerogatives to ensure the preservation of the two races and of the two cultures that were facing each other under the union government, following the uprisings of 1837.
One has but to read the speeches of those who drafted our constitution to become firmly convinced that the British North America Act is the outcome of the unanimous and clearly-stated desire to safeguard the autonomy of the two races which faced each other in Upper and Lower Canada, and to guarantee the rights and the prerogatives of the other provinces which might join confederation. May I be permitted for this purpose to quote some of the statements of the fathers of this confederation which it is our duty to preserve and respect. We will find in these statements the proof that confederation was a treaty between two races, a pact ratified in London, whereby each province agreed to join the other, not so as to disappear but in order to form a central government having jurisdiction over questions of general interest.
It never came to the mind of the fathers of confederation to form a centralizing government which would deprive the provinces of all their sources of revenue, limiting their role to that of a passive distributor of the

The Budget-Mr. Girard liberalities of a central government. If such had been their intentions, the provinces would never have put up with it.
Immediately following confederation, in a speech delivered on May 17, 1867, Sir George Etienne Cartier said, as reported on pages 523 and1 524 of the record of his speeches:
Confederation was a compromise and still retains that character to-day. There are many who went as far as to say that we did not quite know what to expect from Great Britain, that though a good constitution had been drafted at the Quebec conferences, the imperial authorities would change and alter It at will. You know what happened. We went to Britain and we were treated fairly, generously. All our representations were taken into account. These Canadians, said the British ministers, have come to see us with a ready made constitution, agreed upon after friendly agreement among themselves, the result of a mature discussion of their interests and needs. They are the best judges of what is good for them, let us not undo what they have done and let us approve their confederation.
And even before confederation, most of the great parliamentarians of the day were moved by the same spirit.
On February 6, 1865, the hon. the attorney general, Mr. Macdonald, in a speech which I quote from the debates preceding the adoption of the British North America Act, said:
The whole plan of confederation as worked out by the conference and submitted by the Canadian government for the perusal of the people and of the legislature is in the nature of a compromise. I do not hesitate to repeat it, there has been of necessity many mutual concessions.
Such a project may be considered as a treaty passed between the different provinces, and if any serious change is made thereto, every one of the colonies will feel itself absolved from the implied obligation to deal with it as a treaty and will be in a position to amend it ad libitum so as to suit its own views and interests; all our works will remain fruitless and we will have to start all over again and to work out a new treaty.
As evidenced by page 81 of the same volume, Sir Etienne Tache stated, on February 8, 1865:
I must declare that the scheme must be assented to or rejected as a whole because it is the result of deliberations not only of the Canadian government but of the other provinces as well.
And the Hon. Mr. Brown spoke along the same lines when he said:
Whether we ask for a parliamentary reform for Canada only or a union with the maritime provinces, the views of French-Canadians have to be ascertained as well as our own. This plan may be adopted, but no plan not assented to by both sections could be approved.
And the Hon. Sir Etienne Tache said on February 16, 1868-I am quoting from page 243:
Thus, honourable gentlemen, the proposal now before you is not so much the work of the Canadian government, but the collective effort of delegates from all provinces in the form of a treaty.


On the motion for second reading of the bill, in the House of Lords, as stated on page 27 of a book by the Rev. Father Ares S.J., entitled "Confederation: Law or Compact", even Lord Carnarvon said the following:
The Quebec resolutions are, with a few small amendments, the basis of a legislation that I now have the honour to introduce in parliament. These resolutions have been agreed to by all the British provinces of North America and the legislation based on these resolutions must be accepted as a treaty of union.
To those facts which establish that the treaty has really been a pact between the provinces can be added the opinions expressed on direct taxation even before confederation by the fathers of confederation. 1 shall quote the statement made on February 7, 1865, by the Hon. Mr. Galt, which can be found on page 68 of the report of the debates preceding the passing of the British North America Act:
The transfer to the general government of all of the main sources of revenue and-with a single exception, that being the field of direct taxation- of all the means which can be used to have the industry of the nation help meet the needs of government means-the fact will be evident to anyone-that part of the resources placed in such a way at the disposal of the general government will have to be used one way or the other to fill the gap which inevitably will be created between local revenue and local expenditures.
Mr. Speaker, that statement was made in 1865, even before the pact of confederation was signed. I have been unable to find any other statement which at that time could have been interpreted otherwise. It seemed evident that in the spirit of the fathers of confederation the right of direct taxation should be reserved solely for the provinces.
Mr. Paquette, who then represented Lower Canada, made a speech on March 8, 1865, reported at page 795 of the debates on the confederation of the British North American provinces. He was speaking precisely of direct taxes. After compiling various figures, he predicted a deficit of $485,078 for Lower Canada. He stated:
Mr. Speaker, how can we overcome that deficit unless we resort to direct taxation?
And he added:
The Minister of Finance states himself that the federal legislature will have the power of resorting to all taxation systems it may deem advisable to meet the expenses of its administration, while local legislatures will have to resort to direct taxation for the same purpose, if their revenues are not sufficient.
Mr. Speaker, surely one cannot find more frank statements. Well, those statements were made even before confederation, even before the present discussion was started, even before the government decided to nego-

tiate fiscal agreements, and we find that, in the minds of the fathers of confederation, the provinces had a prior right to direct taxation.
And yet, the Minister of Finance dares contend that the question of priority has no basis, neither de facto nor de jure. Section 91, in the light of section 92, either states a general rule, or constitutes a contradiction, which is inadmissible on the part of the fathers of confederation, particularly in view of the fact that the numerous debates on confederation dealt with the necessity of safeguarding the prerogatives of the provinces. Reading the speeches contained in that volume, one finds that, for all purposes, no speaker suggested that any of the provinces could keep its prior rights, its prerogatives. We cannot admit that they made a mistake, or intended that section 92 should be inconsistent with section 91.
We must therefore admit that section 92 sets forth exceptions to the general application of section 91; that it is a clarification of it. And section 92 does state that direct taxation is exclusively a provincial matter. The word exclusively is important. No mention has been made of it in the speeches of the government supporters since none of them could interpret it in a sense favourable to centralization.
After confederation political figures of every party continued to make statements to the same effect. Here is what I find in the debates of the House of Commons for February 18, 1925. The Right Hon. Ernest Lapointe is quoted as follows:
I may say that every time an important amendment was made it was first submitted to the provinces. I do not think there are many cases in which an amendment has been asked to the British North America Act without communicating with the provinces. If it was done it was only in cases where there could be no possible objection on the part of the provinces.
And the same gentleman also stated:
It is somewhat strange that one of the parties to the convention should study the methods of amending the pact without inviting the other parties interested to participate in the discussions.
Again the Right Hon. Mr. Lapointe stated, on February 18, 1925, once more according to Hansard, at page 300. The minister of justice mentions those words, after quoting the opinion of Mr. Churchill stating that the construction of "pact" given to the confederation by public men in Canada was also the one of the public men of the empire. Then he adds:	"That was the interpretation
accepted by every interested person in
The Budget-Mr. Girard Canada, it is the opinion of the public men in the provinces."
Perhaps it will be alleged that precedents altered the constitution without consulting the provinces. I shall answer through Lord Sankey who stated in 1932, as found in Appeal Cases, 1932, pages 54 and 70:
Inasmuch as the act embodies a compromise under which the original provinces agreed to federate . . . the process of interpretation as the years go on ought not to be allowed to dim or to whittle down the provisions of the original contract upon which the federation was founded, nor is it legitimate that any judicial construction of the provisions of sections 91 and D2 should impose a new and different contract upon the federating bodies.
As may be seen, Mr. Speaker, there has been a continuity of views amongst all members of parliament of both parties which have held power since confederation; but all this has become part of the fiscal structure of confederation. Yet some have tried to consider the confederation act as a law, subject to modifications, which could be changed without consulting the provinces.
Well, I know, of course, that the partisans of centralization do not all support the principle of the central government's supreme authority, which enables it to amend the confederation act without the agreement of the provinces; but they approve of a federal law reducing to 5 per cent the rate of our direct income taxation in the provinces. They are blaming a province which did not ask Ottawa's permission to exercise its own right. They dare not deny a province the right to levy taxes, but they dictate a limit to this right. They admit provincial taxation, but as a supplementary one, that should raise no issues with the federal treasury.
Yet it was a distinguished Liberal, the Right Hon. Ernest Lapointe, who declared on February 1, 1937, as may be seen in the official report of the house-and I quote:
The dominion is the child of the provinces; it is not their father. The fact of saying that we have jurisdiction does not give it. The assumption of powers which we do not have does not give those powers to us.
Let those who have nothing but words of praise for the enticing offer of subsidies pretend now that provinces do not lose their autonomy! The other provinces are now asking the government to raise the subsidies they receive.
The hon. Minister of Finance, if he were premier of a province, would not accept such a situation. I base this opinion on nothing but his own statement to the house last year when he dealt with the question of fiscal
4174	HOUSE OF
The Budget-Mr. Girard agreements, as can be ascertained on page 2131 of Hansard for February 19, 1953. I quote:
This might never be possible. As a matter of fact, I am by no means sure if I were a provincial minister of finance that I would agree to such an arrangement. X am afraid I would find something repugnant in the idea that an outside body-a board, council or commission-would be investigating provincial affairs and determining the size of the fiscal needs for a particular period which amount in turn would be the measure of the federal grant.
Who can say that within 25 years we shall not have a socialistic government, a government that will decide the fate of provincial autonomy which is supposed to be guaranteed by a pact that can be broken by the more powerful? No Liberal member seems to have seen that; they have acted against the spirit and the letter of confederation and contrary to all the statements and policies of their own party. Instead they saw in Mr. Duplessis, who resorted to the Quebec provincial tax, an opponent whom they wished to corner, even at the cost of penalizing a province at the rate of $25 million per year, thus placing its citizens in an unfair situation and in a position of economic inferiority as far as the other provinces are concerned.
If the Liberal party is so sure that its policy is the right one, why does it fear so much a vote on the matter? Why does it try to transform it into a mere question of dollars and cents, thus shifting the true meaning of the issue? Why have they chosen to act in a way that is evidently contrary to the interest of their electors, preferring to submit to party discipline? Why did the socialists applaud with so much energy? Why did the Quebec press condemn them unanimously?
They have also tried to cast a smokescreen on the matter by speaking of national unity, Quebec isolationism, ultra-nationalist separatism and so forth and so forth.
I am asking you, Mr. Speaker, who is working against national unity? Is it those who urge compliance with the Canadian constitution or those who try to amend it to suit their centralizing policy? The province of Quebec has always found a safeguard to its autonomy within the very framework of confederation and she will never give in to the tantalizing appeal of fiscal agreements. It safeguards national unity within the framework of the act of confederation, which is the constitution of our country.
We shall not cease to labour the point, Mr. Speaker, until we obtain fair treatment for the province of Quebec, even though the only ones to rise to its defence may be the independent members, as well as those too few Conservative members and the hon. member for Quebec-Montmorency (Mr. LaCroix).


In concluding, Mr. Speaker, I would like to digress a moment to ask the Minister of Labour (Mr. Gregg) whether the government will soon grant supplementary unemployment insurance benefits.
There are in my constituency nearly 1,000 families who have not received any income since April 15. It is perhaps true that the present situation is merely temporary, but I nonetheless support the request of the labouring people and would ask the minister to keep on paying these benefits for a few weeks at least to families without any means of support.
(Text):


Mr. W. G. Blair (Lanark):: Mr. Speaker, the recent budget brought down by the Minister of Finance (Mr. Abbott) some three weeks ago has given considerable time for analysis. One disappointing feature was the fact that there was no tendency revealed to offer assistance to depressed areas.
In former debates in this house I have placed before the house the position of industries in the Ottawa valley and the effect of unemployment, particularly in my own constituency. The Ottawa valley has been known for years as the centre of the textile industry and in that area there is probably the largest concentration of this industry in all Canada. Many mills are closed down through lack of orders, and in the area of Carleton Place and Almonte there are 700 persons unemployed. The greater proportion of these are textile workers. In the month of March last there was paid out in unemployment insurance a total of $40,000. Owing to the fact that steady jobs were not obtainable unemployment insurance has been of marked assistance during a most difficult period.
As opposed to the textile industry it has been argued that the industry has overexpanded; it is not efficient; and has not kept up to date in manufacturing methods. But one very important fact has been entirely ignored, and that is the defence aspect. On former occasions I have placed the position of the Canadian textile industry before this house, but in all fairness to the industry I feel an answer should be given to the arguments which have been presented against it.
Let us first take the question of overexpansion. The industry now supplies less per Canadian than it did before the war, but the per capita share of the domestic market, which has supplied the imports, has almost doubled. There were five per cent more looms and seven per cent more spindles in factories in Canada in 1951 than in 1939. However, it

is to be noted that our population during that period has increased by 24 per cent. It is not true that textile mills have otherwise expanded. It is quite easy to understand the difference between labour costs in Britain and Canada, but it does not fully explain the increase in the United States imports. It is difficult to understand why such an argument can be used in reference to an industry which never at any time had more than approximately 70 per cent of the domestic market.
I would point out that in the period from 1935 to 1939 just prior to the last war Canadian mills supplied 73 per cent of all fabrics which were used on the domestic market. This has now dwindled down to 51 per cent. The domestic market for textile goods is greater than it was in 1939, yet the Canadian industry has a smaller percentage of domestic sales than it ever secured prior to 1939. If the industry over the last three years had been able to retain the former percentage of its domestic sales it would still be in a sound position and could recover its costs and make a profit.
In regard to the charges of inefficiency, I would again point out that this industry since the end of world war II has spent something like $450 million in modern equipment with the object of bringing production in the industry to a high point of efficiency.
It is also charged that the industry has not kept up to date in the use of various fibres. Fabric producers inform me that they are prepared to make goods of any form of fibre, and will produce fabrics of rayon, nylon, or wool, either alone or in mixtures of two or more fabrics, if there is a demand by the Canadian public for such goods.
In spite of the fact that all efforts have been made to produce an effective industry, it is becoming increasingly apparent that our industrialists find it impossible to compete with goods made in overseas countries because our wages are two or three times higher than their wages. In so far as competition from the United States is concerned, distress prices can be established giving a fictitious price, but which have the object and purpose of undermining our Canadian customs structure. It is nonsense to believe that under present conditions Canadian industry can meet price competitions from abroad. No amount of efficiency in industry can cure such a situation. It is only natural that in countries of comparatively low wages goods can be processed and placed on our market to sell more cheaply than our own domestic production.
In so far as wages are concerned, to meet foreign competition would mean a serious reduction in our own wages. Reductions in
The Budget-Mr. Blair wages would mean that the Canadian public would not be able to purchase in the amounts to which they have been accustomed. It is due to our buying power that our standard of living has progressed to the point where it now stands. Unemployed workers are unemployed customers, and unemployed customers will mean that more goods will be left unbought, resulting in piled up surpluses or, on the other hand, more unemployment.
On March 4 I asked the Minister of Labour (Mr. Gregg) to state the policy, if any, the department has considered for the re-employment of textile workers in areas of closed factories throughout Canada. In reply the minister said, and I quote:
When any worker applies to his nearest employment service office for employment, a full record is taken of his work experience, and this information is available in matching men with jobs not only in the immediate locality, but in Canada as a whole. This means that when employment opportunities develop in other industries and those applying for work have suitable qualification, the applicants are referred to them. This applies to alternative employment opportunities which develop in their own immediate areas, or to those which become available in other areas, if suitable workers are not available locally.
In view of the minister's answer regarding unemployment, it is interesting to study the results of a survey conducted in a depressed textile area in New England. This research was conducted by the bureau of business and economic research of Northeastern University of Boston. The object of the survey made a year ago was to find out the position of displaced textile workers. Workers over 45 years of age were having a particularly hard time in finding new jobs. Eighty per cent were drawing unemployment insurance. The majority of the re-employed were earning less than before, and many had been downgraded from skilled to unskilled qualification with a loss of seniority, and very little chance for advancement. Diversification had helped, but new industries are filling jobs with newcomers in the labour market instead of displaced textile workers. Of the first some 156 workers checked, only 5 per cent found jobs in new industries.
In one area in New Hampshire, a town with one mill and 1,500 population, the closing of the mill made idle 200 workers. Some workers were re-employed in a leather products firm which moved into the mill building. Two years after the shut-down a third of the 200 laid off from the woollen mill were still out of work. For the other two-thirds who got jobs, the average period of employment was about five months. Thirty per cent got textile jobs elsewhere, some as far as 64 miles from home; 50 per cent took jobs in a leather products company with downgrading and less pay, and 20 per cent got a variety of other jobs.

The Budget-Mr. Blair The problem of unemployment in the textile industry is serious, and the continuing maintenance of the textile industry under adverse conditions is extremely difficult.
If Canadian textile manufacturers are to maintain their position in the domestic market, there should be full realization of their attempt to do so in competition with other countries with lower wage standards and cheaper production costs. The present adverse conditions in which this industry finds itself cannot be entirely overcome by improving the efficiency of production. As I pointed out, they have spent $450 million to improve efficiency and to lower costs. It is becoming apparent that if these mills could retain their pre-war share of the domestic market, it would lessen their difficulties because production and volume are necessary to make business a profitable operation.
I again bring the position of this important industry to the attention of the government. I am fully aware of the desirability of exploring all possibilities and channels of international trade. When I spoke on this question earlier in the session, as reported at page 402 of Hansard, I stated:
I do not believe it is advantageous to the economy of this nation nor do I advocate a high protective tariff policy for this or any other industry, because such a device can only provide stability for an uneconomic unit at unwarranted high cost to the Canadian consumer of the products which the industry produces.
At that time I suggested that a study be made of the duty on all fabrics coming into Canada. The textile industry is not the only industry which today finds itself in difficulties with regard to foreign imports. A careful analysis should be made of Canadian industry, and this analysis should take into account the consumption level of the domestic market, price structures, production capacity and, most important of all, the element of defence.
There are many manufacturers in Canada who do not worry about foreign competition, but they are worried about foreign industries using the Canadian market as a sales outlet for distress goods. There is little protection against foreign goods offered in Canada below the competitive price here or in the country of their origin. Countries exporting to Canada do this to avoid disturbing their own home market. Textiles, stoves and refrigerators have been principally affected.
As far as tariffs are concerned, they should not be so low as to cause failures of efficiently operated Canadian businesses, nor so high that inefficient producers could still remain in business. If such an approach could be made to the problem of Canadian manufacturers, then it could be reasoned what industries should be protected, the amount of their
rMr. Blair.]
protection, and the position of other industries which are not entitled to any protection at all.
I suggest, Mr. Speaker, that a board consisting of trade officials, and research and efficiency experts would be an advantage. Such a board could make inquiry into the causes of failure, or of inability to meet competition of certain industries, and make recommendations to increase efficiency or suggest certain changes in trade agreements which would enable such industries to manufacture in a competitive market.
I now approach the problem of another type of industry which has been manufacturing in Canada for many years. This industry was developed in early years by Canadian manufacturers and, according to the requirements of that time, was confined principally to the making of stoves. Since that time the industry has kept up to date in all modern developments in heating and has expanded in various factories throughout Canada. Employment dropped by 26 per cent and business prices are down 17 per cent since last year. Canadian manufacturers in this line

and I include refrigerators-are supplying less than half the domestic market in Canada. The position of our Canadian dollar has had its effect because it now commands up to 3 per cent premium. When United States money had a 10 per cent premium it acted as a protection for the Canadian manufacturer.
In the year 1952 the United States exported 2-7 per cent of the total production of gas ranges in that country. Production is much greater in the United States than it is in Canada, for in the same year manufacturers there produced 38 units for every one sold by Canadian manufacturers in Canada. Another 2 per cent of the United States production would destroy any further business of the Canadian manufacturer in this line. At present, merchandise of this type is coming into Canada at prices which are very low even in the United States. Apparently it is the practice for United States manufacturers to sell several carloads to a distributor in that country at a low price. This low price is the one which is used for duty purposes in Canada for single carloads or when selling to large retailers or distributors in Canada.
Canadian manufacturers are looking for a fair market value to be used for duty purposes. If that could be obtained, Canadian manufacturers could carry on and would not find the competition too severe from merchandise which is coming in at prices which are very low even in the United States. The valuation for duty is the crux of the matter. In order to meet competition, Canadian manufacturers would favour a method

in which the value for duty would be the fair market value of similar goods sold for home consumption under fully competitive conditions averaged over a six-months' period in the country of origin.
Gas ranges averages show that imports received over 80 per cent of the market, and the same percentage would hold good for oil space heaters. The Canadian manufacturer is at another disadvantage in that manufacturers in the United States can spread their die and tool costs over large quantities of a model on account of the large market. In Canada where the market is about a tenth as large as that in the United States, the die and tool costs are high. This situation is shown in the fact that in 1952 2,085,385 gas ranges were sold on the United States market while 55,407 were sold on the Canadian market. Therefore it can be appreciated that unit costs of Canadian manufacturers would be much higher. It only requires a small percentage of United States production of gas ranges sold at low prices in the Canadian market to flood our market and embarrass our Canadian manufacturers.
It is to be noted that due to the building of natural gas pipe lines across Canada natural gas will be available to Canadians at low prices. Unless some relief is given to Canadian manufacturers in this line, very little of the market for gas ranges will be available. Some change will have to be made in customs regulations to place them in a competitive position. At present the United States stove manufacturer is able to sell at prices in Canada that have made heavy inroads in the Canadian market. As in the case of textiles, we should again consider the element of defence. Plants of the type I have mentioned engaged in the manufacture of stoves, etc., are well equipped for the fabrication of steel. If it were necessary these same plants could convert rapidly to the production of defence material.
There would seem to be no plan to deal with unemployment. The Minister of Trade and Commerce (Mr. Howe) told a delegation that if they lived in a depressed area they should move to another area where they could get work. The Minister of Labour stated in answer to a question I asked regarding unemployed textile workers that the federal government was willing to co-operate with provincial governments regarding the location of new industries. The present unemployment stems from federal government policies. In the Ottawa valley, where there has been a concentration of textile factories, there should be an all-out effort to place new industries. Conditions are ideal for
The Budget-Mr. Blair manufacturing in this area, and this should be considered in conjunction with a policy of decentralization.
So far as meeting competition is concerned, taxes add to the cost of production and our industry is again placed at an unfair disadvantage. Not only the industry suffers but unemployment is created. High corporation taxes will obstruct industrial growth and industry will not find it profitable to take risks. Excessive taxes do not permit sufficient earnings for industries to expand. The buying power of the nation shrinks resulting in unemployment and the further curtailing of industrial expansion. Increased consumer buying power would stimulate industrial expansion and create more jobs which would be available to those who are unemployed at the present time. Steps taken towards lowering the taxation against production costs in industry would help our industries meet competition not only in the domestic field but also in the export market.
It is to be regretted that there is no mention of economy in the budget. Every year the government finds that the Canadian taxpayer must	produce	more	money.	In	1952-53they	required	$4-6	billion.	In	1953-54
they required $4-9 billion and again there was an upward move to $5 billion in 1954-55. I point this out in view of the fact that defence expenditures will be down $126 million. Last summer we were given to understand that taxes would be reduced in accordance with defence expenditures, but instead of being reduced $126 million they are actually down about a third of that, or $40 million. Taxes can defeat their own ends, and if they are levied at too high a rate they can decrease production and expansion in industry and in the end produce less revenue than somewhat lower taxes. Certainly the corporation tax at 49 per cent leaves little room either for industrial expansion or to meet foreign competition.
I am concerned about the surplus of farm products in the United States. The grand total is over $2-7 billion in value. Included in the list are dairy surpluses, $382 million; vegetable oils, $235 million; wool, $62 million; and grains, $1-91 billion. Under their present program part of the surplus could be used as a strategic reserve. The dairy surplus is held in the form of butter, cheese and dried milk, but even if they retain part of the surplus as a strategic reserve the rest will be sacrificed, and there are indications that it will be disposed of at a loss.
It has already been proposed to get rid of some of this surplus by greater sales to foreign countries at market prices which are
4178	HOUSE OF
The Budget-Mr. Knight below United States prices. In so far as the Canadian dairy farmer is concerned, there is no likelihood nor possibility of the export of their products to the United States. This again brings up the question of the British market. The Canadian dairy farmer is already under severe competition from edible oils. The only market of which the dairy farmer is assured is the domestic market, and even this is under competition. Lack of suitable markets will mean uncertainty in the industry which will be reflected in lack of buying power for the products of Canadian industry.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Robert Ross (Roy) Knight: It is always an interesting event in this House of Commons, Mr. Speaker, when the Minister of Finance (Mr. Abbott) brings down his budget. I have often said, and I have often written, that I feel it is the night of nights in the House of Commons when the people of Ottawa show some interest in the proceedings of this house. I suppose these people are, to some extent at least, representative of the people of Canada. On budget night, therefore, they usually crowd the galleries and even stand up, something that I never quite understood because I know they could get the main points of the budget just as easily and as quickly if they stayed at home. However, for some reason they come.
I believe it was noticeable this year that there were very few people here on budget night. I take it they expected practically nothing, and if I may say so, that was just about what they got. It was a very tame budget. There was nothing inspirational about it, and I imagine that is one of the reasons we have not had many inspired speeches. The minister will forgive me-


Douglas Charles Abbott: Are we going to get one now?


Robert Ross (Roy) Knight: -if I say that other people have told me they are getting accustomed to his cyclical budgeting. Some people have even ventured to say his are political budgets. People naturally supposed that this was not a year in which anything might be handed out to the Canadian people. When I say "handed out to the Canadian people", that is not a proper term to use because we know that any relief we get at budget time is as a result of money which we have already contributed to the public purse. A government has no money except what it extracts from its people.


At any rate, we were faced with a budget of $4,600 million, of which 43 per cent was allocated to defence. Even while the minister was speaking with his usual optimism-it is a great thing to have optimism, and I wish we could have it with some justification at the moment-I could not help but think about the state of the country. This was brought to my attention when I was at home during the Easter recess. One could not help but notice that it was not a spirit of optimism which prevailed.
One or two of my bank manager friends talked very seriously about the situation, and pointed out how slow business was, and how credit had been curtailed, particularly at the country points which are serviced by the wholesalers in my city. This curtailment of credit had forced the merchants to go on a cash basis, and their customers were suffering a great deal because they did not have money to purchase things. Many farmers had the equivalent of money, for in many cases their granaries were bulging with wheat, but as this house knows very well it has been difficult to sell that commodity in recent times.
At one point during the journey home I saw twenty railroad workers who had been discharged on that particular date getting off the train. My own city is rather susceptible to that sort of unemployment because it is a railway centre. Business conditions in the country are generally reflected by the business that the railroads are doing. Of course, this extreme optimism, which is characteristic of the Minister of Finance, is not confined to him. I suppose the Minister of Trade and Commerce (Mr. Howe) might be called the supreme optimist of Canada. One or two other cabinet ministers are optimists too.
I recall certain optimistic speeches that were made by cabinet ministers in my city just before the election. There were five of them who visited my town in the period before the election, and with my usual modesty may I point out that I am now returning their visit. They were very optimistic at that time, and could see no reason for gloom. I notice the Secretary of State (Mr. Pickersgill), our new and junior cabinet minister, is also optimistic. I note in a clipping I found this morning in a Vancouver paper that they actually call the junior cabinet minister the prime minister "designate". The article says he is in no hurry to take over, and I would suggest that is a good idea on his part.
The Secretary of State was very optimistic about the state of the nation and particularly in regard to export trade. One comment in

reply to his optimistic remarks in this paper was to the effect that preliminary figures issued by the bureau of statistics showed that exports for the first quarter were actually down from the same period in 1953. However, the Secretary of State says this:
I am a politician, not a business forecaster, but I do not mind saying export trade is holding up very well and shows no sign of setback.
The two articles were side by side or nearly so in the same paper.
Just as a personal note, and it has no bearing on the question, I should like to comment on the statement of the minister that he is a politician and not a business forecaster. He had been talking about the hon. member for Vancouver South (Mr. Phil-pott) and the hon. member's remarks concerning radio and the private ownership of television. According to the Vancouver paper, the minister said that he and the other cabinet ministers always listened very attentively to members of parliament such as the hon. member for Vancouver South and that the government always listened to what members of parliament have to say, especially when they are members supporting the government. I would suggest that statement from the junior member of the cabinet proves that he was right when he said he was something of a politician rather than an economic forecaster. However, I did not take the statement of the minister too seriously.
I should like to comment now on the statement that export trade is holding up and the fact that our trade generally is good. We in this group, of course, have always been known as being full of gloom. If the minister would study the statistics put out by the dominion bureau of statistics he would find that the figures do not bear out his statement as to export trade, but they would bear out his statement that he is not an economic expert. This D.B.S. bulletin of April 26, 1954 in my hand has to do with the same export trade the minister was talking about. It says:
There were 66,274 cars of revenue freight loaded on Canadian railways during the week ended April 14 as compared with 73,227 in the same period of 1953, bringing the cumulative total from the beginning of the year to 969,605 cars as compared with 1,052,441 a year earlier.
Those of us from the west are interested, of course, in grain loadings. I see in the third paragraph of this same bulletin a reference to reduced loadings of grain. Well, we do not have to be told about that. The paragraph to which I refer is as follows:
Reduced loadings of grain, miscellaneous car loadings and less-than-carload merchandise contributed to a drop of 1,722 cars in the western division to 22,912 cars for the week.
The Budget-Mr. Knight
Then it goes on to say that coal shipments were up to the extent of 209 cars.
Well, that is not a particularly bright picture. Yet, our cabinet ministers go around the country trying to keep the people cheerful and to keep them satisfied with the administration that happens to be in office. For instance, during the Easter holidays the Minister of Agriculture (Mr. Gardiner) was out in the west. May I say I was pleased to see him in his seat today, and to note that he has made such a good recovery from his recent illness. He always seems to thrive on political activity, and perhaps that is one of the reasons he is looking so well after the Easter recess.
Perhaps I shall return to that point again. Meantime I should like to refer to a clipping I have obtained that deals with the subject of credit buying, and appears in this evening's issue of the Ottawa Journal. It bears the heading: "Credit Buying Hits New High at $1,836,000,000." And that is in a country, Mr. Speaker, where we are supposed to have everything, where we have more God-given natural resources than any other country in the world. Yet we cannot buy the proceeds of our own production, and have credit buying to an amount of $1,836,000,000. The article says:
The amount of money Canadian consumers owed for the things they bought on time rose by $59,000,000 to a new high of $1,836,000,000 in the final quarter of 1953.
Does anyone suggest that the people took a sudden splurge of extravagance in that particular time, or does it not indicate that they were short of purchasing power? The article says:
A Bank of Canada survey, contained in the bank's monthly statistical summary, showed that the rise in debt continued in most sectors of the consumer economy-with the exception of buying on time through finance companies which largely finance automobile sales.
Consumer borrowing from banks and other credit institutions was up, and so was buying through the use of charge accounts and instalment plans in retail stores.
I suggest that is not an indication of a very healthy state in our country at the moment.
I should like to say a word or two about the budget itself. I suppose the main feature was the reduction of the excise tax from 15 per cent to 10 per cent on certain goods, and in addition to that the abolition of the 15 per cent excise tax on some goods. This latter group consisted chiefly of luxury items such as electrical supplies, if those can be classified as luxury items. May I say that they are luxuries for a great many people in our country. Then, furs came under this same category.

The Budget-Mr. Knight
However the income tax remained the same, and the 10 per cent sales tax was not changed. I thought as I read the items that some relief might have been given on the necessary articles of daily use. Anyone who will study these items, with particular reference to furs or even electrical equipment, will find that relief is given on goods that are purchased only once or twice in a lifetime, or on those which many people cannot afford to buy at all. I should have liked to see more relief on the smaller items, the day-to-day purchases of the ordinary family. These however appear to have been neglected. The items on which the excise tax has been reduced are those which people of moderate incomes either do not buy at all or buy only once or twice in a lifetime. The relief on the smaller items is so small that it will never be handed down to the consumer. For instance, let us take the small reduction on the price of the gas, or whatever it is called, that is used in the manufacture of soft drinks. The reduction is so small that it certainly will not amount to as much as one cent a bottle in the price to the consumer, and will be absorbed at some other point, perhaps in the profits cf the wholesaler or the manufacturer
As I have said, there is no relief in the income tax schedule. It remains the same; and so does the sales tax. I was glad to note that the minister saw fit to reduce the taxes on municipally purchased and used machinery. For many years in this house I have been suggesting that if we want to encourage small towns to have proper fire-fighting equipment there should be no taxes levied against those machines. I congratulate the government and the minister upon having given this measure of relief.
However I am not so happy about the sales tax on other items, because I feel it is inequitable. This is true, of course, in respect of all sales taxes. They become a heavy burden upon the people in the lower income groups. When a man is spending practically his total salary on food and clothing, when he is paying rent and raising a family, practically the whole of his income is subject to sales tax. The people of Canada generally do not know that they are paying this sales tax, at all. And that is my second objection, namely that such taxes are hidden.
Unfortunately we have a sales tax in Saskatchewan-and I hope they will be able to get rid of it some day. However there is some excuse in the provinces for putting it on, because they do not have the wide taxing powers of the dominion. But when a man pays the provincial sales tax he pays two or
IMr. Knight.]

three cents over the counter and is perfectly conscious of the fact that he is paying that tax. On the other hand he knows nothing about the dominion sales tax. He simply pays his bill over the counter, the tax having been imposed at the manufacturer's level, and he does not know that he has been mulcted of that particular amount. As I have said, this tax falls heaviest on those who are least able to pay.
Another objection I have to the budget is that there were left in the taxing structure certain injustices perpetrated the year before. One of the most amazing of these features, and one hardest to explain, because it is somewhat technical, is the fact that a man who draws his income solely from dividends on corporation shares pays no income tax at all, with the exception of the small tax he pays to the old age pension fund. That is something that is almost incredible to most people. I do not wonder that they have difficulty believing it.
The day before yesterday when I made out my income tax return I discovered that -hon. members will laugh at this; all right, let them laugh-I was able to deduct $4.40 or $8 something, I have forgotten, not, sir, as a deductible amount but I was able to deduct that amount of money actually from the tax which I was assessed. To me that was an amazing thing. I think it is wrong. The minister of course will say that the funds have already been taxed in the hands of the corporation, and that if we were to adopt my suggestion to tax it, it would be double taxation. I do not want to go into that argument although I believe that I could probably expose it as a bit of a fallacy. I do not mean it is a fallacy that the money has not already been taxed. But in its relation to individuals, when we are talking about the income coming from investment or coming from work, and showing there the contrast, then I say there is an injustice. As a matter of fact, while the man who has an income of $10,000 derived in the way in which I have indicated would pay practically no income tax, it is also true that the man who worked for an income of $10,000 would have to pay an income tax of $1,650, or something of that sort, assuming both were married and had two children.
As I say, people in the country, audiences, are simply amazed when that fact is drawn to their attention. Some alteration should be made in it. The other inequity of which I was thinking is the fact that there is a ceiling upon the amount of contribution we make to the old age pension fund. Certainly the method by which it is done is quite contrary to our own philosophy in this

particular group. I need hardly relate how it is done, although there may be a few hon. members who are not acquainted with it. Hon. members no doubt know that under the famous 2-2-2 formula the 2 per cent additional tax is put on the income of each individual paying taxes for the old age pension fund, to supply pensions for himself or for other people or for both, as the case may be. Therefore, if you have $1,000 taxable income you pay $20. If you have $2,000 taxable income you pay $40; if you have $3,000 taxable income you pay $60. Hon. members would expect it to go on and rise so that when you got to $4,000 or $5,000 taxable income you would pay a proportionate amount. But that is not how it works. In other words, there is a ceiling, and when you have $4,000 taxable income you do not pay in proportion to your ability to pay; you simply stop right there, and if you have an income of $10,000 or $20,000 it does not make any difference, you pay the little sum of $60 only into the old age pension fund, in spite of the fact that you yourself are entitled to $40, the monthly pittance, that we pay to old people who have no source of income at all.
There are those privileges to those people. I know the minister does not so consider them. He is thinking about the whole thing and the collective picture, the actuarial basis and all the rest of it. I am thinking of the human beings who are affected by that particular thing. Some provision should have been made in this budget to remove that ceiling. Along with that there should have been some remission of the sales tax with which I have already dealt.
We would have liked to see higher exemptions in the taxation of the lower level incomes. I think I remember my leader suggested $1,500 for a single man and double that for the married couple. One might say: We need the money; why should we remit taxes of that type? Well, the thought that occurred to me when I began to talk here tonight was this matter of the general picture. It seems to me that the general picture needs some expansion of the purchasing power in the hands of the Canadian people.
I do suggest that some remission of these particular taxes would give us a bit of a boost in the matter of putting extra purchasing power in the hands of the people, and it might have boosted our economy and kept it going for at least some time longer.
There is a question with which I have not yet dealt, namely, defence expenditures and the consequent or necessary taxation. I shall admit, of course, that in the present state of 83276-264
The Budget-Mr. Knight the world we must have defence expenditures, but I am just wondering whether we might not have hoped for some reduction; and the question arises in my mind as to how effective any defence expenditure can be in these days, in the light of the new and awful discoveries that science has inflicted-and I use the word deliberately-upon the world. It seems to me that if these mechanisms of science are so awful as they are said to be and if we are committed to spend as much on defence this year as we were last, then we have to face one of two things: Either we must completely change our whole method of defence, if indeed there is any good in doing that, or else we are simply pouring money down the drain by continuing to perpetuate methods of defence which were all right ten years ago but which, in the light of the discoveries to which I have already referred, may be of no value at all.
I am going to suggest that even from the point of view of defence we might be better off in the defence of ourselves by giving to the world, and particularly to some of the underprivileged countries of the world, a feeling of our sympathy and sincerity in the form perhaps of material gifts or certainly technical assistance; and that the best defence that we can have, particularly from the point of view of the Asiatic people, is to give them that knowledge of our willingness to help. We take the view that the creation of friendliness and good will in the world is of more value in the promotion of peace than is the handing out of bullets and of guns and of the implements of war.
That is all I wish to say at the moment, sir, in regard to the budget but I do want to say something about our disappointment-and this applies particularly to the Saskatchewan members of our group-that nothing is being done, and no provision is being made for expenditures in the matter of the Saskatchewan river dam. The people of the province were disappointed. I have been talking to them lately and I know that. I shall not go here into the arguments, shall not describe the drought cycles which have bedevilled our economy over the years in Saskatchewan or instance our need for a greater population, and for a greater diversification of farming, and for the consequent stability that a nation or a state or a province is assured by the residence of people upon the land. I know the right hon. member for Melville, the Minister of Agriculture, was in my own city among other places during the Easter holidays. I have always envied the minister's plausibility and his ability to convince people. It has

The Budget-Mr. Knight been one of the reasons for his political success. I noticed in my local paper, the Star-Phoenix, of April 17, a heading which says: "Outlook for dam better." Do you know why these people are convinced that the outlook for the dam is better? It is because the Minister of Agriculture told them so. All right; that proves the thing I have just said. I would point out of course that he has been telling them that for many, many years. I suppose he still thinks it is good for another election, and I would not wonder but that it is. I shall quote a line or two of this clipping:
The federal government's viewpoint toward the proposed South Saskatchewan river dam appeared to be getting "more and more favourable."
This is quoted as being the opinion of those people who are members of the institution known as the Saskatchewan river development association and who met the minister. When they went out of the meeting they said the federal government's viewpoint towards the proposed South Saskatchewan river dam appeared to be getting more and more favourable every day. What a gift the Minister of Agriculture has. I could go on and read some more of this but I do not think I will.
There is one thing here which is very interesting, and which appeared in the same newspaper. What I am referring to is not a political speech or a speech of any kind made in the heat of the moment by the Minister of Agriculture, but a deliberate statement made by the minister at an interview with, I presume, a reporter on this particular newspaper. The interview carries a very interesting headline. It states: "Ottawa Ignoring Commission's Report on Dam, says Gardiner". With you, sir, in the chair I cannot ask the Prime Minister (Mr. St. Laurent) a question but I am wondering what the Prime Minister's comment would be on that particular statement. Does that headline mean that they are going to proceed with the dam? I take it that the people of Saskatchewan in view of the minister's remarks will not be at all disappointed. I hope that the confidence of the Saskatchewan river dam association is justified.
I do not wish to go into political affairs in Saskatchewan. Certainly I never interfere in provincial-political affairs, but I believe I am entitled to speak in regard to federal-political affairs as they relate to the province of Saskatchewan.
This may be news to some hon. members, and it certainly is news to me, but I understand we have had a distinct resurgence of Liberal-political activity in that particular province. We might notice, for example, that the Minister of Agriculture was closeted with

the president of the Liberal association and what we used to call " the machine", though perhaps my hon. friends on the other side of the house prefer the word "organization". However, there have been some signs of political resurgence and particularly in the minister's sphere. I notice, for instance, that one of the chief Liberal organizers, a very fine man and a good fellow in his own right, Mr. Bird, has been put in P.F.R.A.-or is it P.F.A.A.-and then our old colleague, Mr. Dewar, who it might be recalled attained some notoriety in public affairs in this country, has now joined one of the minister's departments, and in fact I believe it is the same one. I presume of course that those gentlemen will be employed solely in the work of their department. These factors are very interesting to me, and I would also like to observe in passing that I notice the minister's picture has appeared in several newspapers including the Star-Phoenix, Yorkton Enterprise, etc. Indeed, the minister has had a very busy and active time during the Easter week. But who am I to blame him if he hopes to gather in a few votes for the Liberal cause in Saskatchewan, for goodness knows they need them badly enough.
Then there is this question of choosing a new leader and my right hon. friend has always been king of the Liberals in Saskatchewan, and he is not particularly fond of crown princes, as at least one hon. member of this honourable house is well aware. Whether the leader of that party is Dr. Thomson on the one hand, or my right hon. friend's son on the other, I would suggest that the direction of that machine will be retained here in Ottawa which, incidentally, is one of the things of which some of my young Liberal friends who are voting for his party are not too fond at the moment. They are inclined to say, rightly or wrongly, that direction from Ottawa had perhaps something to do with Liberal misfortune in both provincial and federal elections of last year. However I am not competent to judge that and I simply throw out the idea.
As I said before, I have no objection to the minister catching a few Liberal votes if he can get them by promising this dam, so long, and only so long as the dominion government finally carries out its promise and builds the dam. After all, we do not want to wait until we are all dead. We want to see the results of this project on those at times arid plains. Whatever may be the minister's motives, the main thing is to encourage construction of what I think would be a national asset, and if he does succeed in gathering in some votes, or even if he does not succeed

at all in making capital and gathering in a few extra Liberal votes, there is always the greater compensation.
I have no doubt most hon. members are acquainted with the story of Saul who was sent out to gather in his father's asses and succeeded in founding a kingdom. I hope that that is the fate which will befall my right hon. friend the Minister of Agriculture and I hope the job will be done. After all, the main thing is to found the kingdom, and I hope that that will be done in the province of Saskatchewan and water should be brought to those plains.
This has been a subject which has been discussed in this house time and again, and 1 do not wish to repeat myself, but I think, sir, having at least said a word or two in regard to the budget and as regards this irrigation project, which is particularly near to my heart, and the hearts of the people in Saskatchewan and the people in the city who are dependent upon the farm life of the province of Saskatchewan, I shall resume my seat.


Mr. T. H. Goode (Burnaby-Richmond):: Mr. Speaker, I am not going to make a political speech as did the hon. member who has just resumed his seat, but I have two items of interest to my constituency which I wish to bring to the attention of the house. One is firmly entrenched in the political life of British Columbia though I believe it should not come under a political heading, and that is the question of the years-old problem of the Marpole bridge. My riding is on the south end of what perhaps can be considered the terminal for that bridge, and if you visit in the Vancouver, Burnaby or Richmond areas you will find a different rumour at every corner of every street in the riding to the effect that the provincial government of British Columbia is going to do one thing and the federal government is going to do another.
The truth of the matter is this. I sincerely believe that the Social Credit government of British Columbia intends to build a bridge at Marpole, and I believe, although 1 did doubt it for some months, that they are genuine in the news they are giving to the people of British Columbia in regard to the bridge.


An hon. Member:: They are all genuine.


Tom Goode: That may be so, I do not know, but in this case I believe they are sincere. However, I believe the provincial government of British Columbia cannot build that bridge alone, nor do 1 think it is entirely a British Columbia responsibility. Today I received the latest report of the North Fraser harbour 83276-264J
The Budget-Mr. Goode commissioners, a federal body the majority of whose members are appointed by the federal government, and on page 5 of their 1953 report they state:
The Marpole bridge suffered considerable damage throughout the year as a result of collision by scows and log booms. The most serious disruption occurred during the month of December when road traffic was closed off for a period of eight days for replacement of one of the truss span piers. The movable span opened for river traffic 6,691 times during the year,-
That is the year 1953.
-an average of 558 openings per month. 664 openings were recorded in October, the highest month of the year.
Then they go on to say this, and this is a federal commission reporting to the parliament of Canada:
A company of consulting engineers was commissioned by the provincial government in November to make preliminary studies for a high level highway bridge over the north arm of the Fraser river, approximately 270 feet east of and parallel to the existing B.C. Electric Railway bridge, crossing near the foot of Oak street.
And it goes on to say that the commissioners have given certain permission to the provincial government to do their preliminary that the bridge will be built if the province of British Columbia receives financial help from this parliament. Some time ago hon. members from British Columbia discussed this matter in brief and it was said by a gentleman on this side of the house that there had been no contact between the British Columbia government and the federal government with regard to the cost of the Marpole bridge. I find out that that is true. I spoke at Sea Island last Saturday night and I said certain things to the people there whom 1 represent in this house. In part this is what I said. I said that I would support a financial contribution to the bridge from the federal government if certain things were done. These were the specifications with which I qualified my statement: (1) that the bridge be built at Oak street and nowhere else; (2) that the bridge be not a toll bridge; (3) that the provincial government submit to the federal cabinet at the earliest opportunity full plans, specifications and firm costs of the structure; and (4) that the bridge be constructed by the firm giving the lowest tender.
I support in this house at this time, if these particulars are carried out, a contribution on the part of the federal government of one-third of the construction cost. I believe that the provincial government has a financial responsibility in the matter. I also think that the city of Vancouver has a responsibility. I would suggest to the federal cabinet that negotiations be started just as soon as the

The Budget-Mr. Goode provincial government of British Columbia bring forth specific plans for the structure. At that time I will support in this house again, should the necessity arise, a contribution from this house of one-third of the cost.
I wish to bring to the attention of the house one other matter which also interests the municipality of Richmond. The Minister of Public Works (Mr. Winters) will remember that in 1948 a disastrous flood struck the Fraser valley country in British Columbia. When the water had receded and the people had been sent back to their homes with those homes repaired, the cost to the people of Canada was $8jr million, and the cost to the government of British Columbia was an additional $2J million, a total of $11J million altogether. The minister will know of the final report of the Fraser valley diking board, dated March 1, 1950. In that report they make two very definite statements. On page 11 the board suggested that it would provide rockwork on the river banks where the dikes were in jeopardy from river erosion for five years after the date of the report; and on page 17 they say:
Every winter and every spring there exists in the Fraser river basin enough snow to cause a disaster. The timing of the melting of this snow is in the hands of Providence, and engineers can only be guided by the law of averages.
I bring this report to the minister's attention because the municipality of Richmond, which I have the honour to represent in this house, has for the last three or four years made representations to the Minister of Public Works pointing out to the department that the dikes in that municipality could not withstand a serious spring freshet. On February 11, 1952, the reeve and council of the township of Richmond sent a brief to the then minister of public works in which they outlined their concern over the serious dike break that had taken place on January 14, 1952, in the municipal dike in that area. They pointed out that serious erosion was evident along the north bank of the south arm of the Fraser river, which is the main channel. When the dikes were originally constructed by the municipality they were built 100 to 300 feet back from the river and now in many places the foreshore has entirely disappeared and the dike is now on the edge of deep water. In other places the existing foreshore is being rapidly eroded.
The house will please understand that practically the whole of the area called Richmond is under high water level, and forty years ago the people of that municipality built the dikes to protect themselves against a spring freshet. These dikes were then, and still are, owned by the municipality; and it is to the credit of this government


that some thousands of dollars have been spent on rockwork facing the river to protect the dikes. I wish to present to the minister today my sincere concern and the concern of the municipality that the time is coming when the Richmond municipal dike will not hold and a break will occur. If that happens, a disaster of serious consequences will have hit British Columbia, and many millions of dollars will have to be spent by this government to protect the investment by many small householders and farmers in Richmond.
The diking board says that "every spring there exists in the Fraser river basin enough snow to cause a disaster". I have repeatedly warned in this house that one of these years the freshet on the Fraser river will be of such density and force that the old municipal dike will not hold. Because we have built first-quality dikes in the upper Fraser valley the seriousness of the situation in my riding is more pronounced because now extra pressure will be put on the dikes in the delta of the Fraser river. Should the weather in British Columbia turn exceptionally warm, as it did in 1948, then the present protection cannot defend against a disaster of the first magnitude.
I wish to follow along my argument with a description of what is happening from the gulf of Georgia eastward to the city of New Westminster. There is no doubt that New Westminster will become one of the greatest fresh-water ports in Canada. It is not unknown for four hundred deep sea ships to berth there in one year, and we in Burnaby-Richmond rejoice that this should be so. I point out to the minister that the work that is progressively being done from the gulf of Georgia to New Westminster is being done to protect that New Westminster harbour. The Fraser river channel has shifted many times in the last fifty years; and to make sure that deep sea boats could enter the port of New Westminster it has been the policy of the public works department to close in the shores of the river to maintain density of current that will carry with it to the sea the silt that has been building up over the years, and that which comes down from the headwaters every year. Actually what the department is trying to do is to scour the river bottom so that our costs of dredging will not be, as they were for so many years, millions of dollars per year.
And so the department has embarked upon a policy on the south bank of the main channel to put a rock embankment up to the height of 12 and 14 feet in some places, not only to protect that shore but to keep the current in a confined area. I say this is all

being done to enable the city of New Westminster to fulfil its destiny as the greatest fresh-water port in Canada. I support that idea and I believe that any moneys that can be spent on the main channel of the Fraser river to enable boats to enter the New Westminster harbour should be spent-always remembering that Richmond, too, has deep water anchorage-and it will always receive the approval of the people of Richmond and the member for that riding.
However, in building up the south bank of the main channel the department did not figure that the current of the river would be changed, but it has changed and now the north bank, that which borders the municipality of Richmond, from Woodwards Landing west is receiving most of the force of the current and gradually that shore is being eaten away, in some places to the extent of 300 feet. It can be noted here that 25 foot depth channel markers have in the last ten years moved 400 feet closer to Lulu island, proving my point that the shore of Richmond is taking the full force of the current in certain places because of the policy of the department in building strong rock protection on the southern shore.
I have no argument with the work being done by the department. I believe that the sooner they confine the main channel of the Fraser river to a static position the better it will be for everyone concerned, but I do report that the Richmond shore is taking the full brunt of the current at this time. The department has also constructed wing dams along the river which are assisting the rock protection on the south bank to throw the force of the current into Richmond and, as I have said, I doubt that the municipal dike will hold for too many more freshets.
I readily agree that considerable rockwork has been done on the Richmond shore, to the credit of the department, but for another $1 million spent now full protection could be afforded the people whom I represent and their homes would be secure from a serious flood in some spring that will come just as surely as will come tomorrow morning. We have been doing some patching on my side of the river acknowledging, I think, that we have a federal responsibility to the people of Richmond to protect them against a flood. I do submit to the minister that it is essential that rockwork protection be done to complete a 14 foot rock wall the entire length of the Fraser river shore where it contacts my municipality.
From Steveston to the gulf of Georgia we have constructed two jetties, again attempting to confine the river to allow the silt to move into the gulf. We believe that this work was
The Budget-Mr. Goode well done and that the jetties will serve their purpose, that of confining the river in a narrow space, but those two jetties again are going to throw more current force against the Richmond dikes should a serious freshet occur this year or next year.
It seems that it is the destiny of the Fraser valley that when the freshet occurs in late April or early May we also have very high tides, the tides working in a narrow space between the two jetties at the delta and the freshet trying to force itself westward from the headwaters of the Fraser river. The two forces meet between the city of New Westminster and the city of Steveston, British Columbia, and the minister will know that most of this space is occupied by Lulu island, proving again, I think, that now the Fraser valley is protected Richmond too should be protected by a comparatively small investment now, instead of ten times the investment should the dike break down.
In January, 1952, I met the council of Richmond and some of the federal engineering staff at the council chamber when the reeve said:
I do not want to be an alarmist, but I anticipate trouble down there if something is not done before the freshet.
Mr. Miiavsky, a member of the public works staff, said that the federal government were only interested in the river from the point of view of navigation, and that they placed rock only to the extent that it protects the river depth. At that time the official might have been correct. That is certainly not the case now because since then the department has spent many thousands of dollars on channel maintenance and rock protection for Lulu island. The sandbars in my municipality are practically all gone. Some of the rock protection has dropped four or five feet, and had done so at the time we met the public works official in the Richmond municipal hall.
It was pointed out to him then that the increased current in the river was causing undermining of the south arm dikes and, I believe, because of the opinions offered at that meeting someone in the engineering branch changed his mind and the dominion government started doing more extensive rockwork along the north side of the main channel of the Fraser river from Woodwards Landing down to Steveston. The channels between Rose island and Number One island and between Number One island and Woodward island have been closed off, all helping to make the river self-dredging. All this has been done, of course, to increase the flow of the river and not to protect Lulu island.
On March 8, 1954 the reeve and council again wrote to the chief engineer, Department of Public Works, pointing out that the dike

The Budget-Mr. Pinard had now been damaged in three other sections, and I understand that one of these sections is to be protected by rock at the earliest possible moment. But these complaints come in from the council periodically because no policy has been laid down with regard to the south side of the main channel, and I warn the house that before many years are over, and unless considerable money is spent, we will have to undertake a bill of repairs and rehabilitation on Lulu island that will cost millions of dollars.
Finally, may I point out, Mr. Speaker, that the provincial government of British Columbia issues a snow survey every month which gives the condition of the snow in the mountains that feeds into the Fraser river. When visiting the river last week we noticed that none of the snow water had started down from the headwaters at this time, and in looking over the provincial report for this month I find that not only is the snow in the mountains much heavier than it was in 1948 but that the water content of that snow is over 23 per cent heavier than it has ever been before. I ask the Minister of Public Works to send his officials to Richmond at the earliest possible moment so that the freshet, if it comes this year, will not flood my municipality.
(Translation):


Mr. Roch Pinard (Chambly-Rouville):: Mr. Speaker, when the Minister of Finance (Mr. Abbott) made, a few days ago, his important speech, which contains a statement of the financial policy of the government for the current year, it seemed to me, as it did to others I am sure, that his general considerations on the economic situation and the forecast of budget amendments were of secondary importance, on account of the important decision regarding federal-provincial relations, and in particular relations between the federal government and the government of the province of Quebec, a decision which the minister then made known to the members assembled in this house.
For the past few years, the Minister of Finance had devoted an important part of his speech to an examination of these complicated matters of federal-provincial relations. But the statement of principle which the minister made the other day did have the result of placing in its true light this important problem with which the people of Quebec are now faced.
Canadian citizens living in any of the ten provinces of our confederation, who have at heart the common good, who want this country to continue prospering and developing, who want this nation to prosper in har-


mony, well-being and, at the same time, unity, are now going through a period of anxiety because of this conflict between the government of this country and one of the most important provincial legislatures.
I do not want to take too much time, but I would like, during the next few moments, to review briefly the facts in the light of which I will be able later on to lay the responsibility where it belongs, and explain the stand I have chosen to take in the present situation.
Since 1867 Canada has enjoyed a federative system of government. That system, which does not offer as many advantages in a compact country whose territory is limited, constitutes, I think, the only system suited to a country like ours where many problems of all kinds-political, geographical, and economic-arise and must be solved in the general interest of the people of this country.
That is no doubt what our predecessors understood when they decided, one day, to unite the pioneer provinces of this country in one whole which at the present time can be described as one of the most perfect examples of a federative state.
Was it a real treaty between the races making up our nation at the time or was it purely and simply an act of the imperial parliament? I will not attempt to discuss the merits of those questions at this time. This seems to me to be a rather useless controversy, one which has so far led us to little else than an exchange of views devoid of much constructive value. Yet I think we should subscribe to the view, and state our belief in this connection, that the British North America Act was born of an agreement between the original provinces, even though it was impossible at the time to provide against every likely contingency.
In any event, this agreement was definite as far as certain essential rights of the French-speaking minority were concerned. It should be impossible to infringe upon these rights even though the language of the constitution could give rise to ambiguities or different interpretations. Those rights, all legislators, whether they be in Ottawa, Quebec, or in any other section of this country, are under the obligation to respect them strictly, to defend them and to protect them in their letter as well as in their spirit.
To those who would challenge the value of the texts themselves, or to the others who would only see therein the guarantee of inviolable rights of the French minority in this country, I shall recall the statement of principle made in 1950 by our present Prime Minister (Mr. St. Laurent), when he said

before the prime ministers of the other legislatures who had met here in this capital, and I quote his words:
That in no wise runs counter to the firm belief of so many of us that there is something stronger than any legal safeguard, and that is the good faith, the mutual tolerance, and the common understanding which are the highest glory of most Canadians, regardless of whether English or French happens to be their mother tongue.
In that security which is much more reassuring and which springs from a generous and loyal acceptation, by all those who live on our Canadian soil, of that common obligation towards the minority group in this country, Canada has been able to move forward and to grow in concord and harmony.
But I do not want to stray from the subject which is in our minds today and relates to that conflict between the federal government and the Quebec legislature. Let it be sufficient, on concluding those brief remarks concerning the vital rights of the French minority, to reaffirm that this is a sacred trust bequeathed to us by our predecessors and which no legislative power has the right to deny, to scuttle or to destroy.
However, like those who came before us, we want to continue to live under the federative system since it is the sole means for the Canadian people to keep moving forward towards progress in unity, concord and mutual respect.
Our main concern in the present conflict opposing the two governments is the delimitation and the application of fiscal privileges arising from the Canadian constitution.
Any federative system, although it may provide, as ours does, unquestionable advantages, nevertheless gives rise to problems which must be approached calmly and in harmony, but which must also be studied on the sole basis of common interest.
Even though the British North America Act does not make up the whole Canadian constitution, it must nevertheless be recognized that it is in the light of its text and of the application of its spirit that we must examine the various aspects of this disagreement between the Quebec legislature and the Canadian government.
After a serious study of the matter, any unbiased person will necessarily come to the conclusion that although, in the Canadian constitution, provincial rights are set out and clearly determined in a restrictive and complete way, the federal parliament, whose powers are also enumerated, also has a
The Budget-Mr. Pinard further right to legislate about any matter that is not specifically defined and which remains unallocated. This time, it is a general and exclusive power which is contained in this residual clause which makes up the preamble of section 91, wherein it is prescribed that the federal legislature must enact legislation for the peace, order and good government of Canada. Under the circumstances, it is then clearly a power and truly an obligation devolving upon the federal legislature, because there can be no prosperity or true progress in the country unless the federal government fulfils that obligation. The federal authority must necessarily fulfil that obligation if we want the system to be workable.
In any federative system, it is undoubtedly important, I would say, that it is even essential and indispensable that the local governments be in a position to benefit from the advantages granted them and that they be able to legislate as they see fit, without having the federal government interfere with their legislative enactments. But, on the other hand, it is also essential that in a federated state the central power, the federal government, should be able to legislate so that the legislatures do not permit anarchy to take root in the country.
Therefore, if it is the duty of the federal government-and such is the case-to legislate for the peace, order and good government of the country, it shall necessarily have to ensure uniformity in the progress and development of each of the provinces that make up confederation.
It should not follow, for instance, that certain conditions obtaining in one part of the country should be prejudicial to another part of the country. For instance, if a certain group of people enjoy certain advantages and certain privileges, it is up to the federal government to intervene, so as to ensure uniformity, an essentially identical standard of living, an equitable apportionment of benefits throughout the country.
For instance, if because of circumstances of time and place, one part of Canada happens to be more industrialized, with heavily populated centres, thus preventing otherwise desirable migrations to other parts of the country, the federal legislator must provide, through sound measures, for more adequate distribution, decentralization of wealth, more equitable apportionment of the benefits which the nation must offer not only to one but to all

The Budget-Mr. Pinard parts erf the country. We have there the structure and the object of the social security legislation implemented by the government, that is to say, old age pensions and family allowances and national health measures which it has agreed to adopt in order to distribute in a more rational and more uniform fashion the advantages resulting from the prosperity which this country enjoys.
It is clear that such measures entail huge expenditures. The federal government must therefore be in a position to obtain the necessary revenue it needs to implement them. A very large proportion of the national revenue has been devoted to this social security legislation and I do not believe that the people of the province of Quebec-the people from any other province, for that matter-would be willing to see the federal government put an end to these measures which have allowed for a fairer distribution of the wealth of this country and through which the Canadian people have been enabled to advance more rapidly and to progress in a more orderly fashion.
Secondly, the federal government has obligations which are perhaps even more serious in the wider field of foreign relations.
Canada, which is essentially a producing country with a great many natural resources and which gets every year a substantial surplus of production, has the duty to facilitate the disposal, the distribution and profitable sale of its products by creating new markets abroad for its commodities.
This policy has always been followed, or rather applied by the party to which I belong, and it can be said that it is because of the action of former Liberal governments who have succeeded each other for many years in this country, or, at least partly because of their action, that Canada is now experiencing such a degree of prosperity. The central power owes it to itself to create and preserve markets abroad, so as to ensure a profitable distribution of our surpluses.
It was Laurier who said, when introducing a measure of trade reciprocity with our neighbours, that it was proper for Canada to create and maintain markets abroad if this country wanted to grow and prosper. It is the very essence of economic progress in this country.
It is undoubtedly what was in the mind of the fathers of confederation because in the Canadian constitution the federal government clearly has the authority, as defined in fMr. Pinard.]
subsection 2 of section 91, of regulating trade and commerce. The policy of the federal government in that matter will be the very cornerstone of true prosperity in our country and, as a result, in each of our provinces. Again, since it behooves the federal government to formulate the economic policy of our country, this entails large administrative expenses and, in some cases, important capital expenditures, so as to manage this economic planning which comes within the jurisdiction of federal authorities. For that purpose, we must maintain trade missions in other countries, take part in the international monetary and economic conferences, so as to keep informed of the needs of world markets and organize our production accordingly. Here again, we have to draw upon a very large portion of the national income.
But the parliament of Canada must also ensure the security and the defence of the country. I do not think it is necessary to emphasize here how serious is the tension in international relations and how necessary it is for Canada to keep ready at all times to protect and defend itself. Canada, in that respect, cannot live in isolation. It is bound by international commitments, either as a member of the United Nations or as a signatory to regional defensive pacts such as NATO, and our country, on account of that, is forced to earmark an important part of its revenue not only for its territorial defence, but also for the fulfilment of its commitments to the countries with which it has contracted alliances.
Even though a substantial reduction of our defence expenditures would have been very desirable, in order to devote our national revenue to peaceful activities, there is not the slightest doubt that this is impossible for the time being, and that as long as the free world is threatened with another war, as long as our country is open to aggression, we will have to continue to devote a large portion of our national revenue to these purposes. As it is, almost half of our expenditures are used for the defence of our own territory as well as for that of friendly nations with which we have entered into alliances.
Now these obligations of which I have spoken do result from a strict interpretation of section 91 of the British North America Act and more particularly of the residual clause of that section where the

taxation powers of the federal government are defined as unlimited so that our country may be in a position to fulfil such obligations.
The provincial legislatures also have their obligations and in order that they may fulfil them the constitution provides for the method of taxation which they must use. The federal government, according to the constitution, is entitled to use any mode of taxation direct or indirect, that is, any method which it may choose to resort to in order to obtain the money it needs to administer the country. However, according to the terms of the Canadian constitution, the legislatures must levy money through direct taxation, as long as this is only for provincial purposes.
For me it is unquestionable that there is common jurisdiction on direct taxation, that there is concomitance of both governments, but there cannot be, for either system of government exclusive jurisdiction or, if you prefer, prior jurisdiction. There is jurisdiction for the federal government in every case, but it is imperative, in the case of legislatures, that this power of direct taxation be used for provincial purposes only.
The issue therefore is to determine if, in this disagreement between the federal government and the Quebec legislature, the stand taken by the provincial government is not only constitutional but also, and I say especially, really within the spirit of the con-federative system under which it is important that we may continue to live.
Nobody denies to the province of Quebec, to its legislature, nor to any of the other legislatures in this country, the right to impose a tax on the income of its taxpayers, for provincial purposes. In the same realm, as I said a while ago, nobody can deny the same prerogative and the same right to the federal government. I cannot see why, for instance, when a provincial legislature would have accepted to invade a field of direct taxation, the federal government should evacuate it.
But since we live in the same country, since we must, as legislators, use the right of taxation but within the limits of necessity, since serious abuses may spring from an abusive mode of taxation or from the method of double taxation, it is important therefore and it is appropriate, whether in the case of the federal government or in the case of a provincial legislature, to accept to make laws 83276-265
The Budget-Mr. Pinard only after reaching an agreement, or at least after consultation, so that the taxpayers may not have too heavy a burden to carry.
What has been, in this connection, Mr. Speaker, the attitude of the federal government? I think that, such being the circumstances, it has retained, at all times, a sane point of view. It has always preferred consultation with the provincial legislatures before attempting to use any particular method of taxation. It is for this reason, for example, that it has called federal-provincial conferences where its representatives, having convened the representatives of these legislatures, have explained to them the reasons for which such or such a method of taxation was to be resorted to.
I have no wish to recount the whole history of these conferences. But should those who are interested in this problem, and who are really desirous of resolving the present difficulties, have occasion to speak to the delegates which have sat in at these conferences, these federal-provincial gatherings, they will learn of the care which the representatives of the federal government have always taken to make these legislatures and their representatives understand the needs of this government so as to justify the recourse to the means of taxation chosen by it.
If we examine the proceedings of the last federal-provincial conference we find that before making the federal proposals to the provincial representatives, the then prime minister took care to ascertain that they could understand the obligations the federal government had to fulfil. That is why several representatives of the federal administration took turns to explain, as heads of departments and ministers of the Canadian government, the obligations their respective departments had to meet.
We saw the Secretary of State for External Affairs (Mr. Pearson) explain to the provincial delegates the heavy burden of our international obligations and present a picture of the international situation, in order to make them understand the part that our country had to play in the troubled post-war world and Canada's obligations, not only as far as the defence of our own territory was concerned, but also in connection with the defence of other free nations.
Then, in the field of social security, we saw the Minister of National Health and Welfare (Mr. Martin) explain to the provincial representatives the legislation he in-
4190	HOUSE OF
The Budget-Mr. Pinard tended to submit to the government in order to improve social conditions and the special program he intended to propose in the field of national health.
We then saw the Minister of Finance (Mr. Abbott) explain carefully to the representatives of the legislatures the financial obligations of the Canadian government and the revenues required to enable our country to fulfil all the obligations I have just mentioned.
What has been, on the other hand, the attitude of the Quebec legislature and of its representatives and what has been the position of the legislatures of the other provinces? Some of them made counter-proposals. Then, they consented to ratify fiscal agreements. After these negotiations, eight and, later on, nine provinces consented to conclude agreements with the federal authorities.
I do not question the right of the government authorities of the province of Quebec to levy an income tax, but I question the way they did it, that is, without first informing the federal government, the government of the country, of the Canadian nation.
How can we conceive, Mr. Speaker, in this country in which we want to live in harmony, that the spokesman for a legislature could negotiate with the central power through press conferences? On the international level, representatives of nations irrevocably pitted one against the other, are still able to take part in conferences like that now being held at Geneva to discuss the possibility of alleviating the present international tension. Is it possible to conceive that in our country, where we are all Canadians with the same ideals, the ten heads of provincial governments could refuse to get together in a conference? Is it conceivable that the prime minister of one province would not also accept to attend such a conference and even to negotiate with the prime minister of the country to which he belongs?
My principal objection, Mr. Speaker, the main reproach I am now addressing to the representatives of the Quebec legislature is directed against the way they chose for dealing with the central authority through the channel of press conferences. The Quebec taxpayers will challenge such an attitude on their part. They should have agreed to inform the representatives of the central government, and of the Canadian nation, otherwise than through a press conference, of their wish to obtain the deduction of the provincial


Mr. Si. Laurent:: Mr. Speaker, it is because of the absence of the Leader of the Opposition (Mr. Drew) that I abstained from voting on this amendment.


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


Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, it must be a cause for general concern for members, even of the government, to contemplate the gathering unemployment problem which confronts Canada. It must moreover give them little satisfaction to reflect upon the meagre allowances we are granting to our old age pensioners and to the many other people who have a right to assistance at our hands, such as superannuated civil servants and other classes whom we could readily bring to mind. It must be vexatious in the extreme for them to think about the fact that we are accumulating in this country surpluses which we at the present time see no way of disposing of at home or abroad, while the United States is doing a similar thing. I am sure all these matters have been disturbing the members of the government just as they have been exercising all the other members of this house. We now have another problem which threatens to give the government a real and immediate headache, namely, the refusal of the province of Quebec to attempt to carry on any further with the amount of revenue that is left to it after the dominion government gets through taxing.
What can be done about all these problems? Is there nothing that can be done? Are we to confess ourselves beaten in the presence of such superabundance as Canada is capable of bringing into existence? Are we to raise idle

The Budget-Mr. Blackmore and helpless hands and rail against the powers that be when in all probability we have in our own control the means of going forward towards remedying the evils which basically are the cause of these regrettable features in our economy?
Eighteen and a half years ago we in the province of Alberta elected a Social Credit government under William Aberhart, one of the very greatest statesmen to arise in the Dominion of Canada. We were filled with the conviction that we need not rely entirely for our revenue upon money that we could extract from the pockets of the citizens of the nation. We saw no reason why, since the kings of England for centuries created all the nation's money-and it was good money, sound money-someone representing the king in our day should not be able to create money just as good and just as sound as king's money. Whereas the king normally had to have gold or some other precious metal out of which to create money, and inasmuch as we had learned to use paper instead of specie for money and are now finding that we can get along very well without even specie backing behind the paper, we saw no reason why it should not be thoroughly feasible and acceptable and in every way advisable for the nation of Canada to contemplate the creation of money debt free.
We had proposals for the use of that money after it was once created. In the first place we said the all-important thing to do with the money was to bring about a price structure as fair and equitable as it could possibly be made considering the production of which the nation is capable. The first use to which that money would be put would be the bringing down of consumer prices in accordance with the amount of surplus production at that time existing in the country. This would be done by the use of what we would call a compensated discount. I shall not go further into that matter at the present moment except to point out that that would be the first use that would be made of this money created debt free.
We proposed that after the price structure had been modified by discounts to what seemed to be a desirable extent, additional money which the king then found in his possession should be used in issuing to consumers a consumer credit somewhat resembling the cost of living bonus with which everyone became familiar during world war


II. We called this cost of living bonus a dividend. We saw no reason why it should not be called a dividend because it constituted a share of the national income, of the national production which actually of right belonged to every citizen in the nation because either as producer or consumer every person in the nation contributed directly or indirectly to the producing of the goods which formed the backing of the money which the king could produce debt free.
We were greeted with a wide variety of receptions. Almost no one thought we were using any kind of sense. I remember the volumes of abuse that were hurled against Premier Aberhart by the capitalist press from coast to coast in this nation, abuse which it was a disgrace to hurl against any good and honourable man, such as he was, desiring to make conditions better. We were called crackpots, funny money artists, scrip teasers and all those other epithets which ignorance and prejudice generally apply to all people who attempt to improve conditions.
We were not abashed; we were not dismayed; because we remembered similar things were hurled against Wilberforce when he set out to free the slaves and against every other reformer who ever set out to reform existing conditions, especially if it looked as though he were going to be able to succeed. So we came to the House of Commons, to set before members of this honourable house those principles which we believed would help constitute a solution to the serious unemployment problem confronting Canada in 1935, a problem of poverty in the midst of plenty, a paradox, a monstrosity, something not to be seriously considered or contemplated by any sane man.
The favourite phrase that was applied to us then was that we believed in "funny money". It is my purpose tonight, during the time which remains at my disposal, to give some consideration to this matter of funny money and in doing so to go back into the financial history of Canada to the passage of the Dominion Notes Act in 1868, then to follow on down to the passage of the Finance Act of 1923 and on down to the passage of the Bank of Canada Act of 1934, and to show members of the house and the people of the country that practically every single dollar this nation operated on from 1868 down to 1934 was, or was backed by,

funny money, exactly the kind of money that the Social Credit proposal envisaged.


Mr. Speaker:: As it is now ten o'clock, will the hon. member be kind enough to interrupt his speech at this point?
On motion of Mr. Blackmore the debate was adjourned.
Business of the House BUSINESS OF THE HOUSE


Walter Edward Harris: We shall continue this debate tomorrow and if it is completed take the resolution with respect to the trade agreement with Japan.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, April 28, 1954