1954-05-04

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Minister of Labour concerning the current negotiations between the non-operating railway unions and the railway companies. In view of the failure of any two members of the conciliation board to get together on what might be called a proper report, what steps does the government now propose to take to facilitate the reaching of an agreement between the parties?


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, the matter referred to by the hon. member is still under consideration by the parties concerned, and any comment by the minister or by any other third party would, I think, be inadvisable at this time.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I wish to direct a question to the Minister of Veterans Affairs. Is the minister aware that relatives of Canadian war dead are being asked to pay $1.25 for a copy of the entry in the cemetery and memorial registers, giving details of their loved ones' graves? In view of this situation, I should like to ask further: Is the financial assistance to the imperial war graves commission provided by the Canadian government not sufficient to cover this expenditure?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: Mr. Speaker, the registers to which the hon. member refers are pamphlets, books, printed and issued by the imperial war graves commission on each of the cemeteries in which commonwealth forces are buried. These are in the form of memorial books. They contain not only the name of every commonwealth member of the forces who is buried in the cemetery but also photographs, 83276-276
maps, and a history of the campaigns which led to the cemeteries being built. They are not given by the imperial war graves commission but are simply sold as memorial pamphlets, somewhat as the pamphlets in the parliament buildings, giving a description of our memorial chamber, are made available to people who come to visit the memorial chamber.
The financial assistance given by the Canadian government to the imperial war graves commission is for the building of cemeteries, the setting up of headstones and the care and maintenance of those cemeteries afterwards on a pro rata basis, according to the number of graves.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. F. D. Shaw (Red Deer):: Mr. Speaker,
I should like to direct a question to the Associate Minister of National Defence. I am sorry I did not give notice, but I doubt whether he would require it. Has action been taken to ground all Canadian jet aircraft pending a complete investigation into recent crashes?


Hon. R. O. Campney (Associate Minister of National Defence):: Mr. Speaker, I am not aware of any such order having been made. There are various types of jet aircraft, and I know of no reason why all jet aircraft should be grounded. As is well known there has been difficulty outside the service in regard to one particular type of jet aircraft; but I know of no existing grounding order in the service. I will inquire further as to the position.



CHURCHILL


[Stage Direction]
On the orders of the day:
Mr. H. A. Bryson (Humboldt-Melfort):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Will construction of the extension to the government elevator at Churchill, Manitoba, begin this year, and have tenders for this project been let?


Hon. Lionel Chevrier (Minister of Transport):: The answer to the first part of the question is yes, and to the second part the

Inquiries of the Ministry answer is that tenders have been advertised and the expiry date of those tenders is some time during the latter part of the month of May.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Mr. Carl O. Nickle (Calgary South):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Can the minister assure the house of his government's support for the proposal announced in this morning's press of the Union Gas Company of Canada to increase the import of American gas to southwest Ontario and improve the economics of an ultimate gas pipe line from western Canada?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: I have already discussed this matter with the principals concerned including the Union Gas Company of Canada, and I have indicated that under certain conditions there would be no objection to the temporary import of that gas, with the definite understanding that the import would end when western gas is available in the area.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Public Works? Is the report correct that no expert in soil engineering was consulted in the drawing of the plans for the new Winnipeg post office? Will the city of Winnipeg be reimbursed for all the costs resulting from the cave-ins on the streets adjoining the area excavated for this new building?


Hon. Robert H. Winters (Minister of Public Works):: Mr. Speaker, I thank the hon. member for having given notice of his question. We obtained competent architects, the firm of Green, Blankstein and Russell, and followed their advice which, I understand, is in keeping with accepted practice in the area. Some caving has taken place, but I understand from the architects that little if any more is expected. The cost of repairing the damage will be much less than the expense of measures which would have been necessary to prevent caving. Our architects have already been in communication with the city engineering office, and where caving can be


attributed to the excavation for the public building the city of Winnipeg will be reimbursed.



TRANS-CANADA AIR LINES INVESTIGATION INTO CRASH AT MOOSE JAW

[Stage Direction]
On the orders of the day:
Mr. J. A. MacLean (Queens):: Mr. Speaker, I should like to ask a question of the Associate Minister of National Defence. Would the minister say if the finding of the service court of inquiry which investigated the recent crash at Moose Jaw will be made public?


Ralph Osborne Campney: The matter is under consideration. I am not in a position to say when a statement will be made.



THE BUDGET


[Stage Direction]
The house resumed, from Monday, May 3, 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.
(Translation):
Mr. Auguste Maltais (Charlevoix):: When
the debate was adjourned last night, Mr. Speaker, I was indicating the reasons why I felt justified in holding that there could not be any priority in the matter of direct taxation either for the central government or the governments of the various provinces. I then quoted sections 91 and 92 of the constitution, and I also showed the part played by subsidies in the first years of confederation.
Leaving now that aspect of the matter, I would like to revert to the social consequences of the solution to the existing problem between the government of Quebec and the government in Ottawa with respect to the fiscal agreements which were signed, or could have been concluded with regard to fiscal matters, to say that it would entail enormous difficulties from a constitutional point of view. However, if the parties concerned must live up to the constitution, it is equally important to appraise the social and economic responsibilities which constrain the Canadian government to retain for itself its main source of revenue, that is, direct taxation.
Reading through the history of confederation, from 1868 to the present day, we will not fail to realize quickly what increase there has been in the responsibilities of the federal government, both as far as the people of this country themselves are concerned and as regards international relations which have

gained tremendously in importance since those days.
In 1868 the population of this country was approximately 3,700,000 whereas it now is over 15 million. In 1868 the total revenue of the federal government was $13-6 million, whereas in 1952, it rose to close to four billion dollars.
At the time of confederation we were a colony. Now we have become an adult nation which must live up to responsibilities which no government desiring to retain and respect its own national autonomy can escape.
Since 1868, the provinces which pioneered confederation have been joined by six other provinces. Together they now make up this Canadian nation of ours. Of course we have not come this long way together without stresses and strains, and great difficulties to overcome.
When paying tribute to the fathers of confederation, it is appropriate also to appreciate the wisdom of those political figures who, since 1868, have led our country within the framework of the confederative system so that today we may pride ourselves on being Canadians.
But I am digressing and I come back to the argument I wish to make, that is, that the social obligations of the Canadian government in a partly planned economy are closely connected with the use of the direct tax and the use of that field of taxation is definitely not the exclusive possession of a political party or an innovation of the present government.
In 1917 the Canadian government exercised for the first time its constitutional right to tax the income of its citizens in view of the expenditures due to our contribution to world war I. Incidentally, a Conservative minister of finance, who was a member of a union cabinet, proposed that measure himself on behalf of the government then in power.
From 1920 to 1934, the revenue from that new source of taxation hardly changed from year to year. In 1920, those direct taxes brought to the Canadian government $64-5 million, as compared with $61-3 million in 1934.
As will also be remembered a depression then so violently shook the country that several provinces were forced to approach the central government in order to cope with the unemployment crisis that broke over the whole country.
Then came the period of social security legislation, when the Canadian government had to take over responsibilities in the form of financial burdens that time could only increase.
The Budget-Mr. Maltais
First, it was the old age pension legislation in 1927, which the province of Quebec, then under Liberal rule, refused to accept, invoking the principle of autonomy, but that was agreed upon nine years later by a Union Nationale government, as a political advantage out of which sufficient capital has been made since. Then we had legislation concerning unemployment insurance, pensions for the blind, family allowances, in a word a whole set of social measures that is absorbing about a third of the Canadian government's budget.
It is the duty of the national government to maintain a sound national economy and, while respecting the constitutional rights of the provinces, the Canadian government cannot, without running the risk of encountering serious troubles, give away its revenue sources without a previous agreement. It is now possible through our social legislation to eliminate partially the special inequalities which tend to spring up and grow under a democratic system based on private enterprise where economic conditions vary in a more or less pronounced degree between the different areas of our country.
Nobody will deny the sense of responsibility the government has shown when it introduced this legislation providing as it were for the distribution of more than a billion dollars to the Canadian population. When we think that the province of Quebec received, last year, apart from the war veterans allowances, nearly $200 million by way of social benefits, we can realize the tremendous effort put up by this government to avoid a possible unemployment crisis.
In 1953, Quebec children received 107 millions; our 70-year-old citizens, 69-9 millions; those aged 65 to 70, 39-8 millions; and our blind people 1-1 million.
These obligations assumed by the Ottawa government, approved and asked for by all Canadians, are directly connected with the power of taxation on incomes which makes it possible to carry out this social work.
If I take into account the cost of governing this country, the money needed to finance our national debt and the tremendous amount needed for national defence in the face of the communist threat, I am inclined to believe that these national obligations must be considered in the solution of the problem existing between Quebec and the federal government.
In view of the part played by direct taxation in modem public finance, the Canadian government has been forced to rely more and more on this method of taxation, to which it may rightfully resort under our constitution.
4376	HOUSE OF
The Budget-Mr. Maltais
Direct taxation has been, for several years, in the hands of the central government not only an efficient means of collecting revenues but also a control lever for the administration, stabilization and guidance of our national economy.
So it is no wonder that the Canadian government has been under the obligation to depend much more upon direct taxation in the past twenty-five years than during the years which immediately followed the adoption of the confederation act.
Obviously, on account of the equal and concurrent right of the central and provincial governments to that same field of taxation, a reallocation of taxation powers between the various governments has long been wished for.
Since, unfortunately, no such formula satisfactory to all concerned has been found, we have come, for want of anything better, to a temporary compromise, that is to the system of fiscal agreements which was put into effect during the last war and which remained in force with some modifications.
These fiscal agreements aim at two things:
1.	A better apportionment of national revenue between the most favoured province and the less favoured, economically speaking, with a view to enabling the latter to discharge their constitutional obligations in conformity with a principle of autonomy which any province might proudly make its own, and also of making possible a decentralization of the revenues derived from taxation.
2.	The avoidance of double taxation.
In Canada nobody has yet denied that some provinces cannot levy all the revenues they need to fulfil their obligations, even though they resorted fully to the taxation fields granted them by the constitution.
Let those who may be tempted to discount the ill effects of double taxation cast a glance towards the province of Quebec.
This double taxation is today at the root of the trouble we are witnessing in the province where I was born, where I live and where I learned the language I now speak and which, by the way, I have no fear of losing. The government of the province of Quebec, which was represented by its premier at the various federal-provincial conferences at Ottawa, had the opportunity of making counter-proposals to the fiscal agreements but never made any constructive proposals regarding that fiscal policy. In fact, after showing a sincere


desire to co-operate, even to the point of stating its willingness to sign an agreement, the government refused any such agreement. It would seem that it prefers to temporize rather than to act.
Before speaking of the unilateral decision of a majority of the Quebec provincial legislature to levy a direct tax affecting more than 300,000 Canadian taxpayers and before dealing with the request submitted to the Canadian government by a non-political organization, asking that the said tax be deductible, as a Quebec taxpayer I would like to say a few words about the negative stand taken by the Quebec government since 1948.
I am not denying the right of the government of my province to levy a direct tax within the province, even though this is questionable. Moreover, in the absence of any agreement, I would certainly have been in favour of the method suggested by the Montreal chamber of commerce, which asked the Quebec government to levy an income tax of 5 per cent, which would have been completely deductible and would not have cost one cent more to the Quebec taxpayers.
Evidently, the Quebec legislature had a right to levy the tax it wanted, but we were once told that autonomy was not a question of 5 per cent and that principles had no monetary value. Today, we have a 15 per cent tax, of which 5 per cent will be deductible from the federal tax; thus, the cost to Quebec taxpayers will be 10 per cent more.
These figures of 5, 10 and 15 per cent remind me, not of a 5 per cent autonomy, but, as they indicate, of a "5 and 10" autonomy.
The Quebec government refused to sign the agreements. It had a right to do so. But what is the net result? It is as follows:
In 1948, the Quebec government levied, through corporation tax and succession duties, the amount of $43,100,000; in 1949, $59,200,000; in 1950, $61,200,000; in 1951, $71,700,000; in 1952, $84,800,000; in 1953, $80,900,000; in 1954, $82,600,000. This last figure of $82,600,000 is taken from the public accounts of the province of Quebec; in other words, the government of Quebec levied during seven years, though no agreement was signed, the amount of $483,500,000. Let us see now what the Quebec government would have received, if it had signed a fiscal agreement. I include in the following amounts the rental of succession

duties, since the amount produced by this tax was included in the amounts levied by the province of Quebec through its own legislation.
By virtue of these agreements, the government of Quebec would have received in 1948, $45,100,000; in 1949, $64,100,000; in 1950, $69,900,000; in 1951, $78,200,000; in 1952, $107,700,000; in 1953, $111,700,000; in 1954, $121,300,000, that is, all in all, $598 million, or a difference of $114,500,000 which the province of Quebec could have received, but which it has lost.
And that is not all. Since the other nine provinces have already signed agreements with the Canadian government for the next three years, let us see what Quebec will lose by not signing these agreements and taking into account the 15 per cent tax now in operation, let us examine what will happen if the present difficulty persists and if this problem is not solved.
Quebec will receive approximately $23 million this year from its personal income tax, but 5 per cent only of this impost will be deductible from the federal levy. It means that Quebec will receive, during the fiscal year ending on March 31, 1955, without any additional cost to its taxpayers, about $7,800,000, deductible from the federal tax, and it will cost Quebec taxpayers $15,200,000 representing the non-deductible portion; for the fiscal year 1956, Quebec will receive about $7,900,000, deductible and it will cost taxpayers $15,900,000, non-deductible. For the fiscal year of 1957, Quebec will receive about $8 million, being the deductible portion, and it will cost taxpayers $16 million nondeductible.
In brief, the government of Quebec will collect, as being deductible from personal income tax, an amount of $23,700,000 and it will cost taxpayers a further amount of $47,100,000 that the government of Quebec will collect just the same, but which will add to the burden.
If you add to that figure of $23,700,000 the amount Quebec will derive from corporation taxes and succession duties during the same period, you get a sum of $275,700,000, representing the total revenues the province of Quebec will receive from deductible direct taxation.
How much would Quebec get under the temporary agreement system over the same period? Supposing the economic position remains about the same for the next three years, we arrive at an amount of $372 million.
The Budget-Mr. Maltais
Making the necessary deductions, Quebec will therefore, during the next three years, lose the difference between the eventual revenue under the agreements, that is $372 million, less its own deductible taxes amounting to $275-7 million, or a net loss of $96-3 million. Of course, this figure will be partly compensated by the additional burden of $47-1 million, but I am not taking this into account, as this sum will be levied in the province of Quebec, and is not deductible.
As I said a moment ago, the province of Quebec has lost, during a period of 8 years, $114-5 million because it remained outside the agreements, and if the status quo is maintained, the province will lose an amount of $96-3 million during the next three years. Mr. Speaker, since the province of Quebec is going to lose $210 million through maintaining the present situation in respect to fiscal policy up to the time the agreements expire, I am right in saying with my colleagues from Quebec that the problem is serious and alarming.
That sum of $210 million just about equals the budgetary expenses of the province of Quebec for 1951. In other words, the Quebec government would have thus been able to devote to the education and the public health of my fellow Quebeckers twice the amount assigned to those fields in 1951 and would have been in a position to solve without difficulty the problems which confront the universities in Quebec, to say nothing of highways and colonization.
The seriousness of the situation calls for a solution and since the 15 per cent deduction asked for cannot be granted without undermining the very base qf the entire fiscal agreement system now in force between nine of the provinces and the federal government, I shall look elsewhere for a compromise solution which would have the advantage of endangering in no way the existing agreements.
Since the province of Ontario when it signed an agreement did not rent its right to succession duties, would it not be possible to get Quebec, Ontario and the federal government to sign an agreement which would enable those two provinces to collect from that source larger revenues than they are receiving at present?
Such a result might follow a concession on the part of the federal government through which it would reduce the succession duty it is collecting or accept, after negotiation, relatively high rates of deduction with regard to provincial succession duties.
Owing to the fact that the provinces of Ontario and Quebec are more favoured than the other eight provinces, the granting of

The Budget-Mr. Maltais that concession by the central government would not materially affect the agreements with the other eight provinces, because they are already drawing subsidies under the tax rental agreements.
In 1947, the largest revenues derived from the taxation rights were received by Ontario and amounted to $15,200,000; Quebec received $11,400,000, British Columbia, $3,200,000 and New Brunswick, $1 million.
Since revenues derived from that taxation field vary greatly as between the provinces of Quebec and Ontario on the one hand and the rest of the provinces, on the other, such a concession by the central government would not entice the other provinces to avail themselves of that concession.
If such an agreement enabled the province of Quebec to amend her succession duties in order to get $7 or $8 million more than she is now drawing from that source of taxation, and avoid double taxation, the present stalemate could be solved by means of another concession on the part of the Quebec government.
As a matter of fact, the government of the province of Quebec is seeking a further revenue of $23 million, the amount which the 15 per cent income tax levied upon its taxpayers is supposed to yield.
As it could already derive approximately $8 million more from its succession duties, the government of Quebec has only to amend its personal income tax so as to lower the rate to the level of 5 per cent deductible from the federal income tax in order to get another $15 million which would not cost one cent more to its taxpayers, as such a tax would be entirely deductible.
Quebec then, without renting its taxation fields, would get the $23 million which it seeks, and double taxation would be avoided.
On the other hand, there would not be any loss of revenue for the federal government, as that portion of the subsidy that Quebec would get by signing an agreement would remain in the consolidated fund of Canada in order to compensate for the loss incurred by the change made in its succession duties.
Mr. Speaker, I do not know whether such a proposal will be considered, but I believe that no stone should remain unturned if we really want to find a way out of this difficult situation, and I urge the provincial government of Quebec to seek with an open mind and in a spirit of co-operation a common ground for the solution of this fiscal problem.


I am voicing this appeal in all sincerity. I have noticed that at a press conference, on April 9 last, as reported by the Canadian press the next day, the premier of Quebec stated that he would not initiate new negotiations with Ottawa.
The Prime Minister (Mr. St. Laurent) said in this house yesterday that the Quebec government had given no answer following the last federal-provincial conference convened by the federal government. Such being the case, I fail to understand why the premier of Quebec does not wish to enter into new negotiations.
There is no need for new negotiations. It should be sufficient to continue those which were started at the last conference, in regard to which the Quebec government has thus far given no answer. To make things clearer I would like to quote the Prime Minister's statement as reported on page 4338 of Hansard:
The statement agreed to after the in-camera discussions, and published at that time,- . . .
That is after the dominion-provincial conference on fiscal agreements.
*-was that each province would consider these tax rental proposals and would indicate its position at a later date. There followed a great many more negotiations between the Department of Finance and the individual provinces, and within eighteen months or so nine of the ten provinces indicated their respective positions and entered into the proposed temporary rental agreements which are to extend to March 31, 1957. The government of Quebec did not do so, however. It just abstained from having any further dealings or discussion with us about the matter in any way or form whatsoever. I saw in the Montreal Star some time ago a report that Mr. Duplessis said that he had written to me and to the Minister of Finance (Mr. Abbott). He may have written to me and to the Minister of Finance, but not about any solution of the fiscal problems between the federal authorities and Quebec, unless he is referring to some correspondence we had when we were discussing the grants to universities. In one of those letters he said this: Why do you not turn over to me 5 per cent of the personal income tax? That will be more than you are offering to Quebec universities under this $7 million grant. I replied that this grant would expire on March 31. I do not remember just the date of the correspondence but it was some little time before March 31. I said: You know that under the present act we cannot make any remission of this 5 per cent of income tax to the provincial government. We could merely give it as a deduction to a taxpayer who had paid a provincial income tax to your government. The other thing is the constitutional lapsing of this vote unless Quebec's share is taken from it before March 31. Can we not find some scheme which will not prejudice your position or ours but which will not leave these Quebec institutions without their proportion of this grant which is about to lapse? For that year an arrangement was worked out whereby there was a

joint commission of the federal government and the provincial government to make the allocation and to recommend a way in which the grant would be paid to the institutions in Quebec. But that had nothing to do with the general possible collision between the exercise of federal rights and the exercise of provincial rights in the field of direct taxes.
Mr. Speaker, if words have any meaning at all, and if the dominion-provincial conference of 1950 had the respect of the nine other provinces of my country, I have the right to say that Ottawa never closed the door on negotiations and that if the one-sided action of the government of my province had closed the door, the words of the Prime Minister of my country opened it yesterday.
(Text):


Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, this budget is conspicuous on two main grounds. The first is its failure to deal in any way with the changing situation with which Canadians are now confronted. The second is the attitude it displays not only toward the province of Quebec but towards every province of Canada. So far as this budget is concerned there apparently is no unemployment, no serious situation in the textile industry, no great problem in the electrical equipment industry, nor anything to worry those making farm machinery. In fact, the government apparently thinks there is nothing to worry about which will not be cured by the efforts of our friends in Washington. From listening to the obedient desk thumping of the supporters of the government and the bland assurances of the government itself, one would think that there were no problems of any kind to be examined. Yet it is from the official records of the government that we learn of the seriousness of the situation with which we are confronted. As we have been told more than once, 570,000 people are registered as applying for jobs. That does not include everyone who is seeking a job. There is a more important figure when we seek to understand what the buying power of our people is. According to the March figures of the dominion bureau of statistics, which are the last available, the total of unemployed and partially employed was 777,000. That is a formidable figure. That means that according to the government's own figures more than three-quarters of a million of our workers have been greatly reduced in their buying power, with consequent reduction of demand for what other
The Budget-Mr. Drew workers can produce. In fact we have a higher percentage of unemployed or partially employed in Canada than in the United States, in spite of the tremendous development of resources and industrial expansion which is taking place.
We have the greatest wheat carryover in our history. We have the prospects of a better than normal crop this year. Not a word in the budget indicates any recognition of the serious position in which the farmers now find themselves with huge quantities of grain stored on their farms on which they are not able to obtain down payments. Nothing in the budget or the speech of the Minister of Finance (Mr. Abbott) indicates any recognition of what this means to the railways, to the shipping companies and, above all, to the farmers themselves, whose difficulties are aggravated by the fact that the government gives them no lead. Not a word is there in the budget to show any real recognition of the tragic plight of the Canadian merchant marine. There is nothing to suggest that this vital part of our international service is to receive any encouragement from this government.
Our manufacturers who are wondering how they are going to increase employment, our fishermen, our producers of base metals, and the farmers who still provide the firm foundation of our whole economy, are blandly assured that there is nothing really to worry about and that anybody who is in any difficulties had better meet the situation by more efficient methods. This, Mr. Sneaker, does come with particularly bad grace from a government which has refused over and over again to take the steps which are necessary to give it some sort of efficien"y in its own operations. It has been said before and will bear repeating that this government refused to adopt the very methods that any business would adopt if it hoped to remain solvent. Yet this government tells businesses that are finding difficulty in maintaining employment today that the way to solve their problem is to be more efficient, and certainly not to follow the government.
There is not a single member of this house who does not know where millions are being wasted by the government. There is not a member of this house who does not know of duplication of services or, to be more accurate, of multiplication of services. Merely as a symptom, and not in any way as a measure of the disease, it is only necessary to examine the number of economists, statisticians and publicity agents that this government needs to proclaim its virtues.
4380	HOUSE OF
The Budget-Mr. Drew
Over and over again we have introduced a motion asking for the setting up of a body of inquiry similar to the Hoover commission in the United States. As a result of that commission in the United States, according to the statements that have been made, $7 billion has already been saved and they expect to save another $5 billion. On a proportionate basis that would mean a saving of nearly $700 million here and the hope of still more.
I recognize that it is not possible to say in exact figures what savings a similar inquiry could assure here. However, I do suggest that it is not sensible for anyone to suggest that considerable savings cannot be made having regard to the manner in which our government has operated in so many ways along lines similar to those followed in the United States. We have heard figures placed before us of substantial savings that could be made. After all, those relate to some subject that is before us with the figures attached to that item by the government. What I am emphasizing is that there is a broader basis of saving, the kind of saving that every big business undertakes periodically if it has any hope of maintaining its sound economic position. Whatever the figure would be it would certainly run into hundreds of millions of dollars. Without any serious examination of the proposition and with nothing but an arrogant denial that anything can be improved, the government has simply asked its supporters to vote down this motion time and time again.
Yet this is the government which now tells the people of Canada that their answer to the problem they face is to be more efficient in their production and in their daily work. When the government prescribes this cure, well might we remind them of the adage, "Physician, heal thyself". This inefficiency of government, and the firm refusal of the government to deal with it in any practical way, is related to the second important aspect of the budget. As the government has continued to centralize power, the checks and balances provided by the federal system have been more and more weakened and the opportunity to restrain extravagance and waste has become less and less. It is for that, as well as for constitutional reasons, that we should examine the attitude of the government toward the provinces and the municipalities. I say that in the firm belief that the closer we bring the supervision of public expenditure to the people themselves at the provincial and municipal levels, the more effective the supervision of the spending is going to be.
In many ways this subject is the most important part of the budget speech. The Minister of Finance regarded it as sufficiently


important to devote a very considerable part of his speech to an explanation of the negative attitude adopted by the government. The refusal to consider the proposal for tax deductions in respect of the personal income taxes levied in the province of Quebec is important not only in its effect upon the income taxpayers of the province of Quebec but upon the people of every province because of the attitude it discloses towards the earlier undertakings of this government. Four weeks ago today I asked the Prime Minister (Mr. St. Laurent) to invite the premiers of the provinces to attend a conference to discuss our acute tax problems. At no time did I suggest, as was indicated yesterday, that the Prime Minister of Canada invite the premiers to come together to assist him to solve the particular problem with the province of Quebec. That, after all, would have been an affront to the government of Quebec, and it certainly would have placed upon the premiers of other provinces a responsibility that is not theirs.
I urged the Prime Minister to call a conference because the situation arising in relation to the province of Quebec is merely a symptom of the general problem. Yesterday the Prime Minister gave his answer. It was a most unhappy speech in every way. It was unhappy in content, unhappy in presentation and unhappy in its consequences.


Mr. Abbott:: A very good speech.


George Alexander Drew: In effect it was a simple and emphatic statement that until the province of Quebec submits to terms imposed by this government there will be no conference, although every province has been asking for a conference for a long time.
There were some curious omissions from the statement of the Prime Minister. He quoted with satisfaction and at considerable length the statement of the premier of Ontario at Quebec in September, 1950-


Douglas Charles Abbott: At Ottawa.


George Alexander Drew: At Ottawa in 1950-some considerable time before Ontario had signed an agreement, but he failed to make any reference to the statement of the premier of Ontario at the time the agreement was signed. While that may not have been the intention of the Prime Minister, the effect of his quotation yesterday and his speech generally was to leave the impression that Ontario is satisfied with the present situation. For that reason let me quote from what the premier of Ontario said at the time the agreement was signed. This was the text that accompanied the announcement of that agreement.


Douglas Charles Abbott: I think it was 1952.


George Alexander Drew: Yes, 1952.
The signing of this agreement will not solve Ontario's tax problems. It is, at best, a stop-gap, pending the working out of a more satisfactory distribution of tax and revenue sources. Nor does the agreement provide a solution to the municipal problem which is, in turn, dependent on a shift of taxes and revenues from the federal government to the provinces and from the provinces to the municipalities.
We have urged the federal government to begin discussions with the provinces now with a view to obtaining these objectives. The present tax system is outmoded. The rapid growth of industry and population in Ontario has created enormous demands for provincial and municipal public services in the form of new hospitals, schools, highways, sewers, water-works and projects for conservation and pollution control. But in the face of this expansion, the tax structure has remained immobile and out of balance with the requirements of the provinces and municipalities.
Our object should be to achieve a tax structure that is favourable to industrial expansion and gives full play to the willingness and power of the people to work and save. At the same time it should be clear, equitable and in balance with the need of each level of government. We must aim not only at social justice in taxation, but also at devising a system which best assures that economy and efficiency in government services will be encouraged.
At the dominion-provincial conference of 1945-46, an economic committee, consisting of technical advisers of the federal and provincial governments, was established and accepted as permanent machinery by all the governments to serve as a fact-finding body on taxes and other fiscal matters. This economic committee held meetings in December, 1945, and again in January, 1946, but its work was not continued.
We urge the federal government to re-constitute this economic committee. The committee should then be directed to study the Canadian tax structure, including the distribution of taxes and revenues and the allocation of functions among governments, and to report on the fiscal measures which will best serve to promote good government at all levels.
I would point out that at the very time the government of Ontario entered into this tax agreement, it pointed out the agreement was nothing but a stopgap. The premier of Ontario made it quite clear that this was not something he expected to stand until some time nearer the approach of the time to reconsider this agreement. He said, and I repeat words that I have already quoted:
We have urged the federal government to begin discussions with the provinces now with a view to obtaining these objectives.
Surely, Mr. Speaker, this statement is not open to the interpretation that the government of Ontario, any more than any other provincial government, expects to wait until the maturity of the present agreement or until all provinces have similar agreements to examine the situation. It will be seen that the premier of Ontario asked that the economic committee reconvene when he made 83276-277
The Budget-Mr. Drew this statement in 1952. The purpose of this economic committee was to provide the essential statistical information upon which to base arrangements between the governments. As evidence that the position of the Ontario government has changed in no way on this subject, the request for the convening of the economic committee was repeated by the premier of Ontario in his budget speech in March of this year. This was brought to the attention of the federal government. I have no doubt, in fact, that they had already seen it. On March 22, the Minister of Finance (Mr. Abbott) was asked if the government had made any decision concerning the proposals by the premier of Ontario that the economic committee be reconvened. The minister's reply, as reported at page 3195 of Hansard for that date, was certainly illuminating.


Douglas Charles Abbott: As usual.


George Alexander Drew: He said:
Speaking for myself, I have not been able as yet to give any consideration to that suggestion.
As the Minister of Finance says, it was as illuminating as usual.
Having received no satisfaction from the Minister of Finance, the hon. member for Kamloops (Mr. Fulton), who had asked the first question, then asked the Prime Minister (Mr. St. Laurent) on March 26 if the government had made any decision in regard to this proposal. The Prime Minister replied, and these are his words, as reported at page 3364 of Hansard for that date:
Mr. Speaker, the matter has not been discussed in council and, of course, no decision has been arrived at.
There the matter stands. Nearly two months have passed since the proposal was made, but there is still no answer. Evidently the decision has not yet been made or has been made against the proposal. The Prime Minister would lead us to believe that the decision has been not to call a conference because he says he sees no reason for bringing the representatives of the provinces together. In his speech yesterday the tone of the Prime Minister was conciliatory in every way, and so were his words. According to the Prime Minister the door is open. The question arises, open to what?
Can there be any doubt in the mind of anyone who has listened to the speeches of the Prime Minister and the Minister of Finance that the door is open only if the government of Quebec is prepared to accept some arrangement similar to the temporary agreements with the other provinces? The speech of the Prime Minister yesterday, taken as a whole, is not susceptible to any

The Budget-Mr. Drew other interpretation. The Prime Minister asked the government of Quebec to make a proposal. Now, whether the proposal is agreeable to the government of Canada or not, the government of Quebec has made a proposal. We have all read about it for some time, and we have heard it discussed in this house. It was discussed by the Minister of Finance in his budget speech.
The government of Quebec proposes that the 15 per cent personal income tax levied by that government be deductible for federal tax purposes so that there will be no duplication of taxes. Whether this proposal is acceptable to the Prime Minister or whether it is approved by other hon. members in this house, there is no doubt of the fact that there is a definite and understandable proposal which has been refused. It is that situation with which we are now confronted. I submit it is our duty to examine this. We must examine it. The Minister of Finance took a great deal of time to explain why they were refusing this proposal. It is the duty, therefore, of every one of us to consider just what this proposal means; what the effect would have been if it had been accepted, to see if we can find any reason for the attitude of the government under present circumstances.
I have sought to emphasize my own belief that this is part of a common problem affecting every province and arising out of the wartime tax agreements of 1942. It is not something peculiar to Canada alone. The same problem does affect the governments of Australia and does affect other federal states as well. At the time the provinces of Canada gave up their rights in the fields of direct taxation allotted to them by the British North America Act, the government of Canada solemnly undertook to restore the position of the provinces in these tax fields after the termination of hostilities. May I say, Mr. Speaker, that this undertaking was not something put forward by the government of Canada on its own initiative. It was something that was insisted upon by the provinces that at that time recognized the possibility that at the time the agreements ended there might not be a return of those tax rights.
As the Prime Minister recalled, I was present here in Ottawa during some of those discussions. As a matter of fact, I renewed those discussions when I became premier of Ontario in 1943. I know what the reasons were, and I know that it was on the prompting of the provincial governments that certain undertakings were given that were intended to be respected after hostilities had ceased. Having said that, may I say without any reservation -that the provinces which entered into those agreements did so in the


belief that they were playing their part in a common effort to give to Canada the opportunity to meet the great dangers with which we were then confronted in the very gravest days of the last war. After the war was over requests were made that these agreements be carried out. In fact, before the final stages of the war with Japan we were called together in conference here in Ottawa to consider proposals put forward by the Canadian government. In fact, it was on the very day that the first atomic bomb dropped on Hiroshima that we met here in Ottawa to discuss ways and means by which those undertakings could be carried out. That is now nearly nine years ago. The provinces are still waiting for the government to take the initiative, which must be the initiative of the government of Canada, to find a solution to this financial and constitutional problem, which was the result of the combined effort when all the governments met during the years of war to meet the dangers that then confronted the whole of Canada.
I submit, Mr. Speaker, that examining the discussions that took place, examining the agreements that were signed in 1942, examining the statute which approved those agreements and examining all the discussions that have taken place since that time, it is the duty of the government of Canada to find the way to honour that pledge.
Again, let me repeat that this is not an issue between the government of Canada and the government of Quebec alone. This is an issue affecting the whole federal system. It was very simply and fairly stated by the late Angus L. Macdonald in a speech to the Dalhousie law school two years ago in these words:
A fundamental question now arises. It is this: Do we wish to continue as a federal state?
I quote his words because the premier of Nova Scotia at that time was a great student of constitutional law. He had also been closely associated with this problem from its very beginning. That same question is being posed today in Australia. The Prime Minister of Australia said last year that the federal system there will-and I quote his words- "break down hopelessly", unless the authority of the state is restored. I merely quote this to indicate that there are others who have this problem, and that there are others who share the same opinion.
The Prime Minister of Canada said yesterday: What good would come of inviting the premiers of all the provinces to a conference? First, Mr. Speaker, is the fact that it would be fulfilling the duty of the government of Canada to the provinces. Second, is the fact that it would be starting to work out arrangements by which its pledge could be

fulfilled. Third would be the fact that all provinces could discuss this subject with knowledge of the difficulties which will arise if a clear and workable plan is not formulated before the termination of the present temporary agreements.
May I quote one of the most highly respected financial papers in the world in regard to this situation? The London Economist, discussing the agreements signed in Australia in 1942, which followed very much the same pattern as those in Canada, had this to say last year:
No other single act in the history of Australian federalism has done more to strengthen and consolidate the centralization of power in Canberra than the adoption of uniform taxation in 1942.
It was in relation to this statement of the Economist that the late Angus L. Macdonald said this:
If that comment be accurate for Australia, can a like view be taken of the existing federal-provincial agreements in Canada? That is a question to which I should hope all Canadians, and particularly lawyers, should give serious and enlightened consideration.
It is with these warnings and statements of this kind before us that I do urge the Prime Minister and every hon. member to examine this problem with the utmost care and to recognize that what has happened in the case of the province of Quebec is merely an indication of what can happen on a much larger scale, unless the Prime Minister comes to grips with this subject without further delay by inviting all the premiers to a conference.
There is another aspect to this question of a general conference which I should mention in passing. As was recited in the statute approving the agreements of 1942, it was the municipalities as well as the provincial governments which gave up taxing rights. At all times the municipalities have been as greatly concerned with some proper reallocation and definition of taxing power as have the provincial governments. All over Canada today municipal councils are emphasizing the serious situation with which they are confronted. Denied other taxing fields, the increasing local burdens place heavier and heavier taxes upon the homes and real estate generally. If there were no other reason for a general conference at this time this in itself would constitute an urgent and compelling reason why the Prime Minister of Canada should invite the provincial premiers, along with representatives of the municipal councils, to examine this subject without further delay.
If only to emphasize my point, may I recall the statement made by the minister responsible that civil defence organization is more 83276-277i
The Budget-Mr. Drew important than ever before because of the threat of the hydrogen bomb. That was what he said only a little over a week ago. If that is so, and in this case I do not think his statement will be seriously challenged by anyone, then there are added urgent reasons why the plight of the municipalities be examined and a new method found for raising the revenue required by the municipalities as well as in the larger legislative areas.
Now, let me examine the request of the province of Quebec, the proposal of the province of Quebec, that the provincial income tax amounting to 15 per cent of the federal income tax should be deducted. Great exception has been taken to the levy of the 15 per cent provincial income tax. At what point, Mr. Speaker, did 15 per cent become such an impossible figure? The Prime Minister admits that the burdens on the provincial and municipal authorities have increased proportionately with those of the government of Canada. It seems strange that the government of Canada should be so worried about 15 per cent, when it not only approved of an earlier levy of 15 per cent by the province of Quebec, but actually collected that amount for them under a single tax form, with a single cheque payable to the federal treasury and signed by the taxpayer. That system worked well for several years up to the time of the tax agreements in 1942. This government then accepted that percentage as satisfactory and collected the provincial as well as the federal tax under a system which not only worked satisfactorily between the government of Quebec and the government of Canada, but worked equally satisfactorily between the government of Ontario and the government of Canada.


Douglas Charles Abbott: But there was no deduction, of course.


George Alexander Drew: I will deal with that. It worked equally satisfactorily with taxes collected from Manitoba and taxes collected from Prince Edward Island. At that time well over 70 per cent of the taxpayers of Canada were paying their taxes under that satisfactory arrangement. And the fact is that, in the case of Ontario, there was no duplication of taxation. At that time the dominion government had not, of course, all the taxes gathered together the way they have today. They were only collecting 39 per cent of the total tax burden. The provincial and municipal governments had a wide field of taxation open to them. Therefore the Ontario government deducted the taxes payable to the federal government from all the taxpayers in Ontario, and avoided duplication. And at the time the
4384	HOUSE OF
The Budget-Mr. Drew 1942 agreements were signed all the governments were discussing the possibility of extending similar arrangements to avoid duplication.
This is not the first time it has been tried. And when it worked so well in the years up to 1942, I would recall the promises to restore the provinces to their position at the time the agreements were signed. And their position at the time the agreements were signed was a position which included this method of collection-a method of collection which has been asked for by the premier of Ontario as well as the premiers of other provinces.
I submit that this government is in honour bound to adopt that method, if it lives up to its undertaking made in 1942 to restore the provinces to their position at that time.


Mr. Lesage:: It was only 4 per cent in
Quebec in 1942.


George Alexander Drew: At what point did this method become so unacceptable? The fact is that it became unacceptable at the time this government started on a definite plan of the centralization of taxation in Canada to get as much power here in Ottawa as possible. This has been no accident. It has been a steady and deliberate plan to bring under the control of this government as much of the total tax moneys of Canada as possible.
Then we come to the question as to whether the 15 per cent should be deducted. Well, it is not for me, and I submit it is not for the government of Canada, to say whether a provincial government is levying the correct amount, as long as the amount it is levying is within its rights, and for the purpose of carrying out its duties under our constitution.


Douglas Charles Abbott: Hear, hear.


George Alexander Drew: So long as it complies with those requisitions it has a right to do so. And I am glad to hear the Minister of Finance (Mr. Abbott) saying "hear, hear." I would hope that we might see some evidence of complying with that principle. Any talk of a province occupying the whole field is really not worthy of consideration.
The fact is that the provinces are very susceptible to the attitude of the people toward them. The people are much closer to their provincial governments than they are to this government at Ottawa. The provincial governments have not the publicity agents, either, to obscure the realities by the methods that have been employed so successfully by the government. The fact is that the provincial governments will undoubtedly find that voters in any province, if they can, will deal with the situation to meet what is legitimately required for their own purposes.


Now, let us examine the question of deductibility. The Prime Minister (Mr. St. Laurent) indicates that he does not question the right of the government of Quebec to levy its income tax. But he does challenge in the strongest terms the proposition that there is any prior claim to the field of direct taxation. I cannot recall that it has been asserted at any time that there is a legal priority on the part of either government. We all know that through somewhat loosely-worded provisions of the British North America Act the federal government was given particular power to tax in any field. The provincial governments were given the right to tax only in the field of direct taxation. That produces one simple result: If the provinces are to have any real authority, then that authority must be interpreted in their ability to tax. Therefore the provinces, having the direct tax only as a source of revenue for the carrying out of their responsibilities, surely must be assured of an adequate area of taxation within that field.
As premier of Ontario, this is what I had to say on the subject on August 6, 1945- and I repeat that statement now as a statement which indicates the position we took at that time, and it was the same position that was put forward by other provinces. I said:
While it might be legally possible for the dominion government to extend direct taxation to such a point that they could completely blanket the only field of taxation open to the provincial governments, it need not be argued that such a result was never intended and that the very existence of the provincial legislatures and their governments under the British North America Act carries with it the implicit understanding that the dominion government will leave the field of direct taxation open to the provinces to such an extent as will make it possible for them to fulfil their obligations to the people.
Mr. Speaker, that puts forward a position that was not seriously challenged at that time. The fact is that the government of Canada has recognized a priority, and it has itself established the principle of deductibility. Why argue about deductibility as though it was something that had not already been accepted by this government? The question is only as to amount, only as to percentage. This government has already provided for 5 per cent in the case of personal income tax, and it has dealt with the subject also in relation to corporation income tax. Deductibility as such, therefore, is not in question; it is the amount.
If we recognize the fundamental principles of our federal system, it is the right of the government of Canada to say to any province: We accept the proposition that you can levy a provincial personal income tax. We re-

cognize that it should be deductible. But we think it is our duty to tell you that it must not be over five per cent.
Mr. Speaker, the acceptance of that proposition would mean the end of the federal system. The acceptance of that proposition would mean that no provincial government could carry on its duty, except with the consent and permission of the federal government. No matter what the name might be, the provincial governments would be nothing more than subservient commissions carrying out the orders of this government. They would be rubber stamps for Ottawa. And whenever they needed more money they would have to come, cap in hand, as the premier of Quebec has been invited to do, through that door that is opened for such a clearly defined purpose.
Surely that was not the spirit or the intent of our federal system. Then, again, let us recall that this government itself gives the strongest arguments in support of the proposal which has been made by the province of Quebec.
This government for some time permitted five per cent deduction in the case of corporation income tax. The provinces of Ontario and Quebec have levied a seven per cent tax. They were two per cent above the provincial taxes, and the five per cent was deductible as in the case of personal income tax.
Last year the government introduced an amendment extending the exemption from five to seven per cent, and for what reason? They extended it because that was the figure of the provincial levy. This was what the Minister of Finance (Mr. Abbott) said on March 10, 1953, as reported at page 2783 of Hansard:
This amendment is being recommended in conjunction with the proposal which I announced in my budget speech of increasing the credit for corporation income tax from five per cent to seven per cent in accordance with the principle that nothing in federal legislation shall in any way discriminate against a province which does not enter Into a tax rental agreement.
That was a principle clearly asserted in relation to corporation tax which at that time had been set at a figure above the figure for which the federal government had provided deduction. Therefore, for the reasons explained by the Minister of Finance, the deduction was increased to meet the amount imposed by the provincial government. There is no other way by which it could have been arrived at, and the fact is that the only question is one of amount. The only reason that this government will not meet the request for a deduction up to 15 per cent is that five per cent is, so they
The Budget-Mr. Drew say, what the province can have in the case of corporation tax. But it is apparently not for the province to say what they should levy in the field of their own taxation.
If it was proper for the government to extend the deductibility to the point at which the provincial governments had levied corporation income tax, then why is it not equally proper to extend the amount of deductibility in the case of personal income tax?


Douglas Charles Abbott: I did not wish to interrupt my hon. friend, because I know he wants to be accurate; but the seven per cent was raised from five per cent after the negotiation of the 1952 agreement. That is the figure provided in the agreement which the provinces may impose.


George Alexander Drew: Yes; that was the figure provided in the agreement which the provinces may impose for the very simple reason that this government was meeting the levy that was imposed by the government of Ontario and it was made at the suggestion of the provinces.


Douglas Charles Abbott: At the suggestion of the provinces, certainly.


George Alexander Drew: It was suggested by the premier because the provinces were levying seven per cent and that province as well as the province of Quebec arrived at the figure of seven per cent for the reasons which the Minister of Finance has now indicated. The Minister of Finance has now made it quite clear that there was no other arithmetic foundation for arriving at that figure.


Douglas Charles Abbott: At that time it was a matter of negotiation between all the provinces and that was the figure arrived at.


George Alexander Drew: It was a matter of negotiation and I hope there will still be some consideration given to this subject, because I am going to suggest that the same method of negotiation be used in relation to personal income tax as was adopted in the negotiations which took place in regard to corporation income tax.
The government has established the principle of deductibility. It accepted 15 per cent as a perfectly proper percentage on an earlier occasion. Let us therefore examine what the results would be if we followed the same methods of negotiation as were followed in 1952.	*
If this arrangement were carried out, the government of Quebec would receive some $25 million less from this source than it would receive if it entered into an agreement similar to that which the other provinces have signed. The situation therefore is a simple one. The situation is that the proposal
4386	HOUSE OF
The Budget-Mr. Drew put forward by the government of Quebec is one which will cost the Canadian taxpayers generally $25 million less than would be paid if Quebec entered into an agreement at this time, similar to that which this government is so anxious to have them sign.
Since the government of Quebec is prepared to accept $25 million less, and the federal treasury saves that amount, what explanation can there be for the suggestion that any province would be prejudiced by an arrangement of this nature? Yesterday the Prime Minister said, as reported at page 4339 of Hansard:
No one, I hope, would suggest, In order to give Quebec taxpayers more generous deductions tnan those now provided for in our income tax law, that we should either increase the tax rental payments to the other provinces or agree that they too may impose their own taxes and get for their taxpayers, at the very substantially increased expense of the federal treasury, somewhat more generous deductions. The federal treasury just could not stand either of those courses.
I cannot believe, Mr. Speaker, that those were the words the Prime Minister intended to use. It is difficult to understand why they were used. The federal treasury would be paying out $25 million less than they have indicated they are anxious to pay to the province of Quebec. There would not be one cent more paid to any other province. There would be a net saving to the taxpayers of Canada of $25 million which, to be perfectly clear about it, would be at the expense of the income tax payers in the province of Quebec. We cannot complain about that, however, because that is what the government of Quebec has suggested. The situation is that not one cent would be added to the amount that this government -would collect from the other provinces. Is the Prime Minister suggesting that this government really is not ready to have Quebec sign an agreement? I do not believe it. On the contrary, I was under the impression they were anxious to have Quebec sign an agreement. If that is so, then they are prepared to pay Quebec $25 million more without adding a cent to the taxes which would be collectable elsewhere, or change the amount payable by the other provinces.


Jean Lesage: What would be the effect of the 15 per cent deduction in Ontario?


George Alexander Drew: Mr. Speaker, the points I am making are, I am sure, perfectly clear to the Minister of Finance.


Jean Lesage: Why don't you answer the question?


George Alexander Drew: The question that is being asked is as unreal as the statement by the Prime Minister which I have just quoted. Every provincial government has fixed its taxes for
[Mr. Drew.l

this year and the hon. member who has just interrupted should know that. If he does not know that, he should, because they were fixed some considerable time ago, and at the time they were fixing it the premier of Ontario asked the government of Canada to reconvene the economic committee and we are still waiting for this government to decide what it is going to do in regard to that proposition.


Douglas Charles Abbott: You have still failed to answer the question.


George Alexander Drew: I have not failed to answer the question. I have made it perfectly clear that there would be no change this year in the amount that would be collected in Ontario or any other province, not a cent. There cannot be, for the taxes have already been levied and anyone who is aware of taxing methods must know that and would not raise that question.
But, Mr. Speaker, I think there is a solution to this apparent impasse. It is one which would detrimentally affect no provincial agreements. It is one which would detrimentally affect no taxpayer in any part of Canada. I suggest and most earnestly urge that the Prime Minister agree to this deduction. The Minister of Finance indicated this afternoon a method by which this can be dealt with. He indicated that when this government very properly extended the deduction in the case of corporation income tax by the amount levied by the provinces it was done in a friendly co-operative spirit. Now then, let the same method be adopted in regard to personal income tax. Let it be done for this year. Let the Prime Minister at the same time call the premiers together to a conference here and start discussing the vitally important problem-not of the single tax payments in any province but the broad problem-of the reallocation of taxes in every province of Canada for the benefit of the provinces and of the municipalities. That would be a solution that would deal with the situation this year. If this government is ready to send its representatives all over the world to meet other governments in the hope of finding solutions of problems, surely it should be prepared to display the same spirit here in Canada. Surely it does not think that a solution of this difficulty-and I am talking about a solution with all the provinces-is more difficult than is the solution of those problems which arise with the persons that Canadian representatives are now meeting at Geneva.
Mr. Speaker, the Prime Minister has it within his power to display a spirit which would be extremely helpful in ending comments of a kind that are not conducive to the

strengthening of unity within this country. The Prime Minister alone can call this conference together. I assume that we shall soon be voting on the budget.


Some hon. Members:: Hear, hear.


George Alexander Drew: Mr. Speaker, those "hear, hears" show a greater measure of interest in the budget than most of the hon. members opposite have displayed at any time since it was first announced.


Jean Lesage: What about the "hear, hears" from your own side?


Mr. Sinclair:: We have been bored to tears for the last hour.


George Alexander Drew: Mr. Speaker, the solution to this problem is one which need not place before us the necessity for deciding the advantages of one procedure or another. The facts are there. Whether it is the best proposal or not, the proposal before this government is one which will save the taxpayers of Canada $25 million they would otherwise pay if the government of Quebec signed the agreement which this government has sought to have them sign. When the vote on this budget takes place, it is perfectly true that it is not a vote on an ordinary budget. The Prime Minister made that fact clear yesterday. He said that it is not customary for the Prime Minister to enter this debate. That has, in any event, been true in recent years in this house. There are very great differences. The Minister of Finance (Mr. Abbott) made that fact clear by the amount of time he devoted to this particular problem which I have been discussing.


Douglas Charles Abbott: Not as much as the Leader of the Opposition has taken today.


George Alexander Drew: Oh, Mr. Speaker, the Minister of Finance had an extremely poor case. The Minister of Finance took sufficiently long to present the dismal picture he put before this house that he should object to no reasonable time that is now taken to present the real facts of the case.


James Sinclair: What a man!


Douglas Charles Abbott: The Leader of the Opposition has a poorer case today.


George Alexander Drew: Even his assistant did not understand it, as was indicated just a few minutes ago. Mr. Speaker, those who vote for this budget will, by their vote, express approval of the refusal by this government to consider the proposal that is before them from the government of Quebec. That fact is perfectly clear. Those who vote in support of this budget will cast their vote in support of the proposition that there is to be no conference
The Budget-Mr. Drew of the governments of Canada as was promised and as has been asked for by most of the provinces of Canada, if not all. Those who vote for this budget, quite apart from any of the figures involved, will also be voting in support of the proposition that nothing now be done to attempt some method of meeting the urgent needs of the municipalities whose tasks are increasingly heavy at this time and who need consideration as much as do any government authorities in Canada. Do not let any member of this house try to argue that the vote is only on the figures. The vote is on the figures and the meaning of the statement presented to this house by the Minister of Finance and which the Prime Minister yesterday said met with his complete approval and that of the government. That is what the members of this house are voting on.


Douglas Charles Abbott: That is right.


George Alexander Drew: I hear the Minister of Finance say "That is right". I hope hon. members will all recognize the fact that the Minister of Finance, speaking for the government, indicates that his belief is that these are the things which members of this house are voting on if they support this budget.


Jean Lesage: It is a vote of confidence.


George Alexander Drew: Mr. Speaker, I believe the proposal that has been put forward offers a solution which still should be considered even at this late stage in the debate. What is there that separates this government and the government of Quebec so far as anything that has appeared before this house is concerned? What separates them is a costly conflict over the way in which the government of Quebec is going to raise revenues which will be $25 million less than they would be entitled to collect from the very same source if they entered into the agreement proposed by the government itself. That is a costly conflict, a meaningless conflict and one that members of this house should not wish to see take place when such an easy solution presents itself, with the certainty that, before taxes are levied next year by this government or by any provincial government in Canada, they can solve this problem by meeting and dealing with it in the way that governments in Canada have dealt with this subject on earlier occasions.
I believe that the very fact that such a proposal were made would carry with it the suggestion of co-operation and of a friendly spirit which, if it is important in the international field, is far more important right here in Canada where the strength of our country starts to be built. I believe that it will provide a solution which is acceptable

The Budget-Mr. Buchanan right across Canada. No other part of Canada loses anything. No other part of Canada is denied the chance to meet and to discuss the way in which these problems would be solved. Every government in Canada would have the chance to begin to lay the foundation now for those broader arrangements or those wider adjustments that were clearly promised in 1942 when the provincial governments gave up their main taxing rights. The test of harmony and good will to which the Prime Minister referred yesterday lies now with the federal government. Again I urge the Prime Minister to say that this proposal will be accepted and, at the same time, that he will call a conference. I believe that this display of harmony and good will would be in keeping with the grave times in which we now live.


Mr. W. M. Buchanan (Cape Breton North and Victoria):: Mr. Speaker, I am aware of the fact that the house is anxious to dispose of the budget debate but, as a new member who has not taken up any of the time of the house during this, my first session of parliament, I feel that I should make a few remarks at this time because I represent a constituency which is both rural and industrial. The budget is a document that has considerable influence on the year ahead for both farmers and industrial workers. Before speaking briefly on the budget, there are a few matters I should like to discuss which are of particular interest to the people of my consituency. I want to make these observations because in my riding, where we have some unemployment, I think that certain measures that are of interest both to the provincial and the federal governments will be of some help in relieving unemployment. For example, at the present time the federal and the provincial governments are making a forest survey in connection with the pulp industry. Half the cost of the survey is being met by the federal government. The result of the survey may mean more development in the pulp and paper industry which of course would help to relieve unemployment.
The second point that I should like to bring to the attention of the house is the fact that work will be undertaken in Cape Breton this summer on the trans-Canada highway. I understand that as part of this work a bridge will be built across the Bras d'Or lake which will relieve the congestion caused by the present long wait for ferries.
I might also mention that we have one of the finest national parks in the Dominion of Canada at Ingonish. It is a part of the famous Cabot trail and is a great attraction for


tourists, who come from all parts of North America and spend their vacations at beautiful Keltic lodge.
We also have one of the finest harbours on the Atlantic seaboard. The federal government built a new terminal at North Sydney at considerable cost. There are a large number of men employed as stevedores and in similar work at North Sydney which is the point of embarkation for Port aux Basques, Newfoundland. Within a short time we expect a new ferry, now under construction, to be put into operation between North Sydney and Port aux Basques. This ferry is badly needed because imports and exports over this route have increased considerably since Newfoundland joined confederation. I am pleased to say that the people of my constituency appreciate very much the federal government's action in making the ferry route to Newfoundland part of the Canadian National Railways system.
The port of North Sydney also enjoys a large trade with the Portuguese fishing fleet, and the purchases they make in the town of North Sydney are very important from the standpoint of revenue. We look forward to an increasing and expanding trade with the Portuguese fishermen, but I would remind the Minister of Public Works (Mr. Winters) that some dredging is necessary at several docks to permit continued and uninterrupted service for these foreign fishing boats. I am reasonably sure that the minister will see that this necessary work is undertaken.
The budget is a very important statement. It is an account of the stewardship of the government for the past year and a forecast of the social and economic picture for the year that lies ahead. The budget presented by the Minister of Finance (Mr. Abbott) on April 6 did not make any great changes. There is a great deal of argument that many things might have been done, but in my opinion economic conditions in Canada and throughout the world would seem to justify the stand taken by the government, namely, to determine if the economic factors outside our own country which influence trade and mean so much to us in the field of employment will bring about the changes necessary to stimulate our whole economy.
In order to solve unemployment not only government action is required but also the understanding co-operation of labour, management and government. In the circumstances which now confront the country it would appear to me that the only way to increase our purchasing power and to stimulate consumer buying, which would assist in

relieving the unemployment problem, would be for the government to give immediate reconsideration to the extending of unemployment insurance benefits and to the increasing of social security payments. This line of action, I think, is realistic and completely the reverse of recommendations made by some sections of the opposition that the government should retrench by curtailing its expenditures in many fields.
We have heard a great deal about the proposal of the government of Quebec to impose a provincial income tax of 15 per cent and to have it allowed as a tax offset by the federal government. As a junior member of the house, I am not going to say too much on the question of dominion-provincial relations or the constitution of Canada, but I should like to say that the only way we can get equality of opportunity in Canada, as between province and province, is for the federal government to have the power to collect taxes as they are doing under the dominion-provincial agreements so that we will be able to carry on our present social security program, hospital grants, vocational training grants and other assistance to the provinces of that nature.
In effect, under the dominion-provincial agreements, with the taxing powers in the hands of the federal government, the federal government is then in a position to redistribute the wealth of the country on a more equitable basis. The prairie provinces and the maritime provinces would lose very heavily were any action taken which would tend to upset the present dominion-provincial agreements. I feel that it is my responsibility as a Nova Scotia member to put myself on record as stating most emphatically that I will use whatever power I have as a member to support a continuing policy of a more equal distribution of the wealth of the country.
The budget did offer some relief to the Nova Scotia coal mining industry. The 10 per cent sales tax on stokers for use with furnaces in the heating of buildings, and on coal crushers for use directly in the manufacture and production of goods, was discontinued. This, I think, is a gesture in the right direction.	.
The coal industry of the maritime provinces is undergoing a serious period of reconstruction in order to meet the competition from gas and oil. The picture is far from bright, but I feel the industry, the workers and the general public of Nova Scotia are aware of the problem and are doing all they can locally to find a solution. I feel that the people of the maritimes. with their inherent good sense, their vision and courage, will find
The Budget-Mr. Brooks a way out of this problem as they have out of many other serious problems with which they were confronted.
One could continue, Mr. Speaker, presenting the academic picture of the budget. However, I believe I have said sufficient to indicate that little change will be felt by the average person in Canada in 1954 in so far as tax relief is concerned. I repeat, therefore, what I said in opening, that the government was realistic in holding the line for this year in order to determine what changes may be necessary to meet conditions in a changing world. The next year will be a crucial one. If we can get by without a war, and I am sure we can, then the main emphasis will be on making the social and economic changes that are going to be necessary to meet conditions that are arising as other parts of the world get into production and with whom we shall have to compete in world markets.
I am sorry, Mr. Speaker, that I found it necessary to occupy this short time at this period of this session. I did feel that I should make these few observations to indicate to the people who sent me here that I am endeavouring to present their views on matters that are creating difficulties in the country.


Mr. A. J. Brooks (Royal):: May I at the outset, Mr. Speaker, congratulate the hon. member for Cape Breton North and Victoria (Mr Buchanan), who has just taken his seat, upon his address. I feel he found perhaps the same difficulty that most maritime speakers have found, and that is to say anything good about this budget. His remarks conveyed the same impression as the remarks of others from the maritime provinces, that the situation in the maritimes is serious indeed. There is very little help for us in this budget. They all had great difficulty, as did the hon. member, in finding anything to praise.
A few days ago I listened to the hon. member for Westmorland (Mr. Murphy). He pointed out that a great many men in his constituency were without work, and said there were a great many out of employment in the city of Moncton as a result of lay-offs by the Canadian National Railways. The hon. gentleman did not dwell very much on the unemployment situation in Westmorland or the difficulties the people there are having. He spoke about the Chignecto canal, which is always a safe subject either in Westmorland or any other part of the maritime provinces. I have spoken on the Chignecto canal upon many occasions, and like the hon. member for Westmorland, I intend to continue pressing for the development of that canal.
There are, however, immediate problems in the maritimes and, as I said a moment
HOUSE Or COMMONS
The Budget-Mr. Brooks ago, there is little indication that this budget will help us in any way. I listened to the hon. member for Gloucester (Mr. Robichaud). I might say that I wish to congratulate all these hon. members on their remarks. He was greatly concerned about the fisheries in New Brunswick, and in his own county of Gloucester in particular. He spoke of the great need of public works, but did not in any way compliment this government on its budget or upon what it was doing for his part of the country.
Yesterday I listened to the hon. member for Kent, N.B. (Mr. Michaud). He spoke of the great difficulties being experienced by the farmers of Kent county, and of the fact there are no markets for our fisheries. He spoke about the people leaving the county of Kent. He could have gone further and spoken about the people who are leaving the province of New Brunswick and the maritime provinces. He said that only the old and very young people were left in his constituency. He mentioned the fact that the old people were receiving the old age pension and the very young were receiving family allowances. The young men who wish to start homes, the people we are anxious to keep in the mari-times, unfortunately are the ones who are leaving.
I could go on and mention the remarks of other hon. members, such as the hon. member for Cumberland (Mr. Lusby). I wish also to congratulate him on his speech. It was a well prepared address, and he had a strong feeling for his own county of Cumberland as well as for the rest of Nova Scotia. His complaint was, as was the complaint of the hon. member who has just taken his seat, concerned with the sad situation of the coal industry in Nova Scotia today. As I say, there was little in any of these speeches that I feel would commend this budget that has been introduced to the people of the maritime provinces.
I cannot say that I was altogether disappointed in the budget. I have been in this house now for quite a number of years, and I have learned from experience that a postelection budget is never a very satisfactory budget so far as the people are concerned. We have learned not to expect very much, and we were not disappointed in the budget in that respect this year. Some reductions in taxes were made, but as has been pointed out by numerous speakers they were mostly on luxury goods. So far as my home town of Sussex is concerned, I was pleased to note there would be a reduction in the excise tax on soft drinks. There are two manufacturers of soft drinks in the town of Sussex, and this reduction will be of benefit to them.

I was not so well pleased, Mr. Speaker, with the resolution that proposes to tax mutual insurance companies. Resolution No. 6 of the budget resolutions proposes this tax on mutual insurance companies doing business in all parts of Canada. In New Brunswick we have five small mutual insurance companies and, as everyone knows, they are made up mostly of farmers. In the 1930's it was very difficult for the farmers to obtain fire insurance. They banded together and formed these companies in order to help themselves. As far as these companies are concerned the government now proposes to tax what is known as underwriting gains. In some years, over and above the amount of money which is collected from the premiums, there are certain gains. In other years, naturally there are losses. It depends on the amount of money that has to be paid out for fire losses. I understand that these companies are not objecting to any tax assessment on the interest of their earnings, and that is very important; but they do object to a tax on the underwriting gains of the company. The matter came before the Supreme Court of Canada. I might say that the company which was responsible for bringing this matter before the Supreme Court of Canada was the Stanley Mutual Insurance Company of Stanley, New Brunswick. It is one of the five small companies of this kind that we have in the province.
The judgment of Mr. Justice Locke of the Supreme Court of Canada, which was concurred in by the other five judges who sat on the appeal bench, was that these companies should not be taxed. They declared that the gains were not profits. I should like to read just what Mr. Justice Locke said:
"The question is whether the surplus resulting from the amounts received from premiums paid in cash at the time the insurance is effected and from assessments being in excess of that required for the company's operation is a profit or a gain" . . . "no question arises regarding the interest earned upon the company's investment of its reserve fund which is conceded to be taxable."
The court held that the underwriting gain of a mutual was neither profit nor gain so as to be taxable within the terms of the Income Tax Act.
I do not intend, Mr. Speaker, to labour this point further; but I feel that, taking into consideration the judgment of the supreme court and taking into consideration the fact that these companies, as I know them at least, are small companies which are banded together in order to assist farmers mostly, in all fairness this resolution should be withdrawn and there should be no tax

imposed as far as these companies are concerned. I hope that resolution No. 6 will be withdrawn.
The minister was very optimistic in his budget. I feel that very few share his optimism when he said as reported at page 3726 of Hansard:
My reasons for saying this are, first, that the support to be given to production in 1954 in the principal areas where demand originates is well assured. This statement holds good whether we look at the intentions of Canadian business with respect to new investment, or at the probable expenditures of Canadians as consumers or builders of new houses, or at the rate of government expenditures, or at the prospects for export.
As far as business investment intentions are concerned, in 1953 the business investment was $5,059 million. As far as the proposal for 1954 is concerned, it is -4 per cent lower than it was in 1953, which does not indicate that business expects to improve. The minister has told us that there would be an upward swing in the second half of 1954. Well, it is May of 1954, and we shall not have to wait very long to see whether there is an upward swing. I may say that there are very few indications of it at the present time. Unemployment is not only increasing-


Robert Henry Winters: No.


Alfred Johnson Brooks: -but business is finding that it is having a more difficult time as the days go by. I am not one of those who cry blue ruin. As a matter of fact, I do not think there is any necessity to cry blue ruin. I am also not one of those who would say that prosperity is around the corner. The situation is serious and unfortunately it seems is either going to remain serious or become more serious.
As far as agriculture and fishing are concerned, the prospects are that they will be down 5-2 per cent in 1954 over 1953, and the prospects for lumbering and forestry industries are that they will be down 15 -3 per cent. Those industries are of very great importance to our maritime provinces, and when lumbering, fishing and forest industries are down, then the whole economic situation of the provinces is in a bad way.
I might also point out that the maritime provinces always seem to be the first hit when there is a recession or a depression. We have mentioned the textile industry on a number of occasions. As hon. members know, one of the large textile mills in New Brunswick was the first to close its doors, throwing some 500 to 600 people out of work, with no prospects of ever opening again. We also know that the textile mill in Milltown has had to lay off a great many of its staff; and in my town of Sussex four or five years
The Budget-Mr. Brooks ago we were fortunate in having a small textile mill move down from Quebec and open up there. It was a great asset to our town, and gave employment to quite a number of people. The relations between labour and employers were the very best both in the factory and in the surrounding country. Within the last three weeks this factory has also had to close its doors. They say it is only temporary, but still there is no knowledge when it will open again. These things are very serious. To me they are a clear indication that the situation is not good or not as good as it should be.
We might look at some other indications, Mr. Speaker. A fair indication of business in this country is the matter of railway car-loadings. Today they are 8 per cent under figures for the same period in 1953. On March 21 the cumulative 1954 loadings was 737,531 cars as compared with 818,267 in the same period last year. That is a reduction of 10 per cent. That is a very fair indication of the big drop in business in this country.
We also may take as an indication the purchase of new motor vehicles. It used to be considered that a motor car was a luxury. Today it is considered a necessity. In addition to the motor car there is the truck, which is one of the great essentials of business in this country. The new motor vehicles sold in January of this year numbered 23,133, a drop of 7,070, or over 23 per cent, from the same period as last year.
Surely this is a strong indication, Mr. Speaker, of a great drop in business in this country.
Retail value was 21 per cent lower with a figure of $59,137,000 as against $75,031,000 last year. And I could go on to mention numerous other indications. The unemployment insurance claims also give an indication. On the live unemployment insurance rolls of February 26 the number stood at 512,567, an increase of 17,736 or 4 per cent over the month previous, and 149,402 or 41 per cent over the same date last year. These, to my mind, are all very strong indications of what the situation is in this country today.
I was interested to note in the labour research for the months of March and April a list of the number of industries showing a drop in employment. These are selected industries in Canada; and while I shall not weary the house with giving all the information, I shall pick out some of the items. For instance, in February in the forestry industry there was a drop of 15.2 per cent in February, 1954 as compared with February, 1953. In the boot and shoe industry there was a drop of 7 [DOT] 8 per cent, and in textile products, with the exception of clothing, a drop of 16-5 per cent. In cotton yarns and broad woollen

The Budget-Mr. Brooks


Mr. Depuiy Speaker:: I am sorry to interrupt the hon. member, but it being five o'clock the house will now proceed to a consideration of private and public bills.
It having been indicated that there is no business under private and public bills, the house will resume the business previously under consideration.


Alfred Johnson Brooks: Mr. Speaker, I do not intend to labour this point any further. However, I might say this. I think this is an illustration of the horse and rabbit trade. It is probably the greatest illustration in the history of this country or that of any other country of the horse and rabbit trade. Since confederation the maritime provinces have been getting the rabbit and the other provinces of Canada have been getting the horse.


Mr. Rowe:: Fifty-fifty.


Alfred Johnson Brooks: Yes; fifty-fifty. When we
discuss a provincial-dominion conference I feel that this is one of the first subjects which should be discussed at such a conference. No matter what some members may think, I have a feeling that there is fairness among all the members from all parts of Canada. I believe that they will agree that the maritime provinces have not received their just dues with regard to western lands and also the lands of northern Quebec and northern Ontario; I refer to the public domain. I believe that in the interest of fairness a dominion-provincial conference will demand that, even at this late date, justice be done to these provinces.
I know it has often been said that we do a great deal of complaining in the maritime provinces. May I say that we have had a great deal to complain about. We are sometimes told to help ourselves. That is always good advice, not only for provinces but for individuals. We in New Brunswick feel that we can help ourselves. We have always been considered to be one of the poorer provinces but, as hon. members know, in recent years we have been fortunate to discover in our province minerals which, in the past, we did not know we had.
We are told that one of the great reasons why we have not developed more industry is that we have not cheap electric power. In order to develop our mineral resources, to attract industry and to develop more industry we must have cheap electric power. The government of New Brunswick have been trying to solve this problem, as have past governments in that province. Today they think they have a solution in the development of more power on the Saint John river by means of a project called the Beechwood project. It is a project which, for full development, will cost a considerable sum of


money; it will cost more than the province of New Brunswick can afford. For a partial development, which is being promoted at the present time, the cost will be about $44 million. The development of this hydroelectric power will mean a great deal to the province of New Brunswick. It will probably mean the difference between prosperity and difficult times.
1 understand that the government of New Brunswick have approached the federal government, not to ask them to develop the Beechwood project but to ask them for assistance in raising money for the development of hydroelectric power at Beechwood. They have asked the assistance of the federal government by way of making available treasury loans so that they might have a lower nominal rate of interest than they would have if the province of New Brunswick is obliged to borrow the money from outside sources. I do not know what the attitude of the federal government is to this proposition but I think that the proposition that has been made to the federal government is a very fair one. It is one which will mean a great deal to New Brunswick and I hope it will be accepted. It is not one that is going to increase the debt of the dominion. It is not going to mean that the people in other parts of Canada will have to give one cent. The province of New Brunswick will pay its debts. But with the backing of the federal government it can raise money at lower rates of interest than would otherwise be possible, thus making hydroelectric power available to the people of New Brunswick more cheaply than would otherwise be possible. As I say, I hope that this matter will receive serious consideration by this government.


Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, I had intended to sit out this discussion but, as it goes on and on, I feel that I might as well make my contribution also. I first want to compliment the hon. member for Cape Breton North and Victoria (Mr. Buchanan) on his maiden speech. Having regard to the fact that he is a new member, that we have a complicated budget and that we are living in twisted times, I thought that he took a rather realistic view of the whole situation. He did an excellent job. As his next-door neighbour on Cape Breton island I feel it to be my duty to say that I am extremely pleased with his attitude, his manner and his general approach to this problem of the budget. However, Mr. Speaker, I cannot say that I can pay that tribute to every hon. member to whose speech I have listened.
The hon. member for Cape Breton North and Victoria said that, having regard to the times in which we are living, this year was

a good time to take a look around. I think that anyone who is doing any reading at the present time will have to come to that conclusion. I think he will be forced to the conclusion that we are not just faced with a temporary recession and that it is not something that is going to cure itself. The whole thing arises out of faulty mechanics in society. The situation in which we find ourselves indicates that we did not learn much from the last war. In my judgment present circumstances indicate that we are headed back for what we had in 1939 unless some down-to-earth, realistic thinking is done by those in charge of the management of the economy of, not only Canada but of the United States.
I have here in my hand a copy of a magazine called The Reporter. It is a United States publication and it is a rather exclusive one. Some fairly good writers contribute to it. The issue I have in my hand is that of March 30, 1954. In it there is an article with the caption "The Recession is Here". It is written by an economist who takes a look at the whole economy of the United States. He runs through, industry by industry, the present inventories, the percentage of drop-offs, the general market trends and all that kind of thing. The conclusion at which he arrives is that as far as the United States is concerned the recession is here. I am not going to read that article because I like to read these things for myself and to summarize them. Anyone who is interested can pick up the magazine and read it for himself. I consider that article to be an authoritative one written by a man who is not grinding any axe. He is merely reading the danger signs as they affect the economy of the United States.
I think anybody who is reading the newspapers will have to agree with me. What is true of the United States is also true of Canada because the economy of this country is so tightly locked to the economy of the United States that anything that happens over there will spill over into Canada. I am sure that any member of the house who takes a look at our basic industries today must agree that basic changes have got to be made. The Leader of the Opposition (Mr. Drew) missed coal and steel but he did talk about the textile and electrical industries and the difficulties that are facing agriculture.
We have heard discussion about picayune savings in government expenditures, but I do not think they would have very much effect. Someone says that you can cut off a few civil servants, stop publishing certain books and save a million and a half dollars. That kind of thing is unrealistic in the type of situation that confronts us today. I have
The Budget-Mr. Gillis in my hand an editorial from the Halifax Chronicle-Herald. It is an excellent paper. I have always considered that it is unbiased, and I think it perhaps makes the best contribution with respect to maritime problems of any newspaper in Canada. You cannot say that an editorial in that paper represents socialist thinking. It is a straight honest attempt to make an honest appraisal of every problem that arises in the country.


Mr. Harris:: That is not the opposite of socialism, is it?


Clarence Gillis: I am trying to anticipate the kind of comment I would get from a lot of people in this house if I were to suggest the kind of thing that this editorial suggests. The editorial points out that the federal government payroll at the present time is approximately $80 million a month, and I should like to pound the words of the editorial into the ear of the fellow who wants to save $1,500,000 out of $4i billion because he thinks he is going to save the country. The editorial deals with the function performed in terms of money by reason of this capital expenditure.
In my judgment the hon. member for Cape Breton North and Victoria was quite right when he said that a period such as the present, when industry and almost all our economic organizations appear to be standing pat and taking a look at things, is not the time to cut government expenditures but is the time to spend more money and prime the pump if you want to avoid a complete slump. The hon. member was quite right, and to hear that kind of opinion expressed on that side of the house is like a breath of fresh air. The editorial in the Halifax Chronicle-Herald has this to say:
Eighty millions a month, $960 million a year, that is a fabulous figure in any language. But it is money distributed in every part of the country. And that is the function of money, to be kept in circulation. Money hidden away in the "old sock" or under a brick of the fireplace is quite as useless as the gold hoarded in Fort Knox which, as Sir Winston Churchill has said, "might just as well be in the virgin rock in the Rand." No sensible person believes that governments should throw money with reckless abandon, but the idea that money spent is money wasted is just about the most fallacious economic doctrine possible to be imagined. We should not therefore be horrified at a public payroll of the magnitude indicated; rather, we should remember that this money, and a great deal more along with it, flows from the federal treasury as part of the bloodstream of trade and commerce and industry, without which no nation could endure.
I bring that to the attention of some of those who are talking at the present time about cutting government expenditures here and there. I do not believe in inefficiency or waste, but until such time as someone is
4396	HOUSE OF
The Budget-Mr. Gillis able to get up in the house and put his finger on some place where there is inefficiency, then in my judgment the saving of money is not argument enough in the circumstances that this country faces today. The more purchasing power in circulation the greater the chances are of avoiding unemployment, which is our big problem at the present time.
I heard a member who sits not very far from me suggest that the construction of the new C.N.R. hotel in Montreal was a terrible thing and should not be undertaken at this time, that it was going to cost $20 million and someone was going to have to pay for it. I heard that matter discussed in the railway committee. The construction of that building in the city of Montreal is necessary. Before the committee the president of the C.N.R. pointed out the fact that in the city of Montreal there is not a hotel with accommodation for the type of conventions that take place today in Canada where 600, 800,
1,000	or 1,500 delegates assemble. He is quite right because I have had the experience of attending one or two conventions where the convention had to be divided, and that does not tend to good business.
The president of the C.N.R. also pointed out that he has applications from organizations all over the United States that will mean that the hotel will be booked solid with conventions for at least two years after it is completed. The project will pay for itself. It is a self-liquidating project. Some people talk as though Canada were through developing. They talk as though we did not need any more population and give the impression that we should just sit tight, put our money in the sock and all that kind of thing. This country is developing and the hotel project in Montreal will help to solve the unemployment problem to some extent in that city.
I heard a lot of other proposals along the same line, but as far as I am concerned not one of them would stand up. In my judgment they do not mean anything.


Walter Edward Harris: The whole of his speech?


Clarence Gillis: All the recommendations I heard with the exception of a few publications about which he quibbled. I do not know these publications. I do not know what value they have. With that exception I would not say that the economies recommended would amount to very much. I picked out the example of the hotel because it seemed to me that it was a subject to which the speaker had not given very much thought.
Another recommendation I heard was that the annuities administration should be given a going over. That is not a new thing to me.
TMr. Gillis.]

The Minister of Labour (Mr. Gregg), the hon. member for Winnipeg North Centre (Mr. Knowles), myself and others were members of a committee that endeavoured to amend the annuities act not so long ago. The insurance companies from coast to coast put up a terrific lobby and used exactly the same arguments. As far as I am concerned, the annuities act is good legislation. I am sorry it was not amended along the lines of the bill that the Minister of Labour brought in at that time. I am sorry that somebody capitulated to the arguments of the insurance companies. It is the only yardstick we have in Canada by which to measure insurance rates. It was said that it should be put on a competitive basis, but that is exactly what the insurance companies were afraid of. We did want to write in one or two clauses that would make it competitive, but they did not want those clauses. I hope the Minister of Labour will reintroduce that annuities act with the amendments he proposed at that time.


Stanley Howard Knowles: And which the house supported on second reading.


Mr. Maclnnis:: Not a chance.


Clarence Gillis: I want to tell the Minister of Mines and Technical Surveys (Mr. Prudham) that I am not going to say anything about coal. I am going to save that part of my-


Donald MacInnis: That is what they are doing with the coal.


Clarence Gillis: -remarks for his estimates, after I hear him tell us what the government is prepared to do as a result of the last conference he had with the industry.
This afternoon I listened with a great deal of interest to the Leader of the Opposition. His speech was my principal reason for rising at this time because he dealt with a subject that is extremely important to the end of the country from which I come, the subject of dominion-provincial agreements. When he referred to unemployment and so forth, whether or not he realized it, he made one of the best cases against the so-called system of free enterprise that I ever heard. In effect what he said about marketing and the breakdown as it were of the whole set-up proved conclusively the inability of industry in this country to compete today. We had a similar situation on our hands from the twenties to 1939 when we got into another war and, to a certain extent, our economy was planned. Then our economy worked well, and even though we were throwing away 50 per cent of our national income there was prosperity and full employment.

When the shooting was over the government removed the controls and returned control to General Motors, Dominion Steel and Coal, Canada Packers, General Electric and the rest of them. Before the trenches were filled in they were sitting back uttering the same old cry; there is unemployment, and we cannot compete. That is the picture the Leader of the Opposition painted this afternoon. I believe he was quite right in the figures he presented. There is no purpose served by the Minister of Labour or anyone else trying to rationalize the question of unemployment. Figures presented by the minister in this house a month or so ago showed that there were about
520.000	unemployed. He told us also that about 56,000 people who were receiving unemployment insurance would not receive any benefits after April 21.
Now, perhaps the Leader of the Opposition brought the figures up to date when he said that according to information he had there were 570,000 on the unemployment insurance rolls. He said that actually there were
730.000	people looking for work. If this latter figure is correct, I would say that there are about 270,000 people in this country who have been removed from the unemployment insurance rolls and therefore have no income. I know that in my own area there were about 1,100 who were removed from the unemployment insurance rolls on April 21. These people have no income at all. Something has to be done about that. My recommendation is not that the government should fire a few civil servants somewhere or cut out a publication; that is not going to solve the problem. Something has to be done immediately.
My suggestion is, and has been, that unemployment insurance benefits should be extended. They should be extended until such time as these people can be put to work. If the government has to subsidize this fund, then that is too bad but people have the right to eat; that is a prior right.
There is another thought I should like to leave with the minister. One hears it everywhere because I think everyone has picked it up today as their swan song. We are told we have priced ourselves out of the market. Wage rates in Canada are too high. There is another side to that story. Perhaps profits in Canada are too high also. If one looks at some of the recent balance sheets published in the press one finds that profits are very high. Before the captains of industry in Canada start telling the workers that $2 or $1.60 an hour is too high, they should look at their own rates. An example should be set.
I have in my hand a paper called The Guardian, which is the official organ of local 195 of the auto workers union. This little
The Budget-Mr. Gillis paper does a good research job. In talking about wages, the Minister of Labour should remember this. General Motors has quite an unemployment problem, both in United States and in Canada. According to this paper the president of General Motors, in 1953, had an income of $637,233; that is a lot of money. It is $368 an hour for the forty-hour week or $6 a minute. I am leaving this thought with the Minister of Labour because he will be meeting delegations of these people who will tell him they cannot compete with Britain; they cannot compete with the mass production methods of the United States, and their only solution will be to pull down the standard of living in Canada by reducing wage rates. Before that argument presented by the top executives in Canada becomes valid, they should start to make readjustments in their own house. I have just given one example of the amount of money that is paid to those who feel the worker who produces that wealth should take a cut every time they get into trouble. I mention that to the minister because I have heard a lot about it recently, and I know he has. It has all come from the same people, the people who are in the $368 an hour bracket. They should put their own house in order first.
Let me say a few words on this question of dominion-provincial agreements. I do not want to pose as an authority on the British North America Act. I want to say that so long as you have the centralization of wealth in Canada, such as you have in Ontario and Quebec, and a centralization of industry that keeps in the two central provinces about 80 per cent of the wealth of Canada, there is no other way by which you can get any amount of equality for the rest of Canada except by having the taxing powers in the hands of the federal government. Then, as the member for Cape Breton North and Victoria said, the federal government can redistribute some of that wealth to the hewers of wood and drawers of water on the prairies and in the maritimes.
I knew this was going to be a pertinent question, so before I went home for Easter I took a look at some of the figures for my own province. I wanted to see where we would be without these dominion-provincial agreements. The argument has been advanced that the provinces are losing something. For twenty years before coming into this house I listened to talk about the amalgamation of corporations being good business. By an amalgamation of corporations across the country and the head offices in the centre of Canada you cut your administrative costs 100 per cent as far as management is concerned, and it is good business. That is what has been going on. We have been taking from
4398	HOUSE OF
The Budget-Mr. Gillis the outlying provinces most of their wealth and putting it into the two central provinces. The taxes are paid there; the succession duties are paid there and so forth.
I know that Nova Scotia was reluctant to come into these dominion-provincial agreements. There are a lot of people in this country who, when you give them a little job and a little bit of authority, insist on holding that, even if it is just presiding over the poverty that exists in the area. I never could get it myself. It is true that Nova Scotia did not want to come into these agreements but our provincial budget this year will be around $48 million. Some $23 million to $25 million of that money will come back under these dominion-provincial agreements. In personal and corporation income taxes we will pay to the federal government around $30 million; but what are we getting back? That is the point. The fact that this dominion-provincial agreement existed is the only reason that we are getting it back.
I took a look at the family allowance payments in that province from 1946 to 1954, during the lifetime of these agreements, and I found that during that period $131,499 280 was paid in family allowances alone in the province of Nova Scotia since the establishment of the dominion-provincial agreements. In the matter of old age security $39,083,367 has been paid. We have received that amount in these two items alone. Then we come to old age assistance, and during that time the federal government has contributed to old age assistance $1,988,733. In the matter of blind allowances, in the three-year period we have received $617,917 in that field alone. From 1947 to 1953 the subventions on the movement of coal amounted to $5,949,000 odd, or $2.40 a ton on the 2,405,767 tons of coal moved during that period.
For vocational assistance in the establishment of schools in the fiscal year ended March 31, 1953, certain amounts were paid by the federal government to the provinces. During that year $63 900.59 went to Nova Scotia. I have the figures for the other provinces but they are not relevant to my discussion. Hon. members can see from that that if it was not for these dominion-provincial agreements where we would fit in that province, and that is equally true of New Brunswick, or much more so, and it is equally true of the prairie provinces, and partially true of British Columbia.
As long as my hon. friends who oppose these dominion-provincial agreements are prepared to maintain the kind of centralization of industry and wealth in these two provinces of Canada that exists, in order for the other provinces to exist there has to be some


method of redistributing the wealth of this country in the way that it is now done by the federal government.
The Leader of the Opposition brought up the example of Ontario and their 7 per cent. That is true, but it was done by agreement. As I see the present proposal, it was not done by agreement. The province of Quebec enacted the 15 per cent tax, and after they enacted it they said they wanted it to be used as an offset to the federal tax. Well, that is not agreement. The other nine provinces of this country cannot be wrong. Everybody is not out of step except Duplessis, I hope, in this matter of redistributing the wealth of this country. As one member of this house who lives in a section of Canada that likes to be called Canadian, I am glad that the federal government have taken the position that they are going to maintain the kind of policy in taxation that means the greatest good to the greatest number of Canadians. And as I indicated a moment ago, it is in the best interests of the great majority of the people of this country that these dominion-provincial taxation agreements should be maintained.
I do not say they are perfect, but they are a start, and they are subject to discussion and reason from time to time. I would not see any difficulty in the dominion-provincial agreements, as far as Quebec is concerned, if someone came in, sat down and talked the matter over. That is democracy. The right to agree and to disagree and intelligent compromise will be the final result that is democracy. Anyone who is not prepared to do that is not prepared to accept the mechanics of democracy.
I will join with the hon. member for Cape Breton North and Victoria, and say that anything that I can do as an individual member to see that a system whereby we can at least get something back from the centre is maintained, as it is in the dominion-provincial agreements, I will do. [DOT]
People should realize that the wealth of industry that they have in the central provinces was taken from the provinces east and west. We lost fifty industries in the province of Nova Scotia in fewer than fifty years, and a lot of them were large industries, to Quebec and Ontario. Most of the high salaries paid in steel and coal in these organizations today, and the dividends, go to Mount Royal in Montreal, and the taxes are paid in the province of Quebec. The only method that I know of whereby we can at least get some payments to enable us to stay in the field of social security is by redistributing the wealth in the way that we are doing at the present time. But the time will come when we will realize that industry in

this country has to be decentralized to a greater extent than it is at the present time.
In summing up the Leader of the Opposition mentioned what the premier of Ontario had to say in regard to the signing of the agreement. He told me at least that what the premier of Ontario was complaining about was the burden imposed on municipalities and service organizations in this province by the indiscriminate laying down in Ontario of industry after industry that they are not prepared to cater to. First, they developed a huge power shortage. It has made it necessary to develop the Niagara falls project. They went around half in darkness during the war to conserve power because of the great centralization of industry in this province of Ontario.
I notice that in the United States today they are being advised by experts to get busy and to start to decentralize their industrial machine in that country, both for economic reasons and as a greater measure of protection in the event of war.
You know, it is a strange thing but the only reports from any corporations I have seen recently that seem to indicate they are getting along all right are the reports from government-owned plants. Everyone else is screaming. Canada's publicly-owned rubber factory, it is pointed out, is a profitable success. I do not need to read what is said about it. But I do say that the government is going to have to make changes along the lines represented by Trans-Canada Air Lines, the Polymer Corporation and Canadian Arsenals, because these organizations are planning their production. Others are not. It is this type of planned organization which must be implemented in the future if we are going to meet competition from outside. We will have to sit down together and realize that not just a few people own Canada but all the people of Canada are shareholders in the future of our country. If adjustments are necessary, then we can make them together.
But I do say it is bad taste for someone who is receiving $6 a minute to tell someone else that he should work for less than $1.60 an hour. That kind of thing is going to bring about what happened in Europe. It will drag the house of cards down around our ears.
I should like to say a word to the Minister of Citizenship and Immigration (Mr. Harris) concerning the unemployment figures we have today. Every second paper one reads contains a story about an increase in immigration. I have here a small clipping which says that 25,000 families are to be admitted to Canada. At one point in Ontario the minister made a statement a couple of
The Budget-Mr. Gillis months ago that we are going to bring
186,000	immigrants into Canada this year. Well, I would say to him that this is a bad year to be thinking along those lines. As I have said on many occasions in the house, our immigration program lacks planning. No one seems to be taking a look at industry, or at the problems of agriculture, and determining the kind of people we should bring into this country, whether there are homes for them or jobs they can fill. In other words no one seems to be considering the contribution these people must be prepared to make to Canada.
This would be a good time to stop and take a look around. When one looks into this question of immigration he finds that people are saying, "Yes, but there is the humanitarian reason to be considered." Of course there is; I admit that. But let us understand the situation. If we are going to take in 186,000 persons for humanitarian reasons let us be prepared to tax ourselves to feed them. It is not good enough to take them in and drop them in centres already overcrowded so that they will be bidding for jobs against people who have jobs, or for homes when there are no homes available. That is not good enough. If we are taking them in for humanitarian reasons, then let us understand that that is so. But our centres are overcrowded today. The cities in Ontario, Quebec and British Columbia are badly overcrowded. I would strongly urge the Minister of Labour that the first thing that must be done is to put those unemployed persons who have gone off the relief rolls in a position where at least they will be able to take something home to eat.
Until we get around to a point of ironing out the problems of competition we are up against, this fact must be considered. It will not be easy, because the average industrialist wants to make money. If he can take an industry from Canada and transfer it to Africa or Japan or China, or some other country in which he can get cheap labour, and then sell his products in this country, he will do so. It has been done before, and to some extent it is happening today.
We have a serious problem on our hands. So far as my approach to the budget is concerned, I would say it is not a political approach, because my first concern is for the country at large. I am not unmindful of the fact that in two wars thousands upon thousands of our young people offered their lives to see that this country remained fit to live in, and so that we might maintain our institutions as we have them. I would not want to quibble about anything that was good for this country, because I want to see it prosperous.
4400	HOUSE OF
The Budget-Mr. Cardin
Having said that, let me add that I notice from the press that our genial Minister of Public Works (Mr. Winters) has been invited to become the skipper of the ship in Nova Scotia. If I had a vote on that, I would vote for it because something is wrong in that province. It needs a good captain at the present time. There is nothing wrong in the province that could not be cured by a little bit of common sense and some honesty. That is one of the things badly needed in public affairs, generally, of this country-a little honesty.
Whether the Hon. Bob Winters is going to Nova Scotia or not remains to be seen. But I would say that under prevailing conditions in the province-steel production is down; 1,700 men have been laid off from the steel plant; we know that the coal industry is in a bad way-I know from my visits there that they are looking around to see what can be done. Of course it is a job for the Liberal party. As I said before, however, I am interested in the welfare of Nova Scotia and of Canada. I am also interested in seeing that anyone who is calling the shots in any section of the country should have some realistic approach, as well as the courage and the necessary honesty to do that which is right rather than that which is politically exDedient. I am not going to give the minister any advice; but I do hope Bob Winters will go back down to Nova Scotia. I believe he could make a valuable contribution down there; and I know the people of that province well enough to know this that, despite politics, any approach he would make to the problems of the province would meet with co-operation and assistance, because the people down there want to have something done.
These remarks have been rambling, I realize. My main reason in rising was to make some observations on the dominion-provincial agreements. In my view they represent a long step forward and mean a great deal to the provinces outside of Quebec and Ontario It means that some of the wealth siphoned off from those provinces can be returned by way of social security payments, as they are at the present time.
(Translation):


Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, for many years and particularly during these past few months an unfortunate propaganda campaign has been conducted in the province of Quebec to convince the population that the federal government is not only alien to Quebec but moreover hostile towards that province, and that federal legislation aims at nothing but the destruction of


the autonomy of Quebec, and the violation of the rights and privileges granted to it by the constitution of the country.
It seems to me, however, that it is only since confederation, since the establishment of a central government that the government of Quebec, the province of Quebec and its population have been able to exercise fully their rights and their freedom. It is also since confederation that the province of Quebec has made tremendous strides in every field, so that it is now one of the greatest and one of the most prosperous in Canada.
It is also since the central government exists that the French Canadians have been able to play with the other citizens of Canada their rightful part in the administration of this country.
There is no need, Mr. Speaker, to spend much time looking through the history book or the pages of daily papers to find the names of French Canadians who have been and are still standing guard over the destinies of the province of Quebec, as well as over the destinies of this country as a whole.
Mr. Speaker, we have had, in the province of Quebec, to find a solution to many difficult questions and thorny problems, but they are now things of the past, and the province of Quebec never lost any of her constitutional rights, and the problem which now besets my fellow citizens in the province of Quebec will go down in history without the position of the province of Quebec undergoing any change whatsoever. Our province will always remain the place where our children will have the freedom and the right to speak the tongue and practise the religion of their forefathers.
There is not one Liberal member from the province of Quebec who would support the government if he thought that our autonomy, our race or our religion were endangered in the slightest degree by the legislation of the present government. We too are French Canadians and we want, as well as anyone else, to keep our language, our rights and our religion, but we would not be justified, for example, in indulging in unwarranted demagogy and sentimentalism, which would be detrimental rather than helpful to the people of the province of Quebec.
When our forefathers decided to establish a confederation, they did so because they saw certain advantages in that set-up and today all the Canadian provinces benefit from social and economic advantages which only confederation can give to each of the provinces. But the advantages also entailed

certain obligations, among them those upon which rests the very constitution of Canada, that is co-operation and understanding between the provincial governments and the central government, without which there can be no confederation, there can be no national unity, there cannot be any nation.
Mr. Speaker, for the people of the province of Quebec, provincial autonomy is extremely precious and sacred, but we should never lose sight of the fact that national unity is also very important. It is only through sincere co-operation between the governments of the provinces and the central government that Canada can take its place among the great nations of the world in order to settle and direct international affairs and at the same time look after the defence, the economy and the social security of each of the provinces that make up Canada.
I believe that we, of the province of Quebec, should be proud that our nation, which was born on the very soil of the province of Quebec, has become in a few short years, a strong, free and sovereign country, as was envisioned by the fathers of confederation.
Mr. Speaker, I believe we should show the same eagerness to safeguard national unity as we have shown to preserve and safeguard provincial autonomy, because as long as the province of Quebec is part and parcel of confederation, its welfare and its interests wiii be closely related to those of the government of Canada.
Protection of national unity is not tantamount to betrayal of the autonomy of the province of Quebec. These are not incompatible. That idea was well expressed in this house by one whose love for and devotion to the province of Quebec could certainly not be doubted.
I would like to quote in this connection the words spoken by the Hon. P. J. A. Cardin in this house, on November 30, 1944:
In the evening of my life, from the point of view of age and of parliamentary service, let me through you, Mr. Speaker, and from my place in the House of Commons, address just a word to the citizens of the province of Quebec and ask them, whatever may be their sentiments, whatever be their feelings at the present time, to take things easy, to reflect before acting, and to remember that they are not only citizens of the province of Quebec but at the same time citizens of Canada as a whole, who desire to see their country in the not distant future, and with the will of all concerned, become a great and independent country.
They are as much interested as I am, as much interested as others are in the future of our great land, and they should do all they can to help to build up, on the foundation of confederation, a great and prosperous country, which, with the help of God and the concerted effort of those who are
The Budget-Mr. Cardin
in authority, before long will be a country of which we shall be proud and in which we shall have great honour.
Mr. Speaker, those words apply equally to the present situation. They are as true as they were in 1944, and I submit it would be unworthy on the part of the province of Quebec to want to share in the benefits of confederation without recognizing the heavy responsibilities of the federal government and to deny its co-operation in the solution of an extremely complicated problem which concerns every province in Canada.
Unfortunately, Mr. Speaker, the stand taken by the premier of the province of Quebec can surely be interpreted as being un-cooperative; in fact it has even been aggressive in some instances.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Louis-Joseph-Lucien Cardin: Mr. Speaker, when the house rose, I was saying that it was unfortunate that the attitude of the prime minister of Quebec showed a lack of co-operation and was even, at times, aggressive. In some Quebec circles, the idea seems to prevail that it is still possible to change Quebec into a sovereign state. It seems to me, Mr. Speaker, that one would have to be very shortsighted to wish to secede from our confederation at a time such as the present when all the countries of the world are grouping themselves together in order to repulse the attack of the enemy if it comes and to protect more efficiently their national economy.
All the unrest and the misunderstandings now present in Quebec seem to revolve around the claim made by the premier of Quebec that federal-provincial agreements are directly opposed to provincial autonomy and aim solely at the destruction of the French-Canadian element.
I believe, Mr. Speaker, that it is difficult to justify such accusations because federal-provincial agreements are legal contracts which must and shall be upheld before all courts of justice, especially since the preamble of each of those agreements contains a paragraph which formally guarantees the constitutional rights of the provinces and of the central government. I would like once again, Mr. Speaker, to quote the preamble of the agreements signed between the Cana-

The Budget-Mr. Cardin dian government and that of the province of Ontario. In fact I believe the preamble throws so much light on this whole problem of provincial autonomy, that I took the trouble of translating it into French. I now quote the preamble of the agreements between the province of Ontario and the Canadian government:
Whereas, in view of the desire of the parties hereto to avoid as far as practicable a dual system of direct taxation, the parties hereto have resolved to enter into an agreement designed (a) to establish a more equitable system of taxation throughout Canada by reducing duplication of direct taxation and of machinery for the collection of direct taxes, (b) to give a greater measure of stability to the revenue of the province in order to enable it more adequately to carry out its responsibilities, and (c) to enable Canada, with the co-operation of provincial governments, to carry out fiscal and other national policies intended to maintain high levels of employment and production;
And whereas it is agreed that neither Canada nor the province shall be deemed by reason of having entered into this agreement to have surrendered, abandoned or given over to the other any of the powers, rights, privileges or authorities vested in it under the provisions of the British North America Act, 1867, and any amendments thereto, or otherwise, or to have impaired any of such powers, rights, privileges or authorities;
Mr. Speaker, may I point out here that the agreements offered to the province of Quebec were drafted in exactly the same terms.
Moreover, Mr. Speaker, it would seem difficult to entertain any opinion unfavourable to federal-provincial agreements, if we consider, besides, that these agreements are only to operate for five years and that they are after all only temporary measures made necessary by an urgent problem, as much in the interest of the province of Quebec as in that of Canada as a whole. It is also difficult to understand, Mr. Speaker, why such agreements could have been termed injurious to the autonomy of the provinces, or again why it was thought necessary to refuse benefits accruing from them, since all other provinces in Canada have benefited thereby.
I do not intend to repeat the constitutional and fiscal arguments which were brilliantly set forth by the Minister of Northern Affairs and National Resources (Mr. Lesage) and by the hon. members for Chambly-Rouville (Mr. Pinard), Joliette-L'Assomption-Montcalm (Mr. Breton), Charlevoix (Mr. Maltais) and Bonaventure (Mr. Arsenault). They proved beyond the shadow of a doubt


that the federal government had a right equal to that of the province of Quebec to levy a direct tax and that moreover the dominion-provincial agreements brought financial benefits to the province of Quebec.
It would be useless to try to add anything to the brief and lucid statement made by the right hon. Prime Minister (Mr. St. Laurent) in this house yesterday afternoon, when he showed the only stand the federal government could adopt under the circumstances. It would also be useless for me to try to open the doors wider to welcome the province of Quebec than did the right hon. the Prime Minister in order to find a solution which would provide relief for the taxpayers in the province of Quebec.
In spite of the logic of his argument based on rights as much as on facts, the premier of Quebec does not seem to want to understand the position and goes on repeating false accusations to the effect that the federal government wishes to annihilate French Canadians. Well, Mr. Speaker, while this dispute is continuing between the two governments, Quebec taxpayers, who pay more provincial taxes than any other Canadian citizens, must, moreover, unfairly and uselessly bear double taxation caused by the recent introduction of a provincial tax in Quebec. It seems to me that, under the circumstances, the parties involved should consider first and foremost some relief for the Quebec taxpayers and then solve their problem with the calmness, peace and levelheadedness that are necessary for the settlement of such an important constitutional issue.
It might perhaps be well, Mr. Speaker, if I briefly recapitulated the facts that have brought about the present situation in the province of Quebec.
1.	The country faces a financial problem which no magic formula can solve.
2.	Agreements have been proposed to solve that problem and enable the federal government to honour its obligations.
3.	When those proposals were made to the provinces, it was understood that if one or more provinces did not wish to sign such agreements, and insisted upon collecting directly from the taxpayers, these taxpayers could deduct 5 per cent of the tax they were supposed to pay to the federal government.

4.	The Quebec premier refused to sign such agreements, claiming that they constituted an attack against autonomy. He even refused to take advantage of that 5 per cent deduction, which gave him the right to collect a 5 per cent tax, which since 1948 would have represented $53 million.
5.	The premier of Quebec, without consulting the federal government and without any notice whatsoever, imposed a 15 per cent tax on the income of Quebec taxpayers.
6.	Once such a tax was established, he asked the federal government to deduct all of that 15 per cent.
The federal government had to refuse the authorization to deduct that 15 per cent tax in the interest of national unity because when the agreements were signed with the other provinces of Canada, it was understood that the taxpayers of provinces that did not sign would be able to deduct 5 per cent of the tax paid to their provincial government. If the federal government had granted the authorization to deduct that 15 per cent tax, the provinces that signed the agreements under those conditions could have protested against such a violation of the terms of the contract. They could have abandoned the agreements and the federal government would have been faced with the same problem that existed prior to the agreements.
Moreover, in doing so the federal government would have endangered national unity in Canada.
In listening to the remarks of the Leader of the Opposition (Mr. Drew) this afternoon, I asked myself whether he was considering that national unity was not a good enough reason to justify the government's attitude in refusing to authorize a deduction greater than 5 per cent, before the federal-provincial agreements signed between the federal government and the nine other Canadian provinces come to an end. I also wondered whether the Leader of the Opposition, if he were responsible for the administration of this country, would have, under these circumstances, taken upon himself to grant a deduction of more than 5 per cent to the province of Quebec.
As things are, and after seriously considering the situation, the federal government could do nothing but refuse the 15 per cent deductibility requested by the government of the province of Quebec. As the tax had
The Budget-Mr. Cardin already been put into force by the premier of that province, Quebec taxpayers found themselves squeezed between double taxation, without the federal government being able to do anything to help them.
Reviewing those facts, it might be possible to bring redress to the taxpayers who were wronged by the premier of the province of Quebec. Apparently, that 15 per cent tax levied on the personal income of the Quebec taxpayers was intended to yield the amounts needed for health and education, and they claim that the province will derive from that source an additional revenue of approximately $22 million. One can estimate that within three years the province of Quebec will have thus collected about $66 million.
That is why, Mr. Speaker, I suggest there could be an agreement if, on the one hand, the Quebec government were to offer to suspend its new income tax legislation, which it has introduced for a period of three years, that is until 1957, and if, as compensation, the federal government were, upon being formally authorized to do so by the Quebec taxpayers, to grant to that province $53 million, i.e. the amount which could have been deducted from what has been levied from these taxpayers in federal income tax and that the Quebec government could have collected had it imposed a 5 per cent income tax back in 1948.
The provincial government could then, for a period of three years, impose a 5 per cent tax, according to the provisions of the federal income tax legislation, as well as to the terms of the agreements. This would bring to the provincial treasury $14 million. In this way, Mr. Speaker, the province of Quebec would have collected approximately $95 million, that is $29 million more than it would collect by imposing this double taxation.
In that manner the federal government would have respected the spirit and the letter of the terms of the agreements signed with the other provinces.
When the agreements with the other provinces come to an end in 1957, the Quebec government and those of the other provinces of Canada will then be in a position to try to find a permanent solution to the problem we are confronted with today, and that, in the light of the conditions and circumstances then prevailing.
Perhaps I do not see the objections or arguments one can raise against my suggestion, but it seems to me you find there at least the

The Budget-Mr. Cardin basis for an honourable compromise which could be accepted by the Quebec government, nor does my suggestion jeopardize national unity and, after all, would afford relief to the taxpayers in the province of Quebec by delivering them of this burden of double taxation. However I cannot help repeating here that such a compromise is much more complicated and still much less advantageous than the signing of the federal-provincial agreements themselves, which do not violate, either, any part of the rights or autonomy of the province of Quebec.
Of course, Mr. Speaker, 1 shall be accused of betraying my province, my faith and my people. It will be implied that I do not understand the unique position of the province of Quebec within Canada. Some are going to pretend that I do not cherish our autonomy, our faith, or our language as much as our opponents do, but I am satisfied, absolutely satisfied, that it is not by introducing double taxation in the province of Quebec that we shall be able to help our fellow citizens. Neither is it by placing our Quebec industries at a disadvantage that we shall be able to assist the people of Quebec. The refusal to refund 3 per cent interest to those who want to avail themselves of our federal housing legislation will not help our fellow citizens in Quebec to become home owners. It is not by refusing millions of dollars, through hostility to all federal legislation, while weakening the economy of the province of Quebec and posing as a martyr that the premier of Quebec will best serve the people of his province. On the contrary, if our economy is sound and stable, our universities, our technical schools, our colleges, our primary and secondary schools will be in a position not only to survive but also to dispense their science and teaching to a greater number of our young people who, in turn, will take care of the rights, privileges and traditions bequeathed to us by our forefathers.
No, I am neither afraid nor ashamed to uphold the federal-provincial agreements which are neither more nor less than temporary means of getting around a serious and complicated problem and that with a view fully to protecting our national unity.
Now, Mr. Speaker, if the premier of the province of Quebec does not want to sign the agreements, if he does not accept the proposals made here or any other proposals, I

hope, in all sincerity, that he will be kind enough, for the sake of the Quebec taxpayers, to offer some alternative to the federal government.
For I am convinced that there is for the province of Quebec a way of escape from the present deadlock in which she finds herself provided that Mr. Duplessis really wants to show his desire to co-operate with the federal government, a desire about which he spoke at such length at federal-provincial conferences.
(Text):
Mr. John Pallet! (Peel): Mr. Speaker, I wish to say at the outset I consider it a very real privilege to be allowed to sit in this house in company with some of the greatest statesmen of our time. I regret, as does this whole house, the untimely death of Gordon Graydon which necessitated the by-election which preceded my taking this seat. It is my earnest desire to give my country the same high quality of service that was given by the former member for Peel. It is a privilege extended to few Canadians and, attendant with that privilege, are heavy responsibilities.
It would be remiss of me if I did not on this occasion commend to this house certain matters, and one in particular of great national interest. It seems to me that being one of the newest members of the house I can speak perhaps more as a layman than as a house expert. I, personally, am satisfied that my remarks carry the complete support of my county and I am satisfied they will carry the support of the majority of the people of this country.
Some governments have a political philosophy to the effect that rather than introduce legislation that is farsighted and visionary, or shall we say anticipatory, they would introduce legislation that is forced upon them and carries the momentum of the moment with it. They believe that a sounding of public opinion should first be taken, and on finding the legislation cannot be too dangerous to them politically it will be enacted. Tonight one of the matters that I would commend to your attention has the happy condition of containing both these elements of political philosophy, in that in many areas of Canada the momentum of the moment is behind it, while in other areas anyone taking the necessary steps would be blessed in the future with having been sufficiently farsighted to foretell the hardships which are presently occasioned in some parts of Canada.

We say, and with considerable pride, that nothing is too good for the young people of this country of ours. The government expounds the great advances we are making in our social services. The government expounds the great need to keep our ramparts strong in the military fashion against aggression. We say strongly that there must be equal opportunities for all. There is a situation that applies in Canada at the present time that will have the effect of making these platitudes sounded from a great height seem quite meagre and empty. Both by natural growth and by immigration for the past years the population of this country has been increasing considerably, which after all is a condition not unusual in any country after a war. I point out that the situation that must be dealt with tonight is one of the direct results of the increase in population.
Today across Canada the necessary expansion of school facilities is placing an uncompromising burden on the municipal taxpayer. In the long run this can only result in the curtailment of necessary educational services and the consequent reduction in the standard of education provided. This would indeed be a sorry thing in the lives of young Canadians, especially if the governments of the day stand by and do not seek some method by which our educational tradition can remain at a high level rather than be curtailed by austerity programs that are not in keeping with the other standards of living in this country.
I wish to make it plain that the solution of the educational problem must be arrived at without interfering in any way with the autonomous control of education enjoyed by the provinces. It may be argued that this
The Budget-Mr. Pallett educational problem is one which should be left to the provinces and not introduced on the floor of this house. On the contrary, today education is a national commodity. A person educated in Prince Edward Island may well work in the city of Toronto, and a person educated in the city of Toronto may well find employment in Victoria. The benefit of the education given in the formative years is enjoyed where the adult locates, and it is for that reason that I say there is a national interest in education. There is more than an interest merely in the standard of education. There is an interest also in the overwhelming burden the municipalities are being asked to share in the post-war expansion.
Everyone agrees that we must have more houses. With the development of more housing we find the demand on the municipalities for more services involving capital outlay. Some of the expenses incurred for these services, such as water and sewers, may be selfretiring in that the revenue will take care of the expenses incurred. However, there is no self-retiring basis for the expansion required in the educational field. Since the minister believes in a balanced budget and a retiring of the capital debt of the country, is it unreasonable to believe that the municipalities desire to do the same thing? It is evident that this philosophy cannot be carried out under the present system at the municipal level, except by curtailing necessary services.
One need only look at the increase in debt structure of the municipalities to appreciate the seriousness of the municipalities' position. I have with me tonight a table showing the municipal debt structure of seven provinces for the years 1949-50 and 1950-51. This table shows the total increase in municipal debt in this two-year period, and is as follows:
1950
Total
Increase
Nova Scotia	$ 32,564,000	$ 38,623,000	$ 46,437,039New Brunswick	
33,523,000	38,054,000	44,917,303Ontario	
364,475,000	435,038,560	538,117,561Manitoba	
54,767,000	60,000,000	77,588,250Saskatchewan	
35,000,000	41,000,000	47,081,265Alberta	
76,000,000	103,000,000	119,463,855British Columbia	
127,000,000	133,000,000	153,147,786Quebec	
549,262,459Newfoundland	
4,100,573

13.000.	000
12.000.	000
43.000.	000
26.000.	000

From personal observation during the years 1951-52 and 1952-53, I would say that the debt increase has been higher during those years. The total municipal debt of this country in the past four years must have increased until it is now very close to $750 million.
This system of financing is quite contrary to the principle of debt retirement so 83276-278
often enunciated by the Minister of Finance (Mr. Abbott). Now, what are the reasons? Surely the municipal administrators are Canadians, as he is, and therefore they have the usual abilities to administer funds. I wonder if perhaps the reason is the decrease in the percentage of the tax revenue which is now allocated to the municipalities. The
4406	HOUSE OF
The Budget-Mr. A. Gauthier percentage of the per capita share of the tax dollar in 1939 was as follows: the federal share was about 40 per cent; the provincial share was about 20 per cent and the municipal share was about 40 per cent. In 1951 the federal share had increased to 71 per cent; the provincial share remained about the same, it had dropped to about 17 per cent, but the municipal share had dropped from 40 per cent of the national share of the tax dollar to 12 per cent. In other words, there was a drop in municipal revenue directly of 28 cents in the dollar.
It was admitted by the provinces and the municipalities that during the war years the federal budget required bumping up to meet the exigencies of the situation and, accordingly, certain concessions were given. It must now be admitted by this house that municipal budgets need bumping up to meet the exigencies of the situation and it is now time for this government to take the steps necessary to effect that.
It may be of interest to this house to know that without one increase in adult population in this country the educational costs will have doubled by the time the children now in grade 1 reach grade 8. In other words, educational costs in this country will have doubled without one increase in adult population in the next seven years.
I know it is not the intention of the members of this house that the educational systems of which we have become so proud shall be allowed, through lack of a few dollars, to become stagnant pools. We know it is the earnest desire of every member to see that the children in this country are properly educated. I believe that some hon. members are a little inclined to pooh-pooh the position of many of the municipalities, and I believe that a careful study by them of the municipal position will cause them to review their previous thoughts and will perhaps move them to take some concrete steps so that the municipalities which so gladly gave to this country when it was required during the war years will receive their just due at this time so they may continue with the proper services to their own residents.
If we accept the premise that there is a continued need for educational services, and if we accept the fact that the municipalities will shortly not be able to deal with it from their present sources of revenue, then the responsibility lies with this government to seek a satisfactory solution to the problem to ensure the future of the young Canada of today.
(Translation):


Mr. Andre Gauthier (Lake St. John):: Mr. Speaker, the present debate on the budget

Mr. Speaker, I have deliberately refrained from quoting the fathers of confederation and those who have presided over the destinies of our country since then. I have much respect for those who drafted the constitution of 1867, but I believe that our present problem must be settled by our own statesmen, in the light of present conditions.
Owing to the enlightened patriotism of the Prime Minister (Mr. St. Laurent), his sound judgment and foresight, I am confident that the problem that has arisen as a result of the new provincial income tax act will soon be settled.
Mr. Speaker, I wanted to voice my opinion in this debate, but above all to plead the cause of the taxpayers of Lake St. John and of the province of Quebec as a whole.
The Saguenay-Lake St. John district has witnessed in recent years a truly extraordinary economic development as a result of its varied and numerous resources, and more particularly of its powerful hydraulic resources. The prosperous district of Chibougamau, which was a source of envy for the Abitibi and Lake St. John districts, can now be reached from either of them since the government has decided to build a railroad between St. Felicien and Chibougamau and from there to Beattyville.
The Liberal party, which was responsible for the industrial expansion of Lake St. John district in the past, deserves once again the gratitude of the whole Saguenay population for the sound decision which it has just taken, giving new impetus to such a stupendous development.
I would not like to resume my seat without extending special thanks to the right hon. the Prime Minister (Mr. St. Laurent). The people of Lake St. John district want me to recognize, on their behalf, the part he played in bringing about this sound decision taken by the government.
Since I came here, I have advocated on three different occasions the construction of this railroad. Again last year, on March 2, 1953, it was my privilege to conduct and introduce a delegation from the Saguenay industrial development council to the Minister of Transport (Mr. Chevrier). Needless to say how happy I was to hear about that decision, which will be particularly beneficial to the constituency of my hon. friend, the member for Roberval, but which will have a substantial effect, from an economical standpoint, over the whole Saguenay-Lake St.

John district, and therefore, over the constituency which I have the honour of representing in this house.
(Text):


Mr. G. W. Montgomery (Victoria-Carleton):: Mr. Speaker, it is not my desire to take very much time in this debate. While I have not had the privilege of listening to many of the hon. members who have spoken, I have heard quite a few of them in the last few days and have found the speeches most interesting.
I do not think I would have taken part at all had it not been for a situation which seems to have been coming to a head in my own constituency, and apparently is reaching a point where it is serious. Most certainly I agree with other hon. members from the maritime provinces who have spoken. Invariably they have agreed that those of us in the maritimes do suffer disadvantages from which people in the rest of Canada do not seem to have to suffer. The Minister of Finance (Mr. Abbott) has presented a rather prosperous picture in his budget. I imagine that almost everything has been said by way of general criticism, and also many speeches have been made supporting the minister's budget.
It would seem to me, from what I have read in Hansard and from what I have heard people say outside the House of Commons, that we appear to be running into a great deal of difficulty and, for such a prosperous country, there seem to be many trouble spots. We must realize that while there may be prosperity in some parts of the country there are many other places where there is a high degree of unemployment and where the people are having a difficult time. I think it is time this government along with others faced up to this situation. Before dealing with the subject about which I wish to speak I would like to quote a few words from the statement by the Minister of Finance as reported at page 3723 of Hansard where, referring I presume to the past year, he stated:
In the economic sphere, 1953 has been a much better year. Industrial and agricultural production in almost all countries has continued to expand, and consumption has risen.
Last Friday the Minister of Agriculture (Mr. Gardiner) said, as reported at page 4285 of Hansard:
I think, to state it mildly, that agriculture is in a better condition today throughout the Dominion of Canada than it has been at any other period in my experience. And when I say that, I do not mean only my experience in the government, but I mean as well my experience in farming. I think farmers all realize that they are in a better position today than they have been at any other time.
I am not disputing that from the government's standpoint in Ottawa and in studying
The Budget-Mr. Montgomery tables of statistics covering the entire country that might well be a fair statement to make, but each of us who sees the picture as it regards our own constituency arid the surrounding area has a very different perspective. We see the situation as it actually exists, and, as I pointed out before in this house, as it can be seen on the ground. From that point of view the government's outlook seems to be rather exaggerated, particularly when you compare their view with the situation as you know it and when you are familiar with the existing conditions.
Tonight I wish to spend a few minutes in dealing with the economy of my own constituency and the surrounding area in New Brunswick. The chief industry in that area happens to be potato farming. Very few people talk about potatoes in this house. I imagine there are other hon. members who could discuss this topic but most of them are on the government side of the house and I presume they are quite happy with the situation as they find it. However, I cannot say that for my own part because my people are not very happy at the moment. I believe the Minister of Labour (Mr. Gregg) and the Minister of Agriculture will agree with me when I suggest that they are probably in receipt of a large number of telegrams from people in my area and the surrounding countryside.
I am not going to read the telegrams which I have received in regard to this matter but I would like to state briefly the substance of one of them which I think will give this house an idea of the seriousness of the situation. This telegram comes from a group of potato farmers who are organized into what is called the federation of agriculture for Victoria county. Organizations such as this have been established in several counties. However, the telegram to which I have referred states that some 4,000 cars have been shipped and about 3,000 more remain to be shipped with no assurance from the marketing board that they will be handled. This telegram states that the remaining potatoes are deteriorating rapidly and will soon become unsaleable and that because of such deterioration the farmers in that area may be ruined financially. A large percentage of the farmers will be unable to plant another crop and some are now planning to get rid of their stock and machinery if possible and go out into the labour market and look for work.
After setting out these facts the organization winds up by asking that the dominion government through the Minister of Agriculture consider doing something to keep these farmers on the land so that they will be in a position to put in another crop.
4410	HOUSE OF
The Budget-Mr. Poulin
.That is the sum and substance of the situation, stated briefly. However, I would like to enlarge on that. I stated a few minutes ago that I did not dispute the fact that the cash income of farmers in Canada was greater last year than it was previously, but we are now in 1954 and the consumption of agricultural products is apparently diminishing because many people are unemployed and during this winter a great many people have been forced to live on a restricted income. It therefore has not been possible for them to eat as well as they normally would and that factor must be taken into consideration.
The Minister of Agriculture stated that cash income had doubled from something like $4,987 million during 1943 to 1945 to about $8,200 million during, I think he said, 1951 to 1953. I would have liked the minister to carry that calculation a step further and point out that while that cash income has increased the farmers' expenses have also increased. Had he done that I think it would have been demonstrated that the net result to the farmer in 1953 was that he was no better off than in 1943. They were certainly handling more money but they were not making any more. In other words, they could not put any money away, the only difference being that last year most of them put in another crop.
Last fall the New Brunswick potato farmers, following the lead of the farmers of Prince Edward Island, waited on this government and induced them to put a floor price on their potatoes, and that floor price- I think that is the way in which to state it- guaranteed a certain price. I thought that was quite a good idea and I still think so, particularly if the scheme was properly handled, but when the government undertook to do that they had to insist on the potatoes being handled by an agency, which is quite proper, and they were handled -through what is called the marketing board.
But apparently there is a lot of confusion as to whether that board has been a success. During the few days which I spent at home during the Easter recess I met quite a number of farmers who came into my town and some were quite happy about the way in which the board had handled things because they had got rid of the potatoes and they were now in a position to go ahead and put in another crop. But I must confess there were just as many farmers who had not sold any potatoes as yet and they did not speak very highly about the way in which the "board had handled the situation. I believe .there is a great deal of truth in that because I am informed that someone in the department insisted that the board handle this


potato business in a more equitable manner. If that is so I congratulate the officials of the department for keeping on the job. Since they started the quota there has been some improvement in the situation but unfortunately it was too late in the season in the case of those farmers who are still holding potatoes.
Three thousand cars of potatoes from the last week in April until the end of the season represent a large quantity of potatoes. These farmers are, as you may say, getting panicky. I know that many of the officials feel that these potatoes will be handled between now and the end of the season, but there is no assurance of that outcome. That is why these farmers are getting panicky. It is coming right now to the time when they should be starting new crops. A lot of these men are equipped to grow only potatoes. It is a potato area; it is potato land. They have the equipment for potatoes and they cannot easily switch to anything else. They seem to be faced with one of two situations: either to try to get credit to put in another crop, hoping that next year will be a good year-and about one in three or four usually is-or to sell their equipment and go out and try to get work on the labour market. I say that is an unfortunate situation.
I understand that the Minister of Agriculture also has received pleas from some of the municipalities. I can understand that. While I was in my own municipality, at Easter, as I still have a connection with the council I was called in in consultation with regard to loans. The county which is my own municipality is not what you would call a poor municipality. Its credit has been good. It is one of the good farming areas in New Brunswick. But I should like to point out this fact for the benefit of the members of this government who have been asked to give consideration to these pleas. The loans in the said municipality of Carleton are 100 per cent higher today- or they were when I was home-than they have ever been in the history of the county, even in the darkest days of the depression. The bank has been asked to get extra authority from its head office in order to make further loans to carry on until the end of June. If the farmers cannot carry on, they cannot pay their accounts.
A few minutes ago my hon. friend was speaking about the responsibility of municipal governments and the load of taxation. I should just like to confirm what he said from my own experience in my own municipality. Unless things pick up with regard to potatoes-and they are about the only

thing out of which the people in my constituency are able to get money-and the accounts are settled up before August 1, a good many schools in my municipality will not open because I do not think you can expect the school teachers to go in and teach school unless they are sure of their pay. I am sorry to say this, and I am not crying blue ruin. However, I have enough experience to know how much money it takes in that municipality to run the schools, and I know that enough taxes will not be paid in by the first of September to keep all the schools going.
I am stating these facts, Mr. Speaker, and I have taken the floor to review this situation in order to impress it upon the government and upon our own minister from New Brunswick; I refer to the Minister of Labour. I think he understands the situation fairly well. While hon. members from other parts of Canada may say that you are subsidizing potatoes from New Brunswick and Prince Edward Island, I think it is important that you consider going a step further this spring and consider doing something for these farmers who have not been able to get rid of their potatoes or who will not be able to do so, in order to put them in the same position as are those who got rid of their potatoes.
Here is my reason for saying that. When you gave the guarantee last fall to the farmers through the marketing board you assumed some responsibility at least in so far as the farmers are concerned. I feel that you assumed a moral responsibility to see that every farmer who wished to sell his potatoes was treated fairly and equitably. I say that for this reason. The minute the board took over under this government's guarantee the dealers had no choice of free selling. The board bought the potatoes and controlled the orders. You took the competition-if you like to put it that way-away from the dealers. In other years when the market has been free and open and private enterprise has been handling the crop it has always been disposed of and the farmers never became panicky as they have this spring.
I am not saying that the board is not going to be able to dispose of this crop. I am not here criticizing that marketing board. When the board started operations last fall I lent it what little support I could among my constituents. I have stood behind it, and I still hope it turns out to be good. But this is what I want to impress upon this government and the members of it. These people are up against a serious situation and they do not feel like waiting to see whether the
The Budget-Mr. Montgomery board is going to be able to take this stock. They are looking to you for some guarantee that the board will be able to handle it and that if the board falls down on handling it you will come to their rescue.
I say that for this reason, and I wish to repeat it. Had the board handled this whole transaction in an equitable manner, every farmer would have got rid of a certain percentage or all of his potatoes and if some potatoes were left in the cellars or the storehouses of farmers, every farmer would have been treated in the same manner. They would all have some, and then there would have been no kick. But when one man who has
3,000	to 4,000 barrels of potatoes to sell is allowed to get rid of them and another man, maybe his neighbour, who has 2,000 to 3,000 barrels of potatoes to sell has not sold them and has no prospects right away of selling them, that situation does not seem to be fair and equitable. That was the way, up until May 1, that the situation was lining up, as far as I can understand it. That is the reason there have been so many telegrams coming to the government or at least that is why the assistance is being asked for by the farmers for the balance of this season.
I do not think it is necessary for me to dwell any longer on this matter. I know that the potato business is full of rumours. No doubt the department here in Ottawa has heard all sorts of stories. No doubt you may think that some of these telegrams contain exaggerated statements. However, I know that the potato business is a tricky business. On behalf of these people in my constituency back home I want to impress upon hon. members the fact that unless they get a chance to get credit in order to put in another crop, a great many of them are going to be in just the situation described in one of the telegrams. They are going to be on the road. They are going to be out looking for a job in the labour market; and goodness knows there are not too many jobs available in the labour market. In these times no farmer should be forced to sell his machinery, to leave his farm or to go out and leave it unworked in order to make a living. I do not think that is good business. I say that this government is morally responsible because of the fact that they entered into an agreement with the marketing board.
I think you should have gone a step further and insisted that the marketing board treat all farmers alike. If you had done so, I do not think the farmers would have had any kick. But now you should do the best you can and give some direction to the board that they must handle all these potatoes in one way or another so that all farmers will

The Budget-Mr. Roy
be able to get rid of their potatoes and will be treated alike. If it does not work out satisfactorily then you can decide whether you want to carry on another year. I hope that the marketing board will become a successful institution. However, there is one thing against it. It takes away from the dealers the competition of selling and it may not turn out to be as good as we had hoped it would.
I think the Minister of Labour is going to hear more about it from the people in Victoria county, if he has not already, and also the Minister of Agriculture. I impress upon the government the necessity of doing something for these people because I feel that the government went into it in good faith and really led the farmers to believe in it. I am glad to see that the Minister of Agriculture has entered the house. I wish he had been here a few minutes ago, but he can read what I said. It was not very much. In part I was praising him for what he did and in part I was criticizing him for not insisting that the board do equitable work. I do not think you had to do it, but I do think that if you had taken hold of the allotment of orders sooner we would not have been in the position we are today.
I hope that the board will prove to be a success, but in order to make it a success I think the government has to give serious consideration to some of these pleas. As I said a few minutes ago, while you may feel that some of these statements are exaggerated, I know all about the potato business and I am afraid there is more truth in them than I like to believe. I happen to know that the loans of municipalities in this constituency have reached serious proportions. If there is anything you can do to give assurance to these people, get them out of their panicky condition and carry them through this season I am sure they will appreciate it.
(Translation):


Mr. Gustave Roy (Labelle):: Mr. Speaker, since this is the first time I have an opportunity to speak in this house, I would not like to depart from that excellent custom which would have me join every member of this house in congratulating Mr. Speaker (Mr. Beaudoin) and yourself, Mr. Deputy Speaker, upon your elevation to your present high posts and upon the dignity and competence brought by you to the discharge of your duties.
You will no doubt allow me to continue in this vein and to congratulate also the new ministers and parliamentary assistants, and

more particularly the hon. Minister of Northern Affairs and National Resources (Mr. Lesage) and the member for Levis (Mr. Bourget), parliamentary assistant to the Minister of Public Works.
Mr. Speaker, from the few observations I have been able to make on the proceedings of this house, I have concluded that hon. members take advantage of two debates to say a few words on the importance of their constituencies: the debate on the address in reply to the speech from the throne, and the budget debate.
My riding is especially known because it sent to this house two great parliamentarians, two outstanding political figures, two great Canadians and two great autonomists. The first one, a father of confederation, Louis Joseph Papineau, and the second, an uncompromising advocate of the rights granted by this very confederation, Henri Bourassa.
A fervent patriot, a sincere and honest autonomist, Henri Bourassa, that great French Canadian political figure, left in the minds of my constituents, whom he worthily represented for several years, a political spiritual heritage they will preserve for a long time through future generations. Surely if Henri Bourassa were today at this desk, he would express all his satisfaction with the accomplishments which have resulted from ideas he suggested and vigorously advocated a quarter of a century ago. In all his independence, he would congratulate with me the present government for having implemented almost all along the line, in less than twenty years, the ideals he advocated; for having such ideals, suggested and debated hardly thirty years ago, they called him a utopian, a dreamer, and considered him unbalanced.
He would be proud and happy today to commend the St. Laurent government for the repatriation of the constitution, for the appointment of a Canadian governor general, for bringing about our complete independence from foreign ties, for the achievement of this great national unity prevailing among all Canadians. He would rejoice with me to see that an almost complete national unity may soon bring about the acceptance of a purely Canadian flag, the proclamation of a single national anthem, O Canada, and the early appointment of an ambassador to the Vatican.
But I wonder, these days, what Henri Bourassa would think of federal-provincial relations and of the thorny problem raised by the Quebec government with regard to

provincial rights to direct taxation and their corollary, the deduction of the provincial income tax from the federal tax.
No doubt, this question seems to give rise to an issue that is difficult to solve, and since both governments concerned, i.e. the governments in Ottawa and Quebec, seem to have the same rights, I think my illustrious predecessor would dare suggest to the Ottawa government that it should again, under the circumstances, make the first conciliating gesture, in order to find a point of agreement and bring about tangible and profitable results for the Quebec taxpayer as well as for the national and provincial Liberal party.
Mr. Speaker, with the exception of this last controversy, it seems that this budget has not generated too much deception or too much enthusiasm and that, generally speaking, the Canadian people recognize obligingly enough that Canada has had, for several years, an excellent finance minister (Mr. Abbott). We have therefore some reason to share once again the optimism reflected in this last budget.
However, may I suggest to the Minister of Finance to restrain his overenthusiastic advisers who propose to levy a tax on mutual fire insurance companies. In my riding, there are a few of these mutual companies which have every reason to complain and to try to prevent this unjust and unfortunate measure proposed by the Minister of Finance, since the carrying out of the sixth budget resolution would have disastrous consequences for the farmers of my constituency. And I am sure that if the Minister of Finance, with the help of the appropriate experts, goes to the bottom of the question, he will easily discover that these mutual societies are nothing but co-operative enterprises which have nothing to do whatsoever with the insurance business. They are no more than organized charity institutions. They are not looking for profits; on the contrary they involve the collective responsibility of their members. The fact that in some provinces, these mutual organizations have become profit-minded corporations is proof of the generalization of this transformation. If it is right to tax the first group, there must be some way to do it without annoying in any way those of us who remained faithful to the spirit which inspired their foundation.
Mr. Speaker, may I be permitted to suggest to the Minister of Agriculture (Mr. Gardiner) that the Farm Improvement Loans Act be amended or that those entrusted with
The Budget-Mr. Roy
its administration be made to pay less attention to red tape and show more interest in the excellent principles upon which the measure is based, so that the farmers from Quebec, and those of my riding in particular, may be able to benefit in greater numbers therefrom.
Mr. Speaker, the three main sources of revenue in my riding are agriculture, timber and the tourist trade. Because of the fluctuations of our markets and of the international situation, our agriculture is more or less stable, and our lumbering operations leave our forest workers all the time in a state of anxiety and insecurity.
Those two industries have to rely on a third one, the tourist trade, to balance their budget.
Sometime ago I read in an American sports and tourist magazine an article by an economist who stated that if Canada, and more particularly the province of Quebec, earmarked 50 per cent of its budget for the organization of the tourist trade in the vast areas so richly endowed by nature, in ten years the revenue from the tourist trade would double their annual budget and permit them to do away with most taxes, and more particularly with the 15 per cent income tax.
Before the war, and during the economic depression in Canada, the various governmental organizations in Ottawa had put forward several suggestions and projects to build up that profitable tourist trade. Billions of dollars are within our reach; we only have to extend the hand to get them. In my constituency, we have been endowed with natural beauties and advantages and we are only awaiting the funds which the government may decide to earmark for the organization and development of that trade, which would increase the standard of living of my constituents and make them prosperous, while paying dividends that would greatly compensate the government for its investment. Moreover, the expansion of the tourist trade would solve the unemployment problem which, in my constituency, is sufficiently serious to entail material and moral consequences, which the government should remedy.
Naturally those disturbances make themselves felt in various ways on our human resources and more particularly by a decline of health standards. I take pleasure in congratulating the government and the Minister of National Health and Welfare (Mr. Martin)
4414	HOUSE OF
The Budget-Mr. Poulin for the progress made in the field of national health, but I always find it strange that a nation which spends two billions yearly for destructive purposes still has such a high rate of mortality, so many handicapped, so many people who suffer through lack of appropriate medical care because they cannot afford it.
Mr. Speaker, I ask the government whether the time might not be ripe to set up a compulsory health insurance scheme for that large number of Canadians who cannot afford to be sick.
Health insurance could be set up by stages, adding, one after the other, the various categories of medical needs, starting however with medical and hospitalization costs in the obstetric and pediatric group, according to age and severity of illness.
Mr. Speaker, in the same line of thought, I congratulate the government, which will introduce a measure granting assistance to the disabled, adding another stone to the structure of our generous social security system and bringing our country a step closer to the social and economic objectives which consist in the elimination of inequalities in the distribution of revenue, thus ensuring a means of livelihood to vast categories of people.
Mr. Speaker, I would like to say in concluding my remarks that as long as Canada will be under this administration which has been in power for the last twenty years, all Canadians may have faith in their country, in its development, as well as in its wealth and continued prosperity.


Mr. Raoul Poulin (Beauce):: Mr. Speaker, before the debate on the main motion is brought to a close, I would like to say a word on the budget resolutions introduced here on April 6 last, and more particularly on resolution No. 6, which is of interest to me since it is suggested that the surplus of mutual fire insurance companies be liable to taxation as though they were ordinary business concerns.
Of course, much could be made of the peculiar situation brought about in this respect by a judgment of the Supreme Court of Canada, which decided, in 1953, in a test case, that the Department of National Revenue, according to the terms of the Income Tax Act, had no right to levy taxes on that type of company. Following that judgment, which was only an interpretation of the law, the government have, on second thought, undertaken to change the act, to tighten its mesh, so to speak, in order to entrap certain groups of taxpayers who, so far, had got away scot free.


This change, if it is passed by the house, will oblige mutual fire insurance companies to pay taxes on the amounts paid in by the members to make up a reserve in order to face disastrous conditions which will certainly come about sooner or later.
I see two vital differences between the position of mutual insurance corporations and that of capital stock fire insurance corporations. First of all, what is taxed in the case of ordinary insurance companies are real profits, and the most apparent effect of the tax in this case is that the shareholders and not necessarily the policyholders will receive lesser profits, less substantial dividends, and premiums will not be necessarily increased. On the contrary, in the case of mutual insurance corporations, it is no longer profits which are being taxed, but rather expenses: it is the policyholders' premiums and these, of necessity, will have to be increased.
As a matter of fact, the amounts which make up the reserve and which would be taxable, under resolution 6, come only from the premiums paid in by the policyholders, and those premiums are collected in order to pay strictly administrative costs in addition to compensations allowed the policyholders in case of fire.
It is impossible to find in all this anything in the nature of a profit. This is a protection sold at cost, and how can one make a profit when one sells at cost?
I may be asked: if there is no profit, how can there be an accumulated reserve fund? This reserve fund is only meant to facilitate operations.
In principle, each member of a mutual company has, in case of a fire, to pay his share to compensate the victim of disaster. It is understandable that the larger the number of members, the slower and more expensive the operation of collecting contributions. In order to take care of this situation, the premium is collected once or twice a year. In other words, the member is made to pay his quota, or mutual contributions, in advance, instead of having to pay it at the time the disaster happens.
As the contribution is solely used for the compensation of disaster victims, and not for paying out profits to the shareholders, it is necessary to wait for a fire to happen before using it. That is why the amounts are put aside and accumulated for the bad days, and are called a reserve fund. Where is the profit item in all this?

Secondly, in the case of mutual companies, the eventual amount of compensation to be paid is difficult to determine in advance, since the company must base its calculations on a relatively limited number of members. Thus, the 309 mutual companies of the province of Quebec have an average of a little less than 300 members each. Capital stock companies, on the other hand, can rely on an infinitely wider membership. In this case it becomes easy to determine probable standards which will deviate but little from the line generally followed by the number of disasters. And it is exactly for that reason that those large companies have a reserve fund, the amount of which varies very little from year to year while, often enough, the so-called reserve of the mutual companies may be seen to melt suddenly-which would truly be the case-in a fire of major proportions.
Does the government want the farmers to go back to the old method of passing the hat every time one of them is hit by a fire? No doubt, that practice led to splendid demonstrations of a sometimes extraordinary sense of devotion. In fact, this practice is fortunately still in existence in many localities. However, one must not forget that things have changed since those heroic times. Our farmers have grouped themselves into organizations, the same way our workers did, by the way, and it would be unfair, I believe, to penalize them for doing so by taxing the manner in which, in a modern way, they have put to use their good old spirit of mutual aid and of mutual support.
Moreover why should mutual companies dealing with fire insurance be treated in a different manner from mutual companies dealing with life insurance?
During the last few days I have received letters, telegrams or resolutions in which eleven or twelve mutual organizations established in my riding of Beauce voiced their protests. Also, last week end, I had a visit, at home, from the official delegates of three or four other companies who expressed verbally their opposition to the project.
All told, 15 or 16 such mutual societies in Beauce county have officially protested against the government's intention to tax them. I therefore pass on very humbly to the house these protests and I beg the government not to give effect to the project embodied in the sixth resolution of the present budget.
( Text):


Mr. Thomas M. Bell (Saint John-Alberi):: Mr. Speaker, three questions come to my mind in considering the budget from the maritime point of view. They are prompted
The Budget-Mr. Bell by the Minister of Finance's cheerless and pessimistic words with respect to the budget. His statement that present indications point to an early uptrend in business might in itself be considered fairly hopeful for us, but the past records of optimism of the government immediately defeats that in our minds. Further words that the outlook for export trade was uncertain and much depended on the United States were also disappointing to us. Added to this is the constitutional aspect that has developed out of the debate so far. And, surprisingly, we in the maritimes are interested in the British North America Act and its various interpretations.
These questions that come to my mind are, firstly, just what is the economic condition in the maritimes? Secondly, what are our rights and claims with respect to the British North America Act and, thirdly, what course of action might be taken? First of all, I should like to discuss briefly the economic condition of the maritimes. If there should be anyone here who has any doubt that we are in a bad financial strait in the maritimes I wish that he would be attentive while I review some facts pertinent to this point. In 1871 in the maritimes we had a population of 770,000 out of a total of 3-T million. We made up one-fifth of the population of Canada. Now we make up one-eleventh. Saint John, my home town, at that time was the fourth largest city in the dominion; now we are the eighteenth and according to the last census our population has decreased 1,000.
To my mind the weekly wage rate is a key figure. I go through the Canada Year Book and I see these figures which indicate to me that we are not even holding our own in this respect. These are the weekly wage rate figures. In 1947, Prince Edward Island's was $24.75; Ontario, $38.57 and British Columbia, $41.55. The average weekly earnings in 1949, the last figures available, show Prince Edward Island with an increase of $5.01 to $29.76; Ontario had increased by $5.77 to $44.34 and British Columbia had the greatest increase of all, $5.81 to $47.36. While these figures might seem small, they are significant to me in this respect. At confederation the per capita trade figures for Ontario were $35. These are interprovincial trade figures that were kept at that time. They are not available now, but they do give us some comparison. New Brunswick surprisingly had a per capita trade figure of $56. That will give hon. members an idea of the trend since that time. The last figures for personal income show the maritimes at $804 and Ontario at $1,409.
A report on the economic condition of the maritimes is not complete, Mr. Speaker,
4416	HOUSE OF
The Budget-Mr. Bell *without some consideration of present-day problems. The first one that comes to my mind is the unemployment situation. In Saint John the unemployment figures were 2,600 at Christmastime, 3,400 at the time of pur unemployment debate and they are 4,200 now. In other words, the peak is not over in Saint John even though there may be some national trend different from that. Construction has been slow to come around and improvements in that picture will not be seen for some time.
The Marysville picture is still bad, with 385 people still out of work, according to the April 21 publication of the Fredericton Gleaner. Sixty-seven employees have been laid off by the Canadian National Railways in Moncton. The short Montreal closed season has hindered Halifax and Saint John. The other day I saw where some reliable labour group had estimated the unemployment in the maritimes at 20 per cent; whereas we know the Canadian figures are only 11 per cent.
Before leaving the economic picture of the maritimes I should like to quote from the Toronto Globe and Mail of July 17, 1953. It is an article entitled: "Canada's stepchildren". It commended itself very highly to me as a very fair appraisal of the maritime situation. The subheading is: "Maritimes too dependent on Ottawa". I should say that it is written by Richard J. Needham. This reads:
But the fact remains that the economy of that area-
Referring to the maritimes.
-is not in sound shape; that wages, and hence living standards, are substantially below the national average; that, as the financial editor of the Toronto Star put it a year ago, they are cut off from the rest of Canada by a sort of economic iron curtain. The fact remains that for all the money Ottawa has pumped into the maritimes since confederation, they are still unhealthily dependent on it.
And so I leave those figures of the economic situation in the maritimes with hon. members; and I throw out the challenge that if anybody can show me that we are even holding our own down there, I will be appreciative of it.
The second question that comes to my mind concerns our so-called maritime rights. This matter is very thoroughly dealt with in the report of the royal commission on maritime claims, commonly known as the Duncan report. This commission was headed by Sir Andrew Rae Duncan, and sat in 1926.
I believe the findings are still true today. Perhaps some of the suggestions for the future have changed a bit, but a complete analysis of the picture is still pertinent, and
IMr. Bell.]

I recommend it to anyone who might be at all interested in the position of the maritime provinces. Many of these specific claims are dealt with in that report.
I should like to refer to four of those claims. The actual money grants were dealt with most thoroughly this afternoon by the hon. member for Royal (Mr. Brooks). He referred to the claims that those of us in the maritimes believe we have, in view of the additions to territory in Manitoba, Ontario and Quebec. Original agreements were made at the time of confederation- and I refer to both written and unwritten contracts. Before the actual contract was signed there was an understanding with the maritime provinces whereby, due to the fact that they could not possibly have territorial expansion, they would be allowed to share in the additions to the north enjoyed by the provinces I have mentioned. This matter is dealt with very thoroughly, and perhaps hon. members can guess at the results in that respect.
Then, in the matter of tax rentals, may I say I feel strongly about the way this matter was handled by the Prime Minister (Mr. St. Laurent) when he was in Saint John in the election campaign last year. Statements were made to the effect that the government in Ottawa wished to be very generous with the maritime provinces in the matter of tax rentals because it was felt we had a claim to some of the money due to the fact that the head offices of our large corporations are located centrally. Well, that is the very thing to which we are objecting. We definitely want to have some of the head offices of businesses down our way so that it will not be a case of giving a handout every time we go after extra considerations.
Then the development of trade is another matter that confronts us vividly in the maritime provinces. Halifax and Saint John have suffered because of the Montreal season to which I referred a short time ago. Yet no efforts are being made by the central government even to try to regain United Kingdom trade. I feel that with Mr. Peter Thorneycroft and his group coming out to Canada in a short time we should get down to business and talk to them in an effort to regain this United Kingdom trade that is so very vital to the welfare of the eastern provinces.
Then there is one further matter, that of migration. We all know the story of the maritimers who have gone out west and done well. It is all very fine to be able to say that a premier of British Columbia is a New Brunswicker or that a prime minister of Great Britain was from the maritimes, or a justice of the supreme court in one of the

other provinces is from the maritimes. That sounds good; but I say that we are losing our future if the best men in our eastern provinces have to go out west or to other places.
Finally I should like to deal with the course of action that might be taken by us in trying to correct this situation. The first suggestion I would make would be to forget the sectionalism that exists in the maritimes. I think we could take a fine example from western members who, when the wheat problem is under review, drop all their other interests and get behind the discussion of that problem. I remember speaking to a western member only today. I know that he has no connection with wheat farmers and that he is entirely independent of the wheat situation. However, he said to me, "I have to go down and speak about the wheat situation". That is a lesson for those of us from the maritimes.
The hon. member for Charlotte (Mr. Stuart) who comes from New Brunswick is interested in the Passamaquoddy project. Then, the hon. member for Westmorland (Mr. Murphy) has spoken fluently about the Chignecto canal. At the present time I favour the Beechwood project. But I would say this, that we have to get together. I would not mind sacrificing interests or sectional ideas I might have if I felt that we could put our weight behind the suggestions we make. My weight might not be as great as some others who are in a better situation; but I believe that if we would speak up, as the western members do, we would be listened to.
Then my second suggestion is most appropriate in this debate on the budget, because I would refer to the situation at Marysville. The Minister of Labour (Mr. Gregg) spoke glowingly the other day in the committee on industrial relations about the plan they have to correct the situation down there, which has been brought about by the shutdown in the textile mills. We appreciate his efforts; nevertheless I feel it is my duty to say that those efforts are not being directed in the right way. The situation in Marysville can be corrected only by bringing new industry to Marysville. Vocational training for those who are there is all very well; but there must be industry for them to go to.
In this respect I believe we could take a lesson from the New England states. In their bargaining over support of the St. Lawrence seaway I understand some of the states have asked, and been assured they will get, consideration for their surplus labour areas. Another thing that was asked for, and might be worthy of consideration, was an acceptance by the government of a certain
The Budget-Mr. Bell type of depreciation over a number of years, in an effort to induce new industries to locate in these surplus labour towns. In other words, assessments do not have to be lowered by the localities, but the federal government should be willing to depreciate by a special method of low-cost depreciation that would induce industries to locate in towns such as Marysville. I feel that would be a step in the right direction.
I have already pointed out the importance of trade to us in Halifax and Saint John, and I shall leave a suggestion in this connection. ,
I think we should investigate and consider very seriously the possibilities of making; Saint John and Halifax free ports. In the United States today they already have free trading zones, and I know that San Francisco, New York, and New Orleans have had considerable success from this business of foreign trade zones. These foreign trade zones in the United States do not replace other shipping and receiving facilities. They provide extraordinary additional services the greatest of which in many cases develop trade which otherwise would not be able to move. This development of new trade in commodities which had not heretofore entered the United States is deemed to be of prime advantage in assisting, expediting and stimulating foreign trade.
These are the views I leave with you, Mr. Speaker, and in reviewing the matter I would like to say that I have emphasized three questions which came to my mind in first considering the budget. The first of these is, just what is the economic picture in the maritimes? Secondly, what are our rights under the confederation agreements? And thirdly, what course of action might be taken to get some form of agreement such as our western friends seem to be able to obtain? In conclusion, Mr. Speaker, I would like to quote from this report of the royal commission on maritime claims which I have-already mentioned. The words here are very appropriate and I think they hit the nail on the head as far as the maritimes are concerned in relation to the dominion. I quote-from page 11 of the report which reads as follows:
The maritime provinces today are different in the structure of their enterprise from what they were in 1867, and their potentialities are even greater today than they were then. Confederation, too, is no longer an experiment. Its achievements in the complicated art of nation-building have brought it to a point of development which more than justifies the hopes and the vision of the early builders. The maritime provinces have produced, in every walk of life, men who have played a high part in the story of achievement. We believe that the claim which these provinces have submitted . . . and the future possibilities of their own part of the dominion, should now be reviewed with

The Budget-Mr. Holowach
sympathetic consideration and understanding, so that in approaching the future a better balance of territorial prosperity can be assured, and the -original hope of confederation-unity, prosperity and contentment for all the provinces, as well as for the whole of Canada-can be made capable of realization.


Mr. Ambrose Holowach (Edmonton East):: Mr. Speaker, may I have the permission of the house to adjourn the debate?


Some hon. Members:: No.


Ambrose A. Holowach: Mr. Speaker, the budget debate at present taking place in this house offers opportunities to hon. members to express their views on certain matters which [DOT]otherwise may not arise in the ordinary course of the proceedings and which do not generally come under discussion. But listening to other hon. members taking part in this debate, and reviewing the subject matter [DOT]of the serious problems which are brought to 'the attention of the government, I am amazed that up to this time no one has touched on a problem which is surely of concern to all hon. members because it involves a matter of great importance in the rapid growth of this young country.
Looking at a map of the world and Canada's location thereon in terms of its relation to neighbouring countries we cannot help but notice that Canada covers a vast area and is geographically in a strategic position. It is only a few flying hours from our neighbours to the north and northwest. In addition to its strategic position its territories contain vast resources of strategic materials. Space is another thing that we have in great abundance in Canada and while that in a sense is a blessing, when one considers the possibilities of expansion and growth, it

must be borne in mind that our cities and our people are widely scattered and distance carries with it serious liabilities.
In this regard I would like to deal with the problem of the ever-increasing needs for commercial roads and highways throughout our country. There has been very little discussion during this session of parliament on this topic other than the proposed assistance in the construction of the trans-Canada highway project. Highways and roads are of great importance to Canada and I consider it my duty to express views on this "down to earth" subject and introduce for the serious consideration of the government the need for further financial aid to the provinces, particularly in the matter of building certain interprovincial highways which, because of their military significance, are important for the entire country.
It is realized, Mr. Speaker, that the function of building and maintaining highways and roads falls within the jurisdiction of the provinces, but when roads affect the social, economic, cultural and indeed the security and lives of Canadians then I do believe that a certain measure of this responsibility must fall upon the shoulders of the senior government.
On motion of Mr. Holowach the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: We shall continue with this debate tomorrow and later in the afternoon I hope we will be able to take the resolutions.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, May 5, 1954