1954-04-06

[Stage Direction]
Mr. L. Philippe Picard (Bellechasse) presented the first report of the standing committee on external affairs, and moved that the report be concurred in.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. Roland Michener (St. Paul's):: I should like to address a question to the Minister of Citizenship and Immigration, of which I have not given him notice. He may not need any notice because it is the subject of an editorial in the Globe and Mail of this morning. Is any instruction given to the agents of the department abroad to limit to any definite quota the number of immigrants from countries in which they operate?


Hon. W. E. Harris (Minister of Citizenship and Immigration):: No.



DISABLED PERSONS


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare. In view of the near approach of the Easter recess, can the minister say whether the legislation respecting pensions for disabled persons will be on the order paper before we rise for Easter? If not, will it be on the order paper when we come back?


Hon. Paul Martin (Minister of National Health and Welfare):: My hon. friend did not give me notice of this question. The answer is simple. I have already given it three times this session. The fovernment, having initiated this program, will be among the first to see that it is brought in at the earliest possible moment.



TRANSPORTATION


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: should like to address a question to the Minister of Transport. My question is based on the boiling indignation of 3,000 of my constituents at the intent of the Canadian Pacific Railway to terminate steamer service on the Arrow lakes on the 24th day of this month. Has the minister received any communication from any minister of the government of British Columbia urging favourable consideration of any application for a subsidy for the maintenance of steamer service on the Arrow lakes?


Hon. Lionel Chevrier (Minister of Transport):: The answer to that question is yes. I suppose I should add this: The communication came from the minister of public works of that province, in which he asked whether the federal government would give consideration to the establishment of a service by means of a subsidy. While I have not answered his letter, I am afraid that the answer must be in the negative, because the government gave very careful consideration to that matter some time ago and has decided against it.


Herbert Wilfred Herridge: On the basis of the minister's answer, I should like to ask a supplementary question. If the government of British Columbia were to take over and operate steamer service on the Arrow lakes, would the federal government give consideration to an application from the government of British Columbia for a subsidy equal to 50 per cent of the loss incurred, or an agreed percentage in the operation of this steamer service until road transportation was available?


Lionel Chevrier: If the government of British Columbia will make an application along the lines of my hon. friend's question, I am sure we shall be glad to give it the best consideration possible.
3696	HOUSE OF
Inquiries of the Ministry DOMINION COAL BOARD



INQUIRY AS TO CONSIDERATION OF ESTIMATES

[Stage Direction]
On the orders of the day:
Mr. Clarence Gillis (Cape Breton South):: May I direct a question to the Minister of Mines and Technical Surveys? Can the minister inform the house whether he is in a position to bring down the estimates for the dominion coal board before the Easter recess?


Hon. George Prudham (Minister of Mines and Technical Surveys):: Not until after the Easter recess, Mr. Speaker.



PROSPECTIVE AGREEMENTS WITH SPAIN AND PORTUGAL

[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, yesterday, in the absence of the Minister of Trade and Commerce, I put a question to his parliamentary assistant concerning the instructions given to the trade mission going to Spain and Portugal. Can the minister now answer the question?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: The purpose of the trade mission going to Spain and Portugal is to endeavour to straighten out trade difficulties in those countries which arise from exchange restrictions and import controls. It is hoped that by negotiation we can clear the avenues of trade so that we can get better results from our efforts in these two countries.


Donald Methuen Fleming: Is there anything in the way of a new trade agreement, apart from the removal of exchange restrictions and import controls, being sought or expected during the course of those negotiations?


Clarence Decatur Howe: That will depend on the attitude of Spain and Portugal toward a new agreement. If an advantageous trade agreement can be worked out, I have no doubt that the trade mission will recommend it to the Canadian government.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. T. A. M. Kirk (Shelburne-Yarmouth -Clare):: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce, notice of which I sent to his office yesterday. Because of his absence then, he may take it as notice. Is he in a position to make a
(Mr. Chevrier.)

statement concerning the outcome of the meetings held on Thursday and Friday last with Newfoundland and Nova Scotia salt fish operators? If so, will he state the basis on which the operators in the mainland provinces, especially Nova Scotia, will be able to buy salt fish in Newfoundland?


Clarence Decatur Howe: I will accept the question as notice and make a statement later.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I should like to direct a question either to the Minister of Agriculture (Mr. Gardiner) or to the Secretary of State concerning a certain question of mine passed as an order for return on March 3, and having to do with certain stocks of adulterated butter in the hands of the government. I wonder if I might expect an answer before the butter is disposed of?


Hon. J. W. Pickersgill (Secretary of State):: Mr. Speaker, I will look into the matter.



INQUIRY AS TO STIMULATION OF PRODUCTION

[Stage Direction]
On the orders of the day:
Mr. J. H. Harrison (Meadow Lake):: Mr. Speaker, I would like to address a question to the Minister of Trade and Commerce. In view of the dust bowl conditions in the grain producing areas in the United States and the lack of grain production thereby, has the minister any plans for stimulating Canadian grain production and assuring domestic grain supplies for Canada during the next two or three years?


Clarence Decatur Howe: Mr. Speaker, I am sorry I
can offer no such stimulation or assurance. Canada has at least one crop in hand which has not been sold as yet, and I might point out to my hon. friend that we never kill the wheat crop in the month of April either in Canada or in the United States.



QUEBEC SAVINGS BANKS ACT


Hon. Douglas Abbott (Minister of Finance) moved: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to provide for a revision of the Quebec Savings Banks Act in conformity with the decennial revision of the Bank Act.

Motion agreed to and the house went into committee, Mr. Robinson (Simcoe East) in the chair.


Douglas Charles Abbott: Mr. Chairman, the bill to be
based on this resolution provides for the revision of the Quebec Savings Banks Act under which two savings banks operate, one in Montreal and one in the city of Quebec. The principal features of the bill are: (1) the extension of the bank charters for a further period of ten years to July 1, 1964; (2) a provision, complementary to the proposed legislation in the National Housing Act, to permit these banks to lend money on insured mortgages; (3) an increase in the limit on the amount which the banks may lend on conventional mortgages; and (4) an increase in other investment and lending powers.
I am proposing that, for the first time since 1913, there should be a complete re-enactment of this act and a repeal of the former one. In doing so, this bill follows, wherever appropriate, like provisions in Bill No. 338 relating to the chartered banks, which has recently been given consideration by this house and sent to the banking and commerce committee for further study. Many of the administrative changes proposed in that bill have been incorporated in this one as well. I shall be pleased to give a more detailed explanation when the bill is before the house for second reading, and I propose, after it has been given second reading, to move that it be referred to the banking and commerce committee.


Mr. Macdonnell:: Mr. Chairman, in view of the fact that the minister is going to comment further on second reading and proposes to send this bill to the banking and commerce committee, I shall reserve my comments.
Resolution reported, read the second time and concurred in.
Mr. Abbott thereupon moved for leave to introduce Bill No. 419, respecting savings banks in the province of Quebec.
Motion agreed to and bill read the first time.


Douglas Charles Abbott: the second reading of Bill No. 419.
He said: This bill provides for the revision and re-enactment of the Quebec Savings Banks Act and for the extension of the charters of the two banks which operate under this act for a further ten-year period.
These banks, one in Montreal and the other in the city of Quebec, are each over 100 years old, having been founded in 1846 and 1848 respectively. They were later incorporated
Quebec Savings Banks Act by special acts and after confederation were granted charters in 1871 which were to continue in force for ten years. Since that time, it has been the custom to enact decennial extensions of the charters concurrent with those of the chartered banks. Their record has been one of steady progress under sound management and today their combined assets amount to more than $225 million.
The operations of the savings banks are in many ways similar to, and in other ways quite different from, those of the chartered banks. Hon. members will recall that changes were proposed in the method of computing and in the level of cash reserves for chartered banks, but I am not proposing similar changes in this bill. The movement of deposits and loans is far less volatile than in the chartered banks, and the present reserve basis has proved satisfactory for these institutions.
Loans on the security of mortgages have been, for many years, a type of investment in which similar institutions in other countries have invested funds. The act was amended to permit our savings banks to enter this field in 1948 and they have since become quite an important factor. At December 31 last they had outstanding almost $7 million in loans of this kind. At present these loans are limited to the equivalent of 10 per cent of a bank's deposit liabilities. In this bill, I am proposing that the limit on conventional mortgages be raised to 20 per cent of deposit liabilities and that, as proposed for the chartered banks, insured mortgage loans under the National Housing Act may be made without statutory limit.
There are also several provisions in this bill which alter and, in some cases, increase the investment and lending powers of these banks. I shall not deal with them in detail at this stage as the changes will be apparent to hon. members as they study the bill, and it will of course be considered in the banking and commerce committee.
As I informed the house a few moments ago, this bill constitutes the first complete revision since 1913 of the Quebec Savings Banks Act, and there have been included all the provisions of the proposed Bank Act which are appropriate to the operation of these savings banks. Some of the more important are provisions relating to: (1) the period in which the banks may carry on business; (2) a method of increasing the authorized capital and the manner in which the bank may dispose of the additional stock; (3) investment restrictions with respect to bank pension funds; and (4) destruction of old records.

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There are, of course, many consequential changes, but these do not require explanation at this time.
In conclusion, Mr. Speaker, I believe that the amendments proposed in this bill will benefit these two institutions, which have served their respective communities so well for more than a century, and will also benefit those who use their services.
As I have indicated, when the bill is given second reading I shall move that this bill be referred to the banking and commerce committee, where I am sure it will receive the careful study it deserves.


James MacKerras Macdonnell: Mr. Speaker, again, in view of the fact that the minister proposes to refer this bill to the banking and commerce committee, I shall reserve any comments I wish to make until that time.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.


[Stage Direction]
The house resumed, from Monday, April 5, consideration in committee of Bill No. 7, respecting the criminal law-Mr. Garson- Mr. Robinson (Simcoe East) in the chair.
The Chairman:: When the committee rose last evening we were considering group 4, and I shall now call clause 50. Shall the clause carry?
On clause 50-Assisting alien enemy to leave Canada.


Herbert Wilfred Herridge: I just want to ask a question or two about this clause. I have one or two recent letters here that deal with it. One, in dealing with section 50 (1) (a), has this to say. In order to save time I am not going to read the section.
The same phrase "engaged in hostilities, whether or not a state of war exists between Canada and the state whose forces they are" appears here. The same objections mentioned in regard to section 46 (1) (c) hold here. Further, we object to the shifting of the burden of proof: in this section the accused has to "establish" his lack of intent to assist the foreign state. Traditionally in our criminal law an accused has had the protection of a "presumption of innocence": here the presumption is rather of guilt.
I should like to have the minister's comment with regard to that criticism of the section.


Mr. Garson:: I did not catch my hon. friend's concluding sentence. My hon. friend said "I should like"; I did not hear what he would like.


William Alfred Robinson: Order.


Herbert Wilfred Herridge: The question that was raised was this:
Further we object to the shifting of the burden of proof:
I am talking about clause 50 (1) (a). The letter continues:
in this section the accused has to "establish" his lack of intent to assist the foreign state. Traditionally in our criminal law an accused has had the protection of a "presumption of innocence": here the presumption is rather of guilt.


Stuart Sinclair Garson: Mr. Chairman, I thought I had dealt with that question at some length yesterday in reply to the points that were raised by the hon. member for Winnipeg North Centre. I pointed out that the necessity for the accused's establishing what his intentions were did not arise until after the crown had first proved a prima facie case against him. I dissented from the view which the hon. member for Winnipeg North Centre had expressed that there was any shifting of the onus in this section. I said that what the section really did was to spell out that if the accused, although he might have committed some act from which it appeared that he had committed the offence, was able to show that his intent was not to commit it, that would constitute an effective defence.


[Stage Direction]
Clause agreed to.
On clause 57-Offences in relation to members of the R.C.M. Police.
Stanley Howard Knowles: I wonder whether the minister will offer a few comments on clause 57? I believe a few changes have been made from the wording as it was in section 84 of the former version of the code. One is-and I mention this with approval-that the word "wilfully" has been introduced. The only other change of significance seems to be in that the last three lines have been reduced to one line. I take it that the punishments to be meted out for an offence of this kind are on summary conviction and are covered elsewhere in the code. The main question I want to ask is this. Why is it that, in the case of clause 54, no proceedings shall be instituted without the consent of the Attorney General of Canada whereas there is no such proviso in the case of clause 57? Perhaps the minister could indicate not only why that proviso is in one clause and not in the other but could also tell us what is the effect of having that proviso in or out?


Stuart Sinclair Garson: The Royal Canadian Mounted Police, as an institution of government, come under the direction of the Attorney General of Canada. In the ordinary routine of laying a charge under this section I would think the charge would presumably be laid on the

recommendation of the commissioner of the Royal Canadian Mounted Police, which recommendation would be made to his minister who would be the Attorney General of Canada. That would not be true in section 54.


Stanley Howard Knowles: Mr. Chairman, that opens up another question. Why then is the consent of the Minister of National Defence not required in the case of clause 54? I throw out that question to the minister. I still ask him if he can give an answer to my other question, even though he may think it does not now apply: what is the legal significance, in a case like that of clause 54, of having the proviso that the consent of the Attorney General of Canada must be obtained?


Stuart Sinclair Garson: The legal significance is that before proceedings can be instituted, perhaps irresponsibly, the case has come to the personal attention of the Attorney General of Canada who, being a lawyer, is able to examine the facts upon which it is alleged that the proceedings can be instituted in order to make sure that the facts support the proposed charges and that no person will be put to the inconvenience of defending such proceedings unless the sufficiency of the evidence has been passed upon by the Attorney General of Canada.


[Stage Direction]
Clause agreed to.
On clause 60-Sedition.
Stanley Howard Knowles: Clause 60 is the first of three clauses dealing with the subject of sedition, seditious libel and seditious conspiracy. We bordered on this subject yesterday when we were dealing with the subject of treason although, as I understand it, there is a distinct difference. The hon. member for Fort William yesterday spoke with satisfaction of the fact that soon after the Liberals came to power in 1935 action was taken to delete the former section 98 from the Criminal Code. Many of us were indeed pleased that that action was at long last taken in 1936. I do not have yesterday's Hansard in front of me in order to make a direct reference to it but, as 1 recall it, the hon. member for Fort William suggested that section 98 had been obliterated completely and I offered the interjection "Not entirely". I rise to explain my interjection and to go on from there.
If one looks at chapter 29 of the statutes of 1936, which was an act to amend the Criminal Code, he will find that section 1 did what the hon. member for Fort William said was done. It repealed in its entirety section 98 of the Criminal Code, chapter 36 of the Revised Statutes of Canada, 1927. Accordingly, these volumes that some of us have which purport to be office consolidations of the Criminal Code as it now exists have a blank between
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sections 97 and 99. There is no section 98 in the code that is at present in force. However, if one looks further into the same chapter 29 of the statutes of 1936 which repealed section 98 of the Criminal Code, he will find that section 4 of that statute added a new subsection 4 to section 133 of the code. Section 133 of the code is the section dealing with sedition. The point I wish to make-indeed the point I had in mind when I made my reply to the hon. member for Fort William last night-is that some of the words that were in the former section 98 were retained in the code by putting them in subsection 4 of section 133. I refer in particular to such words as "who teaches or advocates". I want to make it quite clear that as I read subsection 4 of section 133 of the code as it now stands-


Mr. Philpott:: Which code are you referring, to, the new one or the old one?


Stanley Howard Knowles: The old one at that moment. 1-or as I read clause 60 of the bill now before us, it is difficult to take exception to any of the words in either instance, although I do take exception to certain words in clause 62. Nevertheless the fact is that under words like those in clause 60-and these are some of the words that were in the former section 98-some things have happened in this country which some of us cannot forget. I made a passing reference yesterday to what happened in Winnipeg in 1919, and the hon. member for Fort William also made reference-to the events in Winnipeg in that year. I have no intention of recounting the events of the general strike that took place in my city in that year, but I do remind members of the House of Commons that on that occasion some nine or ten citizens of my city of Winnipeg were charged under the Criminal Code with various offences, in most cases the charge being seditious conspiracy.
I referred yesterday to the case of the former leader of this group, who was the former member for the constituency I have-the honour to represent, the late J. S. Woods-worth, who was charged under the Criminal Code of Canada with seditious conspiracy. One of the several counts laid against him in that charge was that he had quoted these words in certain articles which he had written:
Woe unto them that decree unrighteous decrees, and that write grievousness which they have prescribed;
To turn aside the needy from judgment, and to take away the right from the poor of my people, that widows may be their prey, and that they may rob the fatherless! . . .
And they shall build houses, and inhabit them; and they shall plant vineyards, and eat the fruit of them.

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They shall not build, and another inhabit; they shall not plant, and another eat: for as the days of a tree are the days of my people, and mine elect shall long enjoy the work of their hands.
These passages from the book of Isaiah actually got into print in an article over the name of J. S. Woodsworth and, believe it or not, they were included amongst the counts laid against him when he was charged with seditious conspiracy. There was a fifth count against him which had to do with certain articles that had got into type but which had never reached print. They have of course reached print since then. In fact I should like to read at the moment from a book on the life of J. S. Woodsworth by his daughter, Grace Maclnnis.
Count five, "Alas! the poor alien", was one of those articles seized in type. An indication of its nature can be had from its opening and closing sentences. It began: "When is an alien not an alien? Answer:	When he is a rich man, a scabherder, or a scab." And it ended: "If after a fair trial undesirable aliens are found, let them be deported. Meanwhile, how about deporting the profiteers? Everyone knows they are undesirable."
There was another count, count six, containing a quotation from the Right Hon. Arthur Henderson, later a minister in the British cabinet. Entitled, "The British Way", it outlined the platform of the British Labour party together with the comments of Mr. Woodsworth, including the following;
This is the British way, and remember! It is absolutely constitutional!
I should say in passing that the reference in some of these quotations to deportation was of course in connection with a certain amendment to the Immigration Act which was passed rather hurriedly during the heat of the Winnipeg strike. I went to the library yesterday to refresh my memory on that part of the story, with which I was already quite familiar, and despite the fact that I have known the story for many years it did seem rather strange to look at just two pages of the printed Hansard tor June 6, 1919, and to discover that within the compass of those two pages one finds the record of the introduction of a bill which had been passed in the other place, and which was given first reading, second reading, consideration in committee of the whole, third reading and was passed, all, as I say, within the compass of two pages of Hansard for June 6, 1919.
Hon. members may be interested in knowing what the very next item was immediately after that bill had been given its three readings in such a short space of time. The next item recorded in that Hansard was that there was a messenger at the door, namely, the Gentleman Usher of the Black Rod. Parliament was in high gear. The bill had been passed in the Senate that same day, before

it came here. It was passed here in less than an hour and the governor general or his deputy was ready to give approval to that amendment to the Immigration Act. Indeed, it was an amendment to amendments that had already been made at that session.
Such was the speed with which parliament acted on that occasion towards people like J. S. Woodsworth and A. A. Heaps, both of whom I mentioned yesterday. Eight others were involved, including William Ivens, John Queen, George Armstrong, R. E. Bray, Robert Russell, W. A. Pritchard, R. J. Johns and F. J. Dixon. These are not men, Mr. Chairman, who can be thought of any longer in this country as guilty of sedition, although a number of them spent time in jail, several of them in Stony Mountain penitentiary or at what was known as a prison farm.
As the Secretary of State pointed out yesterday, the actual case against Mr. Woodsworth was never brought to trial. The reason for that was that the charge against F. J. Dixon was very similar to the one against J. S. Woodsworth and the case of F. J. Dixon was called first. He defended himself in an address to the jury which is one of the masterpieces of the history of our area, and he was acquitted. As a result of his being acquitted, Mr. Woodsworth was informed a few days later that there was a stay of proceedings so far as his case was concerned and that he need not appear until he was advised. Well, he never was so advised, but that stay of proceedings stood for the rest of his life.
I have mentioned the case of William Ivens, one of the few of this group who is still alive. He is living in the city of Winnipeg and is still active and interested in the affairs of this nation. Some months ago I had occasion to make a close study of Mr. Ivens' life in connection with an address I was asked to give. Indeed, it was at a banquet that we tendered him as a testimonial at the time of his seventy-fifth birthday.
I was quite interested in some of the material that is on record, and this relates very substantially to this whole question of what is sedition. My whole point is that we have to distinguish between those who are definitely against the community as a whole, definitely against society, definitely against Canada, and those who are merely seeking or advocating reform. As I suggested yesterday, some of those who have been adjudged criminals by the laws of the land have turned out to be the nation's real patriots.
Just before the incidents of the strike period in Winnipeg in 1919 it appears that Mr. Ivens, who was writing in a publication known as the Western Labour News, said

something rather critical of the Winnipeg Free Press. That goes on all the time and to those of us who live in Winnipeg that sounds like today rather than thirty-five years ago. At any rate, shortly after that the chief press censor for Canada-I need not bother to name him now except to say he was a civil servant-wrote the editor of the Free Press and said something like this: "I note in the issue of the Western Labour News of January 31, 1919, a bitter and unwarranted attack on the Free Press. You might be interested in knowing the record of this man Ivens as revealed by an examination of his writings made at this office."
Then, after using a few epithets and adjectives that were not altogether complimentary, and in my view were quite false and unwarranted, the chief press censor set out to give to the editor of the Winnipeg Free Press some of the quotations from Mr. Ivens' writings which were objectionable, which were seditious, which were terrible. I am going to give one or two of them.


Stuart Sinclair Garson: Did he say "seditious"?


Stanley Howard Knowles: He left that to the Free Press. I am sorry I have not the full text of the letter, and I would not want to make that assertion without checking back on it, but certainly that was the inference. This is one of those objectionable quotations:
War will end not by war and not by the professions of the diplomats while war is in progress, but by the establishment of justice on the earth.
Imagine that as an objectionable statement! I can imagine the Secretary of State for External Affairs saying practically the same thing today. He might use slightly different words but he would express those same sentiments.
Here is another quotation:
The imperative call for the statesmen of the world to adjure and utterly repudiate their imperialistic secret treaties and to restate their war aims in conformity with their claims of a war for justice, right and democracy is resounding across the world today.
As I say, it was quotations of that sort that the chief press censor of Canada drew to the attention of the Free Press so that they might answer "this man Ivens". I must digress for a moment to say that I have not been able to find anything in the files of the Free Press during the period following the writing of that letter to indicate they made use of the information conveyed to them by the chief press censor for Canada. By the way, I should just complete briefly my reference to William Ivens by pointing he was one of those who, during the strike of 1919, was charged with seditious conspiracy and upon being convicted was sentenced to jaiL He 83276-234
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came out of jail to take his place in the legislature in Manitoba, having been elected to that legislature while he was still in jail. The same thing happened in the case of John Queen and George Armstrong, if not in the case of others as well.
As a matter of fact, the Minister of Justice will recall being associated with these men as a member of the legislature of Manitoba during the time when he and they were there together. I am sure he will agree with me that they were not seditious characters. They may have given him a lot of trouble-


Stuart Sinclair Garson: As a matter of fact, one of them, the Hon. S. J. Farmer, was my colleague in the Manitoba cabinet for two or three years.


Stanley Howard Knowles: I do not wish to spoil the minister's story, but the gentleman to whom he refers was not put in jail.


Stuart Sinclair Garson: No, that is right.


Stanley Howard Knowles: He was one of the group who did not happen to have that distinction conferred upon him. John Queen, who was one of those who spent time in jail, was not only in the legislature along with the Minister of Justice when he was there, but for some eight or nine years was mayor of the city of Winnipeg, as was S. J. Farmer shortly after the strike.
It is very easy to talk about these things in retrospect and to say that they will not happen again. I am sure that the people of Winnipeg, prior to these incidents, would not have imagined that these men would be charged with seditious conspiracy and would spend time in jail. It did happen, and some of this language is still a part of the code. I want to say quite frankly that I find it difficult to quarrel with most of the precise wording in the clause that is before us, but I do not like the use of those words "teaches and advocates," because they were in section 98 and have been carried over into this clause 60. I do make a plea for an understanding of this whole situation, and for the realization that we have to distinguish between treachery to one's country and the attempt to win reform, even radical reform. In other words, sedition must be recognized as treachery against the country as a whole and not just opposition to the government that happens to be in power.


Stuart Sinclair Garson: Would the hon. gentleman
permit a question? In the remarks he has made within the last two or three sentences, has the hon. member taken into account the provisions of clause 61 of the bill?

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Stanley Howard Knowles: Yes, and that is one of the reasons why I confess that I And it difficult to pinpoint many words in these clauses against which one could complain, although I am against the length of the sentence provided in clause 62. As the minister says, there is a saving feature in clause 61, which purports to make it clear that one can point out errors or defects in various governmental bodies. With the indication we have of the errors and defects across the way, we would have to claim that right whether or not it was accorded to us.
I ask, Mr. Chairman, that this country not forget the incidents to which I have been referring, and that we lean over backwards to keep it clear that opposition to the government that happens to be in power is not treachery or sedition, but rather that there is a place and a need for the reformer, for the real patriot, for the real citizen of the country who sets out to make things better than they are.


Stuart Sinclair Garson: Now that my hon. friend has finished his remarks, I rise to a point of order. I would suggest that what we are dealing with here is clauses 60 and 61 of the present bill, which have nothing to do with section 98 that was formerly in the Criminal Code. I am afraid that if we get off into a debate of section 98, which could be such a fruitful subject of discussion, we may talk for a long while and not be on the point at all.


Stanley Howard Knowles: The minister will admit that some of the wording in the former section 98 was, in 1936, transposed to section 133 and is now in clause 60.


Stuart Sinclair Garson: I would admit that, but I do not think it has any relevancy to what we are discussing now, because if my hon. friend would look at the case of Rex v. Boucher, decided in 1951, he would agree that most of the points he has been making this afternoon are obsolete.


Mr. Knight:: I should like to ask the minister one brief question on clause 60. I am interested in a definition of sedition as the minister understands it. If the minister will look at clause 60 (1) he will see the peculiar manner in which the definition is stated. It says:
Seditious words are words that express a seditious intention.
And then:
A seditious libel is a libel that expresses a seditious intention.
Again we have sedition defined in terms of sedition. I wonder if for the record the minister could give a definition of just what sedition is, in terms of clauses 60, 61 and 62?


Stuart Sinclair Garson: If my hon. friend will look at clause 60 (4) I think he will find on the record the definition he is seeking.


Mr. Winch:: I was going to ask the same question about clause 60 (4). It says, "without limiting the generality of the meaning of the expression 'seditious intention'." And so on. In other words, we do have power under subclauses 1 and 2, but it is worded in such a way that it says that black is black and white is white. That is exactly what it says.


An hon. Member:: What is wrong with that?


Harold Edward Winch: Well, it certainly does not give a description of the meaning of sedition. It just does not make sense.


Mr. Ellis:: On that point would the minister give us the significance of the words "without limiting the generality of the meaning of the expression 'seditious intention'." In other words, in clause 60 (4) we find what, indirectly, can be described as a definition of sedition as a conspiracy to carry out a seditious intention, or to teach or advocate the overthrow of the government. I would ask the minister to tell us why it is necessary to have written in this section the words, "without limiting the generality of the meaning of the expression 'seditious intention'."


Stuart Sinclair Garson: Well, perhaps I had better attempt to clear up these doubts in the minds of my hon. friends by giving them an example of a case where the words "seditious intention", that are defined in clause 60 (4), were considered. That was the case to which I have already referred. It is a decision of the Supreme Court of Canada in the case of Boucher v. the King, 1951, S.C.R. 265. The main point dealt with in this case was as to whether "seditious intention" included an intention to incite to acts of violence or public disorder in all cases. Excerpts which express the views of the members of the court I shall now quote.
In this instance, the opinion of Chief Justice Rinfret was as follows:
The advocating of force is not the only instance in which an accused could be found guilty of a seditious intention.
That is a minority judgment, as my hon. friend will see as I go along.
Then, this was the opinion of Mr. Justice Kerwin:
The intention on the part of the accused which is necessary to constitute seditious libel must be to incite the people to violence against constituted authority or to create a public disturbance or disorder against such authority. An intention to bring the administration of justice into hatred or contempt or exert disaffection against it is not seditious unless there is also the intention to incite people to violence against it.

Mr. Justice Taschereau stated the following:
Upon application a new hearing was granted and heard by the full court, and in view of the opinions now expressed by the majority, it is settled, I think, that generally speaking, the writings complained of must, in addition to being calculated to promote feelings of ill-will and hostility between different classes of subjects, be intended to produce disturbance or resistance to the lawfully constituted authority. But as pointed out by my brother Cartwright, there is another definition of seditious intention which I think must be accepted. I agree with him that an intention to bring the administration of justice into hatred or contempt or to excite disaffection against it, is a seditious intention.
And then, Mr. Justice Rand:
The test is not either the truth of the language or the innocence of the motive with which he publishes it. The test is this: Was the language used calculated, or was it not, to promote public disorder or physical force.
As Mr. Justice Rand indicates, the words in which he specifies the test are taken from the judgment of a British judge, Mr. Justice Coleridge, in the British case of Rex v. Aldred.
Then, Mr. Justice Kellock expressed the following:
It is noteworthy that the draft code of the royal commissioners was not accepted by parliament, and in my opinion, incitement to violence toward constituted authority, that is, government in the broad sense, or resistance having the same object, is, upon the authorities, a necessary ingredient of the intention.
In my opinion, to render the intention seditious, there must be an intention to incite to violence or resistance or defiance for the purpose of disturbing constituted authority. I do not think there is any basis in the authorities for defining the crime on any lower plane.
At the present time, therefore, in England, matter of the character here in question, if made the subject of criminal process at all, appears to be treated as contempt of court, rather than as seditious libel. Such matters may, of course, be regarded from the standpoint of seditious libel if intention of the necessary character be established.
Then, Mr. Justice Estey:
I would clarify my previous reasons by adding that a seditious intention must be founded upon evidence of incitement to violence, public disorder or unlawful conduct, directed against His Majesty or the institutions of the government. With great respect, I am of opinion that in all cases the intention to incite violence or public disorder or unlawful conduct against His Majesty or an institution of the state is essential.
Then, Mr. Justice Locke:
The question remains whether it is accurate to say that "a seditious intention is an intention to excite disaffection against the administration of justice" as stated by Stephen.
The great English commentator:
Only if disaffection be construed as meaning resistance to or disobedience of the law or the authority of the state is it accurate, in my opinion.
I concur in the opinion by my brother Kellock that that portion of Stephen's definition which declares that "the intention to promote feelings of 83276-234J
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ill-will and hostility between different classes of such subjects" is a seditious intention without more, is inadequate as a statement of the common law and I agree with his conclusion upon this aspect of the matter.
Then Mr. Justice Cartwright:
The reasons of my brother Kellock bring me to the conclusion that the definition quoted above ought not to be accepted without qualification, and that before a writing can be held to disclose a seditious intention by reason of being calculated to promote feelings of ill-will and hostility between different classes of His Majesty's subjects it must further appear that the intended, or material and probable, consequences of such promotion of ill-will and hostility is to produce disturbance or resistance to the authority of lawfully constituted government.
In my opinion at common law an intention to bring into hatred or contempt or to create disaffection against the administration of justice is a seditious intention, and I do not find anything in the provisions of the Criminal Code to negative this view.
I think it will be seen from these judgments that there is a clear majority of judges on the Supreme Court of Canada who hold that incitement to violence is a necessary ingredient of the offence of sedition. It might perhaps illuminate the matter a little bit further if I were to quote at further length from the judgment of Mr. Justice Rand, which I will now do:
The definition of seditious intention as formulated by Stephen, summarised, is, (1) to bring into hatred or contempt, or to excite disaffection against, the King or the government and constitution of the United Kingdom, or either house of parliament, or the administration of justice; or (2) to excite the King's subjects to attempt, otherwise than by lawful means, the alteration of any matter in church or state by law established; or (3) to incite persons to commit any crime in general disturbance of the peace; or (4) to raise discontent or disaffection amongst His Majesty's subjects; or (5) to promote feelings of ill-will and hostility between different classes of such subjects. The only items of this definition that could be drawn into question here are that relating to the administration of justice in (1) and those of (4) and (5). It was the latter which were brought most prominently to the notice of the jury, and it is with an examination of what in these days their language must be taken to mean that I will chiefly concern myself.
There is no modern authority which holds that the mere effect of tending to create discontent or disaffection among His Majesty's subjects or ill-will or hostility between groups of them, but not tending to issue in illegal conduct, constitutes the crime, and this for obvious reasons. Freedom in thought and speech and disagreement in ideas and beliefs, on every conceivable subject, are of the essence of our life. The clash of critical discussion on political, social and religious subjects has too deeply become the stuff of daily experience to suggest that mere ill-will as a product of controversy can strike down the latter with illegality. A superficial examination of the word shows its insufficiency: what is the degree necessary to criminality? Can it ever, as mere subjective condition, be so? Controversial fury is aroused constantly by differences in abstract conceptions; heresy in some fields is again a mortal sin; there can be fanatical Puritanism in ideas as well as in morals; but our compact of free society accepts and absorbs these differences and they are exercised at large within

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the framework of freedom and order on broader and deeper uniformities as bases of social stability. Similarly in discontent, disaffection and hostility: as subjective incidents of controversy, they and the ideas which arouse them are part of our living which ultimately serve us in stimulation, in the clarification of thought and, as we believe, in the search for the constitution and truth of things generally.


Herbert Wilfred Herridge: I want to thank the minister for putting that information on the record. It will certainly be helpful to laymen like ourselves who have not a very clear understanding of some of these legal terms; but I rise to say that I entirely support the approach to this clause of the hon. member for Winnipeg North Centre. As a matter of fact, Mr. Chairman, I often find that the hon. member for Winnipeg North Centre can express my thoughts better than I can myself. I should like to ask the minister this question. Formerly the penalty for sedition was two years, and then under certain amendments In 1951 the penalty was increased to seven years. In this bill it is increased to fourteen years. Will the minister tell the committee why there is such a sharp increase in the punishment for the offence which has always been somewhat vague and difficult to define? It seems to me to be very harsh and severe.


Stuart Sinclair Garson: In the case of this clause, as in the case of some other clauses that we have examined of somewhat similar character, the recommendations of the royal commission with regard to the penalty here are a reflection of the hardening of public opinion that has been going on for some time, with reference to the seriousness of the offence of genuine sedition when it arises, and I think myself that this hardening is probably quite soundly based when we look about us and see so many countries, happily not on this continent, in which the overthrow of free government was accomplished by seditious methods. In the light of current history any person who is a realist at all can hardly quarrel with a penalty of fourteen years for sedition as interpreted in this judgment which I have just read, which indicates that an essential ingredient is the actual incitement of force and violence against the constituted government. This offence of sedition we are discussing as interpreted by the courts does not infringe upon the freedom of speech to which we have been accustomed in this country for a long time. But where you have people in our midst, although I am happy to say that we have not had very many cases of this kind, as a matter of fact-


Stanley Howard Knowles: How many have there been?


Stuart Sinclair Garson: Well, I do not think I can answer that question offhand, but certainly not very many. The group of men in Winnipeg of which my hon. friend spoke earlier this afternoon was by far the largest single group at any one period of time that we have had perhaps in the whole of Canadian history; and since those Winnipeg trials I do not think there has been any similar group anywhere in Canada. But if we were confronted with a genuine, determined and spirited case of sedition embracing the intention to overthrow the state by violence, who is to say that it would be impossible that the circumstances of such a case could not be sufficiently heinous to warrant a maximum penalty of fourteen years? I think that is the test. It does not by any means follow in any of these cases that the judge is going to impose the maximum penalty. The maximum penalty is in the section to give the judge scope to make the punishment fit the crime in these cases where the circumstances are sufficiently heinous.


Harold Edward Winch: I, too, appreciate the endeavour of the minister to give us a studied interpretation of the exact meaning of the words "sedition" and "seditious intent." I look forward tomorrow to being able to make a real study of just what the minister did say and the quotations that he put on Hansard. But I have tried to follow the remarks of the minister very carefully, and as a result of doing that I am now distinctly worried about this clause and the meaning or the interpretation of sedition and seditious intent.
I agree wholeheartedly with the minister when he says that if we have a situation where there can be a conspiracy or an intent in this country to overthrow the government by violence, then we need something like this, and that should be the interpretation, and there should be a penalty to fit the crime. But I want to take the minister back, if I can remember this correctly, to all the statements which he read from learned judges. They did not just deal with the overthrow of the government or constituted authority by violence. I can only just take it as I could get it down, but it did amount to this: that there can be a question of seditious intent if one takes the action by speech or by writing; might cause disaffection; that could give rise to disturbance; that could give rise to discontent amongst the subjects; and that could give rise to hostility. These were the words used and quoted. But I would point out that that happens almost every day in labour circles throughout the length and breadth of the Dominion of Canada, because

you give rise to discontent by opposing legislation, and perhaps if you speak of strikes, or discuss or write about something which may cause a disturbance you are definitely giving rise to a situation which may result in hostility between the government and the subjects, and between the employer and the employee.
I believe I know what is in the mind of the minister in regard to clause 61 and with reference to the judgment he quoted. I believe it was Chief Justice Rand who pointed out that these things by themselves in a country such as this, where you have free speech and the right to express your thoughts and views, could not be taken as being seditious unless, as I believe the minister added, they were of such a nature as to actually involve breaking the law. I have not the minister's exact words but I believe what he said was to that effect.
Now, Mr. Chairman, it also happens on occasion that these things are discussed in labour circles, and if that is a correct interpretation of sedition then I know quite a number of well-respected citizens in British Columbia who could be considered guilty of sedition because they are absolutely opposed to a certain act which was introduced in British Columbia. They are doing their utmost to oppose that act and to arouse hostility toward it, and have even gone to the extent of suggesting the calling of a general strike. A general strike is against the law and one could not possibly be held without breaking that law, and therefore those who create hostility and disaffection by opposing the government because of the introduction of certain labour legislation and call for a general strike would be, according to the remarks of the minister, not just guilty of breaking the law but also guilty of seditious intent. That is a very serious thing, but it is the only interpretation we can place upon the remarks made by the minister.


Stuart Sinclair Garson: The only thing I can suggest as regards my hon. friend's remarks is that he has misinterpreted mine.


Mr. Maclnnis:: Mr. Chairman, in discussing this group of clauses what I have to say has largely to do with the question of punishment and I believe no better case against the extension of the term of imprisonment could be made than is to be found in the minister's own remarks. I cannot remember when the last case of this sort occurred but I believe it was about 35 years ago. There was a prominent case then-


Stuart Sinclair Garson: The case I was quoting from took place in 1951.
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Donald MacInnis: I am aware of that, but as far as other cases are concerned, and since 1951, we have increased the penalty from two to seven years in spite of the fact that nothing had happened in the 30 years before that time. We increased the sentence by 200 to 300 per cent. That, to my mind, would indicate that our people were going to the dogs. We are going to double it again. I wonder what the people who proposed changes in this legislation were thinking. What country did they think they were legislating for? I have been going around this part of the world for some considerable time and I associate with people who sometimes have reason to be dissatisfied with things as they are, and I am quite prepared to tell the minister and the committee that the thinking of the people I have in mind is far more constructive now than it was 25 or 30 years ago. There is far less danger of their doing anything which will be contrary to the law or contrary to the well-being of Canada.
I quite understand that there are a few people in this country who might be willing, if they had the opportunity, to upset things by an appeal to force and violence, but even then the influence of such people is diminishing every day. I believe in the 1945 election the Labour-Progressive candidate who opposed me had something over 4,000 votes. In the 1949 election in the same constituency the Labour-Progressive candidate received about 1,300 votes. In the recent election, in 1953, I am not quite certain but I believe their candidate received around 500 votes, and it certainly was not because of the candidate herself. She was a most attractive person outside of her politics. However, there you have an example in which the votes they received dropped from over 4,000 to about 500. The same thing has happened as regards their influence, although they still have some influence in the trade union movement. But the trade union movement is well able to handle that situation and I feel it is an insult to Canada and the people of Canada to increase a penalty in this case when no crimes have been committed and when the reason for that increase is supposed to be to prevent crimes of this kind. It is perfectly ridiculous and in view of the reasonableness the minister has shown throughout the long discussion we have had on this bill in the house and in committee I am surprised that he should hesitate for a moment, if not to return the penalty to what it was before 1951, at least to restore it to what it was in 1951.


Stanley Howard Knowles: Is the minister not moved by the appeal made by the hon. member for Vancouver-Kingsway, and is he not prepared

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to move an amendment, or have the Minister of Citizenship and Immigration move an amendment, to restore the penalty to a term not greater than was set in 1951?


Stuart Sinclair Garson: If any hon. member in this committee can move me I am sure it is the hon. member for Vancouver-Kingsway. But I would point out that this recommendation came from a royal commission. It went into the other place on two separate occasions and it was debated there and in its banking and commerce committee. It came back into the House of Commons and was considered here and before the special committee of the House of Commons at the last session of parliament. If my memory serves I think I am right in saying that until the exception was taken here this afternoon no person has as yet, in the five years that this bill has been extant, raised the question that this penalty was excessive. Under our laws of sedition that are not in any sense harsh laws and that only apply to genuine sedition where that is proven, I must say I do not think that a maximum penalty of fourteen years is out of the way in the world in which we live today. When I say that I admit, in order to be perfectly candid- and in this perhaps I agree with the hon. member for Vancouver-Kingsway-that this section may not be invoked very often. I hope it will never be invoked. But when it is invoked for an offence under the language that we have here in this bill it will be invoked for quite a serious offence for which it seems to me that the penalty indicated is not excessive.


Mr. Fulion:: May I suggest to the committee and to my friends of the C.C.F., including the hon. member for Vancouver-Kingsway- for whom in general I have great admiration although not always for his judgment-that it seems to me that they are missing out one important point. They seem to be looking at the section-and this was my feeling in connection with the discussion of yesterday evening-and looking at the penalty it provides, and then translating their natural sympathy-the natural sympathy which we all have for a person who may be unjustly accused-into an automatic assumption that such a person will be convicted. I think the point that my hon. friends miss is that these penalties will not be imposed unless the person is convicted. If therefore such a person has not been guilty of the offence described here, these penalties are not going to be exercised against him.
I am not familiar with all the history back of the period to which my friend the hon. member for Winnipeg North Centre was

referring. It may well have been that the prosecution was ill-conceived and improperly laid. I am not justifying or attempting to justify anything that may have been unjustifiable there. It is a great mistake and almost a miscarriage of justice to launch prosecutions under those circumstances. But, as I understand it, the fact is that in the test case the accused was found not guilty. Therefore the penalty was not imposed.
Surely our attitude should be this: What is the crime which we are seeking to cover and for which we are providing a penalty? Is that penalty commensurate with the seriousness of the crime that is under consideration? If it is, then that penalty should stand, because even although it may be a severe penalty it could only follow for an extremely serious crime and will not be imposed against persons who are innocent of that crime. I would say that for the man who is guilty of sedition, uttering seditious words, seditious libel or taking part in a seditious conspiracy within the meaning of those offences, the maximum penalty of fourteen years is not too much.


Stanley Howard Knowles: I suggest to the hon. member for Kamloops that he had better be careful. He may be inviting that penalty for himself one of these days.


Edmund Davie Fulton: I do not think that I shall ever be guilty of sedition, seditious libel or seditious conspiracy. If I were, then I would deserve the penalty.


Stanley Howard Knowles: Some of the things my hon. friend might say might be thought to be that by other people.


Edmund Davie Fulton: Yes; but they have to be proved to be that in court.


Stanley Howard Knowles: The point I really rose to deal with was something which the minister raised. A moment ago he gave an answer which, if I may say so with respect, he has given us a good many times, namely that this has been gone over through all the various stages and that this point has not yet been raised. Even if it has not been raised, that is the purpose of this consideration, namely to check on the various clauses of this bill before it is reported to the house for third reading.
May I also remind the Minister of Justice that, with respect to the clause having to do with treason, he pointed out yesterday that, notwithstanding all the consideration that had been given to the treason clause and the offences and penalties under it, the matter was considered by a special committee of the cabinet. He even boasted-and I do not blame him for so doing-that there were in

the cabinet people who were more exercised about some parts of the treason section than were some persons outside of the cabinet; and hence yesterday he proposed an amendment reducing the sentence in the case of that section of the treason clause that deals with communicating information where that happens in peacetime. Even if no previous consideration had been given to this point, I suggest that it might well be considered by the cabinet, as was done in connection with treason.
However, I am afraid that I cannot accept the assertion that the point has not been raised during the past five years. I have not all the documents at my desk but from amongst the many papers I have here I was able to draw the submission which the Canadian Congress of Labour made to the special committee of the House of Commons on Bill No. 93, under date of February 17, 1953. On page 2 of this brief I read the following:
Section 62 (Seditious Offences).
This is the present section 134, with a much higher penalty. Down to 1951, the maximum was two years; then it became seven; now it is to be fourteen.
Why? It may be arguable that the 1951 increase was necessary because of the vast change in world conditions since 1927, or even since the repeal of the old section 98. Even that is questionable.
I point out that these people not only raised the question but cast doubts upon the increase. I continue reading from the brief:
But what drastic change in the situation in the last year and a half makes it necessary to double the maximum penalty now?
Those are almost the very words used by the hon. member for Vancouver-Kingsway a few moments ago.
We are not, of course, suggesting that sedition is a good thing, or even a trifling offence.
That is what the hon. member for Kamloops just pointed out.
But presumably the government's "object all sublime" is "to make the punishment fit the crime". Does this do it?
It runs in my mind that there have been editorials on this matter and that there have been other briefs that have raised the very same point. I therefore submit, Mr. Chairman, that it was not quite correct for the minister to say that this question had never been raised. On the basis of the evidence I have given it certainly was raised before the House of Commons committee by the delegation representing the Canadian Congress of Labour.


Donald MacInnis: Mr. Chairman, I imagine that while we are discussing the three sections, it would not be in order to move an amendment to section 62 until that section is called. I am going to move an amendment.
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I was going to say that the trouble is that, when questions of this kind arise, they usually arise in times when the minds of people are troubled. In the case that we have been referred to by the hon. member for Winnipeg North Centre in 1919, people were in a state of panic. In my opinion the most seditious thing that was said during that whole affair was not said by any of those who were arrested but was said by the then solicitor general, I think it was; in any case, it was Arthur Meighen. He sent a wire to a lawyer in Winnipeg to have these men on the high seas within twenty-four hours and that the legality of the matter would be gone into afterwards. If there was ever anything that was seditious-and a seditious conspiracy at that-it seems to me that was it, coming from the fountainhead of government. Therefore you can see the sort of atmosphere in which cases of that kind are likely to arise. It is then very difficult for counsel, judge or jury to act reasonably and as they normally would.


Mr. Barnett:: I have been listening to this discussion with some interest. The particular point I want to make is along a somewhat different line from that which has just been followed, but I imagine if the minister has any further reply to make on the question of penalty he will be prepared to do so. I must confess that the thought that has been running through my mind is that the word "sedition" is a nasty one. I know perfectly well that if I go back home among my fellow workers and use the word "sedition" it conjures up a lot of things in their minds and in the mind of other ordinary citizens of this country. Those of us who are fortunate enough to be able to sit here as members of this committee have had the benefit of the explanations that the Minister of Justice has offered with respect to what is involved in sedition. But I think what we have to realize is that most of the people of Canada are not going to have the benefit of that kind of explanation.
In looking at this section I first of all read the words in subsection 1, namely:
Seditious words are words that express a seditious intention.
I must say that my mind was not greatly illuminated. I then looked through all the dictionaries I could find in the library to find out what are seditious words and what is a seditious intention. Not a great many citizens of Canada are going to take the trouble to do that. I must say that there come to my mind the words that the Minister of Justice uttered earlier with respect to the revision of the Criminal Code when he said that it was the desire and intention to produce a revised Criminal Code which would

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be more readily understandable by the ordinary citizens of Canada. A great many sections of the bill set out that for the purposes of the particular section the offence shall be (a), (b), (c), (d) and (e). From my point of view the greatest weakness of this section is that the expression "seditious intention" is not thus defined.
It is something which the ordinary person cannot understand. It is something that can be used by those who wish to mislead the ordinary citizens of Canada. It gives the right and opportunity to do so. I do not know whether other members of the house are as aware as I am of the all-out campaign being conducted at the present time by what are, to my way of thinking, certain subversive interests in connection with the revision of the Criminal Code. As far as I am concerned, if we leave the section the way it is we simply are handing these people ammunition.
I know that if I went home and tried to explain to the working people of my constituency that this is an innocuous section, that it can only be invoked in case of an allout conspiracy to overthrow our government, I would have great difficulty in making them realize that is what is intended. Actually I am not at all convinced myself that such an interpretation of the section would hold water as the section stands at the present time. I think that is the first thing that should be changed. "Seditious intention" should be spelled out as meaning such and such and such and such and such and such. From the very use of the phrase in subsection 4, "without limiting the generality of the meaning of the expression 'seditious intention'," it does not need much imagination to see how a spell-binding communist orator-and they have them-could take that particular phrase and mislead and disturb the ordinary people of the country. That is what they are trying to do and that is what they are going to continue to do if we leave the section as it stands.
If it could be clearly stated that the only way in which the offence of sedition could be committed would be when it involved an offence against the state, I must say that much of the misunderstanding and fears existing in the minds of the working people of Canada would be allayed. But from listening to the minister I still have the understanding that under certain circumstances, in times of stress in labour disputes, this section might very well be invoked again as it has been in the past. If that is the case, then I suggest that the section tends to foment the very conditions which most of us are anxious to prevent. I feel the section should be so

worded that by no stretch of the imagination could it be considered to apply in the ordinary dealings between the employing class and the working class in Canada. If that were done, we would have done a good deal to strengthen democracy in Canada.
From my personal knowledge and associations, and partly as a result of my own thinking, I know that there is a deep-rooted latent fear in the minds of the working people of Canada that at some time in the future those things are going to be done again which have been done in the past, and that as the result of the ill-advised disposition of police forces or other agencies of so-called law and order wrongful acts are going to be committed by the so-called lawfully constituted authorities which will result in counter-measures on the part of the working people, with men being arrested and convicted under these sections.
I have been looking at the provision with regard to the administration of justice in Canada and wondering whether not so long ago I was not in grave danger of being liable under this section. Some of us who are associated with the trade union movement have been gravely concerned by what appears to be a trend on the part of the employing interests to run to the courts and secure various forms of injunctions. We had a situation in which certain members of my own union were involved. I happened to have the responsibility of producing a radio broadcast on behalf of the organization, and I am quite willing to admit now that at that particular moment I was a little hot under the collar. I think I produced a phrase in the script that went something like this, that if this sort of action were continued I could see that it might render the judges of our country-I phrased it very carefully-liable to the suspicion of palm greasing. Now, of course, my script went before the counsel for the radio station, a chap whom I happened to know, and he threw up his hands in horror. He really went through the roof. He said, "Never in the history of British justice..." and so on. I tried to explain to him that I was just as concerned with the preservation of the high tradition of British justice as anyone else. I was concerned to see that no action was taken which might tend to lower the dignity of the courts in the minds of the people of the country.
However, I can quite imagine that if, under the stress of possibly a more serious situation than existed at that particular time, I had gone on the air with some such statement as that, I might have been liable under this section as it is now worded. I maintain that my intention was not a seditious one, although

certainly I may have been in the mood to be highly critical of certain actions that were being taken by a portion of the structure of our society. I feel that the most important thing that might be done with this section would be to rewrite it in such a way that a person with an ordinary education would find the offences clearly spelled out. There should be a clear indication that this section is designed to deal with deliberate and, if you like, full scale intent to overthrow the structure of our society by violence.


Mr. Hollingworlh:: I believe that what we should consider in connection with this section is the whole question of civil rights. Certainly, I shall fight as vigorously as anyone else in this house against any infringement of civil rights. After a careful consideration of this section, and the other sections dealing with this problem, and after listening to the minister's explanation, particularly the quotation from Mr. Justice Rand's judgment, I do not feel that one can take exception to the drafting of this section. I am of the opinion it does not infringe upon the civil rights of the individual, and that is the all important matter with which we should be concerned here.
I must say though, Mr. Chairman, that I do not like the fourteen year penalty. I realize that, as the hon. member for Kamloops has pointed out, it is only the guilty person who is going to suffer, but nevertheless the fact that the section has not been invoked except on rare occasions seems to indicate that the extension of that time limit is unwarranted. The only thing I can say in justification of it is the fact that it is the maximum penalty. It is quite conceivable a judge would impose a lesser penalty if the crime were less serious. However, as I say, I do not like the fourteen years. I would be inclined to agree with the hon. member for Winnipeg North Centre in his remarks in that regard. The saving clause, of course, is that it is the maximum penalty and that period would not have to be invoked. Those are my general observations.


Mr. Nicholson:: The hon. member for Vancouver East, Mr. Chairman, did ask the minister a very easy question to answer, I think, when he pointed out that the wording of this clause is not easy for the layman to understand. Subclause 1 of clause 60 reads:
Seditious words are words that express a seditious intention.
(2)	A seditious libel is a libel that expresses a seditious intention.
(3)	A seditious conspiracy is an agreement between two or more persons to carry out a seditious intention.
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It would appear to me that before members of parliament are asked to support legislation of this type, the minister should be able to give an explanation of the meaning of sedition so that a layman could understand it. He referred to the case of Rex v. Boucher, and while I listened carefully it will require a reading of the extended remarks before I can understand just what learned jurists had to say about this question. I wonder whether, even at this stage, the minister might not start over again and put his comments in words that the members of the house who have not been to law school might be able to understand.


Edmund Davie Fulton: That is an invitation that I hope the minister will be able to resist.


Alexander Malcolm Nicholson: This is a rather disturbing piece of legislation to be asking us to support, since it includes that fourteen year penalty. I believe members in all sections of the house are agreed that any person who becomes an enemy of the state should be dealt with harshly. However, I feel we should clearly outline what the offences are. As has been pointed out by my colleague, a number of people in Winnipeg went to jail for sedition back in 1919, and certainly if this clause had been on the statute books at that time they would have received a fourteen year sentence.
In view of the fact that we have had an exceptionally good record in Canada, we should not be asked to support legislation that is not set out in words that everyone can understand. I feel that the fourteen year penalty is an unreasonable period to be suggesting for offences that cannot be explained in more precise language.


Herbert Wilfred Herridge: I want to support the arguments made by the other members in this group against what we consider the indefinite terminology of this section. I might explain that some of the experiences I have had in life have made me somewhat wary of this word "sedition". It is one that is extremely difficult to define. Sedition can be many different things in different times and circumstances. It depends on the mood of the day.
On one occasion in 1933 I recall being asked by an Anglican clergyman to give an address at the funeral of a member of the C.C.F. party. I gave what I thought was an excellent address, and what do you think happened? The local magistrate informed the attorney general of British Columbia that I had been preaching sedition and asked for me to be investigated. I did not know anything about this until about a month later. The police officer who had been sent in to

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conduct the investigation came to my house and told me all about it. He said it was a lot oi rot and they had been investigating the wrong person.
On another occasion, which I think the hon. member for Vancouver-Kingsway will recall, I was going to address a public meeting in a small town in my constituency. This incident illustrates how time and circumstances alter things. At that time the C.C.F. was far from respectable in many quarters. I went to rent a hall in this small town, and I was refused a hall. The person who refused me told me that the magistrate there had said we were talking sedition. We could not rent the hall and I am quite sure if we had come before that magistrate, or the one I mentioned previously, we would have been proven guilty of sedition and given the penalty imposed by this clause.
In any event, we could not get a hall. Finally, I saw the chief of police and convinced him I was a respectable person. We were allowed to hold a meeting in the public square under police supervision. I just mention these two incidents to indicate how the definition of sedition changes under certain circumstances. We have got beyond that now, and those incidents would not happen today. I mention them to indicate the possibility of the mood of the public or the circumstances changing. I think other members of this group who have suggested that the definition is not clear enough, and that the penalty is too severe, are quite right in those objections.


Mr. Enfield:: To get back to the subject of the definition of sedition, I think when we are discussing the Criminal Code we should look at the clauses from three distinct considerations. One, of course, is the wording of the clause itself. Secondly, we must always keep in mind that there must be an element of what is known as mens rea, or guilty intention to commit a crime. That must always be appended to every clause we discuss. Then, thirdly-and perhaps most important-we have to look at how a section has been interpreted by the judiciary. I know that often many students of law are inclined to think that more legislation is passed by the judiciary than by the legislature itself.
As the minister has already referred to the case of Boucher v. Rex, which seems to be the leading and the most modern case on the subject, I shall not repeat the details of it. However, some hon. members have asked for a capsule summary of what Boucher v. Rex says. I just happen to have, as luck would have it, what I think is a good summary of the ratio decidendi of Boucher v. Rex. I think perhaps it would be of interest if I were to place it on record.

It was held in that case that there is no finding of seditious intention unless there is evidence of incitement to violence. And it is interesting to note throughout this summary that the words "violence" and "resistance to law" are given great emphasis by the judges concerned. It states that there is no finding of seditious intention unless there is evidence of incitement to violence, public disorder or unlawful conduct directed against the Queen or the country's institutions.
It is stated that an intention to promote feelings of ill will and hostility between different classes of Her Majesty's subjects, without anything more, cannot be seditious. I think that is very important to be kept in mind, and it will bear repetition-that an intention to promote feelings of ill will and hostility between different classes of Her Majesty's subjects, without more, cannot be seditious. You have to have something more than that.
Then it must be shown, further, that the intended or natural and probable consequences of promoting such feelings is to produce disturbance of the government, or resistance to its authority. That carries it very much farther. There must be the intention to incite resistance to law, not merely an intention to criticize or to promote contempt for law.
That is the summary from the headnote of the case, which is reported at page 265 of the Supreme Court Reports of 1951. It is true that the summary is prepared by the legal editor concerned. But the idea is to read from the headnote, and then to look through the judgment. If one's feelings are more or less in agreement with the headnote, it provides a basis upon which to summarize the case. Because, obviously, one cannot take these cases and comb through them thoroughly. The job would be monumental. Hence the headnote is provided for the sake of convenience.
As I say, this is the summary that I have found from reading the case. I am giving it to the committee for what it is worth. I suggest that before any change in set-up is made it is absolutely necessary to go into the question of how the courts have interpreted the law. If a change is made there is a great possibility that the judicial interpretations that have gone before are completely lost. You open the door for an astute counsel. The section is changed, and one cannot quote with authority a judgment based upon an earlier section that reads differently from the present one.

So, before we entertain any amendment I suggest, with respect, that this point should be seriously considered. As to the penalty of fourteen years, it seems to me that by comparison with some of the other sections we have covered, where there are penalties of fourteen years, this penalty is a fair one. For example, we dealt yesterday with clause 46 (e), the transferring of scientific information, and a clause which carried a sentence of fourteen years.
When we look at these sections, in comparison, it seems to me that the fourteen years in this clause is justified. The offence is just as serious. Anyone promoting resistance to the law-and presumably this would be some type of force or bodily resistance-is committing just as serious a crime as anyone who gives information to someone else who in turn might use that information to promote bodily resistance or force against the present government.
The penalty of fourteen years is a maximum. Upon making inquiry with respect to judicial interpretation one finds few cases on the subject. Those that have been tried before the courts have been of a serious nature.
One would not want to leave the penalty too low. Where there is a serious offence the court must have the opportunity to punish fully and properly. On the other hand, this is a maximum, and the court still has discretion to limit the sentence to what would be considered appropriate for the offence involved.


An hon. Member:: The hon. member has answered the point.


Paul Joseph James Martin: And a very good answer.


Donald MacInnis: Does he say that the penalty before 1951 was so low that it promoted sedition in Canada? In how many cases was the law of sedition invoked during those years?


Frank A. Enfield: I do not think one can say that the penalty was so low that it promoted sedition. But when the Boucher case was tried in 1951 it was felt that, owing to the seriousness of the situation involved, the law as it stood did not provide sufficient in the way of penalty to cover the degree of wrong that was committed. I am only going by the reported cases on the subject, and there appear to be very few of them. There is Rex v. Frost, in 1889-and I must say I have not counted them up. Then there is Rex v. Shaefer, Rex v. Snyder and Rex v. Felton. There are only about four cases quoted.


Donald MacInnis: Since 1951?
83276-235i
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Frank A. Enfield: Since 1951, so far as I know,- and I may be wrong-there is no reported case. I would imagine that any case on the subject would be reported, because it is very serious.


Clarence Gillis: Are those Canadian cases?


Frank A. Enfield: Yes. As a matter of fact, two or three earlier cases were British.


Alfred Claude Ellis: As important as penalty is the reason for the change. I have not heard a very lucid explanation as to why it has been found necessary to increase the penalty. The minister was asked by the hon. member for Winnipeg North Centre how many cases of sedition he could recount, and I believe he said that offhand he could not say how many cases there were, but that the largest batch of such cases occurred at the time of the Winnipeg strike.
Judging from the change proposed in this bill one might almost be under the impression that this country is seething with discontent, and that the government is mightily worried about the great numbers of people who are guilty or who are likely to become guilty of sedition. I am inclined to believe that any outsider who read this section would be under the impression that sedition had become so serious in Canada that the parliament of Canada found it necessary to increase the penalty in 1951 from two years to seven years, and that it has worsened since that time and again the parliament of Canada has found it necessary to increase the penalty to fourteen years.
The minister suggested the reason the change is proposed is that in troublous times such as we are going through there was apprehension in the minds of the people who proposed the change, and consequently they felt that a more severe penalty was necessary. That argument was used yesterday in connection with the treason clause. I can understand that there is some logic behind that reasoning in so far as the treason clause is concerned. I think hon. members will agree that certainly our history to date would indicate that there are reasons why we should look upon treason perhaps in a different light from what we might have fifteen years ago. But I suggest that in so far as the law respecting sedition is concerned, we should not confuse the two at all. In so far as sedition is concerned, I can see no reason whatsoever why the government should have found it necessary to increase the penalty.
Is it that the government anticipates difficulties and feels that it must strengthen the legislation? Perhaps they have reasons for suspecting that in the future a more severe law might be needed.

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As it affects civil liberties, I suggest that if a situation ever develops where people are so discontented that they will listen to those who suggest the overthrow of the government by force, you will find that laws concerning sedition will not serve the purpose for which they were intended. Our history has shown that even during the depths of the great depression of the 1930's-and the minister will admit this-there were very few cases of sedition. Therefore I can see no valid reason whatsoever for this most spectacular increase in the penalty from two years to seven years and then doubling the seven years to fourteen years. This is a move which I feel deserves a very careful explanation on the part of the minister, and I should like him to give us clearly and concisely the reason why at this time it should be necessary to double the penalty over the 1951 maximum.


The Deputy Chairman:: Shall the clause carry?


Clarence Gillis: I should like to say a word or two on this clause. The hon. member for Vancouver East and the hon. member for Comox-Alberni made statements which should cause the minister to give this clause a little more consideration. The increase in the penalty does not bother me very much; it is the possibility, under the clause, of convicting people of sedition who might just be criticizing.
A few moments ago the hon. member for Kamloops said that he did not intend to commit sedition. He made a radio broadcast, if he will recall it, not so long ago-


Edmund Davie Fulton: It was not a radio broadcast, it was a statement in the press.


Clarence Gillis: I saw it in the press, and I thought it arose out of a radio broadcast. It could have been construed as causing disaffection to Her Majesty's forces.


Edmund Davie Fulton: Not at all.


Clarence Gillis: It just depends on the condition of the liver of the judge that you meet that morning whether you are guilty or not.


Edmund Davie Fulton: It would be a jury who would decide, twelve good men and true.


Mr. Coldwell:: They might be upset, too.


Clarence Gillis: In the final analysis the judge will decide whether you will get fourteen years or not.
There are not very many in this house who have led any kind of an active life who could not have been picked up on a good many occasions under this clause. That is the dangerous part of it. My hon. friend across the way gave four cases that he had looked at. He did the committee a service when he
[Mr. Ellis.1
put that side of the question on the record. I am not particularly concerned about how many years a person gets for sedition provided it is proved beyond a shadow of a doubt that he did commit sedition. The thing that I am concerned about is the possibility of a miscarriage of justice on account of the ambiguous language used in the clause and the many interpretations that could be put on it either by a judge or by a jury.
One case sticks out in my mind that my hon. * friend did not put on the record. I have had little experience with some of these things. A man who was secretary-treasurer of the mine workers union in 1922 became involved in a strike. The union was on strike, and arising out of that strike force was used on the part of the government. The attorney general armed a lot of thugs and put them on horseback. They came into the area and they created trouble. As a consequence of that difficulty the secretary-treasurer of the union made a press statement, and on the basis of that statement he was arrested for sedition. I had the privilege at that time of being one of the people who collected money to provide a defence for him. He was tried and convicted and sentenced to two years in Dorchester penitentiary. That was the maximum penalty at that time.
I know that we cannot criticize the judge who rendered that decision. We are not permitted to criticize the judiciary here, but it has always been clear in my mind that there had been a miscarriage of justice when that man was sentenced for sedition because the statement he made was not any stronger than statements I have made a good many times under similar circumstances. It was because of a section like this that that could happen. Anything at all can be construed as being seditious or having a seditious intent, and that kind of thing. As my hon. friend said, with a good smart lawyer in there to prosecute you and with the average jury that you pick up across Canada and with the ambiguous language contained in the clause, the lawyer can almost convince them of anything.


An hon. Member:: With an emotional approach.


Clarence Gillis: Yes. The attorney general of
that day-I am not going to name any names because most of them are dead, including the person involved-could justify that conviction at that time. He practically admitted that the statement made in the press was true. He told the truth; he merely stated the truth of a certain situation, but there were times when it was a crime to tell the truth. That is the way he justified himself. As I said before, I am not so much concerned about how long

the sentence shall be, but I am concerned about the circumstances under which a judge and a jury can try you and sentence you for sedition.
The hon. member for Vancouver East was quite correct, if press reports are correct, that looming up in British Columbia is a struggle. The changes in the labour code of British Columbia are not so good, and the trade union movement, and rightly so, is up in arms and questioning these changes. Statements have been made and will be made in that city that could render those people liable to sedition. The Minister of Justice should not forget that the enforcement of this law will be in the hands of the provinces and in the struggle of the unions in British Columbia to maintain democracy that struggle is going to be with the provincial government.
I will not impute motives to anyone out there, but it is only natural for a government or an individual to defend themselves and fight back if they believe what they are doing is justified. The danger there is apparent, and I believe the warnings given by the hon. member for Vancouver East are justified. I know of another province in this country where this code will be enforced and where those who will administer this code and laws in that province are not going to be very lenient or understanding in relation to matters which might be misconstrued under this particular clause. I believe the hon. member for Comox-Alberni has stated the case correctly. I believe where we have a clause such as this, where freedom of speech and thought is concerned, and in view of the development of the world situation, the minister should rewrite that clause and make it clear beyond the shadow of a doubt that no one can misapply it or use it for purposes of their own in any given situation. I would like to see the minister remove some of the ambiguous language from this clause because as it stands now it can definitely be misapplied and misunderstood.


Stuart Sinclair Garson: As he so often does, the hon. member for Cape Breton South has just raised points of real substance which I think are certainly deserving of a reply. I would like to make that reply in these terms. The leading case upon this subject is Boucher v. R, which was decided as late as 1951. Now I can quite understand the views of laymen to the effect that it might be better for the purposes of defending this clause against those who criticize it, not always fairly, to attempt to produce an interpretation of all the judgments of the judges of the Supreme Court in the Boucher case, and insert this interpretation in clause 60 as a definition of sedition. From the political point of view there is a
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great temptation to take that easy way. But it seemed to us that clause 60 is tied up closely with the civil rights of the individual Canadian who may be on trial on a charge of sedition. When therefore we already had in the Criminal Code a section dealing with sedition which has been interpreted definitively by the highest court in Canada, it is better to leave that definite result upon the law books even if it is less explicable politically, than to attempt to write another clause into the code which again has to be interpreted judicially before one can say precisely what the law of sedition is.
We have a firm law now and I think it is a very good law. It may be that in the selections I made from these judgments I read extracts which were rather long and by doing so confused the issue. I did so consciously because if there is anything I abhor it is having a sentence or two taken out of context, and in each case I tried to give enough of the context so that the real sense of the single important sentence could be understood by this committee. But perhaps if I were to go through the judgments and read just the single important sentence-


Harold Edward Winch: The Rand judgment is important.


Stuart Sinclair Garson: They are all important because the law is established by a court of nine judges. As the hon. member for York-Scarborough said, the ratio decidendi of that case can only be established by a proper understanding of all the reasons for judgment given by all of the judges.
In the case of Mr. Justice Kerwin this is the single sentence:
An intention to bring the administration of justice into hatred or contempt or exert disaffection against it is not seditious unless there is also the intention to incite people to violence against it.
In other words, in order to bring home the charge against the accused you must prove against him an intention upon his part to incite people, to whom his expression of opinion or his speech is made, to violence against the government.
Now, the next single sentence is from Mr. Justice Taschereau:
I think that, generally speaking, the writings complained of must, in addition to being calculated to promote feelings of ill-will and hostility between different classes of His Majesty's subjects, 'be intended to produce disturbance or resistance to the lawfully constituted authority.
He must intend to create violence, not to make a speech. Mr. Justice Rand puts it in the form of a question:
The test is this: was the language used calculated, or was it not, to promote public disorder or physical force.

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If the language was so calculated, it must also be proven that the person who uttered it intended to create disorder and violence.
Mr. Justice Kellock said:
. . . in my opinion, incitement to violence toward constituted authority, i.e., government in the broad sense, or resistance having the same object, is, upon the authorities, a necessary ingredient of the intention. . . In my opinion, to render the intention seditious, there must be an intention to incite to violence or resistance or defiance for the purpose of disturbing constituted authority.
Then Mr. Justice Estey said:
I am of the opinion that in all cases the intention to incite violence or public disorder or unlawful conduct against His Majesty or an institution of the state is essential.
Mr. Justice Cartwright said:
. . . before a writing can be held to disclose a seditious intention by reason of being calculated to promote feelings of ill-will and hostility between different classes of His Majesty's subjects it must further appear that the intended, or natural and probable, consequence of such promotion of ill-will and hostility is to produce disturbance or resistance to the authority of lawfully constituted government.
Now, what we are talking about in the offence of sedition is the deliberate intention to create violence and disturbance against the lawfully constituted government. That is not too dissimilar in principle to treason. For the offence of sedition a maximum penalty of fourteen years imprisonment is applicable. Now I recognize the force of the argument submitted by the hon. member for Vancouver East and the hon. member for Cape Breton South that it would make both the government's position and the task of hon. members of the house defending this legislation much easier if there were in clause 60 a definition of sedition which reflected accurately all of the reasons for judgment in the Boucher v. R. case.
But if we do that, then we have a different section in the act from that upon which the judgments were decided. If a case arises and comes before the court, then the new language has to be interpreted again. We shall then have found that we have purchased this political facility of explaining our position at the expense perhaps of some doubt as to what the law is, and a doubt that is in relation to a law which is of great importance to the accused. That is the reason why we thought that of those two alternatives, the intellectually honourable thing to do was to stand by certainty in the law and face any criticism in which such a course might involve us.


Edward Turney Applewhaite: Shall the clause carry?


Stanley Howard Knowles: On division.


Edward Turney Applewhaite: Carried on division.
Clause agreed to on division.
Clause 61 agreed to.
On clause 62-Punishment of seditious offences.


Donald MacInnis: Mr. Chairman, I have an amendment to propose to clause 62. I think that sufficient has been said on this matter of penalties and that I need not take up the time of the committee any further. It is shown that breaches of these sections of the Criminal Code are few and far between. As I see it, unless the government falls down in its duty of providing good government in this country, there is nothing in front of us that would indicate there is any danger that there will be more reason for sedition in the future than there has been in the past. I therefore move:
That clause 62 of Bill 7 be amended by deleting therefrom the words "fourteen years" and by substituting therefor the words "five years".
I myself hardly know why I did not put in "two years" instead of "five years" but I imagine that I did it, in my usual reasonable way, in trying to get the support of those who would think that two years was too little. I am sure there are many members in this chamber-on the other side as well as on this side-who think that, without a single case being before the courts, raising the penalty from two years to fourteen years is altogether unreasonable.


Edward Turney Applewhaite: Shall the amendment carry?
Amendment (Mr. Maclnnis) negatived: Yeas, 9; nays, 53.


Edward Turney Applewhaite: Shall the clause carry?


Stanley Howard Knowles: 
Stuart Sinclair Garson: I have only one thing to say, Mr. Chairman, and I shall say it briefly. My hon. friend has no reason at all to say that under the laws of Canada there is not available the same freedom of speech that is available in Hyde park in London.


Edward Turney Applewhaite: Shall the clause carry?


Stanley Howard Knowles: On division.


Edward Turney Applewhaite: Carried on division.
Clause agreed to on division.


Edward Turney Applewhaite: I notice that it is now just on the verge of five o'clock, and we have completed one group of sections. The next group which I presume the committee will start on at its next sitting commences with clause 32 and deals with riots. As hon. members know of the special program that has been agreed upon for this evening, shall I rise, report progress and ask leave to sit again?


Some hon. Members:: Agreed.
Progress reported.



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. 312, for the relief of Bessie Katz Elman-Mr. Hunter-Mr. Applewhaite in the chair.
Clauses 1 and 2 agreed to.
Bill reported.
Mr. John Hunter (Parkdale) moved: the third reading of Bill No. 312.
Motion agreed to and bill read the third time.
The Acting Speaker {Mr. Applewhaite): Is
it agreed that the bill do now pass and that the title be as on the order paper?


Edmund Davie Fulton: On division.
Title agreed to and bill passed on division.
Private Bills



NIAGARA GAS TRANSMISSION LIMITED

[Stage Direction]
On the order:
House in committee on Bill No. 325 (Letter D-10 of the Senate) intituled:	"An act to authorize
Niagara Gas Transmission Limited to construct, own and operate an extra-provincial pipe line."
The Acting Speaker (Mr. Applewhaite):: Bill No. 325 and Bill No. 389 both come from the standing committee on railways, canals and telegraph lines. Is it agreed that they be committed together?


Some hon. Members:: Agreed.



CONSIDERED IN COMMITTEE


[Stage Direction]
Bill No. 325, to authorize Niagara Gas Transmission Limited to construct, own and operate an extra-provincial pipe line.-Mr. Hunter.

[Stage Direction]
The house in committee on Bill No. 389, respecting Trans-Canada Pipe Lines Limited-Mr. Decore-Mr. Applewhaite in the chair.
On clause 1-Repeal.
Stanley Howard Knowles: Before this clause is carried, there is a question I should like to ask. At the moment I am not sure whether it should be asked on this bill or whether it should have been asked on the other bill. What happened to the suggestion made by the Minister of Trade and Commerce that one of these bills might be amended by the addition of a coming into force clause?


Mr. Mclvor:: It was not needed.


Clarence Decatur Howe: If I may answer that, before the bill was referred to the committee the two pipe line companies, Niagara Gas and Trans-Canada, had entered into an agreement, which was signed by both parties and which was submitted to the committee. The committee believed that agreement adequately protected the situation, and that is my own opinion. Therefore I see no present purpose in the inclusion of a coming into force clause.


Mr. Green:: May I ask the minister if there is not the further fact that Trans-Canada Pipe Lines Limited is to build the line from the Niagara river to Toronto?


Clarence Decatur Howe: Yes.


Howard Charles Green: Whereas the original intention was that it should be built by Niagara Gas Transmission.


Clarence Decatur Howe: Yes. The result of the agreement is that Trans-Canada Pipe Lines Limited will build the line.

Private Bills


[Stage Direction]
Clause agreed to.
Preamble agreed to.
Title agreed to.
Bill reported, read the third time and passed.

Mr. David A. Croll (for Mr. Balcom) moved: the second reading of Bill No. 394, respecting Eastern Telephone and Telegraph Company.


Stanley Howard Knowles: Is the sponsor of the bill in a position to make a statement on it?


David Arnold Croll: Yes. This bill is sponsored by the junior member for Halifax (Mr. Balcom) who is absent on constituency business, as is the senior member for Halifax (Mr. Dickey). There is some urgency about this bill which was passed by the Senate on the 31st of March. Its effect is to amend the act of incorporation of the Eastern Telephone and Telegraph Company which was incorporated by a special act of parliament in 1917 with an authorized capital of $10 million divided into shares of a par value of $100 each. At the time of incorporation-I am sure the house will agree with this-it was a highly imaginative undertaking since it was intended to construct a single channel telephone cable.
In 1931 the project was suspended and since that time the company has been inactive. For quite obvious reasons the act of incorporation was amended by special act of parliament in the session of 1931 which authorized the company to reduce its capital by bylaw, which had to be filed with the Secretary of State. This was done on the 1st of September, 1931, and the capital was reduced to $75,000 divided into shares of $100 each.
The house is aware that the transatlantic telephone service since its inception in 1927 has been provided by radio and is subject to atmospheric and other interference not applicable to cable. On November 27, 1953, an agreement was entered into between Her Majesty's postmaster general of the United Kingdom of Great Britain and Northern Ireland, the American Telephone and Telegraph Company, Canadian Overseas Telecommunication Corporation and Eastern Telephone and Telegraph Company. That agreement provided for the construction, at a cost of $35 million, of a cable extending from Oban, Scotland, to Clarenville, Newfoundland, and then to Sydney Mines, Nova Scotia and by radio relay from Sydney Mines to Portland and New York.
The three countries, the United States, Great Britain and Canada, have agreed to

lay this submarine cable which contains thirty-six circuits and will provide for the carrying of thirty-six conversations simultaneously.


Stanley Howard Knowles: We need one in this house.


David Arnold Croll: It would not be such a wonder if they knew this house. The distance between the two mainlands, between Nova Scotia and Scotland, is 2,200 miles. The American Telephone and Telegraph Company will own 50 per cent of the stock; the British post office department will own 41 per cent, and the Department of Transport will own 9 per cent. The head office of the company is now located in Halifax and will remain in Halifax.
The Maritime Telegraph and Telephone Company and the New Brunswick Telephone Company will both have representation on the board of directors of the Eastern Telephone and Telegraph Company. I am requested to ask the house to give second reading to this bill and to send it to the appropriate committee.


Edmund Davie Fulton: Where does Eastern come into that?


David Arnold Croll: They have a charter. Originally it was incorporated as the Eastern Telephone and Telegraph Company. They are now a wholly-owned subsidiary of the American Telephone and Telegraph Company.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.


John William Gordon Hunter: that the following bills be read the second time:
Bill No. 395, for the relief of Elsie Elizabeth Belford Grant.-Mr. Hunter.
Bill No. 396, for the relief of Jean Monette.-Mr. Hunter.
Bill No. 397, for the relief of Pearl Mary Brown Pratt.-Mr. Hunter.
Bill No. 398, for the relief of Annie Holman James.-Mr. Hunter.
Bill No. 399, for the relief of Marie Paule Lemay Mondello.-Mr. Hunter.
Bill No. 400, for the relief of Marilyn Lesley Simpson Lavallee.-Mr. Hunter.
Bill No. 401, for the relief of Edith Lorraine McBurney Robinson.-Mr. Hunter.
Bill No. 402, for the relief of Aline Gosselin du Berger.-Mr. Hunter.
Bill No. 403, for the relief of Eileen Lucy Tollett Power-Williams.-Mr. Hunter.
Bill No. 404, for the relief of William Pappas.-Mr. Hunter.

Bill No. 405, for the relief of Claire Labelle Cousineau.-Mr. Hunter.
Bill No. 406, for the relief of Denise Marie Helene Laporte Woodhouse.-Mr. Hunter.
Bill No. 407, for the relief of Lois Helena Kearns Higham.-Mr. Hunter.
Bill No. 408, for the relief of Dorothy Rita Wade Moulden.-Mr. Hunter.
Bill No. 409, for the relief of Albert Thornton.

Mr. Hunter.
Bill No. 410, for the relief of Koidula Laigma Hagel.-Mr. Hunter.
Bill No. 411, for the relief of Yvette Lafon-taine Tatos.-Mr. Hunter.
Bill No. 412, for the relief of Freda Becker Blumenthal.-Mr. Hunter.
Bill No. 413, for the relief of Monica Elizabeth Benoit Mullin.-Mr. Hunter.
Bill No. 414, for the relief of Felix Andre Landry.-Mr. Hunter.
Bill No. 415, for the relief of Marie-Claire Parisien Barbeau.-Mr. Hunter.
Bill No. 416, for the relief of Marie Muriel Gladys Lena Soubre Dubour.-Mr. Hunter.
Bill No. 417, for the relief of Joan Millicent Kemp Tessier.-Mr. Hunter.
Mr. Stanley Knowles (Winnipeg North
Centre): Before you put the motion, Mr. Speaker, on these twenty-three divorce bills, may I make one suggestion, and I do so confident that it will be carried out. As the hon. member for Parkdale (Mr. Hunter), who is the chairman of the committee to which these bills will be referred, knows, there was some difficulty the other day because when a certain bill was reported back to the committee of the whole it was ascertained that the bill had been dealt with in the committee on miscellaneous private bills before the printed evidence had been received and was in the hands of the members of that committee. I merely rise to suggest-


John William Gordon Hunter: I would point out, Mr. Speaker, that none of these bills came before the private bills committee before the evidence was available although there was one bill upon which the evidence was available only a matter of an hour and a half before the committee met.


Stanley Howard Knowles: I think the statement made by the hon. member for Parkdale serves only to underline the point I am making. My suggestion to him is that we should have the assurance that none of these bills will be considered by his committee until he is satisfied that the printed evidence is in the hands of all the members of that committee. Surely that is the least for which we might ask.
Industrial Status of Women


John William Gordon Hunter: I shall be very glad to do that. In fact, I have already given instructions to that effect.
Motion agreed to and bills read the second time.



BALOISE FIRE INSURANCE COMPANY OF CANADA

Mr. Charles Cannon (Iles-de-la-Madeleine) moved: the second reading of Bill No. 418, to incorporate Baloise Fire Insurance Company of Canada.


Stanley Howard Knowles: Could we have an explanation?


Charles-Arthur Dumoulin Cannon: The purpose of this bill is to incorporate a Canadian company to take over the assets and liabilities of a Swiss company which has been operating in Canada since 1923 in the field of fire and automobile insurance. The bill has the approval of the superintendent of insurance. The capital will be $1 million. Before starting business the paid-up capital will be a half million dollars, which is double the usual requirement. The company intends to do business in the whole of Canada in all kinds of insurance except life.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.


[Stage Direction]
The house resumed, from Tuesday, March 30, consideration of the motion of Mrs. Fairclough for the second reading of Bill No. 2, to provide equal pay for equal work for women.
Miss Margaret  Aiiken@York-Humber: I
want to speak on this Bill No. 2, not because it is one applicable to women but because it concerns a simple matter of justice. Since the turn of the century women in Canada and in the other free countries have been fighting for this type of justice. We are not quite as militant about it today as we were fifty years ago, but 1 believe we are just as determined. Equal pay for equal work is a principle that I believe a young country like Canada should establish forthwith. Only three provinces in Canada have been enlightened enough so far to introduce equal pay laws. They are Saskatchewan in 1952; Ontario in 1951 and British Columbia earlier this year. Even those provinces are not exactly practising what they have enacted.
In Canada we pride ourselves on being a young country and yet we lag far behind on this enlightened legislation. Older countries

Industrial Status of Women such as France and Italy already have equal pay laws, and so has Burma. I believe Mexico was the first country to enact such a law in 1917. Many years ago Britain approved the principle of equal pay but has never actually enacted it into law. I should like to see Canada approve the principle, enact it and enforce it. In the creative field there is no discrimination at all. An artist is judged and paid according to his or her talents. An author signs the same contract with a publisher irrespective of the author's sex. In fact, such words as "authoress" or "poetess" are obsolete today. In the professions a lawyer or a doctor is worthy of his or her hire. I am proud to say that in my own profession there is no such word as "reporteress" or "editoress".
Yet in one of the most important of all the professions, that of teaching, not only are school boards notably reluctant to recognize this basic principle of equal pay but so are a good many of the male teachers. One reason for this, and I have heard it many times, is that men teachers do extracurricular duties that women teachers are not called upon to do or are not able to do. If a job calls for the same qualifications, then it seems to me there should be one salary schedule. If a little extra brawn is needed along with the brain, then a little extra pay should be given for that brawn. But whether it is in the teaching profession, in industry, or in the civil service, the brawn should be paid for and if the brain qualifications are the same and men and women do an equal job then they should receive equal pay.
Even in industry there is a strange reluctance to recognize this principle. It is true that for some time now the steel workers union has been working on the full application of the equal pay principle, and a good many other labour unions have incorporated it into their contracts. Generally speaking, however, the principle has not received more than lip service. On this question of justice the trade unions have not been overly vocal, nor has management. Unfortunately, and perhaps most important of all, women have not been particularly vocal or have not fought for it. Each group has a different reason for this, but I believe we are all the victims of prejudice and tradition.
Our thinking has not caught up with the actual conditions because from kindergarten on through university we give Canadian boys and girls exactly the same education. They start out with an equal opportunity. We turn out equal products, and then when it comes time to pay these products for what they can


contribute we discriminate in the pay. One of the arguments against equal pay for equal work is that men have greater responsibilities towards the establishment of homes and the maintenance of dependents. Like the words "poetess" and "authoress", those are obsolete arguments today. There are more than a million women working in Canada and out of every hundred working women who are gainfully employed, eighty-four work to support themselves and dependents; eight work for special reasons such as buying a house or educating their children or paying off bills; another eight work because they want to work or for the pleasure of paying taxes.
So that 84 out of every 100 gainfully employed women are working because they have to work. While these women may receive one salary for a job, the men receive another salary for the same job. And yet the men meet equally on so many other footings. When it comes to price tags, for instance, there is no discrimination. There is no discrimination when it comes to taxes. When it comes to groceries, fuel or rent there is no discrimination. Yet we do find insistence upon this discrimination in the matter of payment received for jobs.
Some misapprehension has developed among the unions upon the mistaken idea that women will take jobs from men. However, it has been proved again and again that equal pay actually protects men as well as it protects women, and in fact that it protects employees as well as employers. Equal pay discourages employers from hiring women at lower rates of pay, and thus replacing men when they can get cheaper labour. Also, if the principle is adopted universally it protects employers from another industry operating at a cut-rate hiring a majority of women at lower pay, and thus competing unfairly.
I find myself slightly befuddled by the minister's reaction to Bill No. 2. As reported at page 2593 of Hansard he asks this question:
Who is to say what is comparable work, even as between two men employees?
It seems to me the point there is that when it is two men employees who are doing comparable work, or what is considered comparable work, they are paid equally.
Then, as reported at page 2594, the minister pointed out that the four great national labour organizations, and the National Council of Women, have not pushed this matter in their presentation of briefs this year. But I suggest that the government should not sit back waiting to be pushed, but should give leadership in this direction.
It seems to me the minister has been trying to tell us that the people are not particularly

concerned with this problem, and therefore asks why the government should intervene. But I would point out that last year a Gallup poll was taken asking the question from those interviewed, whether they believed in equal pay for equal work, and two-thirds of Canadians answered that they did believe in equal pay for equal work.
Finally, the minister says that he is not against equal pay for women, but that he is going to vote against the bill. This leaves me more befuddled than ever because I cannot see how one can be for something, and vote against it.
In conclusion I would ask the house to remember the preamble in the United Nations charter which establishes the basic principles of human rights in the dignity and worth of the human person, and in the equal rights of men and women.


Mr. Gregg:: May I ask the hon. member a question? In the Gallup poll to which she refers was the question, "Are you in favour of equal pay for equal work?" or was it, "Are you in favour of equal pay for equal work, to be instituted by an act of the legislature or parliament?"


Mrs. Fair dough:: That is splitting hairs.


Miss Aitken:: I shall read the question. The question was: Generally speaking, do you think women who work should receive equal pay with men for the same kind of work, or do you think men should receive more?


Milton Fowler Gregg: I agree with the first question. I am on the side of the angels, there.


Elmore Philpott: Mr. Speaker, I wish to say a few words in support of this bill on equal pay for women, although I am aware that the minister looks with, shall I say, only a lukewarm eye on this particular bill. Let me say at the outset that in my opinion it is not a very good bill, and my reason for giving it a certain amount of moral support-and I certainly intend to vote for it -is that I believe it will encourage the government to bring in a really good bill to do the job which the hon. member for Hamilton West (Mrs. Fairclough) is trying to do.
May I say at the outset that it seems to me a great many of the arguments used for so many years in favour of unequal pay- that is, that the man had to get more pay than the woman-have passed away. That is especially true in this country. Because, under the really wonderful welfare state this government has set up, a state in which there is social welfare without socialism, social welfare without regimentation-things like family allowances, grants, old age pensions and old age security-the need for
Industrial Status of Women the husband and father to get more money than a woman has largely passed away. Therefore, from the standpoint of equity there is no reason now why there should be discrimination between the sexes.
I say, however, that in my opinion this is not a very good bill. There are weak spots in it. I believe there are great weak spots in all the legislation in Canada which deals with equal pay between the sexes. The last time I talked to my very good friend, the late Agnes Macphail, she remarked what a great sham the bill in Ontario was. I know the bill passed in British Columbia, to which my hon. friend referred, has had some very unpremeditated effects; and one effect it had in British Columbia was that instead of benefiting women it actually handicapped them in certain of the industries. Because in some corporations, whose names I shall not mention, there was an immediate reclassification of the jobs, with the result that, in the end, women found themselves worse off than they were before.
I say there are real weaknesses in the bill sponsored by the hon. member for Hamilton West. I notice, for instance, that she has entitled the bill the "Women's Equal Pay Act." I, for one, would like to know from the hon. member why she did not entitle it the "Equal Pay Act"? Is it that all people are equal, but that women are more equal than men?


Mrs. Fairclough:: Perhaps.


Elmore Philpott: I ask that because, just this afternoon, up in the banking committee I asked the president of the bankers association of Canada the same question on this subject, and he told me that while he had no complaint to make about the quality of the work done by women, and that women apparently were just as efficient as men on the job, in certain categories women were being paid more than the men were being paid for doing exactly the same job. So I would like to point out to the hon. member sponsoring the bill that one immediate effect of it would be to reduce the pay of a certain number of bank clerks in Canada. So it seems to me that perhaps, having in mind the Irish gentleman who believed in the equality of all men, but also believed that the Irish were the best of the lot, we should take a second look at some of the provisions in the bill designed to give equal pay to women.
In my opinion a better approach to this whole question of equal pay would have been to put equal pay provisions in the antidiscrimination law passed by the house a year or so ago, and to make it an offence to discriminate against anyone on grounds of race, colour, creed or sex.
3720	HOUSE OF
Industrial Status of Women


Stanley Howard Knowles: Have you consulted the Minister of Labour on that point?


Elmore Philpott: Speaking about labour, I would say to the hon. member for Winnipeg North Centre (Mr. Knowles) that one of the reasons why we have not had equal pay legislation long before now in North America, or better still, we have not had equal pay action long before now is that the trade unions of North America, to say the least, have been decidedly even more lukewarm about this particular measure than the minister happens to be about this particular bill. We had a notorious case of a great union in the United States not so many years ago where even in their own head office, they were not giving equal pay as between men and women for the same job, even though they were setting themselves up as a champion of organized workers in such and such a field.
Further, I may say that while I intend to vote for this bill just as a gesture, a small token, that perhaps we should get this government to bring in a better bill after due investigation, I would think that one of the great things we need in this country is an expert investigation under some proper body as to just what are the facts about discrimination in pay as between men and women, and what might be done most effectively to redress any discrimination that there should be. I know that this is not the stage to discuss it, but if this bill ever gets into the committee stage I certainly will do my best to emphasize the impracticality of the machinery that the bill sets up to try to get a remedy for alleged grievances, because it puts the whole onus on the individual, and then it sets up very cumbersome and clumsy conciliation machinery. I notice also that it invokes a fine of merely $100 on anybody who offends the law. After all, if there were a really serious case of discrimination, the employer could gyp the female employee out of $1,000 salary and could well afford to pay the $100 if he were caught.
However, as I say, this is a long-overdue reform in Canada, and there should not be any discrimination between the sexes. We should have equal pay for equal work, and even if it is true that in some cases people are clamouring for equal pay, especially the school teachers and others, they ignore the fact that there is a certain amount of injustice, for instance, where some of the male teachers are called on to stay for many hours after school is out to carry on extracurricular activities for which they get no compensation. Notwithstanding all that, I do intend to vote


for this bill because I think it is a step in the right direction, even if it is not a very long one.


Mr. Deputy Speaker:: If the hon. member for Hamilton West speaks now, she will close the debate.


Ellen Louks Fairclough: In replying to some of the statements which have been made in the course of this debate I should like to deal with several points, but right at the beginning I cannot resist commenting on a news item which has just been brought to my attention. In this evening's paper there is an article headed: "British budget contains promise of equal pay." It goes on to describe the new budget which was brought down in Great Britain today and it says it is indicated that the British government had at long last acquiesced in the desires of the women of Britain, and intends to bring in equal pay legislation.


Mr. Rowe:: This government might bring it in tonight.


Ellen Louks Fairclough: On March 2 when this bill was introduced the minister, in replying, first of all admitted that women's work was needed certainly in our rapidly expanding economy. I am interested to note that in the current issue of the Labour Gazette it is indicated that women in the labour force are highlighted. There are several articles from various sources, and some extremely interesting information. One article is apparently the product of the department itself. It states that from 1901 to 1951 the number of women in the labour force has increased almost fivefold, and the ratio of women in the labour force to the total population of women of working age has almost doubled. The proportionate increase in their numbers in th& labour force has far exceeded that of men. If I were not simply using this period in reply I should like to quote further from this article, but I do not wish to take the time of the house now because, if it is at all possible, I should like to see this question brought to a vote.
Apart from the fact that the minister has admitted the need of women workers, it is substantiated many times in the articles to which I have referred. Again the minister has said that this bill makes provision for complaints. I should like to say that that is the way it should be. I do not think that the enforcement of such legislation should depend upon inspection. In the legislation there should definitely be a provision for the lodging of complaints. I note it has been said by some of those who have spoken that there have not been very many complaints lodged under the legislation which is in.

[DOT]effect at the present time. In order to find out exactly what the situation is I have procured some information with respect to the Ontario act which went into force just two years ago. I have found that in that time 104 complaints have been lodged; 38 of these are in process at the present time. Of the total number, 14 were dismissed and 52 were withdrawn, presumably after consideration, and I expect a certain amount of agreement between both parties, but 38 are still in the process of being considered.
The minister also made the remark that women do not appear to be numerous in the membership of our labour organizations. I should just like to say that that is probably true and it is all the more reason why they need legislation to protect them. If the large number of women who are employed in industry and in commerce and in education and in other fields today are not protected by labour unions or by labour organizations which promote their rights, then there is all the more reason why federal legislation should set out the intent of labour generally in this country, and certainly indicate the thing which is already, as the hon. member for York-Humber (Miss Aitken) said earlier, the opinion, as shown in the Gallup poll, that most of the people of this country are in favour of equal pay for equal work.
I might say in that regard that the minister was splitting hairs when he asked whether the question put to the people was whether they thought women should have equal pay with men or whether they thought legislation should be enacted to provide for it. Certainly if the predominance of opinion was in favour of it, I would think that the predominance of opinion would likewise be in favour of legislation to enforce it.
The minister said further that he thought that the matter of equal remuneration should be a factor in collective bargaining, and that it had hitherto been regarded as a factor in collective bargaining; but apparently the provinces of Ontario, Saskatchewan and British Columbia did not think so, nor did the 13 states in the United States of America which have enacted this type of legislation, nor did the other countries which have enacted such legislation, and now certainly the British government does not think so either, because they have indicated their intention of bringing in legislation at this session of parliament.
Industrial Status of Women
The minister goes on to say he does not want to give the impression no problem exists, but he adds, as reported at page 2594 of Hansard:
I should like to know that a specific problem existed . . . and that it was serious enough to warrant intervention.
I do not know how serious the minister believes a problem should be before there is intervention. Certainly there is a problem as he admits, and it should be seriously considered and not just brushed lightly aside with a lot of half-baked excuses about the fact that it should be a matter for collective bargaining; that the time is not ripe; that we have not taken advantage of the legislation at present on the statute books; that the present bill is inadequate, or any of the number of minor criticisms which have been attached to this legislation.
As the hon. member for Vancouver-Quadra (Mr. Green) said on March 19, this is a matter of establishing a standard, and probably, as the hon. member for Timiskaming (Mrs. Shipley) pointed out, there would not be many prosecutions, but the act itself would have a salutary effect on employers, and I believe that is why you do not have too many complaints under this legislation. Once legislation is in effect the average person goes along with it and they do not deliberately flout the law. They try to abide by the laws of their country. Several other hon. members have been concerned, as was the hon. member for Vancouver South (Mr. Philpott) today, with the implementation of this act. But I do not believe, Mr. Speaker, that any legislation being brought down for the first time is ever perfect. I cannot agree with him that this matter has any connection with the fair employment practices act. We gave very careful consideration to that matter and I know the minister considered it in detail when he brought in the first bill, but I cannot agree this matter of equal pay for equal work has any place in fair employment practices legislation.
I would suggest that the hon. member for Vancouver South must have been influenced by those who conducted what was more or less a lobby on this subject, and I can assure him that we were all victims of that lobby, although some of us with strong opinions on the subject were not influenced by it.


Elmore Philpott: No one lobbied me.


Ellen Louks Fairclough: Perhaps you didn't recognize it as a lobby. In any event this legislation as I said previously has been adopted by many governments both in this country

Industrial Status of Women and abroad. It is a progressive type of legislation which fits well into the changing employment conditions of our time and I solicit the support of every hon. member of this house in regard to this legislation.


Mr. Speaker:: The time allocated for private and public bills having expired, the house at eight o'clock will consider the business which was previously announced. As it is six o'clock, I do now leave the chair.
Perhaps I should remind hon. members that during a division they should not leave the house and also that they should not leave the house until the Speaker has left the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Jones
Knight
Knowles
Leboe
Lennard
Low
Macdonnell
MacDougall
Maclnnis
McCullough (Moose Mountain)
McGregor
McLeod
Monteith
Murphy (Lambton West)
Nesbitt
Nicholson
Nickle
Nose worthy
Patterson
Philpott
Purdy
Quelch
Regier
Robinson (Bruce)
Rowe
Shipley, Mrs.
Simmons
Small
Stanton
Starr
Thatcher
Tustin
White (Hastings-Frontenac)
White (Middlesex East) White (Waterloo South) Winch Wylie
Zaplitny-78.
Messrs:
Anderson
Applewhaite
Ashbourne
Batten
Bertrand
Blanchette
Boisvert
Boivin
Bonnier
Boucher (Chateauguay-Huntingdon-Laprairie) Bourget Bourque Brisson
Brown (Essex West) Buchanan
Cameron (High Park)
Campney
Cannon
Caron
Carter
Cavers
Chevrier
Cloutier
Cote
Decore
Demers
Deschatelets
Deslieres
Dumas
Enfield
Fairey
Follwell
Fraser (St. John's East)
Gardiner
Garland
Garson
Gauthier (Lake St. John)
Gauthier (Nickel Belt)
Gauthier (Portneuf)
Gingras
Gingues
Girard
Gour (Russell)
Gourd (Chapleau)


Douglas Charles Abbott: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, I think I must depart from my carefully prepared text to express my appreciation for the warmth of the greeting of my friends behind me.
This is my eighth year as Minister of Finance and my tenth budget speech. When I brought down my first budget the world had just emerged from a long and costly war. Looking back at it now I can say that the views I then expressed about our own affairs

have been more than justified, but our international hopes have fallen far short of realization. We have had to cope with recurring threats to peace and security, and we have had to incur heavy costs, in co-operation with our friends and allies, in building up the defensive strength of the free world. Solid progress, however, has been made during 1953 and we can face the future with growing confidence.
The growing strength of the North Atlantic alliance has done much to reduce the dangers of armed aggression, but fundamental solutions are still denied us. A just settlement of these questions requires the free world to continue to improve its defensive position in order to negotiate from strength. We cannot yet afford to relax.
In the economic sphere, 1953 has been a much better year. Industrial and agricultural production in almost all countries has continued to expand, and consumption has risen. Supplies of many products entering into international trade are becoming more plentiful, and international markets more competitive. The recovery of Germany and Japan has contributed to this development. It is becoming increasingly evident that after many years of scarcity and inflation we are returning to more normal competitive conditions.
It is encouraging to note the further improvement which has taken place in trade and payments relations between the dollar and the non-dollar countries. The clearest indication of this is the substantial increase in the gold and dollar reserves of overseas countries. During 1953 the sterling area achieved a substantial over-all surplus with the rest of the world. The central reserves held by the United Kingdom rose by $670 million during 1953 and have continued to rise in the first quarter of 1954. As a result of these favourable developments the position of the sterling area has strengthened considerably. A substantial improvement in the over-all balance of payments and exchange reserves has also been experienced by most European countries.
The progress of the United Kingdom toward freer trade is most significant. Large sectors of trade have been decontrolled; commodity markets have been reopened; and important raw materials and foodstuffs have been placed under open general licence. As a result of these changes, United Kingdom importers are now free to purchase a large part of their basic requirements from the cheapest sources, including the dollar countries. Significant relaxations in trade and
The Budget-Mr. Abbott exchange controls have also been introduced by Germany, Belgium, Holland, South Africa and a number of other countries.
While this worth-while progress toward freer trade and payments is a source of satisfaction it still falls far short of what is needed. In many respects the balance of world trade, although very much improved, still lacks defence in depth. It cannot be otherwise as long as major currencies are inconvertible, and there continues to be a widespread use of restrictionism and discrimination.
Perhaps the most encouraging feature of recent developments in this field is the change in the attitude of many countries to their external financial problems. There is a growing impatience with the existing system of direct trade controls and discriminations and an increased awareness of the serious economic damage which results from the perpetuation of such policies. To a greater extent than at any time since the end of the war, overseas countries are showing a willingness to envisage basic changes in their trade policy in order to deal with their exchange problems in a fundamental way.
This attitude is most clearly expressed in the "collective approach" proposals formulated on the initiative of the United Kingdom at the commonwealth economic conference in December 1952. These proposals envisage the restoration of an effective system of multilateral trade, and the achievement of currency convertibility over the widest possible area through co-operative international action. In the course of my last budget I stated that Canada had participated fully in the development of the "collective approach" and would be willing to co-operate in any common efforts required to achieve these goals. Today, I am glad to report that real progress has been made over the past year in laying the foundations for the implementation of this constructive program.
In January, as the house knows, I attended the conference of commonwealth finance ministers in Sydney, Australia, which-by the way-I consider to be the most satisfactory conference of this kind since the end of the war. In reviewing developments since the December 1952 meeting, the conference agreed that the substantial improvements which had taken place confirmed the fundamental soundness of the policies and objectives which they had set for themselves. Without reservation all commonwealth countries joined in a clear reaffirmation of the "collective approach" proposals for currency convertibility and freer trade.

The Budget-Mr. Abbott
During the past year constructive developments have also taken place in other countries. For most of this period the United States has been in the process of re-examining its foreign economic policies. An important stage in this process was completed in January, when the United States commission on foreign economic policy issued its report. The recommendations of this commission- better known as the Randall report-provide, in my view, a reasonably promising basis for action by the United States in a co-operative movement towards a sounder system of trade and payments.
Progress has also been made by international agencies with responsibilities in this field. The international monetary fund has made changes in its rules and practices to ensure that its resources can be used more effectively to support a major move to convertibility. In Europe the OEEC has undertaken a study to see how the European payments union can best be integrated into a broader payments system, and powerful new voices have recently been raised in western Europe in favour of an early move to convertibility and multilateral trade.
As part of this general move to strengthen the instruments of international economic co-operation, the contracting parties to the general agreement on tariffs and trade have undertaken an important program of work for the coming year. GATT has made a most valuable contribution to the expansion of world trade, and we welcome the decision to undertake a general review of the agreement with a view to making it a more effective instrument. The session which is planned for next fall will also consider the prospects for new multilateral tariff negotiations. In the meantime, in order to safeguard the stability of present tariff arrangements, the existing agreements have been extended to the end of June, 1955.
From what I have said, it is clear that events are shaping up to make the coming year an important one for progress in international economic co-operation. The new and positive attitudes of many countries, their improved trade and payments position, and the substantial progress towards domestic economic stability have combined to create a more favourable climate for advance than at any time since the end of the war.
No single country can by itself ensure the success of an enterprise which must essentially be a collective, co-operative effort. At the same time, I think it fair to say that the policies and attitudes of the United States in this regard occupy a place of central importance. The United States has been one of the strongest exponents of policies directed


towards the reduction of trade barriers and the expansion of international trade. The success that has been achieved in this field is in large part due to the steady encouragement and substantial assistance that the United States people and their government have given to the countries of the free world. Canada has welcomed these policies and has played its full part in this constructive enterprise.
Three weeks ago I attended the first meeting of the joint United States-Canada committee on trade and economic affairs where ministers of our two countries had an opportunity to examine economic problems of common concern. Consideration was given throughout the discussions to the need for action towards freer trade and payments on a broad front. It was agreed that few things would contribute more to the well-being and economic stability of the free nations of the world than a forward move in this direction, and it was recognized that enlightened economic policies on the part of both the United States and Canada would contribute materially to the achievement of a better trade and payments system throughout the free world. United States ministers warmly welcomed the evidence of a desire in many countries to take decisive steps towards the restoration of a broad area of convertibility. I came away from these meetings with a distinct impression that the United States administration is willing to do its part in making such a movement successful. To this end the United States administration has just placed before congress a program designed to give effect to the main recommendations of the Randall commission. It is greatly to be hoped that the actions of the United States in the trade field will continue to provide effective leadership at this critical time.
Canada, as the third largest trading country, also has important responsibilities to fulfil in these co-operative efforts. At Sydney and at Washington I reaffirmed our willingness now, as in the past, to play an appropriate part in bringing about a freer world system of trade and payments.
Earlier in my remarks I referred to the fact that there has been a return to more normal competitive conditions in world markets. As might be expected, this development has brought with it growing protectionist pressures in many countries, including Canada. It should be clear that any retrograde step at this time would not only prejudice the achievements we have already made but would also jeopardize the prospects for real progress which are now at hand.

I come now to a review of economic developments in Canada during 1953 and the outlook for 1954. In 1953 the Canadian economy reached new peaks of production, employment and consumption. A year ago I based my budget on the expectation that the gross national product would increase by about 4 per cent; actually it increased about 5 per cent. Since population increased less rapidly than national product and since prices were stable, the average Canadian worker and consumer had more dollars to spend and was able to obtain more goods for his dollars than in any year in our history.
The main factors responsible for the high level of production of 1953 were much the same as those of 1952 although the relative importance of some of them varied. Our very large defence program continued to give strong support to production and personal incomes, but this element has become a sustaining rather than an expansionist force. In each of the years 1951 and 1952 defence expenditures increased by about $600 million, whereas in 1953 they were about the same as in 1952 and there will be not much change in 1954. This slowing down in the growth of defence expenditures no doubt contributed to the levelling off of production in some industries that became evident toward the end of 1953.
On the other hand, a very substantial increase in consumer expenditures, and an expanding program of private capital investment, were strong stimulating forces. Consumer expenditures, strengthened by the continued rise in real incomes, showed a particularly large increase, and were the most dynamic force in the upward movement of 1953.
New investment in plant, equipment and housing rose by 10 per cent. New housing showed the most striking increase, rising by about 30 per cent, and was responsible for almost two-thirds of the total increase in durable physical assets put in place in 1953. There was a considerable increase in construction in the sectors of trade and commerce and in institutional building, where investment had previously been postponed by government restrictions during the early defence build-up period. Capital expenditures in manufacturing declined slightly, but investment in mining and resource development continued to increase. There was a significant increase in business inventories during the first nine months of the year, concentrated largely in the manufacturing and retail groups. The decline in inventories
The Budget-Mr. Abbott during the final quarter, though it contributed to the levelling off of business activity, was basically a constructive adjustment.
Finally, 1953 was also another big year for Canada's external trade. Imports continued the upward trend which first became apparent in the latter part of 1952, and were 9 per cent greater than the previous year. Exports, on the other hand, while still at very high levels showed a decline of 4 per cent from the record established in 1952.
The substantial increase in demand for imports reflects in large part the high levels of investment and consumer spending which characterized the economy during 1953. It also reflects the improved supply situation in many countries and sharper competition in world markets. These factors also contributed to the small decline in Canadian exports, including such traditional export products as wheat, woodpulp and farm machinery.
A significant change took place in the direction of our export trade. Sales to the United States rose by over $100 million, while the proportion of our exports going to the United Kingdom and other commonwealth markets declined, reversing the trend which had prevailed during 1952. On the other hand, there was some increase in the proportion of our imports coming from the United Kingdom.
The emergence of an import surplus on merchandise account was the main reason for the swing in Canada's balance of payments position from a current account surplus of $157 million in 1952 to a deficit of some $467 million in 1953.
Short-term capital movements during the past year showed a much smaller net outflow on balance than in 1952. At the same time there was an increased inflow of longterm capital associated with an expansion in direct investment in Canada and net sales of new Canadian issues abroad were again substantial. These capital movements produced a surplus on capital account roughly equivalent to the deficit on current account, and there was little net change in our foreign exchange reserves. The foreign exchange value of the Canadian dollar showed almost no net change during the year. It declined moderately from January to May, and then moved up slowly to the end of the year.
Coming now to the present position, the first thing to observe is that the real income of the Canadian people has been expanding at a rapid rate for a number of years. The fact that the economy in 1953 was able to achieve further gains of the magnitudes I have sketched suggests to me that we should


year, these outlays, all of which of course were authorized by parliament, amounted to $430 million. To meet these requirements we have had available from non-budgetary sources the very large sum of $810 million, of which $445 million came from the repayment of loans and advances and $200 million from net receipts and interest accumulations in various annuity, insurance and pension accounts. Details of all these transactions are given on page 62 of the white paper.
After taking into account our budgetary surplus of $10 million and the net amount of $380 million remaining from all these nonbudgetary transactions, $390 million was available for debt reduction. Actually, funded debt in the hands of the public was reduced during the year by about $270 million, and our cash balances at the end of the year were $120 million higher than they were at the beginning.
The public debt operations during the past year have included the redemption or refinancing of a large volume of matured or called bond issues. In addition to the usual refunding or conversion of short term securities, we issued new securities amounting in round figures to $3,150 million and redeemed old securities and acquired others for our sinking fund and securities investment accounts in the amount of $3,420 million. As a result, as I indicated a moment ago, we were able to reduce our unmatured funded debt outstanding in the hands of the public by $270 million.
The average rate of interest paid by the government on its funded debt was slightly higher at the year-end than it was at the beginning. Two years ago the rate was 2-67 per cent and last year it was 2-77 per cent. At March 31, 1954 it was 2'86 per cent.
I turn now to a consideration of a tax policy appropriate to the coming year.
Our present tax structure under prosperous conditions, without inflation, and allowing for a normal growth factor, would produce revenues of about $4,500 million this year. Present indications, in my opinion, point to an early resumption of an upward trend in business, and a good prospect of this figure being realized. It is, of course, possible that external factors might be such that the present pause in our expansion would continue through most of the year, and if that happened our revenue would be lower. I feel fully justified, however, in basing my tax policy on a liberal rather than a conservative estimate of the future. I propose, therefore, to take $4,500 million as

my revenue base; and if I may have unanimous consent I shall insert at this point in Hansard a table giving the details which make up this total.


Mr. Speaker:: Has the minister the consent of the house to place the table on Hansard?


Some hon. Members:: Agreed.


Douglas Charles Abbott: The table follows:
Table I
Revenues Before Tax Changes (in millions of dollars)
(Prelimi-
	1954-55	nary)
Personal income tax 	$1,235	$1,189Non-resident income tax 	55	54Corporation income tax	1,200	1,194Succession duties 	40	40Customs import duties 	415	408Sales tax 	610	592Other excise duties and taxes	540	518Miscellaneous taxes 	15	14Total tax revenues 	4,110	4,009Non-tax revenues 	340	317Special receipts and credits	50	74Total revenues 	4,500	4,400Old Age Security Taxes	2 per cent sales tax	153	1482 per cent personal income tax ..	97	912 per cent corporation income tax	56	55Total 	306	294
The main estimates of expenditure have already been tabled and total $4,492 million. With the co-operation of my colleagues and the treasury board staff, I have been following each year a policy of steadily improving the quality and the completeness of the main estimates, and I believe that this year they are as complete as it is possible to make them. There will, of course, be some supplementar-ies, but I can foresee no large items overhanging us, such as we had last year in the losses related to foot-and-mouth disease and in the costs of the general salary increase for the public service, which together totalled nearly $100 million. Each of the more than 500 items which make up the total estimates are individual maximum authorizations, and there is bound to be a certain amount of underspending and lapsing. The original estimates have been carefully screened and the lapsings will not be large, but they can hardly average less than 1 or 2 per cent. All in all, I have come to the conclusion that a prudent estimate of our total budgetary expenditures is $4,460 million.
My general philosophy with respect to taxation has always been that in good, prosperous years we should balance the budget with a bit over for the reduction of debt. When we
The Budget-Mr. Abbott have had exceptional years, and especially under conditions of inflationary pressures, I have never apologized for having a substantial surplus for debt reduction. I am also convinced that whatever merit there may be in large scale deficit financing under severe conditions, those conditions neither exist nor are they in prospect. On the other hand, I do not think one should be unduly cautious and refuse to consider desirable tax reductions just because conditions might deteriorate and we might have a small deficit.
Taking, therefore, $4,500 million as my revenue base, and $4,460 million as my expenditures, I have a modest sum of about $40 million available for tax abatement.
Beyond the budgets we shall, as usual, have to find cash to make authorized loans, advances and investments. We shall probably require about $125 million for loans to Central Mortgage and Housing Corporation. The Canadian National Railways capital requirements in 1954, which are initially financed by advances from the government, will come to about $190 million. Funds will be needed for other crown corporations and for loans under veterans' legislation and other authorized purposes. There are likely to be net disbursements from the defence equipment replacement account, and it would appear that the revenues of the old age security fund will again fall short of payments. To finance all these requirements, there will be cash available from nonbudgetary sources, mainly from the repayment of loans and advances and from the various insurance, pension and annuity accounts which the government holds and administers. It is not possible to forecast these non-budgetary items accurately, but I expect that, excluding funded debt operations and the requirements of the C.N.R., there will probably be a small net balance in our favour.
Another matter that I am required to report upon to parliament is the position of the old age security fund. I have included this report in the white paper at pages 67 and 68. Hon. members will recall that payments under the Old Age Security Act began in January, 1952, but contributions to the fund became payable at different dates-the 2 per cent sales tax in January of that year, but the 2 per cent personal and corporate income taxes not until July, 1952. There was therefore a long lag between payments out of and payments in to the fund. This lag created a deficit in the fund of $50 million in the first three months of 1952, and contributed largely to the deficit of $99-5 million in the year ended March 31, 1953. Recognizing this lag,
3730	HOUSE OF
The Budget-Mr. Abbott parliament in 1952 appropriated funds from general revenue to extinguish the first three months' deficit.
Last year I reported to parliament that because of the continuing effects of the initial time lag I would have to wait another year before I could form a proper judgment on the real balance of income and outgo in the old age security fund. At that time I had expected revenues of $278 million, payments of $345 million, and a probable shortfall of $67 million. In fact the results have been much better. Payments were $6 million less than I had forecast, revenues $16 million higher, and the deficit at $45 million is one-third less than expected.
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.
Under the Old Age Security Act, deficits in the fund are met by temporary loans from the Minister of Finance and these loans are carried as active assets on our balance sheet. The $99-5 million deficit of 1952-53 resulted in large measure from the original time lag between the commencement of payments and contributions. I do not believe any useful purpose is served by carrying this liability of the fund forward into another year, and I propose, with the consent of parliament to write it off against our accumulated active asset reserve.



FEDERAL-PROVINCIAL FINANCIAL RELATIONS

[Stage Direction]
Before completing this statement of tax policy for the ensuing year, I must make some reference to the general field of federal-provincial financial relations by reason of the fact that the province of Quebec has decided to impose again a personal income tax.
The right of any province to impose such a tax has never been questioned. The preamble to the recent Quebec statute imposing the tax contains a statement, however, which cannot be allowed to pass unchallenged. That preamble contains the following words:
Whereas the Canadian constitution concedes to provinces priority in the field of direct taxation:
There is no foundation in fact or in law for such a statement. The provisions of the B.N.A. Act in this regard are clear and unam-oiguous. Federal taxing power is unlimited. Provinces are limited to direct taxation within
[Stage Direction]

the province for provincial purposes. Nopriority is stated and none is implied. On the contrary, both levels of government have equal and concurrent rights in the field of direct taxation.
Within their powers of direct taxation, provincial governments have imposed general retail sales taxes, taxes in respect of particular commodities such as gasoline, tobacco and liquor, security transfer taxes, and so on. In fact, with the exception of customs duties,
I know of no important source of revenue used by the federal government which has not also been available to provincial governments. Presumably all provincial taxes are direct taxes. If provincial priority in the field of direct taxation is admitted, it follows that they have priority in the case of all the taxes which they levy, including these sales taxes and commodity taxes of all kinds.
Under such a doctrine, the provinces would have the right to demand that the federal government, in effect, abandon taxes up to the extent of provincial use. The federal government would be bound to accommodate fully whatever level of direct taxes the provinces wished to impose, and federal taxes would have to be abated to the extent called for by provincial authorities.
There is, of course, nothing whatsoever in our constitution to support such a doctrine of provincial priority, and no federal state could survive as a nation under such an arrangement.
So far as personal income tax is concerned, the federal government entered this field in 1917 and has remained in it continuously since that time. Today, the personal income tax is one of the main pillars of the federal revenue system.
My own province of Quebec did not enter the personal income tax field until 1940 with a tax applicable to the year 1939. It was then abandoned at the end of the following year when wartime tax agreements were entered into. Thus for only two years out of the eighty-seven years since confederation has the province of Quebec attempted to exercise its right to levy such a tax.
This Quebec income tax was imposed as a flat percentage of the federal tax currently in force at that time. As such, it carried the same level of exemptions and, accordingly, was payable by the same people as were subject to the federal tax. The Quebec tax was in addition to the federal tax. No taxpayer was allowed to reduce his federal tax by the amount paid under the provincial law. They were two parallel taxes on the same income payable to two governments.

The present Quebec income tax law does not follow this pattern. It levies the tax under a separate rate structure, provides for different exemption limits and deductions and imposes a tax upon some only of the persons liable for federal income tax. On those to whom the Quebec tax does apply, my understanding is that the rates work out at about 15 per cent of the federal rates.
Since 1947 the federal law has contained a provision allowing taxpayers to offset up to 5 per cent of their federal tax through payment of a provincial income tax. Generally speaking, the credit in the federal law in respect of succession duties, corporation income taxes and personal income taxes levied by provinces gives leeway approximating the previous level of use of these taxes by provincial governments prior to the war. It was introduced as a measure to accord some degree of relief to taxpayers taxed at the same time by two governments. It was entirely a unilateral concession which called for no comparable concession of any sort by a province. So far as I am aware, this type of tax concession is unique and is found in no other federal tax system.
For instance, in the United States of America, in addition to the federal income tax some thirty different states levy personal income taxes. These state taxes are at varying levels. In New York state, for example, a married person with no dependents with an income of $5,000 a year pays $45 to the state of New York, and $660 to the federal government. It may be of interest to observe that a taxpayer in Quebec with the same income and marital status will pay a provincial tax of $49 but has the right to a credit of $28.50 against his federal tax, a privilege not enjoyed by his fellow sufferer in the state of New York. In the neighbouring state of Pennsylvania no state personal income tax is imposed. Accordingly, a resident of Pennsylvania pays less income tax than does the resident of New York. The weight of combined federal and state taxes will vary with the different states. Perhaps it is of the essence of state or provincial autonomy that their tax levels may differ. It is this very right to be different that is so jealously guarded. The idea that there is anywhere a recognized principle that in a federal state the combined taxes levied by all governments should be no greater in one part of the country than in another is without foundation.
The principle underlying the suggestion that provincial tax should generally be allowed as an offset against federal tax strikes at the very root of the system of federal-provincial tax agreements which have been
The Budget-Mr. Abbott developed in this country. It might be useful, therefore, to outline what it has been sought to accomplish by these agreements.
Prior to 1940, seven of the then nine provinces, as well as many municipalities, were levying personal income taxes. Today there are only two personal income taxes in force-the federal and that of the province of Quebec. Prior to 1940, seven of the provinces imposed taxes on the profits of corporations at varying rates. All provinces imposed a complicated series of miscellaneous corporation taxes. Today there are only two corporation income taxes-the federal and Quebec-while Quebec also resorts to a series of other miscellaneous corporation taxes. Previously all the provinces levied succession duties. Today succession duties are imposed by only the federal government, Ontario and Quebec. The heavy costs incidental to the mere collection of taxes from Canadians as a whole have been greatly reduced. In this respect the federal-provincial agreements have been of the greatest benefit to the provinces, to the federal government and to the whole body of Canadian taxpayers.
While the complete removal of double taxation over so wide a field with the benefits of simplification and efficiency is important, it is probable that the most significant and fundamental feature of the agreements is the way in which they have provided financial stability for the less well-off provinces. The house will recall that in the later thirties a number of provincial governments were in dire financial straits, and were facing the necessity of curtailing essential services to an extent which would have imposed great strains on our federal structure. The situation was very serious. The federal-provincial agreements have provided, through the avenue of friendly discussion, a system under which reasonable and stable revenues are currently being provided to those provinces whose fiscal needs call for more revenue than they could be expected to collect by their own methods. These agreements have helped to enable these provinces to maintain minimum national standards of provincial services.
The third main purpose of the agreements has been to enable the federal government, with the co-operation of provincial governments, to carry out fiscal and other national policies which help to maintain high levels of employment and production in Canada.
Summing up the value of this system of federal-provincial agreements, perhaps I might be allowed to quote one paragraph
3732	HOUSE OF
The Budget-Mr. Abbott from a statement which I made to the federal-provincial conference in 1950:
I have said that some credit is due to everyone seated at this table for the remarkable progress towards a sane tax system which has been made in recent years. The provinces which have been willing to rent to the federal government their important rights in the fields of income and corporation taxes and succession duties have contributed greatly to this desirable result. Under the agreements, literally hundreds of taxes of one sort or another have been suspended and replaced by a relatively few. Meantime, these provinces have received in remuneration rental payments, steadily rising with the increase in national income and provincial population and of a magnitude greater, I believe, than could have been obtained by the direct provincial cultivation of the tax fields in question-at least unless the intensity of cultivation had been pushed to a point which would scarcely have been tolerable under today's conditions. Thus at one stroke a great many old and diverse levies have been suspended while reasonable returns through payments from the federal government have been assured by the agreements. To my mind, this is the essence of effective tax administration.
This Canadian plan of tax rental agreements as a method or device for dealing with the financial problems of the members of the federal state has been developed on a practical basis. Following the rejection of the Rowell-Sirois recommendations, the federal government proposed the wartime tax agreements under which all provinces for the duration of the war, in consideration of certain rental payments, suspended their income and corporation taxes.
After the war the same old problem presented itself again and at the 1945 federal-provincial conference the federal government put forward a comprehensive plan as a substitute for the wartime agreements. This plan was found to be not acceptable to all provinces.
Again the federal government, without the benefit of any workable alternative proposals from the provinces, had to devise some practicable solution to meet the post-war situation. The tax rental agreements were the result and their great virtue is that in achieving important objectives they do not depend upon unanimous acceptance by all provinces.
Prior to the termination of the first series of agreements which had been entered into by seven provinces, a federal-provincial conference was called in 1950 to discuss with all the provinces the prospects for the renewal of the agreements and any suggestions for modification in their terms. Again there were no proposals put forward for
[Stage Direction]

any alternative comprehensive method of solving the over-all problem of conflicting' tax jurisdictions in Canada.
The various options offered under the present agreements have been developed in a genuine attempt to meet the diverse financial needs of provinces which, unfortunately, are not all equally endowed with natural advantages. Naturally provincial governments will continue to argue that the agreements should provide higher rental payments, but by and large the terms are tolerably acceptable to all.
The province of Quebec alone has decided not to rent its income and corporation tax fields to the federal government. I wish to make it perfectly clear as I have on other occasions that the federal government has not urged the province to enter into such an agreement and has no quarrel with the decision taken by the government of that province to use its own tax fields rather than to rent them to the federal government.
The statute imposing the new personal income tax in Quebec was adopted without any prior consultation with the federal government. I do not suggest, of course, that such consultation was necessary, but the tax was imposed with full knowledge of the extent of the tax credit available under the federal law since 1947, which is limited to 5 per cent of the federal tax.
It is now suggested that the federal government should allow taxpayers in Quebec to reduce the income tax otherwise payable by them to the federal treasury by the full amount they are required to pay to the province. I have given this suggestion the most careful and serious consideration. Clearly, however, the obvious implication of the principle involved in this proposal is that this parliament should recognize that any province has the right to determine the amount by which the people of that province may reduce their national tax liability. I consider that any such principle is completely unacceptable.
If a credit up to 15 per cent of the federal tax were accepted, it would appear to be difficult in principle to later deny full credit for, say, a 30 per cent, a 60 per cent or even a 100 per cent provincial tax. If a province had the suggested constitutional priority in the field of direct taxation, then nothing short of the right to reduce federal tax by 100 per

cent would be the stopping point. This would imply that a provincial government without imposing any additional burden on its own taxpayers could secure to its own treasury the full amount which would otherwise be payable by its people to their national government. This would be the obvious consequence of allowing a province to determine the degree of offset against federal tax to accommodate its own tax. I can here only repeat what I said earlier on this point. There is no justification under our constitution for such doctrine. Its acceptance would not only place the federal treasury in an intolerable position but it would completely destroy any basis for federal-provincial tax rental agreements. While this, of course, might not be a matter of serious concern to the wealthy provinces, it can scarcely be disregarded by others.
I have indicated the efforts made by the federal government since 1945 to find a basis for fiscal co-operation which would be fair to all the provincial governments, would fully respect provincial autonomy, and at the same time enable the government of the nation to discharge its obligations to all the citizens of Canada in all the provinces. The tax rental agreements represent the best solution it has so far been possible to find.
It is obviously impossible to conduct intergovernmental discussions through press conferences and public statements, but if the premier of Quebec wishes to follow up his frequently expressed desire for co-operation and collaboration, and will make concrete proposals to the federal government which respect the rights of both federal and provincial authorities under the constitution, which would be fair to all ten provinces and leave the federal government in a position to discharge its national obligations, he will always find the door open for full and frank discussion in the hope of finding a mutually satisfactory solution.
Finally, perhaps I should say a word about what appears to be the attitude of the Conservative opposition on this subject as evidenced by the resolution recently adopted by the Progressive Conservative association. The resolution is reported in the press as follows:
"The Conservative party advocates the principle that any provincial income tax levied by the government of any province be deductible from income tax payable to the federal government by any taxpayer of such province, provided the amount of such taxation does not exceed the amount that 83276-236
The Budget-Mr. Abbott such province would have received from the federal government if such a tax agreement had been negotiated."
This resolution clearly does not support the doctrine of provincial priority in the field of direct taxation asserted in the Quebec statute. Rather it is a general proposition that stems from the tax rental agreements. It appears to propose that any province which does not rent its tax fields should be accommodated indirectly from the federal treasury up to the amount of rent it would have received if it had rented its tax fields. I must confess I find that principle somewhat bewildering, but it would appear to be as effectively destructive of any basis for federal-provincial tax rental agreements as the priority doctrine to which I have alluded. However, if I have misunderstood the purport of the resolution, I am sure hon. gentlemen opposite will clarify the matter during the course of this debate.

[Stage Direction]
May I now place before the house my proposals for tax changes. As I said earlier, there is not much margin for tax reductions, and I have had to consider carefully how I can get the most equity and the best economic results with the resources at my disposal.
Clearly it is not possible to make any general reduction in the income tax rate structure, either for individuals or for corporations. The most I can do in this field is to make a few desirable adjustments. None of them will have any significant effects on revenue.
The incentive legislation for the oil, gas and mining industries will be extended for a further year. In the case of deep-test wells, however, this special concession will in future be restricted to more complicated structures such as occur in the foothills. An amendment will be introduced to re-establish past policy with respect to the tax status of fire and casualty mutual insurance companies. It is proposed to withdraw the provision in the income tax regulations which limits the! deductions for capital costs to the amount taken on the taxpayers' books of account. The maximum deduction allowed for contributions to pension funds will be increased from $900 to $1,500 for both employers and employees.
These are the main changes involving questions of principle, though the amending bill will as usual contain a number of technical changes to keep the law up-to-date and as fair as possible.

[Stage Direction]
Our succession duty law is in need of revision. Within the past few years a great deal
3734	HOUSE OF
The Budget-r-Mr. Abbott oif progress has been made in improving our federal tax laws. It is generally agreed, I think, that an excellent job has been done through rewriting our Income Tax Act. The Excise Tax Act has been streamlined, simplified and made more systematic. Up until now I have not been able to devote enough time to a similar improvement in succession duties. However, I have recently asked officials of the three departments concerned-finance, national revenue and justice-to commence work on rewriting the law.
In the next few months, while the redrafting is proceeding, the views of informed and interested persons, or groups of persons, would be welcomed on any provision in the law which deserves reconsideration. In the meantime no change will be made in the present law.

[Stage Direction]
The budget resolutions relating to the Customs Tariff which I am tabling touch 74 tariff items. I am proposing changes in wording in about 50 of these items which would remove uncertainties, anomalies, and administrative difficulties which have arisen. The other changes all involve reduction or suspension of duties. No increases in duty are proposed.
The duty is being eliminated on machinery and apparatus, including tubing of a class or kind not made in Canada, for the operation of potash and rock salt mines. A former drawback item is being re-established to provide for a drawback of 99 per cent of the duty paid on fire clay fire brick used by basic producers of iron or steel. Duty free entry is provided for materials and parts used in the construction and repair of railway signal systems. The duties on motor rail cars or units are suspended until July 1, 1956, and on uranium until July 1, 1958.
Some of the principal items on which the tariff has been substantially reduced include automatic controls for certain sterilizing processes, tear gas ammunition for use by law enforcement authorities, and impregnated jute fabric used by nurserymen. Motor vehicles imported as settlers' effects are presently exempt from duty and taxes when valued at not more than $1,500 but duty and taxes apply on any value in excess of that amount. This exemption has been increased to $2,500.
[Stage Direction]

A new tariff item has been established to provide for duty-free entry of personal gifts not exceeding $25 in value sent from members of the Canadian forces serving abroad to relatives or friends in Canada. This item continues the exemption provided for by order in council P.C. 6598 of December 6, 1951. Last year we provided duty-free entry for goods valued at not more than $1,000 imported by members of the Canadian forces after an absence from Canada of not less than a year. I now propose to abolish this $1,000 limit, and to provide statutory authority for the long established practice of extending the same privilege to employees of the Canadian government returning from foreign postings.
While each of these tariff reductions will be of real benefit to the producers or individuals affected, their over-all revenue implications are not significant.

[Stage Direction]
I have decided, both for reasons of equity and economic effects, that the bulk of the available tax abatement should be in the commodity tax field. I do not propose any change in the general sales tax rate, but I can recommend some useful changes with regard to the 15 per cent special excise tax. I regret that I am not able to recommend any change in the taxes on automobiles, television sets, radios, phonographs and cigars. The revenue from this group is quite substantial and is more than I can forgo at this time; and consumer demand for these products has been well maintained. Furthermore, in respect of radios and television sets, last year parliament withdrew the radio receiving licence fee, and directed that in its place the 15 per cent excise on sets should be assigned as revenue to the Canadian Broadcasting Corporation. I think it would be inappropriate to recommend any change in this tax for the time being.
I can, however, recommend a reduction from 15 per cent to 10 per cent on such items as soft drinks, candy, cosmetics, tires and tubes, motor cycles, smokers' accessories, matches, coin operated amusement devices, fountain pens, clocks, watches and jewelry.
I can also recommend that the 15 per cent special excise tax be removed completely from furs; electrical household appliances such as vacuum cleaners, floor polishers, irons and ironers, coffee makers, toasters and food

mixers; firearms, golf clubs, fishing equipment; cameras and films; merchandise vending machines; and luggage.
The revenue loss involved in rate reduction from 15 per cent to 10 per cent for the one group, and in the complete exemption of the other, will amount to approximately $33 million.
While the sales tax rate will remain unchanged, I am recommending the addition of certain items to the schedule of exemptions. It is proposed to include in the exempt list certain classes of road machinery and fire fighting equipment when purchased for their own use by municipalities. Wall panels will be added to the list of exempt building materials. Miscellaneous items include the small sizes of drain tile, sheet music and hearing aids. Total revenue loss under all these sales tax changes will be about $3 million.
Taxes in the field of liquor and tobacco products will continue at their present levels. A technical change will be made in the method of taxing beer. The present tax on malt used in making beer will be replaced by a gallonage tax. The purpose of the change is to introduce a more modern method of taxation without affecting substantially the general level of taxation in the industry.
All customs and commodity tax changes will be effective tomorrow, April 7. My colleague the Minister of National Revenue (Mr. McCann) has asked me to give notice that in accordance with standard practice no claims for refunds arising out of tax reductions in respect of goods on which tax has been paid will be entertained.

[Stage Direction]
I can now summarize my revenue and expenditure estimates for the coming year. The reductions in taxation which I have announced will mean a loss of revenue of about $36 million, and that reduces my revenue figures from $4,500 million to $4,464 million. Since I have estimated my expenditures at $4,460 million, I am budgeting for a surplus in the nominal amount of $4 million. If I may have unanimous consent, I shall insert here in Hansard the usual table showing the details.
Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.
The Budget-Mr. Abbott Mr. Abbott:
Table II
Revenues After Tax Changes (in millions of dollars)
Personal income tax	$1,235
Non-resident income tax	 55
Corporation income tax	 1,200
Succession duties	 40
Customs import duties	 415
Sales tax	 607
Other excise duties and taxes	  507
Miscellaneous taxes	 15
Total tax revenues	 4,074
Non-tax revenues	 340
Special receipts and credits	 50
Total revenues	 4,464
Old Age Security Taxes
2 per cent sales tax	 152
2 per cent personal income	tax	
972 per cent corporation	income tax	
56Total	
305
I have reminded hon. members almost every year that in dealing with figures of these magnitudes slight changes in revenue can create big changes in the residual surplus. Each one per cent change in revenue means $45 million. A two or three per cent change means a difference of $100 to $125 million.
As I explained earlier, my revenue figures are based on reasonably optimistic assumptions. I have said frankly that their realization depends upon an early resumption of our normal rate of expansion, which in turn depends very heavily on the external influences affecting our economy. If these conditions do not materialize, there could be a moderate deficit of two or three per cent.
That, Mr. Speaker, concludes my presentation of the contents of my budget. We have completed a year which has broken all our past records of economic achievements in production, in investment, in housing and in standards of living. The past six months have seen some mixed trends; some sectors are expanding as rapidly as ever, some have levelled off and a few have actually declined; but I am confident that unless external factors work against us, we shall soon be moving into a new and healthy period of expansion.
Internationally the political situation remains clouded and uneasy, but I believe the prospects for fundamental economic improvement are brighter than at any time since 1947. I am hopeful that the year ahead of us will see new and important constructive moves in the direction of improved international trade and payments arrangements,

The Budget-Resolutions which will enlarge our established markets and open doors to new markets. These markets and ours will be competitive, and will constitute a challenge to management and labour, to farmers and merchants. The outside world is under no obligation to maintain the Canadian standard of living. That is something we have to do for ourselves. Our costs and our prices will have to be kept in line by continuous improvement in efficiency. I need hardly add that high standards of living and low costs of production cannot be permanently divorced; indeed, the whole economic history of the last hundred years shows that they go together. I am confident that we in Canada can achieve and retain both.



INCOME TAX ACT

[Stage Direction]
"Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That the exemption of income from metalliferous or industrial mineral mines for the first three years of production be extended to mines coming into production during the calendar year 1957.
2.	That the special deduction from income allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of exploring or drilling for oil or natural gas in Canada, be allowed for expenses incurred in the calendar year 1957, and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring for minerals, for expenses of exploring or drilling for oil or natural gas in Canada incurred in the calendar year 1957.
3.	That the special deduction from income allowed to corporations whose principal business is mining or exploring for minerals, for expenses incurred in searching for minerals in Canada be allowed for expenses incurred in the calendar year 1957; and that in addition a similar deduction be allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of searching for minerals in Canada incurred in the calendar year 1957.
4.	That the special deduction from income and taxes allowed to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum
[Stage Direction]

and to taxpayers whose principal business is mining or exploring for minerals, for expenses incurred in respect of deep-test oil wells be allowed for expenses incurred in respect of deep-test oil wells spudded in during 1955.
5.	That for the 1954 and subsequent taxation years the deduction allowed to an employer or employee in respect of amounts paid or contributed to or under an approved superannuation fund or plan shall be increased from $900 to $1,500.
6.	For the taxation of a resident mutual insurance corporation, other than a life insurance corporation, as though the surplus arising from its insurance activities on and after January 1, 1954 were a profit from a business, and declaring that a non-resident mutual insurance corporation, other than a life insurance corporation, shall be deemed to be and always to have been subject to taxation on that basis.

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Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide, among other things:
1.	That the excise tax on the following goods be repealed:
(a)	furs;
(b)	electrical appliances adapted to household or apartment use, namely:	blankets;
chafing dishes; coffee makers; curling irons or tongs; dish washers; food or drink mixers; food choppers and grinders; floor waxers and polishers; garbage disposal units; hair dryers; irons and ironers; juice extractors; kettles; portable humidifiers; razors and shavers; toasters of all kinds; vacuum cleaners and attachments therefor; waffle irons;
(c)	firearms and complete parts thereof and ammunition;
(d)	golf clubs and golf balls;
(e)	fishing rods and fishing reels;
(f)	cameras, camera lenses and unexposed photographic films and plates; projectors for pictures;
(g)	trunks; suitcases; bags and luggage of all kinds; purses; wallets; billfolds; key and card cases; handbags; jewel cases; dressing and toilet cases; shopping bags; golf and other sports bags;
(h)	coin, disc or token operated vending machines.
2.	That the excise tax on the following goods be reduced from fifteen per cent to ten per cent:
(a)	articles, materials or preparations of whatever composition or in whatever form,

commonly or commercially known as toilet articles, preparations or cosmetics, which are intended for use or application for toilet purposes, or for use in connection with the care of the human body, including the hair, nails, eyes, teeth, or any other part or parts thereof, whether for cleansing, deodorizing, beautifying, preserving or restoring, and including shaving soaps and shaving creams, antiseptics, bleaches, depilatories, perfumes, scents and similar preparations;
(b)	motor cycles and all other two- or three-wheeled motor driven vehicles including motors for attachment to bicycles;
(c)	devices, commonly or commercially known as lighters;
(d)	coin, disc or token operated games or amusement devices of all kinds;
(e)	ash trays; tobacco pipes; cigar and cigarette holders; cigarette rolling devices and other smokers' accessories;
(f)	fountain pens; bail-point pens; ink pencils; propelling pencils; desk sets and all other desk accessories;
(g)	matches;
(h)	tires and tubes in whole or in part of rubber for self-propelled machines or automotive vehicles of all kinds;
(i)	clocks and watches;
(j)	articles of all kinds made in whole or in part of ivory, jet, amber, coral, mother of pearl, natural shells, tortoise shell, jade, onyx, lapis lazuli, or other semi-precious stones;
(k)	articles commonly or commercially known as jewelry, whether real or imitation, including diamonds and other precious or semi-precious stones for personal use or for adornment of the person; goldsmiths' and silversmiths' products; pewter ware;
(l)	articles of cut glassware, crystal glassware, cut or not, etched glassware, or metal decorated glassware;
(m)	articles of china, porcelain, earthenware, marble, stoneware, or other pottery ware;
(n)	carbonated beverages, aerated waters, unfermented fruit juice beverages and imitations thereof and all other compounded or mixed soft drinks and all mixtures or products advertised or sold for making soft drink beverages or imitations thereof, whether sold in liquid, concentrated or in dry form;
Co) candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy.
3.	That the excise tax on carbonic acid gas and similar preparations be reduced from twenty-five cents per pound to fifteen cents per pound.
The Budget-Resolutions
4.	That the sales tax on the following goods be repealed:
(a)	oil and gas burners and stokers for use with furnaces for the heating of buildings;
(b)	coal crushers and stokers for use directly in the manufacture or production of goods;
(c)	equipment sold to or imported by municipalities for their own use and not for resale, at a price in excess of one thousand dollars per unit, specially designed for use directly for road making, road cleaning or fire fighting, but not to include automobiles nor ordinary motor trucks;
(d)	wall panels for use in buildings and materials for use in the manufacture of such panels;
(e)	drain tile not exceeding four inches in inside diameter and twelve inches in length;
(f)	sheet music and materials used in its manufacture;
(g)	hearing aids and parts therefor including batteries specifically designed for use with such hearing aids.
5.	That provision be made to require the payment of sales and excise taxes on all products packaged and sold as lighter fluid.
6.	That provision be made to require the payment of sales and excise taxes on the packaging used to contain goods subject to these taxes and on any other articles packaged with them whether the goods are imported, or are manufactured or produced in Canada.
7.	That provision be made to ensure that machines and tools for operation by tractors are not included as accessories therefor in the prevailing exemption from sales tax.
8.	That any enactment founded upon this resolution be deemed to have come into force on the seventh day of April, nineteen hundred and fifty-four.

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Resolved, that it is expedient to introduce a measure to amend the Excise Act and to provide, among other things:-
1.	That the excise duty on malt be repealed and an excise duty of thirty-eight cents a gallon be imposed upon all beer or malt liquor subject to an allowance for wastage.
2.	That any enactment founded upon this resolution be deemed to have come into force on the seventh day of April, nineteen hundred and fifty-four.
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The Budget-Resolutions :	CUSTOMS TARIFF
1.	Resolved, that schedule A to the Customs Tariff be amended by deleting there-.from the following enumeration of goods and *rate of additional duty of customs:
\ "Ale, beer, porter and stout, 40 cents per gallon"; and by substituting therefor the following enumeration of goods and rate of additional duty of customs:
"Ale, beer, porter and stout, 38 cents per gallon."
2,	Resolved, that schedule A to the Customs Tariff be further amended by striking
thereout tariff items 187, 189, 263b, 290, 343, 345a, 352a, 353(a), (b), (c), (d), (e), (f), (g),
(h)	and (i), 402, 409c(l), 409e(l), 409f, 409m(l), 410f(l), 410o(i), 418, 426, 431h, 437, 440i, 442, 443b, 443d(l) and (2), 445r, 446k, 451, 453a, 476a, 480a, 499a, 535e, 561, 569d, 618b(l) and (2), 660a, 696(1), 696a, 703(c), 704, 705a and 848(2), the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:

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Tariff Item	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff12b	Sausage casings, synthetic, of paper	10 p.c.	15 p.c.	35 p.c.	17i p.c.	25 p.c.	35 p.c.187	Albumenized and other papers, textile fabrics and	films, n.o.p.; all the foregoing chemically prepared	for photographers' use	Free	20 p.c.	30 p.c.	Free	20 p.c.	30 p.c.(Prior	to November 19, 1	952.)189	Paper tubes and paper cones of all sizes, with or without	metal or plastic ends, adapted for winding yarns	thereon	Free	Free	Free	Free	Free .	Free10 p.c.	22, p.c.	35 p.c.15 p.c.	20 p.c. i	30 p.c.206a	(4) Materials and articles for the manufacture of the	!	goods specified in tariff items 206a (1), (2), and (3)..	Free	Free	Free	Various	Various	Various237a	Uranium in the form of pigs, ingots, billets or bars	Free	Free	25 p.c.	Free	15 p.c.	25 p.c.On and after July 1, 1958	Free	15 p.c.	25 p.c.	i263b	Diethyl ketone, methyl normal propyl ketone and	i	blends thereof; methyl ethyl ketone, furfural and	methyl isobutyl ketone; all the foregoing for use	only in the refining of oils	Free	Free	25 p.c.	Free	Free	25 p.c.15 p.c.	20 p.c.	25 p.c.290	Cement, Portland, and hydraulic or water lime, in	hulk or in barrels, bags, or casks, the weight of the	....package to be included in the weight for duty	*	per one hundred pounds	5 ots.	8 cts.	8 cts.	5 cts.	8 cts.	8 cts.15 p.c.	20 p.c.	25 p.c.343	Tin, in blocks, pigs, bars, or granular form	Free	5 p.c.	5 p.c.	Free	5 p.c.	5 p.c.345a	Zinc spelter and zinc in blocks, pigs, bars, rods, or	granular form; zinc plates, n.o.p	per pound	| ct.	1 ct.	1 ct.	l ct.	1 ct.	1 ct.
The Budget-Customs Tariff

Tariff
Item
352a
(1)	Bells, when imported for use of churches only.
(2)	Bells, electronically operated or not, including
amplifiers, drivers, reproducers, transformers, keyboards, automatic control coders, pealing devices (strikes), perforated roll players and perforated rolls for such players, all specially designed for use with such bells, but not to include separate record players, control cabinets containing record playing devices nor microphones; parts thereof; the foregoing when for use in churches only	
Aluminum and alloys thereof;
(a)	Pigs, ingots, blocks, notch bars, slabs, billets,
blooms, and wire bars	per pound
(b)	Bars, rods, plates, sheets, strips, circles,
squares, discs and rectangles	per pound
(c)	Angles, channels, beams, tees and other rolled,
drawn Or extruded Sections and shapes	
(d) Wire and cable, twisted or stranded or not, and whether reinforced with steel or not	
(e) Pipes and tubes.
(f)	Leaf, n.o.p., or foil, less than -005 inch in thickness, plain or embossed, with or without backing.
(g)	Aluminum powder	
(h) Aluminum leaf, less than thickness	
005 millimetre in
(i) Aluminum scrap	
Nothing shall be deemed to be aluminum scrap except waste or refuse aluminum, fit only to be remelted.	I
British
Preferential
Tariff
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
Free
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Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- Favoured-N ation Tariff	General TariffFree	Free	Free	Free	FreeFree	Free	Free	Free	Free171 P-o.	25 p.c.	35 p.c.2 cts.	5 cts.	Free	2 cts.	5 cts.3 cts.	71 cts.	Free	3 cts.	71 cts.221 p.c.	30 p.c.	Free	221 P-c-	30 p.c.22j p.c.	30 p.c.	Free	221 P-o.	30 p.c.221 p.c.	30 p.c.	Free	221 p.c.	30 p.c.30 p.c.	30 p.c.	Free	30 p.c.	30 p.c.30 p.c.	30 p.c.	Free	30 p.c.	30 p.c.Free	Free	Free	Free	FreeFree	Free	Free	Free	Free
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The Budget-Customs Tariff
402
Woven or welded wire fencing, of iron or steel, coated or not, from wire not more than -144 inch and not less than -080 inch in diamater, with tolerance not to exceed '004 inch; wire fencing, oi iron or steel, coated or not, n.o.p	,....
Free
409c
(1) Ploughs and parts thereof
Free
409e
(1) Spraying and dusting machines and attachments therefor, including hand sprayers; apparatus for the destruction of predatory animals by the discharge of poisonous cartridges and poisonous cartridges for such apparatus; starter cartridges for diesel engines; apparatus specially designed for sterilizing bulbs; pressure testing apparatus for determining maturity of fruit; pruning hooks; pruning shears; dehorning instruments; parts of the foregoing	
Free
409f Grain crushers; grain or hay grinders; grain or hay dryers; milk coolers; steel stanchions for confining livestock either in pens or individually, including complete equipment for milking parlors; automatic stock watering bowls; barn litter carriers and track; sprinkler irrigation systems; barn hay forks, carriage, pulleys and track; hydraulic hoists for unloading vehicles; hitches and couplings; plough bolts; all the foregoing for use on the farm for farm purposes only; hay loaders; hay tedders; potato planters; potato diggers; fodder or feed cutters; ensilage cutters; post hole diggers; snaths; stumping machines; grain loaders or elevators with a capacity not exceeding 40 bushels per minute and all other agricultural implements or agricultural machinery, n.o.p.; parts of all the foregoing	
409m (1) Internal combustion tractors other than highway truck-tractors; accessories for such tractors (not to include machines and tools for operation by tractors); ! parts of all the foregoing	
Free
Free
410f
(1) Machinery and appliances of iron or steel, of a class or kind not made in Canada, and elevators, and machinery of floating dredges, for use exclusively in alluvial gold mining; parts of all the foregoing..
Free
12^ p.e.
Free
Free
Free
Free
Free
15 p.c. 35 p.c.
Free
15 p.c.	Free	12} p.c.
	12} p.c.	j 20 p.c.
Free	Free	FreeFree	Free	FreeFree	Free	Free10 p.c.	22} p.c.Free	Free	FreeFree	Free	Free. r?"".	Various	Various
Free
Free 25 p.c.
Free
Free
Various
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The Budget-Customs Tariff

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					Rates in Effect Prior to		
Tariff		British	Most-		Rates Proposed in this Budget		
			Favoured-	General			
		Preferential Tariff					
Item	Nation	Tariff	British	Most-	Tariff	Preferential	Favoured-Nation	General TariffTariff	Tariff	410o	(i) Coal heading machines, electric or magnetic machines for concentrating or separating iron ores, automatic scales for use with conveyors, and parts of all the foregoing, for use exclusively in mining or	Free	Free	Free	Free	Free	Free418	Machinery and apparatus and parts thereof, imported	by manufacturers for use exclusively in the manufacture of fish meal, liquid fish and fish solubles, stock and poultry food and fertilizers from fish and	Free	15 p.c.	20 p.c.	15 p.c. Various	20 p.c. VariousVarious	418a	Devices for the automatic control of the composition of	sterilizing and cleaning solutions used for sterilizing and cleaning purposes in food and beverage industries	S p.c.	12J p.c.	30 p.c.	15 p.c.	221 P.c.	30 p.c.426	Ozone generators or ozone airifiers and parts thereof,	Free	5 p.c.	10 p.c.	Free	5 p.c.	10 p.c.427k	(1) Machinery, of a class or kind made in Canada, for	working metal by turning, milling, grinding, drilling or boring, planing or shaping, and shearing or pressing, and accessories and attachments therefor; parts of the	10 p.c.	221 p.c.	35 p.c.	10 p.c. Various	22$ p.c. Various	35 p.c. Various(2) Machinery, of a class or kind not made in Canada, for working metal by turning, milling, grinding, drilling or boring, planing or shaping, and shearing or pressing, and accessories and attachments therefor; parts of the	
Free	7J p.c.	35 p.c.		71 p.c. Various	35 p.c. Various
					Various		
428i	Governors and parts thereof for use in the manufacture						
	of diesel locomotives		Free	7i p.c.	30 p.c.	Free	71 p.c.	30 p.c.
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The Budget-Customs Tariff
83276-237J
431h
Geophysical surveying precision instruments and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following: magnetometers; gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, non-polarizing electrodes, and electrical equipment for making measurements in drill holes; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; sodium iodide crystals, thallium activated, in rough cut blanks, when imported to be manufactured into parts for use in instruments for prospecting; all the foregoing of a class or kind not made in Canada, and repair parts, tripods and fitted carrying cases for any of the foregoing	
437 Locomotives, cars and coaches and repair equipment, belonging to railroads, brought temporarily into Canada for clearing obstructions, fighting fires, or making emergency repairs on railway lines within Canada; detector cars and rail flaw detector apparatus when imported to test rail in tracks in Canada..
437a (1) Materials, including all parts, of a class or kind not made in Canada, used in the construction or repair of railway signal systems	
(2)	Copper oxide, zinc, alkaline electrolyte, primary
(wet) cell batteries, of a class or kind not made in Canada, for railway signal systems, parts of the foregoing	
(3)	Insulated rail joints and connections for use therewith,
used in the construction or repair of railway signal systems; parts of the foregoing	
437b
Motor rail cars or units and chassis for same, of a class or kind not made in Canada, for use on railways for the carriage of passenger, baggage, mail or express traffic; engines and transmissions for such motor rail cars or
units; parts of the foregoing	
On and after July 1, 1956
Free
Free
Free
Free
Free
Free
Free
Free	30 p.c.	Free	Free
		15 p.c.	20 p.c.
Free	Free		Free
		15 p.c.	22* p.c.
Free	30 p.c.	15 p.c.	22$ p.c.
		Various	Various
Free	27* p.c.	15 p.c.	22$ p.c.
		Various	Various
Free	25 p.c.	$5.00	$7.00
		per ton	per ton
		Various	Various
Free	25 p.c.	Free	20 p.c.
20 p.c.	35 p.c.		
30 p.c. 25 p.c.
Free 30 p.c.
30 p.c. Various
27* p.c. Various
$8.00 per ton Various
35 p.c.
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The Budget-Customs Tariff

Tariff Item	Most-Fa voured-Nation Tariff	Rates in Effect Prior , to Rates Proposed in this Budget	Preferential Tariff	Tariff	British Preferential Tariff	Most- Favoured-Nation Tariff	General Tariff440i	The following articles and materials when imported for use only in the manufacture, maintenance or repair of buoys and beacons for the Government of Canada, viz.: flanged and dished steel boiler plate heads over five feet in diameter; lanterns and electric flashing lights; fog horn and, other warning equipment; marine radio beacon timing equipment; actuating equipment, including low discharge storage	Free	Free	Free	Free	Free	Free15 p.c. Various	22£ p.c. Various	30 p.c. Various441g	Grenades, cartridges and projectiles containing tear gas or sickening gas, imported for sale to federal, provincial	Free	7J p.c.	30 p.c.	10 p.c.	22i p.c.	30 p.c.442	Articles and materials which enter into the cost of manufacture of the goods enumerated in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 4091, 409m, 409n, 409o, 409q, 427b(l), 439c and 618b(l), when imported for use in the manufacture of the goods enumerated in the aforesaid tariff items, or in the manufacture of parts therefor, under such regulations as the Minister may	Free	Free	Free	Free	Free	FreeVarious	Various	Various443b	Oven thermostats, automatic oven lighters and dual valves, for use in the manufacture of apparatus	Free	10 p.c.	30 p.c.	Free	10 p.c.	30 p.c.443d	Gas control devices for use on cooking apparatus, or on apparatus for heating buildings, or on apparatus for heating water, or on apparatus for refrigeration, or in the gas line between such apparatus and the meter, or in the gas line between such apparatus and the consumer's gas storage device; gas control devices for the manufacture or repair of, or for conversion to, gas-fired apparatus for cooking, or for heating buildings, or for heating water, or for refrigeration; parts of all the foregoing: 1. When of a class or kind not made in Canada	Free	5 p.c.	30 p.c.	Free	7| p.c.	30 p.c.Free	10 p.c.	30 p.c.	Free	10 p.c.	30 p.c.| Various	Various	Various
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The Budget-Customs Tariff
445r Apparatus for the receiving and transmitting of photographs, weather maps and charts, by wire; parts of the foregoing	
446k Tools, wholly or in part of iron or steel, n.o.p., of a class or kind not made in Canada, for use in machines
Buckles, clasps, eyelets, hooks and eyes, dome, snap or other fasteners of iron, steel, brass or other metal, coated or not, n.o.p. (not being jewellery); parts of all the foregoing	
453a
Metal parts, n.o.p., in any degree of manufacture but not coated, plated nor covered in any manner, for use in the manufacture of spectacle cases and jewellery boxes; hinges of any material, finished or not, for use in the manufacture of spectacle cases and jewellery boxes	
476a Glassware and other scientific apparatus for laboratory work in public hospitals; chairs and tables for surgical operating purposes and parts thereof; infant incubators and parts thereof; infant and patient identification tapes and ribbons of any material; infant identification bead sets including cases, and parts thereof; electrocardiographs and parts thereof, and sensitized film and paper for use therein; electroencephalographic paper; apparatus for sterilizing purposes, including bedpan washers and sterilizers but not including washing nor laundry machines; all for the use of any public hospital, under such regulations as the Minister may prescribe	
480a Invalid chairs, with wheels; invalid chairs, designed to be used with wheels; parts of the foregoing including motive power and wheel assemblies and parts thereof
499a
Nut shells; nut shell flour, wood flour, bark flour, and mixtures thereof; corn cob granules or flour.
535e
Vegetable fibres, horse hair, and mixtures of vegetable fibres and horse hair, for use exclusively in the manufacture of brooms and brushes	
30 p.c.	Free	Free	30 p.c.15 p.c.	22\ p.c.	30 p.c.35 p.c.	Free	10 p.c.	35 p.c.10 p.c.	22\ p.c.	35 p.c.30 p.c.	15 p.c.	22\ p.c.	30 p.c.15 p.c.	22\ p.c.	45 p.c.Various	Various	Various35 p.c.	Free	12£ p.c.	35 p.c.Free	Free	Free	Free15 p.c.	20 p.c.	30 p.c.15 p.c.	Free	10 p.c.	15 p.c.15 p.c.	25 p.c.	45 p.c.20 p.c.	Free	Free	20 p.c.15 p.c.	20 p.c.	25 p.c.7$ p.c.	Free	5 p.c.	p.c.Free	Free	FreeFree	10 p.c.	17i p.c.15 p.c.	20 p.c.	25 p.c.
The Budget-Customs Tariff
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Tariff
Item
546a
569d
618b
Woven jute fabric, impregnated, imported in lengths not more than three feet each	
Woven fabrics wholly or in part of synthetic textile fibres or filaments, not containing wool, not including fabrics in chief part by weight of silk,
n.o.p	
and, per pound
Woven fabrics containing five per cent or less, by weight, of synthetic textile fibres or filaments are not dutiable under this item, but are dutiable as though such fabrics were composed only of the remaining constituents.
(1)	Woven fabrics, not exceeding three inches in
width, made with unserrated selvages, generally known as single, double or four shot corded ribbon, imported by the manufacturers of men's hats for use exclusively in their own factories in making the bands for, or in binding the edges of, men's hats only	
(2)	Woven fabrics, pleated or folded, sewn or not, in
widths not exceeding three inches after pleating or folding, imported by manufacturers of men's hats for use in their own factories in making bands for men's hats only	
Buffing and polishing wheels or discs:
(1)	The component of chief value being cotton...
and, per pound
(2)	The component of chief value being wool	
Tires and tubes, wholly or in part of rubber:
(1)	For equipment of the agricultural implements and agricultural machinery specified in tariff items 409b, 409c, 409d, 409e, 409f, 409h, 409j, 4091, and the tractors provided for in tariff item 409m.
(2)	N.o.p	
British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most- F a voured- N at ion Tariff	General TariffFree	5 p.c.	15 p.c.	12} p.c.	22\ p.c.	30 p.c.27§ p.c.	40 p.c.	45 p.c.	27} p.c.	40 p.c.	45 p.c.Free	Free	Free	Free	Free	Free22} p.c.	25 p.c.	35 p.c.Free	Free	Free	Free	Free	Free25 p.e.	25 p.c.	35 p.c.	25 p.c.	25 p.c.	35 p.c.
10 p.c.	12} p.c.	35 p.c.	25 p.c.	27} p.c.	40 p.c. and
					35 cts. per lb.
Free	Free	Free	Free	Free	Free20 p.c.	22} p.c.	35 p.c.	20 p.c.	22} p.c.	35 p.c.
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The Budget-Customs Tariff
660a
Synthetic resin or cellulose plastic sheets or plates, coated or not, with or without turned edges, tor the production of engravings for use by printers	
Free
696	(1) Philosophical and scientific apparatus (and ancillary equipment thereto), utensils, instruments, and preparations, including boxes and bottles containing the same; maps, charts, photographic reproductions and other pictorial illustrations, casts as models, animals as research or experimental subjects; living plants, seeds, cuttings, buds, scions, tubers, bulbs and root-stock; mechanical equipment of a class or kind not made in Canada; parts of the foregoing. All articles in this item, when for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any public hospital, college, academy, school, or seminary of learning in Canada, and not for sale or for rental, under such regulations as the Minister may prescribe	
696a Moving picture films, sound or silent, separate sound film track, slides and slide films, positive or negative; sound discs, records and transcriptions; models, static and moving; wall charts, maps and posters; when certified by a recognized representative authority of the Government of Canada or when certified by the Government or by a recognized representative authority of the Government of the country of production or by an appropriate representative of the United Nations Educational, Scientific and Cultural Organization as being of an international educational, scientific or cultural character, subject to such regulations as the Minister may prescribe..
Free
Free
(c) Goods (not including alcoholic beverages, cigars, cigarettes or manufactured tobacco) imported by employees of the Canadian Government or by members of the Canadian Armed Forces after an absence from Canada of not less than one year and acquired by them for personal or household use and actually owned abroad by them for at least six months before their return to Canada, under such regulations
as the Minister may prescribe	
Any such goods that are sold or otherwise disposed of within twelve months after importation are subject to the duties and taxes otherwise prescribed.
Free
7i p.c.
Free
Free
Free
30 p.c.	Free	7J p.c.
	15 p.c.	20 p.c.
Free	Free	FreeFree	Free	FreeFree	Free	Free
30 p.c. 30 p.c.
Free
Free
Free
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Tariff
Item
705a
	British	Most- Favoured- Nation Tariff	General Tariff
	.Preferential Tariff		
(a) Apparel, wearing and other personal and household effects not merchandise, of British subjects dying abroad, but domiciled in Canada; books, pictures, family plate or furniture, personal effects and heirlooms left by bequest to any resident of Canada, or acquired by any resident of Canada, as a result of the death of any person resident abroad, or as a gift in anticipation of the death of any such person; all such goods or articles when given as a free gift by anyone resident abroad to a resident of Canada; the Minister to be the sole judge as to whether any goods or any article imported is to be classified as entitled to the benefit of this item or not	Free	Free	Free(b) Personal gifts, not exceeding twenty-five dollars in value and not including cigarettes, tobacco and alcoholic beverages, from members of the Canadian Forces serving abroad, to relatives or friends in Canada	Free	Free	FreeSettlers' effects, viz.: Machines and implements for agricultural purposes, moved by mechanical power, and motor vehicles valued at not more than twenty-five hundred dollars, and boats for fishing purposes, if actually owned abroad by the settler for at least six months before his removal to Canada, and subject to regulations prescribed by the Minister of National Revenue	Free	Free	FreeIn respect to motor vehicles valued in excess of twenty-five hundred dollars duty shall be payable only on the amount in excess of twenty-five hundred dollars. The said machines, vehicles, implements and boats may not be so entered unless brought by the settler on his first arrival, and shall not be sold or otherwise disposed of without payment of duty until after twelve months' actual use in Canada.	
Rates in Effect Prior to Rates Proposed in this Budget
British Preferential Tariff	Most- F a voured- N at ion Tariff	General TariffFree	Free	FreeFree	Free	FreeVarious	Various	VariousFree	Free	FreeFree	171 P-c.	271 P'C-
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708b
Arms, military stores and munitions of war imported by the Government of Canada in replacement of or in anticipation or actual exchange for similar goods loaned to or exchanged or to be exchanged with the governments of a British Commonwealth country or a foreign country designated by the Governor in Council under tariff item 708, under such regulations as the Minister may pre-		
(2) Machinery and apparatus and parts thereof (including motive power) and drilling mud, for use in the exploration, discovery, development and operation of potash and rock salt mines and for use in the production of muriate of potash and in the production of crushed and screened rock salt	Free	Free(3) Seamless, lapwelded and electric welded iron or steel casing, tubing and drill pipe, of a class or kind not made in Canada, used in connection with the exploration, discovery, development and operation of potash and rock salt mines and for use in the production of muriate of potash and in the production of crushed and screened rock salt	Free	Free(4) Materials for use in the manufacture of the goods	enumerated in tariff items 848 (1), (2) and (3)	Free	FreeFree	Various	Various	VariousFree	10 p.e. Free Various	22} p.c. 7} p.c. Various	35 p.c. 35 p.c. VariousFree	15 p.c. 10 p.c. Various	22} p.c. 15 p.c. Various	30 p.c. 20 p.c. VariousFree	Free Various	Free Various	Free Various
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The Budget-Customs Tariff

3. Resolved, that Schedule B to the Customs Tariff be amended by striking thereout tariff items 1004, 1008, 1010, 1013, 1019, 1021, 1022, 1024, 1032, 1033, 1037,	g
1038, 1039, 1048, 1049, 1052, 1061, 1066 and 1068, the enumerations of goods and the rates of drawback of customs duties set opposite to the said items, and by inserting the following items, enumerations and rates of drawback of customs duties in said Schedule B:
Item No.	Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as Drawback1044	Fire clay fire brick	When used by basic producers of iron or steel in the construction or repair of blast furnaces, open hearth furnaces (including checker chambers), electric furnaces, blast furnace stoves, soaking pit furnaces and rolling mill furnaces or in the construction or repair of ladles used with any of the foregoing furnaces	99 p.c.1052	Machinery and precision instruments and apparatus for heat treating, welding, sorting, testing, inspecting or correcting; control panels for use with the aforementioned machinery and	When for use in the plants of manufacturers of automobiles and motor vehicles or of automobile or motor vehicle parts for the manufacture of automobiles and motor vehicles or of automobile or	precision instruments and apparatus; all the foregoing, either new or used, of a class or kind not made in Canada and all parts thereof, not including consumable tools.	motor vehicle parts	99 p.c.
4. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the seventh day of April, one thousand nine hundred and fifty-four, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(See also Budget Papers, pages 3755 to 3844.)
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James MacKerras Macdonnell: Mr. Speaker, "the tumult and the shouting dies", and I think I might add that I have never heard so little applauded so much by so many. The minister has spent an hour and twenty minutes trying to persuade us that this is not a budget of blank negation, but I doubt if he has deceived even himself. I must not forget that if the statements we hear are true, and this should prove to be the minister's last budget, it would be in the highest degree regardless of the amenities and the traditions of the house, if I did not say to him how much we have appreciated his budgets. I do not say by that that we have approved of them. But at any rate we will congratulate him upon whatever he did that was right; though we may not have the same categories as he has. We will also forgive him all his mistakes. And we will all say that, whatever course he follows, he has the good will of all of us.
This has been referred to as his swansong-but I hope not in any literal sense, because I understand a swan-song coincides with the end of the bird. So I am sure there is nothing of that kind going to happen to the minister.
Now, we have had the old, old story. The minister has come and told us that he has spent $5 billion of our money. First of all it looked to be only a matter of $4,600 million; but then we find that the minister deftly had taken $335 million out of another pocket, hoping that that would cause us less pain. I refer to the old age security payment.
We know what a conjurer the minister is. We know how, on occasions, he has here in the evening made us believe by his skill with figures that there was a tax reduction. But, alas, when the cold grey dawn came next morning, we discovered that it had fled away, and that there was really nothing left. That shows the minister's dexterity with figures.
I would also point out with some interest the minister's statement of four or five years ago. It was made with great skill; and I think it is worth recalling. It is not every man who has his remarks of five years ago recalled. It will be in the memory of all who are here that 1949 was an election year. The year before there had been no reductions, but in 1949 there were reductions. The minister explained it in terms which I thought were rather delightful, and I would like to repeat them. Hon. members will see that it needs the changing of only one word to make it completely accurate.
The Budget-Mr. Macdonnell
The minister said:
Tax reductions last year would have come too early to be of real benefit to the public as a whole.
Let me show the mistake the minister made. What he should have said was, "Tax reductions last year would have come too early to be of real benefit to the Liberal party".


Douglas Charles Abbott: The same thing.


William Earl Rowe: "The same thing", he says.


James MacKerras Macdonnell: I shall discuss on another day whether we can afford really this luxury of paying $5 billion in taxation, or whether we may find, contrary to what the minister finds, that it is helping to raise our costs to the point where we may find it very embarrassing indeed-as we presently are in the export market.
Now, of course that will not bother the government; because the government have got to the point where they believe nothing can be wrong while they are in power. Mr. Speaker, just look at them. Did you ever see a more, shall I say, self-pleased lot of men?


Douglas Charles Abbott: Handsome.


William Earl Rowe: Complacent.


James MacKerras Macdonnell: I am going to venture this observation, though perhaps it is not strictly part of my duty-I venture to give them a slogan, a slogan that comes from an extempore prayer, the kind of prayer that is made in the church I belong to, and the church to which some others belong; that extempore prayer is this, and I think you will see how wise it is and how it applies to the present situation: "Lord, if it be possible, help us to be worthy in some measure of the high esteem in which we hold ourselves."


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: Mr. Speaker, I am glad to see that apparently the government receives this without hostility. And I have even some hope that I may have done something useful for them, though that is an odd thing for me to say.
Now, of course it is easy for the government, particularly in the light of things that have recently happened, to contemplate the situation with considerable equanimity. But it is not so easy for the ordinary citizen. The ordinary citizen on the average-every man, woman and child-pays $329 in taxes, or $1,650 for a family. That is hard enough for a family of five. But if there is ever so little flattening out, anything short of a roaring boom, then it will become much harder.
But, Mr. Speaker, I wish to be fair. You, sir, are always fair, and I am sure you wish

The Budget-Mr. Macdonnell us to be fair. And I do not wish to neglect to point out that there was a surplus of $10 million. I was wrong in saying the minister spent $5 billion. He did not spend that: There was $10 million left over, 66 cents for every man, woman and child, if my arithmetic is correct.


Douglas Charles Abbott: It is $4,750 million, not $5 billion.


James MacKerras Macdonnell: The minister has been trying for an hour and a half to put a good face on things. But, after all, why should we be pleased? What is there for the ordinary citizen to be happy about? Have we any reduction in taxation? Well, you could put it all in your eye. There is, I believe, a reduction of two cents a gallon on ale, beer, porter and stout. The minister shakes his head, but that is my interpretation of it. I am sorry, perhaps there is no reduction: Perhaps it is an increase. Perhaps I am giving him credit where I should not give credit.
Is there a reduction in expenditures? Expenditures are practically the same. Is there any plan for dealing with unemployment? No; the minister has told us that he regrets the unemployment, but that there is really no need to take it too seriously.
Really, we have nothing but a lot of fair words. Nobody has been benefited. I was interested in the minister's saying that he took a liberal rather than a conservative view of things. But I would have been more impressed if I had seen any sign of meeting the situation with action. And I wish to point out the fact that if taxes bear heavily upon the rest of us, what happens to those who are unemployed? They, like the rest of us, are the target for all kinds of taxes-taxes direct, indirect, hidden, open, large and larger.
What does that mean to the unemployed? It means something that the rest of us hardly like to think about. What is the government's attitude towards this? Well, so far as I can take it from what the minister said tonight he has really not changed his attitude since February 11 when he said with regard to unemployment, "I cannot say the situation is serious; I would say it is unpleasant".
Well, that certainly is a conservative statement. And of course, when we come to the Minister of Trade and Commerce (Mr. Howe), his estimate of the question of unemployment was even more interesting. He dealt with it rather lightly, and told us a bedtime story of one of the unemployed men he met who had his pockets full of money. Well, I hope that has been circulated to all the other members of the unemployed. Then he told us also that in Port Arthur, where he comes


from-or used to come from-that quite a lot of people there apparently just sign in on the unemployment roll in between jobs, and that there was quite a large number like that.
But the thing that is most astounding jn the government's relationship to this matter is the fact that the government speaks with two voices. You would not allow me, Mr. Speaker, to say that the government is twor faced; but they certainly have two mouths because one department gives an entirely different account of the unemployment situation from the other, and when I say "different" I mean "different" in a big way. According to the Minister of Labour (Mr. Gregg), who I think has an appetite for accurate facts, unplaced applicants on February 20 amounted to 559,000; but at the same time that great institution belonging to the Minister of Trade and Commerce, the dominion bureau of statistics, tells us that the number of persons without jobs seeking work was 312,000, about half as many. With this ridiculous discrepancy going on it is no wonder that labour feels that they are in a kind of merry-go-round, and that so far as the dominion bureau of statistics is concerned, what they are getting is not the facts but a bedtime story.
I should like the minister, who I feel has given us a fairly optimistic view of the situation, to go and tell his story to the steel workers down in Nova Scotia. I should like to have him go to the textile workers and to the agricultural implement workers almost anywhere. I should like to have him go and tell these workers that. I think they would find great difficulty in living on his comforting assurances that later in the year things will be better. I think they would ask him: What are you doing? And his story would not be satisfactory.
I should like to ask the Minister of Labour whether he will go to Marysville and tell the people who are out of work there that all is well. I should like to ask the Minister of Justice (Mr. Garson) who spoke the other evening in Manitoba and said:
Without having an immediate problem of unemployment ourselves, we Manitobans realize that a high level of Canadian employment helps to create a demand for, and supports the price of, Manitoba products.
You see, he was very decent. He admitted he was part of Canada, and he admitted that what went on in the rest of Canada was of interest and importance. I would like him to look at the figures of unemployment right in Manitoba and say whether he feels he would like to go and speak as blandly as that to them.

I come to the Minister of Transport (Mr. Chevrier). I ask him whether he would like to go down to Cornwall and tell them that unemployment doesn't matter very much and that before the end of the year we shall have things better and not to worry too much.
I should like to ask the Prime Minister (Mr. St. Laurent), with 185,000 persons shown as unplaced applicants in the province of Quebec, whether he would feel happy in going to the city of Quebec and giving them that kind of pleasant encouragement. I should like to ask the Minister of Finance (Mr. Abbott) whether he would be prepared to do the same thing in Montreal. I should like to ask the Minister of National Revenue (Mr. McCann) whether he would like to go back to his constituency and tell them that all is reasonably well or that they do not need to worry; or if it is not well now, just trust the government and all will be well before long.
I should like to ask the Minister of Trade and Commerce whether the people in Port Arthur are wholly happy in learning that some of the lake fleet has not been commissioned because of the stoppage in the movement of wheat.


Clarence Decatur Howe: Because the harbour is still frozen.


James MacKerras Macdonnell: Well, that is not the reason the ships are not being commissioned. The ships are not being commissioned, the minister very well knows, because they think there are no cargoes for them.
Of course the plight of the unemployed would be more tolerable if there had been any possibility of tax reductions; but, as I have pointed out, all the tax reduction that is being made you could put in your eye. Of course the Minister of Trade and Commerce told us all that a little while ago. He announced a very interesting economic theory. He said, as reported at page 2106 of Hansard:
... it was decided that this would be a year to loosen the purse strings-
-and that it was no way to improve the situation in the buyer's market to curtail government investment. In other words, the minister, going against all economic opinion, tells us that reducing taxes was not the way
6,	1954
The Budget-Mr. Macdonnell to stimulate the economy, and apparently the Minister of Finance has adopted this view.
We now come to expenditures. The total non-defence expenditures were substantially more than a year ago-$184,000,000 more. There are one or two points I wish to bring attention to particularly. First of all, whereas in the United States they have been able to make big reductions in the civil service, here we cannot do it. We go on from strength to strength in numbers. We do nothing in the way of reducing the number of civil servants, and there seems no likelihood that we shall. Let me take one or two samples of the kind of thing we have in the civil service. Let me refer to the number of economists just as an example. In agriculture we have 55 economists; in trade and commerce, 38; in labour, 30, and in fisheries, 19. In all we have a total of 178. Let me come to librarians. We have 100 librarians; 11 in the national library-that is natural enough; 10 in legislation; 10 in mines; 10 in national defence and so on.
I began by saying that I thought this was a budget of negation, a do-nothing budget, a stand-pat budget, and I have asked what has happened: whether anything has been done in tax reduction, only a trivial amount; whether we have any reduction of expenditures, no; whether we have any plans for dealing with unemployment, no; any plan for reducing the cost of production which is now cutting down our export markets, no. What have we instead? We have the minister's liberal estimates, as he calls it, his confidence that improvement is coming, but no indication of any steps for dealing with the difficulties which now face us.
I move the adjournment of the debate, Mr. Speaker.
On motion of Mr. Macdonnell the debate was adjourned.



BUSINESS OF THE HOUSE

Walter Edward Harris: I believe it would be the sense of the house that we now adjourn, and I so move.
Tomorrow we shall take the Criminal Code.
Motion agreed to and the house adjourned at 9.40 p.m.

The Budget-Appendix



BUDGET PAPERS

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presented by
the Honourable D. C. Abbott, M.P., for the information of Parliament in connection with the Budget of 1954-55
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The Budget-Appendix

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The purpose of these Papers is twofold:
1.	to present a general economic review of 1953, bringing together in one
place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government accounts for the
fiscal year ending March 31, 1954.
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The Budget-Appendix

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Page
1.	National Accounts-
National Income and Product	 3759
National Expenditure	   3760
Personal Income and its Disposition	  3762
Source and Disposition of Saving	 3765
Investment and Capital Expenditure	 3767
Revenue and Expenditure of All Governments	 3770
2.	Balance of International Payments	
37743.	Employment and Earnings	
37784.	Price Trends	
3780
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics and other Government Departments. Some of the figures appear for the first time; others have been published elsewhere. All 1953 estimates are preliminary and subject to revision.

The Budget-Appendix
THE NATIONAL ACCOUNTS National Income and Product
Preliminary estimates indicate a gross national product of about $24-3 billion for 1953, an increase of $1-1 billion over 1952. In terms of volume or real product it is estimated that the increase amounted to almost 4 per cent. At the same time the population of Canada increased by 2-5 per cent and the civilian labour force by 1 [DOT] 3 per cent.
The gain of something less than 4 per cent in the volume of production for 1953 is not, at first glance, as striking as the gains of about 6 per cent which were made in each of the three years 1950, 1951 and 1952. However, this somewhat smaller gain for 1953 does not indicate any reduction in the growth of non-agricultural output. On the contrary, non-agricultural production increased by about 5 per cent in 1953 which is as high as the increase of 1952. There were substantial volume increases in manufacturing and construction, in mining and public utilities, and in wholesale and retail trade. In fact, with the exception of agriculture and forestry, all branches of production appear to have shown increased output for the year as a whole. But the volume of agricultural production, although still very high in absolute terms, was substantially below the record level of 1952.
The expansion in output was greater in the first half of the year when the volume of manufacturing production was rising substantially. This is well illustrated by the index of industrial production which showed a steady advance throughout the early part of the year and comparative stability, with some tendency to decline, in the last half. The high level of production reached early in the year was fairly well maintained through the third quarter; but the down turn of the fourth quarter brought the index at year end to a level slightly below that of December 1952.

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BILLIONS OF DOLLARS	1926 - 1953	BILLIONS OF DOLLARS
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The Budget-Appendix
For the second successive year labour income increased by an amount greater than the total increase in national income. Salaries and wages, inclusive of military pay and allowances, rose by $900 million or 8 per cent compared with an increase of 12 per cent in 1952. Most of the increase was the result of higher rates of pay but there was an increase of about 2 per cent in the number of paid workers. Labour income constituted 63 per cent of national income in 1953, the highest proportion of the post-war period.
Net farm income is estimated to have declined by almost 14 per cent from the level of 1952. More than half of this decline was the result of a reduction in the volume of agricultural production although lower prices also prevailed for many agricultural products. There was a continuance of the trend toward a lower agricultural labour force which has been noticeable for some time. This was particularly true in regard to unpaid family workers.
Net income of unincorporated business other than farming is estimated to have increased by $128 million or about 8 per cent.
Investment income is estimated to have increased by $52 million or somewhat more than 1 per cent. Tentative estimates of corporation profits, the largest component of investment income, indicate a decline of about 3 per cent; but this decrease was more than offset by increases in other categories of investment income such as rents and interest, and by some reduction in dividends paid abroad. This was the second successive year in which corporation profits declined despite large net additions to plant and equipment. However, they were still slightly above the level of 1950.
National Expenditure
During 1953 the volume of Canadian production increased by about 4 per cent. In addition, Canadians drew more heavily on foreign production than in the previous year. Thus, imports of goods and services exceeded exports of goods and services by about $466 million in 1953 compared with an excess of exports over imports of some $166 million in 1952. Taking these two factors

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		. !
1. Wages, salaries and supplementary labour income.	8,311	9,717	10,792	11,6532. Military pay and allowances	:	137	201	270	3093. Investment income	3,155	3,649	3,687	3,7394. Net income of unincorporated business-	(a) farm operators from farm production1	1,503	2,106	1,934	1,66?(b) non-farm unincorporated business	1,444	1,507	1,552	1,6805. National Income (1+2+3+4)..,...	14,550	17,ISO	18,235	19,0486. Indirect taxes less subsidies	2,018	2,478	2,744	2,9087. Depreciation allowances and similar business costs	1,636	1,921	2,126	2,3588. Residual error of estimate	-1	-66	+107	+319. Gross National Product at Market Prices	(5+6+7+8)	18,203	21,513	23,212	24,34510. Index of G.N.P. in Constant Dollars	100	106	113	117
1 Includes undistributed Wheat Board trading profits, and inventory valuation adjustment on a calendar year basis for grain held by Wheat Board.

The Budget-Appendix
into account, the net increase in goods and services drawn from abroad as well as the increase in Canadian production, Canadians used about 6 per cent more goods and services in 1953 than in 1952. About half of this 6 per cent increase in the volume of goods and services used by Canadians was absorbed by increases in personal expenditure on consumer goods and services. Investment in residential construction and in inventories each accounted for about one-fifth of the increase. The remainder was absorbed by the less striking increases in government expenditure and in non-residential construction.
Consumer expenditure rose from $14,424 million to $15,147 million, an increase of $723 million or 5 per cent compared with an increase of $1,126 million or 8 per cent in 1952. The percentage increase in consumer expenditure was no greater than the growth in government expenditure on goods and services and very much less than the expansion of one-third in the volume of residential construction. Nevertheless, in absolute terms, the increase in personal expenditure on consumer goods and services contributed about 50 per cent of the nation's increase in demand and was the largest single element of expansion in the Canadian economy during 1953. This was in contrast to 1952, when an equally powerful forward thrust was supplied by increases in government expenditure; and came about not because of any acceleration in the growth of consumer spending, but because of a levelling off in government outlays for defence. This expansion in consumer spending and the large increase in expenditure on housing, its counterpart in the investment category, are closely related to the substantial relative and absolute increase in labour income which was noted above.
Of the $185 million increase in government expenditure on goods and services in the calendar year 1953, about half was the result of increased defence spending. The increase in defence expenditure was thus about one-sixth as large as the expansion which occurred in 1952. The decline in the relative importance of the increase in government expenditure as a stimulating force in the economy can be seen by comparing it with changes in consumer expenditure. In 1952, for example, the increase in government spending on goods and services was almost equal to the increase in consumer expenditure but in 1953 it was only 26 per cent of the latter.

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-	1950	1951	1952	Prelim. 19531.	Personal expenditure on consumer goods and services 2.	Government expenditure on goods and services	
3.	Gross domestic investment- (a)	plant, equipment and housing	
(b)	change in inventories	
4.	Exports of goods and services1	
5.	Imports of goods and services1	
6.	Residual error of estimate	
7.	Gross National Expenditure at Market Prices (1+2+3+4+5+6)	
8.	Index of G.N.E. in Constant Dollars	12,029 2,326 3,216 960 4,183 -4,513 +2	(Millions c 13,298 3,243 3,810 1,620 5,089 -5,613 +66	>f Dollars) 14,424 4,223 4,265 241 5,588 -5,422 -107	15,147 4,408 4,701 585 5,426 -5,892 -3018,203 100	21,513 106	23,212 113	24,345 117
1 Minor adjustments have been made to the figures of current receipts and payments shown in Table 11 and in "The Canadian Balance of International Payments, 1926 to 1951", Dominion Bureau of Statistics, to achieve consistency with the other component series.
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The Budget-Appendix
Investment in plant, equipment and housing increased by $436 million, about 10 per cent in terms of value and almost 8 per cent in terms of volume. Almost two-thirds of this increase was in residential construction.
Additions to inventories of farm grain and livestock and grain in commercial channels declined by $120 million in 1953. Business inventory accumulation, on the other hand, showed a large increase since the volume of business inventories rose by about 5 per cent in 1953 while there had been virtually no change for 1952 as a whole. This increase was confined to the first three quarters of 1953, being about 7 per cent for that period. The change from large inventory accumulation in the first three quarters to an inventory decline in the last quarter was much more pronounced than can be accounted for by the normal seasonal movement. In the first three quarters of the year the accumulation of business inventories absorbed almost as much of the increase in the nation's product as did the increase in consumer expenditure, and for the year as a whole it was as lame as the increase in capital investment.
Personal Income and its Disposition
Personal income differs from national income in a number of ways. While national income is the total of the annual earnings of Canadian residents from the production of goods and services, personal income is the sum of the current receipts of income regardless of whether these receipts are earnings from production. For example, personal income includes only that part of corporation profits which is actually received by Canadian persons as dividends. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, are part of personal income although they are not payments for services and, therefore, do not form part of national income.
During 1953 personal income rose by $951 million or 6 per cent despite a substantial decline in receipts of farm income. As in 1952, this gain in money income represented a significant gain in real income since consumer prices were relatively stable.
table 3

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-	1950	1951	1952	Prelim. 19531. Wages, salaries and supplementary labour income...	8,311	(Millions 9,717	A Dollars) 10,792	11,653Deduct: Employer and employee contributions to	social insurance and government pension funds.	-256	-329	-357	-3862. Military pay and allowances	137	201	270	3093. Net income received by farm operators from farm	production1	1,402	2,142	1,909	1,6424. Net income of non-farm unincorporated business	1,444	1,507	1,552	1,6805. Interest, dividends and net rental income of per-	sons2	1,295	1,416	1,530	1,6546. Transfer payments to persons (excluding interest)-	(a) from government	1,033	1,033	1,377	1,469(b) charitable contributions made by cor-	porations	25	27	30	30(c) net bad debt losses of corporations	23	25	25	287. Personal Income (1+2+3+4+5+6)	13,414	15,739	17,128	18,0791	Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.2	Includes all government debt interest paid to persons.
The Budget-Appendix
Labour income is the largest component of personal income and comprises almost 66 per cent of the total. Thus, the increase in personal income was due in large measure to the 8 per cent increase in salaries and wages although some other components increased at a comparable rate. Government transfer payments increased by §92 million or 7 per cent, most of the increase being the result of normal growth in family allowances and old age pensions and some increase in unemployment insurance benefits.
Net income of farmers declined by 14 per cent in 1953 but the reduction in farm cash income is estimated at only 4 per cent. This result arose because a much smaller part of the 1953 farm income was kept in the form of increased inventory at year-end. There was some decline in prices of agricultural produce but the decline in volume of agricultural production was a slightly more important factor in the reduction of income. As noted elsewhere, the decline in farm income should be considered in relation to the estimated 4 per cent reduction in the agricultural labour force.
Net income of unincorporated businesses other than farming is estimated to have increased by 8 per cent. Income from interest and rents increased but dividends paid out by corporations are estimated to have declined moderately in line with the reduction in corporate profits.
The pattern of the disposition of personal income was not significantly different than that of 1952. Despite the mid-year reduction in the rate of personal income tax, the increase in personal incomes was sufficient to bring about an increase of 9 per cent in the revenue from this tax.
While disposable income, or personal income after taxes, increased by $842 million, personal expenditure on consumer goods and services rose by $723 million so that there was an increase of $119 million in personal saving. In fact, exclusive of changes in farm inventories, which are to a considerable extent involuntary, personal savings rose by $292 million or about 26 per cent. Some substantial part of this increase in saving can be traced to the 35 per cent increase


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PERSONAL EXPENDITURE ON TOTAL CONSUMER GOODS} AND SERVICES

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I PERSONAL EXPENDITURE ON [ CONSUMER DURABLE GOODS
12000
1926	I93Q	1934	1938	1942	1946	1950	'53
3764	HOUSE OF COMMONS
The Budget-Appendix

[Stage Direction]
-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
1. Personal direct taxes-				
(a) income taxes	612	890	1,177	1,287(b) succession duties	66	69	72	73(c) miscellaneous taxes	62	71	74	72Total direct taxes	740	1,030	1,323	1,4322. Personal expenditure on consumer goods and services- Goods-	(a) non-durable	7,241	8,001	8,517	8,766(b) durable	1,343	1,398	1,559	1,759Services	3,445	3,899	4,348	4,622Total consumer expenditure	12,029	13,298	14,424	15,1473. Personal saving-	(a) personal saving excluding farm inventories	514	1,057	1,144	1,436(b) change in farm inventories	131	354	237	64Total personal saving	645	1,411	1,381	1,5004. Personal Income (1+2+3)	13,414	15,739	17,128	18,079
in residential construction since down-payments for housing constitute part of the nation's savings. A further factor in the increase in personal saving is the large element of contractual saving which increases year by year with the steady growth in pension plans, insurance, and the monthly amortization of mortgages on housing. Personal saving constituted 9-0 per cent of disposable income in 1953 compared with 8-7 per cent in 1952, 9-6 per cent in 1951 and 5-1 per cent in 1950.
The largest increase in consumer spending was on durable goods, sales of which increased by almost 13 per cent. This increase was heavier in the early part of the year and was accompanied by a substantial increase in consumer credit, particularly in the second quarter of the year. Expenditure on non-durable goods rose by something less than 3 per cent while expenditure on services rose by 6 per cent, reflecting the higher prices of services rather than a heavy expansion in volume. The increase in spending on services is comparable to the increase in personal income itself. The expansion in current consumption did not quite keep pace with the rise in income although it reflected that influence. However, personal expenditure on consumer goods and services cannot be considered without taking account of personal expenditure for housing which is classified as investment in the national accounts. A significant portion of the increase in savings for 1953 was used to finance increased personal investment in housing.
Examination of the quarterly trends in consumer expenditure indicates that increases were confined for the most part to the first half of the year and that there was some levelling off in the third and fourth quarters. Thus, the fourth quarter of 1953 was less than 3 per cent above the fourth quarter of 1952 although the first and second quarter comparison indicates a gain of 6 [DOT] 5 per cent. After allowing for price changes, the volume of consumer expenditure rose by almost 5 per cent, or in per capita terms by about 3 per cent. This was the

The Budget-Appendix
second successive year in which substantial gains were made in the volume of consumption without causing a decline in savings, a result made possible by the large increase in real income.
Source and Disposition of Saving
Saving is the source from which investment expenditure is financed. In addition to personal saving, which was mentioned in the preceding section, there is government saving and business saving.
It is estimated that during 1953 the nation as a whole saved $225 million more than in 1952, an increase of about 5 per cent. Both personal and business saving increased but the surplus for all levels of government combined dropped to $136 million, so that government saving was no longer a substantial factor in the total. The amount saved by persons and businesses became relatively more important and constituted about 97 per cent of the nation's total saving compared with 92 per cent in 1952 and 80 per cent in 1951.

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
Personal saving	645	1,411	1,381	1,500Gross business saving-total	£,556	£,578	£,804	8,128(a) Undistributed corporation profits	844	721	673	763(b) Depreciation allowances	1,636	1,921	2,126	2,358-23	-25	-25	-28(d) Undistributed Wheat Board trading pro-	fits and inventory valuation adjustment on	101	-36	25	25(e) Inventory valuation adjustment1	-2	-3	5	5Adjusted government surplus (+) or deficit (-)5	648	1,049	273	136Residual error of estimate5	-1	-66	+107	+31Total	3,848	4,972	4,565	4,7901	The adjustment has been made only to grain held in commercial channels.2	See Table 10.
* See Tables 1 and 2.
Personal saving, or the amount set aside from current personal income, is estimated at $1,500 million for 1953-9 per cent of personal disposable income. It constituted 31 per cent of total saving from all sources compared with 30 per cent in 1952. Excluding the change in farm inventories, the increase in personal saving was even more noteworthy, being about 26 per cent greater than in 1952. As noted above, this is closely related to increased expenditure on residential housing and to the continuing growth in contractual saving.
About two thirds of the reduction in government saving was the result of a further decline in the federal surplus, as adjusted for National Accounts purposes.
Business saving is comprised for the most part of amounts set aside for depreciation and of undistributed profits. There was an estimated increase of about 11 per cent in depreciation allowances. Undistributed profits depend not 83276-238
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The Budget-Appendix

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
Gross domestic investment-	4,265	4,701Housing, plant and equipment	3,216	3,810	Change in inventories	960	1,620	241	585Net increase in foreign assets (including foreign	166	-466exchange) adjusted1	-330	-524	Residual error of estimate*	+2	+66	-107	-30Total	3,848	4,972	4,565	4,7901	Minor adjustments have been made to the figures appearing in Table 11.2	See Tables 1 and 2.
only upon the level of profits but upon taxes and dividend payments as well. The preliminary estimate of corporation profits before taxes indicates a reduction of a little more than 3 per cent for 1953 and this carries the decline in corporate profits, which began in 1952, to about 9 per cent. This decrease in profits has accompanied more normal conditions of supply and demand with a comparatively stable price level. During 1953 there was, however, a substantial drop in corporation taxes because of the reduction in tax rates, so that there has been some increase in the amount of corporation profits after taxes. In addition, it is estimated that dividends paid out were somewhat lower than in 1952, so that some increase in undistributed profits is indicated.
It is estimated that our total payments abroad on current account exceeded our total receipts from abroad by about $466 million and there was, therefore, an increase of like amount in our net foreign liabilities. This was in sharp contrast to 1952 when current receipts from abroad exceeded current payments by $166 million. The movement from a surplus to a deficit in current foreign transactions was much more the result of increased imports than of decreased exports. Imports in 1953 were 9 per cent greater than in 1952 while

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-	1950	1951	1952	Prelim. 19532,506 -981	(Millions 2,810 -1,429	>f Dollars) 2,640 -1,333	2,550 -1,174
1,525 -681	1,381 -660	1,307 -634	1,376 -613
				
				
	844	721	673	763
				
1	Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
2	Taxes paid or payable in respect of the calendar year's income. (See Table 10).
2 Includes charitable contributions made by corporations. (See Table 3 Item 6 (b)).
4 See Table 5.

The Budget-Appendix
exports were about 3 per cent less. Thus although the level of domestic saving was very high, the nation's expanding requirements were financed to a limited extent by capital inflows from abroad, particularly from the United States. These transactions are treated more fully in the section on the balance of international payments.
Investment a.nd Capital Expenditure
It is estimated that investment in plant, equipment and housing amounted to $4,701 million in 1953 and constituted 19 per cent of gross national expenditure compared with 18 per cent in 1952. The increase for the year was 8436 million, 10 per cent in terms of value and 8 per cent in terms of volume. There was a large increase in residential housing which rose by $276 million or 35 per

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
Housing, plant and equipment-total1	3,216	3,810	4,265	4,701New residential construction	801	781	786	1,062Other new construction	1,026	1,260	1,561	1,719New machinery and equipment	1,389	1,769	1,918	1,920Change in inventories-total	960	1,620	241	585Grain in commercial channels2	60	92	145Farm grain and livestock2	131	354	237	64All other inventories3	769	1,266	-88	376Gross Domestic Investment4	4,176	5,430	4,506	5,2861	Includes private businesses and institutions, and publicly owned public utilities.2	Value of physical change.3	Change in value. Includes privately financed industrial and trade inventories.4	See Table 2, Item 3 and footnote to Table 9, p. 15.
cent in value and 33 per cent in volume. The 1953 volume of housing expenditure was about 11 per cent above the previous record level reached in 1950. Non-residential construction, which had shown the largest gain in 1952, rose more moderately in 1953 with an increase of 10 per cent in value and 6 per cent in volume. The estimates indicate that the value and volume of new investment in machinery and equipment were in aggregate practically unchanged from 1952. Declines in investment in farm machinery were offset by gains in trade, finance and commercial services. It should be noted also that while new investment in machinery and equipment did not expand further in 1953, it was already at high levels. Increases in investment in machinery and equipment were large in 1951 because of the expansion associated with defence preparations. In addition, there was a further although more moderate increase in 1952.
In absolute terms the most significant change in investment was the volume increase in business inventories. Whereas business inventories had remained practically constant during 1952, their volume increased in 1953 by about 5 per cent. The effect upon the economy was therefore significantly different than in 1952 when no further charge was made on the nation's productive capacity by demands for increasing inventory. The increase in inventories during 1953 was confined to the first three quarters; and the change from large inventory accumulation in the first three quarters to an inventory decline in the last quarter was
83276-238J
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The Budget-Appendix greatly in excess of the normal seasonal variation. It should be noted that the build-up of inventories in the first three quarters of the year contributed to economic activity in that period, while the wdthdrawal of this stimulus in the last quarter coincided with the normal seasonal slow-down and added to its effect. The increase in investment in business inventories for 1953 was somewhat larger than the increase in the volume of residential housing and together they absorbed about 65 per cent of the nation's increase in product.


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1947	1948
951	1952	1953
Table 9 gives an industrial distribution of business capital expenditures and brings them together with public capital outlays included under government expenditure in Table 2. The total of public and private capital expenditures increased by $394 million or 7 per cent in 1953. In real terms the increase is estimated at about 5 per cent. This is considerably less than the rate of advance in 1952 when the effects of the increased defence preparedness programme were still in evidence. Moreover, there was a distinct difference between 19o2 and 1953 in the categories in which the major increases occurred. While these had for the most part been confined in 1951 and 1952 to increased investment in heavy manufacturing associated with defence, and to the development of strategic resources, the removal of restrictions in 1953 made possible private investment in lines more directly associated with civilian needs. This is indicated by the increased expenditure on housing, commercial buildings, and on retail outlets.
During 1953 the most spectacular increase in capital investment was in the trade, finance and commercial services group, particularly in retail trade. Expansion in these services and facilities generally had not kept pace with the rather rapid growth of the Canadian economy, preponderantly urban in character. The increase in retail store facilities was the most striking. Chain stores, independent stores and department stores spent $189 million on new facilities in

The Budget-Appendix
1953, an increase of $70 million or about 60 per cent. There was some decline in capital investment of government departments and this was largely in the federal field and associated with the decline in the rate of creation of new facilities connected with the defence programme. Investment in institutions increased by $23 million, or 8 per cent, the largest increase being in hospitals. In the utilities group there was a fairly heavy increase of 12 per cent in the capital outlays of steam railways and the bulk of this increase was in machinery and equipment. Elsewhere in the utilities group there were some declines.
In the manufacturing group, fairly substantial increases and decreases were in evidence, but the latter predominated. There was a decline of $23 million in iron and steel products, $30 million in paper products and $14 million in chemicals. Food and beverage industries increased their investment by $6 million, transportation equipment by $31 million and non-ferrous metals industries by $8 million.

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
473	515	555	53734	58	39	35119	181	211	280502	793	973	940369	440	578	553351	460	581	61571	66	73	63397	412	344	480208	236	278	301845	821	826	1,086 789446	595	827	
Total Capital Expenditure1		3,815	4,577	5,285	5,679
				
Total Capital Expenditure as a percentage of	21-0	21-3	22-8	23-3
				
Index of total Capital Expenditure in Constant	100	107	119	126
				
1 For reconciliation with Gross Domestic Investment in Table 8, see below
1950	1951	1952	1953*	- *	. .	* *Public and Private Capital Expenditure-Table 9	
3,815	4,577	5,285	5,679Deduct:	Provincial hospitals and schools, and municipal schools.	
-107	-130	-150	-163Government housing excl. C.M.H.C. rental housing	
-44	-40	-40	-24Direct government department outlays	
-446	-595	-827	-789Other	
-2	-2	-3	-2Add:	Change in Inventories	
960	1,620	241	585Total Gross Domestic Investment-Table 8	5,430	4,506	5,286
The Budget-Appendix
Revenue and Expenditure of All Governments
In Table 10 "Government Transactions Related to the National Accounts" an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here differ from those shown in the various public accounts. It has been necessary to adjust the governments' accounting statements of fiscal year revenue and expenditure to exclude certain transactions such as those relating to reserves, write-offs, amortization, and other similar items, as well as the purchase and sale of existing capital assets; and to include the transactions of extra-budgetary funds such as unemployment insurance, old age security, workmen's compensation and government pension funds. Government loans and investments, and debt retirement are not included in government expenditure.
In the federal accounts, some of the more substantial adjustments are as follows: elimination of reserve for possible losses on active assets, elimination of reserve for veterans' conditional benefits, elimination of expenditures charged with respect to shipment from stocks of military equipment to NATO countries, addition of expenditures out of Defence Equipment Replacement Account, elimination of write-down of active assets to non-active account, adjustment of corporation taxes to an accrual basis, inclusion of the change in inventories of government commodity agencies and the Defence Production Revolving Fund and adjustment of interest on the public debt from an accrual to a due date basis. In addition, the federal figures are adjusted to a calendar year basis by using the monthly figures published by the Comptroller of the Treasury.
Municipalities are for the most part on a calendar year basis but the provincial figures are based on the provincial fiscal years. The 1953 figures for provincial and municipal governments involve a considerable element of estimation.

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1940 1941	1942 1943	1944	1945	1946	1947	1948	1949	1950	1951	1952

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50

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5 0

The Budget-Appendix
Exclusive of the change in inventories held by its agencies or departments, the federal government's expenditure on goods and services increased by $152 million or 6 per cent in 1953 compared with an increase of $687 million in 1952. This marked slowing down in the rate of expansion of federal government expenditure on goods and services in 1953 was the result of the levelling off in defence spending. For example, while defence expenditure rose by $643 million or more than 55 per cent in 1952, the increase in 1953 amounted to $109 million or a little more than 6 per cent. Nevertheless, federal defence expenditure remained a significant element in the national total, comprising about 8 per cent of gross national expenditure and about 75 per cent of the federal government's expenditure on goods and services. Federal government non-defence expenditure rose by about 7 per cent.
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The increase in provincial and municipal expenditure on goods and services is estimated at $129 million or 7 per cent compared with an increase of 13 per cent in 1952. This does not indicate any significant change in the rate of expansion of these services since price rises were a much more important factor in the 1952 increase.
The expansion in federal transfer payments was also much smaller in 1953 than it had been in 1952 so that in this area, as well as in the category of direct expenditure on goods and services, the Canadian economy received much less in the way of a forward thrust. Federal transfer payments increased by $87 million or 6 per cent and this expansion represented in the main the more or less normal growth in family allowances, and old age pensions, together with some increase in unemployment insurance benefits.
Although federal expenditures expanded more moderately in 1953 than in 1952, there was an even smaller upward movement in revenues. There was a rise of about 9 per cent in federal personal income tax collections despite the mid-year reduction in rates which averaged about 11 per cent. The main factor in this increase was the steady rise in salaries and wages. The yield of the corporation tax declined since the effect of the 1953 tax rate reduction was compounded by some decline in profits, the base upon which the tax is levied.
GOVERNMENT DIRECT AND INDIRECT TAXATION AS A PERCENTAGE OF GROSS NATIONAL PRODUCT PERCENT	1939	1953	PERCENT1939	1942	1945	1948	1951	1953
Direct taxes include taxes on personal and corporate income*succession duties,and personal fees.
Indirect taxes include taxes on commodities, services ond reol property,and business fees.
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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
Government Revenue-				
Direct Taxes-Persons		740	1,030	1,323	1,432
Income-				
Federal		612	890	1,177	1,287
				
Succession Duties- Federal	35	35	39	40Provincial	31	34	33	33Miscellaneous-	Federal	7	6	7	1Provincial and Municipal	55	65	67	71Direct Taxes-Corporations	981	1,429	1,333	1,174Income-	Federal	835	1,240	1,232	1,107Provincial	146	189	101	67Other Direct Taxes-	Withholding taxes-Federal	54	56	55	54Indirect Taxes	2,081	2,606	2,843	3,017Federal	1,115	1,495	1,595	1,697Provincial and Municipal	966	1,111	1,248	1,320Investment Income	400	453	529	552Federal	134	164	214	219Provincial and Municipal	266	289	315	333Employer and Employee Contributions to Social	Insurance and Government Pension Funds	256	329	357	386Federal	159	214	230	253Provincial and Municipal	97	115	127	133Transfers from Other Governments-	Provincial and Municipal	251	259	368	412Total Revenue	4,763	6,162	6,808	7,027Federal	2,951	4,100	4,549	4,658Provincial and Municipal	1,812	2,062	2,259	2,369Deficit (or surplus-)	-648	-1,049	-273	-136Federal1	-640	-1,039	-216	-128Provincial and Municipal	-8	-10	-57	-8Total Revenue plus Deficit (or minus Surplus)...	4,115	5,113	6,535	6,891Federal	2,311	3,061	4,333	4,530Provincial and Municipal	1,804	2,052	2,202	2,361
1 For reconciliation with Public Accounts Surplus, see page 3773.

The Budget-Appendix
TABLE 10-Concluded

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-	1950	1951	1952	Prelim. 1953
		(Millions of Dollars)		
Government Expenditure-				
Goods and Services		2,326	3,243	4,223	4,408
Federal-				
Defence	493	1,157	1,800	1,909Non-defence	487	537	669	616Provincial and Municipal	1,346	1,549	1,754	1,883Transfer Payments	1,475	1,483	1,845	1,962Federal	1,020	984	1,400	1,487Provincial and Municipal	455	499	445	475Subsidies	63	128	99	109Federal	60	124	96	106Provincial and Municipal	3	4	3	3Transfers to Other Governments-	Federal	251	259	368	412Total Expenditure	4,115	5,113	6,535	6,891Federal	2,311	3,061	4,333	4,530Provincial and Municipal	1,804	2,052	2,202	2,3611950	1951	1952	1953Reconciliation with Public Accounts Surplus:	(Millions of Dollars)	Federal Government calendar year surplus for	national accounts purposes	640	1,039	216	128Adjustments:	Difference between calendar and fiscal year	-122	-300	+367	+24Difference between corporation tax accruals and	government receipts	-140	-161	-8	+130Revenue items omitted	+73	+67	+49	+91Reserves, write-offs and similar items omitted	from expenditure	-130	-167	-195	-136Change in inventories of government commodity	agencies	-19	-16	+72	-24Shipment of military equipment to NATO	countries, less replacement	-57	-70	-95	-57Extra-budgetary funds for pensions and social	insurance (net)	-56	-144	+27	-30Adjustment to place debt interest on a "due date"	-90	- 14Other adjustments	-58	-37	-95	-88Federal surplus for fiscal year as per public	accounts	+131	+211	+248	+24(1949-50)	(1950-51)	(1951-53)	(1951-53)
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The Budget-Appendix Federal indirect taxes increased by $102 million or 6 per cent. Almost half of this increase was in customs duties, since the yields from these levies reflected the substantial increase in imports. At the same time the generally high and rising levels of income and spending resulted in a considerable growth in the yield from sales and excise taxes.
Provincial and municipal indirect taxes increased by about 6 per cent. At the provincial level, increased revenue from gasoline taxes accounted for two-thirds of the increase and there was also some increase in the yield of provincial sales taxes.
There was a moderate increase in the importance of indirect taxes in the country as a whole. Thus, for all levels of government combined, indirect taxes exceeded direct taxes by some 13 per cent in 1953 compared with only 5 per cent in 1952.
As indicated above, the moderate expansion in federal expenditure during 1953 was not matched by the rise in revenues so that the federal surplus as adjusted for National Accounts purposes declined by $88 million. During 1952 the greater part of the very large increase in federal expenditure was financed by a reduction from the previous year's level of surplus rather than by revenue increases although the latter were substantial. In 1953 however the further reduction in the surplus was more moderate and the over-all effect of government revenue and spending was, therefore, more neutral despite their higher level. Since revenues and expenditures moved closer to balance, government saving became a negligible factor in the nation's total. The federal surplus was the smallest since 1946. The combined surplus of all provincial and municipal governments is estimated to have declined by about $50 million with revenues and expenditures in approximate balance.
The federal surplus shown for National Accounts purposes differs substantially from the public accounts surplus, not only because of the difference between the calendar and fiscal year, but because of other adjustments made to both revenues and expenditures to make the presentation consistent with figures shown for other sectors of the economy. A reconciliation table has, therefore, been appended to the government table which summarizes the major adjustments.

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Canada's balance of payments position in 1953 differed in several respects from the position in 1952. The upward trend in the physical volume of imports which became evident in the last half of 1952 continued into 1953 and for the year as a whole, merchandise imports showed a volume increase of about 9 per cent over the previous year. At the same time, the volume of merchandise exports declined by a little more than 1 per cent from the record levels of 1952 and the terms of trade, or the ratio of import prices to export prices, showed some slight deterioration. As a result there was an import surplus of $55 million in 1953 compared with an export surplus of $491 million in 1952. This change in the merchandise trade balance was the major factor in the movement from a current account surplus of $157 million in 1952 to an estimated deficit of some $467 million in 1953.
Merchandise imports rose to $4,207 million in 1953, an increase of $361 million or 9 per cent over 1952. This increase in imports was a reflection of the high levels of investment, industrial activity and consumer spending which characterized the Canadian economy in 1953. There was a significant increase in imports of farm and non-farm machinery, electrical equipment and automotive and other iron and steel products. At the same time the greater volume of imports of consumer goods such as textiles and durables reflected the strong consumer demand and increasing import competition. This stronger demand for imports was spread throughout all categories.

The Budget-Appendix
Merchandise exports in 1953 were $4,152 million, down by $185 million or about 4 per cent from 1952. The major decreases were in exports of wood pulp, zinc, automotive products and farm machinery. Increased world supplies in both importing and exporting countries reduced the market for Canadian grains; and exports of wheat, barley and oats were below the record levels of 1952, although they remained above the level of any other post-war year. The fall in prices of wood pulp and zinc had important effects on the total value of these products, while declining farm incomes in the United States and import restrictions in overseas countries affected exports of farm machinery. Newsprint showed a large gain and became Canada's leading export in 1953, while sales of pork, pork products and chemicals to the United States showed a substantial increase.

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Estimated Current Account Between Canada and all Countries (Millions of Canadian Dollars)
-	1950	1951	1952	Prelim. 1953
Current Credits-				
Merchandise exports (adjusted)1	3,139	3,950	4,337	4,152Non-monetary gold	1G3	150	150	144Travel expenditures	275	274	275	302Interest and dividends	91	115	142	159Freight and shipping	284	351	383	340Inheritances and immigrants' funds	57	77	85	89Other current receipts	231	249	301	329Total Credits	4,240	5,166	5,673	5,515Current Debits-	Merchandise imports (adjusted)	3,129	4,097	3,846	4,207Travel expenditures	226	280	341	365Interest and dividends	475	450	413	410Freight and shipping	301	354	375	390Inheritances and emigrants' funds	61	70	94	90Other current payments	382	432	447	520Total Debits	4,574	5,683	5,516	5,982Net Balance on Current Account	-334	-517	+157	-467
1 Aid to NATO countries under Defence Appropriation Act has been excluded.
Estimated Geographical Distribution of the Net Balance on Current Account
(Millions of Canadian Dollars)
-	1950	1951	1952	1953*Between Canada and-	-400 +24 -23 +108 -43	-951 +223 -24 +223 + 12	-858 +387 +114 +332 +182	-948 +141 +85 | +255
-334	-517	+157	-467
				
1 Complete details not yet available.
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Another noteworthy feature of Canadian foreign trade in 1953 was a significant change in the direction of exports. Shipments to the United Kingdom and the rest of the Commonwealth, to European countries and to Latin America declined, while exports to the United States increased. As a result, exports to the United States constituted 59 per cent of Canada's total exports compared with 54 per cent in 1952. The fall in exports to the United Kingdom mainly reflects lower sales of wood products and metals while in other overseas countries sales of wheat, barley and automotive products were also down sharply. Exchange difficulties in Brazil were a major factor in the sharp reduction of sales to Latin America.
The change in the direction of imports was less pronounced. The proportion of total imports originating in the United States was about 73 per cent and showed little change from 1952, although their value increased by more than $200 million. Imports from the United Kingdom were greater but there was some decline in the value of imports from other parts of the Commonwealth.
Although the change in the merchandise trade balance was the major factor in the movement to a deficit on current account, the deficit on nonmerchandise transactions also widened from $334 million in 1952 to $412 million in 1953, an increase of $78 million. A significant part of this change arose from the settlement of costs incurred in connection with the Korean hostilities, while payments under the Colombo Plan and in connection with the North Atlantic Treaty Organization were also higher. Receipts from freight and shipping were lower while payments rose with the larger volume of imports. The usually large payments balance on dividend account declined somewhat, while the payments balance on travel account was not significantly changed.
Direct investment in Canada and net sales of new Canadian securities abroad amounted to about $560 million in 1953. As in 1952, direct investment, tentatively estimated at $385 million, made up the bulk of this capital inflow. Of this total, approximately three-quarters represented investment in primary industries such as petroleum and mining and related transportation facilities. Provincial and municipal borrowing in the United States accounted for about two-thirds of the new security issues. Movements of short-term and other capital, however, were closer to balance than in 1952 when there was a substantial net outflow.


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CANADA'S OFFICIAL HOLDINGS OF GOLD AND U.S. DOLLARS (Millions of U.S. Dollars)
Exchange Fund Account and Bank of Canada	Other Government of Canada Accounts	TotalGold	U.S. Dollars	U.S. Dollars	Gold and U.S. DollarsSept. 15, 1939	204-9	33-8	22-4	261-1Dec. 31, 1939	218-0	54-8	33-4	306-2Dec. 31, 1940	136-5	172-8	20-8	330-1Dec. 31, 1941	135-9	28-2	23-5	187-6Dec. 31, 1942	154-9	88-0	75-6	318-5Dec. 31 ' 1943	224-4	348-8	76-4	649-6Dec. 3l' 1944	293-9	506-2	102-1	902-2Dec. 31, 1945	353-9	922-6	232-1	1,508-0 1,244-9 501-7Dec. 31 ' 1946	536-0	686-3	22-6	Dec. 31 i 1947	286-6	171-8	43-3	Dec. 3L 1948	401-3	574-5	22-0	997-8Dec. 31, 1949	486-4	594-1	36-61	1,117-1 1,741-5 1,778-6 1,860-2 1,818-5Dec. 31, 1950	580-0	1,144-9 899-5	16-6	Dee. 31, 1951	841-7	37-4	Deo. 31, 1952	885-0	961-8	13-4	Dec. 31, 1953	986-1	802-0	30-4	
1 Not including $18-2 million in United States dollars borrowed by the Government of Canada in August, 1949, and set aside for the retirement on February 1, 1950, of a security issue guaranteed by it and payable at the holder's option in United States dollars.
There was therefore, a net inward movement of capital, which balanced the deficit on current account without any great change in either the level of official exchange reserves or the external value of the Canadian dollar.
Official reserves of gold and United States dollars were $1,860 million at. December 31, 1952, and $1,818 million at December 31, 1953.
A moderate upward trend in the value of the Canadian dollar over the last half of 1953 contrasted with the slow decline evident in the first half of the year. The range, however, was relatively narrow, the United States dollar having: moved between $0-968 to $0-998 in the first six months of 1953 and between $0-994 and $0-970 in the last six months. At December 31, 1953, the United States dollar was $0-974 in terms of the Canadian dollar compared with $0-970 at December 31, 1952.
(Millions of Dollars)
Capital Movements	1950	1951	1952	Prelim. 1953Loans to United Kingdom and other governments- Drawings	
Repayments	-50 +74	+68	+56	+87Net reduction in the U.S. dollar debt of the Government of Canada (expressed in U.S. dollars)	-50	-	-	-75Increase (-) in official reserves of gold and U.S. dollars (expressed in U.S. dollars)	-624	-37	-82	+12Other capital, including exchange adjustments, errors and omissions	+984	+486	-131	+413Total1	+334	+517	-157	+467
Equal in size but opposite in sign to net balance on current account,
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The Budget-Appendix

[Stage Direction]
Wages and salaries, inclusive of military pay and allowances, are estimated to have reached the record total of $11,962 million for 1953, a gain of $900 million or more than 8 per cent over the previous year. The level of labour income did not, however, advance appreciably beyond the level attained in the second quarter of the year. The seasonally adjusted quarterly figures show a moderate rise of 2 per cent in both the first and second quarters with very little further increase in the third and fourth quarters. This is in sharp contrast to the year 1952 when the nation's payroll continued to rise throughout the year and was 7 per cent higher in the fourth quarter than it had been in the first.
As in 1952, this rise in money income resulted in a substantial gain in real income or purchasing power since prices were comparatively stable. For the two years 1952 and 1953, the rise in labour income has been about 21 per cent while the consumer price index has increased by less than 2 per cent and the number of paid workers by 6 per cent. 1953 was the second successive year in which the proportion of national income accruing to labour showed a substantial increase. Thus, labour income constituted 63 per cent of national income in 1953 compared with 61 per cent in 1952 and 58 per cent in each of the years 1950 and 1951.
The increase in labour income was common to all the broad industrial 'Categories with the exception of the primary industries. The largest increase was in the construction industry where the total wages and salaries paid exceeded the 1952 aggregate by 12 per cent but this gain did not approach the expansion of 21 per cent recorded in the previous year. Earnings in the other main groups, including manufacturing, utilities, trade, finance and other services, increased in about the same proportion as the overall gain in labour income, that is, in the range of some 8 to 9 per cent. On the other hand, labour income in the primary industries showed a decline of some 3 per cent, largely because of a decline in income from logging activities.

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THE CIVILIAN LABOUR FORCE Annual Averages1
(Thousands of Persons)
-	19502	1951*	19522	1953Civilian Labour Force	5,106	5,160	5,257	5,325Male	4,006	4,026	4,091	4,152Female	1,100	1,134	1,166	1,173N on-Agricultural	4,094	4,227	4,371	4,472Agricultural	1,012	933	886	853Persons without jobs and seeking work	164	104	128	136Persons with jobs	4,942	5,056	5,129	5,189In Non-Agrieultural Industries	3,935	4,126	4,247	4,340Paid Workers	3,394	3,596	3,731	3,811Employers, own account workers and unpaid	family workers	541	530	516	529In Agriculture	1,007	930	882	849Paid workers	107	98	110	112Employers, own account workers and unpaid	family workers	900	832	772	737
1 Average of the quarterly labour force surveys in 1950, 1951 and 1952 and of the monthly surveys in 1953.
* Revised.

The Budget-Appendix
During 1953 there was an increase of 82,000 in the number of paid workers. Thus, the 8 per cent rise in labour income amounted to about 6 per cent when calculated on the basis of earnings per worker. The annual average earnings per paid worker rose by about $160 to $2,970. As in the previous year, this increase was possible because higher hourly rates of pay more than offset the effect of a fractionally shorter working week. In 1953, hours worked in manufacturing averaged 41-3 per week compared with 41-5 a year earlier, while hourly rates of pay rose from $1.32 in December, 1952, to $1.38 in December, 1953.
Employment conditions improved in the first three quarters of the year 1953. However, this improvement was not maintained at year-end and in the latter months of the year there was a decline from the very high levels of employment which had characterized 1953 up to that time. This was in contrast to the experience of 1952 in which, partly because of abnormally favourable climatic conditions, employment conditions had been very satisfactory at year-end although the beginning of the year was marked by some hesitation.
In addition to the increase in the number of persons with jobs in the first three quarters of 1953, there was, as in 1952, a decline in the number of persons working short-time. The number of persons working short-time averaged
91.000	less than in 1952 with the principal improvement in this regard occurring in the first two or three quarters of the year.
Persons without jobs and seeking work averaged 136,000 in 1953 compared with 128,000 in 1952. In both years the figure amounted to 2-5 per cent of the labour force. For the greater part of 1953 unemployment was lower than in 1952. However, the number of persons without jobs and seeking work rose to
190.000	in December, 1953, compared with 131,000 for the same month in 1952. This trend continued into January and February of 1954, in which months the figures stood at 280,000 and 312,000 respectively, or 93,000 and 133,000 above the levels of the comparable months in 1953.

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The Budget-Appendix
To some extent the increased unemployment has been due to more severe climatic conditions than those which obtained in the exceptionally open winter months of 1952-53. At the same time, however, certain changes have been taking place in the economy, as receding inflationary forces allowed increased competition to make itself felt in a number of industries. Thus, while by far the largest share of the increased unemployment was accounted for by construction, logging and lumbering activities, widely scattered increases were noted in almost all fields, with clerical, transportation, metal-working, textile, and miscellaneous activities being the groups most particularly affected.
The civilian labour force, which includes both the employed and the unemployed, averaged 5,325,000 for 1953, an increase of 68,000, or a little more than 1 per cent over 1952. This increase of 68,000 in the labour force was accompanied by a rise of 60,000 in average employment. The number of persons employed in non-agricultural industry continued to rise while the number of those with jobs in agriculture is estimated to have declined by 33,000 in 1953. This compares with the previous year's decline of 48,000 in the number of agricultural workers and marks a continuation of the shift from rural to urban occupations.
In addition to the civilian labour force there were 106,000 men and women in the Armed Forces in 1953, compared with 98,000 in 1952. The percentage of the non-institutional civilian population over 14 years of age in the civilian labour force continued to decline slightly, and was 53-1 per cent in 1953 compared with 53 [DOT] 4 per cent in 1952.
During 1953 industrial disputes were much less prevalent than in the preceding year; the total of 1,322,900 working days lost in this way was less than half the 2,880,000 man working days lost in 1952.

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Canadian prices were remarkably stable during 1953, with neither the consumer price index nor the index of wholesale prices moving more than 1 per cent from its 1953 average. The consumer price index has, in fact, shown little variation since May, 1952, by which time it had receded from the post-war and post-Korean high point reached in January of that year. Similarly, the wholesale price index has been practically unchanged since September, 1952, by which time the sharp fall from its July, 1951 peak had come to a halt. Yet despite this stability the yearly averages of both indices were slightly lower in 1953 than they had been in 1952.
The 1953 average of the consumer price index was 115-5, 1 point below the 1952 figure. This was the first time since before the war that a decline from the previous year's average had been recorded. The movement of the index during the year was in a very narrow range, touching a low point of 114-4 in May, and reaching a high for the year of 116-7 in October. These changes were mainly in response to variations in the food component of the index which moved in a range of more than 5 points and averaged 112-6 against 116-8 in 1952. The other components of the index fluctuated but little during the year; and in general the experience of 1953 was similar to that of 1952 in that prices of rents and other services moved in an upward direction while the prices of

The Budget-Appendix


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(1935-39=100)
General Wholesale Prices	Fully and Chiefly Manufactured Goods	Canadian Farm Products99-2	101-9	92-6108-0	109-9	96-1116-4	118-8	106-6123-0	123-7	127-1127-9	126-9	145-4130-6	129-1	155-3132-1	129-8	166-4138-9	138-0	179-5163-3	162-4	192-2193-4	192-4	232-1198-3	199-2	228-7211-2	211-0	236-7240-2	242-4	268-6226-0	230-7	250-2220-8	229-1	219-5221-5	229-0	234-0220-9	228-8	229-9221-9	229-2	228-1219-6	227-9	221-7220-1	228-3	224-2221-7	230-4	226-6221-2	229-6	226-5222-4	230-1	213-6221-5	230-2	208-9220-7	230-0	208-5218-8	228-1	204-9219-0	227-6	206-8219-8	227-8	209-4219-0	227-3	208-81939	1940	1941	1942	1943	1944	1945	1946	1947	1948	1949	1950	1951	1952	1953	1953-	January....
February...
March	
April	
May	
June	
July	
August	
September.
October____
November. December..
1954-	January.... February...
Note: 1953 Indexes are preliminary. The Canadian Farm Products index is revised up to July but reflects initial rather than final payments for subsequent months.
[Stage Direction]
The Budget-Appendix foods tended to be lower. The notable stability of the consumer price index continued into the first two months of 1954, in both of which the index stood fractionally lower than its year-end figure of 115-8.
In contrast with the Canadian experience, the United States consumer index averaged slightly more in 1953 than it had in 1952. American food prices declined by an amount comparable to the decline in Canada, and clothing prices were practically unchanged, but this was more than offset by rises in the rent and other components of the index.
The Canadian index of wholesale prices declined for the second consecutive year in 1953, although the fall was less than half as great as the 6 per cent drop recorded in 1952; the average of 220-8 in 1953 was 2-3 per cent below the 1952 figure of 226-0. The general tendency during the year was for primary commodities to show the sharpest price decreases, with processed items declining only fractionally. Thus, the index of raw and partly manufactured products fell by 2-7 per cent from its previous year-end figure, while the index of fully and chiefly manufactured goods was practically unchanged.
Most product components of the index were at lower average levels in 1953 than in 1952, with the decline in the price of textile products being rather more noticeable than those of other groups. Two exceptions to the general trend were iron and its products, prices of which remained firm during the year, and the non-metallic minerals group, which rose slightly, reflecting higher prices for sulphur, cement, plate glass, and petroleum products.

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Canada		United States	
-	Total	Food	Total	Food1949	= 100	1947-49=100	1939 	63-2	50-2	59-4	47-11940	65-7	52-6	59-9	47-81941	69-6	57-9	62-9	52-21942	72-9	63-4	69-7	61-31943	74-2	65-2	74-0	68-31944	74-6	65-5	75-2	67-41945	75-0	66-3	76-9	68-91946	77-5	70-0	83-4	79-01947	84-8	79-5	95-5	95-91948	97-0	97-5	102-8	104-11949	100-0	100-0	101-8	100-01950	102-9	102-6	102-8	101-21951	113-7	117-0	111-0	112-61952	116-5	116-8	113-5	114-61953	115-5	112-6	114-4	112-8115-7	113-5	113-9	113-1115-5	112-7	113-4	111-5114-8	111-6	113-6	111-7114-6	110-9	113-7	111-5114-4	110-1	114-0	112-1114-9	111-4	114-5	113-7July	115-4	112-7	114-7	113-8115-7	112-8	115-0	114-1116-2	114-0	115-2	113-8116-7	115-5	115-4	113-6116-2	113-4	115-0	112-0115-8	112-1	114-9	112-3115-7	111-6	115-2	113-1February	115-7	111-7	-	
The Budget-Appendix
Despite the steadiness of the general price level, prices of individual commodities showed somewhat more variation in 1953 than they have in recent years. Demand, although still strong, became more selective, while at the same time shortages ceased to be the rule on the supply side. Relative, rather than general, demand and supply conditions became more important in the year just ended, and many commodity prices moved in opposite directions during the year. On the higher side were pork and pork products, cocoa, coffee, pig-iron, and copper, while beef, rubber, steel scrap, lead, and zinc were among those which moved lower.
The over-all stability of the index of wholesale prices in Canada in 1953 was closely matched by the experience of the United States and the United Kingdom. Wide variations in individual commodity prices, and a tendency for the index as a whole to move somewhat lower, were noticeable in all three countries during the year.

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The Budget-Appendix
Part II

[Stage Direction]
Table of Contents
Page
1.	Introduction	
37862.	Highlights of Governmental Financial Operations during 1953-54	
37863.	Budgetary Accounts	
3787A.	Revenues	
3789B.	Expenditures	
37974.	The Cash Position	
38155.	Estimated Summary of Assets	and Liabilities at March 31, 1954	
3818A. Changes in Principal Liability Classifications during 1953-54	
3819B. Changes in Principal Active Asset Classifications during 1953-54	
3824C.	Decrease in Net Debt	
38296.	The Public Debt	
38307.	Supplementary Detailed Tables	
3837
The Budget-Appendix
Part II

[Stage Direction]
1.	INTRODUCTION
Although the Government's fiscal year ended on March 31, the figures which are presented in this Part must be regarded as preliminary and subject to revision for the books must remain open for several weeks in order to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in and properly chargeable to the fiscal year 1953-54. Consequently it is to be expected that the final figures when they become available next August will show some variations from those given in the following pages.
2.	HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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The budgetary revenues of the Government for the fiscal year ended March 31, 1954 are now estimated at $4,400 million. This is $73 million or about I5 per cent less than the amount of $4,473 million forecast in last year's budget speech and approximately $39 million more than the total collected in the preceding year.
Budgetary expenditures are estimated at $4,390 million, which is $72 million or 1§ per cent less than the budget forecast and about $53 million more than the total spent in 1952-53.
On the basis of these figures the indicated surplus is about $10 million compared with the budget forecast of $11 million for the year and with $24 million for the fiscal year ended March 31, 1953.
On the revenue side of the Government's budgetary operations, the most significant feature was the continued buoyancy of the revenues, which despite the tax reductions announced in the 1953 budget, were the largest on record. Direct taxes, which include personal and corporation income taxes declined by $35 million, but this decrease was more than offset by increases of $47 million in indirect taxes (due largely to excise taxes and customs import duties) and of $37 million in non-tax revenues.
On the expenditure side, the most noteworthy feature was the continued importance of defence in the Government's expenditure programme. In 1953-54, defence expenditures were $1,890 million or approximately 43 per cent of the total budgetary expenditures for the year. This is approximately $82 million or about 4 per cent less than the corresponding total in the preceding year when defence expenditures constituted 45 per cent of the Government's total budgetary outlay.
Although the budgetary surplus was $10 million, the Government made loans, advances and other non-budgetary disbursements of about $429 million, and at the same time reduced the amount of its unmatured funded debt outstanding in the hands of the public by approximately $273 million. The manner in which this has been achieved can be understood more readily by taking an over-all view of the Government's cash transactions for the fiscal year.

The Budget-Appendix
As explained in the section on "The Cash Position", the budgetary surplus of $10 million for the fiscal year does not measure the full impact of Government operations in 1953-54 upon the Canadian economy. Substantial sums were received and paid out for extra-budgetary purposes, such as the loans and advances which the Government is authorized to make and the transactions in connection with the many insurance, pension, annuity and deposit and trust accounts which it is required or has undertaken to hold or administer.
These non-budgetary disbursements are estimated at $429 million and include $146 million invested in or loaned to the Canadian National Railways for capital expenditures on additions and betterments and the acquisition of new rolling stock and equipment, $93 million advanced to Central Mortgage and Housing Corporation for house construction and for housing loans, and $45 million loaned to the Old Age Security Fund to finance pension payments out of the Fund which were not covered by old age security tax receipts. More than offsetting these are non-budgetary receipts and credits amounting to $811 million of which the two principal items were $446 million from the repayment of sundry loans and investments (of which $147 million represents the repayment by the C.N.R. of government loans out of the proceeds of the $200 million loan to the public which was issued early in 1954); and $365 million from net annuity, pension and other liability account receipts.
After taking into account the budgetary surplus of $10 million and the net balance of $383 million available from non-budgetary transactions, $393 million was available for debt reduction. Unmatured funded debt in the hands of the public decreased by approximately $273 million during the year, and the Government's year end cash balances increased by $120 million.
3.	THE BUDGETARY ACCOUNTS
Total revenues, at $4,400 million for 1953-54, were $39 million over the total for 1952-53. Total expenditures at $4,390 million were $53 million more than in the previous fiscal year. The surplus for the fiscal year was $10 million as compared with a surplus of $24 million for 1952-53.
A summarized statement of the estimated revenues and expenditures and surplus for the fiscal year ended March 31, 1954, with the actual figures for the fiscal years ended March 31, 1947 to 1953, inclusive, is given in the following table:
TABLE i
Budgetary Revenues, Expenditures and Surplus for the Fiscal Years Ended March 31, 1947 to 1954 Inclusive
(In millions of dollars)
Fiscal Year Ended March 31	Budgetary Revenues	Budgetary Expenditures	Surplus1947	3,007-9 2,871-7 2,771-4 2,580-1 3,112-5 3,9S0-9 4,360-8 4,400-1	2,634-2 2,195-6 2,175-9 2,448-6 2,901-2 3,732-9 4,337-3 4,390-0	373-7 676-1 595-5 131-5 211-3 248-0 23-5 10-11948	1949	1950	1951	1952	1953	
The Budget-Appendix

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1947	1949	1949	1950	1951	1952	1953	1954*
Estimated.

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1947	1948	1949	1950	1951	1952	1953	1954*
Estimated.

The Budget-Appendix A. Analysis of Revenues
Total budgetary revenues amounted to $4,400-1 million in the fiscal year 1953-54 and were $39-3 million or about 1 per cent higher than the previous record of $4,360-8 million received in 1952-53. Of the total revenues for the fiscal year $2,476-7 million or 56-3 per cent were derived from direct taxes, $1,532-3 million or 34-8 per cent from indirect taxes and the remaining $391-1 million or 8-9 per cent from non-tax revenues and special receipts and credits.
A statement of estimated revenues for 1953-54 classified by major categories, and the corresponding actual figures for 1952-53 is given in Table II.

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Statement of Budgetary Revenues by Major Classifications for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
		Fiscal Year Ended March 31				Increase or Decrease (-)	
Source	1954 (Estimated)	1953	Amount	Per cent	Amount	Per cent	Amount	Per centOrdinary revenues- Direct taxes-	1,189-3 54-0	27-0	1,180-0 53-7	27-1	9-3	0-8Taxes on interest, dividends, etc.,	1-2	1-2	0-3	0-61,193-4 40-0	27-2	1,240-1 38-1	28-4	-46-7	-3-80-9	0-9	19	5-0
2,476-7	56-3	2,511-9	57-6	-35-2	-1-4
							
Indirect taxes-	408-0	9 3	389-4	8-9	18-6	4-8228-0	5-2	241 4	5-6	-13 4	-5-6882 0	20-0	841-9	19-3	40 1	4-814-3	0 3	13 0	0-3	1-3	10-0
1,532-3	34-8	1,485-7	34-1	46-6	3-1
							
		4,009-0	91-1	3,997-6	91-7	11 4	0-3
							
Non-tax revenues-	111-5	2-5	111 9	2-6	-0-4	-0-4147-5	3-4	116 9	2-7	30 6	26-2Premium, discount and exchange...	3-9	0-1	1-5	2-4	160-054-5	12	49-8	1-1	4-7	9-4
317-4	7-2	280-1	6 4	37 3	13-3
							
		4,326-4	93-3	4,277 7	98 1	4S-7	1-1
							
		73-7	1-7	83-1	19	-9-4	-11-3
							
		4,400-1	100-0	4,360 8	100-0	39 3	0-9
							
* Excluding tax credited to Old Age Security Fund-
1953-54	1952-53
2% personal income tax	 90-7 million
2% corporation income tax	
55 -6	"2% sales tax	
147-7	"45-2 million 36-9	"141-0	"
294 0
3790
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The Budget-Appendix
(1) Direct Taxes
Tax on Personal Incomes
Personal income tax (excluding the old age security tax) yielded a total of $1,189-3 million in 1953-54, an increase of $9-3 million or 0-8 per cent over the previous year. Deductions at the source from salary and wages since July 1, 1953, have been made at rates averaging about 11 per cent less than those applicable in the corresponding period of 1952-53. In addition, that part of personal income tax revenue which is paid in quarterly instalments, and as balances with returns, has been based in 1953-54 on lower rates than in the previous year. The effect of these two factors however has been more than offset by the increase in personal incomes during the year.
In addition the 2 per cent tax on personal incomes levied under the Old Age Security Act yielded an estimated amount of $90-7 million during 1953-54 compared with $45-2 million in 1952-53. These collections were credited to the Old Age Security Fund.
Taxes on Interest, Dividends, Rents and Royalties Going Abroad
Revenues under this heading are derived from withholding taxes on payments of interest, dividends, rents and royalties made to non-residents. The estimated total of $54 million compares with $53-7 in 1952-53.


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4000
2000
0

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TOTAL REVENUE FROM TAXES (91%)
4000
2000
0
1947	1948	1949	1950	1951	1952	1953	1954*
* Estimated.
Corporation Income Tax
Corporation income tax (excluding the old age security tax) yielded revenues of $1,193-4 million in 1953-54, a decrease of $46-7 million or 3-8 per cent from the previous year's total of $1,240-1 million. While this decrease is due partly to the fact that corporate profits in 1953 were somewhat less than in 1952 it is attributable mainly to the reduction in rates of tax announced in the 1953 budget, applicable to profits earned after January 1, 1953. The 1953 budget imposed rates of 18 per cent on the first $20,000 of profits and 47 per cent on

The Budget-Appendix
profits in excess of $20,000; the former rates had been 20 per cent on the first $10,000 of profits and 50 per cent on profits in excess of $10,000. Also, in 1953 the allowable deduction from federal tax of 5 per cent of taxable income earned in the Province of Quebec was increased to 7 per cent.
The total revenue from corporation income tax includes $9 million paid by corporations paying the 15 per cent tax on their undistributed income. This compares with $10-2 million collected from this source in 1952-53.
In addition the 2 per cent tax levied on corporate profits under the Old Age Security Act yielded $55-6 million during 1953-54 as compared with $36-9 million in 1952-53. These collections were credited to the Old Age Security Fund.
Succession Duties
Revenues from succession duties were $40 million in 1953-54, an increase of $1-9 million or 5 per cent over the previous year.


[Stage Direction]
1947	48	49	50	51	52	63	54*1947	48	49	50	51	5^	53	54*
* Estimated.
(2) Indirect Taxes
Customs Import Duties
Net revenue from customs import duties for the year were $408 million, an increase of 4-8 per cent over the 1952-53 total of $389-4 million. The increase in revenue corresponds to the increase in total value of imports.
Excise Duties
Excise duties are levied exclusively on alcoholic beverages and tobacco products. (Additional taxes are levied under the Excise Tax Act on tobacco products). The revenue from excise duties for the year was $228 million, a decrease of $13-4 million from the previous year's yield of $241-4 million. The decrease is due to the fact that the rates of duty on cigarettes were reduced in the 1953 budget. The decrease in revenue from cigarettes is partly offset by an increase in the revenue from spirits.
Gross receipts from excise duties, before deducting refunds, are divided as follows: $133 million from alcoholic beverages ($127-7 million in 1952-53), and $98 million from tobacco products ($116-9 million in 1952-53).
[Stage Direction]
The Budget-Appendix
Excise Taxes
Net excise tax collections (excluding the 2 per cent old age security sales tax) are estimated at $882 million in 1953-54, an increase of $40-1 million over the previous year.
The sales tax, from the standpoint of revenue, is the principal tax levied under the Excise Tax Act. Despite new exemptions from the sales tax announced in the 1953 budget which were estimated to reduce revenue by about $8 million, the gross revenue from sales tax was $612 million, an increase of $28-2 million compared with $583-8 million in 1952-53. Since there was no substantial changes in the general price level during the year, the increase is attributed to higher production and imports.
Excise taxes other than sales tax yielded approximately $290 million, or $11-5 million more than in 1952-53. This increase occurred in spite of the fact that the stamp taxes on cheques, money orders, and security transfers, which yielded $10-6 million in 1952-53, were repealed in the 1953 budget.
The largest increases in the yields from taxes in this category were from the tax on automobiles, tires and tubes, which yielded approximately $101 million ($89-9 million in 1952-53). Of nearly equal importance is the increase in collections of the tax on tobacco products. Due to increased cigarette sales these taxes yielded approximately $7 million more than in the previous year. Finally, revenue from the tax on radios and television sets is estimated at $16-5 million, an increase of $5 [DOT] 8 million over last year.
In addition the 2 per cent tax on sales levied under the Old Age Security Act yielded $147-7 million during 1953-54, compared with $141-6 million in 1952-53. These collections are credited to the Old Age Security Fund.
Other Indirect Taxes
The taxes under this heading are the tax on premium income of insurance companies, the tax on the export of electrical energy from Canada, and the tax on the export of furs from the Northwest Territories. These taxes produced $14-3 million, an increase of $1-3 million over 1952-53. Of this total the tax on premium income of insurance companies yielded approximately $13-6 million, in 1952-53 the yield was $12 [DOT] 4 million.
(3)	Non-Tax Revenues
Non-tax revenues for 1953-54 are estimated at $317-4 million, an increase of $37-3 million over the total for 1952-53. The following table presents a comparative summary of revenues under this heading for the past two years:

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Non-Tax Revenues for the Fiscal Years Ended March 31, 1954, and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (-)111-5	111-9	-0-4147-5	116-9	30-63-9	1-5	2-44-8	4-4	0-412-7	11-3	1-44-6	5-2	-0-617-6	17-2	0-4120	9-3	2-72-8	2-4	0-4
317-4	280-1	37-3
			

The Budget-Appendix
Post Office
Gross post office receipts for 1953-54 are expected to amount to $129-8 million. After making authorized disbursements from revenue of $18-3 million for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., net post office receipts credited to budgetary revenues are estimated at $111 -5 million. A small increase of $0-5 million in gross receipts over the corresponding amount received in 1952-53 is more than offset by an increase of $0-9 million in payments from revenue, due mainly to an increase in remuneration paid to revenue postmasters and their assistants. Costs of operating the Post Office during 1953-54 (excluding the $18-3 million charged to revenue) are expected to total $114 million and thus will exceed net revenue by approximately $2-5 million. However, in making this comparison it is to be noted that the total shown for post office revenues does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for other special services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.
Return on Investments
Return on investments is expected to yield $147-5 million, an increase of $30-6 million over the total of $116-9 million received in 1952-53. Half of this increase is attributable to the profits of the Bank of Canada, which for the calendar year 1953 were $15-1 million above those for the previous year. Also contributing to the increase in 1953-54 is the estimated surplus of $10 million to be turned over by Canadian Arsenals Limited; the corresponding item for 1952-53 of $6-1 million was included in special receipts and credits. There were also increases in interest received during 1953 from the Canadian National Railways and Central Mortgage and Housing Corporation of $3 -8 million and $1-9 million respectively. In addition $2-2 million is included in revenues representing surplus funds in excess of the $5 million reserve established by Central Mortgage and Housing Corporation which are payable to the Receiver General; in prior years the corresponding amounts were credited to special receipts and credits. The principal item offsetting these increases was a decrease of $6-4 million in the amount of dividends and interest received from Polymer Corporation Limited, due mainly to the fact that there was no receipt in 1953 comparable to the special dividend of $6 million paid by the Corporation in 1952.
A comparative summary of estimated receipts during 1953-54 with actual receipts during 1952-53 under this heading is given in the following table:
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The Budget-Appendix

[Stage Direction]
Return on Investments for the Fiscal Years Ended March 31, 1954, and March 31, 1953
(In millions of dollars)
Loans to, and investments in, Crown Agencies-
Bank of Canada	
Exchange Fund account	
Central Mortgage and Housing Corporation	
Canadian Arsenals Limited	
Canadian National Railways	
National Harbours Board	
Polymer Corporation Limited	
Other Crown agencies	
Other loans and investments-
United Kingdom	
Other national governments	
Provincial and municipal governments	
Soldier and general land settlement loans and Veterans'
Land Act advances	
Securities investment account	
Sinking fund and other investments held for retirement of
unmatured funded debt	
Other loans and investments	
Fiscal Year Ended March 31		Increase or Decrease (-)
1954 (Estimated)	1953	
44-1	29-0	15-116-3	14-8	1-513-3	9-2	4-110-0	10-06-7	2-9	3-84-3	5-0	-0-73-2	9-6	-6-41-6	1-4	0-299-5	71-9	S7-6231	23-4	-0-312-0	12-6	1-1	1-2	-0-15-1	4-7	0-42-3	1-8	0-52-4	0-7	1-81-4	0-6	0-748-0	45-0	S-0147-5	116-9	30-6
Premium, Discount and Exchange
The amount credited to premium, discount and exchange in 1953-54 was $3-9 million compared with a credit of $1-5 million in 1952-53. This revenue item arises mainly from accounting adjustments in asset and liability accounts to reflect a reduction in U.S. dollar and sterling exchange rates from those operative in the fiscal year 1952-53. It is estimated that the Canadian dollar equivalent of outstanding debt payable in sterling and in United States dollars will be reduced in consequence of this revaluation by $4-8 million, offset by 82 [DOT] 5 million reduction in assets payable in these currencies. The result is a net credit in the premium, discount and exchange account of $2-3 million. Net differences in rates on current gold and foreign exchange transactions are expected to account for a further credit of $1 -6 million, resulting in a net revenue item of $3 [DOT] 9 million.
(4)	Special Receipts and Credits
Special receipts and credits are expected to total 873 [DOT] 7 million for the fiscal year 1953-54 compared with a total of 883 * 1 million received in the previous year. A comparative summary of the sources of special receipts and other credits for the last two years is presented in the following table:

The Budget-Appendix

[Stage Direction]
Special Receipts and Credits for the Fiscal Years ended March 31, 1954 AND March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	or Decrease (-)Transfer to revenue of provincial 5 per cent corporation income tax suspense account pursuant to the 1952 tax rental agreements	46-9	45-0	1-9Proceeds from the sale of Crown assets	17-1	7-6	9-5Central Mortgage and Housing Corporation- Profits paid to Receiver General	(1)	2-1	-2-1Proceeds and depreciation reserve with respect to the sale of wartime housing properties	5-2	6-7	-1-5Transfer to revenue of Canadian Wheat Board suspense account	6-3	- 6*3Surplus of Canadian Arsenals, Limited	(1)	6-1	-6-1Write up to active assets-Atomic Energy of Canada, Lim-	4-8	-4-8Miscellaneous special receipts	4-5	4-5	73-7	83-1	-9-4
(1) Included in Return on Investments in 1953-54.
The amount of $46-9 million represents the transfer to revenue of the balance of the provincial 5 per cent corporation income tax suspense account. A fuller explanation may be found in the section on Sundry Suspense Liabilities.
$17-1 million was received during the fiscal year from the sale of Crown assets. Of this amount $7-9 million was received from the Crown Assets Disposal Corporation representing the amount realized from the disposal of surplus Crown assets after allowing for transfers to active assets of amounts applicable to "Balances receivable under agreements of sale of Crown assets". It does not include the residual cash balances nor the value of accounts receivable carried by the corporation as at March 31, 1954.
The remaining $9-2 million under this heading consists of two amounts received under agreements of sale. Crown-owned land and buildings were sold by the Department of Defence Production to A. V. Roe Canada Limited for approximately $17 million. During the fiscal year cash payments of $9 million were received; the balance is set up under "Other loans and investments" as "Balances receivable under agreements of sale of Crown assets." Also under an agreement of sale Crown-owned machine tools and equipment were sold by the Department of Defence Production to Weatherhead Company of Canada Limited for approximately $700,000. A cash payment of $200,000 was received during the fiscal year, and the balance set up under "Other loans and investments" as "Balances receivable".
An estimated amount of $5-2 million is included as revenues received from Central Mortgage and Housing Corporation representing the proceeds of the sale of wartime housing properties including depreciation provisions set aside in previous years by the corporation on properties that have now been sold. In addition, an estimated amount of $11-1 million for interest on loans to the corporation and $2-2 million representing profits in excess of the $5 million reserve established by the corporation was received. Both these amounts are credited to "Return on investments" in the current year. In 1952-53 profits of $2 [DOT] 1 million were credited to special receipts as shown in the table.
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The Budget-Appendix
(5)	Comparison of Actual Revenue with Budget Forecast
Total budgetary revenues for 1953-54, excluding revenue from the old age security taxes, as now estimated were about $73 million less than the forecast made in the budget speech of February 19, 1953. This represents a shortfall of about 1| per cent. Revenues from personal income tax, corporation income tax and excise duties were less than expected, while revenues from customs import duties, sales tax and other excise taxes exceeded expectations.
The following table shows the extent to which actual revenues as now estimated differ from the budget forecast.

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Comparison of Budget Forecast with Actual Revenues for Fiscal Year Ended March 31, 1954
(In millions of dollars)
Source of Revenues	Budget Forecast of Revenues	Actual Revenues (Estimated)	Increase or Decrease (-) compared with Budget Forecast1,250-0 55-0 1,228-0 40-0 395-0 265-0 580-0 285-0 10-0	1,189-3 54-0 1,193-4 40-0 408-0 228-0 592-0 290-0 14-3	-60-7 -1-0 -34-6 13-0 -37-0 12-0 5-0 4-3
4,108-0 290-0	4,009-0 317-4	-99-0 27-4
			
			
	4,398-0 75-0	4,326-4 73-7	-71-6 -1-3
			
			
	4,473-0	4,400-1	-72-9
			
The revenue from personal income tax was $61 million or nearly 5 per cent less than the budget forecast. The deficiency is due mainly to the fact that refunds of tax were considerably more than expected.
Corporation income tax collections are approximately $35 million less than the budget forecast which was based on the assumption that 1953 profits would be larger than in 1952. Preliminary indications are that 1953 profits did not reach the expected level.
Customs duties yielded approximately $13 million more than the budget forecast. This is attributed to record values of imports in the early months of - the fiscal year.
Revenue from excise duties fell short of the budget forecast by about 14 per cent. This difference arises from a combination of causes of which the most important is the fact that the budget forecast was based on an estimate of receipts in 1952-53 which turned out to have been too high. In addition the use of malt did not increase in step with the increase in beer sales resulting in the revenue from this source falling below expectations. Finally the reduction in the excise duty revenue from tobacco products as a result of the reductions in the tax on cigarettes announced in the 1953 budget was greater than anticipated although this was partly offset by higher revenues from the excise tax on cigarettes.

The Budget-Appendix
Sales tax exceeded the budget forecast by about $12 million or 2 per cent. The strength of this revenue source in 1953-54 is indicative of the high level of consumer spending.
The excess of non-tax revenues over the budget forecast is attributable largely to the fact that revenues from return on investments were much larger than anticipated, reflecting the increased earnings of the Bank of Canada for the calendar year 1953, and the fact that profits of Canadian Arsenals Limited and Central Mortgage and Housing Corporation which in 1952-53 were credited to "Special receipts and credits" were in 1953-54 included as "Return on investments".
While special receipts and credits are very difficult to estimate with any high degree of accuracy, the budget forecast of $75 million for 1953-54 appears to have been very close to the actual amount received.
B. Expenditures
The table which follows presents a comparative summary of estimated expenditures by departments and principal purposes for the fiscal year 1953-54, with actual expenditures for the preceding fiscal year.

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Statement of Expenditures by Departments and Major Classifications for the Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)	
	1954 (Estimated)		1953			
Amount	Per cent	Amount	Per cent	Amount	Per centNational Defence	1,839-7	41-9	1,882-4	43-4	-42-7	-2-3Defence Production	49-9	1-1	88-8	2-0	-38-9	-43-81,889-6	43-0	1,971-8	45-4	-81-6	-4-1Public Debt Charges-	Interest on public debt	476-7	10-9	451-3	10-4	25-4	5-6Other debt charges	19-7	0-4	13-6	0-3	6-1	44-9m-4	US	464-9	10-7	SIS	6-8Provincial subsidies and tax rental	payments (including transitional	grant to Newfoundland)	338-1	7-7	338-7	7-8	-0-6	-0-2Government contributions with respect	to civil service superannuation account.	54-5	1-2	38-8	0-9	15-7	40-5Provision for reserve for possible losses	on ultimate realization of active assets.	50-0	1-1	75-0	1-7	-25-0	-33-3Family allowances	350-1	8-0	334-2	7-7	15-9	4-8Unemployment Insurance Act-Admin-	istration and Government's contribu-	tion	58-2	1-3	56-2	1-3	2-0	3-6Agriculture	109-3	2-5	106-7	2-5	2-6	2-4Canadian Broadcasting Corporation	24-8	0-6	8-2	0-2	16-6	202-4Citizenship and Immigration	25-9	0-6	23-6	0-5	2-3	9-7External Affairs	45-4	1-0	39-3	0-9	6-1	15-5Finance	30-3	0-7	29-5	0-7	0-8	2-7Mines and Technical Surveys	37-5	0-9	29-7	0-7	7-8	26-3National Health and Welfare	80-5	1-8	72-4	1-7	8-1	11-2National Research Council and Atomic	Energy Control Board	28-2	0-7	28-3	0-7	-0-1	-0-4National Revenue	50-1	1-1	47-3	1-1	2-8	5-9Northern Affairs and National Re-	sources	19-5	0-5	19-5	0-4	Post Office	114-0	2-6	105-6	2-4	8-4	8-0Public Works	114-5	2-6	97-9	2-3	16-6	17-0Royal Canadian Mounted Police	34-0	0-8	31-1	0-7	2-9	9-3Trade and Commerce	16-7	0-4	16-5	0-4	0-2	1-2Transport	120-2	2-7	103-9	2-4	16-3	15-7Veterans Affairs	239-8	5-5	241-4	5-6	-1-6	-0-7Other Departments	62-4	1-4	57-4	1-3	5-0	8-7Grand Total	4,390-0	100-0	4,337-3	100-0	52-7	1-2
3798
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The Budget-Appendix National Defence and Defence Production
Canada's expenditures for defence comprise the expenditures of the Department of National Defence and the Department of Defence Production. Estimated expenditures of the Department of National Defence for the fiscal year 1953-54 were $1,839-7 million as compared with $1,882-4 million for 1952-53, a decrease of $42-7 million, while expenditures of the Department of Defence Production were $49 [DOT] 9 million, a decrease of $38 - 9 million. Consequently, the combined expenditures of the two departments amounting to $1,889-6 million for the year under review are $81-6 million less than the total of $1,971-2 million for 1952-53. Defence expenditures constituted approximately 43 per cent of all government expenditures in 1953-54, and were, by a considerable margin, the largest class of government expenditure.
The following table shows a comparative summary of expenditures for the two departments for the last two fiscal years:

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Defence Expenditures for the Fiscal Years Ended March 31, 1954, and March 31, 1953 (In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Department of National Defence-			
Army services	407-2	516-1	-108-9Navy services	264-5	260-3	4-2Air services	745-2	768-0	-22-81,416-9	1,644-4	-127-5Defence research and development	43-8	43-0	0-8Government's contribution to the permanent services	pension account	35-3	30-0	5-3Mutual aid to NATO countries	309-2	235-1	74-1Contributions toward military costs of NATO	12-0	11 -3	0-7Administration and general	22-5	18-6	3-91,839-7	1,882-4	-42-7Department of Defence Production-	Capital assistance	39-5	79-1	-39-6Administration and general	10-4	9-7	0-749-9	88-8	-S8-91,889-6	1,971-2	-81-6
Total expenditures for the army, navy and air services were $1,416-9 million for 1953-54 as compared with $1,544-4 million for 1952-53, a decrease of $127-5 million. Expenditures for defence research and development, at $43-8 million, were slightly more than for the preceding year.
The Government's contribution to the permanent services pension account, which is equivalent to If times the contributions for permanent services personnel, was $35-3 million for 1953-54, or $5-3 million more than the amount contributed in 1952-53. Of the expenditures for 1953-54, $30-6 million relates to current contributions and $4 [DOT] 7 million to contributions for arrears. In 1952-53, the corresponding amounts were $25-2 million and $4-8 million, respectively.
Expenditures under the Mutual Aid programme which are authorized by Section 3 of the Defence Appropriation Act, 1950, are expected to amount to $309-2 million in 1953-54, an increase of $74-1 million over 1952-53. Under the provisions of this section of the Act, defence equipment and supplies are transferred from Canadian stocks to other parties to the North Atlantic Treaty. The value of equipment and supplies acquired by the services prior to March 31, 1950, and transferred as Mutual Aid, is charged to this appropriation and

The Budget-Appendix
credited to a special defence equipment replacement account. The value of the equipment is based on its estimated replacement value. In accordance with the provisions of Vote 241 of the Appropriation Act, No. 3, 1953, where equipment and supplies acquired for the services since March 31, 1950, are transferred as Mutual Aid, their estimated replacement value is credited to the appropriate service allotment instead of being paid into the replacement account, and may be expended during the current fiscal year for the purposes of the Canadian forces. The expenditure of $309-2 million in 1953-54 consists of approximately $77-9 million for equipment and supplies transferred from Canadian stocks to North Atlantic Treaty countries and $231-3 million for direct cash outlays for Mutual Aid by the Government of Canada, representing costs incurred in acquiring and supplying new military equipment to parties to the North Atlantic Treaty and in the training in Canada of aircrews from allied countries. In 1952-53, stock transfers amounted to $55-5 million and direct aid to $179-6 million.
Contributions made by Canada towards the military costs of NATO are charged to the National Defence appropriations. These payments comprise Canada's share of the NATO military budgets and of infrastructure costs. The percentage share borne by each nation is established in the North Atlantic Council, subject to ratification by the respective governments. Expenditures during 1953-54 for this purpose were $12 million, as compared with $11-3 million for 1952-53.
Expenditures for the Department of Defence Production were $49-9 million for 1953-54, a decrease of $38-9 million from the total of $88-8 million for the previous year. Capital assistance to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme, totalled $39-5 million, as compared with $79-1 million for 1952-53. Administration and general expenditures of the Department were $10-4 million, an increase of $0-7 million over the previous fiscal year.
In addition to the foregoing budgetary expenditures, the Department of Defence Production has made cash outlays from the defence production-revolving fund for the procurement of materials for use in the manufacture-of defence equipment. For purposes of accounting and control, materials so-acquired are treated as assets in the books of the Government until they" are billed to the Department of National Defence or sold to defence contractors: for use in the manufacture of defence equipment. It is estimated that the net cash position of the fund in 1953-54 was reduced by $17 [DOT] 1 million, as compared with a net increase of $19-7 million in 1952-53.
The replacement of equipment and supplies acquired by the Department of National Defence prior to March 31, 1950, and subsequently transferred to parties of the North Atlantic Treaty Organization, also involved cash outlays which were not reflected as budgetary expenditures. The cost of such replacement is charged to the defence equipment replacement account, which is credited with the estimated value of the defence equipment and supplies, when these are transferred from Canadian stocks to NATO countries. Transfers to this account during 1953-54 were $77-9 million, and it is estimated that $36-5 million was disbursed for the purchase of replacement equipment and supplies. The balance of the account at March 31, 1953, was $271-1 million, and, as a result of the past year's operations, a total of $41-4 million has been added to this account, bringing it up to $312-5 million as of March 31, 1954.
In addition to the foregoing, there is provision under Section 11 of the National Defence Act for the sale of materiel not immediately required for the use of the Canadian forces or the Defence Research Board to such countries and upon such terms as the Governor in Council may determine. The proceeds of sale are credited to a special account to be used for the procurement of materiel. Credits to the replacement of materiel account in 1953-54 totalled $15 * 7 million,, while $3-7 million was withdrawn therefrom.
83276-240J
[Stage Direction]
The Budget-Appendix
The net effect of the defence programme upon the Canadian economy, is a combination of the net cash outlays from the defence equipment replacement account, the replacement of materiel account and the defence production revolving fund, together with the net cash budgetary expenditures of the Departments of National Defence and Defence Production. This not cash outlay for defence amounted to $1,819-1 million in 1953-54, a decrease of $86-7 million from the corresponding total in 1952-53.
The following table presents a summary of the cash disbursements for defence for the last two fiscal years:

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Cash Outlays for Defence for the Fiscal Years Ended March 31, 1954 and March 31, 1953 (In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease!-)Budgetary Expenditures- Department of National Defence	1,839-7	1,882-4	-42-7Department of Defence Production	49-9	88-8	-38-91,889-6	1,971-2	-81-6Less: Value of military equipment and supplies transferred from existing Canadian stocks to NATO countries (included in budgetary expenditures)	77-9	55-5	22-41,811-7	1,915-7	-104-0Disbursements from: Defence equipment replacement account	36-5	-14-2	50-7Replacement of materiel account (Sec. 11, National Defence Act,) (net)	-12-0	-15-4	3-4Defence production revolving fund (net)	-17-1	19-7	-36-87-4	-9-9	17-3Net cash outlay for defence	1,819-1	1,905-8	-86-7

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MILLIONS Or DOLLARS
riSCAL YEARS ENDED MARCH 31

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Estimate.
Note: The lightly shaded area in the chart for Health, Welfare and Social Security represents pension payments out of the old age security fund.

The Budget-Appendix
Public Debt Charges
Public debt charges in 1953-54, as in 1952-53, constituted the second largest item of government expense. The total of $496-4 million for the year under review represented 11-3 per cent of total budgetary expenditures compared with a total of $464 * 9 million or 10-7 per cent in 1952-53.
Interest on the unmatured funded debt was $412-3 million compared with $393 [DOT] 1 million in 1952-53. All of this increase of $19 [DOT] 2 million is attributable to interest on debt payable in Canada. A substantial increase in the amount of Canada Savings Bonds outstanding and an increase of approximately 0 [DOT] 1 per cent in the average interest rate account for the greater part of the increase.
Interest on deposit and trust accounts is expected to show a small increase of $0-2 million over the previous year, while interest on insurance and pension accounts, estimated at $61-3 million, is $6 million higher than in 1952-53. Of this latter increase $2-4 million is in respect of government annuities, $1-4 million is on civil service superannuation account and $1-9 million on permanent services pension account.
Other public debt charges are estimated at $19-7 million, an increase of $6 [DOT] 1 million over 1952-53. The greater part of this increase is due to an increase in the annual amortization charge for discount and commissions on previous bond issues.
The following table presents a comparative summary of public debt charges for 1953-54 and the corresponding figures for the previous year.
table x
Interest and other Public Debt Charges for the Fiscal Years ended March 31, 1954,
and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Interest on Public Debt-			
Funded Debt and Treasury Bills-			
Payable in Canada	400-8	381-6	19-2Payable in London	16	1-6	Payable in New York	9-9	9-9	4ie-s	S9S-1	19-tDeposit and Trust Accounts	3-1	2-9	0-2Insurance, Pension and Guaranty Accounts	61-3	55-3	6-064-4	68-S	e-tTotal Interest on Public Debt	476-7	451-3	25-4Annual amortization of bond discounts and commissions	17-8	12-0	5-8Servicing of Public Debt	0-6	0-5	0-1Cost of issuing new loans	1-3	i-i	0-219-7	1S'6	e-tTotal Public Debt Charges	496-4	464-9	31-5
The Budget-Appendix Subsidies and Tax Rental Payments to Provinces
Payments to the provinces during 1953-54 for statutory subsidies, rentals under the tax rental agreements, the transitional grant to Newfoundland, and the transfer of certain public utility tax receipts, were $338 [DOT] 1 million compared with $338 [DOT] 7 million in 1952-53.
A comparative summary of the payments for the two years is given in the following table:
table XI
Subsidies and Tax Rental Payments to Provinces for the Fiscal Years Ended March 31, 1954 and March 31, 1953.
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (-)Rentals under tax rental agreements c. 49, Statutes of 1952....	309-2	284-8 23-8	24-4 -23-820-1	20-1	-0-84-8	5-6	Transfer of certain public utility tax receipts-sec. 7, c. 58, Statutes of 1947	40	4-4	-0-4338-1	338-7	-0-6
The total paid as subsidies and tax rental payments in 1953-54 is almost exactly equal to that paid in 1952-53 despite the fact that tax rental payments in 1952-53 included the final quarterly instalment under the old 1947 agreements as well as a full year's rental payments under the 1952 agreements.
The payments under the 1952 tax rental agreements in 1953-54 were $24-4 million greater than in the previous year reflecting the increases in provincial populations and gross national product per capita in 1952 over the base year 1948.
Statutory subsidies in 1953-54 were unchanged from the previous year, both years' payments being based on the 1951 census totals of population.
The amount of public utility tax receipts transferred to the provinces is expected to be $0-4 million less than in the previous year. Section 7 of the Dominion-Provincial Tax Rental Agreements Act, 1947, authorized the payment to the provinces, whether participating in the agreements or not, of a portion of the income tax collected from corporations, whose main business was the distribution to, or the generation for distribution to, the public of electiical energy, gas or steam. Provision for similar payments was also made in the Tax Rental Agreements Act, 1952.
A summary of payments, by provinces during 1953-54 is given in the following table:

The Budget-Appendix

[Stage Direction]
Subsidies and Tax Rental Payments to Provinces for the Fiscal Year Ended
March 31, 1954
(In millions of dollars)
-	Statutory Subsidies	Rentals under 1952 Tax Rental Agreements	Transi- tional Grant	TotalNewfoundland	1-6	11-8	4-8	18-22-1	19-5	21-60-7	3-7	4-41-7	16-2	17-93-3	3-33-6	134-4	138-01-7	25-0	26-72-0	25-3	27-32-1	29-8	31-91-3	43-5	44-820-1	309-2	4-8	334-1Transfer of certain public utility tax receipts (Sec. 7,	4-0338-1
Government Contributions to the Civil Service Superannuation Account
It is estimated that $54-5 million will be charged to expenditures in 1953-54 in connection with the civil service superannuation account, an increase of $15-7 million compared with $38-8 million charged in 1952-53.
The government contributes in each fiscal year an amount equal to the estimated payments by individual contributors in the previous year in respect of current and prior service. The government's contribution for 1953-54 is estimated at $16-5 million compared with $13-8 million in 1952-53.
In addition, $38 million is included in the year's expenditures representing the amount required to cover the additional liability created by the general increase in civil service salaries effective December 1, 1953.
Provision for Reserve for Possible Losses on Ultimate Realization of Active Assets
An amount of $50 million is included as an expenditure in the government's accounts as an addition during the fiscal year 1953-54 to the general reserve for possible losses on the ultimate realization of active assets. It is intended, however, to write off $99-5 million, the amount of temporary loans made by the Minister of Finance to the old age security fund in 1952-53, against this reserve. This will leave the balance in the reserve at the end of the fiscal year at $496-4 million which is equivalent to 6-8 per cent of the aggregate active assets.
Family Allowances
Family allowances are payable in respect of all children under sixteen resident in Canada, with minor exceptions such as in the case of children of immigrants who have to reside in Canada a year before an allowance is payable. The monthly allowance is $5 if the child is less than six years of age; $6 in the age group 6 to 9; $7 in the age group 10 to 12; and $8 in the age group 13 to 15.
[Stage Direction]
The Budget-Appendix
For 1953-54 family allowance payments are estimated at $350-1 million representing 8 per cent of the total expenditures compared with $334 [DOT] 2 million or 7-7 per cent for 1952-53. The increase of $15-9 million reflects the increase in the number of children.
The following table presents a comparative summary of family allowance payments by provinces for the last two fiscal years:

[Stage Direction]
Family Allowance Payments fob the Fiscal Yeabs Ended Mabch 31, 1954 and Mabch 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
	1954 (Estimated)	1953	
11-4	11 0	0-416-7	16-3	0-42-5	2-5	14-7	14-3	0-4111-5	107-1	4-41046	98-3	6-317-9	17-3	0-620-2	19 7	0-523-9	22-6	1-326-0	24-4	1-60-7	0-7	
350-1	334-2	15-9
Unemployment Insurance Act Administration and Government's Contribution
Expenditures for 1953-54 in connection with the Unemployment Insurance Act (excluding the government's payment as an employer) are estimated at $58-2 million compared with $56-2 million in 1952-53, an increase of $2 million.
Unemployment insurance benefits are not charged directly to budgetary expenditures. The Unemployment Insurance Fund, from which such benefits are paid, is financed by contributions from employers and employees, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of the combined employer-employee payments.
For 1953-54, the government's contribution to the Fund is estimated at $31 [DOT] 9 million, an increase of $0 [DOT] 8 million over the total of $31 [DOT] 1 million in 1952-53. Administration costs are estimated at $26-3 million or $1-3 million more than the total of $25 million for the previous fiscal year.
Agriculture
The Department of Agriculture expenditures for 1953-54 are estimated at $109-3 million an increase of $2-6 million compared with expenditures of $106-7 million in 1952-53. The net increase of $2-6 million reflects an increase of $5-3 million in the operating losses of the Agricultural Prices Support Board, decreases of $3-7 million in freight assistance on western feed grains, and $1-5 million in premiums on hog carcasses and other smaller changes.

The Budget-Appendix
The following table presents a comparative summary of the expenditures of the department for the last two fiscal years:

[Stage Direction]
Expenditures of the Department of Agriculture for the Fiscal Years Ended March 31, 1954, and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Operating losses of the Agricultural Prices Support Board	37-8	32-5	5-3Freight assistance on western feed grains	17-0	20-7	-3-7Rehabilitation and reclamation projects	14-8	13-9	0-9Premium on hog carcasses including administrative costs....	4-9	6-4	-1-5Experimental farms service	8-7	8-3	0-4Science service	9-0	8-1	0-9Production service	9-7	9-3	0-4Marketing service	4-4	4-8	-0-4Departmental administration and sundry	3-0	2-7	0-3109-3	106-7	2-6
Canadian Broadcasting Corporation
Expenditures by the Government of Canada in respect of the Canadian Broadcasting Corporation are estimated at $24-8 million for the current fiscal year an increase of $16-6 million compared with expenditures of $8-2 million in 1952-53. As proposed in last year's budget the Canadian Broadcasting Act was amended to provide that the corporation in future would receive an amount equivalent to the collections on the 15 per cent special tax imposed on radio and television sets, tubes and accessories. For the current fiscal year, this amount is estimated at $16-5 million consisting of $11-5 million in respect of television and $5 million in respect of radio. Also, as announced in last year's budget speech, the Order in Council under the Radio Act setting the licence fee at 82.50 for private radio receiving sets was revoked as of April 1, 1953. Consequently, in 1953-54 only 80-3 million was collected and turned over to the corporation compared with 85-4 million in 1952-53. Collections in the latter period were derived mainly from private radio station broadcasting licences.
The following table presents a comparative summary of expenditures of the last two fiscal years:

[Stage Direction]
Expenditures in Respect of the Canadian Broadcasting Corporation for the Fiscal Years Ended
March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Sound broadcasting service	6-2	6-2	International shortwave broadcasting service	2-1	2-0	0-1Payments to the corporation of amounts equal to tax collected under the Excise Tax Act in respect of radio and television	16-5	16-524-8	8-2	16-6
In addition, a loan of $4-7 million was made to the Corporation in 1953-54 to cover the costs of television installations and to support the development of the service. This brings the total of loans to the Corporation to $16 million;
3806
[Stage Direction]
The Budget-Appendix $6 [DOT] 7 million of this amount is in respect of television. Interest at various rates is being paid semi-annually by the corporation to the government and is included in non-tax revenues under "Return on Investments".
Citizenship and Immigration
Expenditures of this department are estimated at $25-9 million for 1953-54, an increase of $2-3 million over the total of $23-6 million in 1952-53. The increase is almost wholly accounted for in the expenditures of the Indian Affairs Branch.
The following table presents a comparative summary of expenditures for 1953-54 and 1952-53:

[Stage Direction]
Citizenship and Immigration Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Indian Affairs	16-7	15-2	1-5Immigration	7-5	7-1	0-4Citizenship and Citizenship Registration	0-7	0-5	0-2Administration and general	10	0-8	0-225-9	23-6	2-3
External Affairs
Expenditures of the Department of External Affairs for 1953-54 are estimated at $45-4 million, an increase of $6-1 million over 1952-53. Assistance to other countries directly or through international organizations is estimated at $31-4 million, an increase of $4-8 million. The principal item in this category is an amount of $25 million provided under the Colombo Plan for grants to assist in the economic development of countries in South and South-East Asia. A similar amount was provided in 1952-53. The increase of $4-8 million in assistance to other countries is due chiefly to the provision for a gift of wheat as a contribution towards the relief of famine in Pakistan.
The table which follows presents a comparative summary of the expenditures of the department for the last two fiscal years:

[Stage Direction]
Expenditures of the Department of External Affairs for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Assistance to other countries	31*4	26-6	4-8Canada's assessment for membership in international or commonwealth organizations	3-5	3-5	Representation abroad	6-5	5-5	104-0	3-7	0-3
45-4	39-3	6-1

The Budget-Appendix
Finance
The major items of expenditure of the Department of Finance have been dealt with under the headings "Public debt charges", "Subsidies and tax rental payments to provinces", "Provision for reserve for possible losses on the ultimate realization of active assets" and "Government contribution to the civil service superannuation account".
In addition, other expenditures of the department for 1953-54 were $30'3 million compared with $29-5 million in 1952-53.
The following table presents a comparative summary of these expenditures for the past two fiscal years:

[Stage Direction]
General and Administration Expenditures of the Department of Finance for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (-)Office of the Comptroller of the Treasury-Administration	13-8	13-3	0-5expenses	Grants to universities	5-2	5*1	0-1Grants to municipalities in lieu of taxes on federal property.. Government contribution as an employer to the Unemploy-	30	2-6	0-4ment Insurance Fund	.	
Federal government share of claims-Rimouski and Cabano	11	1-1	-0-30-3	Implementation of guarantees-Ming Sung Industrial Co. Ltd	1-6	1-7	-01Grant to the Canadian National European Flood Relief Fund	1-0	-1-0Departmental administration and general	5'6	4-4	1*230-3	29-5	0-8
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys were $37-5 million for 1953-54 compared with expenditures of $29-7 million for
1952-	53. The increase of $7-8 million is due mainly to increases of $3-3 million in payments under the Emergency Gold Mining Assistance Act and of $3-5 million in the expenditures of the Dominion Coal Board.
A table showing a comparative summary of expenditures for the fiscal years
1953-	54 and 1952-53 follows:

[Stage Direction]
Mines and Technical Surveys Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (-)14-5	11-2	3-3100	6-5	3-57-1	6-5	0-62-6	2-5	0-12-0	1-8	0-21-3	1-2	0-1
37-5	29-7	7-8
83276-241i
[Stage Direction]
The Budget-Appendix
National Health and Welfare
Family allowance payments, because of their importance, have been dealt with in preceding paragraphs of the white paper. Other expenditures of the Department of National Health and Welfare are estimated at $80-5 million for 1953-54 compared with $72-4 million in 1952-53, an increase of $8-1 million.
The following table presents a comparative summary of these other expenditures of the department for the last two fiscal years:
table xx
National Health and Welfare Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
General health grants	28-9	27-3	1-6Old age assistance	20-6	19-1	1-5Allowances to blind persons	30	30	Indians and Eskimos health services	14-9	12-9	20Other health services	5-8	4-5	1-3Civil defence programme	3-3	1-7	1-6Administration and general	4-0	3-9	0180-5	72-4	81
General health grants were inaugurated in 1948-49 to assist the provinces in hospital construction, the improvement of general health services and the control of diseases. Expenditures on account of these services were $28-9 million for 1953-54, an increase of $1-6 million over 1952-53.
The following table presents a distribution by provinces of such grants paid in the last two fiscal years, together with the total paid from the inception of the policy in 1948-49.

[Stage Direction]
General Health Grants to Provinces (In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)	Total for Fiscal Years 1948-49 to 1953-54 Inclusive
	1954 (Estimated)	1953		
Newfoundland	0-9	0-8	01	3-8Nova Scotia	1-3	1-3	5-8Prince Edward Island	0-2	0-2	1-2New Brunswick	1-3	ii	0-2	5-1Quebec	90	8-0	10	37'1Ontario	7-8	8-3	-0-5	33-1Manitoba	1-7	1-5	0-2	6-5Saskatchewan	2-0	2-0	8*9Alberta	2-2	21	01	91British Columbia	2-5	2-0	0-5	1MNorthwest and Yukon Territories	0)	(')	(>)28-9	27-3	1-6	121-7
(*) Less than $50,000.

The Budget-Appendix
Under the Old Age Assistance Act the federal government reimburses the provinces by paying 50 per cent of the lesser of $40 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who were in the age group of 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements may receive a pension of $40 per month from the federal government out of the Old Age Security Fund). Similarly, under the Blind Persons Act, the federal government reimburses the provinces for allowances paid to eligible blind persons in need over the age of 21, but under this Act federal reimbursement is 75 per cent of the total payments.
Payments by the federal government in respect of old age assistance were $20-6 million for 1953-54 compared with $19-1 million for 1952-53. Payments on account of allowances to blind persons were $3 million for 1953-54, unchanged from 1952-53.
The distribution of these payments in 1953-54, by provinces, is given in the following table:

[Stage Direction]
Federal Share of Old Aoe Assistance and Allowances to the Blind for the Year Ended March 31,1954
(In millions of dollars)
-	Old Age Assistance	Allowances to the BlindNewfoundland	0*9	0-1Nova Scotia	1-0	0-3Prince Edward Island	01	(*)New Brunswick	1-2	0-&Quebec	7-2	1-1Ontario	4-9	0-6Manitoba	1-1	0-2"Saskatchewan	10	0*1Alberta	1-2	0-1British Columbia	20	0-2;Northwest and Yukon Territories	(>)	(*>20-6	3-0
(') Less than $50,000.
Indian and Eskimo health services were $14-9 million for 1953-54 compared with $12-9 million in 1952-53. Other health services totalled $5-8 million, up $1-3 million from the previous fiscal year. Of this increase, $0-2 million was for immigration medical services, $0-7 million for laboratory of hygiene and $0 [DOT] 2 million for the administration of various Acts relating to health services.
Expenditures in connection with the civil defence programme were $3-3 million for 1953-54, an increase of $1-6 million.
Administration and general expenditures were $4 million, slightly more than the total of $3-9 million for 1952-53.
National Research Council and Atomic Energy Control Board
Expenditures of the National Research Council were $15-6 million in 1953-54 compared with $15-4 million in 1952-53. The expenditures of the Atomic Energy Control Board were $12-6 million for 1953-54, a decrease of $0 [DOT] 3 million from the previous fiscal year.
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The Budget-Appendix
National Revenue	. .	.
Expenditures of this department are estimated at $50-1 million m 1953-54 compared with $47-3 million in 1952-53. Of the increase of $2-8 million for the year, $1-5 million is in respect of the customs and excise division and $1-3 million on account of the taxation division.
The following table presents a comparative summary of the expenditures of the department for the last two fiscal years:

[Stage Direction]
Department or National Revenue Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Customs and excise division	270	25-5	1-5Taxation division	230	21-7	1-3Income tax appeal board	01	0-1	50'1	47'3	2-8
Northern Affairs and National Resources
The Department of Northern Affairs and National Resources was constituted in 1953-54 by an Act of Parliament which redefined the duties and functions of the former Department of Resources and Development to reflect the growing importance of Canada's northland. Expenditures under the Trans-Canada Highway Act, including administration and contributions to the provinces, and expenditures for housing, both included in 1952-53 under the Department of Resources and Development, have been transferred to the Department of Public Works and the expenditures for 1952-53 shown in the table which follows have been adjusted accordingly.

[Stage Direction]
Northern Affairs and National Resources Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
National Parks Branch	7-3	7-2	01Engineering and Water Resources Branch	1-8	31	-1-3Northern Administration and Lands Branch	3-3	3-7	-0-450	3-8	1-2Canadian Government Travel Bureau	1-5	1-3	0-2Administration and general	0-6	0-4	0-219-5	19-5	
The Budget-Appendix
Expenditures for 1953-54 at $19-5 million were the same as those of 1952-53, a reduction of $1-3 million in the engineering and water resources branch being offset by the increase of $1-2 million in the forestry branch.
Post Office
Gross expenditures of the Post Office Department for 1953-54, including payments from revenue, are estimated at $132-3 million, an increase of $9-3 million over the total of $123 million for 1952-53. Remuneration of postmasters and staffs at revenue and semi-staff offices and commissions at sub-offices are paid from revenue. These payments, which are included in the total of $132-3 million for 1953-54, were $18-3 million compared with $17-4 million in 1952-53. Disbursements charged to budgetary expenditures are estimated at $114 million in 1953-54, an increase of $8-4 million over the previous fiscal year.
The following table presents a comparative summary of the expenditures for the past two years:
table xxv
Post Office Department Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	or Decrease (-)Charged to Expenditures- Operations-including salaries and other expenses of staff post offices, district offices and railway mail services and supplies and equipment and other items for revenue post offices	65-3	60-7	4-6Transportation-movement of mail by land, air and water	45-1	41-3	3-8Financial services	2-4	2-3	0-1Departmental administration and general	1-2	1-3	-0-1114-0	105-6	8-4Charged to Revenues- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices and other disbursements	18-3	17-4	0-9132-3	123-0	9-3
Public Works
Expenditures of the Department of Public Works are estimated at $114-5 million for 1953-54 an increase of $16-6 million over 1952-53.
The following table presents a comparative summary of expenditures for 1953-54 and 1952-53:

[Stage Direction]
Expenditures of the Department of Public Works for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	or Decrease (-)Architectural Branch	61-3	52-7	8-BEngineering Branch	34-0	28-4	5-0Contributions to the provinces under the terms of the Trans-Canada Highway Act	14-2	14-0	0-2Housing	1-6	1-4	0-2Administration and general	3-4	1-4	2-0114-5	97-9	16-6
The Budget-Appendix
Of the increase of $8-6 million in the expenditures for the architectural branch, $2 [DOT] 8 million is due to increased costs for maintenance of public buildings and $5 [DOT] 7 million to increased outlay in the acquisition, construction and improvement of public buildings. Of the increase of $5-6 million in the expenditures of the engineering branch, $4-1 million is attributable to increased costs for the acquisition, construction and improvement of harbour and river works. Contributions to the provinces under the terms of the Trans-Canada Highway Act are estimated at $14-2 million, an increase of $0-2 million over 1952-53.
When the Department of Northern Affairs and National Resources was established, expenditures in connection with housing and the administration of the Trans-Canada Highway Act were transferred to the Department of Public Works. To facilitate comparison the foregoing table has been adjusted to include these expenditures which in 1952-53 were shown under the former Department of Resources and Development.
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police are estimated at $34 million for 1953-54 compared with $31-1 million in 1952-53. The increase of $2-9 million is due chiefly to an increase of $2-2 million in expenditures for land services of which $1-9 million is in respect of operation and maintenance costs, and $0-3 million for construction or acquisition of buildings. These amounts represent gross expenditures; payments received from the provinces for police services are credited to revenue.
The following table presents a comparative summary of expenditures for 1953-54 and 1952-53:

[Stage Direction]
Royal Canadian Mounted Police Expenditures fob the Fiscal Years Ended March 31, 1934 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
29-6	27-4	2-213	0-9	0-40-3	0-4	-0-1Government contribution to the Royal Canadian Mounted	0-7	0-5	0-221	1-9	0-2
34-0	31-1	2-9
Trade and Commerce
Expenditures of the Department of Trade and Commerce for 1953-54 are estimated at $16 [DOT] 7 million compared with $16-5 million for 1952-53.

The Budget-Appendix
The following table presents a comparative summary of expenditures of the department for the two fiscal years:

[Stage Direction]
Expenditures op the Department op Trade and Commerce for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (- )5-4	5-7	-0-34-7	4-5	0-22-4	2-3	0-115	1-4	0-12-7	2-6	0-1
16-7	16-5	0-2
Trans-port
Expenditures of the Department of Transport are estimated at $120-2 million for 1953-54, an increase of $16-3 million as shown in the following table:

[Stage Direction]
Expenditures op the Department op Transport for the Fiscal Years Ended March 31, 1954 and March 31, 1953 (In millions of dollars)
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1954 (Estimated)	1953	
Air Services-			
Telecommunications Division	13-9	12-7	1-2Meteorological Division	70	6-6	0-4Civil Aviation Division	21-2	19-5	1-7Administration	0-2	0-2	Jfi-S	S9-0	S-SCanal Services	9-5	9-9	-0-4Marine Services	20-8	21-7	-0-9Railway Servicesy- Maritime Freight Rates Act-	Difference between tariff and normal tolls	10-5	10-1	0-4Other railway services	13-5	6-4	7-1Maintenance of trackage	7-0	4-2	2-8Sl-0	SO-7	iO-SCanadian Maritime Commission	4-3	40	0-3Deficits and non-active advances- Government-owned enterprises- Net Income Deficits- Canadian National (West Indies) Steamships,	Ltd	0-6	(*)	0-6North Sydney-Port aux Basques ferry and	terminals	2-2	1-9	0-3Prince Edward Island Car Ferry and terminals..	1-6	1-5	0-10-1	-0-1Loans and Advances, non-active-	National Harbours Board	4-3	1-9	2-48-7	5-4	J-SDepartmental administration and sundry	3-6	3-2	0-4120-2	103-9	16-3
(*) Less than $50,000.
[Stage Direction]
The Budget-Appendix
Estimated expenditures of $42-3 million for air services in 1953-54 represent an increase of $3-3 million over 1952-53. Of this increase $1-2 million is attributable to the telecommunications division, $0-4 million to the meteorological division and $1-7 million to the civil aviation division. Expenditures for railway services are expected to show an increase of $10-3 million, of which $2-8 million relates to payments under the Railway Act to the Canadian National and Canadian Pacific Railways for the maintenance of trackage on the railways' transcontinental lines in certain areas of Northern Ontario, $0-4 million for expenditures in connection with the Maritime Freight Rates Act and $7-1 million for other railway services (due mainly to increases of $3-4 million for transportation improvements and facilities with respect to the Strait of Canso and $4-5 million for construction or acquisition of auto ferry vessels). Payments covering net operating deficits of and non-active loans and advances to certain government owned enterprises are estimated at $8-7 million in 1953-54 an increase of $3-3 million compared with $5-4 million in 1952-53, due largely to an increase of $2-4 million in non-active loans and advances to the National Harbours Board.
Veterans Affairs
Expenditures for the Department of Veterans Affairs are estimated at $239-8 million for 1953-54 compared with the total of $241-4 million spent in 1952-53. The net decrease of $1-6 million is due primarily to decreases of $1-3 million in post-discharge rehabilitation benefits, $1-6 million in war service gratuities and re-establishment credits, and $1-2 million in departmental, district and pensions administration and miscellaneous payments, offset in part by increases of $2-1 million in expenditure for treatment services, $0-7 million in pensions for disability or death, and $0 [DOT] 6 million in the provision for the reserve for conditional benefits under the Soldier Settlement and Veterans Land Acts. Conditional grants are made to veterans who enter into agreements with the director for sales of land and chattels provided they fulfil the terms of the agreements for a period of ten years. The amount charged to expenditure in 1953-54 under this heading covers one-tenth of the conditional benefits included in sales to veterans prior to April 1954.
The following table presents a comparative summary of the expenditures for the past two fiscal years:

[Stage Direction]
Veterans Affairs Expenditures for the Fiscal Years Ended March 31, 1954 and March 31, 1953
(In millions of dollars)
	Fiscal Year Ended March 31		Increase
1954 (Estimated)	1953	Decrease (-)Pensions for disability or death	127-7	127-0	0-7Treatment services	42-8	40-7	2-1War veterans' allowances and other benefits	30-3	30-8	-0-5Post-discharge rehabilitation benefits	2-5	3-8	-1-3War service gratuities and re-establishment credits	
Soldier Settlement and Veterans' Land Acts-	9-1	10-7	-1-6Administration and general	5-3	5-7	-0-4Provision for reserve for conditional benefits	
Departmental, district and pensions administration and mis-	8-6	8-0	0-6cellaneous payments	13-5	14-7	-1-2239-8	241-4	-1-6
The Budget-Appendix
4.	THE CAS PI POSITION
In addition to the collection of revenues and the making of expenditures in the strict budgetary sense the Government's financial operations include numerous extra-budgetary transactions which involve the receipt and disbursement of large sums of cash.
The estimated budgetary revenues, expenditures and surplus for 1953-54 have been described and analysed in some detail in the preceding sections. Although these budgetary transactions for 1953-54 resulted in a surplus of $10-1 million, the unmatured funded debt outstanding in the hands of the public decreased by $272-6 million, while the Government's cash balances increased by some $120-2 million. It is apparent that both budgetary and nonbudgetary transactions must be taken into account when measuring the impact of the Government's fiscal operations upon the Canadian economy or considering the implications of Government spending and the methods by which that spending is financed.
The non-budgetary transactions relate to transactions which result in increases or decreases in the Government's assets and liabilities. They do not appear in the Government's income account nor do they enter into the calculation of the annual budgetary surplus or deficit.
On the assets side they consist, for the most part, of advances to, and repayments of loans by, Crown Corporations and other Government agencies and funds (including the old age security fund), foreign, provincial and municipal governments and other borrowers, investments in government securities and outlays for the acquisition of inventories of materials and supplies which will be used in the future and for services rendered in one year but applicable to the accounts of subsequent years.
On the liabilities side the transactions relate primarily to receipts and payments in connection with the numerous deposit and trust, and annuity, insurance and pension funds held or administered by the Government.
The following summary shows how these non-budgetary transactions together with the budgetary surplus affected the Government's funded debt and cash position in 1953-54. For purposes of comparison, the corresponding figures for 1952-53 are also shown:
3816	HOUSE OF COMMONS
The Budget-Appendix
transactions)-
Repayments of loans, investments and working capital advances-Loans to, and investments in, Canadian National Railways. ..
Advances to agricultural prices support account	
Advances to defence production revolving fund	
Advances to exchange fund	
Temporary loan to old age security fund	
1942 loan to United Kingdom	
1946 loan to United Kingdom	
Loans to other national governments	
Loans to provincial and municipal governments	
Other loans, investments and working capital advances..
Net government annuities account receipts-
Premium receipts less payments to beneficiaries	
Government contribution to maintain reserve	
Interest paid by Government	
Fiscal Year Ended March 31
Net insurance and pension account receipts-
Employee contributions less payments to beneficiaries	
Government contributions	
Special Government provision for unamortized portion of public
service superannuation account	
Interest paid by Government	
Net increase in Colombo plan fund	
Net increase in defence equipment and materiel replacement accounts..
Net increase in interest accrued on the public debt	
Net increase in reserve for conditional benefits-Veterans Land Act__
Net increase in matured funded debt, outstanding cheques, interest due
etc	
Net receipts in sundry other accounts	
Total.
Non-Budgetary Disbursements and Charges (excluding unmatured funded debt transactions)-
Loans, investments and working capital advances-
Loans to and investments in, Canadian National Railways	
Loans to Central Mortgage and Housing Corporation	
Temporary loan to old age security fund	
Loans under Soldier Settlement and Veterans' Land Act	
Other loans, investments and working capital advances	
Other non-budgetary expenditures-
Cost of loan flotations (portion to be amortized)	
Net decrease in provincial 5 per cent corporation income tax suspense
account	
Net decrease in reserve for possible losses on ultimate realization
of active assets	
Net decrease in cash balances of unemployment insurance fund.... Net disbursements from sundry accounts	
Total.
Net amount available from, or required for (-), non-budgetary transactions.. Add, Budgetary surplus	
Overall cash surplus available for debt reduction	
Overall cash deficit (-) required to be financed by borrowing	
Net increase or decrease (-) in unmatured funded debt outstanding in the hands of the public:
Unmatured funded debt	
Sinking fund	 ]"
Securities investment account	
Net increase in cash balances.
1954 (Estimated)	1953
(In million	s of dollars)
163-8	
49-8	-71-2
17-1	-19-7
15-0	-45-0
99-5	
53-6	24-3
14-6	14-3
24-4	22 2
3-7	3-8
4-1	1-0
446-6	-70S
32-3	32-9
1-0	0-7
29-0	27-0
62-S	60-6
16-8	17-6
89-8	45-0
	25-0
32-2	28-3
138-8	US-9
18-1	19-9
53-4	85-1
12-2	25-9
8-6	8-0
48-3	7-4
240	22-4
811-3	274-9
145-7	141-8
92-5	72-6
44-8	99-5
7-8	6-8
29-7	12-8
$20 -5	SSS-5
10-3	6-4
47-9	29-8
49-4	-75-0
0-4	0-6
0-1	8-3
108-1	-29-9
428-6	303-6
382-7	-28-7
10-1	23-5
392-8	
	-5-2
-241-0	115-1
-73-1	-1-7
41-5	-0-6
-272-6	112-8
120-2	107-6

The Budget-Appendix
As the table shows, in 1953-54 non-budgetary receipts and credits are estimated at $811-3 million, while non-budgetary disbursements and charges are estimated at $428-6 million, resulting in a net non-budgetary surplus of $382 [DOT] 7 million which, when added to the budgetary surplus of $10 * 1 million, made a total of $392-8 million available for debt reduction. In 1952-53, as there was a net non-budgetary deficit of $28-7 million and a budgetary surplus of $23-5 million, $5-2 million had to be financed by net new borrowing from the public.
Non-budgetary receipts and credits for 1953-54 are estimated at $811-3 million. Repayments of loans, investments and working capital advances totalled $445 * 6 million, due mainly to repayments of $163 [DOT] 8 million by Canadian National Railways, a reduction of $49-8 million in the advances to the agricultural prices support account, net repayments of $17-1 million in advances to the defence production revolving fund, net repayments of $15 million in advances to the exchange fund, a writing off against the general reserve of temporary loans of $99 [DOT] 5 million made to the old age security fund in 1952-53, and repayments of $92-6 million by the United Kingdom and other national governments. Other non-budgetary receipts and credits include $62-3 million on government annuities account, $138-8 million in respect of the several insurance and pension accounts, $18-1 million net increase in Colombo plan fund, $53-4 million representing increases in the defence equipment and materiel replacement accounts, and $93 [DOT] 1 million receipts from various other accounts.
Non-budgetary disbursements and charges during 1953-54 are expected to total $428-6 million. Loans, investments and working capital advances were $320-5 million, these include $145-7 million to Canadian National Railways for capital expenditures for additions and betterments and the acquisition of new rolling stock and equipment and for additional working capital (as mentioned in the preceding paragraph, during the year the Canadian National Railways also repaid loans aggregating $163-8 million); $92 [DOT] 5 million to Central Mortgage and Housing Corporation for housing construction and loans; $44-8 million in temporary loans to the old age security fund to finance the amount by which pension payments from the fund exceeded tax receipts; and $37-5 million for miscellaneous loans, investments and working capital advances (including $7-8 million for loans to veterans). Other non-budgetary disbursements and charges are estimated at $108-1 million, and include $10-3 million for discounts and commissions on loans, $47-9 million for the net decrease in the provincial 5 per cent corporation income tax suspense account $46-9 million of which was transferred to budgetary revenues during the year, a net decrease of $49-4 million in the reserve for possible losses on ultimate realization of active assets (the $50 million provided for this reserve in budgetary expenditures is more than offset by a reduction due to the charge to the reserve of the 1952-53 temporary loan of $99-5 million to the Old Age Security Fund), and $0 * 5 million disbursements from various other accounts.
With an overall cash surplus of $392 * 8 million in 1953-54, and unmatured funded debt outstanding in the hands of the public reduced by $272-6 million, there was an estimated increase of $120-2 million in cash balances at the end of the year.
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The Budget-Appendix
5.	ESTIMATED SUMMARY OF ASSETS AND LIABILITIES OF CANADA AT MARCH 31, 1954
The following table presents in summary form the estimated balances of the asset and liability accounts as at March 31, 1954, the comparable balances at March 31, 1953, and the estimated change in each category during 1953-54:

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Summary of the Statement of the Assets and Liabilities of Canada as at March 31, 1954 and March 31, 1953
(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1954 Estimated	1953	
Liabilities	912-2 205-0 1,767-8 150-8 358-6 11-9 14,569-5	863-9 183-1 1,567-1 130-0 352-0 11-9 14,810-5	48-3 21-9 200-7 20-8 6-6
			
			
			
			
			
			-241-0
Unmatured funded debt				
Active Assets	17,975-8	17,918-5	57-32,539-9 1,788-2 2,437-5 100-7 2-3 260-0 192-0	2,591-8 1,705-2 2,526-1 27-6 2-3 249-7 199-9	-51-9 83-0 -88-6 73-1
Sinking fund and other investments held for the retirement			
			
			10-3 -7-9
			
Sundry suspense accounts				
	7,320-6 496-4	7,302-6 545-8	18-0 -49-4
Less, Reserve for possible losses on ultimate realization of active assets				
Net Active Assets	6,824-2	6,756-8	67-411,151-6	11,161-7	-10-1
Liabilities
The aggregate liabilities of the Government as at March 31, 1954, are estimated at $17,975-8 million, an increase of $57-3 million over the total of $17,918-5 million at the close of the previous fiscal year.
Unmatured funded debt outstanding, including bonds and treasury bills totalled $14,569-5 million or approximately 81 per cent of all liabilities. Of the total outstanding unmatured funded debt, $14,181-6 million or 97-3 per cent is payable in Canada; the balance of $387-9 million is payable in foreign currencies-$337 -6 million in United States dollars and $50-3 million m pounds sterling. A complete statement in tabular form of the Government's unmatured funded debt as at March 31, 1954, with details of interest rates, dates of maturity, annual interest charges and amounts of principal outstanding for each loan may be found at the end of this Part.

The Budget-Appendix
The Government's liability in respect of insurance, pension and guaranty accounts is expected to total $1,767-8 million at March 31, 1954. Floating debt, which includes outstanding cheques, matured funded debt and similar obligations payable on demand and accounts payable (cheques issued in April in payment of accounts relating to the fiscal year 1953-54) is estimated at $912-2 million.
The other liability items are: sundry suspense accounts (where some uncertainty as to disposal exists), $358-6 million; deposit and trust accounts (consisting of moneys deposited with or held by the Receiver General for various purposes), $205 million; deferred credits (consisting of balances whose ultimate accounting treatment is known, but which are held until certain conditions are fulfilled), $150-8 million and province debt accounts (representing settlements arising out of agreements at the time of Confederation), $11-9 million.
Active Assets
Offsetting the liabilities, and to some extent explaining their existence-as a substantial part of the total debt is attributable to them-are the Government's active assets. For the most part these consist of assets which yield interest, profits or dividends, liquid assets such as cash and departmental working funds together with certain prepaid expenses and sundry suspense accounts.
It is estimated that at the end of the fiscal year the total active assets amounted to $7,320-6 million, an increase of $18 million over the total at the end of the previous fiscal year. The totals of the principal active asset categories as at March 31, 1954 were: cash and other current assets, $2,539-9 million; loans to, and investments in, Crown agencies, $1,788-2 million; other loans and investments (including loans to provincial, municipal and national governments, subscriptions to international organizations and advances to veterans and others), $2,437-5 million; deferred charges, $260 million; sundry suspense accounts, $192 million; sinking fund and other investments held for the retirement of unmatured funded debt, $100-7 million; and province debt accounts, $2-3 million.
The reserve for possible losses on ultimate realization of active assets, which now stands at $496-4 million is shown on the statement of assets and liabilities as a deduction from the total active assets, bringing the net active asset total to $6,824-2 million.
A. Changes in Principal Liability Classifications During 1953-54
The gross liabilities of the Government at March 31, 1954, were $57-3 million more than the total at the end of the previous fiscal year. A decrease of $241 million in unmatured funded debt is more than offset by an overall increase of $298-3 million for all other liability items, due largely to the increase of $200-7 million in insurance, pension and guaranty accounts. Other increases are: $48-3 million in floating debt, $21-9 million in deposit and trust accounts, $20-8 million in deferred credits and $6-6 million in sundry suspense accounts.
Floating Debt
It is estimated that floating debt increased by $48-3 million during the fiscal year. Increases of $39-5 million in matured funded debt outstanding (due for the most part to the fact that some bonds of the March 1, 1954 maturity had not been redeemed at the year end), $11-6 million in outstanding cheques and warrants and $11-4 million in miscellaneous accounts payable are offset, in part, by decreases of $13-5 million in notes and other obligations payable on demand and $1-1 million in interest due and outstanding.
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The Budget-Appendix
The estimated changes in floating debt during 1953-54 are shown in the following table:

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Floating Debt as at March 31, 1954 and March 31, 1953 (In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1954 Estimated	1953	
Matured funded debt outstanding	59-5	20-0	39-5Notes and other obligations payable on demand	268-5	282-0	- 13*5Interest due and outstanding	56 0	57*1	- 1*1Outstanding cheques and warrants	242-4	230-8	11*6Miscellaneous accounts payable	269-0	257-6	11 -4Post Office (net liability lor money orders, etc.)	16-8	16-4	0-4912-2	863-9	48-3
Deposit and Trust Accounts
Deposit and trust accounts increased by $21-9 million during the fiscal year. The principal increase was $18-1 million in the Colombo Plan Fund to which was credited $30-4 million voted by Parliament to provide for assistance to countries in South and South-east Asia. Disbursements from the fund during 1953-54 amounted to $12-3 million.
Insurance, Pension and Guaranty Accounts
The increase in insurance, pension and guaranty accounts is estimated to be $200 * 7 million. The following table shows the changes in the various accounts for the fiscal year 1953-54:

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Insurance, Pension and Guaranty Accounts as at March 31, 1954 and March 31, 1953
(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1954 Estimated	1953	
Unemployment Insurance Fund	894-7	863-1	31-6Less, Investment in bonds and accrued interest	883-1	851-1	32-011-6	12-0	-0-4Government Annuities	798-8	736-5	62-3Permanent Services Pension Account	215-6	160-2	55-4Superannuation Account	659-0	555-0	104-082-8	103-4	-20-61,767-8	1,567-1	200-7
The superannuation account increased by $104 million during the fiscal year. This increase is attributable to several factors, the most important of which are the Government's contribution of $38 million in respect of the additional liability created by the general salary increases to civil servants effective December 1, 1953; transfers of $22-5 million from the retirement fund, and $5-6 million from the National Harbours Board Pension Fund due to the coming into force of the Public Service Superannuation Act on January 1, 1954; the Government's contribution of $16-5 million equal to the estimated current and

The Budget-Appendix
prior service payments of individuals in 1952-53; interest of $22-2 million credited to the account; and the employees' current and prior service contributions, less payments from the fund.
The Government annuities account is expected to show an increase of $62-3 million and the permanent services pension account an increase of $55-4 million. The increase in the permanent services pension account represents the Government's contribution of $35 [DOT] 3 million (which is made at the rate of one and two thirds times the current contributions and contributions for arrears), interest on the account amouting to $6 [DOT] 6 million and contributions by permanent services personnel for current service and arrears, less the payments from the account.
Other insurance, pension and guaranty accounts show a decrease of $21 million, which included the decrease of $22 [DOT] 5 million in retirement fund transferred to the superannuation account.
Old Age Security Fund
Under the Old Age Security Act pensions of $40 per month are paid to all eligible persons seventy years of age or over without a means test from the old age security fund. During the fiscal year payments from the fund totalled $338-8 million and credits to the fund from the proceeds of the 2 per cent tax on personal incomes, the 2 per cent tax on corporation profits and the 2 per cent sales tax totalled $294 million. The deficit of $44-8 million resulting from these 1953-54 transactions was covered by a temporary loan from the Minister of Finance under the authority of section 11 of the Old Age Security Act.
During the three months' period in the fiscal year 1951-52 in which the Act was in operation, payments of pension from the fund amounted to $76-1 million, receipts from taxes credited to the fund amounted to $26-4 million and the deficit of $49-7 million on the year's transactions was covered by moneys voted by Parliament in Vote 608 of Appropriation Act No. 2, 1952.
In 1952-53, payments of pension from the fund amounted to $323 [DOT] 1 million and receipts from old age security taxes amounted to $223-6 million, and the deficit of $99 [DOT] 5 million for the year was covered by a temporary loan from the Minister of Finance. A large part of the 1952-53 deficit was because the special 2 per cent personal and corporate income taxes only started to be fully payable to the fund in July 1952. The authority of Parliament will be sought to write this amount off in 1953-54 to the reserve for possible losses on ultimate realization of active assets.
With the deficit of the old age security fund for 1951-52 covered by funds voted by Parliament and that for 1952-53 written off to the reserve for active assets, the balance of the temporary loan to the old age security fund at the close of the fiscal year is estimated at $44-8 million, representing the deficit on the fund's operations in 1953-54.
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The Budget-Appendix
The following table gives a summary of the transactions in the account for the last three years:

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Transactions in the Old Age Security Fund for the Fiscal Years Ended March 31, 1952, 1953 and 1954
(In millions of dollars)
	Fiscal Year Ended March 31		
1954 (Estimated)	1953	1952(')338-8 147-7 90-7 55-6 294-0	323-1 141-5 45-2 36-9 223-6	76-1 24-3 0-1 2-0 26-4Tax Receipts-	2 per cent individual income tax	
2 per cent corporation income tax	
Excess of pension payments over tax receipts	
Temporary loans from Minister of Finance to cover deficit	44-8 44-8 99-5	99-5 99-5	49-7 49-7
-49-7
	-99-5		
			
	44-8	99-5	
			
(*) The Act was in operation for only three months in 1951-52.
A distribution of old age security pension payments by provinces is given in the following table:

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Old Age Security Payments by Provinces for the Fiscal Year Ended March 31, 1954
(In millions of dollars)
Newfoundland	
Nova Scotia	
Prince Edward Island	
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia	
Northwest and Yukon Territories	
7-2 17-7 3-2 12-6 72-0 125-8 20-0 20-1 20-1 39-9 0-2
Deferred Credits
The increase in deferred credits is estimated to be $20-8 million. Interest accrued on public debt shows an increase of $12 [DOT] 2 million and balances receivable under agreements of sale of Crown assets, set up as a contra account to an account under the same name in other loans and investments, an increase of $8-7 million.
Sundry Suspense Accounts
Sundry suspense accounts show an increase of $6-6 million for the fiscal year. The transactions in the defence equipment replacement account reflect an increase of $41-4 million in the undisbursed balance of the credits in the account which was established under section 3 of the Defence Appropriation Act, 1950, and subsequent votes of Parliament for the same purpose. Under the

The Budget-Appendix
terms of the Defence Appropriation Act, 1950, the value of defence materials and supplies transferred to members of the North Atlantic Treaty Organization may be credited to the account and these credits may be used in subsequent years to purchase equipment or supplies for the naval, army or air services of the Canadian Forces.
The replacement of materiel account established by section 11 of the National Defence Act is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries and debited with disbursements representing amounts paid for the procurement of replacement materiel. The increase in the account during the fiscal year was $12 million.
Also recorded under this heading was the amount held by the Government in respect of collections of the 5 per cent corporation income tax levied by the provinces that were party to a tax agreement with the Federal Government in the period 1947 to 1951. Under terms of collection agreements with the provinces, this tax was collected by the Federal Government and the proceeds thereof, when returns were finally assessed, were turned over to the provinces. The amount turned over to the provinces, (less any small amounts which represented collection of interest and penalties) was deducted from the stipulated tax rental payments and thus reduced the Federal expenditures shown on this account.
This arrangement was not continued under the new tax agreements signed for a further five years in 1952 and the provincial corporation income tax was not levied on profits earned after December 31, 1951. However, substantial amounts were collected after 1951 in respect of tax liability incurred during the five years when the tax was in force and towards the end of 1952-53 the account contained approximately $92 million. Prior to 1952-53 amounts in this account, when turned over to the provinces, served to reduce Federal Government expenditures on account of tax rental payments but under the new agreements signed in 1952 the provinces gave up all rights in these collections remaining in the Suspense Account. Accordingly the amount in the account instead of being applied to the reduction of tax rental payments is to be taken into revenue. At the end of 1952-53 the amount of $45 million was transferred from the account to revenue as "Special receipts and credits". As the assessments for the taxation years 1947 to 1951 are now almost all completed, the balance of $46-9 million remaining in the account at the end of 1953-54 has been transferred to revenue as "Special receipts and credits" and the account closed out.
Province Debt Accounts
There were no changes in the province debt accounts during the fiscal year. The amounts have remained unchanged for many years.
Funded Debt Unmatured
The unmatured funded debt outstanding at the close of the fiscal year was $14,569-5 million. The reduction of $241 million reflects decreases of $234-3 million in debt payable in Canada, $2 [DOT] 6 million in the Canadian dollar equivalent of debt payable in London and $4-1 million in the Canadian dollar equivalent of debt payable in New York. The details of the various loan redemptions, flotations and adjustments resulting in this net decrease are described more fully in the section on "The Public Debt".
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The Budget-Appendix
B.-Changes in the Principal Active Asset Classifications During 1953-54
It is estimated that the total of the active assets increased $18 million during 1953-54. However, the reserve for possible losses on ultimate realization of active assets was reduced by $49-5 million during the year, an additional provision of $50 million for the reserve being offset by a charge of $99 [DOT] 5 million, representing the amount of temporary loans made to the old age security fund in 1952-53, written off to the reserve in 1953-54. These changes have the effect of increasing the total of net active assets by $67 [DOT] 4 million. Increases of $83 million in loans to, and investments in, Crown agencies, $73 [DOT] 1 million in sinking fund and other investments held for the retirement of debt and $10-3 million in deferred charges are offset, in part, by decreases of $88-6 million in other loans and investments, S51 -9 million in cash and other current assets and $7-9 million in sundry suspense accounts.
Cash and Other Current Assets
It is estimated that there was a decrease of $51-9 million in cash and other current assets in the fiscal year 1953-54. The changes in the various accounts in this category are summarized in the following table:
table xxxvi
Cash and other Current Assets as at March 31, 1954 and March 31, 1953 (In millions of dollars)
	Balance at March 31		
-	1954 Estimated	1953	Decrease (-)Cash in current and special deposits (including blocked currency of $1-5 million at March 31, 1954 and $2-1 million at March 31, 1953)	376-3	255-8	120-5Cash in hands of collectors and in transit	1200	129-7	-9-7Other liquid assets- Exchange fund account-Advances represented by cash and securities	1,763-8	1,770-8	-7-0Securities investment account	18-0	59-5	-41-5Working Capital Advances- Crown corporations	23-6	23-9	-0-3Defence production revolving fund	85-0	102-1	-17-1Temporary loan to old age security fund	44-8	99-5	-54-7Departmental	46-9	96-0	-49-1Miscellaneous departmental imprest and advance accounts	32-0	24-0	8-0Other current assets	29-5	30-5	-1-02,539-9	2,591-8	-51-9
The principal changes as shown in the table are increases of $120-5 million in cash in current and special deposits and $8 million in miscellaneous departmental imprest and advance accounts offset by an overall decrease of $180-4 million for all other asset items, the chief of which are: temporary loan to the old age security fund $54-7 million, departmental working capital advances $49-1 million, securities investment account $41-5 million, defence production revolving fund $17-1 million, cash in hands of collectors and in transit, $9-7 million and the exchange fund account $7 million.
Advances to the exchange fund during the year are estimated at $140 million, and repayments $155 million leaving a net decrease in advances for the year of $15 million which was reduced by $8 million reflecting the decrease during

The Budget-Appendix
1953 in the fund's revaluation deficit which at December 31, 1953, was $191-2 million compared with $199-2 million at end of the preceding year thus showing a net change of $7 million in the balance of the fund for the fiscal year.
The decrease of $66-2 million in departmental working capital advances is accounted for by decreases of $17-1 million in defence production revolving fund and $49-8 million in agricultural prices support account, reflecting the credit to the account of $37 [DOT] 8 million representing the estimated loss on operation for 1953-54, which is included in the year's expenditures and $12 million, the net credit to the account from sales and purchases during the year by the Agricultural Prices Support Board.
It is proposed that the amount of $99 [DOT] 5 million, the advances to the old age security fund representing the deficit of the fund for 1952-53, will be written off to the reserve for possible losses on ultimate realization of active assets and credited to the temporary loan to the old age security fund. The credit of $99-5 million less the advances of $44-8 million to the fund to cover the estimated deficit of the fund for 1953-54 will result in a credit in the temporary loan to the old age security fund for the year of $54-7 million.
Loans to, and Investments in, Crown Agencies
It is estimated that loans to, and investments in, Crown agencies increased by $83 million during the fiscal year. The more important changes are an increase of $92-5 million in loans to Central Mortgage and Housing Corporation and a decrease of $18-1 million in the loans and advances to the Canadian National Railways. The following table shows the changes in this category.

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Loans to, and Investments in, Ckown Agencies as at Mahch 31, 1954 and March 31, 1953 (In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
-	1954 Estimated	1953	Atomic Energy of Canada, Limited	15-6	8-8	6-8Bank of Canada-Capital Stock	5-9	5-9	Canadian Broadcasting Corporation	16-0	11-3	4-7Canadian Farm Loan Board	32*6	28-9	3-7Canadian National Railways	1,027-4	1,045-5	-18-1Central Mortgage and Housing Corporation- Capital Advances	25-0	25-0 407-5	Loans	500-0	92-5Defence Construction (1951) Limited	2-8	-2-8Eldorado Mining and Refining Limited	8-2	8-2	Export Credits Insurance Corporation	5-0	5-0	National Harbours Board	106-0	106-8	-0-8Northwest Territories Power Commission	8-1	8-5	-0-4Polymer Corporation Limited	34-0	37-0	-3-0Other Crown Agencies	4-4	4-0	0-41,788-2	1,705-2	83-0
Loans to Central Mortgage and Housing Corporation for the fiscal year were $101 million, of which $89 million is for lending purposes, $2 million for construction and $10 million for federal-provincial housing projects. Repayments of $8 [DOT] 5 million bring the net increase in advances for the year to $92 [DOT] 5 million.
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The Budget-Appendix
In the fiscal year ended March 31, 1954, the Government advanced $121 million to the Canadian National Railway Company for capital purposes, the retirement of funded debt in the hands of the public and to cover the operating deficit of the Company for the first three months of 1954. From the proceeds of a $200 million twenty year 3f% bond issue sold to the public early in 1954, the Company repaid the Government $147-8 million of advances for capital purposes. In addition, it repaid a temporary loan of $16 million obtained during the early part of the calendar year, 1953, when the operations of the Railway were resulting temporarily in a deficit. As a consequence of all these transactions the advances to the Company were reduced by $38-8 million during the fiscal year.
In addition, the Government purchased $20 [DOT] 7 million of 4 per cent preferred stock of the Canadian National Railway Company in order to assist the Company to finance additional capital expenditures. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to three per cent of the gross revenues of the Company.
The advances to the National Harbours Board were reduced by $0-8 million during 1953-54, bringing the amount outstanding to $106 million at the close of the year. The balance represents all the outstanding advances in connection with harbour developments at Montreal and Vancouver, and a portion of those in respect of Three Rivers.
Polymer Corporation Limited, a Crown corporation engaged in the manufacture of synthetic rubber, reduced its indebtedness during the year by $3 million.
Advances to the Canadian Farm Loan Board were $32-6 million at the fiscal year-end, an increase of $3-7 million over the total at March 31, 1953.
Other increases in loans to, and investments in, Crown agencies were $6 [DOT] 8 million for Atomic Energy of Canada Limited, and $4 [DOT] 7 million for Canadian Broadcasting Corporation.
Other Loans and Investments
It is estimated that other loans and investments decreased by $88 [DOT] 6 million during the fiscal year. The following table shows the main accounts in this category together with the changes during the fiscal year:

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Other Loans and Investments as at March 31, 1954 and March 31, 1953 (In millions of dollars)
Loans to United Kingdom and other governments	
Subscription to capital of International Monetary Fund...
Subscription to capital of International Bank for Reconstruction and Development	
Loans to provincial and municipal governments	
Advances under Soldier Settlement and Veterans' Land Acts. Miscellaneous loans and investments	
Balance at March 31		Increase or Decrease (-)
1954 Estimated	1953	
1,772-3	1,864-9	-92-6
322-5	322-5	
70-9	70-9	
83-5	87-2	-3-7161-9	162-7	-0-826-4	17-9	8-52,437-5	2,526-1	-88-6
The Budget-Appendix
The loans to the United Kingdom and other governments consist of loans to the Government of the United Kingdom under the authority of The War Appropriation (United Kingdom Financing) Act, 1942, and the United Kingdom Financial Agreement Act, 1946, loans to other governments under Part II of the Export Credits Insurance Act and miscellaneous foreign loans. The following table shows the changes in this category during the fiscal year:

[Stage Direction]
Loans to United Kingdom and Other Governments (In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
	1954 Estimated	1953	
Loans to United Kingdom- The War Appropriation (United Kingdom Financing) Act, 1942	142-5	196-1	-53-6The United Kingdom Financial Agreement Act, 1946...	1,142-1	1,156-7	-14-61,284-6	1,852-8	-68-2Loans to Other Governments-	The Export Credits Insurance Act, Part II	440-8	460-2	-19-4Miscellaneous advances	46-9	51-9	-5-0487-7	512-1	-24-41,772-3	1,864-9	-92-6
Under the terms of an agreement entered into on August 13, 1953, between the Governments of the United Kingdom and Canada, the Government of the United Kingdom agreed to reduce the unpaid balance of the $700 million interest-free loan granted under the provisions of the War Appropriation (United Kingdom Financing) Act, 1942, which then amounted to $188-6 million, to $150 million and to repay the balance by quarterly instalments of $7-5 million payable on March 1, June 1, September 1 and December 1 in each year, the first instalment to be paid on March 1, 1954, and the final instalment on December 1, 1958. Under the agreement the loan is to continue to be free of interest until December, 1958.
During the fiscal year 1953-54, the Government of the United Kingdom repaid $53-6 million of this loan reducing the balance outstanding at March 31, 1954 to $142-5 million.
In addition, the Government of the United Kingdom repaid $14-6 million on account of the $1,185 million loan made under the United Kingdom Financial Agreement Act, 1946, reducing the balance outstanding at the fiscal year end to $1,142-1 million.
Outstanding advances made under authority of Part II of the Export Credits Insurance Act are estimated at $440-8 million, at March 31, 1954, a decrease of $19-4 million for the fiscal year. Advances under this Act represent loans made to certain foreign countries to assist them in purchasing goods and services in Canada. Miscellaneous advances to national governments show a decrease of $5 million, of which $3-6 million is due to the repayment by the Government of the Union of Soviet Socialist Republics of advances made under authority of section 3 of the War Expenditure and Demobilization Appropriation Act, chap. 37, 1945 (2nd Sess.).
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The Budget-Appendix
A summary of the outstanding advances under Part II of the Export Credits Insurance Act is given in the following table:

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Advances to Foreign Governments Under Part II of the Export Credits Insurance Act
(In millions of dollars)
-	Total Outstanding at March 31 1953	Repayments during 1953-54	Total Outstanding at March 31 1954Belgium	55-4	2-3	53-149-4	49-49-9	9-9209-2	8-4	200-8Indonesia	7-7	1-5	6-2Netherlands	110-2	4-6	105-6Norway	
*. *	18-4	2-6	15-8460-2	19-4	440-8
All payments falling due during the fiscal year 1953-54 have been received in accordance with the agreements entered into by the Governments of the various countries and the Government of Canada with the exception of payments owing by the Governments of China and Czechoslovakia.
Miscellaneous loans and investments increased by an estimated $8-5 million during the year. Included in this category are the balances receivable under agreements of sale of Crown assets which show an estimated increase of $8-1 million, of which $8-0 million is the balance due by A. V. Roe Canada Limited from a sale to that Company of Crown assets. (A contra account to these balances receivable under agreements of sale of Crown assets is included in deferred credits).
Sinking Fund and Other Investments held for the Retirement of Unmatured Funded Debt
There was an increase of $73 [DOT] 1 million in these assets during the fiscal year, due mainly to the purchase of $75 million 3 per cent Government of Canada New York Loan 1948-63 bonds having a value in Canadian dollars of $72-7 million
Deferred Charges
Deferred charges increased by $10-3 million during the fiscal year, reflecting a net increase of $10-3 million in unamortized discounts and commissions on loans, due to the payment of $29-5 million for discounts and commissions on new loans offset by the annual amortization charges of $19-2 million on past loans applicable to and included in the expenditure for 1953-54.
Sundry Suspense Accounts
The decrease of $7 [DOT] 9 million in sundry suspense accounts is due to the fact that the deficit arising from the exchange revaluations in respect of the assets and liabilities of the exchange fund account was $191-2 million at December 31, 1953, compared with $199-2 million at the close of the previous year.
Reserve for Possible Losses on Ultimate Realization of Active Assets
The sum of $50 million was added to the reserve for possible losses on the ultimate realization of active assets with a corresponding amount shown as an expenditure during the year and $99-5 million was written off the reserve in respect of the temporary loan to the old age security fund in 1952-53 resulting in a decrease of $49 [DOT] 5 million in the account for the year. The balance of the reserve as at March 31, 1954, is estimated at $496-4 million.

The Budget-Appendix C. Decrease in Net Debt
The estimated surplus of $10-1 million for the fiscal year resulted in a corresponding decrease in the net debt of Canada, reducing it from $11,161-7 million at March 31, 1953, to $11,151-6 million at March 31, 1954.

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Or DOLLARS

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1947	1948	1949	1950	I9SI	1952	1953	1954*
Estimated.

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Estimated.
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The Budget-Appendix
6. THE PUBLIC DEBT
Gross and Net Debt
The unmatured funded debt of Canada decreased by $241 million during the fiscal year but this decrease was more than offset by an increase of $298 [DOT] 3 million in other liabilities-principally in insurance, pension and guaranty, floating debt, sundry suspense and deposit and trust accounts-with the result that the gross public debt of Canada increased by $57*3 million from $17,918 *5 million at March 31, 1953, to an estimated total of $17,975-8 million at March 31, 1954. During the same period the net active assets increased by $67-4 million with the result that the net debt-which is the gross debt less the active or revenue producing assets-was reduced by $10-1 million.
The following table shows the relationship between the gross public debt, the unmatured funded debt and the net debt as at March 31, 1947, to March 31, 1954, inclusive, together with the amount of decrease in net debt.

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Statement or Public Debt, Unmatubed Funded Debt, Active Assets and Net Debt or Canada as at Mabch 31, 1947 to 1954 Inclusive (In millions of dollars)
As at March 31	Gross Public Debt	Less Active Assets	Net Debt	Decrease in Net Debt During Fiscal YearUnmatured Funded Debt	Other Liabilities	Total	1947	16,541-9	1,156-3	17,698-2	4,650-4	13,047-8	373-61948	15,957-4	1,239-9	17,197-3	4,825-7	12,371-6	676-11949	15,585 0	1,365-4	16,950-4	5,174-3	11,776-1	595-51950	15,188-1	1,562-7	16,750-8	5,106-1	11,644-6	131-51951	15,026-8	1,896-5	16,923-3	5,490-0	11,433-3	211-31952	14,695-4	2,562-3	17,257-7	6,072-4	11,185-3	248-01953	14,810-5	3,108-0	17,918-5	6,756-8	11,161-7	23-51954 (Estimated)	14,569-5	3,406-3	17,975-8	6,824-2	11,151-6	10-1
Unmatured Funded Debt
It is estimated that the unmatured funded debt of Canada totalled $14,569 [DOT] 5 million at March 31, 1954. This is $241 million less than at the close of the previous fiscal year, and $1,972-4 million less than at March 31, 1947. Interest charges on the unmatured funded debt amounted to $412-3 million in 1953-54, a decrease of approximately 7 per cent from the total of $444-1 million in 1946-47. However, as the gross national product rose from $12,026 million in 1946 to $24,260 million in 1953 an increase of over 100 per cent, the relative burden of the funded debt, measured in terms of interest charges as a percentage of the gross national product, actually decreased from 3-7 per cent in 1946-47 to 1-7 per cent in 1953-54.

The Budget-Appendix
Summary of Security Issues and Redemptions during the year
During the fiscal year 1953-54 the Government issued securities payable in Canadian dollars in the principal amount of $3,150 million (excluding the refunding of treasury bills which mature periodically) and redeemed maturity issues in the amount of $3,386-1 million of which $3,384-3 million was payable in Canadian dollars and $1.8 million in sterling.
The financing of these redemptions was effected as follows:
(in millions of dollars)
By proceeds of new issues:
Canada Savings Bonds Series 8 (net)	 860
Twenty-five Year Loan	 40
Increase in Treasury Bills	 50
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	950-0
By refunding or conversion into new issues	 2,200-0
By available cash-
Payable in Canada	 234-3
Payable in London	 1-8
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	236-1
3,386-1
As a result of these transactions the net decrease in funded debt is estimated at $236 [DOT] 1 million.
The Canadian dollar value of the Government's unmatured external funded debt is estimated to have decreased by $6-7 million during the fiscal year. Of this amount $4 [DOT] 1 million is in respect of indebtedness payable in United States dollars and $2 [DOT] 6 million in respect of sterling debt. Apart from the redemption of $1-8 million of 4% Registered Stock payable in sterling referred to above, the reduction resulted from revaluation of liabilities payable in sterling and United States dollars consequent upon the change in the exchange rates as compared with the previous fiscal year end.
As unmatured funded debt payable in Canada decreased by $234 [DOT] 3 million and as debt payable in sterling and United States dollars decreased by $6 * 7 million, the net decrease during the year in unmatured funded debt was $241 million.
Average interest rates on unmatured funded debt
The average coupon rate of the Government's outstanding funded debt at the close of the fiscal year was 2-86 per cent compared with 2-77 per cent at the close of the previous fiscal year.
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The Budget-Appendix

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1930	1935	1940	1945	1950	1954*
Estimated
Further details of redemptions and new issues of securities during the fiscal year are set out in the following tables:

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Redemption of Funded Debt Dueing Fiscal Year Ended March 31, 1954.
Maturity Date	Interest Rate	Where Payable	Amount
	%		$
May 1, 1953	If	200,000,000May 15, 1953, Deposit Certificates	u	Canada	200,000,000September 1, 1953	2	Canada	550,000,000November 1, 1953	2	Canada	200,000,000November 1, 1953	2	Canada	200,000,000November 1, 1953	2	Canada	300,000,000March 1, 1954	2i	Canada	550,000,000March 1, 1954	3	Canada	676,355,489September 1, 1958, Registered Stock	4	London	1,764,770War Savings Certificates	3	Canada	36,283,540Canada Savings Bonds, Series 1-7	2J-3J	Canada	471,748,100Total Redemption of Debt	3,386,151,899

[Stage Direction]
New Security Issues During Fiscal Year Ended March 31, 1954
Issued to Bank of Canada-
Six Months Treasury Notes Six Months Treasury Notes. Six Months Treasury Notes. Six Months Treasury Notes,
Issued to General Public-
Loan One Year Eight Months	
Loan Four Years Six Months	
Twenty-Five Year Loan	
Canada Savings Bonds Series VIII Net Increase in Treasury Bills	
Grand Total.
Issue Date	Maturity Date	Interest Rate	Price to Govern- ment	Yield at Price to Government	Total Amount Issued	Renewals or Reconversion Included in Amount Issued	Amount Issued for Cash%	%	$	$	$May 1, 1953	Nov. 1, 1953	2	100-00	2-00	200,000,000	200,000,000	Sept. 1, 1953	Mar. 1, 1954	21	100-00	2-25	550,000,000	550,000,000	Nov. 1, 1953	May 1, 1954	21	100-00	2-25	200,000,000	200,000,000	Mar. 1, 1954	Sept. 1, 1954	2	100-00	2-00	550,000,000	550,000,000	1,500,000,000	1,500,000,000	Nov. 1, 1953	July 1, 1955	21	98-00	3-49	400,000,000	400,000,000	Nov. 1, 1953	May 1, 1958	3	97-15	3-69	300,000,000	300,000,000	Jan. 15, 1953	Jan. 15, 1978	31	97-59	3-91	40,000,000	40,000,000Nov. 1, 1953	Nov. 1, 1965	31	98-875	860,000,000	800 000 000Various	Various	Various	Various	Various	50,000,000	50,000,0001,650,000,000	700,000,000	950,000,0003,150,000,000	
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The Budget-Appendix
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The Budget-Appendix Contingent Liabilities
In addition to the direct debt set out in the statement of assets and liabilities, the Government has certain contingent liabilities. These consist of securities issued by various Government owned enterprises (such as the Canadian National Railways, the Canadian National (West Indies) Steamships, Limited, and the Saint John Harbour Commission), guaranteed as to principal and interest or as to interest only, and a number of other miscellaneous guarantees, the chief of which are the guarantee of deposits maintained by the chartered banks in the Bank of Canada and of bank advances to the Canadian Wheat Board; the guarantees of certain loans made by chartered banks to veterans or farmers for certain authorized purposes; guarantees under The Export Credits Insurance Act and certain commitments under the housing legislation.
The following tables give details of the bonds and debenture stocks guaranteed by the Government, and also indicate the nature and approximate extent of the Government's other guarantees and contingent liabilities. The most significant change during the fiscal year was the sale of $200,000,000 3f per cent guaranteed bonds of the Canadian National Railway Company. The proceeds were applied to the redemption of $50,0000,00 5 per cent Bonds due February 1, 1954 and to the repayment of interest-bearing capital advances from the Government of Canada.

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Bonds and Debenture Stocks Guaranteed by the Government as at March 31, 1954
Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
May 1, 1954		City of Saint John Debentures assumed by Saint John		
Harbour Commissioners	5J	3,329Mar. 1, 1955	Canadian National (West Indies) Steamships Limited..	5	9,400,0004!	48,496,000TTnh 1 10Sfi	4 i	67,368,000lnlv 1 1QR7	45	64,136,000Till 9(1 1Q5S	35	5,636,5063	35,000,0003*	550,72735	3,597,5183	26,465,1304	7,999,0743	35,000,0002}	50,000,00025	70,000,000Ton 1Q71	25	40,000,00035	200,000,00025	6,000,0005	696,4935	223,3314	2,803,579Perpetual	Northern Railway of Canada Debenture Stock	4	8,254673,383,941
The Budget-Appendix

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Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Deposits maintained by the chartered banks in the Bank
of Canada (February 27, 1954)	$ 676,629,369
Bank advances re Province of Manitoba Savings Office
(February 22, 1954)	 2,540,078
Province of Manitoba Treasury Bill (March 31, 1954).	1,000,000
Loans made by chartered banks under the Farm
Improvement Loans Act (January	31, 1954)	 31,460,019
Loans made by chartered banks under the Veterans'
Business and Professional Loans Act (December 31,
1953)	 2,092,918
Guarantees under Part II of the Export Credits Insurance Act (March 31, 1954)	 8,925,000
Loans made by approved lending institutions under Dominion and National Housing Acts (December 31, 1953)	 Indeterminate
Guarantees of land assembly projects under National
Housing Act (December 31, 1953)	 543,286
Loans made by approved lending institutions under Part IV of the National Housing Act, 1944, for home extensions or improvements (December 31,
1953)	 7,214
Loans made by chartered banks under The Prairie Producers' Interim Financing Act, 1951 (January 31,1954)	 29,034
Loans made by chartered banks to Canadian Wheat
Board (February 27, 1954)	 69,117,693

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Loans and Advances and Investments Unmatured Funded Debt
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STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (thousands of dollars)
-	1949-50	1950-51	1951-52	1952-53	Estimated 1953-54$	$	$	$	$Tax Revenue-	Direct Taxes-	Direct taxes on incomes-	621,982	652,329	975,776	1,225,276	1,280,000Less old age security tax trans-	ferred to old age security fund..	-100	-45,250	-90,700Tax on interest, dividends, rents	and royalties going abroad	47,475 603,193	61,610 799,197	55,017 1,132,680	53,674 1,276,940	54,000 1,249,000Less old age security tax trans-	ferred to old age security fund..	-2,000 2,365	-36,850	-55,600Excess profits tax	-1,788	10,141	Total direct taxes on incomes...	1,270,862	1,523,277	2,163,738	2,473,790	2,436,70029,920	33,599	38,208	38,071	40,000
1,300,782	1,556,876	2,201,946	2,511,861	2,476,700
					
Indirect Taxes-					
	225,878	295,722	346,365	389,442	408,000
					
Excise duties-					
	107,035 115,982	129,390 114,486	120,851 100,711	127,684 116,914	133,000 98,000
Cigarettes, tobacco and cigars....					
38	38	36 -3,658	38 -3,276	38 -3,038Less refunds	-2,490	-2,868	
Total Excise Duties		220,565	241,046	217,940	241,360	228,000
					
Excise taxes-					
	415,222	470,627	611,492	725,398	759,700
Less old age security tax trans-					
-24,298 100,904	-141,558 89,883	-147,700 101,000Automobiles, tires and tubes	
Beverages (soft drinks)	38,193 1,627 1,030 7,223 83,497	70,841 7,212 10,880	19,230 11,531 423	12,481 12,391	12,000 12,800
Cigarette papers and tubes			7,734 85,199			
Cigarettes, tobacco and cigars				106,354 4,893 4,793	102,645 4,305 5,710	110,000 5.000 4.000
		2,080 4,509			
	2,937				
Jewellery, watches, ornaments,					
etc		4,077 1,091	6,459 1,161	9,714 1,855	7,488 1,394	7,500 1,300
Matches and lighters						
Stamps on cheques, money orders					
etc.,		9,898	10,945	11,346	10,561	
Stoves, washing machines and					
refrigerators				10,923	1,546	
Television sets, radios, tubes and					
	3,101 4,316 3,967	5,548 4,551	8,252 8,467	10,706 7,195	16,500 7,000
Toilet, preparations						
					
	2,257 2,126 2,310 370	2,604 2,225 4,327 372	3,969	3,603 2,216 5,964	3,500 2,200 6,700 500
Wines				2i 167 7,173 463		
Sundry commodities						
Licenses, interest and miscellaneous				461	
Less refunds (mainly sales-tax)	-11,785	-10,506	-13,723	-20,499	-20,000Total Excise Taxes	571,457	686,768	885,928	841,890	882,000
Other Taxes-					
Chartered bank note circulation		121				
Insurance premiums		3,789 525	4,228 710	4,753 843	12,361 679	13,600 700
					
					
Total Indirect Taxes		1,022,335	1,228,474	1,455,829	1,485,732	1,532,300
					
Total Revenue from Taxes		2,323,117	2,785,350	3,657,775	3,997,593	4,009,000
					

The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
1949-50
1951-52
Estimated
Tax Revenue-Concluded Non-Tax Revenue-
Post Office	
Return on investments	
Bullion and coinage	
Premium, discount and exchange. Other	
84,512
91,529
4,523
25,035
90,443
89,529
4,708
17,562
31,100
104,610
117,622
4,838
17,697
37,205
111.905
116.906 4,386 1,467
45,471
Total Non-Tax Revenue. Total Ordinary Revenue.
205,599
233,348
281,972
280,135
2,528,716
3,018,698
3,939,747
4,277,728
Special Receipts and Credits-
Sale of surplus Crown assets	
Central Mortgage and Housing Corporation-
Profits paid to Receiver General.. Proceeds and depreciation reserve with respect to the sale of wartime
housing properties	
Refundable portion of income tax and excess profits tax-Transfer to revenue of excess reserves set up in
previous years	
Transfer to revenue of provincial 5 per cent corporation income tax suspense account pursuant to the 1952 tax
rental agreements	
Sale of Crown assets under agreements
of sale	
Payment received from the Government of the Union of Soviet Socialist Republics in settlement of equipment and material delivered under mutual
aid after September 2, 1945	
Transfer to revenue of Canadian Wheat
Board suspense account	
Surplus of Canadian Arsenals, Limited Write-up to active assets-Atomic Energy of Canada, Limited-Capital
stock	
Miscellaneous special receipts	
16,351
4,241
2,535
19,613
2,862
4,351
25,000
14,712
3,144
9,843
7,367
7,638
2,054
6,701
45,000
28,298
42,012
6,096
6,325
6,114
4,794
4,469
Total Special Receipts and Credits.. Total Revenue	
51,425
93,838
41,162
83,095
2,580,141
3,112,536
3,980,909
4,360,823
111.500
147.500 4,800 3,900
49,700
317,400
4,326,400
7,866
(>)
5,235
46,900
9,204
2,807
(')
1,674
73,686
4,400,086
(*) Included in Return on Investments.
83276-243i
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The Budget-Appendix

[Stage Direction]
(thousands of dollars)
-	1949-50	1950-51	1951-52	1952-53	Estimated 1953-54S	$	?	$	SAgriculture-	Administration and general	644	692	733	824	86SScience service	5,684	6,685	6,992	8,136	8,967Experimental farms service	5,810	7,140	7,729	8,272	8,693Production service	8,771	9,182	9,335	9,337	9,671Marketing service	4,387	4,936	4,555	4,780	4,412Rehabilitation and reclamation projects	8,846	13,212	11,813	13,852	14,850Freight assistance on western feed	grains	16,764	15,638	14,999	20,661	17,000Premium on hog carcasses suitable for	export to United Kingdom	4,982	5,100	5,374	6,405	4,925Advances to prairie farm emergency	13,138	4,304	Payment to Canadian Wheat Board for	65,000	Net operating loss-Agricultural prices	support account	3,473	3,485	1,743	32,533	37,759Other expenditure	2,548	7,411	3,861	1,911	2,11175,647	142,785	67,134	106,711	109,256Auditor General's Office	562	574	601	576	618Canadian Broadcasting Corporation	2,772	2,405	8,301	8,235	8,304Payment from the consolidated revenue	fund of amounts equal to taxes collected	under the Excise Tax Act in respect	of radio and television sets and	16,50024,804Office of the Chief Electoral Officer	4,456	278	368	405	5,508Citizenship and Immigration-	Administration and general	376	531	1,114	1,399	1,717Immigration branch	4,957	5,578	8,073	7,063	7,533Indian Affairs branch	12,368	14,564	14,054	15.1S4	16,64517,701	20,678	23,241	23,646	25,895Civil Service Commission	1,513	1,580	1,692	1,910	2,060Defence Production-	8,284	9,738	10,37522,695	79,079	39,50080,979	88,817	49,875External Affairs	7,050	7,654	8,225	9,146	10,464Membership in commonwealth and	international organizations	2,071	2,962	2,724	3,477	3,533Assistance to other countries and inter-	national organizations	6,959	11,464	26,634	26,628	31,45016,680	22,080	37,583	39,261	45,447Finance-	Departmental administration and gen-	eral	5,448	7,354	8,361	9,385	9,468Office of the Comptroller of the	Treasury	11,140	11,345	12,554	13,310	13,805Interest on public debt	439,816	425,217	432,423	451,340	476,665Additional amount required to place	87,510	Cost of issuing new loans and annual	amortization of bond discounts and	commissions	10,546	13,354	10,717	13,072	19,033Servicing of public debt	478	449	385	508	612Subsidies to provinces	19,170	18,735	20,108	20,108	20,108Compensation to provinces-	Tax rental agreements, 1947 Act....	76,881	94,123	96,868	23,795	1284,778	309,227Transfer of certain public utility tax	receipts, sec. 7, 1947 tax rental	agreements act	1,375	4,565	3,732	4,370	4,000Transitional grant to Newfoundland.	6,500	6,500	6,500	5,650	4,800Government contributions with respect	to the superannuation account-general	5,461	6,831	12,911	13,802	16,450-special	75,000	98,000	25,000	38,000
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(thousands of dollars)
-	1949-SO	1950-51	1951-52	1952-53	Estimated 1953-54S	$	$	$	$Finance- Concluded	Grants to universities	6,993	5,115	5,244Implementation of guarantees (Ming	1,346	1,695	1,563Premium discount, and exchange	19,740	Wartime Prices and Trade Board	2,567	1,599	155	Commodity prices stabilization cor-	50	307Advances for payment of drawback	claims to millers and other manu-	facturers of wheat products	400	Grant re Red River Valley flood	12,500	Provision for reserve for possible losses	on ultimate realization of active	assets	75,000	75,000	75,000	75,000	50,000Assumption of part of Newfoundland	debt under terms of union	62,293	Write-down from active to non-active	assets-	Trading losses in securities investr	8,299	40	126	7 45,240	752,572	873,6IS	946,968	969,285Fisheries	7,586	8,964	8,733	10,777	9,425Governor General and Lieutenant Gov-	ernors	274	244	275	397	399Insurance	311	369	403	449	498Justice	4,268	4,609	5,103	5,606	5,936Office of the Commissioner of Peniten-	tiaries	6,691	7,798	8,936	9,303	9,25610,959	12,407	14,039	14,909	15,192Labour	9,770	9,030	9,503	10,088	9,539Government annuities-amount re-	quired to maintain reserve	1,256	660	940	744	1,000Unemployment Insurance Act 1940-	Administration and general	24,033	26,805	23,919	25,051	26,273Government contribution	21,084	26,133	29,940	31,139	31,89456,14$	62,628	64,302	67,022	68,706Legislation-	House of Commons	3,765	3,332	4,302	4,528	4,094Library of Parliament	127	137	153	231	295Senate	1,178	976	1,227	1,103	999General	159	266	263	295	2705,229	4,711	5,945	6,157	5,658Mines and Technical Surveys	9,839	10,442	10,779	12,027	12,980Dominion Coal Board	4,357	3,561	5,132	6,484	10,018Emergency gold mining assistance	13,716	7,114	11,841	11,147	14,500Write-down from active to non-active	assets-	Abasand Oils Limited	1,802	29,714	21,117	27,752	29,658	37,498National Defence-	General	383	901	277	295	316Defence forces, army, navy and air	services	348,050	545,738	1,217,579	1,557,660	1,434,009Mutual aid to NATO countries	195,417	126,416	235,053	309,232Defence research and development	22,389	23,415	35,394	42,989	431763Pensions-	Payments under defence services	pension act	5,011	5,011	5,096	5,110	5,101Government contribution to permanent	services pension account	9,046	11,975	30,712	30,009	35,252Contribution towards military costs of	NATO	11,302	12,000S84,879	782,457	1,413,474	1,882,418	1,839,673National Film Board	2,123	2,308	2,662	2,920	2,998National Health and Welfare	16,901	17,344	21,098	22,935	27,918General health grants	15,716	18,875	24,322	27,333	28,964Family allowances	297,514	309,465	320,458	334,198	350,142
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1949-50	1950-51	1951-52	1952-53	Estimated 1953-54%	$	$	$	%National Health and Welfare-Concluded	Old age pensions including pensions to	93,189	103,169	80,206	Old age assistance and blind persons	2.999	22,099	23,55549 669	423,320	US, 85S	498,752	406,565	430,579National Research Council and Atomic	Energy Control Board	16,170	18,014	25,080	28,343	28,245National Revenue including taxation	division	47,832	46,056	45,703	47,313	50,092Northern Affairs and National Resources	22,605	20,704	- 17,423	19,500	19,488Post Office	82,640	. 91,781	97,973	105,553	114,078Privy Council including Prime Minister's	Office	4,248	4,302	4,097	3,767	3,754Public Archives	198	206	251	307	357Public Printing and Stationery	866	706	1,103	1,607	2,035Public Works	67,599	74,458	79,060	83,906	100,3627,205	12,792	13,953	14,17867,599	81,663	91,852	97,859	114,540Royal Canadian Mounted Police	15,971	19,801	27,341	31,141	33,992Secretary of State	1,600	2,065	2,399	2,201	3,292Trade and Commerce	25,761	23,443	21,817	16,503	16,688Deficits incurred by the Canadian	1	Wheat Board covering operations for	4 471	2,536	Deficit-Trans-Canada Air Lines	4 318	1,325	Si,550	27,304	21,817	16,503	16,688Transport-	Administration and general	3,808	2,528	3,179	7,495	10,490Canals service	6,198	8,290	7,991	9,889	9,434Marine service	17,537	17,187	17,465	21,679	20,812Railway service	4,488	1,981	2,306	6,414	13,458Maritime freight rates act	6,982	8,475	10,030	10,130	10,538Air services	34,115	33,553	36,298	39,011	42,382Canadian Maritime Commission	2,277	5,899	4,461	3,984	4,327Deficits-	42,043	3,261	15,032	Canadian National (West Indies)	Steamships Limited	461	1,029	467	4	650Prince Edward Island car ferry and	terminals	1,221	1,267	1,365	1,520	1,603North Sydney-Port aux Basques..	1,846	2,23683	188	55	57	Non-active assets-	National Harbours Board	4,236	1,465	1,252	1,877	4,257123,449	85,123	99,901	103,906	120,187Veterans Affairs-	Administration and general	3,850	2,385	2,513	3,627	2,274Pensions	96,091	95,577	103,703	127,053	127,654Treatment and after-care of returned	soldiers and allowances to depend-	ents	69,507	71,646	76,097	78,541	80,175Hospital accommodation, additions,	alterations and improvements	3,811	3,008	3,758	3,990	4,213Post discharge rehabilitation benefits	25,099	13,502	6,594	3,790	2,518War service gratuities and re-establish-	ment credits	22,641	16,868	9,826	10,737	9,106Soldier settlement and veterans land	acts	7,383	6,282	5,922	5,629	5,342Provision for reserve for conditional	benefits under veterans land act....	6,496	7,110	7,600	8,042	8,570Write-down of assets-	Soldier settlement and veterans land	acts loans	11,500	14	13	16	7246,378	216,392	216,026	241,425	239,859Total Expenditure	2,448,615	2,901,242	3,732,875	4,337,276	4,389,979
The Budget-Appendix

[Stage Direction]
(In thousands of dollars)
Working Capital Advances to Crown Corporations
Canadian Arsenals, Ltd	
Canadian Commercial Corporation	
Canadian Patents and Development,
Ltd	
Commodity Prices Stabilization Corporation	
Crown Assets Disposal Corporation	
Loans to, and Investments in, Crown Agencies
Central Mortgage and Housing Corporation-
Loans	
Canadian Broadcasting Corporation
Canadian Farm Loan Board	
National Harbours Board	
Canadian National Railways	
Other Crown Agencies	
Other Loans and Investments
Provincial and Municipal Governments.. United Kingdom and Other Governments-
United Kingdom-Loan under the War Appropriation (U.K. Financing)
Act, 1942	
United Kingdom Financial Agreement
Act, 1946-Loan	
Export Credits Insurance Act...
Other	
Canada's subscription to capital of-
International Monetary Fund....
International Bank for Reconstruction
and Development	
Miscellaneous-
Loans to veterans under the Soldier Settlement and Veterans' Land Acts Balances receivable under agreements
of sale of Crown Assets	
Other miscellaneous loans	
Sinking Fund and Other Investments held for retirement of unmatured funded debt	
Net Total of Changes in Loans and Investments	
Fiscal Year Ended March 31				
1950	1951	1952	1953	Estimated
				1954
$	$ 2,500	$	$	$
		6,500		
296		Cr. 296		
Cr. 3,000	Cr. 1,500	Cr. 50		Cr. 307
Cr. 1,183		Cr. 45
[Stage Direction]
Cr. 3,887
[Stage Direction]
1,000
[Stage Direction]
6,109
[Stage Direction]
Cr. 307
[Stage Direction]
91,460
[Stage Direction]
79,389
[Stage Direction]
73,624
[Stage Direction]
72,561
[Stage Direction]
92,465
[Stage Direction]
4,500
[Stage Direction]
650
[Stage Direction]
850
[Stage Direction]
2,000
[Stage Direction]
4,750
[Stage Direction]
1,950
[Stage Direction]
1,900
[Stage Direction]
1,300
[Stage Direction]
1,600
[Stage Direction]
3,700
[Stage Direction]
20,382
[Stage Direction]
1,004
[Stage Direction]
227
[Stage Direction]
Cr. 127
[Stage Direction]
Cr. 763
[Stage Direction]
Cr. 20,963
[Stage Direction]
19,888
[Stage Direction]
139,998
[Stage Direction]
141,822
[Stage Direction]
Cr. 18,092
[Stage Direction]
Cr. 1,295
[Stage Direction]
Cr. 540
[Stage Direction]
Cr. 542
[Stage Direction]
14,614
[Stage Direction]
951
[Stage Direction]
96,034
[Stage Direction]
102,291
[Stage Direction]
215,457
[Stage Direction]
232,470
[Stage Direction]
83,011
[Stage Direction]
Cr. 4,031
[Stage Direction]
Cr. 3,180
[Stage Direction]
Cr. 4,129
[Stage Direction]
Cr. 3,782
[Stage Direction]
Cr. 3,774
[Stage Direction]
Cr. 9,936
[Stage Direction]
Cr. 40,567
[Stage Direction]
Cr. 31,092
[Stage Direction]
Cr. 24,282
[Stage Direction]
Cr. 53,616
[Stage Direction]
120,000
[Stage Direction]
20,000
[Stage Direction]
Cr. 14,010
[Stage Direction]
Cr. 14,290
[Stage Direction]
Cr. 14,576
[Stage Direction]
Cr. 10,964
[Stage Direction]
Cr. 22,935
[Stage Direction]
Cr. 20,657
[Stage Direction]
Cr. 20,599
[Stage Direction]
Cr. 19,438
[Stage Direction]
5,541
[Stage Direction]
144
[Stage Direction]
5,461
[Stage Direction]
Cr. 1,602
[Stage Direction]
Cr. 5,002
[Stage Direction]
22,500
[Stage Direction]
5,658
[Stage Direction]
170
[Stage Direction]
796
[Stage Direction]
7,515
[Stage Direction]
1,521
[Stage Direction]
Cr. 1,259
[Stage Direction]
Cr. 793
[Stage Direction]
Cr. 2,889
[Stage Direction]
Cr. 1,043
[Stage Direction]
Cr. 936
[Stage Direction]
900
[Stage Direction]
8,304
[Stage Direction]
Cr. 812
[Stage Direction]
Cr. 54
[Stage Direction]
2,957
[Stage Direction]
Cr. 256
[Stage Direction]
300
[Stage Direction]
125,863
[Stage Direction]
Cr. 40,120
[Stage Direction]
Cr. 60,715
[Stage Direction]
Cr. 65,170
[Stage Direction]
Cr. 88,595
[Stage Direction]
5,499
[Stage Direction]
3,201
[Stage Direction]
1,722
[Stage Direction]
73,085
[Stage Direction]
218,010
[Stage Direction]
68,670
[Stage Direction]
164,052
[Stage Direction]
169,022
[Stage Direction]
67,194
[Stage Direction]
The Budget-Appendix UNMATURED FUNDED DEBT AND TREASURY BILLS AS AT MARCH 31, 1954 AND THE ANNUAL INTEREST PAYABLE THEREON
Date of Maturity
Rate per cent
Where
Payable
Amount of Loan
Annual
Interest Charge
1954,	May 1	
September 1	
July 1	
December 15	
December 15	
1955,	July 1	
July 1	
1956,	July 1	
November 1	
November 1	
1957,	May 1	
November 1	
1958,	May 1	
June 1	
November 1	
1959,	January 1	
November 1	
1960,	June 1	
November 1	
1961,	January 15	
1962,	February 1	
August 1	
1963,	July 1	
July 1	
August 1	
August 1	
October 1	
1965,	November 1	
1966,	June 1	
September 1	
1968, June 15	
1974,	September 1	
1975,	September 15	
1978, January 15	
Perpetuals	
Various, three months
bills	
Various, nine months bills	
treasury
treasury
2i
2
2
2i
2i
2i
2}
21
3
3
3
31
31
3
31
31
3
21
31
(*) 1-709 (*) 2 -289
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
New York
Canada
Canada
London
London
New York
Canada
Canada
Canada
Canada
Canada
Canada
New York
New York
Canada
Canada
Canada
Canada
Payable in Canada___
Payable in London.... Payable in New York.
$	cts.
200,000,000 00
550.000.	000 00
100.000.	000 00
395.000.	000 00
150.000.	000 00
200.000.	000 00
400.000.	000 00
400.000.	000 00 0)855,607,410 50
*98,000,000 00 1,111,261,650 00 *52,000,000 00
300.000.	000 00
88,200,000 00
*48,000,000 00 1,197,324,750 00 *70,000,000 00
1.165.300.350	00 *65,000,000 00
(«)46,560,000 00 1,315,639,200 00 *164,000,000 00 (*) 1,921,837 74 (*) 48,408,155 14 (*) 145,500,000 00 *199,000,000 00
1.295.819.350	00 *860,000,000 00
54,703,000 00 1,691,796,700 00
350.000.	000 00 (*) 97,000,000 00 (*) 48,500,000 00
100.000.	000 00
55,000,000 00
455.000.	000 00
195.000.	000 00
14,569,542,403 38
14,181,652,410 50 50,329,992 88 337,560,000 00
14,569,542,403 38
$ cts.
4.500.000	00
11,000,000 00
2,000,000 00
7.900.000	00
3.000.	000 00
4.500.000	00
9.000.	000 00
9.000.	000 00 25,414,081 50
2.695.000	00 33,337,849 50
1.430.000	00
9.000.	000 00
2.646.000	00
1.320.000	00 35,919,742 50
1.925.000	00 34,959,010 50
1.787.500	00 1,513,200 00
39,469,176 00
5.740.000	00 62,459 73
1,452,244 65
4.365.000	00
7.462.500	00 38,874,580 50 32,250,000 00
1,777,847 50 50,753,901 00
9.625.000	00
2.667.500	00 1,333,750 00
3.750.000	00
1.650.000	00
7,775,950 00 4,463,550 00
416,320,843 38
404,926,689 00 1,514,704 38 9,879,450 00
416,320,843 38
* Estimated.
0) Redeemable at 101 per cent. Amount outstanding includes $8,471,360.50 redemption bonus. (2) Conversion rate estimated at $0-97 U.S. to the dollar Canadian.
(8) Conversion rate estimated at $2-72 to the pound sterling.
(') Estimated average effective rate of discount.
[Stage Direction]
Wednesday, April 7, 1354