1954-05-03

OLD AGE PAYMENTS


Mr. Castleden:: 1. How many citizens in Manitoba, 70 years ol age and over, receive old age security payments?
2.	How many citizens in Manitoba, 65 to 69, receive the old age pension?
3.	How many citizens in Manitoba, 70 and over, receive a supplementary allowance from the provincial government?
4. How many citizens in Manitoba, 65 to 69, receive a supplementary allowance from the provincial government?
5.	What is the total amount of the supplementary allowance paid by the provincial government of Manitoba?
6.	What is the total amount of the supplementary allowance paid by the provincial government of Manitoba in the 65 to 69 age group?


Mr. Marlin:: 1.	In February 1954-42,388.
2.	In February 1954-4,828.
3.	Supplementary allowances are not paid by the province of Manitoba to recipients either under the Old Age Security Act or under the Old Age Assistance Act.
4.	5 and 6. See answer to No. 3 above.



DEPARTMENT OF TRANSPORT EXPENDITURES, NOVA SCOTIA

Mr. Balcom:: What were the total expenditures by all branches of the Department of Transport in Nova Scotia, during the fiscal year 1952-53?
3.	What consideration has been given to such requests?
4.	Will such employees be put on the five-day 40-hour week at an early date? If so, at what date?
5.	If it has not yet been decided to put such employees on the five-day 40-hour week, will the matter be given further consideration?


Mr. Pickersgill:: 1 to 5. Stationary engineers and firemen employed by the federal government in the Ottawa area have not yet been accorded the five-day 40-hour week. Representations, however, have been received and the matter is being given consideration.



QUESTION PASSED AS ORDER FOR RETURN


Mr. Gagnon:: 1.	Has an application been received for the establishment of a French language television station for the Hull-Ottawa district?
2.	If so, has such application been accepted?
3.	Has it been rejected? If so, for what reason?
4.	What percentage of French programs are being broadcast by CBOT?
5.	What is the percentage of French-Canadian population in the Hull-Ottawa district?



DISABLED PERSONS


Hon. Paul Martin (Minister of National Health and Welfare) moved: that the house go into committee at the next sitting to consider the following resolution:


Mr. Langlois (Gaspe):: General	
Canals	
Marine	
Railways	
Air	
$	1,325.00
41,950.89 1,886,721.55 6,032,340.94 1,329,335.38
Grand total



$9,291,673.76 ENGINEERS AND FIREMEN, OTTAWA  40-HOUR WEEK

[Stage Direction]
That it is expedient to bring in a measure respecting allowances for disabled persons and to provide for the payment to the provinces out of the consolidated revenue fund of amounts in respect of allowances for disabled persons paid by the provinces, to certain persons who have attained the age of eighteen years, and who are totally and permanently disabled and in need of such allowances, not exceeding in respect of any recipient fifty per centum of forty dollars monthly or of the amount of the allowance paid by the provinces monthly to the recipients, whichever is the lesser; and to provide for the making of agreements with the provinces in relation thereto and for the conditions and duration of such agreements.
Mr. Knowles:: 1.	Have stationary engineers and firemen employed by the federal government in the Ottawa area yet been accorded the five-day 40-hour week?
2.	If not, have representations been received by the government requesting that such employees be accorded the five-day 40-hour week?
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the house.
Motion agreed to.
4324	HOUSE OF
Inquiries of the Ministry CANADIAN NATIONAL RAILWAYS



ST. FELICIEN AND HILLSPORT LINES-PROVISION FOR FINANCING

Hon. Lionel Chevrier (Minister of Transport) moved: that the house go into committee at the next sitting to consider the following resolution:
That It Is expedient to present a measure conferring authority upon the governor in council to authorize the Canadian National Railway Company to construct lines of railway from St. Felicien to Chibougamau and from Chibougamau to Beatty-ville, all in the province of Quebec, and from Hillsport on the main line of the Canadian National Railways to Manitouwadge Lake, both in the province of Ontario, being on the whole approximately 321 miles at a total estimated expenditure of $38,750,000. The measure will make provision for the issue by the company of securities, which may be guaranteed by the government in respect of the cost of construction. To enable the company to proceed with construction forthwith, temporary loans may be made to the company out of the consolidated revenue fund, upon terms and conditions prescribed by the governor in council and secured by company securities.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. D. S. Harkness (Calgary North):: Mr. Speaker, I should like to ask a question of the Minister of Veterans Affairs. Is it the intention of the government to set up a committee on veterans affairs, the resolution providing for which has now been on the order paper nearly three months?


Hon. Hugues Lapoinie (Minister of Veterans Affairs):: I should think the motion would be moved at a very early date-probably immediately after the debate on the budget.



REQUEST FOR STATEMENT ON INITIAL PRICE

[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: Mr. Speaker,
I should like to ask a question of the Minister of Trade and Commerce. Would the minister say whether an early announcement will be made as to the 1954 initial price for grain, so that farmers can plan to better advantage for the current season of operations?


Right Hon. C. D. Howe (Minisier of Trade and Commerce):: It will not be possible to make an early announcement regarding the initial price. There are too many factors that are obscure at the moment that will be much


more clearly defined later in the season. The announcement will certainly be made before the end of the crop year, but not much before then.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. F. D. Shaw (Red Deer):: I should like to direct a question to the Associate Minister of National Defence, notice of which has been given. Has the investigation into the fire which occurred at the Penhold air station on April 10 been concluded and, if so, will the report be tabled in the House of Commons or otherwise made available to members of parliament?


Hon. R. O. Campney (Associate Minisier of National Defence):: The fire occurred at Pen-hold on April 10. Immediately thereafter a Royal Canadian Air Force board of inquiry was set up to investigate the circumstances of the fire. I am informed that the board completed its investigation late last week and that the proceedings are either in transit or about to be forwarded to Ottawa. I think it is a well-established practice that reports of service boards of inquiry investigating service matters go to the minister for his information and guidance and that of officials of the department. It has never been the practice in this house to table such reports. I shall, however, be glad to give the hon. member any information I can as soon as I myself am in possession of all the relevant facts.



ATOMIC ENERGY


[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinton):: May I
direct a question to the Minister of Trade and Commerce? Is it the practice of the government of the United Kingdom to share with or impart to the Canadian government any of the information of the United Kingdom with respect to atomic or hydrogen bombs? If so, is the minister in a position to comment on a press report in today's newspapers that the British government has a cheaper and more effective hydrogen bomb than the government of the United States?


Clarence Decatur Howe: There is complete exchange of information with the British government on matters with which the Canadian government is concerned; but the Canadian government is not manufacturing bombs, and therefore we have no information to exchange

with Britain on that subject, and we receive no information from Britain on the subject.



THE BUDGET


[Stage Direction]
The house resumed, from Wednesday, April 28, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
(Translation):
Mr. Robert Perron (Dorchester):: Mr. Speaker, when one addresses the house for the first time in the course of a debate such as this, it is somewhat customary, I believe, to say a few words about one's own constituency. I therefore would like, at the outset, to recall certain political memories concerning the county of Dorchester and the men who have represented it here in this house.
I would like, in particular, Mr. Speaker, to remind you that in 1916 the member for Dorchester was holding the office you are performing today with such dignity. I refer to the Hon. Albert Sevigny who presided over these debates also with great dignity. The Hon. Mr. Sevigny later became a minister in the Borden cabinet, and, had it not been for certain circumstances which are of little interest today, would still be, I believe, the member for Dorchester. Mr. Sevigny is now chief justice of the Superior Court of the province of Quebec over which he presides with the dignity and legal experience which are so well known to all.
The Hon. Lucien Cannon, who was the uncle of the present representative of the Iles-de-la-Madeleine (Mr. Cannon), then represented the constituency of Dorchester for about 12 years. He was solicitor general in the Mackenzie King administration. Nobody has forgotten what an able speaker this former member for Dorchester was. I must admit, for my part, that this speaking ability was, to me, a source of the greatest enjoyment when I was still a young man. Later on, the Hon. Mr. Cannon was appointed to the Quebec superior court. His untimely death was a great loss to the bench, among whose most enlightened members he was.
Dorchester also had the privilege of being represented here by one of its native sons, the Hon. Onesime Gagnon, who was a minister in the Bennett cabinet and who is now provincial minister of finance in Quebec. He administers this important department with the same competence, devotion to work and selflessness that he had shown when he sat here.
The Budget-Mr. Perron
And what can we say of my immediate predecessor, the Hon. Leonard Tremblay, who now sits in the Senate, but who represented Dorchester for 18 years. It is always a difficult and delicate thing in circumstances such as these, especially when dealing with political opponents, to speak on topical matters, before the passage of time has completely eliminated all friction. So I shall say about Senator Tremblay, to parody a famous statement: "He did me too much wrong for me to speak well of him, but he did too much good for me to speak ill of him." However I should like to congratulate the government on having appointed him a senator, for he had served his party well and that will enable him to keep on living in the political atmosphere which has always been so dear to him.
Mr. Speaker, need I add that, as a rule, the member for Dorchester is elected with a small majority and that the present member was no exception to the general rule at the last elections. May I say, also, that Dorchester is on the opposition side for the first time. Here, I must confess that it was the other Quebec ridings that were at fault.
Mr. Speaker, I want to deal with two questions of special importance for the province of Quebec, but which have repercussions throughout Canada.
In the first place, I wish to speak to the resolution submitted by the hon. Minister of Finance (Mr. Abbott) amending the Income Tax Act with regard to mutual insurance companies other than mutual life companies.
(Text):


Mr. Speaker:: Order. I am sorry to interrupt the hon. member, but the constant buzzing that I hear here is most annoying. I cannot hear the hon. member who is speaking; there is too much competition with his voice.
(Translation):


Robert Perron: Secondly, I want to discuss federal-provincial relations, particularly as far as the provincial tax just introduced by the government of Quebec is concerned.
Mr. Speaker, resolution No. 6 of the budget speech, which relates to the taxation of mutual insurance companies and appears on page 3736 of Hansard of April 6, 1954, reads as follows:
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
6.	For the taxation of a resident mutual insurance corporation, other than a life insurance corporation, as though the surplus arising from its insurance activities on and after January 1, 1954 were a profit from a business, and declaring that a

The Budget-Mr. Perron non-resident mutual insurance corporation, other than a life insurance corporation, shall be deemed to be and always to have been subject to taxation on that basis.
Thus the government has decided to tax the income of mutual insurance companies, including mutual fire insurance companies. The government has resolved to put an end to a struggle that has been going on for many years and in which it has never come out on top. In fact, following an investigation by a commission appointed by the government to determine whether co-operatives should be taxable, the commission came to the conclusion that some mutual fire insurance companies should not be taxed. Later on, the Supreme Court of Canada gave a decision along the same line. And these conclusions are quite logical.
The one aim of many mutual fire insurance companies is to help their members in the event of some disaster. They sprang from a charitable purpose. At first, when a farmer lost his farm buildings or his house by fire, the parishioners organized a subscription to compensate him for his loss. Then, it was found more practical and easier to create a relief fund based on yearly contributions. This fund was used to compensate the victims of disasters. In this way there was less delay. There is no question of profits. Those who look after the administration and development of these mutual fire insurance companies give their time voluntarily or almost free of charge and their zeal should not be taxed. There are no dividends, as all profits are turned back into the relief fund. Moreover, it is recognized in the amendment that it cannot be considered as commercial operations or profits, since the law says that the revenue is taxable "as though it were a profit from a business". It is thus recognized that no profits are involved. Moreover, the government commission and the Supreme Court held these same views since they stated in their conclusions that these are co-operatives without capital stock, without dividends, without refunds, and which have been established for the sole purpose of helping their members.
Mr. Speaker, this amendment, in my opinion, is a denial of justice because it is retroactive and makes subject to taxation organizations which, the Supreme Court has ruled, should not be taxed. If, in a given year, there is no fire, the treasury will have the same devastating effect as fire on the finances of these mutual companies.
I am therefore asking the minister to modify this amendment which affects at least


300 mutual fire insurance companies operating in the rural parishes of Quebec and which has created quite a commotion among their 60,000 members. This tax affects the very existence of these mutual companies which are necessary institutions and whose value is beyond doubt. I therefore ask the government to abide by the decisions of the Supreme Court and of the royal commission.
Mr. Speaker, may I be permitted now to broach a question of current interest, which concerns the right of the taxpayers from Quebec to demand that the federal government deduct from their federal income tax the amount which they are called upon to pay under the provincial income tax act. It is a hot issue in that province at the present time, especially since the Minister of Finance rejected the Quebec taxpayers' request.
It is only in this house that there seems to be any argument about the question. In the province concerned, all the people, regardless of political affiliation, unanimously recognize the fact that the federal government has absolutely no grounds to refuse a deduction based upon the most elementary justice.
All the newspapers, French or English, even those which, usually, support the Liberal party, have declared that the federal government was under the obligation to grant such a deduction and for my part I have seen no article in any paper, whatever its political colour or creed, defending the stand taken by the Minister of Finance.
Municipalities, chambers of commerce, labour unions, and a great many public organizations, associations or corporations have made representations and been unanimous in asking for such a deduction.
Opinion has never been so unanimous throughout the province. It is perfectly synchronized; the only false notes have come from the supporters of the government representing Quebec constituencies.
I admit that I find this rather strange and difficult to understand. However, we must recognize that the arguments advanced until now lacked the firmness and conviction usually shown on the other side of the house. Those arguments do not seem to have converted many people in the province of Quebec. Those arguments smell of oil, as Boileau would put it, and in reading them or listening to them one has the impression that they are the result of long sleepless nights.
Mr. Speaker, everything has been said on this matter during the past two months and

In saying that, I do not think that they endangered national unity. Let me quote what Sir Wilfrid Laurier said:
It is a completely false principle which permits one government to receive revenues and another to spend the money; that will always lead to wastefulness.
People have not been up in arms as a result of that statement, so far as I know. On the contrary, I believe everyone applauded it. Today, it is exactly the same thing as we must decide whether the province of Quebec shall or shall not rely on subsidies. In my opinion, we should not worry about national unity, even if some hon. members seem to worry about the Union Nationale.
Quebec has always generously contributed to the assistance given less privileged provinces. She has done so since 1945 without demanding any compensation, while other provinces have received subsidies; Quebec has thereby contributed more than any other province of our confederation to the maintenance of Canada's economic stability. It is not because Quebec wants to avail herself of a right that this economic equilibrium will be disrupted. The people of Quebec understand that they are citizens of a great country and they want to keep on contributing to its development and greatness. In return, they have the right to demand firmly what is rightly theirs. It would only be an act of distributive justice to accede to their request.
Before concluding my remarks, I wish to say that I am proud of my party's stand on this matter. In demanding that we respect the pact which brought about confederation, the Conservative party follows the tradition of its great leaders, Sir George Etienne Cartier and Sir John Macdonald. I am all the more happy at the stand taken by my party that it was the very stand taken by such great Liberal leaders as Laurier, Mackenzie King, Taschereau, Lapointe, and others, during more than half a century. The Liberal party is shunning its past in favour of a centralization which is the very negation of the principle embodied in the constitution, and such centralization is bound to have evil consequences on Canadian politics. Fortunately, we are in a position to foresee that the Conservative party, which was responsible for confederation, will be one day entrusted by the Canadian people with the task of stemming the tide of centralization and of rebuilding that which will have been destroyed.
Because of the importance of this question of personal income tax, and because this government has turned down the Quebec

taxpayers' request, I take the liberty, Mr. Speaker, before resuming my seat, of appealing from this decision to the Prime Minister himself. I do so on behalf of 300,000 taxpayers and in the very name of justice, placing this question outside and above the realm of political partisanship.
(Text):


Mr. W. Ross Thatcher (Moose Jaw-Lake Centre):: Mr. Speaker, I should like to say a few words on this legislation before it is passed. I assume that this will be the last budget the Minister of Finance (Mr. Abbott) will bring down. I hope to spend about 30 minutes telling him what I do not like about his current effort. Nevertheless, I think I should say in passing that I am sure history will record that the Minister of Finance has done a first-class job in the years during which he has been Minister of Finance.
Now, Mr. Speaker, in analysing this current budget, one fact very quickly emerges. Nine years after the war, at a time when most Canadians are tired and weary of heavy federal taxation, the government once again is providing little or no tax relief. The concessions offered by the minister in his speech before Easter amounted only to about $40 million. If we work that amount out on a per capita basis, it means that the average Canadian this year will receive tax relief of only about $2.67 each. Surely hon. members will admit that this reduction is trifling and insignificant.
During the coming year the minister is proposing to take the staggering sum of $4,460 million from the pockets of the Canadian people. I believe this total is about $60 million more than he took from them last year. I am convinced, Mr. Speaker, that our present tax burden is already adversely affecting the Canadian economy, particularly in the fields of employment and trade. In the first place, of course, it is obvious that high taxes blunt incentive and discourage initiative. Today it is also obvious that federal taxation is lowering consumer purchasing power in the domestic market. Very substantial sums which the average Canadian might otherwise spend to build a house, buy an automobile, or purchase farm machinery, are being siphoned off in high taxes. The resulting reduction in the demand for goods is reflected in many Canadian cities today in reduced demand for labour.
In the third place, I think that even the Minister of Finance (Mr. Abbott) would have to admit that our present tax level is hurting our investment program in new plant and new equipment. I think we would have been in trouble several years ago had it not
The Budget-Mr. Thatcher been for the heavy influx of United States capital. Personally I have always believed -and I believe today-that, where taxation is concerned, there is a point of diminishing returns. When that point has been exceeded, individual and corporate saving is hindered, and the creation of new jobs is jeopardized.
Finally, Mr. Speaker, I contend that our present tax rate in Canada is helping to force up the Canadian cost structure. Many authorities tell us that Canadian prices are among the highest in the world. We are being undersold in both the domestic and the export market in many instances. We are being undersold despite our modern factories, despite our proximity to natural resources, and despite our technical knowledge. I contend that one of the reasons we are being undersold, is the heavy federal tax burden which is imposed upon Canadian producers. During the past winter Canada experienced a mild but very definite economic recession. At one time we had more than 540,000 persons unemployed. That was a greater number unemployed than Great Britain had in the same period. In proportion to population, I think it was a greater number of unemployed than the United States had. Yet, in this budget, the government has taken virtually no steps to deal with the problem of unemployment.
I believe that the primary aim of this budget should be to check the present mild recession in Canada before it becomes really serious. The government should adopt fiscal policies which would make the economic climate more favourable for individuals and for business to expand, thus indirectly creating a greater demand for labour. As I see it, the first step in promoting such expansion should be a sharp reduction in federal taxation. The minister argues that if he cut taxes, he would lose revenue that he needs. In taking such a position it seems to me that he is failing to grapple with the basic problem involved. I contend that he could reduce taxation yet still balance his budget, if he would curtail relatively unnecessary expenditures, and if he would eliminate waste, extravagance and duplication in government services. Surely a dollar saved by economy means just as much to the federal treasury as does a dollar collected in taxes.
In his budget speech the minister admonished Canadian industry to eliminate waste and to cut expenses. I think that Canadian business would take that advice more to heart, Mr. Speaker, if the minister and his colleagues had themselves been setting a better example in conducting the biggest business in the country, which is the federal

The Budget-Mr. Thatcher government. In his speech before Easter the minister gave no assurance whatever to the people of Canada that he planned to be more thrifty. Not a word was spoken, nor a promise given, concerning the elimination of waste or the reduction of costs in government. I remind the Minister of Finance of the old adage, that actions speak louder than words. I think his advice would be more effective if he practised what he preached. In his budget speech of a year ago about the main contribution he made with regard to saving was this, and I quote from page 2121 of Hansard of 1953:
We are, for example, this year inaugurating a suggestion awards plan in the civil service which we are confident will, over the course of time, result in many major and minor improvements in efficiency of operation . . .
What saving has the plan produced? I quote from Hansard of December 9, 1953 at page 735:
Approximately 30 suggestions have been implemented which will result in an estimated savings of $6,500 for the first year each actual suggestion in efficiency of operation . . .
I think savings of that kind are rather paltry. It seems to me, Mr. Speaker, that in this house the word "economy" is like a foreign language. If you mention it too often, you are likely to get into trouble. Yet if we are going to have real tax reductions in the near future I think something must be done to cut federal expenditures.
Time and again the Minister of Finance has suggested to opposition members that they should be specific, and that they should try to pinpoint places where they think savings could be made. I have gone over the estimates this year, as I have gone over them in the past. I shall try to make specific suggestions again this afternoon, even though I know many hon. members may not agree with what I have to say. I should like to make a few proposals to the minister for his consideration.
My first specific suggestion has to do with the Canadian National Railways. According to a report which was recently carried by the Montreal Star and other papers, the C.N.R. is proposing this year to build a 1,000-room hotel in the city of Montreal. The new building is to be a luxury hotel which will accommodate 2,500 people at banquets and 4,000 people at conventions. The president of the C.N.R, is not proposing to build this hotel out of revenue. Rather he is coming once again to the taxpayers of Canada for another handout. I suggest that there are certain reasons why this handout should not be forthcoming.
Two years ago parliament approved a reorganization of the capital stock of the


C.N.R. That reorganization had the net effect of wiping out approximately $1 billion in liabilities and substituted therefor noninterest bearing stock. At that time we were given the assurance that, if the reorganization went through, the profit and loss picture of the C.N.R. would be greatly improved. To a degree it has improved. Nevertheless, despite the reorganization, and despite the fact that the C.N.R. has literally billions of dollars invested, in 1952 it was able to show a profit of only $142,000 and in 1953 of only $244,000. A few weeks ago, when appearing before a parliamentary committee, President Gordon told that committee that he expected the railroad this year would once again be deeply in the red.
Perhaps I do not know very much about business, but it seems to me that it is not sound business practice for a company to indulge in luxury expenditures at a time when it has a substantial deficit. I think this should be particularly true with regard to the C.N.R., when we look at the past record of their hotel system. The profit and loss picture of the hotel system has never been particularly good. One of the best years was 1952. In that year, with an investment of $31-5 million, the hotel system showed a profit of $535,000. But even that profit was only a bookkeeping profit, as the annual statement points out, because adequate depreciation reserves were not set up. Yet despite the past history of the hotel system, Mr. Gordon now comes before parliament and suggests that the taxpayers should spend another $20 million on another hotel. How are we to know that this building might not be another white elephant? I want to tell the Minister of Finance (Mr. Abbott) that in my opinion the people of Canada are most willing to finance capital expenditures for the C.N.R. if or when they are opening up and developing the country. Such a policy is sensible and logical in a country like Canada. But I do not believe that the building of a luxury hotel any place in Canada falls within that category of expenditure. When Mr. Gordon can show a substantial profit for the C.N.R. let him come to parliament and propose to spend that profit any way he wishes. If he wants to build a hotel, that will be his business; but until the time comes when he can build it out of revenue it seems to me that such an expenditure should be struck from the estimates.


Mr. Abbott:: It is not in the estimates.


Wilbert Ross Thatcher: I would refer hon. members to vote 179 in the estimates of the Department of Labour.


Douglas Charles Abbott: What is the number of the vote for the C.N.R.?


Wilbert Ross Thatcher: I am sorry, but I have not the number available offhand.


Douglas Charles Abbott: The reason I ask is that there is no vote.


Wilbert Ross Thatcher: It is an expenditure which is being proposed in any event for the current year.


Douglas Charles Abbott: Not by the government.


Wilbert Ross Thatcher: What is the difference? The C.N.R. is owned by the government. I would refer the house next to item 179 of the estimates of the Department of Labour. This item proposes the expenditure of just under $1 million for the administration of the annuities act. In addition to the amount for administrative costs, a sum of $1 million is also being sought in order to keep the fund on a sound actuarial basis. The original purpose of the annuities act was to permit people of moderate means to make provision for their old age. Even with the advent of a better old age pension scheme I think there is a place for the annuities act in our overall system of social security. On the other hand, I cannot convince myself-and I am speaking only for myself-that it is sound or sensible to sell federal government annuities at less than cost.
Since the inception of this legislation the taxpayers have been forced to bear costs in the neighbourhood of $33 million. I strongly believe that when government annuities are sold, the premiums should be sufficient (1) to carry the administrative costs and (2) to keep the fund sound. I think that annuities could still be sold at prices which would be most competitive and considerably under the prices that insurance companies charge for similar kinds of policies. I emphasize that I think the annuities act is a useful piece of legislation, but I urge the government to save roughly $2 million annually by making operations under the act self-sustaining.


Mr. Gregg:: Before my hon. friend goes on to something else, may I be permitted to ask a question? May I ask if his remarks regarding annuities represent the present policy of his party?


Wilbert Ross Thatcher: I thought I made that very clear. I said that I was speaking personally. I am quite sure that the leader of this group and probably certain others do not feel as I do, but I still think it is a matter which, as a member of parliament, I should discuss. I trust I have made myself clear.
Item 98 in the estimates of the Department of External Affairs calls for an expenditure of $200,000 for the international civil aviation organization. The purpose of the vote
The Budget-Mr. Thatcher is to provide the organization with rental charges at less than commercial rates. When the vote was originally authorized in 1950 the amount was only $64,000, but the amount has been increasing each year. Up to the start of the present fiscal year the taxpayers have subsidized the organization to a total of $310,000. May I say at once that I think Canadians are most happy to have the headquarters of the organization in Canada but, speaking for myself, I can see no reason why the organization, like Canadian organizations, should not pay its own rent. I believe that the subsidy of $200,000 should be discontinued.
I draw the attention of the house to items 53 and 54 of the estimates which call for the expenditure of approximately $2,400,000 for the overseas shortwave broadcasting service. I remind the house that this service was originally inaugurated during the war, and my understanding is, that its main purpose was to keep in contact with our troops overseas. When our troops came home, there was of course no need for this type of communication. It is quite true that the broadcasts have some propaganda value overseas but I do not think that the costs, which have been increasing year by year, are anywhere in line with the value received by the Canadian taxpayer. The elimination of this expenditure could save the taxpayer $2,400,000.
In the fifth place, I think that a good deal of money could be saved by the elimination of duplication in various government departments. I believe, rightly or wrongly, that since coming to Ottawa I have seen overlapping which no business firm could afford. I should like to give the house an example of what I have in mind. I would refer hon. members to sessional paper 161-A. That return shows that in the city of Ottawa alone, the federal government today maintains forty-five separate and distinct libraries, at a total cost to the taxpayers of $750,000. The Department of Justice has three separate libraries. The Department of Mines and Technical Surveys has four separate libraries. The Department of National Defence has seven separate libraries in the Ottawa area alone. The Department of Northern Affairs and National Resources maintains five separate libraries. The Department of the Secretary of State contains two, the Department of National Revenue has two, and so on.
In addition to the libraries operated by the different government departments, there are those in such agencies as the national film board, the civil service commission, the public archives, the R.C.M.P., Central Mortgage and Housing Corporation and so on. I simply cannot believe that so many libraries do not represent duplication. I

The Budget-Mr. Thatcher suggest to the Minister of Finance that if he would consolidate them he could probably save in the neighbourhood of $250,000. I suggest also that the example of libraries is only typical. It seems to me that the government is riddled with similar types of duplication in government departments.
I should like to refer now to sessional paper 120-B which was tabled for me earlier this session. This sessional paper shows that in the past year, the atomic energy control board made two grants at Deep River for the building of churches. The first grant was for $75,000 and was made to St. Alexander's parish church, a Roman Catholic church. The second grant of $142,000 was made to the community church, a Protestant church. Both churches were fairly elaborate in their construction. I should like to quote from the Ottawa valley Ensign of November 21, 1953, which contains a report of the proceedings at the laying of the cornerstone of the Roman Catholic church. The paragraph reads as follows:
The future church, an apricot brick structure, will feature tinted glass windows, a bell tower displaying a 60-foot high spire, laminated wood trusses of Gothic design in the interior, and a baptistry directly below the bell tower.
In other words, it is a fairly luxurious church, and obviously the Protestant church is even more so because almost double the amount of money has been spent on it. I take exception to these grants for two main reasons. In the first place, as far as I can find-and I am subject to correction if I am wrong-these items were not in the estimates. If they were, they were certainly well hidden, and I do not think parliament discussed the expenditures before they were made. In the second place, I object to expenditures of this kind because in my constituency, and I think in other constituencies in Canada, the people themselves contribute towards the building of churches. It seems to me that this expenditure singles out one separate community for special treatment. I do not think it is fair that people elsewhere in Canada should have to contribute taxes to build a church in any community, and I hope that expenditures of this nature will not happen again.
Item 76 in the estimates proposes to provide $130,000 for a number of paintings for the national gallery. This is in addition to the expenditure of $350,000 made late in March for that same purpose. Personally, I cannot become too enthused about expenditures of this kind. It seems to me that in this period of heavy federal taxation some kind of limit should be put on them. I suggest that, at the very outside, the national gallery should spend in any one year no


more than $150,000. If that had been done this year the taxpayers could have been saved $330,000.
In the seventh place, I think one of the very foolish expenditures, if I may call it that, was connected with the government's decision this year to move the film board down to the city of Montreal. My understanding is that by the time that palatial home is completed, and by the time a staff of 475 and their families are transferred, the taxpayers will be out between $6 million and $7 million. I guess it is too late to do anything about it; but if it were possible I would certainly suggest to the Minister of Finance (Mr. Abbott) that he could save that $7 million very easily by leaving the board in Ottawa, without the service being impaired.
In the eighth place, I feel impelled to say a few words about the civil service. And I want to emphasize, as I did when the Minister of Labour (Mr. Gregg) queried me, that I am only speaking personally, and not for this group. However, as elected representatives I think it is our duty from time to time to go over the payroll of the civil service. Now, it is a fact that in recent years our civil service numbers have been increasing very rapidly. I would remind the house that at the outbreak of war in 1939, Canada had a civil service that, in all, totalled 46,106 persons. During the height of the war, when we had such organizations as the wartime prices and trade board, rationing boards and the like, our civil service was only 115,000 persons. By 1950 it had moved up to 125,000; and according to a parliamentary return, at the beginning of this year our civil service numbered 135,000. If you add casual employees, the Royal Canadian Mounted Police, commission employees, and ships' crews to our civil service, then at the start of the year it numbered 172,000. And that figure still did not include the 152,000 who were employed in government corporations and agencies.
Now, it is quite true that Canada has grown mightily in wealth and in resources since 1939. But I find it rather hard to understand why, with a population increase of 40 per cent since 1939, our civil service should have almost tripled in number. I think our record in this regard should be examined all the more carefully when we compare what 'has been happening in Canada with what has been happening in the United States and Great Britain. From October 1952 to October 1953 in the United States, under the Eisenhower administration, the civil service was reduced by 197,000 employees or 10 per cent.

Last year Prime Minister Churchill was able to reduce the civil service in Great Britain by 20,000.
Now, in view of those figures many taxpayers throughout Canada are wondering if it is really necessary for our civil service to continue to grow and grow. Today in Ottawa scarcely a week goes by when some new board or commission is not set up. And when a new office is set up it must have a new staff. My experience has been-and I am speaking generally-that when a board is disbanded, usually the employees who were working for it are simply sent over to some other branch of the civil service. Over the years, that kind of policy cannot help but tend to impair efficiency.
I am speaking subject to correction, of course, but as I see this problem there are some departments which have superfluous civil servants. I shall give one specific example to the Minister of Finance, in the hope that he might examine it. This has to do with the office of the deputy minister of national defence. In 1944, at the height of the war, the combined offices of the deputy ministers of air, army and navy had a staff of 98. In 1946 there were only 77. But today, according to a parliamentary return tabled earlier in the house, Mr. Drury's office has 114. There may be a reason for the expansion; but on the surface, at least, it looks to me as though there might 'be something out of line. I feel that the number of government employees could be reduced without impairing efficiency. I am not suggesting that the government should commence any large-scale program of dismissals. I know that such a program would not be feasible, nor would it be desirable. But I do suggest that, generally speaking, the numbers of the civil service should be frozen at the present level, even though a few exceptions might have to be made. I think a sharp reduction could be accomplished if vacancies in the future were not filled by new appointments, but rather were filled by a reshuffling of existing personnel. If treasury board should see fit to indulge in such an economy drive, I believe the taxpayers of Canada in the coming year could save $30 million or $40 million.
My ninth suggestion has to do with item 283 of the estimates, and the subject of national fitness, which comes under the Department of National Health and Welfare. I I am pleased to see that there is an expenditure this year of only $78,000. This expenditure has been reduced by about $125,000 annually over the last several years. But I still do not think we have done quite well enough. When this legislation was inaugurated during the
The Budget-Mr. Thatcher war, it was for the purpose of co-ordinating physical fitness programs among the various provinces. Actually, while it has done a certain amount of good in distributing literature, and the like, by and large the program has been a disappointment. In the first place, two provinces did not come into it at all; and in the second place the division which was supposed to be interested chiefly in physical education has, in later years, become mainly interested in adult education, including such things as the drama. I do not think the taxpayers are getting value for their money and I suggest the item should be deleted from the estimates.


Paul Joseph James Martin: Perhaps you and I are in agreement.


Wilbert Ross Thatcher: I hope so, Mr. Minister.
I refer next to the estimates of the Post Office Department. Hon. members will recall that early last year the department had the firm of J. D. Woods and Gordon Limited come in to do an examination to see whether greater efficiency was possible. One of the major recommendations of the company was that the post office savings branch should be discontinued. Company officials claimed a saving of $377,000 could be made. I am aware of the reasons given by the Postmaster General (Mr. Cote) as to why he did not think this was a logical saving. Nevertheless I would like to see the matter re-examined. I think there was merit in the Woods and Gordon suggestion.
In the eleventh place I would refer to item 251 in the estimates, which has to do with sick mariners' treatment service. Since confederation the treatment of sick mariners on a prepaid basis has been provided at Canadian ports. Under the Canada Shipping Act tonnage duties are levied against ships using this service to offset the cost of providing the treatment.
In the year 1952-53, according to the public accounts, 20,000 Canadians were treated under the provisions of the act and 89,000 foreign seamen. That year the cost of the service to the taxpayer was $588,000. Yet, the revenue collected on duties was only $340,000, or a net loss of about $250,000. Perhaps there are reasons why my suggestion would not be feasible, but it seems to me that it would be logical to increase the duties which are charged for this service until they cover the cost. If that could be done I suggest that the taxpayer could be saved in the neighbourhood of $250,000 a year.


Paul Joseph James Martin: Would the hon. member
recommend that that be done?


Wilbert Ross Thatcher: It looks logical to me; if it is not, I would be glad to hear from the minister.

The Budget


Mr.   ThatcherMr. Martin@: I would be very glad to have that question put.


Wilbert Ross Thatcher: I remind the minister and the house that 80 per cent of the service is provided to foreign seamen rather than to Canadians.
A saving which I mentioned a year ago had to do with the printing of government pamphlets, bulletins and publications, which seem to me to be of little value to the taxpayers. In the year that has gone by I do not think very much has been done to curtail those unnecessary expenditures. I hold in my hand the annual catalogue which is put out by the queen's printer. It is headed: "Canadian Government Publications." As one looks through the publication, he cannot help but be appalled at some of the things on which the government is spending money to have printed. I recall the hon. member for Notre Dame de Grace (Mr. Hamilton) pointing out some of these pamphlets. For instance, on page 213 I find one having to do with the "Cruising speed of goldfish in relation to water temperature". On page 215 I find that a bulletin is put out by the government on "The effect of fin clipping on the cruising speed of goldfish." I question the value to the taxpayers of bulletins such as these. On page 444 I find a bulletin listed on "Land snails from the Canadian Rockies"; another one, "Some shell heaps in Nova Scotia". On page 446 I find listed: "Dinosaur tracks from Peace river". On page 447 "Hooded Hadro-saurs of the Belly river series of the Upper Cretaceous".


Mr. McCann:: Is there anything funny there about Moose Jaw?


Wilbert Ross Thatcher: I have not been able to find it. If you know anything, I would be glad to mention it.
On page 451 I find this publication listed: "The lizard Chamops from the Wapiti Formation of Northern Alberta"; on page 453: "The Inviting-in-Feast of the Alaska Eskimo"; on page 454: "Abnormal Types of Speech in Nootka". One can go on page after page-


John Whitney Pickersgill: May I ask the hon. member a question? Is it not true that all the publications he has mentioned are merely reprints of relatively short learned articles which appeared in publications that have to be published anyway, and that they bring in a little extra revenue by being separated from the publications in which they appear?


Douglas Charles Abbott: He would not know.


Wilbert Ross Thatcher: That is a true statement; I would not know.


John Whitney Pickersgill: Perhaps it would be a good idea to find out first.
[Mr. Thatch.er.1


Wilbert Ross Thatcher: I think every hon. member would agree that hardly a week goes by that 25 or 30 pamphlets published by some government branch or bureau do not come into our offices and are consigned to the waste-paper basket. Some of them undoubtedly have value, but I am not going-


John Whitney Pickersgill: If I may interrupt the hon. member again, I wonder whether he would in the next month send me all the publications that he receives from the printing bureau or from any government department that he would otherwise consign to his wastepaper basket? I would like to have them.


Wilbert Ross Thatcher: I will do better than that.
I will give the minister a list of all those in this book, which will speak for itself.


John Whitney Pickersgill: No, I would much prefer to have those that come to the hon. member's desk.


Wilbert Ross Thatcher: I will do that if the minister will do one thing for me. If he or the Minister of Finance will have the queen's printer assemble in the railway committee room every pamphlet, bulletin, etc., published by the government in the past year, for examination by members, I will accept his suggestion. If he did that, even he and the Minister of Finance would be surprised at the waste.
I still contend that the taxpayers could be saved several millions of dollars if some of these unnecessary pamphlets and bulletins were not printed.
Finally, Mr. Speaker, I regret that the government still has not seen fit to set up a central purchasing agency to purchase supplies and materials for the crown. Today there are dozens of different branches that are making purchases for the crown. Sometimes these branches are actually competing against each other. I doubt whether there is a single large company in the Dominion of Canada which has not a central purchasing department. Out in the province of Saskatchewan we tried it some years ago, and the provincial minister tells me that he has been able to effect a good many economies through bulk buying. A central purchasing agency of the federal government could effect very substantial economies by taking advantage of maximum quantity discounts through bulk buying. I can only guess, but I would estimate that about $10 million could be saved in a year if the minister wanted to carry out this suggestion.
I know that I have only touched on the problem of saving very superficially. Nevertheless at least it gives some indication of what I have in mind, and I suggest that if

some of the economies which I have mentioned today were put into effect a minimum of $75 million could be saved. At the same time, I also realize that if we are to make major economies it will have to come from the Department of National Defence.
I am not going into the Department of National Defence in detail but events have transpired in the last year which make me wonder whether it would not be possible to have modest defence cuts. In the first place, the shooting war in Korea has ended; and it would seem that the international situation has bettered somewhat. During the past year President Eisenhower, who is perhaps one of the greatest military men living, has seen fit to ask the United States government to carry out cuts of 10 per cent in defence expenditures, and now he is aiming for a 15 per cent cut. Prime Minister Churchill tried to effect a similar reduction in Great Britain. The Australian government is trying to cut defence expenditures by 8 per cent.
In recent months I believe the construction of airport buildings, military buildings and the like, has pretty well neared completion. Under these circumstances I believe that our defence effort could safely be cut at this time, without impairing efficiency, by perhaps $200 million.
In conclusion I repeat that the time has come when the Canadian people do want tax cuts. I also know that they cannot have tax cuts unless we have reduced expenditures. Taxes at the three levels of government today are taking one-third of our net national income. That fact is jeopardizing our trade position abroad and is contributing to unemployment at home. I call upon the federal government to set an example to Canadian industry, by improving its own efficiency, by cutting its own expenditures and reducing its own costs. If it will set such an example, then and only then is it fair for the minister to tell Canadian business to compete by becoming more efficient.


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, subject to only one minor incidental exception that I remember, it has not been the practice for me to take any personal part in the debate on the budget. The government's proposals and its policies with respect to the budget are put forward by the Minister of Finance (Mr. Abbott), and in doing so he speaks for each and every one of his colleagues.
Now, this year, as in the past, the Minister of Finance has done that in a manner which in fact as well as because of our joint constitutional responsibility has the full and unqualified support of each and every one
The Budget-Mr. St. Laurent of us. There has arisen, however, an unfortunate clash over the use of direct taxing powers by the federal authorities and the authorities of the province of Quebec. The Leader of the Opposition (Mr. Drew) on two occasions already has suggested that this clash is such as to make it my duty, as Prime Minister, to invite all the provincial governments to meet with the federal authorities to deal with it. I feel that I should make a short statement to the house-


Mr. Drew:: Mr. Speaker, on a question of privilege, I cannot let that statement go unchallenged. I have at no time said that it was necessary to call the premiers together to resolve the problem that has arisen with Quebec. What I said was that this problem affected all the provinces and that all the provinces should be brought together to discuss the broad question of taxation, which it is the duty of the Prime Minister (Mr. St. Laurent) to resolve in some way in view of the promises made.


Louis Stephen St-Laurent: Well, Mr. Speaker, I stand corrected if there is any correction in what the hon. gentleman has said.
I feel that I should make a short statement to the house on my position as Prime Minister with respect to the suggestion of the Leader of the Opposition, whether it be expressed in my terms or, if he prefers, in his terms.
This clash in federal-provincial relations is not something new. It should not be forgotten that its resurgence at this time is not the result of any recent action of the federal government. It arises as the result of a statute recently adopted by the legislature of Quebec imposing taxes on the personal incomes of a certain number of Quebec taxpayers who are also taxed under the federal Income Tax Act.
The provincial statute contains an assertion that under the constitution the provincial governments have priority over the federal government in this field of direct taxation. This recent action follows the serious attempt made in the dominion-provincial fiscal conference of December, 1950, to find and to implement a satisfactory solution of the problem arising out of the present needs of the federal and provincial authorities, and their concurrent taxing powers over the same taxpayers. It might be interesting to compare this assertion of priority of right in the field of direct taxation with what I think is a quite frank and realistic attitude taken at this 1950 conference by another provincial government, that of Ontario.

The Budget-Mr. St. Laurent
We find in the report of the proceedings of the conference at page 22 that Mr. Frost said the following in that connection:
In the past there has been a great deal of discussion over the respective rights of our federal government and our provinces in the various fields of taxation. The federal government has an unquestioned right in the field of indirect taxation. The field of direct taxation has been divided. The opinion of Sir Thomas White when he imposed the first federal income tax in 1917 has often been quoted. He stated that because the provinces and, in consequence, their municipalities were confined in the raising of revenues to the measures of direct taxation the federal government should not, except in a case of "manifest public necessity", invade the fields to which the provinces were solely confined for the purpose of raising their revenue. He indeed indicated that in entering the field of income tax the federal government was violating the spirit though not the law of the confederation arrangement.
Mr. Frost then went on:
We believe that we must be realistic about these matters. In 1950 we are living in a different world than that of 1917. We do not think it is possible for the federal government to withdraw from the fields of personal income or corporation tax. They derive a great portion of their revenue from these fields and they are indispensable to them. What is needed is the frank recognition that there must be a joint occupation of these fields and with this recognition an active spirit of cooperation between the provincial and federal governments. The federal system of government is a partnership and if it is to operate efficiently it must be a working partnership. We believe that ways and means of either assigning or sharing these fields of taxation can be devised which will be mutually satisfactory to the federal government as well as to the provinces. After all, such a recognition carries with it the realization that both federal and provincial taxes come from the same source, namely, the Canadian taxpayer.


Donald Methuen Fleming: Hear, hear.


Mr. Si. Laurent:: I do not believe anyone can dispute that the federal government does derive a great portion of its revenues from these fields. In fact, the taxes from these fields yield almost 60 per cent of the total federal revenue, about $2-5 billion of total revenues of something less than $4-5 billion.
Now, are those revenues indispensable to the discharge of the federal government's national responsibilities? To get an answer to this question, we have only to remember that the debt charges amount to about half a billion dollars; that federal subsidies and tax rental payments to the provinces amount to about $340 million; that defence and defence production expenditures amount to almost $2 billion-$1,900 million; and that welfare expenditures disbursed by the Department of National Health and Welfare and by the Department of Veterans Affairs amount to almost a billion dollars. Well, that represents almost four-fifths, almost 80 per cent of the total federal expenditures. I feel everyone will admit that all these are national

responsibilities, have become national responsibilities, and that provision for them has to be made.
I am not disputing that the provinces and municipalities also have pressing fiscal needs.
I am merely saying that Mr. Frost's realistic statement of December 1950 is still true as a realistic appraisal of the situation now. It is true also that the federal system is necessarily and inevitably a partnership, and if it is to work efficiently it must be a working partnership. We tried our best at the expiry of the wartime tax agreements, and again in 1950, to devise a method whereby our system could operate as a working partnership, based on that frank recognition of the fact that our fiscal needs were such that there had to be joint occupation of the field of corporate and personal income tax or an appropriate sharing of the revenues derived from that field.
On the other hand it is not in agreement with the facts to say that the federal government failed to recognize its undertaking given when the wartime agreements were made, that they would be only temporary agreements. They were only temporary agreements and they came to an end. But the problem did not come to an end and because it did not come to an end we tried to devise some way of meeting it, and having found that our so-called green book proposals were not acceptable to some of the provincial governments we offered to renew the wartime tax rental agreements on a basis which provided a larger share of the revenue to the provinces than during the years of the war. No province had to make a new agreement, and as a matter of fact the two largest provinces did not make any new tax rental agreement, although seven of the then nine provinces chose to make them and they were authorized by acts of parliament and of the legislatures and became operative. But they were all temporary agreements and it had been one of the undertakings at the time they were being discussed and being prepared for signature that there would be another dominion-provincial fiscal conference at least a year before they expired to determine what would happen when they again came to an end.
That conference took place in December 1950 though the agreements were still to operate until March 31, 1952, 15 or 16 months before the expiry of the agreements. In December 1950 the situation was as described by Mr. Frost in his opening speech at that 1950 conference, and we could think of nothing better to suggest than a further renewal, because the problem was still there. We did make that suggestion, but we did

not pretend that these tax rental agreements were an ideal solution nor that they should or could be a permanent solution, but we had been unable to devise anything that was apt to work out as satisfactorily under the conditions which existed at that time. We and others felt that there was some merit in a system of sharing the proceeds of these taxes on a fair basis rather than having each one of two or more authorities imposing and collecting taxes from the same taxpayers in the same field.
No other scheme was discussed, though some of the provincial premiers expressed their dislike of having what they referred to as subsidies instead of exercising the responsibility of levying their own taxes. Most of the provinces, however, favoured the renewal agreements, and even the premier of Ontario, who had had no agreement since the expiry of the wartime agreement, expressed these views concerning the fiscal arrangements:
... I believe that these must be framed against the background of the emergent and, I hone, transient conditions to which I have referred.
We are experiencing inflation. The cost of government, as of other things, is rising. We cannot say where prices will be a year from now. let alone four or five years from now. Under these conditions we should try to avoid making decisions which will commit us irrevocably to a course from which we might find it impossible or impracticable to retrace our steps. I suggest in view of the emergent conditions through which we are passing that we endeavour to proceed to an agreement or agreements on the grounds of finding mutually satisfactory methods for the next few years which will meet the substantial requirements of the federal government and those of the provinces without making irrevocably basic alterations in our relationships.
We now have the experience of the last four years in which eight of the provinces have participated in tax rental agreements with the federal government.
Newfoundland had come in in the meantime and it had made a tax rental agreement but there was none with Ontario or Quebec.
These tax agreements have filled a need in Canada. They have been of considerable assistance to several of the provinces, and it is likely they will continue in some form to have a place in the arrangements which will be made here.
A little further on in his speech he said:
Perhaps the needs of all the provinces for the next few years would be met if we were to revise the present plan in some particulars to encourage certain improvements which experience now shows would be desirable. Probably it would be better to follow this course rather than to attempt at this time to create something which would be entirely new and untried.
After the opening speeches of the conference which are reported in the published report, the conference resolved itself into a committee of the whole to sit and discuss in camera. The only published record of what
The Budget-Mr. St. Laurent took place in the in-camera discussions is the offer which was submitted by the Minister of Finance (Mr. Abbott) and his explanatory statement about that offer followed by the release of the agreed statement to the press which was issued and published after the in-camera sessions had been adjourned. That is to be found at page 137 of the published report of the conference and it is in these terms:
The conference discussed:
1.	The offer of the federal government for new tax agreements;
2.	The offer of the federal government respecting old age security.
3.	A provincial proposal for an amendment to the constitution to permit the provincial legislature to levy an indirect sales tax at the retail level.
It will be remembered that at that time there was also being discussed at this fiscal conference the proposal for the universal old age pension scheme which would require an amendment to the constitution, and apparently there also had been discussed the suggestion of an amendment which would permit the provincial legislatures to levy indirect taxes at the retail level.
The statement goes on:
It was agreed:
That the proposed amendments to the constitution regarding this indirect tax and regarding old age pensions should be drafted by the Department of Justice and submitted to the provincial governments for early consideration;
That a continuing committee should be set up to consider the character of legislation which would be appropriate respecting persons between the ages of 65 and 69 and to what groups thereof and under what conditions it should be made applicable in each province;
That the continuing committee should be under the chairmanship of the Minister of National Health and Welfare and should be brought together as soon as provincial decisions had been reached on the constitutional amendment;
I believe the constitutional amendment referred to in that last paragraph was the one which would be required to provide for the old age pension.
The statement continues:
And that the provincial governments would consider the proposal for new tax agreements and indicate their respective positions at a later date.
It was also decided to suspend the further deliberations of the federal-provincial conference on constitutional amendment and of its continuing committee of attorneys-general pending consideration of the tax agreements and related matters. Once these have been disposed of, the committee of attorneys-general will resume its deliberations at the earliest convenience of the federal and provincial governments.
Here I digress for a moment to call attention to the fact that this is the explanation of the fact that the federal-provincial conference on constitutional amendment and the continuing committee of attorneys general have not met since that time. It was agreed
4338	HOUSE OF
The Budget-Mr. St. Laurent that their deliberations would be suspended. It must be recalled that that conference had nothing to do with any other actual amendment to the constitution than the provision of a method whereby subsequent amendments could be made here in Canada without having to be referred to the parliament of the United Kingdom. It was realized that that was something that was desirable but not urgent and something about which it was not apt to be possible to reach any agreement if we could not reach an agreement on the immediately urgent fiscal problems that we had to deal with. Hon. members know that those fiscal problems and the matters relating to them have not yet been disposed of. Of that fact there can be no better evidence than the turn which part of this debate has taken on the present budget.
But with respect to the tax rental proposals I was of the opinion-as I still am-that these temporary agreements were, under the circumstances, good agreements; I was of the opinion that they were good for Canada and good for each one of the provinces. They recognized and gave effect to the concurrent rights of Canada and of the provinces in this field of direct taxes. I do not think that they impaired in any way the constitutional jurisdiction either of parliament or of the legislatures of the provinces. They also provided that, while they were in force, the people of each province would have for their provincial services a fair share of the kind of taxes which are made possible by the general economic activity of the Canadian nation, although for collection purposes they cannot be evenly productive throughout the whole country. I can assure the house that if I had felt that the agreements could have meant any permanent impairment of either federal or provincial jurisdiction, I would not have been prepared to recommend them.
The situation at the present time is such that I think it would be a grave responsibility to make any permanent change in what was provided by the original act of 1867. That does not mean that there cannot be agreed to from time to time a modus vivendi as to the way in which the respective powers of the federal authorities and the provincial authorities will be exercised. But I cannot bring myself to believe that I would be prepared to take the responsibility of any permanent alteration in the constitutional powers as they were allocated between the federal authorities and the provincial authorities at the time of confederation.
I happen to be-as I happened to be in 1950 -the Prime Minister of Canada, but I am a resident of Quebec; and I am just as firm a believer in the integrity of our federal system


with its division of powers and responsibility as is any other Canadian, whether he is a resident of Quebec or of any other province. Both as Prime Minister and as a resident of Quebec I would have been happy to see my native province participate in this modus vivendi because I did not see nor can I now see in it any danger or threat to either federal or provincial constitutional rights.
The statement agreed to after the incamera discussions, and published at that time, was that each province would consider these tax rental proposals and would indicate its position at a later date. There followed a great many more negotiations between the Department of Finance and the individual provinces, and within eighteen months or so nine of the ten provinces indicated their respective positions and entered into the proposed temporary rental agreements which are to extend to March 31, 1957. The government of Quebec did not do so, however. It just abstained from having any further dealings or discussion with us about the matter in any way or form whatsoever. I saw in the Montreal Star some time ago a report that Mr. Duplessis said that he had written to me and to the Minister of Finance (Mr. Abbott). He may have written to me and to the Minister of Finance, but not about any solution of the fiscal problems between the federal authorities and Quebec, unless he is referring to some correspondence we had when we were discussing the grants to universities. In one of those letters he said this: Why do you not turn over to me 5 per cent of the personal income tax? That will be more than you are offering to Quebec universities under this $7 million grant. I replied that this grant would expire on March 31. I do not remember just the date of the correspondence but it was some little time before March 31. I said: You know that under the present act we cannot make any remission of this 5 per cent of income tax to the provincial government. We could merely give it as a deduction to a taxpayer who had paid a provincial income tax to your government. The other thing is the constitutional lapsing of this vote unless: Quebec's share is taken from it before March 31. Can we not find some scheme which will not prejudice your position or ours but which will not leave these Quebec institutions without their proportion of this grant which is about to lapse? For that year an arrangement was worked out whereby there was a joint commission of the federal government and the provincial government to makefile allocation and to recommend a way in which the grant would be paid to the institutions in Quebec. But that had nothing:

to do with the general possible collision between the exercise of federal rights and the exercise of provincial rights in the field of direct taxes.
Then, as the house knows, a few weeks ago, without any suggestion whatsoever from the Quebec government that some kind of agreed working arrangement with the federal government might be desirable, the Quebec legislature passed this taxing statute which is in force and which gives rise to this controversy. It is in force and those of us who reside in Quebec must comply with it. Like many others, no doubt, I myself have commenced to comply with it and have made my first quarterly payment in accordance with its terms. Under the legislation as it exists, and as it was known to exist at the time that the Quebec statute was passed, we who are taxed by it will be entitled, when we settle our 1954 federal income tax, to a credit not exceeding 5 per cent of the federal income tax, though the provincial tax amounts to 15 per cent or more. According to my calculation-I may be leaning backwards-it is something over 16 per cent in my case. Of course no one likes the idea of having to pay about 10 per cent more income tax because he resides in the province of Quebec than if he resided elsewhere. The question arises: What can be done about it? Well, it is my opinion, Mr. Speaker, that anything which can be done about it will have to be the result of some kind of temporary agreement between the federal authorities and the Quebec authorities. I hope it is not the view of the Quebec authorities that there cannot be any kind of agreement with the federal authorities because of the danger of impairing what they claim to be involved in the autonomy of Quebec. I hope they do not feel that there could not even be any exploratory negotiations with us, but if that were the situation I do not see how there is any way of avoiding the consequences of this clash.
Surely no one will suggest that this parliament should agree or could agree to recognize the asserted claim of Quebec's priority of rights over the rights of the nation as a whole in the field of corporation and personal income taxes. If the fathers of confederation had been so unwise as to make that the law of the constitution, of course we would have to get along with it as best we could in spite of its paralysing effect upon the nation as a whole. But fortunately it is not the law of the constitution and this government and this parliament, I am sure, are too conscious of our respective responsibilities to the nation as a whole, the nation
The Budget-Mr. St. Laurent of today and the nation of future generations, to do anything that would tend to make that the law of the constitution.
What then is the alternative? The Leader of the Opposition (Mr. Drew) has suggested, perhaps not as a complete alternative but as something that should be done, that there should be a federal-provincial conference. Well, what reason is there for bringing together the representatives of the other provinces? The other provinces have all made tax rental agreements which still have about three years to run. These agreements were entered into in good faith. They were entered into under the authority of acts of parliament and of the legislatures of the respective provinces, and I think Canada has got to live up to them unless they are modified by mutual consent.
This government is not going to suggest to the provinces that have made these agreements that they should consider modifying them unless we have got some better reason for doing so than the mere fact that one of its provinces has not made a similar agreement and has proceeded to levy its own taxes without any agreement at all. No one will suggest, I am sure, that the federal government should or could give preferential treatment to any one province. I think we would all feel that just could not be done. No one, I hope, would suggest, in order to give Quebec taxpayers more generous deductions than those now provided for in our income tax law, that we should either increase the tax rental payments to the other provinces or agree that they too may impose their own taxes and get for their taxpayers, at the very substantially increased expense of the federal treasury, somewhat more generous deductions. The federal treasury just could not stand either of those courses.
On the other hand, I think that everybody hopes some temporary arrangement can be worked out which will enable the people of Quebec to get for their province's services a fair share of the taxes on corporate and personal incomes without having to bear income tax burdens greater than those which prevail elsewhere in Canada. How that eminently desirable result can be achieved in some other way than through the way agreed to by the other provinces I do not know, but there may be alternatives. I hope there are alternatives. Since the taxing statute was passed many individuals and groups of individuals have had thoughts and made suggestions about possible alternatives. One proposal has been put before the provincial commission on constitutional problems by the institute of chartered accountants of Quebec.

The Budget-Mr. H. O. White I have not seen their brief, but the Montreal Star in its issue of April 27, 1954, had this to say about it:
It proposed a sweeping revision and a sharing of tax fields along lines which may, or may not,
be adapted to the national need but which deserves study just the same.
The Gazette of Saturday, May 1, reported that the Montreal board of trade had also submitted a brief to the same commission. The report reads:
The Montreal board of trade proposed yesterday that the Quebec royal commission on constitutional problems prepare immediately an interim report on income and corporation taxes and urge the provincial government to confer promptly with federal government representatives to find a satisfactory compromise to end an "intolerable situation". In a brief presented at a commission sitting here, the board said it believes the matters in dispute must and can be settled by negotiation without impairment of the constitutional rights of the province, "provided the negotiations are approached in a spirit of good will and having in mind the interests of the taxpayer".
I am sure any negotiations would be approached in a spirit of good will and having in mind the interests of both the federal and provincial governments and the very pertinent fact that those interests affect the same taxpayers of both levels of government. Briefs have also been submitted by the chamber of commerce and many other public bodies and, as I have said, we ourselves have had representations from many individuals and groups who are concerned, as we all are, about this problem.
But the only authority we can recognize as entitled to make suggestions for the province of Quebec is the Quebec government. I think that is self-evident, and that is why the Minister of Finance (Mr. Abbott) stated in his budget speech that if there was a desire for co-operation and collaboration the premier of Quebec would always find the door open for full and frank discussion in the hope of finding a mutually satisfactory solution. Some persons, both in this house and outside of it, have tried to describe that as an invitation to the premier of Quebec to come cap in hand knocking at the federal door. Of course it is nothing of the kind, and I do not think it is helpful to try to so distort it. It was and it remains a sincere and genuine expression of readiness at all times to sit down with the authorities of Quebec for a full and frank discussion of any alternative to a tax rental agreement and the hope that they will indicate their readiness to do so too. It implied our further hope that through these discussions we might be able to find a mutually satisfactory solution. That is, of course, still our position, and those are still our hopes.


If, after negotiations between us and the Quebec authorities, it appears that there is some kind of modus vivendi which could be agreed to between us and which would respect the rights of both the federal and provincial authorities, and which could be offered to other provinces or any of them, in lieu of their present tax rental agreements, and still leave the federal government in a position to discharge its national obligations, I would not hesitate a moment to invite representatives of all the provinces to meet with us in another conference. But, quite frankly, I do not think that under any other conditions the holding of a federal-provincial conference now would be desirable, or apt to be at all helpful.


Mr. H. O. White (Middlesex East):: Mr. Speaker, at this moment I do not propose to discuss any of the problems with which the Prime Minister (Mr. St. Laurent) has just dealt. I am going to leave that to those who have made a study of federal-provincial affairs.
I do wish to say that I appreciate what was said by the hon. member for Moose Jaw-Lake Centre (Mr. Thatcher) regarding the budget and the savings that could and should be made in the administration of our affairs so that the Canadian taxpayer, whether he be a manufacturer, a farmer, or engaged in any other occupation, could lower his costs of production.
I rise today to protest against budget resolution No. 6 in the amendments suggested to the Income Tax Act. It reads as follows:
For the taxation of a resident mutual insurance corporation, other than a life insurance corporation, as though the surplus arising from its insurance activities on and after January 1, 1954, were a profit from a business, and declaring that a non-resident mutual insurance corporation, other than a life insurance corporation, shall be deemed to be and always to have been subject to taxation on that basis.
I was one who thought that when the Supreme Court of Canada ruled on the case of the Stanley Mutual of New Brunswick this question of taxation of farm mutuals was a closed book. However the Minister of Finance (Mr. Abbott) has seen fit to introduce it in his budget, for reasons which I cannot quite understand.
First of all, what I do understand is that from that proposed taxation only about $130,000 could be expected. When one thinks of that amount and compares it with the hundreds of millions of dollars the government is taking from the people, and spending, he realizes at once that it is only a small pittance. And it is for this reason I rise in my place today to voice my protest against resolution No. 6.

I do so, first, because in their long history the farm mutual fire insurance companies have provided fire insurance at cost to their policyholders-and I say "at cost" and not at a profit. Never in their long history have they indicated a profit.
I protest in the second place because this move would aid in the final and eventual elimination of many of the farm mutual insurance companies.
Thirdly, I protest because the minister has not seen fit to accept the ruling of the Supreme Court of Canada in the case of the Stanley Mutual in the province of New Brunswick.
Fourth, I rise to protest because the minister failed to take into consideration the fact that in addition to the premium they pay, the farmers and others insured must also sign a premium note to the extent of a percentage of the face value of the policy. And the premium note is for no other purpose than to share in the losses-not in the profits-that might come to policyholders of mutual insurance companies, and to assist in their financing.
I understand there are about sixty-eight local mutual companies operating in Ontario. They operate in areas where in most cases fire-fighting equipment is either inadequate or non-existent. Therefore they are taking risks that many straight line companies do not take, and do not care to take.
Then this question arises in my mind: Who are the real culprits behind the minister who are so insistent that budget resolution No. 6 shall be proceeded with? Through the years the premiums paid by farmers on their policies have varied according to the costs of providing the insurance. But, as I say, there has always been the premium note which has stood as a guarantee against loss. Surely, of all people, the minister is or should be aware of the fact that mutual fire insurance companies, as in respect of other companies, must have reserves with which to operate.
I think this is an ill-conceived move and one that should be dropped. And I am not alone in this, because members on all sides of the house know of the plight of these insurance companies and of the resolution, and are just as perturbed as 1 am about the final and net result which, in many cases, would mean the elimination of small farm mutuals, some of which have been in operation since prior to confederation. (Translation):


Mr. Paul E. Gagnon (Chicoutimi):: Mr. Speaker, the refusal of the government to grant the income tax deduction requested by the taxpayers of the province of Quebec
The Budget-Mr. Gagnon brings once again to light the matter of the rights of the central government and of the provincial legislatures.
It therefore seems appropriate to recall the debates that preceded and followed the pact of 1867, to stress certain statements made at that time and in the years that followed and to analyse the decisions brought down by the courts in that matter.
The arguments I wish to submit today to the kind attention of this house lead me to believe and to assert that the provinces have a prior right in the field of direct taxation. In support of that theory, which is not new, I would like to quote the opinion of a few legal lights and political leaders. I have taken those statements from works pertaining to constitutional problems.
During the debate on second reading of the act of 1867 in the House of Lords, Lord Carnarvon, who had helped the Canadian delegates put the finishing touches to the document, stated:
(Text):
The several provinces which are now free to raise a revenue as they may think fit, surrender to the central parliament all powers under this head except that of direct taxation . . . But there is, as I have said, a concurrent power of legislation to be exercised by the central and the local parliament. It extends over three separate subjects-immigration, agriculture, public works.
(Translation):
In the case of the Liquidators of the Maritime Bank of Canada v. the Receiver General of New Brunswick, Lord Watson clearly defined the character of our constitution and the status of the federal and provincial governments:
(Text):
The object of the British North America Act was neither to weld the provinces into one, nor to subordinate provincial governments to a central authority, but to create a federal government in which they should all be represented, entrusted with the exclusive administration of affairs in which they had a common interest, each province retaining its independence and autonomy ... In so far as regards those matters which by section 92 are specially reserved for provincial legislation, the legislation of each province continues to be free from the control of the dominion, and as supreme as it was before the passing of the act . . .
The provincial legislature possesses powers not of administration merely but of legislation in the strictest sense of that word; and within the limits assigned by section 92, of the act of 1867, these powers are exclusive and supreme.
(Translation):
To those who contended that the British North America Act broke all ties between the crown and the provinces, the privy council answered that the latter were not subordinated to a federal government, and reasserted the supremacy of the province in matters reserved for provincial authority.

The Budget-Mr. Gagnon
(Text):
And, in Hodge v. the Queen, Spragge, C.J.,
says:
The provinces had possessed plenary powers upon subjects of a local and domestic nature before confederation; and the general scheme of confederation appears to have been to leave to them the plenary control of these subjects. They were, under the act, legislatures in regard to these subjects in the true and full sense of the term. This is the more apparent from the use of the words "exclusive" and "exclusively" (and they are used repeatedly), in the imperial act.
The following passage from the argument of Mr. Edward Blake before the privy council in St. Catharines Milling and Lumber Co. v. the Queen, may be quoted in this connection:
What then was the general scheme of the act? First of all, as I have suggested, it was to create a federal, as distinguished from a legislative union: but a union composed of several existing and continued entities. It was not the intention of parliament to mutilate, confound and destroy the provinces mentioned in the preamble, and, having done so, from their mangled remains, stewed in some legislative cauldron, to evoke by some legislative incantation absolutely new provinces into an absolutely new existence. It was rather, I submit, the design and object of the act, so far as was consistent with the redivision of the then province of united Canada into its old political parts. Upper and Lower Canada, and with the federal union of the four entities. Nova Scotia. New Brunswick and the resettled parts of old Canada, Ontario and Quebec-it was the design I say, so far as was consistent with these objects, by gentle and considerate treatment to preserve the vital breath and continue the political existence of the old provinces. However this may be, they were being made, as has been well said, not fractions of a unit, but units of a multiple . . .
(Translation):
Sir Alexander Galt, who had advocated legislative union in a speech delivered in Toronto, nevertheless made the following statement during the parliamentary debates of 1865:
(Text):
In transferring to the general government all the large sources of revenue, and in placing in their hand with a single exception, that of direct taxation, all the means whereby the industry of the people may be made to contribute to the wants of the state . . .
(Translation):
Remembering that Galt was then minister of finance in the Canadian legislature, and, as such, entrusted with the estimates of the new provinces, that he was one of the men most responsible for the pact of 1867, moreover, that he was a known centralizer, we realize that even the advocates of a strong central authority were giving up direct taxation exclusively to the provinces. It was then a source of revenue of little importance, quite unpopular-just as it is today-which they thought it was almost impossible, or at least very difficult, to put into force.


During the 1867-1917 period, as I said here recently, the central power, recognizing the exclusive rights of the provinces, abstained from encroaching upon that field.
(Text):
As Mr. Benjamin observed upon the argument in Russell v. the Queen before the privy council on May 2, 1882, referring to sections 91 and 92:
The general rule of construction is one of course which your Lordships will keep in view, that general words are controlled by special and specific provisions; that you do not take general words to override special provisions, but you take special provisions as constituting in their nature exceptions to the general words.
(Translation):
The reference at the time was to the right of Ottawa to regulate the liquor trade.
In the case of Bank of Toronto v. Lambe, this point of view would seem to have been approved.
(Text):
Their Lordships adhere to that view, and hold that, as regards direct taxation within the province to raise revenue for provincial purposes, that subject falls wholly within the jurisdiction of the provincial legislatures.
(Translation):
Before the Supreme Court, Mr. Justice Sedgwick, in the Local Prohibition case, expressed the view that the act is an agreement, a treaty, a pact concluded by independent communities upon federating. He says:
(Text):
When a general subject is assigned to one legislature, whether federal or provincial, and a particular subject forming part or carved out of that general subject is assigned to the other legislature, the exclusive right of legislation, in respect to the particular subject, is with the latter legislature. For example, parliament has marriage, but the legislatures have the solemnization of marriage. On that subject they are paramount and supreme.
(Translation):
And so, any particular matter handed over to a province may not be absorbed by a general matter handed over to the federal government, even though one would be included in the other.
Lord Watson, to explain his interpretation of sections 91 and 92, in that case, states:
Any other interpretation of the general authority devolved upon the Canadian parliament by section 91, in addition to the powers therein enumerated, would not only be contrary to the intention of the act, in Their Lordships' opinion, but would also be tantamount to divesting the provinces of any autonomy.
Clement, in "The Law of Canadian Constitution", at pages 480 and 481 clearly stated that the particular excludes the general:

(Text):
From any large general class in either section must be excepted any particular class in the other which forms a branch or subdivision of the larger general class.
For example:	from the general class
"criminal law (sec. 91, no. 27)" must be excepted the particular class, provincial penal law, sec. 92-15.
From the "regulation of trade and commerce, section 91, subsection 2, must be excepted trade "licences", section 92-9. From "property and civil rights," section 92, subsection 13, must be excepted many items contained in section 91. From "the administration of justice in the province" must be excepted certain branches of jurisprudence which are to be found wrapped up in some of the items in section 91.
It has, indeed, been suggested that all the items of section 92 are in the nature of exception to section 91; but, while there is a sense in which the proposition is certainly true, it is equally certain that in the sense of the rules under discussion some of the items in section 91 are particular classes to be excepted out of larger general classes enumerated in section 92.
(Translation):
In the case of Citizens Insurance Co. v. Parsons, in 1880, Judge Montague Smith analysed the potential conflicts between the subject matters of section 91 and those of section 92.
(Text):
He believes that the legislature could not have intended that the powers exclusively assigned to the provincial legislatures should be absorbed in those given to the dominion parliament. He gives as an example the celebration of marriage in a province and direct taxation. He adds:
... so the raising of money by any mode or system of taxation is enumerated among the classes of subject in section 91; . . .
But direct taxation within the province in order to raise revenue for provincial purposes has been assigned to the provincial legislatures by section 92, so it obviously could not have been intended that in this instance also the general power should override the particular one.
(Translation):
A general power cannot include a particular power which flows from it.
In the case of Hodge v. the Queen, in 1883, the privy council refused to recognize that provincial parliaments were inferior institutions. Their Lordships stated that, within the limits of the subject matters and 83276-274J
The Budget-Mr. Gagnon fields mentioned in section 92, "the local legislature wields a supreme power and enjoys the same authority as the dominion parliament". This may be found at page 59 of the report of the royal commission:
Sovereignty resides in the state. Central and local governments are the agents of that sovereignty and they cannot destroy or control each other.
(Text):
Joseph Doutre in "Constitution of Canada", page 222, says:
According to the well-known rule where a general intention is expressed in a statute and the act also expresses a particular intention incompatible with the general intention, the particular intention shall be considered as an exception," direct taxation must be considered by section 92 as being excepted from the monopoly given in general terms by 91st section to the federal parliament.
Bora Laskin, professor of law at the University of Toronto, in Canadian Constitutional Law, Toronto, 1951, notes that the respective taxing authority of dominion and provinces may not be used by either of them to sterilize powers of the other government. (Translation):
If the federal government had a prior right in the field of direct taxation, the provinces would, in fact, be deprived of this source of revenue and, in spite of the explicit terms of section 92 (2), would be unable to make use of it.
We cannot maintain Canadian federalism without autonomous provinces, and our provinces would not be autonomous if they could not keep their financial independence.
Obviously, powers assigned solely to the provincial legislatures must not be absorbed by the powers granted to the dominion parliament.
(Text):
In re Regulation and Control of Aeronautics in Canada (1932) A.C. 54, Lord Sankey, L.C., stated that:
Inasmuch as the act embodies a compromise under which the original provinces agreed to federate, it is important to keep in mind that the preservation of the rights of minorities was a condition on which such minorities entered into the federation, and the foundation upon which the whole structure was subsequently erected. The process of interpretation as the years go on ought not to be allowed to dim or to whittle down the provisions of the original contract upon which the federation was founded, nor is it legitimate that any judicial construction of the provisions of sections 91 and 92 should impose a new and different contract upon the federating bodies. (Translation):
If this is a compromise, Mr. Speaker, each power is a sovereign power within the limits of its attributions.
Sections 91 and 92 are mutually exclusive.
Section 95 confers on the dominion and on the provinces a joint responsibility with

The Budget-Mr. Gagnon regard to agriculture and immigration, with a predominance of federal authority in case of disputes.
The constitution has therefore given to the central government, in matters pertaining to taxation, powers which are limited by those granted to the provincial states. The latter have thus the exclusive power to levy direct taxes within the limits of their respective territory for provincial purposes. "The theory of the federal government's unlimited rights crushes, in its very principle, the fiscal autonomy of the provinces."
Such a conception is definitely anti-federative. A federation is not based upon the principle that one of the partners can alter the conditions of the federation or destroy it but upon a pre-established equilibrium that can be modified through evolution without any of the parties having the power to break it of its own initiative.
Through centralization of revenue sources and an almost absolute control of financial, social, and economic legislation, the Ottawa government is endeavouring to establish a national spirit which can result in a consolidation of its position but also, on the other hand, in the destruction of the loyalty of the taxpayers towards the local governments.
Some of the provinces may like to be nothing more than pensioners but the province of Quebec is not one of them. Following the example set by our ancestors, we are proud enough to refuse to be valets.
He who holds the purse strings holds every initiative, every liberality and the most powerful means to reduce refractory elements to acceptance of his ideas.
Professor Adarkar, Ph.B., in "The Principles and Problems of Federal Finance" (London, 1933), establishes a distinction between political sovereignty and legal-in principle-sovereignty. He holds that financial sovereignty determines political sovereignty, whatever the situation in respect to legal sovereignty may be.
(Text):
Mr. W. A. Carrothers, from Victoria, in "Problems of the Canadian Federation" published in Canadian Journal of Economics and Political Science, February 1935, states at page 28:
Political sovereignty would be of little value without commensurate financial authority: otherwise a government would be unable to implement its own legislation.
Mr. J. A. Corry, of Queen's University, editor of the same publication, in an article entitled "The Federal Dilemma", volume 7, page 26, 1941, says:
The wide taxing powers of the federal government, if resolutely used will help to whip the states into line.

(Translation):
Since the federal authorities cannot legislate in one way for French-speaking Canadians and in another for the other citizens of the country, it becomes important that "the province of Quebec which is, de jure and de facto, the legal and political habitat of French-speaking Canadians" have and maintain the necessary executive, judicial and legislative powers as well as the revenues for the good administration of the rights and privileges which belong to her exclusively.
Those privileges, essential to the survival of our racial group, have been guaranteed to us by the pact of 1867 and any encroachment upon Quebec's autonomy amounts to a breach of the contract between the two great races of this country.
Authorities agree that section 92, subsection 13-pertaining to property and civil rights in the province-was included in the act of federation for the sole purpose of-
-safeguarding the fundamental institutions and ways of life of Quebec.
That quotation is taken from page 34, volume 1, of the report of the royal commission on dominion-provincial relations.
The case of Quebec is truly unique in our federation. All provinces except Quebec have the British civil law. All except Quebec and Newfoundland have divorce courts. All except Quebec and Newfoundland have a system of neutral public schools. All provinces except Quebec have but one official language, English. Quebec is the only province with a legislative council. Finally, this province is the only one having a majority of its citizens who do not speak English, that is the French-speaking group.
One should not lose sight of that historical fact.
Any amendment to the constitution requires the consent of all contracting parties.
(Text):
On February 18, 1925 the then minister of justice, Mr. Lapointe, said as reported at page 298 of Hansard:
. . . the British North America Act itself is not only the charter of the Dominion of Canada: it is just as much the charter of the provinces of Canada. We derive our powers from the British North America Act; so do the provinces. They have no constitution other than the British North America Act; all their powers they derive from that act. Would it then be fair for us to arrogate to ourselves the right to change the act which is just as much the constitution of the provinces as it is our own?
. . . the conclusion is that we cannot ask for power to alter, without the consent of the provinces, the constitution which is their own constitution as well as it is ours. I ask my hon. friend this question. Confederation was achieved and the new parliament was opened in 1867. Does he believe that two years afterwards, in 1869. for

instance, this parliament could have fairly and reasonably amended the B.N.A. Act or have asked the imperial parliament to amend it, without the consent of the four original provinces? Could he fairly say that that could have been done two years after the opening of this parliament? If it could not be done at that time, could it be done 25 years afterwards, or even 50 years afterwards, without the consent of the contracting parties in the pact of confederation?
I heard it suggested some time ago that this idea at confederation of a treaty is an antiquated idea. Maybe it is. But truth does not cease to be truth when it gets old; and old truth is always true. You cannot prevent the facts from being facts whether you like them or not.
(Translation):
A dishonest practice aimed at drawing the sympathy or hatred of the ignorant and the anti-French elements, which has become popular in certain quarters through the insidious propaganda of centralizers, consists in painting the supporters of autonomy in the darkest colours and calling them separatists or isolationists.
However, nothing could be more false. What we are defending in rejecting legislative and fiscal absorption is the sacred right of remaining ourselves, of preserving our language, our religion, our ideals and our culture within the Canadian community.
(Text):
Referring to tax rental agreements in his budget speech last year the Minister of Finance said:
The virtue of this approach was that it was not dependent for success on the unanimous acceptance by all provinces. A cardinal principle in the offer was that no pressure, direct or indirect, should be placed on any province to accept an agreement. This has been a fundamental position in the federal government's attitude ever since.
(Translation):
Quebec, therefore, could, without running the risk of being blackmailed or criticized, refuse to sign the proposed agreement.
As for personal income tax, the federal legislation, recognizing that a provincial tax of that kind is possible and legitimate, allows specifically a 5 per cent deduction from the federal tax.
The central government thus recognizes, to a certain extent, the principle of deductibility.
To object, now, to this right being exercised, is to show open intention of forcing the province of Quebec to meet the requirements of the central power, which are opposed to the principles of sound democracy.
It is unjustifiable, we read in the brief submitted to the right hon. the Prime Minister of Canada by the chamber of commerce of the district of Montreal, to draw a distinction between a taxpayer entrusting the
The Budget-Mr. Gagnon federal government with remitting to the provinces a share of the taxes he has to pay, and the taxpayer who divides it himself.
The stand taken by the Prime Minister is no surprise to me, for he stated, at Winnipeg, in July 1953, that he didn't want to go down in history as the one responsible for depriving the federal government of powers that may be vitally needed to ensure our common salvation.
He prefers to take the responsibility of "undermining the federal pact, and surrendering the French Canadians to the majority", wrote Mr. Andre Laurendeau, after that statement was made. It is he who, as the legal adviser to the Rowell-Sirois commission, advocated a return to the first days of confederation, in other words, one fiscal authority in possession of all important revenues, and provinces supported by grants. It was also he who stated, in this very house, that the federal parliament could abolish section 133 of the constitution providing for the use of French in official documents, without the necessity of obtaining the prior consent of the provinces.
It would be impossible to imagine that those who drafted the agreement of 1867 would have wanted to bring about the disappearance of the provinces or to place them in such a position that they would be unable to benefit fully from the advantages of that sovereignty which they already possessed and to exercise those prerogatives devolved upon them by the act itself.
Those who represented at the time Lower Canada, that is, the province of Quebec, would never have signed a treaty divesting my fellow citizens of rights and revenues indispensable to their existence.
They knew in 1867 that in order to build schools, colleges and universities, government help was imperative; they knew that subsidies were necessary to preserve them, and still it was decided to leave to the provinces absolute authority on matters pertaining to education.
When offering subsidies to universities, the federal government recognized that they needed financial assistance. The step they then took in an unconstitutional way, why would they not take it indirectly, in the way advocated by the Quebec legislature, namely through allowing the deduction of the provincial tax from the federal tax. They would thus co-operate in the application of legislation designed to help those institutions.
For the central power, this is a nominal sum, $15 million at the most, taking into account the 5 per cent deduction already allowed and provided for by the act.
4346	HOUSE OF
The Budget-Mr. Gagnon
The Department of External Affairs will grant this year $31,450,000 to help other countries and international organizations and the Quebec taxpayers would be refused the few millions they claim?
Twenty-five million dollars are given under the Colombo plan in order to further the economical development of coutries in south and southeast Asia, but the legitimate claim of the people of Quebec is rejected.
Leopold Richer wrote on March 27, 1954, in Notre Temps:
Ottawa is acting as if it wanted open warfare or desired to crush the national unity which it pretends to build up and defend.
No concessions for Quebec, say the Liberals. No concessions for Quebec or the Vatican! But, on the other hand, let us make every possible concession to the communist governments and to Mao, the communist dictator of China!
That is how we are ruled. The Quebec Liberals betray the highest and most permanent interests of their province. They scarcely can be proud of such an attitude!
Like everybody else, judges have very different views, on political issues, says the royal commission report, at page 60. Should by any chance the present finance minister (Mr. Abbott) be appointed to the supreme court, it would be easy to foresee what rulings would be rendered in judicial disputes between the provinces and the central power.
The rights of the provinces in the field of direct taxation cannot be denied and autonomy becomes an empty word if the revenue essential to its preservation is not guaranteed through the granting of exclusive sources of revenue.
Notwithstanding the opinions of our fashionable "internationalists" and of our ambassadors of "good will", who are much more preoccupied with the fate of South Koreans or Indians than with the future of French Canadians in our confederation, the present struggle is not partisan in scope.
The main cause is the unjust and repeated encroachments of the Ottawa government on the fields allotted to the provinces. The struggle is that of those who ask for the integral respect of the 1867 contract between the two great races established in Canada, that of free men who cherish their financial and economic independence, without which it is impossible to exercise the other freedoms inherent to a sovereign state, that of people opposed to the dictatorship of socialist centralizers.
In that struggle, conducted not only for the benefit of the citizens of Quebec but for the welfare of all Canadians, we, of Quebec, are ready to fight until final victory is ours.
The people are on our side. We shall remain in the van as champions of provincial auton-


omy; we wish to prosper, but not by begging subsidies and alms from the government in Ottawa, not by being the servants of a wealthy but stingy master. We wish to work in peace and harmony with the central power, "to be united," as Talleyrand said "like a horse and its rider," provided the horse is not always the province of Quebec.
Let there be no barriers to our cultural development; let us have the necessary taxes to make our educational system prosper and, as always, Quebec will remain one of the glories of Canadian confederation.
Mr. Speaker, it is essential that the sacred interests of national unity and of our country should not be confused with the political interests of the Liberal party.


Mr. H. J. Michaud (Kent, N.B.):: Mr. Speaker, on the occasion of my first speech, I would like to congratulate you upon your elevation to the high office of Speaker of the house.
The day a new member delivers his first speech is surely a day to be remembered. It is an opportunity for him to express the feelings which are a source of joy and satisfaction in the fulfilment of the duties he has assumed; it is also for him an opportunity of appraising some fearful aspects of the perspectives that open before him.
My first joy is, no doubt, to say how deeply honoured I am to represent in this house the good people of my constituency. The county of Kent, faithful to its tradition, once more indicated its confidence in the great Liberal party by sending me here to support this government, headed by a great leader, the right hon. Prime Minister (Mr. St. Laurent). Political history tells us that, since 1900, the county of Kent has been represented by a member of the Liberal party for forty years.
I therefore feel happy to uphold that tradition which, I hope, will be maintained for many more years.
The thought of those who preceded me in this house makes me fear the task I am beginning to fulfil, knowing that they have fulfilled theirs with brilliance and experience. But their example will be a source of inspiration to me, as I proceed forward along the path that lies ahead.
May I be allowed to mention at this point those predecessors of mine who are still alive. Many hon. members know with what zeal and devotion my immediate predecessor, the Hon. A. D. Leger, discharged his mandate during the thirteen years he spent in this house. It was to no one's surprise, such being the case, that his many years of

selfless service, his merit and his experience should have brought upon him the very great honour of being called upon to sit in the other place. Many hon. members here too will have known and appreciated the member who sat for Kent from 1935 to 1940, Mr. Louis P. Robichaud, of Richibucto. He has always devotedly served his county where he has been for a record breaking number of years a most diligent and devoted secretary-treasurer of the municipality of Kent. Some too will remember Mr. Telesphore Arsenault, who sat for Kent from 1930 to 1935. Mr. Arsenault, who is now over eighty years of age, also resides in Richibucto, loved and respected by all who know him. I also want to say a word about the member for Kent from 1911-17, Mr. Ferdinand Robidoux, a lawyer, who now resides at Shediac. Not only is he active in national causes, but he also is a devoted servant of his own municipal corporation. And without leaving the federal scene, I should also like to mention the name of Mr. Pius Michaud, who practises law in Edmundston, N.B.
Mr. Michaud sat in this chamber for seventeen years, and although he is 84 years old, he is still very active, and may I add that he has always been for me a most genial uncle. Here again, I want to recall the memory of the late Dr. E. N. Leger, federal member for Kent riding from 1890 to 1892, until his untimely death; the latter was my uncle, as well as the uncle of hon. Senator A. D. Leger. I now want to talk about the provincial political field, to recall the name of the Hon. A. A. Dysart, now judge of the New Brunswick court, former provincial member for Kent riding during 27 years, and premier of the province of New Brunswick from 1935 to 1940, and the memory of the late David Landry, former member for Kent from 1908 to 1917, who was successively minister of agriculture and provincial secretary-treasurer; he also was a most distinguished uncle of mine.
Mr. Speaker, Kent riding is part of the area called Acadia. Its people are also Acadians, to a large extent. So, as member for that riding and as an Acadian myself, I must talk now about the celebrations which will mark, in 1955, the bicentennial of the dispersion of the Acadians.
It is useless to retrace here the different stages of this historical event, the anniversary of which we want to stress. That, however, is not the aim of the celebrations that are being prepared. They will rather point out our rehabilitation as an ethnical group. What we shall try to demonstrate during these
The Budget-Mr. Michaud anniversary celebrations will not be so much the negative side of this historical fact, which would insist upon what the Acadian people was not to be, but rather the positive aspect, by showing what this people is now and what it is meant to become. The lessons we shall try to learn therefrom are related to our faith in our future. We shall spread, before today's generation, all the courage and strength our fathers needed in order to obtain for us the place we now occupy in this country of freedom, Canada. And in view of our past, we shall show the present generation tomorrow's duties and obligations. The Acadian people have only one ambition, that is to contribute, by the full development of qualities and gifts bestowed by Providence, to the cultural, economic and moral expansion of this country. Mr. Speaker, there is something more to this drama of dispersion. The fact that two countries, two races, which two centuries ago were full of animosity and hostility towards each other, have come closer together, in Europe as well as in America, and live in friendship and peace, is for the world, in these days of uncertainty and trouble, an invitation to universal peace addressed to men and countries of good will.
There are in America today from 1,200,000 to 1,400,000 Acadians: 600,000 in Louisiana;
300.000	in the maritimes; 150,000 in Quebec;
150.000	in New England; 50,000 in Ontario and the western provinces. Everywhere they profess the same faith, everywhere they sing the same hymn, "Ave Maria Stella", everywhere they fly the same flag, blue, white and red, with a gold star. Except in Louisiana and in the western provinces, the main Acadian communities are united under the banner of a fraternal society, the Assumption Society. That organization aims first of all at maintaining, through its branches, a sound solidarity, and, secondly, through its insurance fund, at ensuring a concentration of the savings of its members for their own protection and for the financing of their own Acadian enterprises.
The head office of that company is located in Moncton, New Brunswick. It is in the maritime provinces, in the very heart of Acadia of olden days, that Acadian life in its most ardent and authentic form is to be found. There we have prosperous, religious, educational and economic institutions which do honour to the whole country. Religious life is organized in one archdiocese and three Acadian dioceses: the archdiocese of Moncton, the dioceses of Edmundston, Bathurst and Yarmouth, the latter newly-formed. Numerous

The Budget-Mr. Michaud institutions look after our people's education. Among the most important, may I mention St. Joseph's university, Sacred Heart university at Bathurst, St. Louis university at Edmund-ston, Ste. Ann's college at Church Point, Notre-Dame d'Acadie college, at Moncton, and Maillet college at St. Basile, Madawaska. The two latter are classical colleges for girls.
Acadians also have their daily newspaper, L'Evangeline, founded through the generosity and with the help of everyone.
The French-language radio station recently set up at Moncton by the Canadian Broadcasting Corporation gives much pride and satisfaction to the Acadian groups of the district. In the economic field, prosperous co-operative societies help their members to achieve economic independence.
Mr. Speaker, as an eminent man said just a few days ago: Acadia has risen; it is on the march. True, the Acadian population is still made up primarily of farmers and fishermen, who have always been in the forefront; but that group has its own institutions, its clergy, its professional classes and its leaders. Those are additional factors that ensure its survival.
Mr. Speaker, I have just given the house a brief outline of the Acadian people who will soon commemorate the bicentennial of the dispersion. The Acadian people invite all Canadians to join them during those celebrations. They urge the Canadian government and the governments of the provinces where Acadians are to be found to commemorate the event by appropriate deeds and acts.
(Text):
As a maritimer, Mr. Speaker, I should now like to refer to different statements made in the house with regard to the economy of the maritime provinces. True it is that in the light of the general economy of our country there are reasons for a certain concern about our present conditions. As a stimulating measure some are advocating the Chignecto canal project for the purpose of increasing trade through our seaports. Others, viewing the need for more industrialization, are advocating the Passamaquoddy project as a means of providing more and cheaper power. Still others, in their own way, offer their own unbiased personal suggestions. But when all these proposals are made I am sure they are made with one common purpose in mind, to be of some assistance in devising ways and means to stimulate our maritime economy.

As a member from the maritimes I too have a keen desire to see that our provinces share more fully in, and contribute more effectively to, the fast expanding economy of our country. Perhaps I could illustrate to some extent the situation as it exists, if not in the whole of the maritimes at least in some parts, by relating to the house an incident which I personally witnessed a short time ago on the train to Ottawa. While I was sitting in my seat I could overhear the conversation of two young ladies sitting back of me. At a certain time I heard them speaking of a town that I knew very well, in the vicinity of my own home town. I then introduced myself and engaged in a conversation with them. I learned that the two ladies were the last members of a family of fourteen who had left their home town to take up domicile in a city west of our capital city. When I further questioned them as to the motives that had prompted the family to choose that particular city in preference to many others they gave me a still more significant answer. They said that they had chosen that city because half the people of their home town were already there. Our chief problem in many parts of the maritimes, Mr. Speaker, is a vital one. Unless we can hold at least the greater part of our natural increase of population we are faced with a future full of uncertainties. I shall endeavour to enlarge upon this statement at a later stage of my remarks.
May I now be permitted to deal more specifically with my own constituency of Kent, New Brunswick. The demographic situation of my county could not better be described than by the words of a friend of mine who, during a speech he made in the New Brunswick legislature a short time ago, had this to say:
In Kent county the population is 85 per cent French; the other 15 per cent is divided somewhat equally between the Irish, the English and the Scotch. We live together harmoniously and we are all liberals!
Before I endeavour to outline some special aspects of the conditions in my own constituency there is one point I want to clearly establish. I am outlining this picture in a purely objective manner without attempting at this time to apportion the responsibility for this situation to any existing authority particularly. Census reports from the 1951 census give us the following information with regard to the population of Kent county. During the ten years involved there were
8,000	births registered. During that same period of time 2,000 deaths were registered. Yet our net increase was but 1,000. It is therefore apparent that in those ten years

5.000	people, or about 83 per cent of the net natural increase, have left the county. Now, if we further analyse the situation we come to other undesirable conclusions. The majority of those leaving the county are those entering the earning period, that is to say our young people. In fact, in checking with the municipal officials, I received the information that during the year 1953 there were but 12 to 15 new homes built in the whole county-that is, in a county of some
27.000	population.
Under those conditions, it is therefore obvious that we are fast moving towards the status of a population composed mainly of children and old people. This in turn brings the unhappy situation where the increasing municipal burdens have to be borne by comparatively fewer people. In fact every year the school budget requirements are becoming heavier, due to an increasing demand for a more advanced teaching program. More schoolteachers have to be hired; new schools have to be built. Yet as soon as those who during their school age were a liability to the municipality reach the age where they should become an asset, they set out for other parts of the country, due to a lack of opportunities at home. The same situation now applies in our church organizations. In my own town of Buctouche we are just starting to build a new church. Due to the high number of large families, we have to build a large church. Naturally we would be very anxious, on the other hand, to keep most of that growing generation with us, when they attain the earning period, so that they could assume their part of the financial responsibility now contracted on account of them.
What is the answer to this situation? There is but one answer: To create opportunities. We are convinced that the greater number of those leaving the county are doing so through a matter of necessity and not through a matter of their own choice. We know that to be a fact, because when these people come back during vacation periods they tell us they would come back to stay if only they could make their living.
And how do we create new opportunities? May I suggest that a special study of the local conditions be made so as to determine every possibility to provide employment for our ever-increasing population. May I suggest, furthermore, that we need at least a few manufacturing industries in our county. While I know that in speaking that way, I may sound presumptuous, I do so for one reason that possibly very few others in this house, if any, could advance: Kent county is without a single permanent manufacturing 83276-275
The Budget-Mr. Michaud establishment. True, we have our fish plants along our shores, but these are only seasonal. For that reason I ask that the possibility of establishing any industry, be it of any size, be seriously investigated at the first opportunity. In the meantime I submit we should direct our attention towards a greater development of our primary industries, namely, agriculture, fishing and lumbering.
Agriculture, to me, always is an appealing subject. I imagine that when you are born on a farm, and brought up on a farm, it leaves impressions in your mind which will never fade. You can never forget those wide horizons, the charms and melodies of nature, the peaceful atmosphere of rural life. Nor can you forget the good people of the countryside, those rugged, hard-working farm men and women, who are the backbone of the country.
Mr. Speaker, let us be all solicitude for our country people; without them, our economy cannot be maintained. I have heard many true statements in this house about our farming people, and about the hard conditions they are facing. But I also feel that many things have been said in this house which contain something more than solicitude for the farmer's welfare; many a speech I have heard here, I submit, reflected more political display than economic dismay. Agriculture is a subject of major importance in our country, too important indeed to be abused for sheer political motives. Mankind has always subsisted through the land, and I contend that our Canadian way of life, depending to a large extent upon the prosperity of the farm, is not on the verge of disruption. When man will work the land diligently, yes in hardship at times, but also with hope, it will provide for him abundantly.
Mr. Speaker, it is well to accept those things which nature provides; but human ingenuity is also essential. Agriculture is the main industry of Kent county. Our farmers for the past few years have enjoyed certain advantages of great benefit to them; namely, the services of a devoted -class of agronomists, the benefits of the price and support board, the federal freight assistance, the helpful influence of the maritime co-operative services, free courses supplied by a school of agriculture, and others. Yet they also have their difficulties. The farmers of Kent county, like those in most part of the maritimes, are mixed farmers. The mixed farmers are probably those we hear the least about, although their difficulties are as great as those of any other class of farmers. Due to the small acreage of the Kent county farm there
4350	HOUSE OF
The Budget-Mr. Michaud remains little possibility of increasing the actual operations, which often fail to provide sufficient income to make it profitable. I would, therefore, be very anxious to see that an economic survey be conducted to ascertain the possibilities of improving the present conditions.
In that respect I am convinced that there are two fields of endeavour which, if carefully studied, could be very profitable to our farmers. First, I am sure that we are losing the opportunities of a profitable market in the canned vegetable and canned fruit business. I can think of no reason why we in the maritimes should look to the outside to supply our needs of those food commodities. Vegetables of almost every kind, and many varieties of fruits, grow well in our part of the country. And the vegetable crop arrives during vacation time, when the Children of our large families in Kent county could supply advantageously the necessary labour to pick those crops. And the high freight rates now existing in the transportation of goods would add to the advantages of such a project.
Secondly, I feel that for somewhat similar reasons we should be able in the maritimes to provide for our own requirements of canned milk. It was pointed out a few days ago by the hon. member for Westmorland (Mr. Murphy) that the design of the maritime industrial economy, in his own words, has suffered a decline since 1867. This situation, in some respects, has probably been brought about by an inferiority complex detrimental to our own welfare and prosperity. Why before perspectives like these should we meet only sentiments of doom, just because the initiative should start at home rather than somewhere abroad? In fact, a few experiments in some parts of the maritimes have already been made in these fields, and the results have proved very satisfactory.
A few years ago, in some sections of New Brunswick, no one had ever thought of making a great business of the strawberry crop. Today in those same areas this crop has become a thriving business, which brings good returns annually. Why could we not obtain the same results in other similar fields? These projects, canned vegetables, canned fruits, and canned milk, could be studied from a double angle. First, by subsidizing local firms or organizations willing to undertake such projects; or, secondly, by inviting firms already in those lines of business in other provinces to open branches in our own region. Such industries, I am sure, would be of great benefit to all in the


maritimes, to the farming population particularly, and in a special manner to my own farming population of Kent county.
Mr. Speaker, may I be permitted to say a few words about fisheries. The fishing industry in Kent county in the matter of importance comes next to agriculture. It will be easily understood, therefore, that I attach great importance to this subject. The people of the fishing villages of my constituency are hard-working people, striving to derive from their labours, sometimes with great risk, a modest subsistence. There are two observations I wish to make at this time, with regard to this industry.
First, I want to draw the attention of the government to the fact that I believe the time has now arrived when we should give more importance to education in the fishing industry. If I remember correctly, the hon. member for Gloucester (Mr. Robichaud) in his speech earlier made reference to the matter, and I concur in what he said. In agriculture, for instance, we have our technicians, our agronomists, our agricultural schools, our farm organizations. Our fishermen are also confronted with their problems, but have no institutions to assist in solving them. New regulations in the fishing industry are enacted every year. Most of the fishermen hear of these through government officials living in their midst, not as technicians ready to assist but as officers to enforce the law.
I believe if more stress was placed upon educating these people in the different aspects of their profession a lot of complications would be eliminated when law enforcement is applied. I am happy to say that an experiment of that nature will be attempted by the Department of Fisheries in Kent county shortly. I had requested that competent authorities be sent into the different fishing centres of the county to explain, in a series of educational talks, the numerous aspects of the lobster industry. This, I am informed, will be done before the next fishing season, and I am very happy about it. I hope that this initiative will be but a first step in a complete educational program for our fishermen everywhere.
I feel that in my own part of the province of New Brunswick, facilities for such a program could easily be obtained at St. Joseph's University. This institution, through the services of its extension division, has already proven to be of great assistance to our population, and I am sure the authorities would welcome the opportunity of further participation in the education of the fishing class of our population.

My second observation, sir, bears upon a subject of a particular nature: the oyster industry in Kent county. I can well remember when a very few years ago, this industry was very flourishing in my constituency. Today it has completely disappeared. And in the face of the present economic conditions of my county the importance of restoring this industry cannot be overemphasized. Our departmental technicians and scientists have the knowledge of the causes responsible for this condition. I now urge them to investigate the situation, and to use every means to revive the oyster industry in Kent county. We need it.
The third industry of Kent county is lumbering. Many depend upon it for their main source of livelihood, others as a supplement to their farm and fishing income. As a further result, this industry provides a substantial source of labour for the stevedoring industry during the navigation period, around the ports of Buctouche and Richibucto. The recent recession in the lumber industry has been felt in almost every business field of Kent county. It is hoped, therefore, that we will soon witness a return to those conditions when activity will again reign at its peak in our forests, along our roads, and around our ports for a better climate in the economy of Kent county.
I have no illusions, Mr. Speaker. The mandate I agreed to carry when elected to this house is heavy. I trust that with guidance and assistance all will be well.


Mr. W. M. Hamilton (Notre Dame de Grace):: It was with more than passing interest that I listened to the remarks of the Prime Minister (Mr. St. Laurent) this afternoon. It rather seemed to me that the Minister of Finance (Mr. Abbott), having applied the lash a little while ago, the Prime Minister was now holding out the carrot, and that both of them, to a certain extent in their attitudes, seemed to feel the province of Quebec in its attitude was playing a little bit of the donkey. I for one cannot go along with that feeling. I do feel that we learned this afternoon there was going to be no federal-provincial conference in the immediate future. We learned that the Minister of Finance was not really being nasty in his remarks in the budget debate. He did not really slam the door. We did not learn very much else. It was unfortunate, first because we do very much need a conference between the provinces and the federal government at this point to resolve some of these difficulties, and we need it, Mr. Speaker, held in an atmosphere of amity, good understanding and 83276-275J
The Budget-Mr. Hamilton co-operation, and not in an atmosphere of mutual vilification, no matter how it is clothed.
We also need at such a conference to realize, all of us coming to that conference, that certain parts of this country have peculiarities that they are very proud of. The government, and particularly some of its luminaries, must realize this and approach the negotiations with the provinces of Canada with an understanding of the peculiarities and the differences of each region.
Quebec, Mr. Speaker, does not want to be set aside and treated as a region which is apart. We do have our regional differences perhaps; we have our prides and our peculiarities but I am an English Canadian coming from Quebec and that is why I am treating this subject in this way. Since I live in that province and meet the residents of that province day after day, so many of whom are French Canadians, I realize that they, their province, their philosophy and their thinking have made a tremendous contribution to the development of this country. Partially because of that and partially because of their own long history, they are jealous of their prerogatives.
They want the freedom to develop and to keep the traditions that they hold most dear. I hold no brief for those within Quebec who are isolationists and who would set the province apart. I hold no brief either for those here at Ottawa in this government who would set Quebec apart. I feel that perhaps the time has come when some of these things should be said, and when these regional differences and the necessity for operating within them should be recognized and should be emphasized.
I know as I go across this country, and I have been across it from one end to the other, that there are few people who realize just what is in the minds and in the hearts of most French-Canadian citizens in Quebec. They think of them as a people who perhaps want to live completely unto themselves. They do not realize that the French Canadian views himself as the first Canadian, as the one who is proudest, not only of his own little portion of Canada but of Canada as a whole. He views himself as having made, and as continuing to make, a tremendous contribution to the development of this country of ours. Within that framework, however, he does not feel that he should be anglicized or that he should have certain pressures exerted on him which would change his culture, that culture which has contributed so much to this country of
4352	HOUSE OF
The Budget*-Mr. Hamilton ours. Nor does he feel that he wants to impose his culture, his religion or his way of life or anything about him, upon the other parts of Canada.
He truly wants to live in amity with everyone. I think perhaps, Mr. Speaker-I hesitate to mention this-the change which those of us who live in Quebec can see in the attitude of those who live with us in the province towards international affairs bespeaks more than anything else the willingness of those in Quebec to learn to co-operate, and to change and fit themselves into the world as they know it. We do know that over the years the majority of the residents of our province have keenly felt the necessity for avoiding foreign wars or foreign entanglements. There have been many almost catastrophes that have occurred as a result of that feeling. Today, as our province becomes more urban, as the people of Quebec have learned more and have travelled more, the attitude of everyone in the province, French and English, toward international affairs has changed a great deal.
Just recently I read in the newspaper, for example, that the question of conscription, so long almost a fighting word in that province, was no longer a fighting word; that the people of Quebec were coming more and more to be prepared to play their part, as they have always done when the chips were actually down, in all phases of international affairs. I cite that, Mr. Speaker, and I do so perhaps using words very poorly, as some example of the thought I am trying to get across. It is a sincere desire on my part that this government should do more than simply say that the door is open. After all, doors are open under many circumstances, but people do not necessarily call at the door or go through the door unless they have reasonable assurance that on the other side they are going to be met with a welcome; they are going to be met with co-operation and kindness; they are going to be met by people who really want to sit down with them in amity and understanding to work out their problems.
I suggest, Mr. Speaker, that this government should give more indication than it has so far, not only that the door is open, but indicating the type of reception that will be found by those who go through that door. I believe that perhaps we have not as yet heard too much about that. Above all let us remember that while those in Quebec are particularly affected by this problem at this particular moment, it is a national problem that affects every province in Canada. It is going to affect us on a continuing basis until a reasonable solution is found. The evasion of the issue by not calling a federal-provincial conference is merely postponing the difficulty. rMr. Hamilton.]

May I call it six o'clock, Mr. Speaker? At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
William McLean Hamilton: Mr. Speaker, when the house rose I had just concluded making a few remarks about the possibility of a federal-provincial conference. I would like now to turn my attention to the budget generally and express at least my personal regret at the general tone of the budget and my views on what it contains. I rather like to think of it as having been brought down by a likeable Minister of Finance who brought in an unlikeable budget. It is always the case that when unpleasant things are brought in by pleasant people we never know whether to discuss the unpleasantness of the thing or the pleasantness of the person. Actually this budget is one which seems to perpetuate the government's idea that a million dollars is just a drop in the budget and that decreases in the cost of one department must be balanced by increases in the amount allotted for another department.
There is one thing though we must say about our Minister of Finance and the government generally. They do not allow being rather hopelessly in debt to prevent them from spending. Certainly that must seem to be the case in view of some of the things included in the estimates. It does seem, however, Mr. Speaker, that we badly need a more careful study of the impact of taxation on the Canadian economy. The tax problem today is more difficult than it has ever been before in our history, and it is made so by problems of national security and by the high level of our social security payments. Since there seems to be general agreement that social security payments are necessary in the world of today, there are only two major fields in which reductions seem possible. One lies in the possibility of examining national security payments, and the second in administrative expenditures of all kinds. I think that perhaps in both these fields we have a great opportunity through increased efficiency and the elimination of waste and extravagance to reduce our expenditure quite considerably.
On the other hand, to allow national security expenditure to fall below the level necessary to provide a reasonable measure of national security would be absolutely foolhardy, and also to fail to levy ample taxes for national security and other government expenditure would really be self-defeating because in a time of full employment such

as this we would pay for these expenditures in another way which would, in effect, mean inflation.
We must work toward a solution of our tax problem by making progress in two directions. First, the development and execution of policies which will provide adequately for our national security at a minimum cost; and, secondly, the development of a tax system to meet the necessary costs of government, including the cost of national security, with the least impairment of national growth and the minimum of hindrance on the development of the individual in his work and in encouraging him to make the greatest possible contribution to our economy by providing him with sufficient monetary reward.
To give some idea of how our present tax structure penalizes the individual who makes an above the average income I have worked out comparisons on taxes paid over the lifetime of the statistically average Canadian, and two hypothetical individuals, the professional man and the medium successful businessman. Working from dominion bureau of statistics figures I have assumed that these men were married at the age of 27, which is the normal age for marriage in Canada, that they had their first child two years later, and the second child again two years later, so that you have here something approximating the average Canadian family.
The statistically average Canadian I have described here starts work at 16 and works until he is 70 years of age. It is interesting to note that his income by the time he is 27 years old and married is about $2,380 and then it rises to $2,558 from the period when he is 35 until he reaches the age of 44, and declines gradually from there on. However, throughout the lifetime of this statistically average Canadian-and this average is reached by taking the incomes of all Canadians and averaging them out-this individual never makes more than $50 per week, and on this he must establish a home, keep a wife, and raise two children as well as pay the government during the course of his lifetime the amount of $3,202 in income tax. For a man who never makes more than $50 per week this is an amazingly large sum. It is more than he will make in any one year of his lifetime, and it is more than he would require to put his son or daughter through college.
Then we turn to the businessman and the same set of figures apply. We estimate that he works from 17 to the age of 70 and that his income rises gradually from $2,000 to a top amount of $4,800 and then drops down ultimately as his earning power
The Budget-Mr. Hamilton declines to about $4,000. The Minister of Finance and his taxes, and the Minister of National Revenue (Mr. McCann) with his collections, will take from this man the sum of $21,715.
Then we turn to the professional man, the most highly paid class in Canada. I might add incidentally, Mr. Speaker, that in looking over these tabulations I was amused to find that as well as there being classes covering the professional men, salesmen, employed people and businessmen there was another class covering deceased. This made me realize just how extensive are the operations of the taxation departments.
These professional men start oft at the age of 25. Up to that time they have been obtaining an education. They start off with an average income of $3,000 and eventually their average reaches $7,400 and they finish work at the age of 65 making the sum of approximately $6,500 per year. Throughout the period of his lifetime, Mr. Speaker, this professional man pays the government $34,382 in income tax.
If hon. members will examine these figures for a moment they will see how tremendous is the burden which is being borne by the person who through his own efforts, initiative, or ability stands out above the ruck in any way, shape or form. The average Canadian pays the astonishing amount of $3,202 during his lifetime in income tax alone. The businessman on a medium income of approximately $5,000 a year pays $21,700, and the professional man with the average professional man's income pays $34,400.
We must remember there are men in every walk of life, in business, in factories, and men working with their hands in industry throughout this country who have the ability and even the desire to work a little harder in order to make a little bit more money to improve themselves. But with this tremendous impact of taxation on them as individuals, what incentive is there? It is bad enough when you examine it on the basis of one year; but when you examine it on the basis of a man's lifetime, you can see the reasons which might almost encourage him not to work so hard and not to make such a contribution to our economy when so much of it is going to be taken away from him in taxation.
I should now like to turn for a few moments to one other suggestion concerning the operation of business in Canada. The responsibilities of business and of industry in this country of ours are many; but perhaps the most important one of all is the responsibility of business and industry to improve

The Budget-Mr. Hamilton the living standard of everyone in Canada and to supply steady jobs for those who want to work. In order to accomplish this result, business and industry must constantly improve their present products, they must create new ones and they must persuade people to buy their output. In order to accomplish this objective there are certain methods and media which they can use.
Primarily, they have the work they can do on research on their products and on the improvement of those products. They have the work they can do in the field of research in finding new markets for themselves. They have the work they can do in the field of sales and advertising efforts to move these products into the hands of the consumer once they are manufactured. To me it seems that it is a primary responsibility of government to encourage business to operate in all these fields under all conditions, but particularly to offer business and industry some opportunity and some encouragement to operate in the fields of research and distribution of their products when times are difficult and when perhaps we are in a minor recession. At that time there is sometimes a tendency for business to restrict their expenditures or to cut back on expenditures which they feel can be carried over from one year to another. When sales slip, we must offer them the opportunity and the encouragement to carry on these important expenditures because it is essentially on them that our future prosperity is going to be based.
I suggest to the Minister of Finance that there might apply here something to which I referred last November in the course of the throne speech debate. I greatly regret not having seen something of that nature done when the budget was presented to us. To be specific, I am suggesting for his consideration that every business should be given the opportunity or the right to get a tax deduction each year, in addition to that which is now allowed, up to, say, 3 per cent of their sales dollar, in order that they might buy non-interest-bearing government bonds which would be redeemable at will by the buyer. The payment on these bonds would be allowed as a deductible expense. By the terms of this suggestion this money would have to be used either for research expenditures or for advertising expenditures. The buyer of the bonds could redeem them at will at any time. If he chose not to use the money for the designated purposes, he would be taxable on the amount at the time the bonds were redeemed. If he merely held the bonds for five years, they would be automatically redeemed at the end of the period and the buyer would be taxable on the


amount but he would not be taxed on that amount if he could prove that the amount of money redeemed through the bonds had been invested in research or in advertising. For research, he could use the money for the creation of new products, for new packaging or for new plant methods to produce products more cheaply. For advertising, he could use the money to stimulate the consumer into buying products through any means that were at his disposal.
The important thing is that the government of Canada would lose nothing through the introduction of such a measure because if the money was not used for the designated purposes the government would collect their taxes. If it was used for the designated purposes, there would be additional taxes coming to the government through increased business arising from the use of the money in this particular way and through increased employment which would result as the outcome of research into new products and the sale of those new products.
While this suggestion is perhaps new here, it is not really a new proposition. Something similar to this procedure has been done in Switzerland for some time. While it is a new proposition perhaps in exactly the way it is presented, we must remember that under our present tax laws, business and industry are allowed to do something quite similar in many fields. For example, through their accounting practice they can follow a procedure which moves profits from one year to another, and they can do this quite legitimately. Through inventory valuation they can accomplish the same thing. Through either capitalization or write-offs, at varying rates of their assets they can determine to an extent their taxation. Their depreciation policy generally has an effect on it. Of course, the major item is the carry-forward or carryback of losses in any one year in so far as they affect taxes. Under such a suggested procedure the government is, of course, in the position of getting rather considerable sums of interest-free money for anywhere from one to five years. I have already shown how the government would not lose in taxes collected under such procedure.
In conclusion, I put forward an idea such as this and I point out the heavy impact of taxation on the individual Canadian not in any hope or expectation that hon. members who sit opposite are going to be greatly impressed. I do it almost with a feeling that my words are falling on deaf ears. But it does seem to me we have got to realize at some point that, although it was the individual who built this country in the first instance, in the 1500's, 1600's and 1700's and, with an axe in

one hand and a gun in the other, pushed back our frontiers, although the industrialist and the businessman, that job having been done, have furthered that development in the last forty or fifty years and brought us to the rather comfortable position which we as individuals enjoy today, these incentives and opportunities are gradually being delimited and made smaller and smaller.
The man who thinks big in Canada today, under our government regulations, under government control, under government supervision, is at a disadvantage. In looking across the floor of the house I wonder how someone like the present Minister of Trade and Commerce (Mr. Howe) would have felt if he had started out in life under the same restrictions, controls, taxation and everything else that his successors are encountering today. He is an older man now. He has made his mark, and certainly in the field of industry and engineering it is a good mark. But there are men who are going to come after him, men who are even now pushing themselves forward, who want to make a life here, a life that stands out, a life that means something, a life of accomplishment, who are not satisfied just to be another person, who are not satisfied to do another job but want to really accomplish something, and the incentive is being taken away from those people today.
Admittedly something else is being given in its place. They are being given cushions underneath them and all around them. They are being featherbedded, but the type of man I am talking about does not want featherbedding. He does not appreciate it. He appreciates the opportunity to live and do for himself and for his country to the best of his ability. I hope that in the years to come that type of man is going to be given the atmosphere in which to operate that will encourage him and lead him on. I do not think it ever will be done by the feather-bedders who sit opposite. It will be done by other groups, and primarily those among whom I sit, who have a keener appreciation of what built this country and made it great, and who can make this country greater than any member of the present government can even envisage.


Mr. F. G. J. Hahn (New Westminster):: Mr. Speaker, there are certain problems pertaining to the lower region of the Fraser valley and to British Columbia itself that have been well dealt with, such as the need for adequate diking and diking facilities, river crossings, provincial assistance and many others, and I do not intend to spend much more time on them. I wish to add my voice in endorsation
The Budget-Mr. Hahn of the stand taken by those who have raised them. We need dikes. Many people live in fear of our mighty Fraser river. We need means of crossing it, and there is a federal responsibility here. The Fraser is the St. Lawrence of British Columbia and we should regard it as such.
The fact that the Prime Minister (Mr. St. Laurent) has entered this debate is indicative of the need for a complete appraisal of the problems with which Canada finds itself faced today. Apparently the provinces are having financial difficulties. We have labour and unemployment problems. We have social assistance problems involving assistance to the aged, to the war veterans, to the blind and to the incapacitated. We have a problem of trade. We have a problem of conservation. The problem of taxation as it pertains to Quebec was dealt with to a degree by my associate, the hon. member for Okanagan-Revelstoke (Mr. McLeod). I would also urge the government to be primarily concerned about the effect that the situation may have upon the morale of thousands of Canadians forced to live in the province of Quebec at the direction of the Department of National Defence. These include men and women in the armed forces and many civil servants who are not there of their own volition. Therefore particular consideration should be given them to see to it that they are not dealt with in this fashion. I was pleased that the Prime Minister agreed that some temporary agreement with the province of Quebec must be reached.
My main reason for taking part in the debate at this time is twofold. I wish to draw the attention of the government to a problem that is applicable particularly to my own riding and to the province of British Columbia as a whole but is also national in scope. I wish to deal with the question of fisheries and also the matter of our old age pensioners. With respect to the old age pensioners I have a part of table 23 here from the census of 1951 which deals with age distribution and gives the figures for those 70 years and over in the various provinces compared with the total population.
I have taken the time to figure out the percentage represented by those 70 years of age and over compared with the total population of the dominion. If I might be permitted at this time to have the table placed on Hansard I think I could save an appreciable amount of time.


Some hon. Members:: Agreed.

The Budget-Mr. Hahn Mr. Hahn: The table is as follows:
	Age 70	Total	Percentage of total represented by those
and over		Population 70 and over	
Canada 	652,776	14,009,429	4-7Newfoundland ..	14,419	361,416	3-9Prince Edward Island 	6,439	98,429	6-5Nova Scotia ....	35,485	642,584	5-5New Brunswick	24,747	515,697	4-8Quebec 	138,936	4,055,681	3-4Ontario 	245,266	4,597,542	5-3Manitoba 	38,121	776,541	4-9Saskatchewan ..	38,110	831,728	4-5Alberta 	37,504	939,501	4-0British Columbia	73,210	1,165,210	6-3New Westminster Federal Riding Delta 	434	6,701	Langley 	887	12,267	Surrey 	2,486	33,670	New Westminster 	1,754	28,639	Riding Total	5,561	81,277	6-84
On a national basis those 70 years of age and over represent 4-7 per cent of our total population. The provinces in which the figure is greater than the national average are Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba and British Columbia. The provinces in which the number of these 70 years of age and over is less than the national average are Newfoundland, Quebec, Alberta and Saskatchewan. The two provinces which are well above the national average are Prince Edward Island, with 6-5 per cent, and British Columbia with 6-3 per cent, compared with the national average of 4-7 per cent.
My own riding of New Westminster is well above these averages with 6 84 per cent of its population over 70 years of age. The population of the riding of New Westminster compares with that of the province of Prince Edward Island. The reason for people settling in these two regions, Prince Edward Island and the coastal region of British Columbia is, I find, primarily climatic, but many have also come to my riding on the specific advice of their physicians.
I am not going to deal with the emotional aspect of the problem of old age pensioners at this time. As the Prime Minister said, we must be realistic. As I see it, the problem is a realistic rather than an emotional one. The provinces of British Columbia, Alberta and Saskatchewan have long realized the need of assisting these people.
Some years ago British Columbia supplemented the allowance of the aged by $10 a month. Alberta likewise had given their aged a supplementary allowance of $10 a month. So-called socialist Saskatchewan has


helped their aged to the extent of $2.50 a month. This year British Columbia and Alberta have each increased their assistance to $15 a month. Saskatchewan has undoubtedly found its cost of socialistic automobile insurance and health insurance will not permit it to increase its supplementary allowance, and so has added nothing to its supplementary allowance.
So we find that British Columbia gave $15 supplementary allowance per month, that Alberta gave a similar amount, and Saskatchewan $2.50. On the yearly basis the aged in British Columbia receive $180 supplementary allowance, those in Alberta receive the same amount and those in Saskatchewan $30. In the rest of Canada they receive nothing in addition to their regular old age pensions. But those persons eligible for old age pensions and supplementary allowance have a total income in Alberta and British Columbia of $480 plus $180 or $660, and in Saskatchewan $480 plus $30 or $510. In the other provinces of Canada they receive only $480.
Apparently, federally, we expect our aged to live on less than one-half the amount we allow by way of income tax exemptions for others. The problem resolves itself into four parts. First, there is the individual's ability to get and to hold a job. The individual must obtain a job and he must hold it if he intends to supplement his own allowance.
Secondly, there are municipal obligations -the ability to give medical and relief services to the individual. Then there is the provincial obligation-the recognition of its obligations to the individual and the municipality.
Fourth, we have the federal obligation, which includes the three-obligations to the province, the municipality and the individual. If we analyse each particular case we see this: In the individual we have as a society taken this man off the market as a labourer, and he therefore of necessity frequently becomes the responsibility of the state. We have declared him too old. He is a senior citizen. The municipality in such areas as Delta, Surrey, Langley and New Westminster, which I have the honour to represent, are hard pressed. They have many more than their comparative share of the senior citizens. The figures show that 6-8 per cent of their population are those of 70 years of age and over, while the rest of Canada has only 4-7 per cent. I might point out at this time that their average of 6-8 per cent is much higher than the rest of British Columbia, which is only 6-3 per cent; and that, in turn, is much higher than that of the rest of Canada. Many of them are not revenue producing. In the past they have not contributed to the cost

of operating the municipality, and they have not paid their share of the utilities costs. Many are ill and many are in need of medical help.
Then we find such municipalities as Surrey and Delta with no hospital facilities. They depend upon surrounding areas; they need and wish to build a hospital. They have in this particular instance tried for the last ten years to raise funds to do so, but have never been able to. The national health grant of $1,000 per bed is not sufficient to assist them, even though they have more than their share of the number of aged, as compared with the rest of Canada. They need help.
This poses the question: Is it the responsibility of the municipal district that has not received any revenue from some of its citizenry to supply them with this help; or is it a federal responsibility to try to help in these areas those who have come from other provinces? And therefore should not the federal government make a substantial contribution to those areas having considerably more than the Canadian average of aged? Certainly it would appear they are deserving of some help.
In British Columbia we find the average cost of hospitalizing senior citizens is $15 per month. Our municipalities should have a direct claim on each area which has sent us some of its senior citizens. You have most of the dividends of their labours. We have some of your finest citizens you have had.
The next obligation is provincial. I maintain that since British Columbia now gives a supplementary allowance of $15 per month to these people under a means test they have met their obligation. This is specially true when one adds the medical expenses of our senior citizens to this group. As I said earlier, it is at an average cost of $15 per month for old age pensioners.
Now I come to the federal responsibility. The major taxation field is in the hands of the federal authority. They give $40 per month. My proposal would be that the federal government should increase the old age pension to at least $60 per month. Where any man or woman is denied the privilege of working because he or she is too old, such persons should not be expected to live on less than $60 per month. That should be the minimum allowance from the federal government. It must be kept in mind that the senior citizen has only one alternative: He must choose food, clothing or shelter. Canada is a cold country, so he must pay the piper for a place to lay his head. That leaves him little with which to buy things to eat and to wear. The more he eats the less he wears; the more he wears the less he eats. Simple,
The Budget-Mr. Hahn isn't it? Let us try it some time-or perhaps the thirties give example enough. I appeal to hon. members to make this adjustment.
Earlier in the course of this debate the member for Okanagan-Revelstoke referred to the conservation of our forests in British Columbia, a problem to which we must give attention. Trees do not mature overnight. Reforestation is a problem of today, not of the distant future. It is the responsibility of this government to help protect the industry of the future. And I am sure every member in the house, be he Liberal, Conservative, C.C.F., Social Credit or an independent, will say, "We must protect Canada's forests". Therefore I shall not devote any more time to this problem. But as I said earlier: Conservation is one of those factors that require complete appraisal.
Frequently I feel the hon. member for Vancouver-Quadra (Mr. Green) is right when he suggests that if the capital of Canada were much farther west we could expect different treatment from what we get today. I refer specifically to the apportionment of the tax dollar in direct relation to what our province contributes to the taxation coffers of the Minister of Finance.
I do not refer to the treatment from the Minister of Fisheries (Mr. Sinclair). The people of my province for a time have had the utmost respect for his decisions. Up to now the Minister of Fisheries has given careful consideration to the fisheries problem in British Columbia. We now have a further problem of conservation, however, which has not received the careful study we think he should have given it. Therefore I am bringing the question of conservation of pink salmon on the Fraser river to his attention. We find there are three means of destruction of pink salmon, the first of which is the natural means, the second of which is man's stupidity and the third, fishing.
To deal first with the natural process of destruction. I would point out that this is the law of balance in nature whereby fish eat fish and birds eat fish and spawn, thereby gradually bringing about a balance through the process of survival. This, it seems to me, is self-explanatory.
The second means of destruction is that of man's stupidity. The erection of dams and other artificial impediments prevent fish going to their spawning ground. And we might add here the factor of the pollution of water about which we have heard so much in recent days. Quite frequently pollution destroys spawn and fish.

The Budget-Mr. Hahn
The third element of destruction is that of fishing. This is a process of deliberate destruction by man. I would say that the fisheries problem is a dual one.
I should like to point out what the province of British Columbia has done in the matter of the conservation of salmon. I shall read the report issued by the Fisheries Council of Canada on April 23 of this year, page 2, under the caption: "British Columbia bill to guard Salmon runs endorsed":
Vancouver Sun, April 9 reports: "Fisheries Minister Ralph Chetwynd in Victoria received a pat on the back for spear-heading provincial legislation to protect salmon from the river dam construction. Fisheries Association of British Columbia gave Chetwynd "full credit" for introducing Bill 47, an amendment to the fisheries act which received second reading in the legislature Wednesday. "The bill indicates the government does not intend to allow construction of hydro-electric installations at the expense of our valuable salmon fisheries", the association said. "This fact is implicit in the wording of the bill which clearly states the minister shall approve plans for a fishways, screens and other devices before construction starts." The association described Chetwynd as the "first provincial fisheries minister to fully recognize and accept responsibility which Victoria shares with Ottawa for protection of British Columbia resources against unilateral development."
Let us now go to the federal field. Here we have an announcement by our Minister of Fisheries that calls for the closure of the Fraser river above the Pattullo bridge after September 16 of each year. This affects the livelihood of some 600 fishermen, some parttime and some full-time. Now, Mr. Speaker, the fishermen on the Fraser river are aware of the need for conserving the British Columbia pink salmon run. 1 am sure our Minister of Fisheries will agree with that, but they are unhappy, very unhappy for very good reasons. The Department of Fisheries in its very democratic fashion sent a questionnaire to each fisherman and others interested in this business of conservation and related British Columbia fisheries problems of which closure of the river to fishing was question No. 5. To the best of our knowledge it is not proved by the majority report. If it is, then certainly the plea and resolution of the fishermen should be given more complete consideration.
I will therefore read a resolution of which I am sure the minister has a copy. I refer to the resolution issued by the United Fishermen and Allied Workers' Union, dated April 8, 1954, as follows:
Whereas the fisheries minister James Sinclair has officially stated that the Fraser river above Pattullo bridge will be closed each year after September 16, and
Whereas the two reasons given are conservation and quality, and
Whereas it can be shown that there is no difference in quality below or above the bridge and it does not offer a solution to conservation by closing that area but does, as a result, cause overcrowding

in other areas and creates extreme hardships to those fishermen who cannot move to other areas.
Therefore be it resolved that we use every means at our disposal to have the government rescind the closure above the Pattullo bridge.
Be it further resolved that we make a strong demand for the postponement of any final decision until 1956 in order to provide ample opportunity for full discussion with the fishermen directly affected, to give them ample opportunity to make adjustments, and to allow them to participate in the Adams river sockeye run in 1954.
Be it finally resolved we demand special compensation for the fishermen directly concerned by the federal government in event the department still insists on proceeding with the closure order.
I should like, Mr. Speaker, to deal with the preamble to this resolution. There is no question about the need of an explanation respecting the fact that the minister has called for closure of the fisheries. As far as the fishermen and I are concerned, the reason requiring the closure for conservation purposes meets with our approval. There is definite need for conservation of fish. As far as the quality of the fish is concerned, however, as you can discern from this resolution, up to now it has not been definitely ascertained that any man can go to the Fraser river and take samples of either fish that go up that river above or below the Pattullo bridge, and taste any difference in quality with any degree of accuracy. As far as the resolutions themselves are concerned I shall deal only with the one reading:
Be it finally resolved we demand special compensation for the fishermen directly concerned by the federal government . . .
In this particular case I would say that probably the fishermen concerned might have been much better advised to have requested the government rather than demanded that they do something about it. I am sure that a request would meet with more consideration. I would say that these are probably desperation tactics on the part of those particular individuals concerned.
On April 12 the United Fishermen and Allied Workers' Union-the same union to which I made reference a moment ago-had this to say in part II of a brief which I understand they have sent to the minister:
On February 5, 1954 the United Fishermen and Allied Workers' Union submitted a lengthy brief to the Department of Fisheries opposing this new regulation. We quote here from this brief: "The area above the Pattullo bridge accounted for less than 10 per cent of the sockeye, less than 3 per cent of the chums and less than 2 per cent of the cohoe, caught by Canadian fishermen in the Fraser river and its main approaches. Even in the Fraser river alone, area 29D (above Pattullo bridge) accounts for only 18 per cent of the sockeye, 16 per cent of the chums and 23 per cent of the cohoe. It is therefore clear that the elimination of fishing in this area is not vital to conservation of the salmon runs to the Fraser river. We might add that salmon fishing has been pursued in this area from the very beginning of the industry. We

do not believe it has suddenly become impossible to conserve our salmon, except by closing down this entire area.
We must also draw your attention to the fact that the date proposed for the closure of area 29D (above Pattullo bridge) coincides with the arrival of the Adams river sockeye run at the mouth of the Fraser. Thus, the fishermen who have been curtailed in their fishing efforts during the past eight years in order to rebuild the Fraser river sockeye runs would now be cut off. for all time, from any participation in these late runs of sockeye".
Mr. Speaker, reference to the documents that I have just read indicate that it is not a problem of conservation to deprive these men of fish that they have already conserved. They have a certain right to expect that they would have the privilege of fishing on these particular grounds. For the past eight years they have been protecting those grounds for the very purpose that they would have the right to fish when the fish began to run. Now that they are beginning to run they are being deprived of that particular privilege. I do not think that is quite playing cricket. I continue with the document:
The United Fishermen and Allied Workers' Union is absolutely opposed to the closure of the area between New Westminster and Mission bridge. We feel we should briefly sum up our objections as follows:
1.	Conservation of fall salmon, pinks and chums, or any other species of salmon, is not mainly dependent upon closure of this area.
That was indicated in the percentage of fish that was caught in that particular area, Mr. Speaker. I must say that I concur in the suggestion that the conservation of the fish is not dependent upon that area above the bridge. I continue:
2.	A treaty with the United States covering conservation of pink runs and equal catch division is the real need in conserving pink salmon and not the closure of any section of the Fraser.
You will probably recall that at the time of the throne speech I spoke along this same line and suggested that probably an agreement might be reached between the authorities in the United States and ourselves, particularly with the state of Washington, which is concerned, for the purpose of drawing up a commission similar to the sockeye commission to carry on the work of study of conservation. I understand that to a degree this commission is set up. I continue:
3.	Equalization of weekend closures between the approaches to the Fraser and the Fraser river combined with a deliberate program of equalizing catches between Canadian seiners and gillnetters would at the same time provide a better opportunity to apply conservation measures.
In respect to this suggestion that the fishermen themselves had to make, it appears to me that if the seiners and gillnetters are prepared to take off an extra day each week
The Budget-Mr. Hahn to permit the salmon to run up the Fraser, and therefore allow the fish to spawn, it would be a more reasonable excuse than to deprive 600 fishermen in the one section of the river from carrying on the fish trade that they have been used to doing for so many years. The brief continues:
4.	Overcrowding in the industry must be solved by a fair program of licence limitation, not by eliminating our historic fishing grounds.
I would not completely agree with this idea of licence limitation. The very fact that we are living in a world of free enterprise would, in itself, indicate that each person should be privileged to enjoy fishing in an area where others are permitted to do so for commercial purposes. However, since we are limiting the number of fish that we are allowing these people to catch, there may be a certain justification in permitting our government to issue licences to them.
Now, there is one other suggestion that I would add to this group respecting licences in those fields, and it is this. In the event of licensing, and in the event that the minister feels we are going to have to close the river, then I would suggest that the government should grant these licences and make them revocable on a basis of possibly ten or fifteen per year, as the case might be, and provide these fishermen with another means whereby they can earn their livelihood. One must understand the situation thoroughly. One must realize that the Pattullo bridge in this instance divides the Fraser at the city of New Westminster. About half of the gill netters work on the east side of the Pattullo bridge and the other half on the west side. What is being suggested is that the group shall move from the eastern side of the bridge, about six hundred of them, down into the western side of the bridge where there is a larger body of water. However, by not stopping these fishermen from fishing in that area west of the bridge I maintain, and so do the fishermen, that we are just transplanting the problem. We are not going to solve the problem of conservation. We are still going to have to tell these people they can only fish so many days each week.
I believe that the Department of Fisheries, and the capable minister, realizes that since the Fraser river channel is becoming one of the continent's most rapidly growing fresh water navigation centres, we should at least be prepared to stop fishing in that area at some time. I know that the fishermen in that area fully realize the necessity for cutting down on fishing licences, but they are not prepared to go along at this time with the sudden request that the fisheries shall close on September 16. I am quite aware of the fact that this thing has been growing for

The Budget-Mr. Lusby years. I do know that the fishermen, too, had 'been aware of that fact to a degree, but they had not been told at any time that this was the year so that they might have prepared themselves for it. It is for that reason they are making the request that an extension be granted this year and possibly to 1956, which would give them the chance to reestablish themselves in other occupations.
As I said earlier, some of them are not fully occupied in the fishing industry, but they supplement their income by fishing. The Minister of Labour (Mr. Gregg) knows how difficult he would find things if they gave him another 600 unemployed and said, "Here, you have to find jobs for them". It would make him quite unhappy, and I would sooner see a group of fishermen partly unhappy than see our Minister of Labour completely sad. I, therefore, request that the Minister of Fisheries and this government reconsider the announcement of the closure of the fisheries on the Fraser river after September 16 each year, and deal with the problem in the manner it has been my privilege to propose.


Mr. Speaker:: Some time earlier in his speech, the hon. member for New Westminster (Mr. Hahn) asked that certain tables be printed in Hansard, interspersed amongst his remarks. I am sorry that at the time he made his request I was conversing with another member, so in order to assure the regularity of the proceedings I should like to ask if the hon. member has the permission of hon. members?


Mr. Fraser (Peterborough):: May we know what those tables were?


Mr. Speaker:: At the time the hon. member made his request, other hon. members attempted to direct my attention to his request by saying they were agreeable to having these tables printed in Hansard. At the time I believe the hon. member explained what they were and it was the consensus of the house they should be printed in Hansard. I wanted to ensure the regularity of the proceedings at this moment, and I thank hon. members for their co-operation.


Some hon. Members:: Agreed.


Mr. A. R. Lusby (Cumberland):: As we
reach the later stages of this budget debate, I have no desire to prolong its life unduly. I should like, however, to take the opportunity to make some comments with regard, not only to the budget itself but also to certain matters of public interest with which this or any budget necessarily has a definite connection. I think also, Mr. Speaker, I shall take just one moment to extend to my colleague and office mate the hon. member

for Kent, N.B. (Mr. Michaud), who apparently has been promoted to the cabinet, my congratulations upon his excellent maiden speech delivered in this chamber this afternoon.
Like many other citizens I have in the past followed with some degree of attention, through the medium of the press and the radio, the annual presentation of the budget. The presentation of this budget is, of course, the first one that has been accompanied- I will not say adorned-by my presence on the floor of this house, an effective guarantee of my keener interest. I suppose, therefore, that I may still fairly call myself, to an appreciable extent at least, a budget neophyte. The word, I think, in addition to its meaning as a novice or a tyro, may also designate a convert or new believer. I find that on the present occasion, and with reference to myself, I may safely use it in both senses. It is my firm opinion that this budget is a sound and equitable one, a budget suited to the times. In his presentation of it on April 6, the Minister of Finance (Mr. Abbott) has given to the Canadian people, whom it so immediately affects, a budget statement which they have found both acceptable and, for the most part at least, reassuring.
Viewed merely as, shall we say, an extended communique from the taxation battlefront, or a recurring tally of what is required of our citizens in the way of rendering unto Caesar the things that are Caesar's, the budget forms a financial document of exceeding importance. But in a broader sense, seen as a mirror of our entire national and economic life, our external relations in a troubled world and our prospects for the future, the budget and its presentation go far beyond mere finance and become a matter of vital concern to all Canadians. That, I take it, is the major reason for the wide latitude of topics traditionally allowed in this debate.
During the last few months much has been said, both within and beyond the confines of this chamber, concerning the perils, the difficulties, the problems which menace our national safety, our democratic freedom and our diversified economy. In the spate of discussion there has been, to my mind, a very real distortion of emphasis, in the economic field at least, by the opponents of this government. Marked stress has been laid upon the darker aspects of the picture, but there has been a tendency to underrate or ignore the existence of those favouring factors which can operate so powerfully as a redressing influence. In my opinion, the minister's budget speech has contributed notably to restoring a saner perspective.
It is true that in that vast and often obscure sphere of international relations,

wherein lie ultimate peace or war, there cannot as yet be any high degree of optimism, nor did the minister attempt to exhibit it. Even here, of course, there are favouring factors. But for all the increase in armed strength of the west, for all the earnest if groping efforts towards attainment of lasting settlements, no responsible person can seriously argue that the shadow of a third world conflict does not still hang dark above us, an ominous and constant threat to our security and very existence. And until that shadow departs and a stable peace is assured the cost of our national defence must inevitably continue as by far the largest single classification of government expenditure. Even success in the current negotiations at Geneva can achieve only a troubled peace, permitting no relaxation of vigilance. To drowse at any time beside the bear and the dragon would be to court a rude awakening.
To all considerations of peace and war there has been imparted an urgency, as of desperation, by the recent revelations of the stupendous powers of mass destruction now available to man in the hydrogen bomb. To many the results of the Pacific tests have meant literally the end of all hope, and a descent toward either inertia or hysteria.
The minds and souls of men recoil in horror from the grim potentialities of the future. And yet here too there has been, I think understandably enough, a distortion, a confusion in popular thought, between the dangers which total war would bring and the danger of its occurring. The imminence of the latter has tended to be confused with the magnitude of the former.
But that greatest of statesmen, that rarely fallible prophet of the international scene, Sir Winston Churchill, has made a calmer appraisal. To him the hydrogen bomb has in fact lessened, rather than augmented, the likelihood of a third war of the great powers. Apart altogether from the stature of the British Prime Minister, his reasoning appeals to many, among whom I count myself. What man, or group of men, would deliberately invoke a world conflict when the price and fruits of victory have so terrible an identity with the penalties of defeat?
That is not to say that the hydrogen bomb is or ever can be a guarantee of peace. Great wars have been precipitated in the past, and may be again, by the accident of events, with scant deliberation or forethought on either side. And the hydrogen bomb may even increase the incidence of perimeter wars such as we know in Korea and Indo-China. For the communist world, shrinking, even as we do, from the consequences of a direct clash
The Budget-Mr. Lushy between the great powers, may well divert an increasing segment of its strength towards the fomenting of such acts of aggression as may, with little likelihood of H-bomb reprisal, sweep one by one the lands of Asia, of the Middle East, and of Africa into its pouch. That is a mounting danger, not to be effectively met or averted by any threat of the hydrogen bomb, which, in the circumstances, as our enemies could well foresee and count upon, would almost certainly never be translated into action. And yet we must be resolute and able to act against any such aggression. We know that if, by gradual encroachment elsewhere, the free west is reduced to the status of a beleaguered fortress, a larger Dien Bien Phu in a uniformly hostile world, the ultimate fall of that fortress is inevitable.
Is it not apparent then that to guard against and, if necessary, to resist and repel all or any such aggressions wherever they may occur, the democracies must maintain their armed strength at the highest level in every conventional form as the only means for effective action?
And again, even in a major conflict, one cannot entirely ignore the possibility that the horrors of the hydrogen bomb may impel a mutual abstention from its use. And finally, even if these bombs fall, many experts of war still envisage a real and vital role, both in defence and in attack, for the fighting forces of land and sea and air which have constituted our bulwarks of the immediate past.
To me, therefore, the suggestion that such existing forces, with their conventional weapons, are obsolete, their maintenance and expansion a needless and wasteful drain upon this country's economy, has no foundation in either present reality or future probability. It could be justified only by the achievement of a just, enduring, and universal peace, and that is still far from us, not yet engendered in the minds of men.
Not only this year, therefore, but indefinitely we must continue to provide for our national defence those vast sums which represent so great a part of our entire governmental revenue. No budget can be compiled, no plan laid for the expansion of the national economy or the advancement of our people, without taking into full account that formidable necessity. Certain critics of the present budget might well bear this more clearly in mind.
I turn to our economic situation concerning which, as I have said, I see an undue distortion toward gloom in the professed thinking of many opposition members in this house. As a corollary, they have inevitably accused the Minister of Finance of unwarranted

The Budget-Mr. Lusby optimism in his budgetary conclusions. This is not, by many, the first year in which his critics have laid that charge at his door. Thus they have been hammering at him, like woodpeckers against armour plate, for the best part of a decade. But he has confounded those critics uniformly and often -nine times, the count, is it not? And it is my prediction that the present occasion will constitute the tenth. They may, however, draw some consolation from the thought that thereafter their humiliation, that is at the hands of this particular Minister of Finance, seems likely to end.
As I have indicated, I hold the minister's outlook for our economic future to be amply justified. Indeed, there are already signs that the earlier government forecasts of an upward trend in business as the year rolled on are to prove accurate. And considering the position of Canada, the vast possibilities for development within her borders, the wealth of her natural resources, and the character of her people, I see little room to doubt that her history for many years to come, given only peace, will be one of advancement and prosperity.
That is not to say, Mr. Speaker, that our progress will be without minor, sometimes perhaps substantial, interruptions and setbacks. One must never forget that dependent as we are on foreign trade to dispose of much of what we produce we are far from being complete masters of our own commercial destiny.
I do not wish to imply by anything I have said that I am in a mood of unreflecting optimism. Indeed it would be difficult for one from the maritimes to be ever wholly optimistic concerning the economic future of those provinces, for our special economic problems we have always with us, to a greater degree, I think, than any other area of Canada.
Not long ago, Mr. Speaker, another and veteran member of this house, from a different part of the country, remarked to me that the present session had seen less talk than usual concerning maritime rights. The truth of this statement my brief experience cannot gauge. But if there has been in fact during this session less assertion of maritime rights, or aspirations, or difficulties, I can assure the house that it is not because of lack of material. So long as geography leaves us where we are-and I see no prospect of any imminent change in that regard-we shall remain a distinct regional entity with problems and difficulties uniquely our own.
This brings me to a point on which I wish to lay particular emphasis. Laissez-faire is dead. The evolution of democratic


government has long been toward assuming a steadily widening responsibility for the economic welfare of nations and people. It is a process, I think, not only advantageous but inevitable. That is not to say, of course, that this or any other government is or can be a complete underwriter of prosperity. Business and industry, as in the past, must stand primarily by their own efforts. But few now question that it is an accepted function and duty of this government to foster and encourage, to every reasonable extent, those economic conditions under which business and industry may best flourish and our people correspondingly benefit.
Now, it is my contention, Mr. Speaker, that this responsibility is not discharged in its entirety if, whatever the opulence of the country as a whole, the prosperity of any one region lags unduly behind that of the rest. In such case, I hold it to be the peculiar obligation of the national government to alleviate by every reasonable exercise of its legitimate powers the effect of those handicaps, geographical or otherwise, which militate against that region's economy.
Any dream of a universal equality, or near equality, of prosperity throughout the nation must I fear remain a dream; but every region is entitled to a fair place in the economic sun, and the lessening of existing discrepancies should at all times form a prime objective of this government.
The maritime provinces, unfortunately, have almost traditionally lagged behind the rest of Canada in the economic race. Like the other parts of the country, we have made material progress in recent years, but we are still, relatively as well as absolutely, far in the rear. The grossness of existing inequalities calls for strong remedial action toward their abatement.
I am happy to say that this government is not unmindful of its obligations in this regard, and that many measures which it has inaugurated have contributed substantially to the advancement of the maritimes.
This has been true to a degree even in fields where no special regional significance is evident or intended. The great achievements of social security, old age and family allowances, unemployment insurance, and veterans benefits have no merely regional application; and yet I think that, relatively speaking, they benefit most those provinces whose people have least. So indeed it is with every federal measure involving proportional expenditures throughout the whole country.
Other federal action has been aimed directly, and with a fair degree of success, at stimulating our maritime economy. In

the field of freight rates, where so many of our commercial ills originate, much has been done by way of alleviation. The system of coal subventions and the assisted movement of feed grains from west to east have all played their part and have earned for this government the trust which our people have accorded it. Yet the task remains heavy if the maritimes are to enjoy their full and rightful share of the national prosperity. It is not, I think, primarily a matter of doing now what should have been done in the past, although I shall cite one or two instances of that nature. Rather, there is a need to devise new measures or to expand existing measures in order to overcome new problems as they arise; and of newly-arisen problems the economic history of the maritimes has always shown a plenitude.
Of all the sweeping changes which have affected the economy of this country since confederation few, whatever the ultimate good, have failed to come initially as a staggering blow to the maritimes. We may go back to that vast sea shift from sail to steam in the last century which ended their golden age. We may come forward to this very hour and find the Nova Scotia coal industry, a chief prop of the economic life of the province, facing a desperate struggle for survival against the increasing competition of oil and gas from the new fields of western Canada. Therefore, Mr. Speaker, the obligations of this government towards the maritimes can never be regarded as static. They go far beyond the mere continuation of existing measures which now may well prove to be inadequate. Such new action must be taken and such new measures must be devised as will prove at least sufficient to prevent any further deterioration of our maritime economy as compared with that of the rest of Canada. I am, of course, well aware that the problem is not that of the federal government alone. Each province concerned has its own responsibility-and an urgent one-to shoulder. Of my own province I may say that it faces the task with energy and determination.
But here I must point out an inherent evil in the situation. Lack of economic development and opportunity creates the need for action. The same lack inevitably limits the provincial capacity to meet the need. The financial resources of the maritime governments are slight compared with those available to the governments of the wealthier and more populous provinces where, at the same time, the problem of economic expansion virtually solves itself. Thus it is that
The Budget-Mr. Lusby the greater the burden, the less the provincial capacity to sustain it. In our maritime provinces we must therefore look-and I maintain that we have the right to do so- to this federal government for a correspondingly generous measure of assistance in the removal of those barriers which so greatly beset our path of economic progress. The enduring prosperity of this nation demands the prosperity of all its parts. Let none forget that we too were created the heirs of Canada.
In what forms should such assistance be devised and extended? To a lame man a crutch may be desirable or necessary, but a lasting cure of his affliction is much to be preferred. Therefore the real aim for the maritimes-certainly not always to be easily achieved-should be the permanent strengthening of their economy in all its phases, including farming, mining, lumbering, fishing and manufacturing. No other benefits within the power of this government to bestow- whether of social security or otherwise-can begin to match the benefits that would flow from the attainment of this aim. I have mentioned the advantages of social security measures to the maritimes, but I think perhaps I should also say that we certainly have no wish to be reduced to the status of a race of pensioners.
The most immediate of our problems in Nova Scotia is that of the coal industry. However, since this industry will no doubt be the subject of extended debate in connection with the dominion coal board estimates, I touch upon it at present no further than to say that the preservation of this industry is essential to the provincial economy, and that there exists a reasonable prospect that adequate governmental assistance now will enable it not only to survive but to stand again largely upon its own feet within the next decade.
Perhaps I should interpolate here that I accept as sound the view that no government can or should adopt a policy of perpetual assistance to every industry which, without that assistance, cannot continue to operate. No government can entirely repeal the law that an industry must be able to meet competition or give way to those that can. On the other hand, it has long been recognized in this country-and I think it is not seriously disputed-that a policy of governmental assistance to certain key industries on which a national or regional economy depends is often not only desirable but imperative. Every case must be judged on its individual merits. On that ground I am confident that the maritime coal industry has the strongest
4364	HOUSE OF
The Budget-Mr. Bushy of claims upon this government, as will be fully demonstrated, I hope, when they are presented in this house on the fitting occasion.
As I said a few moments ago, maintaining our maritime economic life at a respectable level, in so far as this government is concerned, is not merely a matter of continuing measures which may have sufficed in the past. The inevitability of change prohibits a static policy. Let us then consider possible new measures to stimulate maritime economic activity and to prevent the occurrence of any undue unemployment. I stated earlier that this nation faces the necessity, extending into an indefinite future, of maintaining a towering level of expenditure for armed defence. Thus governmental contracts in this connection will continue to play a leading part on the industrial scene.
I think much can he said for the view that in the placing of such contracts very special consideration should be given, as a matter of national policy, to those areas which, like the maritimes, stand most in need of industrial stimulation. It might be added that such a policy would also tend to discourage the overexpansion of certain already established industries of central Canada. We have been told that such overexpansion is a major cause of the difficulties troubling some of those industries today.
Whenever the need arises to quicken industrial activity and to provide increased employment a vast program of public works is invariably suggested. Public works are an excellent thing, and I should be delighted to learn, for example, that a new post office was on the drafting board for every hamlet in my constituency. Undoubtedly a considerable amount of employment would be thereby created. Unfortunately, it would be for the most part of a temporary nature and merely a palliative. Our situation in the maritimes calls rather for more lasting remedies through a permanent development and expansion of our industrial and other economic activities.
Again, it has been pointed out that in this day of power machinery the number of men employed, even on extensive public works, is as a rule comparatively small. In this connection, however, I should like to emphasize a difference between two classes of public works. Incidentally, may I say that I am using the term "public works" in a very broad sense, and not merely as referring to projects properly coming within the scope of the department of that name so ably presided over by my fellow Nova Scotian, the Minister of Public Works (Mr. Winters). One class might be exemplified by new post offices or, indeed, by most new government buildings.


This class of public work provides a certain amount of employment during its construction. Upon completion it may, and usually does, fill a long-felt need and minister to the pride and convenience of local residents. But there its contribution to the economy of a community or the surrounding areas largely ends.
On the other hand, we have that type of public work which, in addition to achieving all these results, also exerts a lasting and beneficent effect upon the level of economic activity throughout a community or a whole region. That is, to my mind, the type of public work which, when proposed, should always receive from this government the most careful and sympathetic consideration, the more so when the objective is the permanent advancement of areas such as the maritimes. Any temporary abatement of unemployment to be afforded by the actual construction-desirable though it might be in itself-would constitute only a minor factor in the whole range of implications.
An outstanding instance of this type of public work is the proposed St. Lawrence seaway development. Nova Scotia also is not without examples. The marshland reclamation now being carried on there and elsewhere is one. Its benefits to the segment of our agricultural population affected are for the generations, although I suggest-as I have suggested before-that the full and rounded completion of the project involves also a vastly expanded program of research to determine all those potential new uses to which the reclaimed lands may be most profitably put.
If I may call it a public work within my broad definition, then I may also name the Yarmouth-Bar Harbor ferry soon to be in operation and so largely a result of the forward vision and indomitable persistence of my good friend, the hon. member for Shelburne-Yarmouth-Clare (Mr. Kirk). The stimulus which this ferry will give to our growing tourist trade, as well as to the general commercial life of western Nova Scotia, is incalculable.
To the people of my own immediate area, however, the Chignecto canal will remain the prototype of the class of public work I have last mentioned. We do not urge construction of the canal merely because of the employment to be created by its building, or merely because it represents an unfulfilled promise of confederation. We urge it rather because of the permanent and far-reaching uplift which we are confident it will bring to the economic life of the whole territory of the maritimes, as well as to Newfoundland and even farther afield.

The employment of a few hundred men for perhaps two or three years upon the actual construction would be indeed welcome, and nowhere more than in my own town of Amherst which stands almost upon the canal's prospective banks; but that result, that benefit, is of scant significance compared with the comprehensive and lasting advantages to our economy which the canal and its use will bring.
The hon. member for Westmorland (Mr. Murphy) recently gave a detailed and convincing account of these latter advantages which, indeed, anyone can substantiate by glancing at a map. The hon. member for Colchester-Hants (Mr. Purdy) has also touched upon the topic. I have no wish to repeat or elaborate further at this time upon what they have said, but I certainly add to it my hearty concurrence. If this government seeks ways and means for the permanent strengthening of our maritime economy, here is a beckoning opportunity.
And, indeed, my constituency provides another, if less spectacular, opportunity. For many years until the last war, when its operation was discontinued, an automobilecarrying ferry, subsidized by the federal government, plied between the port of Parrsboro on the Minas basin shore of my constituency and ports of Kings county on the opposite side of the basin. By this means a water route of some fifteen or twenty miles eliminated for motor vehicle traffic an overland journey of ten times the distance along the shores of Minas basin and Cobequid bay to Truro, which stands at the head of salt water, and thence down the far shores again.
Apart altogether from the convenience to local residents, the ferry was much patronized by tourists, and today, with the vastly increased stream of tourist traffic, it would be put to correspondingly greater use and would give a very strong impetus to that trade which is to us a major source of revenue. I hope to see in the not distant future comprehensive representations made to the government for assistance in effecting a resumption of this ferry service with expanded and improved facilities. I most earnestly hope that these representations, when they are made, will be given most careful study and most sympathetic consideration.
Turning to another topic, I may say that we of the maritimes heartily approve the steps taken by the government, in conjunction with those of the provinces, to widen the scope of the vocational training program so that persons displaced from one industry may be trained for employment in others. This will certainly prove a boon in countless
The Budget-Mr. Small individual cases, and as such it deserves the highest commendation. But the advantage to a province as such is dependent chiefly upon there being within that province alternative industries capable of absorbing the retrained workers. From a maritime point of view, the placing of those workers in the industries of central Canada, however beneficial it will be for the individuals concerned, represents a loss to us. And so we return to our fundamental need, a general stimulation and expansion of all phases of our economy.
It has been predicted-I am going into the future now-that the continuing threat of war may eventually lead, as a measure of national safety, to the widespread dispersal throughout all the provinces of those manufacturing industries now so heavily concentrated in central Canada. By such an occurrence the maritimes would presumably benefit in their degree. But for the present it is no more than a possibility of the future.
Equally of the future is the suggestion that the coming application of atomic power to industrial use may accomplish somewhat the same result and bring all provincial economies more nearly to a common and equitable level. As to that, we shall see. An easier prediction, I fear, is that the misuse of the atom in war may bring all mankind to a common level, the illimitable level of the desert. For the meantime it is better to deal with present realities and for us in the maritimes to face as they are those economic problems which still beset us. With the full co-operation of this government, given to us in the future as it has been in the past, they can be overcome.


Mr. R. H. Small (Danforlh):: Mr. Speaker, having listened to the budget debate, with all the fanfare attending it, from the beginning, and the different titles that have been given to it, and having witnessed the debonair manner in which the finance minister delivered his budget speech, I think it was a masterly job of making the best out of the sorry mess the government is in. First everything is lovely and we will be all right, but there are one or two soft spots. We will have an odd rough one here or there. The industries are doing fine, except for textiles, machinery and electrical equipment. The farmers are not doing as well as usual. In other words, we are going to have a good year if we do not run into the hard times that I see ahead and that I hope we can miss.
You could call this budget the much ado about nothing budget. At page 3724 of

The Budget-Mr. Small Hansard of April 6, 1954, the Minister of Finance (Mr. Abbott) said in his budget address:
For most of this period the United States has been in the process of re-examining its . . . policies. . .
He went on to say that the United States commission on foreign economic policy had issued its report, the Randall report, and then said that the recommendations contained in the report-
. . . provide ... a reasonably promising basis for action by the United States in a co-operative movement toward a sounder system of trade and payments.
I suppose this reasonably sound basis in a co-operative movement is to be found in the restrictions by way of quota that they have imposed on our rye shipments to them and the inhibitions that our cattle trade endures which I presume come under the broad and expansive application of the GATT program, that instrument of vague benefit to Canada since it has been in operation and which has therefore been extended to June 30, 1955. The Minister of Finance (Mr. Abbott) also said:
The United States has been one of the strongest exponents of policies directed towards the reduction of trade barriers and the expansion of international trade.
So much is this so that they have contributed to the deterioration and demise of our textile industry, and they play havoc with our fruit, vegetable and flower markets in the springtime. This was further ameliorated by the Minister of Finance in these consoling words:
... it was recognized that enlightened economic policies on the part of both the United States and Canada would contribute materially to the achievement of a better trade . . . system throughout the free world ... To this end the United States administration has just placed before congress a program designed to give effect to the main recommendations of the Randall commission.
I suppose that the government is confident that these recommendations will be passed by the House of Representatives and the Senate in toto. The Minister of Finance also stated, as found on page 3724 of Hansard:
As might be expected, this development has brought with it growing protectionist pressures in many countries, including Canada.
What could he expect? Why, all through the debate on the speech from the throne and in subsequent debates there was a constant litany from the government seats, the epitome of which was "from this, good Lord, deliver us, and give protection to relieve our local condition."
The cool merger of free traders with the protectionists on the government benches insisting that something be done about the

withering condition of trade is causing an increase in unemployment in every walk of life in our economy. They pictured the difficulties of the farmer, the fisherman, the potato grower, the textile worker, the lumberman, the apple grower, the miner, from the Atlantic to the Pacific, and implored that something be done to give some kind of relief from the business atrophy that has beset us since the last election when Canada's continued prosperity was promised, when the assorted aggregation of "pie-in-the-sky" boys who grace the benches opposite were masquerading as the evangels of everlasting prosperity with the proverbial pot of gold at the end of the rainbow, which has turned out to be only dross, in the form of unemployment, loss of markets, and adverse trade balances. Well, the warning signals are now flying to tell of stormy weather ahead. Whether or not it is palatable to this so-called "free trade" government, they tell that we will have to protect the home markets and industries.
The traditional policy of the Conservative party has been the development of our natural resources and their fabrication into consumer goods, as well as the protection of our labour potential, and we have always implemented this by legislation brought in by the front door; but the Liberals have always brought it in by the back door, and masquerade as free traders under a cloak of simulated protection. It is the voice of Jacob but the hand of Esau. The Minister of Finance also states:
Our very large defence program continued to give strong support to production and personal incomes, but this element has become a sustaining rather than an expansionist force.
There is the nub of the whole situation today around which our economy is wrapped, and the levelling off process is the sequence that has stabilized our economy and kept it from disintegrating. But in its wake has followed a plethora of financial organizations that are ever ready to lend the hard-pressed citizen, who is now feeling the pinch of the government's alluring policies, needed money at high rates of interest to see them through Canada's continued prosperity. Then he gives this fillip to their flagging spirits, to encourage them:
-while the proportion of our exports going to the United Kingdom and other commonwealth markets declined, reversing the trend, which had prevailed during 1952.
On the other hand, there was some increase in the proportion of our imports coming from the United Kingdom.
You will notice the hedging in the last sentence of this quotation, to explain the lost wheat market.

43G7
That hackneyed phrase, "no truck or trade with the Yankees", seems to be a favourite expression of accusation of the Minister of Transport (Mr. Chevrier) in his tirades against the Conservatives. Well, it is obvious now that, intentionally or not, there has been put into operation by the government, to our detriment, a quite opposite policy: "No truck or trade with the British", and they are enjoying with evident satisfaction that accomplishment, little realizing that they have impaired the flow of the lifeblood of our nation. He further states:
The emergence of an Import surplus on merchandise account was the main reason for the swing in Canada's balance of payments position from a current account surplus of $157 million in 1952 to a deficit of some $467 million in 1953.
Reduced to ordinary language, we had more imports than exports by some $310 million. That can be attributed to our two jacks of trade, the right and left bowers, the Minister of Trade and Commerce (Mr. Howe) and the Minister of Agriculture (Mr. Gardiner), who have trumped each other's ace-or probably we can call it a misdeal- in their handling of our wheat crop. One said sell, the other said hold, and between the two the farmers were left holding the bag.
The only satisfaction that the wheat growers have extracted out of it is that the Minister of Trade and Commerce has restored to them as of December last the car order book to take a few paltry bushels per acre to the storage elevators, while the advice of the Minister of Agriculture was ignored; the double shuffle took place, and the deal lost us the British market for a difference of eight cents a bushel, and a difference of $150 million surplus to $460 million deficit, with the farmers rich in the possession of wheat they cannot sell, the farm implement industry on short rations, the shipping industry folded up, and the railways on the skids to deficit earnings. What one hell of a mess in continuing Canada's prosperity!
We on this continent are living in a paradise, with our country unscathed by the hand of war. We have a standard of living that three-quarters of the world's human population have never enjoyed, and if they have any knowledge of it, it is from the picture and story books.
For the last decade and a half, the total productivity of our economy was in demand, and that demand far exceeded our ability to supply. There were ready markets for our goods, both abroad and at home. With the cessation of the war, and our armed forces repatriated, there was a huge backlog for all kinds of durable goods to be supplied, caused by the shortage of materials necessary for our wartime economy-houses to
The Budget-Mr. Small be built-homes to be furnished-clothes to refurbish the depleted wardrobes-plus the expansion in our industry, and the need for getting the war-wracked and devastated countries back on the road to recovery.
That we have flourished and prospered was not the creation or design of this government, who could neither retard nor accelerate it. It can be attributed to the productivity of labour and management, who have been rewarded for a job well done by the government letting inflation run rampant; the bonds and securities purchased in good faith are worth but half in their purchasing value, and the purchasing power of our dollar is only fifty cents, and probably less after we have paid our taxes.
Today, with our inflated economy, which the government created, we have barriers to our entry into world markets, and this is further aggravated by the re-entry into world trade of Germany, Japan, Italy and the other war-devastated countries, and the reluctance of the Latin-American countries to deal with us, notwithstanding the glowing reports from the Minister of Trade and Commerce after his visit to them.
In Hansard of February 17, 1954, page 2189, the hon. member for Vancouver South (Mr. Philpott), speaking in the unemployment debate, was discussing the last worldwide depression of the 1930's, and he said:
I think there Is a lot in this theory of the stars, astrology, or whatever It may be. 1 do not know whether the Conservatives turn up before a depression, or whether the depression turns up before the Conservatives, but you find they arrive at almost the same time, in this country.
Well, the stars in their courses may indicate that a certain condition will happen in the cycles of life. I will tell the hon. member for Vancouver South that his conclusions are at fault. It is not that the depression and Conservatives arrive together. The truth of the matter is that the Liberals, when in power, eventually get the country into such an unholy mess that the people turn to the Conservatives to extricate them from their plight, and again bring about stabilization and the consolidation of our economy. And that day is not far off.
The Minister of Northern Affairs and National Resources (Mr. Lesage) made reference in Hansard of April 14 to an adherence to the spirit of confederation to establish an equality of treatment in the distribution of revenues to all provinces, so that they may fulfil their constitutional obligations, and effect fiscal agreements that would avoid double taxation. To this everyone will agree.
By the terms of the British North America Act, set out in section No. 91, this parliament has exclusive authority to raise money by any

The Budget-Mr. Small mode or system of taxation. It also sets out in section No. 92 that each province has the exclusive right to raise revenue by direct taxes for provincial purposes. To this everyone is in agreement-as to the power of both bodies being able to collect by direct taxes.
The difference arises out of who will have priority in collecting, or who will carry the opprobrium of being the body making the second collection when agreement cannot be effected to collect by a single collection. Notwithstanding what has been said by the Minister of Finance, and his examples of how in some of the states in the United States they have dual taxes, there is this difference: Whether it was done by tacit agreement or understanding, the provinces were the only bodies employing direct taxation from confederation up to the year 1917, when the then finance minister, the Hon. Thomas White, under the stress and demand for more revenue to carry on world war I, introduced the first dominion income tax, and went into considerable explanation for so doing, and why they had to invade what was recognized by all as the exclusive taxing field of the provinces.
This remained the situation up to world war II, with parliament utilizing only one of the fields of direct taxes, but during the interval from confederation to world war II some provinces had intermittently used the personal income tax for revenue.
With the heavy demand during the dark days of world war II, to obtain further revenue parliament then made a proposition to the provinces to invade the fields of succession duties, corporation, transportation and amusement taxes, and the provinces, motivated by patriotism, did, by a fiscal agreement, vacate their taxing fields for the duration of the war, actually renting them to parliament, after which, unless further agreements were made, a return to the status quo would ensue.
The situation now prevailing is that the government has made separate agreements with every province except one, instead of by the original method of a dominion-provincial conference when a general agreement was amicably worked out. The government has manoeuvred itself into the position that it is reluctant to give up and return to the status quo, to which they originally agreed.
Now then, if the government did not believe that the provinces had some claim through their long tenure of occupancy from confederation, notwithstanding the government's constitutional position, why did they enter into these tax rental agreements with the provinces to vacate their taxing fields? The only conclusion we can arrive at is that


they had to jockey into a position where they had possession and be in complete control, to be the first to levy taxes, and a province or provinces which did not enter into an agreement with them would have to bear the full odium of having imposed a double tax when the real offender is the government, by virtue of the facts and conditions I have outlined.
This is a matter of grave concern, not only to one province but to all provinces, and some consideration should be given to the provinces because of their vested rights in the long uninterrupted occupancy of their taxing fields.
It is unfortunate that the impact had to come upon the government from the province whence they get their greatest support. The government is now caught in the milieu of their hybrid Chauvinism. This Liberal party has been so long in office by reason of its hold on Quebec. It held Quebec by a deliberate policy of banking the fires of racial prejudice. Now these fires are bursting into flames, and severely scorching the faces of the federal Liberals.
We Conservatives live and think in the tradition of Sir John A. Macdonald. It was he who saw the vision of a united Canada- French and English-neither one of the two main racial origins seeking votes by trying to exploit its unnatural prejudices, but living and working together in mutual self-respect for the common weal of the nation.
(Translation):


Mr. Auguste Maltais (Charlevoix):: Mr. Speaker, if I waited until now to take part in the present debate on the budget, it is because, faced with the confusion which seems to exist and with the complexity of the problem created by the unilateral decision of the Quebec government to collect a personal income tax-the move being based on the alleged priority of the legislature in respect to direct taxation-I felt under the obligation to listen first of all to the representations of the electors of the riding I have the honour of representing here as well as to the various arguments which would be put forward, before taking a definite stand.
It was my duty to take such an attitude because the problem has assumed new aspects and can give rise to grave consequences, in the provinces as well as in the entire country. The Leader of the Opposition (Mr. Drew) said here that much too bitter terms had been used since the government of my province announced that it would collect a personal income tax equal to 15 per cent, inasmuch as it was free to refuse to participate in

the fiscal agreements, freely signed by the other provinces in co-operation with the Canadian government, and as certain nonpolitical organizations have asked the latter that permission be given to deduct the provincial tax from the federal tax.
I am taking for granted and I recognize, following the statement made this afternoon by the right hon. Prime Minister (Mr. St. Laurent, that the government of the province of Quebec did not itself ask for this deductibility and that no official approach has yet been attempted by the Quebec government in order to obtain this deductibility of 15 per cent, if press conferences, that are often characterized by considerations of party politics, have not admittedly become the consecrated formula for an exchange of views between the various governments of this country. As the newspaper Le Devoir, which is not lacking in ideas, says, it would be introducing a "new look", a twentieth century look, in federal-provincial relations.
As during the time allotted to me, 1 intend to speak about federal-provincial relations from the point of view of fiscal authority, I hope to be pardoned if I hesitate to utter my remarks in the manner of our opponents, in whose speeches the confusion raised by their ideas is only equalled by the contradictory spirit pervading all their policy announcements, according to the time or place of their statements.
The Conservative member for Eglinton (Mr. Fleming) contradicted the hon. member for Quebec West (Mr. Dufresne) when he said, on April 28, as reported at page 4211 of Hansard, that the agreements concluded between the Canadian government on the one hand, and the provincial legislatures on the other are legal, while the hon. member for Quebec West had stated emphatically, on April 27 of this year, as reported at page 4159 of Hansard, that the fiscal agreements were illegal. And then the hon. member for Three Rivers (Mr. Balcer) told us, on behalf of the party to which he belongs, that the Conservative party recognizes and supports the principle of deductibility which was accepted following a resolution of the general convention of the Conservative party. The official financial critic of the Conservative party (Mr. Macdonnell) and his leader himself, in an accusing silence, are not even bold enough to refer to that doctrine in the present debate, leaving us under the impression that they do not support the stand taken by their senior member from Quebec.
The only spirit which now moves me is a feeling that I share with a large number of my fellow citizens. We are worried about
The Budget-Mr. Maltais the 300,000 Quebec taxpayers who will have to bear the burden of double taxation, and the lack of understanding which still remains in the minds of some of them who still do not understand the failure of their government to accept the 15 per cent deduction formula put forward, which would allow the Quebec government to obtain an amount lower than that which it would have received had it entered into an agreement.
I stated a moment ago that the situation resulting from the unilateral decision of the government of my province of levying a tax on personal income and then trying through subrogation, that is through the help of nonpolitical organizations, to obtain deduction of that tax, without previous agreement to that effect, gave rise to a very complicated problem owing to the fiscal agreements binding the federal government and nine other provinces.
In my humble opinion, the solution to that problem, owing to its constitutional implications, its social and economic consequences as well as its political impact, must take all those factors into consideration. I think that a proposed agreement that would not take these various elements into consideration might well remain inoperative. I shall go even further and state that a long-term and permanent solution must also take into account the special position of the province of Quebec because of the distinctive character of the racial group that makes up its population.
I was happy the other day to hear once again the hon. member for Joliette-L'Assomption-Montcalm (Mr. Breton) assert that the Liberal party was, of all political parties, the one truly Canadian and national party, the one that had best understood the position of Quebec. I am confident that the Liberal party which now presides over the destinies of the nation, will be able to find the remedy to those growing pains which have now developed between the government of my province and that of my country in the taxation field.
In speaking thus, Mr. Speaker, I do not want to shirk my responsibilities by refraining from making the remarks I proposed to make about that stalemate or, at the risk of repeating myself, about those growing pains of the Canadian nation.
I would like first of all to speak about the constitutional aspect of the matter, of its social character, and then of its economic and political implications.
In the constitutional sphere, most glaring contradictions have been expressed. It has been said that provincial legislatures had exclusive

The Budget-Mr. Maltais jurisdiction in the field of direct taxation, as has been asserted this afternoon by the hon. member for Chicoutimi (Mr. Gagnon), who later said that this right was prior to that of central government. As far as I am concerned, I share the opinion of those who believe that the rights of the Canadian government in matters of direct taxation are equal to and concurrent with the rights of the provinces and that there is no prior right, neither in favour of the central government nor in favour of a provincial government.
The British North America Act of 1867 embodied that principle under section 91 which grants the Canadian government the power to raise money by any mode or system of taxation, and under section 92 which grants the provincial legislature the power to raise money by means of direct taxation within the province for provincial purposes.
That, Mr. Speaker, is what the Canadian constitution provides, and though I am not a lawyer, I can hardly see how this text could be read as granting a prior right to either one of the two authorities. It is true that the word "exclusively" appears in the preamble of section 92, but the same word is to be found also in the preamble of section 91. On the other hand, it is not the first time the Canadian government holds powers concurrent with those of the provincial legislatures.
Many more examples could be quoted in the sphere of Canadian political activities where the jurisdiction of the central government runs parallel with the jurisdiction of the various legislatures.
Is that not, in any event, the very point which has been an issue between the federal government and the provincial governments since the early days of confederation? That point of view will be readily understood if only we remind ourselves of the thousands of dollars which the Canadian people have had to pay in legal costs while endeavouring to obtain a determination of certain rights or a clear definition of the meaning of certain sections of our Canadian constitution.
How is it that no authority has ever tried to bring before the courts this matter of concurrent and equal jurisdiction in the matter of direct taxation, since this state of affairs has existed since 1917? Along with the Minister of Northern Affairs and National Resources (Mr. Lesage) I would say that that alone proves that the theory of priority rights in the matter of direct taxation is something new and would be extremely difficult to prove. I am not sure, though, that the privy council did not hand down a decision in that connection, in London, around 1936.

The hon. members of this house will no doubt recall that Manitoba citizen who challenged the right of his province to impose an income tax, under the pretext that income could not be taxed twice, namely by the federal government and the provincial government at the same time. I now refer to the judgment of the privy council in the case of Forbes v. the Attorney General, where the following may be found, at page 260:
Both income taxes (federal and provincial) may co-exist and be enforced without conflict. The federal government taxes part of the Manitoba citizen's income, the province taxes the other part.
That judgment speaks for itself. In addition, the question of the levying of taxes and that of their distribution is intimately connected, according to the spirit and the interpretation of confederation.
Without going into the merits of subsidies, I must just the same admit that it is fair and honest to look for an interpretation of the Canadian constitution with the fathers of confederation themselves, who, in addition to giving us our constitution, also put it to the test during the few years following 1867. What was, then, the fiscal policy in 1868 and during the ensuing years?
In 1868, on the morrow of the birth of the Canadian constitution, the province of Quebec received from Ottawa, by way of subsidy, the amount of $913,412, or 59-7 per cent of the total budget of the province. In 1869, the Quebec budget was made up to the extent of 59-2 per cent of Ottawa subsidies, in 1870, of 52 per cent, in 1871 of 49 per cent, and in 1872, that is five years after the passing of the confederation act, the budget of the province of Quebec consisted of subsidies from Ottawa to the extent of 47-1 per cent.
These, Mr. Speaker, are true facts in the constitutional field that nobody is able to deny and that prove without ambiguity, that in 1954, the matter of subsidies, even if related to a power of taxation belonging to the provinces, may not be quoted in this debate as an argument contrary to the spirit of confederation. The hon. member for Lapointe (Mr. Girard) tried to argue, with the help of quotations from the fathers of confederation, that the spirit of the British North America Act was contrary to the policy of subsidies resulting from fiscal agreements. He quoted Brown in support of his argument.
To paraphrase the saying of a French author, I might tell him: Give me something taken out of its context and I can succeed in having the author of the words hanged. He found that a quotation of Brown's declara-

tions could be of use to him. I shall therefore go to that same Mr. Brown for a statement which will contradict him. I borrow a quotation from the official report of the debates preceding confederation, page 93, where Mr. Brown was dealing with the question of federal subsidies:
We had to face the following alternative: grant to the provinces the revenue from indirect taxation, which field we wanted to leave exclusively to the central government, or allow the central authority the right to collect the money and allocate it afterwards to the various local governments to enable them to face their local needs. We chose the latter solution.
If words have any meaning, that statement of a father of confederation is abso-
The Budget-Mr. Maltais lutely different from the impression which my hon. friend from Lapointe tried to give in quoting this great Canadian.
(Text):
On motion of Mr. Maltais the debate was adjourned.



BUSINESS OF THE HOUSE

Mr. Harris:: We shall continue with this debate tomorrow, and when the motion is carried, take the resolutions.


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

[Stage Direction]
Tuesday, May 4, 1954