1954-04-28

Mr. Roch Pinard (Chambly-Rouville):: Mr. Speaker, I rise on a question of personal privilege which arises out of a newspaper report appearing in today's issue of the Montreal Gazette where I am quoted as having said this:
He said the government should stop considering Quebec "as the illegitimate child of confederation."
I never used those words. On the contrary, I believe that this government is considering the province of Quebec as one of its most glorious sons. Knowing well the concern that this paper has for accuracy and the consideration it always has for the government and its supporters, I thought it would be well to bring this matter to their attention.



QUESTIONS


Mr. Thatcher:: 1.	Since January 1, 1952, has the Canadian Broadcasting Corporation moved employees from other points in Canada to Ottawa?
2.	If so, how many and at what total cost?
3.	Are any offices or divisions formerly established in Montreal and Toronto, now established in Ottawa?
4.	If so, what offices or divisions and what was the purpose of moving same to Ottawa?


Mr. McCann:: 1.	Since January 1, 1952, 50 employees have been moved to Ottawa at a cost of removal expenses amounting to $37,459.96.
In addition to routine transfers to head office and to stations CBO-CBOT, certain senior officials and employees in the national offices of the program, engineering, personnel and administration, press and information, and station relations and broadcast regulations divisions previously located in Montreal and Toronto have been moved to Ottawa to provide closer co-ordination in the general management of the corporation.
2,	3, and 4. See answer to No. 1.


C.B.C.-SPACE OCCUPIED IN OTTAWA
Mr. Thatcher:: 1.	How many square feet of floor space does the Canadian Broadcasting Corporation or any division or subsidiary thereof occupy in Ottawa?
2.	Where is this space located?
3.	What is the total monthly or yearly rent for this space?


Mr. McCann:: 1.	46,744.
2.	Head office:	Victoria building, Holt-
Renfrew building, Bryson-Graham building, 17 O'Connor street.
Station CBO studios and offices: Chateau Laurier hotel.
3.	$108,197.50 yearly rental rate.



NATURALIZATION


Mr. Fulton:: 1.	In order to obtain his certificate of naturalization on March 1, 1945, did Sam Carr swear an oath or subscribe to a declaration of allegiance or make any other form of affirmation of loyalty to His Majesty and to Canada?
2.	Has his grant of naturalization ever been revoked on grounds that it was obtained by false representations or on any other grounds?
3.	Who was minister of the department in charge of naturalization at the time this certificate was granted?


Mr. Harris:: 1.	Yes.
2.	No.
3.	The late Hon. Norman McLarty.



FOREST INVENTORY, NOVA SCOTIA

Mr. MacEachen:: 1.	Has the federal government signed an agreement with the government of Nova Scotia for the completion of a forest inventory in Nova Scotia?
2.	If so, (a) to what extent does the federal government participate in the cost of same; (b) how much has been paid by the federal government to date, and when is it anticipated the inventory will be completed?


Mr. Lesage:: 1.	Yes.
2.	(a) Under the terms of a federal-provincial forestry agreement dated June 12, 1952, the federal government has undertaken to pay, for the duration of the agreement, one-half of the cost to the province of preparing and maintaining, in accordance with

Inquiries of the Ministry certain specifications, an inventory of the forest resources of Nova Scotia. The present agreement terminates on March 31, 1956, but is subject to renewal thereafter on terms and conditions then to be determined.
(b) Payment to date is $25,248.46; it is expected that the inventory will be completed in the fiscal year 1956-57.



HIGHWAY TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: Will the Minister of Transport give the house a report on the dominion-provincial conference on highway transport which has just been completed?


Hon. Lionel Chevrier (Minister of Transport):: The federal-provincial conference on highway transportation convened in Ottawa on Monday of this week and completed its business this morning. I think it is safe to say that the conference was a successful one.
In view of the position of the federal government that it was reluctant to enter the field of extra-provincial highway transportation, it suggested to the provinces that they control and regulate such extra-provincial undertakings in the same manner as that in which they were controlling intra-provincial movements. The provinces seemed to be willing to accept this suggestion. Thereafter there was drafted a bill which was submitted to the conference for its approval. Dependent upon the reaction of the various provincial governments to this draft bill, the federal government will be willing to give consideration to enacting at this session of parliament legislation which would make the proposed bill valid.


Howard Charles Green: As a supplementary question may I ask whether it will be necessary to amend the British North America Act in order to implement the agreement?


Lionel Chevrier: If the suggestion contained in the draft bill meets with the approval or the favourable reaction of the provinces, the answer to the question is no.



CIVIL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Clarence Gillis (Cape Breion Soulh):: May I be permitted to direct a question to the Minister of National Health and Welfare?
[Mr. Lesage.l
It arises out of a press dispatch in this morning's Globe and Mail captioned "Ottawa Said Ready to Match All Grants for Civil Defence". Is the minister in a position to tell the house what procedure is necessary on the part of the provinces and the municipalities in order to qualify for these grants?


Hon. Paul Marlin (Minister of National Health and Welfare):: Mr. Speaker, my hon. friend was kind enough to give me notice of his intention to ask this question. I have not had an opportunity of reading in detail the press dispatch to which he makes reference but I am advised generally that it deals with the proposed new financial arrangements in connection with the operation of civil defence in Canada.
This matter was discussed at the dominion-provincial conference held in Ottawa a few weeks ago, when the whole matter of civil defence, and financial arrangements in connection therewith, were discussed with all the provinces and when there was, as a result, general agreement on what was disclosed there and on the new financial formula. I will discuss the formula in the house on the occasion of the presentation of the departmental estimates, and I hope the proposal will stimulate action in those places where action is not now adequately taking place.


Mr. Fulton:: Will this require a constitutional amendment?



TRANS-CANADA AIR LINES INVESTIGATION INTO CRASH AT MOOSE JAW

[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: May
I direct a question to the Minister of Trade and Commerce? When may we expect the report on the regrettable accident at Moose Jaw? Has the inquiry been completed yet?


Lionel Chevrier: Perhaps I might answer this question. The report is not, I think, complete. By that I mean it has been completed on the ground but in so far as the preparation of it is concerned it is not yet completed. I expect to have it some day this week. When I do my first responsibility will be to discuss it with my colleagues before I can impart its implications to the house.



INQUIRY OF THE MINISTRY


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: I should like to direct a question to the Minister of National

Health and Welfare. Has the minister anything to say with respect to the substance alleged to have damaged automobile windshields and in some cases, particularly at Wellandport, Ontario, to have caused minor injuries to persons?


Paul Joseph James Martin: Beyond what has already been reported I have nothing to say.



CANADIAN OVERSEAS TELECOMMUNICATION CORPORATION


[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilton (Notre Dame de Grace):: I should like to direct a question to the Minister of Transport and ask him whether the government-owned Canadian Overseas Telecommunication Corporation is considering an upward adjustment in its rates at the present time?


Lionel Chevrier: I am grateful to the hon. member for having sent me notice of his question. I am not aware of any consideration being given at this time by Canadian Overseas Telecommunication Corporation to a revision upward of its rates, but I should say that the matter of rate revisions, either upward or downward, is always a matter under consideration by any corporation. Subject to that, I think I should tell my hon. friend that there is at this time no intention of an upward revision.


William McLean Hamilton: Would the minister examine the report directed to him by the directors of the corporation which gives some indication of this fact?


Lionel Chevrier: Yes, I will be glad to.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Yesterday, in my absence, the hon. member for Saskatoon asked the following question:
In view of the discussions held in Ottawa from April 12 to 14 with representatives of the United Kingdom government on the subject of possible modifications to the Canada-United Kingdom air transport agreement, is the government now in a position to indicate what changes, if any, will be made in this agreement?
The answer is no. There have been amicable discussions with the United Kingdom authorities on the subject of the Canada-United Kingdom air agreement, and there are
28, 1954	4197
The Budget-Mr. Blackmore no changes to be announced at this time. If there are any to be announced at a later date they will be announced in the house.



REPORTED OFFER TO PURCHASE BARLEY

[Stage Direction]
On the orders of the day:
Right Hon. C. D. Howe (Minister of Trade and Commerce):: In my absence yesterday an hon. member asked the following question:
Would the minister care to comment on a recent press release regarding a Russian offer to buy 3 million bushels of Canadian barley?
I may say that the Russian government has asked this government to arrange for trade quotations on 50,000 tons of barley. Quotations have been submitted but no purchase has been made as yet.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, April 27, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, last evening I closed my introductory remarks with the following words, speaking of the opponents of Social Crediters in the 1930's, as found at page 4192 of Hansard:
The favourite phrase that was applied to us then was that we believed in "funny money''. It is my purpose tonight, during the time which remains at my disposal, to give some consideration to this matter of funny money and in doing so to go back into the financial history of Canada to the passage of the Dominion Notes Act in 1868, then to follow on down to the passage of the Finance Act of 1923 and on down to the passage of the Bank of Canada Act of 1934, and to show members of the house and the people of the country that practically every single dollar this nation operated on from 1868 down to 1934 was, or was backed by, funny money, exactly the kind of money that the Social Credit proposal envisaged.
In tracing this development as regards Canada's money I propose to follow the account of Canadian financial history as it is given in the report of the royal commission of 1933 on banking and currency in Canada, beginning at page 21, paragraph 44.
Before commencing this review may I say that "funny" money, as our opponents and critics apparently use the term, must refer to money which is created by the minister of finance, for the fundamental characteristic of the Social Credit proposal in respect of money is that money can safely and soundly
4198	HOUSE OF
The Budget-Mr. Blackmore be created by the government or the minister of finance. No one ever seems to doubt that coin money can be created through the Canadian mint. No one ever seems to call that funny because it is created by the government, but when it comes to paper money, then government-created money immediately becomes "funny", which, I must say, is extremely funny to me.
In examining the question of a government or a minister of finance creating money, may I point out that we are told in paragraph 44 of the report of the royal commission on banking and currency in Canada that the Dominion Notes Act of 1868 empowered the minister of finance-note that, the minister of finance-to issue, that is, to print, to create, $8 million in bills, $5 million of which would have 20 cents' worth of gold behind each of the dollars and $3 million of which would have 25 cents' worth of gold behind each of the dollars. Obviously that money was created by the minister of finance. Consequently it must have been "funny" according to our critics, but I think probably most men will find some difficulty in establishing the funniness of that money.
The chartered banks were required to keep in such dominion notes one-third of whatever cash reserve was required on their part, which meant that money that came out of the banks must have been funny too. Then again, to a large extent the notes remained in circulation, which indicated that our fathers in those days apparently did not worry very much about the notes being funny as long as they could get them.
In paragraph 46 of this report we find that by 1913 the minister of finance was empowered to issue, that is, print, create, $30 million provided he had 25 cents' worth of gold in reserve behind each of those dollars, that is, $7,500,000 behind the whole $30 million. If he desired to print further money, which he could, he had to have a dollar of gold of course behind each one dollar bill.
In paragraph 47 we learn that in August, 1914, parliament legislated that the minister might create-print-and issue $50 million against partial gold backing. After that, $16 million were issued by the minister of finance and the notes were backed by deposits of railway securities guaranteed by the dominion government. We notice here a definite move in the direction of what might be called a modern, realistic conception of the backing of money, that is, with securities.
Then, $10 million were issued and those notes were not backed either with securities or with metal. Now, that might appear to have been really funny, but it was not looked


upon as such in those days by the realistic minister of finance, Sir Thomas White. In 1917, as recorded in the same paragraph, $50 million were printed and used to buy $50 million worth of Canadian goods which were sent across to Great Britain. This $50 million was backed by British treasury bills. Apparently no one thought those notes were funny. They did the job. They paid the Canadian farmers and other producers and they supplied the goods to Britain without immediately having goods in return.
May I suggest to Canadians, both within this house and without, that it is well to give careful attention to this fact. This is an incident in Canadian financial history illustrating a principle, the application of which might mean we could solve our problem in connection with exporting goods to foreign markets where purchasers are unable to obtain Canadian dollars. May I suggest very humbly that if the members of this house go back to their constituencies and tell the people that nothing can be done about exporting our goods when these facts stand before them in the royal commission's report on finance, then they are betraying a trust. The same is true of the Minister of Finance (Mr. Abbott) if he comes before us and tells us that nothing can be done in respect of the same kind of exporting.
On August 3, 1914, there was passed an order in council authorizing the minister of finance to issue advances of dominion notes to chartered banks against securities submitted by them to the Minister of Finance and approved by him. This again is in paragraph 48 of the report. It indicates the recognition of the fact that Canadian dollars could be issued, partly against securities, and they would be good money, not funny. They could be taken into a bank and issued by that bank in payment of its responsibilities, still without being "funny".
In August, 1914, parliament passed the Finance Act of 1914, confirming the issues of notes already made under the order in council of August 3, 1914, and providing for authorization by proclamation of similar advances in case of war, invasion, riot, insurrection, real or apprehended, or in case of any real or apprehended financial crisis. Now, that comes right down to our own times, I imagine. If we are not now faced with a financial crisis then a good many of us are misinterpreting the signs.
In paragraph 49 of the report we are told that the proclamation in pursuance of the Finance Act of 1914 was made on September 3, 1914, and thenceforth throughout world war I and the early post-war period extensive

use of the act was made; that is to say, of the principle of having the minister of finance against the backing of approved securities print and issue the money which was necessary to carry on the activities in which the nation was at that time engaged.
In paragraph 50 we learn that an act passed in 1919 provided for the continuance in force of the proclamation of September 3, 1914 until two years after the conclusion of peace on termination of the war. This would seem to indicate that the act had been found effective and satisfactory during the war.
Paragraph 51 tells us about the power to issue dominion notes against approved securities being made a permanent part of the Canadian financial system. It would appear that the men who sat in this house from 1919 to 1923 were Social Crediters in their thinking. They did not consider the social credit monetary concepts funny. Paragraph 51 contains words which I think it fitting we should include in Hansard. Here are the words:
But extensive use continued to be made of the power to issue dominion notes to the banks against approved securities with the result that it was decided in 1923 to make this part of the Finance Act mechanism a feature of the normal Canadian financial system. In introducing the new legislation, Mr. Fielding, the Minister of Finance, made the following brief explanation of its purpose:
"The act (the Finance Act) was adopted as a war measure and no doubt was exceedingly useful in the financial operations during the war. It may be said that the war being over we no longer have any need for the act, but experience has shown-
Note these words.
-that the act is still required; indeed, I am inclined to think that something of the kind will have to become almost a permanent part of our financial system.
In my opinion that statement is of great significance, as I think it must be to every person who gives it careful attention. Here was a measure adopted by a Conservative government and administered with great success by a Conservative finance minister, one of the very greatest the dominion has produced. It was re-enacted by a Liberal government upon recommendation of a man recognized as being one of the greatest of the Liberal finance ministers.
I should like to read two brief excerpts from this report, one from paragraph 48 in order to go back and sum up the whole picture.
Another extremely important change in the Canadian monetary structure was effected by the passing of the Finance Act in the 1914 war session of parliament.
I read that just to emphasize the fact once more that the Finance Act of 1914 was a new departure, the beginning of a new and remarkable era in Canadian finance.
The Budget-Mr. Blackmore
May I read now paragraph 55 of the commission report, in which the commission described the whole process as follows:
From this brief survey it can be seen that while the Dominion Notes Act has developed mainly along its original lines, the position of the dominion note issue has been substantially changed by the introduction of the Finance Act.
It is important to bear in mind that this royal commission, from whose report I have been reading, was composed partly of men from Great Britain. The Right Hon. Lord Macmillan, P.C., K.C., of the City of London, England, was chairman of that commission. Sir Charles Stewart Addis, K.C.M.G., of the City of London, England, was apparently his assistant. Then, there were on the commission three eminent Canadians in the persons of the Right Hon. Sir William Thomas White, P.C., K.C.M.G., of the city of Toronto, in the province of Ontario; secondly, the Hon. John Edward Brownlee, K.C., M.L.A., of the city of Edmonton, in the province of Alberta, and Beaudry Leman, Esquire, B.Sc., C.E., of the city of Montreal, in the province of Quebec.
Apparently the object of those who selected the commission was to have a report adverse to the finance acts of 1914 and 1923. The object was to destroy in Canada these very successful finance acts of 1914 and 1923 and, as it were, to put Canada in bondage by establishing a Bank of Canada, or a central bank, that could grow into an instrument powerful enough seriously to control the activities of any minister of finance and his government.
We shall find that as the commissioners prepared their report that report was slanted slightly against what Canada had done under the finance acts of 1914 and 1923.
When they issued their report they recommended, as everyone suspected they would, the establishment of a Bank of Canada which, of course, could involve the discontinuance of the finance acts of 1914 and 1923.
Now, two eminent Canadians on that commission, Sir Thomas White and Beaudry Leman, recommended solemnly against the recommendation of the commission. Sir Thomas White wrote a memorandum of dissent which appears at page 85 of the report dated October 3, 1933. I believe it is only fitting that I should read certain extracts from that memorandum, so that those who have been unable to have access to the report may be in a position to know what Sir Thomas White thought about the whole proposal of establishing the Bank of Canada.
I quote first from page 85 as follows:
But there was on the part of the government no "policy of inflation." Credit inflation automatically and inevitably occurred owing to the need of financing the government's own war expenditures in Canada and of providing the British government

The Budget-Mr. Blackmore
with the necessary funds to pay for the vast amount of foodstuffs, munitions and other products purchased in Canada and required by Britain and her allies in the prosecution of the war. In respect of these advances to the British government aggregating more than twelve hundred million dollars it is to be observed that conversely that government made advances in sterling in London to the Canadian government to meet the expenditures of the latter in maintaining the Canadian forces abroad. On balance at the end of the war the British government owed the Canadian government two hundred and twenty million dollars which was duly paid.
That passage clearly indicates how the finance minister created money in Canada so as to enable Great Britain to buy goods in Canada during world war I. And that is the very thing we need to be able to do now, on a larger scale.
Then, on the same page I find this:
In these conditions and having regard to the suspension of the gold standard in all the great nations of the world except the United States, the Finance Act instead of being an instrument promoting a policy of credit inflation served with the highest efficiency the purpose of providing in conjunction with the note issues of the banks adequate currency facilities for the financing of the rapidly mounting volume of Canadian agricultural, industrial and commercial production and trade. It is my belief that no central bank in the world during the war period functioned more smoothly or was capable of being utilized more promptly or with greater immediate effect in serving the purposes of national and business finance than the Canadian Finance Act of 1914. It is also my view that during the period in question and in the very trying period of so-called reconstruction following the armistice no other monetary system proved more efficient or better adapted to national needs than that of the chartered banks of Canada supplemented as it was by the provisions of the Finance Act of 1914. The advantage of that system to the government of Canada, in making its issues of bonds to the Canadian public and of having immediately available through the agency of the Canadian Bankers' Association the facilities afforded by the chartered banks with their thousands of branches throughout the dominion needs only to be mentioned to be realized and appreciated. And in my opinion the same high degree of efficiency has been maintained by the Canadian financial system down to the present time. Of this statement we have at least partial proof in the stability of that system during the unprecedented world depression of the past four years.
And then at page 87:
Although it may be technically correct that "the Finance Act did not provide Canada with the organization needed to undertake the tasks which the maintenance of the restored gold standard implied," the fact is that in conjunction with the policy followed by the banks the Canadian monetary system worked quite as efficiently as the central bank systems of nations economically similar to Canada.
And this further quotation:
It was suggested during the course of our hearings that political influence might possibly affect unfavourably the administration of the Finance Act because the treasury board which authorizes advances and fixes rates of interest payable thereon is composed of members of the government. With


regard to this I have only to say that if by "political influence" is meant partisan or improper influence not a shred of evidence has been adduced before the commission in support of such a suggestion. The fact is that authorization of advances under the act is an almost purely routine matter of administration carried out by the treasury board, aided by the recommendation of the Minister of Finance and the advice of his chief officials. I have no hesitation in asserting that the administration of the Finance Acts under all governments has been wholly free from any such influence.
And again at page 88 he uses these words:
Should it be the opinion of the Minister of Finance that he requires additional expert assistance to that available in his department he might appoint as a permanent member of his staff an outstanding economist whose special duty it would be to continuously study the economic and banking situation in Canada. Such an official together with the deputy minister of finance (himself a distinguished economist) and the inspector general of banks would constitute a most competent departmental committee to advise the minister and the treasury board upon all applications for advances by the banks. Personally, if any change is made in the existing mode of procedure, I would prefer such a permanent departmental advisory committee to an independent board created for the purpose of control and regulation of credit through the administration of the act. It may be of interest to the public to know that since the enactment of the Finance Act in 1914 the dominion government has received a total revenue, by way of interest charged the banks upon advances, of $22,782,602, with practically no additional cost to the Department of Finance.
And, again, here is a quotation of importance:
Upon this most important question which involves consideration of structural change in Canada's monetary system I regret to find myself in disagreement with a majority of the members of the commission. With my colleague, Mr. Leman, I dissent from their recommendation that "a central bank for Canada be forthwith established." The terms of our dissent are to be found in paragraph 238 of the report and are as follows:-
"238. Sir Thomas White and Mr. Beaudry Leman dissent from the arguments and conclusions contained in this chapter as to the need of the establishment of a central bank at the present time and under existing conditions and also as to certain features of the suggested constitution of such a bank should it at any time be established in Canada."
One further important quotation is as follows:
Even if I believed however (which I do not) that a central bank could now perform useful functions as a part of our monetary system, I would still entertain the view that the present is net a suitable time for its establishment. My reason for this conviction is that, without regard to the financial disturbance which would undoubtedly be caused by such a fundamental alteration in the structure^ of our monetary system, an institution of this kind would hamper rather than help the government of the day in dealing with the manifold and complex financial problems with which it is confronted.
And this final quotation:
A central bank, newly established, entrusted immediately with the ownership of the entire cash reserves of Canadian banks, and administered by a

necessarily untried and independent board of directors, clothed with the power of controlling currency, credit and security issues and charged with the conduct of negotiations respecting our external public finance, could, I think, be only an impediment to the government in this trying period, when direct unfettered governmental action is manifestly required.
A little further on he uses these words:
In the solution of all these problems, it is my belief that the existing banking system of Canada supplemented by the provisions of the Finance Act, affords the government a much more efficient instrument than that system controlled and regulated by a newly-created central bank, independent, in theory at least, even of the government of the day.
I think probably men throughout this country, and particularly the men who are responsible for moulding the opinions and guiding the destiny of this nation in the trying times ahead, would be well advised to stop using the term "funny money" entirely until they begin to know something about what constitutes "funny" money and nonfunny money. I maintain that the quotations which I have read and the information which I have given, drawn from this report of the royal commission on banking and currency in Canada, 1933, constitute an absolute, unanswerable argument in support of the whole Social Credit position.
There is just one matter that needs to be given thought before we leave. People will ask: How can we determine how much money can safely be issued and brought into circulation without causing inflation? That is certainly an all-important question. The answer is this:	The amount of money which needs
to be in circulation at any time must depend directly on the total amount of goods within the country to be purchased and to be exchanged; consequently the amount of money in active circulation at any given time must be gauged in accordance with the amount of goods and particularly the amount of surplus goods and productive capacity not being moved into consumption or not being used. Bearing this in mind, and remembering that surely it must be possible to find men skilful enough to be able to make the calculations necessary in order to harmonize the amount of money in circulation with the amount of money work to be done-exchanges to be effected-bearing this in mind, certainly it must appear that the Social Credit proposals are well worthy of most careful and respectful attention by all hon. members and by this country.


Mr. Speaker:: Before the hon. member for Joliette-L'Assomption-Montcalm (Mr. Breton) proceeds with his speech, may I tell the hon. member for Lethbridge (Mr. Blackmore) that today again I found that he had been quoting too much at great length. I did not wish to
The Budget-Mr. Breton interrupt him while he was making his speech, because during this debate great latitude is allowed; but I do not want him to consider that because I have been lenient today, on other occasions I shall allow him to quote at such great length while he is speaking.
(Translation):


Mr. Maurice Breton (Jolieiie-L'Assompiion-Montcalm):: Mr. Speaker, with your permission, I shall endeavour, during a few moments, to shed a ray of light over the discussion in vogue nowadays, that is, the question of direct taxation and federal-provincial fiscal agreements, by analysing certain aspects of the problem.
A few days ago a serious and independent newspaper wrote:
We remember that it was following a temporary agreement with Quebec that Ottawa took over income tax. Now, on the strength of an authorization granted for a time, the federal government claims that the province has no longer any right in that field.
We have here, Mr. Speaker, exactly the kind of information which misleads opinion, instead of enlightening it. And such confusion is spreading more and more in the minds of a great many people, so much so that one is inclined to believe that speech was given to man to bewilder the mind.
I quote the Hon. Maurice Duplessis, premier of the province of Quebec, who says that the provinces have exclusive right in the field of direct taxation, while claiming at the same time that the constitution must not be changed by one iota. The spirit and the letter of the constitution must be preserved, he asserts. The late premier of Nova Scotia, Mr. Macdonald, said that the act of confederation should be redrafted. The Ligue d'Action nationale de la province de Quebec stated before the Tremblay commission that our confederation should be rebuilt to prevent it from being a lie, that it must recognize the prior right of the provinces. Others say that subsidies are contrary to the spirit of confederation.
The Hon. Antoine Rivard relies on the fact that education is reserved to the provinces to state that the provinces have a prior right in the field of direct taxation. The Montreal chamber of commerce, which is not a political body or at least should not be, says that the matter of prior rights has no importance. In fact, they say it would be better for the federal government to authorize the deduction because the agreements would bring greater advantages. What confusion!
It is the same thing with the Conservative party, but confusion is still greater there, if that is possible. It passed a resolution at its convention, but completely disregards it in the house. And so we wonder whether the

The Budget-Mr. Breton party is preparing one kind of political campaign for Quebec and adopting a different stand in the other provinces.
Mr. Speaker, I shall try to make my modest contribution and to throw a little light on this, even though I may have to repeat what others have said before me, because many people do not know the truth about this problem.
I fail to see why some people make statements as if they were the Gospel truth without even trying to find out what the truth is. Calmly and objectively, in order to do justice to the province of Quebec as well as to Canada as a whole, I shall try to deal with some interesting points in order to show why the federal government has to maintain the stand taken on this matter.
Why did the federal government propose fiscal agreements to the provinces?
Well, it is simply because the federal government and the provincial governments have legally a right of joint ownership in the field of direct taxation. That is a formal right; it is clear and to the point.
A great man has questioned that statement. At the federal-provincial conference of 1945, the premier of the province of Quebec, the Hon. Maurice Duplessis, stated, and I quote the following words which appear at pages 355 and 356 of the report of the reestablishment conference of 1945-46:
Among the matters exclusively reserved to the provinces, section 92 of the British North America Act mentions "direct taxation within the province." On the other hand, section 91 of the said act also vests in the federal parliament the right of raising money "by any mode or system of taxation". These two enactments are not contradictory; they mean that the provinces, in which according to the letter of the law has been vested the exclusive right of direct taxation, should have a priority right in such a field.
This problem turns on the word "exclusive" which appears in section 92 of our constitution. Unfortunately, the Hon. Maurice Duplessis has forgotten something. The respect which I owe him forces me to say that he must have committed an extremely serious oversight, one which has unfortunately cost the province of Quebec $164 million since 1948, when he could have recouped $53 million without even signing an agreement, by accepting the 5 per cent offered to the taxpayers.
And yet, if he had read the preceding section, section 91 of the constitution, he would have seen that the word "exclusively" is to be found in both sections 91 and 92, and I quote section 91 which he forgot to quote in his statement before the conference on re-establishment:
It shall be lawful for the Queen, by and with the advice and consent of the Senate and House of

Commons, to make laws for the peace, order and good government of Canada, in relation to all matters not coming within the classes of subjects by this act assigned exclusively to the legislatures of the provinces; and for greater certainty, but not so as to restrict the generality of the foregoing terms in this section, it is hereby declared that (notwithstanding anything in this act) the exclusive legislative authority of the parliament of Canada extends to all matters coming within the classes of subjects next hereinafter enumerated; that is to say,-
3. The raising of money by any mode or system of taxation.
And so, when we read the two sections, we find that the word "exclusively" appears in both. They seem to contradict themselves and to be in mutual opposition. But on studying the text carefully one realizes that under section 91 the federal government has the exclusive right to raise money by all kinds of means for federal purposes, namely for purposes specified in the section.
In section 92, the word "exclusive" means that the provinces have the right to raise money in a direct way only, and for provincial purposes only. So there is no opposition and you have to admit that the text is clear and precise. Besides, that is how the other premiers of Canada, even the then premier of Ontario who is now the Leader of the Opposition in this chamber, understood it at the conference. The provincial prime ministers have realized that the federal government was entitled to levy taxes in every way.
To prove my case let me quote some of their statements. The premier of Manitoba said, on page 140 of the report:
To the dominion were given the expensive national responsibilities and to assist them unlimited powers to support any kind of tax, direct or indirect.
The Hon. Mr. Macdonald, the premier of Nova Scotia, said, on page 531 of the same report:
At confederation, as it has been said many times around this board, as we all know, the right to direct taxation was given to the provinces, and the dominion was given the right to levy and collect money either by direct or indirect taxation.
And the hon. premier of Ontario (Mr. Drew):
The provinces were empowered to levy taxes in the field of direct taxation . . . whereas the dominion government was authorized to raise money by any form of direct taxation.
Now, here is what the Hon. Mr. McNair, premier of New Brunswick, is reported to have said, on page 27:
The dominion has adequate power to meet the needs of our provinces as well as others. With its control of monetary policy, and the broad and unlimited powers of taxation it possesses, the dominion is in a position, drawing upon the resources and tax-bearing capacity of the whole nation, to see to it that the provinces are placed in a position to maintain their local services at appropriate and uniform Canadian levels.

And the Hon. Mr. McNair added:
Let me say that we in New Brunswick are just as jealous of our constitutional rights and privileges as are the people in any other province. But we want autonomy in substance, as well as in name. We look upon provincial autonomy as a means to an end-not an end in itself. We look upon dominion autonomy in the same way. The end to which they should be devoted, through their proper exercise, is the greatest good for the greatest number of Canadians.
But, Mr. Speaker, is it possible for us to admit, even for a moment, that the premiers of the other provinces could really be a party to the handing over to the federal government of rights which do not rightfully belong to it under the constitution, to their own detriment? Out of nine premiers, eight at that time recognized the federal government's right to levy taxes by any and every means. One premier only refused to recognize that right, and that is the Hon. Maurice Duplessis.
However, Mr. Duplessis does recognize the necessity for an agreement. Here are some of his words to that effect, as found at page 123 of the report:
As the conference was convened by the federal authorities it was only proper for them to place before the delegates their own proposals. With all due respect for the opinion of others X do not think it is up to the provinces just now to make proposals or counter-proposals.
And further, at page 324, he added:
During the time necessary for the study and solution of these Canadian problems, a temporary agreement, precise, clear and categorical, the duration of which would depend on the needs of the federal body and the needs of the provinces, might be entered into, as a temporary measure, but based on the very foundations of the Canadian constitution.
In short, it would be possible to rent, and we insist on the term rent, in return for a fair compensation not only material but even constitutional, certain present taxation powers of the provinces, powers that could reasonably be rented without in any way impeding the march forward, the progress and prosperity of the province.
Is this not a recognition of the need for agreements between the central and the provincial governments? Then he adds, on page 414:
Speaking for the province of Quebec . . .
No, as I do not want to be unkind, I am not going to quote this. I am now reading from page 415 of the report:
It should be possible, and it could be possible, without changing the fundamentals, which cannot be changed and which should be considered as untouchable; it should be possible and it is possible to make temporary arrangements, clear, precise and definite arrangements, taking into consideration the rights and prerogatives of every party to it.
We are willing to collaborate during the necessary time by renting to Ottawa-and I insist on using the word "renting" to Ottawa-certain sources of
The Budget-Mr. Breton revenue which can be discussed and which could be found, because we are in good faith and we have the sincere and deep desire to collaborate.
We must therefore come to the conclusion that all of the governments of the country have recognized the necessity for an agreement. If no such agreement could be reached it would mean the sowing of the seeds of national disunity, with the progressive destruction of the ideals which the fathers of confederation and the following generations have pursued and which we are still striving to attain.
During the negotiations, there were three different opinions out of nine. Mr. Macdonald, premier of Nova Scotia, was of the opinion that subsidies were a bad thing and that the constitutional act should be revised. The premier of Ontario, who had his own common ground of agreement with the premier of Quebec, said that taxation powers should be defined. We are ready, said Mr. Duplessis, to rent temporarily our taxation rights, provided a conference be called on a set date to define taxation rights. I do not want, he said, mere electoral promises because I have been in politics for 25 years and I know what promises are worth. That means that the federal government in exchange for a temporary agreement would have to undertake to relinquish sovereign powers which had been officially recognized by the constitution. Did you notice the bargaining, Mr. Speaker? One can readily see that such a transaction is impossible because, owing to its growing commitments, the Canadian government is unable to abandon its powers of taxation, just as the provinces are unable to abandon the powers granted them by the constitution. Each are independent entities which, within their own spheres, have absolute and sovereign rights. However, as far as taxation rights are concerned, the fathers of confederation have given to the federal government, which is the essential organization for the maintenance of economic and social life as well as the development of our country as a nation, powers which enable it to obtain the necessary funds to meet and fulfil all its commitments.
The fathers of confederation were great men, but when one thinks that in 1867 the provinces gave up freely for a mess of pottage a revenue of $13,600,000 against a fixed subsidy of 80 cents per capita, and when one thinks that they abandoned their rights to sources of revenue likely to increase considerably and which then made up 85 per cent of the national revenue, one must admit that those who drafted the pact of confederation did not intend to give a prior right to the provinces in taxation matters.
4204	HOUSE OF
The Budget-Mr. Breton
About three years later, in 1870, I believe, Nova Scotia complained that the per capita subsidy set at 80 cents per person was not enough to enable it to fulfil its obligations. At that time, direct taxation was an unimportant taxation field, and no government wanted it.
The right hon. Prime Minister of Canada (Mr. St. Laurent) stated that there could be absolutely no question of allowing the federal government's sovereignty to be infringed upon by a renunciation of its powers of taxation. We have had two wars and, following these, the federal government was obliged to assume a public debt of the order of $12 or $13 billion and to pay an interest on that debt of $400 or $500 million annually. And a third world war still remains a possibility. That is why we must all co-operate in working for a better social, economic and political future in this country. The federal government, of whatever party it may be, can have no special sympathy or antipathy for the provinces, there can be no question of discrimination towards different races or religions, not even towards the various political parties which govern the provinces. The federal legislation must be uniform throughout the country.
We Quebec Liberals do not want it to be said that through sentimental weakness towards our province, we have contributed to destroy the Canadian confederation.


Mr. Balcer:: You are destroying Quebec.


Maurice Breton: No, we do not want to destroy Quebec; all the members of this house know it, and I will go further. The Liberal party has always been an autonomist party and remains so, whereas you Conservatives, when you wish to speak of autonomy, must quote Sir Wilfrid Laurier and the Hon. Honore Mercier. The Liberal party has always been the defender of the minorities in this country, and, first of all, that of Quebec. Our whole political history is there to prove it. We are autonomists, because we aspire to freedom and cherish democracy.
The confederation was established, Mr. Speaker, so that two great races might unite and work together for the development of our country. It had to be so, if we wanted to create a nation capable of flourishing and of taking its place on the international scene. That is confederation.
A question which should be studied with extreme care, in an objective manner, has


become an emotional and confused issue, with utter disregard for the Canadian nation.
There is a nationalism which befits the Canadian government. It is that nationalism which calls for the pursuit of an ideal which leads to independence and sovereignty for Canada in national and international affairs. It was the nationalism of the late Henri Bourassa who has largely influenced our march towards that magnificent goal. We wish to continue his work. Mr. Bourassa rendered a great service to this country by expounding ideas which led at the time to great controversies but which have favourably influenced the policy of this country.
This long digression was brought about by the interruption of the hon. member for Three Rivers. I would now like to talk about taxation and subsidies.
In 1885, Mr. HonorS Mercier, then premier of Quebec, invited the other provinces to take part in a conference for the purpose of forcing the federal government to increase the subsidies.
In 1907, Sir Wilfrid Laurier told the House of Commons that Lower Canada and the maritimes would not have become part of confederation if they had been told that they would have to levy direct taxes in order to get revenues.
That shows that political problems are apt to assume widely different aspects: in those days nobody would levy direct taxes; today everybody is clamouring for them.
In 1953, the Montreal chamber of commerce-or the Quebec chamber, I cannot remember exactly-presented a brief to the Hon. Maurice Duplessis. This brief began with these words: "We are happy to appear before a great leader, the defender par excellence of provincial autonomy."
Following which the same organization, appearing before the Prime Minister of Canada, "recognized his great desire for conciliation".
That is a gesture to be noted, and I insist upon it because when confronted with those difficult problems the Canadian government tried to extend a friendly hand to all the governments of Canada in order to foster national unity, without which our provinces, one after the other, may eventually become small republics, having at their head an omnipotent and permanent president. They would have modern capital cities, but their people would be miserable, illiterate and poor. That may be a sad picture, but it could be the outcome of the separatist dream.

I know that the Hon. Mr. Duplessis is not a separatist because he has said too often that he wants to co-operate with the federal government and that the constitution should not be changed. We can count on the fingers of one hand those people who have such nebulous dreams, that can bring about quarrels and disputes such as we are now witnessing in the province of Quebec. Mr. Speaker, I am of the opinion that the immense majority of the people of Quebec and of the whole of Canada are anxious to preserve that structure so patiently and so successfully erected by our forefathers, and I hope that our children will continue to make Canada a beautiful and a great country, that the two great races living side by side in this country will better appreciate each other as they have only one desire, that is to safeguard our liberties, to increase our common security, and to eliminate the inequalities which necessarily exist in a free country.
Our constituents tell us about the great problems with which are faced workers, farmers, professional people and all those other citizens who earn an honourable living for themselves and their children. Through the daily contacts we have with our constituents, we know that nationalistic tendencies are not truly representative of the Canadian people as a whole. We know too of the responsibility which the federal government has to discharge. It is to administer the country to the advantage of all, without distinction. We must understand that we have been sent here with the express mandate of promoting national unity. I am convinced that there are people who try to sow confusion in the minds of the others, but I am confident that the province of Quebec will be able to tell the difference between provincial autonomy and their obligations toward this country.
Mr. Speaker, it seems to me that the autonomist feeling of the province of Quebec is as legitimate and normal as individual aspiration towards liberty. We should not, therefore, hold it against a Quebecker if he should be an autonomist. This is a natural reaction which any democratic system must encourage just as other rights to freedom.
Still autonomy, like freedom, has limits beyond which lie licence and anarchy. In the same way in which every right carries with it an obligation, autonomy or, if you prefer, independence carries with it, in the case of the province of Quebec, responsibilities towards the Canadian nation.
May I be allowed to state at this point that were these agreements arrived at by
The Budget-Mr. Breton coercion, and should this mean that the majority in this country was enabled to impose its views on a minority in this country, the Liberal party, or at least its representatives in the province of Quebec should carefully analyse the consequences of such a political attitude. If one reads the history of this country one will notice that the Liberal party has always been energetically opposed to a majority policy whereby no account would be taken of the opinions and rights of a minority. I hope that it will continue as it has done in the past to defend this ideal.
Mr. Speaker, I am told my time is up. I am sorry.


Mr. Speaker:: I might ask the hon.
members if they would consent to the hon. member continuing his speech.
(Text):
The hon. member has exhausted his time. He says he has just a few more things to say. Therefore would hon. members agree to give him unanimous consent so that he can conclude his speech?


Some hon. Members:: Agreed.
(Translation):


Mr. Perron:: Mr. Speaker, I have no objection to letting the hon. member continue his remarks.


Maurice Breton: I thank you, Mr. Speaker, and I thank the house for its kind attention. I shall strive to be as brief as possible. I thank more particularly the hon. members who do not understand French but who stay here just the same.
The figures mentioned in the brief of the chamber of commerce gave the impression that the federal government was guilty of centralization and was keeping for itself all sources of revenue. According to that brief the federal government is now taking 77 per cent of all the provinces' revenues, the municipal governments are taking 11 per cent and the provinces 12 per cent.
That is a very sad picture of the federal government's encroachments. I took the trouble of checking how true it was. I obtained figures from the Department of Finance and from the bureau of statistics. Here is the result. Here are the figures concerning provincial and municipal revenues: 75 per cent in favour of the provinces and the municipalities in 1950; 67 per cent, in 1951; 57-3 per cent, in 1952, and 52 per cent, in 1953. That is quite far from the 23 per cent given to the public by the chamber of commerce and repeated in this house by the hon. member for Three Rivers (Mr. Balcer).
4206	HOUSE OF
The Budget-Mr. Breton
Municipalities have powers which are granted or given to them by the provinces. It they do not enjoy more revenue, that is not the federal government's doing, since the provinces can grant them powers of taxation. The province of Ontario for instance helps its municipalities by giving subsidies which come to $4 per capita in the case of Toronto, and $3 in the case of Ottawa, that is $4,000,000 for Toronto and $600,000 for Ottawa. The Ontario government gets along with its municipalities since agreement is necessary for the success and prosperity of Ontario. Quebec should do the same, but that is not our problem. If I mention the fact, it is simply because provincial and municipal revenues have been lumped together.
Now if we merely stop to consider the provinces and the federal government, we will see that ever since confederation the revenues of the former compare quite favourably with those of the central government.
The ratio is about constant. During the depression of 1930, the provinces drew as much revenue as the federal government. And do you know what happened? The provinces kept receiving subsidies from the federal government which did not have sufficient revenue for its own needs and had to borrow to make up its deficits and help the provinces. Situations such as those show why the fiscal problem is a difficult one which calls for experts.
I have here a table of the gross revenue of the provinces compared to that of the federal government from 1867 to 1941, along with a table showing the net revenue from 1941 to 1953. These figures are as follows: 37 per cent of the federal government's revenue in 1867, 28-5 in 1870, 23-4 in 1921, 50 in 1930-31. The federal government had in 1930-31 a total revenue of $327,720,000, compared to $179,143,000 for the provinces. In 1935-36 the percentage of provincial revenue, compared to the federal government's, was 64-4 per cent. Yet, in that same year 1935-36, the Canadian government was still paying the provinces subsidies in a proportion of 16 per cent of their own sources of revenue. The proportions in favour of provinces are always considerable, and in any case, much more important than is shown in the brief submitted by the chamber of commerce.
I conclude for hon. members have already been very patient. We must all, here in Ottawa, consider the fact that the government of Canada has been created for the Canadian nation and that nationalism must only exist as far as it is needed by the Cana-


dian nation. We all must infer that the provinces cannot, nowadays, claim a privileged position with regard to the federal government. Consequently the 15 per cent deduction as suggested by the Progressive Conservatives and approved by the chamber of commerce is not acceptable because it would result in a situation equivalent to giving prior right to the provinces.
We must accept what the Minister of Finance told the Leader of the Opposition at that time. That shows how extremely complex this problem is. An honourable compromise must be reached and the solution will not be found in an electioneering climate, nor through a recourse to ultimatums or the levelling of charges of centralization. That would not settle anything.
At the time of the conference the right hon. Prime Minister of Canada, who was then minister of justice, was willing to make important concessions. He asked the provinces whether they had counter-proposals to make, and he asked Mr. Duplessis what amount he would like to get in return for the renting of his rights for a temporary period. He never got any answer. "Taxation rights must be defined, and the federal government must abandon its rights," said Mr. Duplessis. "Then we might agree to rent temporarily our rights."
I do not think that we can thus settle the fiscal problem in a way that will benefit the economic and political life of our country, or resolve the problems of unemployment, war and peace.
I believe that a compromise is essential and I think that the interests of a party or of a group should not be opposed to those of Canada.
If the Hon. Mr. Frost can recognize, as he did at the opening of the 1952 session in Ontario, that his province didn't give up any of her constitutional rights when the agreement was signed, the hon. premier of Quebec could do the same without any risk. The premier of the province of Quebec would do honour to himself by signing that agreement, and I am sure that he would have the approval of the Canadian people, and, in particular, of the 300,000 taxpayers who will have to pay this tax.
The right hon. Prime Minister of Canada, who was then minister of justice, went as far as to recommend, in his proposals, that the provinces prepare an amendment to the constitution, granting them the right to collect the provincial sales tax in an indirect

manner. They did not even answer. I therefore call upon the good will of the interested parties.
(Text):


Mr. Brooks:: On a point of order, Mr. Speaker, I do not wish to seem discourteous to the hon. member, but he has now had about sixteen or eighteen minutes' overtime. It seems to me he is establishing a precedent that we should not like to have continued in this house.


Mr. Speaker:: Order. I was just about to rise myself, because for the last seven or eight minutes I heard the hon. member say that he was concluding, and I was hoping for the last word. But it looks to me as though we might be of some help to him and ask him to give us his last word now and resume his seat.


Maurice Breton: I have, Mr. Speaker, and I thank you.


Mr. Donald M. Fleming (Eglinion):: Mr. Speaker, it was a poor, scrawny creature that the Minister of Finance (Mr. Abbott) dragged into this chamber on April 6 when he presented his budget. Nevertheless it was accompanied by the usual showmanship, the usual obedient cheering from the Liberal benches, led by the cheer leaders in the front row. But it was obvious to those of us who sat over here and observed the performance that hon. members opposite had not much stomach for the task that had been assigned to them.
There is no reduction of taxes in this budget; there is of course a pretence of certain reductions, Mr. Speaker, but let us look a little deeper. Let us look behind the pretence and the sham to the reality of the situation. We find in two or three of the resolutions that reductions in certain excise taxes on certain goods are proposed. It is interesting indeed, Mr. Speaker, to recall that on many of these commodities these are taxes which this government imposed, in many cases raised, which we of the opposition opposed and demanded should be reduced long ago. And we are glad so far as these limited and meagre reductions extend to see now the success of our efforts in previous sessions. Those of us who sat in this house in the last parliament will recall the fight we put up year after year in budget debates for reductions of the altogether too heavy taxes that were being applied to such articles as electrical appliances, luggage and other things.
But if one looks a little further at these proposals and their contents he discovers some weird and wonderful things in the
28, 1954	4207
The Budget-Mr. Fleming selections which have been made by the Minister of Finance for his rather limited bounty. If one examines the proposals he will see for instance that the Minister of Finance has found it within his big heart to reduce from 15 per cent to 10 per cent the excise tax on lapis lazuli; whereas at the same time he does not find it within his heart to make any reduction whatsoever in the sales tax on such necessities as clothing, boots and shoes, prepared foods and household furniture. Apparently there is no room in the plans of the Minister of Finance for reduction of taxes on such necessities of life. It is preferable, in his view, to go on adding to the cost of living by collecting those taxes on basic necessities of life.
And then of course there are those strange anomalies, Mr. Speaker. Apparently the Minister of Finance is a two-wheel man or a three-wheel man. He is certainly not a four-wheel man, because if one examines these budget resolutions he will see that the minister is proposing a reduction from 15 per cent to 10 per cent in the excise tax on motorcycles and all other two or three-wheel motor-driven vehicles including motors for attachment to bicycles, but not a copper of reduction in the taxes on motor cars. The bounty of the minister ends with three wheels. There is no place in his economy for a reduction in taxes on four-wheel vehicles. And so we shall have for another year a continuation of a situation where on the low-priced cars, standard models, the federal tax collected in this country amounts to $350 per car; whereas across the border in the United States the federal tax amounts to only $90. Is it any wonder that motor cars are very much more expensive in this country than they are in the United States? The explanation, Mr. Speaker, is to be found in the tax policy of this government, and there is not a cent of reduction found in this budget on the heavy taxes, the extortionate taxes, which are being collected by the federal government on motor cars.
Hidden taxes go on. There has been no attempt on the part of the minister to bring these taxes out in the open so that the consumer, the man who pays for the goods, knows what portion of the price is going for taxes.
Then, Mr. Speaker, any who looked for any possible reduction in the income tax this year has of course looked in vain. The same heavy rates are to be borne by the Canadian people for another year. Taxes start at 18 per cent on the first $1,000 of taxable income and are graduated steeply up from there. But, Mr. Speaker, I suppose the realists in this country, those who know the mind and the
4208	HOUSE OF
The Budget-Mr. Fleming mentality of this taxing government, knew better than to expect reductions in taxation this year, because this is not an election year. The warmth of the feeling exhibited by the Minister of Finance a year ago in bringing in his budget, his consideration for the taxpayers at that time has vanished. It is a bleak chill that he has breathed upon the taxpayers this year. But of course the tax cycle has moved on. This is not an election year, and those who know the mind of this government had no reason to expect that there would be any reductions this year.
Mr. Speaker, there will be no effective, significant reductions in taxation at Ottawa here until this government faces up, as it has never done, to the problem of its own waste and extravagance. Time after time when proposals have been made in this house for review of the operations of government with a view to introduction of efficiency and elimination of waste and extravagance our efforts have been defeated by the government.
This year, what do we see with regard to the matter of expenditure? It happens that the burden of rearmament this year is to be reduced by $128 million as compared with last year. This heavy burden that has been borne by the Canadian people since the outbreak of hostilities in Korea four years ago is to be lightened this year to the extent of $128 million, while still continuing at a total rate of $2 billion. But, Mr. Speaker, has that saving been passed on to the Canadian people in the form of reduction in taxes? It has not, because this spending government has found ways and means of spending an additional $200 million on departments that have no relation to rearmament, an extra $200 million over last year. And so, Mr. Speaker, the Canadian people are to be called upon to pay more in taxes this year than they paid last year because expenditure is to be higher this year than it was last year.
There is a rumour current on this parliament hill that this is the last budget to be introduced by the present Minister of Finance. Well, he has apparently made up his mind that it is to be a record budget, for record budget it is. It is a budget that proposes to take more money from the pockets of the Canadian people this year in taxes than has ever been taken from them in any year in our history. As compared with what was up till then the record year, 1953-54, this budget adds another $76 million on top of last year's total of taxes. It is a record budget in another respect because at no time in all our history, save only at the very climax of world war II, has the government proposed
[Mr. Fleming.!

to spend so much money as in this budget. And so, Mr. Speaker, a record budget it is, and as such it should be defeated.
The effects of high taxes are having ever-widening consequences. We see them reflected increasingly today in the high cost of production which is having secondary effects in this country of very serious significance. We see on every hand, every day, Mr. Speaker, the effects of these high taxes in the increasing cost of production, and they have been a major contributing factor in bringing about a situation where our export trade has been falling off to a disturbing degree.
Do you realize, Mr. Speaker, the extent to which, by reason of these high taxes and high costs we have been pricing ourselves out of some of our best markets abroad? The government seems to take no account of that fact, and no responsibility. The effects do not stop with our markets abroad, for right here at home, by reason of these high taxes and the high costs to which they have given rise, we are seeing the loss of our domestic market to goods which are being imported from countries abroad where the burden of taxation is less heavy.
In consequence we see today Canadian unemployment at a post-war peak. The latest government figures issued by the national employment service have shown that on March 18 the number of Canadians applying for work through that service totalled no less than 570,000. We have had no figure to compare with that in the last decade and a half.
Does this budget offer any relief at all for unemployment? Mr. Speaker, the situation is serious but it does not seem to worry this government. They have not faced up to it. They have not even taken the trouble to acknowledge the seriousness of the situation. Already 50,000 of those receiving unemployment insurance have exhausted their benefits. What is the government doing about that? Nothing! And when this situation has been laid before them, when we have asked for a parliamentary committee representative of all the parties in the house to study the question and formulate plans they have defeated all our efforts. And what is their solution for the problem of unemployment? To do something? No, Mr. Speaker, there is nothing that the government proposes to do in relation to unemployment. They have even quite blithely passed up the opportunity this budget offered of doing something to lower the cost of production in these industries where unemployment is very serious today.

One thinks at once of the textile industry. One thinks of the farm implement industry. Are those and others afforded any relief in this budget? Are the workers who are employed in them? No, Mr. Speaker, the same taxes weigh on these industries under this budget as they have weighed in the past. They will carry that same burden in trying to confront competition facing them in the home market today. And the answer of this government? Well, Mr. Speaker, the answer is just the usual shrug of the shoulders; the usual attitude of nonchalance and complete indifference to the situation.
It is evident, Mr. Speaker, that through all these lush years this government has made not the slightest preparation for the situation that has been emerging with respect to unemployment. They have not even been concerned about it. Their record on preparation is a complete cipher.
There was one subject which occupied not a little of the time of the Minister of Finance during his budget speech, and it has occupied the thoughts of a number of hon. members in this house, particularly hon. members from the province of Quebec during the course of this debate. I propose, Mr. Speaker, to devote a few minutes to the consideration of a situation which, as I see it, will assume serious proportions unless grappled with now by the Prime Minister, and can have lasting consequences of a most undesirable nature.
The subject of dominion-provincial relations was introduced by the Minister of Finance in what was a very belligerent and truculent passage in the budget speech he delivered on April 6. One other cabinet minister, the minister of northern development, has spoken on the same subject in this debate and last evening we heard a speech on the same subject from the parliamentary assistant to the Secretary of State for External Affairs (Mr. Pinard).


An hon. Member:: And a good speech too.


Donald Methuen Fleming: There have been other
speeches delivered by private members on this subject. But, Mr. Speaker, is it not rather amazing that in a subject of such cardinal importance, a subject which now confronts this house, and a subject important enough to engage the attention of two cabinet ministers, that from the Prime Minister we have had not one word in the course of this debate? It has been a very coy performance we have had from the Prime Minister of Canada on this subject in this debate. Dominion-provincial relations are at all times a matter of first importance in Canada. They
The Budget-Mr. Fleming are in a special sense peculiarly the responsibility and special concern of the Prime Minister. Invitations have been extended in the course of this debate to the Prime Minister to make a statement on this subject. Two weeks ago yesterday my leader urged the Prime Minister to call a conference of the dominion and the provinces about that matter. Only the Prime Minister can call such a conference. Has the Prime Minister taken any notice of that appeal? We are waiting patiently for the Prime Minister to break his very strange silence in this debate. National unity has been shown to be at stake but, Mr. Speaker, the Prime Minister continues silent.
It is a simple proposition of our system of cabinet government that the Prime Minister assumes responsibility for what has been said by his cabinet ministers. Indeed, Mr. Speaker, there can be little doubt the Prime Minister was fully aware of what the Minister of Finance had to say in his budget speech before that speech was ever delivered. But still the Prime Minister has remained silent. Having been privy undoubtedly to this budget speech, being constitutionally responsible for statements made in the course of this debate on this subject by his own ministers, I say, Mr. Speaker, that it is time this house heard from the Prime Minister on this subject and I, for my part, speaking with I hope the modesty becoming a private member, wish to say that I challenge the Prime Minister to enter this debate and make a statement on his position on this subject of dominion-provincial relations.
The situation has been referred to in numerous speeches in the course of this debate, and the hon. member for Joliette-L'Assomp-tion-Montcalm (Mr. Breton) gave us a fiery speech this afternoon. But that is the situation we have seen developing and while, Mr. Speaker, I do not propose to review at length the history of this subject there are, nevertheless, several salient facts in the history of this subject which must, I think, be fully understood.
In a sense the year 1942 is something of a watershed in the matter of dominion-provincial relations in relation to matters of taxation. My reference, of course, is to the wartime agreement for which authority was given by parliament at the 1942 session of this house and which is to be found in chapter 13 of the statutes of that year. Authority was given to the Minister of Finance to enter into agreements with the provinces, and the
4210	HOUSE OF
The Budget-Mr. Fleming keynote of this statute and of the powers conferred upon the government by it is to be found in the preamble, which reads as follows:
Whereas the dominion and the provinces and certain municipalities have been levying taxes upon incomes and upon corporations, and it is expedient during the continuation of the present war and for a certain readjustment period thereafter that the dominion only should levy such taxes;
What was the background, Mr. Speaker, out of which this statute arose? As we have been reminded, Mr. Speaker, the British North America Act does purport to confer powers of taxation on both the dominion and the provinces. Section 91 of the British North America Act, in subsection 3, purports to empower parliament to make laws for "The raising of money by any mode or system of taxation". Then section 92 in subsection 2 purports to confer upon the provinces exclusive powers including:
Direct taxation within the province in order to the raising of a revenue for provincial purposes.
Until 1917 the dominion had never entered the field of direct taxation; and when the dominion entered the field under the stress of conditions existing in world war I, Sir Thomas White, in introducing the first federal income tax, referred to it as "a distinct innovation in federal fiscal legislation". He recognized at the time that in most of the provinces there was a municipal tax upon income and indeed, in some of the provinces, a provincial tax on income as well. The fact of the matter is, Mr. Speaker, that prior to 1942 the majority of the provinces of Canada had already enacted laws providing for a provincial income tax. In addition, some of them had passed laws providing for municipal income tax. For instance, British Columbia levied its first income tax in 1876, Prince Edward Island in 1894, Manitoba in 1923, Alberta in 1932, Saskatchewan in 1932, Ontario in 1936 and Quebec in 1939.


Mr. Pickersgill:: In 1940.


Donald Methuen Fleming: The year in which it was enacted was 1939.


John Whitney Pickersgill: If the hon. gentleman will look up the date, I think he will find it is 1940.


Mr. Drew:: No; it is 1939.


Donald Methuen Fleming: If the hon. gentleman who interrupts would be a little more sure of his facts, Mr. Speaker, I think he would have less to say in the house.
The situation in 1942, Mr. Speaker, was that the majority of the provinces had already entered the field of provincial income taxation and had also passed laws providing for


municipal income tax within their boundaries. It is also an interesting fact that the dominion from 1936 on co-operated-in a way in which they are not prepared to co-operate today-with these provinces which were collecting a provincial income tax. To facilitate the collection of the provincial income tax, to reduce the cost of collection and the burden of machinery, and to have some regard for the taxpayer who has to make out the forms, the federal government collected the provincial income tax and combined the federal and provincial collection in one return form. That was done, Mr. Speaker, by the federal government in connection with the provincial income tax of Ontario, Quebec, Manitoba and Prince Edward Island. Those of us who lived in one of those provinces well recall the forms. The form provided for the usual tabulation leading up to the calculation of the federal tax. Then we arrived at the taxable income for provincial purposes and to it applied the provincial rate in a short addition to the federal form. It all went in in the one form with a minimum of trouble to the taxpayer and a minimum of expensive collecting machinery.


Mr. LaCroix:: When was that?


Donald Methuen Fleming: That was being done from 1936 on until 1942. In 1942 under the stress of wartime conditions the provinces, with some understandable reluctance, agreed to step out of these fields in return for certain payments guaranteed to them under the agreements and with the firm understanding that these fields of taxation would be restored to them when the war was over. I read the preamble of the statute. You will recall, Mr. Speaker, that the preamble expressly provides that these agreements were of limited duration.
What has the situation been since 1942? Mr. Speaker, I do not dwell in detail on this matter but I point out that the principal fact which emerged in this field since 1942 is the skyrocketing rise of the federal income tax. Along with it has gone an increasing responsibility upon the provinces and municipalities and rising costs to them of all those services which they are called upon to render to their people. In the meantime, the provinces which had these income taxes had largely disbanded their collecting staffs.
Along came the dominion-provincial conference in 1945; it was adjourned to 1946, adjourned in 1946 and not then resumed. It was adjourned under circumstances that made it quite clear that it was to be resumed, but it never was resumed. Instead, the federal

government then began to make individual dickers with individual provinces. But then there was a ray of hope in 1950. After the federal election of 1949 it seemed as though some sanity was to be introduced into this situation, and that some attempt was to be made to bring the dominion and the provinces together; because then the federal government called a dominion-provincial conference to meet here at Ottawa at first. Later it adjourned to Quebec and resumed there with respect to one particular matter of concern, namely methods of amending the Canadian constitution in Canada. But discussions on financial aspects of federal-provincial relations were not resumed in any conference and the responsibility for the fact that those discussions were not resumed rests upon the shoulders of the government opposite.
Let it not be forgotten that in these conferences some eloquent voices were raised against any attempt on the part of the federal government to crowd the provinces out of those fields which had been theirs prior to 1942. One thinks at once of the eloquent voice raised time and again in those meetings and in public even after those meetings, frequently, by the late Angus Macdonald, premier of Nova Scotia, when he reminded the Canadian public as well as the people of his own province that the rights of the provinces must be respected, and that if we are to have regard for the fact that this constitution under which this country was brought into being is a federal constitution, then the federal government cannot elbow the provinces out of rights and fields of taxation that were given to them by the constitution.
I hope it will not be forgotten, Mr. Speaker, that the first voice raised in a dominion-provincial conference, by way of acknowledging that the central provinces, by reason of the fact that most of the large corporations have their head offices in those provinces, should share some of the taxation benefits of that fact with the other provinces, was my leader who was then premier of Ontario.
Yes, Mr. Speaker, and regard should be had for a principle which apparently in the government of today has no place. It is the principle of which the house was reminded in his speech yesterday by my colleague the hon. member for Three Rivers (Mr. Balcer), who recalled the words of Sir Wilfrid Laurier, echoed by the late Mr. King, in pointing to the unsoundness of a situation where one government collects and another government spends. But these sound admonitions have been forgotten by hon. gentlemen opposite. There is no place any more in the thinking of this government for the kind of principles
The Budget-Mr. Fleming that the leaders of the past, Sir Wilfrid Laurier and Mr. King, thought to be axiomatic in Canada.
Let it not be forgotten, Mr. Speaker, and let it not be denied that the federal government has made it as tempting as possible for provincial governments to sign these agreements.
These agreements are legal, they are binding, and they must be honoured. Let there be no question about that. I was shocked last summer, in travelling through Manitoba in the course of the election campaign, to find that the Minister of Justice (Mr. Garson) was trying to frighten the people of that province into thinking that the dominion-provincial agreements then existing would be jeopardized if a Conservative government were elected to office. Such utter nonsense, Mr. Speaker!, It was a fiction. The fact of the matter is that the Conservative party has said that those agreements would be honoured and would be respected and carried out to the letter. That is still the position of Her Majesty's opposition.


John Whitney Pickersgill: May I ask the hon. gentlemen a question?


Donald Methuen Fleming: With pleasure.


John Whitney Pickersgill: Would they be renewed at the expiry of the present agreements?


Donald Methuen Fleming: I am quite sure that whatever deal is acceptable to the provinces when these agreements expire the provinces would get an infinitely better deal from a Conservative government than they would from this Liberal government, and nothing will be forced down their throats either.


Mr. Harris:: You would raise the ante, would you?


Donald Methuen Fleming: We have heard some interesting departures in this debate on the part of hon. gentlemen opposite-the latest interruption is symbolic-departures from the realm of reality and flights into the realm of fancy. What was the situation? The provinces at the conclusion of the wartime agreements had been out of the field of levying direct personal and corporation tax for some five years. It was politically difficult for them to re-enter that field. The resumption of taxes that they had collected for years before 1942 would have looked to many people like a new tax. It might not have been politically possible.
In the second place, many of them had no collecting machinery and, Mr. Speaker, at that point the federal government refused to do any collecting for them. What had
4212	HOUSE OF
The Budget-Mr. Fleming been possible before the war, what the federal government had willingly done up to 1942 the federal government was not prepared to do after 1947.
In the third place-and this is the most important fact of all-the federal government had so completely occupied the field of income taxation, whether on individuals or corporations, by its extortionate rates of taxation that there just was not room in that field for any other taxing authority. All the adroit sophistry we have heard on the part of the Minister of Finance and others who have spoken in the same vein, talking of respecting the concurrent rights of the provinces in the field of taxation, simply ignores the hard facts of the case. The camel got its head into the tent and the camel, the federal government, proceeded to get its whole body into the tent and occupied the whole tent. There was no room at that stage for any provincial government to climb into the tent. There was no room for any provincial camel any more.
There is the hard fact of the situation, and there is the fact that makes this sophistry we have listened to from the Minister of Finance and others so completely unrealistic. You can talk today about concurrent rights on the part of the provinces, the Minister of Finance and others can say that the provinces have just as much right as they ever had to levy income tax on persons or corporations but, Mr. Speaker, you must take account of the fact that the federal government is already taxing to the limit in those fields. That is the inescapable fact, and no amount of fallacious sophistry on the part of hon. gentlemen opposite will change that fact. Nothing will change it except action on the part of the dominion and the provinces to come together to reach an agreement in this field and then action on the part of parliament and the legislatures in consequence.
Now, Mr. Speaker, as a gesture the Minister of Finance has made provision in recent years to allow provincial governments to collect the equivalent of 5 per cent of the federal tax on individuals, of course with their own machinery, and to collect the equivalent of 5 per cent of the federal tax on corporations up until a year ago, at which time it was increased to 7 per cent. The situation now remains that part of the taxes paid by taxpayers, whether personal income tax or corporation tax, in any province which has not signed one of these agreements with the federal government, is used in part to pay rentals to the signing provinces. What is left by the existing federal legislation to any province that does not sign an agreement, namely 5 per cent of the federal income tax on persons and 7 per cent of the federal


income tax on corporations, is not nearly as much as any non-signing province would receive if it signed an agreement.


Mr. Lesage:: Except Ontario.


Donald Methuen Fleming: I will deal with that because the agreement with Ontario is not complete. It does not include succession duties. It was limited.
There is one other fiction that has a bearing in this debate with which I wish to deal and deal explicitly. It is the fiction that no pressure has been applied by the dominion government on the provinces. That is so far from the facts as to bear no resemblance to them.
I have pointed out in the first place the inadequacy of any field left to any nonsigning province without imposing on its taxpayers burdens that, in addition to the existing federal impositions, would be too heavy to be borne. In the second place, there has been that obstinate refusal on the part of the federal government to collect provincial income tax for any provincial government which seeks to collect its own personal tax or its own tax on corporations. It has compelled any such government to set up its own expensive collecting machinery. In the third place, the federal government has tried to make these agreements as attractive as possible to any province in the hope that all will sign. But, Mr. Speaker, there is more direct evidence than that of pressure on the part of the federal government. One has only to recall the statements made by the ministers who signed the agreement on behalf of the Alberta government a few years ago when remarks were made on the part of these ministers that a pistol had been held to their heads and they were signing the agreement virtually at pistol point.
This afternoon the hon. member for Joliette-L'Assomption-Montcalm (Mr. Breton) had a good deal to say about the fact that the premier of the province of Ontario had signed an agreement in October, 1952. Evidently he has completely overlooked what the premier of Ontario had to say about the agreement that he signed at that time, for here are the words that were uttered by the premier of Ontario on October 21, 1952. He said that at best the agreement was nothing more than a "stopgap arrangement." He warned that it did not provide a solution to the municipal problem, which in turn is "dependent on a shift of taxes and revenue from dominion sources to the province and then to the municipalities". These next words are a direct quotation from his remarks:
We have urged the dominion government to begin discussions with the provinces to obtain these objectives. The present tax system is outmoded.

These are the words of the premier of Ontario and he has made similar statements since that are to the same effect as the remarks he made at that time.
Nothing short of a dominion-provincial conference seeking agreement with reference to fields of taxation will be adequate to meet the needs of the situation. The provinces of Canada have important constitutional rights and responsibilities. Those rights and responsibilities must be respected. In Canada we live under a federal system. There never would have been a Canada had there not been a federal system and, sir, the responsibilities which the provinces and their creatures, the municipalities, are bearing today are becoming ever more costly. While that process has been continuing, while their burdens have been growing, the federal government on the other hand has in fact been increasing its powers under our constitution by the extent to which it has been centralizing at Ottawa the collection of revenues. Sir, prior to the war the percentage of the total taxes in Canada collected by the federal government was 39 per cent. Last year that percentage had doubled to 78 per cent. More federal taxation and expenditure mean more federal power at the expense of the provinces.
Warnings like those that came from the eloquent tongue of the late Angus Macdonald have fallen on deaf ears opposite, so that today we have confronting Canada a situation which is the inevitable result of the policies followed by the federal government and its failure to seek agreement with all the provinces through the medium of a dominion-provincial conference.
This situation, Mr. Speaker, is a matter of concern, not simply to the province of Quebec, not simply to Quebec members in this house, but to all of Canada, because we see here, and have seen it in this debate, the wells of Canadian unity being poisoned by the statements that have been made by hon. members opposite; bellicose statements exposing the same kind of belligerent truculent attitude that was shown by the Minister of Finance during the course of his remarks in the budget debate.
It is imperative that there be called a dominion-provincial conference. Only the Prime Minister of Canada can call a dominion-provincial conference. The agenda for that conference must include this whole field of taxing powers and responsibilities. It must take due account of the necessity of honouring and respecting, both in the letter and in the spirit, all existing agreements. It must seek in the long run, under the proper auspices and with a patriotic Canadian spirit, to secure a better deal than any of the provinces have 83276-266
The Budget-Mr. Fleming had as yet. It would mean an end, Mr. Speaker, to a situation such as that which now has arisen and for which this federal government must accept responsibility.
No one in this house has spoken more eloquently on the subject of national unity than has the Prime Minister, and upon the necessity for maintaining that unity. Today national unity in Canada is threatened by this situation that has been allowed by the federal government to emerge. Provocative truculence on the part of ministers and members opposite is no contribution to the settlement of this problem. What has been exhibited here on the part of the federal government is evidently a determination to beat the province of Quebec to its knees.
Yes, Mr. Speaker, it was a strange afterthought, it was a remark completely out of tone with the other remarks made by the Minister of Finance in his budget speech, when he said at the end of his remarks that the door was still open. It was a curious afterthought, and completely different from the prevailing tone of the minister's remarks in relation to this subject in his budget speech. It is evident that if there is to be any discussion, so far as the attitude of the government opposite has been expressed, the Quebec government will have to come cap in hand and rap on the door of the Minister of Finance.
I say this is a matter of concern to all of Canada. The fact is that all the provinces have asked for a resumption of the dominion-provincial conference. When it adjourned in 1950 it did not end there. It adjourned, ostensibly to meet later, with optimistic statements on the part of the Prime Minister and other representatives of the federal government; optimistic statements about the good that had been accomplished by the conference and what was yet to be accomplished in the course of further discussion.
Is it not a strange contradiction, is it not an amazing commentary on the attitude of the government opposite, that at this very moment at Geneva representatives of the Canadian government are sitting around a table with representatives of communist governments, Russia and China, to discuss matters of at least common concern, yet the Canadian government will not bring itself to sit down with fellow Canadians representative of the provinces to discuss matters of common concern?
It is not long ago that the Prime Minister returned from a tour abroad during which he visited several of our sister nations of the commonwealth. He undertook this tour with the complete approbation, and indeed the earnest good will of all political parties in this house.

The Budget*-Mr. Pickersgill
During the course of the tour the Prime Minister gave expression, as indeed we all knew he would, in his visits to other countries, both those in the commonwealth and those outside the commonwealth, to the Canadian spirit of friendliness, conciliation and good will. This same spirit is urgently needed now here. It rests with the Prime Minister of Canada and no one else to decide whether a dispute, which has already been the occasion of very bitter expressions on the part of some hon. members opposite, a dispute which apparently is becoming more bitter day by day if we are to judge by their bitterness, is to be permitted to continue to become more divisive, more threatening to Canadian unity, or whether instead there is to be a sensible approach in the true Canadian spirit of good will and understanding. Which course is to be followed, bitterness, disunity and division, or the conference table, the spirit of good will, understanding and accord? The choice rests with the Prime Minister of Canada.


John Whitney Pickersgill: I wonder whether I might ask the hon. member for Eglinton (Mr. Fleming) a question. I ventured to suggest that the Quebec income tax was imposed in 1940 rather than in 1939 and the hon. member suggested I did not know what I was talking about. I wonder whether he has seen chapter 16 of the statutes of Quebec 1940, which imposed the Quebec income tax?


Donald Methuen Fleming: This is a curious remark
from the hon. member. I suppose he is not unfamiliar with a reference book prepared in 1945 for the dominion-provincial conference on reconstruction, the so-called green book, bearing the label "Personal Income Taxes." It is a federal publication, so perhaps he even had something to do with compiling it. If he will be good enough to look at page 21 he will see the federal government had this to say under the heading "Quebec":
The province of Quebec first levied a tax on income in 1939 (chap. 16, Laws of 1940). It differed from the tax of the other provinces in that it imposed a flat levy of 15 per cent on the amount of tax payable by an individual to the dominion . . .
I draw to the attention of the minister the fact that this tax was first imposed in 1939. I think he is dealing with the statutory reference of 1940. There may have been a change made then, but I am prepared to go by what the federal government said in its green book.
But, Mr. Speaker, be that as it may, whether it began in 1940 or 1939, it had been in existence for not less than two years before the dominion-provincial agreement of 1942. And I also draw to the attention of the hon. member the fact that the rate then in


effect in the province of Quebec was 15 per cent of the amount of taxation payable by an individual to the dominion-the same rate now proposed. The federal government in those days was generous enough and big enough to collect that tax on behalf of the province.


John Whitney Pickersgill: Mr. Speaker, I think, if I might be permitted to say so, that the hon. member was misled, as others were misled.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: Well, I have not spoken in this debate; and this is all I expect to say.
The hon. member was misled, as others have been misled, by the not very precise reference in the green book. But the fact is, as he would see by looking at chapter 16 of the statutes of 1940, that the tax was imposed in 1940 and that it applied to income earned in 1939.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: Well, it is a matter of some little importance. It happens to be a matter of some little importance because in 1939 the present premier of Quebec was in office in that province. In 1940 he was leader of the opposition in that province and he objected, I understand quite vigorously, to an income tax being imposed in Quebec, as being something that was quite unnecessary.


Donald Methuen Fleming: May I ask the Secretary of State a question? Did he write the green book?


John Whitney Pickersgill: That's a secret.


Mr. F. S. Zaplitny (Dauphin):: Mr. Speaker, I have no intention of following what has been said in the last while by hon. members who have preceded me in the debate in the discussion of a number of very interesting subjects. We have heard many speeches on dominion-provincial relations; and earlier today we heard from the hon. member for Lethbridge (Mr. Blackmore) an interesting address on the subject of Social Credit. Let me say at once that I always enjoy his exposition of the subject. Each time I hear it I have the hope that I will understand the theory. Yesterday evening I think he came about as close to disclosing the philosophy as he ever did when he mentioned that it had been referred to as scrip tease. I thought that at last he was getting down to the bare facts of Social Credit. But it was not to be.
What I have to say will not follow along the lines of the debate which has been taking place this afternoon. I would like to speak directly to what is in the budget speech, particularly as it affects trade. In my opinion this budget overlooks a great many

things which the people of Canada had a right to expect to find in it. My understanding is that a budget should do three things: It is a review of the current economic position of Canada; it is an announcement of the fiscal and other changes to be recommended by the government; and it is also a forecast of government policy. Under those three headings I should like to examine the provisions in the budget and see to what extent they are satisfactory.
First of all, in giving a review of the economic situation in Canada I believe the Minister of Finance tried to give a rather optimistic picture. However in one or two places in his speech he had to admit-and I shall quote his own words

that the situation is not as rosy as he would like to have us believe. For example, as reported at page 3725 of Hansard for April 6, he made this significant statement when he referred to the fact that there has been a slowing down of business activity and a drop in incomes in certain sectors of our country. He gave this as the reason:
This slowing down in the growth of defence expenditures no doubt contributed to the levelling off of production in some industries that became evident toward the end of 1953.
That is a significant statement, for this reason, that at various times the public has been led to believe that it has been the general economic policy of this government and of the party which now holds power that has been responsible for that condition in Canada described as prosperity. But now we have the significant statement that due to a lower expenditure on defence, immediately there has been a slowing down of production, a levelling off of prices, and so on.


Mr. Benidickson:: In some industries.


Frederick Samuel Zaplitny: Yes, in some industries; and later on I shall point out the industries concerned. The significant point is that we are told all these conferences that are being held throughout the world, including the one in progress today, are designed to bring about a peaceful situation in the world, a situation in which all nations can continue to live in peace and prosperity. I believe all nations are looking forward to a time when war will become unnecessary.
If that is the over-all objective, then we must dare to hope that defence expenditures will be reduced as a regular thing in the future. If the small drop in national defence expenditures in Canada this year has already affected our economy to the extent indicated by the Minister of Finance, then surely it is time to do some serious thinking as to what the effect will be if conditions were such that it was possible for us in Canada as well as for 83276-266J
The Budget-Mr. Zaplitny people in the United States and in other countries to cut defence expenditures in half, or to even less than that. Surely that is a matter which must be given serious consideration. Because until the beginning of the second world war we had a situation in Canada which was described in various terms, but was commonly known as a depression. During those times there were members in the house who suggested to the government that it was not necessary, in a country as wealthy as Canada in potential natural resources, to have unemployment and to have poverty in the midst of plenty. Those suggestions and ideas were disregarded. In fact I well remember that Mr. Dunning, who was minister of finance in those days, used quite often to brush aside such suggestions with the question, "Where is the money to come from?"
Later on as we moved along it was discovered that money was the least important of the considerations, and that as long as we had the natural resources and the potential, a medium of exchange could be found. And it was found. We found we could expand the economy and the industry of this country to an extent undreamed of in 1939. Those who would have said that it was possible in, let us say, 1938 or 1939 to expand the production and industrial potential capacity of the country to the extent it was expanded in, let us say, 1945, would have been called, and indeed were called, dreamers and visionaries. Yet they spoke the economic truth.
I wish to refer to another statement in the minister's speech, found on the very next page, where he said:
There is no need for me to go into detail concerning the nature of the present economic situation. It is characterized by more unemployment than we had last year at this same time, and by more unemployment than any of us like to see. It is marked also by a slackening in the growth of production and by declines in certain industries.
There is an indication of the fact that we are slowly, perhaps not too slowly, drifting back into a position of recession which may end up in a major depression. The reason I put that on the record is that the paragraph farther down, as far as I can see after reading the speech, is the only recommendation the minister had to make as to what could be done about such a position. Here are his words, as reported at page 3726 of Hansard:
The re-emergence of keen competition in trade means readjustment and reappraisal. It means a sharpening of pencils and a careful re-examination of managerial and labour efficiency. This is not an easy process, but it is a very necessary one, and the longer it is postponed the more difficult it becomes.
So far as I can see, that was the advice the Minister of Finance (Mr. Abbott) had for those industries who find themselves in a.

The Budget-Mr. Zaplitny depressed position. He advised them to sharpen their pencils, to look into their methods of doing business, to create greater efficiency and so forth. May I suggest, Mr. Speaker, that that is not the solution. I do not believe that anyone in this house seriously believes that that is the solution. It is not a matter of greater or more efficient production. When we look over the situation in Canada and when we listen to the speeches of private members on the government side of the house, we hear from day to day that their greatest problem is in the field of marketing. We have surpluses of this and of that; we have produced and are producing great quantities. It is not a matter of being able to produce more; it is not a matter of greater efficiency. It is a matter of creating, in my opinion, a proper price relationship in order that the medium of exchange may be as equally distributed as it is possible in our economic set-up so that the wheels of industry may continue to turn.
I now come to some of the budgetary changes. I do not need to go into detail. They are available to the public and printed in the press. It strikes me as rather strange when I look at the changes that were made, -and I am in favour of some of them; for example, the reduction or the removal of the sales tax on implements or equipment used by municipalities, the reduction of excise taxes on certain goods, are desirable- when you boil it all down, when you study all the budgetary changes you find that it all amounts to so little that the general public has expressed a great deal of dissatisfaction and discontent.
Only a short time ago, in the budget before the election, it struck me, as I went back over the literature published by the Liberal party during the election, they took a great deal of credit for what they called the "sunshine budget". They took a great deal of pride in some of the tax reductions that were made. They made it appear as though they were well on the way to lifting some of the tax burden from those who now have to bear it. Since the election is over we seem to come right back again, to the budget which was brought down this year and which I think was correctly described by the hon. member for Eglinton (Mr. Fleming) as a scrawny budget. It has been described in various terms. I find in one of the newspapers that the secretary-treasurer of the Canadian Congress of Labour characterized it as an empty budget. He was not far out. They also point out that the government seems to have ignored almost completely the representations made by agriculture.


I am not going to go through that, but to illustrate I hold in my hand a letter and certain other representations made by the Manitoba Federation of Agriculture and Cooperation. This is an organization which represents a large number of farmers. It also represents the co-operative movement in Manitoba. I have found them to be extremely modest in their requests, and so has the government. We are informed that this organization made a certain request to the government with respect to certain tariff changes. To give an illustration of the way they feel about it I shall read the first two paragraphs of this letter. It starts out by saying:
On March 9, 1954. in a memorandum presented to the Minister of Finance, the Canadian Federation of Agriculture, of which this organization is a member body, requested that certain changes be made in the Customs Tariff and the Excise Tax Act.
In bringing down his budget on April 6, the Hon. D. C. Abbott made no reference to the suggestions of the federation of agriculture and made none of the suggested changes in the Customs Tariff or Excise Tax Act. This is a regrettable omission.
To that I say, hear, hear. In a moment I shall make reference to some of the requests that have been heard. Those requests were exceedingly modest and reasonable and I dare to hope that the government will yet take the opportunity, which will be present when we are in committee, to recommend certain amendments to the resolutions which will be before us and make those changes.
The federation asked that all instruments of production used by farmers in Canada be duty free. Certainly there was nothing very radical about that request nor anything very unreasonable about it. It is in line with what the government says is their policy. We have been repeatedly told that they believe in lower tariffs; that they do not believe that farm implements, which enter into the cost of production, should be subject to customs duty. But there are a number of very important pieces of equipment, let us say, which are used in farming which are still subject to taxes, and this organization asked that they be removed. Nothing was done about it, and no mention was even made of that request in the budget speech.
They also asked that the sales tax on stock feeds be removed, and that apparently was not done. One or two other requests were made which I hope the government will still be prepared to carry out before the resolutions are carried.
What about government policy? I believe that is the most important part of the budget, Mr. Speaker. Apparently what budgetary changes the minister has recommended the

government feels are sufficient. We may have a difference of opinion on that, but we are not going to be able to do very much about it. Government policy is important because it has to do with the future. And in a country as young as Canada I believe we must have a policy, and a great deal will depend on the type of government policy that is in operation in future years. I find that the government has actually no policy for the future. I say that because in 1949 the Minister of Trade and Commerce (Mr. Howe) made a certain statement as to what the philosophy of the government was and that was quoted as recently as March 9 by the Secretary of State for External Affairs (Mr. Pearson), apparently with approval. These are the words:
Canada is a free enterprise economy and the initiative for economic expansion rests with private individuals and firms. The government will endeavour, through its policies, to create a climate within which private initiative thrives and industrial expansion is encouraged.
There is nothing particularly wrong with that statement except for the fact that when you analyse it it means that the government is prepared to do nothing in the way of economic planning, believing as they do in what they call free enterprise, which sometimes is referred to as private enterprise. Call it what you will, they believe in the policy of laissez-faire, drift. I take issue with that policy because I believe we are in a time in which, whether this government likes it or not, whether any party in this house likes it or not, the government of Canada is going to have to take a greater share in the economic affairs of the country if they are to fulfil their responsibilities.
We have advocated and do advocate economic planning. There are those who oppose it. Well, let us face the issue. Let us give each other the benefit of the doubt. We are honest about our opinions. We believe in economic planning because we believe that there is nothing that can be substantially accomplished without planning. That is being proved every day in our business and industrial affairs. It does make a difference what the planning is for and it makes a difference who is doing the planning, but if the government actually believes that they are going to take some responsibility for the general welfare and the economic development of the country they must accept that the philosophy of economic planning is necessary.
After examining the proposals of the budget and the budget speech we have heard questions asked everywhere on certain points. I am sure hon. members who were home recently during the Easter recess have had these questions thrown at them regardless of
The Budget-Mr. Zaplitny the constituency they represent or the party to which they belong. People are asking what is being done about unemployment. What are we going to say? Are we to quote for them the words of the Minister of Trade and Commerce which apparently is government policy? He stated that it is private initiative which must look after the economic affairs of this country, and that the government takes no responsibility for these matters. Are these the answers we are supposed to give the unemployed? If we are to follow out the government policy and interpret it in that way then certainly the people in this country will wonder what we are doing.
We are asked about the grain situation. Recently figures have been presented in the press showing that over one billion bushels of grain are now available in Canada. We will soon be entering into another crop year. In 1954 the acreage under seed will be as high as ever and it is estimated we will have another huge crop for this year. But then, if we get a good crop, as good as we have had in past years, what will the situation be? How are we going to turn that grain into cash? I agree, to some extent, with what the Minister of Agriculture (Mr. Gardiner) has often said, namely, that a large amount of grain in storage on the farms or in the grain elevators is not a bad thing. Of course, I believe we might well have lean years as well as the more productive years we have had, and the situation may well arise when we may be very happy if we have a great deal of grain in storage because it is one of the best, and least perishable foods on this earth. But the farmer has to pay his expenses, pay for his tractor fuel, hired help, and all the other incidental expenses which go into farming, as the Minister of Agriculture very well knows. To the farmer grain stored in the granary or in the elevator, unless he can turn it into cash, is not a very useful commodity. Therefore, something has to be done to turn that into cash. Various suggestions have been made but none of them apparently have met with the approval of the government, though it is a matter which is becoming more and more urgent, particularly since we are approaching next year's crop.
We have been told by the Minister of Trade and Commerce that the best we can hope for is a quota of seven bushels per acre during the present crop year. But what will the situation be after that? On the first of August it is more than likely to be down to two bushels an acre again and how will farmers handle that situation when they have some 1952 crop, when they have not sold the 1953 crop and the 1954 crop is coming on top of that? How are they going to meet their expenses? How are they going to safeguard

The Budget-Mr. Zaplitny their credit which is even now in jeopardy? And how are the dealers and local merchants going to continue to carry their customers with the credit they have been extending, unless some of that grain, or a substantial part of that grain can be turned into cash? That situation has to be faced and faced very quickly, but apparently so far the government has no plan and has given us no hope that they have any solution to the problem.
The government has turned down all the suggestions that have been made. The budget debate has not brought out any new suggestions, nor have any alternative suggestions been advanced by the government. We are anxious to know what they are going to do about that situation.
Then there is the question of price relationship. I am not going to speak extensively on that subject this evening because I have spoken so often on the question of prices in this house that I hesitate to weary hon. members any longer. But I feel strongly about this because I believe a great many of our troubles can be traced to the price policies of the present administration. I believe it was a major mistake when in 1946, 1947 and 1948 the government began to abolish price controls as quickly as possible and permitted the condition to be created where price relationship went entirely out of joint.
The government, of course, will probably say this is a matter which can be handled quite properly within the provinces. I am not going to go into that controversy because we have heard enough about dominion-provincial disputes during this debate. But I would like to say this, that no one can seriously claim that any provincial government in this country could successfully operate a price control system within its own borders. It is either a question of this parliament enacting the proper legislation or we will not have it at all. Let us get that point quite clearly fixed. But in speaking of price control, and I have mentioned this point before, I hope it will be clearly understood that I do not necessarily mean lower prices. As a matter of fact, it does not have to mean lower prices at all. It would mean the establishing of a price relationship so that the cost of production can be safeguarded in relation to the price at which the product is sold.
At this point I would like to refer once again to the speech of the Minister of Finance and point out that what this government has done is to permit 50 per cent of the savings and of the incomes of those who are on pensions to be confiscated by inflation. I make that statement on the authority of the Minister of Finance himself, although, of course,


he did not say so in so many words. However, if you turn to the appendix to the budget, at page 3759 you will find a graph which sets out the gross national expenditure and underneath that there is written "in current and constant dollars." Now the current line on this graph shows $24 billion and the dollar, taking 1935 to 1939 as a basis of 100, drops down to exactly one-half. In other words, this is an admission by the Department of Finance that the dollar of 1935 to 1939 is today worth exactly 50 cents. It means that those whose income has not increased since price controls were removed, and who are for example on a pension or a war veterans allowance, or some other fixed income, have had one-half of their income confiscated by inflation.
Now that is a fact which the government cannot dispute, and that has also been the effect on those who have saved up a little money during the years of the war or previous to that, or who retired during 1945 and 1946 as many people did. They are mostly farmers and business people and others who have saved up a little money, put it in the bank, and hoped that that money would see them through. They have found that inflation has confiscated 50 cents of every dollar they saved. That is also true of people who bought war bonds with dollars which were worth 100 cents. When they receive their money, or when these bonds are redeemed, they are going to get dollars which are now worth 50 cents.
That is confiscation and it is a strange irony to find that the same party which so often used to accuse the C.C.F. of the intention of confiscating the people's money through nationalization of the banks- though that is a form of propaganda I do not hear any more-themselves today stand guilty of having confiscated 50 per cent of the savings of the Canadian people and of all those who are on a fixed income such as a pension.
That is what has happened under our price relationships since price controls were taken off; and that is not all of it. We have a marketing problem. We were told by the Minister of Agriculture not so long ago that there would be no difficulty in selling Canadian farm products on the overseas market provided we are prepared to accept the price that they are willing to pay. That statement in itself may be a perfectly truthful one, and I am not disputing it; but what does it mean? It means that Canadian producers, whether they be producers of grain, livestock or any other farm commodity, would have to accept, in many instances, a price which would be less than or very close

to the cost of production. In other words, they would have to accept a price at which they could not economically operate their farms. If we had a proper system of price relationships, where the costs of production could be safeguarded by keeping at the proper level the price of things that go into the cost of production such as fuel, farm machinery and all the other things that go into farm production, it would be possible for Canadian farmers today to accept a lower price than that which they are currently asking or getting and to retain those world markets which have slipped through our fingers in recent years. But certainly no one today can be heard to say, "Oh, yes, we have allowed your cost of production to go up until it is almost double what it was a few years ago, but if you are willing to sell your production at half the price you are now getting, we will find markets for it." We have got ourselves into that dilemma owing to the fact that there is no proper price relationship between the cost of production and the price of the goods we sell.
Then what about social security? I have already pointed out that inflation has reduced the real income of those who are on pensions, who draw family allowances and so on. People are asking what this parliament is prepared to do about increasing family allowances, old age pensions, blind pensions and so on, in order at least to compensate them for the loss they have sustained due to inflation. After looking through the budget and listening to the speeches made so far by those on the government side of the house, I can offer no hope to those who ask these questions. Apparently nothing is to be proposed to this house this session with the exception, of course, of legislation which we expect in respect to persons who are disabled.
When we plead for improvements in our social security measures we are often admonished by members on the other side of the house, including members of the cabinet, *-even the Minister of National Health and Welfare (Mr. Martin) himself-who point out that it is going to cost money to do these things. Obviously it will cost money. But, Mr. Speaker, I plead on behalf of the aged, the disabled, the blind and so on and I do so without any apology because I ask for them no greater generosity than that which the government has seen fit to lavish upon the members of this house and the members of the Senate. There seemed to be no hesitation with regard to where the money was coming from in that respect.
Then what about a national health plan? Obviously that is another one of those skeletons in the closet which the government
The Budget-Mr. Zaplitny hopes will not rattle too loudly and will not attract too much attention. They hope that they can tiptoe past that issue quietly without having it raised too many times during this session. But it is another one of those election promises which have been made again and again. No doubt it will be made just as blithely at the next election as it has been in the past. I think it is time to play fair and to be honest with the Canadian public. If this government intends to bring in a national health plan, then certainly something should be done in this session to indicate that it is going to be done before this parliament is dissolved.
I have already pointed out that we believe in economic planning and in establishing a proper price relationship. May I just say now in a general way that I believe it is time we had a new economic philosophy, a new way of looking at things. Here I speak for myself only as an individual, and I say that I believe it is time we accepted the philosophy of co-operation in place of the philosophy of competition. I know that a large majority of the members of this house think that the competitive system is the right type of economic system. I respect their views, but to me it runs counter to all the other teachings and to all the other things which we accept as being right on the moral side of life. From the time we learn to speak or start in to school or take part in any activities in relation to our fellow human beings, we are taught to respect each other and to help each other.
For example, we are taught the golden rule: Do unto others as you would have them do unto you. But as soon as we get into the economic sphere, as soon as we get to the age where we must make a living, then we have to pervert and degrade the golden rule. In order to live with the system you have to do others before they do you. There is something fundamentally wrong about that concept. There is a conflict between the moral forces which we accept and boast about as the Christian principles of kindness and brotherly love. Then we turn around in our economic affairs and we attempt to live in a cutthroat or jungle fashion: we compete and fight. Often I used to thrill to a statement made by the former prime minister of Canada. I used to love to hear one phrase he used so often during the years of war, when he said that we must have a new social order in which human need will be the cardinal principle and not human greed. How little of that philosophy one finds in this budget or in the policies of the present government.

The Budget-Mr. Zaplitny
I believe it is time that we accepted the philosophy of co-operation, of helping each other in our activities, and translated that philosophy into our economic system. It is not something that is going to be done overnight. I am not so optimistic or so idealistic as to think that. But I think it is time a good start were made. If we accept that philosophy seriously and want to translate it into our economic affairs, the place to do it is in our annual budget in order to show that we believe in helping each other instead of competing with each other.
There are business people today who are beginning to realize that this whole question of competition, which to them has been sold as the idea of free enterprise, is not what they thought it was in the first place. From time to time we get reports on the growth of monopolies, combines and cartels, these economic machines which try to throttle free competition, which try to put the small man out of business in order that the big monopoly can operate more freely. All these things are beginning to persuade the people that more co-operation in economic life is needed in order to bring it into line with the philosophy of co-operation that we accept in our moral principles.
In addition to that I will say only this. I think it is time that this parliament was prepared to raise its sights. This budget which we are now discussing is not something we can feel proud of. Somehow, I think every one of us should have a slightly guilty feeling; and those who are directly responsible must, of course, bear the greatest portion of it. When we leave this parliament, when this session is completed, and go back into the constituencies, people will say to us, "So you have passed the budget; you have made provision for certain taxation and so on"; and they will ask, "What have you done that is new? What economic plan have you developed that is going to solve our unemployment situation or is going to do something about trade, or about our grain problem?" and so on.
We are going to have to say that the excise tax on jewelry, fur coats, cameras and fishing rods was reduced. I am sure there will be great comfort in that for the half a million unemployed who are wondering how they are going to pay their rent or make the next payment on their house or car. With the finance company looking over their shoulders and breathing down their necks, it will be a great comfort to them to be told that they are going to be able to buy cameras, fishing rods, jewelry or fur coats a little more cheaply than before. I am sure these are not the kind


of things in which these people are interested. I think it is time that we raised our sights and realized the great development potential there is in this country, particularly in the northern areas. We should be prepared to accept public investment as one of the methods to bring about that development.
I am not opposed to private investment but there are times and places where, because of the nature of things, this great potential will remain undeveloped unless public investment is used as an instrument of development. The whole history of Canada proves that, and I need not go into it in detail. I believe it is time that we were prepared to set up an investment board which would have a twofold function. One function would be to provide a place where the public could invest their surplus funds and the other would be to direct investment toward the useful development of our natural resources. I believe we have a great deal of potential wealth and unless we are prepared to remain hewers of wood and carriers of water for United States capital we must be prepared to use Canadian capital and public investment where necessary in order to develop the great potentialities of our country.


Mr. Raymond Bruneau (Glengarry-Pres-coil):: Mr. Speaker, as I see it, it is the wish of every member of the house that oratory be spared so that the present debate on the budget may be as short and as concise as possible. In accordance with this wish and to help the advance toward a successful early end of the session, I will circumscribe my remarks to a few points of special interest to my own constituents and deal mainly with a proposed amendment to the Income Tax Act with respect to mutual insurance companies, with federal-provincial relations and with two or three other points arising from the impressive speech delivered by our able Minister of Finance (Mr. Abbott) on the night of April 6 last. May I be permitted first to extend my sincere congratulations, and those of the population of Glengarry-Prescott, to the minister for his comprehensive review of Canada's economic and financial position. His conclusions on our national production in 1953 and his forecast for 1954 are not only most encouraging but contain a factual indication of the ascending development of our country under a competent Liberal administration.
By many sources, including stout supporters of the opposition, it has been said that the Minister of Finance has presented a "wait and see" budget. Never, perhaps, was a more impressive tribute paid to a government financial expert. By saying so, even those who intended to criticize were recognizing the far-reaching viewpoints that

obtained in the preparation of the budget by the Minister of Finance. His realistic approach to all economic and financial problems made him realize that the world, and consequently Canada, had reached a turning point where careful steps alone are to be made if one wants his country to go ahead in the international financial organization without disrupting our own industrial or commercial set-up. For all this, and the tactful way in which he managed to protect so many sectors of the population from being hurt by an unfair distribution of taxes among the paying public, the Minister of Finance is to be thanked and congratulated.
But, in opening my remarks, I indicated that I intended to speak briefly about a subject that is of particular interest to my constituents, that of a proposed amendment to the Income Tax Act with reference to mutual insurance companies. On this, which is also of great interest to the great majority of Canadian farmers, I wish to express my fear as to the consequences of the budget income tax resolution No. 6 which reads as follows:
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
6.	For the taxation of a resident mutual 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.
This resolution might have to be clarified, but I am given to understand that it would allow the government to re-establish as taxable the surpluses of mutual insurance companies, thus disregarding the favourable report of the royal commission which gave its opinion that purely mutual companies should be taxed only on investment income. As you know, Mr. Speaker, this opinion was concurred in by the income tax appeal board and backed up by the Supreme Court of Canada last summer.
If that is the meaning of resolution No. 6 as it stands, I want immediately to take a firm stand against it and to ask hon. members of this house to keep in mind the danger involved when the resolution is discussed in further detail by the house. The great majority of farmers of my constituency have their fire insurance with the Glengarry Farmers' Mutual Fire Insurance Company or with the Prescott Farmers' Mutual Fire Insurance Company. The two insurance companies are giving insurance protection at cost and any surplus they build up is solely for the reserve demanded by the department of insurance. There are no profits.
There is no doubt, if these two companies have to pay extra taxes along the suggested lines, that the additional cost would have to 83276-267
The Budget-Mr. Bruneau be charged to the insured farmers who, in my estimation, are already charged heavily enough. What is bound to happen in Glen-garry-Prescott can be multiplied across the country by the number of constituencies where farmers are organized on a mutual basis for fire insurance protection. That is why I think that it would be in the general interest that the members of the house, especially those representing rural constituencies, should scrutinize resolution No. 6 when the amending bill is before the house.
I also indicated in my preliminary remarks that I intended to speak about federal-provincial financial relations. On this subject as well I will be brief, but I think, at this stage of the debate, that it is about time that the voice of a French-speaking Canadian living outside of the province of Quebec should be heard, pointing out the importance of standing united as citizens of a great and fastgrowing country. The only direct reference I will make to the statement of the Minister of Finance on the matter will be to say that the vast majority of my constituents entirely agree with his understanding of the constitutional rights on taxation.
(Translation):
It would not be right for me to continue my remarks on that subject without congratulating most sincerely the hon. Minister of Northern Affairs and National Resources (Mr. Lesage) on the outstandingly clear presentation he made of this matter in the afternoon of April 14. He really did examine the problem in its true light, setting it out in a perfectly sober and logical fashion, throwing back the responsibility for double taxation on the shoulders of those to whom it really belongs, that is, on those members of the Quebec legislature who have voted this provincial income tax legislation. The minister was fully qualified to speak on behalf of his Quebec colleagues. Speaking for myself, and with due regard to my very inadequate qualifications, I would make so bold as to express the opinion of those who have been called, in the province of Quebec, the "separated brethren", and for the survival of whom, we are told, some are prepared to fight to the bitter end.
(Text):
As a representative of a merged constituency where the best elements of the two great racial groups of Canada are represented, I feel particularly well qualified to speak on that subject. A good number of my constituents are, as I am, of French extraction and speak that language. They are consequently very interested in any political moves that are made in their name across the Quebec border. The English-speaking

The Budget-Mr. Bruneau group also has a keen interest in these moves lor they may have, as in this case of double taxation, a devastating effect on national unity and on the whole ol the Canadian economy.
But what prompted me mainly to say a lew words on this question today is the fact that most of the steps taken in Quebec for the so-called protection of provincial autonomy are represented as being moved for the defence of the rights and the survival of French Canadians, no matter where they live in Canada. The latest instance along this line was the adoption by the Quebec government of the act to create a new provincial income tax. I wish to state emphatically today that French-speaking Canadians living outside of the province of Quebec do not agree with this interpretation.
As citizens of Canada we are fully conscious that everything tending to disrupt efforts for unity is not in our best interests. We feel that the Quebec income tax law tends only to separate Quebec from the government of this country, instead of putting forward an authentic desire for co-operation that would give monetary help to the taxpayers of Quebec as well as solidify the national structure without endangering the constitutional rights of the French-speaking population.
As "separate brothers", we cannot accept the contention of the Quebec administrator that the British North America Act was a pact between the two main races of Canada. We consider it, as the fathers of confederation considered it at the time, an act uniting the provinces of one country under a single government charged with the general administration and with full powers of taxation, leaving to the provinces questions of local administration with powers restricted to direct taxation. If the British North America Act were a pact between races, how would the Quebec government be able to legally act for the French-speaking population living in other provinces?
On the other hand, as has been said so well by others who have taken part in this debate, no one questions the right of the provinces to direct taxation. But if the British North America Act limits the taxing powers of the provinces to direct taxation, it does not mean that this limitation gives them a priority in that field as the Quebec administrator would like us to believe. It does not mean either that the fathers of confederation were logical in granting equal powers in the same field of taxation to both the provinces and the federal government. But it is our feeling that we should try to make the best of what we have as long as the fiscal clauses of the British North

America Act are not modelled to the satisfaction of all. We know the Canadian government, our government, stands ready to study appropriate means of minimizing the present difficulties. Unfortunately, we cannot say the same for the Quebec government now.
My only reason for bringing up this subject today is to point out the necessity for close co-operation between the various elements of the country, and the danger of an individual being out of step and sabotaging the common effort towards the building of a strong and powerful nation. It is for that reason I limited my remarks on the constitution to general viewpoints without going into details, and emphasizing only that a false conception of the factual position of our constitution can become a menace to the future of national unity as well as to the welfare of a great portion of the population.
When we initiate a study to improve social welfare, particularly the rehabilitation of disabled persons and the establishment throughout the country of assistance to invalids, we find that if some increase could be brought about in these measures of assistance it would prove of tremendous relief to these people. In my province we already grant a measure of assistance to invalids.
There is one question that is of particular interest to me, sir, and that is the help and encouragement of the youth of this country. I feel that in Canada we have young people with talent, initiative and tremendous possibilities. Unfortunately many of them lack the means to put these potentialities to some use. With the eventual implementation of the Massey commission recommendations, why could we not devise some means whereby our young people could be given a helping hand and provided with an opportunity of serving the country in b manner more appropriate to their potentialities? I have seen many young people who were brilliant students and graduated from school with flying colours, yet they had to seek employment. If they were given the opportunity, these students would enter fields for which they feel they are better suited. If our young people felt there was a federal youth department to which they could apply for assistance or guidance, I am sure that before too long we would have the experts that today we are seeking from other lands.
A youth department established on a national scale would certainly not infringe upon the provincial departments of education. Through co-operation with the provincial departments we could have at the

disposal of our young people experts in the different fields of learning and craftsmanship who could give guidance to those young people who had not yet gone out on their own in life's struggle. These young people would be able to discuss their own problems and aspirations with men of experience. We certainly have fields or divisions in all departments of this government where such young people could serve. We could give guidance to the young men from the farm, who could study at experimental farms or stations throughout the country, as to new methods of farming that would improve the lot of those living on the homestead. Under the supervision of this new department young people in industry could learn for themselves, thus putting their own talents to the best use in order to make our world a better place in which to live.
The same thing might be said of the different fields of knowledge because with the proper guidance and the help of grants our young people could follow a course best suited to their aptitudes.


Mr. Speaker:: Order. Does the hon. member wish to adjourn the debate?


Raymond Bruneau: Mr. Speaker, I shall only take about one minute to complete my remarks.
The Budget-Mr. Bruneau


Mr. Speaker:: Does the hon. member have unanimous consent to continue beyond six o'clock?


Mr. Knowles:: For one minute.


Some hon. Members:: Agreed.


Raymond Bruneau: If we were to help the young men today I am sure it would pay dividends a hundredfold and give us better citizens tomorrow. I hope, sir, that before too long Canada will have a youth department, because it would pay countless dividends. If we are, even unwillingly, under obligation to spend billions to teach man to kill man, I believe the idea of a youth department is worth considering and some effort should be made to help our young people serve this country better.
On motion of Mr. Perron the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: Tomorrow we shall begin with the Department of Public Works. If it is completed tomorrow, we shall take the department of northern affairs for the balance of tomorrow. However, on Friday the minister of the northern affairs department will not be here, so we would go on with agriculture and national health and welfare.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
83276-267i
[Stage Direction]
Thursday, April 29, 1954