1954-04-12

[Stage Direction]
Rodolphe Leduc, Esquire, member for the electoral district of Gatineau, introduced by Right Hon. L. S. St. Laurent and Hon. Alcide Cote.
Yves Leduc, Esquire, member for the electoral district of Verdun, introduced by Right Hon. L. S. St. Laurent and Hon. Alcide Cote.
James Alexander McBain, Esquire, member for the electoral district of Elgin, introduced by Hon. George A. Drew and Mr. H. O. White.
John C. Pallett, Esquire, member for the electoral district of Peel, introduced by Hon. George A. Drew and Miss Sybil Bennett.


Right Hon. C. D. Howe (Minister of Trade and Commerce):: I desire to lay on the table, Mr. Speaker, the supplementary report of the Canadian wheat board, being the final accounting and auditors' report for the 1952-53 crop year. I ask that this be referred to the committee on agriculture and colonization.


[Stage Direction]
Motion agreed to.

Hon. Lionel Chevrier (Minister of Transport):: I desire to make a statement on the Canadian National (West Indies) Steamships.
It has been drawn to my attention that what I had to say on the subject of the future of the Canadian National (West Indies) Steamships Limited, when the report of that company was being considered by the railways and shipping committee, has created the impression in some quarters that the government has in mind the winding up of the affairs of that company. Such a misconception of the government's intentions may well prejudice the efforts of the steamship company when soliciting business, and I think therefore that the facts should be restated.
What I said before the committee was that while the financial year of the Canadian National (West Indies) Steamships in 1953 was a disappointing one, the expenses incurred were abnormal owing to abnormal circumstances. I endeavoured to make it clear therefore that 1953 was not a year to look at to obtain a true picture of the situation with respect to the usefulness of the steamships.
The situation is therefore that there is reason to entertain hope that the position of the steamship company will improve, and it is not the intention of the government to abandon this service now. However, the management and the government will keep a very careful eye upon the operations this year in particular in order that we may obtain a true measurement of the usefulness of the service with respect to the future. Consequently those who are interested in the continuation of the service will have an opportunity to demonstrate their willingness to provide sufficient traffic to support it.



NATIONAL HARBOURS BOARD ACT


Lionel Chevrier: the first reading of Bill No. 421 (from the Senate), to amend the National Harbours Board Act.
Motion agreed to and bill read the first time.



OPIUM AND NARCOTIC DRUG ACT


Hon. Paul Martin (Minister of National Health and Welfare) moved: the first reading of Bill No. 422 (from the Senate), to amend the Opium and Narcotic Drug Act.
Motion agreed to and bill read the first time.



QUESTIONS


Mr. Stewart (Winnipeg North):: 1.	Has a recommendation from NATO that parliamentarians should be encouraged to visit NATO military and civilian headquarters been received by the government of Canada?
2.	If so. what action has the government taken?

Questions


Mr. Blanchette:: 1.	Yes.
2.	No action has yet been taken by the government to implement it, but the matter is under consideration.



LONG SAULT RAPIDS CANAL


Mr. Casselman:: What is the proposed cost of the suggested1 new 27-foot draft canal and locks on the Canadian side of the Long Sault rapids?


Mr. Langlois (Gaspe):: 



$70,230,000. HAROLD C. BANKS

Mrs. Fairclough:: 1.	Has a board of inquiry under the Immigration Act been held with reference to the residence of Harold C. Banks?
2.	On what date was the Department of Citizenship and Immigration made aware of the court record of Mr. Banks in the United States?
3.	How was that information acquired?
4.	At the time of application for permanent residence, was Mr. Banks called upon to make a declaration with regard to convictions in the United States?
5.	If so. what did the declaration disclose?
6.	If not, what type of declaration was required of him?
7.	Was his record investigated by the offices of the department before granting permanent residence?
8.	Has Harold C. Banks returned to Canada from the meetings of the international labour organization?


Mr. Harris:: 1.	No.
2.	May 2, 1953.
3.	Inquiries were made by the department.
4.	In view of the ready admissibility of citizens of the United States of America as immigrants under the law, it is the practice to make minimum inquiries of them when entering Canada. Mr. Banks signed the usual landing card which supplied general information and indicated conditions of health, finances, and whether he was ever refused admission to or deported from Canada.
5.	See answer to No. 4.
6.	See answer to No. 4.
7.	No.
8.	Yes.



CORONATION MEDALS

Mr. Balcer:: 1.	How many medals commemorating the coronation of Her Majesty Queen Elizabeth II have been granted to Canada?
2.	By what department of government, or through what agency were these coronation medals distributed?

3.	On what basis were the recipients of these medals chosen?
4.	Were there any orders in council passed in this connection?
5.	What are the names and addresses of all the recipients of these coronation medals?


Mr. Pickersgill:: 1 and 5. In accordance with traditional practice, information is not available as to the number of medals and the names of recipients.
2.	The Department of the Secretary of State.
3.	On the basis of categories approved by Her Majesty the Queen.
4.	No.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Diefenbaker:: 1.	Since April 1, 1952 and to date, what have been the total expenditures of the national defence department, navy, for advertising of all kinds, the purpose of which is to encourage enlistments in the Royal Canadian Navy?
2.	How many men have applied since said date to the Royal Canadian Navy for appointment as administrative officers in (a) the regular force; (b) the short term service; (c) the reserve force?
3.	How many men have been commissioned since said date as administrative officers in (a) the regular force; (b) the short term service; (c) the reserve force, and how many were (i) former officers in the Canadian navy; (ii) original appointments?



NATIONAL DEFENCE


Mr. Hansell:: 1. What was the total cost involved in advertising for recruits in each branch of the Department of National Defence, in each of the following categories: (a) newspapers; (b) weekly and monthly magazines; (c) radio; (d) billboards and posters; (e) other forms of advertising?



ARMED FORCES


Mr. Jones:: 1.	Is any psychiatric or mental examination given to persons seeking to enlist in the armed forces?
2.	If so, what is the nature of such examination?
3.	Are any applicants refused enlistment for psychiatric or mental reasons?
4.	If so, what standards are applied?
5.	Are personnel in the armed forces examined regularly as to their psychiatric or mental state?
6.	Are any personnel discharged for psychiatric or mental causes?
7.	Are any standards of literacy applied to persons seeking to enlist in the armed forces?
8.	If so, what are they?


Mr. Blanchette:: Return tabled.

Inquiries of the Ministry
BUSINESS OF THE HOUSE	GRAIN



EASTER ADJOURNMENT

Righi Hon. L. S. St. Laurent (Prime Minister) moved:: That when this house adjourns at six o'clock p.m. on Wednesday, April 14 next, it stand adjourned until Monday, April 26 next, at 2.30 o'clock p.m.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to ask a question of the Prime Minister. Now that we are about to rise for the Easter recess, is the Prime Minister in a position to indicate to the house what items of government legislation, other than those now on the order paper, are yet to be introduced at this session?


Louis Stephen St-Laurent: I am sorry I am not in a position to indicate that today, nor do I expect to be able to do so tomorrow or Wednesday. But I do hope to be able to do so shortly after we return, following the Easter recess.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. G. K Fraser (Peterborough):	Mr. Speaker, I should like to ask a question of the Minister of National Defence. Is the minister going to make a statement in regard to the fire that occurred in a hangar over
the week end?
Hon. Brooke Claxion (Minister of National Defence):: No, I was not intending to.


Mr. Fraser (Peterborough):: Are you at a
later date? This is a very important matter -a $2 million fire, according to what the papers say.


Brooke Claxton: May I refer to the question asked by the hon. member for Peterborough. As the hon. member and other hon. members know, the practice is that after a fire occurring in any of the armed forces a very thorough investigation is made. That of course is under way now. If any hon. member wishes to have any information after the investigation is held, I shall be only too glad to give it.



REQUEST FOR LOW INTEREST LOANS ON FARM-STORED GRAIN

[Stage Direction]
On the orders of the day:
Mr. H. A. Bryson (Humboldi-Melforl):: Mr. Speaker, I should like to ask a question of the Minister of Trade and Commerce of which I gave notice on April 5. Has the government received a request from the government of Manitoba that low interest loans be made to farmers on farm-stored grain? Does the government intend to reconsider its attitude against loans of this nature?


Clarence Decatur Howe: Mr. Speaker, I have no recollection of having received a communication from the government of Manitoba, though I noticed in the press that the legislature of that province has unanimously voted that this government should do as the hon. member has suggested. It is easy for one legislative assembly to vote that another legislative jurisdiction should pay out money. However, the government has no present intention of changing its policy in that particular regard.



INQUIRIES FOR RETURNS


[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: Mr. Speaker, I should like to ask the Secretary of State what progress is being made in preparing two returns, one of which was ordered on February 18, dealing with the subject of non-Canadians in the public service, and the other on March 3 dealing with the subject of the number of architects employed in departments other than the Department of Public Works.


John Whitney Pickersgill: I shall have inquiries made.



VETERANS LAND ACT


[Stage Direction]
On the orders of the day:
Mr. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I should like to ask a question of the Minister of Finance. I originally directed this question to the Minister of Agriculture (Mr. Gardiner), but I was informed before coming into the house that it related to the Department of Finance. Is the minister aware that veterans farming under the Veterans Land Act are being refused farm improvement loans? What is the reason for the change in policy respecting veterans?
3980	HOUSE OF
Inquiries of the Ministry


Hon. Douglas Abbott (Minister of Finance):: I shall look into the matter and give my hon. friend an answer later.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilton (Notre Dame de Grace):: Mr. Speaker, I should like to ask a question of the Minister of National Defence. I wonder if he could tell us whether information on Canada's radar defences in the north is now being made generally available to the public.


Brooke Claxton: Well, sir, the advice of the chiefs of staff, which hitherto I have acted on, is that they should not be made available to the public. However, inadvertently some information has been made available but not in a systematic form. It is very desirable that they should not be made available to the public, but the very nature of radar stations prevents their being completely secret, as stations are usually erected on the tops of hills. What is important is that we should not officially give a list of radar stations that indicates their existence, our progress in building up, or their operational qualities, thereby enabling the only potential enemy to check the efficiency and effectiveness of its own sources of intelligence.


William McLean Hamilton: May I ask a supplementary question? Will the minister say that much of the information to which he refers was revealed in an air force publication which has a fairly general circulation?


Brooke Claxton: No, not in that form, Mr. Speaker. This magazine, the Roundel, is what I had in mind in my previous answer. Through inadvertence it published in lists of postings from one station to another postings to radar stations.


William McLean Hamilton: A further question of the Minister of National Defence, Mr. Speaker: What steps has the minister taken to see that publication of such secret data made by our Department of National Defence does not occur again in a government publication?


Brooke Claxton: The question raises a good many questions as to future policy regarding security for radar stations, and the whole matter is being looked into.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. E. G. McCullough (Moose Mountain):: Mr. Speaker, my question is directed to the Minister of National Revenue. It arises out of letters I have received from farmers in Saskatchewan complaining of the methods used by income tax inspectors. Has the minister received complaints from farmers as to the procedure of income tax inspectors in Saskatchewan? If so, is any action being taken to correct their methods in making certain investigations?


Hon. J. J. McCann (Minister of National Revenue):: No complaints have been received that I am aware of.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to direct a question to the Minister of Labour. Has he the most recent figures available of those seeking jobs in Canada at the present time?


Hon. Milton F. Gregg (Minister of Labour):: I have no over-all figures later than those announced over two weeks ago for the previous month.



RADIO BROADCASTING


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier	(Minister of
Transport): I should like to answer a question asked on Friday by the hon. member for Macleod (Mr. Hansell) as follows:
Have consultations been held between the Department of Transport or the Canadian Broadcasting Corporation and any representatives of the Mexican government or radio interests in Mexico during the last month in respect to frequency allocation? . . . If the answer is in the affirmative, will the minister state the nature and result of these negotiations or consultations?
The answer is yes. Consultations have been held at technical level between officers of the government of Mexico and of the government of Canada looking towards the solution of engineering problems arising out of the sharing by radio broadcasting stations in both countries of the channels in the standard broadcast band. These consultations are to be continued by correspondence.


[Stage Direction]
On the orders of the day:
Hon. Robert H. Winters (Minister of Public Works):: On April 8, the hon. member for Peterborough (Mr. Fraser) asked whether the government has sold or will sell the old customs building and the existing post office building in Peterborough.
In reply, I may say that neither building has yet been sold. Consideration is being given to using the site of either one or the other building to provide accommodation for the unemployment insurance commission.



THE BUDGET


[Stage Direction]
The house resumed, from Tuesday, April 6, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, I find it very hard to deal with this budget. It does not itself seem to deal with anything in particular. We have a lot of optimistic hopes by the minister. On the one hand he says, if such and such a thing happens, then the prospect is satisfactory; if it does not happen, things will not be so good; but his conclusion is that the favourable things will happen. This is all very well and fine but the minister gives next to nothing to support his optimistic conclusions.
Next we have a microscopic tax reduction which seems related to nothing in the world except perhaps the minister's desire to leave a good farewell impression in the minds of the children and the users of curling tongs.
The budget reminds me of a book by the late Hilaire Belloc which he entitled "On Nothing".
As I said the other evening, the minister spent an hour and twenty minutes trying to persuade us that the budget was not a budget of blank negation. But I doubt if he even deceived himself. At any rate the immediate and universal feeling throughout the country, so far as one can judge from the press, is that the budget has been a dud.
Let me set on the points on which it is negative. It has nothing for employment, nothing real to relieve the taxpayer, nothing to break the deadlock in wheat, nothing to
The Budget-Mr. Macdonnell indicate any intention of improving the efficiency of government, nothing to reassure us that we are not going to have another spate of inflation.
We have come to regard the budget as a statement of what the government has been able to do for the welfare of the Canadian people and its citizens, and second, as a kind of statement of economic conditions in the country.
Judged by this first test, what has the present budget done? The minister will bring in some resolutions, and they will be finally embodied in legislation, but no one can suggest that they will have the slightest effect on the life of the community. They will cause scarcely a ripple. I understand that Birks have announced a 10 per cent reduction on wedding rings. It is not of personal interest to me, but I doubt whether even in these days it will either stimulate or retard the number of marriages that will take place, and I so far have been able to see no other effect of any kind.
I wonder whether it has ever occurred to the minister that if he had only left last year, basking in the sunshine of reduced taxes it would have been a happier thing than in the twilight of today. Gone are the surpluses which rejoiced the heart of the minister, and indeed there is an ugly fear that even the picayune surplus of $4 million which he predicts may not materialize. There is an ugly fear that perhaps he has been a bit optimistic in predicting that, and that he has found it easy to run away from some of the awkward facts. For example, the minister did not find it in his heart to tell us of the large number of industries in which, according to recent reports, production is down: Metal mining, coal mining, non-metal mining, manufacturing as a whole, non-durable manufactures, dairy products, wheat flour, rubber products, tanneries, textiles, clothing, coke and gas products, durable manufacturers as a whole, wopd products, iron and steel products, including primary iron and steel, non-ferrous metal products, non-metallic products and electric power.


Stanley Howard Knowles: Mr. Speaker, on a question of privilege; I wonder whether my hon. friend would consider moving a little to the right or to the left so that he would be in front of one of the microphones.


Mr. Fleming:: Preferably not to the left.


Stanley Howard Knowles: We are having trouble in hearing what he is saying.
3982	HOUSE OF
The Budget-Mr. Macdonnell


James MacKerras Macdonnell: I am extremely flattered that the hon. member for Winnipeg North Centre (Mr. Knowles) should wish to hear me, and I certainly will do my best.


Stanley Howard Knowles: So you responded by moving to the left.


James MacKerras Macdonnell: But not far.


Donald Methuen Fleming: Only in a geographical sense.


James MacKerras Macdonnell: May I ask whether I can now be heard?


An hon. Member:: That is better.


James MacKerras Macdonnell: May 1 again thank hon.
members for wanting to hear me. It is a very unusual experience.
The minister's optimism naturally has attracted a good deal of attention, and the Free Press-1 mean the Winnipeg Free Press-has this to say-


Stanley Howard Knowles: Capital "F".


James MacKerras Macdonnell: I quote:
He makes the surprisingly buoyant assumption that the upturn in the second half of the year will more than compensate for the declines which have been evident in certain branches of industry since the beginning of the calendar year.
The minister makes it clear that he is basing this optimism on his expectation of an upturn in the United States. My only comment on that is that I think it needs a lot more than an upturn in the United States to cure our situation. I think it needs a good deal of effort on our own part. I think it means bringing down our costs in the export trade where we are being hampered at the moment by competition we cannot meet.
Nevertheless, the minister's optimism is attractive. As I listened to it, my mind carried back to a cult-I suppose it was a cult- which was popular a good many years ago, called Coueism. It was a kind of autosuggestion. People muttered incantations to themselves and by that means I suppose they bucked up their morale and the morale of others, and made themselves feel better. One of the incantations I remember was, "Every day and in every way, I am becoming better and better." I suppose the minister has perhaps adopted a little of that and says, "Every day and in every way things are becoming better and better."
I would be the last to deprecate optimism, but I do feel that, while our long-term prospect is brilliant, we should not assume that it is free from perhaps a little of what the minister calls hesitation. I thought that was a nice word. I propose to refer to it later- occasional hesitation. But while I love optimism, I do not think that we should


confuse optimism with wishful thinking. I think what we need is informed and well-based optimism, and I wonder a little whether the minister, humanly enough, just made up his mind that he was going to go optimistic. After all, after seven prosperous years it is hard to contemplate a change and, as I said the other night, I realize that when governments are carried along on the crest of a boom they come to believe that really nothing can go wrong when they are in power-at any rate, that nothing can go seriously wrong. I think they come to believe that they are the darlings of fortune and that fortune will never desert them. So the only world dreamt of in their philosophy is a world where things are always bigger, better and brighter.
Although the minister does admit that there are considerations which give some cause for hesitation, nevertheless he comes definitely down on the side of optimism, but what I would rather call wishful thinking. In this connection it is very interesting to read a short comment on the minister's speech from the Financial Times of London. It is a matter of some interest that the Canadian Minister of Finance (Mr. Abbott) and the British Chancellor of the Exchequer presented their budgets on the same day. It did invite comment, and I propose to read a short comment from the Financial Times. The Times says it is obvious from the Canadian budget that finance minister Abbott has based his entire economic policy on an early recovery in the United States. Again, they say:
That, it is worth noting, is more than Mr. Butler, chancellor of the British exchequer ... is willing to do.
Again:
This contrast perhaps also serves to explain why Mr. Abbott had not shown more concern about the marked deterioration in the Canadian trade balance in the past year.
And further:
Evidently it would be very hard indeed for Mr. Abbott to contemplate any other assumption than an early revival of American economic activity without some fundamental changes in his whole financial policy. But that does not make his present policy any less of a calculated risk.
The comment I wish to make on that is that I fail to find very much calculation in the Minister of Finance's assumption of risk. I fear, indeed, that there was not much calculation but that the assumption was a bad assumption, and perhaps even a misleading one. At any rate, there was not enough to support it.
I wish to come now to the definite topics that I want to consider. I wish first to refer

to the continued rise in non-defence expenditure which faces us this year, as in other years, and which we find perplexing and to which there seems to be no answer that the government has been able to find. This year, with things uncertain, we might have expected some kind of retrenchment, but apparently there is none whatever. Private individuals, private corporations, even government corporations like the Canadian National, have to economize. They have to cut their suit according to the cloth. They have to be realistic. But apparently as long as the government has the pocket of the taxpayer open to it it does not become realistic. If only there were a higher power to say to the government, "This is all you have to spend, you cannot spend any more", I think magical things would come about in the way of reorganization.
That has happened in the United States. We are told that they have cut off $7 billion and hope in the coming year to add $5 billion to that. They are taking it seriously. Realism has overtaken them. I suppose one thing which has prevented our taking the situation realistically is that we have had these surpluses. In the United States they have not been misled by surpluses. They have not taken extra money from their people and they have not had these surpluses which are apt to lead a government astray, and I think have led our government astray.
In some mysterious way our government seems to believe there is a divine dispensation which relieves us of the necessity of doing what other people have to do. We apparently do not have to practise prudence and economy. Optimism is the substitute. Of course we all know that that does not make sense. We all know that taxes enter into the cost of production, and we all know that non-defence expenditure should be coming down.
I want to deal with this matter at some length. Let us have a look at our non-defence expenditures since 1948. In the fiscal year ended March, 1948, they were $1,994 million, in round figures. At the end of the next fiscal year they were $1,907 million, a blessed drop to encourage us, but there has been no such encouragement since. At the end of the last fiscal year they were, when you add the old age security fund, $2,697 million, and the present budget provides for $2,892 million. When you take into account the supplement-aries and our non-civil defence expenditures they will be approximately $3 billion this year.
What about our civil service payroll? Permanent and temporary employees increased from 118,000 in 1948 to 135,000 in December, 1953, and the payroll rose from $226 million
The Budget-Mr. Macdonnell to $360 million. If we add casuals, ships' crews and so forth, the number of civil servants as of the year 1953 is not 135,000 but 171,000, and the payroll, on the basis of adding casuals, is not $360 million but approximately $475 million. Commenting on this, the Financial Post says:
The trouble with a government job or project is that it never seems to end. Hardly a week passes but some new board or commission is set up, an office opened and a staff hired. But seldom indeed are these groups disbanded even when their original mission has been accomplished. The usual practice is to absorb the staff into some other branches of the service. Over the years that sort of thing adds thousands to the government pay roll but little indeed to government efficiency.
I do not propose to dwell on these figures. I do propose later to dwell as emphatically as I can on what I believe is the need for a close scrutiny into government operations. However, at a time when questions are being asked in the house as to why the C.N.R. has had to reduce its staff, at a time when, from all across Canada, labour departments report unemployment, at a time when there is the greatest anxiety in labour circles about the existing situation, at a time when the unemployed are being asked to tighten their belts and hope for the best and believe the minister has some heaven-sent inspiration when he predicts that all will be well or nearly well in the autumn, at this time the one organization which does not practise what it preaches is the government.
In spite of all this the minister forecasts a surplus. It is microscopic compared to the surpluses of his big days, and even here one wonders whether by the desire to make things look good, by the inability even to contemplate a deficit, he has not been led away by unwarranted optimism. Last year he underestimated the gross national product by $345 million. Nevertheless, even with this windfall of more than a third of a billion dollars, he was high in his revenue estimate by nearly $100 million. If, as some think, the gross national product may be actually lower than last year, if our economic growth has really slowed to a walk, then it could be the minister would have a substantial deficit. I should like to ask him when he replies to state his present estimate of the gross national product.
It is perhaps natural that the attention of an opposition should be especially attracted to one form of expenditure beyond all others, namely the millions spent on displays, films, advertising and other informational publicity.
"Informational publicity"-what a blessed phrase. Especially invented, no doubt, for the use of government so as to be able to use public money, incidentally, to advertise itself. The government has seized with

The Budget-Mr. Macdonnell avidity upon this means of advertising. The figures have grown from $1,799,000 in 1930-39 to $7,177,000 in 1950 and $11,164,000 in the budget for 1954-55. Various instances might be given but I think it is perhaps interesting to refer to some of the pamphlets published under the authority of the Minister of National Health and Welfare (Mr. Martin).
Under the slogan "Posture's Important When you are Very Young" is a picture of two posturing children apparently modelling themselves on two giraffes and what I take to be an ostrich in the background. Then, again, with the minister's blessing, we have the "Robertson" children going to the dentist. They are remarkable children. They brush their teeth immediately after every meal. They do not eat candy or sweet things between meals or before going to bed. This looks to me like total abstinence, and I fear that the minister's tax reduction on candy will mean little to them; but I am sure they will appreciate the kind thought of the Minister of National Health and Welfare. Finally, there is a posture circular for adolescents. The instructions are long but I gather that the authorities are against protruding abdomens and hollow backs. Again comes-


Paul Joseph James Martin: May I ask the hon. member a question? Does he think we should discontinue these three publications which are strongly supported by the department of health of the government of the province of Ontario?


Mr. Ferguson:: I heard nothing about that when I was young.


Douglas Charles Abbott: That is obvious.


James MacKerras Macdonnell: I submit that all I was doing was bringing these to the attention of the house and to the skilful use of language on the part of the minister. When the minister rose I was afraid he was going to reach for one of those speeches he always has ready.


Paul Joseph James Martin: I have too much regard for the hon. member.


James MacKerras Macdonnell: That is very kind of the minister, but I should add that I do not feel the other departments are idle in this good work. The Department of Agriculture, for example, is busy giving information to the farmer. No doubt the farmer obtains much the same information from the provincial government, but on the other hand no doubt the economists, of whom there are 55 employed by the Department of Agriculture, have many interesting things to say and the only thing one can hope for is that they do not overlap too much.


It is not perhaps surprising in the light of this that there are complaints in the press. The Edmonton Journal, which I believe is an independent newspaper, states:
What makes this all the more disheartening-
And what they say is very true.
-is the fact that the increase is not the result of some major crisis requiring costly emergency measures, but rather a general rise in ordinary expenditures.
The Journal goes on to make what I believe are very pertinent criticisms:
No attempt is apparently being made to offset higher salaries by cutting down the size of departmental staffs. Irritating extravagances of the past are being faithfully carried on.
This points dramatically to the different administrative attitudes in the United States where the Eisenhower administration has cut the federal budget $7 billion below its previous level, and is planning a further cut in the neighbourhood of $5 billion.
The Edmonton Journal concludes:
Our government's indifference to economy is all the more unfortunate because the general economic outlook in 1954 is more uncertain than it has been for several years.


Mr. Speaker:: May I interject here and point out that the hon. gentleman has already quoted three extracts from newspapers. I would remind him of citations 264 and 265. Citation 264 states:
It is out of order to read extracts in a debate if they:	(a) refer to other debates during the
same session, etc.-
It is not in order to put on Hansard the expression of opinions by outsiders commenting on our proceedings. The hon member is quite entitled to express his own opinions but he cannot put on Hansard the expression of opinion by others. I quite realize that certain hon. members may think I am being rather drastic in this instance but I know this debate will be prolonged, and it is my belief that too many members indulge in the habit of reading quotations into Hansard. I do not say all hon. members follow that practice but I believe it would be wiser if I gave a warning at the opening of this debate. Unless that is understood we may have opinions expressed by every newspaper in the country put on Hansard by the time this debate ends, and that is exactly what I wish to avoid. I will read citation 264 again which states:
It is out of order to read extracts in a debate if they:
And so on. And then the last paragraph states:
Bourinot, page 335, refers to these objections when he says a member may read extracts from

documents, books, or other printed publications as part of his speech, provided in so doing he does not infringe upon any point of order.
Citation 265 states:
It is not in order to read articles in newspapers, letters or communications emanating from persons outside the house and referring to, or commenting on, or denying anything said by a member or expressing any opinion reflecting on proceedings within the house.
Citation 266 states:
On the 17th March, 1933, a member quoting a newspaper in debate was ruled out of order by the Deputy Speaker who said: "The rule is quite clear, that the quoting of a newspaper, an author or a book which reflects upon debate before the house, either directly or indirectly, is entirely out of order, because members are here to give their own opinion and not to quote the opinion of others . . ."
I am obliged to cite these authorities so that we do not have during this debate the reading of several quotations on Hansard.


James MacKerras Macdonnell: Mr. Speaker, 1 am sorry if I have forced you to correct me again. As a matter of fact, I was a little bit uneasy. The temptation, of course, to take quotations is extremely strong because free writers so often express your views better than you yourself are able to do so. However, I think I am in the happy position that I have now read all my quotations and that there is no need for me to trespass upon your patience any more.
We in our party have constantly sought to keep before the people of Canada the urgent need for the federal government's reaching agreement with the provincial governments with regard to the reallocation of taxing power. We have done this so often and in such detail, I do not think that I shall repeat this argument today. We have strongly criticized and continue to criticize the obstinate procrastination and ineptitude of the government in not pursuing this matter as they have been urged to do. In the amendment that I propose to move today I shall include the exact words of a paragraph which my leader moved in this house dealing with this subject on November 24, 1952: I regret that the government shows no intention of dealing with a matter which threatens the very foundations of our national unity.
Mr. Speaker, I am coming back to this question of spending because I believe it to be of the very greatest importance. I have not spent a lot of time talking about this or that extravagance because I have come to the conclusion that unless the government is ready to do what it as yet has utterly refused to do, except in one or two special cases, namely to invite outside assistance in their organization, it seems to me that the
The Budget-Mr. Macdonnell matter is hopeless. I am therefore not giving a lot of detailed cases of expenditure.
When even the ministers are admitting that things are uncertain and that we are maybe running into difficulties, I confess that I would have thought that this would have been a time for retrenchment, but I have seen no sign of it; there is no sign of it. It would look as if the government has no capacity to deal with this matter. Apparently, something comes over men when they have been a long time in power, and they do not seem to reach the conclusions that sensible men would reach in their own business or which I assume the members of the government reach in dealing with their own affairs. But when you find that nondefence expenditures are up by hundreds of millions of dollars, it really causes you to think. Of course, in a private organization that kind of thing could not happen. There would be the acid test of the profit and loss account. I confess that I had thought that even the government, faced with a situation which has been partially disclosed to us, would have taken some steps to deal with it; but as I say, I can find no sign of it whatever.
The leader of my party, who incidentally has had a great deal of experience of government, has made suggestions with regard to calling in outside assistance, and the answer has been in the negative. The Minister of Trade and Commerce (Mr. Howe) dealt with this matter at considerable length and his refusal took two lines, first that there was nothing to correct and, second, that if there were a report such as that which was made by the Hoover commission, it would do no good. The arguments which were used I found to be very strange and 1 propose to deal with them at some little length because I regard this as a matter of first-class importance; and if it is possible that anything I shall say will have any effect on the decision, I want to say it.
The first argument used by the minister I thought was extremely strange. He pointed out what is true, namely that our cabinet comes into being in a different way from that of the cabinet in the United States where, as we know, members of the cabinet are named by the president. He seemed to think that because the government obtained its authority from the votes of the people, unlike the government in the United States which is appointed by the president, that fact was going to make all the difference in the world. I find his argument interesting,
3986	HOUSE OF
The Budget-Mr. Macdonnell unusual and, if I might say so without being offensive, nonsensical. Here it is. The minister first says:
These men-
That is, the members of the Canadian cabinet.
-take an oath of office that they will carry out the specific work that has been assigned to them.
By that remark the minister seems to imply that by taking the oath of office people, regardless of their capacity or their experience, by some magic have become supremely or absolutely competent to do their job. The minister goes on to say this, and what he says is quite unwarranted:
We are asked now to accept the view that these men are mediocre people, and very bad administrators.
Nobody has used harsh words of that kind. There has been no suggestion of that kind. The suggestion has been that there was room for assistance from outside. Nobody knows better than does the Minister of Trade and Commerce that, in the business world, it is those who are most competent who are most ready to call in outside assistance.
Then next the minister says this-


Douglas Charles Abbott: Will my hon. friend allow me to inquire whether these quotations are from a debate during this session or some previous session?


James MacKerras Macdonnell: At a previous session, I think; yes, I am confident that they are from a debate in a previous session.


Douglas Charles Abbott: If they are from this session of parliament, then they are out of order, of course.


James MacKerras Macdonnell: I am confident that it is a previous session. The next thing we have is this:
We are asked to get a group of Independent people, as though there were no independence in those administering the affairs of government.
I find myself unable to think of the right word by means of which to describe this argument. I will reply to it merely by asking a question of the minister. When it was found necessary for the Post Office Department to get an outside report-which I understand was before the regime of the present Postmaster General (Mr. Cote)-did the government ask a member of the government to do it or did they get someone from outside? We all know the answer. Therefore the government's action really makes absurd the answer given by the Minister of Trade and Commerce.
I am dwelling on this matter, Mr. Speaker, because it seems to me a striking and almost
IMr. Macdonnell.]

unbelievable instance of the complete, impenetrable and absurd self-satisfaction of the government. The minister repudiated the idea that anyone from outside could help. He said:
I presume that the government would choose the very best men they could find, but the fact that it would be an independent body without responsibility to anyone would be, in my opinion, no guarantee that they would be better judges of how this parliamentary government should be organized and administered than are the elected representatives of the people who have sworn to carry out that particular task.
Again you see, Mr. Speaker, the belief in the mythical effect of taking an oath. I will not embarrass the minister by asking him if it is really true that in the case of all his colleagues the oath has covered all defects of mind and heart, and whether he has found them all the supermen we are now asked to consider them.
Now, the minister goes on and says that he has not heard of any great changes being made as a result of the Hoover report. To that I would answer that I commend to the minister a publication entitled "Status of the Hoover Report", by a committee of citizens. It is further called, "A citizen's guide to the progress of Federal Reorganization". It is worth setting out some of the conditions which the Hoover commission found when they began to delve into the Washington situation, because I assume we will not be stupid enough to imagine similar conditions would not be found here.
I shall recite some of the incidents upon which the Hoover commission reported. One Missouri farmer received conflicting advice on the use of fertilizer from five separate agencies in the Department of Agriculture. It would not be hard to imagine, with all the economists we have in our own department, that there might occasionally be duplication in our Department of Agriculture. Budgeting and accounting-the government was maintaining four separate distinct and duplicate sets of books for some important types of federal accounting. Because of obsolete laws, freight car loads of old vouchers were being shipped to Washington for detailed audit when a simple spot check in the field would suffice. Labour -there were more federal activities outside the Department of Labour than in it. This reminds one, incidentally, of our own Department of Trade and Commerce producing unemployment figures as far apart as the poles from those of the Department of Labour. Indian affairs-there were 12,000 Indian bureau employees administering the affairs of 393,000 Indians, or one federal employee to each 32 Indians. Medical activities-five large and thirty smaller hospital systems

went their separate ways "with little knowledge and no regard for" one another's operations. New hospitals were sometimes built in areas where others stood empty. Others were built in remote places where neither patients nor physicians could use them.
Does anyone believe that if an expert reviewing agency reviewed our affairs it would fail to find similar situations? If anyone does, let him look at the Woods-Gordon report on the post office. 1 quote the following from page 42 of that report:
The "Primary Sortation" is the first division of unsorted mail into a number of different groups. While this plan will require further development, there is an indicated annual saving in the forward letter section of the Toronto post office alone of approximately $200,000 per annum.
I quote again from page 54:
While these suggested revisions in the organization's structure in the transportation branch do not materially change the administrative functions they strike at the primary weakness, the lack of future policy and program regarding the extent and nature of transportation services.
To suggest in the face of this that there is no need of inquiry and investigation does not make sense. It will merely create the impression the government is not happy about the situation and that there are things to hide.
It only remains to add that the story of the results of the Hoover commission does not in the least warrant the suggestion it has been ineffective. Here is a summary which is illuminating. The recommendations made by the commission totalled 273. Of these 116 or 42 per cent have been accomplished; 35 or 12 per cent have been mostly accomplished; 44 or 16 per cent have been partially accomplished, which leaves 77 out of 273 remaining.
I do not think, in the light of this, anyone will seriously say that the Hoover report should be laughed off. Of course, it has been hard, when everything has been booming, to get the public interested, but it may be more easy to interest them in the future than it is now. The government is content to advise other people to reduce their expenses, but they do not set an example. Indeed, of course, the government makes it almost impossible for other people to reduce their costs by maintaining taxation at such a rate.
I come now to the question of unemployment. There is nothing in the budget to comfort the unemployed except the minister's optimism, which is a thin mixture. However, I believe the unemployed should turn their wrath rather on the Minister of Trade and Commerce than on the Minister of Finance. The Minister of Trade and Commerce
12, 1954
The Budget-Mr. Macdonnell manages to ignore the figures which come from the Department of Labour. He runs an opposition show of his own. The confusion really becomes complete when the two departments use different words to describe unemployment. It is a kind of runaround. "Unplaced applicants", as they are called by the Department of Labour, are not far from 100 per cent higher than the "persons without jobs and seeking work", which is the phrase produced by the trade and commerce department and used by its minister. Then, we have a third category of "persons without jobs and seeking work, plus persons on temporary layoff".
Here are the latest figures available as at February 20 last. Unplaced applicants, in round figures, totalled 559,000. This is the figure published by the Department of Labour, but the dominion bureau of statistics produces an entirely different figure for "persons without jobs and seeking work, 312,000". To add to the confusion, there is the third figure entitled "persons without jobs and seeking work, plus persons on temporary layoff, 335,000". We have, as I say, complete confusion. We have the government speaking with two if not three voices, and the confusion gets worse the farther we go.
In speaking about this the Minister of Finance says, as reported at page 3727 of Hansard for April 6, 1954:
And I do not believe, in any case, that increased public works of the kind appropriate for the federal government can remedy a problem which is to a large extent local in character.
Now, the word "local" attracted me because I think the minister has failed entirely to keep in touch with the labour department. The March issue of the Labour Gazette shows an average of 40 per cent of Canadian wage and salary earners in what is called "substantial labour surplus areas", and almost all the rest in moderate surplus areas. To put it differently, may I say that of 109 localities, 57 were in substantial surplus, 48 in moderate surplus, and only four very small places were in approximate balance of labour demand and labour supply. In percentage figures what this means is that in more than half the area there was at least one worker in every ten unemployed, and in practically all the other areas from one in ten or one in sixteen were unemployed.
In the face of this situation, what comfort are the unemployed to get? All that they have is what the Winnipeg Free Press calls "the surprisingly buoyant assumption that the upturn in the second half of the present year will more than compensate for the declines which have been evident in certain branches of industry since the beginning of
3988	HOUSE OF
The Budget-Mr. Macdonnell the year." Now, the minister says again, at page 3726 of Hansard for the same date:
Indeed, in the dynamic kind of economy we have in Canada an occasional hesitation in its forward movement may well be one of the consequences of the buoyant character of our economic growth.
"Occasional hesitation"-I think that will seem, to the man who is suffering from unemployment, like a far-off distant voice of some superior being to whom the affairs of poor mortal men are remote. "Occasional hesitation", however, will mean something very real and vital to the unemployed in their day-to-day lives.
The ministers tosses the ball lightly from one to the other. The Minister of Labour (Mr. Gregg) says the time has not come for public works, and that the Minister of Finance will deal with the situation by fiscal and monetary measures. The Minister of Finance seems to be in the same mood he was in earlier in the year when he said that unemployment was not really "serious", although he admitted that it was "unpleasant". Having got himself to this point, his conclusion is not surprising. He said:
In the light of all these considerations I do not feel that drastic measures by government are appropriate to the present economic situation. Governmental intervention or expenditure is not a cure for the problem of those industries where supply has temporarily outrun demand.
The ministers are good at negation. "It is not time for this". "It is not time for that". What is it time for? We get nothing but negation, and the hope that the United States will cure our problem. That is really all that is left.
I should qualify that to this extent, that the Minister of Trade and Commerce speaking the other day in Toronto, did seem to have a vague idea that not everything was quite right. He did say that there would be cooperation between government and industry with regard to employment. But he did not seem to worry about it, at all. His conclusion was:
By and large, the Canadian economy remains buoyant and expanding.
Of course everyone hopes that the ministers are right. The Minister of Finance is pinning his hopes on United States recovery. But we must, incidentally, remind ministers that costs must come down, and that blithely offering cheap advice to producers about costs, while the government does not do anything about it, leaves them in the very greatest of difficulty.
What the unemployed make of all this, I cannot say. When ministers are not agreed on the problem, how is it likely that the


unemployed will feel when there is no serious interest being taken? And when other ministers ignore the Minister of Labour, how can the unemployed have confidence? It is too much to expect. If uncalculated optimism blunders into being right, well and good. But supposing this optimism is wrong-then we will be in a proper mess, and the government will be responsible for taking the risk, which the Financial Times says is a "calculated risk", but which in my opinion is wishful thinking.
I have been talking about the unemployed. Their plight is largely caused by shrinkage in our export trade, and I now propose to say a few words about trade, including the subject of wheat. The Minister of Finance spoke hopefully about international organizations which have to do with international trade. He mentioned the international monetary fund, the organization for European economic co-operation, and the general agreement on tariffs and trade. And we can all hope that his expectations will be realized. But again I say that he cannot take advantage of these conditions, however important they may be, unless we have set our own house in order, and can meet competitive prices.
The Toronto Star draws this warning from what the minister said, when it says:
Our economic growth has slowed to a walk.
And again:
It may not be necessary, as Mr. Abbott says, for the government to take any drastic measures to deal with the recession. But even if business recovers to last year's levels it will not give us the expanding economy we need to sustain full production and employment.
I suggest that is a remark well worth pondering, because it is true our economic activities these last few years have depended upon a constantly expanding economy. In the atmosphere which has been created, to stop expanding is going to mean the equivalent of going backward, because so many people have come to count on expansion as the ordinary course of things; to believe that next year will be better than this, and to arrange their expenditures accordingly. Indeed, I think we can say that the government has, in effect done that. And it is not surprising that the ordinary citizen has followed their lead.
So the condition we have is that the government is gambling with the welfare of the unemployed, and indeed with the welfare of all of us. I shall not worry hon. members with long details of trade figures. I could point out that in 1953 we had a trade deficit of $210 million against a surplus of $325 million the year before, or a net worsening of $535 million.

The reasons are three in number. The first of these is the premium on the Canadian dollar, which impeded trade to some extent. The second is the price of Canadian goods and the third the shortage of dollars in certain areas.
As regards the prices of Canadian goods I wish to remind hon. members of a comment which has been quoted in the house- and, Mr. Speaker, I am not quoting from the press, but rather from the speech at the annual meeting of the Royal Bank where Mr. Muir said:
Startling and unpleasant as it may be, there is evidence that Canada is tending to become a high cost economy in which natural and artificial barriers prevent us from achieving the degree of flexibility and mobility required for orderly adjustment.
Now, I have spoken about the decline in foreign trade, caused increasingly I think by our high costs and our failure to meet competition abroad, which is disconcerting enough. But, worse still-and there is plenty of evidence of it-is the failure to meet competition at home. Mr. Forsyth, president of Dominion Steel and Coal Corporation, has spoken recently of the failure to meet competition "in our own backyard." He no doubt had in mind cases of Canadian manufacturers being substantially undersold by European competitors, particularly those from the United Kingdom. Two recent cases have come to my own attention, in one of which a United Kingdom competitor tenderer 50 per cent below the Canadian tenderer and in another case 22 per cent below.
Of course we all know the results of German competition because there is much of it. Particularly, with our own eyes, we see the little German motor car, the Volkswagen, on our streets.
What does the Minister of Finance say about all this? Well, he seems to be doing a kind of balancing act. On the one hand, in a realistic passage of his speech he says:
Some industries are finding that they have not watched their costs as carefully as they should, that their break-even points are uncomfortably high, and that their costs and prices are out of line.
And again he says:
The re-emergence of keen competition in trade means readjustment and appraisal.
But in the next breath we have:
I do not believe that the current slowing down of expansion will be serious or prolonged.
Then he comforts himself by saying:
Responsible opinion in the United States seems to be confident that the present down-turn will not be deep or prolonged.
The Budget-Mr. Macdonnell
And finally he has persuaded himself by his own optimistic arguments when he says:
I think an up-swing in the second half of the year will more than compensate for the declines that are evident in certain branches of industry at present.
I think it would have been more accurate if the minister had said, not "I think" but "I want to think" or "I must think" or "I am determined to think".
While I am speaking about export sales I should like to say a word about wheat. Apart from the large amount involved, wheat has always been regarded as a kind of index of the Canadian economy. The many inquiries made in the house the Minister of Trade and Commerce was apt to wave aside rather airily, and to suggest there was nothing much to be concerned about. But I do not think the position of the farmers warrants his unconcern. The net income of farmers was down 14 per cent in 1953 from 1952, and more than 23 per cent from 1951, while the index of the things the farmer buys shows that it is down only 4 per cent.
I think the seriousness of the situation struck the house and the country suddenly about a month ago when the minister told us that no wheat from the 1953 crop was yet sold, and that on January 30 there were 127 million bushels from the 1952 crop in the hands of the wheat board. On January 30, 127 million bushels from the 1952 crop were in the wheat board's hands. The situation on March 24, I am informed, was that 359 million bushels were in commercial positions, and 328 million bushels estimated deliverable on farms, making a total of 687 million bushels.
If the disappearance in the last four months of the crop year is 35 million bushels a month, which I understand is favourable, it would leave us about 550 million bushels on July 31, which is only six weeks away from the delivery of the 1954 crop. Notwithstanding this very high supply position, the Canadian government has taken what competent people regard as the very speculative, long position. It seems perfectly clear that if we have another good crop this position will almost certainly cost Canada dearly.
Those who are interested in precedents carry their minds back to a similar situation existing in 1929. At that time the pool virtually tried to hold up European purchasers and it had what we have learned to call a chain effect on shipping and other things, and was one of the things that precipitated the unfortunate situation that descended on us then.
I suggest that there should be some cooperation, a meeting of minds between the

The Budget-Mr. Macdonnell Minister of Trade and Commerce and the Minister of Agriculture. The Minister of Trade and Commerce is constantly telling us we are very fortunate to have that wheat just as wheat, and says you cannot go wrong as long as you hold wheat. There are some others in this house who have a mercenary idea that wheat is for the purpose of being sold, and they do not all seem to agree with the minister; however, I am not quoting them because their views will not prevail very far. But I do think that the Minister of Trade and Commerce ought to try to persuade the Minister of Agriculture. There does not seem to be unanimity there.


Mr. Gardiner:: There is on that question.


James MacKerras Macdonnell: Well, not unless the minister has changed his mind from what he said on December 7-maybe there has been a meeting of minds since. The minister himself may be able to reconcile what I am just going to read.


James Garfield Gardiner: Why not quote the speech I made in this house during this session?


James MacKerras Macdonnell: I am going to quote what the minister said on December 7. He will make his own speech if he wants to. I am going to quote the strong language he used in Home on December 7. He said:
During the war we were asked to produce great quantities of cereals, particularly wheat. Now we find no one to buy our surpluses at prices for which our farmers can afford to sell.
Again, he said-


James Garfield Gardiner: On a question of privilege, Mr. Speaker, I want to say that those two statements that have just been read are parts of two different sentences in two different parts of my speech that were put together by someone and made to give that impression.


Mr. Argue:: Still using an alibi.


James Garfield Gardiner: The last part of the statement has to do with cheese and butter, not with wheat.


Mr. Rowe:: What impression did you want to give?


James MacKerras Macdonnell: I come to butter and cheese later. I thought butter and cheese were in here. The minister will exonerate me from wanting to quote anything inaccurately-


Hazen Robert Argue: Don't quote the minister.


James MacKerras Macdonnell: -from the press. The minister will correct me if he wishes.


James Garfield Gardiner: The first part of what has been read is really a lead that was written by the newspaperman. It has to do with wheat, and in the other instance it has to do

with dairy products, and another which was quoted only the other day in the Gazette, and that is why I am so familiar with it.


James MacKerras Macdonnell: I am going to quote something more unless the Speaker stops me, and perhaps by the time I am through the minister will feel that it gives a better story of what he said. I hope the Speaker will not prevent my reading it. Again he said:
Our costs of production are very high. I do not think there is any country in the world today which can afford to buy some of our products at the prices our farmers must charge if they are to make a living.
He also said that Canada's cost of production of butter and cheese is extremely high. The minister indeed, as the phrase has it, certainly "blew his top".
Another remark attributed to him was that:
Canada will maintain her vast grain store reserve with or without international aid.
There seems to me at the moment no question of international aid; the question is about selling wheat in a competitive market, and without pretending to adjudicate between two such experts as the two right hon. gentlemen, I have a feeling that the Minister of Agriculture has had quite a lot of experience in selling wheat, but maybe he will want to correct that, too.


James Garfield Gardiner: If you will take my speech I will send you a copy of it, if you wish it. If you will take it and read it to this house they will see that it does not say these things at all.


William Earl Rowe: You should have given a proper release to the press.


James Garfield Gardiner: I did not give a release at all.


James MacKerras Macdonnell: I should be glad to read the minister's speech at any time.


William Earl Rowe: It is bad enough to have to listen to it.


James MacKerras Macdonnell: I have to make do with what I have which, as I say, comes from a responsible source. The minister will be glad to know I am not going to quote any more of it, but I do think we are entitled to know what his position on this matter is at the moment, and that brings me back to the Minister of Trade and Commerce. I am sorry he is not in his seat. He is not as anxious to hear me as the people to the left. I hope, by the way, that my voice is carrying better.


Mr. Coldwell:: Yes, much better.


James MacKerras Macdonnell: You are standing it all right?


Major James William Coldwell: Yes, following it very well.


Stanley Howard Knowles: Did you say standing it or understanding it?


James MacKerras Macdonnell: I said "standing".


Stanley Howard Knowles: You have a very pleasant voice.


James MacKerras Macdonnell: The Minister ol Trade and Commerce is a man of many devices, but whether he is good at salesmanship is something that I do not know. Of course his experience with the grain business had nothing to do with selling; it had to do only with storing, and I am wondering whether he has a complex; whether he has got very, very good at storing and not much good at selling, and whether he gets great pleasure out of having bursting elevators all across the country-very well built by him. There was one unfortunate instance that we were told of the other night where one of the C.C.F. members nearly met his end, which would have deprived us of the pleasure of meeting him. At any rate, that is a long time ago. But it seems to me, when we have all this wheat and the minister sitting on top of it, the question does arise whether we are in a good position or not.
The Minister of Trade and Commerce has always been a great perplexity to me because he says-and I am sure he says it sincerely- that he is a believer in private enterprise. I have no reason to doubt that, except there are so many things he does that seem utterly inconsistent with it. Here we have a situation where the minister tells us we have got to rely on the good judgment of the wheat board. I have no doubt that the wheat board, if we could get inside their minds, would say; Of course we have to rely on the judgment of the minister. At any rate, between them they arrive at conclusions, and in any event it is the judgment of a small group of men; and this minister, who is a great exponent of private enterprise, is on the other hand so keen on having control in his own hands that we do not really get the benefits of private enterprise in anything that he gets hold of by way of public enterprise. Therefore I think it is legitimate to ask-I have no expert knowledge to do more than ask-whether it is possible that a few men who are now in control of selling wheat are backing their judgment against experienced purchasers in Europe. If they are, the question further arises whether they have open minds to believe that the situation is changing. Do not let us forget that the present handling of wheat has deprived us of merchandising skill. My friends to the left, even if they listen to what I say, will disapprove entirely of what I say. We are deprived of the judgment of scores or hundreds of expert 83276-2524
The Budget-Mr. Macdonnell merchandisers backing their judgment against each other and each day reaching what is the best composite view as to what price wheat can be sold at.


Major James William Coldwell: Is the hon. member suggesting that the farmers should market their grain on the grain exchange again?


James MacKerras Macdonnell: I am not making any suggestions except that I hope that the minister is not going to leave us in the position we are in now. The well-informed and always moderate review of the Bank of Nova Scotia for March has this important thing to say:
The piling up of wheat stocks, not only in Canada but in the United States, the current restrictions on United States wheat acreage, the slow rate of sales under the international wheat agreement this season, the year-long decline in wheat prices outside the agreement and the recent seven-cent reduction in the Canadian lakehead price, are all symptomatic of the changed atmosphere. The world wheat market has become much more competitive . . . world trade in wheat will likely be smaller this year, and there is much to suggest that North American exports will bear more than their share of the decline.
Again the writer says:
The combination of increased supplies and lessened demand has brought about a striking change in the atmosphere of the world wheat market. This change is clearly reflected in the slow movement of wheat under the international wheat agreement. Up to mid-February only a little more than 35 per cent of the amount of wheat which the four participating exporters agreed to sell and the 45 participating importers to buy in 1953-54, had been sold. And it should be noted that the total commitment under the agreement this season, because of the failure of the United Kingdom to enter, amounts only to 421 million bushels. At the corresponding date in each of the two preceding seasons, at least 70 per cent of the annual amount of 581 million bushels then covered by the agreement had been sold.
Later it has this to say:
Though the policy of the wheat board is to keep. Canadian prices fully competitive, there seems to. be no disposition to pursue an aggressive policy of price reduction.
Finally:
Regardless of how well prices hold up during the remainder of the season there is no doubt that the more competitive wheat market and the mounting surplus make the outlook for Canadian wheat more uncertain than it has been for a long time.
The matter could hardly be in a more unsatisfactory position. The minister gives us the bland assurance that wheat is a good asset. As time passes the minister takes things more and more into his own hands, and instead of obtaining the best composite judgment we can have we have to rely on him. Attempts were made to hold up the purchases in the United States and Canada in 1929 but they failed. As I said, there was

The Budget-Mr. Macdonnell a chain reaction on shipping and other business. There is a vast difference between the situation today and in 1929 but enough similarity to make us think.
Outside North American markets, wheat is becoming more competitive than for a good many years and purchasers are in a stronger position. Is the wheat board following the example of the Minister of Finance and relying on the hope that all will be well? Are they taking a gamble hoping that they can make the purchaser dance to their tune? Is there in the backs of their minds the feeling that if things turn bad they will be able to deposit the problem on the doorstep of the government?
One thing is certain, that others are suffering. Lake shippers are facing a serious situation and ocean shippers too. Up to a few weeks ago little or no wheat had been booked for shipping via the St. Lawrence this season, something almost unprecedented. Freight ships have left Saint John virtually empty.
I have been talking about trade, notably wheat. I wish now to say a few words about competitive costs, taxation and inflation. We are collecting $1,200 million from corporations by way of income tax. This means $1,200 million added to production costs. It is conceded by every reputable authority that the best way to revive purchasing power is to reduce taxation. Of course, in addition to the taxes on corporations we take approximately $1,200 million income tax from individuals, and there are other taxes direct and indirect. When ministers advise us to cut down costs but can do nothing to assist by reducing taxes it is really preaching to the air. The position in which exporters are going to find themselves, if there is no means of cutting down their costs by tax reduction, may be a very serious situation indeed.
I want to say a word about monetary policy. We have had fifteen years of boom stimulated by the government's financial policy. In 1946 the government feared a recession, and at that time they took action to stimulate when it was proper, but since then they have been trying to eat their cake and have it by stimulating purchasing power and at the same time, as in 1946 and 1947, trying by financial measures to avoid rising prices. This proved largely ineffective, and it is essential to recall that while prices were rising the government was artificially stimulating investment through double depreciation.
Reviewing the intervening years quickly, in 1950 the boom which had existed slackened slightly and there was fear of unemployment. Then came the Korean war which stimulated the boom to still further heights. In the
IMr. Macdonnell.]

spring of 1951 the government did take steps to curb, but their courage deserted them in 1952 under pressure, and again they abandoned restraining measures. Instead of moderation the government stoked up the boom. The gross national product kept mounting until it was $24-3 billion in 1953, 33 per cent higher than in 1950, and 75 per cent higher than in 1946. Now the rate of expansion has slowed, perhaps to a walk.
In 1952 the gross national product was 7 per cent ahead of 1951. Last year the increase was 5 per cent and this year it is expected to be not more than 3 per cent. We must remember of course that inflation has always been very attractive to the government because it has enabled them to spend more and still have surpluses, but this built-in inflation, as it has been well called, of high taxes will take a lot of readjustment. As I said earlier, anything short of a roaring boom in the mentality which we have developed is going to be hard to live with.
I shall not detain the house longer on inflation, but we should not forget its danger merely because it has been living with us for a long time. Some well-informed people believe that the recent call for redemption of $2 billion of government bonds indicates a new voyage into inflation. The Republican administration in the United States came into power with a great blowing of trumpets pledged to hard money, so-called honest money. Now they have done a right-about-face and with the fear of the November election they are pursuing a soft-money policy. They are trying to give the economy stimulation by cheap money and low interest rates, in other words, another dose of inflation.
I do hope this operation of our finance department is not the signal for us to start in on a debasement of the currency with all that it means in the way of high prices and other unfortunate results. I end, Mr. Speaker, where I began, with a list of the negations of which the budget consists: Nothing done for employment; nothing real done to relieve the taxpayer; nothing done to break the deadlock in wheat; nothing done to indicate any intention of improving the efficiency of government; and nothing done to reassure us that we are not going to have another spate of inflation. It is a dismal recital of hopes, vague optimism and admonitions to others to do things when the government itself seems helpless to do anything. I move, Mr. Speaker, seconded by the hon. member for Dufferin-Simcoe (Mr. Rowe):
That all the words after "that" to the end of the question be deleted and the following substituted therefor:
"this house regrets that the government
(a)	has failed to reduce taxes which are an

excessive burden on the Canadian people and place our producers under a severe disadvantage in meeting competition from abroad;
(b)	has failed to reduce unnecessary expenditure;
(c)	has failed to improve the efficiency of its administration;
(d)	ignores the problem of unemployment;
(e)	has failed to retain and regain markets for our surplus primary products;
(f)	has failed to reach agreement with the provincial governments in regard to a clearly defined reallocation of taxing powers so that the provincial governments and municipal councils may have adequate financial resources to carry out their rapidly-increasing responsibilities."


Major James William Coldwell: Mr. Speaker, I am sure the house will understand if I do not discuss the various suggestions, proposals and criticisms made in the amendment which has just been moved. In his address the hon. member for Greenwood (Mr. Macdonnell) dwelt at some considerable length on some topics with which I would also like to deal at some length, the most notable being the problem of marketing our farm produce and wheat. However, since that is a matter which should be the subject of extended consideration I do nbt propose to deal with it. I shall leave that to one or more of my colleagues who are familiar with the wheat situation in western Canada. However, I do wish to say something about the budget and the speech the Minister of Finance (Mr. Abbott) made when he introduced his budget.
The minister has, as usual, given an interesting and optimistic review of the Canadian economy and its prospects for the current financial year. Time alone will tell whether his optimism-which my hon. friend calls wishful thinking and I suppose optimism is closely allied to wishful thinking-is justified or not; but I am sure that people generally believe that the outlook is not nearly as rosy or as encouraging as he painted it.
As the minister spoke, more than 500,000 people in Canada were registered as seeking jobs; and on the farms the impact of falling prices has already been felt. The farmers in western Canada, as we have been told, have a vast accumulation of grain, and the marketing prospects are far from bright. Some farmers, including some in my own constituency, had little or no crop in 1952, and the failure to market or make arrangements for advance payments on any part of the 1953 crop, which could not be marketed because of the quota, has caused difficulty and stress.
Taking into account those considerations, I believe the minister is unduly optimistic. He indicated, too, that the gross national product for 1954 will be much the same as
The Budget-Mr. Coldwell in 1953. He appeared to be satisfied with that position. But I would point out that, unless our gross national product increases at a greater rate than our increasing population and in accordance with the technological improvements which are made from time to time, the problem of employment will become increasingly difficult. If the gross national product in 1954 remains at the same level as in 1953, it should be clear that there will be no improvement in the employment situation in Canada next autumn and winter, although activity in the coming spring and the summer should give us some temporary relief.
The budget then, in our opinion, fails to take any decisive action to meet the two problems to which I have referred. They are the two important and urgent problems of maintaining full employment, to which we are committed under the charter of the United Nations, and the improvement in the agricultural industry.
It seems to me that now is the time, when the budget is being introduced, to outline some positive steps to improve these conditions. I believe the minister failed to do this. Budgetary steps should have been taken to increase the purchasing power of the average Canadian so as to enlarge the domestic demand for the larger product which we can produce. That could have been done, Mr. Speaker, in several ways. Among them and coming immediately to mind should have been an increase in the exemptions under the Income Tax Act to those taxpayers in the lower brackets. I am not urging any relief in corporation taxes. With the high rents and high prices for clothing and other commodities which enter into the cost of living, steps should be taken to relieve the small taxpayers of impositions that were placed upon them when the cost of living was appreciably lower. We have urged before and I do so again that exemptions for single persons should be raised to $1,500 and for married couples to $3,000.
The minister, in effect, echoed complaints that the old age security plan was becoming an increasing burden on our budget. These payments are like family allowances and unemployment insurance. They are means of redistributing the national income and maintaining the purchasing power among our people. They are, in effect, insurance premiums against depression and are therefore, in my opinion, legitimate impositions on our people as a whole. One means, of course, of improving the position of the old age security fund would be to remove the ceiling on the two per cent levy which is now limited to a
3994	HOUSE OF
The Budget-Mr. Coldwell maximum of $60 per individual taxpayer. The removal of this ceiling would be a step in the direction of levying the contribution according to the ability to pay. I believe that levying according to the ability to pay is the kind of levy that is favoured by most people today.
Then, too, there should have been much more of a reduction in excise and sales taxes. Some excise taxes were reduced but they affect a relatively small number of items and I do not think they will be felt at the level of the consumer. Sales taxes are the most regressive form of taxation. Where they are used in the provinces they are used of necessity to meet social services which, we believe, should be the responsibility of this parliament through a national social security plan, a plan that was proposed by the government in 1945 at the dominion-provincial conference of that year. Sales taxes are a tax on purchasing power and thus not only reduce the ability to buy goods to the amount of the tax, but discourage people from buying in the domestic market upon which we must depend more and more as time passes. This discouragement is felt particularly by the great mass of the people whose purchasing power, individually, is low, but in aggregate, represents the bulk of the buying of consumer goods in this or any other country. Moreover, the new exemptions under the sales tax and excise taxes, reduced or repealed, relate to many articles which may be deemed luxury goods, such as jewelry, diamonds, semi-precious stones, cut glass, and articles of that description.
I should immediately say, however, that I wish to commend the minister in one particular and that is for the exemptions under the sales tax on equipment sold to, or imported by, municipalities, especially designed for road making, fire-fighting and so on. But I regret that this does not include motor trucks, which represent a heavy cost to municipal governments. It is regrettable that household necessities, such as children's clothes and babies' shoes, are still taxed. This emphasizes the point that the tax reductions or exemptions have been made in many instances on the wrong item.
Because of the government's failure to take what I have termed positive action, and which would meet the general economic recession which has manifested itself during the past few months, the pressure has been growing on this parliament to take a negative kind of action. By this I mean that there have been increasing demands for protection through higher tariffs for certain industries which have been feeling the effects of the economic recession.

I want to say immediately that we of the C.C.F. have often urged general economic policies to meet the needs of the economy generally, but I do not propose to recite them at length today. Most of them were very clearly developed by my colleagues in the recent debate on unemployment. In effect, by refusing to plan actively for full employment and for more stability in agricultural prices, there has been strong pressure for increased tariff protection which, in his budget speech, I am glad to say the minister felt compelled to refuse. I should like to say to him that we in this group stand for the principles of freer trade among the nations. We believe that the welfare of Canada depends not only on intelligent trade relationships providing opportunity for our entry into world markets, but that this opportunity can only be provided to our producers to the extent that we are prepared to accept goods in exchange for the goods that we sell abroad.
I found it difficult to follow the statement of the Minister of Finance (Mr. Abbott) to the effect that the United States has been somewhat at least of a champion of freer trade. Personally, I have not seen any clear evidence of this in their actions, though many speeches have been made by prominent Americans, including the President, seeking to convey that impression. There is an old proverb which says, "Actions speak louder than words". The minister's statement came very soon after the latest breach, on the part of the United States, of the Geneva agreement on tariffs and trade by way of new restrictions on the importation of Canadian barley. I should like to say that I was disappointed, when this matter was drawn to the attention of the house, that the Minister of Trade and Commerce (Mr. Howe) felt that this breach of GATT did not require an emphatic protest from our government. This was particularly the case because it is only the latest in a series of unilateral actions on the part of the United States which emphasizes the uncertainties of United States markets for Canadian produce and goods.


Douglas Charles Abbott: I think my hon. friend meant to say rye, not barley. He said barley.


Major James William Coldwell: That was a slip of the tongue. I meant rye.


Douglas Charles Abbott: That is a much smaller item.


Major James William Coldwell: Yes. I thank the minister for the correction. It is because of this uncertainty that we have been urging the government to endeavour, in a more positive fashion, to encourage trade with nations other than the United States, more particularly, of course, with the United Kingdom and other commonwealth countries.
'Mr. Coldwell.]

The budget, I say, made few reductions in what I have called regressive taxes or indeed in any other form of taxation. I have noted before that both the United States and the United Kingdom have outlined some reductions in their defence expenditures. I feel that with the relaxation in world tension we could safely reduce our defence expenditures, as the United States has done, by at least 10 per cent this year. I am sure that our people cannot look happily upon suggestions that it may be necessary to maintain indefinitely that drain upon our national expenditures to the extent of some 43 per cent of the national budget. I want to emphasize once again that the strength of Canada and that of the democratic world rests not so much on a high level of armaments-although again I reiterate that defence expenditures are necessary in the kind of world in which we are living today-but that true defence will lie in the feeling of the mass of the people that the needs of themselves and their families are being adequately met by national policies as far as they affect our national economy.
There are indeed many worth-while social security measures that Canadians themselves must have in order to maintain and improve their standards as a modern, democratic and progressive people. To the extent that we can move in that direction, and indeed assist other peoples in the world to move in the same direction-and I think that is equally important-to that extent can we reduce and finally, we hope, eliminate the present threats of totalitarianism whether of the fascist or communist variety. Let us bear in mind that the threat to freedom in the world is not only from communist sources but from varieties of fascism here and there across the world. Thus, I want to suggest once again that since the new and frightful weapons of war make most types of military equipment for our forces obsolete, we should do everything possible to assist in reaching universal agreements for progressive disarmament and thus to be able to divert a substantial part of our defence appropriations to giving material and-what is perhaps more important- technical aid to underprivileged and underdeveloped peoples and areas everywhere. I want to say that this, in our opinion, is the only sure way of promoting the peaceful progress of mankind.
Among measures that are required to strengthen our own economy and to avert serious distress are not only projects like a national health plan-which I would place at the very top of our requirements in the realm of social security legislation-improvement in family allowances, old age pensions,
The Budget-Mr. Coldwell unemployment benefits, crop insurance and so on, but economic undertakings-because, after all, if we are going to have the kind of social security that we envisage, we must have an economic basis that will carry the social security system-that will bolster the economy in vulnerable areas and increase production to enhance our gross national product. Among these are, of course, projects like the St. Lawrence seaway project and irrigation projects. Among the latter, first and foremost, is the utilization of the waters of our great rivers, particularly those of the South Saskatchewan river.
I am sure hon. members will pardon me if I refer to this particular project for a few moments at this time because, as a matter of fact, my own constituency is both sides of this river and the undertaking of that irrigation project would affect my constituency more than any other one in the province of Saskatchewan. Those of us who, like myself, can remember the years of drought and disaster over large areas of otherwise fertile land on both sides of this river are most anxious to see this project undertaken. 1 do not propose this afternoon to outline the tortuous statements made in Saskatchewan by supporters of the federal government regarding this project or to discuss the varying estimates of cost that have been produced by the federal government from time to time, it seemed to many of us, to delay the carrying out of this important project. I think this is clearly outlined in the record of correspondence over the years between the federal government and the provincial government of Saskatchewan. I think that an examination of the correspondence and statements indicates that the federal government has been vague and, if I may use the term, somewhat evasive.
I know, of course, that the present government of Saskatchewan has never asked the federal government to subsidize the generation of electric power. It has been clear, I think, that the provincial government has been prepared to contribute to the construction of the dam the same amount of money that it would cost the province to generate the potential power in some other manner. There are two sides to this question but no one, I think, would suggest that the users of power in the province of Saskatchewan should be asked to subsidize an irrigation and water conservation project which is the responsibility, in my opinion, of the federal government and which it has assumed elsewhere. It seems to me that the time has come when, instead of the Minister of Agriculture (Mr. Gardiner)-whom I am glad to see in his seat this afternoon-presenting his
3996	HOUSE OF
The Budget-Mr. Coldwell views to the government of Saskatchewan, the Prime Minister (Mr. St. Laurent)-and I am glad to see him here to hear this suggestion-and the federal government should be prepared to state that they are prepared to undertake the project on a fair and equitable basis and, I hope, to undertake it within a very short time. Negotiations have been conducted, it has appeared to me, in the hope that by driving an increasingly hard bargain the provincial government can be forced to reject federal proposals in the hope that blame for any failure to proceed will fall upon the provincial government. The difficulty has been that, even when the Saskatchewan government has been willing to make an agreement along lines suggested by the Minister of Agriculture, he has always been in the position of being able to say that for various reasons the federal government has decided not to proceed with the undertaking at the time.
1 think it is unfair to ask one party to carry on negotiations with the knowledge that any firm commitments made by the province are regarded as binding, whereas any commitment which the Minister of Agriculture or his officials may make is done with a clear understanding that the federal government is not yet committed to proceed, even though a satisfactory agreement may be reached by a joint committee of the P.F.R.A., acting on behalf of the federal government, and by representatives of the provincial administration.
As I have said, what is required is a firm statement from the Prime Minister (Mr. St. Laurent) that this government intends to proceed with the dam in the event of a satisfactory agreement being reached between the two governments regarding the divisions of costs. The time has arrived, indeed has long since passed, when the provincial government should not be expected to negotiate on a purely hypothetical basis, not knowing whether they are being merely manoeuvred into rejecting an impossible agreement, and without any assurance that if a satisfactory agreement regarding division of costs is worked out the whole thing may not be rejected in the final stages by the federal government. To those of us who represent constituencies which may become once again stricken by dry years and drought, this project is of primary interest and importance; but more than that it is of fundamental interest to the economy of Canada and to all the people of Canada. I want to emphasize this in view of the tremendous cost of the relief that had to be poured into these areas because of the prolonged drought in the thirties.
'Mr. Coldwell. 3

Mention of this dominion-provincial project leads me to comment on the finance minister's forthright statement declining to allow the deduction from federal income taxes of the new 15 per cent personal income tax in Quebec beyond the present limit of 5 per cent. I recognize at once that, under our constitution, a province has the right to impose a direct tax, such as the income tax, if it chooses to do so. But it is equally clear, I believe, that the federal parliament also has a constitutional right in this field. The doctrine that the provinces have priority in the field of direct taxation and that the federal government should, in effect, move over to the extent that the provinces decide, is a dangerous, insidious and false doctrine that could not, under any circumstances I believe, be supported by any member in this house. We must always remember that the people of the provinces are represented in the federal parliament as well as in the provincial legislatures.
We in this group believe in our federal system and want to preserve it. We want to preserve the rights of this parliament. We want to preserve the autonomy of the provinces in the fields in which they are granted complete sovereignty and autonomy. In the past, we had given our support to the federal-provincial tax rental agreements because we believed that they best served the interests of all the people of Canada by assuring all provincial governments of more adequate revenue to administer their provincial programs in their own way and under their own authority, while at the same time assuring the federal government the necessary fiscal powers to develop social security and other policies that will benefit Canadians generally wherever they may live, and tend to spread more adequately the burden of taxation in all parts of Canada.
In saying this and taking issue with the demand of the premier of Quebec, I want to make it very clear that in his activities over the past few years in promoting the fallacious idea that Canada is less a nation than an association of ten sovereign states, with the assumption by the premier of Quebec of the right to pass legislation often incompatible with the fundamental democratic rights of Canadian citizens, he has merely carried forward the type of propaganda used for many years by the Liberal party in Quebec to further its own political interests. In other words, in my view, to some extent these are chickens coming home to roost. I do not propose to elaborate upon this to any extent at the moment, but the pages of Hansard as well as the public press will vindicate the view I have just expressed.

In the recent past the federal government neglected to protect Canadian civil rights when the padlock law was passed, and most recently when the freedom of worship act was amended by the Quebec legislature. I know this act was directed against a sect with whose teachings and with whose type of propaganda I have no sympathy whatever, but that legislation could be used to curtail other religious rights and freedoms of other religious denominations and minorities in Quebec. I want to emphasize that throughout the years the propaganda of the Liberal party, both provincial and national, prepared the groundwork for this ultra-nationalism and the claims of Mr. Duplessis. The Liberal party of Canada, I repeat, as well as the Liberal party of Quebec, must bear the grave responsibility for paving the way for what is today an attack, and a very threatening and insidious attack, on Canadian unity and our general national welfare.
Let me say again that we believe in the federal system. We desire to see all the provinces of Canada able to carry out their constitutional functions without interference by this federal parliament. We believe that, in order to achieve this purpose, the tax rental agreements are of primary importance and concern to the welfare and autonomy of the provinces of Canada, particularly of the less favoured provinces. Let me say, however, to the federal government that it must not forget its own proposals to the dominion-provincial conference on reconstruction in 1945, which included more than these fiscal arrangements. The terms on which the federal government asked the provinces to release certain tax fields, including that of personal income tax, which incidentally some of them including Quebec and Ontario had only begun to enter, comprised not only rental payments but undertakings by the federal government to do things that would ease the financial burdens of the provinces. I believe Quebec did not impose a personal income tax until 1939, and then had it in effect for only two years.
Among these proposals was complete responsibility for adequate old age pensions at the age of 70 without a means test, and half the cost of old age assistance for persons between 65 and 69. No one will argue today that $40 per month is adequate. There was, too, the proposal to assume full responsibility for assistance to the employable unemployed. Most important of all, there was the proposal to introduce a national system of health insurance to give complete health coverage to the people of Canada. On 83276-253
The Budget-Mr. Coldwell the economic side the federal authority proposed a public investment policy to compensate for fluctuations in private investment and to maintain full employment.
In the past the government has replied, when these proposals were brought to its attention, that they could not be proceeded with until the taxation agreements were generally accepted. Now, there is only one province remaining without a tax rental agreement, and there is surely no longer any excuse for delaying the implementation of its own proposals made to the provinces in 1945. Incidentally, these proposals followed a long series of discussions, all of which are outlined for those who would read in the voluminous reports of the Rowell-Sirois commission, reports which, when they were presented, we believed would form the basis for better relationships and found better conditions for, not only the provinces but for all the people of Canada who live in the various provinces.
And this reminds me of at least one other respect in which the federal government is to blame for this new issue between the premier of Quebec and the federal parliament. Since 1950 meetings between representatives of the federal and provincial governments on matters connected with tax rental agreements have been adjourned, or as I recollect, on the understanding that there would be a permanent committee under the chairmanship of the Minister of Justice (Mr. Garson).


Douglas Charles Abbott: Not on the tax rental agreement; on the constitutional matter.


Major James William Coldwell: I am relying on my memory completely in that regard. But, in any event, there have been no further discussions of the type which, I think, should have been held over the last number of years.
And of course I immediately say that I think before the legislation was introduced into the legislature of the province of Quebec, the premier of Quebec should have endeavoured to have some discussions with the federal government of Canada regarding the proposed legislation and the problems which might arise out of it.
But, I think too, that blame can be placed upon the federal government for not convening conferences from time to time, when difficulties have been envisaged by the provinces or the dominion, to see whether these matters could be straightened out by negotiation and discussion.
Therefore to that extent I agree with my hon. friend from Greenwood when he criticizes the government. And I believe there

The Budget-Mr. Coldwell is a clause in his amendment-although I did not have time to read it carefully, because I had to rise immediately upon his taking his seat-which puts into words just what I have in mind. These words are:
-has failed to reach agreement with the provincial governments in regard to a clearly defined reallocation of taxing powers so that the provincial governments and municipal councils may have adequate financial resources to carry out their rapidly-increasing responsibilities.


Douglas Charles Abbott: Are you in favour of "a clearly defined reallocation of taxing powers"?


Major James William Coldwell: I shall have something to say about that. When that was moved I heard someone say, "You voted for that in 1950".


Stanley Howard Knowles: 1952.


Major James William Coldwell: Well, I was not here at the time, but I think my colleagues did vote for a similar resolution. But I want to say this, that words placed on the record in one setting often have a very different connotation and different meaning when they are placed on the record in another setting. I would say that I would want to go into the meaning of this more fully than I am able to go into it this afternoon before I would decide that I would vote for the wording of it. But I did suggest that we might try to amend it, and I think possibly I can move an amendment that will help.
Therefore I move, seconded by the hon. member for Vancouver-Kingsway (Mr. Maclnnis):
That the amendment be amended by inserting in paragraph (f) thereof, immediately after the words "has failed", the following words:
"to reconvene the dominion-provincial conference from time to time so that an effort might have been made";
and also by adding at the end thereof the following additional paragraph:
"(g) has failed to make provision for raising the income tax exemption levels to $1,500 for a single person and $3,000 for a married person, together with increases in the income tax rates in the higher brackets, and an increase in corporation taxes."
Perhaps I would make it more intelligible if I were to read it, in the form in which we suggest it should be. The effect of my subamendment is to alter paragraph (f) as moved by the hon. member for Greenwood so that it would read as follows:
this house regrets that the government... (f) has failed to reconvene the dominion-provincial conference from time to time so that an effort might have been made to reach agreement with the provincial governments in regard to a clearly defined reallocation of taxing powers so that the provincial governments and municipal councils may have adequate financial resources to carry out their rapidly-increasing responsibilities.
IMr. Coldwell.]

That, as a matter of fact, differs quite markedly from the paragraph in the amendment moved by the hon. member for Greenwood. I think anyone reading it will see the difference at once. Then, in addition, the subamendment adds a new paragraph, which I have already read, calling for the raising of the income tax exemption levels together with an increase of income tax rates in the higher brackets and an increase in corporation taxes.
In other words, what this amendment does is to change the meaning of the words by placing them in a different setting, just as in 1952 when similar words were moved on the address-not on the budget-they were in an entirely different setting.
And now I must come to a conclusion. There are some things the minister could have done with relatively slight reduction in prospective expenditures. Chief among them might have been the elimination of the floor under medical expenses. With soaring costs of hospitalization, relief in this field is badly needed, pending the adoption of a comprehensive national health plan to include all Canadians.
These are, then, some of the main criticisms 1 wish to make on behalf of my colleagues and myself. I do not have unlimited time; therefore time does not permit me to deal with other phases of our economy and budgetary policies which deserve closer study and more consideration than I have been able to give them when addressing the house this afternoon.
These, and indeed the necessarily brief criticism of the points I have mentioned, will be discussed and elaborated by other members of the party who will participate in this debate within the next few days.
However once again, before I take my seat, I wish to express the disappointment many of us feel that the burden which has remained on the great masses of the people continues to remain there, and that when relief is given, often it is not given in those places which would be most desirable from that point of view.
The hon. member for Greenwood referred to the inflation that has taken place in the past few years. Our people have suffered from that inflationary process. We argued at the time that there were methods we could use to control inflation. However we have seen inflation come and the earnings of our people almost cut in half because of the rapid increase in the cost of living. This has had a most disastrous effect on people receiving pensions or other small incomes of various types.

And so, Mr. Speaker, these are some of the criticisms we want to place before the house. As I have said, my colleagues will elaborate on some of the points and offer further criticism, particularly on the point mentioned at the close of the speech by the hon. member for Greenwood, namely the wheat situation, and the general position in the matter of agriculture at the present time.


Mr. Solon E. Low (Peace River):: Mr. Speaker, I imagine hon. members will understand if I fail to take time today to give consideration to the amendment and subamendment which have been moved this afternoon. The amendment itself is long and involved, and I should like to have time to give it consideration. I would also like to take plenty of time to give consideration to the way in which the amendment has been modified as the result of the subamendment just moved by the hon. member for Rose-town-Biggar (Mr. Coldwell).
The leaders of the smaller groups on this side of the house, as was just said, do not have unlimited time and for that reason we have to be more selective in the things about which we speak in the budget debate. If I do fail this afternoon to mention any of these which are considered to be of first-line importance it will not be because I do not attach importance to them, but simply because I have not time to deal with them and other things as well. However, there will be several speakers in the debate from our group, and we shall try to deal with all of these things that touch the lives of the people in the country, and upon which it will be necessary for us to make a pronouncement.
My hon. friend, the Minister of Finance (Mr. Abbott), has presented what he says is his last budget. Such an occasion calls for some things to be said that might not be said in the course of an ordinary budget debate. The minister's qualities, his affability, his engaging personality, his cordiality at all times have won for him I think a sure place in the affection of hon. members and of the people of Canada. So long as budgets of this kind are going to be presented to parliament, there is no one I would rather see present them. May I add that no one but the Minister of Finance could get away with such a budget as this one with less resistance.
The high regard that I have for the minister but sharpened the keen regret that I felt on Tuesday evening last as he made his presentation in his usually effective way and very jaunty style, that provision after provision of his budget made it clear to me that 83276-253J
The Budget-Mr. Low he missed a golden opportunity to present a budget which would have been a departure from the ball and chain budgets of the past, because that is what they have been; and especially is it a matter of regret at this hour when the scourge of unemployment has again descended on Canada, and has already taken heavy toll in too many of our Canadian communities. This is an hour in Canadian history when even though they are employed the breadwinners in so many homes are experiencing hardship and privation and are having a very difficult time to make their take-home pay cover bloated costs and overgrown living expenses. At this hour, the minister could have brought down a budget that could have dispelled the ugly threat and at the same time made possible a decent standard of living in every Canadian home.
Moreover, Mr. Speaker, the message of his budget could have been a ringing assurance to the people of Canada that the maintenance of that decent standard of living that I just mentioned would be secure. If that had been the case, the minister's last budget would have been an historic one and would have brought him fame and the abiding satisfaction that always comes to one when he renders a real service to the millions of his fellow citizens. Instead of a message of real assurance and hope, what did the minister give to the people last Tuesday? Well, clearly his message was this: "If you have tears, prepare to shed them now. But if weeping over my nine previous budgets has drained you of tears, I have arranged to lower the tariffs on tear gas to help you find some tears of crocodile size for this, my tenth effort. My generosity, fellow Canadians, overcomes me. Come, let us weep together." That is just about the message of last Tuesday's budget.
I say this with deep regret: The minister, unless he is ready at the eleventh hour to accept the suggestions of changes, has missed his great opportunity in the same way as the Hon. Mr. Dunning missed a similar opportunity under similar although more pronounced circumstances in 1929 and again in 1936, and as the Hon. Mr. Bennett did in 1931.
Hansard records a famous speech made in this house many years ago by an illustrious Canadian, Sir Wilfrid Laurier. On this particular occasion Sir Wilfrid Laurier indulged in this effective oratorical declaration: "Canada needs three things:	The first is
transportation; the second is transportation; and the third is transportation." Transportation was Canada's greatest need in Sir Wilfrid Laurier's day. We have made progress since

The Budget-Mr. Low then in providing this country with transportation, although I feel sure that if Sir Wilfrid had been at the helm between the two wars and since world war II especially, the trans-Canada highway would long ago have been completed. We do not need transportation so badly as we did in his day, but we still need transportation in some parts of the country. But if Sir Wilfrid Laurier were here today he probably would say, to meet the challenge of this hour: "Canada needs three things: The first is markets; the second is markets and the third is markets."
Our home market is the best market we have. It could be a much better one, much better than it is if we followed the right financial and budgetary principles to make it so. For the optimum development of that home market we do need transportation of a form, not the kind of transportation about which Sir Wilfrid Laurier spoke but the widespread distribution amongst the Canadian people of that medium which transports goods over the counter from the merchants' shelves to the consumers who need and want them; or, in the case of durable goods, from the warehouses to the farms or the factory. What Canada needs most right now is a home market well supplied with a properly adjusted, continuous flow of purchasing power that will permit our people to buy and use all they want of what we can and do produce.
The government claims that we have prosperity in Canada, and it claims credit for bringing that prosperity. I spoke a moment ago about Sir Wilfrid Laurier, but he described in his speeches a potential prosperity for Canada by reference to vast undeveloped resources, as they were then. Well, these still exist in spectacular abundance in Canada. We have today a tremendous flow of goods and services provided by the developed resources of this nation. Those goods are in the form of food, clothing and articles that are useful, and they take the drudgery out of life in the home and on the farm; services such as electricity, transportation, hospitalization and so on exist, and these can be made to exist in ever-increasing quantities at levels sufficient to bring a great degree of comfort to every last citizen in our country. But, Mr. Speaker, so many thousands of our own people are not enjoying that prosperity for the simple reason that it has not been brought within their reach through wise financial, economic and monetary means.
Sir Wilfrid Laurier, the statesman about whom I was just speaking, said at one time: "I will give you a prosperity you can feel in your pockets." Mr. Speaker, Canada needs that kind of prosperity in this hour, and needs it desperately.
IMr. Low.]


' \
the kind of budget he did. It may be too late for the minister to do so, but he should still imagine himself in the position of the head of a family, and without a job and take-home pay.
For that reason I would like to quote a letter which appeared in the February 22 issue of the Toronto Globe and Mail. I have no hesitation, Mr. Speaker, in quoting this because it is short and because it was written by a responsible secretary of an association of social workers who get right down among the people and see them in their homes. This is the letter, and I quote:
The executive committee of the Canadian Association of Social Workers, representing over 400 men and women giving service to families and children through various social welfare organizations in greater Toronto, is deeply concerned about the situation facing many families whose breadwinner is now unemployed and for whom there are no unemployment benefits or whose period of benefit has expired.
At the present time there is no assistance available from any official source for such families, the city of Toronto having provision only for unemployables and federal and provincial authorities not having organized in any way to meet this widespread need.
Last year, after more careful study by the Canadian Welfare Council and its membership across Canada, representations were made to the government at Ottawa and to all provincial governments regarding the urgent necessity of having some overall and permanent provision made to meet the situation and avoid the destitution and disruption of normal family living which today faces many families through no fault of their own. As far as can be observed, nothing has been done to make effective the recommendations made in this report or to evolve any satisfactory alternatives. Unemployment of able-bodied employable people who need and want work is a national problem which strikes at the very roots of family life and causes untold suffering.
We feel that all citizens should be fully aware of this situation and should do all in their power to urge upon the federal and provincial governments to appropriate funds for the suitable relieving of need, and upon the municipal government to extend its relief program pending the availability of government resources for this purpose.
Many people today in Toronto are actually suffering from hunger because of unemployment due not only to seasonal interruptions but to closing down or reduction in many industries.
The letter is signed by Miss Betty Quiggin, corresponding secretary of the association which I have named. What Miss Quiggin reports about Toronto has undoubtedly been true of many other Canadian cities for quite a number of months now.
With that picture in mind let me refer to an incident which involved one of the most capable and intelligent ministers of this government. In the Globe and Mail of February 11 last there appears a report of what took place when a labour deputation came to Ottawa and made six recommendations to the Minister of Trade and Commerce (Mr. Howe). The minister at that time insisted

that the backlog of demand for farm implements had been filled, and therefore the production of them must be reduced; and that members of the labour unions involved must seek other jobs.
Now, listen to this, and I quote from the Globe and Mail report of February 11 last:
The brief, which was a joint presentation of the United Auto Workers Union and the United Steel Workers, both C.C.L.-C.I.O. affiliates, said it was incorrect to state that the decline resulted from farmers being adequately supplied with implements. The 1951 census revealed that for every 100 farms in Canada, there were only 64 tractors, 53 passenger cars, 31 trucks, 29 gasoline engines and 32 electric motors. The problem, said the brief, was that many farmers were financially unable to buy equipment.
I think it must be abundantly clear that the real answer is to be found in that quotation from the article in the Globe and Mail. That article reveals the answer to the question of how to solve the problem of the hour, not only for the farm implement industry, but the whole unsolved problem of distribution in a situation where the problem of production has been completely solved. The answer is simply: Make the consumer or user financially able to buy, and he will do the job of keeping our economy in balance and unemployment at the irreducible minimum. That is the solution and the only effective solution.
That news item to which I referred gave the capable and intelligent Minister of Trade and Commerce credit for this statement:
It was no longer the case that everything and anything produced could be sold.
In that single sentence the Minister of Trade and Commerce put his finger on the frame of mind which is responsible for the iniquities in this budget and which have been in every budget presented to this house since 1929. Not only the iniquities it contains but the benevolences which it also contains. Any useful and every useful thing which can be produced could be sold. The only reason they are not all sold is that those who need and want them have not the money with which to buy them. The medium which transports them over the counter or out of the warehouse is not available to so many of the people of this country so that they cannot make use of these things which are produced for them.
In the commercial letter put out by the Canadian Bank of Commerce dated February 19, 1954, there is to be found this short but potent paragraph:
The task ahead, and this applies to every segment of the economy, is to maintain economic activity at current levels. Above all else, it would seem essential, in this regard, that increasing attention be given to the consumption side of the equation.
The Budget-Mr. Low
There, Mr. Speaker, you have it in a nutshell from a bank which is doing big business in this country and which has its finger on the pulse of the economic situation. The problem before us, therefore, seems to be as clear as day. Now, if ever, business must be kept steady and as free as possible from heavy jumps and declines. Certainly we would be utterly stupid to allow a depression to come upon us, or even a serious recession. I remind hon. members that our enemies will be impressed with our economic strength and the well-being of our people just as much as they will be impressed by our defensive military strength. They will become proportionately more bold and determined if they see unemployment grow or even continue at the level which has existed in this country over the past several months.
From the minister's speech of last Tuesday I note that he forecasts an upturn in the last six months of 1954 in Canada. He bases his hopes, to some degree at least, upon the improved situation in the United States. At least, he mentioned that as one of the reasons that he had for the forecast. As a consequence of his faith in the future, the minister in this present budget made very infinitesimal provision to take care of the present situation. I must be extremely critical of the failure of the government to take action on unemployment, not only just now but weeks ago when it became apparent that it was growing beyond the seasonal limit.
I think that the minister and the government are to be criticized for taking the position that simply because there appears to be some chance of a favourable upturn in the economic situation in the United States, our own trends will follow suit later this year. It seems to me the minister fails to bear in mind that the favourable turn in the United States came about as a consequence of deliberate and well-planned governmental action. They did not stand pat in the hope that everything would turn out all right in their country. The government got busy and made tax concessions to the people. They prepared to spend more money, to make credit easier to the public, to push housing and a number of other things deliberately chosen to stimulate employment and to keep activity at a healthy level. But, by contrast, the government of Canada decided to stand pat and to let things take their own sweet course back to something like a favourable level.
Let us just suppose for one moment that the minister's hopes for the last six months of 1954 do not materialize. Then what? That is the question. Certainly it is clear that this
4004	HOUSE OF
The Budget-Mr. Low budget makes no provision whatsoever to meet such a situation as that; not for a moment. This budget is definitely not the kind of budget that Canada needs at the present time. I say that the provisions of this budget would be woefully inadequate to meet the situation in Canada at the end of the first six months of this year if the expected upturn does not materialize.
The minister in his budget should have provided for whatever eventuality might arise later in this year, particularly in view of the facts as they are at the present time. The budget that we are now considering should have 'been one which provided for quick encouragement of increased consumer purchases. It should have been one providing for encouragement of increased production in many lines in order to keep up employment. It should have been one to provide for the use of a money mechanism which would get purchasing power into the hands of the ultimate consumers quickly and directly so that, by their effective demand, they could bring and keep the balance at or near the point of equilibrium.
More specifically, Mr. Speaker, this budget should have provided for a much greater reduction of taxation than it provides for. We are all grateful, of course, for the small things which the Minister of Finance did for the people by way of tax relief but I feel, as does my friend the hon. member for Rose-town-Biggar, that in so much of the field that was covered by the very small reductions which the minister brought in the ultimate consumer will not feel the effects. He is the one who needs the help in this country. He is the only one who can correct the situation by his effective demand.
The municipalities are going to feel happy about the removal of the sales tax on roadbuilding equipment, but I am going to say this: The school divisions and districts of this country will not share that happiness because the same tax was not removed from their purchases of school buses to carry the children to school. They look upon the sale tax on buses as a means used by the federal government to make the school districts collectors of taxes for them from the farmers and other ratepayers in the districts, as it really is. It is simply a method used by the federal government to have the school districts collect for the federal government taxes that the average ratepayer in the school districts does not understand and cannot see.
Canadian housewives, of course, will be thankful for the removal of the excise tax on some items and its reduction on others; but they will never reconcile themselves to 

a situation where they have to pay a very substantial price differential over what their opposite numbers pay for the same thing down across the line in the United States. One could refer to cottons, electrical goods, dress goods and so on. Another good example is this. An American can buy a Chevrolet standard model automobile just across the line from Oshawa for from $500 to $700 less than Canadians can buy the same car. On the purchase of such an automobile in Canada the purchaser pays to the federal government over $500 in sales and excise taxes alone. We impose a 10 per cent sales tax and a 15 per cent excise tax at the manufacturer's level, but the United States has had the good sense to refrain from that practice over the years.
The price differential between Canada and the United States on many items our people want to buy is striking. Cottons, electrical goods-which I have already mentioned- heavy hardware and automobiles are just a few examples. The differential has arisen quite largely as a result of the difference in taxation on commodities between the two countries. The result is that many thousands of Canadians who can afford to do so have been making regular shopping tours into the United States in order to bring back their legal quota of tariff-free purchases. I wonder whether the minister has ever thought of this fact: If just half of Canada's population were to spend only half of their customs-free allowance in the United States each year, $1,200 million of Canadian money would be spent across the line each year for things that are lower in price there than they are here. That is just another reason why the price differential should not be allowed to become great enough to encourage mass movement on shopping tours down into the United States. Imagine what $1,200 million extra spent in Canada would do for business and employment in this country!
The minister should have announced in this budget the abolition of that part of the sales tax which is not earmarked for old age pensions or, in the alternative, should have provided himself with the authority to abolish it if the expected upturn in economic activity and outlook does not materialize during the last six months of this year.
The sales tax imposed at the manufacturers level is a pyramiding tax, very largely responsible for many of the heavy price differences between Canada and the United States. It is the poor man's income tax. It puts some Canadian producers into a handicapped competitive position as far as trade is concerned and helps to clutter up trade.

For these and many other reasons which I could offer but which I have not time to deal with today, I say the sales tax should be abolished. This was the budget that should have provided for its abolition. This is a time of readjustment when many businesses are at or near the boom peak. To make the adjustments that are necessary, prices have got to come down enough to put Canadian businesses into a position to compete in a world of trade where competition has again become very keen.
Tax reductions of the magnitude I have suggested would stimulate industrial activity and reduce unemployment. Moreover, while the minister fears that he would not be able to replace the lost revenue I am convinced that by reducing the tax burden as I have suggested he would bring down prices in Canada. With lower prices, our people would buy more, and so stimulate business from the retail level on back to the primary producer. More people would be put to work and unemployment would cease to bedevil many parts of Canada. Not only that, but I say that the minister's tax base would also be preserved so that his actual loss of revenue would be small, if any.
In conclusion, Mr. Speaker, as I see that my time is about up, may I say this. Coupled with the type of tax reductions that I have suggested, the present and foreseeable future situation calls for an all-out housing drive. What I say is that you are not going to be successful in that housing drive unless interest rates on long-term mortgage loans are brought somewhat lower, and unless money at quite low interest rates is made available to municipalities and limited dividend corporations for low income housing projects.
Every effort should be made to push the completion of the trans-Canada highway and to provide for federal participation in a highway system for Canada. Work on the St. Lawrence seaway and various developmental schemes should be pushed ahead as fast as possible.
Finally, the minister while this budget is before the house ought to provide himself with a monetary mechanism that will make it possible to inject purchasing power directly from its birthplace into the hands of ultimate consumers so that they can quickly convert it into effective demand, and thus exert a stimulating influence on declining business activity. The production is already in existence, and as much more as we want can be brought into existence. The need for old age pension increases, war veterans allowance increases, and blind pension adjustments is
The Budget-Mr. Houck very great. We have every material requirement to fill these needs and make these people in these brackets to which I have referred happy, except the financial means. We in this group strongly urge the use of the Bank of Canada to provide all the new money that is required at cost. This would be one step at least towards emancipating our people from the Frankenstein which we have allowed to grow up in our midst, and which threatens to destroy all freedom.
If we fail, Mr. Speaker, at this hour to provide the purchasing power to enable every Canadian to enjoy the material things our country is producing and can produce, we will be letting our people down and endangering the security of our country.


Mr. W. L. Houck (Niagara Falls):: As this is the first time I have availed myself of the opportunity to speak since becoming a member of this house, I should like to follow the time-honoured custom of congratulating the Speaker and you, Mr. Deputy Speaker, upon your appointments to these high offices. I am not saying it in a boastful attitude whatever, but I have had the privilege and honour of serving under quite a few Speakers in the Ontario legislature, and I should like to say to Mr. Speaker and to you, Mr. Deputy Speaker, that although many verbal bouquets have been thrown to both of you-yes, almost reaching the point of orchids-I want to say that you are by far the two best looking Speakers under whom I have ever had the privilege of serving.
When I first arrived in this house I felt rather at home because of the fact the Leader of the Opposition (Mr. Drew) served with me for some six or seven years in the Ontario legislature. I had the privilege also of sitting alongside the hon. member for Spadina (Mr. Croll); the hon. member for Trinity (Mr. Conacher) and the hon. member for Cochrane (Mr. Habel), so I really felt at home.
I have listened with a lot of amusement to the various speakers talking about then-various ridings. I presume that this debate, along with the debate on the address in reply to the speech from the throne, does serve a useful purpose because of the fact a member has to say something about the importance of his riding. This afternoon I find myself in a rather peculiar position. I do not have to say anything about Niagara Falls. The whole world knows about Niagara Falls. I doubt if any city in Ontario or in the whole Dominion of Canada gets more free advertising over radio and television than does Niagara Falls. Yesterday afternoon I was rather interested in listening to Gracie Fields during her excellent program

The Budget-Mr. Houck on television refer to the fact that she had spent her honeymoon at Niagara Falls. That city is known as the outstanding honeymoon centre of the world, Mr. Speaker. Then, too, we have the rather doubtful honour that quite a few come back later on to commit suicide.
I do want to say that we in Niagara Falls are not jealous or selfish in any respect. We want to share it with the rest of the world. I am sure I could say to the hon. member for Spadina, whose home is in Toronto, that if he happened to be abroad in any foreign country and a small child came up to him and asked, "Where are you from?", when he replied "From Toronto", that child would immediately say "How far is that from Niagara Falls?", in order to know just where the hon. member did come from. In fact, we are so beautiful at Niagara Falls and so well known throughout the world that I had a dream the other night. My dream went something like this. I had gone up the steps to St. Peter, if a politician ever gets up the steps to St. Peter, and St. Peter said, "Where did you live?" I said, "Niagara Falls." He said, "That is a beautiful place, I do not think you are going to like it up here."
Speaking in a more serious vein, Mr. Speaker, we in Niagara Falls are exceptionally proud of our splendid relationships with our brothers and sisters directly across the Niagara river. I suggest that we provide a wonderful example to the rest of the world of those things called democracy or free enterprise. In the vicinity of the border line we do not merely give lip service to that thing we call democracy, but we actually live it. We have now lived for almost a hundred and forty years in peace and harmony with our good neighbours to the south of us. The rainbow arch, which is visible most of the day, is indeed a symbol of the peace and friendship between two great countries and two great friends.
I know that during the course of the next few weeks we are going to hear some criticisms of the budget. Perhaps some other remarks will be made from a jealous and selfish point of view, but I think all hon. members agree with me that the Minister of Finance (Mr. Abbott) has brought down a very fine budget. I must say that we in Canada have been fortunate indeed, regardless of our political stripe, in having had very fine ministers of finance. I believe, however, that the name of our present minister, the Hon. Douglas Abbott, will go down in history as one of the finest ministers of finance we have ever been privileged to have.


There are a few comments I should like to make, pertaining to the St. Lawrence and to hydro, both of which are near and dear to my heart because I come from a hydro riding. I believe, Mr. Speaker, there are always occasions in one's life which stand out. One such occasion that I recall most vividly was nineteen years ago when I had the honour of moving the address in reply to the speech from the throne in the Ontario legislature. I am sure that my speech today will be another occasion that I shall remember for many years.
I should like to deal with a subject of great importance, not only to the welfare, economy and future prosperity of Ontario but to this great Dominion of Canada. In my opinion, Mr. Speaker, and I am sure it is shared by other hon. members, the signing of the agreement between the government of Ontario and the dominion government at Ottawa on December 3, 1951, marked an historic milestone in bringing the St. Lawrence seaway and power project closer to realization than it has been at any time in the long history of negotiations on this vital development. Under the terms of that agreement the Ontario government entered into a contract with the dominion government authorizing the Ontario government to develop the Canadian power rights of the international section of the St. Lawrence river with an appropriate authority in the United States.
Now, in my opinion, Mr. Speaker, that agreement was not only historic but it was significant for a number of reasons. First of all it revealed very clearly that the St. Lawrence seaway and power project is an undertaking which men of action, regardless of their political views, recognize as being vital to the future progress of Ontario and Canada and of fundamental importance to the welfare of the people of this province and to the Canadian people in general. The St. Lawrence project is therefore one which transcends political considerations. It points up the fact that the public men who have been working untiringly to make it a reality are Canadians first, regardless of their political affiliations.
The subject of harnessing the power of the St. Lawrence has been the subject of negotiation between Canada, Ontario, the United States and the state of New York for over half a century. To the average citizen of Ontario and Canada the St. Lawrence power project is a mammoth undertaking that has seemed to appear and disappear from our field of notice always without finality one way or another.

Representing as I do the Niagara Falls district of the province of Ontario I have always been intensely interested in the development of hydroelectric power and in the power needs of our communities. One has only to recall that a little less than thirty years ago the average household in the province of Ontario was using only half a horsepower for lighting and one-and-a-half horsepower for electrical appliances. Today the connected load is more likely to be more than two horsepower for lighting and between twelve and fourteen horsepower for appliances.
This increase, coupled with the tremendous building program and industrial expansion, makes us realize that unless something is done to maintain the supply of low-cost power Ontario will face a critical situation in the near future. And I know that the most immediate and the most important concern of the Hydro Electric Power Commission of the province has always been with the shortage of power, not with the surplus of power as some people are led to believe.
Every citizen of the province of Ontario therefore should have a deep interest in the situation governing the St. Lawrence power project. Many of us thought that the negotiations for the St. Lawrence had possibly terminated with the great lakes-St. Lawrence development basin agreement in 1941. Events have proved how we were wrong. Canada waited eleven years for the United States to ratify that agreement. Finally our government decided that the 1941 agreement was superseded by the international joint commission order of October 29, 1952. This ruling gave approval to the Canadian and United States applications for the joint development of the power project on the St. Lawrence river, and led the way to the possibility of an all-Canadian seaway.
And I think it is a matter of interest to us members of the house to know that Canada has already spent some $300 million on various sections of the St. Lawrence, compared with the United States expenditure of approximately $93 million. And according to the Department of Transport, fifty per cent of Canada's expenditures were made during the period when each construction dollar represented something like four of today's dollars.
It is therefore reasonable to assume that the cost to Canada to the present day has been something like a billion dollars. The seaway is of course of tremendous importance to Canada and, despite the fact that the major portion will be located in Ontario, the far-reaching effect on our economy makes it of prime importance to every province in this great dominion.
The Budget-Mr. Houck
And, important as the seaway may be, the power project is by far the matter of greater urgency, in fact a matter of immediate urgency, if the future of Ontario is to be protected. Ontario hydro electric officials have made this fact abundantly clear on many occasions. Since 1945 demands for power have increased at a rate which is without parallel in the history of our province. And when one realizes that more than half of Canada's industrial output stems from the province of Ontario, and that this province leads in agricultural production, it can be easily seen that the power project is also of vital importance to this dominion.
Ontario hydro has stated on many occasions that the power needs of the people of that province must be met if our present high standard of living and growing economy are to be maintained. In an effort to keep pace with the growing demand for power, hydro has utilized every major source of power within economic transmission distance of large load centres. Despite a tremendous construction program involving more than a billion dollars, Ontario hydro will still be faced with a shortage of power towards the end of this decade.
During the seven immediate post-war years industrial consumption of power increased by 45-7 per cent, commercial use of power increased by 132-5 per cent and domestic use was up by 145-8 per cent. Farm electrification has progressed at such a rapid pace that farmers in Ontario at the end of 1953 were using 272 per cent more power than in 1945. During this same period the number of rural customers increased by 215,295.
There can be little wonder that Ontario hydro is deeply concerned about the continued delay in getting action on the St. Lawrence. All thinking people realize that, as Canada's leading mining, manufacturing and agricultural province, Ontario must have a new large source of low-cost power in the next few years if it is to maintain its present phenomenal expansion.
The St. Lawrence is the only answer, apart from high-cost steam generated power or the development of small sites which at present would not be economical because of their remote location.
Ontario hydro is, of course, studying the feasibility of using atom power. But, unless the development of this new source is much more advanced than I am led to believe, we cannot expect low-cost power from atomic energy for many years to come or even if it does come.
Ontario hydro's program of power expansion will be completed in 1957. At that time its dependable resources will have been

The Budget-Mr. Houck increased by some 132 per cent, allowing for the fact that the United States may be, at this time, making full use of its allocated diversion of waters at Niagara. Even with this tremendous increase in resources it is obvious to the people of Ontario that the 1,100,000 horsepower to which Ontario is entitled from the St. Lawrence will be required by 1958 if the present rate of growth is to be maintained. In fact, I am informed that every one of the 6,300,000 kilowatt hours a year from the St. Lawrence could be utilized right now for the benefit of Ontario and Canada.
The total potential power between lake Superior and Montreal based on the average amount of water available is in excess of 14 million horsepower. This is almost as great as the total installed capacity of all the hydroelectric plants in Canada today. Of course, the development of the entire St. Lawrence power potential is not economical or practicable. It is believed, however, that a total installation close to 10 million horsepower would be justified.
Of this 10 million, some 5,400,000 horsepower would be at Niagara, 2,200,000 horsepower at the international rapids section of the St. Lawrence, 2,000,000 horsepower at Beauharnois, and 1,100,000 horsepower at Lachine, Quebec. From this total installation available on the Niagara and St. Lawrence rivers some 5,500,000 horsepower would be available to Canada.
On the St. Lawrence river itself, as the figures show, about 5,400,000 horsepower would appear to be economically justified at Lachine, Beauharnois and the international rapids section. Of this, 4,300,000 horsepower would be in Canada and 1,100,000 horsepower in the United States at the international section.
Now, Mr. Speaker, with regard to our own power load, about a third of these total resources have been developed, to date. We have on the Niagara river a 500,000 horsepower plant, which is called the Sir Adam Beck Niagara generating station No. 1, at Queenston. We have another 180,000 horsepower at the Ontario power plant in Niagara Falls; another 145,000 horsepower at the Toronto power plant, also in Niagara Falls, and another 100,000 horsepower at the Canadian Niagara station. Then, Mr. Speaker, we have 200,000 horsepower at DeCew falls, which is very close to St. Catharines. At Beauharnois and at the Cedars plants in Quebec, I believe approximately 1,200,000 horsepower has been developed. Rapidly approaching completion, of course-and I am happy to say this-is
	s I
the new Ontario plant at Niagara Falls, which will develop 1,828,000 horsepower.
It is a pity to me, Mr. Speaker, that those who take a narrow and selfish view and those who fear their interests may be adversely affected have been loud and persistent in their clamour against the St. Lawrence project. Large sums of money have been spent in promoting anti-St. Lawrence publicity. Fortunately much of this deceptive propaganda has collapsed when subjected to careful study.
It is somewhat ironical when one considers that almost every major newspaper or publication has commented during the last few years on the fact that the St. Lawrence is one of the most important developments of our age. Despite the tremendous support which this scheme has enjoyed, however, we are still awaiting authority to proceed.
There can be little doubt of the need for an early start on this project. During the post-war years in Ontario the increase in industrial use of electricity has been enormous. More than 600 factories, new to Ontario, have been established; technical processes have been developed; personnel has been trained, power equipment installed and a strong broad industrial base has been laid. On this broad base industry is capable of rapid expansion. I need hardly add that it would also be the arsenal from which our defence production materials could be drawn if necessary.
You may recall that a treaty was negotiated in 1950 between the Canadian government and that of the United States permitting a larger diversion of water for power at Niagara. The Hydro Electric Power Commission of Ontario-and I give them full credit, Mr. Speaker-lost no time in beginning a development which will eventually harness the falling waters of Niagara river to develop a further 1,828,000 horsepower.
Since I come from Niagara Falls, Mr. Speaker, naturally I have taken a keen interest in this project, and I want to say this to the credit of the Hydro Electric Power Commission. Although the United States and the state of New York have the right and the power to use the available water at Niagara falls, along with the Hydro Electric Power Commission, for the last two years they have not seen fit to take any of it. I throw my chest out and my shoulders back in justifiable pride that we here in Canada, and in Ontario, have gone ahead and set a picture and a pattern for the people of the United States, and we have shown them what we can do with regard to the water that is available at Niagara for power purposes.

They are fighting at the present time, and will continue to fight over there for many months to come, as to whether or not that power should be developed either by private enterprise or by public enterprise. But while they are going on with their arguments we are going ahead, and we shall have that development finished in a very short time.
The Sir Adam Beck generating station No. 2 is scheduled to open officially next August 8. Truly remarkable progress has been made since construction began in December 1950, just two months after the final ratification of the Niagara river diversion treaty. The new plant, named in honour of the man who is the father of hydro in Ontario, is just upstream from the No. 1 plant at Queenston, which was at one time the largest hydroelectric station in the world. This new plant, the new diversion, is spread across an eight-mile distance. The works of the Niagara project include tremendous engineering feats by Canadians on the staff of the Ontario hydro. Two intake structures for the tunnels are located two miles above the famous falls, near Chippawa; the twin 54-mile long tunnels with diameters of 51 feet are being constructed under the city of Niagara Falls; the 2i-mile open-cut canal is almost complete and the new powerhouse at Queenston, located six miles below the cataracts, is rapidly taking shape.
I want to say this, Mr. Speaker, we have had very many fine hydro engineers not only in the province of Ontario but in the Dominion of Canada as well. 1 think I can say without fear of contradiction that among the finest was Dr. Harry Acres. Dr. Hogg was another fine efficient hydro engineer. We also had Mr. Hearn, who is now the chief engineer of the Hydro Electric Power Commission of the province of Ontario, and Mr. Andrews of the Harry Acres Company at Niagara Falls. Perhaps, Mr. Speaker, I can paraphrase the advertising slogan of a famous automobile company, which goes something like this: "When better cars are made, so and so will make them". I want to say, Mr. Speaker, without fear of contradiction: When better hydro engineers are produced, the Niagara Falls area will produce them.
Will you 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 Limburg Houck: Mr. Speaker, before the
adjournment for the dinner hour I was telling the house something about the mammoth new
The Budget-Mr. Houck hydro development at Niagara Falls and I was also speaking about the willingness of Ontario and New York to co-operate to undertake the power development on the St. Lawrence at a cost of something over $600 million. I firmly believe that the benefits to the province of Ontario, the state of New York and, indeed, Canada and the great republic of the United States of America, will outweigh the original cost. Looking ahead we must picture in our minds just what this new source of power will mean to our people, and especially what it will mean to industry. One engineer has estimated that the power going to waste in the international section of the St. Lawrence is equivalent to the energy that could be created by 28 million healthy workingmen every year.
Over the last few years a great deal has been said concerning the decentralization of industry. One cause for concern, especially in the maritime provinces, is that the seaway and the power project may have a strong centralizing influence. I believe this government recognizes the importance of carrying out, in so far as it is possible, an orderly and economic policy of decentralization of industry. We must not forget this policy and steps should be taken to see that it is followed in every possible field.
In considering this power project we must not lose sight of the old saying that "trade follows the flag". The modern adaptation of this saying is that "industry follows power". Ever since the industrial revolution it has been traditional that industry developed where there was an adequate supply of primary power. I believe it is part of our national responsibility that every power resource that can be developed must be developed, and that it is the prime responsibility of this government or any other government to do so.
Power resources are all a part of our great national heritage. They are all part of the vision of development that the fathers of confederation had, and unless we are prepared to see that every single natural resource in Canada is developed we are not going to meet that challenge and achieve the destiny envisioned by the pioneers, the fathers of confederation.
Almost all the opposition that the seaway project and the power development are meeting seems to come from extremely powerful lobbies in the United States, lobbies that seem to have bushels of money with which to operate and seem to be accomplishing what they have set out to do. It is my firm belief that much of the objection to these developments is coming from selfish business interests who care nothing about the country's

The Budget-Mr. Houck welfare as long as they are well looked after. Another thing that should stand out prominently in all these negotiations between Canada and the province of Ontario is that politics have played no part whatsoever. Probably no bigger football has ever existed n Washington than the St. Lawrence project tself.
I quite well recall that some ten or twelve years ago, when I had the privilege of serving on the Hydro Electric Power Commission of the province of Ontario, we at that time met the whole Senate committee from Washington for three days along the St. Lawrence. We inspected the whole project and at the end of the three days' conference they as much as assured us that the St. Lawrence project could be proceeded with within two months. That is twelve years ago.
In time of peace shortage of power is unfortunate. In the event of war a power shortage is a national disaster. As the best friend that the United States has among the nations, Canada is deserving of better treatment than she has had in relation to engagements for power developments on rivers in which both countries have a common interest. Canada's efforts to obtain the St. Lawrence projects have been backed by almost all representatives across the dominion. Without the wonderful co-operation shown between the two levels of government, federal and provincial, Canada's firm stand could not have been upheld. I think that our government leaders from Newfoundland to British Columbia are to be congratulated for the splendid spirit they have shown and the foresight they have had for the future of our great country.
I want to apologize to the house. I realize that I have probably spoken longer than I intended. I am also aware of the old saying that the brain can only absorb what the seat can endure, and I promise that I will only be another minute or two. I want to bring to the attention of the Minister of Public Works (Mr. Winters) the fact that we are badly in need of the new Burlington bridge at Burlington. I hope that the same spirit of cooperation that has existed between the dominion and the province with respect to the St. Lawrence seaway will exist with regard to that bridge. On week days and holidays it takes you longer to travel through that strip at Burlington than it does to go from Niagara Falls to Burlington, a distance of some forty-five miles. The present bridge is one of the great handicaps that tourists meet in getting through the traffic hazard at Burlington.
I also want to draw to the minister's attention the bridge at Homer. The bridge is
TMr. Houck.]

raised when ships are passing through, and on many days last year I have seen the traffic lined up from the bridge in St. Catharines to the city of Niagara Falls, a distance of twelve miles, waiting for the bridge to be lowered.
I want to pay my respects to the Minister of National Revenue (Mr. McCann) and the Minister of Citizenship and Immigration (Mr. Harris) for the very fine officials they have at our border points, especially at the ports of Niagara Falls and Fort Erie. These customs and immigration officials are the first greeters of our immense tourist traffic, and very seldom are there complaints from tourists with respect to the treatment they receive from these splendid officials. Our first impressions are our lasting impressions, and many times tourists at Niagara Falls have told me of the wonderful way in which they were handled by these fine officials at the border. I say to the ministers concerned that they are to be congratulated on having such fine officials. They are doing a lot to sell this great Dominion of Canada.
I feel, Mr. Speaker, that it is a distinct honour, one that I will cherish for many a day, that I should be the first representative of the new riding of Niagara Falls. I hope I may carry out my duties with honour and distinction to that great riding.


Mr. H. O. White (Middlesex East):: Mr. Speaker, in rising tonight to take part in this budget debate may I say that in my opinion it is probably the most serious in all the years I have been here because in preceding years business was on the upswing. But now we have come to a period of readjustment and, as the minister pointed out in his presentation of the budget the other evening, business and industry have to sharpen their pencils and get down to brass tacks. My first reaction to the budget was that the the people had asked for bread and were given a stone.
On April 1 taxes went up in a sense. We had to pay more postage for first-class letters, and while on budget night a few crumbs of comfort were thrown in by the reduction of taxes on certain lines they amounted to so little that the resentment stirred up by the increase in postage rates was greater than the acclaim that greeted the minister's budget.
I criticize the budget on several grounds. It failed to take into consideration mounting unemployment. I know that the Minister of Finance (Mr. Abbott) and other cabinet ministers have said that the condition is seasonal but it is hardly seasonal when unemployment is double what it was a year

ago. It was seasonal then. Therefore that is not quite the answer to the problem. I realize, Mr. Speaker, that you warned the hon. member for Greenwood (Mr. Macdon-nell) about reading quotations from newspapers. I do not intend to read a quotation, but I have here in my hand excerpts from many Canadian newspapers, all of which point to the serious problem confronting many areas of this country due to mounting unemployment.
One other point the minister failed to mention is that business failures have increased by 19 per cent from a year ago. That underlines how much tougher it is to do business today, and how competition from foreign countries is depriving many of our industries of their business, and the people who work in them of their livelihood. The source of my information in that regard is the dominion bureau of statistics publication, volume 32, No. 3, which deals with business failures and which states that such failures have increased by 19 per cent over the third quarter of 1952. That, in my opinion, is a fair barometer of what is going on in this country.
The minister also failed to take into consideration the shrinkage in freight tonnage or car loadings. That, to my mind, is one of the best indications of economic conditions as they exist today. A dominion bureau of statistics bulletin issued by the Minister of Trade and Commerce deals with this point. I have no wish to bore the house with an endless series of figures, but taking the month of October as a yardstick there were 825,607 tons less freight loaded in October 1952 compared with October 1951. Comparing the months of October 1951 and October 1953 there were 1,385,471 tons less freight loaded in 1953 than in 1951. That also is an indication of an economic trend within this country.
It occurs to me that possibly the next election is too far off to expect much in the way of tax reductions, but probably we will come back to that happy state of affairs as the years roll on. However, I wish to bring to the attention of the house some other factors which should be taken into consideration. Down through the years I have been here the government has effectively killed as far as was humanly possible every connection we have had with the British commonwealth and the United Kingdom, even to the extent of putting an eagle on the cap badge of the R.C.A.P. We have put all our trading goods in the United States basket, as it were, and this has resulted in the loss of our export markets. It has also resulted in a flood of United States goods into this country.
12, 1954	4011
The Budget-Mr. H. O. White
In accordance with your ruling, Mr. Speaker, I do not want to quote from a newspaper but I would like to refer to an item in the Windsor Daily Star of a week ago which pointed out that with respect to one item alone, namely onions, 243 carloads of United States onions were sold in 12 Canadian cities since January 1954. This took place while hundreds of thousands of bags of Canadian onions failed to find a market in the three southwestern counties of Ontario and in the Bradford marsh area, northwest of Toronto.
Is it any wonder then that implement companies and their employees are idle and farmers cannot buy their produce? It must be obvious that farmers are not going to turn around and buy the products of factories whether they produce textiles or farm implements.
However, I would like to reiterate that the government has severed as far as possible our British connections in terms of trade and in many other ways. The government has put its trust in the United States market, despite the fact that recent experiences indicate that we have been shut out of that market in terms of dairy products, oats, and rye, and this was done without any consultation with our government, regardless of the Geneva trade treaties to which we as well as they were signatories.
These Geneva trade treaties have cramped our field of action. We signed this treaty as did 33 other nations and attempted to bring about comparative tariffs, but we fail to take into consideration that many of these countries who are signatories to this treaty have a much lower standard of living and lower wage rates than we have. Despite that fact we are expected to compete with them.
I would like to draw to the attention of the house the plight of the electrical goods industry. The average wage rate in that industry today, both in the United States and Canada, is $1.67 an hour. The countries which supply electrical goods to this country, such as Sweden, Switzerland, the United Kingdom and other countries, have an average wage rate running from as high as 37 cents to as low as 27 cents. Is it any wonder therefore that we have men idle when these goods can be delivered at a price which is far below our cost of production? Regardless of this the minister tells industry and labour to sharpen their pencils and to become more efficient. The comparison I have given you as far as electrical goods are concerned applies equally well to the textile and other industries.
4012	HOUSE OF
The Budget-Mr. H. O. White
I think I can agree with the hon. member for Middlesex West (Mr. McCubbin) that optimism has its place, but so has a little realism, and I believe that realism was lacking in last week's budget speech.
Barring a miracle it is very likely that milk supplied to the milk concentrating factories of this country may slip down a few cents in price, and if the government wishes to bring on more unemployment all they have to do is to take the floor price from under farm products. They will then find even more industries laying off their workers.
While I am dealing with the farming industry and their problems I would like to say a word about daylight saving time. We have railway time, airline time, bus time, and daylight saving time. We will have city time and country time. If this government believes in democracy then they ought to have a referendum so that the people can decide whether we should or should not have daylight saving time. The whole problem is complex and extremely confusing. For example, in Windsor, Chatham, and western Ontario they have eastern standard time, while London and many other cities have daylight saving time. In my opinion those who wish to go to work an hour earlier should do so, but there is no reason to change the clocks.
A year or so ago, though it seems just like yesterday, the Minister of Trade and Commerce (Mr. Howe) returned from his tour of South America. I remember his telling us about the great opportunities there for expansion of trade; but from that day onward our trade with those countries has gone down and down. Maybe it is not his fault, but he certainly promised us some great things as far as those South American countries were concerned. I hope he does not take another jaunt around there to sell Canadian products and come back with the same results.
Taxation plays a bigger part in our economy than many of us realize. It is estimated that it requires an investment of between $8,000 and $10,000 to equip a factory so that it will employ one man and so on for every employee. In other words, the amount of money that is drawn off in taxation reduces the number of potential jobs in this country. On more than one occasion I have pointed out to the house and to the government that inflation is the root cause of many of our troubles. Through inflation we have priced ourselves out of world markets. Inflation is the most subtle and sinister invasion of the assets and wealth of the people. In Germany


this inflation ended in Hitler's dictatorship, because when you can control currency and destroy people's faith in their monetary system you can do with them almost anything that you desire to do.
From the budget speech I note that the government have finally adopted a suggestion of the Conservative party-and incidentally it is one of my own-that the sales tax on municipal purchases be done away with. I am glad to see the adoption of that suggestion.
I am coming back again, Mr. Speaker, to what the minister said about labour and industry becoming more efficient and his telling them to sharpen their pencils and cut their costs. The strange part about that matter was that the government themselves failed to do that. The biggest business in the country, they neither sharpen their pencils nor become more efficient. I think here is a case where the government could and should give a lead to industry and labour by showing that they themselves can follow their own advice; but apparently they either are unable or unwilling to reduce the cost of government.
I want to return for a moment to our unfavourable trade balances. I have here in my hand the monthly summary of foreign trade published under the authority of the Minister of Trade and Commerce. This monthly summary shows imports for consumption from all countries. To summarize it quickly for you, in the month of January, 1952, imports from foreign countries amounted to $307-1 million and in January, 1953, they amounted to $327-8 million; in other words, they were up $20 million. As to our exports to foreign countries, they were down from $324 [DOT] 1 million to $317-3 million in the same months. In the months for which I have the figures here, namely January, February, March, April, May, June, July and August, of 1953, only two show a favourable trade balance, those of June and August. In June there was a favourable trade balance of $9-7 million and in August one of $1-6 million. As to the other months the figures range all the way from minus $87 million to minus $47 million, minus $35 million and minus $6-6 million. In other words, we are employing people outside of Canada to make the things that could well be made by our idle people.
Then as to imports for consumption, in the month of August, 1952 we imported agricultural and vegetable products to the tune of $33 million worth. In July, 1953 we imported $42 million worth. In other words, some of these onions that I was talking about have been brought into the country while our own were wasted. As to fibres, textiles and other products, in the same months our imports

for consumption went up from $25 million to $31 million; iron products, imports went up from $97 million to $150 million; chemicals and allied products went up from $13 million to $18 million; non-metallic minerals and like products went up from $54 million to $64 million. In other words the totals for these main groups imported into this country went up $100 million in the year from August, 1952 to July, 1953.
I say again, is it any wonder that we have idle people? While I am mentioning to the minister the matter of sharpening his pencil and becoming more efficient at home, may I say this. From the dominion bureau of statistics report I notice that the number of employees of the dominion government increased by 11,678 in the past twelve months.
There is another matter in the budget to which I want to draw the attention of the minister and the house. I refer to the matter of dominion-provincial relations. It is quite apparent to me-at least, it is my opinion- that that matter was dragged in as a red herring to draw the people's attention away from the serious economic and unemployment situation prevailing and away from the burdensome amount of taxation they are paying, amounting to something over $1,300 for a family of four in Canada before they have a dollar with which to buy their groceries, pay their rent or clothe themselves.
I would point out to the minister that over the years the Liberals too have had some resolutions in their platform. One was the health insurance plan which has been forecast every election year since 1919, but nothing has been done about it. They have promised to reform the Senate ever since 1867. But worst of all, they have failed to formulate plans to aid in the development of the natural resources of the country, thereby increasing employment in the country.
I want to extend my congratulations to the hon. member for Niagara Falls (Mr. Houck) who preceded me. I was glad to note that he had at last become a disciple of that great man-probably the greatest of all Ontario citizens-Sir Adam Beck. I noticed that in his speech he also failed to mention the repudiation of the hydro contracts carried out under Mitchell Hepburn.


Mr. J. W. Noseworihy (York South):: Mr. Speaker, in the present budget now before us the government proposes to raise, including the special old age security tax, the sum of $4,765 million. Of that sum they propose to spend something over $2 billion on national defence. Because our national defence expenditures will take approximately 42 per cent of our total budget and because I did
The Budget-Mr. Noseworthy not take part in the external affairs debate, I propose to deal with some aspects of our responsibility as a nation for helping to safeguard the survival of democracy and for making it work in the kind of world in which we live today.
The democratic world has, in our generation, fought two world wars to secure the survival of democracy against the onslaughts of nazi and fascist dictators. Today we are confronted with the problem of securing the survival of democracy against the advancing and ever-increasing forces of communist dictatorship. I believe we all agree this dictatorship is a much more sinister force than that which we fought in world war I and world war II. It is more sinister and more dangerous because, whereas the nazi and fascist dictators appealed chiefly to the racial superiority of one or two races, communist dictators appeal to the hungry and dispossessed peoples of every race everywhere.
We sometimes think today in terms of two worlds, communists and non-communists. The world in which we live is torn by tension between those two forces, between the two great most powerful states, Russia and the United States of America. In addition to that we are living today in an age of revolution. The world in which we live is, in my opinion, passing through the greatest revolution in its history. We are living in a world in which two-thirds of its population is rising up against inequalities of race and inequalities of economic opportunity.
We on this continent are inclined to think our great task today is to stop communism. We are sometimes inclined to believe that but for Russia we could all enjoy a stable peace. I suggest, Mr. Speaker, that we are experiencing today a world revolution for equality. I suggest, further, that were every communist in the world removed that revolution for equality would continue. Let us take a brief look at that world. We are told that there are 200,000 babies born into this world every day. Only one in three is white. Two of every three are born either in countries that have revolted and thrown out the white folk who govern them or in countries who are still trying to throw out the white folk. Only one in four of those babies is born a Christian. One in four is born in China. One in nine is born in India. Those born in India have a one to four chance of surviving infancy. Those who survive infancy have only a fifty-fifty chance of ever reaching maturity.
Half of those 200,000 babies born every day in this world, unless we can make

The Budget-Mr. Noseworthy democracy work in other countries, will always be hungry. Many thousands of them will die of famine before reaching maturity. We are told today that two-fifths of the world's population can neither read nor write. Only five in every hundred in Africa, still a part of the free world, can read. Two billion of these sick, hungry, and illiterate people live in the free world, in that free world which we are trying to lead in a crusade against communism.
When we look at Russia, we think in terms of tyranny. When these millions in Africa, Asia, or South America look at Russia, tyranny does not frighten them. They have never known anything else. What they see is not tyranny but the possibility of liberation from landlords and local money lenders to whom they have been in debt all their lives and to whom they pay from 30 per cent to 100 per cent interest. They see not tyranny in Russia but the possibility of planned reconstruction of their country on the basis of modern machinery. They see possibly an end to all the misery and despair that is unknown to us, and such as we can scarcely imagine.
It is true that such sickness, hunger and misery is not anything new to these people, but this is the first time in their history that hundreds of millions have learned that because of new scientific knowledge, new technical skills, their suffering is unnecessary. They have now come to realize something they have never known before. There is plenty of evidence the peoples of Asia, Africa and South America are determined to solve their economic problems. The great question that confronts us as a member of the free world is whether or not we can demonstrate to these millions, in time, that democracy can offer them a better solution to their problems than can dictatorship.
I submit that it is only by doing that we can ever hope to hold these two billion people within the free world. In other words, unless we want to live in the communist dominated world, unless we are prepared to see communism dominating the world in which we live, we must make democracy work not only in our own countries, but in Asia, Africa and South America. We ask what we are doing in that regard. What are we doing to demonstrate to these people that democracy does offer them and can provide them with more freedom and security both in the field of economics and politics, than can communism.
Quite frankly I think we have made a fair beginning, though I admit it is but a beginning. If we compare the course of action


that was adopted by the victors of world war II with the course of action that was followed by the same victors of world war I,
I think we realize that we have been making some progress in this job of making democracy work. We have been making democracy work better in the domestic field in Great Britain, Europe and North America, and to some extent in the international field.
Before world war II one of our most painful social problems was that of mass unemployment, the inability of our economic system to employ a large sector of the available labour force in productive enterprise. Somehow we have managed to avoid mass unemployment since world war II. Some say that is because of our rearmament program, but I think an impartial observer must admit that our employment figures were nearly as high in 1948, 1949 and 1950, before we embarked upon our rearmament program, as they have been since that time. That is particularly true in this country.
To be quite frank I suppose we must admit that our rearmament program has been one factor in our provision for unemployment. To be frank again, we must admit that the scarcities created by the ravages of war in Europe have contributed markets for our products and enabled us to maintain a high degree of employment.
However unemployment is again raising its head in this country. And whether the government believes that that unemployment is seasonal or temporary, it is a factor involving half a million Canadians. The fact remains that even with our experience of the thirties we have not yet learned to provide full employment for all our people without recourse to rearmament or recourse to war, or depending upon shortages created by war.
That is one of the lessons which somehow we must learn in this and other countries of the free world, if we are to enable democracy to survive and if we are to prove to our own people and others the advantages of democracy over communism. If we turn again to the pre-war world we find that another of our difficulties was the inability to find employment for available savings and capital. Today on the other hand there is always a shortage of capital for investment in the numerous enterprises sponsored by government agencies and private firms within the free world system.
The third symptom of our domestic economy in the pre-war days, particularly in North America and Europe, was the stagnation of agriculture. Lack of markets made it necessary for us on this continent to burn food, to burn agricultural products we were

unable to dispose of. Today we are experiencing a veritable agricultural revolution in the mechanization of agricultural processes and in boosting agricultural output. We are getting nearer to the goal of being able to feed some of the hungry millions of the world than we were in the post-war years. There, again, we find today our granaries filled, bulging with wheat; we find ourselves without markets and unable to dispose of our wheat, while millions of people are hungry.
There again we must learn somehow to find a way of distributing food we can produce among the hungry peoples of the world. This buoyancy of our post-war economic system has been brought about, in part, by reason of war and rearmament, in part by shortages created by war and also in part by the shift of political power and influence within the countries of Europe and North America.
Since the war, under the pressure of public opinion, governments have been forced to devote a higher percentage of their production and net income to improving the standard of living of the common people within their borders. This has been made possible by a redistribution of our national income. Governments in every country enjoying representative forms of government, or government responsible to the electors, since the war have been taking bigger slices of the national income and redistributing it through welfare-state measures such as children's allowances, old age pensions, health insurance, workmen's compensation and the like.
That, and the increasing amount of capital investment made by governments or in government-sponsored or government-supervised and, in some cases, government-owned enterprises, have served to provide the consuming public with more spending power, and have served to remove the unbalance between classes in our domestic economy.
Here I think we need to stop before we take too seriously the advice of those who tell us that, because industrial workers have been receiving higher wages and because farmers have been receiving higher prices for their products, we are pricing ourselves out of world markets, and consequently the thing to do to regain those world markets is to begin reducing wages and farm prices. 1 think we would do well to stop and consider before we follow any such advice as that.
After all, we cannot maintain full production unless our consuming public have the wherewithal to buy that production. It is true that we must of necessity export a great part of our production, but we must take in turn from those countries to which we export goods of that country's origin. We must take these goods in exchange for ours. These
The Budget-Mr. Noseworthy goods that we take back in exchange must in the final analysis be sold to our own people. Therefore, unless we can maintain in one way of another the purchasing power of our consuming public in Canada we have no hope of continuing the kind of prosperity we have enjoyed in the past.
Let us turn now to the international field where the unbalance between the nations that have and the nations that have not still remains to be adjusted. What have we done in that field? Again 1 say we have made a beginning, but nothing more than a mere beginning. Prior to world war II the only means by which the increasing capital of industrial metropolises could be spread throughout the world was that of foreign investment on private account and for profit. As masses of capital accumulated in one or two of the most advanced nations, it was lent to or directly invested in the less developed parts of the world. This method of investment led to the extension of actual sovereignty of the capital exporting nations over those in which the capital was invested. The necessity of providing some security for investments resulted in the whole world becoming colonized. It was this method which led to the partitioning and repartitioning of the globe and led to the frightful collisions between major industrial nations, the relations which we know as world war I and world war II.
That picture has changed somewhat since world war II. The whole mental climate of our times is inimical to that type of enterprise today. After world war II the economies of Britain, France, Germany, the rest of western Europe and Japan were shattered. In the past this problem would have been met as after world war I by raising of ordinary commercial loans from private investors in the United States. These loans would have been made with an eye to private profit. This time, after world war II, no one even supposed that this method could possibly be followed.
The economies of Britain, France, Germany and Japan have been largely restored through Marshall aid and similar arrangements. Much of the needed capital was exported as a free gift. Some of it was advanced on easy terms and modest interest rates. The capital was not raised voluntarily, but was provided by the United States government out of taxation compulsorily levied on the United States public. Whatever we may say about the United States' motives for this, the fact is that an entirely new way was found of rectifying to some extent the unbalance between the United States and Europe after the war.

The Budget-Mr. Noseworthy
The real and gigantic job that now lies ahead of us in order to make democracy work and thereby save for the free world two billion people living in Asia, Africa and South America from going communist is to find some way whereby the United States, together with Canada, Great Britain and those European countries which are again going concerns, can pour their capital into Asia, Africa and South America. From China to Peru the majority of the human race remains untouched by the industrial revolution. Psychologically and politically they are waking up, and unless some acceptable means can be found of providing capital and technical knowledge to enable them to develop their countries they will certainly be lost to the free world. They will pass into the Russian orbit which can do far less for them economically than can democracy, but which will do even that little for them at the expense of those freedoms that we in the free world cherish.
In this field I submit we have fallen down badly so far. We have laid the foundation. We have the Colombo plan and the technical assistance plan within the United Nations; but to date work in this field has received very scant consideration. Our main efforts have been devoted to rearmament. We in Canada spent approximately $1 on economic aid for every $100 we spent on rearmament. Altogether we have been spending in Canada approximately $29 million a year on Colombo, economic aid and all the United Nations' agencies combined. That, I submit, is not good enough and is simply an indication of the fact that we do not realize in this country, nor do our allies in other countries realize, the magnitude of the greatest problem that confronts us today.
World war II, it is said, cost the United States $330 billion. If world war III began tomorrow, whether it began in Indo-China or wherever it began, the United States, Great Britain, Canada and other countries of the free world would immediately find the hundreds of billions of dollars needed to prosecute that war, but those same nations today can find a matter of millions instead of billions for the greatest of all tasks that now confronts the free world if we are to make democracy work. If, indeed, we are to enable democracy to survive.
Because of the immediate situation in regard to Indo-China, Mr. Speaker, we are in danger at this time of diverting our thought from the greater, the more important and long-term program of assisting the hungry and dispossessed peoples of the world. Whatever we may do, or whatever happens in Indo-China, we must not lose sight of the

fact that we must somehow, by some means, convince the leaders of the two billion not yet brought within the Russian orbit that democracy has more to offer them both in economic and political freedom and security than has communism.
Have we any reason whatever to believe that if the United States and other free nations choose to fight it out to the bitter end with the communists in Indo-China that China and other communist countries will not give assistance to the communists as they did in Korea? Surely, Mr. Speaker, with our experience in Korea, and the knowledge we now have of the powers of the hydrogen bomb, it is the part of sanity to try, as our own Secretary of State for External Affairs (Mr. Pearson) suggested to us in his speech, by every means possible to secure a negotiated settlement of the dispute in Indo-China without embarking on another Korea. Such embarkation might very easily result in the use of the H-bomb by one side or by both.
Any move that will lessen the possibility of such a negotiated settlement will shock the conscience of the entire world today, and history may well regard the perpetrator of such a move as an enemy and not a friend of mankind. The United States and her allies in the free world may have to make some concessions to communist countries to achieve that kind of settlement in Indo-China. It may be possible that we may have to recognize Red China or admit Red China to the United Nations or open up avenues of trade with countries behind the iron curtain. We may have to make concessions to public opinion in France regarding the rearming of Germany. But none of these concessions will be half as terrifying to mankind as the possibility of the two great world forces using H-bombs against each other.
While on the subject of H-bombs, I want to say that in my opinion Canada's role should consist of using every possible effort to secure international agreement on two points; one, that there be no more trial explosions of H-bombs in the Pacific and, two, that this infernal machine, capable only of destruction, be outlawed from the face of the earth. The H-bomb just has no place in a world of human beings who still have some interest in survival.


Mr. A. J. MacEachen (Inverness-Richmond):: Mr. Speaker, in rising to take part in this debate in its early stages, I wish at the outset to compliment the Minister of Finance (Mr. Abbott) upon his budget and the message of assurance which it contains for the Canadian people. In the welter of pessimism that is being generated in Canada today, it is refreshing to have the chief financial officer

of the country paint an optimistic picture, a picture which, I think, is justified and supported by an economic review of last year's achievements and by an assessment of the critical economic factors that will affect the development of the country in the year ahead. If there is any relationship between the economic development of the country and the financial or economic policies pursued by its government-and that proposition has been widely urged in the house since the debate began-then I think the Minister of Finance should receive the commendation of the Canadian people for having presided over the financial affairs of the country in the period of its unprecedented economic growth.
In announcing another surplus the minister has continued his policy of adjusting the budget accounts to the state of the economy. It used to be a belief of public finance that a surplus was always desirable and that a deficit was always undesirable. But now-and this view has been presented only in recent times-it is true that a surplus or a deficit is neither necessarily good nor bad in itself, but derives its virtue from its accommodation to the need of the economy. Of recent origin also is the belief that the budget can be used as a defensive and offensive weapon in maintaining balance in the economy. Therefore, the government has continued its policy of creating surpluses in periods of prosperity for the prudent reason of retiring the public debt gradually but for the more solid reason of facing up to a deficit without extraordinary strain when such a policy is required in the national interest.
The gradual retirement of the public debt is useful because it reduces the annual burden of debt carrying charges and also because it appeases the distortion in income distribution which is inevitably associated with a large public debt. I believe that the Canadian public have supported this policy of creating surpluses. I believe an opposite policy would have bordered on imprudence, if not improvidence. Last year, the budget accounts reveal, Canada established new records in the gross national product, in employment and earnings, in the size of the labour force, in the rate of personal savings and in other categories of economic significance. The achievement of last year takes on additional perspective in view of the equal or greater achievement of previous years. The trend has been a steady and upward growth in the economy.
In view of this background one must ask himself whether the current unemployment problem represents a basic reversal in the upward growth of the Canadian economy. The minister faced this issue squarely and stated that the current unemployment is
The Budget-Mr. MacEachen the result of increased price competition from foreign suppliers and a general readjustment to a more competitive economy. If this diagnosis is correct, and no alternative diagnosis has yet been presented, then in my judgment the real solution does not lie within the realm of fiscal policy. By fiscal policy I mean the augmenting or enlarging of the stream of purchasing power through tax reductions or increased government expenditures. Such a measure at this time would not assist the specific industries facing price competition, because there is no presumption that consumers will buy higher-priced goods simply because purchasing power has been discharged into the economy.
Furthermore, the application of general fiscal measures would not likely have the desired effect unless there is a general malaise affecting investment, consumption, and government expenditures. No evidence has yet been brought forward to counteract the evidence of investment plans presented in the annual survey tabled in this house by the Department of Trade and Commerce. Defence expenditure will continue to play its role in sustaining the economy and the only sign of weakening among these three sensitive barometers is a weakening in purchasing power, and even with that weakening, purchasing power still remains strong.
If price competition from foreign markets is the problem then the short term solution is clear, if unacceptable. It lies in the realm of commercial policy. The quickest way to provide such price relief is through the application of a tariff against competing products. The minister has wisely resisted pressure for increased tariffs. Such a policy at this particular time would work against increased world production and against Canada's stake in multilateral trade.
I believe the high aspirations expressed by hon. members in the debate on external affairs have now taken practical effect, and this practical effect will be supported by the same firm purpose that was expressed in that debate. Indeed, Mr. Speaker, as a member for the province of Nova Scotia I can testify to the adverse internal effects further tariff increases might have on regions which must export their primary production.
It is my belief that Canada has reached the peak point in its unemployment and that the downward trend will soon be evident.
One phase of this problem which has been neglected is the rapid rise in Canada's civilian labour force. In 1945 the total civilian labour force in Canada was 4,481,000 while today it is 5,230,000, an increase of 749,000 persons. The increase for the past year was 36,000 persons. It might be of some help in

The Budget-Mr. MacEachen putting this problem of unemployment in perspective if we consider the number of employed as well as the number of unemployed. The dominion bureau of statistics figure for persons without jobs and seeking work as of February 1954 was 312,000, which is the highest figure for this category since and including the year 1945. At the same time the total number with jobs in Canada as of February, 1954 was 4,918,000. This figure demonstrates that there were more persons with jobs in Canada in February 1954 than at the same time in 1945, 1946, 1947, 1948, 1949 and 1950. According to the recent D.B.S. labour supplement there are more jobs in Canada now than in 1951 or 1952.


An hon. Member:: That will go over with the unemployed.


Allan Joseph MacEachen: It is true that the number of jobs in this country have decreased since last year at the same time by 97,000, and while I lament and I am distressed as much as hon. members opposite at the number of unemployed in the country I still believe that in order to maintain a balance we should also rejoice that the Canadian economy is, as of now, maintaining employment for almost five million Canadians.
Naturally a growing population combined with an expanding economy will result in an expanded labour force, and if our economy, Mr. Speaker, is in for a period of general readjustment then it might be wise for hon. members of this house to consider how the expansion of the labour force could be arrested during this temporary period. One of the most obvious devices that occurs to me is an increased emphasis on vocational education in necessary skills in Canada.
May I turn now to another aspect of the budget. The total non-defence budgetary expenditures in round figures amounted to two and a half billion dollars. Two-thirds of this amount is accounted for by interest and service on the public debt, social security benefits, subsidies and tax rental payments to the provinces, and services and assistance to agriculture.
I should like to discuss two classes of expenditure mentioned by the minister, namely, tax rental payments and social security benefits, with particular reference to my own province of Nova Scotia.
In my judgment the tax rental agreements have served or achieved two ends. First, by agreement with the provinces, they have permitted the federal government to become the chief collector of corporation and income taxes, providing the central government not only with this rich source of revenue but


also giving the central government weapons of the first importance in controlling the economy.
Second, these tax agreements have attempted to overcome disparities in economic development as between parts of Canada by effecting what amounts to a regional redistribution of government revenue. For the fiscal year ended March 31, 1953, the total revenue collected by the province of Nova Scotia amounted to approximately $48 million. Of that amount approximately $20 million was revenue under the tax rental agreements. Had the province of Nova Scotia cultivated these tax fields on its own its collections would have fallen far short of payments under the tax rental agreements, and that province would have been unable to provide the standard of service now available to the residents of that province. Even with the tax rental agreements, there is considerable strain on the province of Nova Scotia in attempting to meet the standards of the wealthier provinces of Canada. Though the tax rental agreements have been of undoubted value to the province of Nova Scotia, I am sure I will be forgiven by hon. members if I confess that I have always shared the view, so frequently expressed by Premier Macdonald of Nova Scotia, that a more efficacious method of handling the province of Nova Scotia would have been to adopt the principle of fiscal need first recommended by the Rowell-Sirois commission, and later incorporated in the original proposals made to the province.
May I turn now, Mr. Speaker, to a few remarks on the subject of social security and its contribution to the national life. The comprehensive system of social security in Canada is meeting the needs that arise in an acute form in any industrial or market economy. In such an economy, income from gainful employment is the source of livelihood for large classifications of people. The loss of income, through causes beyond the control of the individual, and the inability to accumulate savings to meet the critical emergencies of life have been the principal considerations which have led modern governments to establish programs of social security. I am proud, Mr. Speaker, of Canada's achievement in this field because through this medium we have relieved human insecurity in critical areas of life and we have met the challenge of problems associated with industrialization.
At one period of time the chief support for social security came solely from persons who wished to relieve human suffering, and I trust that such motivation will continue to be the

basic philosophy of our approach to the problem. But to those supporting social security unexpected aid came from economic science. Economic science proved, I think without any doubt, that social security or transfer payments constitute a permanent support to purchasing power and contribute to the desirable social and economic objective of overcoming inequities in the distribution of income.
The work of the government in this direction has not ceased. As a new member of this house, I received my greatest satisfaction from the announcement made by the Minister of National Health and Welfare (Mr. Martin) that assistance would be provided for disabled persons. The Nova Scotia legislature aas passed enabling legislation in order to be .n a position to adopt this legislation.
I have mentioned particularly the tax rental agreements and social security payments principally because they indicate the direction of government expenditures. I believe that these two policies have been instruments that have increased the appreciation of Canadian citizenship. There are no other two policies that indicate more clearly the manner in which this government has met the challenge of Canadian federalism. It is true, Mr. Speaker, that in the province of Nova Scotia at present there are difficulties that no one should overlook. There is particularly the difficulty associated with the coal and steel industries. But because an opportunity will foe provided to discuss this matter when the estimates of the dominion coal board come before the house I shall postpone my remarks on these subjects until that time.
Mr. Speaker, if the claim is made that those who strike an optimistic note are wishful thinkers, then I want to join that band of persons who have faith in the future of Canada, that group which is not dismayed by a single temporary interruption in the steady growth of the Canadian economy.


Mr. Deputy Speaker:: Is the house ready for the question?
Some hon Members: Question.


Mr. Speaker:: Is the house ready for the question?
4020	HOUSE OF
The Budget-Mr. Knowles


Some hon. Members:: Question.


Stanley Howard Knowles: Mr. Speaker-


Mr. MacDougall:: You always have to spoil it, Stanley.


Stanley Howard Knowles: Mr. Speaker-


An hon. Member:: Take your time, Stanley.


Stanley Howard Knowles: Mr. Speaker, I wish to say a few words-


John Lorne MacDougall: "A few words"?-hear, hear!


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order.


Stanley Howard Knowles: This is the most voluminous applause I have ever had in this House of Commons.


An hon. Member:: The first time you have earned it.


Stanley Howard Knowles: As I was saying, I wish to say a few words-


An hon. Member:: You said that.


Mr. Speaker:: Order.


Stanley Howard Knowles: I am having as much difficulty, Mr. Speaker, as I sometimes have when asking a question on the orders of the day.
In his budget speech the other night the Minister of Finance (Mr. Abbott) made this statement upon which I wish to comment briefly. As recorded at page 3730 of Hansard for April 6 the minister referred at some length to the matter of the old age security fund, and then said this:
Looking at the year just beginning, it seems probable that we shall again have a deficit of about $50 million. A precise accounting approach might suggest that I ought to propose an increase in the scale of contributions; but, as I said a few minutes ago, I do not think this is a time to be increasing taxes in Canada if that can possibly be avoided. I propose therefore to carry on with the same scale of contributions for another year.
Naturally, Mr. Speaker, I do not quarrel with the statement of the minister that he does not propose to make any increases in the taxes provided under the Old Age Security Act, so far as this year is concerned. But I do wish to register my strong objection to the inference that the day might come when, because of deficits being incurred- bookkeeping deficits, if one might call them that-in the old age security fund it might be


necessary to propose an increase in one or other of the 2 per cent taxes levied for purposes of the old age security fund.
The fact that that inference is there is supported by various news reports commenting on what the Minister of Finance said in the paragraph I have just read. For example, under the byline of Warren Baldwin, the Ottawa Citizen of Wednesday, April 7, 1954, had this to say:
Canadian taxpayers have been given another year of grace before being put on a pay-as-you-go basis for payment of old age pensions. They will continue to contribute two per cent in sales tax, two per cent through corporation tax and two per cent on personal incomes up to $60.
Faced with the alternative of increasing his overall tax structure or budgeting for a deficit, Finance Minister Abbott has avoided both and put off the day of reckoning.
Similarly, the Ottawa Citizen in its editorial on the minister's budget, also in the issue of April 7, referred to this act of the minister in these words: "And so he temporizes for another year." The point I wish to make is this, that we are paying for old age pensions now on a pay-as-we-go basis. The fact that the total cost of old age security payments at their present level of $40 a month is not covered by the earmarked taxes does not mean that those payments are not being made out of current income. The fact is that old age security payments at the present time are being made in part from these three 2 per cent taxes, and in part from revenues out of the consolidated revenue fund, but all of these revenues are equally current.
In my view, the point should be made that there is nothing wrong with the payments being met as they are today. In fact
1	go further and say it is better that these payments be met in that way than that the
2	per cent social security tax should be increased in order that there might be a bookkeeping balance. So long as the present situation is maintained, to the extent that old age security payments are met in part out of the consolidated revenue fund, to that extent they are paid for on an ability to pay basis, to an extent that is greater than is the case with respect to the 2-2-2 formula. The funds that are received into the consolidated revenue fund on the basis of the personal income tax and on the basis of the corporation income tax are on a much more progressive basis than is the case with the three 2 per cent taxes. I want to register my very strong protest at any

suggestion that there should be any increase next year or the year after in those 2 per cent taxes that are collected for the purpose of old age security.
In fact, as hon. members know, when these three 2 per cent taxes were brought in we objected to certain features of them. For example, we objected to the fact that the tax on personal incomes for purposes of the old age security fund was not put on a graduated basis. In addition to it not being on a graduated basis, it is cut off at the $60 point, and we objected very strongly to that. We agree that old age security pensions should be on a contributory basis and they are; yes, they should be on a pay-as-you-go basis, and they are; but we also contend that they should be on an ability to pay basis. That is not the case if you insist on balancing the old age security fund by 2-2-2 tax, or a 3-3-3 or a 4-4-4 formula, or whatever the minister may devise.
To the extent that old age security payments are paid out of the general revenues, out of revenues collected from the income tax and the corporation tax, to that extent they are being paid on a fairer basis than is the case with respect to the formula set up in the Old Age Security Act. Therefore, Mr. Speaker, I meant what I said when I started this speech, in spite of the fact the minister and other members were surprised and gave me that questionable applause. I meant to speak only for these few minutes to underline the point that there should not be any increase this year, next year or in future years in these special taxes under which old age security payments are made at the present time.
If additional moneys are needed, let them be found by increasing the income tax in the upper brackets, let them be found by increasing the corporation tax. While I am referring to this matter, Mr. Speaker, may I suggest that the time has come-my leader suggested it this afternoon in his remarks- for an increase in the old age pension itself. My leader pointed out that the federal government as long ago as 1945 had described itself as ready to accept the full responsibility for adequate old age pensions for all our people 70 years of age and over and of participating in adequate pensions from 65 to 69. The sum of $40 a month is not an adequate pension at the present time. I suggest that at the very least that figure 83276-254
The Budget-Mr. Knowles should be $60 a month, and that could be paid and should be paid at the present time.
I strongly urge, Mr. Speaker, the view of the man in the street that it is very strange that parliament can find so much money for so many other purposes but cannot find it for increasing old age pensions. To the ordinary Canadian this is a sad commentary on the way in which this government operates. Therefore, Mr. Speaker, far from putting any pressure on the country to get ready for the idea of an increase in the old age security tax, I say that this tax should stay where it is or be reduced, but that the old age pension should be increased and that the funds necessary for increasing the amount of the old age pension should come out of general revenues on the basis of the income tax structure and on the basis of the corporation tax, for those are taxes which are paid according to ability to pay.
Just in the two or three minutes that remain to ten o'clock-and I am not adjourning the debate, Mr. Speaker, for as I said when I started, I wanted to speak just very briefly on this question-


Douglas Charles Abbott: The hon. member is making a record for himself.


Stanley Howard Knowles: In the two or three minutes that are left I wish to say that in addition to my feeling that something should be done at this session of parliament to raise the old age pension, I certainly hope that if nothing is placed on the order paper of this House of Commons before we go home for Easter, when we come back we shall find on the order paper notice of legislation to increase the amount of the war veterans allowance. I was hoping today that the Prime Minister (Mr. St. Laurent) in reply to my question on the orders of the day would be able to tell us before we go home for Easter what legislation remains to be introduced during the balance of the session, and that his answer would have included an amendment to the War Veterans Allowance Act. I urge, sir, very strongly that along with an increase in the old age pension, the old age assistance pension-and the blind pension too-there should be an increase in the war veterans allowance and in the permissible income allowed to recipients of that pension.
If anyone is saying: Oh, there is the C.C.F. again, asking for payments, asking for increases in old age pensions but not proposing any means for raising the money, I suggest,
4022	HOUSE OF
The Budget-Mr. Knowles Mr. Speaker, that there is on the order paper in my name a motion which I cannot now debate because of the rules of the house, asking for an elimination of the $60 ceiling on the old age security tax, for this very purpose; and just a few moments ago there was before this house an amendment in the name of my leader asking for an increase in income taxes in the upper brackets and for an increase in corporation taxes. When we make such proposals we have it in mind that that is a way in which money can be found to increase old age pensions and make these

other improvements in social legislation which we feel should be made at this session of parliament.
On motion of Mr. Drew the debate was adjourned.



BUSINESS OF THE HOUSE

Mr. Harris:: We shall continue this debate tomorrow.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
.	Tuesday, April 13, 1954