1954-05-18

Hon. Lionel Chevrier (Minister of Transport) moved: for leave to introduce Bill No. 446, to amend the Radio Act.


Mr. Knowles:: Explain.


Lionel Chevrier: Mr. Speaker, the Radio Act provides that no one shall be employed as a radio operator unless he is a British subject. By virtue of the Emergency Powers Act the Minister of Transport was authorized to enter into an agreement with the United States government providing that it could establish radio stations in northern Canada and employ operators who were not British subjects. The object of this bill is to amend the Radio Act in order to implement, by way of legislation, that arrangement and also to include certain landed immigrants to be employed as radio operators and who are not yet British subjects.
Motion agreed to and bill read the first time.



CANADIAN CITIZENSHIP ACT


Hon. W. E. Harris (Minister of Citizenship and Immigration) moved: the first reading of Bill No. 445 (from the Senate), to amend the Canadian Citizenship Act.
Motion agreed to and bill read the first time.



QUESTIONS


SECURITY SCREENINGS


Mr. Dinsdale:: 1.	In the case of veterans of world war II re-enlisting in the Canadian armed forces, is any reference made to world war II records for screening purposes?
2.	If so, when was this practice introduced?
3.	Has this screening process been made retroactive to cover world war II veterans who re-enlisted before the practice became operative?
4.	How many applicants for the Canadian armed forces have been screened as a result of unsatisfactory world war II service records?


Mr. Blanchette:: 1.	Yes.
2.	This practice was introduced at the end of the second world war during the reorganization of the Canadian armed forces.
3.	Not applicable.
4.	Until quite recently it has not been considered useful to keep statistics of the numbers of applicants rejected because of previous unsatisfactory military service. However, in January, 1953, the army began to keep such statistics and has so far rejected 649 applicants whose previous service record was considered unsatisfactory.



RADIO RECEIVING STATIONS-INSPECTION

Mr. Hansell:: 1.	Does the inspection of receiving stations referred to on page 148 of the 1952-53 annual report of the Department of Transport refer to radio receiving sets? If so, what was the total cost of this inspection?
2.	What is the nature of the inspection of amateur experimental stations, and what was the cost of this for 1953?
3.	Does any revenue accrue to the government from any radio inspection services? If so, what was the revenue for 1953?


Mr. Langlois (Gaspe):: 1.	Yes. For the purpose of investigating radio interference to private receiving sets and for the obtaining of evidence for prosecution of unlicensed private receiving stations. No breakdown of cost made as this work is carried out coincident with general inspection duties.
2.	A technical inspection to assure that stations are operating in accordance with domestic laws and international agreements. No segregation of cost made because duties performed by same staff when on general inspections and interference duties.
3.	The fees for licences for radio stations, other than private commercial broadcasting stations and private receiving stations when the latter were collected, were established on the basis of defraying in part the cost of licence issuance and inspection service. Such fees totalled $130,358 for the fiscal year 1952-53.



WOOD PULP EXPORTS TO RUSSIA

Mr. Pearkes:: 1.	Have any permits to export rayon wood pulp to the U.S.S.R. been approved since January 1 1953?

Questions
2 If so (a) to what Canadian firms have such permits been granted; (b) what quantities of wood pulp have been authorized for export to the U.S.S.R.; (c) what is the value of the shipments authorized; (d) is the type of wood pulp to be exported used in the manufacture of textiles or explosives?


Mr. Dickey:: 1.	Yes.
2.	(a) It is not in the public interest to reveal details of private transactions of individual companies;
(b)	9,850 tons;
(c)	$1,678,000;	.
(d)	for the manufacture of textiles.



VOCATIONAL TRAINING FOR UNEMPLOYED

Mr. Zaplitny:: 
Mr. Gregg:: 1.	Yes.
2.	Unemployed persons who require training to fit them for suitable employment may be referred to the national employment service for short-term training, not exceeding twelve months, in classes operated under the Canadian vocational training program. 1,660 such persons were referred for training during the past fiscal year.
3.	Yes, under the provisions of the vocational training agreement which provides for equal sharing of the costs by provincial and federal governments.
4.	British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia. Ontario provides such training for disabled persons only.
5.	Federal contributions for the fiscal year
1953 were as follows:
Nova Scotia	$78,289.25
Quebec	  21,828.28
Manitoba	 30,370.60
Alberta	 53,621.76
New Brunswick	 37,438.75
Ontario	 18,235.99
Saskatchewan	 27,673.18
British Columbia	 10,432.14
Total	$277,889.95
No claims for federal funds have yet been received covering expenditures for the current fiscal year.
[Mr. Pearkes.l



EXTERNAL AFFAIRS-RECOGNITION OF RUSSIA


Mr. McWilliam:: 1.	Has the Rosehall Nurseries Limited, Brantford, Ontario, had contracts with Central Mortgage and Housing Corporation in 1953?
2.	If so, how many and what was the total amount of money involved?
3.	Has Rosehall Nurseries Limited, Brantford. Ontario, had any contracts with Central Mortgage and Housing Corporation in 1954?
4.	If so, how many and where are the contracts being performed?
5.	Have all contracts between Rosehall Nurseries Limited, Brantford, Ontario, and Central Mortgage and Housing Corporation been completed?


Mr. Bourgel:: 1.	Yes.
2.	Contracts-3; total value-$10,035.
3.	No.
4.	Not applicable.
5.	No.


POST OFFICE DEPARTMENT OFFICIALS
Mrs. Fairclough:: 1.	Who is the chief investigator for the Post Office Department?
2.	When was he appointed?
3.	What is his salary?
4.	Who is the regional director of the Post Office Department for the Quebec region?
5.	When was he appointed?
6.	What is his salary?
7.	Were either of these offices created or established as a result of the Woods and Gordon report?
8.	If so, was the appointment handled by the civil service commission?


Mr. Cole:: 1.	S. Chartrand.
2.	April 1, 1953.
3.	$8,500.
4.	Vacant.
5.	See answer to No. 4.
6.	Position carries salary of $7,800 to $8,400.
7.	Yes; chief investigator.
8.	Yes.



MOTION FOR PAPERS


Stanley Howard Knowles: For a copy of all letters, telegrams, memoranda and other documents exchanged between any person or persons and the Post Office Department, since January 1, 1949, concerning sub-post offices in the federal constituency of Winnipeg North Centre, together with a statement showing the locations of all sub-post offices in the federal constituency of Winnipeg North Centre as at December 31, 1953, and a copy of post office regulations in connection therewith.



VETERANS LAND ACT


Hon. Hugues Lapointe (Minister of Veterans Affairs) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure to amend the Veterans' Land Act to provide financial and technical assistance to veterans for home construction and also to provide further financial assistance to veterans presently settled under the act as full-time farmers or who may be so settled in the future and to veterans who may in the future become qualified as part-time farmers or commercial fishermen.
Inquiries of the Ministry
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister arising out of press reports of the speech that he made at Ste. Foy over the week end? When the Prime Minister referred to Canada's continued confidence in the possibility of securing peace through negotiation, did he have in mind any specific negotiations or any specific leadership which Canada is intending to initiate at the present time?


Right Hon. L. S. St. Laurent (Prime Minister):: No. I had in mind the efforts that are being made by all those who are assembled at Geneva to try to work out a peaceful settlement of the problems that are before them there.


FRASER RIVER
[Stage Direction]
On the orders of the day:
Mr. T. H. Goode (Burnaby-Richmond):: wish to address a question to the Minister of National Defence. Conditions of run-off on the Fraser river are causing concern in British Columbia. Should the situation worsen will the Minister of National Defence give assurance that the services of the army, navy and air force will be offered to the people of British Columbia, and will sandbags be available to fight flood should the necessity arise?


Hon. Brooke Claxion (Minister of National Defence):: Mr. Speaker, it is not for the navy, army or air force to offer their services. If those services are required, that matter would be decided by the governor in council in accordance with section 35 of the National Defence Act. If they are required, the armed forces are prepared to do anything within their capacity to deal with the emergency. In the meantime they are keeping in close touch with the provincial authorities and also with the actual situation in the river.
With regard to the question of sandbags, may I say that I understand that the Department of Public Works of the province has approximately 1 million sandbags. There is

Municipalities-Taxes on Purchases also a productive capacity for sandbags now in the western provinces; that is in addition to the large quantity the Canadian army has on hand.


Walter Edward Harris: that the house go into committee of supply.


MUNICIPALITIES-EXEMPTION OF PURCHASES FROM SALES AND EXCISE TAXES
Hon. George A. Drew (Leader of fhe Opposition):: Mr. Speaker, following the
accepted practice I propose to take this opportunity to rise on a question which is assuming increasing importance throughout the whole of Canada. The same subject has been discussed on earlier occasions, but new emphasis has been placed upon the need of the municipalities for a thorough re-examination of their position as a result of many of the new demands which are being imposed upon them. There seems to be some tendency to accept a satisfactory surplus in the federal financial position or in the provincial position in any province without due regard to the fact that there are many municipalities in Canada today, at a time of high earnings and high revenues, that simply cannot make ends meet.
This is borne out by resolutions presented by the municipalities themselves and by the repeated resolutions of meetings of mayors and reeves in their various organizations throughout Canada. The fact is that the municipalities, which, after all, provide that form of local government closest to the people, and which give many of our most important services to the people, find themselves caught between the millstones of rapidly mounting costs on the one hand and limited tax resources on the other.
There is a particular reason why the federal government should seek the support of parliament to ease the burden upon municipalities in every way it can. It is sometimes forgotten that when the provincial governments entered into the tax arrangements in 1942, under which they gave up certain taxing powers, many municipalities gave up their taxing powers at the same time. This was recited in the statute which approved of the agreement signed at that time. They have never been restored to their position in relation to those taxes, nor has their taxing power been restored in any corresponding field.


Mr. Speaker:: Order. May I interrupt the Leader of the Opposition at this point? If he does not relate his subject very shortly to
[Mr. Claxton.l

one which is covered by the scope of federal affairs I will have to inform him that it is not in order, even on a motion to go into supply, to bring forward as a grievance a matter with which this parliament has nothing to do. The municipalities are creatures of the provinces. There may be a relationship between the provinces and the federal parliament but I do not see a direct link between the parliament of Canada and the taxing powers of the municipalities. It may be that my remarks are inopportune or premature, but I should like the Leader of the Opposition to know that if he is going to continue with the subject that he has introduced, without linking it specifically to affairs over which this parliament has jurisdiction, I will have to tell him that he is not in order.
I am informed that there is on the order paper a resolution having to do with a measure to be introduced to extend the benefits of the Municipal Grants Act and to provide for certain changes in connection with the administration of the act. I do not want to anticipate what the arguments of the Leader of the Opposition are going to be, but if he is going to contend that larger benefits should be paid to municipalities by way of grants in lieu of taxes I will have to tell him that in this respect he will be discussing a matter that involves legislation already appearing on the order paper, and that too is not in order on a motion to go into supply.


George Alexander Drew: No, Mr. Speaker, it is not my intention to discuss that subject. That subject will be discussed at the time that the resolution is given consideration. I am confronted with the problem that always presents itself as to how long an introduction should be. Nevertheless, I think that the remarks I make are very clearly related to something that is directly and exclusively within the jurisdiction and authority of the government of Canada and this parliament. I am going to discuss the urgent need for reconsideration of the position of the government in relation to the sales and excise taxes charged on purchases by municipalities throughout Canada. This is in no way covered by the resolution to which Your Honour has referred.


Walter Edward Harris: On a point of order, that matter is before the house in the budget resolutions which, according to the order of business, will be called later this day if reached.


George Alexander Drew: The subject matter I am raising is not covered by the resolution that has been mentioned. That resolution relates to a very limited proposal. I submit, Mr. Speaker, that it is proper to place before the house considerations which should be borne

in mind in dealing with any matter that has not already been disposed of and is not covered by a motion before the house. There is no proposal before the house that the municipalities be exempted in whole from the sales and excise taxes on their purchases of machinery, equipment and things of that kind which they need. It is to that very urgent requirement that my remarks are directed.
The need for consideration of this subject has received new emphasis in recent weeks because of the discussions which have taken place with respect to the problem of equipping the municipalities to meet such plans as are prepared for the civil defence of this country. I raise this point by way of illustration only. I would point out that the Minister of National Health and Welfare (Mr. Martin), under whose department civil defence has been placed, has emphasized the vital importance of preparing to meet this situation. If his advice is accepted, then there are many new requirements which must be purchased by the municipalities and which will in no way be covered by such limited exemption as will be afforded by the resolution referred to by the Minister of Citizenship and Immigration (Mr. Harris) if it should be the will of parliament to adopt it. I would also point out that right across Canada there is increasing evidence of the need for revenue, a need that is not covered by local taxation or by any compensating grants made by the provincial governments to the municipalities. At the point where His Honour asserted that I had not yet clearly indicated the purpose of my remarks, I had intended to point out that there has been some compensation to the municipalities in respect of the taxing rights which they were called upon to forgo under the agreements of 1942. Nevertheless it is only necessary to ask any mayor, any reeve, or the member of any urban or municipal council across Canada whether or not the present situation is satisfactory to find out that today the municipalities are unable to continue to meet the increasing demands for those vitally important local needs unless some new method of taxation is found.
I do not intend to embark today upon a discussion of the need for a conference between the various levels of government in this country. I have already made that request to the Prime Minister (Mr. St. Laurent) who is the only person who could call such a conference. I have emphasized my reasons for believing it should be done. I leave that where it stands because the Prime Minister has indicated he is not prepared to accept that proposal. I do strongly urge, Mr. Speaker, in the absence of any immediate
Municipalities-Taxes on Purchases discussion of a general readjustment of the taxing position as between the national, provincial and local authorities, that this tremendously important relief could be granted, and should be granted having regard to the practice that is already being followed.
It need not be pointed out that the whole strength of our society, and in fact the real foundation of our democracy, rests upon municipal government. It is there our whole democratic system begins; that is where the concept of personal representation is first made evident to the people of our country; that is where the relationship between the government and the elected representative is most effective; that is where we see the real supervision of the business of the people themselves. I suggest that at this particular time we have reason in this House of Commons to realize that the plans for housing, the plans for the general improvement of our country and the plans for the development of Canada, initiated in this House of Commons and approved by the parliament of Canada, in themselves impose new burdens upon the municipalities. Unless the municipalities are able to meet them, then many of the plans are rendered ineffective or hindered by difficulty in finding the appropriate conditions in which those plans can be advanced.
In no single case is this more evident than in the case of housing where the burden of the municipalities is to provide adequate services, not only such services as sewers, roads, water works and things of that kind, but educational facilities, health facilities and everything of that nature, which form an essential part of any particular program of development for the advancement of our society which may be contemplated. There is another reason, Mr. Speaker, why it seems to me that action along these lines is long overdue. The municipalities, as Your Honour pointed out a short time ago, are the legal creatures of the provincial legislatures. I hope that no member of any municipal council will feel that I am using any term that does not recognize the full dignity of the municipalities when I make that simple and unchallengeable statement.
Under our constitution, the municipalities take form under the municipal acts of the various provinces. The way in which they elect their local governments, the way in which those governments serve the people and the way in which their many activities are carried out, are defined and supervised by the provincial government. There is, therefore, a close, intimate and continuous association between the municipalities and the provincial authorities. In fact, in many cases the municipal councils are an integrated part
4774	HOUSE OF
Municipalities-Taxes on Purchases of the general provincial activities. For that reason it has been difficult for many of us to understand why it is appropriate that the provincial governments should be able to buy exactly the same things that are bought by the municipal councils, and yet they should pay no sales or excise tax while the municipal councils are called upon to do so.
I sometimes wonder why a device has not been employed which could, in some substantial measure, overcome this difficulty. I think it might be one that perhaps might commend itself. If the provincial governments created a purchasing organization for the municipalities, it would seem quite evident that a provincial organization of that kind would be free of sales tax and excise tax, and could pass on that benefit to the municipalities. Nevertheless, that is a cumbersome procedure that should not become necessary, and certainly will not become necessary, unless this parliament fails to carry out the obviously necessary reform.
In saying all this, it is not my intention to discuss the motion which has been referred to by the Minister of Citizenship and Immigration (Mr. Harris), beyond saying its effect is so limited it offers little or no relief to the municipalities, and particularly in regard to those purchases which are of the greatest importance and cost. However, this subject is one that has been presented to the government by resolution on many occasions. The municipalities find themselves more and more reduced to taxes on real estate for their increasing needs. The very things done by this parliament throw a burden on the home owner, the farm owner and the owner of small business properties in the municipality. This is something that should be borne in mind. This is not an act of mere generosity we are suggesting, but a practical reciprocal recognition of the fact that the municipalities are called upon to do many things that, in themselves, are essential if the programs initiated here are to be carried out.
Now, Mr. Speaker, the figures in themselves are interesting and revealing. We find, for instance, that last year the mayor of the city of Edmonton stated that if the dominion had paid its share of the general obligations that the municipalities have been asking the dominion to bear, there would be a saving of approximately $600,000 in that city. That is certainly a substantial figure for any city. Whether that be the right amount or whether it should be a lesser amount, we do know what this amount of sales tax is for the city of Montreal. For the financial year 1951-52, the city of Montreal, on materials and equipment purchased either by the city itself or


by contractors, paid $382,000. Mr. Speaker, I repeat these are only amounts that illustrate what is happening in varying degress across this country. These payments are largely due to things that must be done in order to carry out programs initiated on behalf of our people by the government of Canada and by provincial governments in the general advancement of our society.
I believe that there is no single reform in taxation more greatly needed today than a readjustment of taxes which would relieve home owners, farm owners, owners of businesses and property, of the present burden of taxation. Nothing would, of itself, encourage more greatly a still more extensive building of homes and farm buildings and things of that nature, when reason suggests that it should be done. When this very thing is being done for provincial governments in relation to the very same things, then I submit that the municipalities, which are brought into existence as corporate bodies under the laws of the provinces, should have the same right and courtesy extended to them.
Therefore I move, seconded by the hon. member for Greenwood (Mr. Macdonnell):
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
"this house is of the opinion that consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax."


Mr. Speaker:: As I had occasion to inform the Leader of the Opposition (Mr. Drew) earlier, an amendment to the motion to go into supply should not involve legislation placed on the order paper. The very effect of this amendment is that legislation be introduced similar to that contemplated in a budget resolution.
I hold in my hand May's fifteenth edition in which, at page 706, I find this:
The ordinary rules of debate are applicable on this occasion.
That is, on a question for Mr. Speaker to leave the chair. It continues:
For instance, a matter which should be considered upon a substantive motion, or which would anticipate a more effective form of proceeding of which notice has been given cannot be discussed. A subject, or matter of detail which should be discussed in the committee, has been held to be out of order. The rule which prohibits reference to matters involving legislation-
Then there is a reference to page 717, to which I shall refer later. It continues:
-having been found too rigid, was relaxed, on the recommendation of the select committee on procedure of 1946.

Well, so far as we are concerned, that rule was not relaxed by any committee of procedure of this house.
And then, if hon. members will look at the reference to page 717, which is mentioned here in brackets, they will find this under the heading "General Restrictions on Debate in Committee of Supply":
Regarding the general conduct of debate in the committee of supply, it may be observed that remarks on the conduct of a servant of the state, made on the grant containing his salary, must be restricted to his official conduct. The committee of supply does not afford the proper opportunity for discussing from which house of parliament a minister should be chosen, or whether he should be in the cabinet or not, or which minister should represent the government in respect of the estimates under consideration. The administrative action of a department is open to debate, but the necessity for legislation and matters involving legislation cannot be discussed in committee of supply.
It has also been a rule in this house that if an hon. member wishes to introduce legislation or to amend legislation there is a definite form of procedure. The Leader of the Opposition may say, "Well, if it involves the expenditure of money or the imposition of a tax, I cannot move it. It has to be moved by a minister of the crown." That is the very basis upon which our parliamentary procedure is founded. Matters having to do with the spending of money or the imposition of taxation have to be introduced by the executive. The opposition has the right to criticize and to censure by amendment or by motion. But in this particular instance, on a motion to go into supply, what has to be heard is a grievance, but not a motion involving legislative matters which are to be dealt with later as they appear on the order paper.
Of course I am prepared to hear comments on the ruling. However, in view of what I have said, which is fully explained in May, I would be inclined to declare that the amendment cannot be received.


George Alexander Drew: Mr. Speaker, there seem to be two points raised in connection with this matter, the first of which is that of an amendment dealing with possible legislation, and the other being the question of a matter already before the house.
If Your Honour's ruling has the effect of denying the right to place before the house the proposal that consideration be given to certain legislation, then I submit that the long history of the effective employment of a motion to go into supply to present positive proposals to the House of Commons will have been destroyed. I submit further that, over and over again, in every session, the procedure I have suggested has been followed
17. 1954	4775
Municipalities-Taxes on Purchases with a regularity which embeds it firmly into the practices of the House of Commons.
And I would say this, that in so far as the legislation is concerned, the amendment is very carefully drawn to propose that consideration be given to legislation which is not now before the house, and which is not in any way suggested to the house in the speech from the throne, in the budget, or in any resolution on the order paper.
And, so far as the second point is concerned, if the fact that some resolution dealing with a particular aspect of a problem is to deny the opportunity to propose consideration of a general approach to the problem, then I would point out that a very effective blocking device could be employed simply by introducing a series of resolutions dealing with very limited aspects of every question that might come before the House of Commons. The hands of the house would be tied in that hon. members would not be in a position to present this kind of resolution which in the past, both here and at Westminster, has over and over again formed the basis for positive and effective discussion- discussion which, in many cases, has had satisfactory results and received the acquiescence of the government. Even within the last two or three years we have had encouragement in that we have seen certain of these proposals actually accepted.
I would point out that if a resolution of this kind-which, I might add, has been introduced every year for several years, in a somewhat similar form-is to be withheld from discussion by something dealing with a limited part of it, we would have a serious situation. How could this be done? Well, certainly the government could anticipate that such a resolution would be brought forward, in view of the fact that this argument has been presented before. Under such a ruling it would only be necessary to introduce a motion that the sales tax on school rulers be removed, and there could be no discussion on the broad subject of the relief of municipalities in regard to purchases of machinery and equipment either for municipalities or for schools. Surely the intention of the rules and the rulings made in this house should not be to restrict the opportunity to place positive proposals before the house. I submit, Mr. Speaker, that on the contrary, the rules should be so interpreted as to encourage positive recommendations dealing with those matters that are obviously of considerable concern to the people of Canada, and particularly the municipal taxpayers of this country.

Municipalities-Taxes on Purchases


Mr. Coldwell:: May I just say a word, Mr. Speaker? I agree with the Leader of the Opposition in regard to the suggested objection you have made to this particular amendment. This amendment follows strictly the line that has been laid down in this house ever since I have been here at least. It merely asks for the consideration of the introduction of certain legislation which is outlined.
I am in sympathy of course with the purpose of this amendment, though, if you suggested that this might not be in order on account of resolutions which we are considering in connection with the debate on the budget, I would have agreed with you. But if the ruling is made merely on the basis that the form of this is not compatible with the usual procedure of the house, then I certainly could not agree with you, Mr. Speaker, with all due respect.
I think that you might, if I may suggest it, give more consideration to this amendment because on the ground that you have just suggested the ruling made might be on very shaky foundations. On looking it over I find it is quite compatible in form with many resolutions that have been moved and accepted from time to time in this house.


Mr. Fulton:: May I just say a word on the various points that have been raised? Dealing firstly with the last point made by the leader of the C.C.F. party, I would remind you, sir, that we had an amendment earlier in this session dealing with the unemployment situation and advocating immediate action, as I recall it, not only advocating measures to reduce unemployment but also, certainly by inference, at any rate an amendment to the unemployment legislation. Perhaps I should put it this way. The action urged in that resolution would have required legislation, and that amendment was allowed as being in order at that time. In fact there was an amendment and a subamendment. I suggest that on the same principle this amendment, although it might be that it does require legislation to implement it, is within the rules laid down by the ruling on amendments to the motion to go into committee of supply.
Very obviously, sir, in the vast majority of cases of redress of grievances or of matters that are put forward at this stage from this side of the house as being grievances requiring redress, it would require legislative action to deal with the request which is put forward in the resolution. If you were, sir, to embark on the kind of rulings which meant that only a resolution, the implementation of which would not require

legislation, could be moved at this stage, then I submit, sir, that the raising of grievances and the moving of formal amendments with respect thereto would be virtually impossible. Therefore I would echo the words of the hon. member for Rosetown-Biggar (Mr. Coldwell) and ask you carefully to reconsider your ruling before you put it on that basis. On the other basis which was alluded to and on which I understand at present you are not ruling it out of order, I think it is sufficiently obvious, sir, from what has been said by the Leader of the Opposition, it does not confine itself in any way to the particular subject embraced in the budget resolution which is, it is true, on the order paper.
I do not know whether the hon. member for Rosetown-Biggar was inviting Your Honour to give further consideration to that matter, but I simply suggest to you, sir, it goes so very much beyond what is embraced in that budget resolution that it would be impossible to rule it out of order on that ground. Therefore I respectfully submit that it stands on all fours with similar resolutions moved at this stage in the past and should be allowed as being in order.


Stanley Howard Knowles: Mr. Speaker, I trust that you will meet the request that has already been made that you reconsider the opinion that you have tentatively placed before the house. I have been looking through such references as I have under my hand, and I find no instance of an amendment of this kind being ruled out of order. On the other hand, I find several instances of amendments almost, if not exactly, the same as this being allowed. It seems to me that if Your Honour focuses attention on the word "legislation" you should not ignore the governing phrase "the opinion that consideration should be given to the introduction of legislation".
I confess that the other amendments that I have looked up thus far do not use the word "legislation" but they do express the opinion of the house that certain steps should be taken; that provision should be made; that measures should be taken. As a matter of fact, this amendment could be corrected on that point, if Your Honour thinks it needs correction, by just striking out the reference to legislation. I do not think such a change is necessary, but it could be made to read:
this house is of the opinion that consideration should be given to the exemption . . .
And so on. Now, bearing in mind that these are amendments that do not have an operative effect, the results are the same either way, and with all respect I must say that Your Honour pays too much attention

to the word "legislation" which appears in this amendment, bearing in mind that the amendment is one of those abstract amendments that do not have an operative effect.
It seems to me that in citation 345, which is one of the general citations providing for the redress of grievances, there is wording that covers this amendment where it says that the amendment need not be relevant but may relate to every question connected with public administration.
Then there is citation 444 as well, which refers to motions. I think Your Honour will admit that it covers amendments as well. It reads as follows:
Private members may introduce resolutions that do not directly involve the expenditure of public money and have no operative effect but simply express an abstract opinion on a matter which may necessitate a future grant.
Whether one is asking for the expenditure of money or asking for legislation that may result in the expenditure of money or the loss of revenue to the public treasury, the result is the same. Citation 444 appears to have formed the basis of decisions made by former Speakers which I shall not read. But I would mention that they may be found at pages 519, 529 and 537 of Beauchesne's Parliamentary Rules and Forms, third edition. In all these cases what was involved was a motion that indirectly could involve legislation or the expenditure of money. But the Speaker in each case allowed them as motions or as amendments because they were abstract; they were inoperative in their effect; they just expressed the opinion of the house. Surely, if I may read it again, that is what this amendment asks for when it says:
this house is of the opinion that consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax.
There have been a number of motions of this kind. Indeed, a number of them have come from members of this group. The former member for Melfort, Mr. P. E. Wright, presented a motion that called for money in connection with wheat on June 5, 1950, and it was in order. Similarly, there was a motion on March 9, 1951, which was moved I believe by my deskmate, the hon. member for Assiniboia (Mr. Argue), and it called for an initial payment of $1.75 for wheat in that year. On May 11 last year, just before the end of the session, I moved an amendment which read as follows:
"this house is of the opinion that consideration should be given to increasing the payments made to our old age and blind pensioners, under the Old Age Assistance Act, the Old Age Security Act and the Blind Persons Act, to an amount commensurate with today's cost of living."
17. 1954	4777
Municipalities-Taxes on Purchases
That, Mr. Speaker, can be found at page 5110 of Hansard for May 11, 1953. Now, Your Honour might point out that that motion did not have within it the word "legislation", but the effect would have been the same if my motion had been adopted. If it had carried it would have been the expression of the opinion of this house that that step should be taken and it was a step that would require legislation either by the government then in power or the one which would have taken its place if the government had been defeated on the motion.
I therefore submit, with deference, Your Honour, that you have paid too much attention to the word "legislation" as it appears in this amendment. It is my belief that, in accordance with the excerpts you have quoted from May, to move the direct introduction of legislation on the motion to go into supply would be out of order. It would not be in keeping with the grievance procedure. But that is not what the Leader of the Opposition (Mr. Drew) is doing. He has simply exercised his right on the motion to go into supply to express as his grievance his opinion that consideration should be given to making a certain provision, taking a certain course, and introducing certain legislation. I trust that the arguments advanced by those of us who have spoken from the floor will prompt Your Honour to reconsider your opinion on this matter.


Louis Stephen St-Laurent: Mr. Speaker, I would
like to say a few words on this matter. On the first point, in reference to which Your Honour cited May, I have always understood that "legislation", there, was legislation which was before the house for consideration at the session which was in progress, and not legislation generally, because the practice, I think, since I have been here, has been on several occasions to have amendments on the motion to go into supply which express the opinion, whether the word "legislation" is used or not, that there should be some change that could not be made otherwise than by legislation. However, I think the citations to which you have referred are still applicable to this case because here this is in effect an amendment which says the resolution that is before the house is insufficient and should not extend the relief from taxation merely to certain items, but should extend it to all items purchased by municipalities. Here we have something before the house which is a proposal for legislation by the government, and I have no doubt that when the resolution is under consideration we will hear it said that it does not go far enough. But I think that will be the time when it will be in order to say that, and
4778	HOUSE OF
Municipalities-Taxes on Purchases meantime it is not in order to say it in the form of an amendment to a motion to go into supply.
When we reach consideration of the resolution on the Excise Tax Act, which reads as follows-
4. That the sales tax on the following goods be repealed:
(c) equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of one thousand dollars per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not to include automobiles nor ordinary motor trucks;
-we will hear it said that that is very good, but that it does not go far enough and that it should be extended to all equipment and supplies purchased by municipalities.
That being the proposal which is before parliament at this time for debate, I think the citations from May make the word "legislation", as used in these citations, applicable to the present amendment.


Mr. Speaker:: I wish to thank hon. members-does the hon. member for Eglinton (Mr. Fleming) wish to speak?


Mr. Fleming:: Yes, Mr. Speaker, I should like to say a word on this matter. I do not pretend there is much to be added to the arguments which have already been addressed to you on this subject, but I would ask you, in weighing your decision on this matter, to bear at least these two things in mind.
This is a matter of high importance, Mr. Speaker. It is not just an ordinary amendment upon which you are called upon to make a decision, because if the decision you have indicated as being in your mind is given effect by you, Mr. Speaker, it seems to me it is going to have the inevitable result of greatly curtailing the procedure which has been recognized here for a very long time of permitting the effective airing of grievances in this house.
I ask you, if you will, sir, to consider very carefully that if the ground upon which you have proposed to rule this amendment out of order is sound it can have the effect of curtailing to a degree I think very few of us in this house can fully apprehend the well recognized and extremely useful and democratic procedure we have on motions of this kind. May I urge, sir, that basically the approach of the Chair to amendments of this kind should be to admit these amendments freely unless there is a clear offence against some rule, order or previous decision.
It appears that some weight is attached in your mind, Mr. Speaker, to the suggestion that there is some legislative effect to this
(Mr. St. Laurent.]

resolution. At any rate that appears to be the understanding of hon. members, including the Prime Minister, in regard to what you said. It seems to me that the use of the word "legislation" in the amendment does not fix the nature of the amendment. It would be mere hairsplitting to say an amendment of this kind is legislative in its nature simply because the word "legislation" is used in some place in that amendment. The essential nature of the amendment, sir, is the governing consideration in my submission, and the essential feature of this amendment is to invite, in the time-honoured word, "consideration" of this matter. If it is adopted it can go no further than to invite consideration in proper quarters of the matter that is referred to here, namely, the exemption of municipal councils and school boards from payment of this tax.
The Prime Minister (Mr. St. Laurent) made reference to the budget resolution proposing an amendment to the Excise Tax Act, which was introduced on April 6. Now, sir, if the amendment is to be ruled out on that ground I would suggest to you that in effect the ruling then will say that the greater includes the less. If an amendment such as has been introduced by the Leader of the Opposition is out of order simply because there is somewhere before the house a resolution which deals with a tiny fragment-and it cannot be more than that under the language of the budget resolution-of what is proposed in the amendment, then, sir, it is going to be, if not impossible, then virtually impossible hereafter to introduce an amendment to a supply motion, in any event after the budget has been introduced.
It would seem to me, sir, and I say this with the utmost respect, a quite extraordinary thing if, once a budget is introduced with a group of budget resolutions, somehow the whole atmosphere in which we approach these questions of amendments on supply motions should change, because the budget resolutions are very wide in the nature of things they touch. If on a supply motion an amendment suddenly becomes out of order simply because it touches on something on which there is nothing more than the most casual reference or fragmentary provision in the budget resolutions, it is inevitable that under such a decision the power and useful right of members of this house to introduce amendments on supply motions is going to be virtually nullified.
With great respect, Mr. Speaker, I consider that is not putting it too strongly if your proposed ruling is going to stand on the grounds on which it has been proposed and discussed here. I would urge, with the

utmost respect, that on a matter of this kind we are dealing with something that goes to the very root of the rights of members of this house. It is the type of matter on which *-if I may express this opinion to you, Mr. Speaker-the approach should be not one seeking to coniine but one seeking to provide the freest possible assertion of the rights of the members of the house. With great respect, Mr. Speaker, I urge upon you that the subject matter of this amendment does not trespass upon existing subject matter of things that are on the order paper now; far from it. It is not legislative in its scope any more than any resolution introduced by a private member could be legislative as applied to the balance of ways and means, expenditures or taxation. This is the recognized form in which the house expresses itself on these questions.


Edmund Davie Fulton: In the hope that it may clarify the matter and enable you to reconsider your ruling I would propose to move,-and in this I act with the knowledge and concurrence of my leader-seconded by the hon. member for Lanark (Mr. Blair):
That the amendment be amended by deleting the words "the introduction of legislation which would provide for"
The amendment would then read:
this house is of the opinion that consideration should be given to the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax.
I have no wish to make that motion unless it would be of assistance to Your Honour. If Your Honour's feeling is that the subject matter of the resolution is out of order, then of course the suggestion I have made would not cure it. But I understand Your Honour's opinion to be that the objection to the resolution is that it advocates specific legislation. If that be the objection, then I would suggest that it would be cured by the amendment. It is for that purpose alone that I would move the amendment.


Mr. Speaker:: Hon. members have been extremely kind. I must thank them all for having provided me with such valuable assistance. Before I deal further with this point, I should like to reread what I said earlier because it seems to me that I was somewhat misunderstood or that I was not clear enough. I should therefore like to leave the matter as it stands for the time being. If an opportunity is given to me to study it, I will start by rereading what I said earlier. Then later I will be in a better position to give a ruling which I hope will give satisfaction to everyone.
17. 1954
Municipalities-Taxes on Purchases To my mind legislation does not mean an existing statute. It is the kind of legislation which begins, if it is a money matter, with a resolution, followed by first, second and third readings of the bill. It is legislation which Beauchesne talks about, I think in citation 467, where he says that an amendment should not relate to a piece of legislation, namely a resolution of ways and means which is already on the order paper. My point-and the one that the hon. member for Rosetown-Biggar (Mr. Coldwell) thought I should have made-was strictly related to his, although I had not amplified upon it. If the hon. member recalls what took place, he will remember that when I concluded my remarks I said that I was inclined to rule it out of order but that I should like to hear observations upon what I had said. I was perhaps keeping until the end what I consider to be the best of my arguments. I have before me here the budget resolution which appears at page 3737 of Hansard. I thought that this amendment was strictly related to a piece of legislation which is now before the house, namely a resolution which is on its way to becoming a bill. That is what we are talking about when we speak of legislation; it is the various processes from the resolution stage to the adoption of a bill. If it has received royal assent, it is a statute. I think it was the hon. member for Cape Breton South (Mr. Gillis) who the other day said I had spoken perhaps too long. But at that time, as he will recall, I was explaining what was meant in the resolution moved by the Minister of Veterans Affairs (Mr. Lapointe) and which contained the expression "such other legislation". I thought that today I did not require to make myself as clear as I tried to do on that occasion. This is what I had in mind. In any event, I have been impressed by the remarks made by the hon. member for Eglinton (Mr. Fleming), the Leader of the Opposition (Mr. Drew) and all the others who have taken part in this debate. It is not my intention in any way to curtail the opportunities for members to put forward grievances, because it is a time-honoured right that members have: No supply before redress of grievances. I do not want to curtail that right in any way. On the other hand, it is my duty to make sure that the rules of the house are not transgressed either by reviving debates or by duplicating them. I must deal with the rules as I have them in my hand. Citation 467 of Beauchesne's third edition, towards the end of the paragraph, reads as follows:
... if one is moved, shall not relate to any decision of the house during the current session, nor to any item of the estimates, nor to any resolution to be
4780	HOUSE OF
Municipalities-Taxes on Purchases proposed to the committee ol ways and means, nor to any matter placed on or whereof notice has been given in the order paper.
As I say, we have here this budget resolution which the Prime Minister (Mr. St. Laurent) read a moment ago. What I have to examine is what is meant by the word "relate". I should like to consider the matter further before I give a final ruling.


Major James William Coldwell: Then I presume, Mr. Speaker, that for the moment the subject matter of the amendment is properly under discussion? If so, I should just like to say a few words upon it.


Mr. Speaker:: Perhaps the hon. member will allow me to interrupt him for a moment. I do not think I have read the amendment. I will read it so that it will be proposed from the chair. The Leader of the Opposition, seconded by the hon. member for Greenwood (Mr. Macdonnell), moves:
That all the words after "That" to the end of the question be deleted and the following substituted therefor:
"this house is of the opinion that consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax".
Then the hon. member for Kamloops (Mr. Fulton) has expressed the wish to modify this amendment, I assume with the consent of the mover.


Edmund Davie Fulton: Your Honour, what I was suggesting was that if it would assist you in making a ruling, I would be prepared to move that amendment. But if I might have your consent and that of the house to withdraw the amendment, I think it would simplify matters.


Mr. Speaker:: Since I have not received the amendment, we will consider that it has not been properly moved-


Louis Stephen St-Laurent: Agreed.


Mr. Speaker:: -because I do not think it would affect the matter anyway. Whatever decision I may make on the point, I will e;ther accept the amendment or rule it out on the ground that it relates to a resolution already on the order paper to be considered in the committee of ways and means. But I want to think it over further.


Major James William Coldwell: I was just going to say that the amendment moved by the Leader of the Opposition would not be in the possession of the house until it had been read. I suggest that with your permission the hon. member for Kamloops might be allowed to make the change in the amendment that he suggested. I recollect that on one previous occasion at


least my former leader in the house, Mr. J. S. Woodsworth, moved an amendment or a resolution-I have forgotten which-and it was not then read to the house. Mr. Speaker Lemieux suggested that during the supper hour it could be better worded. The change was made and the house accepted the change since the amendment or motion had not been formally placed before the house by Mr. Speaker reading it into the record.


George Alexander Drew: With the consent of the hon. member for Rosetown-Biggar, may I make a suggestion consistent with what he has now said. Rather than regard the proposed amendment as an amendment to the amendment, may I suggest that the practice the hon. member has now suggested be followed. For the purpose of avoiding anything that might appear to be presenting unnecessary difficulties in relation to established practice the house might follow the course he has indicated. That would place my request before you for your consideration, if you should find that is an essential part of what you are doing, namely, that the words "introduction of legislation which would provide for the" be dropped so that the amendment would read:
This house is of the opinion that consideration should be given to the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax.
I sought permission to present this suggestion to you in the hope that we might not find ourselves confronted with a ruling which might appear to limit our debate in a way that perhaps might not be fully understood by hon. members.


Major James William Coldwell: I mentioned it in order to give Mr. Speaker the opportunity, if he so wished, to consider whether he would follow the procedure adopted by Mr. Speaker Lemieux in the case I have mentioned.


Mr. Speaker:: So that all discussion pertaining to this particular subject may follow consecutively on the record, may I add at this point that I understood that the hon. member for Kamloops was moving a correction to the amendment already moved by the Leader of the Opposition for the purpose of helping the Chair, by suppressing some words, in making a decision which would have perhaps kept the amendment in order. I have said that whether these words are suppressed or whether they remain will not change anything one way or the other as far as my decision is concerned.
The Leader of the Opposition, perhaps because of a suggestion made by the hon. member for Rosetown-Biggar, has said that

he would prefer to see the words "introduction of legislation which would provide for the" removed. If I, like Mr. Speaker Lemieux some years ago, had thought that their removal would result in a better wording of the amendment I could have arranged to have those words removed. However, that is not the case because I do not think that it would improve the resolution one way or the other. It reads just as well with those words as without them, and it will not change my ruling one iota.


Edmund Davie Fulton: On the point of order, I quite agree with you, Mr. Speaker, that my amendment was designed to cure what I had thought was a defect that you had indicated in the resolution. I now find, in the light of your subsequent remarks, that that was not the point on which you were going to rule. Therefore I feel there is no purpose in proceeding with my suggestion.


George Alexander Drew: May I interject, and then my interjections are finished. Since this ruling is, I believe, regarded as a matter of some importance, I would not wish the record to leave any uncertainty as to my position. In making the suggestion I did I was not conceding for a moment that the resolution as it stood was not in order. I believe it is. I was merely offering the suggestion, should Your Honour feel that it did in any way change the situation, that a device that has been employed on other occasions might be adopted. Since Your Honour has made it clear that it does not change the effect then I would naturally prefer the amendment to stand exactly as it is.


Major James William Coldwell: have almost forgotten what I started to say, Mr. Speaker, because it seems so long ago. I am not objecting because I think this is an important point of order and an important ruling to which you must give consideration. But since this amendment is under discussion for the time being at least, I wish to say that I have every sympathy with the views expressed by the Leader of the Opposition, and I believe that those views will be shared very largely by members in all parts of the house. Some of us, before coming to this parliament, have had a certain amount of experience in municipal affairs. I can look back now more than a third of a century to the time when I was first elected to the city council of the city of Regina. Over those thirty-three years municipal administrations have been faced more and more with problems that require considerable expenditures of money, and at the same time they have found it difficult
17, 1954	4781
Municipalities-Taxes on Purchases to impose any more direct taxes on real and improved property than they were imposing before.
The result is that both urban and rural municipalities are faced with difficulties when they find it necessary to import fire fighting equipment or trucks and so forth. During the debate on the budget I referred to this problem and I said that I regretted that the excise tax had not been removed from trucks imported for use by municipalities. I think that the house has to give consideration to ways and means of improving the financial resources of the municipalities of Canada. Of course, because they are parts of municipalities the same applies to the school boards of Canada. Quite frequently school supplies have to be imported from other countries, the United States or Great Britain. Where foreign languages are taught, supplies have to be imported. In the case of science, new apparatus devised and developed in many other countries has to be imported.
In some instances there is duty free importation, but then we find that other forms of taxation are levied. When supplies are bought within the country they are of course subject to the sales and excise taxes in many instances. In view of the difficulties now facing the municipalities and school boards and, indeed, educational institutions generally, including universities that are financed by the provinces and universities financed by endowments or gifts from time to time, the government should give consideration to introducing legislation designed to relieve these burdens as far as it is possible to do so. After all, as the Leader of the Opposition indicated, our democratic system is based upon local government and local democracy. That was the origin of the institutions that we have in democratic countries. Go back to Anglo-Saxon times. There were the village or folk moot and the hundred moot leading up to the national witenagemot and so on down to our parliamentary institutions. If we weaken the local governments, if we make it more difficult for them to fulfil the obligations they have to the people, then we shall be faced with a more acute problem. As a former member of a city council on which I served for many years, I know that the people are more conscious of the things that happen in the municipalities or in the council than they are of what takes place in this parliament. I know that the members of those bodies are closer, in many respects, to the people who live in those municipalities, than are the members of parliament in this House of Commons.
I say that I have every sympathy for the amendment introduced by the Leader of the
4782	HOUSE OF
Municipalities-Taxes on Purchases Opposition (Mr. Drew). Whether or not it is in order on other grounds, I am not going to say. If it stands, we most certainly shall support it. If it is ruled out of order by Mr. Speaker, we shall see to it that the grounds upon which the ruling is made are good grounds, and we shall be governed accordingly. All I want to do this afternoon is to say that I feel this parliament has to consider ways and means of helping the municipalities and our school boards. My colleague, the hon. member for Saskatoon (Mr. Knight), has frequently suggested federal grants for education, something of which we in this group are very much in favour. He knows much more about the financing of education in the various provinces, and in the various cities, than perhaps I do at the moment. I join with others in this house in urging the government to consider how best this parliament may strengthen the local governmental institutions in our country, the municipalities, the school boards and boards of a similar nature.


Mr. Solon E. Low (Peace River):: I should like to say just a word on the subject matter that has been suggested by the Leader of the Opposition (Mr. Drew), that is the matter of giving assistance through our federal tax policies to the municipalities and school districts of the dominion. This is a subject in which I have been keenly interested for quite a number of years. Indeed, more than a score of times, I am sure, I have brought before this house the whole question of the exemption of school districts and municipalities from the payment of sales taxes and excise taxes on their purchases of machinery, buses, trucks and that sort of thing.
I want to indicate here that we favour the type of action that is contemplated in the resolution moved this afternoon, and if Mr. Speaker rules the amendment is in order, then of course I shall have to support it. It is true, however, that in the budget the Minister of Finance (Mr. Abbott) did provide for some relief to the municipalities by granting exemption from sales tax on the purchase of road building machinery. Now, that went only part way towards meeting the requests that have been made so often by members in this house. In the budget debate I expressed disappointment that the minister had not gone farther and exempted the purchases of buses and that sort of thing by school boards.
At the moment, I am not too familiar with the situations in the cities of Canada. I know they are having their troubles, of course, but they cannot be having nearly the trouble the rural municipalities are having because
[Mr. ColdwellJ

in the cities there are large concentrations of industries that are subject to taxation. You do not find this concentration of industry in the rural municipalities. Consequently, the only source of revenue the rural municipality has is the taxation applied against the farms and the homes of the people. This places a heavy burden on the rural municipalities. Federal policies dictate that on every purchase of road building machinery or equipment to transport children to school, things of that sort, a municipality has to pay a 10 per cent sales tax, and in addition certain other excise taxes.
I have calculated that on the purchase of an ordinary standard model Chevrolet car from the factory the purchaser must pay this government nearly $500 in excise and sales taxes combined; that is more than the labourers receive to build the car. I do not believe it is to the credit of the government of Canada that a situation like that exists. The ordinary, standard model Chevrolet car sells at the factory for around $2,200 or $2,300. What would a school division out in the country have to pay in sales taxes at 10 per cent on the purchase of a school bus, let us say, with which they transport the children to school, costing in the neighbourhood of $12,000 or $15,000? I shall let hon. members make the calculation themselves. It becomes a substantial sum, especially when it is recognized that the sales tax of 10 per cent is applied at the manufacturer's level and is often pyramided into a much greater percentage by the time the school division buys the bus from the retail distributor.
It is because of the extra burden on the school divisions and municipalities that I have spoken on a number of occasions in favour of having this tax abolished, and for that reason amongst others I welcome the opportunity to say something about it this afternoon and to ask the government to give some serious consideration to the extension of the good work they began in the budget this year. They should extend the exemption to cover all these purchases by municipalities and school districts, by means of which they build roads, give services to their people and transport the children to school. It must be remembered that these things are not purchased for resale. They are not bought by municipalities and school boards for the purpose of making money. They are purchased in order to give service, and for that reason the municipalities and school districts should be given every consideration.


Mr. Daniel Mclvor (Fort William):: I am not
an expert on taxation, but I did serve for a number of years on our school board in Fort

William. I cannot see any outstanding reason for this discussion now, because what has been said here could have been said on legislation that is coming along. In so far as the dominion government handing over any money for the support of education in Ontario is concerned, I shall oppose that strongly until the big surplus Ontario now has is used up for education.
This resolution asks for a reduction in taxation. I do not think it is so urgent after all, judging from my own city. We have another need in Fort William, which is suggested by a resolution that comes from Sault Ste. Marie to the effect that the dominion government spend a little more money in extending unemployment insurance benefits. How are we going to reduce taxes and spend more money? I think we have got to look at things in a common-sense way. Why reduce taxation in one way and extend it in another? I would like to back up the government in extending unemployment insurance. While I know it is on a sound basis, and that it is risky to touch it, yet when men are out of work and their unemployment insurance is running out it is far more important that there should be no reduction of taxation at this time.


Mr. J. H. Ferguson (Simcoe North):: Mr. Speaker, apparently my hon. friend would neglect the children of this country for other purposes. But two wrongs do not make a right. We need this support for these children, for their education; and that is what we are asking for. We are not referring to the conglomerate picture of unemployment insurance. Let us stick to the subject matter, and discuss it on its merits.


Daniel (Dan) McIvor: Why does not the province of Ontario use up its big surplus?


Julian Harcourt Ferguson: Why don't you try to run
the province of Ontario?


Mr. R. R. Knight (Saskatoon):: Mr. Speaker, the hon. member for Fort William (Mr. Mclvor) has said that he would not support any of these moneys coming from the federal government. I would suggest to him that there are other provinces, outside of Ontario, who are not in as fortunate a position, financially.


Daniel (Dan) McIvor: I am from Ontario.


Robert Ross (Roy) Knight: My leader has said a word in respect of my own work in supporting educational grants, and I do not propose to go into that matter today. To my mind this is not the opportune time to do so; but when that time does come I shall have something to say about it.
17. 1954	4783
Municipalities-Taxes on Purchases
I think it is fair to say however that some of the municipalities in some of the provinces -and I think perhaps some of the maritime provinces are particularly unfortunate in this respect-have, as it were, reached the end of their financial tether. They do not know how to keep their educational institutions operating. I have been warning this government and the people of Canada generally about the matter for a number of years. The government must be cognizant of the situation. It is a condition which will have to be remedied eventually, either by the present government or by another one. The situation is becoming pretty bad when we cannot even train the personnel required to man our schools. We find that the province of Ontario, to which the hon. member for Fort William has referred-and I see that he is leaving the chamber at the moment-has been unable to train its personnel and, quite openly, is bringing in teachers from Great Britain on a full-time and permanent basis.
I have no objection to this; but I do say that it is a situation which should not exist in this country. I believe Ontario is doing better than some of the other provinces that have dodged the issue and simply lowered their standard, thus letting the system of education deteriorate.
That is all I wish to say at the moment. As my leader has suggested, I have a good deal of information on the subject, but I shall leave any further arguments until some other day. Meantime, if this amendment is in order, I shall support it.


Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, it seems to me the real question to be decided here is one of priority, to decide what we think is most important. The hon. member for Fort William (Mr. Mclvor) does not think there is any urgent need, because of the surplus in Ontario; and the hon. member for Saskatoon (Mr. Knight) has reminded the hon. member for Fort William that there are other provinces in Canada.
I think the leader of the C.C.F. party has made eloquent reference to the importance of the municipality in our life. As we look back we realize that the basis of our living is to a great extent centred in the municipalities. I remember the time when I had the good fortune to be a country member-that is, before a certain unfortunate incident took place. I discovered, to my great interest, the very large number of people in the country
who take a direct part in government________
government on a smaller scale, if you like. Nevertheless it is government.
I have tried to do some work with pencil and paper, and my figures show that, roughly,
4784	HOUSE OF
Municipalities-Taxes on Purchases there are two hundred times as many people in the country as there are in the city who have something to do with self-government. In a large city less than a hundred people are directly concerned as members of the city council, the board of school trustees, etc., whereas my mathematics would show that there would be about two hundred times as many in the country for the same population. I think those of us who have not had that experience fully realize what a useful experience it is. We could very well do with some of it ourselves. This all has reference to the municipalities, to their needs, and their importance in our life.
If I might interject something at this point, I would say that we are living in a time when we may be forced to take stock of the basic realities of our political life, to an extent greater than we have before, because we are faced with an extraordinary situation under which those who follow a doctrine which we regard as diabolical, follow that doctrine with a degree of enthusiasm which it seems to me we might do well to show in support of our own beliefs.
Returning from that digression, I should like to read a brief passage from an article by Professor Curtis of Queen's University, as it appears in the Canadian Journal of Economics and Political Science for August 1951. In this article he speaks about the importance of municipal government, and says-


Mr. Deputy Speaker:: Order. May I remind the hon. member for Greenwood that we are now directing our attention to an amendment moved by the Leader of the Opposition (Mr. Drew) which deals particularly with the exemption of municipal councils and school boards from the payment of dominion excise tax, including the 10 per cent sales tax. I would also direct the hon. member's attention to citation 469 of Beauchesne's third edition which says:
When an amendment has been moved to the question for the Speaker to leave the chair, discussion should be properly confined to its subject-matter.
I have been following the hon. member with some attention, and I would ask him to direct his remarks more particularly to the subject matter of the amendment before the house.


James MacKerras Macdonnell: Well, with deference, my answer must be this, that unless I can argue that municipalities are an overwhelmingly important consideration, and that they are in need, I have nothing to say at all. In what I am now saying I am seeking to set out the importance of municipalities; and I propose then to say something about their needs. If


Your Honour rules that I am out of order, then I shall have to accept your decision. But certainly my attempt is to stress the importance of municipalities, and to stress their needs; and on the basis of that to stress the need of making this concession to them.
Returning to the quotation from Professor Curtis as it is set out in the Canadian Journal of Economics and Political Science, I find he makes this reference to local government:
I regard it as having a permanent and significant place in our structure of government. It is valuable for the training and interest which it gives to a large number of citizens, making them sources of information and political experience within the community. It serves a useful purpose by keeping many local and controversial issues out of the range of provincial and federal decision. That is, when problems can be settled locally, it means less detail and argument in the administrative and political fields of provincial and federal governments.
I want to remind the house of the importance of the municipalities, going back, as the leader of the C.C.F. has already done, to the city states of Greece and Rome and later on to Italy and Germany.
Then I go on to read briefly from a brief of the federation of mayors and municipalities, from which I seek to show the plight of the municipalities and the basic need of coming to their assistance. I read from page 5 of the brief:
The stringent nature of the revenue sources available to municipal governments constitutes a very real national problem. While it is felt more acutely in the larger cities and towns it also affects and restricts the efficient administration and development of smaller communities. The problem is nation-wide in scope, differing only in degree in different provinces and municipalities. Because it is a national problem, any long-term solution must be sought within the framework of some kind of federal-provincial agreement or broad national policy with respect to the matter. It is certain that the municipal governments themselves cannot resolve the problem for they do not have the power to do so. It is equally doubtful whether all of the provinces, within the limits of their available resources, can find a fully effective solution.
What is needed is a national approach and agreement or policy with respect to what is essentially a national problem.
And later:
The finance-taxation problems of local governments have been recognized in varying degrees by the provincial governments of Canada. The chief form of aid and assistance that is being provided is in the form of grants and subsidies for both specific and general purposes. While such measures are of substantial aid to municipal governments there is an inherent danger that they may weaken the vitality and sense of local responsibility of municipal governments through increasing dependence on this form of aid. In the long run, dependence upon grants and subsidies means a weakening of local autonomy . . .
I wish to read also a word or two from Professor Curtis, at page 300 of this Canadian Journal, because it seems to me he puts his

finger on the very crucial point of the whole business and shows why it is that we have the situation which faces us now in the municipalities:
(1) The rapid growth of the real national income and (2) the full exploitation of income and corporation taxes and (3) a mildly rising price level brought a great bulge of easy public revenues which coincided with a period of increasing demands for public expenditures.
He is referring now to the years preceding
1951.	Then he goes on to say:
But now, the continued demands for public expenditures, the problem of defence expenditures, and the impact of rising costs have combined to bring all levels of Canadian government, municipal, provincial, and federal, to an agonized search for larger revenues, either from new or from old taxes. It is at this point that the municipal fiscal position must become a part of the general dominion-provincial picture. The problem must be dealt with as a whole or the pressure will have much the same results in Canada as it has had in the United States, where states and municipalities have developed a truly bewildering multiplicity of taxes. A recent survey showed the following situation with respect to American cities: 259 cities tax gas and electric bills; 196 cities tax gross business receipts; 182 cities tax admissions (theatres, etc.); 113 cities tax automobiles; 89 cities tax retail sales: 62 cities tax cigarettes and tobacco; 39 cities tax gasoline; 34 cities tax alcoholic beverages; 24 cities tax individual incomes; 4 cities tax hotels, occupants.
As Professor Curtis very well points out, we have reached the stage where all levels of government have been brought to an agonized search for larger revenues; but of course in that search the municipalities are comparatively weak compared with the others, and therefore they are coming out much worse than the others.
May I say a word as to municipal growth? In population, from 1941 to 1951, the rural growth was 3-4 per cent; the urban growth over-all, 30-3 per cent.


Mr. Deputy Speaker:: Order. I have listened for some considerable time to. the remarks of the hon. member for Greenwood, and I feel sure he will agree with me that I have given him every leniency. I do feel that his remarks are of a very general nature, and in view of the fact that the amendment is now before the house he should confine himself, not to the general needs of the municipalities but to the particular need for the elimination of the payment of the dominion excise tax, including the 10 per cent sales tax.


James MacKerras Macdonnell: Mr. Speaker, my argument for the need of course is the whole position of the municipalities. There is no use in just standing up and saying it would be nice to have the tax burden of the municipalities eased unless I can establish some reason for it. I want to refer very briefly to the growth of population, and then in regard to matters 83276-303
Municipalities-Taxes on Purchases which I feel the municipalities have had thrust upon them, which I do not think are their burden at all, and to give one or two illustrations of that.
As to the growth of population, I wish to draw particular attention to the fact that while the over-all urban growth is 30-3 per cent, on the fringes of the metropolitan centres, such as the city of Toronto, the part outside the original city, the growth there is 66-9 per cent.
The primary responsibilities of municipalities are, I take it, for water, police, roads, fire and education; but actual proximity, the actual impact of other considerations on them, means that they are really forced to subscribe generously to hospitals, for the care of the poor, and to do a good deal for public health and other things as well.
The thing that I want to refer to particularly is roads. One senior municipal official in Ontario said to me the other day that roads were perhaps the greatest source of unfairness to the municipality. He pointed out to me in places like Toronto, where the growth of population has been so great, and where there is tremendous through traffic, how much they have to spend on roads. It interested me very much to learn that in the city of Detroit the city is assisted, in respect to several of the main thoroughfares, by a 50 per cent grant from the federal authority, a 25 per cent grant from the state, and 12J per cent from the county, leaving only 12J per cent for the city itself. I suggest that shows the step they have taken to face the situation there, and the utterly unfair burden which is still being left on our municipalities and for which we are asking this measure of relief. I refer again to the agonized search for new revenues. We can understand how limited are the chances of the municipality in trying to extend its taxation rights. The dominion assuages its agony very easily by taking new taxes out of us; the municipalities have very much greater difficulty.
I should like to say a word as to the effect of this financial stringency in the municipalities on welfare work. There is no doubt that the municipalities, with their tremendous expanding services for schools, housing developments and so on, are cramped in looking after other things. For instance, the employable unemployed come back on them in a good many instances. They have increasing dependency and juvenile delinquency as a result of inadequate welfare work. In many ways the position of the municipalities is such as to hamper welfare work and bring about certain deteriorations in civic life.
4786	HOUSE OF
Municipalities-Taxes on Purchases
Another point which has arisen is the extreme disparity in provincial assistance. One of the provinces-and this is a "have not" province where people are not so well able to look after themselves-leaves it to the municipality to carry the whole welfare load itself. As it was put to me, it was practically like the old Elizabethan poor law. On the other hand, another and well-to-do province pays 80 per cent of the relief. Therefore you have those least able to help themselves left with this burden at the bottom of the heap.
It is no answer to shrug off the municipalities. With all due deference, I think the Minister of Finance (Mr. Abbott) is inclined to do that. The municipalities are greatly handicapped in obtaining any new revenue. Real estate has to bear practically the whole load. Real estate raises 85 per cent of municipal taxes, and it is a burden which becomes heavier and heavier.
Therefore, Mr. Speaker, it all comes back to a question of what we really want, and what we believe is important. Is it more important to have 55 economists in the Department of Agriculture or, including the minister himself, who I think is no mean economist, perhaps we should say 56? Is it more important to have 56 economists in the Department of Agriculture, or to have better rural schools in some provinces which are finding it very difficult to meet the demand? Is it more important that the Minister of National Health and Welfare (Mr. Martin) should give us a picture of the Robertson family going to the dentist, or that the potholes in the streets of Ottawa should be made less deep than they are now?


Mr. Martin:: That whole question, of
course, is decided largely by the provinces.


James MacKerras Macdonnell: Yes, in conjunction with the minister who, I am sure, has the same eloquent speeches ready for them as he has for us.
So, I come back to where I began. It is a question of what we think is really urgent. It is quite true the Minister of Finance has not the same easy surplus that used to rejoice his heart, but nevertheless we have no right to penalize those who are not able, under our constitution, to look after themselves as they might. I therefore hope, Mr. Speaker, that this resolution will receive consideration from the house.


Stanley Howard Knowles: Mr. Speaker, I should like to suggest to the house that consideration be given to the vicious nature of this tax, which can be seen if we take a moment to follow it through. Under the terms of the amendment


which is now before the house, we are discussing the payment of dominion excise taxes and the general sales tax by municipalities, school boards, and so on. As has just been pointed out by the hon. member for Greenwood (Mr. Macdonnell), about 85 per cent of the revenues of municipal corporations are obtained through the medium of real estate taxes. Hon. members are fully aware of the nature of the sales tax. As we have pointed out on many occasions it is not a tax levied on the basis of ability to pay, which we think should be the principle underlying any fair taxation program. Here you have a tax which is levied on something other than the ability-to-pay basis, which the municipality has to pass on, again on a basis which is not strictly according to ability to pay. This unfair sales tax which municipalities have to pay is in turn levied on the holders of real estate within the municipalities. In other words, it seems to me you have here the case of a tax, which is not on an ability-to-pay basis, being compounded into another tax which is not on an ability-to-pay basis, and in that vein to me it is most unfair.
It means in effect that educational supplies, equipment, and all the things necessary for providing a multitude of services to our people in our cities and municipalities across this country result in a land tax having to be paid so that the municipalities can pay a sales tax. Again I would emphasize the fact that both these taxes depart from the fairest principle in taxation, namely, that taxes should be levied according to the ability to pay.
In some instances this sales tax, which a city or municipality has to pass on in the form of a real estate tax, is a tax on rented property, and in some of those instances the landlord effects a mark-up on that tax which he collects from the tenant. I realize we are discussing a very small proportion of the taxes paid by the owners of real estate in our municipalities, or a very small proportion of the taxes paid indirectly by those who rent homes in our municipalities. But nevertheless the principle is surely quite evident, namely that we are compounding one unfair tax on another, and in some instances providing for a mark-up on that tax. Surely the fairest thing all round would be for the federal government to cease collecting excise and sales tax from our municipalities so that the passing on of tax in this unfair way could be avoided.
It is sometimes put forward as an argument by members on the government side, when they feel it is necessary to defend a tax of this kind, that the money has to be found

somewhere. It is always very interesting, of course, to hear government supporters defend the status quo while it exists, then boast of the fact that the situation has been changed when the government some day sees the light. At any rate, it is a fair question. If this sales tax on municipal purchases could be suspended and the exact amount of money lost in that way had to be made up, where could the government get that money? Well, even if it meant collecting more money by means of income taxes or corporation taxes, and even if government supporters were to argue that that means collecting money from the same people, namely the citizens in our cities and municipalities across the country, then I would emphasize the point that in that instance the government would be collecting the money on a fairer basis to the extent that the money which is collected directly in income tax from our people would be paid on a graduated basis, a basis of ability to pay. That is a much fairer method than this vicious sales tax which is collected by means of real estate taxes, and mark-ups in the case of rents where those real estate taxes are paid on owners' rented property. On all counts a graduated income tax is much fairer than the method now in effect.
I certainly hope, whatever happens in regard to the procedural aspect of the amendment we now have the privilege of discussing, that the government will one of these days pay attention to this very justifiable plea made so often by the municipalities of this country, this justifiable plea which is being made from the opposition side of the house today, and that they will do away with the business of requiring municipalities and school boards to pay these unfair excise and general sales taxes.
As the government knows, and as people generally know, some of us feel the time has come to take a much broader crack at the whole question of sales taxes. We feel they should be reduced across the board. However, as Your Honour has pointed out that the subject before the house at the moment is limited in scope, I have risen for just these few moments to emphasize the vicious nature of the sales tax when it is applied to municipal and school board purchases, and to urge the government to accept the principle set out in the amendment which is now before the house.


Donald Methuen Fleming: Mr. Speaker, I have not been more convinced at any time of the value of service in some municipal capacity before entering parliament than on the occasion of a debate of this kind. Members of this house who have 83276-303J
17, 1954	4787
Municipalities-Taxes on Purchases had municipal experience, whether in municipal councils or school boards or both, will have a fundamental appreciation of the problem that may not strike others quite so forcibly.
The fact of the matter is that the municipalities in this country-and this applies to the municipalities in all provinces-are sorely in need of a better deal than that which they now enjoy under existing constitutional arrangements. Since 1867 there has been virtually no change in the constitutional formulas as applied to the municipalities, whether on the side of their responsibilities on the one hand or on the side of their revenues on the other. But while these constitutional formulas have remained virtually unchanged for 87 years, there has been not simply a steady increase in municipal responsibilities but a mounting multiplication of them and the attendant financial burden.
I do not propose to review the ground that has been amply covered in this debate, particularly in the remarks of my colleague the hon. member for Greenwood (Mr. Macdon-nell), as to the specific responsibilities of the municipalities. I suppose no one of those responsibilities has increased more rapidly in cost than has the responsibility of providing schools. It repays anyone holding public office at any level of government to sit down and examine the rise in school costs over the period of the last 30 years. These costs have mounted literally by leaps and bounds. The public requires and is demanding newer and better schools. On every hand, with the development of the country, increase in population and shifts in population, new schools are being built in response to public demand and to necessity, at a rapid rate. The cost of construction today has outstripped anything that has been known in our past.
In the province of Ontario I suggest there is not a school that is being built today or extended of which the cost runs much less than $30,000 a room. In addition to that cost, there is the great burden of providing maintenance of school buildings and of paying the salaries of those who are employed in the school system. This burden has fallen on the municipalities with increasing weight. It is quite true that in some provinces, like Ontario, for instance, the provincial government has come to the assistance of the municipalities in helping them to meet their costs of providing schools and school facilities. But, Mr. Speaker, in the whole field of education in Canada, the burden the municipalities are carrying is one that is entirely disproportionate to their means.
Just in the last generation there has been the whole problem of providing for those
4788	HOUSE OF
Municipalities-Taxes on Purchases who are said to be unemployable. Then there are those who are today the employable unemployed for whom no provision is being made except at the expense of the municipalities. Time and again appeals have been made to the Minister of Labour (Mr. Gregg) and to the government to face up to this increasing problem, which is quite acute in the larger areas, of providing for the employable unemployed. Yet, Mr. Speaker, the federal government continues to deny any responsibility. These unemployed are on the doorstep of the municipality and they cannot be allowed to starve. The municipality therefore makes provision for them.
There are also the problems of those social agencies which are connected with the municipal government and which have helped so much to provide relief in these cases to which I have referred. There is the increasing burden of providing hospitalization. Although the provinces have increased their contributions to the building of hospitals and also to the per diem costs of providing for patients, nevertheless the municipalities continue to bear a too heavy share of this increasing burden. Mention has been made of the cost of constructing roads. I need not repeat what has been said on that matter.
All of us will have in mind, I know, the extent to which the housing problem has for many years now been thrown in large measure on the municipalities. Particularly in the metropolitan areas where growth has been extremely rapid and the housing problem has been most acute, the burden of providing municipal services has been cast largely on those municipalities. In some of them the problem has become so acute that the municipalities have virtually been obliged to discourage house construction and land subdivision because they could not cope with the problem of providing costly municipal services for the land.
On every hand, Mr. Speaker, the experience of the municipalities has been one of confronting rising costs. If one measures the scale of increase over the past 30 years, one can only describe it as a multiplication. At the same time within that existing constitutional formula to which I have referred there has been no increase of assured revenues to the municipalities. The municipalities are functioning today with the same tax base as that which existed in 1867, and virtually with land taxes as the only source of revenue. There are some minor sources such as licence fees and that sort of thing but they are not material in relation to the total.
The hon. member for Greenwood has stressed the undesirability of providing subsidies. There is much to be said on that


subject, Mr. Speaker. Here, however, we are dealing with an aspect of the problem which is pressing and urgent and which illustrates the utter unfairness of the way in which the federal government is proceeding to exercise its taxing powers. For the municipalities-and this applies alike to the municipal councils and the boards of education which must levy through the municipal councils-the base remains virtually the same as it was 87 years ago. The taxes that the federal government applies to the municipalities are hidden taxes. It is a thousand pities that those taxes are hidden. If the citizens of the municipalities were fully aware of the way in which they are being taxed by the federal government there would be an uprising of an outraged public opinion. But as in so many other respects, the federal government applies its taxes in this subtle manner. They are hidden. The taxpayer does not realize or is not conscious of the full weight and the unfairness of them. Every sales and excise tax that the federal government is today collecting from the municipalities is hidden. That is one of the fundamental curses of these anomalies in the constitutional powers of taxing that are being exercised in this country.
The federal government, with its abundant sources, should be devising ways of helping the municipalities to meet these urgent demands for necessary but costly services which they are financially unable to provide. On the contrary, the federal government is not only not helping the municipalities but it is actually levying taxes upon the municipalities.
How can it be said that there is anything inherently wrong in the principle for which I am contending or that there is any insuperable administrative difficulty in applying it when we see in existing federal legislation provision for exemption of purchases made by provinces? If you will have regard, Mr. Speaker, to the provisions of the Excise Tax ' Act you will see that in sections 45 and 46 clear provision is made for the exemption of goods imported by Her Majesty in the right of any province of Canada for certain purposes, with the exception of three. These three exceptions to the general rule of exemption of provincial purchases are in respect of goods purchased for these purposes:
(a)	resale;
(b)	to be used by any board, commission, railway, public utility, university, manufactory, company or agency owned, controlled or operated by the government of the province or under the authority of the legislature or the lieutenant governor in council; or
(c)	to be used by Her Majesty or by her agents or servants in connection with the manufacture or production of goods or to be used for other commercial or mercantile purposes.

There is a strong case to be made out for treating municipal corporations and commissions which are engaged in any commercial enterprise on the same basis in respect of federal taxation as similar organizations operating under private ownership. But, Mr. Speaker, as to the fundamental principle here,
I say that we have in the sections to which I have referred a clear recognition of a principle that the federal government ought not to levy the sales and excise taxes provided for in the Excise Tax Act upon provincial governments. Why is the line drawn there? If it is sound that provincial governments be exempted from federal sales and excise taxes upon their purchases, why should the principle not have equal application at that municipal level of government where the need is very great, where financial pressure is stringent today?
The same principle is not recognized in the Excise Act but there, Mr. Speaker, you will recall that the act applies to the products of distilleries and breweries, tobacco and alcohol in various forms, things which municipalities are not normally purchasing. But in the sections of the Excise Tax Act that I have read we have the recognition of a principle, a recognition that emanates from a sense of fairness and a realistic appreciation of the needs of the provincial governments. At the municipal level the need is even more acute today.
What is the extent of the problem? How much is the federal government collecting today in taxes from municipalities, from municipal councils, school boards and boards of education? 1 do not believe anybody knows. I do not believe any attempt has been made to ascertain the total that is being collected year by year in this way. Some municipalities have made calculations. This afternoon the Leader of the Opposition (Mr. Drew) referred to a calculation made by the municipal authorities of the city of Montreal. Their estimate was that through these taxes the municipal corporation is paying into the federal treasury year by year a sum of about $300,000 annually. I may add that the city treasurer of my own city of Toronto has estimated that the city, through purchases made by the municipal council and by the board of education and separate school board, is paying a total of approximately $500,000 a year in taxes into the federal treasury. It is a shocking state of affairs that this federal government, with all the ample sources of revenue open to it, far from assisting municipalities, handicapped as they are by meagre resources, rising costs and multiplying
Municipalities-Taxes on Purchases demands for services, should actually be levying vast amounts in taxes from these municipal treasuries.
Let us not have offered to us today the hoary excuse, the hoary pretext of administrative difficulties. If administrative difficulties were not permitted to stand in the way of the exemption of provincial purchases from federal sales and excise taxes, then certainly there is no case to be made out to justify any refusal to extend that exemption to purchases made by municipalities.
This is an urgent problem. Municipalities from one end of the country to the other are crying for assistance in the form of a realistic approach to their constitutional difficulties. There must be, in my submission, an opening of the eyes of the federal government to the way in which they are increasing the burdens and the difficulties of the municipalities. The time has come for action. Among all the anomalies, among all the injustices in the federal tax structure today that are crying out for reform, none is more pressing than the one we have been discussing this afternoon and which is the subject matter of the amendment, the iniquitous imposition by the federal government of taxes upon our municipal governments in the form of municipal councils, school boards, boards of education and other municipal organizations.


Mr. Angus Maclnnis (Vancouver-Kings-way):: Mr. Speaker, regardless of what the ultimate disposition of the amendment before us may be, I think this is a matter that is worthy of discussion. The preceding speaker has mentioned that those members of the house who have had municipal experience will perhaps realize the difficulties of the municipalities better than those who have not had such experience. I am in the fortunate position of having had experience on both a school board and a city council. Because of that experience I seldom fail to read items in the daily papers that have reference to municipal and school board matters. In that way I think I keep fairly well in touch. In addition, when I get my city tax notice considerable information is sent with it as to the taxes collected and what is done with them.
I agree with those who have spoken that the plight of the municipalities is a real one. Of the three levels of government, municipal government in its various aspects is the one that is closest to the people. It is the one that has to deal with the people's problems first.
For instance, I see the Minister of Citizenship and Immigration (Mr. Harris) doing me
4790	HOUSE OF
Municipalities-Taxes on Purchases the honour of paying attention, so I shall just take an example that touches on his department. His department brings in a family of immigrants, a husband, a wife and three or four children. They settle in a city. If the husband is able to find employment, the minister is well pleased as that is one difficulty that has been met so far as his department is concerned. However, it is really then that the problems of the school board, for instance, commences because they have to find school accommodation for three or four new pupils. While ultimately these immigrants are going to be an asset to the country, at this time they become a real problem to the school boards across Canada.
Then let us consider the matter of health for a moment. If the immigrant to whom I referred becomes ill, the first duty of looking after him falls upon the municipal authorities. The minister shakes his head, but despite anything else that may be done for the immigrant, it takes a little time and during that time lag the city has to provide certain services. Then, the hon. member for Eglinton (Mr. Fleming) referred to the matter of housing.
After mentioning school accommodation and health requirements, there is this question that has been mentioned, unemployment, and here again the municipality has had to pay out considerable funds this year to look after those who have been affected by the unemployment situation. These are things the municipalities have to do, because if they do not provide for the people in one way they may have to provide for them in another. If they do not provide schools, hospitals and housing, they will have to provide jail accommodation, juvenile courts and that sort of thing. The problem of our increasing population falls, therefore, first on our municipal councils.
In the matter of education, the situation is becoming extremely serious. I know that is the case in my own province of British Columbia. We believe we have as good a school system as any that can be found in Canada. As a matter of fact, we are quite proud of it. During the last several years the incidence of taxation on property owners for school purposes has reached the point where the property taxpayer cannot do any more. There is grave danger now that our educational standards will have to be lowered. Perhaps all these things have been said by others during this debate, and if I am repeating them now it is merely for emphasis.
I feel the time has arrived when the representatives of the three governments should sit down together and decide upon 

some more equitable distribution of the taxes that are paid by the people of Canada, whether in their capacity as municipal taxpayers, provincial taxpayers or federal taxpayers. They are the same people. At the moment I do not wish to take perhaps the extreme position that was taken by the hon. member for Eglinton, but I cannot believe that the federal government can say that education is a provincial matter and is no concern of theirs. I do not think it is enough either to say that the municipalities are the creatures of the province, and consequently, are not a federal responsibility.
The point that we must get over is that we are dealing with the problems of the same people, whether they pay their taxes or require services as residents of a municipality, residents of a province, or citizens of this Dominion of Canada. Who is to say, "well, it is too bad if you cannot find the taxes for education; it is too bad if you cannot find the taxes for hospital services or for looking after the unemployed, but that is really not our problem". These are problems of the people of Canada, and the people of Canada are represented in this parliament. Every problem that is a problem of the people of Canada is a problem of this parliament, whether under our constitutional set-up at the moment we have direct responsibility for looking after it or whether responsibility has been given to some other governmental organization that we have created.
I am sure that ultimately the people will not take it for granted nothing can be done about their problems because the government with the largest amount of resources is not going to look after this problem. There will be a demand that this government take a look at the picture as a whole, and leave to each level of government sufficient funds to enable it to discharge the responsibilities it has been given. If there are not sufficient funds to do everything we want to do, then we shall have to establish some system of priorities and decide which are the more essential things. The people of Canada, discussing these matters through their various governments, will decide how these taxes are to be allocated and what services are to be provided. Perhaps this is a situation for which no one in particular is responsible. It has grown and developed within our system of government, but we should endeavour to ascertain our collective responsibilities and then discharge them.


Mr. A. H. Hollingworih (York Centre):: rise to make a few comments, mainly because of an article I saw in this morning's Globe and Mail that my constituency of York

Centre, which is comprised mostly of North York, is opening four more public schools this fall. I note that there are 48 public schools already in operation with 589 classrooms, including 20 basement classrooms and 68 portable classrooms. I am quite aware of what the hon. member for Eglinton (Mr. Fleming) has been saying about the need for some kind of relief in connection with the school problem, particularly in the growing municipalities outside the metropolitan area.
I should like to point out what the hon. member for Eglinton did not point out-as a matter of fact, he seemed to avoid it- that the municipalities are the creatures of the provinces. This point cannot be stressed strongly enough. I thought it was rather strange to hear from him that we were doing nothing to help the municipalities, when obviously, as a man who is familiar with constitutional law he should be the first to realize, it is not within our province to look after the municipalities. The direct responsibility is with the provinces. That is something he skipped over very lightly.
Then, of course, we are helping the provinces. In 1951 the Municipal Grants Act was passed; and on the order paper at the present time we see that the subject matter is mentioned again, and that the benefits will be extended. That is something that should be stressed. It would seem to me that within its jurisdiction the federal government is doing a great deal to help the municipalities. I would also point out that, indirectly, municipalities are helped by the tax rental agreements. My understanding is that in 1953 Ontario was granted about $124 million and that in 1954 the amount will be larger.
It is significant also that Ontario had a sizeable surplus, which presumably in part resulted from the tax rental agreement. It seems to me logical therefore that Ontario should help the different municipalities from its surplus. That was one of the important aspects of the tax rental agreement. With the tremendous number of schools being erected it seems to me that is a logical way in which to spend that money.
The municipalities are not looking to the federal government for assistance. It may be that they are to some extent, but certainly not primarily. They are looking to the provinces, where the responsibility lies. Consequently I suggest that we cannot speak glibly about what the federal government should do for the municipalities. It has shown that it is interested in their problems by granting relief in connection with roadbuilding machinery. Primarily however the problem is that of the provinces concerned; that is something we should keep in mind constantly.
Municipalities-Taxes on Purchases


Mr. Claude Ellis (Regina):: Mr. Speaker, there are one or two comments I should like to make at this time. The last speaker made much of the oft-repeated statement that the municipalities are the creatures of the provinces. I suggest however that we must take into consideration the great changes that have taken place since the time of confederation. I do not think anyone would suggest that the conditions existing in 1867 were those of today. While it was quite true that in all their wisdom at that time the fathers of confederation saw fit to place certain responsibilities in certain quarters, anyone who wishes to view objectively the changes that have taken place since that time must realize that some of the responsibilities cannot be met adequately with the taxing and fiscal powers possessed by the junior governments.
I believe it is recognized today that many of the problems which formerly were looked upon as municipal or provincial are now considered national in their scope. I do not think anyone can view education as being the problem of any particular part of Canada. We have a very serious shortage of teachers in this country, from one end of Canada to the other. I do not think the shortage is confined peculiarly to any one province.
Then the health needs of Canadians are national in their scope. We do not find any particular part of Canada in a position to take care of those health needs. I suggest therefore it is absurd to dismiss the suggestions made simply by saying that after all under the British North America Act the provinces were made responsible for municipal government within their boundaries. To take that view one would have to ignore completely the developments that have taken place in Canada in recent years.
I know that in my own province one of the most onerous responsibilities of municipal government is the construction of market roads, just as it is the great job of any provincial government to build the highways. We know that the federal government derives a great amount of revenue from the taxation levied against new automobiles. Were it not for the fact that the provincial governments are building highways and the municipal government are building the market roads, no automobiles would be purchased. And if it seems logical that provincial and municipal governments should take care of their roadbuilding problems, then by the same token the federal government should be prepared to leave to those junior governments the full revenue that might be derived from the automobile industry. It seems somewhat inconsistent to be told that certain responsibilities
4792	HOUSE OF
Municipalities-Taxes on Purchases should be borne by the municipal governments when at the same time the federal government is deriving a great deal of revenue from taxes on the sale of automobiles, when such revenue would not be available were it not for the expenditures made by the junior governments.
I believe it is recognized that Canada's health needs are nation-wide. We cannot expect that our junior governments will be able to bear the full burden in these matters.
I am thinking of our medical college now being completed in Saskatchewan. It has been estimated that when we begin graduating doctors from that college, in addition to the sums of money paid by way of fees by the students it will cost the provincial government somewhere in the neighbourhood of $10,000 for every doctor who graduates. In many cases those doctors will serve in various parts of Canada. The fact that in a time of war their services are urgently needed by the armed forces indicates that the federal government has a direct responsibility in this field. Consequently any relief it can provide to the municipal and provincial governments is to be desired on that account.
Then, as to education. As a teacher I am fully aware of the great need for granting some assistance for the educational authorities in Canada. I repeat that when in 1867 the fathers of confederation, in their wisdom, set up a certain relationship of powers and responsibilities as between the provincial and the federal governments they could not foresee the great need in future years for an extended educational program. Certainly no one can argue today that if we are going to have the type of educational program across Canada we feel we should have it would not require the co-operation of all governments.
How is this going to be done? For some years in this group we have argued in support of some form of federal aid for education. We feel that if the problem is going to be met and if we are going to provide an adequate number of teachers at proper salaries, and if we are going to have adequate plant equipment and more extended educational opportunities, there will have to be federal participation in a manner such as to leave no suggestion of any attempt on the part of the federal government to encroach upon the rights of provincial governments to provide education in their respective provinces. We do feel however that this can be done, and that the federal government could provide some measure of aid to the provinces in the matter of education.
Now, what we have been talking about this afternoon is not something direct. We are simply suggesting that this is certainly one 

manner in which some assistance can be given education without in any way encroaching upon the rights of the provinces to control and manage their own educational system. Because if the federal government grants a proper and adequate measure of relief in so far as taxes are concerned to school boards, then I suggest that it will indirectly be making a contribution, small as it may be in scope, toward education in Canada. Therefore, I am suggesting that in the light of the arguments that have been advanced this afternoon a case has certainly been made for the government to give consideration to granting some measure of tax relief to school boards and to municipal governments in Canada in order that they might more effectively carry out the duties that we expect of them in Canada at the present time.


Mr. Speaker:: At this time I am ready to discuss the point which was raised earlier with respect to whether the amendment is in order. I regret that the mover of the amendment is not in the house at the moment. If other hon. members wish to speak, I can delay rendering a decision.


Some hon. Members:: No.


Mr. Speaker:: Perhaps he will be here shortly. In any event, the remarks that were made either by myself or by the hon. members who participated in the debate on the point of order-perhaps I should say mostly the remarks made by hon. members, not by myself-have thrown some light on the subject.
I have examined the remarks of the Leader of the Opposition (Mr. Drew) in the light of the speech which he made on the motion for a committee of ways and means when the budget resolutions were introduced, and by comparing the two speeches and the amendment which was moved by the hon. member for Greenwood (Mr. Macdonnell) on that occasion I find that the subject debated today and included in this amendment was debated on that occasion. It was also included in the amendment moved by the hon. member for Greenwood which was defeated by the house.
The Leader of the Opposition moved today that:
this house is of the opinion that consideration should be given to the introduction of legislation which would provide for the exemption of all municipal councils and school boards from the payment of dominion excise taxes including the 10 per cent sales tax.
In his speech he dealt with the agreements of 1942 under which the municipalities, together with the provinces, gave up certain taxing fields. He dealt with the burdens of

municipalities having to do with civil defence, two subjects which he dealt with when he spoke on the budget. Then, he referred to the difficulties of municipalities with respect to housing. The house will remember that we had a discussion on housing earlier in the session, and no doubt those points were also made. The amendment moved by the hon. member for Greenwood on April 12, 1954, contained, among others, this paragraph:
(f) has failed to reach agreement with the provincial governments in regard to a clearly defined reallocation of taxing powers so that the provincial governments and municipal council may have adequate financial resources to carry out their rapidly increasing responsibilities.
If the Leader of the Opposition will go over with me the last part of his speech which appears at pages 4383 to 4387 of Hansard I think he will agree that many of the points covered today were covered by himself then. I think he will agree with me especially that in his understanding of what the vote would mean, he said, and I quote from page 4387 of Hansard-that hon. members:
...will also be voting in support of the proposition that nothing now be done to attempt some method of meeting the urgent needs of the municipalities whose tasks are increasingly heavy at this time and who need consideration as much as do any government authorities in Canada.
Prior to that he had been dealing with the same subjects that he dealt with today, as will be seen in the pages of Hansard that I have mentioned. If I look at the attitude of my predecessors for help in similar circumstances I will be forced to say that an amendment of this type cannot be moved at this time. On Thursday, November 24, 1932, a motion was made for the Speaker to leave the chair for the house to go into committee of supply. An amendment was moved by Mr. King, seconded by Mr. Casgrain, as follows:
This house is of the opinion that the government should immediately announce what policy, if any, it has with respect to the relief of agricultural distress, and permit full consideration of the same before parliament adjourns over the months of December and January.
Mr. Speaker Black said:
The motion before the house is that the Speaker leave the chair for the house to resolve itself into committee of supply. An amendment concerning agricultural conditions in Canada and agricultural relief has been offered. The point of order has been raised that the amendment is out of order on the ground that it again introduces matter that was debated and disposed of when the right hon. Leader of the Opposition on October 10 moved an amendment to the address including the words: "the government has wholly failed to afford a remedy for agricultural distress." Whatever the object of the amendment may be and whether it concerns past, present or future policy of the government seems to me to be beside the point. The question for the Speaker to consider is: Has the matter 83276-304
Municipalities-Taxes on Purchases raised by the amendment been discussed and debated? The subject matter of the amendment now proposed was undoubtedly discussed and debated upon a former occasion, and to allow a discussion of this question now would be simply to repeat the debate that has been held on agricultural conditions. The amendment moved has not been accepted by the government, and so is a motion of want of confidence. This house refused to condemn the government's policy on agriculture by rejecting the amendment to the address. In view, therefore, of that decision and in view of the precedents I find this amendment, which deals with the questions of agricultural conditions and agricultural relief, to be not in order.
On the same subject, Mr. Speaker Black on Tuesday, November 22, 1932, took a similar line in a similar case, and so did Mr. Speaker Glen, on March 29, 1943, as may be found at page 213 of the Journals of that year. The amendment at that time was:
This house desires to record its opinion that before the marketing policy announced by the Minister of Trade and Commerce on January 29 with respect to the 1943-44 crop is put into effect it be revised to bring it into conformity with the needs of agriculture, so that the latter may be enabled to make its full contribution to the war effort.
Mr. Speaker ruled the said amendment out of order on the ground that the adequacy of the government's agricultural policy had already been considered by the House, which had rejected the amendment moved by the Leader of the Opposition to the address in reply to the speech from the throne and, moreover, the said policy providing payment of $2 on each acre less seeded to wheat in 1943 than in 1940 was a financial policy which could not be disturbed by a private member's motion.
In 1949 Mr. Speaker Macdonald ruled out an amendment along the same lines because it did relate to several items which appeared under the heading of "Marketing services" in the estimates. I am dealing with another ground. The first one is that in the amendment moved by the hon. member for Greenwood the subject matter of the present amendment was fully debated and decided by the house in the negative. There is on the order paper now a budget resolution which says that the sales tax on the following goods be repealed. This reads:
(c) equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of one thousand dollars per unit, specially designed for use directly for road making, road cleaning or Are fighting, but not to include automobiles nor ordinary motor trucks;
Now, citation 467 of Beauchesne states it shall not relate to any budget resolution or to any item in the estimates. I was worrying as to what the word "relate" meant, and whether it offered any scope. It appears to me, on examining the precedents, that the relation need not be a very close or direct one. If the subject matter of the amendment comes under the same heading as that which is dealt with in the ways and means resolution, in the estimates or a bill on the order paper then it has been held to be related.
4794	HOUSE OF
Livestock-Floor Prices I see some hon. members do not agree with me. Well, the hon. member for Winnipeg North Centre (Mr. Knowles) on one occasion moved an amendment on a motion to go into supply and that amendment had to do with income tax. On that occasion, as reported at page 1489 of Hansard for November 7,1949, Mr. Speaker Macdonald, quoting citation 467 of Beauchesne's Parliamentary Rules and Forms, third edition, said that an amendment to the motion to go into supply cannot relate to any resolution to be proposed to the committee of ways and means. He continued:
At the present time there is on the order paper, appearing in the name of the Minister of Finance, a resolution to amend the Income War Tax Act and the Income Tax Act which is to be proposed to the committee of ways and means, and as the amendment of the hon. member for Winnipeg North Centre also relates to the Income Tax Act, it would appear to be irregular in view of the aforementioned citation 467.
This would also be related-


Stanley Howard Knowles: But the Speaker allowed it.


Mr. Speaker:: The hon. member said "The Speaker allowed it". But his concluding paragraph is this:
Notwithstanding what I have said, in view of the fact that such an amendment might be in order after the budget resolutions are disposed of,-
Which is not the case now.
-and also because there has been considerable debate on the proposed amendment,-
This could be said of the proceedings today, but I will suggest another move after I am through.
-I feel that it would expedite the business of the house if the proposed amendment were entertained and disposed of at this time. In reaching this conclusion, I should like to emphasize that this should by no means be regarded as a precedent to be followed on future occasions.
Apparently that is the message he left for me on that occasion. Hon. members will find another ruling of Mr. Speaker Macdonald made during 1950 at page 47 of the Journals for February 28 where he also dealt with a borderline case and allowed the amendment. However, he did not wish his decision on that occasion to be taken as a precedent.
Now, on these two grounds: (1) that the matter contained in the amendment was already debated and decided upon by the house when the amendment moved by the hon. member for Greenwood on the budget was negatived; and (2) on the ground that the amendment on the motion to go into supply should not relate to a ways and means resolution which is on the order paper, I cannot, as hon. members will realize, agree to allow the amendment.
It often happens that when an amendment offered to the motion to go into supply has


been debated at some length hon. members ask that the amendment be withdrawn. I can quote several precedents to that effect. If there are any reasons why hon. members believe that my ruling on this occasion, notwithstanding the short but attentive study I have given to it, might be a precedent which would endanger their future position it might be advisable for them to take this course and by leave withdraw the amendment.
On the other hand, if hon. members wish the ruling I have made on this occasion to remain on record as being either a good or a bad one I have no alternative, in the light of the precedents I have quoted, to declare the amendment out of order.


LIVESTOCK
Mr. A. M. Nicholson (Mackenzie):: Mr. Speaker, before Your Honour leaves the chair I wish to discuss a matter of importance, and I might say at the outset that the amendment which I shall move eventually has been prepared by a well known parliamentary authority, namely the hon. member for Winnipeg North Centre (Mr. Knowles). The hon. member has a very good memory and a great deal of respect for the decisions Your Honour has made, as well as for those of previous Speakers, and he has assured me that the amendment I propose to move is in order.
The plight of agriculture is a matter which concerns not only my own riding but all of Canada, but on this occasion I propose to confine my remarks chiefly to the problems confronting livestock producers. I would like to refer to two briefs which were presented, one to the government and the other to the Minister of Agriculture (Mr. Gardiner), by the Interprovincial Farm Union Council of Canada in regard to what has taken place in our livestock industry during the past two years, and both of which cast serious doubts on the efficiency and justice of the present marketing system.
One brief points out that the prices paid for cattle in Montreal in 1951 amounted to $24.82 compared with $14.31 in 1953. In Toronto the price dropped from $29.70 in 1951 to $17.34 in 1953, and in Winnipeg the price dropped over the same period from $27.40 to $14.70. These figures underline the decrease which took place over a period of 24 months.


An hon. Member:: Hurrah!


Alexander Malcolm Nicholson: I am sorry to hear an hon. member say "Hurrah" because this is a matter which concerns his constituents and

all hon. members must, I think, be concerned about the drop in the return earned by any group of primary producers, particularly to the extent of 43 per cent over a two-year period. If one takes into account the increase in the cost of living for farmers during that period then the drop is more in the nature of 50 per cent.
One of these briefs points out that in Canada we consume about 95 per cent of our meat production, and it would not seem reasonable that the five per cent we export should be responsible for the ups and downs in the price of meat products we have experienced over the last few years.
The brief also points out that at the beginning of the century we had 1,278 cattle per thousand population in Canada, compared with 784 in 1953. It is very difficult to understand why we should find it impossible to produce as many cattle per thousand people in this day and age, especially in view of all the experimental work being done in our agricultural colleges. I believe we should be able to increase our production until it meets the levels attained at the beginning of the century. At any rate the situation is so serious that the interprovincial farm union decided that a special brief should be presented to the Minister of Agriculture. In this brief the following proposal was made:
1.	Effective implementation of the Agricultural Prices Support Act to provide adequate floor prices to the producer determined by a recognized formula on all classes and kinds of livestock;
2.	Appointment of a federal board of livestock commissioners; and
3.	Calling a national marketing conference to discuss and explore the possibilities of assisting in a federal livestock marketing program.
So much for this farm organization. I should like to make reference to the views expressed by the Canadian Federation of Agriculture. Their brief presented to members of the cabinet on February 19 of this year points out:
The relative over-all economic position of agriculture has been on the decline during the past two or three years, with farm prices reduced substantially, and with farm costs virtually at an alltime peak. The future, in farmers' eyes, is uncertain, and the word "surplus" is, with reason, increasingly heard. We need the machinery for a strong policy of orderly marketing and assured price supports for agricultural products in the home market, and a more adequate international program for expansion of trade and the disposal of burdensome surpluses.
In their brief they also have the following point:
We would urge increased use of the Agricultural Prices Support Act-a key feature in our national agricultural policy.
Then in some of the releases from the federation of agriculture I find that a total 83276-3044
Livestock-Floor Prices of 189,000 farmers in Canada filed income tax returns but only 61,670 were found taxable. The bureau of statistics informs me that we have about 623,000 farm families in Canada. These figures would indicate that about 10 per cent of the farmers in Canada are receiving income sufficient to pay income tax. I think these figures explode completely the fallacy that the Canadian farmer is rolling in wealth. If agricultural products are selling at high prices in the stores-and they have been doing so in some places-the farmer certainly has not been getting the cream of the production. With 10 per cent paying taxes you have a very small percentage who are receiving their cost of production.
The federation also presents a table pointing out that in 1953 the farmer income position in Canada is more serious than it has been for many years. In 1926 the farmer received 14-8 of. the total national income. By 1946 the figure was 11-3 per cent. In 1951 it was up a little bit to 12-3 per cent; but by 1953 the percentage was down to 8-7 per cent. With roughly 20 per cent of our people classified as farmers, having 8-7 per cent of the national income going to such a large group certainly is not a fair distribution of our national wealth.
Another federation release tells about the net cost of price support in Canada. It has been small, it is said, compared with what the United States government has spent. The release states:
Net cost of all price support programs for agricultural products over a period of six years, from 1946 to 1951 inclusive, was only $10,306,000 . . .
Under the special "disaster" program in livestock, the net cost in pork to the government up to March 31 last was $7,839,493.73, and the net cost in beef was $24,208,595.98.
That was as a result of the foot-and-mouth disease. But taking into account the net cost of the foot-and-mouth disease support program of approximately $32 million, with the net cost of the other price support program of approximately $10 million, it amounted to a total of approximately $42 million.
In the United States there is a far different story. I have here the 1953 report of the president of the commodity credit corporation. In the United States they have been supporting wheat. Over a billion dollars was spent in 1952 supporting wheat. Other commodities include cotton, cottonseed oil, butter, dried milk, cheese, tobacco, wool, flaxseed and peanuts; and what they paid for peanuts really is not peanuts. In 1952 $12 million was paid and in the previous year $73 million was paid to support the production of peanuts in the United States.

Livestock-Floor Prices
One further report from the federation of agriculture sets out what the farmer's position has been during the period from 1949 to 1953. His taxes have gone up 16-4 per cent; farm wages have increased 22-6 per cent; farm machinery, 25 per cent; building materials, 31 per cent; gas, oil, et cetera, 10 per cent; and fertilizer, 28-8 per cent. Farm family living costs have increased 17 per cent.
Another brief that I have before me was presented by the employees in the Canadian farm implement industry. This group of workers in this industry realize how vitally they are affected when farm incomes go down. They point out as follows:
During the past two years the prices received by farmers for their products have been falling, while farm operating costs have continued to rise, with a resultant decline in the net income of farm operators . . .
Between July, 1951 and August, 1953, (the latest available figures at time of writing), the D.B.S. index of farm prices of agricultural products (on the base 1935-39 = 100) fell from 308-3 to 240-4, a decline of 22-0 per cent.
With mounting unemployment and with ex-service people available, it is extremely difficult for me to understand why in Canada our consumption of beef, pork and milk should be less than it was during the war years. I might mention the fact that during the time I was in parliament previously in 1946, I had an unusual experience for a private member, namely that of proposing, before going into supply, a motion that carried. My motion made on August 27, 1946, was as follows:
That all the words after the word "that" to the end of the question be left out and the following substituted therefor:
"This house desires to record its opinion that consideration should be given to the continuance of the milk subsidy so as to ensure adequate return to milk producers and make possible the consumption of milk for the nutrition of the Canadian people without any further increase in the price thereof to the consumers".
After a debate, there were 69 who voted for it and only 41 who voted against it. Some of those who voted for it were Liberal members like Senator Reid, as he now is; the hon. member for Hamilton East (Mr. Ross); and the former member for Springfield. But although this motion carried in the house, the subsidy was not continued. The bureau of statistics informed me this morning that during the period 1930 to 1935 we consumed in Canada -8 pints of milk per

person per day. The figures of consumption are as follows:
Consumption of Fluid Milk and Cream in Pints per person per day
1930-35	  -80
1935-40	 -87
1941		 -86
1942	  -91
1943		 -98
1944		 1-01
1945		 1-02
1946		 1-02
1947		 -97
1948		 -90
1949		 -90
1950		 -90
1951		 -89
1952		 -88
As I have indicated, with over a million of the youngest and ablest Canadians in the war services during the war years and with another large group of able-bodied people in the war industries, including the old and the young, I do not know how we can explain to our children that our Canadian farms were able to produce sufficient milk so that the Canadian people consumed during those war years more milk than we have since. Of course the explanation was that the government of the day thought that it was good for the Canadian people to consume more milk, and so milk consumption and production were subsidized. But here is a piece of legislation that did not receive any criticism in parliament or throughout the country. I do not know of any legislation that was more popular than that which made large quantities of milk available. Some of my friends do not agree with my views on the question of alcoholic liquors but none of them will quarrel with me when I urge that every Canadian should consume more milk. When one considers that consumption of milk is now away below that of the war years, that it is getting back to the level of the hungry thirties, then obviously there is something wrong with government policy when we cannot make the production and distribution of milk sufficiently interesting to the farmers and distributors.
I have figures here regarding beef. In the period from 1935 to 1939 we consumed 54-7 pounds of beef per person per year. During the war years that amount was increased to 69-3 pounds. That was in 1943. That was the peak. We were well up in the sixties. By 1952 we were down to 44-8. In 1951 the figure was 43-7, and last year we were up a good deal, the estimate being 59-1. I have similar figures as to pork which are also

interesting. During the period from 1935 to 1939 pork consumption per person per year amounted to 39-8 pounds. We reached a high in 1944 of 61-3 pounds. Last year the figure was 57 pounds. Taking mutton, we dropped from an all-time high of 4-8 pounds in 1944 to 1-9 pounds in 1952. Veal dropped from 10-8 pounds in 1942 to 6-7 pounds in
1952.	Poultry meat dropped from a high of 26-6 pounds in 1945 to a low of 19-2 pounds in 1948.
In a little booklet I have here entitled "The Story of FAO" there are some passages that I think are appropriate in the light of the figures I have given. They read as follows:
A real surplus of food has never existed in the world. There have always been great numbers of undernourished people. Yet governments of the highly developed agricultural countries have sometimes found it necessary to limit their production in order to keep farm prices high enough to provide a good living for rural families....
The farmers of the world can produce enough food to rid the world of hunger-if they can use the best agricultural methods we know now. The hungry people can get plenty of the right kinds of food-if they have some means of earning money to buy food and other necessities. . . .
This is the job of the food and agriculture organization as stated in its constitution: "raising levels of nutrition and standards of living of the peoples, securing improvements in the efficiency of the production and distribution of all food and agricultural products, bettering the condition of rural populations, and thus contributing toward an expanding world economy".
Then it is pointed out that it should be guaranteed that producing nations will be able to sell their commodities, that buying nations will be able to get as much of the commodities as they need, and that prices will be fair to both. We in Canada cannot control the prices of these things outside of Canada, but if we were able during the war years to organize our own economy so that we not only maintained but increased our production and consumption of milk then I submit that we can certainly work out a program so that our farmers will have an incentive to produce and sell whole milk and so that the people of the country who want milk supplies for their children will have adequate supplies. Therefore I should like to move, seconded by the hon. member for Kootenay West (Mr. Herridge):
That all the words after the word "That" to the end of the question be struck out and that the following words be substituted therefor:
"in the opinion of this house, the government should give consideration to demonstrating its support of the principle of orderly marketing through livestock marketing boards by announcing floor prices with respect to cattle and hogs at levels not less than the average of the prices which prevailed during the period from January 1, 1951 to December 31, 1953."
Livestock-Floor Prices
In the year 1951 the average price per hundred pounds for beef was $33.49. In 1952 it was $25.85 and in 1953 it was $20.11. The average prices for hogs per hundred pounds, dressed Toronto, grade Bl, were $32.85 in 1951, $25.70 in 1952 and $30.40 in 1953. When the Minister of Agriculture was discussing his estimates he took three-year periods at convenient stages, and by taking the three-year period we get in this case an average for beef of $26.50 and for hogs $29.50.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to second the amendment and to say a few words. I shall be brief as usual because not only do I believe in the conservation of natural resources but also in the conservation of time. I rise to support the amendment because I believe in the principle of orderly marketing. I also rise because I have a real grievance. I understand that the purpose of this procedure is to permit members to bring urgent grievances affecting their constituents to the attention of the house and the people of Canada. That is why the hon. member for Mackenzie (Mr. Nicholson) has moved the amendment and that is why I intend to deal with a particular grievance. As I say, I believe in orderly marketing, but I also say that you cannot have orderly marketing unless you have orderly transportation, and that does not exist on the Arrow lakes in my district at the present time.
I intend to deal with this problem for a minute or two because I have received a couple of letters this afternoon which clearly indicate the situation of the fruit growers. The whole district is up in arms about the lack of steamer service on the Arrow lakes. I have mentioned this question before, but I repeat, the people there have the support of powerful groups in British Columbia, the associated growers of British Columbia, the farmers' institute, the women's institutes and the chambers of commerce of the Kootenay district. In fact anyone with any common sense at all who understands the circumstances is supporting the protests of the residents of the Arrow lakes region against the discontinuance of the steamer service and urging both the federal and provincial governments to do something to see that the service is resumed.
The loss of this service is a very serious thing to fruit farmers and others in my constituency. If no satisfactory service is provided it will mean the loss to some of their life's work. To illustrate that point, I am going to read a couple of letters I have received today. The first is from Mr. R. O. Forslund of Edgewood, B.C. I have known this gentleman ever since he was a baby, and

Livestock-Floor Prices I knew his father well. His father was one of the pioneer steamship captains on the Arrow lakes. He used to run between North-port and Revelstoke and was a famous skipper. When the Duke of Devonshire was on the steamer on one occasion he said, "Captain, it looks like rain today, doesn't it?" The captain said, "Like hell it does, Your Excellency; you don't know the Arrow lakes". I mention that story to indicate what roots and interest this person has in the district. Now, I am going to read his letter:
Dear Sir:
I am writing you in hopes that you may be able to do something about the mess we have been left in due to the taking off of the S.S. Minto on the Arrow Lakes ran.
There has been a makeshift service started from Robson to Needles, but the rates that are charged are such that they are impossible to pay. as well as the fact that they only run once a week. I have enclosed a ratesheet, and you can see from that how impossible they are.
I would like to know if there is any control, whatsoever, over such rates as these.
I have examined the rates, and they are simply outrageous.
Furthermore, as you know, our most income is out of cherries, and unless they are moved at least three times a week we cannot do anything with them. So if these conditions continue we have no other course than to move out of here, which I certainly do not want to do after spending fifty-two years of my life here.
Might add further that even if there was a boat three times a week, we could not ship on it because of the ridiculous rates. Cherries would have to go by express.
As you know we could not use the road via Nakusp to Nelson due to roughness and distance.
Will add here that the frost damage that hit the Okanagan did not hit here as hard, and looks like we will have a fair crop along this waterway.
I might point out that we on the Arrow lakes do not suffer the extreme changes in weather that are experienced in the North Okanagan.
I am enclosing a letter which I want you to place on the desk where you think it might do the most good. It is only an outline of our conditions caused by the stopping of the S.S. Minto but it may point out how impossible our conditions are, due to transportation, to those in charge.
I want to read this other letter, Mr. Speaker, because this is a serious matter to quite a number of people. It reads:
I want to draw your attention to our conditions on the Lower Arrow lake at Edgewood due to the discontinuance of the C.P.R. boat S.S. Minto, which I certainly think was very unfair to all of us settlers along the lakes-


Mr. Speaker:: Order. Surely the hon. member does not think that what he is now reading is related to the amendment that was moved. I believe when the Department of Transport estimates are before the house the hon. member could quite properly discuss the withdrawal of the S.S. Minto from service. However, at this moment the hon. member

should be indicating the support he would like the government to give to the proposal for orderly marketing. Of course, he might say that the S.S. Minto provides transportation for the livestock.


Herbert Wilfred Herridge: That is my point, Mr. Speaker.


Mr. Speaker:: The one letter the hon. member read was related more to the discontinuance of the service than to marketing. It is the practice in this house when hon. members read a document into Hansard to reveal the source. Perhaps the hon. member has done so for the first letter, since I was conversing with a colleague and perhaps did not hear him. If he has not done so, I would ask him to reveal the source.


Herbert Wilfred Herridge: I did, Mr. Speaker.


Mr. Speaker:: The hon. member says this is the last letter. I hope it is not as long as the first one, because we are all anxious to hear him speak to the resolution and tell us how he relates these letters to the subject matter of the amendment.


Herbert Wilfred Herridge: I bow to your ruling, but my point was that you could not have orderly marketing without orderly transportation. I want to point out that this is a serious matter to these people, Mr. Speaker, and with your permission I shall just read the concluding paragraph of this letter and then make my point.
It certainly seems to me that there is something that our provincial government can do to relieve the situation here, and if it is going to do any good this summer it has to be done at once.
Will add here and now that I for one would very much like to know if the government are going to do anything to relieve this situation or not . . .
He thanks me for giving this my attention, which I am doing, at this time.
There was a press dispatch in the Victoria press recently that indicated that Mr. Gaglardi, minister of public works in British Columbia, had said that negotiations are continuing with the federal government concerning the resumption of this steamer service. I want to bring to the particular attention of the Minister of Transport (Mr. Chevrier) the fact that I urge, in view of the serious matter this is to the fruit growers along the Arrow lakes, if the provincial government makes a proposal concerning the joint subsidy to keep this transportation service in operation until other forms of transportation are provided he deal with it promptly. It is a serious and urgent matter. The crops are developing and they cannot be marketed without satisfactory transportation.

Without economic and suitable transportation these good people will simply lose their means of livelihood, after years of toil and investment.


Mr. McCullough (Moose Mountain):: May I
call it six o'clock?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Edward George McCullough: Mr. Speaker, it gives me a great deal of pleasure to have this opportunity to enter the debate which began prior to the dinner recess. The amendment moved by my colleague, the hon. member for Mackenzie (Mr. Nicholson), is as follows:
In the opinion of this house, the government should give consideration to demonstrating its support of the principle of orderly marketing through livestock marketing boards by announcing floor prices with respect to cattle and hogs at levels not less than the average of the prices which prevailed during the period from January 1, 1951, to December 31, 1953.
During the introductory remarks of the hon. member for Mackenzie I was surprised to hear a member of the Liberal party interject by shouting "Hurrah" when the hon. member had stated that agricultural livestock prices had dropped drastically. I would want to be as kind as possible to the hon. member who interjected because I should think he must have made that comment in a jovial frame of mind.
On the other hand, if there be anyone in the house who would gainsay the importance of what the hon. member for Mackenzie was saying when he quoted figures showing the very serious drop in the prices of agricultural commodities, I would hasten to say to him that there can be no more important subject for discussion in the House of Commons, and certainly no subject which would affect more every single citizen in Canada than does the prosperity of those who are engaged in agriculture.
The hon. member should be congratulated upon having moved the amendment because already during this session of parliament we have seen delegations coming to Ottawa asking for federal assistance. We know that the ramifications of the situation extend into every home in Canada. It is well understood by all people that unless we have a healthy and prosperous agriculture we will have a serious economic condition among all other industries in Canada.
Livestock-Floor Prices It is with this in mind that I appeal to hon. members this evening to bear with me when I present the case for agriculture, in its relation to the marketing of livestock. It is now some twenty years-I believe it was 1934-since the price spreads commission indicated that at that time there was a necessity for a national livestock board. That position was taken because it was felt that at that time the producers of livestock in Canada were not getting their proper share from the sale of their commodities. An investigation into the prices farmers were receiving during the depression period indicates this quite clearly.
Since that time however we have come a long way. We know that during the period of the war and in the post-war years livestock producers in Canada have enjoyed somewhat better conditions for the marketing of their product. Under the present system however the marketing of livestock is a precarious procedure, and one with which I can assure hon. members most farmers are not satisfied.
Hon. members will have noticed that in the amendment we ask for two things, namely the establishment of the principle of national livestock marketing and also an announcement by the government in respect of floor prices for cattle and hogs at a price level not less than that obtained in the period of time indicated in the amendment. The farmer is not so much concerned with the income he receives from the marketing of his livestock as with the relationship that income bears to the cost of production.
I say the present government, and former Liberal governments, must accept a great deal of responsibility for the present position in which farmers find themselves so far as livestock prices are concerned. From 1945 on members of this group pleaded with the government to maintain some sort of peacetime price controls. If one were to look into the findings of the royal commission that sat in 1949 he would find that while they did not indicate their belief that a wartime price control policy would be feasible in peacetime, or in a post-war period, yet they did indicate that some peacetime method of price control could have been maintained. As a matter of fact the government did keep for a little while the promise it gave to the people of Canada in the days of war. In other words, it did maintain some of the price controls. One after the other, however, those controls were thrown out the window, and of course prices began to rise.
That is the key reason why today we in agriculture find ourselves in a position where our costs have mounted to such an extent that, taken alongside falling prices, we have

Livestock-Floor Prices been caught in a price squeeze. One should of course look at a farmer's income in relation to his costs. I know the Minister of Agriculture (Mr. Gardiner) and other government spokesmen are prone to quote figures of gross national income in respect of agriculture. That of course does not show the true picture of income in agriculture.
In this connection I should like to quote in full an article which appeared in the Co-operator for January 1954. On this occasion the Canadian Federation of Agriculture takes up the cudgel with the Minister of Agriculture and the leader of the government in the Senate, when it says:
Agriculture Minister Gardiner, in the annual agricultural conference at Ottawa on November 24, and Senate leader Ross Macdonald a day later, in the Senate, deliberately set out to soften the general warning issued by provincial government delegations and leaders of the federation of agriculture alike that the farming industry of Canada was facing a serious situation economically because of continually rising farm costs and declining farm prices.
For this purpose both the minister and the Senate leader quoted figures respecting the cash farm income and the net farm income of Canadian agriculture in 1953 as compared to 1949. It was quite easy for them to show that the net farm income of Canadian agriculture in 1953 will be about five per cent above that of 1949, although the bureau of statistics has announced that there will be a reduction of 12 per cent in 1953 from 1952.
But what the honourable gentleman failed to do was to co-relate the net farm income figures with costs of both farm operations and farm living. Therefore, without such co-relation, it is unfair to leave the impression that Canadian agriculture is as prosperous, from the farmer's own standpoint, as it was in 1949, for such is by no means the case.
The fact of the matter is that, when all factors of farm operations and farm living have been taken into account, the net result is that, even with the increase in net farm income mentioned, the purchasing power of this income will be 10 per cent less in 1953 than it was in 1949, because of increased farm costs.
In other words, while there may be no more dollars in income on farms, in mere terms of dollars, those dollars have 10 per cent less value in purchasing power than they would have had in 1949. Figuring 1949 as a basis of 100, the purchasing power of net farm income in 1953 works out at 90.
On this occasion the Canadian Federation of Agriculture pointed out to the public and to the government that there must be a basis of relationship between what the farmer gets and what he has to pay for the costs of production in order to establish his real income.
As I said before, under the present system of marketing it is impossible in practice for the farmers to get a just and fair price for their livestock. From the time that the price spreads commission in 1934 indicated that a national livestock marketing board was necessary to market livestock for the protection of both the consumer and the producer until

the present time we find that the situation has grown immeasurably worse from the producers' point of view.
We have four major packing plants controlling the purchasing of livestock in Canada. With this monopoly control it is virtually impossible for farmers to have anything to say about what they get for their livestock. I am sure no hon. member would say that there can be any justification for this state of affairs, or any justice to the producer in it. A farmer can take a carload of cattle and send them to the Winnipeg stockyards and get perhaps 18 cents a pound at the week end. Then on Monday morning another car from another neighbour can come in and there will be a variation of three cents or four cents a pound. Yet there has been no visible change in the situation in regard to the demand and no change in regard to the supply. Hon. members can readily see the injustice of that situation.
The problem that faces agriculture can be laid at the doorstep of the Liberal party, owing to the fact that they did not keep on price controls as they should have until things had levelled off and thereby maintain a decent price relationship between producer and consumer in Canada. Then there is also the fact that we have lost most of our export markets to Britain, which was our historical market, and that has come about because of the policies of this government.
I do not want to go into that in detail other than to illustrate to the house what has taken place by some figures that I received in a return on March 18 to a question I asked of the department. In 1944, the year before the end of the war, we were shipping 980,800 hundredweight of beef and veal to Britain; 11,356 hundredweight of mutton and lamb; 103,751 hundredweight of fresh pork; 21,650 hundredweight of poultry and 6,923,103 hundredweight of bacon and hams; 338,378 hundredweight of canned meats; 142,300 hundredweight of edible offal and 408 hundredweight of other meats. That was in the peak year. In the second peak year, which was 1945, Canada shipped to Britain 1,843,777 hundredweight of beef and veal; 73,579 hundredweight of mutton and lamb; 4,460,693 hundredweight of bacon and hams; 160,441 hundredweight of canned meats; 103,186 hundredweight of edible offal and 6,082 hundredweight of other meats.
Then we have the picture of the post-war period in relation to the livestock products from Canada going to Britain. This is a record of our trade with that country. In the year 1953 we shipped 64,501 hundredweight of beef and veal; no mutton and lamb; no fresh pork; no poultry; no bacon and hams

and only 27 hundredweight of canned meats; no edible offal and only 10 hundredweight of other meats.
Is it any wonder that this government, through its fiscal policies and trade policies, has failed to keep that historical market for our agricultural products? I recall very well the hog prices in the period between July 21 and September 22 of 1951, when they dropped 25 per cent. Surely, no one can say that such a condition, when the price of our livestock drops 25 per cent in that period, can be justified.
Then we come into the supply situation. I hold in my hand a submission to the government of Canada by the Interprovincial Farm Union Council, submitted on February 15, 1954. It indicates that there is no justification for the present drop in beef prices to the producers in Canada. In this submission to the government we find the following:
We note in the September issue of "Current Review of Agricultural Conditions in Canada" issued by the federal Department of Agriculture at Ottawa, that we in Canada consume 95 per cent of our total marketings of cattle, and that only approximately 5 per cent was exported during the first seven months of 1953. Latest statistics even show that stocks of meat held by packers, abattoirs, and cold storage warehouses on December 1, 1953, were 13 million pounds less than on the same day the year before.
I want to draw the attention of the house to the figures which correspond to this period I am reviewing. In Montreal in 1951 the price, taking the over-all average, of beef was $24.82 a hundredweight; in 1953 it dropped to $14.31. The Toronto market in 1951 was $29.76. It had dropped in 1953 to $17.34. The Winnipeg market in 1951 was $27.40, and it had dropped to $14.17. Who makes all the money in the process?


An hon. Member:: The farmer.


Edward George McCullough: Somebody said "the farmer". That shows how little he knows about what he is talking. I do not know whether he wants to get a rise out of me. I will not mention his name because I do not think it would be fair to him, but surely he must have a better understanding of the situation than that. When we come back this fall I am sure that the hon. member who is now interfering with my attempt to present the farmers' plight will be one of those who will be rising in his place when we have delegations here wondering what is wrong with the employment situation in Canada.
This whole problem, Mr. Speaker, of a fair and just income to the farmer, is tied up with the welfare of everybody in Canada.
Livestock-Floor Prices The fact that we have already had delegations representing the agricultural implement industry in Canada coming to Ottawa to see this government is an indication that the income of the agricultural producer has been drastically cut in the last two years; and more people will be coming here unless this government takes action and does something along the lines that we are suggesting. What we need today is a national livestock marketing board with producer representation.
This government should take the Agricultural Prices Support Act off the shelf and use it, and not leave it hidden away some place. This act should be used to protect the agricultural industry of this country. It is all right for this government to subsidize the gold mining industry which in five years has been subsidized to the extent of some $60 million. It is all right to dig gold in Canada and then send it down to be buried in Kentucky. But when we come here and ask this government to get busy and set up a marketing plan and use the Agricultural Prices Support Act to protect the agricultural industry of this country then our case is ridiculed by hon. members opposite.
I have posed the question as to who makes the profit when we have a decline in return to our agricultural producers.


An hon. Member:: The Liberals.


Edward George McCullough: Well,
according to statistics issued by the Department of National Revenue for 1951 the entire packing industry in Canada made a net income of $7,552,000 or 30 per cent on the capital shares of the gross amount earned by the industry. I have already indicated that the market is very unstable under the present conditions and there is nothing to protect livestock producers. Part of their difficulty is due to the fact that these agricultural producers cannot sell their wheat. However, I do not think it is within the orbit of this discussion to go into that aspect of the problem in any detail, but I would like to point out to the house that during the eight-month period of August to March,
1952-	53 compared with the same period for
1953-	54 there was a 53,167,433 bushel drop in the amount of wheat marketed, and that has resulted in a drastic lowering in the income earned by the agricultural industry.
It is all very well for members of the government or anyone else to go around and say to the farmers, "That wheat in your bins is as good as money in the bank". During the Easter recess when I visited my own constituency I saw piles of grain amounting to as much as 4,000 bushels lying out exposed
4802	HOUSE OF
Livestock-Floor Prices to the weather. That should not be, and our farmers should have an income sufficient to allow them to bin that grain properly so that it is protected from the weather conditions in western Canada.
I would again point out to the government that due to the fact that our agricultural prices have dropped, and the fact that they cannot sell their grain, farmers today are not in a position to buy the building materials necessary to enable them to store their grain properly. I would therefore appeal to this government to consider this amendment so that our agricultural producers will have some protection. It will not be sufficient to undertake a scheme such as is now applied to the production of eggs where it is not the producer who is subsidized but the packer. A few years ago I consulted one of our local merchants and at that time I understood this government had a floor price for eggs. During that period there was no packing station. The local merchant collected his eggs and shipped them to the packers and he paid the farmer about 22 cents a dozen. I said to this merchant, "Well, I understood the government had a floor price for eggs". He replied: "We see nothing of that. These eggs are packed and shipped to the packer and this is all we get. There is no further payment and the price for which we sell these eggs is the only payment we receive". That sort of scheme will not be sufficient in this case and certainly was not sufficient in the case I have illustrated.
What we want is to see both consumer and producer protected. We do not want the packers to be able to hog all the profits.


Mr. Argue:: They can take the squeal.


Edward George McCullough: We
feel there could be set up in Canada the kind of organization suggested to this government by the various farm unions and organizations in Canada. I recall back in the period between 1945 and 1949 when I was in this house, the Canadian Federation of Agriculture appealed to the government to set up a national livestock marketing board. Since that time we have seen the growth of the farm union movement in Canada, and this movement now represents farmers in practically every province of Canada. Through their organizations the farmers have requested the federal government to set up a producer livestock board with producer representation under which the farmers would have some say in the marketing and control of their products.
In conclusion, Mr. Speaker, I would just like to say that many hon. members, at least on the other side of the house, do not seem to be particularly interested in this problem.


It is my belief that by next fall, unless some action is taken by the government, we will find the hog industry in a much more serious position than it is today. Today the farmer obtains a reasonable price but by next fall, unless the government is prepared to put a proper floor under hogs and beef cattle and relate that to the cost of production, we are going to have a very serious marketing situation throughout the entire hog industry.
Therefore, Mr. Speaker, I want to appeal to the government. During this session we have asked them to take cognizance of the fact that the farmer has not been able to sell his wheat. I recall during the last election campaign there appeared statements in a western newspaper attributed to the Minister of Trade and Commerce (Mr. Howe). Interviewed in one of the maritime provinces and questioned on the sale of Canadian wheat the minister said in effect that he did not think there would be any serious difficulty in marketing that wheat. He advised "if they got a hurry on" the wheat could be marketed. I am now asking the government to pick up its feet and take some action. I would urge them to get cracking on this very serious problem of formulating a program under which we can market our livestock profitably so that the producers of our farm livestock products and the consumer will be protected.


Mr. Victor Quelch (Acadia):: Mr. Speaker, at the outset of my remarks let me say that we in this group do not like the way in which this amendment has been worded. On the other hand, we dislike even more the situation which is developing in this country in regard to agriculture. However, as we believe in the general principle of supporting agricultural prices at parity we will support this amendment for it at least guarantees a price equal to and not less than the parity price for livestock products.
I am not suggesting for one moment that in western Canada there is what one might call a real agricultural crisis. On the other hand, there are plenty of danger signals for those who are not too blind to see. The Minister of Finance (Mr. Abbott) in his budget speech pointed out that the price of agricultural products had fallen and that the net income for farmers during the past year had fallen by 14 per cent, while the net income of industries other than agriculture had risen by 8 per cent, leaving quite a disparity between agriculture and other industries.
If you take the fall in farmers' net income for the past two years you find there has been a drop of around 23 per cent. The question of the falling off in farmers' net income combined with the piling up of surpluses is causing a great deal of concern

to farmers and farm organizations. I am afraid that the Minister of Finance in his budget speech did not in any way remove that concern because he stated that government intervention would not be a cure for that situation. In order to meet the present situation he said it would be necessary for industry to increase their efficiency, to cut down their costs and to try to find new markets. On the other hand, he said that government intervention, in his opinion, was no cure for the situation.
Let us just examine those points he mentioned so far as agriculture is concerned. Let us first of all take the question of efficiency. Would anybody argue that agriculture today is not as efficient as, if not more efficient than other industries in this country? Let me quote what the president of the Canadian Federation of Agriculture had to say in his address before the annual convention:
In our office Dr. Hope attempted to compare the efficiency of farmers with the efficiency of Canadian workmen as a whole. He took the years 1930 and 1950 and compared the value of production per worker in agriculture with the value of production over all workers and made appropriate adjustments to get the results in terms of constant dollars. His calculations turned out favourable to the farmer. He found that production per worker in the whole economy increased from $906 in 1930 to $1,688 in 1950

an increase of 86 per cent, while production per worker in agriculture increased from $357 in 1930 to $685 in 1950-an increase of 92 per cent.
Using that statement as a basis, I think one may well argue that agriculture is just as efficient as are other industries, if not more efficient.
As to the question of costs, there are many people perhaps who will think that the farmers are receiving prices well above their cost of production. If anybody is under that delusion, all he has to do is to read the speech that was made by the Minister of Agriculture (Mr. Gardiner) before the food and agriculture organization dealing with this matter. I want to quote from that speech. It is reported in the Ottawa Journal of December 8. Speaking before the food and agriculture organization at Rome the Minister of Agriculture stated:
Our costs of production are very high. I do not think there is any country in the world today which can afford to buy some of our products at the prices our farmers must charge if they are to make a living.
After that statement nobody could argue that the farmers are receiving prices greater than the cost of production. The minister is there pointing out that our costs are so high that he is extremely doubtful whether people in other countries can afford to pay them.
Livestock-Floor Prices
What can we do in order to try to bring down the cost of production? I would say that government policies play an important part in relation to the cost of production. For instance, if the government were prepared to eliminate the 10 per cent sales tax they would be bringing about a considerable reduction in the cost of producing farm products in this country. Then if the government were prepared to restore the value of the Canadian dollar to the level at which it was a few years ago the farmers in this country would be in a much better position to meet the competition of other countries.
Today the Canadian dollar is above the value of the United States dollar. A few years ago it was held at 90 per cent of that of the United States dollar. As a result of that change the farmers are losing 18 cents a bushel on wheat alone. The same thing applies to all agricultural products. As a result of the government's policy in appreciating the Canadian dollar, the farmers of this country are severely penalized. Some may say: That is true of all exporting industries. That may be so; but there was at least one case where the government took steps to relieve an industry of the burden caused by the appreciation of the Canadian dollar. I have in mind the gold industry. We subsidize the gold industry to t*ie extent of about $10 million a year. This year I think it was $17 million. In the past five years we have subsidized it to the extent of over $50 million. When the subsidy was first paid, it was paid largely on account of the fact that we had appreciated the value of the Canadian dollar.
Can anyone argue that there is any justification today for maintaining the Canadian dollar above par with the United States dollar? What is supposed to determine the value of a nation's currency? The determining factor is supposed to be its purchasing power. How does the purchasing power of the Canadian dollar compare with that of the United States dollar? Obviously anyone who has travelled in the United States will know that the United States dollar has a higher purchasing power than has the Canadian dollar; that is to say, the United States dollar will buy more goods in the United States than the Canadian dollar will buy in Canada. On that basis, therefore, the Canadian dollar should be valued below the United States dollar.
Another matter that is supposed to decide whether a nation's currency should be appreciated or depreciated is the question of the balance of trade. For a number of years
4804	HOUSE OF
Livestock-Floor Prices we have had an adverse balance of trade with the United States. Hence on that score you would expect the Canadian dollar to be valued below the United States dollar. The main reason the Canadian dollar is above par is that the United States is making heavy investments in this country. In other words you might say that the reason the Canadian dollar is above par is owing to speculation. The Canadian government, if they so desired, could easily control the Canadian dollar at 90 per cent of the United States dollar. In that way we would greatly help the exporters of this country-not only the farmers but all other exporters-to compete in the markets of the world. But so long as our currency is appreciated in value in the way it is we are having to face extremely unfair competition with those nations whose currency is depreciated below the United States dollar.
The next question that comes to mind is this: Are farmers justified in expecting the government to underwrite the price of agricultural products? I get sick and tired of reading newspapers in which the charge is made that the farmers are asking for a handout from the government. All the farmers are asking the government to do is to honour their obligations or the promises they have made in the past. The farmers have already paid in full for any help they might get in having agricultural prices stabilized.
Let me go back a few years; let me go back to the 1930's. We all remember how the prices of agricultural products then fell to extremely low levels. When the farm organizations asked the government to guarantee the prices of agricultural products in those years, we probably remember how they were told by the government that the government could do nothing because those prices were set by an international market; in other words, the farmers must sell at world prices. Hence during those years of the depression the farmers had to take extremely low prices for their products and, as a consequence, they went heavily in debt.
Then the war came along. Shortly after the beginning of the war the prices of agricultural products rose. Then shortly after, the government placed a ceiling on the prices of agricultural products. They told the farmers that they could not have world prices because those prices were too high. May I say that you cannot have it both ways. If the farmers had to take world prices during the depression, they were justified in asking for world prices when prices rose. However, when the government placed a ceiling on agricultural prices they told the farmers that this was part of a stabilization


program' under which they would guarantee to stabilize agricultural prices after the war. I remember that, some days ago, the Minister of Trade and Commerce seemed to be extremely doubtful whether that guarantee had ever been made. I should therefore like to quote from a speech that was made by the late Right Hon. Mackenzie King in a radio broadcast delivered on December 4, 1943:
I wish to thank the farmers of Canada for their magnificent contribution to the battle of production. I wish again to appeal to them to continue to help hold the front line against inflation by continuing to support the price ceiling. If, to help win the war, the farmers are asked to accept a ceiling on prices, we believe they are entitled to a floor under prices to ensure them against an agricultural depression after the war. As an essential part of its post-war policy, the government intends to ask parliament at the next session to place a floor under the prices of main farm commodities.
We all know that after the war the prices of farm products remained fairly high for a number of years. It is true that the government appeared to implement their promise by introducing the Agricultural Prices Support Act under which the government could guarantee farmers what you might call parity prices. In other words, they would step into the market and buy agricultural products when the prices fell below a level that would bear a fair relationship to the prices of other commodities. They were not required to take any action until 1949. In 1949 the first severe drop in agricultural prices took place involving hogs and one or two other commodities. The government did place a support price under hogs and some other commodities but the farm organizations were not satisfied with the support prices that were established.
I was at the convention in Niagara Falls in 1950 and the farm organizations asked the Minister of Agriculture what was the formula for establishing support prices. The Minister of Agriculture stated that they had a formula under which these support prices were established. He said that the formula was that they would support the price of agricultural products so their price would bear the same relationship to the prices of other commodities as had existed in the three years, 1943, 1944 and 1945. Since that time most of the support prices, with the exception of those applying to livestock, have been below that formula.
Of course wheat does not come under the Agricultural Prices Support Act, but it is rather interesting to note that on the basis of that formula the price of wheat in 1951 should have been $2.53 a bushel. The price of wheat has of course been well below the price that would have been paid if the formula had applied to wheat. But, as I say,

with the exception of livestock prices, the support prices established by the government have been below the formula. I think the question that is worrying farmers today probably more than any other is to find out exactly what the government's policy is regarding support prices. The Minister of Agriculture has given farmers reason to believe that no support price is going to be established under livestock products. I have here a copy of the Western Producer of April 29, 1954 which contains an article referring to a press conference with the Minister of Agriculture. It is pointed out that the minister stated to the press that the federal government is not considering establishment of a support price of all livestock.
As a result of the fall in the prices of many farm products that has taken place, a great deal of interest is being shown in the establishment of marketing boards. I believe that enabling legislation has been set up in most provinces but up to the present such legislation has not been passed in the province of Alberta. In Alberta there is a very wide difference of opinion among farmers on this subject. Right at the present time quite a war is going on between one group of farmers and another as to whether or not marketing boards should be set up. The policy being followed by the province is that if the majority of the farmers appears to be in favour of marketing boards a plebiscite will be taken, and if two-thirds of the farmers are in favour of such boards no doubt enabling legislation will be passed.
I think there is a very good reason why the farmers of that province are somewhat leery about whether or not they would benefit under a marketing board for livestock or any other commodity. That reason is that the Minister of Agriculture has made it quite clear that if marketing boards are set up prices will be guaranteed not so much under the Agricultural Prices Support Act as under the Agricultural Products Cooperative Marketing Act, and that act does not guarantee any security at all for the farmers. It is true that the act provides that the government may guarantee an initial payment up to 80 per cent of the average price of the past three years, but the whole value of that is nullified by subsection 3 of section 3 which reads as follows:
An agreement made under subsection 1 may include a provision that the minister may on such notice as he deems fair and reasonable require that the delivery of an agricultural product to a cooperative association, processor or selling agency shall be discontinued with the result that the min-inister shall not be liable in respect of any agricultural product delivered to the co-operative association, processor or selling agency after such requirement.
Livestock-Floor Prices
That just means that if a serious fall in the price of any agricultural product takes place the government can relieve itself of any responsibility by instructing the board to refuse to accept any more of the commodity, and in that case the guarantee would disappear entirely. If we are going to have agricultural products marketing boards set up by the provinces, then we should have a guarantee from the government that they will provide support prices for those products under the Agricultural Prices Support Act. That is what the Agricultural Prices Support Act was set up for, in order to underwrite the prices of farm products. That guarantee was given by the former prime minister during the war. Is the government of today not prepared to live up to the guarantee given by the prime minister of this country during the war? If they are prepared to live up to it, it is time they made that quite clear to the farmers. If that were made clear to the farmers I think we would then find it a whole lot easier to establish these marketing boards because the farmers would know that if a marketing board was set up the initial payment could be made with safety without any danger of the marketing board finding itself in the very difficult position in which the wheat pool found itself in 1929, I believe.
We in this group believe in a two-price system for agriculture, and in view of the fact that about 95 per cent of all agricultural products with the exception of wheat are consumed in Canada we cannot see why the 5 per cent that is exported abroad should be allowed to determine the price of the other 95 per cent consumed in Canada. We feel that the government should guarantee parity prices for agricultural products consumed in Canada. The surplus could be exported abroad and sold for the very best price that could be obtained. We can no doubt help to find markets for our surplus goods by advancing credits to nations unable to pay for the goods they desire, or by being willing to accept their currency in payment.
But the point we want to emphasize is that the all-important market for agricultural products is the home market. In the final analysis the only market we have is the home market because imports brought into Canada in exchange for the exports we ship out have to be consumed in this country. The result is we have to be able to consume the total production of the country or the imports brought in in exchange for our exports. I do not think anybody would argue for one minute that we have anything like developed our own home market.
We have a tremendous potential market in this country. This potential market is

Livestock-Floor Prices represented by the thousands upon thousands of people in low income groups; the people in the old age pension brackets; the war veterans; the people with disabilities, all of whom are having to accept low incomes today. Then there are the unemployed. I know it has been argued, I believe by the Minister of National Health and Welfare (Mr. Martin), that a program of increased pensions for these people would be very costly. I wonder whether the government has ever stopped to calculate what it is costing the country to have half a million unemployed people?
Supposing the half a million unemployed people were earning a moderate income, say $2,400 a year or $200 a month. This would mean that we could be having in this country another $100 million a month in goods and services, another $1,200 million a year. Would that not more than offset the cost of paying a decent pension to the old age pensioners, the war veterans and the physically disabled? By paying a decent income to these people we would also stimulate the market for agricultural products. I do not think anyone will deny that the world needs expansion in the production of food, and that any surplus produce should be stored to take care of crop failures. Then in years when there were crop failures we would be able to draw upon our stored surplus to make food available to the nations needing it.
I believe that expanding the production of food would bring prosperity to the farmers, provided they were guaranteed fair prices. Let no one forget that as long as agriculture prospers, Canada will prosper because the people engaged in agriculture provide one of the very best markets for the products of other industries in this country.


Mr. D. S. Harlcness (Calgary North):: I am
sorry, Mr. Speaker, but because I was in the agriculture committee this afternoon I did not hear the hon. members who took part in this particular debate. However, the two speakers whom I have heard tonight have laid a great deal of stress on the dangers facing agriculture in Canada today. I am fully cognizant of the dangers facing agriculture. As a matter of fact about two weeks ago last Friday, during the debate on the agriculture estimates, I believe I made that abundantly clear. I shall not, therefore, repeat anything that previous speakers have said concerning this difficulty or anything that I said at that time.
Although I am thoroughly cognizant of the dangers facing agriculture, I do not believe the solution proposed by this resolution is the answer. As a matter of fact.
[Mr. Quelch.l
the answer to most of our agricultural problems lies in expanded markets for our products. Our difficulties so far as the wheat surplus or what many prefer to call the "so-called surplus" is concerned lie in selling that wheat to people in other countries who could use it, as well as expanding the market for it within Canada. The same remarks would apply to livestock products. When we have sufficient market for our products we do not need to worry unduly about the price, and perhaps we do not need to worry unduly over putting in floor prices, as has been suggested here.
I feel that this resolution was prompted by very grave fears that exist in Canada today concerning what the future may hold for the livestock industry, and as to what may happen to the price of cattle and hogs particularly, the two main products of that industry. There has been a widespread demand, of course, amongst farmers for a long time for some system of floor prices in this country. This demand has been met to a limited extent. A floor price was established for hogs some time ago, and a floor has been established for butter. As I say, the demand has been met to some extent by floor prices under one product here and one product there, but there has been no general system of floor prices for agricultural products. There is undoubtedly a very strong demand amongst farmers in this country for some system of that sort.
In my opinion, if this resolution were put into effect it would be, more or less, complete socialization of the livestock industry. Most livestock producers of whom I am aware do not want their industry socialized. They want to have that industry remain on the basis of free enterprise. As a livestock producer myself for many years the last thing I want is to have control of the sale of my livestock taken completely out of my hands and put into the hands of a government or a board appointed by the government. As I say, most livestock producers want the same thing. The demand for a solution such as is proposed here, a socialized livestock industry, does not come from the majority of the farmers producing the majority of the livestock. There are no producers with reasonably sized livestock farms of whom I am aware who want a solution of this sort. The only people I have met who want a solution of this kind are the people who produce a very small amount of livestock, and I, personally, have met very few of them.
I am not going to go into the extremely complex subject of floor prices for agricultural products; what those floor prices should be, or the formula that should be used to arrive

Livestock-Floor Prices
at them. That is a matter upon which one might make a dozen speeches of the length to which we are limited in this house, and still not nearly exhaust the subject. In my opinion this particular proposal comes very close to being complete nonsense, and I think bears no relationship to any realistic conception of what the livestock industry is, what conditions are or anything of that sort. It merely says there should be a floor price put under cattle and hogs of not less than the average of the prices which prevailed during the period from January 1, 1951 to December 31, 1953, a period of three years.
There are many people who would argue that during the early part of that period the price of hogs was too low, and now it is too high. There are other people who would argue that during the earlier part of that period the price of cattle was too high, and now it is too low. The idea of taking any particular three-year period and saying the average price of those three years should be the price for the next one or two years, does not take into account at all the present price of livestock feed stuffs or other important factors. Certainly, it is not the kind of formula that anyone who has made a real study of this matter would recommend. For those reasons, perhaps, the formula is not a reasonable or realistic yardstick to use. The whole purpose of this resolution, if carried into effect, would be to socialize the livestock industry. Personally, I oppose it, and oppose it very strongly.


Hazen Robert Argue: When I looked across the way this evening and saw the Minister of Agriculture (Mr. Gardiner) was not in his place, I wondered who would tell us the government's position concerning the resolution before the house. I think the speech delivered by the hon. member for Calgary North (Mr. Harkness) has filled the bill very well, for the Minister of Agriculture; and it may not be necessary for the minister to make a rebuttal since, I imagine, he would be making about the same type of rebuttal as that made by the hon. member for Calgary North.


Douglas Scott Harkness: You had better let him speak for himself.


Hazen Robert Argue: I think the speech delivered by the hon. member for Calgary North was ridiculous, foolish and downright silly. I have never heard anything quite so ridiculous in this House of Commons for a long time- and I am referring to his statement that the establishment of floor prices would result in the socialization of the livestock industry. Because I say to him that floor prices couldn't possibly result in the socialization of the livestock industry.


Douglas Scott Harkness: On a point of order; I must object to the hon. member's putting words in my mouth which were never there. I did not say that floor prices would result in the socialization of the industry; I said the effect of this whole resolution would result in that, if it were put into effect-but not floor prices. I went on to say that floor prices were themselves a big subject which I would not take the time of the house to discuss tonight.


Hazen Robert Argue: A far bigger subject, I suggest, than the hon. member would be capable of dealing with. But I come back now to my statement, as to the remark he made in referring to this resolution, when he said that it would mean the socialization of the livestock industry; and I say that that remark was completely foolish.


Mr. Pickersgill:: Has the hon. member any objection to that? Has he any objection to the socialization of the livestock industry?


Hazen Robert Argue: And that is another silly question-it is perfectly silly.


John Whitney Pickersgill: Answer it anyway.


Hazen Robert Argue: And the Secretary of State-


John Whitney Pickersgill: Answer the question.


Hazen Robert Argue: I will answer it then. I will say that so far as I am concerned, the livestock industry as it is now operated and managed by the producers of livestock is the best possible system for the livestock industry. To my mind it is a system that should be preserved, and this government should not allow farmers to go into bankruptcy because it has failed to act under the powers of any one of three statutes now on the statute books, and which could be used to provide floor prices to deal with this situation.
I come back now to the terms of the amendment, and the suggestion that if it were implemented it would result in the socialization of the livestock industry. We have in the United States right now, operated by a Republican government, a government that is not too often criticized by members of the Conservative party in Canada, a system of parity floor prices established under the main agricultural commodities in the United States.


Mr. Trainor:: And what a headache that is!


Hazen Robert Argue: Someone interjects by stating, "What a headache that is!" Well, I would far rather be a farmer in the United States-


An hon. Member:: Go ahead, then.


Hazen Robert Argue: -with the headache of receiving more than $2 a bushel for wheat, and floor prices under all the main agricultural

Livestock-Floor Prices commodities than a farmer in Canada producing under a total lack of adequate legislation and adequate floor prices for the livestock industry, as we see it under this government.


Stanley Howard Knowles: It gives a headache even a doctor could not cure.


Hazen Robert Argue: If this amendment we have suggested would result in the socialization of the livestock industry then all I can say is that the Americans socialized their livestock industry years ago, because they have adequate floor prices and adequate parity prices.
The Minister of Agriculture believes in floor prices. During the transitional period from war to peace he has had legislation placed on the statute books for the support of agricultural prices. Under that legislation prices can be supported. Then we know that there is an act to provide for the establishment of an agricultural products board. He could establish floor prices under that act. Then if he did not like the way those two acts read, he could turn to chapter 5 of the statutes to assist and encourage in the cooperative marketing of agricultural products.
The Minister of Agriculture has three separate statutes under which he could do the very thing advocated in this amendment. Of course he likes to have all kinds of legislation to confuse people, and then do nothing about it. For many years western agricultural producers fought to get orderly marketing of their farm commodities. In spite of the many speeches delivered against the principle of orderly marketing, speeches such as the one delivered tonight by the hon. member for Calgary North, they have been successful in obtaining the Canadian wheat board. I submit the wheat board is an outstanding body providing for the marketing of wheat and other grains in an orderly fashion.
The Canadian wheat board establishes an initial price, which acts as a floor price. Yet it has no more socialized the wheat producers of western Canada than in my judgment this amendment would result in the socialization of the livestock producers.
If I were considering the kind of policy we should adopt in relation to the livestock industry one of the first things I would do would be to read the resolutions passed by the various farm organizations. The Saskatchewan wheat pool in its outlined future policy states in its annual report on page 49, and this is the seventh plank in that policy:
Increased use of the Agricultural Prices Support Act as a means of providing adequate support prices for those farm commodities to which the act applies.


8. The establishment of support prices on all livestock marketed through licensed stockyards.
That is exactly what we are attempting to have done by pressing this motion. We are attempting to have a floor price set on livestock and to have greater use made of the Agricultural Prices Support Act.
At this time the farm unions of western Canada have taken great interest in the idea of marketing boards, and have established in Manitoba, and I believe also in Saskatchewan, an interim marketing board. It is their hope that they will be able to handle livestock and receive from the federal government support in the way of adequate support prices underwriting the operations of those livestock boards. I hold in my hand the Western Producer for Thursday, April 29. In it is outlined the result of a very successful conference held in Saskatoon regarding the establishment of a livestock board. An interim livestock board was established, and here are the members of that board: Mr. E. A. Boden, Cutknife, prominent hog breeder and wheat pool director for district 12, who will serve in an individual capacity; Mrs. Eric Lund, Borden, S.F.U., woman director; Don Griffin, farmer, Alameda; Jim Gray, S.F.U. official, Saskatoon; Percy Wright, Tisdale, former C.C.F. member of parliament for Melfort, and Fred Messenger, Kelvington, vice-president of the Saskatchewan association of rural municipalities.
The board is headed by a chairman, Mr. Speaker, who is well known to members on both sides of the house, a former colleague in this house, Mr. Percy Wright of Tisdale. I suggest that the honour that was bestowed on Mr. Wright by selecting him as chairman of the board demonstrates something that all of us who have been associated with Mr. Wright over the years have come to know, namely, that he is an extremely able person and was the very best choice in my opinion that this conference could make to head the interim livestock board. I do not have the press report here, but I understand that an interim board has been established in Manitoba and that Mr. Scottie Bryce, an able former colleague, is a member of that board. Scottie, by being back closely associated with the livestock industry, is once again engaged in the work that has been so dear to him throughout his lifetime.
The establishment of those interim boards by the farmers' unions in western Canada, supported as they are by farm unions in Ontario to British Columbia, demonstrates that the livestock producers of Canada want orderly marketing through livestock boards, and further desire that adequate support prices be placed under livestock. I might say

in this regard that the report of the conference in the Western Producer states of Mr. Phelps:
He reported that S.F.U. officials had held a successful conference with federal agriculture minister J. G. Gardiner the previous day. The minister, said Mr. Phelps, had promised that if a producers' board were established, the federal government will provide-
And this is very interesting:
-financial guarantees under the Co-operative Marketing Act of 1939 to enable payment of an initial price. Mr. Gardiner had also promised consideration of a national board of livestock commissioners.
However, it is perfectly correct, as the hon. member for Acadia (Mr. Quelch) pointed out, that in the same issue of the Western Producer the Minister of Agriculture is reported as having said that there will be no financial assistance from the federal government. All I can say is that that proves to me at any rate that the Minister of Agriculture was in Saskatoon and discussed with two different sets of people the question of some financial support for the livestock industry. He is now able to get up in the house, or in any other place, depending which side of the argument he takes at the moment-he may take his pick as to which part of the Western Producer of April 29 he decides to quote- and prove that the government is either going to support financially the livestock marketing boards or he can demonstrate that the government has no intention of providing such financial support. I am hopeful, Mr. Speaker, that since the president of the Saskatchewan farmers' union says that the Minister of Agriculture did say to him that the federal government would provide financial support for livestock marketing boards that commitment of the Minister of Agriculture will be fulfilled.
We want marketing boards; we want financial support for the livestock products that are marketed by those boards. If such floors were provided, then the statistics I have before me show that such a proposal would provide a floor price for good steers, basis Toronto, $26.50 a hundred. I would say that for an average grade steer in the various parts of Canada it would result in something under 20 cents a pound live weight. I suggest that such a floor price is fair and moderate and will give the producer a reasonable return but nothing more. The floor price under hogs would be $29.65 a hundred for grade B1 hogs at Toronto. I suggest that such a floor price under hogs is reasonable and would keep the price of hogs in fair relationship with the stated support price for cattle. I am hopeful, Mr. Speaker, that all members representing rural constituencies and agricultural ridings will give this
Livestock-Floor Prices motion very serious consideration so that the agricultural producers of Canada may make further progress in their battle for orderly marketing and stability, and may make one further step toward obtaining the same kind of stability that the United States farmer has now enjoyed for a great many years.


Mr. Speaker:: Is the house ready for the question?


Mr. G. H. Castleden (Yorkion):: I have a word or two on this matter, Mr. Speaker, which is of particular importance to Canadian agriculture. Most of the arguments have already been made in support of the establishment of a livestock marketing board for Canada and something being done in these days to see that the Canadian people, both producers and consumers, get the same kind of a fair deal.
There are very few people in Canada, and certainly one would not realize it if he listened to the debates in this house, who are familiar with the extent of the livestock marketing industry in Canada. Figures show that it is in volume of gross value of business done the second largest business in the whole of Canada, surpassed only by the pulp and paper industry. However in this industry hundreds of thousands of farmers, and millions of Canadian people indirectly, are involved in the producers' side of this business, and practically every Canadian family is very directly affected from the consumers' side of the question. Therefore I consider that from the standpoint of importance to the Canadian people there is no industry which requires more of the attention of the people than does the livestock industry at the present time. More and more people depend for their livelihood upon the livestock industry, and the cost of living for everyone generally is seriously affected by the amount charged for meat and meat products. There are all kinds of by-products, margarine, animal fat, oil, bone meal, fertilizer, hides-


An hon. Member:: Bologna.


George Hugh Castleden: If that is a by-product then we are seriously affected by it in this house. The sales of Canadian produce in Canada in 1950 amounted to $757 million. In 1951 they went up to $892 million and-an interesting fact which reveals the trend in Canada and which every Canadian interested in agriculture and livestock production should realize -our exports of livestock are dwindling very rapidly. The Canadian producer is becoming more and more dependent upon the returns he receives from livestock as years go by. In 1947 about 23 per cent of Canada's production of livestock was exported; in 1948

Livestock-Floor Prices only 22 per cent was exported, and in 1949-50 13 per cent. The following year it fell to 10 per cent, and gradually but eventually we are losing our livestock markets abroad. If that trend continues Canadians are going to be in a very difficult position with regard to our export position.
The one danger, and the one evident factor in the situation today which causes the Canadian people, particularly organized agriculture, to ask for a livestock marketing board, is the fact that competitive markets are disappearing. There are 155 slaughtering plants in Canada, 61 concentrated in Ontario and about 37 in Quebec with the remainder in other provinces, and three large firms control 60 per cent of the entire business. Even the royal commission which investigated prices underlined this in the report they issued for consideration by Canadians and by the Canadian parliament. They said, and I quote:
. . . the processing-
That is meat packing.
-industry shows a high degree of concentration. The three largest firms account for about 60 per cent of the total inspected slaughterings in Canada, which would indicate that competition operates within a fairly restricted framework, though there may be considerable rivalry among these firms. These large firms are efficient in their operations and, though realizing small profits per unit of output, earn substantial returns on their investment, The very heavy capital investment required, together with decreasing cost ratio as the scale of the business expands, tends to keep additional competitors from entering the field.
What the Canadian producers are asking for in almost every one of the briefs and through every one of their farm organizations is that there should be a livestock board established in Canada to see that adequate and proper prices are maintained for the producer, and to see that there is not a wide disparity between what the farmer receives and what the producer has to pay.
Prior to 1950-51 western farmers received for a good steer around $250. Today the average price for a good steer is down to between $100 and $120, but there has been no corresponding decline in the price paid by the Canadian consumer. These large firms which control to a large extent both the price the farmer receives and the price the consumer pays rush out stories to demonstrate the very small margin they receive per pound of beef on each of the groups going through their plants, but they have not yet explained to the satisfaction of the Canadian people why there should be this wide disparity between the price they had to pay for meat products three years ago and the price they have to meet today.
The producer is receiving less and less in actual return and that is why he wants an
[Mr. Castleden.l
adequate marketing board. They have no bargaining power whatsoever with the few large firms which buy their commodity. The farmer is in their power and all these firms have to do is to refrain from coming to any formal agreement as to the price. By adopting that method they avoid any violation of the anti-combines act.
Today the pressure on agriculture is becoming more and more severe. When the farmer received a good price for his wheat he could afford to leave the livestock industry to those who were interested, particularly when the amount of return he was likely to receive did not appear attractive to him. But today, when he cannot deliver his grain, when he is cut off from deliveries to the extent in 1954 of about 130 to 140 million bushels, he has to depend to a larger and larger extent on the sale of his livestock.
But cattle prices have tumbled to a terrific extent and the only thing left to him, as has already been pointed out here this evening, is the hog industry. The farmer is now turning more and more to the good prices he can receive today for his hogs. The result has been that at the present time, and government statistics will bear this out, the farmer is turning more and more to raising hogs in the hope that the present prices will be maintained.
However, the fact is that these prices cannot possibly be maintained without a much larger consumption, particularly in view of the fact that Canada's export market for hogs has virtually disappeared and the Canadian people practically constitute the only consumers. Under these circumstances the important thing is to guarantee Canadian producers some decent return for their produce, grant them some form of stability and security in prices. Nothing could do more to guarantee a greater security to the producers of this country than the establishment of a livestock marketing board. Under such an arrangement the farmer would feel satisfied that in accepting a price for his meat he is not contributing to a monopoly in the industry which is allowed to go on at the present time, as it has been for a number of years, without giving an account of its stewardship to the producers and consumers of Canada.
In this connection I would point out that the one thing which has satisfied the western farmers in Canada and given them some hope for the future has been the establishment of the wheat board under which orderly marketing of his produce is guaranteed, and under which he is today protected from the

kind of competition he had to face in the Winnipeg grain exchange. The Winnipeg grain exchange enjoyed that competition, but the farmer in effect was being fleeced year after year. The wheat board now undertakes this marketing of the farmers' produce. It is taken in, graded properly, and the board handles the selling of that commodity either on the home or export market. But whatever the price the farmer receives for his produce, whether it be for grain or anything else, it is the actual price less the cost of handling. He sees today an extremely wide spread between that practice and the one which is operating with him with his livestock produce, and this request is uniform throughout the producers.	,
You will find the same thing coming from producers everywhere that they can possibly get organized to discuss their problem. The basic principle of the livestock marketing board is accepted by the producers of the west and the producers of the east. A livestock marketing board is one thing which will restore some confidence in the hearts of the producers and give to Canadians some assurance that they are not being exploited by those who are able to take control of a commodity, buy whatever they wish at whatever the market can stand for the stuff they get, process it into a commodity for all the Canadian people and then sell it to the Canadian people for whatever price the market will bear. That kind of thing must be eliminated in Canada. We call upon every member of this house, by his vote on this resolution, to show what he thinks of it.


Julian Harcourt Ferguson: Mr. Speaker, to hear our friends to my left in the C.C.F. group talking about their theory of how you are going to market beef in this country is certainly not an eye-opener to those of us who have been sitting here for a few years. We have shipyard workers in my part of the country who are out of work. Maybe our friends can suggest some method they know, tried and true, that will put those men to work. They like to pick at and pull apart good industries in the Dominion of Canada who are doing a great service to this country. I am sick and tired of that sort of thing. Have they offered one suggestion by means of which to market the farm beef after it leaves the farm? They like to forget all about the trials and tribulations connected with the handling of the beef until the time it reaches the consumer. Is it the great packers who rob the public, as they have been accused of doing? Is it the retail butcher?
Livestock-Floor Prices
Some farmers are not satisfied with beef prices today. Nobody is ever satisfied with the price at which he sells his commodities. But let us have some honest reasoning from these people here rather than the pulling of people down and the tearing apart of great industries. I have not a share of stock nor have I ever had one in any great marketing organization for meat products; but I hate to sit here and listen to these people being torn apart when they do not deserve it. The farmers in my part of the country would not stand for it. They would not jump into a marketing board as quickly as some of these people suggest until these people here to my left-these great theorists-can tell us how to market the beef after it leaves the farm, how to keep the prices up and how to make me or anyone else eat more beef. Who makes the profit? Is it our butchers? The local butchers slaughter in my own home town. They are not growling. They are fairly friendly with the farmers. I hear many farmers say they would like 34 cents a pound but they also say that they are not doing too badly at 24 cents. What I believe they need-and what I should like to see them have-are parity prices for farmers. But I certainly do not think the time has come when we can tell these fellows who talk like the great Socrates to take over from coast to coast, because none of them, I think, has much business experience.


Mr. Speaker:: Is the house ready for the question?


George Hugh Castleden: What about the wheat board?


Julian Harcourt Ferguson: I should like to remind my friend that the wheat board cannot compel export buyers to buy wheat in Canada. The surplus is just one of those things we are troubled with. We would all like to sell this wheat at $2.25 a bushel. Maybe they could tell us where the market is. There is no market at the present time. They cannot tell us where they are going to get a market.


An hon. Member:: It is better than the grain exchange.


George Hugh Castleden: Tell us your system. You tell us.


Julian Harcourt Ferguson: I am not talking much about something I do not know anything about.


Mr. W. G. Dinsdale (Brandon-Souris):: The
amendment that we have before the house at the present time I consider to be an extremely important one. I have listened to the discussion thus far this evening with a great deal of interest. Unfortunately I am in the same position as that of the hon. member
4812	HOUSE OF
Livestock-Floor Prices for Calgary North (Mr. Harkness). I was absent from the chamber this afternoon because of my duties on the agriculture committee and therefore did not hear the discussion that took place in a preliminary way on this amendment. I understand that as yet there has been no statement from the government side of the house on this subject. I think that is an unfortunate situation because it is a matter which is important to the farmers generally and particularly to the livestock producers. The fact that so much enthusiasm and almost emotion has been generated in our discussion this evening would suggest that it is a highly important subject and, at the same time, an extremely controversial one.
I rise to say a few words on the subject because some reference has been made to certain discussions going on in my own province of Manitoba at the present time concerning the matter of setting up a producers livestock marketing board. As I have listened to the references in this chamber to the discussions on this matter that have taken place in Manitoba, the impression I have received is that the farmers generally are in support of the marketing board proposal that is before them at the present time. I would suggest, Mr. Speaker, that this is far from being the case. Although I have not been home in the province during these discussions, as I read the press reports from various parts of my own constituency as well as from neighbouring constituencies it would appear that discussion of the proposed producers livestock marketing board that is at present before the livestock producers of my province is producing just as much heated controversy, I might say, as we have seen generated in this chamber this evening.
As a matter of fact, the present plan has been repudiated by the majority of livestock producer groups in the province because it is too compulsory and, as has been indicated by the hon. member for Calgary North, it approximates socialized marketing. Among the groups who have not given their support to the plan are the Manitoba pools, which in a largely attended meeting in the city of Brandon just a few weeks ago, while supporting the broad principle of producer marketing boards, opposed to the extent of 90 per cent the proposal that has been put forward by the Manitoba farmers union. Also the Manitoba cattle producers association is opposed to the present plan.
As a result of the controversy that has arisen, the livestock farmers have organized themselves into a voluntary association which they have named the independent livestock producers association. They are moving


throughout the province at the present time, holding very enthusiastic meetings, in order to arouse the farmers of the province to the dangers that are inherent in the compulsory plan that has been put forward and to which I think the hon. member for Assiniboia (Mr. Argue) referred to as being a plan generally acceptable to the livestock producers of Manitoba. I have before me certain of the proposals contained in the plan that has been presented, and to demonstrate their compulsory nature I shall read one or two excerpts. First of all there is this provision:
The hoard shall have all the powers of a body corporate and, within the province, shall have power to regulate and control in any or all respects the marketing of the regulated product, including the prohibition of such marketing in whole or in part and, without limiting the generality of the foregoing, shall have the following powers . . .
Then a long series of powers is set out. I should like to refer to paragraph (c) of the official document, which reads as follows:
To prohibit in whole or in part the marketing of any grade or class of the regulated product of any kind or variety thereof.
Paragraph (h) reads as follows:
To seize, remove and dispose of any of the regulated products marketed in violation of any order of the board and retain or otherwise dispose of the proceeds thereof.
I think that will serve to give some idea of why the majority of livestock producers of my province are so vehemently opposing the plan for a producers' marketing board that has been put before them at this time. While saying that, I must reiterate that from time to time during recent years strong support has been voiced for the principle of a producers' marketing board in the field of livestock. With such widespread general support, it is unfortunate that a proposal has cropped up which has tended to disturb the livestock producers and caused them to repudiate the scheme to the overwhelming extent that I have already indicated. Returning to the amendment before us it reads as follows:
In the opinion of this house, the government should give consideration to demonstrating its support of the principle of orderly marketing through livestock marketing boards by announcing floor prices with respect to cattle and hogs at levels not less than the average of the prices which prevailed during the period from January 1, 1951, to December 31, 1953.
The language is very vague. First of all it makes reference to the broad principle of orderly marketing through livestock marketing boards. Then, having thus sponsored the idea of marketing boards, it moves on to emphasize floor prices based on a certain production period. No one can say whether prices during that period were average, above average or below average. Because of this I would be interested in hearing some

spokesman from the government side outline their attitude toward the amendment now before the house. It deals with an important topic of a highly controversial nature. The farmers in my own province are aroused, and before we jump off the deep end and give our support to a measure as important as this I think there should be some clarification from official government sources.


Tom Goode: Mr. Speaker, because of the illness of the hon. member for Medicine Hat, I did not vote.
Motion agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.
Livestock-Floor Prices (Gaspe)
++NAYS
Messrs:
Anderson		Eyre
Applewhaite		Fairclough, Mrs.
Ashbourne		Fairey
Balcer		Ferguson
Batten		Fraser (St. John's East)
Bell		Fulton
Benidickson		Gagnon
Bennett (Grey	North)	Garland
Blair		Garson
Blanchette		Gauthier (Lake St. John)
Boisvert		Gauthier (Portneuf)
Boivin		Gour (Russell)
Boucher (Restigouche-		Gourd (Chapleau)
Madawaska)		Green
Bourget		Gregg
Bourque		Habel
Breton		Hamilton
Brisson		Hanna
Brown (Essex	West)	Hardie
Bruneau		Harkness
Buchanan		Harris
Byrne		Hees
Cardiff		Hodgson
Carter		Hollingworth
Cavers		Houck
Chevrier		Howe (Wellington-
Churchill		Huron)
Cloutier		Huffman
Cote		James
Croll		Jutras
Dechene		Kirk (Antigonish-
Deschatelets		Guysborough)
Dickey		Kirk (Shelburne-
Dinsdale		Yarmouth-Clare)
Drew		Lafontaine
Enfield


DEPARTMENT OF JUSTICE
[Stage Direction]
162. Departmental administration (Including the former administration of justice; miscellaneous expenditure, including expenses of litigated matters), $427,600.
Item stands.

[Stage Direction]
177. Departmental administration, $683,551.
Item stands.

[Stage Direction]
417. Departmental administration, $262,619.
Item stands.
Progress reported.

Walter Edward Harris: On Friday night I set out the legislative program for Monday, Tuesday and Wednesday. We shall follow that in the same sequence tomorrow, except that the first resolution to be taken after we have disposed of the budget resolutions will be that in the name of the Minister of Veterans Affairs having to do with the Veterans Land Act.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Tuesday, May 18, 1954 LIBRARY OF PARLIAMENT

John Whitney Pickersgill: Mr. Speaker, I move, seconded by the Minister of National Revenue (Mr. McCann):
That the report of the civil service commission respecting the establishment and reclassification of certain positions in the library of parliament, laid upon the table of the house on Friday, May 14, 1954, be now approved.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Prince Albert):: I should like to direct a question to the Minister of Trade and Commerce. It arises as the result of communications received from western farm groups. The suggestion is that the minister might be in a position to say something in addition to what he has already said regarding the prospects for wheat marketing and the degree to which his expectations are being realized so that the farmers will know whether or not they will be able to dispose of their wheat now in storage before the next crop season.


Right Hon. C. D. Howe (Minister of Trade and Commerce):: Some weeks ago, in reply to a question from the hon. member for Prince Albert, I gave an analysis of the situation as at the 31st of July next. Events that have taken place subsequent to my review confirm my view that the situation will be pretty much as then outlined.



WAYS AND MEANS

['for leave to introduce Bill No. 448, to amend the Excise Act.\nMotion agreed to and bill read the first time.']
Hon. Douglas Abbott (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Motion agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.



[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things:
1.	That the excise tax on the following goods be repealed:
(a)	furs;
(b)	electrical appliances adapted to household or apartment use, namely: blankets; chafing dishes; coffee makers; curling irons or tongs; dish washers; food or drink mixers; food choppers and grinders; floor waxers and polishers; garbage disposal units; hair dryers; irons and ironers; juice extractors; kettles; portable humidifiers; razors and shavers; toasters of all kinds; vacuum cleaners and attachments therefor; waffle irons;
(c)	firearms and complete parts thereof and ammunition;
(d)	golf clubs and golf balls;
(e)	fishing rods and fishing reels;
(f)	cameras, camera lenses and unexposed photographic films and plates; projectors for pictures;
(g)	trunks; suitcases; bags and luggage of all kinds; purses; wallets; billfolds; key and card cases; handbags; jewel cases; dressing and toilet cases; shopping bags; golf and other sports bags;
(h)	coin, disc or token operated vending machines.
2.	That the excise tax on the following goods be reduced from fifteen per cent to ten per cent:
(a)	articles, materials or preparations of whatever composition or in whatever form, commonly or commercially known as toilet articles, preparations or cosmetics, which are intended for use or application for toilet purposes, or for use in connection with the care of the human body, including the hair, nails, eyes, teeth, or any other part or parts thereof, whether for cleansing, deodorizing, beautifying, preserving or restoring, and including shaving soaps and shaving creams, antiseptics bleaches, depilatories, perfumes, scents and similar preparations;
(b)	motor cycles and all other two or threewheeled motor driven vehicles including motors for attachment to bicycles;
(c)	devices, commonly or commercially known as lighters;
(d)	coin, disc or token operated games or amusement devices of all kinds;
(e)	ash trays; tobacco pipes; cigar and cigarette holders; cigarette rolling devices and other smokers' accessories;
(f)	fountain pens; ball-point pens; ink pencils-propelling pencils; desk sets and all other desk accessories;
(g)	matches;
(h)	tires and tubes in whole or in part of rubber for self-propelled machines or automotive vehicles of all kinds;
(i)	clocks and watches;
(j)	articles of all kinds made in whole or in part of ivory, jet, amber, coral, mother of pearl, natural shells, tortoise shell, jade, onyx, lapis lazuli, or other semi-precious stones;
(k)	articles commonly or commercially known as jewellery, whether real or imitation, including
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diamonds and other precious or semi-precious stones for personal use or for adornment of the person; goldsmiths' and silversmiths' products; pewter ware;
(l)	articles of cut glassware, crystal glassware, cut or not, etched glassware, or metal decorated glassware;
(m)	articles of china, porcelain, earthenware, marble, stoneware, or other pottery ware;
(n)	carbonated beverages, aerated waters, unfermented fruit juice beverages and imitations thereof and all other compounded or mixed soft drinks and all mixtures or products advertised or sold for making soft drink beverages or imitations thereof, whether sold in liquid, concentrated or in dry form;
(o)	candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy.
3.	That the excise tax on carbonic acid gas and similar preparations be reduced from twenty-five cents per pound to fifteen cents per pound.
4.	That the sales tax on the following goods be repealed:
(a)	oil and gas burners and stokers for use with furnaces for the heating of buildings;
(b)	coal crushers and stokers for use directly in the manufacture or production of goods;
(c)	equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of one thousand dollars per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not to include automobiles nor ordinary motor trucks;
(d)	wall panels for use in buildings and materials for use in the manufacture of such panels;
(e)	drain tile not exceeding four inches in inside diameter and twelve inches in length;
(f)	sheet music and materials used in its manufacture;
(g)	hearing aids and parts therefor including batteries specifically designed for use with such hearing aids.
5.	That provision be made to require the payment of sales and excise taxes on all products packaged and sold as lighter fluid.
6.	That provision be made to require the payment of sales and excise taxes on the packaging used to contain goods subject to these taxes and on any other articles packaged with them whether the goods are imported, or are manufactured or produced in Canada.
7.	That provision be made to ensure that machines and tools for operation by tractors are not included as accessories therefor in the prevailing exemption from sales tax.
8.	That any enactment founded upon this resolution be deemed to have come into force on the seventh day of April, nineteen hundred and fifty-four.
Douglas Charles Abbott: Mr. Chairman, if I may have leave of the committee, I have to be in the banking and commerce committee later this afternoon and I have a certain proposed amendment to the resolution concerning personal income tax which I should like to communicate to the committee since I cannot be here when the discussion of that resolution will take place.


William Alfred Robinson: Has the minister leave?


Some hon. Members:: Agreed.


Douglas Charles Abbott: As the committee is aware, since the budget I have received a large number of representations from members of the house and others regarding paragraph 6 of the income tax resolution which deals with the tax status of mutual insurance companies in the fire and casualty field. I might explain that this paragraph does not introduce new policy with regard to the tax treatment of mutuals but is intended merely to enable past policy, adopted in 1946, to be continued.
In the representations made to me by members of parliament and others it has been emphasized that by far the great majority of the companies affected by this policy are small local companies insuring farm property where there is no organized fire protection. They are not in competition with the ordinary profit-making insurance companies. In fact it is claimed that they are compelled to provide this service in their communities for themselves owing to the reluctance of ordinary companies to enter this field.
In the light of these representations I have reviewed the results of the study of this situation by the McDougall commission. After careful consideration of all the facts placed before them the members of the royal commission recommended:
That the income of any insurer, mutual or otherwise, shall not be liable to taxation when in any year the net premium income in Canada is derived, to the extent of not less than 50 per cent thereof, from the insurance of farm property and other property not protected by municipal or other firefighting organizations, or is derived wholly from the insurance of churches, schools, or other religious, educational and charitable institutions.
I am prepared to accept the general principle of this recommendation and I am now suggesting an amendment to the income tax resolution recognizing this general recommendation. The McDougall recommendation dealt mainly with farm insurance. The amendment I am proposing deals likewise with fishermen and applies the same general rule to insurers giving protection to their property.
I would therefore ask one of my colleagues to move:
That the resolution to amend the Income Tax Act be amended by adding thereto the following paragraph:
7. For the exemption from taxation for the 1954 and subsequent taxation years of insurers, not less than 50 per cent of whose gross premium income was in respect of the insurance of farm property, property used in fishing or residences of farmers or fishermen.


Walter Edward Harris: I so move.


Douglas Charles Abbott: I would suggest if the amendment is adopted that it be discussed with the resolution when it is called later, if that meets with the approval of the committee.


James MacKerras Macdonnell: I would merely like to say that, while one always wants to study carefully the full effect of what is proposed by way of relief, I think that prima facie, at any rate, those who have been appealing to the minister will view with satisfaction what has been done.


William Alfred Robinson: The resolution with regard to the Excise Tax Act. Shall the resolution carry?


Donald Methuen Fleming: Mr. Chairman, there is
another matter in relation to the resolution respecting amendment of the Excise Tax Act to which I should like to refer. It is not a new matter. It was discussed extensively a year ago when the budget resolutions were before the committee of ways and means on March 31, 1953. The matter was also referred to briefly on that previous occasion, May 4 this year, when the house began its review of the budget resolutions.
The matter I should like to mention, sir, is not to be found in the resolution as such. My purpose is to express regret that no action has been taken by the Minister of Finance in regard to the matter. I refer specifically to the need for extending the exemption from sales and excise taxes to those charitable and welfare organizations that are not now exempt from such impositions.
I believe that it would come as a profound shock to many people in this country to realize that the federal government is levying substantial taxes upon welfare and charitable organizations, engaged in work that commands the respect of all citizens and commands, I hope, the active support of all of us in this house. The fact of the matter is that, with some exceptions, charitable organizations in general are not exempted from the full effect of the sales and excise taxes levied by the federal government.
These organizations exist in large measure, and are enabled to carry on their beneficent work, only because generous citizens contribute to their support. They do not receive assistance from the federal government. Whatever assistance they receive from governmental sources comes at the municipal level. Most of them function entirely upon assistance received from charitably disposed citizens. Yet the federal government is applying to organizations of this kind, engaged in work of the highest value to this nation, the full weight of these heavy sales and excise taxes.
In the year 1950 the house did give some relief in this field by amending the Excise Tax Act to exempt from those taxes otherwise levied under that act certain definite charitable organizations. The group so defined 83276-305
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is altogether too narrow in its scope. There was not, as I recall it, any opposition in this house to the amendment then to the Excise Tax Act. The criticism that was made at that time was that the exemption was being extended to an altogether too narrow group of charitable organizations. The group defined by the 1950 amendment is as follows:
(a)	a bona fide public institution whose principal purpose is to provide permanent or semi-permanent shelter and care for children or aged, infirm or incapacitated persons who reside in the institution; and
(b)	in receipt annually of aid from the government of Canada or a province for the maintenance of persons specified in paragraph (a).
The exemption, of course, applies only in the event of purchases by such organizations of goods for their own use, and not for resale. In anything I have to say today on this subject I am confining my request to circumstances under which charitable organizations purchase goods for their own use and not for resale.
You will recall, Mr. Chairman, how very narrow is the relief extended by that 1950 amendment. It does not include the vast majority of organizations in this country engaged in charitable and philanthropic work. It does not, for instance, include welfare agencies that, in the bulk, constitute the membership of the various community chests of the larger cities of this country. It does not include, for instance, children's aid assistance, family welfare agencies, the various visiting nurses associations, community chests and welfare councils. My submission to this committee is that this principle ought to be extended to the full scope of all charitable organizations that have a well organized existence.
There may be some charitable organizations that are not sufficiently organized to have established their identity, with the prospect of continued existence, to satisfy any reasonable government demand. But I am dealing in the main here with organizations with well established positions, permanent in their nature, and undertaking to do that work which, unhappily in many cases, is bound to be virtually permanent in its nature.
In 1950 the house recognized the principle of exempting certain charitable organizations. By what authority, by what logic, upon what principle, does the government or this house stop at that point and deny other charitable and philanthropic organizations the same kind of exemption? I make bold to say that if the people of this country fully realized the present situation, the public conscience would be shocked to think that the federal government

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is dipping into the treasury of organizations functioning with funds contributed by charitably disposed citizens, dipping its big hand into the coffers of those organizations whose only source of revenue is charitable donations.
Let us remember always that these excise and sales taxes are hidden taxes. In the main, those who pay them are not aware that they are paying them. They are levied at the manufacturers' or producers' level. The consumer has no knowledge of the proportion of the price that he pays that goes to pay these federal taxes. Let us remember as well, sir, that because these taxes are levied at the manufacturers' level they attract mark-ups as they pass from hand to hand through the wholesaler, the jobber and the retailer. A tax that starts out at the manufacturers' level at 10 per cent in most cases has doubled itself in the course of these mark-ups applied by those who are handling the goods before they ultimately reach the consumer. In the case of most of these goods it is no exaggeration to say that what the consumer is paying is ordinarily closer to 20 per cent than 10 per cent.
The public, I am sure, has only been lulled into the position in which it is today on this matter by reason of the fact that these taxes are hidden. How much is the government taking out of the pockets of charitable organizations in this country through these sales and excise taxes? Well, nobody knows. There has been no nation-wide estimate prepared. The government does not segregate that portion of its sales and excise revenues that are collected from charitable and welfare organizations. I may say that a study was made a year ago by the Canadian Welfare Council in an endeavour to ascertain, as far as might be possible with the sources of information available, what might be estimated to be the amount collected in a year through the sales tax from charitable organizations. I think it will astound members of this House of Commons who have not seen the figure before when they are told that the result of that inquiry by the Canadian Welfare Council was an estimate that the amount of sales tax collected by the federal government in one year from charitable organizations in this country was in excess of $500,000.
The work these organizations are doing commands the respect and admiration of us all. I am sure each member of the house in his own way and according to his own means is trying to contribute to the assistance of these charitable and welfare organizations. How then do we as members of the house justify the imposition by the federal government of taxation upon these organizations?
I hope we are not going to be told by the

government that there are administrative difficulties in the way. That old excuse has been worn threadbare by this government.
I submit there could not be any administrative difficulty involved in the proposal I am submitting to the house today that was not already involved in the amendment the house approved in 1950. The same problems exist; the difficulties are in no way different in kind.
I, for one, am convinced that if in the face of any administrative difficulty that might be suggested the government would apply to that difficulty the same kind of ingenuity they apply to many other fields, particularly in the levying of taxation, any administrative difficulty could be overcome quickly and effectively.
Therefore, Mr. Chairman, while it is evident that the government is not going to do anything about the problem this year- because there is no provision in the budget resolutions to deal with it-I wish to say that I deplore the fact that the government is taking no action in the budget this year. And I say to them that before another year rolls round I would hope that the government's conscience will be roused in this matter, and that it will set itself resolutely to removing what is a crying and cruel injustice.
Sir, this is not a small matter. It is not a small matter in its scope; much less can it be said to be a small matter in the principle involved. Therefore I am appealing to the conscience of the government in the matter.


Stanley Howard Knowles: Mr. Chairman, the matter the hon. member for Eglinton has now spoken about is one I indicated on May 5 I would like to raise when we reached a later stage, possibly that of second reading of the bill. However, as the parliamentary assistant realizes, my reason for making that suggestion on May 5 was to facilitate the passing of the resolution on that day, if possible. Since that was not done I see no reason why we should not have a full discussion now, and I am glad the point has been raised again by the hon. member for Eglinton.
As I said, when I made reference to the question on May 5, as reported at pages 4447 and 4448 of Hansard, the subject was pretty well covered on March 31 last year in speeches made by the hon. member for Eglinton, the hon. member for Spadina and myself. One of my reasons for indicating last year's Hansard reference when I spoke on May 5 was so that the parliamentary assistant might be prepared to deal with the question on a later occasion. I hope he is now ready to deal with it; and I also hope that that does

not mean that he is only ready to say no. I would hope that at this time more favourable consideration would be given to the requests from the charitable organizations which have been made to the government on several occasions through the Canadian Welfare Council.
As the hon. member for Eglinton has just pointed out, there is no way of estimating accurately the total amount of sales tax collected from these charitable organizations and institutions; but it has been estimated that something more than half a million dollars is being collected annually from those agencies which come under what are known as community chests.
Those who have been interested in the matter have tried to address themselves to the difficulties raised by the department. I believe it is correct to say they have gained the impression that the main problem raised by the government is the administrative one. Addressing themselves to that objection, the Canadian Welfare Council has made certain specific suggestions to the government as to how the administrative problem might be handled. It seems to me the suggestions they have made could form a basis upon which the question could be handled.
They suggest that in order to qualify for the exemption from sales tax any charitable organization should be one certified by the Department of National Health and Welfare as a bona fide social welfare agency. They suggest also that it might be required that any such charitable organization should be one to which donations are permitted as income tax deductions. Then there are one or two other qualifications to which these people are prepared to agree in order to assist the government in working out the administrative details.
I share the views expressed by the hon. member for Eglinton as to the vicious nature of this tax. The hon. member has expressed himself in his usual strong language concerning this procedure of imposing a sales tax on purchases made by these various charitable organizations, and it is not necessary for other hon. members to repeat what he has said. However, I do press upon the parliamentary assistant and, through him, upon the government the reasonableness and the responsibility with which the Canadian Welfare Council and others who are interested have made their requests to the government. I would impress upon the parliamentary assistant the fact that these people have set out specific proposals and have suggested specific qualifications that might be laid down. I support 83276-305i
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wholeheartedly their appeal for the extension of sales tax refunds to these bona fide charitable organizations.
I fully realize the hon. member for Spadina is not in his seat at the moment because he is actively involved in the deliberations of one of the five or six committees meeting today. I mention his name, however, because I am sure if he were in the house this afternoon when this matter is being discussed he would support this year, as he did last, the representations being made.
Earlier this afternoon we had an example of the Minister of Finance paying some attention to representations made to him after the bringing down of his budget. I hope that will not be the only example in this session. I would hope that consideration might be given to these representations and that even yet the necessary amendment might be made to the budget resolutions to provide sales tax exemptions for the benefit of these charitable organizations.


Mr. Thatcher:: I do not know whether the parliamentary assistant wishes to answer the particular question asked at the moment. If he does not, I should like to say a few words on this legislation. With the minor tax reductions which have been made under the act, I am in accord, but I am sure the parliamentary assistant will forgive me if I say they are completely inadequate. There is no tax that is pleasant; but, as I see it, these hidden taxes that hit the taxpayer when he is not looking are particularly insidious. Last year, although most Canadians failed to realize it, the government collected about $115 from each citizen in indirect taxes. That amounts to about $575 for a family of five. There is an excuse for hidden taxes of that size in wartime, but I cannot see where there is any justification for them in peacetime. The collection of such a large proportion of our taxes by the indirect method is unhealthy to our economy for a number of reasons. In the first place, these excise taxes bear most heavily on the people in the lower income tax groups. In other words, this taxation is not based on ability to pay. For example in purchasing a car, a poor man, or a man in the lower income tax group, must pay the same amount of tax as a wealthier citizen. Such a principle in taxation is not sound.
In the second place, I feel that these excise taxes are discriminatory because they tend to penalize some industries selling in the consumer market, as compared with others. For instance, our automobiles today have a 15 per cent higher tax imposed on them than

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furs. Incidentally, Mr. Chairman, the automobile industry is one industry that should have been given some kind of tax relief under this bill we are discussing today. The automobile is certainly not a luxury. A modern car is part of our Canadian way of life. Yet during the past fiscal year, the government collected from the automobile industry in sales tax and excise tax $162 million. That amount of money was actually more than the automobile industry paid out in wages. Surely, there is something wrong when a situation of this nature can occur. I say that this level of taxation on the automobile industry is discrimination of the worst kind, which simply cannot be justified. There are about 200,000 persons in Canada engaged in producing automobiles and supplying the automotive industry. In keeping this excise tax of 15 per cent on automobiles today, the government is gambling with the future of thousands of working people in that industry.
In the third place, I think it is fairly obvious that these excise tax levies are keeping up prices in many fields unnecessarily. In the fourth place, I think this deceptive form of taxation is poisonous to our democratic way of life. Today there is not one taxpayer in Canada out of a hundred who has even the faintest idea of the amount of tax he is paying each year to this federal government. The average citizen seems to feel that he, at least, is not the one who is paying very much of the nation's tax burden. Many citizens seem to be confident that it is the corporations or the wealthier citizens of this country who are paying most of the federal taxes. Because of that attitude, they often have no hesitation in asking the government for bigger and better federal spending projects. As I see it, those citizens are mistaken. Today it is the Canadian consumer, directly or indirectly, who is shouldering the bulk of the tax load. Today the average citizen is paying 33 cents out of every dollar he earns to one government or the other, whether it is federal, provincial or municipal. But unfortunately, because many of our people cannot see their federal tax which is absorbed in retail prices, they remain blissfully ignorant of the astronomical figures involved in this federal budget that we are now discussing.
I for one do not believe that any tax should be relatively painless. Every citizen should realize the amount of money he is paying in federal taxes. He should realize that every time he makes a our chase today the government is dipping into his pocket. He should realize that no matter how low his income may be, he is still contributing to the cost of governing this country.
fMr. Thatcher.]
I know that today it would not be feasible for the government to wipe out all excise taxes; but failing that, I suggest it would be a great forward step if manufacturers, wholesalers and retailers were required to label their goods in such a manner that the federal tax would be shown separately and distinctly. Then, when a citizen went to purchase a new car, a refrigerator or clothing he would see how much he was actually paying in federal taxes.


Mr. McCann:: Does the hon. member do that in his business?


Wilbert Ross Thatcher: No, but I think it would be a very good idea if all retailers did so on a nation-wide basis.


James Joseph McCann: Does the hon. member not know that he has the privilege of doing that? I do not want to interfere with his business. Perhaps it is none of my business, but I should be quite surprised if the hon. member did not mark up his goods with the tax included, and take his profit on both.


Wilbert Ross Thatcher: The minister need not be so touchy. I made a suggestion which I thought might be a good one. If he does not wish to carry it out, of course that is his privilege. But I suggest it would be a good thing not only for citizens generally, but also for the minister, if it were required that taxes be shown on sales tickets. If such a procedure were followed the citizen would comprehend much more clearly that before any government can spend a dollar or give away a dollar, it must first of all collect that dollar in taxes. If the citizen realized that the dollar which was being spent might be his own, he would exercise greater care in the future in making demands on the government. Most citizens under those circumstances would regulate their demands for government spending, in accordance with their willingness to pay taxes. In other words, I think that such a policy would make citizens more tax conscious and more government conscious. I repeat, Mr. Chairman. in my opinion the government today, in collecting 34 per cent of its revenue by the backdoor method, is making a serious error. If they continue to do so, there may be repercussions in the future.


Mr. Garland:: Since the Minister of Finance brought down his budget on April 6 I have had some correspondence from members of the soft drink industry, and I hope the committee will not mind my mentioning the soft drink industry because it is of that industry that I have some knowledge.

The soft drink industry is concerned over paragraph 6, which reads as follows:
That provision be made to require the payment of sales and excise taxes on the packaging used to contain goods subject to these taxes and on any other articles packaged with them whether the goods are imported, or are manufactured or produced in Canada.
I rise merely to have that point clarified. We in the soft drink industry are in this position with regard to packaging. The title does not pass. The bottles in which the goods are contained are put into the store on a deposit basis, and therefore it seems to me that we would not be taxable. But with respect to this section on packaging, the industry has expressed some concern. I merely want the assurance of the parliamentary assistant at this time that it is not the intention to impose any further taxation in this regard.


Mr. Starr:: Mr. Chairman, with your permission, it is my intention at this time to discuss at some length paragraph 4, subparagraph (c), of the Excise Tax Act. I have made some extensive inquiries among practical experts in municipal affairs, Mr. Chairman, about this paragraph, but I have not been able to find anyone who had a word to say for the government's reply to the many pleas and representations that have been made by the 4,000 municipalities in our country. Nor have I found anyone who could explain the purpose of this, with the possible exception of a few realists who seem to think that this is another one of the government's tokens, tokens to which we have become accustomed in the past. Our hard-pressed municipal administrators are too close to the realities of ever-mounting expenses and the ever-widening gap between revenue and financial responsibilities to be taken in for a moment by the niggardly action described under paragraph 4 (c), which reads as follows:
(c)	equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of one thousand dollars per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not to include automobiles nor ordinary motor trucks;
In the first place it is limited to two classes of municipal expenses, those on roads and those on fire-fighting equipment. In the second place it limits exemption to purchases within these categories where the per unit cost exceeds $1,000. In the third place the road equipment is limited to road making and road cleaning. In the fourth place it attempts to set up a new category of equipment unknown in the business world, and that is the phrase "ordinary motor trucks".
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I shall discuss these absurdities in detail in a moment. First of all, however, I think it should be said that the offhand and careless manner in which this important subject has been dealt with in the budget appears to me, and to many others with a special knowledge and experience in municipal finance, to prove as conclusively as nothing else could the complete unconcern of the government at the plight of the municipalities in this matter of excessive federal taxation.
Here in this expression of government policy, Mr. Chairman, we have the evidence that the representations of worried and harassed municipal officials and their associations are regarded by this government as unworthy of serious attention or honest thought, and even of reasonably precise draftsmanship.
The shock with which the budget announcement was received by municipal officials throughout Canada was twofold. First of all, there was the keenest disappointment that the request for fair treatment for the municipal level of government had been so arbitrarily-I might say almost jocularly- brushed aside. The fair treatment which they demanded, and which they still demand, is the same treatment in the matter of tax exemption for the poorest level of government, that is municipal, as that enjoyed by the richer provincial and federal levels of government. Instead they received this thoughtless brush-off, and I for one can only hope that we can impute to it no more sinister motive than political expediency, or a misguided ministerial or departmental sense of humour.
Secondly, there was something close to despair when it was realized that the detailed representations made by the municipalities have resulted only in this impractical declaration of policy with which a first-year school trustee would have been ashamed to be associated.
The first absurdity is the limitation of exemptions to road and fire-fighting equipment. What possible sense can this make? Does this government really think that roads and fires are some special kind of municipal responsibility? Apparently so, and it would seem, therefore, to be time for somebody to make it clear that these are only two categories, of hundreds of categories of municipal services, which are today of the utmost importance to millions of Canadian home owners. I cannot believe that anyone with any knowledge of municipal government would have omitted, for example, school expenditures, hospital and social welfare expenditures, when these exemptions were being considered.

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Mr. Benidickson:: Hospitals are exempt.


Michael Starr: Certain items, but not all.


William Moore Benidickson: Everything is exempt in the case of public hospitals and certain institutions.


Michael Starr: Not in the construction stage.


William Moore Benidickson: Building materials are generally exempt from the sales tax.


Michael Starr: There are, of course, some general exemptions applicable here, but the fact remains that millions of dollars are still being exacted in tribute by the federal government from the efforts of our municipalities to provide adequate education for our youth, hospitalization for the sick, and comfort for our senior citizens in their old age.
We all know, Mr. Chairman, that in other fields we regard some kinds of money as tainted. I respectfully suggest to the government that any money it obtains from these sources falls into that category. We know that, according to current fiscal policies, some fields of taxation are regarded as especially fair game to the taxing authorities. I suggest that the field of school, hospital and social welfare expenditures by municipal governments is one on which our people would, if they could, post "no hunting" signs, and expect them to be honoured, even by the federal government.
Surely, Mr. Chairman, it is not too much for the municipalities to ask, even at this late date, that an immediate survey be made by the government of this whole field of municipal expenditures so that whatever action may be taken in the future it will at least be realistic, practical and in keeping with the facts of the situation, not just with the fancies of some dreaming draftsman.
To give only a single example from a jurisdiction with which I am familiar, a general exemption from sales tax of school board purchases in the city of Oshawa alone would mean a saving of some $35,000 to $40,000 to the citizens of that community. To carry the matter further, the decision of the government to grant equal and fair treatment to municipalities in this whole matter of sales and excise taxes would mean a saving to that one community alone of almost $200,000, or more than three mills in the municipal assessment. The second absurdity-


William Moore Benidickson: When my hon. friend refers to $35,000 as a tax saving for the school board in Oshawa, is he including in that amount the expense of construction?


Michael Starr: No, just ordinary purchases of school supplies. The second absurdity in the token treatment the municipalities received

last April is the limitation of the exemption to unit purchases exceeding $1,000. What possible sense can this have? Does it mean that this government believes that there is some virtue, worthy of special reward, in big and better spending? Perhaps so, for we have some evidence that some of our federal departments seem to think so. But, Mr. Chairman, municipalities have not yet, the Lord be praised, caught this glamorous federal government disease. They are not big-time spenders; at least they do not have a big-time spending mentality. Yet, under the present policy of the government, they would be foolish to pay a mere $900 for a road machine, when they could actually win friends in this government, and even save money, by paying $1,001.
But apart from that aspect, I am wondering if the government in its mania for large spending, has completely forgotten that $1,000 in many little items is just as important to the municipal taxpayer as $1,000 spent on a single item. The very nature of municipal financing means an excess of small over large items. It is part and parcel of the thrift and good housekeeping which characterizes municipal spending. Yet it is currently penalized, and penalized heavily, by the federal government.
The third absurdity-I might almost call it a prize boner-is the limitation of road equipment exemptions to road making and road cleaning. Has anyone in this government ever stopped to think that the making and cleaning of roads constitutes actually less than 50 per cent of average road expenditures by municipalities? In other jurisdictions, of course, these may well represent a larger proportion of the whole, but on the municipal level road maintenance is the big item. Then why was it not mentioned? Perhaps some will say that this is a mere technicality, but I cannot agree. The words as they stand are specific and they do not include maintenance; nor do they include bridges which are also an important item in municipal expenditures. If the omission was merely carelessness-as I suspect it was-then our municipalities at least know to what extent they may in the future expect serious, thoughtful and painstaking consideration of their problems by the present government.
The fourth absurdity-and it has already caused endless difficulty-is the careless phrase "ordinary motor trucks". Can anyone on the government side of the house-or anywhere else, for that matter-tell me what an "ordinary motor truck" is? Is it a motor truck to which no snowplow is attached? If so-and I believe that is the current ruling- does it cease to be ordinary when the snowplow is attached? Should the municipality,

therefore, pay its toll to the federal government in summer but not in winter, in good weather but not in bad? And what, Mr. Chairman, may I ask, is so terrible or wrong about ordinary motor trucks? Again, are municipalities to be encouraged to purchase extraordinary equipment just because the federal government has some strange animus against municipalities buying the simplest and cheapest equipment that will serve their purposes? I confess that I do not know the answer to these questions, nor indeed do any of the many municipal officials I have asked.
These are absurdities, Mr. Chairman, but I do plead with the government when next it addresses itself to this urgent problem-if it ever does-not to be content with merely removing absurdities. Surely, sir, in all humanity and fairness, it must go much farther. It must give the most serious consideration to the complete removal of the present discrimination by one government against 4,000 others. That, in the last analysis, is exactly what the present situation is. It is more than that. It is a sort of discrimination which is beating the weaker brethren of the family into the ground. That is no exaggeration. Has anyone in this house ever heard of citizens going around from door to door, begging money on behalf of the federal government? Of course not. Even to suggest it seems ridiculous.
The federal government is the well-heeled big-time spender among the Canadian governments. It is one in 4,011 governments in Canada which has no money problems. It has unlimited powers to raise money and it uses them often and flamboyantly whenever a need, or fancied need, arises. We are all admittedly envious; this is especially so of the municipalities. They are so far from well-heeled that, today, every one of the
4,000	has to depend on the charity of its citizens for its most essential services. I wonder if there is, at this moment, a single municipality in all Canada where citizens are not voluntarily going from door to door, from farmhouse to farmhouse, begging for funds for a hospital, a school, a library or a school bus-probably just an ordinary bus, which the federal government would not even give garage room to.
Our people are giving-and giving generously-to these appeals. And yet, Mr. Chairman, those very donations will sooner or later be reduced by 10 or 15 or even as much as 25 per cent, if they are applied against purchases upon which the federal government insists on its preposterous rake-off. Of course, we can warn them not to buy "ordinary motor trucks" and to insist instead on their money being used to buy
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extraordinary ones; but it is more likely than not, sir, that these charity donations will be applied against a variety of small and simple needs, the very category of municipal expenditure on which the federal excise tax of 15 per cent and sales tax of 10 per cent are levied. It should be added here, perhaps, that every municipal official knows that the alleged 10 per cent sales tax is nothing but a statistician's fiction. Actually, when markups are added all along the line to the manufacturer's price plus sales tax, the federal government is found to add 15 or 16 per cent to the consumer's cost.
The Canadian Federation of Mayors and Municipalities has presented many briefs to the government on the subject, because they know that their members regard it as the most urgent matter of relief which they need to face the emergencies of supply before them. Many of them have seen their populations double and even treble in the post-war years, and yet they are allowed a much smaller share of the Canadian tax dollar than at any time in Canadian history.
Surely, Mr. Chairman, it is an acknowledged principle of our way of life that the strong must help the weak, that the rich must assist the poor, and that great power involves great responsibilities. If those principles, upon which I am sure we are agreed in this place, are applied to this request, I am sure that there still will be no doubt about its disposition. I hope that the government will give this matter more careful consideration and eventually accede to the pleas and demands of the municipalities and the Canadian home owners at this time.


Mr. Nesbitt:: Mr. Chairman, I have just a few remarks to make on these budget resolutions. First of all I should like to say that I thoroughly support the remarks that have already been made by the hon. member for Eglinton and the hon. member for Winnipeg North Centre, and that I do not propose to reiterate what they have already said. However, I should like to say that I think the 10 per cent sales tax and the excise taxes that are levied against bona fide charitable organizations and national organizations of a health and welfare service nature such as the Canadian Cancer Society should not be levied and that consideration should be given by the Minister of Finance to the removal of those taxes. In view of the change of mind that we had in the minister with respect to mutual insurance companies already, I hope that before the session ends we might have another change of mind with respect to such organizations as I have just mentioned.
I mention the Canadian Cancer Society because it is an organization that I have had

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the honour and the pleasure of working with in the past. The matter of this 10 per cent sales tax on material that is purchased by the Canadian Cancer Society is a very real item. I think we all know that the Canadian Cancer Society is doing an extremely fine job in this country in combating one of the most dread of all diseases that we have not yet found a method of coping with adequately. The Canadian Cancer Society spends a great deal of its funds on research and on public education and information so that people can get medical treatment in time for, if not a cure, at least an extension of life. The Canadian Cancer Society also provides free dressings and comforts for those who are unable to provide them themselves. At the present time this particular association is attempting to raise funds. I think it is rather appropriate for me to make these remarks at this time, having regard to the great expenses involved in printing and stationery, advertising and in canvassing material for all the thousands of voluntary canvassers all over the country. If the 10 per cent sales tax were to be removed from all this printing and stationery that is necessary for this purpose it would make a real contribution to helping the society carry out its work which is of a type that could affect every hon. member in this house in a very personal way at some time as well as every person in the dominion.
In closing these remarks, may I say that it has always seemed strange to me that, whereas a person is allowed to make certain deductions from taxable income for donations to organizations such as the Canadian Cancer Society and so on, the government, giving with one hand, should with the other hand proceed to levy a sales tax on those contributions to welfare and charitable organizations. It does not seem consistent. It does not seem to make good sense, and I hope that some consideration will be given to removing this very offensive tax.


Mr. Gillis:: I should like to say a word or two. Before the parliamentary assistant closes this discussion, I hope he will clarify in the minds of some of us the question of taxes paid by charitable organizations on purchases that they make. I listened to the hon. member for Eglinton and the hon. member for Winnipeg North Centre. The last speaker said that the Canadian Cancer Society should not have to pay the tax on the dressings that they purchase. They should be entitled to relief, but I am not so sure about the question of advertising. Newspapers are going to charge full rates for advertising and if the tax is going to be charged then let it be charged. Nobody

should make any money out of it. I want this matter cleared up in my own mind. Some organizations are entitled to exemption and some are not. Let us know which are and which are not and the reason why. For many reasons I think it is necessary that that should be known.
There is one type of charitable organization that I think should receive some consideration. I have had correspondence with the department in the past about this matter. All across the country you will find church groups organizing boys' camps. It costs a lot of money, and the money has to be collected from the community. When such a camp is established it is necessary to purchase baseball and other equipment in order to promote sports and carry out the purpose for which the camp is organized. Such equipment is taxed. On several occasions I have appealed to the department and have cited specific cases but up to this time the situation remains the same. The tax was not changed.
There is another problem which, although it may be isolated, does arise from time to time in many communities. Many communities throughout Canada maintain local bands. A year ago I wrote the minister about a certain band in a rural community. This band has been in operation since 1914. They do not have very much money. When there are military or other demonstrations in the community the band plays and serves the purpose. Under the regulations a band of this description cannot get an exemption on the purchase of equipment. The band to which I have referred gathered together enough money to buy some instruments and found that by purchasing them in the old country they could save over $1,000. When you have to knock on doors and collect ten cent pieces to buy equipment a saving of $1,000 means a great deal. But when the equipment arrives in Canada the tax on it pretty well cuts the saving in two. This is not a commercial band. The people do not get paid for appearances at Legion gatherings and so on.
In any event, the tax has to be paid. The minister was sorry but the regulations did not permit him to make any changes. Apparently no change is being made by these amendments, but the matter might be taken under advisement for next year. The extenuating circumstances might be looked at and something might be done to relieve that type of organization. There are community bands in many places throughout the country, but I have pinpointed this one because I happen to live nearby. The application of the sales tax to another category is, in my opinion, discriminatory.


Julian Harcourt Ferguson: May I ask the hon. member a question? Does he suggest that the tax be taken off bagpipes?


Clarence Gillis: I do not suggest that. If the
hon. member is asking me that question, I suggest that he get in touch with Senator Reid and ascertain first of all whether the bagpipes are a weapon or an instrument. If it is his interpretation that they are a musical instrument then I will go along with removing the tax. I was about to direct the attention of the parliamentary assistant to another matter involving manufacturers of cabinets and equipment of that kind who employ quite a large staff. The sales tax does not apply in that case because as far as such a manufacturer is concerned he does not sell directly but farms out his product to retailers. He is not taxed on the cabinets, window frames and so on that he manufactures. There is no sales tax.
I have had a decision from the department within the last year involving a small shop. A small shop in the same city may employ two or three people and the owner also works. He turns out the same type of equipment but on a much smaller scale and sells directly.


William Moore Benidickson: My hon. friend must be careful not to mix sashes with cabinets. Sashes are considered to be building material and are exempt, but cabinets are looked upon as furniture and would be subject to tax.


Clarence Gillis: In the case I am talking about the larger plant is exempt. That manufacturer is not paying any sales tax, but the people responsible for enforcing the taxation regulations in the same city have told the owner of the smaller shop that he has to pay the 10 per cent sales tax and include it in the cost of his product. That increases the cost of his product compared with the cost of the product of the larger shop, and so far as competition is concerned the smaller shop is under a handicap.


William Moore Benidickson: I think my hon. friend must be mixing up a sash and door factory with a small furniture factory.


Clarence Gillis: If the parliamentary assistant will look at the departmental files, he will find that I set out the case in detail with all the facts and figures. I regret to say that I did not get any adjustment. That was the way it was and that was the way it had to be. I say it is discrimination against the smaller manufacturer, with two or three employees, who is trying to eke out an existence. It would appear that no change has been made in the regulations, and the smaller manufacturer with not much capital 83276-306
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is put in a very bad competitive position when there is a large plant nearby doing the same type of work that does not have the additional handicap of the sales tax.
The hon. member for Moose Jaw-Lake Centre and others have referred to the application of the sales tax. Every time I hear that matter discussed I always think about dominion-provincial relations. I cannot understand how some people can reconcile the attitude of asking the federal government to pay everything while at the same time authority remains in the hands of other bodies. I agree with the member for Ontario in his plea for the municipalities, but to help the municipalities you have got to go through the provincial governments. The federal government cannot make any grants or concessions directly to municipalities.


Owen C. Trainor: They are already making them.


Clarence Gillis: Well, I do not think it is going to help them very much. There is a lot of thinking to be done on this problem. We have to look at the British North America Act, and at the interpretation the Supreme Court of Canada has put upon it. In my opinion you will find the Supreme Court of Canada has completely nullified the intentions of the fathers of confederation. These things are all tied in with this whole question.
I feel that a municipality that buys firefighting equipment, largely on orders from the civil defence organization today which is demanding uniformity of hose couplings and that sort of thing, should at least be exempt from paying taxes on that equipment. This is part of our defence set-up. In the first place, I believe it should be the responsibility of the federal government to supply this equipment, because there are many small communities that would be very important in the chain of civil defence, and who could very well get along with a less expensive type of equipment, that are forced to have this interchangeable equipment because of a large community close by. This expensive interchangeable equipment is a part of our national program today. I am not going to repeat the argument made by the hon. member for Ontario, because I agree with him.
There are many municipalities across Canada that are nearly bankrupt, and that have no means of taxation except the property tax. This tax is about as high as it can go. I feel the problem has to be argued through the provincial government, and some uniform system arrived at. We could make a start by helping the municipalities, as the hon. member for Ontario has suggested.

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Now, this sales tax generally, as it is today, does not amount to 10 per cent at all. Take as an example an article you are importing from the United States, such as a part for an automobile. When it comes into the country it costs perhaps $2. The person who imports it passes on the cost of the article plus whatever duty he paid on it, and then on top of that he adds the 10 per cent sales tax. The article goes to someone else in the city of Toronto, and he adds the 10 per cent sales tax on top of the other fellow's mark-up, the sales tax he paid and the duty he paid at the border. By the time the article passes through three or four hands, as it will in many instances, and the consumer gets it in the maritimes or out in British Columbia, that sales tax amounts to over 100 per cent. It is the method of applying the tax that is wrong.
If we are going to have a sales tax, it should be imposed at the manufacturers' level and the article stamped to show the sales tax has been paid. Then, when it is resold, no one in Canada should be permitted to charge any more sales tax on it. The tax was paid at the manufacturers' level and it was worked into the cost; that is where it should end. It is the pyramiding of this tax right along the line, and the tax being added to a profit of perhaps 20 per cent or 30 per cent by someone along the line, that is the thing that really hurts in the application of the sales tax. If the tax is going to be applied by the retailer, then no one but the retailer should charge that sales tax. If the hon. member for Moose Jaw, for example, were to sell me a refrigerator and the sales tax were going to be paid by him, then no one else should impose it. He should mark the 10 per cent tax on the bill he issues to me, then show the cost of the refrigerator so that I would know what I was paying. That would be a direct tax.
The way this tax is imposed now, it is an indirect tax. It has become a tax on a tax, and a tax on a profit, and instead of being 10 per cent in many cases it runs over 100 per cent. I know the department is aware of this because the subject has been mentioned year after year. I have read speeches made in this house years ago that mentioned this very thing. I believe it is time someone in the department began to sort it out. I know the popular thing to do is to say you are against taxes altogether, but if we are going to function we have to have them. I feel they are misused and abused. I believe the government is getting a lot of blame it does not deserve. The only people who set out the tax as a separate item are the printers. If you go into a printer's shop

and get a bill you will see that the printing is shown as so much and then the sales tax is added to that. You know what you are paying. This idea of telling the small manufacturer that he is to apply that sales tax but not to show it, to work it into the cost, is bad. The minister has a file on this kind of thing that I sent him dealing with printing in one instance, and dealing with the small-


James Joseph McCann: The small lumber mills and so on; they all added the tax and showed it.


Clarence Gillis: There was one chap about
whom I wrote, and he was told not to show it but to work it into his cost.


James Joseph McCann: By whom?


Clarence Gillis: By the inspector who goes in and looks at the books to see if the tax is being applied.


James Joseph McCann: He may have been told, Mr. Chairman, that he need not show it but I would suggest that he was not told not to show it.


Clarence Gillis: What is the difference? The one way would be dishonest and the other would be honest.


James Joseph McCann: They both would be honest practices.


Clarence Gillis: I am not going to argue with the minister, because I intended to do so by correspondence last year. I had the whole case outlined; the instructions from the inspector, the fact they were reviewed at Moncton, and I had the whole thing outlined. I was told that was the way it had to be done. I believe that is the wrong way to apply the taxes. I still believe that if the minister and some of his people would have a look at it there would be a possibility of correcting it. I do not believe the practice is in accordance with the regulations as they are today.
The only reason for making these rambling remarks was the question of purchases made by different charitable organizations in this country. I should like to have that question clarified for my own benefit. I should like to know who are entitled to the exemption, and why they are entitled to it. I should like to know why one charitable organization gets an exemption and another does not. As members of parliament, we are questioned along these lines from time to time, and we are not in a position to give the answers unless we get them here.


Daniel (Dan) McIvor: I was going to make a suggestion, Mr. Chairman. Those who contribute to charitable organizations get an exemption on their income taxes when they have a receipt. I was going to suggest that any reductions in

taxes tor charitable organizations-and I think there ought to be-should be levied against incomes. I think that would be the logical way to get it. They have to have taxes anyway.


Edward George McCullough: I should like to support the hon. member for Cape Breton South in his plea to have something done about the present method of imposing the sales tax. I am not going to elaborate except to say I support him and the very fine explanation that he gave to the house of the pyramiding there is of that tax by the time the goods are bought by the consumer. The point I wish to make is not contained within the provisions of the present excise tax amendment. Rather, I want to bring to the attention of the committee a point of administration in connection with the act, and also a point concerning the tax itself.
In Canada the excise tax still applies to motor vehicles sold in this country. While this brings in a large amount of revenue to the federal government, I do feel that in this day and age, when it is recognized by all people that a motorcar is no longer a luxury, but that everyone should have the advantage of owning one, a somewhat different approach might be made to the problem.
On March 10 I received a return to a question I had asked the administration concerning the amount of excise and customs taxes collected by the federal government in connection with the sale of motor vehicles, and this return discloses a total amount of about $90,600,000. I realize that it is easy for a member in an opposition party to rise in the House of Commons and advocate certain tax cuts and changes, because we are not responsible for giving the service of government to our people. In the opposition groups we do make demands upon the government to give extended services; and when I say I think either that this tax should be discarded or that it should be greatly lowered, I do so with a full sense of responsibility.
Speaking for myself, I feel there are other ways the government could collect taxes-


Daniel (Dan) McIvor: Name them.


Edward George McCullough: -without levying an excise tax on motor vehicles. It could get revenue from the imposition of an excess profits tax, through which of course it would get money from those corporations that are making excessive profits. In any case this is a tax to which consideration should be given by the taxation branch of the government, so that it may be made possible for more people in this country to buy cars, and to buy them cheaper.
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During the Easter recess various distributors of motorcars brought to my attention the fact that in the administration of the act there is a provision which works a hardship upon them. My understanding is that under that provision dealers must pay the tax prior to the sale of the motorcars they hold. Hon. members know very well that the larger dealers may have on their showroom floors perhaps twenty or thirty motor vehicles; and the submission I am making will apply in proportion to the smaller dealers holding a smaller number of cars.
My understanding is that at the moment the dealers must pay the excise tax for the cars they are holding. They must finance those cars through their banks. These are all responsibilities charged upon the distributors of motor vehicles in this country. I maintain this is not fair to the distributor.


William Moore Benidickson: Does my hon. friend realize that all these taxes are paid upon the sale from the manufacturer to the retailer, the wholesaler, or whoever it may be?


Edward George McCullough: I
understand that when these cars reach the hands of the distributors they have to pay the tax; and where the cars are held five or six months, as happens on many occasions, this is a charge upon the financial abilities of the distributors.


William Moore Benidickson: That is true of any sale from any manufacturer to any dealer.


Edward George McCullough: I am
pointing out a feature in connection with the administration of the act which I do not think is a proper one. I am placing before the committee the hardship which, I say, is suffered by the dealer.
Let me say that in my view there is a way in which this could be avoided. The dealers could be allowed to charge the tax on the car when it is sold. The parliamentary assistant may argue that there would be administrative difficulties. My contention is that there could be a recording of the sales, and that the dealers could be charged at the time sales are made. Certainly it would bring about a condition whereby cars could be sold more cheaply. Because, after all, if the dealers are making a greater profit, that would be taken back by the federal government in the form of income tax. If this would mean lower operating costs for the distributors, then in all likelihood, I suggest, the people of this country would be able to get cheaper motorcars.
I bring these two points to the attention of the committee and the government in the hope that the minister will give them serious

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consideration. A situation has developed now where many of our dealers, owing to a lack of sales of automobiles and trucks, are not having the extent of turnover they had formerly. I suggest the tax is a hardship on the distributors of motor vehicles.


Julian Harcourt Ferguson: Mr. Chairman, I should like to make one brief remark. If there is to be any reduction in the sales tax, then I suggest seriously to the minister that every consideration be given to the abolition of the tax on goods used by charitable institutions for the athletic development of the young people of this country. Those young people should be the primary consideration of each one of us. It is very difficult to supply them with the proper athletic equipment. There is a great lack of it; and if by any chance- and I know money is required to run the country-if by any chance he could add the amount to my income tax, and take it off the kids, I would be delighted. Thank you.


William Moore Benidickson: Mr. Chairman, the debate yesterday and today has focused chiefly on the question of the remission of sales tax. In particular members in the opposition parties have suggested that it would be a comparatively easy thing to widen the opportunities for rebate or remission. Let me assure them we are not exaggerating the administrative difficulties of this form of rebate. As hon. members know, the federal tax on commodities is levied at the manufacturers' level; and after that article has passed through several hands it is very difficult to arrange a rebate.
The Leader of the Opposition suggested that in the case of municipalities it might be possible to have them organized as one entity under a provincial government, and that by virtue of that situation the number of units with which the federal government would have to deal would be reduced. It is true that at the moment provincial governments are exempt from federal taxation. This is not as a result of any concessions, or because these matters are easy to administer. It results from our constitution. That constitution, established more than eighty years ago, has stated that neither government could tax the other.
That particular constitutional requirement does not extend to municipalities. There are more than four thousand municipalities with which the federal government would have to deal in matters of this kind. I repeat that the administrative difficulties must not be minimized. And in support of that I would draw to the attention of hon. members the fact that in the last few days we have heard

a good deal about the closer association between the provinces and the municipalities than exists either legally or constitutionally between the federal government and those municipalities.
Notwithstanding that, and notwithstanding the fact that frequently we have heard the province described as the mother of the municipalities, while sales taxes are imposed by five of our provincial governments I know of none of the five that provides a rebate on purchases of municipalities. In addition to that, even when we get into the field of remission with respect to charitable institutions, it is true that the federal government has provided a certain and a considerable measure of remission to certain defined charitable institutions.
The hon. member for Cape Breton South asked that they be defined. As the hon. member for Eglinton said, we have had this provision since 1950, and the institutions that are free from federal sales tax are those bona fide institutions that care for children, the aged, the infirm, the incapacitated, if the institution qualifies and receives a grant either from a federal or from a provincial government. That means that all this class of institutions, in so far as federal sales tax is concerned, gets a rebate. On the other hand, hon. members will again recognize that there is a much closer relationship, in the field of health and welfare, between a provincial administration and hospitals than there is between the federal government and those hospitals. But I know of no provincial government-and there are many that are imposing sales tax-that provides similar remission on the purchases for hospitals.
The hon. member for Ontario referred, as a specific example, to the possibility that a school board in his city might save considerable sums were they not subject to a federal tax. I indicated to him that practically all building materials are among that wide class that are exempted from federal sales tax; but this is not true in the case of five of the provinces that impose sales taxes. In other words, if a school board in any of those five provinces had to pay out taxpayers' funds for the construction of new buildings, it would be exempt from federal tax in so far as practically all the materials that go into that building are concerned. But in the case of those provinces that impose a sales tax, they would have to pay to the provinces a sales tax, even though, as I say, we have heard frequently of the close relationship, of motherhood, of the municipalities to the nrovinces.


Donald Methuen Fleming: May I ask a question? In the case of how many of the provinces which do impose a sales tax is that sales tax applicable to construction materials entering into the building of schools?


William Moore Benidickson: Building materials as a
class are generally taxable under the sales tax provisions of the five taxing provinces; whereas the-


Donald Methuen Fleming: Will the parliamentary assistant state what provinces do impose sales tax on construction materials entering into schools?


William Moore Benidickson: My point was that exemptions are not provided by those provincial administrations to municipalities or school boards; and since they generally tax building materials, school boards would have to pay the tax on the materials that go into the construction of schools.


Donald Methuen Fleming: Will my friend answer that question, then? Will he tell us in what provinces sales taxes are levied on construction materials that enter into the erection of schools?


William Moore Benidickson: My source of information is a book put out last year for the Canadian Tax Foundation by John F. Due, and in that-


Julian Harcourt Ferguson: We would rather take the government's figures.


William Moore Benidickson: -he says that building materials are taxable in these five provinces, namely, Newfoundland, New Brunswick, Quebec, Saskatchewan and British Columbia.


Donald Methuen Fleming: Does the author of the work in question say that the provincial sales tax in that case is applicable to construction materials entering into the erection of schools?


William Moore Benidickson: I think my hon. friend can assume that from the explanation that I have given him. I certainly do.


Mr. Hodgson:: The parliamentary assistant does not know that for a fact.


William Moore Benidickson: In addition, so that this question of administrative difficulty is not minimized, I want to point out to the hon. members that in the case of those five provinces that impose sales tax, they themselves have seen the administrative convenience of taxing even the departments of the provinces in connection with their purchases. Again, in the case of the federal government, so difficult and costly is the paper work in connection with exemptions, rebates and remissions, hon. members know
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that similarly in the case of the federal government the purchases of those departments bear sales tax.


Alexander Malcolm Nicholson: It is indirect; therefore it is much easier to pay.


William Moore Benidickson: I suggest to my hon. friend the very opposite. I suggest to my hon. friend that when a sales tax is imposed at the manufacturer's level, and when that article is sold at retail level without the tax being specified, administratively it is much more difficult to provide a rebate in connection with the federal tax than it would be in the case of the provinces where the tax is imposed at the retail level and, as my hon. friends have pointed out, is seen.


Mrs. Fairclough:: Is it not true that the department does have a formula for providing for these rebates where they are in order?


William Moore Benidickson: In connection with the institutions, there is a rough formula, but it is not, as I say, too easy to operate administratively. We would find a terrific enlargement of the people with whom we would have to deal if we widened it beyond what we are doing.


Ellen Louks Fairclough: It is done all the time now, though.


William Moore Benidickson: It was suggested yesterday that even when one does a good thing or moves along, as we are in this particular instance, in an experiment or an innovation, there are people who are bound to say: Well, it is not good enough. We have had some very vehement criticism on a couple of points this afternoon from hon. members of the official opposition particularly. I remind them that municipalities have made those same requests during the period in the life and memory of hon. members facing me when administrations that were of their choice had an opportunity to rectify this particular point and did not.


Donald Methuen Fleming: The problem is infinitely more acute today.


William Moore Benidickson: I suggest to my hon. friend again the very opposite. I draw to his attention the predicament of the municipalities when friends of his were in power politically on the last occasion, and I say that most municipalities by no means are having the difficulty financially today that they had then.


Julian Harcourt Ferguson: That was right after the Liberal party started the depression, you mean. It started in 1929.

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William Moore Benidickson: That opportunity was not taken. The tax exemption suggestions of course come very easily from people in opposition. We have also heard this afternoon about some inequity in taxes of the indirect type. Again I remind my hon. friends that when that government, again of their choice, levied the tax, some 63 per cent of the total taxes received by the federal administration were of the indirect type that has been criticized this afternoon.


Donald Methuen Fleming: The total amount was only a fraction of what it is today.


William Moore Benidickson: In contrast to some 30 per cent at present.


Mr. Rowe:: Will the parliamentary assistant permit a question? Will he tell us what percentage the dominion government allowed the provinces to collect of the total tax of the dominion at that time, compared with today?


William Moore Benidickson: Perhaps I can give that to my hon. friend at another time.


Donald Methuen Fleming: I do not wish to interrupt my hon. friend if it is not convenient, but he-


William Moore Benidickson: I listened pretty attentively to my hon. friend yesterday, though I was prompted several times to correct him.


Donald Methuen Fleming: Does my hon. friend not wish to answer the question now? If not, I shall leave the matter until later.


William Earl Rowe: If you could correct him, why would you not answer him?


Donald Methuen Fleming: I was going to ask my hon. friend this question. Instead of talking about the averages, will he deal with absolute figures of taxes collected, both of a direct and an indirect nature, by the federal government? Let him go back to the year 1935 and compare that with 1953-54.


William Moore Benidickson: I think percentages are a fairer comparison in connection with the point that I have just mentioned; but I want to say this-


William Earl Rowe: I hope you can correct him better than you can answer him.


William Moore Benidickson: As I said on May 5, we are taking the first step in this respect. I listened to my hon. friend from Peace River, and I recall that in the debate last year he himself said that if a total exemption could not be provided it would be a very desirable thing to pick out the more costly items of municipal expenditure and provide an exemption with respect to them. That, as an experiment and innovation, is being done this year. My hon. friend from Peace River

the other day made certain* assertions about the tax on automobiles, and he referred particularly to the weight of tax on school buses. It is true that there is a sales tax on school buses, but I would remind my hon. friend, if he is not already aware of this, that there is no excise tax on a bus or on a truck.
During his speech the hon. member made a reference to the tax on certain motor vehicles and I was a little surprised to find that in the figures he gave he was referring to an ordinary Chevrolet car and gave the factory price at some $2,200. I made some inquiries today in regard to a Chevrolet standard two-door sedan and I find that the retail price, not the factory price, of that vehicle was $2,190 and the tax was not in excess of $500 but amounted to $370.


Solon Earl Low: That is the manufacturer's level. 1 referred, of course, to the retail level.


William Moore Benidickson: Yesterday my hon. friend used the word "factory" level.


Solon Earl Low: I said the tax average at the manufacturer's level.


William Moore Benidickson: Yes, but the tax is
certainly not over $500.


Solon Earl Low: If the parliamentary assistant will refer to the other part of my speech he will see exactly what I meant. I said that by the time the purchaser bought the car from the retailer he had to pay over $500 in taxes.


William Moore Benidickson: In this particular case the same point has been made by the hon. member for Moose Jaw-Lake Centre. He made the suggestion that there should be some special marking of the taxes which are applied, but that is generally true in a large item such as an automobile, and in most cases the dealer indicates not only the sales tax but the excise tax. In my investigation this morning I found that that was done and both these taxes were spelled out on the tag attached to the car.


Owen C. Trainor: But may I point out that the motorcar industry is the one single exception in this regard.


William Moore Benidickson: I think there are probably some others, but this is a conspicuous example. In this connection I made another small calculation which may be of interest to my hon. friend from Moose Jaw-Lake Centre. I do not know whether in spelling out certain items of cost he, as a merchant, would also wish to set out the cost price. In the case of the automobile, by the mere fact that they specify the 10 per cent sales

tax, it is very easy to determine the manufacturer's price of that vehicle. I checked on another low-priced car. The delivery or retail price was $2,245; I found that the sales tax was $137. With these particulars one can very easily calculate that the manufacturer's selling price is $1,377 and the total taxes amount to $343. I believe my hon. friend told us that generally speaking taxes were the equivalent of the wages paid out by the automobile industry, and perhaps even more. Let us say, the tax and wages would amount to $680. But I have found that the dealer's mark-up accounts for some $525. Now, my hon. friend, as a retailer, can use his own judgment in regard to specifying and marking the 10 per cent sales tax on some of these articles, but I do not think he would do that in his own business.


Wilbert Ross Thatcher: I would be delighted to do that for the parliamentary assistant if others would do likewise.


William Moore Benidickson: That is a good proviso.


Wilbert Ross Thatcher: There is no sense in my doing it alone.


William Earl Rowe: That sounds like free enterprise.


William Moore Benidickson: We have had some figures presented to the committee as to the probable saving which could be made by municipalities were they not subject to the sales tax, but on some occasions I have found these figures very vague and the language difficult to comprehend. For example, in the case of the city of Edmonton, the Leader of the Opposition used these words, as reported at page 4774 of Hansard for May 17, 1954:
We find . . . that last year the mayor of the city of Edmonton stated that if the dominion had paid its share of the general obligations that the municipalities have been asking the dominion to bear, there would be a saving of approximately $600,000 in that city.
Hon. members will easily recognize that that certainty cannot be tied down to the sales tax. My hon. friend from Eglinton very quickly accepted his leader's figures in the case of Montreal, and I have no doubt that in the case of Montreal the sales figure referred to includes the other sales tax I mentioned which is imposed by the provincial government.


Donald Methuen Fleming: Mr. Chairman, my hon. friend should not assume that. The figure given by the Leader of the Opposition was provided by authentic Montreal sources-


William Moore Benidickson: I will quote the words.


Donald Methuen Fleming: -and the figure I quoted as to Toronto in regard to taxes amounting to
Excise Tax Act
$500,000 was a federal tax. My hon. friend knows there is no provincial sales tax in Ontario.


William Moore Benidickson: My hon. friend, as was the case recently, is not too careful with his figures. I would like to refer to his last radio address over a national network when he used an astounding figure in regard to taxes on automobiles. He said, and I have a copy of the speech here, that in the United States the sales tax amounted to $90 on certain low-priced cars. Now, I know that the federal sales tax on automobiles in the United States is 10 per cent and I do not know of any car which sells at the manufacturer's level for $90.


Julian Harcourt Ferguson: The car does not sell for $90. Surely he did not say that.


William Moore Benidickson: I beg your pardon, $900.


Julian Harcourt Ferguson: I beg your pardon for correcting you.


William Moore Benidickson: The other day I made
certain inquiries with respect to cars in the low-priced field and I found that across the border the cheapest of these low-priced cars sold for $1,250, and I find that in Canada the same car at the manufacturer's level costs $1,356. I suggest to my hon. friend that he cannot indicate any car in the United States which bears a tax of only $90, and to which he made reference in his radio address. I also want to point out that in-


Donald Methuen Fleming: May I ask my hon. friend what tax that car bears?


William Moore Benidickson: Ten per cent without state tax.


Donald Methuen Fleming: Then that tax would be $125 in the United States.


William Moore Benidickson: That would be the minimum. The factory price is somewhat higher in Canada.
There were one or two other points raised during the debate to which I think I should reply. The hon. member for Nipissing referred to an item in the excise resolutions and asked whether this would have the effect of making the containers or bottles for the soft drink industry taxable. If those containers are returnable, as is generally the case, they will not be subject to excise tax by reason of this change. However, I understand there is some tendency to distribute beverages in cans. If they are distributed in cans that are thrown away, the can as well as the content would be subject to a tax under this regulation.


The Deputy Chairman:: Shall the resolution
carry?

Excise Tax Act


Donald Methuen Fleming: No, Mr. Chairman. There are some things in the rather bellicose speech of the parliamentary assistant that I think call for some comment.


Mr. Mcllrailh:: It was the interruptions that were bellicose.


Donald Methuen Fleming: No. It was the tone of the parliamentary assistant's remarks that was bellicose. Apparently the hon. member for Ottawa West was not paying attention.


George James McIlraith: No; it was the tone of the interruptions.


Donald Methuen Fleming: The hon. member for Ottawa West may have lost interest in what was going on in the house.
I wish to refer briefly, Mr. Chairman, to several of the remarks that have fallen from the lips of the hon. gentleman. Let me speak first of all about the matter of the sales tax levied by the federal government and of which he spoke. He undertook to take issue with a figure used by the Leader of the Opposition in his remarks yesterday. The Leader of the Opposition referred to the collection by the federal government of sales tax at the expense of the municipal corporation of Montreal. The parliamentary assistant is asking the committee to believe today that that was a figure of combined federal and provincial sales tax. Mr. Chairman, it is no such thing.


William Moore Benidickson: It included contractors' expenditures.


Ellen Louks Fairclough: No.


William Moore Benidickson: Yes, it did. Read
Hansard.


Donald Methuen Fleming: May I say to the hon. gentleman that the source of the figure is a publication of the city of Montreal. In that publication we have this statement:
The city of Montreal has paid in the year 1951-52 an estimated amount of $382,000 for the federal sales tax of 10 per cent on materials and equipment purchased either by the city itself or by contractors who carry out its works.


William Moore Benidickson: By contractors; surely.


Donald Methuen Fleming: That is the direct expense of the city of Montreal. Is my hon. friend saying that, because the city of Montreal has certain work carried out on its behalf by contractors and therefore it is the contractors who have to pay the federal government, by some magic that is not a federal sales tax paid by the municipality? Surely in this chamber we have not reached the point where that kind of sophistry carries any conviction.


William Moore Benidickson: Does the province
of Quebec exempt those contractors' expenditures?
[The Deputy Chairman.]


Donald Methuen Fleming: I do not happen to know the answer to that question; and from the way my hon. friend runs away from my question I can judge that he does not know either.


George James McIlraith: Would the hon. member permit a question?


An hon. Member:: Sit down.


George James McIlraith: If he would permit a question, I would appreciate it.


Clayton Wesley Hodgson: The hon. member is not a minister.


George James McIlraith: Can the hon. gentleman tell the committee who retains ownership of the equipment on which that sales tax is paid? Is it the contractor or is it the city?


Ellen Louks Fairclough: The city.


Donald Methuen Fleming: Evidently the city. We are not talking simply about purchases of equipment that the contractor used in his own business apart from the city. This is put forward by the city of Montreal as the payment by them of sales tax on materials and equipment purchased either by the city itself or by contractors who carry out its works. That is all passed on by the contractor to the city and, in that way, to the municipal taxpayer. That is the whole point.


George James McIlraith: I had understood quite differently the quotation read by the hon. member for Eglinton. I had understood it to imply that the contractor retained ownership of the equipment and that all the city of Montreal was saying in its statement was that the tax those contractors paid was a factor of cost to the city. But it did not go on to say that, as is now being argued, the whole of that tax was applicable to the city and a direct cost on the city as such.


Donald Methuen Fleming: If there was anything lacking in my observations, I must express my appreciation to the hon. member for Ottawa West for having clarified whatever was left in need of clarification in my remarks. We have the statement of the city of Montreal.
I made a statement yesterday in this chamber as to the payment of federal sales tax by the city of Toronto, and I said that amount had been calculated by the city treasurer or finance commissioner to be in the sum of $500,000 in a year. Those are incontestable facts. Let us not have any beating about the bush with regard to the matter.


William Moore Benidickson: Has my hon. friend any breakdown of the expenditure?


Donald Methuen Fleming: No; I have not a breakdown. However, that was the statement. I quoted it here yesterday. I quoted it in the house last year. At the same time I said

that no one knows how much is being collected by the federal government in sales and excise taxes at the expense of the municipalities because there is no segregation of the figures. In the two instances that are under discussion, we know what those two principal cities in this country are paying; and we can properly infer that substantial amounts of money are being collected by the federal government in sales tax and excise tax at the expense of municipal corporations. I believe a figure has been given for the city of Vancouver. Enough figures are available, Mr. Chairman, to leave no doubt in the mind of anyone who wants information on this subject that the federal government is collecting extremely large sums of money at the expense of the municipalities.


William Moore Benidickson: They will likely find the exemptions for these costly items to be very beneficial.


William Earl Rowe: The few that are being given; yes.


Donald Methuen Fleming: The parliamentary assistant keeps coming back and talking about some items. I have been talking about the actual imposition on the municipal taxpayers of these several cities of federal sales and excise taxes. Those figures are incontestable. I do not quite follow the purport and the purpose of the hon. gentleman's present interruption.


Mr. Lennard:: He does not know himself.


Donald Methuen Fleming: Let us turn for a moment to his interesting reference to the collection of sales and excise taxes some twenty years ago. It is an extremely poor answer to a strong case to delve back a generation ago and to say that no action was taken by the government of that day to meet the problem that is now under discussion. The fact of the matter is that whatever may have been done or left undone at that time, the needs of the situation are apparent to anyone today who is a realist. My hon. friend excuses the failure of the present government to bring any relief in the field of indirect taxation by saying that in 1935, when the Bennett government went out of office, the federal government was collecting 63 per cent of its total revenues in the form of indirect taxes. I have not the figures before me. I am not in a position to comment on the accuracy of the hon. gentleman's figure. I have no doubt that he is speaking from acceptable government records. However, I wish to look a little bit further into those figures. The budget of the federal government in that year was something between $400 million and $500 million. Actually, if my memory serves me
Excise Tax Act
correctly, it was less than $450 million. The budget with which we are dealing today is more than ten times the budget of 1935. My hon. friend's figures of percentages are not particularly eloquent in the light of the actual amounts. What was 63 per cent of $450 million? Mr. Chairman, it was something under $300 million, in round figures. But the federal government today is deriving 40 per cent of its revenues in indirect taxes. What is 40 per cent of a figure which is close to $5 billion? You have to take into consideration the other charges made by the federal government in reckoning up the total they take by these indirect taxes. That 40 per cent, Mr. Chairman- again taking a round figure-of $5 billion is something like $2 billion. Let my hon. friend give figures and not these misleading percentages. Let him compare the less than $300 million taken in indirect taxes in 1935 with the almost $2 billion taken today by this government in the form of indirect taxes. There you have a fair basis of comparison.
Again, Mr. Chairman, my friend speaks of the problem of 1935 as though it were more acute than the problem today. It is quite true that many municipalities were bearing a very heavy burden in 1935. There were many municipalities in default in this country. No one denies that. The fact of the matter is, however, that the federal government today is taking many times more from the municipalities in indirect taxes than it took in 1935.
Let it not be forgotten that when the Bennett government went out of office in 1935 the sales tax was levied at the rate of 6 per cent, and in that fateful year of 1935 the late Mr. Mackenzie King campaigned up and down the country denouncing the sales tax and referred to it as "that iniquitous tax".


William Moore Benidickson: Do not get bellicose.


Donald Methuen Fleming: Excise Tax Act
Sir, my friend threw about so many figures that I do not know whether I have covered all that I intended to cover. I have this comment to make on what he said about the sales tax on American motor cars. He worked himself into quite a lather over what he said was the astounding figure of $90 that I had used in a radio address as being the federal tax on a standard type low-priced motor car in the United States. I took that figure from published figures of the American automobile industry and I have no doubt it is correct.


William Moore Benidickson: I assure my friend that it is not.


Donald Methuen Fleming: But I draw to the attention of the committee that what my friend worked himself into such a lather over was the difference between his figure of $125 tax on a motor car and mine of $90. Apparently there is such a world of difference between $90 and $125 that my friend is justified in fulminating in the manner in which he did this afternoon.


Walter Edward Harris: Pretty nearly 40 per cent.


Donald Methuen Fleming: Yes, it is a figure of about 35 per cent more than the figure I used. I am quite prepared to take the figure published by the American automotive industry as an authentic figure. It is a figure that has been published in that country and in this country as well.


William Earl Rowe: This is the first time the government has been so concerned about $35.


Donald Methuen Fleming: If the parliamentary assistant is looking for ways of saving $35, then I suggest to him that he might take another look at the excessive taxes on Canadian motor cars that are being collected by his government. The figure I quoted in my recent radio speech, to which he did me the honour of making reference in his remarks, was contained in this sentence:
For example, the federal tax on a standard type low-priced motor car without extras is $350 in Canada and only $90 in the United States.


James MacKerras Macdonnell: He was only 40 per cent wrong.


William Moore Benidickson: It was the hon. member for Eglinton who was 40 per cent wrong.


Donald Methuen Fleming: The fact is that I should like to see the hon. gentleman, with his powers of subtraction, go to work on that figure of the Canadian tax and see what he can do to convince his minister and his government that the time is long past when a substantial reduction should be made in the heavy federal imposition on motor cars in this country. We hear people complaining about the high cost of motor cars in Canada. The fact is that

the Canadian federal government is contributing very substantially to the high cost of motor cars in this country and to the extent to which the cost of such motor cars in Canada exceeds that prevailing in the United States.
I shall not try to go over the ground further. We have had discussions in the house on the subject of indirect taxes. The reasons that the federal government chooses to levy its sales taxes at the manufacturer's level rather than at the retail level are that the taxes in that way are hidden and the consumer does not know what tax he pays, and, in the second place, that it is easier for the federal government to do it that way, regardless of the effect on the consumer, regardless of the fact that these taxes accumulate mark-ups as they pass from hand to hand, pyramiding as they go. But that has not given the government any degree of trouble or concern. What has concerned them is that they should find a way in which it will be easy for them to extract these taxes from the people so that the consumer who buys the goods shall not know exactly what he is paying in federal sales taxes.
Of course the provinces have no option in the matter. If they are going to collect a sales tax it must be at the consumer level because they have no power to levy indirect taxes. But in the United States the federal government has been a little fairer with the consumer and, where it finds it necessary to impose a sales tax, does not hesitate to levy it on the consumer rather than on the manufacturer or producer.
I commend that example to the consideration of the government. I have not said that the federal government in the United States collects all its excise and sales taxes in that way but I do say that the federal government in the United States has not found it impossible to collect its sales taxes at the consumer level rather than at the producer level. I commend that to the consideration of the government.


Robert Ross (Roy) Knight: It is a little difficult to disentangle the customs tariff, excise taxes and sales taxes, particularly with respect to such a matter as I want to mention, the taxes that still remain on books. I was glad that the government mcved considerably in the matter of abolition of the sales tax. It was an important step that they took and I congratulate them upon it, but I am still concerned that there should be any taxation upon the dissemination of knowledge because such, I consider, is any tax upon books. I am not of course alone in that opinion. The people who

use libraries are concerned, and may I say that we are woefully deficient in the matter of libraries.


William Moore Benidickson: What kind of books does my hon. friend have in mind? There is a very general exemption, as he knows.


Robert Ross (Roy) Knight: I know there is a fairly general exemption, but what about the application of the customs tariff upon books? Novels and fiction at least are still subject to a customs tariff of 10 per cent. Is that not true?


William Moore Benidickson: That may be. Of course we are not on the customs tariff resolution at the moment, but so far as the sales or excise taxes are concerned, there is a very wide exemption. Books exempt from sales tax include books printed and bound that contain no advertising and are solely for educational, technical, cultural or literary purposes, and materials for use exclusively in the manufacture thereof, etc.


Robert Ross (Roy) Knight: Is that item 169?


William Moore Benidickson: It is one of the items in schedule III to the Excise Tax Act, and the act itself says that the items in schedule III are exempt from sales tax.


Robert Ross (Roy) Knight: I got a return with respect to the matter in 1951, I believe, but I know the picture has changed since.


William Moore Benidickson: Last year we extended the exemption to books of the category that I have outlined.


Robert Ross (Roy) Knight: Am I justified in interpreting the parliamentary assistant's statement to mean that there are now no sales or excise taxes on any books that could be considered educational?


William Moore Benidickson: That is correct.


Robert Ross (Roy) Knight: I could postpone my discussion of the tariff duty until another occasion when the estimates of the minister in charge of that department are before the committee. I was not aware that the exemption was so complete.


William Moore Benidickson: Last year.


Robert Ross (Roy) Knight: I know there are some books that are still subject to the sales tax, but whether or not they could be classed as educational, I do not know.


William Moore Benidickson: Of course, I indicated that one of the exceptions would be books that contained advertising. I am sure that is not what the hon. member has in mind.
Excise Act


Robert Ross (Roy) Knight: I am not worrying about those for the moment. I am glad to have the parliamentary assistant's assurance on that point. As I said a moment ago, I am in complete sympathy with the removal of all taxation, I do not care from what source, upon reading material. I congratulate the government upon acceding to our wishes in that regard. This is a fight in which I have been engaged for a good many years.


Herbert Wilfred Herridge: I have just one point to bring to the attention of the parliamentary assistant in connection with books. I wish to draw his attention to the fact that I have two or three groups in my riding who are interested in historical events, who have published books in connection with jubilee celebrations held in small cities or towns. The Kaslo committee in my constituency provides an illustration of my point. Last year, without any knowledge of the advertising terms of the act, this committee published a very good history of the city in question for sale during the jubilee. The book was supposed to be published at cost, but in fact the committee lost money on the publication. I was wondering what could be done about that sort of thing in the future to inform people who may publish a book of great interest and value. In this case the book was circulated amongst those interested in history and the school children and the committee did not think that by accepting a few advertisements they would have to pay sales tax.


William Moore Benidickson: The fact that it is put out
with a fair advertising content or any advertising content is justification for considering it a commercial venture, and it is subject to sales tax.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
That It is expedient to introduce a measure to amend the Excise Act and to provide, among other things:
1.	That the excise duty on malt be repealed and an excise duty of thirty-eight cents a gallon be imposed upon all beer or malt liquor subject to an allowance for wastage.
2.	That any enactment founded upon this resolution be deemed to have come into force on the seventh day of April, nineteen hundred and fifty-four.
William Moore Benidickson: Perhaps hon. members would like an explanation of the purpose of this change. Paragraph 1 of the resolution proposes that the excise duty of 21 cents per pound on malt be repealed, and that all beer and malt liquor be subject to an excise duty of 38 cents per gallon. It is a change of method. The purpose of the change is to

Excise Act
introduce a more modern method of taxation rather than to substantially alter the general level of taxation in the industry.
At present the law also provides that where beer is brewed from a substance other than malt, for example from brewer's corn flakes or other corn adjuncts, an excise duty of 42 cents per gallon of beer will be levied in lieu of the duty on malt. This rate has been in effect since April 8, 1952, when this gallon-age duty was set at 42 cents per gallon. I am informed that approximately 2 pounds of malt were used in the production of one gallon of beer, thus making the gallonage duty about equal to the effective rate of duty on the beer brewed from malt.
However, due to changes in the brewing process the amount of malt used in the production of a gallon of beer has been steadily reduced. Consequently beer brewed from malt has been taxed at a lower rate than beer brewed from other substances. Representations have been received from farmers and others engaged in processing corn for use in the brewing of beer to the effect that brewers were reluctant to use corn adjuncts because of the differential in the two rates of duty. Adoption of this amendment will, of course, entirely remove the differential and brewers will have no reason to refrain from using corn products because of the excise duty.
Available information indicates that at present, on the average, about 1-8 pounds of malt is used in brewing one gallon of beer. I mentioned that when the tax was set it was assumed that two pounds of malt would be used in the production of a gallon of beer. This means that the previous duty levied on the malt content of beer was about 38 cents per gallon; that is the proposal in this amendment. Broadly speaking, the introduction of the new rate of 38 cents per gallon will not change the levy On malt beer. On other beer the duty will be reduced to 38 cents from 42 cents, but this class of beer constitutes only about 6 per cent of Canada's total beer production.


Alexander Malcolm Nicholson: Can the parliamentary
assistant indicate what will be the position of the government so far as revenue is concerned when this change is made?


William Moore Benidickson: I indicated there will be a slight reduction in the case of the 6 per cent of beer that is brewed from corn adjuncts, but in the case of the beer brewed from malt there should be no substantial change because of the ratio of malt now going into the brewing of beer which has worked out now roughly to 38 cents per gallon, and that is the proposal in the amendment.


Alexander Malcolm Nicholson: I would think there would be some estimate in terms of dollars and cents as to what the position would be. Can the parliamentary assistant give us that?


William Moore Benidickson: As I said in my statement, we really do not expect much change in revenue, assuming the same quantities are produced. I might indicate that the revenue from the 21 cent per pound tax on malt for the last year for which I have figures, 1952-53, amounted to something in excess of $80 million.


[Stage Direction]
Resolution agreed to.
Edward Turney Applewhaite: Shall we proceed to the next resolution, the customs tariff? It starts on page 7 of the ways and means resolutions.


William Moore Benidickson: I wonder whether we
could have the income tax resolution, Mr. Chairman, because of the personnel of assistants I have with me?


Edward Turney Applewhaite: Is it agreed?


Some hon. Members:: Agreed.


INCOME TAX ACT
[Stage Direction]
That it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That the exemption of income from metalliferous or industrial mineral mines for the first three years of production be extended to mines coming into production during the calendar year 1951.
2.	That the special deduction from income allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of exploring or drilling for oil or natural gas in Canada, be allowed for expenses incurred in the calendar year 1957, and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring for minerals, for expenses of exploring or drilling for oil or natural gas in Canada incurred in the calendar year 1957.
3.	That the special deduction from income allowed to corporations whose principal business is mining or exploring for minerals, for expenses incurred in searching for minerals in Canada be allowed for expenses incurred in the calendar year 1957; and that in addition a similar deduction be allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of searching for minerals in Canada incurred in the calendar year 1957.
4.	That the special deduction from income and taxes allowed to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum and to taxpayers whose principal business is mining or exploring for minerals, for expenses incurred in respect of deep-test oil wells be allowed for expenses incurred in respect of deep-test oil wells spudded in during 1955.
5.	That for the 1954 and subsequent taxation years the deduction allowed to an employer or employee in respect of amounts paid or contributed to or under an approved superannuation fund or plan shall be increased from $900 to $1500.

6.	For the taxation of a resident mutual insurance corporation, other than a life insurance corporation, as though the surplus arising from its insurance activities on and after January 1, 1954 were a profit from a business, and declaring that a non-resident mutual insurance corporation, other than a life insurance corporation, shall be deemed to be and always to have been subject to taxation on that basis.
7.	For the exemption from taxation for the 1954 and subsequent taxation .years of insurers, not less than 50 per cent of whose gross premium income was in respect of the insurance of farm property, property used in fishing or residences of farmers or fishermen.
William Moore Benidickson: On May 5, when these resolutions first came before the committee-


Donald Methuen Fleming: Before the parliamentary assistant proceeds with his remarks may I make a suggestion about the way we might proceed?


William Moore Benidickson: I was going to do that. I was speaking to a point of order. As I was saying, at that time a ruling was made that we would vote once on a resolution. In looking at some of the debates in previous years, I recalled that it might be of convenience to the committee to deal with the paragraphs seriatim. I think that some freedom was allowed at the introduction of the resolution for some general discussion, and when it appeared that members had been satisfied in that respect the chairman did direct the discussions specifically to the individual paragraphs of the resolution.


Donald Methuen Fleming: May I suggest that it would contribute greatly to an orderly discussion if the suggestion made by the parliamentary assistant were followed. The first four paragraphs of the resolution respecting the Income Tax Act relate, broadly speaking, to one subject, the petroleum industry. Paragraph 5 relates to quite a different matter, the effect of the exemption of contributions by employers and employees to approved superannuation funds. Then, paragraph 6 applies to something quite different again, namely the taxes on mutual insurance corporations. I would urge, Mr. Chairman, that when we do proceed, if you will call the paragraphs individually it will greatly contribute to orderly discussion in the committee.


Herbert Wilfred Herridge: I should like to make an observation in view of the remarks that have been made. I feel, in view of the procedure that was carried out last year and the procedure on the Excise Tax Act, there should be a limited general discussion and then the paragraphs should be called in order. Otherwise, those of us who want to make a few additional suggestions would be ruled out of order.
Income Tax Act


Edward Turney Applewhaite: I believe the hon. member for Kootenay West has pointed out the only real difficulty. If I might be permitted to express a personal opinion, I would say that the ruling, if one could call it that, which I quoted the other day does not in my opinion add to orderly discussion. At the same time it is my duty to point out that we can carry or vote down only one resolution, and that the question cannot be put paragraph by paragraph.
I suggest therefore that whatever we undertake to do should be done by mutual arrangement and agreement. Then perhaps when we reach detailed discussion the chairman might use some such form as, "shall we proceed to the consideration of the next paragraph?" and then the question would be put at the end.
The hon. member for Kootenay West has pointed out that some general observations with respect to the income tax, and points omitted from the resolution, might be in order. I think I shall endeavour to make no ruling. I would suggest that by consent hon. members in the committee would endeavour, if they have any general observations to make, to make those observations; then perhaps the Leader of the Opposition or of the government might indicate that we are prepared to discuss the paragraphs one lifter another.
I do wish to make it doubly clear that I am not presuming to upset any ruling which may have been made previously. I am just saying that if there is a willingness in the committee to do so, we can discuss the resolution in that way.


Donald Methuen Fleming: Agreed.


Herbert Wilfred Herridge: Thank you very much, Mr. Chairman, for your consideration and the suggestions you have made. I wish to make a few comments on the question of income tax deductions with respect to individuals and corporations, because they are both mentioned in this Income Tax Act resolution as we have it before us. I wish to refer particularly to some suggestions that are not mentioned in the resolution.
I do not lightly suggest the granting of exemptions, just for the sake of pleasing everybody, because I know we have to collect taxes and to meet our responsibilities. But I do wish to bring to the attention of the parliamentary assistant what I consider to be three or four omissions in the present resolution.
The first of these concerns a number of my constituents, and has concerned them for a number of years. I refer to the fact that there is no exemption in respect of what I would

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term unusual or abnormal travelling expenses. I refer to expenses incurred by workers and other people who have to proceed some distance to their places of employment. The need for this exemption is increasing because, more and more in order to obtain housing and other accommodation, working people, and those who are performing services, find that they must live at greater distances from their employment. For instance some of the workers of the Consolidated Mining and Smelting Company now live as far as thirty miles away from their employment. They have been forced to go that distance to obtain satisfactory sites for the building of their homes. Without doubt it is an exceptional expense for these workers. I am informed the same situation is found in other parts of the country. It is a constant cost over which these people have little or no control. We provide an exemption for a salesman who travels even a hundred miles to sell bubble gum. In contrast to that provision I do suggest there should be some consideration for the abnormal and unusual expenses of working people who are contributing to the production of this country.
I wish now to refer to another heavy expense experienced by those in my constituency who have to resort to the use of ambulances. Owing to the distances that must be travelled, ambulance charges sometimes run to as much as $50 or $100. Indeed, frequently people have to be taken 150 or 175 miles for treatment, I do think that under such circumstances ambulance charges should be deductible for income tax purposes. When a person requires an ambulance in an emergency he or she is ill or has suffered an accident, and most certainly is going to be unemployed for some time.
Then with respect to farm improvements I would point out that in the resolution the mining and oil companies are given exemptions for the development of their properties on the principle, as I understand it, that they are increasing the total productive capacity of the country. I make a plea for the farmers who are clearing land, or who may be draining or irrigating land. In this way they, too, are increasing our production. The costs incurred in these clearing, draining or irrigating operations should be allowed as deductions for income tax purposes.
There is one further point which is of particular interest to many of my constituents. It is also of interest to me, because I have been interested in the forest industry all my life. I believe those engaged in forestry are entitled to the same kind of exemption as those who are engaged in the mining or oil industries. Those in the forest industry 
should receive exemptions in respect of work undertaken to increase the conservation of timber on their properties, and in connection with replanting, the building of roads, the proper management of their properties and, in particular, for expenditure on fire protection.
I have brought this to the attention of the house on a half dozen occasions and, in this connection, wish to read from the report of the department of resources and development for the fiscal year ended March 31,
1953.	This makes reference to the activities of the forestry branch of the then department of resources and development, and states at page 97:
During the year, the interdepartmental committee on the relation of income tax deductions to forest management made its report. This committee, set up under the direction of the minister of resources and development was composed of representatives of the departments of finance, of national revenue (taxation division), and of resources and development. The committee, with the director of this branch as chairman, was particularly interested in corporation income tax deductions and their relation to sustained-yield forest operations.
It is interesting to note that they were interested only in corporation income tax deductions. What about the individuals who are also undertaking this kind of work in the forestry industry? The report continues:
Informal representations by the forest industries and discussions by the committee members resulted in two main changes with respect to income tax-deductions, both of which will encourage sustained-yield management.
I agree with that, and have spoken in favour of it on many occasions. The report continues:
Access roads and trails are now subject to a generous rate of depreciation, and forest management expenses designed to promote sustained yield are, generally speaking, recognized as current costs for income tax purposes.
That is the very thing several of us have been advocating in the house for a number of years. But according to this report it applies only to corporations. I wish to say that from my knowledge of the lumbering industry in my constituency I have not heard of any of the smaller companies or individual operators receiving any exemptions, or having knowledge of the policy designed as a result of this investigation.


William Moore Benidickson: That is an interesting point; but the act uses the word "taxpayer". So that it does not make any difference whether a taxpayer is a corporation or an individual, the same principle would apply. If an individual had an income from the business of logging or forestry he would have

exactly the same rights in the same circumstances as have been read out by the hon. member, although he referred to a "corporation".


Herbert Wilfred Herridge: I have practically completed my remarks, but I should like to ask the parliamentary assistant this question: What has been done to inform industry of this provision? I am confident, from my personal contact with quite a number of lumber operators who are attempting to carry on their operations along forest-management lines, that they are unaware of this provision. What is being done to inform industry, and would it be possible to obtain a copy of the regulations covering this type of exemption?


William Moore Benidickson: This right is not spelled out in the regulations. It would be the same type of deduction as an expense that people in many other types of business would be using. It is not usual to have to inform people of their rights under the Income Tax Act. It is usually the other way around. A request is made for a deduction. The ground is plowed by the taxpayer, when he finds something new, to see whether it will be treated as an exemption. Usually we do not have to advertise these things.


Herbert Wilfred Herridge: If an operator were to write to the department and ask for the regulations covering activities for which he could receive an exemption would he receive specific information?


William Moore Benidickson: The best procedure
would be for the taxpayer to inquire at the nearest district tax office. These are all based on regions, and he could communicate with his own regional director.


Herbert Wilfred Herridge: I am quite sure the majority of them know nothing about it. However I think the big companies are well informed about these exemptions.


Mr. Enfield:: While we are still in the midst of discussing the general provisions of the Income Tax Act there are a few points I should like to make apropos of some omissions, or to correct some inequities in the act that one would like to see. I merely put these suggestions forward. I should preface my remarks by saying that we are committed, and rightly so, to the principle that you cannot at the same time reduce sharply your taxation generally in a period when demands on government spending are not only very heavy but are likely to increase. I think it is sometimes a pity that that principle is not kept in mind by hon. members when we are discussing taxation. It would certainly help to put the discussion on a higher intellectual plane.
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Stanley Howard Knowles: You are not against putting taxes on a fair basis, are you?


Frank A. Enfield: The point I want to raise particularly at this time is in respect of section 11 (1) (1). The sidenote of this paragraph is "alimony". I shall read the paragraph and then point out how the interpretation of it can be important. I might say here that no matter how well some of the statutes may be drawn in the beginning, obviously, as we put them into use, we shall find occasions when interpretations by the department and by the courts sometimes reveal inequities in the act itself. It is that kind of thing that I am concerned with here. The paragraph reads:
-an amount paid by the taxpayer in the year pursuant to a decree, order or judgment of a competent tribunal in an action or proceeding for divorce or judicial separation or pursuant to a written separation agreement as alimony or other allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the marriage, or both the recipient and children of the marriage, if he is living apart from the spouse or former spouse to whom he is required to make the payment.
This sets out what requirement you must fill if you fall within the exception in the statute. The requirements of this paragraph are four. You must have an order for divorce or judicial separation. That is the first requirement. In Ontario, at least, and I think in several other provinces, there is no action for judicial separation, so that that exception is taken out of the picture. Therefore you must have an order for divorce or a written separation agreement under which the husband pays maintenance to the wife or, if you pay alimony, payments on a periodic basis, and under each of the three conditions, if the parties are living apart, such amounts may be deducted from your taxable income.
The problem is this. In Ontario, in a case where no divorce action can be obtained and in a case where the parties are separating and no separation agreement under the circumstances can be entered into, normally proceedings are taken through the family court. The family court handles all matters of domestic relations and, as hon. members can understand, by far the majority of domestic problems are heard in the family court, and by far the greatest majority of payments ordered by any court are by virtue of orders of the family court. There you will find the bulk of your cases. If you have a rich client you start alimony action in the supreme court, but that is not normally the case. We find then that family court orders represent the bulk of the cases where court orders are made for payment of money by the husband to the wife. That is what happens

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in Ontario, and I am sure it applies in many of the other provinces. The problem is that such payments made by order of the family court are not deductible from the taxable income by interpretation of the income tax department. I would put forward as a suggestion to the department at this time that it would be well worth considering what I have termed an inequity in the act.
A curious by-product has arisen from this situation in that the judges of the family courts in the provinces of Ontario feel very badly. They feel that their courts are not considered as being competent courts of jurisdiction in such matters. Family court officials receive constant inquiries regarding this particular situation. This is one place where appropriate action could be taken to rectify what is an obvious misinterpretation by the department in regard to this particular point.
The other point I had was in regard to family allowances. We have new Canadians coming to this country. They have children but they do not qualify to receive family allowances until they have spent twelve months in the country. At the end of that time they can then get the family allowance, and their children qualify. But after the children qualify the allowable deduction is reduced from $400 to $150. If a child, for example, qualifies and the parent collects family allowance in the month of December they might receive one payment of $5 for family allowance, yet the allowance they are allowed as a deduction is reduced over the whole period of the year from $400 to $150. New Canadians find themselves rather at a loss to understand this situation. Of course it can be pointed out to them that when the children reach 16 they may have been receiving family allowance for eleven months of that year, but due to the fact that the child became 16 during the last month of the year they are allowed to go back to the $400 rate for the whole year. Hence what they lose in the roundabout they gain on the swings, or vice versa.


Alexander Malcolm Nicholson: But they are lucky to be able to pay income tax the first year they are here. Ninety per cent of the farmers are never fortunate enough to pay income tax.


Frank A. Enfield: We hear a great deal about the farmers, although I did not think their problems would be injected into this present discussion. In the case of a child born in Canada it is quite true that it works out in the latter manner I have suggested, but in the case of new Canadians coming into the country they have to wait for a twelvemonth period before the child qualifies, and

when the child reaches the age of 16 they are not always in the position where they can make up what they lost at the beginning. I therefore think they have a very good point in bringing this matter forward and again, along with my suggestion regarding the family court payments, I would like to suggest this latter question regarding immigrants coming into the country be brought before the department for their consideration while we are discussing these resolutions.


Mr. Nickle:: Mr. Chairman-


Edward Turney Applewhaite: Does the hon. member wish to discuss matters of general interest?


Carl Olof Nickle: I want to deal generally with income tax matters in relation to maintenance in the oil industry, covered in part by some of these items.


Edward Turney Applewhaite: I wonder if the
hon. member would mind. He will no doubt have noticed that the two hon. members who preceded him have spoken on matters which are not included in these resolutions at all, and we thought it might add to an orderly discussion of the resolution if general remarks dealing largely with omissions were taken first, and we could then proceed to discuss the subject matter of the resolutions.


William Moore Benidickson: Mr. Chairman, could I just intervene at this point, because I would like to reply at the first opportunity to the hon. member for York-Scarborough.
He mentioned two matters in connection with an order issued by the family court and I wish to assure him that some consideration was given to this problem prior to the bringing down of this budget. However, for the moment it was looked at adversely chiefly for the reason that we are informed that this court lacks jurisdiction in the matter of judicial separation or divorce. Now in connection with the second point, also raised by some other hon. members, and I refer particularly to the point raised by the hon. member for Argenteuil-Two Mountains in connection with immigrants, I think he will find that that will be rectified when the bill is brought down.


Ellen Louks Fairclough: Mr. Chairman, along with some other points, I raised this matter in previous years and I remember the regulations were changed a year or so ago in the case of a Canadian so that the allowance took effect as of the date of payment instead of on the date of qualification. It is true that it is very difficult for these people to understand why we have these regulations,

particularly so when they first come into this country. At that time their whole exemption is prorated according to the number of months they have been in the country, but they cannot see any reason why the amount of the allowance for children should not be prorated according to the payment they receive the first year. I do not know that I can go along one hundred per cent with that.


William Moore Benidickson: We feel we can correct that in the bill.


Ellen Louks Fairclough: The only thing I would like to suggest this time is that the department consider doing the same thing for them as it did for Canadian children born in this country, and that is to make the exemption applicable according to the actual payments, rather than according to the date of qualification or eligibility.
I would like to say a word also on the other point brought up by the hon. member for York-Scarborough. The matter he raised creates a very real problem for a good many taxpayers, particularly when a man may be contributing to the support of his family from which he is separated, and he can still be paying a large part of his earnings to them and still be taxed as a single man by reason of the fact that the wife has obtained employment which puts her in the taxable bracket also.


William Moore Benidickson: My hon. friend, of course, is aware that the payment from a husband would be taxable and-


Ellen Louks Fairclough: But the husband does not get the benefit and this creates a very real problem.


Stanley Howard Knowles: Mr. Chairman, while we are on the subject of omissions, may I take just a moment to remind the parliamentary assistant, the government and the Minister of Finance of a very serious omission. I refer to the absence in the minister's budget proposals of any reference to the floor under medical expenses so far as income tax deductions are concerned. I need not take the time of the house to relate the history of this question. It is one that is well known to all hon. members of the house and well known throughout the country. But I do think that it is most unfortunate that the job the minister started a year ago of reducing that floor from 4 per cent to 3 per cent has not been continued.


William Moore Benidickson: It was originally 5 per cent, of course.


Stanley Howard Knowles: Well I can go back and give the history of this matter though I did not intend to, even though the parliamentary
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assistant has asked for it. He is perfectly correct. In 1944, or possibly in 1943, the rate was reduced from 5 per cent to 4 per cent; in 1953 it was reduced from 4 per cent to 3 per cent. I hope we are not going to have to wait until 1963 to get it down to 2 per cent, and 1973 to get it down to one per cent, and 1983 to get rid of it altogether. That would really be a long, long story, considering the fact that members of this house showed considerable interest in the idea of abolishing that floor by allowing a certain motion to go through a couple of years ago. Again, I am not seeking to revive that debate because we might very well get off into the procedural aspects of the matter.- But I would suggest, Mr. Chairman, that the feeling of the people of this country is valid in that many of them have expressed the view that if medical expenses are to be allowed as deductions they should foe allowed right from the first dollar as is the case with charitable donations.
Speaking for myself I have no objection to there being a ceiling as to the amount that could be deducted. There are some who think there should be no ceiling, but it is true that a case can be made for a ceiling and the government two years ago raised that ceiling from what it was before. But there is no excuse for not allowing income tax deductibility for the first dollars one has to pay out as medical expenses, in the same way that the first dollars given to approved charities are allowed income tax deductibility.
I might point out once again that the Windsor chamber of commerce has been carrying on a considerable campaign in respect of this matter. The proposal that body makes is, I suggest, a second-best. But if the government is not prepared to go the whole way and to remove altogether the 3 per cent floor, they might give consideration to the suggestion made by the Windsor chamber of commerce and other bodies. That suggestion is that the 3 per cent floor should relate not to the net income, as is the case at the present time, but rather to the taxable income after the statutory deductions have been made. That procedure would make quite a considerable difference, and certainly it would seem to be more reasonable. The way the matter now stands, Mr. Chairman, a great many medical expenses are not allowed at all. That statement applies, I might point out, in particular to moneys paid out for expensive medicines such as insulin, ACTH, cortisone and some of these other modern drugs about which the minister had so much to say when he added them to the list. He was proud of the fact that he

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was making those items deductible under the heading of medical expenses. Yet many people who thought they were going to get relief because of that change have discovered that what was the 4 per cent floor but is now the 3 per cent floor denies to them the advantage of those drug items being included as deductible, because heavy though their expenses are they do not happen to exceed 3 per cent of their total income.
Since you were good enough, Mr. Chairman, to allow this brief period when members might express their regrets over some of the omissions from the budget presented by the minister this year, I take this opportunity to express once again my great regret that nothing was done this year to remove the 3 per cent floor under medical expenses deductible for income tax purposes. I trust this floor will yet be abolished, and that medical expenses will be allowed as deductible right from the first dollar.


William Earl Rowe: Mr. Chairman, I do not always find myself in complete accord with the hon. member for Winnipeg North Centre. However, this is an occasion on which I must say that I find myself in complete accord with him. The matter of the health and welfare of the people is one of the great problems of today. There is no one who feels the heavy burden caused by ill health more than does the person in the lower income brackets. It seems to me to be almost absurd that, when any allowance is made as a deduction for income tax purposes, the whole amount of hospital expenses or medical expenses is not allowed as an income tax exemption.
I am not going to repeat what the hon. member has just said, but I should like to add one other thing that I think might be given consideration by the department or rather one other exemption that might be further extended. I refer to charitable donations or donations in that category by those who wish to help others in the matter of hospital care. Throughout this country there are many people who are helping those who cannot afford to meet their expenses for sickness and those of their families and are helping them to pay their hospital bills. Surely when hospitalization and medical care is as expensive as it is today, an exemption should be allowed to those who are thus contributing, even for nursing assistance and assistance in small hospitals, as is being done by people who feel they can afford to help someone else who is less fortunate. It seems to me that such an exemption would be just as justifiable as that which is given if one were to write out a cheque as a donation towards the building of a hospital. I think the exemption allowed for charitable donations is limited to a percentage of one's

income. These exemptions include grants to hospitals and assistance for other charitable services. Surely the department might give consideration to exempting for income tax purposes donations and assistance that are given by those who feel they can afford to do so.
There are many people in this country who have no children but who are financially able to assist those who have. There are many people who are growing older, who have small families or no family at all, who have been extremely fortunate and have estates who feel that they want to help those who are less privileged. I think that is a feeling that should be encouraged. In the older days when we did not have such assistance as that afforded by family allowances and other social benefits it was the common practice for those who could afford it to help those who were not able to look after themselves; that was a more common practice then than it is today. However, I submit that there are still many instances where people who have sufficient means are assisting in the hospital care of incurables and others who are less fortunate. I would urge the parliamentary assistant to the minister to give some consideration, not only to the point suggested by the hon. member for Winnipeg North Centre-and again I say that I am in complete accord with him on the matter- but also to extending the exemptions to those who are assisting in the hospitalization of what we might call the underprivileged or the less privileged people, and to put such assistance in the same category as a contribution to a hospital.
I am not going to detain the committee longer. There are many other items that could be mentioned at this time when you, Mr. Chairman, have broadened the scope of the discussion for the purpose of allowing mention to be made of the things that might have been included. There are many things that I thought might have been included in the whole budget, let alone in this one feature. However, I am not going to delay the committee longer for fear that if I were to point out the many features of omission in the budget generally, I might detract from the force of my argument with respect to the two points that I think are vital at this particular time.
Mr. Nose worthy: I think that practically every political party and group in this house have at some time or other expressed their opinion in support of the matter raised by the hon. member for Winnipeg North Centre, namely that of getting exemption from income tax of medical expenses. I am sure that if Liberal members outside of the

cabinet were given an opportunity of voting freely on this subject they would again-as did similar groups some years ago-support a measure of that kind. All that remains to be done in order to secure for us that legislation is for the Minister of Finance and his cabinet colleagues to decide that not just extraordinary expenses but also ordinary expenses incurred with respect to medical bills should be exempt.
I want to support the request made by the hon. member for York-Scarborough with regard to the family allowance as it affects new Canadians. I have a number of cases which I have referred to the Department of Finance. I have on file a couple of letters from the minister indicating that this matter was to receive his consideration in connection with the present budget. The difference between the new Canadian and the native Canadian is that in some instances the new Canadian brings with him two, three or four children. I have examples of new Canadians coming here with families of three or four children who qualify in December for the children's allowance. The new Canadian who comes here with three children and receives the family allowance for the three children for one month can only claim an exemption of $450 instead of the $1,200 that he would have been able to get if he had not received the one month's family allowance.
I am told that in other countries where family allowances are paid and where they affect income tax the regulations are much more lenient, and that an adjustment is made in the case of those who come to the country in the second half of the year. I would certainly urge the department to give consideration to that point.
There is another matter that has not been raised yet which involves another of these exceptions. It is a question that I have discussed at some length with the department and it has to do with servicemen. When an ordinary civilian citizen is married on the last day of the year he is entitled to married status when filing his income tax return for that year and can claim an exemption of $2,000 as a married person. Taking the case of the serviceman who remains in the service and is married in the latter part of the year, although his income tax has been collected monthly and he can get no refund on what he has paid, as a civilian would under the same circumstances, I understand that it is nevertheless possible for him to get an adjustment with respect to his income tax payments in the months to come whereby he may receive the same credit that a civilian who had changed his marital status in the latter months of the year would get.
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In the case of the serviceman who is discharged from the service at some time during the year and marries after his discharge, I understand that he is then treated by the income tax department as though he were two men. For that part of the year during which he was in the service and for which he paid his income tax, although he may have paid income tax as a single man for ten months of the year and was married in the last month of the year, he is not entitled, having withdrawn from the forces, to any return or refund on the amount he has paid, as a civilian would be in similar circumstances. That looks to me as though we have developed for administrative purposes a set of regulations which discriminate against the serviceman. I realize that there may be some administrative difficulties in permitting the serviceman who is married in the latter part of the year after his discharge to get a refund on the taxes he paid as a single man, but surely there are not so many of these cases as to render it necessary for us to perpetuate that discriminatory action.
I have urged the department, and I do so again, to take some steps whereby a serviceman who withdraws or is discharged from the service some time during the year and marries in the latter part of the year may be compensated by way of refund for the taxes he paid as a single man just as in the case of a civilian.


Mr. Fraser (Peterborough):: I was at a meeting of new Canadians about a month ago and many of them said that what they noticed about being in Canada instead of in their own country was the lack of security here owing to the fact that if they got sick their expenses were not taken care of as they were in the United Kingdom. In one case a man who was a machinist and had an income of $3,980 had a bill for one daughter of $1,469. He cert-tainly felt that the 3 per cent floor on medical expenses should be dropped entirely so that he might have a chance to get on his feet again. He not only owes the hospital and the doctors but has just managed, through getting loans, to pay the nurses.
In talking to different people who have had heavy medical expenses I have found that in most cases they receive only a very small deduction unless those sick have been in a hospital and there has been an operation. The parliamentary assistant will know that there really has to be an operation before the taxpayer gets any substantial deduction. I have also said before in the house, and it has been mentioned by other members, that the cost of transportation back and forth to a hospital or to a doctor should be taken care of. Ambulance charges should be allowed as a deduction. I know one case in particular where the

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man has to go to the hospital twice a week. He is forty-six miles away and has to pay for a taxi there and back because no one in the family can drive.
Before I sit down I should like to ask the parliamentary assistant a couple of questions. When he is speaking later will he tell us what amount of compulsory savings has not been repaid yet? I should also like to mention that there is a feeling that the allowance of $400 for a person 21 years of age or over who is physically unfit is not sufficient. In many cases somebody has to be there all the time to look after such people. I know of three cases where the mothers are unable to look after these children. There are cases where they are not bad enough to be admitted to a provincial hospital, and I feel that something should be done along that line.
Referring to the T.7B form, may I point out that it states that it is for use by individuals who are required to make instalment payments. I had a party come to me and say that he had to make quarterly payments but he did not know just what form to use. I feel that right at the top of that form T.7B there should be a notation that it is for quarterly payments.
Another question I should like to ask is: What was the amount received by the income tax department from fines levied for infractions of the Income Tax Act? There were about 4,741 convictions as compared with 3,601 for the year before.


William Moore Benidickson: Probably I could reply right now to the hon. member for Peterborough because he has asked me some specific questions. In so far as the amount of compulsory savings is concerned, that is a matter for the Department of National Revenue. I am not in a position at this moment to give him that information.


Gordon Knapman Fraser: I thought you would have that.


William Moore Benidickson: No. In so far as the total of the income tax fines is concerned, again the answer would be given by the Department of National Revenue. I feel it would probably be better for a question of that kind to be put on the order paper, and the answer brought down.


Mr. Fairey:: I should like to ask the parliamentary assistant if consideration has been given to the position of residents of British Columbia with respect to deductions allowed for medical expenses under the new scheme initiated by the present government of that province. Formerly, residents of British Columbia paid a premium on hospital insurance, and medical expenses paid on their

behalf from that fund were allowed as deductions for income tax purposes. A few months ago the provincial government cancelled that scheme entirely, and premiums are no longer charged. A 2 per cent sales tax has been imposed, and from that fund medical expenses are paid on behalf of all citizens who are hospitalized.
My question is: Has the government given consideration to the position of the individual, and will medical expenses paid by the government on his behalf out of the proceeds of this additional 2 per cent sales tax be allowed as deductible medical expenses for income tax purposes?


William Moore Benidickson: Some consideration has been given to this problem as a result of the new system. I think my hon. friend knows that a premium paid for health or hospital insurance is not an item that can be deducted under this provision. On the other hand, even though an insurance company was, under a policy, responsible for paying a hospital bill the taxpayer is able to include the bill as one of the items if his total expenses are over 3 per cent of his taxable income.
I believe that the British Columbia act is worded in such a way that it says a portion of the premiums are being paid by the provincial treasury to insure citizens in this health scheme, and therefore the citizen who could obtain a hospital receipt would be able to use it for this purpose.


Mr. Johnston (Bow River):: Before this item is carried there is a question along the same lines I should like to ask. It has come to my attention that in Alberta a similar scheme was entered into. The province, as most hon. members know, pays a portion of the hospital bill and the municipality pays a portion, while the patient pays $1 a day. In one case that was brought to my attention, which I took up with the income tax department, I did not get a very satisfactory answer. I was told to have him send in his bill and then we would see what happened. Apparently down here they had not had a definite case of that kind.
Now, the total bill was $201, if I recall correctly, and that included medicine and everything else. The amount the patient had to pay was $125, and there was a difference of $76. The point is that the patient had to pay the $125, but indirectly he had to pay the balance because the money came out of the municipal taxes and provincial taxes that he paid. Now in what position is the taxpayer in a case like that? He has the total bill from the hospital of $201, but that is not a receipt. He has his own personal receipt for $125. In what position is he

placed in regard to the total amount of that hospital bill of $201? Can he get tax exemption for it?


William Moore Benidickson: I am not familiar with the Alberta scheme to which the hon. member for Bow River refers. Is there a universal health insurance scheme in Alberta or is it simply a form of partnership between the province and the municipality in the case of a welfare patient?


Charles Edward Johnston: No, it is an
over-all scheme. The municipalities pay a portion of it, the province pays a portion and the patient pays $1 a day.


William Moore Benidickson: Some consideration has been given to the British Columbia legislation but the officials before me tell me that, like myself, they are not familiar with the Alberta situation. I believe I can only assure the hon. member we will look into it.


Charles Edward Johnston: Will the minister have his departmental officials communicate with British Columbia and Alberta to get a ruling on that question, because it is one that I might say affects me personally, as well as the other residents in Alberta.


William Moore Benidickson: I will see that the hon. member's remarks in Hansard are drawn to the attention of the officials.


Mr. Cameron (Nanaimo):: Following the question asked by the hon. member for Victoria, B.C., I wonder whether the parliamentary assistant could tell us the position with regard to the dollar a day that patients in British Columbia hospitals now pay when they are hospitalized. What is the status of that? Can that be deducted or is that part of the premium?


William Moore Benidickson: That would be part of the hospital bill, and provided the amount is in excess of 3 per cent of the amount of taxable income, it could be recovered. It is the total of the hospital bill with which the income tax people are concerned.


Colin Cameron: The reason I was asking is that for some strange reason the present government and the previous government insisted on calling this dollar a day a co-insurance scheme, as though it were part of a premium.


Alexander Malcolm Nicholson: We have had this problem in Saskatchewan for some time, and it has been settled amicably. The patient receives a bill for the entire hospital charges, and the full amount is claimed. However, there is another problem that has not been settled so far as I know. I live in a rural municipality and we have two doctors who are paid out of taxes. What happens when a patient uses
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the services of one of these doctors for an extended time, and there is never any bill rendered? How does that taxpayer receive credit for what normally would have been paid to a doctor for medical services?


William Moore Benidickson: That is an unusual problem, Mr. Chairman. I am afraid if there is no bill there is nothing to submit to claim a deduction.


Alexander Malcolm Nicholson: But the taxpayer has paid the two doctors.


William Moore Benidickson: In his general municipal taxes.


Alexander Malcolm Nicholson: The doctors have been paid in the same way as we pay our hospital taxes. Apparently everybody in the municipality has to pay a tax which does cover the salary of these two doctors. It seems to me there should be some adjustment when you come to pay income tax. Would the parliamentary assistant indicate whether or not it would be in order for one of these doctors to render a bill indicating what the normal charge for that service might be?


William Moore Benidickson: I am afraid not. This is a circumstance that is not covered.


Alexander Malcolm Nicholson: Quite a large number of municipalities, particularly in Saskatchewan, have prepaid medical service. It would appear to me that the taxpayers in those areas, who have a problem of medical care, should be given some consideration. I think at one time about twenty-five per cent of the rural municipalities had prepaid medical care. It seems to me that if some provision could be made to give consideration in respect of the cost of medical services under this plan it should be done. Would the parliamentary assistant indicate whether he would consider bringing in next year some amendment that would give relief to this fairly large section of taxpayers?


William Moore Benidickson: We shall certainly inquire with a view to obtaining further information as to the type of practice my hon. friend has described. But I cannot give any assurance to him that, in the absence of receipts, we would be able to cope with it.


Clarence Gillis: I should like to ask the parliamentary assistant to clarify my mind on one point. In Alberta, where the provincial government has an over-all health scheme of some kind, the department is considering ways and means of permitting a rebate for income tax purposes. On the other hand, in Saskatchewan I understand the maximum payment by way of taxation is $40 a year. It is optional whether you consider your hospital expenses on the 3 per cent basis, or

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whether you put in the $40. That $40 is not allowed for taxation purposes, as I understand it.


William Moore Benidickson: No, under no circumstances, even in private schemes, can you claim for premiums. You submit the actual amount of your receipts showing medical expenses paid hospital, doctor or whatever they may be.


Clarence Gillis: That is the point. There are private schemes across this country that could be considered as charity to the extent of perhaps 50 per cent. In the end of the country I come from they pay subscriptions for doctors and hospitals that run well over $100 a year. I am safe in saying that half the people who pay that amount per year for the purpose of keeping up those hospitals, and helping to pay the salaries of the doctors, never receive anything back by way of services. However at the end of the year, when the income tax is being filed, the amount of money paid into that particular kind of medical set-up is not allowed for taxation purposes.
I suggest to the minister that when you pay over $100 a year merely for the purpose of maintaining a service in a community that you may never use, some consideration should be given to tax relief in that type of scheme. Because I know that without that kind of gesture on the part of the communities, the chances are there would be very little by way of hospital service or doctors in those communities. I have stressed this point time and again.
While I am on this subject of taxation and tax exemptions I should like to bring to the attention of the parliamentary assistant another matter I have stressed for some time. Both the Department of National Defence and the Department of Finance are concerned with this problem. I have pounded this into the ears of several ministers; perhaps the parliamentary assistant will be a little more sympathetic.
I refer to service personnel who contribute to a superannuation fund. I have a case where a soldier has served ten years, and at the end of that ten years died while in the service. His disability was not considered attributable to war service, with the result that no pension was indicated. The superannuation was paid back to the widow in a lump sum. The income tax branch has classified that as income for the current year, and has levied a tax of about $600 against this refund of superannuation payments.
I think the Department of National Defence is at fault in failing to make some provision in their superannuation fund regulations for a case of this kind, and it is
[Mr. GUlls.l
also at fault for not having some understanding in the matter with the Department of Finance. It is all very well to talk about it, but the consequences are most unfortunate to those who are affected. I have in mind a widow with three children. She did not receive a pension, despite the fact that her husband had served. She is too young for the war veterans allowance for widows. I think it is pretty rank treatment when we find the income tax branch taking $600 of the superannuation payments.
This is not new. I have been talking about it for two years. The Minister of National Defence knows the whole story. I am wondering whether something could not be done to correct this situation. Young men are being urged to join the services as a career. Then, despite that, we set up roadblocks of this kind, thus preventing many young men from finding their careers in the services. I would ask the parliamentary assistant to consider this matter, and see what can be done about it.


Mr. Barnett:: Mr. Chairman, I have been following with interest the discussion as to what might be done in connection with deductions for medical expenses and hospital bills. There are one or two other matters I would like to discuss.
I was pleased some time ago to hear the hon. member for Kootenay West discuss the problem of the expenses in which working people are involved in connection with travelling to and from their occupations. As a citizen I have never had any objection to the payment of taxes, provided I felt I was receiving value for that portion of my earnings spent in that direction. At the same time, both as a citizen and now as a member of the House of Commons, I think one should be concerned to see that taxes levied shall fall equitably upon all sections of the population who are called upon to pay them. This is particularly so in the case of the income tax.
I have been concerned by the fact that large sections of the working population in British Columbia must travel long distances to and from their jobs. The necessity of having to move those long distances to their homes does result in a heavy burden, so far as many workers in that province are concerned. And it is a burden for which they receive no consideration in the income tax deductions.
I should like to pursue this matter for a few moments and, as it is now six o'clock, perhaps I might be permitted to do so after recess.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Thomas Speakman Barnett: There are many things which one might mention in dealing with this resolution on the Income Tax Act and the legislation which it proposes to introduce. I suppose one could deal with the fact that the income tax policies of this government seem to be overwhelmingly weighted in favour of the coupon clippers of Canada. I do not intend to go into that because these matters have been covered by other speakers from this group during the course of the budget debate, and in any event I suppose they are matters of high government policy about which we cannot expect the government to do very much at this time. As I indicated when I rose before the dinner recess, I do intend to attempt to deal with some of the more elementary matters of justice and injustice in the application of the Income Tax Act as it affects the people of Canada.
As I said previously, as a citizen of Canada I have never felt that one should object to the paying of legitimate taxes, and by and large that goes for the great majority of the people of Canada. But it is in those instances where people feel that there is some injustice in the way in which the Income Tax Act applies to them that they are apt to be most concerned. I suggest that one of the instances where an injustice does exist is in the case of a great many of the workers of Canada who have to spend a good portion of their yearly income in travelling to and from the job which they are required to do. I intend to use as an illustration of this situation the manner in which the present working of the Income Tax Act applies to the loggers in the coastal area of British Columbia, because I feel that the situation in which they find themselves does offer a very clear-cut illustration of where an injustice exists.
Many of the loggers of British Columbia who have their homes in cities such as Vancouver and other places are required in the course of their normal employment to travel distances up to several hundred miles in some instances to the remoter logging camps. They have to pay their board and lodging in the logging camps and also to maintain a home where their family is. But in addition to this, they have to pay fares to and from their employment ranging from $30, $40 to $50 in each direction. This is not something which they have to do only once a year; it is something they have to do each time that the camp opens up and closes down. When the camp closes because of snow in the winter the cookhouses and the bunkhouses are closed down and those workers have no alternative but to return to their homes. When
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they open up in the spring and the loggers go back to work they find themselves confronted with a situation where the camps are closed down because of fire hazards, and once again they have the expensive trip back to the city, and then in the fall when the camps reopen they again have to pay that fare.
Probably those people would grumble about having to pay taxes in any event, but they can clearly see that in many instances they are paying quite large sums for travelling expenses which people in other categories do not have to pay. They realize perfectly well that when any of the executives of those logging corporations travel to and from those camps they travel on company expense accounts, and those expense accounts are deductible as part of the expense of the operation of that company; whereas in their case they have to dig out that amount from their own pockets, and when they make up their income tax return at the end of the year no consideration whatever is given to that as an allowable deduction.
Hon. members may or may not be aware of the fact that the loggers union over a number of years has been attempting to secure as part of their agreement with the companies the concession that these fares to the remote logging camps should be paid. They realize perfectly well that if that arrangement could be written into their collective agreement the cost of those fares would then become part of the operating expenses of those logging companies and would be deductible for income tax purposes. Therefore, on the one hand they feel that the companies should pay those fares, and certainly on the other they cannot see any justice in the situation where, as long as they have to pay them themselves, the fares are not deductible for income tax purposes.
As a matter of fact, under the pressure of some shortage of skilled logging labour during the war years there was introduced what is known in the coastal area as the Queen Charlotte islands differential, which meant that the loggers were reimbursed in part at least for the fare to the more distant logging camps. They realize full well again that the amounts which the companies were paying under those conditions were considered to be part of the operating expenses of the companies for income tax purposes. Therefore, Mr. Chairman, here is a clear-cut instance of what is sauce for the goose should be sauce for the gander, and that as long as travelling expenses are allowable to corporations or to individuals in business, then they should be allowable when they are the necessary part of an individual worker's means of earning his livelihood.

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Some may be inclined to suggest that it is a good idea, but it is impracticable from an administrative point of view. I must confess I have heard that argument advanced, and I cannot see that that is any valid reason why this arrangement should not be made. It seems to me it would be a very simple requirement that the individual concerned would have to attach a receipt for his travel vouchers to his income tax return, and if necessary in addition the travel voucher could have to have the verification of the employer that in fact that expense had been incurred in the course of going to and from his employment. I cannot see how there could be any insurmountable difficulties in the way of putting such a provision into the Income Tax Act and the regulations.
There is another example I would like to give which I think is parallel, and I refer to the case where business firms can deduct certain things as expenses for income tax purposes, whereas the working people are not allowed to do that. I have in mind the case of the skilled workers, technicians, and tradesmen who, in order to carry on their employment, have to make very substantial investment in tools and equipment, and men such as loggers and miners who have to spend considerable amounts on clothing for heavy duty wear. In these cases we find a situation where these things are not deductible for income tax purposes and it is my belief that in such instances the act should be so drawn that it will apply right around the book and these men will be able to make deductions for such expenditures.
I notice in one of the forms put out by the Department of National Revenue, namely the Farmers' and Fishermen's Guide, 1953, there is a statement on page 3 to the effect that people who are covered by this guide are allowed to deduct certain things for income tax purposes. For example, on that page it states that small tools having a normal life of five years or less and costing not more than $50 may be claimed as expenses during the year. I cannot see why it is fair and just that certain people should be allowed to deduct such items when the ordinary tradesman who has to make an investment running into hundreds of dollars on articles which are subject to constant depreciation and replacement should not be allowed some reasonable deduction for income tax purposes.
While I am on my feet, Mr. Chairman, there is one other matter to which I would like to draw the attention of the committee. Some hon. members may recall that trade union dues are now deductible for income tax purposes. But there are certain funds which unions require from time to time

which are not deductible for income tax purposes. In certain instances the situation arises where the unions feel that they have to adopt some special means to protect themselves, and in the trade union movement we occasionally have such things as an assessment fund. In large measure these funds are collected by the union in an attempt to accumulate, if you like, a bit of a war chest. I would like to suggest, Mr. Chairman, that here is an instance where, due to the necessity of having to protect themselves from unscrupulous action on the part of the employers, the working people of this country have to accumulate funds which should be allowed to be deducted for income tax purposes.
As long as the employing interests in this country are able to deduct certain funds for income tax purposes which they apply for the very self-same purpose, then the working people of Canada should be able to do so too. Anyone who has had any experience with a strike realizes that strikes cost money to operate and I cannot see any reason why such deduction should not be allowed. For example, I have in my hand here a copy of the Gazette for Monday, March 15 and this issue contains an advertisement inserted by Noranda Mines Limited. Such things as that enter into the advertising expense accounts of corporations; and when unions find it necessary and desirable to levy an assessment of one dollar per month or something like that on their membership in order that the union may be in a position to protect itself I do not see why there should be any quibbling about allowing such amounts to be deducted under a trade union heading for income tax purposes.
Now, Mr. Chairman, if I may I would like to make a brief reference to the amendment introduced this afternoon by the Minister of Finance. I might say that as far as the immediate practical effect of that amendment is concerned-


William Moore Benidickson: I wonder if, as a matter of convenience to other hon. members of the house, it would not suit most hon. members if the discussion on the item my hon. friend has now mentioned could be allowed to stand over until we reach that particular paragraph.


Thomas Speakman Barnett: I would be quite prepared to defer my remarks in that connection until later if that is the general wish. I felt it might perhaps save time if I made just one speech covering all these items, but I will leave that matter until later. Meantime, Mr. Chairman, I hope that the parliamentary assistant will at least take under advisement

the various points I have raised which I feel are points which have a very practical bearing on the equitable application of the provisions of the Income Tax Act.


Mr. Pearkes:: Mr. Chairman, I would like to say just a word on a subject which was raised by the hon. member for Cape Breton South just before the dinner recess. When a serviceman dies the amount of contributions he has paid into the pension fund are returned to his non-pensionable widow and subjected to income tax deductions for that year, thereby placing a very considerable hardship upon that widow at a time when she finds circumstances very difficult.
I believe this to be an opportune time to give consideration to making that tax easier to bear by the widow by extending the period in which she might pay that income tax. Earlier in this session we passed an amendment which enabled the widow who is pensionable to have her succession duties extended over a much longer period. In fact, she was allowed to commute her pension so that the payments would be extended over a lifetime. It seems to me that this is a time to introduce some sort of similar concession to the non-pensionable widow because she is in a much more difficult situation than the pensionable widow. I would ask the parliamentary assistant to give that matter careful consideration and to see whether we could not bring in line with the concessions made to the pensionable widow the regulations which now govern the payment of income tax by the non-pensionable widow.


William Moore Benidickson: I assure the hon member for Esquimalt-Saanich and the hon. member for Cape Breton South that I will give this matter consideration.


Mr. Michener:: Mr. Chairman, this seems to be a suitable time to point out one of the shortcomings of the income tax resolutions or one of the omissions. I should like to do so by reference to item 5 of the resolution where a proper recognition is given to the desirability of saving money for one's days of retirement or for one's old age. The Income Tax Act provides-and it has done so for some time-that the contributions made by an employer and by his employees to an approved pension fund or superannuation fund are deductible for tax purposes. To my mind that is a proper provision in the act. In these days of high taxation everyone knows that it is not easy to make any saving for one's old age or to accumulate any reserve against the day when one will not be able to earn further.
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William Moore Benidickson: Mr. Chairman, I know that the hon. member this afternoon was attending the banking and commerce committee. But at that time there was in the house a general agreement that we would discuss in a general way, probably, what hon. members felt to be certain omissions in the resolution, but that we would come to a point where we would deal seriatim with the paragraphs in the resolution. I think the subject upon which my hon. friend intends to speak is one that he could well defer until we come to paragraph 5 of the resolution. I am sure that other hon. members also have a desire to say something about this matter.


Daniel Roland Michener: If that course is preferable, I have no objection at all. It is an omission not with regard to the substance of No. 5 but related to it, as the parliamentary assistant states.


William Moore Benidickson: In this instance we have in one of the paragraphs an item that is so closely connected with my hon. friend's feeling that I think it would be better and more orderly to have debate at that point when that paragraph is reached.


Daniel Roland Michener: I am quite content with that procedure.


William Alfred Robinson: Do I understand that the general discussion has been completed?


Ellen Louks Fairclough: No, Mr. Chairman. Now that we are getting so technical that we have to relate every subject to something that is in the resolution or we are asked to defer discussion until such time as it is reached, I think this is the place at which I should raise a matter which I have been considering for a long time and upon which I have felt strongly for a long time. It is one that has consistently escaped the notice, I might say, of the Minister of Finance and also that of the Minister of National Revenue. I refer to the taxation which is paid by individuals on owner-occupied premises in the municipalities. In my estimation, Mr. Chairman, the taxes which are paid by individual taxpayers within the municipalities on the premises which they themselves occupy should be deductible from taxable income for purposes of income tax. I should like to elucidate a little bit.
Those who are familiar with income tax realize full well that the only type of municipal taxation which is not deductible from income for purposes of income tax is the tax which is paid by the individual on the premises which he himself occupies. First of all, we should consider the case of the industrialist. On the premises which he occupies for business purposes he pays a tax or possibly two different types of taxes; he pays possibly

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a real estate tax and a business occupancy tax. The business occupancy tax, of course, varies according to the various provinces in Canada. He may pay one or two types of tax on those premises. Sometimes he pays both. But those taxes are deductible from the revenue of his business for purposes of assessing the income tax which he as an individual or which the corporation which he represents shall pay to this government.
There is also to be considered the case of the person who owns municipal property and who rents it to various tenants for various purposes. In turn he may deduct from the revenue which he receives from that property the taxes which he pays to a municipality. Whether those taxes be for purposes of school rates or ordinary services, or even if they are for local improvements, he can deduct those taxes from the revenue which he receives from the property before calculating his revenue for tax purposes.
Then let us take the case of the farmer. The farmer is permitted to deduct from the revenue he receives from his farm the amount he pays to his municipality for municipal taxes. But the man who lives in his own home, who has made an investment in his own property and who occupies that property and rents no portion of it to anyone, is debarred from any exemption whatever from his income for income tax purposes.
Mr. Chairman, this is not a matter which I have approached lightly. It is something that I have thought about for a great many years. The more I think about it, the more am I convinced that the man who occupies his own premises-premises which he owns himself and in which he has invested a sizeable sum of money-definitely gets the short end of the stick. It is my opinion that the income tax department could probably do more than could any other department of government to encourage home ownership. It could certainly remove a terrific burden from the shoulders of the owner of small premises, the wage earners within our country, if it would permit such wage earners or owners of any property whatever to deduct from their incomes for income tax purposes the taxes which they pay upon the premises they occupy.
In making this proposal I realize that I have embarked upon a controversial subject. I know of its many ramifications. I know that a small businessman who runs a little store and who lives upstairs over that store in an apartment is not permitted to deduct the portion of taxes which apply to the premises which he personally occupies, but he can deduct those which apply to the portion of

the premises which he occupies solely for business purposes. I maintain, Mr. Chairman, that this is an oversight on the part of the department. No doubt they have thought of it. I am sure that they have had consultations on the subject. However, for some inexplicable reason they have consistently turned it down. Hence I am prompted to raise the matter at this stage on the resolution in connection with the Income Tax Act and to suggest that the department should take the matter seriously under consideration and should at the first available opportunity bring down an amendment to the act which would permit the deduction from income for tax purposes of those real estate taxes which are paid on owner-occupied premises.


William Moore Benidickson: I think probably at this point I should say something in answer to the hon. member for Hamilton West. Actually I know of no capital ownership by anybody that is as free from taxation as is the ownership of one's private residence. A tenant of course pays his rent out of income after paying his taxes, but in the case of one who lives in a house of his own ownership there is no assessment under income tax for the value of living in that house. I am informed that in the case of Great Britain they do assess a certain value, from the point of view of income taxation, for the fact that the person is living in a capital asset of his own ownership.


Ellen Louks Fairclough: True enough, that is the case in Great Britain, but I do not think you can take a specific item from any country's income tax regulations and apply it to ours without examining the ramifications of the whole act. It is true that the tenant pays his rent, but just let us ask ourselves what his rent would be if the landlord were not permitted to deduct the taxes he pays from his revenue.


William Moore Benidickson: In that case it is a business. The landlord is in business, and he pays tax because he has an income from a premises other than those in which he lives. Like any other businessman he can deduct the expenses that are incurred before he earns that income.


Ellen Louks Fairclough: Very true, but if he were not permitted to deduct the real estate taxes he pays do you mean to tell me that the tenant would pay exactly the same rent? Certainly not. If the landlord had to pay another $500 the tenant in turn would pay another $40 a month rent. There is no doubt about that.


William Alfred Robinson: Do I now understand that the general discussion is through?


Walter Gilbert Dinsdale: I want to present a problem to the parliamentary assistant to the Minister of Finance mainly for the purpose of clarification. There is a section in the Income Tax Act which allows a special exemption up to $500 in the case of persons physically handicapped. I believe it is possible to deduct expenses arising from the handicap up to a limit of $500. A case has come to my attention in which the exemption was granted in 1951 and was denied in 1952. There was no explanation as to why it was disallowed in 1952. I should like to ask the parliamentary assistant whether there has been an amendment to the act which has changed the circumstances surrounding this special exemption.
The particular case I have in mind is that of a young woman who works as a stenographer. She is physically handicapped to such an extent that she uses crutches. She is crippled in both limbs and as a result has to incur special expenses in getting to and from work because of the necessity of hiring taxis. It is not possible for her to use public transportation facilities. We have been emphasizing in the house in recent months the need for successful rehabilitation of the physically handicapped. This being so, it would be my impression that every effort would be extended under the special provision in the Income Tax Act to take care of this difficulty in order to assist this person, and others like her, to make her living, even though under difficult circumstances.


William Alfred Robinson: Has the general discussion now been completed? The hon. member for Calgary South on paragraph 1.


Carl Olof Nickle: Having listened with a great deal of interest to the discussion of the omissions from the proposed amendments to the Income Tax Act, I should like to deal briefly now with the first four amendments proposed by the government and then follow with two or three points dealing with omissions because of government policy in so far as they affect these first four items.
The first four items of the proposed amendments to the Income Tax Act are designed to maintain a stimulus to development of Canada's mineral resources, particularly petroleum and natural gas, gold, base metals and other industrial minerals. The first three amendments simply extend for one additional year, the calendar year 1957, policies which are already in effect, and no change of course is involved. The fourth amendment, that covering deep-test wells, involves a one-year extension covering the 83276-307J
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calendar year 1955 but with one important restriction to the scope of its application.
In his budget address the Minister of Finance stated, as found at page 3733 of Hansard:
The incentive legislation for the oil, gas and mining industries will be extended for a further year. In the case of deep-test wells, however, this special concession will in future be restricted to more complicated structures such as occur in the foothills.
With the extension of this legislation the Conservative group in the house has no quarrel. In fact we believe that the real question is: Is mere extension of the prevailing policy enough? We strongly endorse the position of adequate incentives to ensure large-scale development of Canada's subsurface mineral resources in order that the nation's economy may be further strengthened, that production may be expanded for both peacetime and emergency needs, that new industries, both primary and secondary, and many thousands of new jobs may be created in Canada and, finally, that the feedbag of income from which governments in Canada secure their sustenance may be progressively enlarged.
Taxation policies of government must do more than simply gouge out from the always unwilling and unhappy taxpayer enough income to meet the apparent needs of government. They must also look ahead to the tax needs of the future by leaving the taxpayer enough incentive to continue working towards enlarged income and expanded production. They must also recognize the nature of problems peculiar to individual kinds of enterprises and take those special problems into account.
Among the industries with special problems peculiar to themselves are of course the metalliferous, industrial mineral and petroleum and natural gas industries. Each mine or well draws upon a strictly limited quantity or volume of solid, liquid or gaseous mineral. The owner of each mine or well literally produces himself out of business as he draws on his patch of subsurface resources or else he keeps himself in business, and thus continues to be an employer, producer and taxpayer, by continuously exploring for new source-beds of minerals into which he can tap with new mines and wells.
The fact that a mine or well is a depleting asset is recognized in Canada and in practically all other nations which have income taxes by provision of depletion allowances providing for some portion of income of a mine or well to be exempt from taxation. I will deal further with depletion allowances

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after examining the four income tax amendments now before us which relate to minerals. The first amendment provides:
That the exemption of income from metalliferous or industrial mineral mines for the first three years of production be extended to mines coming into production during the calendar year 1957.
This, Mr. Chairman, is an indirect subsidy incentive designed to accelerate the opening up of new mines in Canada.
Item 5 amends section 83 of the provisions of the present Income Tax Act under which mines coming into commercial production prior to the end of the 1956 calendar year are exempted from tax for the first 36 months of that production. It applies to all metalliferous and to most industrial and mineral mines. It does not apply either to petroleum or natural gas wells. The stimulating effect of this tax concession subsidy has already been evidenced by the opening of many new mines across Canada. Without such freedom from taxation during initial difficult years, against the background of high costs and initial low income, it is extremely doubtful that Canada would be experiencing the mining booms of Bathurst, Ungava, Mani-touwadge, Sudbury, Lynn Lake and others now under way across the nation.
I might say, sir, the immediate net cost to Canada's treasury for the loss of corporate tax revenue from new mines is largely offset by the increased personal income and other tax revenue that would not exist without the new mining development spurred by the tax concession. In balance over the long-term, the nation and its tax collector will gain heavily from the new industry, production, jobs and revenue created.
I will skip now, sir, to the fourth amendment because it is in the same category as the first, that is, it is an indirect subsidy incentive. This one provides, and I quote:
That the special deduction from income and taxes allowed to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum and to taxpayers whose principal business is mining or exploring for minerals, for expenses incurred in respect of deep-test oil wells be allowed for expenses incurred in respect of deep-test oil wells spudded in during 1955.
This extends, sir, by one calendar year, 1955, the provisions in 5 (a) of section 53 of chapter 25 of the statutes of 1949, as amended. I might say that I have been having a good deal of fun going through the various sections of the statutes on income tax law and the regulations dealing with this particular industry. I find items in a great many different places. Now, this particular amendment permits deduction from income -I should say deduction from income tax payable-of 35 per cent of the drilling costs
[Mr. Nickle.l
of exploratory wells that have been qualified in advance by the government as deep-test wells. The tax concession applies only if the wells are failures, that is dry holes.
In effect, the government pays indirectly through a reduction in tax received for 35 per cent of the deep-test dry hole drilling costs. The oil or mining company pays the other 65 per cent of drilling costs plus 100 per cent of the geological and geophysical exploration costs, which in some cases will amount to more than the drilling costs of the deep-test well. If the deep-test well finds oil or gas, that is a discovery, the tax concession does not apply. This concession was designed specifically to encourage the drilling of test wells at least 7,000 feet deep and costing at least $150,000, in areas where the dominion geological survey and Dr. George S. Hume, director general of scientific services, believe significant and valuable geological data can be gained.
I perhaps should point out that, in the act itself, no reference is made to the geological survey by Dr. Hume. To qualify as a deep test requires an actual order in council issued following a recommendation from the Minister of Mines and Technical Surveys. I mention the geological survey and Dr. Hume, sir, to ensure that the committee may not be under the misapprehension that before approving a deep-test purely scientific knowledge is not applied by the government department in passing on this particular feature.
Now, sir, only a very small fraction of exploratory wells have been qualified for this deep-test concession. From now on the percentage will likely be no more than one per cent of all wildcat or exploratory wells because of the limiting of the plan to the complicated deep structures such as those in the Alberta foothills. In 1951 there were only four wildcat wells qualified as deep-test. Of those, two were discoveries of oil or gas and thus lost the concession in taxes but opened up important new revenue sources for the government and for the companies which drilled them. In 1952 seven wells were qualified as deep-tests. Of those, six wells were dry and the government lost in taxes 35 per cent of their drilling costs. The seventh well was a discovery, so no concession was given. In 1953, twelve wells were qualified, and of those three were discoveries. So far in 1954, sixteen wells have been qualified as deep-tests, and the results of course will be determined in the months ahead.
During the three and one-third years covered by this deep-test concession a total of 39 wells have been qualified. During the same period some 3.000 exploratory wells

have been drilled or are now under way. This does not include an even larger number of development wells, in areas where oil or gas has been discovered. Thus the deep-test concession has applied only to about one and one-third per cent of exploratory wells.
It can be correctly concluded that the subsidy cost of the deep-test concession to the Canadian treasury has been less than one-half of one per cent of the total sums spent in the past three and a third years by the oil industry on exploration in Canada. Because the concession has ensured drilling of certain exploratory wells valuable to Canada that would not otherwise have been drilled, the deep-test provision has been, and is, important. However, the small cost in lost taxes should be viewed against a background of valuable geological information, discovery, personal income and other tax revenue deriving from drilling of the deep-tests, and of course against a background, too, of the tremendous exploration program in which the deep-test provision plays no part.
I come back now to the second and third amendments to the Income Tax Act affecting the mining and oil industry. One of these provides that:
That the special deduction from income allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of exploring or drilling for oil or natural gas in Canada, be allowed for expenses incurred in the calendar year 1957, and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring for minerals, for expenses of exploring or drilling for oil or natural gas in Canada incurred in the calendar year 1957.
Paragraph No. 3 is almost the same, with the exception that it relates to the expenses incurred in searching for minerals in Canada, undertaken by both mining and oil companies.
Now, these, sir, are the most misunderstood by the Canadian public and by many members in this parliament, including some members of the cabinet, of the incentive provisions of the Income Tax Act. These two amendments simply extend by one year, the calendar year 1957, the provisions of section 53 (1A) of chapter 25 of the statutes of 1949 as amended, under which mining and oil companies are permitted to deduct from income before taxes the costs of exploration and development of oil, gas, and minerals. Under these provisions a mining or oil company expenses of exploration and development costs are charged off against income, if it has enough income, or are set up as a charge against hoped-for future income now or has income smaller than the expenses for exploration and development.
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As many who have invested or gambled money in oil or mining companies know, there is no guarantee that sufficient income to recover exploration and development costs will ever be obtained, for exploration risks are high, and there are even numerous cases where companies have spent all their capital on exploration without success, and have folded up without ever enjoying production income. In these cases, of course, the provision permitting expensing of exploration or development costs has only a paper value.
By no stretch of the imagination is the right to expense exploration and development costs a subsidy or a tax concession, in the sense that the three-year freedom from taxes of new metal and industrial mineral mines and the deep-test well concessions are subsidies.
I regard, and I believe the government and public should also regard, the expensing of exploration and development costs in exactly the same way we all regard the normal operating expenses of normal businesses.
Costs of exploring for and developing mines and wells are just as much a necessary, normal operating expense of an oil or mining company, if it wants to stay in business, as are the costs of advertising to a merchant, the costs of a plant to a manufacturer, the costs of seeding and harvesting to a farmer, and all the other costs which must be taken into account by anyone in any kind of business if he hopes to make a success of it.
I recall that last summer a member of the cabinet of this government spoke in Alberta and was quoted by the press as stating that "the Liberal government of Canada has contributed half the cost of oil and gas exploration and development in the west" in its great desire to assist in getting a maximum development. This was presumably a reference to the so-called tax concessions or incentive legislation whose extension we are now considering.
Without in any way disparaging the legislation, the government which put it into effect, or the minister who made the statement-I must point out that his comment in Alberta indicated an all-too-widely accepted misconception of what this legislation is and does, and to what extent legislation of other nations-particularly the United States-affects exploration and development spendings in Canada.
The first question that arises is this: Are exploration and development costs a normal operating expense which properly should be chargeable against any income before making a split of the net income between the federal tax collector and the company that spent the money to create the income?

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If such expenditures are not normal operating expense, then it might be correct to say that the government indirectly contributes half of these costs by permitting their deduction from income under this incentive legislation, in the light of prevailing rates of corporate taxation.
If the expenditures are normal operating expense, then it would be just as correct to say that the Canadian government pays half the cost of a merchant's advertising bill because it permits the deduction of such normal business costs from that merchant's income, before taxes are calculated and collected.
The second question that arises is this: Do other nations, particularly the United States, from which country comes over half of the moneys for minerals exploration and development in Canada, contribute to Canadian development in the same general manner as does the Canadian government? The answer is Yes. The United States for many years has encouraged American companies to risk their capital in natural resources exploration and development in other nations, by permitting deduction of these costs from American income before calculation of American taxes. This policy has brought hundreds of millions of United States dollars to Canada in the past eight years.
If we were to concede that the special deductions from income of exploration and development costs are in the nature of a handout from the government-something which I do not concede-then only one logical conclusion could be made: the taxpayers of the United States are contributing a big slice of the funds for Canadian resources development.
Actually, in so far as deduction of exploration and development costs from taxable income is concerned, I do not believe that the taxpayers of either Canada or the United States are paying a single dollar. What the governments are doing is recognizing that exploration and development are normal expenses undertaken by the companies concerned in an effort to find and develop new revenue, in which the government will share as soon as costs have been recovered.
Of course there is no assurance that exploration spendings will bring discoveries and profit-making production. If they do not, the losers are the companies who have footed the bill. Many of the companies, both domestic and foreign, carrying out Canadian exploration, have yet to make discoveries adequate to pull them out of the red. Many others have made discoveries that will assure an ultimate profit, both for
[Mr. Nickle.l
themselves and government. Many, many more discoveries will undoubtedly be made in Canada if the economic climate is favourable.
In fact, the Canadian government has already been assured by discoveries to date of many hundreds of millions of dollars of additional tax revenue in years ahead, as oil, gas, metal and industrial mineral discoveries of recent years advance from the return of capital stage to the stage of paying profits. The Canadian government will draw the same share of those profits, whether the discovering and producing companies are Canadian or foreign.
Since American companies play such a major role in Canadian resources development it might be well to look briefly at how United States and Canadian tax policies function in relation to them. Some operate here as a division of the American parent; others operate through Canadian subsidiary companies.
An American company doing business in Canada may include its Canadian exploration and development expenditures in its parent company's consolidated United States tax returns, deducting these expenditures from this United States income. When and if it develops Canadian income that income will also go into its consolidated tax returns. For Canadian tax purposes the expenditures may be carried forward and charged off against future income in Canada, when and if it is obtained. In order to invoice international double taxation in profit years, tax payments made in Canada may be used as a credit against the United States tax liability.
In effect United States income foots the bills for United States companies' explorations and pays any losses if adequate Canadian income is not obtained. If sufficient Canadian income to leave a profit after recovery of exploration costs is obtained, the profit is shared with the Canadian government.
The second method of operation of United States companies in Canada is through Canadian incorporations as subsidiaries to the parent. In the case of Canadian subsidiary companies, of course, they pay taxes in Canada, after the write-off of prior years' expenditures, the same as for an American subsidiary. The United States taxes at current rates would be paid on dividends transferred to the American parent company.
Sir, I now come to some suggested recommendations which I feel the minister and his aides might well take under consideration in trying to arrive at perhaps an even better program, from the viewpoint of Canada, in

so far as the income tax program is concerned, in stimulating or accelerating the development of resources in Canada.
My first recommendation is this: That the provisions under section 53 of chapter 25 of the statutes of 1949 as amended, for the charging off as expense of exploration and development costs associated with oil, gas and minerals search in Canada, should be incorporated in the Income Tax Act on a permanent basis; in contrast with the present practice of dealing with these annually as a special tax concession subject to extension each year.
In contrast with the present practice of dealing with this annually as a special tax concession subject to extension each year, this recommendation refers specifically to paragraphs 2 and 3 of the resolution to amend the Income Tax Act because the special deductions they refer to are designed simply to recover from income the actual costs of exploration and development which are simply normal operating expenses of the oil and mining industries, and they are not a subsidy. This recommendation specifically excludes paragraphs 1 and 4 of the resolution to amend the Income Tax Act on the grounds that these items are in the nature of incentive subsidies.
The first paragraph exempts from taxation the first three years' income from new metalliferous or industrial mineral mines. The other provides for deduction from taxes of 35 per cent of drilling costs of certain deep-test wells drilled in search of oil and gas but which fail to get production. This special concession applies to only about 1 per cent of exploratory wells.
Quite properly, sir, incentive subsidies should be subject to annual review and annual extension, revision or cancellation, dependent upon conditions prevailing at the time of review. I might add, sir, that depletion allowance changes, which I shall suggest in a few moments, could do much to reduce or eliminate the need of these incentive subsidies set up in items 1 and 4 of this Income Tax Act amendment.
The second recommendation is that the definition of exploration costs for oil and gas should be broadened to include all, instead of just part, of the costs incurred in land acquisition. This is the standard practice under the United States tax laws and its adoption in Canada would give Canadian companies closer to an even break with United States firms in the competition for rights to explore potential oil and gas lands in Canada.
Canada has already accepted in part the principle that cash paid for the acquisition
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of the rights to enter upon lands for the purpose of exploration spendings and drilling are necessary and thus properly deductible in the same manner as drilling and exploration costs. Section 53 (3A) of chapter 25 of the statutes of 1949 as amended provides for deductions of amounts paid to the federal or provincial governments in the acquisition of a legal lease of oil and gas rights, provided the lease is surrendered without production being obtained.
The same principle, I submit, should apply with equal force and similar deductions should be allowed for bonus payments for the rights to do the same exploring and drilling granted under freehold leases and government permits, licences and reservations, items which in total represent many millions of dollars of costs which cannot now be deducted as an expense.
The final recommendation, sir, is this: Depletion allowances, as provided for in part 12 of the income tax regulations, should be revised, particularly in regard to oil and gas wells, to provide for their full application to gross income rather than net. This recommendation is based on two facts: The first fact is that the present depletion allowance policy in Canada encourages Canadian companies to rest on their laurels, drawing production from current wells, and cutting down on exploration; for the depletion allowance is only effective when a profit position has been reached and all exploration and development costs have been recovered.
The second fact is that the present Canadian depletion policy gives the United States company a competitive advantage over the Canadian firm in Canada, because the United States tax law permits deduction of depletion from gross income, prior to recovery of exploration and development costs.
Depletion allowances, basically, are recognition that a well or mine is a wasting asset, strictly limited as to the ultimate production it can yield. To stay permanently in business the owner must continuously explore to replace with new wells or mines the reserves that are produced. In principle, depletion allowances provide natural resources production industries with a lower rate of taxation than applies to industries which do not have the same problem of replacing by exploration the basic products they process. I might say, sir, that depletion does not apply of course to the normal business phases of such an industry as oil; in other words, profits from refining and marketing are taxed at the full corporate tax rate without benefit of depreciation allowance.
Under present Canadian policy the operators of oil and gas wells are permitted a

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depletion allowance deduction of 33J per cent of the net profits until all the costs of exploration and development have been recovered. In recent years the oil and gas industry has poured into exploration and development many hundreds of millions of dollars in excess of production income. I believe that since the Leduc discovery in 1947 the total expenses in exploration and development have been over $1| billion in western Canada. The gross value of production before any deduction of costs has been just over $600 million. In other words, to date less than half the total expenses have been recovered. One result is that only about one-tenth of the companies who are actively exploring and producing in Canada are in the position of having net production income against which to apply depletion allowance. The actual depletion allowance benefit to active exploration companies therefore has only amounted to a fraction of 1 per cent of the spendings designed to replace and increase proved reserves of oil and gas. The purpose of the depletion allowance provisions therefore has been largely defeated.
Under present regulations a company could discover an oil or gas pool and if it were carrying on an active exploration program could produce all the oil or gas therefrom and receive very little, if any, depletion allowance. On the other hand, if the company reduced or halted exploration it could derive a very substantial depletion allowance and ultimate profit from the operation of the pool. As the regulations now apply, there is a penalty imposed on the company willing to continue large-scale exploration and that, sir, is an undesirable state in a nation like Canada where our national future depends in no small measure upon the continued risking of large amounts of capital on natural resource exploration and development.
The odds against discovery, in other words, the tremendous risk factor, must be kept in mind when considering depletion allowances as related to the oil and gas industry. To the investor and speculator considering putting his cash into oil the obvious attraction must be that there will be at least as much money left after taxes as would otherwise be available in less hazardous enterprises. With that incentive larger sums of money will be available from Canadian sources and the search to provide oil and gas requirements of the nation will be expanded.
In contrast to the very limited application of depletion provisions to the companies who pay the cost of Canadian exploration and development, we have a depletion allowance of 25 per cent of gross income extended to recipients of gross royalties and similar 
interests in oil and gas wells; in other words, the groups who do not pay the costs of exploration and development.
I would strongly urge that the government amend its current regulations to provide that the depletion allowance of 25 per cent of gross income be extended to those who provide the costs of exploration and development in place of the current allowance of 33J per cent of any ultimate net profits.
Such a step would go a long way towards providing the continuing incentive for Canadian capital to maintain a large-scale exploration program in Canada and would in addition put the Canadian in a nearer-to-equal position with his friendly and essential competitor, the American, in the drive to develop to the full Canadian resources.
I may say, sir, that United States companies have a choice when it comes to depletion in oil and gas wells. That choice is between the greater of two calculations: (1) percentage depletion 27i per cent of gross income not to exceed 50 per cent of net income. You will notice, sir, that this division in the United States is substantially greater than the present division under the Canadian act, and also greater in terms of gross income depletion than the proposal I have made.
The second point in the United States is cost depletion method which means a recovery of acquisition costs such as bonuses, et cetera, for the year on a unit of production basis. I do not understand that program myself so I will not attempt to interpret cost depletion.
I believe the existing regulations and policies in regard to encouraging the development of Canada's industrial mineral and metalliferous resources are adequate to accomplish the nationally desirable objective.
So far as oil and gas resources are concerned, government policy has undergone a considerable change for the better in recent years as the government's knowledge of the potentialities and problems of this comparatively new oil and gas industry increase. But present policies and regulations cannot yet be considered to have reached the final form in which they could achieve the maximum benefit for Canada.
I trust the government will give further serious consideration to the amendments I have suggested, preferably now before the legislation is passed or, if not now, at least long before the house again considers these matters a year hence.
In conclusion, sir, may I say briefly that there are four groups in Canada which may be said to be concerned with her natural resources development.

The first group comprises those who pay the shot for exploration and development, the oil and mining companies and those who invest their cash in them.
The second group consists of those who own the mineral rights, mainly the provincial and federal governments so far as the territories are concerned, plus a minority of rights owned by private companies and individuals.
The third group is the federal government which, on behalf of all Canadians, collects a share on the profits of all resource production in Canada, plus a goodly share of the moneys spent on exploration and development.
The fourth group, sir, is the Canadian people themselves who, as workers in the resources industry or in industries which are built up around resources development, and as citizens of a nation to whom the supply of oil and gas and other resources plays a vital part in their future development.
Now, under our existing mineral rights policies and tax policies in Canada, at least so far as oil and gas are concerned, we can reach one conclusion as far as the benefits are concerned. These benefits are spread between the groups I have mentioned and we can say this, that the ultimate net profit so far as oil and gas are concerned under existing regulations, the net profit of which will be realized by the companies who risk all the capital for exploration and development, will be about equal to the ultimate tax take by the federal government resulting from the capital spending and the production income.
This take or net profit to those who risk all the capital will also be about equal to the cash revenue derived by the government and private owners of mineral rights whose minerals are being appraised and developed by the members of the resource industries. Since those who risk all the capital wind up with a cash profit return of roughly equal to one-third of the total cash benefits to be derived in the development of these resources then I believe, sir, it behooves both the provincial governments and the mineral rights owners, as well as the federal government as the principal taxing authority, to do all in their power not to use the public's money for the development of these resources but to ensure that these private companies who actually finance and take the risks of resources development are given a fair deal in terms of tax policy.


Edward Turney Applewhaite: Is there any further discussion on paragraph 1?
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Some hon. Members:: Carried.


Edward Turney Applewhaite: Paragraph 2?


Some hon. Members:: Carried.


Edward Turney Applewhaite: Paragraph 3?


Some hon. Members:: Carried.


Edward Turney Applewhaite: Paragraph 4?


Some hon. Members:: Carried.


Donald Methuen Fleming: May I ask the parliamentary assistant if he is going to say anything in reply to the very able address we have just listened to from the hon. member for Calgary South?


William Moore Benidickson: Well, Mr. Chairman, as all hon. members of the house recognize, it certainly was a very interesting, thoughtful and informative address, and we all know that the hon. member speaks from a rather unique position when he is dealing with the petroleum industry because he has a very special interest in it these days.
I think my hon. friend pretty well summed up the intent and tenor of the resolution now before us. He pointed out to the house that the first three paragraphs are not new either in intent or content, and are merely an extension of existing practice. In so far as item 4 is concerned he urged that rather than being somewhat more restrictive, as the Minister of Finance announced he might be, we should continue past policies. Certainly the hon. member's remarks will be given the closest-


Carl Olof Nickle: Mr. Chairman, on a point of order. May I point out that I did not urge that the previous policy in regard to point 4 be continued. I supported the restriction that has been set up.


William Moore Benidickson: The hon. member, of course, very properly drew attention to the expansion of the number of deep-test wells which have been recognized in a progressive way from 1951 up to the present time, but generally speaking we are very conscious of the fact that the deduction in this case for deep-test wells is rather an unusual one, particularly in that it is not only the deduction of the expenses incurred in this drilling, but is the aggregate of the expenses incurred in drilling the test wells and a 35 per cent of cost deduction from the actual tax. The Minister of Finance announced in his budget speech that this has always been an order in council recommendation, and that there is a likelihood from now on that the territory which may be considered as justifying this form of tax consideration may be somewhat narrowed.

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Edward Turney Applewhaite: Shall we pass on to paragraph 5?


Daniel Roland Michener: Mr. Chairman, I hope the parliamentary assistant's suggestion that my proposition be deferred to this point indicates a willingness to consider a revision of paragraph 5. It seems to me there is an almost unanswerable case in this regard, and I shall be very interested to hear what reasons can be advanced against the extension of the principle of deducting pension payments from taxable income in the case of the selfemployed. The resolution provides for an increase in the deductions allowed to an employer or employee in respect of the amounts paid or contributed to or under an approved superannuation fund or plan.
My concern is with that great group in the community who are not now privileged to share in those deductions. As I began to say earlier, these deductions commend themselves to everyone as a means by which, in this era of high taxation, a person can lay up some part of his income in the form of a pension and can make some saving to provide for his retirement and old age. As I say, that principle commends itself to everyone because it is extremely difficult for anyone, after providing for the income tax that is at present payable, to save anything from his earnings. So much is that so that I believe that the normal self-employed person, unless he makes some capital appreciation which is not taxable, is unable in these days to build up any estate. I am not so much concerned about the problem of building up an estate as I am about the prospect which is open to employed persons but not to the self-employed, to acquire for themselves the equivalent of an estate in the form of a pension which is payable to them When they retire.
As matters now stand under the law, a man who is employed is not required to pay taxes on $900 of his income which he puts aside in the purchase of a superannuation pension. In fact, that amount can be increased, in the payment up of arrears, to $1,800 and his employer can make a like contribution. The employer's contribution is, in effect, part of the employee's salary; that is a fact which everyone recognizes, because the employer regards the employee as being worth not only his salary but the contribution which the employer makes. Hence today you have the possibility of normal savings of $1,800 of income, by putting it into a pension plan, on which no tax is levied.
That is the situation with regard to the employed. My question is this. Why is the self-employed person in any different position from that of the employed person? Who
[Mr. Benidickson.l
are the self-employed? My description of them may not be complete, but obviously they comprise a large section of the community. First you have the small businessman. No one will deny that the man who carries on business in an unincorporated way as an individual proprietor usually has a small business and has great difficulty not only in meeting his current expenses but in providing for his future. Then you have the fisherman who is working for himself and you have the farmer who is working on his own. Then you have the professions, that great group which comprises many of the members of the House of Commons and which includes doctors, dentists, lawyers, nurses and accountants. All those people normally work on their own account and have no employer from whom they receive a salary. In addition to them, you have artists. Then if you move on to the trades, you have people who work as plumbers, painters and artisans of one kind and another. A great many people in this country are not employed by anyone but rather exercise their right, their intelligence and their enterprise to provide for themselves in their own way.
Those people are not entitled to the benefits which accrue to the employed. Those people are not privileged to lay up $1,800 of their income each year, tax free, in the purchase of an annuity, a pension or other means of providing for themselves when the inevitable time of retirement comes along. It seems to me that that disability is one which should not be allowed to continue, Mr. Chairman.
I know that this point has been raised before in this chamber. I know that answers have been given to the effect that technically it is not easy to extend to those who are not on payrolls the right to save money in this way as can their associates who are employed. It seems to me that the technical difficulties are not hard to remove if the spirit to do so is present. By way of illustration I should like to put to the committee the simple case of two people, both working in the nursing profession, one employed by a hospital-say the Toronto Western hospital of which I happen to have some knowledge- which has an approved superannuation scheme. She can provide each year for her superannuation by a deduction from her salary, and a similar amount is contributed by the hospital.
In the next room to her may be working a nurse who is not employed by the hospital or is not on the staff, but who is employed by the patient in that particular room on a per diem fee. She has no such privilege

as that which is enjoyed by the other nurse. Yet they are both doing identical work. They both have to retire in due course. They are both entitled to save and to provide for their retirement by this method which has been so well recognized in the past for the employed. If there is any good reason for this disability-in fact I would use a stronger term than that; I say it is discrimination against the self-employed-to be continued, I shall be glad to hear what it is.
I know there are thousands of people in this country who would be extremely glad to be put in the same position as that of their fellow citizens whose only difference is that their income comes from a pay envelope instead of through their own earnings but who have exactly the same needs and pay exactly the same rate of taxation on their earnings. It seems to me that an approved annuity, which is payable as a retirement annuity, or an approved pension should be granted recognition. We have pensions purchasable from the federal government; we have retirement annuities supplied by the insurance companies. It seems to me that those provisions for one's retirement, which may not be anticipated, can in every sense be approved and be regarded as the equivalent to the approved pension plans. I therefore suggest that this matter be given immediate attention.


Donald Methuen Fleming: Mr. Chairman, resolution
No. 5 invites comment both for what it contains and for what it omits. It proposes:
That for the 1954 and subsequent taxation years the deduction allowed to an employer or employee in respect of amounts paid or contributed to or under an approved superannuation fund or plan shall be increased from $900 to $1,500.
That resolution, if approved, will involve amendment of two subsections of section 11 of the Income Tax Act. On the one hand it will permit an increase in the permissible deduction of the employer from $900 to $1,500 per annum in respect of any employee under such an approved superannuation or retirement scheme, and on the other hand it will permit, in the case of every employee under any such approved scheme, an increase in his permissible deduction from $900 to $1,500 without at the same time making any change in the right given to him under the section to deduct as well in respect of contributions to such a scheme for previous years' service.
First of all, as to what this resolution proposes, may I say this. It is evident that it involves a vertical extension of the provisions of section 11 of the act in this regard. What the reasons for this vertical extension are have not been indicated in any way to the committee as yet. We shall await with 83276-308i
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interest what the parliamentary assistant has to say about that matter. So far as at least some of us in this chamber are concerned, we have not heard any public demand for this vertical extension. It will be interesting to know from what quarter have come the requests for it.
In at least one newspaper I have seen an editorial suggesting that this extension was being introduced for the benefit of members of parliament. This seems to me, Mr. Chairman, about as far-fetched an observation as anyone could well imagine, and I think the parliamentary assistant owes it to the house to say something about this. I think the public ought to be made to realize that the maximum that a member of parliament can contribute in respect of current indemnity is $240 a year. He falls far short of the $900 deduction allowed to him under the law at present, so that he is not going to derive any benefit from the extension of this amount to $1,500. I mention that in passing because it seems that members of parliament are always fair game in these matters for anyone who feels a little jaundiced. But, sir, it will be interesting to know what is the genesis and origin of this particular vertical extension.
So much, sir, for what the resolution proposes. I have more to say about what the resolution fails to do that should have been done. There should have been an extension proposed in the resolution of a horizontal nature rather than a vertical one. This is not a new matter. It was discussed in the house on April 10, 1953, very fully. That was when the house was in committee of the whole on the bill to amend the Income Tax Act. At pages 3702 to 3708 of Hansard is contained what I think was a useful and comprehensive discussion of this question.
The Minister of Finance is not in the house at present. I know his parliamentary assistant will not misunderstand me when I say I wish the minister were here to add to what he said last year because, while he then put forward certain objections and indicated certain difficulties in the way, he did leave us with the impression that he was not dismissing the subject finally, that he was prepared to keep an open mind on it and would review the subject further. Many of us hoped that by this year he would have been ready to propose some remedial legislation. At page 3704 he summed up his view in this way;
I have not taken a final position but the difficulties, the inequities, still appal me.
The minister is not here to explain what his thinking on this subject has been since we discussed the matter thirteen months ago.
The principle is incontestable in this house that the Canadian people should be encouraged to provide for their old age. We do give

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recognition to that principle in various ways. The principle is recognized in the Income Tax Act in various respects. For the purpose of the present discussion, the principle is already extensively recognized in the subsections of section 11 of the act which I have mentioned. If these provisions in favour of employers and employees with respect to contributions to approved superannuation funds are allowed to stand and the principle upon which they stand is not to be further recognized then I must say that there is discrimination which must be subjected to close examination.
In the discussion a year ago the minister ventured to suggest that to extend the principle in the manner then proposed by some of us would in effect constitute a discrimination. I absolutely reject the minister's argument. The fact of the matter is that the principle is already recognized. The discrimination, if any exists, has been written into the act now, and the way to meet this situation is not to put an end to all remedial legislative efforts but rather to apply our best efforts to extend the principle and in that way abate any existing discrimination. The principle has been recognized and the statute in this respect is working quite satisfactorily.
So far as any of us have heard in discussion in the house, there has been no criticism of these provisions in section 11 of the act and there has been no complaint of difficulty on the part of the government in administering them. I do not doubt that in the ordinary course problems are presented in the process of administration but, Mr. Chairman, that is what we have administrative machinery for, and it is evident that this legislation has been operating satisfactorily. That cannot be gainsaid.
Those who are excluded, as has been said by my colleague, the hon. member for St. Paul's, are, broadly speaking, the self-employed. Those concerned can be grouped into many categories but generally speaking -and it is for such groups that it seems to me the principle should be extended-they are bona fide agricultural, labour, business, industrial or professional associations or similar organizations. In proposing the extension to bona fide organizations of that kind I am proposing, it seems to me, nothing that is open to attack in principle and nothing that will present administrative difficulty that cannot be readily overcome.
There have been many submissions made to the Minister of Finance on this subject. Probably the most notable was the one made a year ago. It was a joint submission put before him on behalf of the following organizations: the Associated Dentists' Co-operative, the Association of Professional Engineers
[Mr. Fleming.!
of the Province of Ontario, the Canadian Dental Association, the Canadian Institute of Chartered Accountants, the Canadian Medical Association, the Certified Public Accountants Association of Ontario, the Commercial Travellers Association of Canada, the Law Society of Upper Canada, the Royal Architectural Institute of Canada and the Toronto stock exchange. It was a very impressive brief that was submitted to the minister in the name of these organizations. The minister must have been impressed with that presentation.
Now, sir, there was some suggestion from the minister last year about administrative difficulties. I submit that there is no administrative difficulty offered in this respect that cannot be overcome in the same way that any administrative difficulties have been overcome in reference to the operation of the existing subsections (f) and (g) of section 11 of the act.
The minister promised to give consideration to this subject during the past year. He has made no reference to it whatever even in introducing his resolution for a vertical extension of the provisions of the present act in this regard. I am afraid that the minister, contemplating his retirement from the office which he now holds, has probably lacked the interest to press these matters to a conclusion. It is evident that in this and in other respects which have come under debate in the house during the past two days he is leaving many problems on the doorstep of his successor, whoever he may be.
There was one difficulty raised by the minister last year that I think warrants special mention. He suggested that what would be involved in the case of the selfemployed of the groups to whom I have alluded would be virtually a double deduction. He said in effect: Today we allow the employer a deduction of $900 from his taxable income and we allow the employee a deduction of $900 from his taxable income, so that there is a total deduction of $1,800 in the case of the contributions to a retirement allowance for any one employee. In the case of the self-employed, the minister contended that to put them on a similar footing we would have to allow a similar total deduction of $1,800, and in the case of the self-employed that would accrue entirely to the benefit of one person and not two as at present. My answer is that whatever limitations are necessary to assure equitable application can certainly be devised. That kind of objection is no excuse for doing nothing to meet a situation of this nature where a very serious discrimination now exists.

Looking abroad, sir, there has been since this matter was under discussion on April 10, 1953, one very notable development in the United Kingdom. It is the submission to the chancellor of the exchequer of what is known as the Millard Tucker report. This report was submitted recently to the chancellor of the exchequer by a royal commission which takes its name from the chairman, Mr. James Millard Tucker, K.C., J.P. The committee was appointed in August, 1950, by Sir Stafford Cripps when he was chancellor of the exchequer, and is composed of very eminent men. It has surveyed this whole question of the taxation treatment of superannuation and retirement provisions under the law of the United Kingdom. I am told that the same committee is now extending its investigations into other aspects of taxation law and administration.
This report deals specifically, among other subjects, with the subject of the tax position of the self-employed in relation to provisions being made by them in various forms for their maintenance on retirement. I do not propose to weary the committee by referring to the details of this report. It is a document embracing some 156 pages of very fine type, a report that has about it every mark of learning and of thorough investigation into this subject. The reference to the committee calls for investigation into this and a number of other related subjects. The committee has among its extensive recommendations included one in favour of a scheme for putting self-employed persons on a comparable basis in regard to taxation with employees who enjoy the benefits of a superannuation scheme provided by their employers.
There is a minority report submitted by two members of this committee, which makes certain observations upon the report of the majority, but as I read that it does not attack the basic recommendation to which I have just made reference. The committee covers this particular subject of the tax position of superannuation provision made by the selfemployed in chapter 6, and has embodied some 30 recommendations in detail dealing with almost every aspect of the subject and certainly providing every type of safeguard that is required to ensure equitable treatment of those in the self-employed field and to avoid any form of discrimination with respect to that class.
Now that report came only recently before the chancellor of the exchequer. When asked whether he would be prepared to introduce legislation to implement its recommendations at the present session of the parliament of the United Kingdom I am informed he said that the session was so far advanced he did
Income Tax Act .
not feel he had time to give this subject the study it required before introducing legislation based upon the recommendations of the Millard Tucker committee. But he did give assurance that before another session of the parliament of the United Kingdom was convened he would give to this subject and to the recommendations of the Millard Tucker committee exhaustive study and consideration.
Exhaustive study and consideration of this subject are long overdue in Canada. At a time when the government has seen fit to propose this vertical extension of the provisions of the present act, it seems to me the government has failed in its duty in coming before the house without any proposal for a horizontal extension of the same provisions. A horizontal extension is unquestionably much more urgently required in the interests of fair play, in the interests of the removal of existing discrimination, than is any vertical extension. The time to deal with a vertical extension, if there is a case for one, is after a horizontal extension has been written into the law of this land to remove the existing discrimination and to give fair play and justice to the self-employed in this country.


Stanley Howard Knowles: Before the parliamentary assistant replies to the statements that have been made by the hon. member for St. Paul's and the hon. member for Eglinton I should like to urge that he give the committee a clear statement as to why the changes set out in this part of the resolution are being made. Without necessarily agreeing to all the specific suggestions that have been made by the last two speakers, I certainly agree with the general statement that a horizontal extension is more important than a vertical one.
What does strike me about these figures is the practical result. It is now possible for an employee to get a deduction for $900 in the course of a year as a current payment into a superannuation fund. What employee can pay even that much into a pension fund? The payments that employees make into pension funds are at varying rates, but 6 per cent of one's salary is a fairly good rate, indeed, shall I say, a fairly high rate. This $900 is 6 per cent of a $15,000 annual salary. It does seem to me if provision has been made for a person on a salary as high as $15,000 a year to get income tax deductibility for 6 per cent of that, that is about as far as we need to go.
If this amount that can be deducted is to be raised to $1,500, that is 6 per cent of an annual salary of $25,000. It seems to me that the government is getting the cart before

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the horse in being concerned about people up in those brackets before it does something to encourage the broadening of pension plans to cover our people generally. One could look at a lot of different tables and get different results, but speaking very generally and bearing in mind the fact that these contributions are in turn usually matched by the employers, when you are talking about a $900 annual contribution from employees, that usually means a total of $1,800, $900 from the employee and $900 from the employer. Over 25 years that could buy a pension of between $4,000 and $5,000, depending upon when the contract starts and the age at which the person goes on pension.
The proposal to raise the amount that can be deducted to $1,500, according to this very rough calculation I have made, results in allowing income tax deductibility to people who are purchasing pensions of $8,000 or $9,000 a year. It does seem to me we should be concerned about broadening the base of the exemption and encouraging the development of plans that will help those who are now not covered at all before we should be concerned about income tax deductibility for the purchase of pensions of these high orders.
I stress the further point that when you raise the amount that you can deduct from $900 to $1,500, not only does that take you up into the higher income brackets before a pension of that kind can be afforded, but when you get up into those upper brackets it means that the income tax saving that arises from the greater deductibility is that much greater, because you are in the higher income tax brackets.
Perhaps the parliamentary assistant has an explanation for this. He may think it is a good one, and we will be glad to hear it as soon as he is given the opportunity to speak. But I do want to say that this is hardly the sort of thing the government should be bringing in, bearing in mind the fact that we are still waiting for the government to go ahead with the plan that it had before us a few years ago, which was to raise the amount that can be bought under a government annuity.
Mr. Chairman, I am not going to get out of order by discussing that question, but I do lay this before the committee as an example. There was an occasion when something was being done to make it possible for people who could buy annuities at $1,200 to have them increased to $2,400. That is down within reasonable brackets. But it was not carried out, for some reason which has not yet been made known to us. But here is

this move, which is a help to people in brackets which to most Canadians seems rather high and fanciful.
I think something should be done to encourage the establishment of the kind of pension plans that would enable employees to carry their pension rights with them when they move from one employment to another. And one of the ways that can be encouraged is through income tax provisions providing income tax deductibility where plans are funded, and employees are given the right to move about.
It is one of the things that happens with some pension plans, that sometimes employees seem to be frozen on the job because they cannot lose such pension rights as they have earned. It seems to me that that is the sort of problem, the need for broadening the base, to which the government should be directing its attention, instead of raising these figures to levels which produce the results I suggest they produce- and which, so far as I know, have not been requested. I hope the parliamentary assistant will explain why this resolution was brought in at all.


William Moore Benidickson: One of the questions raised and described by the hon. member for Eglinton was the reason for what he described as a vertical rise in the pension ceiling. This legislation I think was generally approved in 1946, when it was introduced. A ceiling of $900 was established at that time. I think hon. members will recognize that wages and salaries have increased between 1946 and the present time roughly in the proportion of the increase in the ceiling proposed here.
My hon. friend from Eglinton, too, was asking from what quarters the suggestion was made that brought about this legislation. I certainly want to assure him, as he said, that it did not come from members of parliament; because under their pension scheme this change in the act would be of no benefit. The hon. member himself outlined that our maximum contribution is in the nature of $240.


Donald Methuen Fleming: That is per annum.


William Moore Benidickson: Yes, per annum. The hon. member for St. Paul's of course was not with us in the last session, and I do not know whether he has read the very full statement that was given by the Minister of Finance at the last session explaining why he felt that this could not or should not be extended to the self-employed.

The hon. member for Eglinton emphasized, and I felt wrongly, the minister's explanation of last year, in that he suggests that he presented administrative difficulties as being the important difficulties in his rejection last year. Then and now, on this suggestion that the self-employed should have a provision in a horizontal way, similar to what is provided for employees, I suggest to the hon, member for Eglinton-


Donald Methuen Fleming: The minister did not confine his objection to the matter of administrative difficulty. He argued on the basis of discrimination and that is why I spent as much time as I did in my remarks in dealing with the subject of discrimination.


William Moore Benidickson: Certainly the preponderance of the minister's argument was on principle. I wish to assure my hon. friend that not only this year but last year the representations that came in from certain groups were very carefully considered. But I am quite satisfied that after a re-examination of the problem the minister came to the same conclusion that he did last year, which the hon. member for Eglinton quoted:
I have not taken a final position but the difficulties, the inequities, still appal me.
The hon. member referred to the report in the United Kingdom of a commission which was giving consideration to this problem. I believe the commission brought in a report about two months ago. Perhaps it was too early to have it considered by the chancellor in his budget, which was brought down the same night as our Canadian budget. I do wish to point out-


Edward Turney Applewhaite: Order. I am not calling the parliamentary assistant to order, but rather hon. members who are not maintaining order in the chamber.


William Moore Benidickson: I see it is about ten o'clock, Mr. Chairman. I was going to conclude by saying that there is a very striking difference in the take-home pay, shall we say, after taxes of the self-employed, in the United Kingdom, as compared with the same group in Canada. I have some figures here showing the tax of a married taxpayer with no dependents receiving an income of $10,000 a year. In Canada that person would be paying a tax of $1,660, plus $60 as the old age security tax. The same individual with
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that income in the United Kingdom would pay a tax of $4,086, plus a social security tax of $39. I think that is the distinguishing point between the situation in this country and that in the country from which this commission report has been received.
Resolution stands.
Progress reported.
Resolutions reported, read the second time and concurred in.


EXCISE TAX ACT
Walter Edward Harris: for leave to introduce Bill No. 447, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.


EXCISE ACT
Walter Edward Harris: for leave to introduce Bill No. 448, to amend the Excise Act.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE

Walter Edward Harris: Tomorrow we shall begin
with the resolution in the name of the Minister of Veterans Affairs, which I understand may not take too long. Then we shall have second reading of the bill with respect to the Canadian National Railways which, upon receiving second reading, will go to the committee. Then we shall take the Vocational Training Co-ordination Act in committee. I understand that since everyone supported it when it was in the house and in committee it should not take too long. We shall then take second reading of the bill to amend the Department of Transport Act; second reading of the bill respecting inventions by public servants, and the resolution with respect to crown corporations; second reading of the bill to amend the Radio Act and second reading of the bill to amend the Opium and Narcotic Drug Act.


Stanley Howard Knowles: And then go into supply?


[Stage Direction]
It being three minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, May 19, 1954