1954-05-05

Right Hon. C. D. Howe (Minister of Trade and Commerce):: Mr. Speaker, an interim report on the Moose Jaw aircraft disaster has now been received by the Minister of Transport (Mr. Chevrier). Interim reports have also been received by the Minister of National Defence (Mr. Claxton) and by myself as the minister responsible for Trans-Canada Air Lines. The following statement is a summary of the facts disclosed by the three reports, all being in agreement as to the facts.
On April 8 last a Harvard training aircraft of the R.C.A.F. and a Trans-Canada Air Lines North Star were in collision over the northeast outskirts of Moose Jaw, Saskatchewan. Investigations into the circumstances surrounding the collision are being conducted by the Department of Transport, the R.C.A.F. and Trans-Canada Air Lines. Completion of reports in this connection will take some time, but certain facts have been established which indicate what took place.
Trans-Canada Air Lines' scheduled flight No. 9 en route from Montreal to Vancouver was proceeding west on civil green airways No. 1 over Moose Jaw in accordance with its flight plan. The R.C.A.F. Harvard was climbing in a northeasterly direction across the airway in accordance with its flight plan which involved a routine navigational exercise. It was not performing aerobatics nor engaged in interception of the civil aircraft. The weather at the time of collision was excellent from a flying standpoint and visibility could not have contributed to the collision. All findings indicate that both of the aircraft were functioning properly from a mechanical standpoint and that the communications systems were in order. The T.C.A. pilots were competent in every respect for their assignment and their previous records were free from accidents. The captain had flown approximately two million miles in the company's service. The R.C.A.F. pilot of the Harvard had an outstanding record on his course and was known to be a mature and responsible young officer.
The two aircraft were on converging courses. The initial impact apparently took place between the nose of the Harvard and the left outboard engine of the North Star. It is calculated that as the aircraft approached the point of collision the North Star was approximately 45 degrees to the right of the Harvard line of flight. The Harvard was approximately 23 degrees to the left and one or two degrees below the North Star line of flight. Partial destruction of the aircraft took place at the point of collision with total destruction following, by fire and impact with the ground. It cannot be established whether either pilot saw the other aircraft, but it must be concluded that they did not see each other in time to avoid collision, although both were in a position to have done so.
As in the case of road traffic, the rules of the air provide that when two aircraft are converging the aircraft on the right has the right of way and the aircraft on the left must alter course to avoid collision. This, of course, does not relieve either pilot of the responsibility for keeping a sharp lookout to avoid collision.
Standing instructions of both the R.C.A.F. and T.C.A. emphasized the necessity for care arising out of the proximity of the airways and the Moose Jaw training establishment.
It has always been the policy within Canada and in other countries to avoid unnecessary restrictions on flying under clear weather conditions of good visibility. Canadian regulations are under constant review and are not only comparable with, but in some cases more rigorous than, those of other countries. Nevertheless, a special examination of existing regulations, both civil and military, has been undertaken on a joint basis to ascertain whether changes, particularly in those sections having a bearing on this accident, are required.
Prompt steps have been taken to effect settlement with those who suffered from the disaster. The Royal Canadian Air Force has assumed responsibility for settling damages for life and property that occurred on the ground, and Trans-Canada Air Lines has assumed responsibility associated with passengers in the aircraft. These settlements are being made without prejudice to the division of the costs of the settlements between R.C.A.F. and Trans-Canada Air Lines, which will be determined after all final studies have been completed.
4420	HOUSE OF
Aircraft Crash at Moose Jaw


Mr. Green:: Does the minister not think that further steps should be taken to keep those training planes away from the travelled routes of the passenger planes?


Clarence Decatur Howe: Steps are being taken at the present time to determine further measures to protect both the training planes and the passenger planes. Just what that report will be I do not know, but I assure my hon. friend that his question is receiving study at this time.


Mr. E. G. Hansell (Macleod):: Mr. Speaker, in view of the fact that the minister has reported for three departments, may I ask him: In the event of an opportunity occurring, either to discuss the report of the accident or to make suggestions, on what estimates of what department should the matter be discussed if it is desired?


Clarence Decatur Howe: Mr. Speaker, I presume the logical opportunity would be when the estimates of the Department of Transport are under discussion.
(Translation):



PRIVILEGE


Mr. J. W. Dufresne (Quebec West):: Mr. Speaker, I rise on a question of privilege. This morning's issue of the Montreal Gazette acquainted us with the fact that today, May 5, the hon. member for Vaudreuil-Soulanges (Mr. Beaudoin), who is also the distinguished Speaker of the house, is celebrating his birthday-


Mr. Speaker:: I am sorry to have to call my hon. friend to order, especially since he is being so kind to me, but the subject which he wishes to speak about is not such as to allow him to rise at this time on a question of privilege.


J.-Wilfrid Dufresne: Mr. Speaker, would you allow me to present my best wishes to you later, personally?


Mr. Speaker:: It is always permissible for any hon. member to approach the Speaker, whatever the reason.
(Text):



CANADIAN WHEAT BOARD ACT


Mr. H. A. Bryson (Humboldt-Melforf) moved: for leave to introduce Bill No. 441, to amend the Canadian Wheat Board Act.


Some hon. Members:: Explain.


Hugh Alexander Bryson: Mr. Speaker, the purpose of this bill, as set out in the explanatory notes, is to permit producers in the area accessible to Churchill to benefit from the cheaper freight rates.
Motion agreed to and bill read the first time.



QUESTIONS

[Stage Direction]
H.	M.C. DOCKYARD, ESQUTMALT

Mr. Pearkes:: I.	Have tenders been called for overhead cranes and monorails for the electric shoo at H.M.C. dockyard, Esquimalt, British Columbia?
2.	If so, (a) what safety factors have been set out in the specifications, including safety devices at discharge points and interlocks; (b) what specifications have been made regarding provision for impact loads; (c) what specifications have been given for the maximum beam deflection under full load?


Mr. Dickey:: 1.	Yes.
2.	(a) The specifications call for a safety factor of not less than 5 to 1. This safety factor applies to safety devices at discharge points and interlocks and through discharge points and interlocks. The specifications also call for all interlocking beams which constitute discharge points to be locked together with safety and perfect alignment by means of a heavy slotted steel fork held in place by spring action. The automatic stops are to be raised to allow passage of the wheels of the hoist carrier under them only when the crane girder is properly aligned and the interlock thrown. This is designed to eliminate the possibility of the carrier running off when the interlock is disengaged.
(b)	A minimum allowance of 10 per cent of the live load is required for impact as required for electric hoists operating at a speed of less than 30 feet per minute.
(c)	There has been allowed a maximum beam deflection of 1/450 of the span in the specification for all cranes, runways and monorails in this system under full load.


CANADIAN BROADCASTING CORPORATION
Mr. Hamilton:: 1.	Has Raymond Arthur Davies, recently sentenced to two years in jail for passport frauds, ever been connected in any way with the Canadian Broadcasting Corporation?
2.	If so, in what way, for how long, and at what dates?
3.	Has the Canadian Broadcasting Corporation ever purchased scripts or material from him?
4.	If so, what was the title of each, and when was it broadcast?

5.	If Mr. Davies was ever employed by the Canadian Broadcasting Corporation, who authorized his employment, and who recommended him for employment?


Mr. McCann:: 1.	No.
2.	See answer to No. 1.
3.	Yes.
4.	During the spring of 1944 several short items were selected and used from a number which Davies submitted on a free lance basis while in Moscow as a newspaper correspondent. Following his return from allied countries he made five 15-minute broadcasts dealing with conditions in allied countries in eastern Europe on the following dates: December 21 and 28, 1944; January 4, 11 and 18, 1945.
5.	See answer to No. 1.


RIDING MOUNTAIN NATIONAL PARK
Mr. Dinsdale:: 1.	Is the government building a slaughterhouse at Riding Mountain national park?
2.	If so, what will be the cost of this slaughterhouse, and what functions will it perform?
3.	Who is performing these functions at the present time, and at what cost?


Mr. Lesage:: 1.	No.
2.	Not applicable.
3.	To keep the herd at about a constant level, a small number of buffalo are slaughtered each year. Tenders are called on the basis of per pound dressed carcass weight, f.o.b. the animal enclosure at the park. The animals are shot by the park staff but the skinning, dressing and removal of the carcasses from the park are carried out by the butcher submitting the highest tender. The actual cost of the work is therefore not known. The total paid to the department in 1953 by the successful tenderer, Mr. H. W. Scrase of Dauphin, Manitoba, was $1,157.77.


CIVIL DEFENCE
Mr. Cavers:: 1.	Has a federal-provincial conference on civil defence been held recently? If so, on what date?
2.	Who attended the conference?
3.	Was there any discussion of the administration of the civil defence grants program? If so, what was the gist of such discussion?
4.	What were the other principal aspects of discussion?


Mr. Martin:: 1.	Yes. On March 29 and 30, 1954.
2.	The Minister of National Health and Welfare. The provincial ministers responsible
Questions
for civil defence. The provincial civil defence co-ordinators. Federal civil defence officials. Sir John Hodsoll, director-general of civil defence training for the home office, Great Britain, and the Hon. Mrs. Katherine Howard, assistant administrator of the United States federal civil defence administration, also attended.
3.	Yes. The discussion revolved about proposed extensions to and revisions of the grants program and methods of making the grants more flexible.
4.	Among the other principal subjects of discussion were the hose coupling standardization program, training programs, revisions to the existing federal civil defence compensation scheme, continued co-operation between all levels of government, medical and welfare stockpiling problems and communications and warning systems.
Sir John Hodsoll advised the delegates regarding the civil defence problems faced in Britain, the Hon. Mrs. Howard summarized civil defence programs in the United States, the chairman of the Canadian chiefs of staff committee gave an appreciation from the military point of view of the international situation, and the chairman of the defence research board discussed new developments in the field of offensive and defensive weapons.


HAROLD C. BANKS
Mr. Hamilton:: 1.	Was Mr. Harold C. Banks ever a member of the labour advisory board of the Canadian maritime commission?
2.	If so, what was the date of his appointment?
3.	Is he now a member?
4.	If not, when did he resign?
5.	What was the reason for his resignation?


Mr. Langlois (Gaspe):: 1.	Yes.
2.	March 12, 1952.
3.	No.
4.	May 12, 1952.
5.	In tendering his resignation Mr. Banks wrote that his duties as vice-president of the Seafarers International Union of North America left him no time to continue on the labour advisory board.


MICHEL SEIGNEUR
Mr. Stewart (Winnipeg North):: 1.	When and how did Michel Seigneur enter Canada?
2.	Was he, at any time, an inspector of the Waffen SS?
3.	Has he been sentenced in any French court for treason?
4.	If so, what was the sentence?
5.	Has Seigneur been granted Canadian citizenship?
Questions


Mr. Harris:: 1.	On December 1,	1946, as a nonimmigrant. As the House of Commons was informed on March 2, 1949, Dr. Seigneur was granted a landing under authority of order in council P.C. 2920, dated June 29, 1948.
2.	Information not available.
3 and 4. He was sentenced to death in absentia, by a French court of justice, as guilty of having had dealings with a foreign power with a view to encouraging the undertakings of that power against France.
5.	Yes.


LEPROSY
Mrs. Shipley:: 1.	Approximately how many new cases of leprosy are admitted to Canadian leprosaria annually?
2.	What proportion of these contracted the condition outside of Canada?


Mr. Martin:: 1.	1951-52, 3 cases; 1952-53, 1 case; 1953-54, 3 cases.
2.	All of the above cases are believed to have contracted the disease outside Canada.


IMMIGRATION-VACCINATION
Mrs. Shipley:: 1.	How many persons are vaccinated annually under Canada's quarantine regulations requiring vaccination of persons entering Canada?
2.	From what countries may persons enter Canada without the requirement of recent vaccination?


Mr. Martin:: 1.	Not less than 300,000 persons are vaccinated annually as a result of present quarantine requirements. These include 150,000 immigrants, 50,000 visitors from Europe,
50.000	of the 200,000 merchant seamen who arrive at Canadian ports each year on ships subject to quarantine, and approximately
50.000	travelling Canadians.
2.	Persons entering Canada from the United States, Alaska, the Hawaiian islands, Panama canal zone, Bermuda, Cuba, the Bahamas, Jamaica, the Virgin islands, St. Pierre, Miquelon, Iceland and Greenland, are not required to have vaccination certificates on entering Canada.


CHIGNECTO CANAL
Mr. Murphy (Westmorland):: Will consideration be given by the international joint commission for the inclusion of a canal across the isthmus of Chignecto. making Boston the American eastern seaboard terminal of the St. Lawrence seaway?


Mr. Pinard:: No. The international joint commission has no jurisdiction over the isthmus of Chignecto.


OUESTIONS PASSED AS ORDERS FOR RETURNS
Mr. McBain:: 1.	Did the railway car ferry Ashtabula go aground in Port Burwell harbour?
2.	If so. how many feet of water does the Ashtabula draw?
3.	What is the estimated depth of the water in Port Burwell harbour?
4.	In view of this, does the government intend to send the public works dredge to Port Burwell?
5.	If so, when will it commence dredging operations?


DISABILITY PENSIONS
Mr. Dinsdale:: 1.	How many disability pensioners, by provinces, are there in Canada?
2.	How many disability pensions, by provinces, have been awarded each year since 1949?
3.	What were the total enlistments, by provinces, during world war II?
4.	How many disability pensions, by provinces, have been awarded to veterans with service in Canada only, and how many for service in the United Kingdom and European theatres of operation?


Mr. Pickersgill:: Mr. Speaker, I had a word with the hon. member for Brandon-Souris (Mr. Dinsdale) and he is agreeable to having substituted for the word "provinces", where it occurs in this question, the words "districts of the Department of Veterans Affairs"; and also to substitute for the date "1949" the phrase "each fiscal year since April 1, 1949". This will make it much easier to answer this question and on that understanding might it be made an order for return?


Mr. Speaker:: The question as amended is made an order for return.



IRRIGATION


[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, may I direct a question to the Prime Minister? Does this rather attractive pamphlet, which came to me at noon today and which is entitled "Proposed South Saskatchewan river development project", printed by the queen's printer in Ottawa and dated April, 1954, containing all the details of the scheme, mean that the government has decided to go ahead with the South Saskatchewan dam?


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, I have not seen the interesting pamphlet to which the hon. member refers, and all I can say is that no decision has been reached in that regard up to the present time.


Major James William Coldwell: I will be very glad to send the pamphlet across to the Prime Minister, and I would point out that it was produced by the government.



PURCHASES IN 1954  SUPPORT PROGRAM

[Stage Direction]
On the orders of the day:
Mr. J. H. Proudfoot (Ponliac-Timiskaming):: Mr. Speaker, I should like to ask the Minister of Agriculture the following questions: (a) Is the agricultural prices support board purchasing 1954 butter, and if so at what price? (b) Has there been any recent change in the butter price support program?


Right Hon. J. G. Gardiner (Minister of Agriculture):: 

ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE

[Stage Direction]
The house resumed, from Tuesday, May 4, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. Ambrose Holowach (Edmonton East):: Mr. Speaker, when I moved the adjournment of the debate last evening I had made introductory remarks with respect to the theme of my address. I said that the budget debate offers opportunities for hon. members to express their views on matters which ordinarily do not come up for discussion unless, of course, they appear in the program of business of the house.


Mr. Speaker:: Order. The time for private consultation having expired, may we now resume the discussion of the budget?


Ambrose A. Holowach: Thank you, Mr. Speaker. Speaking yesterday evening, I mentioned that various members who had taken part in the budget debate had already touched on timely problems but that, thus far, no one had discussed a matter which is of primary and basic importance in the rapid growth of this young country. It was pointed out that Canada's geographic position on the map of the world is strategic, and that our cities and our people are scattered widely over a large area. It follows that distance is a blessing in the matter of our future potentialities, but since our cities and people are widely scattered on the face of the map this presents serious liabilities in connection with the protection of this vast country of ours.
The problem which I intend to discuss is created by the ever-increasing need for commercial roads and highways which will serve Canada not only in the economic sense but in the event of emergencies. I further pointed out that thus far little reference had been made in this session of parliament to furthering federal aid to the provinces in the matter of their road programs, beyond the assistance given to the provinces in the matter of the trans-Canada highway project. The need for federal aid to the various provinces in their road programs is extremely great. I intend to make reference to the need for one particular interprovincial highway which, apart from its commercial advantages to western Canada, would provide western Canada with further measures of protection.

The Budget-Mr. Holowach
In my opening remarks I explained that I realized the building of highways and roads is a matter which falls within the jurisdiction of the provincial governments. But since roads affect our entire economic and social life-and surely we will agree on this point-as well as providing security in the event of emergencies, a great deal of responsibility in the matter of assisting the provincial governments in their road-building programs rests with the senior government.
I am sure that we will all agree, Mr. Speaker, that the purpose of our assembly is to legislate and to govern. But this function does not always provide common ground for agreement for the simple reason that, with regard to legislation, there are various interpretations which various members give, as to what is the best type, as far as the needs of our country are concerned. However, I am certain that all of us will basically agree on this, namely, that the purpose of government is to offer protection to our country and to our people. It seems proper for me to say that realism suggests that roads are essentials for the well-being of our people in the economic, the social and the security sense.
I spent considerable time yesterday with this thick volume of some 600 pages containing the government's estimates for the fiscal year ending March 31, 1955. The estimates provide for expenditures of close to $5 billion, and of this amount $2 billion is for national defence. From there I proceeded to the lengthy text of the budget address, and I searched in vain for some indication of further federal aid to the various provinces in the matter of assisting them with their road programs. I was naturally disappointed because I could see no measure or outline of program which would indicate that such aid is forthcoming. Especially regrettable was the fact that no reference was made to the need for construction of additional trans-Canada highways, and in particular one from the city of Winnipeg to the west coast, through the central portion of western Canada by way of Saskatoon, Edmonton, Jasper park and the Yellowhead route.
The various provincial governments of western Canada and public-spirited bodies as well as military authorities have insisted that such a road should be undertaken. I believe that the federal government would perform a great service to this end were they able to spark negotiations and give some measure of inducement and encouragement to the provinces involved in the matter of building this essential highway.


According to the details itemized on page 53 of the 1954-55 estimates for the Department of Public Works, the total federal contributions to the provinces under the terms of the Trans-Canada Highway Act will be $20 million, which is an increase of only $5 million over 1953-54. This amount is for all the provinces of Canada with the exception of Quebec which, I understand, has not entered into the dollar-for-dollar cost arrangement. Further, it is indicated that the grand total of expenditure for the administration, the operation, the surveying and construction of trans-Canada highways through the national parks, as well as the already noted contributions in the matter of the trans-Canada highway project, will be $22,487,484 which is an increase of some $6,031,883 over the preceding year. While some may feel that the federal contribution is substantial, in the light of the comparison with what the provinces are spending and allowing for factors of revenue and population, I believe that the federal contribution is "embarrassingly insignificant" and represents only a scratch on the surface as far as the highway problem is concerned.
In the April 10, 1954, issue of the Financial Post, on page 46 there is indicated an outline of the various spending of the provincial governments in the matter of highway construction. I should like to read just a few of the larger expenditures. As to Quebec:
During 1953-54 the Quebec roads department completed an extensive program of road construction, in many cases continuing the work begun in the previous year. Outlay for roads totalled $57-7 millions.
As to Ontario, the following interesting report appears:
The current year, which is the fifth in a five-year building program, is provided with $124-3 millions for building, maintenance and administration. But there is a balance of $21-5 millions in the highway reserve account. The total of current budget and reserve account makes it very likely that the province this year will complete a record highway building, reconstruction and maintenance program.
With regard to Manitoba, the following appears:
Two major factors have given impetus to road highway development in Manitoba:	the tourist
traffic and the development of the province's natural resources. This impetus is measured by a $17 million expenditure last year, to be boosted to $18 millions this year.
As to Saskatchewan, we have this report:
Saskatchewan's road budget has been raised to $18-6 millions this year from 1953's figure of $17-2 millions. Some $5 millions has been earmarked for trans-Canada highway including the federal government's share.

With respect to Alberta the report is as follows:
Alberta's expenditure for highways this year shows the biggest increase over 1953 of any province: $57 millions this year compared with $38 millions last year. Of the total, $41-8 millions will go for new construction.
This is the situation with respect to British Columbia:
In the fiscal year ended March 31 the province spent $27-1 million on construction and $13-1 million on maintenance. It looks now as though 1954 spending will be about equal to this figure.
A most interesting report that should be considered by the house is one issued by the trans-Canada highway system association dated April 21, 1954. It contains a tabulation showing United States federal aid authorizations to the various states for road construction. I might say that the report is based on pertinent information from the United States bureau of public works. It indicates that in nearly every fiscal year since 1916 tremendous amounts have been set aside for the purpose of assisting various states with their highway construction. The report outlines post-war authorizations by the United States government and indicates that during the fiscal years 1946, 1947 and 1948, $500 million was expended yearly making a grand total of $1,500 million in federal aid for road building during the three-year period. For the years 1950 to 1955 the colossal sum of $3,050 million has been allocated for the national system of highways. Peak aid is to come during the years 1954 and 1955 with some $575 million allotted to the various states for each year in order to assist them with their road programs.
In following recent congressional hearings in the United States, one also finds much emphasis laid on the importance of highways in that country. One of their objectives is to establish road-building standards at an early date. It seems to me that the exemplary program being followed by our good neighbours to the south should give us food for thought so far as our own highway programs are concerned. Many of the historical facets of the history of our nation are linked with the story of roads and routes. I am sure it would surprise many if they were to examine the events that have changed the course of nations and discover the important effect that roads and highways have had on the outcome of those events. I think that the impact of good roads on every phase of a nation's development cannot be questioned.
In the light of the tremendous development taking place at the present time in western Canada, and also because of the geopolitical situation in which our country finds itself, I
The Budget-Mr. Holowach think that the aiding of our various provinces in their road and highway programs is most necessary. Time and again we hear the need to develop new areas of Canada mentioned. As Canadians we realize that this country abounds in great resources and possibilities, and in addition to wise federal fiscal policies which are necessary in order to encourage development of our natural resources we must also have the means of acquiring access to those resources as well as to bring out the production of our rich country. Before we can take advantage of these resources we of course must have roads.
Nor do I think any hon. member can advance a logical argument why we should not formulate a clear-cut national program of highway construction. This would not mean that we would interfere with or jeopardize in any way the jurisdiction of the various provinces with regard to highways and roads, but it would provide a certain amount of guidance and objectives as well as standards which would suit not only our present needs but also those of future years.
I think such a policy is desirable particularly from the standpoint of national defence. Of course such a policy would have to be divorced completely from all political considerations and would have to be based on cold facts and what is in the best interests of the country. I realize that all of this requires money. The provinces need money. The federal government has heavy commitments, but I do not think that the words "financial assistance" should frighten us in view of the purpose for which the money would be spent. As grown-up men and women we of course understand that it is impossible to build all the highways we require or give all the assistance necessary at one stroke unless of course we implement the very sound principle that what is physically possible and desirable should also be made financially possible.
But under our method of doing things we recognize first things come first, and so far as highways are concerned those that have a direct bearing on the well-being of our nation as a whole should rightfully be considered as the first undertakings. The government grows bigger and bigger each year, and in the light of the broad scope of the bills introduced, and studying the various expenditures that are made, it would appear that we are not too far away from the time when there will be few functions that the government does not possess.
However, the primary concern of the government, as I mentioned before, is the security of our nation. Defence is a national
4426	HOUSE OF
The Budget-Mr. Holowach matter. It occupies the highest priority in the spending of the taxpayers' money. There is no quarrel with that, for in the light of what is happening in the world we have no alternative. But it does seem strange that certain highways which would serve to make Canada great industrially and strong defensively do not share in that priority. I should like to make this matter clear. It is understandable to every thinking person that the provincial governments, undertaking as they do vast and varied road programs within their respective provinces in order to meet the needs of the various communities, cannot do justice to the needs of their provinces and on top of that build highways which will serve all the people of Canada in the light of our evergrowing economic expansion.
This matter has been brought to the attention of the federal government for many years. As recently as last spring the western provinces requested a conference with the federal authorities in order to discuss serious highway problems. I refer to a request on March 28, 1953, and again on April 10, 1953, by Premier Manning, acting on behalf of and in accord with the provinces of Saskatchewan, Alberta and British Columbia. May I say that backing this request were the people of western Canada who were not seeking concessions but felt justly that the building and undertaking of this road I have mentioned is worth while and in the best interests of Canada. As Canadians, these same people approve the building of the Canso causeway in Nova Scotia as well as the proposed St. Lawrence seaway as being of benefit not only to eastern Canada but to the whole country. In the Prime Minister's reply to the first request for such a conference he is reported in the Montreal Star of April 28, 1953, as having stated:
In view of our own very heavy commitments and of the excellent financial condition of the provincial governments, it is hard to see how the federal authorities would be justified in undertaking any additional responsibility for highways at this time on the assumption that they might some day be required for defence purposes . . . Defence planning involves the determination of priorities and . . . there would always be projects much more urgently needed for our defence.
The premier of Alberta, Mr. Manning, made a second request for a meeting on April 10, 1953. In reply to this request the Prime Minister (Mr. St. Laurent) stated that the cabinet was busy trying to complete the session before the coronation, and added:
As there is no possibility of considering any addition to the provision now being made for highway expenditure by the federal government in the present fiscal year, there would appear to be no urgency about arranging to meet the delegation.


I believe, Mr. Speaker, that the presentation of expenditures at this session of parliament nullifies the argument on this latter point, and I do believe that the arguments advanced by the Prime Minister in his first answer to the premier of Alberta are contested by substantial and unassailable arguments to the contrary.
The building of a highway from Winnipeg to the west coast through central Canada by way of Saskatoon, Edmonton, Jasper park and the Yellowhead route will mean we are making strategical moves instead of just talking about them. It will show possible aggressors that we intend to be prepared, and that is one way of stopping aggression. The adoption of such a route would provide rapid and efficient transportation to that portion of Canada most likely to be the scene of our defence. In any event, the building of this road would certainly expedite the growing development of that vast area. The highway I have just proposed would tie in with the airports which, because of their strategic location, are the headquarters of the northwest air command of the R.C.A.F., as well as with the centres which are the headquarters of the western command of the Canadian army.
Not long ago the Prime Minister, in his usual sincere manner, enunciated great faith and confidence in these territories. I refer to the remarks that he made when speaking to the Northwest Territories Act on January 19 in this house. The case for the route of a second trans-Canada highway that I propose is overwhelming, and not the least of the arguments is the fact that the terrain, the elevation, snowfall conditions and population factors lend themselves to the effort involved and would help realize the economic construction of this route. For example, I have certain figures that are quite revealing. The highest elevation in the Yellowhead route is 3,717 feet, as compared with 5,337 feet and 4,450 feet on the Kicking Horse and Crowsnest pass routes. In so far as the matter of snowfall is concerned, the Yellowhead route has less than that of any route proposed, as can be verified by graphs from federal sources. It is the only route that could eventually lend itself easily to the construction of a four-lane transcontinental highway. These features resulted in the choosing of the same route by the Trans Mountain Oil Pipe Line Company, in their very impressive construction project.
Apart from the commercial and military significance of this route, which makes it an absolute necessity, it would run through

the central and most densely populated portions of western Canada and could easily link with the already constructed 1,600 mile Alaska highway, which was built at a tremendous cost and which represents one of the great engineering feats of this century. Furthermore, the route as I have proposed it, should have priority and construction should be undertaken immediately because of the overwhelming concentration of targets such as oil, uranium and chemical plants. This highway would serve all the local areas for the betterment of trade and commerce as well as the tourist industry, which is one of Canada's great sources of revenue.
My few remarks are not intended in any way to be a complete appraisal of the advantages the selection of this route would have for all of Canada. It is not intended to detract from the importance of the presently constructed trans-Canada highway. It is intended to show the need for making an early start on other projects, quite apart from the presently constructed trans-Canada highway, in view of the red tape and length of time it takes to get things started. By way of illustration I would point out that although parliament did pass the Trans-Canada Highway Act in December 1949, the target date for completion will not be until the year 1956 or later. In other words, using that as some form of timetable, it can be seen that if a decision were made at this moment to undertake the building of this route, it would be many years before it would be completed. I just wonder whether we as Canadians can afford to wait. I think not.
I am sure the provinces of Alberta, Saskatchewan and British Columbia would cooperate and welcome the federal government's interest in assisting them in the building of this highway. We in Alberta have always favoured not one but three arterial highways running from east to west. There is one trans-Canada highway in this country, but the United States has ten national highways. I believe that the time for action in this important matter is now because a road, like anything else, cannot foe built with good intentions alone. I submit that from the public standpoint it is most desirable the federal government meet with the provinces in order to discuss this vital matter. Canada is a big country. I feel we are justified in advancing this great proposition.
The job of giving Canada adequate systems will not be accomplished by provincial road programs alone. Further postponement of the building of the road, which I have submitted is necessary, will retard and harass
The Budget-Mr. Pommer further development in western Canada. It will retard industrial investment as well as the defence of our nation. Furthermore, at a time when our country has many unemployed, the undertaking of such a project would absorb many of those seeking work. I submit that the calling of a conference with representatives of the provincial governments, in order to discuss highway problems, is vital to the public interest. Such a conference would have as its objective the formulating of a national highway program and the offering of further aid to the provinces with their own highway programs. I feel that defence highways could then be discussed at this conference. I am sure such deliberations would indicate the advisability of undertaking the route I have outlined and the need for assisting in the maintenance of the important all-weather Yellowhead route.


Mr. W. A. Pommer (Lisgar):: Mr. Speaker, in rising for the first time to address this house, I should like to follow the custom by congratulating you, Mr. Deputy Speaker, and Mr. Speaker on the high honour that was conferred upon you in your appointments to these high offices. I should like to commend you on the able and impartial manner in which you are carrying out your duties. I realize that time is marching on and that we have been engaged in this budget debate for a good many days, but I thought this afternoon I should make a few remarks in support of the policies of this government to show how those policies have affected my province of Manitoba.
In preparing notes for the remarks I propose to make it seemed to me it would be appropriate if I were to direct the attention of the house to the growth and prosperity my home province has enjoyed in the last few years. I am convinced one of the main tests of democratic government is to see how its policies and administration work out when applied in the day-by-day affairs of the businessmen, and of its people generally. And when I say "businessmen" I include of course farmers, fishermen, miners, and all who engage in business activities. Because in modern times the financing and managing of our farms has become just as much a question of business management as has the operation of factories, and retail-wholesale establishments.
Mr. Speaker, the details of the government's financial plans have been set forth by the Minister of Finance (Mr. Abbott) in such a comprehensive and lucid manner that it would be presumptuous for a new member like me to attempt to add anything to it.

The Budget-Mr. Pommer There is, however, an old and true saying that the proof of the pudding is in the eating; and since as a Manitoba resident of many years' standing I can justly claim to know Manitoba, I would like to tell the house how the government's policies have worked in Manitoba in recent years. The results which this government's policies have produced in my province are the best proof of their soundness and wisdom.
For example: In bringing in the present budget, this government has followed the sound fiscal and trade policies which have so substantially contributed to the economic development of Canada and, as a result, Manitoba. The trade and tariff policies which have been directed toward an expansion of our international trade have contributed to our growth as well as our wealth.
In a country such as ours, which is blessed with surpluses of almost all products, we must depend upon exports. We must trade and buy where we can sell. Therefore, in my opinion, the government's continued resistance to tariff increases is a welcome and healthy sign.
In more recent years the implementation of the dominion-provincial tax rental agreements by this government have done much toward stability of revenue in provinces such as Manitoba. It has enabled provinces such as these to plan ahead. Knowing that certain revenues will be available, it has assisted government at the local level-the municipalities and the school districts, through the increased grants they now receive from the provinces, thereby making their financing less difficult. These agreements are of considerable importance to us, and the expressed intention of the government to preserve them has been reassuring to the people of Manitoba.
Several speakers from eastern Canada have told of the part played by their constituencies in the early history of Canada. My constituency and indeed the whole of Manitoba has grown to its present stature in the period since confederation. In fact, it is very doubtful whether 100 years ago there was a single permanent white resident in the whole of the area of my constituency. I think it is a matter of real pride that in less than 100 years this district has grown, from what many people looked on as uninhabitable, and frozen wilderness, to a prosperous, highly developed agricultural community, with an excellent system of highways, railways, and with telephone, electricity and radio in almost every single home in the whole of the constituency.
I repeat that this has all happened in less than 100 years. We could narrow that considerably to say that a very great part of it has occurred in the last 20 years, the years of

Liberal government at Ottawa and the years in which were developed the policies and practices which I am here to support.
I have recently been interested in the material being issued by the Manitoba department of industry and commerce in respect to the growth and development of various Manitoba industries in the last few years. I think the story which they tell reflects great credit on the people and government of my home province and I think it reflects equal credit on the policies adopted and put into effect by the federal government.
In the case of agriculture, it is estimated that the total value of production in 1953 in Manitoba amounted to $290 million as compared with only $89 million in 1938. In other words, in 1953 agricultural production amounted to three times the value of 15 years ago. This represents, of course, a combination of price increases and of increases in the volume of farm production. It reflects also the development of new and more profitable types of vegetable and animal products The prosperity brought about by this great increase in the value of farm products is reflected in the fact that the value of machinery on Manitoba farms in 1951 was estimated at $232 million as compared with only $59 million in 1941. Many of our people thought that mechanization of agriculture had gone a long way by 1941. The fact is that since 1941 the number of tractors on Manitoba farms has more than doubled, while the number of combines has increased from approximately 1,700 to over 15,000. At the same time our farmers were buying and paying for this vast amount of new farm machinery, they also enjoyed the first benefits of a rural hydro program which brought electricity to every farm in my constituency, and they bought corresponding quantities of electric stoves, electric refrigerators, and other appliances, as well as new automobiles and trucks. The figure quoted is that trucks on Manitoba farms in 1941 numbered approximately 7,600 and in 1951 the number had increased to over 21,000.
That this great amount of new equipment has been bought and paid for out of improved earnings of Manitoba farmers is clearly demonstrated by the fact that mortgage indebtedness to life insurance, trust and loan companies was down in 1952 to less than $6 million as compared with over $32 million in 1937. These figures speak well for Manitoba farming industry and they speak equally well for the prudence of Manitoba farmers in taking advantage of good times to pay off their debts and get into a strong position for the future.
I could not, however, end my remarks on this subject without adding that the record

of the last few months is much less satisfactory than the record over a period of years. Farm prices are no longer rising, and have indeed dropped sharply in some cases. Farm costs, on the other hand, are continuing to rise. Freight rates and other transportation charges are an important cost to Manitoba farmers. Farm machinery costs and tractor fuel, municipal taxes and provincial and federal taxes must all be paid before anything is left for the farmer and his family. If farm prices drop, and, even more so, if one or two bad years cut the output of Manitoba farms, the result will be disaster unless steps are taken to make corresponding reductions in the expenses which our farmers must meet. There is nothing new in these points, but they are well worth repeating in order that our attention to them will continue.
Agriculture is and always has been the backbone of Manitoba, but in recent years manufacturing has achieved an increasingly important place, until now the total value of manufactured products in Manitoba is more than double the total value of farm products. A great part of our manufacturing is, of course, the processing of farm products on their way to market, but other industry is far from unimportant.
In 1953, fifty thousand people were employed in manufacturing industries in Manitoba and these industries had a payroll of over $115 million and turned out a product estimated at $610 million. Between 1941 and 1951 Manitoba's production of manufactured goods increased by 260 per cent which is almost the exact per cent of the increase recorded for the province of Ontario.
The wide range of manufacturing carried on in Manitoba is well illustrated by the 60 new industries which are reported to have begun operations in Manitoba during 1953. These 60 new industries were distributed as follows: 17 in clothing and textiles; 11 in iron and steel products; 8 in wood and paper products; 7 in non-ferrous metal products; 5 in food and beverage processing; 4 in nonmetallic mineral products and 8 in other product varieties.
I do not feel that I should take the time of the house to dwell on the development of the north country, since the hon. member for Churchill (Mr. Weaver) is more qualified than I am to speak of the mineral developments in northern Manitoba; but I do want to mention the nickel properties being developed at Lynn Lake, which is the only Canadian nickel mine outside of the province of Ontario. Then there is a new railway line through the territory between Lynn Lake and the Flin Flon-Sherridon area.
The Budget-Mr. W. M. Johnson
The progress being made in oil exploration in the southwest sections of Manitoba is also of remarkable value to us, but it has been overshadowed by the outstanding results farther west; but we in Manitoba are proud of the steady growth of oil production in our province and we are very pleased to see industries developing in Manitoba which draw their raw materials from the oil pipe line. We are looking forward to the completion of the Trans-Canada gas pipe line as another feature for further industrial development in Manitoba.
As I remarked earlier, all these developments are a source of satisfaction to our province and indicate that we of Manitoba, like most Canadians, have done extremely well in the past few years under the present administration. We hope to continue that progress, and this administration, and for that reason we support the measures necessary to carry it forward.
In concluding, I would like to refer to two further figures. The department of industry and commerce of Manitoba reports that toward the end of 1953 it conducted a survey of all manufacturing firms in the province, and received replies from approximately 500 of them. Of the firms reporting, some 24 per cent indicated that they had expanded their plant during 1953, and no less than 44 per cent of them reported that they are planning expansion in 1954. This is truly a remarkable expression of confidence in the continued growth of this area. It is significant also that this anticipated growth is based upon the foundation of an income and living standard which, in 1953, gave to Manitoba retail sales estimated at $840 per person which is some 8 per cent higher than the average of retail sales for the whole of Canada. Surely, a province which is able to buy from retail stores in such quantities as this has every right to feel that its people have been well served by the fiscal and trade policies of this government.


Mr. W. M. Johnson (Kindersley):: Mr. Speaker, in rising to take part in this budget debate there are two features that I should like to deal with as they affect western agriculture, and, because of the importance of western agriculture, as they affect our Canadian economy.
The world's wheat situation and the surplus situation in Canada were adequately dealt with by my colleagues, the hon. member for Assiniboia (Mr. Argue), the hon. member for Yorkton (Mr. Castleden) and the hon. member for Humboldt-Melfort (Mr. Bryson), so I will not deal with that particular phase at any great length. I am going to deal specifically with one problem as it affects the western farmers.

The Budget-Mr. W. M. Johnson
From time tp time many suggestions and improvements are offered for the Canadian wheat board, and I do not think these can be construed as criticism of our board system of marketing. Everyone should know that there is no group that has fought harder and longer for the system of orderly marketing such as the wheat board than the members of the C.C.F. Farmers generally are strongly in favour of the board system of orderly marketing. There was some dissatisfaction last July and August when the board deviated from their policy and opened delivery quotas. As many of you know, the delivery quota is an invention of the Canadian wheat board, which allows farmers the opportunity of delivering their grain in orderly fashion. And when the board deviated from that program in a pre-election period some of us had cause to wonder. The results of that deviation were most unsatisfactory. Apart from criticism of that nature or suggested improvements as I would rather call them, anyone who says that the C.C.F. is opposed to the board system of marketing has been misinformed by a political pinhead, or is one.
We heard this cry in the last election: it was said that a vote against the Liberals is a vote against the Canadian wheat board. There are even today some members of the Conservative party who criticize the Canadian wheat board, but the basis of their criticism is not the same as ours. Many of the members of the Conservative party are criticizing the Canadian wheat board because they prefer the cutt'hroath competition of the open market. The hon. member for Greenwood (Mr. Macdonnell) said, as reported at page 3991 of Hansard:
I hope that the minister is not going to leave us in the position we are in now.
We are currently operating under a system of orderly marketing under the Canadian wheat board.
We must be realistic about conditions that exist in the Canadian grain picture. Owing to three successively large crops we have unprecedented stocks of grain. The Minister of Agriculture (Mr. Gardiner) has said that a large stock of grain is a very good thing for Canada and that the government is following the policy of storing the grain for future use.
With orderly marketing our present surplus can gradually be fed to world markets and will in time be sold. Take, for example, the very low grades of 1951 with which, I believe, the Canadian wheat board did a creditable job.
The minister said that we were pursuing a policy of storing grain in Canada, but we are storing that grain at the expense of the
[Mr. Johnson (Kindersley) .1

farmers of Canada on the farms of Canada. If the government wishes to follow a policy of that nature I think it should embark upon it realistically and advance methods which would allow the farmer to store that grain. It might be suggested that the high cost of building government terminals and public storage would put this out of the question, but what better place could one find to store grain than where it is currently stored, namely on the farms of Canada?
Under the policy which the government is now pursuing, of leaving the farmers with their unsold stocks of wheat, we have found the situation where the farmers are desperately short of cash for operating expenses. These expenses have consistently increased over the past ten years and we cannot for one moment assume, as I am afraid many do, that gross returns from a farm are in reality the net returns. In an earlier debate I calculated that the cost of production per wheat acre was in the neighbourhood of $17.75, not allowing for any return to the operator or his family or for the retirement of debt. With the inclusion of these factors it came to an amount in the neighbourhood of $25 per wheat acre.
On Monday, March 29, the Minister of Trade and Commerce (Mr. Howe) stated, as reported at page 3412 of Hansard, that the wheat board was in the process of making a final payment, and that it would be sufficient to take care of spring seeding requirements. The payment to the 250,000 permit holders in Canada of $58,282,438 meant that each farmer received $233. With that amount of money, the first that many farmers had received in four or five months, and in some cases much longer, the farmer is expected to feed and clothe his family; he is expected to pay interest on his borrowings at the bank; he is expected to pay his income tax; and he is expected to treat his seed for wire worm and other types of seed diseases at a cost varying up to 75 cents an acre. He is also expected to purchase his gas, oil, grease, and pay his repairs. It is obvious that the average receipt of $233 by farmers is sadly inadequate in meeting these requirements. At points fortunate enough to have a supplementary quota the farmers will be short of cash in the very near future, and will have used up their bank credits.
The shortage of purchasing power in the hands of farmers is having an effect on the rest of Canada. We have heard of the recession in the farm implement industry, in the automobile industry, and in other industries which supply goods and services for the Canadian people, and a great deal of the

responsibility for that recession can be attributed to the inability of Canada's major industry, agriculture, to obtain adequate purchasing power.
Therefore, Mr. Speaker, I am again requesting that this government consider making an interim payment on properly stored farm grains. The matter has been suggested before and did not receive very much consideration or sympathy. Conditions in western Canada are growing consistently worse, and immediate action is required in this matter. I am not asserting that all the farmers in western Canada require an advance payment on their grain, but there are many who do, the smaller farmers, for example, and those who have recently become established.
It would be a simple matter to have an inspection of the grain stored on the farms by the many P.F.A.A. representatives whom this Liberal government has so liberally scattered around Saskatchewan. If they were found to be incompetent, the grain agents of the elevator companies could be bonded to carry out an inspection of farm stored grain.
Once the authorities were assured that there was an adequate supply of grain properly stored on the farm, they could make a cash advance of 75 cents a bushel on a maximum of 2,000 bushels. That figure of 75 cents would be approximately half of the amount for which the government hopes to sell the wheat, and I do not see how there could be any chance of the government losing in that regard.
If each of the 250,000 permit holders in Canada took advantage of the opportunity to borrow $1,500-and evidently the constituents in the riding of the hon. member for Lisgar (Mr. Pommer) who has just spoken are in no need of the advance because as he has just said, everything there is rosy because of the policies followed by the Liberal government-it would reduce this figure somewhat, and if all the permit holders took advantage of the opportunity the maximum loan would be $272,500,000.
Now the cost to the government of this loan would be in terms of the interest rate only, and the government should be able to obtain a short term loan at two per cent which would give us a figure of $5,450,000 which would be the cost of implementing a program of interim payments on farm stored grain. In other words, the cost of putting nearly $300 million purchasing power into the hands of the farmers would be less than the amount required to move the national film board to Montreal. It would amount to, I believe, just one-eighth of one per cent of our gross budget, and since the money that the farmers receive would in turn be put
5, 1954
The Budget-Mr. W. M. Johnson into circulation, it would give an impetus to those industries which service the agricultural industry and which are now suffering a recession, and it would reduce unemployment.
In the month of February of this year the government paid out the sum of $30 million in unemployment insurance benefits. But $300 million of purchasing power in the hands of the farmers would increase employment and reduce this figure, so in effect it would cost the people of Canada nothing to implement a program of interim payments on farm stored grain.
I mentioned the farm implement industry, and this is another phase of our western economy with which I would like to deal. In a period when farm income is on the downward trend we can give consideration to the problem in two ways. We can concern ourselves with mechanisms to increase the receipts of the agricultural population and these mechanisms could take the form of guarantees and floor prices which could be extended to livestock products. The other approach is to give consideration, as the Minister of Finance (Mr. Abbott) recommended in his budget, to maximum efficiency, in that way reducing the costs of production of the farmers in western Canada.
As is the case with other industries, farming has become highly mechanized. In 1830, prior to the invention of the reaper and the steel plow, it required 55-7 man-hours to produce one acre of wheat. In 1896, with the development of the horse-hauled binder, the manhours were reduced to 8-8, and again, with the development of the small tractor and tillage implements, to 3-3 in 1930. Today it requires about one and one-half man-hours to produce one acre of wheat. These figures I am quoting were taken from the Financial Post of two years ago. It is apparent then that there has been a transfer of labour from that directly involved in agricultural production to that supplying the goods and services required by farmers and servicing the products of the farm. With this high degree of mechanization a farmer is in a position where he must have the most modern and efficient equipment if he is to exist. If he fails to keep pace with his neighbours and to effect the various economies that are necessary for maximum efficiency, he will end up in a position of bankruptcy and will be bought out by a more efficient operator.
As evidence of this fact, purchases of farm machinery in Saskatchewan increased from $142,754,400 in 1941 to $525,644,660 in 1951. The machinery requirements of the Saskatchewan farmers increased from $2 to $9 per acre as an over-all average in this
4432	HOUSE OF
The Budget-Mr. W. M. Johnson period. The select committee on farm implements of the Saskatchewan legislature of 1952 determined that the machinery investment ranged from $37.27 per acre for a 160-acre farm to $13.10 for a 640-acre farm to $8.29 for a 2,000-acre farm. We must at the same time be aware of the fact that mechanization is far from complete and that much of the equipment in Saskatchewan is in need of replacement. It will be noted that I quoted figures for the past few years in terms of dollars, and I do that as a background to the claim that farm machinery prices are out of all reason.
The farmers of Saskatchewan-as well as the farmers in the other provinces of western Canada and Ontario; in fact the farmers all over Canada-are in the position of having no alternative to buying machinery, and the machine companies are taking advantage of this fact. The cost of one-way discs, harrow plows and tiller combines at the plant increased from $163.35 in 1943 to $329.86 in 1949 to $473.43 in 1952. The costs of this composite line of machinery at the factory level increased nearly 350 per cent in that nine-year period. The costs to the farmer would increase even more because of the increase in the freight rates and the increase in handling costs. With current freight rates, the charges in many cases are 10 per cent of the final cost of the machine delivery to points in western Saskatchewan.
The problem of the high cost of farm machinery is not a new one. It has been the subject of Saturday night conversation for many years on the street corners in all of the towns in western Canada. The matter was thoroughly investigated by a special committee of this house in 1936 and 1937. The high costs were dealt with by a select committee of the Saskatchewan government in 1939 and again in 1952. It is apparent that the recommendations of these various committees have fallen on deaf ears or it would not be necessary to bring the matter up again at this time.
At page 420 of the Journals of 1937 it is stated:
The companies having during the depression years maintained relatively their price levels, the committee suggests that now they are approaching a period of normal or above normal volume of production and sales, the companies can well afford, comparatively and actually, to lower their prices and still make satisfactory financial returns, because of the great savings in overhead per unit of production. This policy would be of particular benefit in the period in which the farmer is making the necessary replacements.
At this period of time in 1936 and 1937 there was a severe depression in Saskatchewan, and farmers were consequently unable to purchase farm machinery. As the


crop failure years passed away the war took over, and the farmers were still unable to purchase equipment. Hence there was a terrific backlog of demand in the post-war years. The high cost of farm machinery in these post-war years has been a deterring influence, and there are many farmers who are still in dire need of new and more efficient farm machinery.
The select special committee on farm implement prices and distribution in Saskatchewan of 1939 had this as one of their conclusions:
The committee is of the opinion, therefore, that the reasons advanced by the companies as justification for increased prices cannot be supported, and finds, as did the Ottawa and United States inquiries, that prices are substantially higher than they should be.
The select special committee of the Saskatchewan provincial government in 1952 would, without a doubt, have reached the same conclusion. In fact, I think it is fair to say that the failure of the major implement companies to co-operate with that committee would be evidence of guilt.
The high price of farm machinery did not stop with 1952. The index of farm machinery prices rose from 189-2 in August, 1951 to 198 in August, 1953; that is an increase of 4-7 per cent. In this same period the index of commodities and services used by the farmers increased by only 1-8 per cent. Today, in spite of the increase in technology and of all the developments in manufacturing techniques and production line assemblies, we have a persistent and regular increase in the price of farm machinery.
The machinery companies make the claim that it is the high cost of wages and material that has been solely responsible for the increase during the past ten years or so. We cannot deny that increases have taken place, particularly since the price controls were removed by the Liberals, aided and abetted by the Conservatives. Out of fairness to labour it should be pointed out that the net value of production for each dollar paid out in wages has increased from $1.46 in 1946 to $1.75 in 1951. In other words, in 1946 the average worker in the farm implement industry earned $1,735 in wages and produced $5,476 worth of goods. In 1951 the average worker earned $2,947 in wages but he produced $12,159 worth of goods.
I am not trying to make the claim that the costs of materials and labour have not been partly responsible, but there is one other factor that is more significant in the increase in the cost of farm machinery, namely the profits enjoyed by the major machine industries. From 1946 to 1951 there was an increase in gross sales of 122-1 per cent

whereas in this same period the profits, before taxes, increased by 223 * 6 per cent. I know that this will be denied by a maze of figures and statistics from the large implement companies. In fact, they will probably come out with figures to show that they are losing an equivalent amount. It is obvious that at least some of the companies are not losing too much when we find a major implement company in Canada buying out the Ferguson company and putting itself in a position of leadership in Canada, and in a position where it could monopolize the production of many lines of machinery.
The select special committee to investigate the farm implement industry in Saskatchewan in 1939 concluded that the price structure in Canada is not decided on a cost plus a reasonable profit basis, but on a basis tacitly at least agreed upon by the leaders of the industry. This committee further concluded that the price of each comparable implement is fixed at approximately the same amount by the companies manufacturing such implements. The Ottawa committee made this finding:
The committee is of the opinion, as a result of the above finding, that there is competition in the matter of securing sales but little or no effective competition in the matter of prices as between companies.
With the increase in the selling price of farm machinery the commission received by the dealer is naturally going to increase since it is computed on a percentage basis. The competition at the retail level is therefore quite keen. The dealer finds himself forced to give more than the true value for used trade-ins in order to effect a sale. Right now the yards of the implement dealers in western Canada are loaded to a worrisome capacity. In most cases the dealer has offered much more than the true value in an effort to attract some business. The small implement dealer is not the one who should accept the responsibility for initiating competition. This should rest with the manufacturer.
The implement dealers play a very important part in the agricultural life of western Canada and it is generally agreed that it is only fair that they should be allowed a fair return on their investment and labour. Generally speaking, there is no group supplying a service to agriculture that accepts that responsibility as conscientiously as do the implement dealers. During the busy season their businesses are open at all hours of the day and night, and I know of many instances where implement dealers have worked all night to repair a combine that has choked on a good-sized stone or a tractor motor that has a connecting rod through the side. Many
The Budget-Mr. W. M. Johnson
implement dealers are playing an important part in relaying technical information to the farmers. They act as a liaison between universities and the agricultural industry.
The royal commission on price spreads of 1934 found that the price of repair parts was out of line with the costs. At that time the selling price of a machine made up of repair parts was 173-2 per cent of the cost of the new machine. The Saskatchewan report of 1939 states:
Companies fixed retail prices of repair parts at a mark-up of 60 per cent of the factory cost in excess of the mark-up on a completed farm implement.
This would work out to an average markup of 80 per cent. Part of this is due to lack of standardization. I know of many pieces of equipment that use almost identical bearings at different parts in the machines, and standardization would mean that the implement dealer would be able to get by with a smaller stock. May I also point out so far as repair parts are concerned that the part number is either stencilled on or cast in the metal. When a part is broken it is in many instances greasy and dirty and many times the pieces are not recovered. When the implement dealer orders a repair part from the divisional point and the wrong number is given the implement dealer is expected to throw the part under the bench and keep it in his stock with no hope of utilizing it and try to recover the cost of that operation from his other sales. I would suggest that the companies allow their dealers to return unused stock at periodic intervals.
It is apparent from the brief outline I have given of the farm implement industry that there is a severe lack of competition, that the implement companies are operating for the purpose of making the maximum profit and without consideration for the provision of service to the farmers of Canada. I would therefore suggest to the Minister of Justice (Mr. Garson) that he put his anticombines legislation into action against this target and determine the degree of price fixing there is in the farm implement industry. Failing that, I would request that the government establish another committee to investigate the farm implement industry in order to determine why the price of farm machinery is out of all reason.
I have pointed out that it is obvious that the government should initiate a policy of interim payments on farm stored grain to this very important section of the economy. As I have pointed out, it is particularly required by those starting to farm under the Veterans Land Act and by those commencing any type of farming. It is also required by those who followed the advice of the government last
4434	HOUSE OF
The Budget-Mr. LaCroix year. The government said that next year after the election things were going to be better than they were then, that there was nothing to worry about and they should go ahead and spend their money. The farmers who followed the advice of the Liberal campaigners are some of those who are in need of an interim payment on farm stored grain. This would help the Canadian economy generally. Surely if the gold mining industry is worth a subsidy of approximately $15 million the agricultural industry is worth one-third of this amount, and the government would probably get it back through various benefits to other industries.
I have shown that production costs must be reduced. I have demanded an inquiry into the farm implement industry, but such an inquiry should not stop there. There should be an investigation into high freight rates, the high cost of fertilizer and other factors that contribute to the highest cost of production that western agriculture has ever experienced.
(Translation):


Mr. Wilfrid LaCroix (Quebec-Montmorency):: Mr. Speaker, I have already made known my attitude on the subject of the deductibility of the provincial from the federal income tax; this was on March 24, before the budget was brought down. Following the budget speech, the chamber of commerce of the district of Montreal, in an editorial published on April 19 in Commerce-Montreal, made the following statement on this subject:
In other words, it is no longer a question, as it was last year, of freedom, of a complete absence of pressure. A province has to sign an agreement or feel the pressure of its taxpayers who have to pay higher taxes than those of other provinces.
Viewed in that context, one really wonders what is meant by the invitation made by the federal Minister of Finance to the premier of Quebec, asking him to come to Ottawa to submit proposals. Let us not forget that within the framework established by the federal government, such proposals can only deal with the renting of taxation fields from Quebec for a consideration. Any other proposal is eliminated. There can be no question of a greater deductibility than that which has been recognized. It has been refused. There can be no question of compensating the taxpayer in proportion to the amount that the province would derive from the renting of its taxation fields. Such compensation is refused. What then?
Why not give the province of Quebec to understand that its representations would not be in vain?
I am entirely of that opinion, but I do hope, having heard the rather conciliatory remarks made by the right hon. Prime Minister (Mr. St. Laurent) whose tone was entirely different from that of the Minister of Finance (Mr. Abbott) that, sooner or later, a solution may be found, as in the case of the Quebec cor-


porations. After all the federal treasury cannot indefinitely resist the just and reasonable claims of the people of my province.
In view of the statement made by the Minister of Finance in this house, on May 4, in answer to a question put to him by the Leader of the Opposition, and according to which a vote for the budget was a vote against the deductibility of the provincial tax, and in view also of the fact that no account is taken of the deduction of the provincial tax in the budget as it now stands and that the principle of non-deductibility is therefore at stake therein, I will vote against its adoption since to act in any other way would mean that I am approving the government's refusal in this connection.
(Text):


Louis Stephen St-Laurent: It is because of the absence	
of the Leader of the Opposition (Mr. Drew)	
that I abstained from voting. Otherwise, I	
would have voted for	the motion.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Robinson (Simcoe East) in the chair.
['Agreed.\nResolution stands.\nProgress reported.']
The Chairman:: We shall now deal with the Excise Tax Act.
Excise Tax Act



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


William Alfred Robinson: Order. I am extremely sorry to interrupt the hon. member, but I must ask hon. members of the committee to maintain silence while the hon. member has the floor.


James MacKerras Macdonnell: Thank you, Mr. Chairman. I realize how dull it is, but hon. members can sympathize with me and know that it is worse for me than it is for them.
I want to spend a moment or two in trying to assess, with the experience of four weeks behind me, just what this budget has done and has not done, and I wish to draw attention very briefly to some of the views which have been expressed as to the adequacy of the proposals which have come before us.
I read very briefly from the Globe and Mail of April 8, which says that cuts in the budget
[The Chairman.]
are mere "nicks", and says that the minister confined them to a few commodities in the luxury and semi-luxury class. The writer of the same article, speaking of the Minister of Finance says: He and his advisers are men of little faith.
In a way, they have reason to be, for they have a tiger by the tail-the tiger of remorselessly progressive expenditure.
I go on to read from the Ottawa Journal.


Mr. Benidickson:: I do not want to interrupt the hon. member's speech, but I do recall that when the hon. member was making his major address on the budget and was attempting to do the very same thing, the Speaker, who was then in the chair, said that the rules did not permit the member to read editorials from outside the house reflecting on or expressing opinions about the conduct inside the house.


James MacKerras Macdonnell: I remember very well that the Speaker took me to task, but I thought at that time it was merely because I was seeking to read at some length expressions of views. Here I wish merely to quote a few brief phrases just indicating the general discontent which we find throughout the country. I go on, Mr. Chairman, as I say, to read very briefly from the Ottawa Journal of April 7:
It will be a long time, If ever, before the man In the street feels substantial effects from sales and excise tax cuts.
And then the Calgary Herald of April 8 refers to a few small crumbs tossed his way, referring to the citizen, in the form of reduced luxury and excise tax, and then in an editorial entitled: "Encore Not Demanded" the Sydney Post speaks of the government sitting tight and fixedly hoping for the best. The St. Catharines Standard of April 17 says:
It takes a little time to get the hang of the budget, and some late discoveries reveal windowdressing which Invites ridicule, if nothing worse. There is to be no tax on curling irons, about as much in general use now as the old moustache cup.


William Moore Benidickson: In the speech of the hon. member to which I referred a moment ago, he quoted from three editorials, and the Speaker said that was not in order. The hon. gentleman said that he had read all that he wanted to read anyway and was quite content to dispense at that point. We have had more than three at this time, and 1 wonder what your ruling is, Mr. Chairman.


Mr. Ferguson:: Would you mind making a ruling?


William Alfred Robinson: Order. I think the-


Julian Harcourt Ferguson: There is only one Speaker in the house.


William Alfred Robinson: Order. Perhaps the point of order which has been raised by the parliamentary assistant could be based on citation 306 of Beauchesne's second edition, which I might read to hon. members of the committee.
It Is not in order to read articles in newspapers, letters or communications emanating from persons outside the house and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the house.
I have been listening to the extracts which have been read by the hon. member for Greenwood and up to this stage I do not think he has transgressed citation 306.


James MacKerras Macdonnell: Thank you, Mr. Chairman. Anyway, the parliamentary assistant will be glad to know that I am nearly through. There is one from the Toronto Star that probably he would particularly like to hear.
In its general application, the sales tax continues at 10 per cent, and is the worst tax which Canada imposes.
Then, I have one final quotation from the Toronto Star of April 23:
The $40 million tax cuts in the recent federal budget, while distributed over a broad range of items, will probably have "little discernible effect on the economy at large, either in lower prices or higher profits," the Bank of Montreal said in its business review.
Again we have this further quotation from the Bank of Montreal review:
The budget was notable not so much for the changes that were made as for the changes that were not made.
I should like now to make a comparison, Mr. Chairman. It has been referred to in the house already, but I want to dwell on it a little, and that is a comparison of the microscopic reduction in taxes that we have got, and incidentally no reduction in expenditure at all, with what has happened in the United States. I am informed that there has been a reduction of $7 billion for this year from Truman's estimate for the year. On that basis, if one divides by say twelve, which I think is a rough and ready figure, it would mean that we should have a reduction in this year of something like $600 million instead of $36 million. I think that gives us something to think very earnestly about. I ask the question why our reduction is so small. I think the answer is very simple. There is no sense of urgency in our government in regard to reduction.
Now, economy is not an easy thing and we all know that. But I would like to again emphasize this lack of urgency. The minister has grown accustomed over the years to what he has called "buoyant" revenues. We were able to spend, and spend and still have surpluses. It was a jolly life, while it lasted.
Excise Tax Act
After all, Mr. Chairman, no one likes an economizer. He is usually a lantern-jawed fellow with perhaps a Scottish Presbyterian background and people avoid him because they think that is not going to be the kind of fellow they will like. They do not like economy. On the other hand, they like a spendthrift. They like a jolly fellow, ruddy and probably a little full in the face, with nice pleasant easy manners who makes the spending of money attractive. And that is the kind of thing that people come to like.


Mr. Rowe:: That side of the house is full of them.


James MacKerras Macdonnell: As far as I can see we
are going to go on like that until something happens to change it. Spending your way through is much more pleasant for a lot of people than saving, particularly for those who have the most to say. The truth of the matter is that we have been on a huge spending spree or jag and it will go on as long as the taxpayers allow it. Of course, the government can argue that the taxpayers, by their action last August, did allow it. I suppose they might even argue that the government has a mandate to spend. That may be for the moment, but on the other hand perhaps the day will come when people will begin to suffer from this and the taxpayers will take a different view.
However, the government goes ahead, and the minister has estimated a tiny surplus which is really no surplus at all. He was in his usual optimistic mood. Nevertheless, he admitted his budget was based on an optimistic estimate. If you had the present situation in a private business people would be on their guard. They would be preparing for possible eventualities. They would not bet their whole future on the continuation of a boom. After all a private company has to take precautions of that kind and even a public corporation is in the same position.
In this morning's Gazette there was a reference to a very substantial falling off in the gross revenues of the C.N.R., but to their credit there is also a very substantial falling off in their expenses, and indeed it is almost as great.
We have a surplus estimated but it is a tiny surplus; as I have said before, you could put it in your eye. If you had a situation of that kind in a private corporation the management would begin to take action. The difference in public affairs is that you always have the taxpayers' pocket available and you can always borrow if necessary, and so it goes on. Over the past 15 years the government has become accustomed to living in a boom. There is no sign that they think the situation has changed. The minister admitted

Excise Tax Act
the possibility of it, but he is really betting on the return of the boom. That, in plain words, is what we are doing.
At page 3727 of Hansard the minister, after having referred previously to the situation in the United States, was reported as saying:
My general conclusion is that our national products in 1954 will be at least equal to 1953, and probably higher; in other words I think that an upswing in the second half of the year will more than compensate for the declines that are evident in certain branches of industry at present.
That is what we all hope, and perhaps it will come true. But in private business they would not rely wholly on that. They would have to take steps to deal with the situation. The government, as I have said, is betting on a boom. We are all familiar with one hackneyed quotation from that famous character Micawber. I have got one which is not quite so familiar and which I think is worth while bringing to the attention of the house. It is the opinion .of Mrs. Micawber about her husband and, as will be indicated in the quotation, these were the days when people went to prison for debt. This is what she says:
I have known him come home to supper with a flood of tears, and a declaration that nothing was now left but a jail; and go to bed making a calculation of the expense of putting bow-windows to the house, "in case anything turned up" which was his favourite expression.
Now, Mr. Chairman, I suggest that we are living in that same sense of fancied security and just hoping everything will be all right. Just hoping-and taking no steps.
We get an increase in expenditure across the board and the minister comforts himself by saying that he thinks all will be well. It is a kind of "Rake's Progress"-a very nice rake, of course-and it can turn out to the great disadvantage of this country.
As I have already pointed out, there can be no economy without a sense of urgency, but if you have a sense of urgency then, as we have seen in the United States, remarkable things can be done. Hon. members will recall that old music hall catch "Where there is a will there are three ways." Well, we have not even found one of the ways, and it is about that that I now complain. Everyone knows there is extravagance. I myself have previously referred to the fact that there are 55 economists in the Department of Agriculture. I took some trouble to get some ideas as to what these economists do.


The Deputy Chairman:: Order. The hon. gentleman is causing me just a little worry and I think perhaps in fairness to the committee and to the hon. member who now has the floor I should raise this question at this

time. I am of the opinion that the government's financial policy, particularly with respect to spending and charges of extravagance and so forth, should be dealt with on the general debate on the budget. But we are now in committee of ways and means and standing order 58, paragraph (2), states:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
The item now under discussion is the Excise Tax Act and I am going to suggest to the committee that it would be unreasonable for the chairman to prevent any hon. member who is addressing the committee to lay a foundation of general policy for the remarks he wishes to make. However, I believe it is my duty to the committee to ask the hon. member to come to the Excise Tax Act. I am not trying to control the committee too rigidly because I understand this is the first time in the committee during which hon. members have had an opportunity to discuss the budgetary measures now before us. But I am suggesting to the hon. member, and I think he will agree with me, that he should now turn his attention to the item before us. He has every right to lay a ground for attacking the proposals under the Excise Tax Act but that is what I must ask him to do at this time.


James MacKerras Macdonnell: Mr. Chairman, with all due deference I somehow sensed that incidents of this kind might arise and I fortified myself as far as I could by making inquiries in what I thought were well informed circles, certainly better informed than I, and I was informed that it was clear that in beginning to discuss this resolution which, after all, contains the whole or most of the tax reductions we are getting, it would be relevant to refer to * tax reductions as a whole and to indicate how small they are and give one or two illustrations after criticizing them and indicate why I think they might have been larger. I do not propose to go into this matter at any length. Indeed I think I have only one illustration I want to give. Then I see in my notes in large letters, Mr. Chairman, that I come next to the "details of reductions".


Edward Turney Applewhaite: Perhaps the hon.
gentleman will permit me just to say this. I am sure that he will co-operate. If we permit him to discuss matters and if we have speeches which would require an answer, we are likely to find ourselves debating the subject matter of the hon. member's speech and not the subject matter of the resolution before us. It is that situation which I was trying to avoid.


James MacKerras Macdonnell: I think what I am going to say will be so convincing that there will not be any answer at all. I just wanted to make a reference to the expenditure of the Department of Agriculture which has 55 economists. I tried to find out what they do, and I want to read just one short extract showing the kind of thing they do because it seemed to me to be doubtful that it would be very useful to the ordinary farmer. I have here a pamphlet entitled "The Influence of Prices on the Relative Consumption of Beef and Pork". It is published by the Canada Department of Agriculture and is dated Ottawa, June, 1953. At page 7 there is a technical appendix in which appears the following:
The assumptions of the analysis are:
1.	The consumption ratio of beef to pork will vary inversely with the price ratio.
2.	A given absolute change in the price ratio will not produce a constant absolute change in the consumption ratio. The amount of change will vary with the general level of the price ratio.
Then I go on to read one short paragraph which I hope will make all this clear to members of the committee because, up to the present time, I have not understood it very well. Here is what we find:
When the ratios are plotted the result is a curve with constantly decreasing slope, very noticeably concave upwards. If Xi is the consumption ratio and X2 the price ratio-both expressed as percentages-the general equation of such a curve is
b
Xi = CX2
where C and b are constants, the latter being negative.
I read only that short extract, Mr. Chairman. I do not know how widely this pamphlet is distributed. I propose to return to this matter when we reach the estimates of the Department of Agriculture. It may be that that pamphlet goes only to a few experts who are capable of understanding it, something which I am not capable of doing. It occurred to me that that is one of the things which happens when you feel that there is lots of money and that you can just spend your way through.
I now come to the details of the reductions and I ask the question: What principle was arrived at in reaching these reductions? Was it on the basis of necessities or luxuries? I shall just read a few, Mr. Chairman, and I hope I am well within the mark now. I will just read these few: Furs, electrical appliances, firearms, golf clubs; then I go on and I read: coin, disc or token operated games, ash trays, fountain pens, and so on. To refer briefly to one, namely furs: Are they a necessity or a luxury? The minister told us the other day, after a speech he had made in Toronto, that he had been convinced by a 83276-280i
Excise Tax Act
very eminent authority, namely his wife, that actually furs were necessities. However, I feel that that conviction arose after the budget and not before it. Now we come to firearms and complete parts thereof. I suppose they are used by two classes of people, namely sportsmen and gangsters. To gangsters I suppose they are a necessity but to sportsmen I take it that they are luxuries. And so it goes as we come to golf clubs, fishing rods and the others. My conclusion is that these results have been arrived at not on the basis of necessities or luxuries or on the basis of the greatest good to the greatest number but rather on the basis of the least good to the greatest possible number; in other words to spread it out as far as possible; in other words, to appeal to as many voters as possible. The principle seems to be the least good to the greatest possible number. That is the only principle that I have been able to discover in this list.
I should like to draw attention to one or two of the figures here; and when I am doing that I should like at the same time to draw attention to the increase in expenditure that has been going on. For example, let us take electrical appliances by way of illustration. We find that $5 million of the $33 million reduction is on electrical appliances. In passing I just point out that at the same time that is going on, the expenditure in agriculture proposed for this year is $76 million, roughly, which is up about $1,700,000. I come down to the small item of matches, which is $300,000. I mention at the same time that the Canadian Broadcasting Corporation expenditure is to be up from $8 million to $23 million. I think there is a special reason there because I think a special earmarked tax, which we objected to a year ago, has yielded a good deal more than it was expected to yield. Therefore that figure-and I want to guard against any comeback on that matter-perhaps is, in a sense, accidental; but there it is. We have $15 million up there against a reduction of $300,000 that I just mentioned a moment ago. Then we come to candy and chewing gum. That is one of the large items-nearly $4 million-at the same time the expenditure of the transport department is up about $15 million. I do not think I need to take further time on this matter, Mr. Chairman. I just wish to point out that this microscopic $33 million reduction is all that we are getting to assist us at the same time that expenditures are going up, up and up.
I should now like to hasten to a conclusion. I should like to point out that we have to deal with these trivialities-because that is all they are-when big questions have received no answer. We are told on all hands that high

Excise Tax Act
costs of the things we produce may cause us great embarrassment in selling. Yet we go on collecting $1,200 million or more in corporation taxes. These taxes raise costs and make the difficulty of selling just that much greater. All that the minister has to say is to admonish the people who are in business that they must sharpen their pencils and do a better job. But no example is given by the government. I recall to my mind the words used somewhere in Shakespeare: "I could easier tell twenty what was good to be done than to be one of the twenty to follow my own good advice." I think that statement is true in the case of the minister.
We now have vivid, disagreeable and alarming evidence of the extent of unemployment because this very day we have had here representatives of the union of the unemployed. What a phrase that is that we have come to: the union of the unemployed. The union of the unemployed are here and yet nothing has been done. Nothing definite has been done with regard to unemployment. Indeed there has hardly been an admission by the government that unemployment is a serious problem. They are standing by and hoping that things will turn out all right. As I said a little while ago, it is the boom mentali ;y. We are relying on things improving in the United States, although that improvement carries with it no guarantee that our problems will be solved because as we know-and I shall not take the time to reiterate it again-the United States in many ways competes with us; and the fact that things improve there will not necessarily solve our problem at all.
The plain fact is that in the years that have gone by we have regarded boom as normal. We have bewitched ourselves into feeling that in some mysterious way because we have got a lot of natural resources we will always have a market for them. We are getting most unpleasant evidences from time to time that there is only a market for them at a price. We are getting even more disturbing evidences that we can be undersold in our own back yard, as somebody put it, by foreign manufacturers. As I said a moment ago, the mere fact that conditions in the United States may improve is no guarantee that ours will.
Therefore I should like to comment on this resolution. The reductions, even though it is very difficult to find any principle on which they were arrived at, will be welcomed of course by the people for whom they are made, but they seem to me to be without any rhyme or reason except the possibility of pleasing the largest possible number of people. It does seem to me that the upshot of it all is that we are just toying rather aimlessly with a serious situation.


Mr. Knowles:: Mr. Chairman, I noted at the start of today's discussion on this resolution that it was referred to by the chair as "a" resolution. It is not my purpose to revive the discussions we have had in former sessions on a point of order so far as voting is concerned, but for the purposes of discussion may I ask whether we are discussing the whole of the Excise Tax Act resolution or whether we are discussing it clause by clause or paragraph by paragraph. The reason I ask that question is that the points I want to raise relate mainly to clause or paragraph 4 and perhaps some others. In other words, if we are taking the resolution paragraph by paragraph I am prepared to let paragraph 1 go, but if in order to make comments on paragraph 4 I have got to make them at this initial stage I will have to govern myself accordingly.


Edward Turney Applewhaite: I think this matter was given a little consideration before we went into committee today. I consider that I am bound by the decision-I think it may be called a decision-of the house of April 26, 1951, which I think is summed up by the remarks of the deputy chairman found at page 2434 of Hansard of April 26, 1951. The deputy chairman said:
The hon. member was not in the house this afternoon when the matter was discussed as to whether or not the paragraphs of the resolution were to be discussed separately or as a whole. The decision was made by the house that they were to be discussed as a whole. Therefore what is now before the committee is not eight items or eight clauses. It is one resolution with eight paragraphs. Therefore there is only one item so far as the committee is concerned, and that is the whole resolution.
Accordingly, I think that I must permit discussion as members see fit upon anything which is included in the Excise Tax Act resolution now before us.


Stanley Howard Knowles: I will not ask you, Mr. Chairman, what you think of that course of procedure, if we have no alternative but to follow it. I wish to ask the parliamentary assistant to the Minister of Finance a few questions relating more particularly to the sales tax or consumption tax which is included in this omnibus resolution. Can the parliamentary assistant say whether consideration was given to reducing the amount of the sales tax right across the board from its present total figure of 10 per cent to some lesser figure?


William Moore Benidickson: Yes, Mr. Chairman. Certainly the budget is preceded by a great number of meetings between the finance minister, several of the other ministers concerned and their officials, and this is a development that takes place over weeks, even months. There is at all times an examination of the merits

in a particular year of making a tax reduction, if one is possible, in one section or another. My hon. friend of course realizes that the particular tax to which he refers, the 8 per cent sales tax and the 2 per cent old age pension tax, yields a large amount of money. As I recall it, I think the 2 per cent tax accumulated almost $150 million last year. Therefore a 1 per cent reduction in the rate of the consumption tax, as my friend describes it, on the same items that are subject to tax at the present time means a loss of revenue of something in the nature of $75 million. One can thus appreciate that a tax reduction of that amount in this particular year would have resulted in a forecast of a deficit.


Stanley Howard Knowles: I wish to express the view very briefly that it would have been better to reduce the sales tax right across the board than to remove the excise tax altogether from certain luxuries, as was done by the Minister of Finance in this budget. It does seem to me that the government is relying on the fact that people have become used to the sales tax and the government seems to have got away from any serious consideration of the possibility of reducing it substantially right across the board. In my view a 10 per cent hidden sales tax, that has as wide an application as this sales tax has, is a regressive form of taxation, and I regret that this year's budget did not include provision for a reduction in that sales tax.
May I now ask one or two questions under the general heading of the sales tax which relate to a more specific matter. Paragraoh No. 4 of the resolution before us includes a provision for repeal of the sales tax with respect to equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of $1,000 per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not to include automobiles or ordinary motor trucks. That of course is a welcome relief to municipalities so far as it goes, but I suggest that its relief and its application are indeed very limited.
In connection with the position of municipalities, I should like to ask the parliamentary assistant to comment on the fact that the regulations under the Excise Tax Act, dated April, 1950, include this section numbered 12:
Where persons, firms or corporations produce printed, multigraphed or mimeographed matter for their own use, to a value of over $3,000 per annum, they are required to account for the consumption or sales tax on their total production of such goods. The tax is to be computed on the total cost of all materials, including electros, engravings, stereotypes, plus 220 per cent. The value of negatives, electros, engravings, stereotypes, half-tones, and other printing plates is to be included only once-
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That is very kind of them.
-in the value on which sales tax is to be calculated and not each re-run.
This regulation was drawn to my attention by one of the officials of my own city of Winnipeg. In drawing this to my attention it was pointed out that from my own experience, having once upon a time been a member of the council of the city of Winnipeg, I know there is a need for mimeographing a great deal of material so that it may be placed in the hands of the aldermen and others who have to work on it. It has been pointed out to me that if in preparing this material the officials simply used typewriters and sheets of carbon paper so as to produce carbon copies, they would pay only the 10 per cent sales tax upon the cost of the typewriter ribbons and on the cost of the paper and carbon paper that would be used. Obviously when a great many copies and a good deal of material has to be prepared that is a rather inefficient and expensive way to do it. The officials of the city of Winnipeg, therefore, like the officials of other municipal bodies, resort to the use of mimeographing machines.
But lo and behold, this regulation under the Excise Tax Act makes the provision that I have just read. It works out this way. If the city council of Winnipeg purchases mimeograph paper worth $1,100 and simply leaves it on the stock shelves the only tax that would be paid would be the 10 per cent tax. But if it is used for its own purposes, namely for the production of mimeographed documents, it works out this way. The sales tax item of $100 is first of all reduced, leaving the value at $1,000. But then there is added to that $1,000 for the purpose of computing the sales tax the amount of 220 per cent, so you add $2,200 to the $1,000 which gives you $3,200 as the figure on which the sales tax must be computed. It is then that the 10 per cent figure is brought into play, and 10 per cent of that amounts to $320. This sales tax of $320 has to be paid on an original purchase of $1,000.
When I started to give this example I believe I said we should assume the purchase of $1,100 worth of mimeograph paper. What I should have said was, assume the purchase of $1,000 worth of mimeograph paper plus the 10 per cent sales tax which would bring it to $1,100. It is from that point the deduction of $100 is made so that the much larger figure can be added. The result is, as I say, here is a sales tax of $320 that has to be paid on a purchase of $1,000. I do not believe the aldermen of the city of Winnipeg are particularly incapable of understanding things, but it looks to them as

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though they are paying a 32 per cent sales tax on their mimeograph paper and mimeograph supplies.
When the Winnipeg officials have taken this matter up with the authorities to try to get an explanation, they have been given the explanation that if they had the material printed the sales tax that would be paid on all the plates and materials that went into the printing process would result in their paying a figure which would come to that amount. Surely a city council is not going to be asked to compare the mimeographing that has to be done for its regular meetings or for meetings of its committees, which has to be done very quickly and in many cases is just for temporary use, with the kind of material it is necessary to print in more permanent form. As has been pointed out to me, the whole purpose of resorting to the mimeograph process is to do a job that would normally be done not by printing at all but by the typewriter and by the making of carbon copies. It is an attempt to be more efficient and more economical that leads to the use of the mimeograph process rather than typing carbon copies.
The figure I have for a recent fiscal year in the city of Winnipeg suggests that the amount of tax that has to be paid is not going to break our city of Winnipeg. As a matter of fact it is the sum of $1,254.78. But it does strike the aldermen of the city of Winnipeg as a rather large sum to pay in taxes on mimeograph paper, especially when for all practical purposes it works out to a rate of 32 per cent. I should like to have the comments of the parliamentary assistant on that situation. I can hardly ask him to justify it, because I do not think it can be justified. I suppose he can give the explanation for this gouge, if I may call it that, that has been given to the city of Winnipeg, but more particularly I should like to know whether consideration has been given to the eliminating of the regulation which I read so there will not be this sales tax of 32 per cent on mimeograph paper and supplies.


William Moore Benidickson: I confess that the detail on this point is new to me. But I know the hon. member holds a card in the printers union, and he doubtless appreciates that any printing of this kind on a large scale, we will say in an industry or something of that kind, is to that extent in competition with the printing that would be done in the normal way by the printers and bears a considerable labour content. From the remarks he made, I was not quite clear whether he felt that a regulation of this kind should be removed solely in respect of municipalities, because he started his discussion with reference to an item in the resolution dealing with municipalities.
Is the hon. member saying that if the expenditure were over $1,000 in the case of a municipality, this particular requirement should be waived? Is he saying that any business firm or anyone else with internal printing of that size should also escape the imposition of this form of tax?


Stanley Howard Knowles: In reply to the first comment made by the parliamentary assistant, may I remind him that I dealt with it before he made it. I pointed out that this is not material that would otherwise be printed by any letter-press process, or even by an offset process, but it is material which would otherwise be produced for the aldermen by the process of typing carbon copies. There is no element here of competition with the established printing trade.


Mr. Fraser (Peterborough):: Would it be mimeographing?


Stanley Howard Knowles: Yes, that is what we are talking about, the mimeographing of reports, agendas and things of that sort that you have to have around the city hall, most of which material is not of a permanent character. I know quite well that the minutes and proceedings of the city council of Winnipeg, which are permanent, are printed. Indeed they are printed in a union shop, I might tell the parliamentary assistant.
As to the other question, it is the government that boasts, as the minister did when he presented his budget on April 6, that it is doing something to relieve the costs imposed upon municipalities by taxation. If the government wishes to go further with this matter and establish some figure at which exemption would be granted, that is up to the government. I confess I am not as much concerned about the relief of taxation as it would affect private firms in business to make money as I am about the relief of municipalities who operate wholly on the basis of money they receive from the taxpayers, and mostly on the basis of money raised from taxes on real estate. I have tried to answer the question of the parliamentary assistant, and I would be glad if he would answer mine.


William Moore Benidickson: Frankly I do not think that in all cases my hon. friend could assure anyone that only mimeographed paper would be used, and that the machines being used internally could not be of another type- perhaps of the offset type-which might be in direct competition with a printing plant. As I said at the beginning, it was a new point so far as I was concerned. Certainly I shall make inquiries about it; but I was
(Mr. Knowles.]

anxious to find out whether my hon. friend's concern was solely from the point of view of the municipalities.


Stanley Howard Knowles: That is my chief concern.


William Moore Benidickson: Yes. It is not one of those items that is particularly spelled out in this resolution. I still disagree with the hon. member when he suggests that another municipality, for a completely different purpose, other than that of minutes, could not probably use another type of printing.


Stanley Howard Knowles: The government itself, under the terms of paragraph 4 in the resolution, has accepted the principle that municipalities are entitled to some relief from the sales tax.


William Moore Benidickson: Yes, on some things. This is the first step. We are going reasonably cautiously with it. We have always explained in the past that we feel a great many municipalities have to be dealt with. Administrative difficulties are sometimes heavy in proportion to the expenditure. All those things have been explained in the last two years. This is the first step of its kind. The hon. member makes reference to a rather unusual item that he thinks should be added. He will recognize of course that I am not in a position to say that it can be added this year. I can assure him however that his remarks will be considered by those who will be looking into the matter at a later time.


Mr. Michener:: I have a question referring to paragraph 4(c) which, as has been noted, assists municipalities in carrying out their functions by giving some relief from the sales tax. It refers to certain items of equipment. A good deal has been said in the general debate on the budget as to the problem of the municipalities under the present division of taxing authority or taxing power. It has been made apparent that they are being heavily subsidized by the provincial governments to enable them to carry out their responsibilities. I note that in the case of provincial governments the sales tax is given as a complete exemption in the articles with which they have to deal, and that the principle has also been extended to public hospitals and other institutions by way of assisting them in carrying out their purposes. As the parliamentary assistant has said this paragraph represents the first step in one method of assisting the municipalities. I know, too, that we have on the order paper item No. 9 the import of which is not yet known to us, but which is as follows:
Resolved, that it is expedient to bring in a measure to extend the benefits of the Municipal Grants Act and to provide for certain changes in connection with the administration of the act.
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I assume that this is a measure to assist municipalities by federal action. The fact that this appears on the order paper, and the further fact that a brief, which I have seen, has been submitted from Toronto, a city of which my riding is not an inconsiderable part, leads me to ask the parliamentary assistant whether he would care to indicate whether the government has set its face, shall I say, against any additional exemption from sales tax for the municipalities. In other words, is it going the whole way in freeing them from this tax and, if so, whether this other method of assisting the municipalities, which is not yet known, is in any way comparable in extent?


William Moore Benidickson: This is as far as the government intends to go in this field at the moment. My hon. friend has referred to other legislation which, I may point out, amends an existing statute so as to make it more generous. I would remind him that the original legislation is relatively recent. It is only in recent years that the federal government has made grants in lieu of taxes to municipalities. As I say, this is new; and after consideration prior to the budget this year this is the extent to which the government will go.


Mr. Mclvor:: There are some good things in paragraph 4. Those who suffer from failing hearing will now get their equipment free of sales tax. In the last three years the minister has been asked to free hearing aids. This is the first time it has been done, and it is important to many people. It may not seem important to some, but those who are selling hearing aids believe it is. And I am sure those who buy them will share that view. I commend the minister for having taken this step as set out in paragraph 4 (g).


Gordon Knapman Fraser: Could the
minister give figures showing the loss of revenue in respect of the item set out in paragraph 1 of the resolution.


William Moore Benidickson: I could give an estimate. The revenue loss estimated for the coming year in respect of electrical appliances is $5 million. I believe that was the figure used by the hon. member for Greenwood. The estimated loss of revenue in respect of furs is $4,400,000; coin operated merchandising machines, $250,000; cameras, $1,350,000; firearms and ammunition, $1,300,000; fishing rods and reels, $350,000; golf clubs and golf balls, $200,000; luggage including trunks, bags and the like, $3,300,000. Those are the items in respect of which the entire 15 per cent is being removed.

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Gordon Knapman Fraser: I have a question on some of the other items in part 2. This was brought to my attention by a man who is in the undertaking business. Line 4 reads:
. . . for use in connection with the care of the human body.
Down below that it says:
Preserving or restoring.
He wondered whether that included embalming fluid.
Paragraph (d) reads:
Coin, disc or token operated games or amusement devices of ail kinds.
Does that include those machines of chance?


William Moore Benidickson: No; a distinction has been made between vending machines-


Gordon Knapman Fraser: That is in No. 1.


William Moore Benidickson: The hon. member is referring to No. 2?


Gordon Knapman Fraser: Yes.


William Moore Benidickson: Only the 5 per cent reduction applies to that type, and the 15 per cent applies to the vending of merchandise as opposed to or contrasted with the use of the machine for amusement purposes.


Gordon Knapman Fraser: There is no deduction on the machine of chance.


William Moore Benidickson: Five per cent.


Gordon Knapman Fraser: Five per cent only?


William Moore Benidickson: Yes. Everything in item 2 is subject to a 5 per cent reduction, bringing the excise tax from 15 per cent to 10 per cent.


Stanley Howard Knowles: Does that apply also to machines that are illegal under the Criminal Code?


William Moore Benidickson: I am not aware of that kind.


Gordon Knapman Fraser: I believe they are included in this 5 per cent reduction.


Stanley Howard Knowles: A fine example of cabinet solidarity.


Gordon Knapman Fraser: Paragraph (e) of No. 2 mentions pipes, cigar and cigarette holders and so forth. Was any consideration given to reducing the tax on cigarettes? The reason I ask that is that in this morning's paper the Royal Canadian Mounted Police report that they caught two men smuggling
165,000	United States cigarettes, and another case of 140,000 cigarettes and another two men were arrested with 25,000 cigarettes. It is all in this morning's paper. With the tax on cigarettes in Canada as it is at the

present time we cannot expect anything else but that people will try to smuggle them in. I ask the parliamentary assistant whether any consideration was given at this time to this matter.


William Moore Benidickson: A very substantial reduction was made last year, partly having in mind the matter of smuggling which had been increasing. We believe from the evidence in the intervening period of the past year that this kind of thing has gone down very considerably since the reduction of last year.


Gordon Knapman Fraser: It is still pretty high, though, which I believe the assistant to the minister will acknowledge. In paragraph (i) of item No. 2 we find that the tax has been reduced on clocks and watches. Clocks and watches are an absolute necessity. Although this will help the Canadian industry to some extent, I do feel that some restraint should be put on the import of parts of watches because it will certainly ruin the Canadian trade. In paragraph (j) of item No. 2 we find:
Articles of all kinds made in whole or in part of ivory, jet, amber . . .
And so forth. Practically everything that is mentioned in this paragraph is imported. Is this change made to help the importers? The stuff is not made in Canada; most of it is imported into Canada. A reduction from 15 per cent to 10 per cent is made on articles made of ivory, jet, amber, coral, mother of pearl, natural shells, tortoise shell, jade, onyx, lapis lazuli, or other semi-precious stones. All that stuff is imported.


William Moore Benidickson: I think the hon. member for Peterborough will recognize that a number of these items are reassembled into other articles of jewelry and adornment and the tax reduction, added to the reduction in the general classification of jewelry, will doubtless be reflected in the ultimate consumer price.


Gordon Knapman Fraser: Just one more question. Item No. 7 reads:
That provision be made to ensure that machines and tools for operation by tractors are not included as accessories therefor in the prevailing exemption from sales tax.
With respect to tools and machines for operation by tractors, there would be hydraulic lifts, shovels, blades and different things of that kind. Can the assistant to the minister tell us just what is meant by this item?


William Moore Benidickson: At the present time the act provides for an exemption for tractors for farm purposes, or used for logging, and accessories for this purpose; but some items are

not considered to be accessories for which the exemption is intended: Such things as bulldozers and tractor shovels, tree dozers, cable control units, hydraulic control units and things of that kind are not to be considered as accessories entitled to the exemption.


Gordon Knapman Fraser: A hydraulic lift on a tractor is almost a necessity on some farms, because the farmers have to use them all the time in handling some of their equipment. Why should they not be included in it?


William Moore Benidickson: An item such as my hon. friend describes, and particularly the ones that I recited, are considered rather to change the function of the tractor itself. It gets you into a different field, and they are not considered to be accessories.


Daniel Roland Michener: Can the parliamentary assistant give me the estimated total tax loss which this resolution will cost and also two or three items which I should like to have the details on. First, paragraph (h) of item No. 2, tires and tubes, and, second, the item to which I referred before, namely, equipment for municipalities. How much is estimated will be lost on these two items and on the whole resolution?


William Moore Benidickson: Really, Mr. Chairman, we have not a good estimate on the possible revenue loss in connection with the exemptions on certain items for municipalities. The exemption does not apply to all municipal purchases for which there might be some statistics. I am afraid I could not answer that particular part of my hon. friend's question. I can give an estimated loss of revenue on the reduction of excise taxes on certain articles from 15 per cent to 10 per cent. On tires and tubes, which the hon. member asks specifically, the estimated loss is $3,500,000; candy and chewing gum, $3,950,000; fountain pens and pencils, $275,000; jewelry, glass, china and those other items, $2,400,000; lighters, $100,000; matches, $300,000; motorcycles, $50,000; slot machines, $100,000; smokers' accessories, $150,000; soft drinks, $3,800,000; toilet articles, $2,800,000; carbonic acid gas, $100,000.


Daniel Roland Michener: Can the parliamentary assistant give an estimate for the whole resolution, if only approximate? There must be some estimate of it.


William Moore Benidickson: The major items are in paragraphs 1 and 2 and each amount to about $16 or $17 million, and I would suggest the average would run to about $36 million.


Daniel Roland Michener: That is true probably of the entire forecast?


William Moore Benidickson: Yes.
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William Earl Rowe: I would like to question the parliamentary assistant with regard to section (c) in paragraph 4 which deals with the deduction with regard to municipalities. It seems to me there are quite a number of conditions surrounding that expenditure in excess of $1,000 in regard to equipment used directly for road making, cleaning, or fire fighting, but not in the case of automobiles or ordinary motor trucks. As one looks at this amendment to the Excise Tax Act it seems to be somewhat of a gunshot prescription. There does not seem to be any particular justification for reductions on some articles while others are left as they were.
For instance, in this section we have a reduction on mink coats, fishing rods, and golf balls, but we have a limitation on the reduction as it affects municipalities which are hard-pressed at the moment. It appears to me as though the government is trying to do something for the municipalities and is then undoing it. Surely automobiles and ordinary trucks are used for fire fighting, road maintenance, road cleaning and so on. The hon. member for Peterborough has also raised the question of accessories on certain equipment used on the farm which is almost as important today as the tractor itself, and I am rather amazed that more consideration has not been given to such items.
This' is a very tardy way of handling tax reductions in any event. The entire tax reduction proposals are minor in character. In fact the government will be taking more from the people this year than they took last year while ordinary expenditures have increased. You cannot very well call it a substantial reduction in taxation if you merely take a little bit off mink coats, golf balls, fishing lines and a few other things and leave the same tax on the attachments to farming equipment. The farmer uses these attachments such as manure and gravel loaders, and they are as important as the tractor.
When we turn to the municipalities, on whose behalf we have been pressing for reductions for a long time, we find the government will allow them a reduction on anything over $1,000 but not in the case of ordinary motor trucks or automobiles where no reduction is allowed at all. I would submit, Mr. Chairman, that an ordinary motor truck is essential for fire fighting. It is essential for road cleaning and maintenance. I would like the parliamentary assistant to give us the reason why we have these fancy, delicate reductions in the case of luxury items while with other things which are an absolute necessity in carrying on municipal functions there has been no reduction at all.

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William Moore Benidickson: An attempt was made in taking this step for the first time to include a number of the more costly items on which municipalities obviously must spend a substantial amount of money. The question of exempting motor vehicles was certainly looked at but, on the other hand, it was felt that in the treatment of some of these major items of municipal equipment there was much greater likelihood that they would be subject to resale and trading and that would have a greater effect on the general automotive truck and automobile business.


William Earl Rowe: You mean up to $1,000?


William Moore Benidickson: No, over $1,000.


William Earl Rowe: But you mean there would be more trading up to $1,000?


William Moore Benidickson: An automobile would probably be put on the market again for resale much more readily than other things, particularly if it had a lower tax rate than was general within the community.


Mr. Zaplitny:: Mr. Chairman, on paragraph 4 I would like to draw the attention of the parliamentary assistant to a request made by the Canadian Federation of Agriculture to which I referred earlier in connection with stock feeds. Perhaps the best way in which I could do that would be to read the submissions of the federation which are contained in a brief submitted to the department. This is their statement:
In dealing with the Excise Tax Act, we requested that all materials used in the manufacture of stock feeds be made exempt from sales tax by adding the following item to the farm and forest section: "material to be used exclusively in the manufacture or production of poultry, cattle and other stock feeds" and that the following item be added to the tax exempt farm and forest list of schedule III of the act; "antibiotics and veterinary drugs."
Apparently nothing has been done in that direction as far as I can judge, and at this time I would ask the parliamentary assistant to bring this matter to the attention of the minister so that it might be given some consideration. Obviously we are not going to pass all these resolutions today. I would be quite happy to move an amendment in this regard, but, of course, it would be out of order under the rules of the committee so I will content myself with the hope that the minister will give that request consideration. In my estimation it is a reasonable and modest request and there seems to be no reason why materials used in the production of livestock should not be treated in the same manner as other farm equipment which goes into the cost of production. I hope the parliamentary assistant will give this matter some consideration.


William Moore Benidickson: Consideration will be given to the hon. member's remarks. I recall that he did refer to this brief in making his speech on the budget but I would draw to his attention the fact that under the schedule in the Excise Tax Act there are quite a number of categories given exemption and they include a long list of foodstuffs and a long list of farm products. In so far as stock feeds are concerned they are not subject to a sales tax, but it may be that certain items that are part of the mixture are themselves taxed because they have been manufactured somewhere else. Stock feed, which is the finished item, is a compound of the whole thing and not subject to tax.


Frederick Samuel Zaplitny: Of course that is a reference to the materials used in the manufacture of stock feeds, and is quite a different matter.


Gordon Knapman Fraser: Mr. Chairman, I would like to ask the parliamentary assistant a question. Section (h) of paragraph 2 mentions tires and tubes in whole or in part of rubber for self-propelled machines or automotive vehicles of all kinds. I suppose that includes bicycles. Could the minister tell us how many of those tires and tubes are imported? The reason I ask is that I was in a store last week and they did not have a Canadian tire in the place. They were all imported tires and it appears that they can get them cheaper than from Canadian manufacturers.


William Moore Benidickson: I have not got that figure for my hon. friend at the moment but I will make a note of his question and see that he is supplied with that information if it is possible to obtain it.


Mr. Charlton:: I would like to ask the
parliamentary assistant if the tires included in the purchase of a new car are exempt from this tax.


William Moore Benidickson: Yes.


John Alpheus Charlton: And when the manufacturer buys tires to put on combines or farm machinery or trucks does he get that exemption?


William Moore Benidickson: They are considered to be an accessory in the case of farm machinery and come under the general classification of, I believe, section 409 of the Customs Act which covers the free entry of farm implements.


William Earl Rowe: I should like to ask the parliamentary assistant a question. I did not quite clearly understand him when he mentioned the fact that bulldozers and road equipment

are exempt. It is understood that under paragraph 4, clause (c) to which I had referred, bulldozers and road equipment would be exempt from sales tax?


William Moore Benidickson: My hon. friend and I are really not referring to the same section. I think that in paragraph 4 (c) there is a list of equipment on which municipalities will no longer have to pay sales tax.


William Earl Rowe: Oh; I see.


William Moore Benidickson: The discussion in connection with bulldozers had reference to another item in this resolution.


William Earl Rowe: That is what I thought.


William Moore Benidickson: Bulldozers, if over $1,000 and purchased by a municipality, would not be subject to sales tax.


William Earl Rowe: For information purposes only may I ask this question? As to a bulldozer that is purchased for logging operations or for farm operations, is it exempt from taxation?


William Moore Benidickson: That is correct; in a
general way.


William Earl Rowe: In a general way?


William Moore Benidickson: As you know, there is the matter of from the stump to the common carrier; I think that is the general phrase used in logging operations.


William Earl Rowe: The tax is on for construction companies; on bulldozers purchased by these companies there is a tax but for a farm operation or for making bush roads and so on, bulldozers and other machinery are exempt, are they not?


Gordon Knapman Fraser: A bulldozer is not exempt on a farm.


William Earl Rowe: Maybe your farm does not need a bulldozer.


Gordon Knapman Fraser: Yes, it does. That is why I asked about hydraulic equipment.


William Moore Benidickson: No. I am informed that in the case of a logging operation-that is the pushing out of the road-the bulldozer would bear tax.


William Earl Rowe: It would bear tax?


William Moore Benidickson: Yes.


William Earl Rowe: Nearly all other types of logging equipment are exempt, are they not?


William Moore Benidickson: Yes; generally speaking. There is a classification like the farm implement classification.
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William Earl Rowe: In logging operations bulldozers are extremely important machines. Neither the provincial government nor the dominion government assists companies and loggers much in building roads which are helpful for fire fighting and are also absolutely necessary for the carrying on of their operations.
I might submit that I do not think there is any other item in logging operation equipment on which the exemption would be more greatly justified than it would be on the bulldozer. As the parliamentary assistant indicated a few minutes ago this afternoon, I realize that there has been a certain amount of caution and a certain amount of fear that some of these articles would be juggled, where advantage would be taken of the exemption and they might be resold or retraded. There may be administrative difficulties along that line but I wish to submit to the parliamentary assistant and his minister that serious consideration might be given to the exemption of bulldozers, machines which are of such great importance in production.
Again I want to emphasize the fact that it is highly desirable that roads should be built through the forests for the purpose of fire protection. I have often suggested that both provincial and dominion governments should co-operate to a greater extent with operators in order to get a better system of roads for fire protection and for the development of proper forestry through the various northern sections and areas that are not being operated effectively, in order to protect the trees from disease, fungi, fire and so on.
I just wish to draw this matter to the attention of the parliamentary assistant for his consideration. As everyone who is familiar with bush operations knows, in the matter of building roads a bulldozer is just about as essential as is any other implement in that field. I think some reconsideration might be given to this matter.


William Moore Benidickson: So far the exemption is limited just to the tractor portion of the equipment.


William Alfred Robinson: Shall the resolution carry?


Stanley Howard Knowles: Mr. Chairman, I have no objection to the resolution carrying today, if that is the wish of the committee; but there is one other subject that I want to say something about. However, I am prepared to do it on second reading of the bill. Since I have indicated that there is such a subject, perhaps I should let the parliamentary assistant know what it is so that whoever is piloting the bill through the house at the second-reading stage might be prepared to discuss it. I refer to the request of charitable

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organizations for a sales tax refund similar to that which is granted to hospitals. Whoever is sponsoring the bill on that occasion can find what we will probably say by looking at Hansard of March 31, 1953. There the parliamentary assistant will find that his colleague the hon. member for Spadina as well as the hon. member for Eglinton and I spoke on the question. I am sure that the other members to whom I have referred will agree with me that the time has come for something to be done in this connection. We shall have more to say about the matter later, in case it is the desire of the committee to pass this one resolution today.


William Earl Rowe: I do not want to hold the
resolution up, Mr. Chairman; but before it passes I should like to have some assurance that the parliamentary assistant and his minister might give some consideration to paragraph 4 (c) with reference to municipalities. I do not want to hold the resolution up beyond six o'clock, but I still feel we have not been given any real reason why the exemption is limited to articles whose price is over $1,000 or why a motor truck should not be included as a necessity for municipalities, for such purposes as road cleaning, road construction and so on. I cannot help thinking that the government might well have considered these articles and might not have so greatly restrained their reductions. As far as I am concerned, I will be satisfied if the minister would agree to give serious consideration again to that item. I do not want to hold up the resolution.


William Moore Benidickson: Fairly serious consideration has already been given but it certainly can be reconsidered between now and the time of bringing in the bill.


James MacKerras Macdonnell: I do not want to hold the resolution up either, Mr. Chairman, but I do not feel altogether happy about the answers we have been getting, as I understand it, as to why this reference in paragraph 4 (c) "in excess of one thousand dollars per unit" is necessary. As I understand it, the suggestion has been made that it would be easier, in respect of smaller items, to abuse the statute by dealing in them. Surely the municipalities have, first of all, some conscience and, in the second place, they have to keep records. I would think that one ought to be able to trust them. But in so far as you cannot trust them or if you are not prepared to operate on that basis, it should be remembered that they have records. It surely ought to be possible to have records. If the reason which has been given is the only one, I should like to ask whether the matter could not be reconsidered before this resolution passes. I do not want to be less reasonable than was my colleague the hon. member for Dufferin-Simcoe.


Some hon. Members:: Carried.


William Alfred Robinson: Shall the resolution carry?


James MacKerras Macdonnell: No; it is not carried.


William Alfred Robinson: Shall I rise, report progress and ask leave to sit again?


Some hon. Members:: Agreed.
Resolution stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Harris:: Mr. Chairman, tomorrow and Friday we shall take estimates, beginning with northern affairs, continuing with fisheries and then agriculture.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Thursday, May 6, 1954