1954-03-05

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: May I direct a question to the Minister of Labour? Has the minister any statement to make on the report appearing in this morning's Montreal Gazette concerning the arrest of certain persons in connection with alleged unemployment insurance irregularities? In making such a statement, will the minister do what he can to protect the good name of the nearly 7,000 unemployment insurance employees who give good and honest service from one year's end to the other?


Hon. Milton F. Gregg (Minister of Labour):: With regard to the first part of my hon. friend's question, as he will be the first to agree, since the matter of arrests reported in this morning's Gazette is now in the hands of the courts it would be quite improper for me to make any statement on it.
With regard to the second part, I welcome the words he used. As hon. members know, the staff of the 220 unemployment insurance offices across Canada handle very large amounts of money each day under circumstances which make the work very difficult. I would be the first to ask the house to pay high tribute to the work of the many devoted servants of the unemployment insurance commission, and as far as I know this is the first instance of the kind of any importance that has happened during recent years.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Brooke Claxton (Minister of National Defence):: Yesterday, the hon. member for Winnipeg South Centre (Mr. Churchill) asked me a question about the rounds, whether I was aware that the Belgians use the FN rifle which uses the -306 round. I answered yes. I answered that really on the understanding -perhaps I did not hear him correctly-that
he was asking about the 30-06 round. In that event the answer is yes. If he was asking about a -306 round then I would have to answer no, because I do not know of the existence of any such round. I should add that the Belgian government announced its intention to adopt the FN rifle with the -30 standard NATO round on February 10, 1954.



PRAIRIE FARM REHABILITATION


[Stage Direction]
On the orders of the day:
Mr. F. S. Zaplilny (Dauphin):: I should like to direct a question to the Minister of Agriculture. Is it the intention of the minister to recommend to parliament the extension of the scope or designated area of the Prairie Farm Rehabilitation Act in the province of Manitoba?


Right Hon. J. G. Gardiner (Minister of Agriculture):: The hon. member for Dauphin was kind enough to send me notice of his question. I will have to say in reply that such a decision is a matter of government policy which will be determined in due course.



INCOME TAX


[Stage Direction]
On the orders of the day:
Hon. J. J. McCann (Minister of National Revenue):: Yesterday, the hon. member for Three Rivers (Mr. Balcer) asked this question:
What is the reason why the employees of the taxation division of his department are not treated in the same way as the rest of the taxpayers in Canada in regard to receipts for charitable donations?
The answer is:	For good administration
and to ensure that the integrity of our own staff is beyond question. I might also point out to him that the Canadian procedure is not as rigid as that of the bureau of internal revenue in the United States, where employees of that department are required to file affidavits with their tax returns.


Mr. Balcer:: May I ask a supplementary question. Is it the intention of the department to extend this practice to all the taxpayers of Canada?

Inquiries of the Ministry


James Joseph McCann: That is a matter of policy, Mr. Speaker, which has not yet been determined.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Mr. H. B. McCulloch (Piclou):: I should like to direct a question to the Minister of Mines and Technical Surveys. Will the government state why the total order for 37,000 tons of coal as agreed upon by the Canadian National Railways management and the Drummond mine at Westville has not been completed according to arrangements? Is it the intention of the C.N.R. to complete the full order? If not, why not?


Hon. George Prudham (Minister of Mines and Technical Surveys):: I have not had prior notice of this question and I should like to take it as a notice, and either the Minister of Transport (Mr. Chevrier) or I will answer on Monday.



ALLEGED COMPETITION OF ARGENTINE CROP

[Stage Direction]
On the orders of the day:
Mr. H. A. Bryson (Humboldi-Melfori):: Would the Minister of Trade and Commerce comment on a dispatch in this morning's Montreal Gazette that the new Argentine crop, together with a proposed change in export price policy, will provide stiffer competition this year for Canadian wheat?
Righl Hon. C. D. Howe (Minister of Trade and Commerce): Argentina is a traditional exporter of wheat, as are Australia, the United States and more recently Turkey. Each of those countries sell their wheat in competition with one another. I am confident that the quality and the pricing policy associated with Canadian wheat will enable Canada to hold its own in competitive consuming markets.


Mr. H. R. Argue (Assiniboia):: May I ask a
supplementary question. Does the coming of Argentina into the export markets explain in any way the fact that Italy has not bought any of its 31 million bushel quota under the international wheat agreement?


Mr. Howe (Port Arthur):: Argentina has always been in the export market. For two or three years that country had droughts which cut down the quantity of grain available for export. Last year they had a very good crop and they sold some wheat to Italy. Italy bought certain wheat from Canada, I may inform my hon. friend.


Hazen Robert Argue: That was last year.


Clarence Decatur Howe: Last autumn.


Hazen Robert Argue: But not under the international wheat agreement for the current crop year.


Clarence Decatur Howe: Yes.


Hazen Robert Argue: Not according to your wheat review.


Clarence Decatur Howe: I know that certain Durum wheat was sold to Italy last autumn, and anything that is sold after July 31 is included in the current crop year.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. E. G. Hansell (Macleod):: May I address a supplementary question, perhaps to the minister of external affairs. I am sorry that I did not give notice of it, but it is a supplementary question with respect to surpluses of food and agricultural products. I believe the food and agriculture organization is presently holding a conference in Washington at which several nations are represented, but I do not believe that Canada is among them, at least not officially. Would the minister care to say now, or perhaps on Monday, whether Canada has a delegation or an observer at that conference. They are discussing the possibilities of disposing of agricultural surpluses.


James Garfield Gardiner: I answered that question a few days ago. The situation is that we were at the FAO conference in Rome and a committee was appointed upon which Canada was not represented. It was understood that Mr. Hopper, the agricultural representative at Washington, was to be called in if there was any necessity for doing so.



CANADA EVIDENCE ACT


[Stage Direction]
On the orders of the day:
Hon. Sfuari S. Garson (Minisler of Jusiice):: Mr. Speaker, the Acting Prime Minister (Mr. Howe) has asked me to reply to a question which was directed to him yesterday by the hon. member for Prince Albert. The question was:
Will the government give consideration to introducing an amendment to the Canada Evidence Act at the present session so that the sources of information of press and radio in any future action shall be considered confidential and inadmissible as evidence?
This question arises, as the hon. member has indicated, as a result of a certain action

in the British Columbia courts entitled Wismer v. Maclean-Hunter Publishing Company and Fraser. This was a civil action for damages arising out of an alleged libel. I understand that in the course of these proceedings it was held that where malice is a relevant issue the defendant may be asked the name of his informant unless it appears that the plaintiff had an improper motive in seeking that information.
The Canada Evidence Act does not apply in the case of civil actions in the provincial courts; consequently the amendment to the Canada Evidence Act which has been suggested by the hon. member for Prince Albert would be entirely ineffective in any such future action.


Mr. J. G. Diefenbaker (Prince Albert):: Would the Minister of Justice comment on the fact that in the Alberta press case of 1938 the Supreme Court of Canada held that freedom of the press was not a matter of provincial jurisdiction but came within the ambit of the federal authority as part of our parliamentary system.


Stuart Sinclair Garson: I should be glad to comment upon that. My hon. friend is quite right in what he says about the Alberta press case. But that point has nothing to do with the judgment in the present case under discussion which was in a civil action for damages for an alleged libel; and the question we are discussing was as to whether a defendant could by interrogatories be asked the source of his information. I am sure that my hon. friend will agree that if it were thought desirable, as he seems to think it is, that an amendment to an evidence act should be passed to apply to a situation of that kind, it would have to be to the British Columbia evidence act and not to the Canada Evidence Act.


John George Diefenbaker: I was just wondering whether in view of the supreme court decision that would be so.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I should like to ask the Minister of Veterans Affairs whether the government has yet reached a decision on the question of introducing legislation at this session to amend the War Veterans Allowance Act.


Hon. Hugues Lapointe (Minister of Veterans Affairs):: I might say to the house that some time ago I indicated that legislation other
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than that which had been introduced up to then would be introduced before the end of the session. My hon. friend will find out when it is brought before the house just what that legislation is.



NATIONAL HOUSING ACT


[Stage Direction]
The house in committee on Bill No. 102, to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and building conditions-Mr. Winters-Mr. Robinson (Simcoe East) in the chair.
On clause 1-Short title.
Mr. Fleming:: Mr. Chairman, with the return to the House of Commons of Bill No. 102, the house is again faced with a bill referring to what is still one of the most vitally important subjects for all Canadians, namely, housing.
It was on January 28 that the house gave second reading to this bill. In the meantime the bill has been submitted to what I believe I may fairly call exhaustive study on the part of the standing committee on banking and commerce. That committee proceeded to its task with diligence. In the period between February 2, when it held its first meeting on the bill, and March 2 when it concluded its labours on the bill and reported it with a number of amendments that committee held, if my reckoning is correct, no fewer than 23 meetings. In my experience of 85 years as a member of the banking and commerce committee I do not recall any case where that committee has given more careful and constructive study to any measure laid before it than it did to Bill 102. There has been no evidence whatever of partisan considerations in that committee, but the desire evidenced on all hands was to make this bill as good and as effective a piece of legislation as was possible within the principle of the bill as approved by the house on second reading.
The chairman of the committee, the hon. member for Spadina, is I believe also deserving of commendation for the way in which he presided over the sittings of the committee, and for his conduct of the affairs of the committee. While we did not agree on all matters, nevertheless he did contribute to the atmosphere of co-operation which prevailed.
The committee has heard extensive evidence. That evidence has not been printed

National Housing Act as yet in its entirety, Mr. Chairman, and perhaps it is regrettable that the house, now in committee of the whole, is dealing with this matter without having before it all the evidence taken in that committee. It is probably a fair estimate that the evidence when printed in its entirety will extend to something like 600 printed pages, all in small print at that.
The evidence was drawn from many very competent witnesses representing organizations whose views are entitled to be treated with respect on the part of that committee and this house. No doubt the principal witness was Mr. Mansur, the very able president of the Central Mortgage and Housing Corporation. It is not the first time that Mr. Mansur has appeared before the banking and commerce committee as a witness. The committee heard him at very considerable length two years ago when it reviewed the operations and reports of the Central Mortgage and Housing Corporation. I believe this tribute is due to Mr. Mansur. He has always shown himself to be a well informed, willing and co-operative witness. His answers were clear and they always impressed the committee as being frank. I believe the committee is much indebted to Mr. Mansur for the evidence which he tendered to it at many of the 23 meetings which were held.
We also heard evidence, Mr. Chairman, from representatives of such organizations as the Dominion Mortgage and Investments Association, represented by its president, Mr. John T. Bryden. We heard from Mr. Atkinson, president of the Canadian Bankers Association, and from Mr. Graham Towers, the governor of the Bank of Canada. We also heard from representatives of the three national labour organizations, and from representatives of the Canadian Construction Association, the Canadian Home Builders' Association, the Canadian Association of Mayors and Municipalities, the Co-operative Union of Canada and others.
In all cases, Mr. Chairman, the evidence given was of very substantial assistance to the committee and through the committee to the entire House of Commons.
Organizations of this kind and their representatives perform a most useful public service in placing before a parliamentary committee the fruits of their study of a measure of this kind and the important subject upon which it is based.
Let me turn back to put in its setting the position in which the house found itself after giving this measure second reading on January 8. In saying this, Mr. Chairman, I do not propose to reopen the debate on second


reading. What I propose to do is to put in its setting what occurred then and to lead up to what I hope will be a constructive review of some of the evidence submitted to the committee, much of which is confirmatory of the views which some of us sought to place before the house on second reading, and other parts of the evidence of interest on other accounts.
The procedure of this house requires that even in a bill of a technical nature in which the principle is not easily isolated or identified, that principle must nevertheless be approved before the bill is submitted to a detailed study in the committee to which it is referred, whether the reference is to the committee of the whole or to one of the select committees of the house.
I believe the procedure followed in another place does not involve that same approval in principle on second reading before the bill is given detailed study in a committee, and there are occasions when such a procedure, it seems to me, has a definite value. It would have value on a bill of this kind which is largely a technical bill, which covers a vast territory, and which by common agreement was to be referred after second reading to the standing committee on banking and commerce for detailed study and review.
On second reading, Mr. Chairman, the point of view of the official opposition was put forward-and I think I am summarizing it fairly-in a manner which was designed to enable us to discharge our duty as an opposition by scrutinizing that bill very closely and by seeking to compare it as far as was then possible with the accomplishments under the legislation which it was proposed to replace. We sought to expose what we believed to be the dangers involved in the bill, acknowledging at the same time benefits that were held out for the bill by those who introduced it. We sought in a fair and, I hope, constructive way to put the bill in such a setting that its value could be measured not in terms of the propaganda which had been built up around it, but in terms of its true merits. It was recognized that the bill, in the great majority of its provisions, was simply a re-enactment of existing provisions of the National Housing Act and it was on that basis, Mr. Chairman, and I want to lay emphasis on this, that we of the official opposition voted for the bill on second reading in order to approve what we considered to be the principle of the bill.
It was a little surprising that, despite that frank and, I hope, constructive way in which we approached the bill, and made our position known for the four days during which this

bill was debated on the motion lor second reading, hon. members opposite should shout in derision when we voted for the bill on second reading as though there was something inconsistent in the position which we had taken in voting for that bill on second reading. The official opposition was completely consistent with the position which it had taken on that bill.
Whatever may have been our feeling about the way in which hon. members opposite conducted themselves when the vote was being taken on second reading, let me emphasize, sir, that it did not affect our position in the committee. We went into that committee, and I am quite sure the chairman and other hon. members of that committee will readily acknowledge this, with a completely constructive attitude. There were no partisan considerations evident in that committee, so far as I am aware, at any time.
The desire shared by all members of the committee, regardless of party, was to report back to the house as effective a measure as could be devised within the powers given to the committee with respect to Bill No. 102. The bill has now come back to the house, which is now sitting in committee of the whole, with a number of amendments which I think, in all cases, can be described as technical amendments. In these amendments there has been no interference with the essence of the bill or with the nature of the new scheme that is proposed therein.
Let us then consider this bill in relation to the underlying purpose of it. The purpose indicated in the debate on second reading and before the committee can, I think, be fairly classified under two headings. Broadly speaking, the purpose of the bill is to maintain the rate of house construction in Canada which last year reached a round figure of
100,000	housing units and, if possible, to increase that figure. The second aspect of the purpose of the bill is to bring it within the reach of more Canadians to build houses for their own occupancy. Therefore the question which the committee must ask itself at this stage is whether, in the light of the knowledge that we now possess, the bill is likely to accomplish this purpose of a twofold nature.
One of the first questions put to Mr. Mansur-and I am dealing now with the latter aspect of the purpose of the bill, namely to bring it within the economic power of more Canadians to build their own houses-was what would be, in his estimation, the increase in the number of those within the band of effective economic demand as a result of the enactment of this bill with its provision for
National Housing Act
reducing the down payment and lengthening the amortization period of mortgages. I consider his answer must be regarded as setting the boundary within which we must approach the whole question. I think it is correct to say that Mr. Mansur's answer came as a surprise to many of us, in view of the elaborate build-up the bill has had. His answer was that the bill would enlarge existing effective economic demand in Canada for homes by between 5,000 and 15,000 persons.
That answer is to be measured as against further testimony of Mr. Mansur. He was asked what is today the effective economic demand for houses; in other words, what is the number of Canadians who want to build houses under the provisions of the National Housing Act and who have the means today to meet the existing terms as to down payment, income and so forth. His answer was 120,000.
In order to see this bill in its true perspective, Mr. Chairman, we must realize that what Mr. Mansur was saying was that if the bill is enacted you will increase the number of those who are today in the field, qualified under the act and able to purchase within its terms, by between 5,000 and 15,000. Let us take the middle figure for percentage purposes and let us say it is 10,000. That would represent an increase of 10,000 on top of an existing number of 120,000. Therefore it means an increase of something between 8 per cent and 8J per cent.
Accordingly, Mr. Chairman, when we look at the bill in the light of that important evidence, I think it becomes immediately apparent that the bill is not going to work all the wonders that some-and particularly some hon. members opposite in their speeches on second reading-held out for it. The pictures that were drawn of the new heaven and the new earth that was suddenly going to be created following the introduction of this bill and the new scheme of insured loans just does not stand against the evidence given by Mr. Mansur, who was a most capable and informed witness. I say that not in any hostile sense, Mr. Chairman; far from it. I say it with a view to asking this committee of the whole house to consider the bill in its true proportions, stripped of a lot of the propaganda that has been built up around it from government sources.
Let us now examine the means by which the existing band of economic demand is to be enlarged. The two methods put forward are, first of all, a reduction in the down payment and, second, the extension of the period for repayment of principal. I am not going to dwell on those aspects because

National Housing Act
I am sure the terms of the measure are well known to the committee. So far as the down payment is concerned, I think what has been said on the other side of the chamber in relation to the measure must be compared with what I have just recalled of the evidence of Mr. Mansur. As to the extension of the period of amortization from the present period of twenty years to a maximum period of thirty years, it is quite evident that the extension of the time will help to increase the number of economic purchasers, as will indeed the provision for reducing the down payment. But let us remember that extending the period of amortization increases, in the aggregate, the carrying charges. Let us also bear this point in mind because I think it is something that is of crucial importance, and I propose to say a little bit more about it when I come to the subject of interest. Simply because there is an extension of the period of amortization from the present twenty years to a maximum of thirty years, we cannot assume that there will necessarily be any reduction in the amount of the monthly payment. Let us also bear this further point in mind. With the reduction in the down payment, there will be a corresponding increase in the mortgage. Let us bear in mind also that if there is an increase in the rate of interest you are going to have a situation where, depending upon the amount, the monthly payments could actually increase under the present bill.
Having made those passing comments on the problem of bringing it within the power of more Canadians to qualify for home purchase under the act, let me turn now to what has become, in the light of the bill, a matter of the highest importance. When the Prime Minister made his announcement of this measure on October 1, he indicated that the purpose of the legislation, when introduced, would be to increase the supply of funds available for loan on mortgage security. He took account of the present prevailing high rate of home construction in Canada-running in 1953, as I have said, to a figure of about 100,000 units per year- and said that it would be necessary to find new sources of mortgage funds if the necessary financing to sustain a home construction program of that size were to be assured. The scheme of insured mortgages is the government's answer along with the enlargement of the group of approved lending institutions by the inclusion therein for the first time in Canada's history of the chartered banks and Quebec savings banks. No one in Canada, in fact, no one on this globe, can say with certainty what will be the result

of the enactment of this bill so far as sources of mortgage funds are concerned. We can simply take the evidence that has been put before us and weigh it, recognizing that it is based largely upon estimate and opinion.
The first result of the bill will be the abolition of the joint loans under the present part I of the National Housing Act. That will immediately result in the withdrawal from the supply of available mortgage funds of $60 million per annum which the government now is contributing through Central Mortgage and Housing Corporation to the total now available. Therefore we must be assured that under this measure there will be at least $60 million of new funds available, and we hope more, for there would be little use in tearing up the present National Housing Act and replacing it with another if there were not reasonable assurance of a substantial increase over that $60 million per annum from funds available from new sources.
The great bulk of mortgage funds available hitherto has come from the approved lending institutions consisting of the life, loan and trust companies in Canada. The evidence tendered on their behalf before the committee indicates that we may expect, subject to payment of attractive interest rates, a continuation also of approximately the same volume of mortgage funds as they have made available in record amounts in recent years. They do not foresee an increase in funds available. They consider that they are now lending to the limit on mortgage security. The question was asked: Will there be other new sources? Is there any indication that funds will perhaps be available from outside Canada which have not hitherto been available from foreign sources? Mr. Mansur was able to tell us that there had been some inquiries from foreign capital, which might indicate that there is some little possibility at any rate that funds may be attracted into this country for investment in mortgages under the provisions of this bill which may not have hitherto been available. As things stand now, those are only inquiries.
But it is quite clear, Mr. Chairman, that the house must depend principally upon the chartered banks for new sources of mortgage funds to replace first of all the $60 million of government money which will not now be contributed to the pool of mortgage funds, and to augment the total after that. I wish to be fair in my treatment of the evidence on this very important aspect of the bill. Let us recognize in the first place that insured loans, that is, mortgage loans

insured by a government agency, are something absolutely new in Canadian experience. The United States has had a form of insured mortgage loans under federal legislation, but for Canada this is something quite new, and only time will tell the extent to which the insurance feature of this scheme will have the effect of attracting sources of capital. Time will be needed to measure public reaction, the reaction of sources of capital, and the usefulness of the scheme in general.
Let us recognize, sir, that there are disagreeable tasks accompanying the enforcement of the mortgage security. Under the bill there is no claim open to any mortgagee holding an insured loan unless he delivers title and possession to Central Mortgage and Housing Corporation. That undoubtedly will require in all cases either foreclosure or acquisition of the title of the mortgagor by quit claim deed. Those tasks are not very attractive to any mortgagee, particularly if this is new in his experience. The prospect of moratorium legislation or debt adjustment legislation in the event of a recession in Canada looms very high, and the effect of moratorium legislation or debt adjustment legislation would be to put it beyond the power of any mortgagee holding an insured loan to deliver title and possession and thereby qualify himself to make a claim for payment under the insurance guarantee on the part of Central Mortgage and Housing Corporation.
I come directly now to the question of what we may expect from the chartered banks of Canada by way of funds for this new type of mortgage. This, I take it, is in the last analysis the crux of the bill. We are looking to the possibility of sustaining the rate of house construction in Canada of
100,000	units a year. We hope to increase that. The capacity of the Canadian house building industry was described to us as somewhere in the neighbourhood of 125,000 units. Very well. Let us then examine the evidence on this point. Mr. Atkinson, the president of the Canadian Bankers Association, was their spokesman. He brought a brief which he said had been submitted to all members of the association, which includes all the chartered banks of Canada, and he said he had no doubt that they subscribed to the brief and the views which he put before the committee.
These are the facts which are outstanding in the evidence of Mr. Atkinson in relation to the vital question of what the banks are likely to contribute to the pool of mortgage funds. First, the banks were not consulted
National Housing Act
before this legislation was announced. Second, the banks did not seek legislation of this kind nor the power to lend money on the security of real estate. Third, there is no enthusiasm on the part of the banks made evident in any degree for the scheme of the bill. Fourth, Mr. Atkinson did express genuine concern about the effect on the public relations of the banks if they are obliged, as an incident of realizing on these insured loans, to foreclose on the homes of people who undoubtedly in a large number of cases will be their own customers. He did not relish the effect on the banks' public relations of having to take that course.
Fifth, this is an entirely new field in the experience of Canadian bankers, and Mr. Atkinson was extremely cautious in many of the opinions he expressed because, as he said, he was not qualified to do so, having had no experience whatsoever in the field of mortgages on real estate. Mr. Graham Towers in his evidence recognized that this is, in the words of the expression used on page 269 of the proceedings and evidence of the committee, "a radical departure" from Canadian banking legislation and Canadian banking practice hitherto.
Sixth, let me say a word about the use that will be made of bank branches. The picture has been drawn for us that with
4,000	bank branches in Canada there will be 4,000 local mortgage lending offices.
Well, sir, that may be a very pretty picture, but it does not accord with the evidence given on behalf of the banks by Mr. Atkinson. While assuring us that the banks would do their best to make this scheme work, he did say that, while the local branches of the banks will receive these applications for loans, there is going to be very extensive supervision exercised by the banks from their regional offices, usually one in each province. If one looks at the evidence on page 301, it will be seen that Mr. Atkinson is saying that most of these mortgages, once up into the figures into which most of them are going to run, around $8,000, are going to be referred to the regional bank office for approval before the local bank manager will be able to give an answer to the applicant for the mortgage loan.
On the subject of co-operation, Mr. Chairman, Mr. Atkinson confirmed what everyone knew he could expect, namely that the banks would co-operate. The Canadian banks are such that, and I think this should be said to their credit, their co-operation in matters of public policy on any proper subject is assured. I said when I spoke on second reading that we could be assured of that co-operation. My

National Housing Act words to that effect are recorded on page 1329 of Hansard for January 21, 1954. I said, "I know we can assume that the banks will co-operate". Speaking later, the hon. member for Brantford, as recorded at page 1344 of Hansard for the same day, said:
The hon. member for Eglinton thought that the banks would not co-operate . . .
His statement, of course, had no basis whatever in fact. It was completely without foundation, and indeed was the very opposite of what I had said. Let there be no doubt about it. It was said on behalf of the banks of Canada that they would endeavour to make this scheme work. There can be no doubt about that.


Mr. Dupuis:: It is to their profit, undoubtedly.


Donald Methuen Fleming: The hon. member says it would be to their profit.	It must be
remembered that we are dealing with a measure here which depends for its success very largely upon making this new form of investment attractive to those who have capital. Unless we recognize that fact, we can finish up legislating to provide for a scheme of mortgages which would fail to attract that capital that is going to be necessary to make the scheme work. When one talks, as I shall have occasion to do in a moment, about some of the features of this scheme, let us be quite frank with one another and let us recognize that one does not say these things with a view to mollycoddling any particular holder of capital. One says these things with a view to recognizing the realities of the situation, and to show that unless these mortgages are sufficiently attractive to capital then the whole scheme under the act could prove abortive. We could finish up with a situation where we were worse off than we are under the present act.
Before I leave that subject let me stress this. The present act has produced substantial accomplishments. There is no hon. member in this house who can contend with any degree of success that the present act has broken down or has proven a failure. On the contrary, the evidence that was adduced before the committee went to show that the accomplishments of the present act have been substantial; it has worked well. The scheme of joint loans under part I of the present act has been successful. I, for one, Mr. Chairman, do not wish to see us reaching out for shadows and giving up the substance of the present act unless I can be very sure the new bill does offer substantial advantages over what I know to be the existing advantages of the present act.


The eighth point in the evidence tendered on behalf of the banks was that the funds of the banks are now fully employed. Indeed, Mr. Atkinson said, "We are now relatively fully loaned". I am not overlooking the fact that there will be, we trust, new sources or at least there will be new bank deposits in the future. But let us remember that the banks are going to have pressing claims upon them to continue to finance business and industry in the whole broad picture of national development. Whatever funds may be put into the hands of the banks by way of new savings of the Canadian people are not going to be available in their entirety for loans on mortgage securities; let no one believe that.
Let me make this final comment upon the evidence given on behalf of the banks. How much money are the banks likely to put into this pool of mortgage funds in Canada? That is the principal question. The answer, and the only answer I think that can be accurately given to that question in the light of the evidence tendered before the committee, is that the banks are going to be very cautious in their approach. Their participation, certainly in the early stages of this scheme, is going to be limited. Mr. Towers, in his evidence, made it quite clear that, even before it became apparent to him that new sources of mortgage money would be required to sustain the existing program or to enlarge it, he felt that the time had come to remove the strict prohibition upon bank loans on mortgages and real estate. He said that in his opinion the banks would subscribe a fairly modest percentage of the funds available in their hands. At another point he said it would not amount to 25 per cent of the funds in the hands of the banks available for lending. When I pressed him, he said he had just picked that figure out of the air, and was not prepared to say what that figure would be. It was purely a negative statement he had made with regard to that percentage.
I come now to one aspect of this matter on which I think it can be fairly said the Minister of Public Works dwelt with some emphasis in his statements, both during the resolution stage and in his two speeches on second reading of the bill. It was the answer he sought to give to the problem of liquidity. Of course, we realize that the twin problems of security and liquidity facing the banks are different in their nature. The answer to the problem of security, in the view of the government, is the insurance. But let us look at this problem of liquidity. It is a different thing altogether to say that the bank's loan on real estate is secure, because at the same time you must recognize that the bank is

stepping out of a field in which credit is extended for periods up to a maximum of nine months and into a field where the period of the loan extends to a maximum of 30 years. In the face of that situation, even recognizing that the banks' loans on mortgages are quite secure if you will wait for redemption over 30 years, how can we maintain the necessary liquidity that is the essence of the Canadian banking system?
The answer put forward by the government was the provision to be made for financing on the part of the Bank of Canada. And so the committee awaited with no little interest the evidence of Mr. Graham Towers in this respect. I think the evidence of Mr. Towers in this respect was a severe surprise to many members of the committee. Mr. Towers made it abundantly clear at the outset that the Bank of Canada will not buy and will not discount a single insured mortgage. In the second place, the Bank of Canada, on certain terms, will be authorized and will be prepared, on terms acceptable to it, to accept these insured mortgages as collateral. But he said these insured mortgages would not be the first security resorted to by the chartered banks in seeking accommodation on the part of the Bank of Canada.
In the third place, the Bank of Canada reserves the right to refuse to extend that accommodation if it is not satisfied. And while under present conditions one cannot imagine the Bank of Canada refusing, nevertheless who is to say that the circumstances might not drastically change?
And in the fourth place, Mr. Chairman,- and this no doubt was the greatest surprise of all-Mr. Graham Towers said emphatically that the period for which accommodation would be extended to the banks would not be anything like the period of the loans, 30 years, would not be for a year, would not be, if you please, more than a matter of several months, and finally he got down to saying a matter of weeks.
Well, in the light of that evidence, when Mr. Atkinson came to the committee as a witness the following day, naturally we asked him about the use the banks would make of that provision for accommodation, and what value they attached to it. If you will look at page 270 of the evidence, Mr. Chairman, you will see that Mr. Towers sums up the value of this provision for accommodation on the part of the Bank of Canada in these words. My question is at the bottom of page 270, and reads as follows:
Q. Have you formed any estimate or are you prepared to express any opinion as to the extent to which you think the banks may be expected, over a period of one year, or over a few years, to use
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their portfolios of insured mortgage loans as collateral with the Bank of Canada?-A. Oh, I would say very little.
Then, further on, at page 302 where Mr. Atkinson replied to a previous question as to this same matter and said that this provision for accommodation by the Bank of Canada would have very little bearing on the banks' attitude toward taking insured loans, this extract from the evidence follows:
Q. You say it would have no bearing. What value would it have for the banks to be able to get this limited accommodation at the Bank of Canada on these insured mortgages as collateral?-A. From a practical point of view, none.
Q. No value?-A. None.


The Chairman:: Order. I am extremely
sorry to interrupt the hon. member, but I am obliged to advise him that his time has expired.


Mr. Winters:: Go ahead.


William Alfred Robinson: Has the hon. member unanimous consent to continue?


Some hon. Members:: Yes.


Donald Methuen Fleming: Thank you, Mr. Chairman, and I thank the committee for its courtesy. I am sure, Mr. Chairman, that what I am saying now by way of review will perhaps help to shorten the debate later on; in fact, I can say to the committee that that will be the result.
Now, sir, I leave that subject of liquidity with the observation that in the view of those who are principally concerned, namely, the banks, they attach no value whatever to the right to obtain accommodation from the Bank of Canada on their portfolio of insured mortgage loans for short periods.
I turn now, sir, to a wider question. Naturally this next problem is one that must give us concern. It certainly gave the government concern following the outbreak of hostilities in Korea. I refer to the possibility of inflation. It is the question of pressures resulting from an enlarged demand for what might prove to be a limited supply of houses and materials.
The government has said that the reason it stepped in in 1950 and 1951 to curtail house construction in Canada was that they felt it necessary to do so because of the threat of inflation. Well, sir, this must be a question to engage our consideration. Today the price of houses is high. It is at an all-time height in Canada. It has levelled off in the past year. It might be said that the price of houses and the cost of construction have been stabilized. Nevertheless, Mr. Chairman, I do not think anyone will say that, even in the

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face of that levelling out, we can just accept without concern the high cost of housing in Canada today.
Mr. Mansur has indicated that the existing demand, namely, 120,000 units-and that he said is the effective economic demand-is more than a whole year's output of housing in Canada according to present rates.


Mr. Philpoii:: Will the hon. member permit a question?


Donald Methuen Fleming: Yes.


Elmore Philpott: At page 92 of the evidence Mr. Mansur very clearly points out that the effective demand is now 125,000 to 130,000. Why does the hon. member persist in using a figure that is 10,000 lower than that which Mr. Mansur gave?


Donald Methuen Fleming: Well, it is not a figure of
10.000	lower. The figure of 120,000 was used elsewhere. It will be remembered that Mr. Mansur was asked this question in several places. Let me draw my hon. friend's attention to the statement he has just read. Mr. Mansur was asked about the rate at which the market would absorb housing coming on the market at the present time. The answer was:
At the present time new houses, both tor home ownership and rental, are coming in at the rate of about 105,000 units a year. I believe that the effective demand is sufficient to look after new production at the rate of 125,000 to 130,000 units a year.
My hon. friend, was a member of the committee and will recall that when we came to the question of capacity of the house construction industry in Canada, it was put at
125.000	and questions were asked of Mr. Mansur, even up to the last day of testimony, about the ability of the present demand to absorb 125,000 to 130,000 units a year, namely, the full capacity, without appreciable inflation. I think my hon. friend will find that the same figure was not used in all cases. I am not going to take the time now to refer to the figures. As a matter of fact, I am quite prepared, for the purpose of the point I am now making, to take the figure of 125,000 as the existing effective economic demand, but not the housing need. Here we are thinking simply in terms of those who have the means to buy, to qualify under the existing act. I am dealing with the point whether, in the face of the existing demand, if you bring on to the mortgage market another
5.000	to 15,000 persons, heads of families who can qualify under the new provisions, you may expect an upward pressure on existing prices as the result of that enlargement of demand.

I wish here to say, Mr. Chairman, that opinions on this point on the part of the witnesses were not unanimous. Representatives of the Canadian Home Builders' Association and the Canadian Construction Association said that the Canadian market could absorb another 25,000 housing units a year, namely, a total of 125,000, without appreciable inflation. On the other hand, there were witnesses such as Mr. Bryden, president of the Dominion Mortgage and Investments Association, who felt the inevitable effect of enlarging the present effective economic demand would be to exert upward pressures upon the cost of construction in Canada.
There remains the problem of the lack of serviced land. The Minister of Public Works has recognized this quite frankly in several speeches he has made in the house. The lack of serviced land is still the principal bottleneck limiting house construction in Canada. Mr. Mansur referred to this on page 87 of the evidence. This shortage exists in its most acute form in the places where the need is greatest, namely, in areas contiguous to the large metropolitan centres where the housing need is felt most keenly today. This bill contains no new provision in relation to this subject; it simply re-enacts the present provisions.
I leave this subject with the observation which I have made not a few times in this house, that we are not going to grapple effectively with the problem of the lack of serviced land until something really concrete is done to assist the municipalities in this country who are compelled, in the face of rising costs, to limp along with the same sources of revenue which they were given in 1867.
The problem of rural housing was of concern to the committee and I assure you that that concern was not confined to hon. members representing rural ridings. The fact of the matter is that only insignificant use has been made of the provisions of the housing act to assist rural housing. At page 59 of the proceedings Mr. Mansur is reported as having said:
The result Is that the loans on the farms have been much more in the field of maintenance and improvement than in the new construction field. We have made, I think, only about eight farm loans in the last six or seven years.
And again:
There just does not seem to be any demand for loans for new farm houses. The actual number, sir, is nineteen farm loans.
So far as farm loans are concerned, the bill has no special provisions. The provisions in relation to loans on farm homes are the same as those for city homes. The problem

remains one of willingness on the part of the lending institutions to lend money for the construction of farm homes and, on the other hand, the existence of an effective economic demand.
With regard to slum clearance, a very important question, there is no new treatment under this bill except in one particular. The bill re-enacts the provisions of the existing act in precisely the same form with one change. Instead of referring to the kind of conditions that the legislation proposes to grapple with after a fashion as slums, substandard and dilapidated housing conditions, the word "slum" is now omitted and we find that the statutory description is confined to dilapidated or substandard housing conditions. Whatever may be the sufficiency of the reason for eliminating the word, let us realize that simply by taking the word "slum" out of the National Housing Act we are not doing one thing to grapple with the problem of slum clearance.
This problem of slum clearance must receive more attention in all parts of Canada than it has hitherto. Something very frank and wholesome was said on this subject on behalf of the Federation of Mayors and Municipalities in the evidence that was submitted to the committee, in which we find this statement:
There is considerable public apathy with respect to the matter and active opposition to the idea of public housing in some quarters.
It is perhaps because of these considerations that' the federal government itself appears to be somewhat reticent in encouraging the use of those provisions in the National Housing Act whereby a large-scale program of slum clearance and low rental housing could be undertaken.
There is a lot of public apathy in regard to this question. Indeed the matter has been submitted to local electors in some areas and in some cases they have rejected proposals for slum clearance. There are many in this house and elsewhere who make a habit of throwing brickbats at the city of Toronto. As an unrepentant citizen of the city of Toronto I wish to say that I am proud that my city has taken the lead in this respect and that the Regent Park project has set a standard, an example which, if followed in other parts of Canada where similar conditions exist, would create beneficial results.
I had the privilege of being a member of the civic body in Toronto, the city planning board, which in 1943 made the first concrete recommendation for the establishment in the area bounded by Parliament, Dundas, River and Gerrard streets in Toronto of a housing project to replace existing slums. I think that enterprise has been a credit to the city of Toronto and it sets an example which I commend to other municipalities.
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Hector Dupuis: I assure you that we cannot say the same thing for Montreal.


Donald Methuen Fleming: My hon. friend will have to speak for his own city. I am simply commenting on what I think has been a salutary example. May I say also that this question was first submitted to the electors of the city of Toronto who approved of the proposal by a substantial majority.


Hector Dupuis: A good thing.


Donald Methuen Fleming: Let me say in passing that a very effective presentation was made to the committee on behalf of the Co-operative Union of Canada. The bill contains no change in the provisions of the existing act with respect to co-operative housing. The minister did say why in his opinion the request of the Co-operative Union should not be granted. Their request was that they should be accorded the same terms as are now available to limited dividend housing corporations in the matter of interest rates and the period of amortization. I think members of the committee felt that something should be done to encourage co-operative housing. Certainly the statement made to the committee in support of co-operative housing was an impressive one.
Finally in this review of matters that were considered I should like to report to the committee of the whole, as the evidence of the committee on this point has not yet been printed, that when the minister was asked when the government proposes to proclaim the provisions of part IV of the act in relation to home improvement and home extension loans he indicated that the government is not prepared to do so at the present time but would review the situation in six months' time to see to what extent funds made available for the assistance of housing were fully employed. I think we shall all hope that it will be possible for the government to proclaim the provisions of part IV of the housing act soon. Parliament does not like legislating, I am sure, provisions that are simply permitted to remain a nullity.
I am trying to hurry to a conclusion, Mr. Chairman. This bill, if recognized for what it is, is to a substantial degree simply enabling legislation. It proposes to confer the widest powers on the governor in council to pass regulations, regulations which will be essentially legislative in nature. This should concern us. We are not legislating fully in passing this measure; to a considerable degree we are legislating in the dark. We are legislating in terms of what in many important respects is simply a skeleton measure. We sought information as to what


Robert Henry Winters: Mr. Chairman, perhaps at this point I should rise on a question of privilege. I know my hon. friend will wish to be corrected. I made that matter perfectly clear in my speech on second reading of the bill. I made it clear that I was not taking credit for the government nor taking credit for the legislation. I said housing was an effort on the part of all Canadians concerned therewith. I must say at the same time that the minute there is a downturn, then the responsibility is placed on the shoulders of the government and blame is attributed to the legislation.


Donald Methuen Fleming: I am happy to have the statement made by the minister this afternoon. It makes the matter perfectly clear as far as I am concerned, and I shall say no more on that score. I simply make this clear because the impression I formed, as I said, when the minister was speaking, was that of

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too much "we". As he realizes, I am referring to what he said on page 1572 of Hansard. In view of what the minister has now said, I will say no more about it.
This is my final word, Mr. Chairman. We wish to see houses built. We will give every opportunity to any measure that holds out any hope of providing more houses for Canadians, by proper schemes and sensible undertakings. In keeping with the careful scrutiny that we have given to this measure, we will continue to apply careful and, I hope, co-operative and constructive scrutiny to the administration which the bill will receive at the hands of the government.


Robert Henry Winters: Mr. Chairman, may I just make one interjection before the next hon. member who speaks takes the floor? I wish to refer to the page of Hansard of which the hon. member for Eglinton was good enough to remind me, namely page 1572. In reply to a question by the hon. member for Eglinton in which he said:
I think the minister will agree that not all were under the act.
I said as follows:
X readily agree with that, Mr. Speaker, and I have said so. This is an effort by all Canadians who are concerned with the house building business, encouraged, aided and abetted by the government under the terms of the National Housing Act.


Donald Methuen Fleming: That was a big rider you added.


Mr. Stewart (Winnipeg North):: 
Mr. Enfield:: Would the hon. member
answer a question? Is the figure of 50 per cent not based on the fact that they will apply for a maximum loan on a $10,000 house?

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Alistair McLeod Stewart: It is reasonable to assume that they would have to apply for maximum loans because their income is so small they could do nothing else. They have little savings.


Frank A. Enfield: But do you not think you should qualify that statement because they can get smaller loans if they make their down payment larger?


Alistair McLeod Stewart: My hon. friend says that they can get smaller loans. Surely that is very academic in view of the cost of living today and the fact that the normal family must find it extremely difficult to exist on $3,000, let alone save money to increase their down payment. The minister said in the house that whereas stimulation and assistance for housing can come from the federal government, in the final analysis it is the municipality which decides the amount of housing to be built. There is a regrettable element of buck-passing in this matter because today municipalities in Canada are finding themselves increasingly squeezed owing to the financial conditions under which they operate. Into municipalities around the area where I live are coming new families with children who are occupying new homes. The municipalities have got to provide services, sewer, water and police services, perhaps even hospital services, roads, and of course educational facilities. I find that municipalities are faced with the problem of having to decide to build either roads or schools. They cannot afford both even if they can afford one, and such is not always the case.
Are these municipalities going to look with assurance on still further additions to housing in their areas when they find that their financial means are such that they cannot service those already there? I do not think so, not unless the government changes its policy and decides to come to the rescue of municipalities by making long term low interest loans for the purpose of providing the ordinary amenities of life such as education and other necessities. If that is not done the response of the municipalities will of necessity be a negative one.
I assume that one of the purposes of this legislation is to make the rate for lending more attractive. Fears have been continually expressed that the supply of funds is drying up. We were told that the insurance companies already have 30 per cent of their assets in mortgages. At page 1314 of Hansard of January 21 the minister said:
... it has become increasingly clear that at some stage they would have to reduce their rate of new mortgage lending from its recent level.

Later he said that a decline in mortgage money from this source must be anticipated. There is going to be a decline, and what is the government's answer, in part, under this legislation? It is to make that decline even worse by taking away the quarter share of the guaranteed loan. That is not an answer for which I have any appreciation. In the committee Mr. Mansur said that financing in 1953 would depend on the continued willingness of the life companies to increase then-relative holdings of mortgages. The increase last year made possible the expenditure of about $95 million. The life companies were willing, Barkis was willing last year, but what of this year and what of the years to come? If the companies decided not to increase their ratio, if indeed the companies decided to decrease their ratio of mortgages, then from what source would we get the additional funds?
Mr. Mansur said there is no substantial source of private mortgage funds available under present arrangements to provide an offset. Yet, what is the government's solution? It is to cut out their quarter, to cut out their payment of $60 million spent on acquiring homes. Mr. Mansur said again under the new arrangement the quarter share provided under joint loans by Central Mortgage will no longer be available. That is not an answer, as I said, that I understand or appreciate. Mr. Bryden said in the committee that the number of units financed will decrease by the abandonment of joint lending. Under this part of its policy the government is going to decrease the number of units; the government's answer is to reduce the money available from government sources for home building.
Obviously then it has to find some other source of money. As the minister said, it is quite clear if there is to be an increase in home building additional funds must come from somewhere other than the present source of institutional mortgage funds. Then, someone in the government had an idea, a revolutionary idea. He looked at the banks' reserves; he looked at the banks' liquid position and said: Boy, here we have got it. The banks are going to supply the money. We will pass legislation and get out of the business; leave it to free enterprise and everybody will be happy. We will put the banks in the real estate field, and we will revolutionize everything in Canada; we will get started on free enterprise home building.
The announcement about the banks being allowed to advance money on real estate was made in October by the Prime Minister. One can only assume that in Montreal the topless towers of Ilium quivered and shook. I suggested to Mr. Atkinson that the banks were

rocked to their foundations by this drastic change in policy. His answer was that he would not agree that they were rocked to their foundations, but he was surprised. For a usually conservative banker to admit surprise is, I would say, equivalent to a lesser person saying he was thoroughly shaken. However, the government sugared the pill.
On page 1316 of Hansard for January 21, 1954, the minister said:
In the matter of liquidity, as I mentioned earlier, it is proposed to make insured mortgages eligible security for Bank of Canada advances to banks in the same way as government bonds.
What did these ungrateful bankers do? They spat the pill out. They did not like it. Mr. Atkinson said he was confident it was not the intention that the central bank should carry for an indefinite period these mortgages as security for loans to banks. When he was asked, as the member for Eglinton pointed out, about their value as collateral, Mr. Atkinson said that, from a practical point of view, there was none. So much for the government's policy.
Then, what were the reasons for asking the banks to go into this field? I think the minister told us when he spoke of the widespread branch system, and of the 4,000 branches stretching from coast to coast. Perhaps the government envisages queues of potential borrowers lining up before the banks to get money to build homes. The evidence given by Mr. Atkinson must have poured cold water on the government's idea, if nothing else, for Mr. Atkinson informed us that very few of his branch managers were entitled to lend even as much as $10,000 without reference to a regional supervisor.
Then Mr. Atkinson said also, dealing with the type of loan, that he thought the banks would not attempt to make loans which they felt were likely to go into default. I am convinced that is true. The only money the banks are going to lend is on such gilt-edged loans that there will be very little risk. I cannot conceive, under this legislation, a worker in my constituency being able to go to the Bank of Montreal and say, "I want $8,000 for a house", and getting it. I do not think it is practical under our present banking system.
What was the banks' answer in case there should be a default? Let the government take the "rap"; that was all there was to it. Mr. Atkinson agreed the government should stay out of business. Mr. Atkinson agreed the banks should be allowed to make profits without government interference. But when it came to losses, Mr. Atkinson agreed that the representatives of the people of Canada should stand the losses for the banks, and
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leave the banks to take the gravy. It is not a system to which the C.C.F. adheres, but of course it is the regular free enterprise system which we happen to oppose.
Now, one of the reasons for going to the banks was their liquidity. I suggested again to Mr. Atkinson that the banks' position was very good; that the banks were drowning in liquidity, but naturally he did not quite see eye to eye with me on that. Mr. Towers said the banks could make up the deficiency for the government's quarter share in the joint loans. Mr. Towers was quite certain of that He thought it could come, in part, from savings deposits. There is about half a billion in savings deposits in Canada today, not all available for loan; let us admit that. Mr. Towers was pressed as to what percentage might be available, and thought 50 per cent was most immodest and 25 per cent perhaps a little less immodest. We could not pin him down to any specific figure. I suggested 10 per cent of savings deposits. Mr. Atkinson in his evidence thought 10 per cent was still high, and that the banks could not possibly reach that amount for some considerable time.
Mr. Towers thought that a moderate percentage of savings deposits would not impair the liquidity of the banks. Again, we asked for a definition of "moderate", but there was none. We asked for a definition of "modest", but there was none. I do not have it in me to blame Mr. Towers, although I should like to have some sort of a definition. Mr. Towers agreed that at least $60 million a year advanced by the banks would not be overly much. Mr. Atkinson subscribed to that idea, and thought $60 million was well within the capabilities of the banks. By a happy coincidence, I suggested that the sum of 6 per cent of the savings deposits was what the banks would perhaps feel inclined to lend over a long period. This 6 per cent would be about $300 million and if that was put up over a period of, say, five years, it would be about $60 million a year. By another odd coincidence, $300 million was the hypothetical figure which Mr. Towers pulled out of the air when he was discussing this matter. My only point in stressing this is to suggest the banks are going, in their own mind, to fix a percentage of the savings deposits that they will be prepared to lend in total. When they reach that percentage, they are not going to go any farther. In other words, the borrowing from the banks is not going to be indefinitely recurring, except in so far as there is a revolving amortization fund and in so far as there are increasing savings deposits.
There again, there is a disagreement amongst the experts, and who am I to enter


Mr. Johnston (Bow River):: I should like to add my voice to this debate at this time. At the outset, I want to say that in my experience in this house of over 19 years this committee was one of the most effective I have ever sat on. I say that because the evidence given by the witnesses on all occasions was straightforward. They gave the very best evidence they could. In most instances they did not hesitate to add their own opinions, and because of that it was a very successful committee. They had a difficult problem to deal with, a problem which most
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of us in this committee and most of the people in the country agree is most disturbing.
Bill No. 102 endeavours to deal with the national housing problem. The government hope that through the medium of this bill they will be able to stimulate house building in the country. I said on another occasion in this house that I did not think the bill would do what the government expect it will do, and I am still of the same opinion. One of the main things upon which the government is basing its hopes is the fact that by bringing the chartered banks into this field a greater amount of money will flow into the construction of houses. I shall speak on that a little later on. The Quebec savings banks are being brought in.
It is possible that with the addition of the chartered banks and the Quebec savings banks some additional money will be found.
I suggest to the government at this time that they go one step further and permit the provincial government treasury branches of Alberta to participate as well, on the same conditions. Whether the inclusion of the banks will accomplish what the government hopes remains to be seen. There are some changes in Bill 102 which will have serious effects. One which I would just note for the moment is that this bill will assist people in the income brackets of over $3,000 a year, but I am positive it is not going to increase home ownership by people in the income brackets of less than $3,000 a year. As I said when talking on this bill on another occasion, it is the people in the low income brackets we should concern ourselves with more than those in the higher income brackets. Those in the higher income brackets could participate under the old set-up. I do not think there will be any improvement in that respect under the new bill.
Then there is the provision for a lower down payment, reducing it from $2,000 to $1,400 on a $10,000 house where the lending value is $8,000. That is going to be of some assistance and will permit a few more people to participate in this plan than was the case heretofore. Then there is the longer amortization period of 25 to 30 years. That will reduce the monthly payments but it will increase the indebtedness, and in the long run the ordinary person is going to pay for his house almost double what he would pay if he had the cash to build it himself.
Then there is the possibility-and I use the word "possibility" advisedly-of better inspection. That to my mind is probably the most important point in building a house, outside of financing. It caused probably more

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trouble in the past than any other single factor. Mr. Mansur was quite frank in his evidence before the committee when he said he was not entirely satisfied with the inspections in the past, but hoped the new bill would bring about some improvement. I do not hesitate to say at this point that I think perhaps the new bill will bring about some improvement in this regard.
Then there will be higher interest rates for the loan companies. That is good for the loan companies, but it is not so good for the people in the lower income brackets. There is a better guarantee for the loan companies, which is charged up to the borrower and for which he gets nothing in return except the privilege of getting a loan.
This brings us to the over-all question of whether this bill will result in stimulating house building. As I said a moment ago, it is hoped that the banks will come to the government's assistance. I should like to refer at this point to the evidence appearing on page 291 of the proceedings of the committee. Some of the sections to which I intend to refer may have been referred to by others, but I think to refer to them again would only serve to bring out the point I wish to bring out. At page 291 of the evidence Mr. Atkinson, vice-president and general manager of the Royal Bank of Canada, who appeared for the mortgage companies and banks concerned, had this to say:
When it was announced by the Prime Minister on October 1 last and simultaneously advised to the banks on the same day by the Minister of Finance, we had not any prior knowledge that such a move was being considered by the government. As I have intimated, such a move would not, I think, have been sought by the banks, particularly at the present time, when the chartered banks in Canada are relatively fully loaned-certainly in our own case it would not have been sought.
The point I want to make there is that according to Mr. Atkinson the banks are relatively fully loaned. Under the present set-up, therefore, the banks will not be in position to make money available under this plan. I should like to refer to what the minister said on December 16 in dealing with this very point, and I quote from page 998 of Hansard:
Later in this session my colleague, the Minister of Finance (Mr. Abbott), will place the Bank Act and the Bank of Canada Act before the house for revision, when it is proposed to make insured mortgages eligible security for Bank of Canada advances to chartered banks, as is the present position in respect to government bonds.
I do not think I am wrong in assuming that what the Minister of Public Works had in mind then was that more money was going to be made available to the banks, in addition to what they already had, in order

to assist in this house building program. If I am not right I hope he will correct me at this moment. That was the interpretation I placed upon it when I was speaking to this measure some time ago. Of course that is not going to be the case. If the minister expects that to be the result he is doomed to disappointment. Mr. Graham Towers was questioned on this very point by the hon. member for Acadia, and I quote from page 246 of the evidence as follows:
Q. Could you explain just what the provision will be by which additional cash reserves will be made available by the Bank of Canada to chartered banks? Will it be in the form of the purchase of mortgage-or bans against?-A. It won't be in either form, Mr. Quelch. The Bank of Canada, in open market operations in government securities, influences the amount of cash which the banks have. So if we add somewhat to our holdings of securities, as we have in recent times, that puts up bank cash.
The point is that the banks cannot use these insured mortgages to get long-term credits or to increase their cash reserves from the Bank of Canada, and further it will not result in what the minister hopes, because, as Mr. Graham Towers pointed out, if the banks needed money they could use government securities, such as government bonds, and get all the money they needed. But he says, and I have put it on the record already, that the banks are fully loaned, so I am afraid the hopes of the minister are doomed to disappointment. In order to make doubly sure that I am right in this respect I should like to refer to page 270 of the evidence. This has been referred to already, but I refer to it again. Here the hon. member for Eglinton asked this question:
Q. My next question is this: Have you formed any estimate or are you prepared to express any opinion as to the extent to which you think the banks may be expected, over a period of one year, or over a few years, to use their portfolios of insured mortgage loans as collateral with the Bank of Canada?-A. Oh, I would say very little.
Q. Within that small area, is it possible?-A. In fact, perhaps I ought to go further than that and say that I would not expect them to use them at all as security unless they thought it was desirable to do so for psychological reasons.
It is not because they need money but for psychological reasons. I agree with that statement.
Otherwise if they had occasion to borrow funds they would probably put up government bonds because they have plenty of them, and it is a very convenient method of doing it.
Therefore when we are told that under this bill the insured mortgages will be of assistance in financing the construction of homes that is not the case, and the evidence is very clear in that respect.


Robert Henry Winters: Is the hon. member familiar with section 11 of the bill now before the committee?


Charles Edward Johnston: Is the minister referring to the section which deals with advances?


Robert Henry Winters: Yes.


Charles Edward Johnston: Yes, I am familiar with that; but the trouble is that while the chartered banks might be able to use these insured mortgages for advances from the Bank of Canada that is only for a matter of two or three weeks. I believe the evidence is clear on that point also.


Robert Henry Winters: Central Mortgage has the right to buy or lend.


Charles Edward Johnston: I understand the Bank of Canada is not going to buy the insured mortgages. They will buy bonds and they can do that; and if the chartered banks required the money they have sufficient bonds now which they could sell to the Bank of Canada in order to raise their cash reserves to the degree desired. They do not require insured mortgages for that purpose. The only result of the insured mortgage is to give the lender a greater degree of protection than the 25-75 per cent arrangement which was in force before. Now they have 98 per cent. I believe that statement, that the banks will not and do not intend to use the insured mortgages to increase their cash reserves and thereby make more money available for housing, still stands.
We all know that we really require houses in this country, and the extent of this problem has been referred to on other occasions. As I said before Dr. Forsey on behalf of the C.C.L. gave the estimate that the backlog amounted to 300,000 houses and possibly ran as high as 500,000 houses. Mr. Mansur himself suggested that the backlog in his judgment would run to between 75,000 and 200,000.
If we intend or hope that legislation under Bill No. 102 will maintain the pace which was set last year, at around 105,000 starts, then how can we ever hope to overcome that backlog so the people who really need the houses will get them? It will not be possible under this legislation. I think we will be fortunate if this legislation succeeds in maintaining the present pace, without increasing it. I am certain the government intends that this housing scheme will to a large extent assist in meeting the major unemployment problem which faces us at this moment.
I suggest that anyone who takes advantage of this housing legislation will go into debt
National Housing Act
for 25 or 30 years. Everyone who has already taken advantage of it has gone into debt for a period of 20 or 25 years. That means that unless a policy can be implemented whereby the present unemployment situation will be taken care of, the lending institutions will be faced with the problem of evicting many families. Why? Because they cannot earn sufficient money to pay the monthly charges on the loans they have acquired.
Our biggest concern is not for the people of this country who can afford to build their own houses at the present time, nor are we concerned with those who can afford to pay the high down payments required under this present legislation. Our concern is and should be with those people who cannot afford to come under the housing act, and who have not sufficient income to pay $1,400 as a down payment and then continue to meet high monthly payments over a period of 25 or 30 years.
Dr. Forsey, speaking before the committee, referred to the fact that in June, 1951, about 58 per cent of wage and salary earners were obtaining less than $2,500 per year. This is roughly equivalent today to about $3,000. I would emphasize that point, namely that 58 per cent of our people are in a financial position where they do not obtain more than $3,000 a year. That means that this bill will be of assistance to only 50 per cent of our people.
Speaking in the house not so long ago the minister, referring to this fact, said in effect that not more than one-third of the Canadian people could afford to own or rent homes of their own. I have used that quotation before, and I use it again at this time to demonstrate how closely the remarks of the minister were to the facts which were produced by Dr. Forsey when he represented the C.C.L. before the committee. The words in fact are almost the same, and I believe it is quite safe to say that one-half of our population will not be able to take advantage of the provisions of this bill. I do not think that is good enough.
Let us look at the cost of some of these houses. If we turn to the evidence presented before the committee we find something about this question. These remarks were referred to a moment ago, but I am going to put them on the record again because they fit in with what I am saying. In their

Private Bills
submissions the C.C.L. gave this illustration, and I am reading from the bottom of page 336 of the evidence:
Then there Is the question ot the down payment and the period of amortization and the mortgage insurance, and so of the total cost. For a $10,000 house, under the present act, this works out as follows:
Interest: 51 per cent, compounded semiannually.
Amortization: 20 years.
Down payment: 20 per cent.
Monthly payment on $8,000 mortgage: $53.66. Total monthly payments: $53.66 x 12 x 20: $12,878.40
Down payment:	 2,000.00
Total:		 $14,878.40
Now let us look at the position under the new bill.


The Deputy Chairman:: Order. I am sorry to interrupt the hon. member but it is five o'clock, and the house must proceed to consideration of private and public bills.



PRIVATE BILLS


Mr. Deputy Speaker:: There are a number of divorce bills on the order paper, namely Bills Nos. 314 to 324 and Bills Nos. 327 to 337. Is it agreed that these bills be taken in one motion?


Some hon. Members:: Agreed.


Mr. John Hunter (Parkdale) moved: that the following bills be read the second time:
Bill No. 314, for the relief of John Wright Sinclair.-Mr. Hunter.
Bill No. 315, for the relief of Florence Jean Moffatt Tucker Johnston.-Mr. Hunter.
Bill No. 316, for the relief of Margaret Hilda Popper Parker.-Mr. Hunter.
Bill No. 317, for the relief of Cecil Alfred Ellis.-Mr. Hunter.
Bill No. 318, for the relief of Robert Jack-son.-Mr. Hunter.
Bill No. 319, for the relief of Madeleine Marguerite Faure Eden.-Mr. Hunter.
Bill No. 320, for the relief of William James Cutler McKillop.-Mr. Hunter.
Bill No. 321, for the relief of Agnes Mary Kelly Winters.-Mr. Hunter.
Bill No. 322, for the relief of Florence Elizabeth Hough Topp.-Mr. Hunter.
Bill No. 323, for the relief of Roch Cote.- Mr. Hunter.
Bill No. 324, for the relief of Domina Emerius Lefebvre.-Mr. Hunter.
Bill No. 327, for the relief of Lucien L'Esperance, junior.-Mr. Hunter.
Bill No. 328, for the relief of Charles Edouard Dubois.-Mr. Hunter.

Bill No. 329, for the relief of Donald Clarke Allen.-Mr. Hunter.
Bill No. 330, for the relief of Jean Albert Raymond Rasson Desloover.-Mr. Hunter.
Bill No. 331, for the relief of Hazel Helena King Featherston.-Mr. Hunter.
Bill No. 332, for the relief of Jessie Ruby Dawe Greenslade.-Mr. Hunter.
Bill No. 333, for the relief of Romuald Fregeau.-Mr. Hunter.
Bill No. 334, for the relief of Jean Nelson Williams Blampied.-Mr. Hunter.
Bill No. 335, for the relief of Horace Ger-vais.-Mr. Hunter.
Bill No. 336, for the relief of Margaret Ann Eddie Casselman.-Mr. Hunter.
Bill No. 337, for the relief of Marcel Prud'homme.-Mr. Hunter.
Motion agreed to and bills read the second time.



NIAGARA GAS TRANSMISSION LIMITED

John William Gordon Hunter: the second reading of Bill No. 325, to authorize Niagara Gas Transmission Limited to construct, own and operate an extra-provincial pipe line.


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


Mr. Green:: May we have a statement from the sponsor?


John William Gordon Hunter: Mr. Speaker, this is an application by Niagara Gas Transmission Limited, an Ontario company, for authorization to construct, own and operate an extraprovincial pipe line as defined in the Pipe Lines Act, chapter 211 of the Revised Statutes of Canada, 1952, and further, that the general Pipe Lines Act will apply to this company. The issued share capital of this company is owned 65 per cent by the Consumers' Gas Company of Toronto and 35 per cent by the Tennessee Gas Transmission Company. Any further issue of capital stock will be in the same ratio, and the balance of funds required will be obtained through the sale of bonds and/or debentures.
The fact is that the Consumers' Gas Company of Toronto is a limited dividend company, incorporated by a special act of the provincial legislature. After ordinary business expenses, allowance for the plant and buildings renewal fund and directors' fees, any surplus remaining goes into a special surplus account which, when it becomes the equivalent of five cents per thousand cubic feet of the amount of gas sold in the previous year, is used to reduce the price of gas.

This special surplus was wiped out in 1933 following a reduction in the price of gas the previous year.
The company has had two other reserves, one established under the act of 1887 of $1 million, and the other arising from the premium received from shareholders on the sale of the capital stock of the company from time to time. The result of recurring deficits over the last 20 years has been that the reserve arising from the premium on capital stock, which was $7,499,680, was reduced by $6,239,871.
For some years the Consumers' Gas Company of Toronto has been fighting a losing battle and in most of the recent years has been forced to dip into its reserve. The cost of manufactured gas has been so great that this company has been gradually pricing itself out of the market. The Toronto city auditor reports that the earnings on the shareholders' investment were 5 * 08 per cent in the year ended September 30, 1952.
The company is authorized by the act of 1887 to pay in dividends 10 per cent on the par value, which was then $100 per share. As from the 1st of January, 1941, the company has been paying 8 per cent, or 80 cents on the present par value of $10 per share. The actual return to individual shareholders depends, of course, on the amount paid for the stock, either from the company treasury or in the stock market. The company has not been permitted since about 1928 to issue rights to existing shareholders. Additional stock must be sold either by auction or tender. The average price received for the stock has ranged from $149 in March, 1932, to $201 per $100 share in February, 1937. Thus the premium on the stock is part of the capital investment. In so far as dividends have tended to reduce the reserve created by this premium, the dividends have been a return of capital.
The directors' fees are limited to $25,000 per year in total. This includes the remuneration to the president, who is not a working president. Two of the directors, the vicepresident and general manager, and the assistant general manager are full-time employees of the company, and presumably receive salaries commensurate with their duties and responsibilities.
The plant and buildings renewal fund, as shown by the report for the year ended September 30, 1953, stood at $9,869,605, compared with investment in plant and equipment and real estate of $31,835,198. This fund arises from the authority of the company to appropriate each year a total of 5 per cent of the value of plant and buildings, but not real estate or unfinished construction. The 83276-1731
Niagara Gas Transmission Limited company has no other provision for depreciation. At the end of 1952 the fund was approximately 32 per cent of the value of plant, buildings and equipment.
When natural gas reaches Toronto the coal gas plant will be obsolete, and it is understood it will be scrapped. The gas holders as well as the water gas sets and the propane plant will be maintained as stand-by units. The equipment to be abandoned, while not new, is, I understand, carried on the books at several million dollars.
The annual report of Consumers' Gas for the year ended September 30, 1953, stated that sales of gas for the 12 months were lower by 4-6 per cent than for the previous year. This was attributed to milder weather. In the first three months of the current fiscal year -that is, October, November, December- sales were again reduced by 4-52 per cent. However, there was an increase in January due to the fact that the average temperature was 8 degrees lower than for January, 1953. The over-all loss of output for four months was 2 per cent.
The sales department of the company, particularly in the house heating division, is very seriously concerned because it is a fact that gas is too expensive under present conditions. The company was holding its business, but not increasing it, in proportion to the increase in population, up to April, 1952, when a further substantial increase in wages resulted in an over-all increase of 25 per cent in the cost of gas. The new rates were calculated on an expected loss of business; and the fact that the company showed a profit for the first full year under the new rates, the first one in 20 years, is due in fact to the inability of householders to quickly change from one kind of cookstove or other appliance to another.
It is estimated that the franchise area of the company now has a population of 1,300,000. The total number of meters divided into that population shows a population of about eight per meter. In contrast, in 1933, when the population of the area was estimated to be 650,000 the population per meter was four persons. The fact is that the manufactured gas business is a dying business. Wages all the way from the coal mine to meter reading have made the price disproportionately high in comparison with electricity, which is untaxed in this province, and with fuel oil which can be delivered at a much lower labour cost.
The 1953 report of the company showed that there are 5,801 shareholders. The average holding is 251 shares. The percentage owned in Canada is 95 per cent, and of the total number of shareholders 55 per cent are
2720	HOUSE OF
Niagara Gas Transmission Limited women. A large part of the stock is owned by insurance companies, which accounts for the fact that there are two insurance company presidents on the board of directors: Mr. J. K. Macdonald of the Confederation Life and Mr. Ross Poyntz of the Imperial Life. The city of Toronto is a shareholder to the extent, I believe, of 15,000 shares.
The company's charter provides that so long as the city owns shares to the par value of $10,000 the mayor shall be ex officio a director of the company and entitled to vote the stock or shares held by the city. A curious feature of the company's charter is the provision whereby no shareholder may have more than ten votes, no matter how many shares he owns. The owner of one share has one vote. I think three shares entitle him to two votes. By the time he gets to the ownership of 20 shares, he has ten votes, and no more.
From the foregoing it is obvious that Consumers' need for a reasonably priced and dependable supply of natural gas to replace the present expensive manufactured gas is urgent and immediate. Unfortunately none of the applicants for an export permit from Alberta to eastern Canada has given Consumers' a definite quotation or has indicated conditions of delivery. It is, of course, impossible to estimate probable gas sales, or sales of any other kind for that matter, unless the price of the product to be sold and delivery conditions are known.
Last year the Consumers' Gas Company made a contract with some United States suppliers in Louisiana and Texas for the purchase of 22,600 million cubic feet of natural gas, this to be transferred to the Niagara river, the international boundary, by Tennessee Gas Transmission Company, and from the centre of the Niagara river by Niagara Gas Transmission Limited, the company making application for this act. At the time this company was formed no authority was required under the Pipe Lines Act, and it was not until the amendment at this session that this application was required.
It is believed by Consumers' Gas Company that the purchase of this gas will be of very great benefit to the consumers in the greater Toronto area. It is believed that natural gas will become directly competitive with oil and will probably be competitive with coal. Because of the very high British thermal unit content of natural gas, and because of the degree to which its heat may be controlled, it is believed that many industries will find it more suitable for their purposes than either coal or oil.
The experience of similar cities in the United States has been that over a period of


a few years the consumption of gas has doubled, and many industries find it economical to use it with small auxiliary appliances to be turned on at times of peak loads during very cold weather. With the present limited production of electric power it is felt that this will be not only economical but of valuable assistance to the people in areas served by this company.
It should be pointed out that the Consumers' Gas Company of Toronto was incorporated by special act of the province of Ontario, which act has been amended a number of times since. As mentioned above, the salaries of the officers and directors are limited. The mayor of Toronto is automatically one of the directors, the dividends to be paid are limited, and when the reserves reach a certain figure the price of gas must be forthwith reduced. The franchise is exclusive to this company for the city of Toronto and for the townships of Toronto, Toronto-Gore, Etobicoke, Vaughan, North York, York, Markham, East York, Scarborough and Pickering, which area of course now includes such municipalities as Forest Hill, Leaside, Swansea, Mimico, New Toronto, Long Branch and Port Credit.
At the time this contract with the United States suppliers and the further contract with Tennessee Gas Transmission Company were made, application was forthwith made to the federal power commission of the United States and authorization was granted for the export from the United States to Canada of this gas. Naturally at that time it was not known that a Canadian pipe line would be built from Alberta to Ontario and Qnebec. Accordingly it was not realized that it might be considered that this contract for United States natural gas might be depriving a Canadian pipe line of one of its major customers. However, a contract has now been made between Tennessee Gas Transmission Company and Consumers' Gas Company of Toronto whereby over the period of the 20-year contract between Consumers' Gas and the United States suppliers, Tennessee Gas Transmission Company will purchase all or any of this gas at any time. This latter contract was made so that if Canadian natural gas is brought to Toronto the Consumers' Gas Company can purchase Canadian gas and dispose of the United States gas for which they have contracted, without any loss to Consumers' Gas.
It is not known at this time how this Canadian gas is to be handled in the province of Ontario and whether a provincial authority will be used for its disposal, but Consumers' Gas Company of Toronto is now in the position that, upon this act being

passed and assuming approval by the board of transport commissioners, they will be able to supply the greater Toronto area with cheap natural gas before the end of this year, and if and when Canadian natural gas becomes available they will be in a position, without loss to themselves on the United States contract, to switch to Canadian natural gas. It is felt, therefore, that the passing of this bill will be of great, immediate and long-term advantage to the Toronto area, and will fit into the Canadian over-all plan to the general benefit of Canada.
It is of course clear to all members of the house that the passing of this act is the embryonic stage in the building of this pipe line. Evidence must still be adduced before the board of transport commissioners showing public convenience and necessity, and to have the location and construction approved. In addition, the company will have to satisfy all provincial legislative requirements and regulations.


Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, what has been explained to us has dealt largely with the immediate requirements of the city of Toronto and the importance of an early supply of natural gas for that large city which is now embraced in the metropolitan organization that has been set up. I submit there is a great deal more to this situation than has been mentioned so far. I am not disagreeing with the facts or figures put forward by the hon. member who is presenting the bill, but I do believe there are very important details which should be in the minds of all members in dealing with the measure now before us.
As has been explained, the bill authorizes the construction of a gas transmission pipe line for the purpose of carrying to the outskirts of the city of Toronto a supply of natural gas from Tennessee, which would then be distributed in the metropolitan area of Toronto by the Consumers' Gas Company. This gas would originate in Tennessee and would flow into a new pipe line to be constructed under the authority of the charter that would be granted by this measure, and then into the servicing lines of the Toronto system.
It has been mentioned already that this in fact is expected to be a temporary arrangement. It was stated the day before yesterday by Mr. A. R. Crozier, the fuel controller of the province of Ontario, that it is expected that within two years there will be a pipe line from western Canada carrying Alberta natural gas to the Toronto field as well as to other parts of eastern Canada.
What is important is the understanding very clearly expressed by Mr. Crozier, the
Niagara Gas Transmission Limited Ontario fuel controller, and the Ontario minister of mines, to whose department Mr. Crozier is attached, that when western gas becomes available the flow will then be reversed through the pipe line to be constructed under the authority of this act, and Canadian gas will be carried to that area in Ontario through which the pipe line will pass coming from Niagara Falls. This, I think, is clearly understood. However, it should be remembered in considering this measure that in expressing their belief that it is desirable that authority be granted for the construction of this pipe line, the Ontario minister of mines and the Ontario fuel controller have both made it clear that this is related to an unqualified condition that this area will be available and will be supplied by gas from western Canada when the Canadian pipe line is constructed.
That being the case, I think we must consider the position in which we find ourselves in dealing with this measure. It is a simple bill of two sections giving general authority to Niagara Gas Transmission Limited to construct, own and operate an extra-provincial pipe line. There are no details as to where the pipe line will be constructed but it is understood by everyone that it will run from the Niagara Falls area to the outskirts of the city of Toronto.
A bill of this kind became necessary as a result of the amendment to the Pipe Lines Act which became law on December 16 last, which required a company to be authorized by a special act of parliament before constructing or operating an extra-provincial pipe line as defined in the amendment. We must remember that whatever is proposed by Ontario or Quebec or any other provincial government is subject to the interprovincial and international authority of the federal government in matters of this kind.
For that reason I feel this government should insist upon an unqualified undertaking that with the construction of an all-Canadian pipe line to eastern Canada, this gas from western Canada, which would then become available, would be used in the area that would be supplied by the pipe line to be constructed under the authority of the proposed measure now before us. I feel it is appropriate that the government give us the assurance that such a condition will be insisted upon during the course of the debate on second reading.
There is more to the measure than simply the construction of a pipe line. There is the broad pattern of the use of natural gas in this country which we cannot deal with in airtight compartments, and which must be regarded as part of the whole mosaic of construction throughout the whole of Canada.
2722	HOUSE OF
Niagara Gas Transmission Limited I have seen statements made, even in the past few days, which suggest there is still in the minds of some people the thought that it is economically unwise to construct an all-Canadian pipe line. I have seen the suggestion that this would create a situation that would be unfair to the producers in Alberta. I hope anything that may be said here will be said with the acceptance of the basic proposition that as Canadians we are having full regard for the future economic welfare of the producers in Alberta and the people of that province, just as we are having regard for the people of eastern Canada who may be served by this project.
In dealing with this subject when that time comes-and this is not the time when the details of this problem can be dealt with-I think we should at all times remember that the price to be paid for natural gas in Alberta should be one that is fair to the producer, that will encourage new exploration and development, and that will afford to those who have risked their capital the reasonable expectation of profit which, in a country that fortunately still supports in the majority a system of free enterprise, will encourage the development there.
No question need arise in connection with this proposal as to the problem of export of gas from Canada or import from the United States. The supplies are enormous, according to the report of the petroleum and natural gas conservation board of Alberta dated November 24 last. It was estimated then that the reserve of natural gas already established in that province as of June 30, 1953, amounted to 11-5 trillion cubic feet. It is established with reasonable certainty that new wells will add at least 3 trillion additional cubic feet each year. These are astronomical figures. Taking those figures and dividing them by the demand that might be reasonably expected, it is expected that they will meet the demands of the local market, the markets of the provinces of Ontario and Quebec who will be very large consumers of that gas, for some time to come.
It may well be that the figures will be higher as time goes on. The figures, however, already established with a high degree of certainty make it clear that the demands of all the provinces to the east, including Ontario and Quebec, can be supplied, and that in addition there can be a substantial export of gas to the United States. For that reason there has been an arrangement under which the company which sought permission to export to the United States has combined its activities with those of the company that applied for permission to build the all-Canadian route. The result of this agreement is


that the present plans contemplate an allCanadian pipe line through the prairie provinces into Ontario and Quebec, as well as a branch pipe line south from Winnipeg to supply the Minneapolis area in the United States. With the added supplies, the amount available for eastern Canada and the United States will doubtless increase.
I mention this now because it is to be hoped that in the consideration of the measure now before us there will be no opposition to the bill on the grounds that it involves importation into Canada from the United States, or any suggestion that in the over-all plans now under consideration there is any objection to that measure of export which can be assured once our own future demands are protected. I would hope that in dealing with this we would have the assurance of the Minister of Trade and Commerce (Mr. Howe) that it is the intention of the government, with its wide powers over these matters, to insist that the construction of this pipe line carries with it the definite understanding, and in fact the undertaking, that when Canadian gas becomes available and the local market develops as a result of the supply of gas from Tennessee sources, then the market will be supplied by Canadian companies.
I mention that for a definite reason. There are those who believe it is absolutely necessary that a very large consuming area in Toronto and the surrounding districts be part of the area supplied by western Canada if the financing of that development is to be a practical possibility. Concern is also felt by some that this proposal might in some way endanger the construction of the all-Canadian line, unless the most rigid assurances are given. To indicate that this is no idle concern may I mention something I noticed in a quarterly publication called The Heartland, which is published in Washington. I have before me the edition for the fall of 1953. In referring to this development of a pipe line from the Niagara district to Toronto, which would carry Tennessee gas into Toronto, I find on page 50 this statement:
This development is taken to mean the death knell of the all-Canadian project so dear to the federal officials in Ottawa.
I immediately concede that a statement of that kind has no bearing on the prospects; I merely mention it to indicate that there are those who do hold the opinion that this might endanger the construction of the all-Canadian line. I would also point out that this statement was made some months ago, before the statement had been made about the over-all plan for a Canadian pipe line which embraces

the combined activities of the two companies which were mainly concerned with this problem.
In dealing with this we should all be assured the government has decided definitely that, subject to the availability of financial resources for that purpose, the all-Canadian route will be encouraged, and the encouragement of that route will not be adversely affected by the support of the measure now before us. I do not think we can look at this measure alone without looking at the whole proposal. This is the time for us to decide that not only in the use of gas but in the use of our other natural resources the first consideration in every case will be the development of Canada and the employment of those resources to provide more work for Canadians here in Canada.
There can be no reasonable objection to that proposal by anyone living in the United States. After all, the United States built its great wealth and its great strength upon that basic proposition. They would be the last who could reasonably complain if we adopted the very same policy which was at the root of their rapid and impressive development during those past centuries.
When we have said that let us always make it clear that this does not carry with it any suggestion, such as is sometimes made, that we are refusing to deal on a fair and equitable basis with our friends in the United States. That would be unreasonable; it would be unsound; it would be contrary to the future interests of our country. Nevertheless we must remember that as we encourage immigration we are encouraging new demands for work at a time when there are those who are already looking for work in Canada. It is doubly important that we should remember that everyone who comes to Canada is also looking for a chance to work. It does seem inconsistent to me that we should encourage and accept as new citizens of Canada people who need work, while at the same time we export any resources which could more economically be used here, because the exportation of resources is not merely the export of some physical commodity; it is the export of work itself. As we encourage new working hands to join with us in building the greater Canada of tomorrow, it is surely wise for us to be certain that we keep within Canada whatever sources of employment are required to give work to these new Canadians on their arrival.
This proposal is related, and directly related, to other measures 'which have been before us at different times in the past two .years. Long debates have taken place in
Niagara Gas Transmission Limited this house on pipe lines in the past. Quite frankly, those debates were for the purpose of keeping those bills before this house so the need for a truly all-Canadian policy on this subject should be established. I know that on the other side of the house there was a great deal of resentment that those private measures, which were in fact government bills for all practical purposes, were held so long in this house before being passed. Nevertheless, it is significant that out of those debates there has emerged the Canada-first policy which was advocated by the members of this party. We made it clear that in those extended debates, which it would perhaps not be inappropriate to describe as filibusters, the one purpose was to use the right of debate to insist by every means within the power of the opposition that the interests of Canadians be given first consideration before we agreed to the export of this or other resources from Canada.
The debates on this subject began with the oil pipe line. I have no hesitation in saying that I still regret the decision of the government to support the construction of an oil pipe line south of the great lakes before we were assured of an all-Canadian pipe line. Nevertheless I am not going to renew the debate on that matter. However, I would point out that some of the warnings were justified. That line was constructed to carry oil to Superior, Wisconsin, from which port the oil could be carried by tankers to the Canadian refineries at Sarnia. However, it was only a short time after the oil pipe line to Superior was completed that the next step was taken and the pipe line was extended through the United States south of the great lakes and then back into Canada at Sarnia.
I do not believe for one moment that this intention was not in the minds of those who constructed that pipe line in the first place. I think that intention should have been disclosed to us. I am not making the statement that the government withheld information in their possession, but I am making the statement that I do not believe that those who constructed the pipe line so suddenly changed their minds after it had been constructed to Superior.
However, I agree with the statement that there is a difference between the transmission of oil and the transmission of gas. Gas can be carried only by pipe line; oil can be carried not only by pipe line but by tankers and tank cars. Therefore oil is more easily moved to different places than gas. I think it is certain that unless the gas pipe line is constructed through Canada we will be denied any advantages of the use of that gas in the area through which that pipe line
2724	HOUSE OF
Niagara Gas Transmission Limited would pass, which would not otherwise be served if it were to pass south of the great lakes. I mention this now because I believe it is a consideration in support of my request that the government assure us that in supporting this measure we have the right to do so in the belief that appropriate steps will be taken to make sure that the market developed in the metropolitan area of Toronto as a result of this will be available to the suppliers of Canadian gas when that pipe line is completed in two years, as we hope it will be.
Sometimes this subject is discussed as though you could deal with it only on the basis of dollars and cents in determining the economic factors which should be borne in mind in reaching a decision. Mr. Chairman, the difference in cost, which has been estimated variously to be in the neighbourhood of $25 million, is something which should not be left to stand alone when considering what the effect would be of building this pipe line through Canada the whole way.
If the pipe line were to be built south of the great lakes presumably it would go south at some point near Winnipeg. You would have half of a pipe line costing in the neighbourhood of $300 million being built in the United States. That money would go to workmen in the United States. It would go for the purchase of land in the United States. It would go for supplies in the United States. It must be perfectly obvious to everyone that we would lose a great deal more than $25 million by the route passing into the United States and returning to Canada at some point in eastern Ontario. When I say eastern Ontario I am speaking of the Sarnia area which is in fact eastern Ontario, although it is sometimes called western Ontario.
The advantages of this construction should not be regarded as selfish advantages desired by people living in any particular community; nevertheless let us look at what would happen. If this gas was transmitted by a Canadian route instead of going south of the lakes it would pass through such cities as Kenora, Fort William, Port Arthur, Sault Ste. Marie, Sudbury and North Bay. There would be feeder lines into other areas in northern Ontario. It would then pass on to serve the Toronto area, the Montreal area, southwestern Ontario, eastern Ontario and those parts of Quebec which would receive service from feeder lines. The possible use of gas throughout that area is tremendous. Unless there were diversions of gas from this United States pipe line at different points, there would be nothing to equal the demand that would be 

created by those very active and important communities which would be using gas from this pipe line.
New demands are emerging almost every day. They are dramatic, they are romantic. For example, we have all been reading the dramatic story of the new discovery of metal in the Manitouwadge area in Ontario. Already it is estimated by the Ontario department of mines that there would be a daily demand of ten million cubic feet of gas a day in that area alone, which was nothing but bush only a short time ago. It is estimated also that there would be a demand of ten million cubic feet a day at Cobalt in Ontario and Noranda in Quebec. Similar demands would be expected in these other communities.
The history of the use of power of this kind, whether it be gas, oil or electricity, is that the consumption multiplies far beyond the estimates of the most optimistic at the time the original arrangements are made. I have seen what happened in Ontario in the use of hydroelectric energy. There is no reason to expect other than that the use of natural gas as a source of power for industry as well as for domestic fuel for the home owner will multiply far beyond the original expectations, in the same way as in the case of electricity and oil. That being the case, we may expect that the first use of gas in these areas will create new uses and new demands. All this will be lost, not only to those areas that would have this advantage but to those carrying the gas to eastern Canada, unless that route is followed.
I think this bill is part of what I referred to earlier as a great mosaic of development of a new source of fuel and power in Canada. I hope it will be regarded by the members of this house as part of that mosaic. However, can we have an assurance that it is part of that mosaic, and that in offering support of this measure we do so with the assurance that there is no wavering in the declaration of policy in regard to an allCanadian gas pipe line?
I do not believe it would be right to pass from this discussion now without commending those who so persistently and for so long have fought for this policy. This policy has been stated, and we can say without boasting that this was the policy we advocated from the beginning, and continued to advocate over long weeks and months. I hope we will have the assurance now by the one minister who is in a position to give that assurance that this bill with its two sections does not stand alone. I hope we can have the assurance that the great possibilities in the development of an all-Canadian route, with full consideration for the rights and expectations of

the producers in Alberta as well as the consumers in eastern Canada, will be part and parcel of the decision we make in approving this bill.


Clarence Decatur Howe: Mr. Speaker, I will say at once I believe there is no substantial difference between the Leader of the Opposition (Mr. Drew) and myself as to what we hope to do in serving Ontario and Quebec with natural gas.
I think, though, I should at once correct one misconception. The Leader of the Opposition asked the government to give assurances that if this bill passed certain things would happen. I would like to point out to him that by an act of this parliament the importation of gas across the international boundary was brought under the provisions of the Pipe Lines Act. Prior to that legislation the government had. no authority whatever to control the importation of gas from the United States, as he knows. The Pipe Lines Act, before it was amended, provided for gas moved across provincial boundaries, but perhaps through an oversight it did not provide for the movement of gas across the international boundary.
However, this is a private member's bill asking for the incorporation of a company to build a pipe line. No import permit is required to do so and if parliament passes this bill the government as such would have no control over the situation. It is true that the bill must go to the board of transport commissioners, which, as hon. members know, is a judicial board. I sincerely hope the board of transport commissioners will be seized with the long-range problem of bringing gas to Ontario and Quebec, and will measure the effect of the application made under this bill with regard to the over-all results.
I would emphasize, however, that once this bill is passed the machinery operates as set out in the Pipe Lines Act, and no further federal government authority of any kind is required. If the board of transport commissioners should decide that no regard should be paid to tne situation brought about by plans to bring gas from western Canada, the government would be powerless to intervene.
Having said that I would point out that I am not opposing the second reading of this bill. I believe that if a responsible company desires to build a pipe line for a purpose which is in the interests of Canada or any section thereof, then the incorporation should be granted. But I believe it is the duty of the committee on railways, canals and telegraph lines, to which this bill will
Niagara Gas Transmission Limited be referred, to bring the interested parties before it in order to deal with the points raised by the Leader of the Opposition, which are certainly most important, and to report to the house its findings based on what it learns from an examination of the bill. I have no doubt the committee will wish to see the contract for gas which would be implemented through the building of this pipe line, and that it will also wish to make sure that the Toronto area is reserved for natural gas from the west.
The incorporators of Trans-Canada Pipe Lines Limited have embarked on the largest operation of this kind ever undertaken. It is a project which will adequately supply gas to the fuel-starved areas of Ontario and Quebec. In regard to this great national project it is my desire, and I am sure the desire of every hon. member of this house, to see that nothing intervenes in the meantime which would jeopardize the success of that project.
Strangely enough I have never received any communication from the incorporators of this bill. I have read letters addressed to me in advertisements in the press, but I have never had a letter laid on my desk which was signed by anyone connected with the Consumers' Gas Company. I must say I did not read these letters very carefully because I do not care to be addressed through the public press, but it seems to me an extraordinary complex must exist in certain sections of Ontario, when people prefer to address a minister of the crown in that fashion. However, I do not resent that particularly. I merely wish to emphasize that I know very little about the plans of the incorporators of this bill.


George Alexander Drew: I do not want to interrupt the Acting Prime Minister (Mr. Howe) but I do not believe he will question the fact that those interested in this project were here in Ottawa discussing this matter.


Clarence Decatur Howe: Not with me; never with me.


George Alexander Drew: I think the Acting Prime Minister will agree they were here. I happened to see some of them myself.


Clarence Decatur Howe: I have seen them here also, but they have never discussed the subject either with me or any member of my department. A year or so ago Colonel Bishop came to see me about the matter and we discussed the situation in a general way; but ever since then, as I say, all I have seen were letters addressed to me through advertisements in the press. I have never talked to any of the officers of the company face to face.

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I would like to give my views on the situation in some detail, but meantime I would ask that the debate be adjourned.
On motion of Mr. Howe (Port Arthur) the debate was adjourned.


The Acting Speaker (Mr. Applewhaile):: At
eight o'clock the house will resume consideration of the business which was interrupted at five o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock. NATIONAL HOUSING ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. 102, to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and building conditions-Mr. Winters-Mr. Applewhaite in the chair.
On clause 1-Short title.
Charles Edward Johnston: Mr. Chairman, at five o'clock I had just put on the record the cost of building a house under the present act over a 20-year period of amortization. That appeared at page 336 of the evidence. I wish now to turn to page 337, the following page, and put on record the cost of building a house.
Under the new bill, with interest at the probable rate of 55 per cent, the cost works out as follows: Interest: 55 per cent, compounded semi-annually. Amortization: 25 years.
Down payment: 10 per cent on the first $8,000: $800 30 per cent on the other $2,000: $600 Monthly payment on $8,772 mortgage (includes 2 per cent insurance): $53.55 Total monthly payments: $53.55 x 12 x 25 $16,065.00
Down payment	 1,400.00
Total	 17,465.00
With a 30-year amortization period, the monthly payment is $49.47, which brings the total cost to $19,209.20.
You will notice there, Mr. Chairman, that the cost of $9,209.20 is due entirely to a financial charge. That figure is almost equal to the original cost of the house. It seems to me that in itself is evidence that the financial cost of erecting one of these houses is out of all proportion, having regard to what the people can afford to pay. When I said a while ago that two-thirds of the people of Canada-using the minister's own words- were not in a position to own or rent homes of their own, I think this is the answer to it.

If we can get around that difficulty or if we can devise some means whereby we can bring down the financial cost-


Robert Henry Winters: I wonder whether the hon. member would permit me to interrupt at this point. He has used that illustration on one or two occasions. What I meant was to own new accommodation or pay an economic rental for new rental accommodation.


Charles Edward Johnston: I did not catch the first part of that explanation.


Robert Henry Winters: It applied to new accommodation.


Charles Edward Johnston: 
Elmore Philpott: Would the hon. member permit a question?


Charles Edward Johnston: Yes.


Elmore Philpott: I am surprised to note that the hon. member makes no reference whatever to two sections of the act which provide for co-operation in large scale building of rental projects. Section 36, for instance, provides up to $50 million.


An hon. Member:: That is not a question; that is a speech.


Charles Edward Johnston: What is the hon. member's question? The hon. member is right. I have not referred to the co-operative housing section yet, and I would be quite out of order if I did so. I am now dealing with home ownership, and this does not apply to the co-operative section. I shall have something to say about co-operative housing when we arrive at it, and that will be when that section comes before us as we discuss the sections of the bill. I have not overlooked it by any manner of means.
On other occasions in this chamber I have proposed a plan which I think would solve the problem. I may be wrong. This Social Credit party which sponsors that plan may be wrong, but at least we have offered something, and I have not heard any other proposition offered today. I therefore want to repeat the one that we have persisted in offering. I am speaking now of making money available to people at 2 per cent.


Mr. Ellis:: That is C.C.F. policy.


Charles Edward Johnston: No; that is not C.C.F. policy.


Edward Turney Applewhaite: Order.


Charles Edward Johnston: The C.C.F. have just adopted the policy which we suggested. I am sure they are becoming enlightened. For that fact I am indeed grateful.
From the figures I put on the record a moment ago, Mr. Chairman, you will see that it is possible to build a house, charging 2 per cent interest, and come within the bracket of $3,000 or less. In fact, as I said a moment ago, it would be $2,808. When the bill we have before us will not take care of that class of people, it seems to me that something in addition to what we are doing under Bill No. 102 should be contemplated by the government.
This suggestion as to 2 per cent interest is not new. There is on the statute books under the title of the Municipal Improvements Assistance Act a law which permits money to be loaned to municipalities at 2 per cent. We in Alberta have been practising that principle in self-liquidating projects, where the province lends money to municipalities at 2 per cent to create the so-called self-liquidating projects which could be used for servicing land.
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If the provincial government can do it, it does not seem to me that it would be such an impossible task for the federal government to do the same thing. It would take but little adjustment in the wording of the Municipal Improvements Assistance Act, which deals with self-liquidating projects, to put housing on a self-liquidating basis as well. I do not see what difference there is between calling the installation of a water system or an electric light system a self-liquidating project and calling a housing project a self-liquidating project. Over a period of time the loan is paid off, and as the money is repaid it is put into the revolving fund and can be used again.
Under the present legislation the down payment is $1,400. I would suggest that under a revolving fund plan established by the government the down payment could be set at at least $500. I use the figure of $500 because
1	think if a person is going to build a home he should have a fairly substantial equity in it when it is started, and in my opinion $500 would be sufficient. Then when he and his family started to live in the house his equity would increase every month, and that would be an encouragement to take proper care of the premises.
One of the biggest difficulties we have had under the National Housing Act, which was admitted by Mr. Mansur, has to do with supervising construction and the detailed management of the corporation. Inspection has been one of the things that have caused the greatest trouble. I think the municipalities should have that responsibility. The only part the federal government should play is to see that the money is made available at
2	per cent, that there is proper backing from the municipalities and provincial governments, and that the houses are built according to the plans and specifications. An inspector is all that is required in that field, and I think there would be much greater satisfaction than exists now.
As I said a moment ago, if the federal government refuses to accept this proposal, at least it could extend the same privileges to those people who are unable to come under this legislation, the class of people to whom the minister himself referred, those with incomes of $3,000 a year or less.
There is a good deal more that I should like to say. An hon. member on the other side of the house mentioned a while ago the construction of houses under a co-operative plan, I should also like to speak on subsidized low rental housing. No matter how low the down payment or the monthly payments may be, there is a class of people who just cannot qualify. There is a class of people who for one reason or another never will

National Housing Act desire to own their own homes. Circumstances control that situation as far as they are concerned. In that case I think we would have to go beyond my proposal of a revolving fund or the provisions of the bill now before us, and definitely enter the field of subsidized low rental houses. I should like to speak on that if time would permit. I do not have time to deal with these matters now but I shall reserve the privilege of speaking on them when the various clauses of the bill are before the committee.


Mr. Vincent:: Mr. Chairman, a few weeks ago I had the privilege of telling the house that the present legislation involved a fair and middle of the road course. The legislation has now come back from the banking and commerce committee and I still am of the same opinion. But at the same time I think it is my privilege and my duty to draw the attention of the house to certain recommendations I made at that time which for some reason the banking and commerce committee has not seen fit to adopt. I refer to the scope of the National Housing Act. I think the act in itself is national in scope, but it should also be national in its application.
When speaking early in January I suggested that the down payment should be uniform at 10 per cent for all categories of houses, not only for housing costing $8,000.
I merely made a simple statement at that time, but today I should like to amplify it and give the house the reasons which led me to make this recommendation. During the debate an hon. member from the province of Quebec asked that loans should be made for the benefit of the large families of Quebec.
I should like to correct this statement, because I do not believe Quebec is the only province in Canada that has large families. I do not believe large families are only a matter of creed, religion or race. I can cite from history, for example, the case of George III and Queen Charlotte. They had 15 children. So I say that under the housing act we should as far as possible give everybody the privilege of borrowing the amount of money they need to build a home that will suit their own purposes.
A man with three children will need a greater loan than $8,000, because if he does build a home worth $8,000 he is building a slum house. I regret that the banking and commerce committee has not seen fit to take this fact into consideration. We speak of immigration and enlarging our population, but I think we should take care of our human capital at home because our human capital is most vital and important. I have no objection to bringing immigrants to this


country; they can become very good Canadian citizens. But at the same time I think we should see that our Canadian families have the possibility of expanding. I think we should let nature take its course. That may seem a humorous remark to the house, nevertheless I think it has a social bearing. I believe it is my duty to again draw the attention of the house to this matter.
In the second place, I wish to state that there is also an economic reason. If we grant loans on houses and give preference to $8,000 homes, we are creating a market for $8,000 homes. If we build too many $8,000 homes under present circumstances the housing market in Canada will not have the diversity which is needed in any commercial market. I do not think a manufacturer who produced only size eight stockings or gave preference to that size just because he had machinery for that size of stocking would be able to compete in the market. This same argument applies in the housing field.
I should like to make a few remarks on the application of the National Housing Act. I said in January I was glad to see this bill before the house because I believed it would solve the problem of housing where the old act failed. I can say now, and I shall repeat it in this house, that the old act failed in my constituency to the extent of about 80 per cent of the population. Why was that so? It was simply because the joint loans which were made through the finance companies were left entirely in the hands of the finance companies. If they did not wish to lend in one community or another, then those communities were denied the benefits of the act.
Under the new bill, and I must bring this to the attention of the house, the people of Canada will ultimately be footing the bill if foreclosures occur. For this reason, I feel that we should give every Canadian and every region in this country the opportunity to get loans. In the international field this country has seen fit to give grants under the Colombo plan. Well, I agree with that. On the other hand, I do not feel there should be any underprivileged regions in Canada. I should like, therefore, to see this act applied in such a way that all regions are given a fair chance to get loans. If the act is applied properly by Central Mortgage and Housing Corporation, and if the lending institutions refuse loans in certain regions, then I advocate that the government step in and say that loans must be made in every town in this country. Then we would have a National Housing Act applied nationally. That is what I am asking here tonight. I should like to see fair play for all Canadians.

After all, the principle of no taxation without representation does not And its full expression merely because a constituency has a member sitting in this house. It finds its full expression through the benefits which the whole population derive from that taxation. If the people of Canada as a whole are going to foot the bill in case of foreclosures, they should be given an opportunity of obtaining loans under this National Housing Act. There should be no underprivileged regions.
In closing, I recommend that these few remarks be taken into consideration, and I thank the government for whatever steps are taken to see that all the people get a fair chance to get loans under this act.


Mr. Thaicher:: I was rather interested in the remarks of the hon. member who just took his seat. I feel that he expressed some of the doubts which many of us have about the bill which is before us. I should like to invite him, a little later, to vote against the bill, as no doubt I shall.
The main purpose of this legislation, as I understand it, is to try to find a method of easing Canada's housing shortage.	Some
weeks ago, along with the hon. member for Nanaimo, I voted against the motion for second reading of this bill. I did so because I was convinced that it was not an effective answer to our housing difficulties.	After
sitting in the banking and commerce committee during a substantial number of meetings I am even more convinced of that fact today.
What is the housing situation in Canada at the moment? I think all hon. members would agree there is a very heavy backlog of housing because of the depression and the war years. As a matter of fact, the housing shortage continues to be desperately acute. Mr. Mansur, the president of Central Mortgage and Housing Corporation summed it up in one sentence, in this way. He said, at page 88 of the committee evidence, that "starting from 1948, I think the effective demand is higher today than at any other time". We, as members, I suppose must assume that this legislation is the government's answer to that present demand.
Surely in evaluating this bill tonight, whether we sit on the government or on the opposition side, we should ask ourselves one question. Will this legislation ease the acute housing shortage in Canada? Will this bill give housing to the people who need it? It seems to me there are a number of weaknesses in the legislation which could make it virtually ineffective. I hope this will not prove to be the case, but I fear it will.
National Housing Act
In the first place, so far as I can see this bill will do nothing to provide housing for those in the lower income groups. Mr. Mansur placed some very interesting evidence before the committee at page 161 of the proceedings. He put on the record several tables. The first table shows that to build a $10,000 house and amortize it over a 20-year period with interest at 5-5 per cent, a man must have an income of $4,002. If we look at the figures which the Department of National Revenue puts out, in its report "Taxation statistics for 1952", we find that 85-4 per cent of Canadian wage earners in that year did not earn $4,000. In other words, if we do not count the income of wives only 15 per cent of Canadian wage earners could qualify under this act to build a $10,000 house.
If we take a $12,000 house-and many people with children would have to build a $12,000 house with the extra bedrooms- we find that Mr. Mansur's statement shows that with interest at 5-5 per cent a person must have an income of $4,686. In the year I mentioned, 90 per cent of Canadian wage earners did not earn that amount. I suggest, therefore, that only 10 per cent of Canadian wage earners could qualify to build a $12,000 home under those circumstances. Thus, as I see it, the first weakness in this legislation is that it will do nothing to bring home ownership to the vast working class that really needs it.
In the second place, if I interpret this legislation correctly we have no assurance that even if the bill passes, the mortgage funds available for housing will increase. It was pointed out this afternoon that as soon as this bill passes the government will cease making joint loans. Thus there will be approximately $60 millon which was available last year from this source that will not be available this year. In other words, in this bill the government is abandoning what little responsibility it did have in the field of house financing. Mr. Mansur pointed out fairly clearly, as did Mr. Bryden of the insurance companies, that in the coming year Canadian insurance companies will have smaller amounts of mortgage funds available for housing than they had in past years. Therefore this legislation is designed, I suppose, to more or less take up the slack, to make bank deposits available for long-term housing loans. Mr. Speaker, we should realize that this is only permissive legislation. We have no assurance that the banks will make available the amount of money we need for adequate housing.
In his evidence Mr. Atkinson, vice-president and general manager of the Royal Bank made it very clear that the banks did not

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regard housing as a suitable field for investment. Time and again the banks have told us that they are already fully "loaned" and that they have not large sums available for housing mortgages. Thus I say this legislation gives no assurance that the banks will lend the amount of mortgage money required. It is very clear that the banks themselves are dubious about this legislation.
In the third place, I suggest that this bill will do nothing to provide cheaper houses. Certainly in my constituency, and I presume in others, one of the main obstacles to a man becoming the owner of a house is the very high cost. Under this new plan housing is going to be much more expensive than it was under the old plan. Under the new plan, for instance, the purchaser must pay a premium for insuring the loan. That will amount to 2 per cent of the mortgage. If the mortgage is $10,000 that amount will be approximately $200. Moreover, the lower down payment, the extended amortization period and the higher housing interest rate are going to force the prospective owner to pay more for his house in the long run.
I should like to compare the cost of the same house built under the old plan and the new plan. For example, let us take a $10,000 house. Under the old plan the down payment was 20 per cent, the interest rate 5J per cent, and the amortization period 20 years. Under the old plan the total cost was $2,000 down, $8,000 principal, $4,878 interest. Under the new plan the down payment will be $1,000; the interest rate at least 5J per cent-it may be 5f per cent; we have not been told yet-the amortization period 25 years. The total cost could be $1,000 down; $9,000 principal; $7,482 interest. I have compounded the interest semi-annually in both cases. In other words, an identical house built under the new plan is going to cost the purchaser, by the time he owns the title, roughly $2,600 more than it would cost him under the old plan. I suggest that is not a very satisfactory answer to the nation's housing needs.
There is one other aspect of this bill which I do not like. Even if the banks can find adequate funds, they may do so only by taking those funds from somewhere else. Such a diversion might make it more difficult for farmers in eastern and western Canada to obtain funds from the banks at a time when they need them urgently. The banks might also be forced to tighten up on industrial and commercial loans. In other words, I maintain that this legislation is not the answer to Canada's housing problem.
Even if the bill passes new houses will still be beyond the reach of the average Canadian family. Under this legislation the

interest rate is excessive, the over-all costs are too high, and the income qualifications are too severe. In my opinion this legislation is little more than a mirage to the vast majority of would-be house owners.


Mr. Blackmore:: That is right.


Wilbert Ross Thatcher: Under this legislation the government is passing the housing buck to Canadian banks, and the banks understandably are reluctant to receive it. They are not enthused about being made the goat. The bill is unsatisfactory and inadequate, and I shall continue to vote against it at every stage, if further votes are called. We in the C.C.F. still believe that the present housing problem in Canada can only be solved by the marshalling of public funds to complement private construction.
(Translation):


Mr. Gagnon:: Mr. Chairman, the evidence heard during the sittings of the banking and
commerce committee has not only been very interesting but it has enabled us to appreciate the great service rendered by the Central Mortgage and Housing Corporation to the Canadian people.
The associations that have been called upon to do business with the corporation have been pleased to recognize that they have always obtained useful and frank co-operation from the corporation.
There is no doubt that the benefits of the new legislation will be appreciated by citizens in a position to take advantage of them, that is, people earning $3,600 and over per year. I am in favour of the present bill because it is absolutely necessary in spite of its shortcomings. I would like however to call the hon. minister's attention to the need of helping family heads earning less than $3,000 per year. In that connection it might be advantageous to copy the Quebec family housing act and grant a rebate of interest to the borrower.
The housing problem is a highly social matter and, in my opinion, those who are less fortunate should be looked after first, because they are the ones most in need of help and protection. To save a few hundred dollars, most workers must toil and make sacrifices for several years. It is practically impossible for them to meet the conditions prescribed by the present legislation.
In my constituency, particularly in the city of Chicoutimi and the town of Port Alfred, farsighted and courageous men, moved by an extraordinary civic spirit, have succeeded, through hard work, will power, steadfastness and in spite of many obstacles, in organizing housing co-operatives, the results of which

are now the pride and beauty of those towns. It is the duty of the government to stimulate that kind of activity and to contribute to its development.
Those are, Mr. Chairman, the few remarks I wanted to make in connection with this bill.
(Text):


Mr. Cameron (Nanaimo):: In the first place it must be said that it is rather regrettable the government saw fit to bring this bill back to the house before the minutes of the final meeting of the banking and commerce committee on the bill were made available to all hon. members. However, in the minutes that hon. members now have in their possession we have perhaps a basis for discussing the actual realities with regard to this bill.
I have always regretted that I was out of the house at the time the Minister of Public Works made his speech with regard to the criticisms of this bill by members of the opposition. Of course since that time I have had an opportunity of reading his speech, and I must congratulate him upon it. But I wonder if before he and his officials see this bill put into effect he will think he was quite wise in the view he took on that occasion of the position taken by the members of the opposition.
I have in mind, for instance, the criticism he made of the various estimates made by hon. members with regard to the possibility of people with lower average incomes owning their homes under this bill. Referring to the remarks of the hon. member for Broadview, he said it was a complete distortion of the realities of the situation to suggest that only houses of $10,000 and up could be built under this bill. The minister is reported at page 1574 of Hansard of January 28 as follows:
I have just checked with Central Mortgage, who tell me that in 1953 approximately 25 per cent of the houses for home ownership were below $10,000 in cost. He took the example of a $10,000 house, and gave the impression that anybody with an income of less than $3,860 a year need not apply for a loan under the National Housing Act.
I think the hon. member for Broadview was probably on fairly sound ground when he took that position. We find on page 163 of the minutes of the banking and commerce committee a table set out which was presented to the committee by Central Mortgage showing the relationship between home ownership income and down payment and interest rates. I notice, curiously enough, that the example Central Mortgage and Housing saw fit to present to the banking
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and commerce committee was that of a $10,000 house. While it may be true, as the minister says, that in 1953 a number of houses were built at a cost of less than $10,000, he does not tell us how much less than $10,000.
When we turn to a statement presented to the committee by Mr. Bryden, appearing at page 170 of the evidence, we find set out the experience of the companies for which he was speaking. He had some interesting figures to give. He showed that in 1953, which was only last year, the average loan for new single houses was $7,990. If it had been $10 more the average house cost would have been $10,000 in 1953. It is quite true that because the average was $7,990 for an 80 per cent loan instead of $8,000 there were a number of houses built at a cost of less than $10,000. But how much less? How important a factor in the whole picture did they constitute?
As I say, I was interested in the minister's tour de force on the second reading of this bill, but I was interested also in what he had to say at an earlier stage. At that time he was more in the role of a statesman introducing legislation than a politician replying to attacks in the House of Commons. As I recollect it, the minister was telling us at that time of the manner in which the government through this legislation was enabling larger sums to be made available for mortgage purposes for the building of houses. Then, so that the banks would not endanger the liquidity of their assets, he pointed out that there were two features in the bill which offset the possibly dangerous tendency involved in this new departure in banking practice.
These two new features were, first, the fact that mortgages issued under the authority of this legislation would have a comparable status with government bonds for the purpose of deposit with the Bank of Canada for loans. The other was the insurance feature whereby when a bank had finally evicted a delinquent borrower they could go to Central Mortgage and Housing and they would bail them out.
We had before the banking and commerce committee Mr. Atkinson, who is general manager of the Royal Bank of Canada. He had a few things to tell us. He was asked a question with regard to this strange proposition of the minister that these loans being made available for deposit with the Bank of Canada ensured the liquidity of the bank's assets. In answering that question Mr. Atkinson apparently was of a different frame of mind from the minister.


William Alfred Robinson: Shall clause 1 carry?

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Colin Cameron: 
[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Authority to lend.
Stanley Howard Knowles: Mr. Chairman, may I ask a question on this clause? I am sorry it has not been possible for me to read all the minutes of the evidence in the committee, so I will simply have to ask whether the point I have in mind was considered there. My question comes under the wording in this clause which refers to "an approved lender". Was there any discussion of the possibility of pension funds being made available for housing on the same insured basis as funds are to be made available under this legislation?


Robert Henry Winters: I was not in attendance at all the proceedings of the committee. However, I read the evidence, and to the best of my knowledge that matter was not considered by the committee.


Stanley Howard Knowles: May I ask whether it has been considered by the government? I have in mind the substantial moneys that are put away by companies with private pension plans and so on. Moneys of that kind are, under the present order of things, seeking to earn interest. It is also true that funds are needed for housing. Hence my question, was consideration given by the government to making such funds available for housing on an insured basis?


Robert Henry Winters: Although we have not done it so far, and although I do not believe it was discussed by the committee, we are prepared to recommend that pension funds be made eligible to approved lenders, for the purpose of making insured loans.


[Stage Direction]
Clause agreed to.
On clause 4-Interest.
Stanley Howard Knowles: I wonder whether the minister will not treat the committee of the whole house with a little bit more frankness on this question than that with which apparently the banking and commerce committee was treated. A few moments ago reference was made to a secret that is locked up in his bosom, or maybe it is behind the skirts of the Minister of Finance.
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Mr. Abbott:: Behind what?


Stanley Howard Knowles: Despite all the arguments that have been used against it, surely this committee of the whole has the right to know what the rate of interest is going to be when this legislation is enacted. I remember the night the resolution preceding this bill was introduced-it was one night in December before we went home for the Christmas recess -when the minister made the statement that the rate of interest would not be made known until the bill had been passed through all its stages, both in this place and in the other place, and had been given royal assent. At the time I heard that statement I thought the minister had made a slip and really did not mean that; but apparently he knew what he was saying.
It seems to me that we are dealing here with perhaps one of the most important aspects of this legislation, namely what the rate of interest is to be. The minister will no doubt come back and tell us that this idea of having it in the act in the nature of a formula is not new, that this is the way it was before. Surely the minister knows what the rate is going to be. Surely he should not be so coy and should not kid us along in the way he is doing, but should tell us what the rate of interest is going to be.


Robert Henry Winters: 
Stanley Howard Knowles: Is the minister suggesting that we keep on talking on this bill and stall along until the interest rate falls a little bit more? Perhaps the hon. member for Eglin-ton would help him out if that is the proposal.


Mr. Sinclair:: The hon. member can do it all by himself.


[Stage Direction]
Clause agreed to.
Clause 5 agreed to.
On clause 6-Insurance of loans, etc.
Auguste Vincent: Subsection 2 of clause 6 I think refers to the principle at which I was driving a while ago. It reads as follows:
The corporation may prior to the issue of an insurance policy in respect of a loan give an approved lender an undertaking that it will issue the insurance policy if the loan is fully advanced in accordance with this act.
Does this mean that the government or Central Mortgage and Housing Corporation will take into consideration the recommendations made by the bank; or does it mean-and I should like the minister to answer this question-that if an application is made to a bank for a loan, Central Mortgage and Housing Corporation will have the privilege of refusing this loan?


Robert Henry Winters: Yes, Mr. Chairman. The fact that the bank applies to Central Mortgage and Housing Corporation does not automatically imply approval on the part of Central Mortgage and Housing Corporation. However, it is a safe bet that any mortgage security which the bank refers to Central Mortgage and Housing Corporation will be accepted. That is a fairly safe assumption.


Auguste Vincent: Does that mean that any loan referred by the bank to Central Mortgage and Housing Corporation will be more or less accepted in principle?


Robert Henry Winters: That would be a fairly safe assumption, although it does not of necessity follow.


Auguste Vincent: A while ago I was referring to the fact that in certain regions the lending institutions and even today the banks will not favour lending. In that instance, what will be the policy of Central Mortgage and Housing Corporation in the application of the act?


Robert Henry Winters: It is the government's hope that, with the banks now authorized to lend under the sections of this act, the coverage will be broader than it has been. There is in addition the continuation of the old section 31A of the present National Housing Act which authorizes the government to make direct loans. Up until now Central Mortgage and Housing Corporation-acting of course on the authority of the government-has been reluctant to make direct loans in any metropolitan areas. We feel that is a field for approved lending institutions, and we would

hope that these institutions would now see fit to lend more widely in metropolitan areas.


Auguste Vincent: In case these lending institutions do not see fit to lend, does the minister think the same principle would be followed by Central Mortgage and Housing Corporation?


Robert Henry Winters: That would be something that we would have to assess in the light of developing conditions. We would want to see how this new arrangement works.


[Stage Direction]
Clause agreed to.
On clause 7-Insurable loans.
Wilbert Ross Thatcher: It seems to me. Mr. Chairman, that one of the obstacles to the average Canadian's purchasing a new home is the high price involved. The average workingman simply finds that $10,000, $12,000 or $14,000 is too high a price. On the other hand, it is rather difficult for him to purchase a used home today because the sellers of used homes seem to want cash, half cash, or at least a substantial portion in cash. When he goes to the bank, under present circumstances he cannot borrow money on a mortgage on an old house. I wonder whether there would be any objection by the minister to making these new regulations apply to the purchase of used homes? Personally I think it would help to solve the problem of home ownership so far as many people in the lower income groups are concerned. For that reason I should like to move the following amendment:
That clause 7. section 1, be amended by inserting therein at the end of subparagraph (a) the following:
(iii) for the purchase of an existing residential structure.


Robert Henry Winters: Mr. Chairman, this of course is the sort of amendment that one would like to be able to say he accepts at once. The policy under the National Housing Act, dating back to the earliest days, has been to encourage the production of new houses in Canada. My hon. friend from Moose Jaw-Lake Centre is one of those who talk about the great backlog of housing in this country, and at the same time as recently as this evening he expressed fear that there might not be sufficient mortgage money available to take care of the construction of new accommodation. I feel at this stage we should concentrate on the construction of new housing accommodation. While saying that, may I add that the day may come when it will be feasible to add such a provision to the act, but at the moment I think our efforts should be directed to providing new accommodation. Therefore I must oppose the amendment.
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Alfred Claude Ellis: It has been pointed out by some hon. members that the new housing legislation overlooks a great percentage of low income wage earners, and it has been suggested that if houses are built at a cost of $10,000 or more the housing situation may be eased in that some people may be able to acquire houses formerly occupied by those who build new homes. The advantage of the amendment is that it would perhaps enable some people to purchase homes who are not in a position to build new homes. It would enable them to purchase homes occupied at the present time by those who will occupy new homes in the very near future.
As has been pointed out repeatedly in the house, a great percentage of the people of the country will never be able to afford to build new homes under this legislation. They have been completely ignored by the government. While I appreciate that the main purpose of the bill is to facilitate the construction of new homes, I think there is a strong case for making it possible for people to purchase used homes for perhaps $6,000 or $7,000. If people do not have the money to build new homes at the present time they are not in the position where they can pay all cash, or a good part of the purchase price in cash, for an existing house. In view of the fact that this legislation will not afford any advantages to those in the low income groups, I ask the minister to consider the amendment very seriously. I believe it may make it possible for a few more Canadians to own their own homes, and I think the minister will agree that in itself that is a most worth-while objective.


Mr. Stanton:: I believe the minister and all other members of the house should give wholehearted support to the amendment. There are homes 40 or 50 years old that are sound and solid in every respect and that are possibly much better built than a new $10,000 house. These old homes are found on the outer fringes of our cities and towns throughout the dominion. Many of them are being sold at the present time for $5,000, $6,000 or $7,000. They are far more substantial and are worth more money than new homes that are being built at the present time at a cost of $10,000 or $12,000. I believe the minister should give serious consideration to accepting the amendment.
Amendment (Mr. Thatcher) negatived: Yeas, 8; nays, 79.


Mr. Pouliot:: There is one class of Canadian citizens who cannot benefit from this legislation. I refer to members of parliament. I wonder whether the minister would have any objection to letting the clause

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stand and discussing the matter with his colleagues, with a view to amending the Senate and House of Commons Act to permit members of both houses of parliament to take advantage of this legislation for building homes.


Mr. Fulton:: I should like to ask the minister whether this is the point at which one should raise a matter about which I spoke in the debate on second reading, namely the making of the facilities of this act as fully available to smaller communities as is the case in larger centres; or would it be more appropriate to discuss that on clause 40? It seems to me that it might be done under this clause, but if it is felt that it would be more appropriate under clause 40 I would be prepared to wait until then.


Robert Henry Winters: I think it would be. Clause 40 is the direct loan section. I think it would perhaps be more appropriate there.


Edmund Davie Fulton: There is no absolute prohibition against the lending institutions making loans in the smaller centres, is there?


Robert Henry Winters: No. We would be delighted if they would do it.


Edmund Davie Fulton: What is the policy of the corporation with respect to urging the lending institutions to enter the field in smaller centres so they may take advantage of section 7?


Robert Henry Winters: Central Mortgage and Housing Corporation has made every effort to encourage the lending institutions to make their lending operations as national as possible. It is only to the extent that they did not do it that the old section 31A was finally introduced to provide that type of coverage.


Edmund Davie Fulton: I know that doubts have been expressed whether the chartered banks would be willing to constitute all their branches as lending offices, although I understand the minister has expressed that as a hope. Is there anything in the act to prevent a chartered bank, with this new authority to advance money on mortgage loans, advancing that money for housing loans in smaller centres?


Robert Henry Winters: There is nothing whatever, Mr. Chairman, to prevent them from doing so.


Edmund Davie Fulton: Has the minister any further information, or any light to throw on the remarks he made earlier to the effect that it is hoped the branches of the chartered banks will become lending offices? Has he

had any further conversation with the banks which would indicate whether or not that could be done?


Robert Henry Winters: I based that on the traditional role of the branch bank manager, who becomes an integral part of the local community, who knows the problems and circumstances of the various people. He is more likely to be in a position to judge their ability to retire loans than perhaps the lending institution that has no local agency as close to the people.


Auguste Vincent: Earlier tonight I advocated the possibility of having the 10 per cent down payment apply on all homes, not only on those costing $8,000. I am referring to subparagraph (d) of clause 7. Would there by any possibility of the government considering this request?


Robert Henry Winters: Before introducing the present formula of 90 per cent of the first $8,000 and 70 per cent of the balance, all these possibilities were considered and it was decided that in the light of conditions prevailing now, the formula in this bill was the best one.


Alfred Claude Ellis: Was the $8,000 figure set in the belief that would be the minimum figure at which a home could be built? How did you arrive at the $8,000?


Robert Henry Winters: It was an effort to reduce the amount of the down payment on houses generally which everybody in this house has seemed very anxious to do. I heard some doubt expressed tonight by the hon. member for Moose Jaw-Lake Centre, who said that this was contrary to his concept because it increased debt burdens. It does increase debt burdens. That is one of the things I pointed out on various occasions. It is one of the penalties a borrower must pay if he wants a lower down payment. It does, at the same time, widen the band of potential home owners, and I think that is a good thing. This, therefore, was an effort to reduce the down payment and at the same time make available the greatest amount of loans for low cost houses.


[Stage Direction]
Clause agreed to.
Clause 8 agreed to.
On clause 9-Payment by corporation upon conveyance of property.
Donald Methuen Fleming: On clause 9 I should like to observe that the fact there are very few points being raised with respect to the clauses of the bill is, I think, a tribute to the thoroughness with which the banking and commerce committee reviewed these clauses in detail.
There was a point, however, discussed with the minister concerning the form of clause

9, subclause (d). This clause was rewritten by one of the technical amendments introduced into the bill in committee. There is no problem about the intent with respect to the compounding of interest in case of default, but there was a serious question raised as to whether the clause, in the revised form in which it appears now in the reprint of the bill, does carry out that intent. I offered an amendment with a view to eliminating what appeared to be a difference of opinion as to whether the clause, as reprinted and amended, did give effect to the intent.
The problem arises, Mr. Chairman, in clause 9(d) (i) with respect to the meaning of the words, "for the period of such excess." The question was whether the use of the words "of such excess" limits the application of the compounding to the period following the conclusion of the first six months of default. Three lines above those words you find the expression "in excess of six months", and *with the use of the expression "period of such excess" it does suggest that a proper interpretation of the section means that the compounding applies only to that portion of the arrears arising at the end of the six months, and not to the portion of arrears accruing during the first six months of the period of default.
The view expressed by Mr. Mansur in the committee was that there was no problem on the interpretation, and that the compounding will be applied in the usual manner to all arrears dating from the date of the first monthly default. Perhaps the minister is prepared to make a statement on the view taken with respect to the meaning of the expression.


Robert Henry Winters: I am aware there has been some question of the adequacy of the wording, but at the same time I agree with the hon. member for Eglinton that there is no question whatever as to the intention. This particular subsection was discussed at great length by the committee, and then by various individuals on the committee. I have had discussions on the same point with Mr. Fortin, who is representing the Dominion Mortgage and Investments Association, and I know his views on it as well.
It seems to be one of those points in which lawyers regard various combinations of words as expressing different meanings. After discussing this both with the law officers of Central Mortgage and Housing Corporation and with the Department of Justice I am advised that the words as now set forth in the clause in the bill are adequate. The law officers of the crown are satisfied that the clause is so worded that the approved lender will receive interest at the appropriate
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rates compounded in accordance with normal mortgage practice at the six months rest periods, for the full period of eighteen months, if the default period extends to this length. It is the intention of the government that this should be the case.


Colin Cameron: I was on my
feet, Mr. Chairman, to raise a point on clause 8 when you rushed through 8 to clause 9 and then called on the hon. member for Eglinton on clause 9. May I revert to clause 8?


William Alfred Robinson: Is it agreed that the hon. member has permission to revert to clause 8?


Some hon. Members:: Agreed.


Colin Cameron: This clause refers to co-operative housing associations. I wonder whether the minister can clarify the situation for us. He will recall that it was discussed at the final meeting of the committee, and that is one of the reasons I regret the minutes of that meeting are not here. I rather gathered from what communication I have had that there was some misunderstanding as to the position of the minister and Central Mortgage and Housing Corporation concerning this proposition. It will be recalled that a question was asked as to whether a cooperative housing association could qualify as a low rental housing project, and with some qualifications I gathered that it could do so. One qualification was that there was no technical assumption of title, and that provision could be made for the member of such an association who moved out of the low income bracket to receive his equity in order to make it available to someone still in that bracket. Could the minister give us some clarification of that position?


Robert Henry Winters: Yes, Mr. Chairman, this clause was discussed by the committee on the last day of the sittings, at which time I made a statement which I thought clarified the position. I said that although it was not the intention to set up a separate class of home owners who could qualify for the low rate of interest normally applying to the limited dividend section, if a co-operative could in fact qualify as a limited dividend company then it would be eligible for the low rate of interest prevailing for limited dividend operations.
There is one requirement in respect to co-operatives as set forth in clause 16 of this bill. There must be independent management of the co-operative, and that is one of the points we have been discussing with the Co-operative Union. I had quite a discussion

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with Mr. Staples, the president of the Cooperative Union, this evening, and I believe he understands our position on the matter.


Frederick Samuel Zaplitny: Clause 9 contains a provision calling for the payment to the approved lender of an acquisition fee of $125. It does not seem clear how that figure is arrived at. Is it a flat amount, or is it only an estimate in order to cover all exigencies, or is it a maximum figure? Suppose, for example, the acquisition costs fall below $125. In some cases they may not amount to anything. Would the approved lender still get $125, regardless of what his costs might be?


Robert Henry Winters: Yes, he would.


Frederick Samuel Zaplitny: If that is so we should have some explanation of why the provision is there, because eventually it is going to come out of the taxpayers of Canada. What is the reason for guaranteeing $125 as an acquisition fee, even though the cost to the approved lender may be considerably less? If it read "not exceeding $125" we would have some protection; otherwise we have none.


Robert Henry Winters: This figure was evolved as the result of many conversations between the lending institutions and the Central Mortgage and Housing Corporation. There is no doubt that the average cost of getting title to a property is considerably in excess of $125. The lending institutions think this is far too little, especially if they are obliged to go through legal proceedings. There are some instances in which one would hope and expect that they would get quit claims, and then their charges would not be as great as $125. We took this as a minimum average, having regard to conditions across the country. The lending institutions believe that their average costs are more likely to be $225 than $125.


Charles Edward Johnston: That refers
only to the expenses of the lending institutions if they have to go to law. What about the poor home owner who may have to go to law against the mortgage companies? Does he get any compensation? It has happened before now.


Robert Henry Winters: There is no provision in the legislation for that. That does not happen very often.


Mr. Holowach:: Would the Minister of Public Works care to make a statement relative to the period allowed for a loan to be in default? Is there any definite period allowed for that sort of thing, or is it left to the discretion of the bank?


Robert Henry Winters: Under the provisions of the legislation the lending institutions must report to Central Mortgage and Housing Corporation if a loan is in default for a period of three months, as to principal, interest and taxes. Then it will be a matter for decision as to what action will be taken. There is a period of 18 months provided in the legislation, during which time they are required to get clear title to the property.


[Stage Direction]
Clause agreed to.
Clause 10 agreed to.
On clause 11-Investments by corporations.
Colin Cameron: I presume this is the clause under which the government would act if it does intend to carry out such a policy as I suggested earlier this afternoon. Can the minister give us any information as to the government's real intention? Does it intend to take off the hands of the chartered banks the mortgages they have issued and assume the role of the lender, or to take them off their hands and assume the task of disposing of these mortgages otherwise? We should know what is the government's real purpose in this regard.


Robert Henry Winters: As I said in my second speech, which the hon. member for Nanaimo termed statesmanlike, before I became a politician-


Edmund Davie Fulton: He is a new member.


Donald Methuen Fleming: You will never do that again.


Robert Henry Winters: I said that our considerations were for the liquidity, negotiability and marketability of these mortgage documents, and we had in mind the general structure and the healthy structure of the Canadian banking system. My hon. friend made certain comments on my references to liquidity, but I would remind him that we were concerned with the broader concept. He was concerned only with the ability of the banks to borrow from the central bank whereas we, as a government, must of course be concerned with the matter of general public confidence in the banking system.
It is the hope that the banks themselves will be able to operate and provide the amount of loan money necessary for operations under this legislation and to ensure a high house building program in Canada. To the extent that the banks, for one reason or another, in the light of developing circumstances wish to use insured mortgages to obtain money from Central Mortgage and Housing Corporation, they may proceed under clause 11 (a) and (b) which are the enabling sections to provide the necessary

authority to Central Mortgage to buy insured mortgages or to lend on the security of insured mortgages as required.


Colin Cameron: I am sorry that in answering this question the minister decided to take as his model his second speech rather than his statesmanlike speech. I still do not know, and I suggest no hon. member knows, what the government really has in mind with regard to this clause. We are entitled to know in view of this fact. The banks told us before the banking and commerce committee that in the first place it is an illusion to imagine they have any large pool of available capital. In the second place, Mr. Atkinson told us that the only way the banks could possibly participate to any appreciable extent in this scheme would be if a market was developed for mortgage funds. I suggest that here there is a suggestion that the government itself is going to provide that market, and I think we are entitled to know the government's fiscal and monetary mechanisms by which they may do so.


Robert Henry Winters: I do recall that when Mr. Towers gave evidence before the committee he said the banks should have no difficulty in making loans of $100 million a year under this legislation. I would imagine that it was in his mind that such could be done without difficulty at all, and that a larger amount could easily be envisaged.


Donald Methuen Fleming: He said it would not be a large sum for the banks.


Charles Edward Johnston: May I have a word in regard to this section, because the minister referred to it while he was speaking this afternoon. He wanted to know if I recalled clause 11. What I was speaking of this afternoon was the possibility of the banks carrying out this housing scheme by creating more credit, and the minister suggested to me that under this section they would be able to do that. Under this section they would not be able to do it. It is true that under this section the corporation can buy back mortgages from the banks, but that would only be reimbursing them for the money they had already paid out; it would not in any way increase their cash reserves so they would be able to lend new money for the building of houses.


[Stage Direction]
Clause agreed to.
On clause 12-Regulations by governor in council.
Stanley Howard Knowles: Can the minister make any statement as to whether any change is to
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be made in the regulation which determines the minimum income that a person can have and still qualify for an N.H.A. loan?


Robert Henry Winters: I take it that the hon. member is referring to the 23 per cent which is normally considered to be the limit for good credit risk. If a borrower must devote more than 23 per cent of his income to the payment for his home he normally goes beyond that category. The only stipulation set forth in the Central Mortgage and Housing Corporation regulation is that when the ratio gets beyond 23 per cent the loan must be discussed by the lending institution with Central Mortgage. Up to that time the lending institution is free to act without consulting Central Mortgage as to the risk involved. There are loans made beyond the 23 per cent, depending on the circumstances, but the 23 per cent is the point at which under the regulations there must be discussions between the corporation and the lending institution.


Stanley Howard Knowles: Does the minister say that has been the case under the act as it has stood, or is that the situation envisaged at the moment?


Robert Henry Winters: That has been the case. I am informed that in 27 per cent of the loans made in 1953 the ratio was greater than 23 per cent.


Stanley Howard Knowles: When a person seeks a loan where the amount to be paid would be in excess of 23 per cent of his income, who initiates discussions with Central Mortgage and Housing Corporation, the applicant for the loan or the money-lender?


Robert Henry Winters: The lending institution.


Stanley Howard Knowles: Suppose a lending institution is not prepared to initiate those discussions; has the applicant for a loan any recourse?


Robert Henry Winters: They are the ones who take the mortgage risk. Application is made to the lending institution, and that is the normal channel.


Stanley Howard Knowles: My question is still valid. Has the applicant any recourse or appeal? The minister indicated that the ceiling is 23 per cent of one's income. As he knows, there are many people who have to pay an even greater percentage of their income by way of rent. It seems to me that there ought to be some way for such persons, when the lending institution turns them down, to make an appeal to Central Mortgage and Housing Corporation. Is there not some way in which that can be done?


Robert Henry Winters: I do not understand how one could force a lending institution to lend money on a risk they did not consider to be

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good. I think that is the criterion. We are trying by these means to enable the lending institutions to lend money to encourage the production of new houses in Canada. The negotiation is between the lending institution and the borrower. The government extends its facilities to enable the lending institutions to lend money more expeditiously.


Stanley Howard Knowles: Do I take it that despite all that has been said in the house, in the press, in the committee and in other places about this matter, for all practical purposes it still stands that nobody whose income is less than around $3,800 a year can qualify for an N.H.A. loan? If that is the case there has certainly been very little improvement.


Mr. Mcllrailh:: I would point out to the hon. member that in Ottawa last year more than one-quarter of the loans made under this legislation were in that category.


Stanley Howard Knowles: Does the minister or the hon. member for Ottawa West know what the situation is in other parts of the country? What is it that puts Ottawa in that special category?


George James McIlraith: I do not think it is a special category. That is the normal practice, for the lending companies to send in the applications and have them considered.


John William Gordon Hunter: May I point out that in Toronto about 17 per cent of the loans were in that category.


Stanley Howard Knowles: It is good to have these parliamentary assistants to the minister giving us information. Perhaps somebody else can tell us what the picture is in other cities, and also for the country as a whole.


Mr. Harris:: Perhaps the hon. member can give it for Winnipeg.


Stanley Howard Knowles: I do not know. I am not a parliamentary assistant to the minister.


Alfred Claude Ellis: In his speech the minister
referred to the creditworthiness of a borrower, and I am just wondering whether a person who qualifies under this 23 per cent would be considered as a creditworthy borrower.


Robert Henry Winters: I do not think we can take that as a criterion. It is a matter of the lending institution determining the creditworthiness of a borrower. A man might have only 20 per cent and still have a bad credit rating, and the lending institution would not accept his mortgage loan. As I said before, the 23 per cent is simply the point at which the lending institution comes to Central Mortgage and says, "Let us discuss this and see whether we should make a loan".


Stanley Howard Knowles: The minister says that the lending institution comes to Central Mortgage, but that is done only if the lending institution decides to follow that course. So far as the individual applicant is concerned, if the lending institution says "No," I gather that he would have no recourse. I think there will be considerable disappointment that there has been no improvement in connection with this very important point over which there has been so much discussion while this matter has been before us.


Mr. MacLean:: Mr. Chairman, there is some information I should like to have. I hope the minister will forgive me, as I was not a member of the committee and the information I want may have been supplied already. It occurs to me that there may be cases where the credit of the borrower is good. He may want to borrow perhaps only 75 per cent of the cost of his house, or even a smaller percentage. Is it possible that he would be informed by Central Mortgage and Housing that the lending value of his house was far below the cost and he could not be granted a loan even though he himself was considered to be a good risk? I would like to know how the lending value of a property is arrived at. Is there an element of speculation as to what the future value may be? In other words, if you have identical houses in different places would the lending value be the same? Is there some formula by which the lending value is arrived at, so that a borrower could be informed beforehand and have an idea whether it would be possible for him to build in a certain area?


Robert Henry Winters: Generally speaking the lending value is based on current construction costs in the area plus a 5 per cent profit. That was explained in committee. I know the hon. member was not a member of the committee, and I am pleased to have the opportunity of explaining that to him. As regards the question whether a loan could be less than the maximum prescribed under the act, the answer is that it could go down to 70 per cent of the appraised lending value of the house.


[Stage Direction]
Clause agreed to.
Clauses 13 to 16 inclusive agreed to.
On clause 17-Loans to borrowers engaged in mining, lumbering, logging, or fishing.
Mr. MacEachen:: Mr. Chairman, on clause 17, the function of which is to make loans available to operators in the mining, lumbering, logging and fishing industries, I would like to ask the minister if he would outline the considerations in committee which led to the elimination of the agricultural industry

from this particular clause. I know consideration was given to this matter in the banking and commerce committee, but the elimination is so striking that I feel some additional clarification would be helpful.


Robert Henry Winters: Mr. Chairman, knowing the hon. member's interest in the farming community I am very glad to be able to inform him that there is a provision for financing homes on farms under part I of the act. As to why farming was not mentioned in this particular clause, there are three reasons which occur to me, though there are perhaps others. In the first place the parent company must be an incorporated entity, and there are not many large corporations which are primarily concerned with the farming industry. Second, loans have to be secured on mortgages on the land on which the houses are to be built, and this sometimes presents difficulties because of the fact that there is often a mortgage on the land for other purposes. Third, the period of amortization has to be 15 years, and this might not be appropriate for farming purposes.


Edmund Davie Fulton: While I do not wish to provoke a discussion on the subject I would suggest that the reasons advanced by the minister as to why agriculture could not be included under clause 17 do not apply in the case of quite a number of ranching concerns in British Columbia. I would like to know whether these concerns would be covered under the other provision he mentioned in part I. The ones I have in mind are practically all incorporated companies which have a considerable problem in providing housing for their employees, even though they own the land.


Robert Henry Winters: The answer is yes.


Edmund Davie Fulton: They would be covered under that other provision?


Robert Henry Winters: Yes.


Mr. Cardiff:: I would like to pursue that statement the minister made regarding mortgages on farm property. In towns you have nothing but the ground on which the house stands; and even supposing a farm was mortgaged, that should not prevent them from obtaining assistance of this kind.


Robert Henry Winters: Mr. Chairman, there is a
section under part I of the bill which covers that. I am simply saying here that clause 17 applies to incorporated companies, and there are not many farms of the type my hon. friend has in mind which are incorporated companies.
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[Stage Direction]
Clause agreed to.
Clauses 18 to 23 inclusive agreed to.
On clause 24-Corporation to pay losses upon terms prescribed.
Stanley Howard Knowles: Can the minister tell us how much activity there has been under the home improvement loans section and how much there is likely to be under the new act?


Robert Henry Winters: This clause, Mr. Chairman, has been proclaimed only on a regional basis. I believe there are three areas, the Fraser valley, Kamsack in Saskatchewan, and Yellowknife. The only place in which advantage was taken of the section was Yellowknife, where there have been 12 loans recently.


Stanley Howard Knowles: Is it intended to proclaim the section in any other regions?


Robert Henry Winters: When the measure was
before the committee I said that it might not be wise to proclaim the section at this moment when we are trying to secure the production of new houses and develop a flow of mortgage money into that channel. We hope that within the next six months or a year we will be in a better position to proclaim this section.


[Stage Direction]
Clause agreed to.
Clauses 25 to 35 inclusive agreed to.
On clause 36-Corporation may undertake projects jointly with provinces.
Elmore Philpott: Mr. Chairman, we have heard over and over again in this committee of the whole the contention that nothing has been done under this act for people with incomes of less than $3,800. That, of course, is absolute nonsense, because one of the most important clauses in this bill has been carried over from the old act, and it provides very large sums of money indeed for the financing of low rental housing projects to be carried out between the federal government and the various provinces. Hon. members opposite who have emphasized with some vigour the necessity for large scale public works have an opportunity right in their own provinces and in their own municipalities to go ahead without further ado and promote such projects. We have the evidence of Dr. Forsey in support of this who said, speaking before the banking and commerce committee, as reported at page 338 of the evidence:

National Housing Act
The subsidized low-rental housing provisions of the present act have not been used as widely as they should have been. This is partly the fault of the municipalities, which have to set the whole thing in motion; partly the fault of citizens who ought to have prodded the municipalities into action; partly the fault of the dominion government, which has been content to hide this particular light under a bushel, instead of setting it on a national candlestick. The government ought to have trumpeted its achievements in putting this section on the statute book four years ago, and ought to have encouraged people all over the country to take advantage of it. Instead, it has been strangely reticent about one of the things it should have been proudest of.
Therefore, if that strong contingent from Saskatchewan wishes to get money for low rental housing projects all it has to do is get busy. The hon. member for Bow River talked a great deal about the wonderful revolving fund in Alberta. All he has to do to get the merry-go-round going around is to get busy and get hold of some of this $50 million.


Stanley Howard Knowles: Ten o'clock, Mr. Chairman.


Robert Henry Winters: Mr. Chairman, in the light of the urgency of having this legislation passed;
in view of the speed we have been making and the relatively few clauses still remaining, I wonder if hon. members would be prepared to sit a few minutes after ten in order to complete this bill.


Stanley Howard Knowles: Mr. Chairman, the banks are not open tomorrow. There is not that much hurry.


William Alfred Robinson: Is it the unanimous wish of the committee that we sit after ten o'clock?


Stanley Howard Knowles: No.
Clause stands.
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, in view of the relatively few sections of this bill left to be dealt with, I would suggest that on Monday we take it first, followed by the Bank Act.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, March 8, 1954